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INVESTMENT – Investment restructuring – key to successful economic shift
VOV
Vietnam
should boost its economic growth through investment restructuring, as
well as its business and financial markets, said Deputy Prime
Minister Vu Van Ninh.
Mr Ninh made this suggestion on October 18 at a seminar in Hanoi on Vietnam’s response to current global economic issues.
He
said that Vietnam has taken many measures to overcome the negative
impacts of the world’s economic downturn since 2008. However, the
country
still faces numerous difficulties in dealing with inflation and high
interest rates.
Delegates
at the seminar raised concerns about imbalances in Vietnam’s investment
structure, which relies a lot on the private sector and
foreign investors..
Many experts agreed that it is necessary to reconsider investment projects to avoid inefficiency and waste.
They
stressed the need to issue laws on public investment and give priority
to key national projects. Strict monitoring and inspections should
be imposed on projects receiving investment from the State budget.
According
to the Central Institute for Economic Management (CIEM), in the
1995-2010 period the State economic sector consumed 60 percent
of the country’s total investment, which was more than its contribution
to the GDP, while the non-State sector only accounted for a fifth to a
third of the investment proportion.
RENEWABLE ENERGIES -
Vietnam borrows $1b from US-based bank to develop wind power in Mekong Delta region
Vietbiz24
Deputy
Prime Minister Vu Van Ninh has recently approved Vietnam Development
Bank (VDB) to sign a credit commitment letter to borrow $1 billion
for wind power development in the Mekong Delta region in 2011-2015
period.
The loan will be financed by the Export-Import Bank of the United States (EXIM Bank).
Some
coastal provinces in the Mekong Delta region such as Bac Lieu, Soc
Trang and Kien Giang have potential for wind power development.
Till
February 2011, Vietnam had 21 wind power projects studied to conduct in
central provinces of Binh Thuan, Ninh Thuan, Binh Dinh and Lam
Dong with designed capacity of over 2,000 MW.
Recently,
the prime minister issued a decision on preferential mechanism for wind
power development, including incentives on investment capital,
taxes and fees, land infrastructure and electricity price support for
grid connected wind power projects.
In
the master electricity plan VII, the total capacity of electricity
sources using renewable energy will be 5.6% by 2020 and 9.4% by 2030.
ENERGY - EVN reiterates power price hike proposal
VietnamBusiness.Asia
The
Electricity of Vietnam Group (EVN) has again proposed that the Ministry
of Industry and Trade approve a power price hike of 10-13 per
cent from November.
In
early September, EVN asked for an increase in electricity price from
that month, but several leading economists denied the need for it,
saying that the proposal was inappropriate in the context of the
country's rising inflation rate.
According
to an EVN official, this time, all three elements, including fuel
prices, foreign exchange rate and power outputs that affect power
price calculations have increased over the past three months.
Under
the Ministry of Industry and Trade’s regulations, EVN could hike power
prices by a minimum of 5 per cent if the factors related to
input costs report an increase of more than 5 per cent over three
consecutive months.
As
the Ministry of Finance has said power prices should not be amended on a
quarterly basis to avoid a negative impact on the national economy,
EVN has decided to seek approval to increase power price from November
instead.
The latest power price hike was applied from March 1, 2011, raising the electricity rate by 15.28 per cent.
Currently, EVN is facing mounting losses and spiralling debts, which it claims is due to low retail prices.
The group’s debts to PetroVietnam have now surpassed VND10 trillion ($477.4 million).
In
addition to its debts to PetroVietnam, EVN still owes over VND2
trillion ($95.5 million) to the state-owned company Vietnam National
Coal-Mineral
Industries Group (Vinacomin). This means that EVN’s total debts amount
to over VND12 trillion ($572.9 million).
Apart from its debt problem, EVN is struggling to find capital for power projects.
The
Ministry of Finance recently allowed EVN to calculate its losses and to
offset the losses by gradually increasing power prices in the
coming years.
If EVN is allowed to raise electricity price by 5 per cent per quarter, it could offset its losses by 2013.
RESOURCES - PVGas faces difficulty in finding strategic partners
Vietbiz24
Do
Van Hau, general director of Vietnam National Oil and Gas Group
(PetroVietnam) announced that PVGas has currently faced difficulty in
offloading the shares to strategic partners.
The
main reason behind this was because the debt of 10 trillion dong that
Electricity of Vietnam (EVN Group) failed to pay PVGas and PetroVietnam
Power Corp (PVPower) caused debt chain among PetroVietnam’s member
companies, and would worsen the financial situation of the concerning
parties.
In
2011, PVGas expects to reach targeted revenue of 57.165 trillion dong,
equivalent to 129 percent of the year plan, pre-tax profit of 5.559
trillion dong or 128 percent. At present, PVGas has planned to list
shares of PVGas and other member companies (PVID, CNG VN) on the stock
market.
Foreign investors seek new opportunities in Vietnam
Vietnamplus
The
second annual Vietnam Investment Summit opened in HCM City on October
19, drawing over 100 representatives of investment funds and businesses
at home and abroad.
The
two-day forum discusses the macro-economic environment in Vietnam and
seek new investment and development opportunities in the country.
Addressing
the function, deputy minister of Planning and Investment Dang Huy Dong
presented a strategy to attract more foreign direct investment
in Vietnam, which clarifies foreign investment attraction policies,
introduces the government's investment priorities and solutions to
manage the monetary market and curb inflation.
Meanwhile,
CEO of Standard Chartered Bank for Vietnam, Laos and Cambodia, Louis
Taylor, voiced the expectation of stock market investors,
saying that Vietnam has potential for good development.
The
Vietnamese government needs to build confidence for investors through
stable macro-economic policy and close inflation control, he said.
Country
Representative of the Asian Development Bank in Vietnam, Tomyoyuki
Kimura, introduced projects which are in need of investment capital
and put forward measures to attract investors in sustainable projects
with his presentation on increasing public-private projects in Vietnam.
Investment pledged for north-central region
Saigon Times Daily
Many
local and foreign investors pledged to invest hundreds of millions of
dollars in the north-central provinces of Vietnam at a promotion
conference held in Nghe An on Monday.
The
conference was organised by the Ministry of Planning and Investment in
cooperation with six provinces in the region, namely Nghe An,
Thanh Hoa, Ha Tinh, Quang Binh, Quang Tri and Thua Thien-Hue.
The
event also had the participation of deputy prime minister Nguyen Xuan
Phuc, 20 embassies and over 100 local and foreign enterprises.
The
conference witnessed investment certificates handed over to nine
project owners with total investment capital of 17,144 billion dong
and $45.8 million.
Also,
four projects invested in Nghe An Province with 18,500 billion dong in
total capital were signed. Two of these projects belong to the
Vietnam Cement Industry Corporation (Vicem).
The
corporation will construct Hoang Mai II Cement Factory with annual
capacity of 4.5 million tonnes and develop Dong Hoi Port in the
province.
EuroWindow
Vietnam will invest 2 trillion dong in an urban area and service
complex, comprising offices for lease, apartments and commercial
centers, located in Cua Lo Town. The remainder is Bac A Bank’s project
to invest in a resort area with $160 million capital.
When
these projects are rolled out, the advantages and potentials of the
north-central region will be promoted. Then, the region will become
an attractive and secure destination for investors.
This
is the biggest ever promotion conference to be held in north-central
Vietnam in order to project the image of the region to investors.
Deputy
minister of Planning and Investment Danh Huy Dong stated the region had
difficulties in investment orientation due to its lack of
skilled labour force and supporting areas for big foreign direct
investment (FDI) projects.
Meanwhile,
a representative of the Ministry of Transport said the region must have
its transport system improved. The region is lacking synchronous
development and many national highways are deteriorating.
As
of now, the north-central region has had 243 FDI projects so far with
registered capital of $19.9 billion which accounts for 10 percent
of the country’s total FDI capital.
Despite
its poor performance in attracting investment, the north-central area
has an advantage in the marine economy and coastal tourism
with many airports and seaports.
The
six provinces are calling for 342 investment projects in a number of
fields, such as real estate, industry, agriculture, education and
entertainment.
Kenmark affirms it does not run away
TBKTVN
The
information that Kenmark Group, which invests in the project on
developing the Viet Hoa – Kenmark Industrial Zone (IZ), has escaped from
Vietnam leaving a big debt of 50 million dollars, has stirred up the
public. However, Kenmark’s representative has affirmed that Kenmark does
not run away and that there is still solution to the problem.
The
4-5 storey grandiose white buildings were the things that reporters
could see first when they arrived in Hai Duong province. However,
the buildings were quiet with no worker at the workshops. There were
only several security guards and the three sealed-off entrance doors.
These are all the things which have been built over the last year, since
the IZ project was kicked off.
Kenmark does not run away
This
is the affirmation of Hwang Ding Kuo, the legal representative of KID,
the Taiwanese investor of the IZ project. The statement was then
confirmed by Mai Van Chon, Head of the Hai Duong IZ Management Board and
Nguyen Van Thang, Director of the Quang Ninh branch of the Saigon-Hanoi
Bank.
“I
fly to Vietnam every month to work with commercial banks and the Hai
Duong IZ Management Board. Lately, on August 22, 2011, I had a working
session with BIDV and other banks which gave the syndicated loan,” he
said.
Chon
said that before officially stopping the operation, KID paid salaries
and fulfilled its duties to laborers. Besides, the investor paid
the land leasing fee for 50 years already, worth 2.5 million dollars.
The
investment certificate dated December 1, 2006 granted by the Hai Duong
IZ Management Board shows that KID has the chartered capital of
29.529 million dollars and it committed to implement the project on
developing the Viet Hoa – Kenmark IZ in Hai Duong which has the total
investment capital of 1594 billion dong, or 98.430 million dollars.
In
order to mobilize more capital for the project, KID signed a contract
on a syndicated loan with BIDV (Thanh Do branch), SHB (Quang Ninh
branch) and Habubank (Bac Ninh branch). The total value of the loan is
52.85 million dollars and 57.5 billion dong, which is equal to 70
percent of the total capital needed for the project.
Meanwhile, local newspapers reported that Kenmark has incurred the loss of 50 million dollars.
After
getting the investment certificate, KID began building the
infrastructure of the IZ. According to Chon, the investor has completed
the construction of some infrastructure items such as roads, electricity
system, water supply and drainage and waste treatment system as
scheduled.
However,
on June 20, 2010, KID sent a dispatch to local agencies, informing that
it stopped the operation in the Viet Hoa – Kenmark IZ because
KID met big difficulties in the global economic crisis. The information
raised big worries to creditors, contractors and clients, who then sent
petition to relevant agencies, saying that KID has fallen into
insolvency and escaped from Vietnam.
Ways-out still exist
According
to Bui Thi Mai, General Director of Habubank, an investor has expressed
their intention to buy the whole Viet Hoa – Kenmark IZ.
The investor has had working sessions with BIDV on the procedures to
transfer projects and pay debts. It is expected that everything would be
settled in October. Creditors, including Habubank, will have to
thoroughly consider the financial capability of the
new investor before deciding the methods of debt settlement.
Nguyen
Van Le, General Director of SHB, said that SHB has requested BIDV, as
the leading bank, to contact KID’s managers and Kenmark group
to discuss the solutions which help settle the current problems. Banks
and KID have reached an agreement about the methods of setting debts.
Malaysian
Kris Sakti Holdings Group is now interested in the project, while
involved parties are still discussing relating issues.
Hwang
Ding Kuo has confirmed that the group is looking for the partners to
transfer the IZ project. Of the Japanese, Chinese investors and the
investors from the Middle East,
who are interested in the project, one investor has proved that it can
pay all the debts and resume production quickly.
ECONOMY – MPI says SOEs make heavy, but ineffective investments
TBKTVN
MPI says SOEs make heavy, but ineffective investments
The
most critical issue today is the ineffective use of the state’s
resources by the state owned enterprises (SOEs), which affects the
quality
of growth, development and competitiveness of the economy.
The
Ministry of Planning and Investment (MPI), which is drafting the plan
on improving the efficiency of SOEs’ operation to be submitted
to the Prime Minister, has pointed out that the biggest problem of SOEs
now is that they are wasting the resources.
SOEs’ investments don’t have high efficiency…
The
MPI’s report has pointed out that SOEs have been using more resources
than private enterprises, but the values of the products made by
SOEs are lower.
In
2009, SOEs had 37.2 percent of the total capital, 44.8 percent of fixed
assets and long term investment, but they only created 25 percent
of the total revenue, 37 percent of pre-tax profit and 20 percent of
industrial value.
According
to the General Statistics Office, in 2009, SOEs had to use 2.2 dong in
capital to create 1 dong of revenue. Meanwhile, non-state
owned enterprises only needed 1.2 dong in capital to create one dong of
revenue, and foreign invested enterprises needed 1.3 dong.
“It is clear that the investment efficiency of SOEs is much lower than that of other economic sectors,” MPI said.
The
checking over the investments by SOEs carried out in 2008 and 2011
found out that SOEs, especially economic and general corporations,
have been made “overly hot investments.”
In
2008, state owned economic groups and general corporations built the
investment and development plans with the capital equal to 24.8 percent
of the total assets’ value and 89.5 percent of the total chartered
capital. Meanwhile, the figures were 26 and 72 percent in 2011,
respectively. Especially, some of them planned the investment projects
with the capital 1.5-3.1 times higher than their chartered
capital.
MPI
believes that the enterprises decided to make investment even when
there were not enough conditions to implement projects, when the
projects
were not necessary or not urgent, or when enterprises met difficulties.
“The
low investment efficiency of SOEs has badly affected the investment
efficiency of public investments and of the whole national economy,”
MPI has concluded.
Finally,
when the government decided to cut public investments in an effort to
curb inflation, 1445 projects of state owned economic groups
and general corporations, accounting for 12.7 percent of the planned
investment capital, were canceled in 2008. Meanwhile, 31 percent of
projects and 10.72 percent of the planned total investment capital were
canceled in 2011
The
overly hot investment by SOEs has been attributed to the current
mechanism which gives high power to the board of directors and general
directors.
…and bring high risks
Statistics
show that 12 percent of SOEs make losses every year, while the average
proportion of enterprises in the national economy is 25
percent. However, the average loss incurred by an SOE is much higher
than that of non-state owned enterprise.
The Electricity of Vietnam, for example, reported the loss of 8500 billion dong
in 2010. The audited finance report of the Post Corporation
showed the loss of 1026 billion dong. Meanwhile, the Song Hong
Construction Corporation lost 20 billion dong in the same year.
Comparing
the figures of the last 10 years, MPI has found out that the ratio of
pre-tax profit on capital of SOEs never exceeded the 6 percent
threshold, while the figure of foreign invested enterprises is about 10
percent.
Meanwhile,
the report by the Committee on Enterprise Renovation and Development
shows that in 2010, the ROE (return on equity) of SOEs was
only 13.1 percent, much lower than the interest rates of commercial
loans at the same time.
According
to the General Statistics Office, at the beginning of 2010, a
Vietnamese enterprise had the accounts payable higher by 2.1 times
than its stockholder equity, while the ratio of SOEs was 3.09.
Inefficient public investments hamper growth: experts
Saigon Times
The
low efficiency of Vietnam's public investments coupled with the
increased intervention by the State are among factors resulting in
current
economic woes, experts said at a seminar in Hanoi on Tuesday.
"Vietnam's
economy has become uncertain partly because public investments are too
big but inefficient, coupled with the increased intervention
by the State," said Le Xuan Ba, head of the Central Institute for
Economic Management.
Speaking
at the seminar "Global Economic Prospects and Vietnam's Responses," Ba
compared the average growth rates in two recent five-year
periods to highlight problematic public investments.
The
overall investment in the economy in the 2001-05 period accounted for
39.1 percent of gross domestic product (GDP), but the annual GDP
growth rate was 7.2 percent. However, in the next five-year period of
2006-10, the economic growth slowed to 6.92 percent while overall
investment increased to 42.7 percent of the GDP, Ba said.
He
stressed that public investments made up as much as 45.7 percent of the
overall investment in the past decade, which Ba said was a very
high rate.
As
percentages of the GDP, investment from the State Budget averaged out
at 9.8 percent in the past ten years, capital from State-owned
enterprises
some 4.8 percent, and State credits 2.5 percent.
The efficiency has been quite low, as seen in the ever-increasing Incremental Capital Output Ratio (ICOR) index.
Ba
referred to the numerous cost-extensive infrastructure projects that
are of low efficiency. He pondered why Vietnam should have 100 seaports,
22 airports including eight international airports, 18 coastal economic
zones, 267 industrial zones plus 918 industrial clusters, and 28 border
economic zones among others.
"We
have invested huge capital resources but the cost-effectiveness is low.
If changes are not made, we will face more economic setbacks,"
he said.
Ministries,
State agencies and localities have submitted their lists of public
investment projects for implementation next year to the Ministry
of Planning and Investment, with the combined capital reaching a
staggering $300 billion.
"The
economy's size is only $105 billion, so (the lists) show that we must
set aside all GDP in three years to meet the investment demand
for one year only," he commented.
Ba
also cited the Ministry of Planning and Investment's figures to warn of
a ballooning budget deficit, saying if government bonds are taken
into account, the real deficit hit 9.7 percent of the GDP rather than
the formally-announced figure of 5 percent.
Nguyen Xuan Thanh from the Fulbright Economic Teaching Programme drew the seminar's attention to the increasing public debts.
Public
debts, as calculated by the Ministry of Finance, had risen to 56.7
percent of GDP as of end-2010, far exceeding the discretionary
proportion of 40 percent suggested by the International Monetary Fund
for emerging economies.
Speaking
at the seminar, deputy prime minister Vu Van Ninh said the government
had revised down the economic growth next year to 6-6.5 percent
compared to the previous target of 7-7.5 percent in a bid to stabilise
the economy.
"The
government is also determined to restructure public investments, the
State sector and the banking sector in the next couple of years,"
Ninh added.
Vietnam's GDP growth expected at 6pct this year: PM
StoxPlus
Vietnam's
economic growth is expected to reach 6 percent this year, prime
minister Nguyen Tan Dung said in his 2011 economic review and plan
for 2012 and strategy for 2011-15 at the National Assembly Congress in
Hanoi today October 20, state-run television VTV1 broadcast live this
morning.
In his report, the Vietnamese government is taking measures to stabilise macro-economy and ensure economic development.
The
country faces high inflation of 16.63 percent in the first 9 months of
this year, and likely to curb it at 18 percent for the whole year.
To
curb inflation, the country has applied tightening policy both
financially and fiscally, he said. Vietnam's credit growth is estimated
at 12 percent, M2 at 12.5 percent this year. However, liquidity has been
navigated to production sectors and was limited to non-production
areas.
Vietnam
state budget deficit is expected to be tamed at 4.9 percent GDB in 2011
compared with the target of 5.3 percent this year.
The
government also focused on stabilising the forex market. The country is
closely monitoring gold and dollar trading, stabilising foreign
exchanges.
The
Southeast Asian country is expected to incur a trade deficit of $10
billion this year, or 10.5 percent export revenues, better than the
target of not-higher-than 18 percent.
The
lower trade deficit helped support the country's balance of payment,
the prime minister said, adding that the forex market is stabilising.
He also said the country's public debt was at the safe level, but no specific number was given.
FINANCE – Vietnam Central Bank: M&A Inevitable
StoxPlus
Merger and acquisitions of banks become an inevitable trend to increase competitiveness.
Merger
and acquisitions of banks become an inevitable trend to increase
competitiveness, the central bank said in a statement on October
18, adding that M&A could bring additional benefits to banks via
economies of scales, prestige enhancement, costs reduction, customer
base and network expansion, the local online newspaper Tri Thuc Tre
(TTVN) reported.
M&A can be carried out between big banks, big and small banks or among small banks, said the State Bank of Vietnam.
Vietnam
has established a quite integrated and complete legal framework on
M&A activity, including the Law on Enterprises, Law on Investment,
Law on Competition, Law on Credit Institutions and Law on the State Bank
of Vietnam.
Besides,
the State Bank of Vietnam issued Circular No. 04/2010/TT-NHNN dated
February 11, 2011 to facilitate the mergence, integration, acquisition
of credit institutions.
The state agency is also willing to offer technical guidance to banks seeking for M&A deals.
dong drops to record low on trade deficit, gold imports
Bloomberg
Vietnam's
dong fell to a record low on speculation a widening trade deficit and
increased gold imports have bolstered demand for dollars.
government bonds declined.
The
trade deficit jumped to $1 billion last month from a revised $396
million in August, government data show. Vietnam has imported $1.5
billion of gold in the January through September period, Tien Phong
newspaper reported October 4, citing the Ministry of Industry and Trade.
The country imported about $600 million of gold in September alone,
according to the report.
"I
expect the balance of payments to bear the consequences of the State
Bank of Vietnam's decision to increase the gold- import quota," Francois
Chavasseau, head of fixed-income research at Sacombank Securities
Joint-Stock Co. in HCM City, wrote in an e-mail to Bloomberg. "A higher
trade deficit combined with dwindling foreign-exchange reserves is
putting more pressure on the dong."
The
dong slid 0.1 percent to 20,938 per dollar as of 4:05 p.m. in Hanoi,
the weakest level since Bloomberg began collecting data on it in
1993. The State Bank of Vietnam set the daily reference rate 0.05
percent weaker at 20,733 per dollar, the ninth time this month it fixed a
lower level, according to its website. The currency is allowed to trade
up to 1 percent on either side of the fixing.
People
are moving away from the dong after the central bank forced banks to
strictly comply with dong-deposit interest-rate caps and businesses
are starting "to rush to unwind their dollar loans," also putting
pressure on the local currency, Chavasseau said.
The
yield on the government's five-year bonds rose one basis point, or 0.01
percentage point, to 12.41 percent, according to a daily fixing
price from banks compiled by Bloomberg.
Central bank says to restructure banking system, ensure liquidity
Tuoitrenews
The
State Bank of Vietnam said it would restructure the banking system in
the next five years via mergers and acquisitions and vowed to ensure
liquidity for lenders.
"Mergers
and acquisitions are an indispensable trend to raise competitiveness",
the central bank said in a statement on Tuesday, though it
said it would deals to be conducted voluntarily.
After
years of high credit growth, bad debts in Vietnam's banking system
reached 3.04 percent of all loans at the end of July from 2.16 percent
at the end of 2010, according to government statistics.
Smaller
banks have been facing a funding squeeze after the central bank took
strict measures to maintain a deposit ceiling at 14 percent,
driving depositors to withdraw cash to deposit in large lenders.
Overnight
lending rates have soared to between 17 and 19 percent in the past few
days and the one-month rate jumped to 30 percent on Monday,
the state-run news website VnExpress (vnexpress.net) said.
The central bank will ensure liquidity for every lender and the safety of the banking system, it said in a separate statement.
"The
State Bank of Vietnam has taken... measures to support lenders to deal
with temporary liquidity shortages, ensuring the liquidity safety
of the system", it said in a statement.
Vietnam has more than 40 partly private banks, led by VietinBank and Vietcombank, as well as four fully state-owned banks.
Last
month, Vietcombank said a unit of Mizuho Financial Group agreed to buy a
15 percent stake in it for 11.8 trillion dong ($567.3 million),
in what could be the largest acquisition in the country's banking sector
to date.
Vietnam to inspect real estate and mining projects: official
Vietbiz24
The
Vietnamese Ministry of Planning and Investment said it will check and
inspect many real estate and mining projects throughout the country,
Tuoi Tre (Youth) newspaper quoted Do Nhat Hoang, head of the Foreign
Investment Agency of the Ministry of Planning and Investment on Friday.
Hoang confirmed that the ministry will also inspect a series of steel and cement projects in near future.
Facing
the situation of concerns on golf course projects using agricultural
land, forestry projects, mining projects causing serious environment
pollution and others, Hoang said that currently, the licensing was
decentralized to the people’s committee of provinces and project
management units, so if not lawful, the licensing agency shall have to
take responsibility for the law and the government of
Vietnam.
“As
for mining projects, I know some provinces have large-scale mineral
deposits, but local authorities have been ‘reshaped’ these mines
into the small-scale so that they can decide themselves. That is the
story which needs more fundamental measures from us in the near future,”
said Hoang.”
Vietnam will not issue licenses to projects that ’waste energy’
VietnamBusiness.Asia
Vietnam
says it will not issue licenses to foreign-invested projects that
“waste energy”, use outdated technology or pollute the environment,
according to a statement posted on the government website today.
The
government will give licensing preference to high- technology projects
and ones that are “friendly to the environment,” the statement
said.
Prime
Minister Nguyen Tan Dung has ordered ministries and provinces to
step-up monitoring of projects to ensure they meet the guidelines,
according to the statement.
Vietnam stops licensing new mining projects
Tuoi Tre
With
little economic effectiveness gained from the large number of mining
projects around the country, the Vietnamese Prime Minister has
ordered ministries and localities nationwide to temporarily stop
licensing new projects since August 30, 2011.
The
decision was the government’s effort to curb the disorderly state in
the mining sector on a national scale, which has resulted in negative
consequences for social development as well as the environment.
Pham
Quang Tu, an official from the Vietnam Union of Science and Technology
Associations, told Tuoi Tre newspaper that experts and media
reports have been raising alarms over the issue but the government has
yet to have any solution.
He
said since the Mineral Law 2005 allowed localities to approve mining
projects, 4,000 licenses have been granted within only five years.
The
licensing had boomed since most localities believed that the extractive
industry would increase their budgets and contribute to local
economic development, he said.
In
fact, since most of the minerals exploited were exported as raw
materials, their contribution to the local budgets was inconsiderable.
Instead, the mining projects have left the localities burdened with
serious environmental problems.
The government also had a loose control and management over the mining industry, he added.
“The
government didn’t monitor the extractive businesses’ operation after
granting them licenses…Hence, we do not know how much they had
exploited or exported.”
He
urged the government to review all of the mining projects around the
country to eliminate those making no economic effectiveness but causing
harm to the environment.
The
government should also complete the legal documents regarding the
extractive industry and develop a proper plan and strategy for the
mining projects before re-allowing the licensing process, he advised.
INFRASTRUCTURE - PPP projects set pulses racing
VIR
Industry
insiders are digging into recently approved public private partnership
projects whose pilot implementation needs government approval.
The
four public private partnership (PPP) projects are southern Bien
Hoa-Dong Nai expressway, a Ho Chi Minh City elevated road, Song Hau
1 water plant and a section of Hanoi’s beltway 4.
These
projects came from a list of 24 entries submitted by the ministries of
Transport, Construction (MoC), Industry and Trade, Hanoi and
Ho Chi Minh City people’s committees to get rolling under PPP form.
According
to Ministry of Planning and Investment’s Foreign Investment Agency
deputy head Dang Xuan Quang the selection was based on projects’
attraction and other important factors such as capital recouping,
private sector’s capacity to tap technology advantages as well as their
management and operational expertise as seen in prime ministerial
Decision 71/2010/QD-TTg providing regulations on PPP
project pilot implementation.
“These
are just preliminary assessments. We are teaming with relevant state
agencies to draw project records so as to render projects’ overall
investment efficiency in a comparative correlation between PPP and state
investments,” said Quang
Challenges
lie on the fact that the state must work on analysing expenses and
interests of existing alternative investment forms from the
state and private equity investor angle, from there appraising PPP
form’s investment efficiency, projects’ profitability, and drafting
incentives to make PPP projects appealing to investors.
Besides,
defining risk sharing models in each investment area should be flexible
since private equity investors involve in each PPP project
at different levels.
The
experiences of South Korea, one of four nations with high ratio of PPP
infrastructure projects in 2010, show that lack of professional
expertise in drafting and assessment PPP projects, vague risk-sharing
schemes, and non-transparent investment incentives were holding back PPP
projects’ implementation in the period before 1999, according to
France-based Organization for Economic Cooperation
Development’s senior economist Celine Kauffmann.
Relative
to one of the first four PPP pilot projects Song Hau 1 water plant
MoC’s Construction Economics Department deputy head Tran Van
Khoi expressed concern at water price and waste-water treatment charge
setting vagueness.
“The
project will lose its charm to investors if those factors are not made
clear and transparent for investors to draft their investment
records,” said Khoi.
Khoi also suggested outlining suitable PPP models to each infrastructure field.
Quang voiced the need to hire professional international consultants in drafting PPP project proposals.
“Prestigious
consultants will make projects more lucrative to investors,” said Quang
adding that after these four pilot projects got prime
ministerial approval their pre-feasibility reports should be given to
reputed foreign consultants.
EVIRONMENT - Denmark to give $135 million ODA for green growth
VNS
The
Government of Denmark will provide US$135 million in official
development assistance (ODA) to Viet Nam during the 2011-12 period, with
the funds earmarked for projects that foster green growth.
Work
funded by the ODA will include projects on clean water, energy
efficiency, and research on climate change adaptation. Funding will be
provided for improving quality and access to drinking water for poor
households while also reducing water loss in the country's water supply
network.
John Nielsen, Danish Ambassador to Viet Nam, said climate change was an area of particular concern.
"Two
years ago, Denmark was one of the first sponsors of Viet Nam in the
field of climate change, as we know that the country is forecast
to suffer great losses caused by climate change," said Nielsen.
The
ODA funding will be combined with transferring high quality,
cost-effective and environmentally-friendly technologies from Danish
companies
to their Vietnamese partners in the waste management, solar energy and
wind power sectors.
"We
hope to establish partnerships between enterprises from both countries
especially in the area of wind power, as it is considered a strength
of Danish industry," said Nielsen.
He
added that with 125 Danish companies working in Viet Nam, he believed
that it is possible for Danish companies to find suitable Vietnamese
partners for the projects.
When
implementing the projects benefiting from the ODA, the embassy would
make annual check to ensure that the projects reach expected results,
he said.
Since
1993 Denmark has been a key ODA partner for Viet Nam, providing more
than $1.2 billion in ODA, which was provided to sectors including
agriculture, water and sanitation, fisheries, justice and private
business development.
FOOD AND BEVERAGE - Decision to import meat makes farmers worried
TBKTSG
The
Government finally had to allow importing meat in order to stabilize
the domestic market and prevent the prices from escalating. However,
farmers complained that the decision has pushed them against the wall.
The
decision to allow importing meat has been applauded by Vietnamese
consumers, because they can buy food at lower prices. However, farmers
do not feel happy at all, because the meat prices have gone down to the
low levels which cannot cover their expenses.
According
to the General Department of Customs, by the end of September, Vietnam
had imported 85,249 tons of meat, including 6000 tons of
pork, 66,251 tons of poultry meat and other livestock products.
The
big imports, which aimed to improve the short shortage in the months
from May to July, have successfully helped stabilize the market
and stop the “price fever.”
The
pork and chicken prices have decreased significantly by 30-50 percent
at the traditional markets in Mekong Delta’s provinces in comparison
with the prices in May and June. At Cai Lay (Cai Lay district), My Tho
(My Tho City), Vinh Kim (Chau Thanh district), Cai Be (Cai Be district)
markets, the retail pork prices now range between 60,000 and 85,000 dong
per kilo, a decrease of 30,000-40,000 dong
per kilo.
In
Long An province, chicken is now priced at 30,000-35,000 dong per kilo
after the price has dropped by 20,000-25,000 dong per kilo.
In Vinh Long, Dong Thap and An Giang provinces, the meat prices have also decreased by 15,000-40,000 dong per kilo.
Nguyen
Thi Phuong, a housewife in My Tho City of Tien Giang province, said
that just one or two months ago, she did not dare to purchase
chicken, because it was too expensive. But now she can sigh with relief,
because the prices have gone down.
Yen
Trang, a worker of the Thanh Thanh Cong Company in My Tho Industrial
Zone in Tien Giang, also said that if the meat price continues
increasing,
she will not have meat for meals, because the salary is not high enough
to cover her basic needs.
Livestock farmers cry
While
consumers feel happy because the meat prices have decreased
significantly, farmers feel worried stiff when the pork and chicken
prices
have decreased, which will cause big losses to them.
A
farmer complained that since the beginning of August, the meat has
decreased continuously from 6-6.2 million dong per 100 kilos of live
weight to 4-4.3 million dong for pork and from 60,000-70,000 dong per
kilo to 30,000-35,000 dong per kilo.
Tran
Van Hai, a farmer in Chau Thanh district of Tien Giang province, said
that with the current sale prices, farmers have incurred heavy
losses, because the input costs have increased sharply, from the animal
feed, electricity and water, to medicine.
A
representative of Than Cuu Nghia Livestock Enterprise in Chau Thanh
district in Tien Giang province said that it is nonsensical if the
animal feed price increases, while the poultry meat decreases. He said
the food prices need to increase to truly reflect the input cost
increases.
“If
the pork and chicken prices keep decreasing, the husbandry would fall
into a crisis,” he said, warning that farmers would give up farming
because the turnover is not high enough to cover expenses.
Analysts
have warned that the domestic shortage may occur again, if farmers give
up farming, when the blue-ear epidemic still has not been
extinguished.
According
to the Ministry of Agriculture and Rural Development, by mid October,
the blue-ear epidemic had broken out in five provinces, including
Tien Giang, Long An, Soc Trang, Tay Ninh and Quang Nam.
Foreign food invading domestic market
Tien Phong
Producers
and exporters from Europe, the US and Australia have been promoting the
sale of farm produce to Vietnam, the country with 80 percent
of population living on agricultural production.
Supermarkets selling foreign food
Truong
Thi Yen, Director of HHAFCO, a food distribution company in HCM City,
said that from October 2011, her company begins importing food
products from Italia and Canada to sell domestically. The import
products would include fresh, canned, frozen or bottled fruit juice,
grinded fruits, olive oil and vegetables.
Yen
has revealed that in the immediate time, her company would import one
container a month, but the volume may increase later depending
on the domestic demand.
Goodfood
Company, a well known food importer and distributor in HCM City, is
importing some 200 foreign food items, including meat of different
kinds, seafood, fresh and processed fruits and vegetables, vegetable
oil, sweeties and coffee, mostly from the US, Europe and Australia.
The
representative of Huong Thuy Trade, Service and Production Company,
known as a big dairy product and food importer, has also said that
the import turnover of the company has increased sharply in recent
months.
Importers
say that the high grade products are imported to be provided to hotels,
restaurants, supermarkets, groceries and pharmacy stores
as well.
Truong
Thi To Loan from Big C supermarket chain said that the retailer has
received an increasingly high number of invitations for foreign
food and farm produce. However, Big C has refused the invitations
because it has a specific business strategy.
The
representative of Coop Mart also said that the supermarket has to
refuse foreign food suppliers to prioritize selling domestic products.
However, market analysts have commented that the invitations show that
European and American food is gradually invading the Vietnamese market.
Global economic recession brings foreign food to Vietnam
Experts
say that foreign food from Europe, the US and Australia has been
flowing into Vietnam and other regional countries, because the economic
recession has led to the sharp demand falls in the country, which has
forced foreign producers to push up export to other markets.
Vietnam proves to be a good target market, where the demand is increasingly high thanks to the improved living standards.
Bui
Minh Hue, Director of Sao Viet Company, a distributor in HCM City, said
that despite the economic difficulties and the dollar appreciation
against the dong, big importers and distributors still can “hold out”
thanks to their profuse capital. They are the people who decide the
prices of import products.
Analysts
have predicted that foreign food would keep flowing to Vietnam in the
time to come, because of the increases in the big-scale marketing
activities of some governments. 73 percent of the 373 companies which
participated in Food & Hotel 2011 exhibition in late September in
HCM City were foreign companies.
Especially,
the event witnessed the presence of the businessmen from the US and
Germany. The group of US agricultural representatives comprised
of 15 enterprises, led by Michael Scuse, Acting Deputy Secretary of
Agriculture, arrived in Vietnam to seek the business opportunities for
US agricultural products.
UPEMI,
the organization of European meat exporters, has said it will step up
the export of pork and beef of European countries to Vietnam.
Germany enterprises not only try to bring food to Vietnam, but also try
to approach the Vietnamese market by joining forces with Vietnamese
partners to set up production bases which make products with the
trademarks of German groups.
Dr
Rober Kloos, German Deputy Minister of Agriculture has revealed that a
German company would team up with a Vietnamese partner to make
sausage products under German standards which would be sold in Vietnam.
Market
surveys have found a surprise in Vietnam: while housewives would refuse
to buy import beef because the products are too expensive,
they would accept to eat the import beef at restaurants. This explains
why expensive luxurious food still can be sold very well in Vietnam.
LEGAL NEWS - Ministry plans to simplify income tax procedures
Tuoi Tre
With
the tax procedures being simplified, at least 70 percent of taxpayers
will be happy with them by 2015, the Ministry of Finance promises.
The
complaints of taxpayers and their expectations would be addressed
within the next five years by the restructured tax regime, it said.
For
instance, the time required for completing tax procedures would come
down, it said, adding it also hoped to increase the ratio of payers
satisfied with tax services to 80 percent by 2020.
A general Department of Taxation spokesperson, however, refused to tell Tuoi Tre about the current satisfaction ratio.
The
ministry also promised to reduce corporate income tax rates to attract
investment and help businesses improve their competitiveness,
and personal income tax.
The
number of items that currently had attracted just 5 percent VAT - half
the normal rate - would be reduced, while many items would be
added to the list subject to special consumption tariff, it said.
The ministry plans to open at least 3,000 new tax offices by 2015 to facilitate payments.
Tax authorities would inspect at least 3 percent of tax payers to check transfer pricing and tax evasion, the ministry said.
Telecom and petroleum giants lead list of 1,000 biggest corporate income tax payers in Vietnam
Vietbiz24
Vietnam
Post and Telecommunication Group (VNPT), Viettel together with many
other large enterprises such as Vietnam National Oil and Gas
Group (PetroVietnam-PVN) and Vietnam Commercial Joint Stock Bank for
Foreign Trade (Vietcombank-VCB) are in the list of 1,000 biggest
corporate income tax (CIT) payers in 2011, Vietnam Report Joint Stock Co
(Vietnam Report), in cooperation with the general
Department of Taxation's Tax Journal and VNR500's Advisory Council,
reported on October 18.
List of Vietnam's 1,000 biggest CIT payers (V1000) was made public for the first time on October 22, 2010 in Hanoi.
The CIT paid by the 1,000 enterprises from 2007-2009 was equal to 7 percent of total state budget revenues during this period.
This
year, VNPT overcome other rivals in the banking and financial sector to
take the head in the list of 1,000 biggest CIT payers.
PetroVietnam
Exploration Production Corp. (PVEP) ranked at the second, the
Vietnam-Russia Petroleum Joint Venture (Vietsovpetro) took the
third, PetroVietnam at the fourth and Military-run telecommunication
firm, Viettel at the fifth. The rest was other enterprises in sectors
such as banking, mobile telecommunication, petroleum and coal minerals.
This
year, MobiFone lost the pole place last year to rank at the sixth in
the top ten, Viettel from the second to the fifth and Vietcombank
from the third to the tenth position in the ranking list.
Some
state economic groups such as Electricity of Vietnam (EVN), Vietnam
Garment and Textile Group (Vinatex) and Construction Corp continued
their absence in the top ten of biggest CIT payers.
This
assessment was conducted in three consecutive years (2008-2010),
providing detailed data on the performance of tax obligations of
Vietnamese
enterprises. The data was updated from 250,000 enterprises and compared
the data from two stock exchanges of Hochiminh Stock Exchange (STC) and
Hanoi Stock Exchange (HNX). Top ten CIT payers posted a total tax
contribution in 2011 of up to 64.847 trillion
dong, accounting for 72.42 percent of the total revenue of 1,000 tax
payers in the ranking list.
Top ten biggest CIT payers:
1. Vietnam Post and Telecommunication Group (VNPT)
2. PetroVietnam Exploration Production Corp. (PVEP)
3. Vietnam-Russia Petroleum Joint Venture (Vietsovpetro)
4. Vietnam National Oil and Gas Group (PetroVietnam-PVN)
5. Military telecommunication Group (Viettel)
6. Vietnam Mobile Telecom Services Co (MobiFone)
7. Vietnam National Coal and Minerals Industries Group (Vinacomin)
8. PetroVietnam Gas Corp (PV Gas)
9. Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank-VCB)
10. Vietnam Commercial Joint Stock Bank of Industry and Trade (VietinBank-CTG)
Labour-intensive firms to benefit from tax payment delays
Saigon Times
Enterprises
employing more than 300 workers and cooperatives in certain sectors
will have their 2011 tax payments delayed for one year, according
to a prime ministerial decision.
Decision
54/2011/QD-TT inked by the prime minister last week following a
Ministry of Finance proposal is aimed at helping enterprises cope
with current tough market conditions such as high inflation and high
interest rates.
In
addition to labour-intensive businesses, cooperatives in sectors such
as agriculture, forestry, aquaculture, textiles, footwear, electronic
components, and infrastructure construction will not have to pay 2011
taxes until next year.
The
taxes whose payment can be delayed from the end of next month should be
roughly calculated every quarter and declared in the firm's tax
statements for 2011, excluding the tax on incomes from other activities
than business and production.
Tax
payments in Q1 will be rescheduled to end-April next year, those in Q2
to end-July 2012, those in Q3 to end-October 2012, and those in
Q4 to end-March 2013.
Duong
Thi Ninh, an official from the finance ministry, told the Daily that
the ministry would issue a circular this week guiding the implementation
of the decision for local tax agencies.
The
ministry suggested tax payment delays totalling around VND6.7 trillion
for small and medium enterprises (SME) and labour-intensive companies.
The
ministry also suggested raising the personal income tax threshold to
VND9 million per month. Those leasing out homes or providing babysitting
services should have their income tax slashed by half while stock
investors should be exempt from income tax. The total amount of tax
breaks is estimated at VND4.2 trillion this year and VND2.2 trillion
next year.
Oliver Massmann
Rechtsanwalt
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