Ptahhotep's views

Travel scams

2011-11-03T13:03:00.000+07:00

Believe it or not, but the planet is a fairly peaceful place. Most people - no matter culture, income, or strange language - are friendly and will only do their utterly most to help you. But then there are those few who are trying to take advantage of vulnerable travellers. Everyone can fall victim to their tricks but being aware of the most well-known travel scams will steer you clear of the worst.

Card gambling scam

Risk zone: Southeast Asia, especially Kuala Lumpur, Bangkok and Bali

This scam is normally quite sophisticated and extremely well executed. First you are approached by a friendly local who invites you home for some reason (kid's birthday party, niece is moving to your home country, whatever). Back at his/her place, which is likely to be far out in the suburbs, an uncle shows up and tellsyou he is working as a dealer at a casino and of course knows some great tricks. He will invite you tostart practicing Blackjack and you will quickly pick up his hand signal system so you can tell what theother players have. Now with the two of you being close pals and working as a team, the dealer suggestscheating this "rich guy" who is supposedly arriving for some VIP Mahjong later on. When this guy, nowpresented as coming from Brunei, Singapore or even the Middle East, shows up, he does not mind somepetty card gambling before his real gambling, but of course you will have to play for real money. Noworries though, your old mate the dealer pays up and you start to play. Because of the dealer's earlierlearnt hand signal, your cheating system is wining you a lot. At some point you get 21 and know that the "rich guy" has 20. Suddenly his bets get insanely high and you, of course, can hardly believe your luck. He takes out a large bundle of cash (as in USD 10,000) and requests to see some real money from you too. You are asked to just put in as much as possible, while your dealer friend will cover the rest. With this cash now placed in a safe, the scam can go different ways. Either the game will be momentarily postponed so you can be taken to an ATM for more money, or the game will be postponed to the next day so you can bring more money from your hotel or you actually win the game but are forced to continue gambling and suddenly start losing. There is also the risk of being drugged. However the scam plays out, the point is to part with all your cash (possibly including a forced ATM withdraw).

Cheap overnight bus scam

Risk zone: Thailand

This scam is about getting tempted by the price of too cheap bus ticket for an overnight journey. But don't!Because during the night all the bags in the luggage compartment will get emptied for valuables - andsome hand luggage might get the same treatment. The thief is part of the bus crew and the ridiculouslyearly arrival time is part of the scam, with nobody realizing what has happened before the bus has left.This scam has been going on for ages. Guide books warn against it, travel forums are full of reportsof it but money conscious travellers still take the super cheap buses to/from e.g. Khao San Road. Forovernight journeys, either take a government bus from the bus station (not Khao San Road) or do a bit ofresearch and go with one of the more expensive but reputable private bus companies. And while we areat it, it is always advisable investing in a bag that can be padlocked!

Chinese tea house scam

Risk zone: China

This scam comes in many disguises around the world, but here it is the Chinese tea houseversion and it takes place at Tiananmen Square in Beijing. You are chatted up by two sweet lookingyoung ladies who claim to be studying English. They ask if you have some time to chat so that theycan practice their language skills. Sure, why not. They will suggest some tea, so they take you to a traditional Chinese tea house. This can be done so discreet and subtlety making you believe you might actuallyhave picked the place yourself. At the end you might offer to pay for the tea or maybe youfind the girls are gone when the bill appears. In any case, the tea turns out to be extremely expensive ataround 75$-200$. Of course declining any offer by anyone approaching you around Tiananmenor Wangfujing is the best way to avoid this scam, but if do find yourself confronting an outrageous bill,the best thing seems to be a laughing rejection and a stern threat of calling the police. Modesty andpoliteness will make things worse. And yes, the girls are in on this, no matter how cute and friendly theymight seem.

Claim it on the travel insurance scam

Risk zone: Wholewide, but seems very popular in India

This scam involves you trying to scam others. Yes. A doctor, or a friend of a doctor, chats you up andsuggests issuing some fake doctor bills (including rapport, official stamps, and everything) on your behalf,which you then can claim back on your travel insurance. You will of course have to pay him part of thefake bills value up-front in the belief that you will pocket the other part when the insurance claim getsthrough. Well well. Travel insurance companies are well aware of this kind of scams and have probablyalready seen a number of fake bills from your new doctor friend. Remember that no insurance companywill pay out a huge post treatment claim without having been in contact with the hospital and/or doctorin question. So as tempting as it might seem at first glance, forget about financing your travels by dodgyinsurance claims. Bearing in mind that a little insurance scam on the companies' behalf is likely to maketravel insurance even more expensive for the rest of us, as well as the most obvious fact of this of coursebeing illegal.

Coin collector scam

Risk zone: Asia

This is a little harmless trick performed mostly by very young kids. A "collector" will approach you andask for any foreign coins you might have. Appearing incredibly knowledgeable about currency andnominations of your local money they thus convince you of coin-collection actually being their prizehobby. In most cases travellers will happily hand over a few coins believing they are supporting aninnocent hobby. So, when a good collection of foreign coins have been accumulated, the next step is tothen sell them back to other tourists for the local currency under the excuse of some tourists having paidthem in Swedish Krona or Japanese Yen. Clever, right?

Credit card fraud

Risk zone: Worldwide

Oh boy, don't get us started on this one. The tricks are too many and too painful. SO... only use yourcredit card to withdraw cash from ATMs that look authentic or to make purchases at well establishedbusinesses (and no, that tailor down the side street in Agra is probably not well established).

Credit card fraud, part II

Risk zone: Worldwide

So now you only use your credit card at ATMs, but your sorrow isn't over yet. Smart scams range fromfake fronts that swallow your card along with the PIN to more sophisticated plastic sleeves that areinserted into the card slot to jam your card and make you believe the card is swallowed after you haveentered the PIN. So if at all possible, only use ATMs in connection with banks that are open. If need be,thoroughly check the ATM and see if it looks tampered with in any way. Or simply be patient and wait untilyou have witnessed someone else using it successfully - without losing their card.

Dirt on shirt scam

Risk zone: Europe and South America

You are walking in a crowded street and suddenly you get something on your jacket, it can be anythingfrom coffee to dog pooh. Faster than lightning a diverse group of friendly locals appear wanting to help,offering to clean your jacket with their napkins brought for the occasion. Before you realize what is trulygoing on your wallet/money belt/camera/daypack is changing hands. The best advice on this one is tostay cool when it happens, firmly decline any service offered and walk away fast. You can always checkout the stains in a safer place later on. If you don't realize the scam before they are freeing you fromyour valuables, yell out loud and act aggressively. Of course use your good judgment but trick thieves ingeneral are rarely into attention and violence.

Donation scam

Risk zone: Worldwide

Some charity collector imposter - let it be a school kid in Sri Lanka, a monk in China or even an orthodoxJew at the Western wall in Jerusalem, approaches you pretending to represent some do-good causeasking for a donation - the scam of course being the donation ending up in their own pockets. You wantto do good, but how can you tell the real charitable person from the con artists preying on want-to-do-the-right-thing travellers? Well, it can be difficult to tell but it is likely to be a hoax if the collector only targetstourists, is being very persuasive and smooth talking (and in good English) and if s/he is asking for aminimum amount while showing you a book of how much other tourists have paid (often being exorbitantamounts). Do give to the real ones and never get bullied into giving to the fake ones.

Drugged

Risk zone: Worldwide

This trick is particularly famous in the Philippines, but again it could happen anywhere from Europe toSouth America. At the bus or train station you are chatted up by some friendly locals. Maybe they aregoing on the same bus or train as you; maybe they are just waiting like you. After a while they offer somesweets which you out of politeness and respect don't feel like you can refuse. Unfortunately the sweetscontain some sedative drug and when you wake up, you find yourself without any of your valuables. Thisone is hard to see coming and there is no reason to be paranoid. But do be wary if travelling alone orotherwise vulnerable.

Fake changes

Risk zone: China

You get offered a very good deal on goods from a street vendor near a tourist site. The price is not anice neat round amount so you pay a bigger note and get your change back, so far nothing special. Well,maybe yes. This scam has two sides. First the obvious one that traders will never make deals whichare not to their benefit. If a bargain sounds too good, it probably is. The second part is the actual scam,with the vendor giving back your change in counterfeit money. There are a lot of fake Chinese money incirculation (especially 50RMB notes) and quite a few end up in the unsuspecting hands of tourists.

Fake cops

Risk zone: South and Central America, Africa, East Europe and Central Asia

A couple of plainclothes men come up to you and present some kind of official looking police ID claimingto be "tourist police" or similar. They ask to see your passport and/or money, maybe even mentioningsome obscure reason like there being fake money around. If you hand over your passport you end uphaving to pay up to get it back. If you hand over your money you for sure will not see all of it again. If yourefuse doing either, they will ask you to follow them to the "police station" in their car, where you will getseriously robbed. So, what to do? Show them a photocopy of your passport at first and insist that if that isnot sufficient, you will go with them to the nearest police station - by walking. In the meantime, try to lookaround for some uniformed officials, like traffic police or military, which you can try and catch the attentionof. Whatever you do, do not step into a car - anything else will be a better solution. There is, of course,the very slight chance of them being real cops in a seriously corrupt country, but if so, you are probablyalready aware of this scam since you have chosen to travel there.

Fake cops, version II

Risk zone: South and Central America, Africa, East Europe and Central Asia

This one starts with a (fake) local tourist approaching you. While you two are chatting, a fake cop appearsdemanding to see passports and money of your both. Your fellow tourist will of course hand this overright away, assuring you that you should be doing so likewise. During the inspection, you will of course berelieved of some of your money. So, listen to your mother and don't trust strangers - at least with regardsto you money belt.

Finder do not keep

Risk zone: Russia

This has been the going scam on the Red Square for some time. A guy passes by you on the street andaccidentally drops a wad of money at your feet. Another guy comes by, picks it up, and offers you halfof the stack. After sharing the money the second guy disappears and moments later the first guy returnsaggressively demanding his lost money. Well, why would anyone really want to share a lot of money with a traveller like you? If it seems too good, it probably is.

Gem scam

Risk zone: Thailand and India

This is a classic Bangkok scam (but the gem part is also popular in India) and every guide book carrieswarnings against it and for good reasons. It typically starts with a very cheap tuk-tuk ride. Your superfriendly driver wants to show you a special temple, possibly because your choice of destination isclosed... because today just happen to be "Buddha day" or some other noteworthy day you are unlikelyto be in a position to either know of or argue against. The driver might start talking about a specialgovernment promotion on diamonds with no tax and mentioning the promotion as only being for today.When you get to the temple of the driver's choice, you just happen to meet this friendly guy who is tellingyou that he is financing his honeymoon by buying diamonds under this special government endorsedpromotion. He suggests that you could also make some easy money by buying some. Don't get tempted,everyone is in on this scam. The goal is to trick you to the diamond shop and sell you some close-to-worthless diamonds under the promises that you can easily sell them on back in your home country andof course with a huge profit. The moral is; if it sounds too good then it is too good. So don't get temptedby easy sounding ways of financing your trip by buying diamonds, carpets, or anything else that you don'tknow Jack about.

Gypsy kids

Risk zone: Southern and eastern Europe

This is a classic scam and typical in both Rome and Milan. A group of gypsy kids approach you. Onesullen looking kid shoves a piece of cardboard with some text in your face. Whilst you are occupied andbusy reading the text, the other kids expertly go through your pockets. Sometimes this is done so subtleyou hardly feel it. Other times they really just go for it, leaving you fending for yourself. Best precaution isto simply avoid large groups of gypsy kids and to not engage with them with any sign of interest.

Money swapping taxi driver

Risk zone: Worldwide

This is quite a simple trick but unfortunately very effective. You have finished your taxi ride and pay thedriver a note of ten of the local currency. The driver takes the money and then returns a/nother note toyou claiming that you only gave him a note of one. You are almost certain that you paid him a note of ten,but what to do? So, in most cases you end up paying out another note of ten. Not very nice of him, is it?

Organised crime

Risk zone: Poor countries with an underground crime scene, like Albania and Cambodia

This is not actually a scam, more a reminder to stay cool when you go drinking in fancy bars whiletravelling in poor countries. Since ordinary locals can't afford this kind of flamboyant activity, chances arethat at least one of the other guests is the son of some hotshot; a crime lord, a military general or eventhe country's president. Most of times they will of course just ignore a travel bum like you, but some mightalso find you interesting... if for nothing else but for the novelty factor. Some are friendly and they mighteven invite you back to their after party. Others can be drunk and dangerous and both at the same time.So this is just a kind motherly advice to avoid mingling too close with guys who drive expensive Americancars in troubled countries.

Oriental carpets

Risk zone: Middle East, Central Asia, Pakistan, India and Nepal

The making of oriental carpets is an ancient art form - and so is selling them. Buying a Persian rug oran oriental carpet on a trip can be the best souvenir ever purchased... or it can turn out to be the worstspent money ever. Don't fall for the "it could pay for your trip if re-sold at home". It most likely won't. If youare going to buy any, then buy with your heart. If you like it and you have negotiated the price down tosomething you feel to be acceptable, then do it. But don't try to outsmart the seller and believe it is a lifeinvestment. And never ever pay extra for special features you don't have a clue about, e.g. "interestingthat you should pick that one, for it is a very rare one hundred years old tribal rug made of silk dyed invegetable pigments... ". Buy a carpet because you like it and not because the seller convinces you it is agood deal - for it rarely will be.

Ping pong banana show scam

Risk zone: Where there are strip bars

This is the Bangkok version of the classic drinks overcharging scam, not too different from the Chinesetea scam described above. It goes something like this: You are lurked into some strip bar in Patpong inBangkok under the promises of an outrageously kinky and free show involving flying ping-pong balls (ifyou don't know what a ping pong banana show is, google it!). Maybe you are wise enough to ask for thedrinks prices first, but still, you are likely to get very surprised when the bill arrives after a few rounds.Suddenly the price of a beer is not 100THB as promised, but 1000THB, and two big bouncers (yes, theydo exist in Thailand too) want the money and they want it now. So what to do? Always ask for pricesbefore every single order and always pay as the drinks arrive, never work up a tab. If there are othercustomers in the bar, some loud gesticulating talking might get you away with a more reasonable bill,or you could try with threats of calling the tourist police. Always weight up the situation carefully beforedeciding on the possible value of making too much of a fuzz. It seems that both Soi Cowboy and NanaEntertainment Plaza are better options for hustle-free shows.

Rape accusation scam

Risk zone: Cambodia, but probably elsewhere too

This scam is aimed at all you gorgeous boys believing you are simply just too handsome to be resisted.So you meet this local woman who thinks you are hot. You start a consensual sexual relationship underthe assumption that she is not into it for the money. After a couple of happy days, you are sharing a beerwith some newly found local friends, possibly a "brother" of your new "girlfriend", when she drops by. Shegreets you by slapping you in the face and screams loudly that you raped her the other night. The menaround the table stand up and start shouting at you whilst mentioning police, jail, and worse things. Asit turns out, the only solution is a trip down to the ATM... and as long as your credit card is working onetrip might not be enough. So before you jump into bed with a local lady you might want to ask yourself what she gets out of it - for she is probably asking herself the same question.

Reverse exchange rate scam

Risk zone: Central America

This scam can be used anywhere but is especially prominent where the currencies are close to eachother, like e.g. between Honduras and Nicaragua.

You arrive at another border crossing and want to get some local money. You might have done yourhomework and remember what the exchange rate should be, let's say 1.2. The dodgy-looking money guyagrees to 1.2, takes the calculator and divides your amount with 1.2. So far so good, right? Across theborder, however, you find out that the rate was 1 to 1.2 and not 1.2 to 1 as what you got. The rate thusshould have been multiplied, and not divided - get it? The point is to not just check the exchange rate, butalso to make a mental note of which currency is worth the most. This scam can seem ridiculously stupidand obvious, but beware that chaotic border crossings can disturb even the coolest cleverest minds. Anddo we need to tell you to always count the bills and check for counterfeit ones?

Robbed fellow traveller scam

Risk zone: Southeast Asia

This scam is ugly because the starring con-artist is someone your instinct tells you to normally trust,namely a fellow traveller. It goes likes this; you get approached by a traveller who claims to have been thevictim of a robbery. Having lost everything, he is asking for 20 USD or so to be able to fax/call/get to theembassy. Luckily the con-artist is always some dodgy looking guy and not some trustworthy-looking lady(who probably could make a fortune if she had no morals). In Phnom Penh, Cambodia, we met the sameunlucky "robbed" guy with months intervals, the scam also seems popular in the more touristy parts ofThailand. So, again, use your good judgment before handing over your cash, or help by pointing them tothe nearest police station so they can report the robbery officially.

Tuk-tuk scam

Risk zone: Thailand and India

This scam is essentially the same as the gem scam, but without the gems. A friendly tuk-tuk driver offersyou a far too cheap ride. After a bit of sightseeing in the back alleys he takes you to a tailor, a silk, a gemand basically any you-name-it shop. "Just for looking" suddenly becomes a very persuasive sales talk inevery one of the places. Even if you are genuinely interested in shopping, it will be a bad idea to bring atuk-tuk driver since they get a commission in every shop. And no, just for the record, the shop owner isprobably not the driver's uncle, brother or other relative as otherwise claimed.

Wrong hotel scam

Risk zone: Worldwide, but especially India and Vietnam

Commission rewarded taxi drivers try to convince you that the hotel you want to go to is either closed forrefurbishment, torn down or simply just fully booked. Luckily your driver knows of another existing andavailable hotel, which of course always turns out to be overpriced and badly located (but the taxi drivergets a commission for every guest he brings there). In Vietnam they have even taken this scam a bitfurther by nondescript hotels being re-named to match the name of popular hotels tricking newly arrivedtravellers into believing that they have indeed been taken to the right hotel by the taxi driver. So nevertrust a taxi driver's alternative suggestions and always insist on being taken to the hotel of your choice.In the case of Vietnam, always make sure to be taken to a specific address and not just a hotel name.All shops and hotels in Vietnam have their addresses stated on their sign, so it is easy to check if theaddress of the hotel is correct or not.

http://www.globespots.com/scams.php#fdnk

Three Tips for Creating a Reliable Demand Forecast

2011-11-03T08:09:00.005+07:00

And what to do in the not-so-unlikely event that it fails.
Shawn Casemore

The devastating events in Fukushima earlier this year demonstrated once again the powerful impact of supply-chain disruptions. Couple these types of unplanned disruptions with fluctuating customer demand, and the ability to effectively manage becomes a seemingly futile pursuit. Regardless of the source of the volatility, however, the failure to properly predict and prepare for demand will result in lost revenue and a tarnished reputation.
There are numerous examples of highly successful organizations that have failed to meet consumer demand. The most recent publicized examples include Apple’s unexpected and prolonged shortage of the iPhone 3GS in 2009 and the iPhone 4 in 2010. In both circumstances, the impact on company revenue was significant.
To be successful, creating a reliable demand forecast must be a joint effort among the customer, supplier, and internal company stakeholders. It must be continuously monitored, modified, and aligned with both business strategy and customer preference. And it should be prominently displayed and discussed, not sheltered or hidden from view.
Here are three key steps in developing a reliable demand forecast:
1. Understand — really understand — historic demand.
Don’t just review historic demand patterns, but look at the drivers that influence demand. For example, are spikes in demand the result of one-time events such as a price adjustment, a successful marketing campaign, or the acquisition of several new customers? What are the factors that influence these events and under what circumstances might they be replicated?
2. Monitor market trends.
Avoid the tendency to make decisions based simply on media information, and instead become intimately aware of the dynamics of your marketplace. This can be done through continuous communication with friendly competitors, customers, bankers, and other individuals who are attuned to your marketplace.
One of our most successful clients operates a distribution business and maintains close contact with customers, consistently obtaining feedback. This habit, although time-consuming, has been the backbone of its success in forecasting demand. The client has collected information in several ways, including simple telephone or e-mail communications and customer surveys, as well as more-complex statistical reviews of customer order history and market trends.
The results have supported its preparation for growth. And, interestingly enough, a side effect of this process has been the positive customer relationships it has developed.
3. Identify and track key indicators.
What are the leading indicators of fluctuation in your customers’ demand patterns? For example, if you are selling fishing poles, your key indicators of demand might include the obvious, such as water levels, fish population, and weather patterns across your sales regions. More importantly, however, you will want to consider demographics. Why demographics? Consider for a moment that as the baby-boomer generation transitions into retirement, it will have more time available for hobbies such as fishing, possibly increasing your sales. Maintaining a view of the changing demographics in your sales regions can create a good window into your future demand.
Manage, but Mitigate
Of course, there are times when even the most well-thought-out plans fail to meet customer demand. Consider the inability of LG to provide screens fast enough to meet rapid demand during the launch of Apple’s iPad. Although this is a good problem to have, it reinforces the need to develop sound mitigation plans to prepare for unpredictability in customer demand.
Applying the following strategies to mitigate demand-fluctuation risk will assist in preparing for the unexpected while minimizing financial impact.

1. Consign inventory.
Seek opportunities to consign inventory with suppliers under a pay-for-use agreement. This is a particularly attractive option relative to high-value or high-cost equipment or materials. It provides a means of reducing inventory investment while ensuring safety stock is still readily available in the unforeseen event it is required.

2. Standardize.
Continuously identify means to standardize materials and processes and avoid the customization trap. One of our clients was forced to deal with the welcome, but very untimely, issue of a one-time buy that virtually eliminated its stock of clothing. Lead times for replacement product from overseas extended well past predicted demand. However, as a result of its mitigation plans to maintain standardization of garments, the client retained a small in-house garment shop. With this, it was able to quickly convert inventory of slow-moving garments into replacement products, providing sufficient cushion to meet demand until replacement stock arrived from overseas.

3. Put your eggs in two baskets.
As the events in Japan suggested to many companies, avoid sole sourcing at all costs. Always seek to qualify more than one potential source, even if you provide business to the secondary source only on a periodic basis in order to maintain a relationship. Developing alternate sources of supply is a sure means to maintain a consistent source of supply when unpredictable demand occurs.
Managing supply during times of fluctuating consumer demand or unforeseen circumstances can create challenges that can have a significant impact on a company’s financial sustainability. Developing and continuously revisiting demand forecasts in conjunction with the development of sound mitigation strategies will reduce not only the risk to business but also the investment required to manage the risk.

Shawn Casemore is the president of Casemore & Co., a consulting firm specializing in supply-chain management.

http://www3.cfo.com/article/2011/10/growth-strategies_create-demand-forecast-mitigate-risk?

Parliament: Malaysia Has One Million Expatriates Abroad

2011-11-01T08:18:00.001+07:00

October 31, 2011 15:27 PM

KUALA LUMPUR, Oct 31 (Bernama) -- There are about one million Malaysian expatriates working overseas as of April this year, the Dewan Rakyat was told today.

Deputy Minister in the Prime Minister's Department Datuk S.K. Devamany said the figure was based on a joint study by the World Bank and the Economic Planning Unit of the Prime Minister's Department.

He said the setting up of Talent Corporation Malaysia Berhad (TalentCorp) was an apt move in the effort to attract them to come home.

"Among the initiatives taken by TalentCorp to reach out to them is through the Returning Expert Programme (REP)," he said in reply to a question from Salahuddin Ayub (PAS-Kubang Kerian).

He said TalentCorp would create a professional network with those who wanted to remain abroad to inform them of the job opportunities available in Malaysia and to leverage their expertise and network for the country's economic development.

"TalentCorp will reach out to them, including those in Australia, United States and United Kingdom," he said, adding that these expatriates contributed to the country's gross domestic product through remittance.

-- BERNAMA

http://www.bernama.com/bernama/v5/newsindex.php?id=623538

How to Respond to Rude Email at Work

2011-10-22T14:35:00.005+07:00

Hopefully you'll open to find courteous messages in your in-box.

You've reread it three times and still it seems like the email message was nothing but rude. But should you call them and clarify if they meant to be rude... or not?
Netiquette at work is as important as anywhere else. Allowing the standards of politeness to slip simply because the medium used emboldens people who would usually not be so forthright in a face-to-face context is not acceptable. However, it's also important to be realistic and objective about those emails that you think are rude but might be quite something else. So, the next time your boss, co-worker, or even the head honcho at work sends you what you think is a rude email, here's what you might like to do.

Steps

Puzzled as to whether or not it's a rude email?
Discern what a rude email probably looks like. It's easy to misinterpret the intent, tone, and words of an email. Obviously, an email doesn't come equipped with facial expressions, voice tone, and body language, so if you're feeling swamped with work, sugar-depleted, and feel like you just want to get out of the office, it can be easy to make the mistake of assuming negative intent in an email where there was none intended. Signs that you might have a rude email include:
- The language used is clearly abusive and/or derogatory. (If you do receive an email filled with foul language, this is likely to be a breach of your workplace policy, and it's highly unprofessional. It can also be cause for legal action depending on what is said, especially if you feel threatened, harassed, or slurred.)
- The email is written in all capitals (yelling) or particular parts of it that express demands or condescension are written in all capitals. (Be aware that some bosses and coworkers are still grappling with the All Caps key, so they may need to be simply excused out of sheer laziness or lack of "getting with it".)
- The email is basically a demand with no hello, please, thank you, or closing name. Not using your name and not signing off is fine for an email that is an ongoing interaction but when it's the first email for a fresh topic and it's making a demand or giving instructions, then it's impolite to leave out these small courtesies in a workplace context.
- The email refers to you unkindly (personal digs) or levels accusations at you and/or suggests that you do X, Y, Z, or else.
- A rude email may have a lot of exclamation marks or question marks in it. Multiple uses of "!!!!!!" and "??????" is often viewed as being rude or condescending.However, it can also be a sign of emphasis, so don't use this alone as an indicator.
- The sender is copying in someone else who is in charge of both of you as a means of "coercing" you into doing something.
Read the email carefully before making up your mind as to its intent.
Read the email carefully before making up your mind as to its intent. If you simply scanned it and decided it was rude, it is vital to read it with greater care. Even if you read it carefully the first read, reread it to ensure that you haven't missed anything or you're not reading things into it that are not there. And it's a good idea to ask yourself what it is about the email that has upset you so much. This can be another clue as to what the content intends to convey to you; for example, if you're already having a dispute with a coworker or boss and this email comes at the tail-end of a heated discussion, then it's understandable that you'll view it poorly straight away. On the other hand, if there has been no indication that your coworker or boss is annoyed with you, then perhaps you're misreading it.
- What is the intent behind the words?
- Is this person known for poor communications or someone who is normally polite? Even with someone who is normally polite, they may be struggling to put across a message effectively using the email rather than aiming to be rude.
- Is this person perhaps just posturing, trying to appear more forceful by email than they have the courage to be face to face? In such a case, it may be more a case of bluffing around the edges in the hope you'll do what they're too afraid to ask you to your face.
- Are there elements of the email you simply don't understand? In this case, you're probably better off assuming nothing until you know more. People who type fast often drop words, and some people don't think that proper punctuation or spelling is needed in emails. And then there is a growing tendency to use texting in emails, which can be hard to interpret if you don't understand it.
Avoid assuming that you know the sender's emotional state.
Avoid assuming that you know the sender's emotional state. Check that you're not making assumptions about the sender's emotional state.^[5]^[6] Poor communication skills, misguided sarcasm or joking, and just plain lazy or sloppy writing can all lead a reader to think that the written piece is rude when it means nothing more than that a person wanted to say something but didn't get it out right. Realize that few people are highly skilled writers in a short space of time and most people write quickly with the intent to get the message off their to-do pile so they can get on with the next bit of work.
- There are exceptions to this rule, of course. If you're already having a difficult time with the person in question at a face-to-face level, it's quite possible that they're letting their emotional side slip into their email communications. All the same, play it by context, not by expectation.
Hold off replying, also known as "review, don't react".
Hold off replying, also known as "review, don't react". Until you feel you've both understood the message objectively and calmed down, it's important not to reply. In replying quickly, you may be tempted to be just as rude, thereby compounding the problem. Even worse is to reply rudely when the original intent of the email meant nothing of the sort! So, take a breather. Close the email and take a walk. Have a cup of coffee, stretch, and do something different for a bit to clear your mind. That way, when you come back feeling a little calmer, you can reread the email and decide whether or not it's still as upsetting to you as when you first read it.
- Never reply in anger and always sleep on an angry reply. Long-term consequences follow from having angry words in a written record form.
- The more emotionally charged you are and the more emotionally charged the email, the more important it is to sleep on your reply.
5
Seek clarification.
Seek clarification. If you can, simply pop over and talk to the person about what they meant in their email. Resorting to face-to-face communication is more likely to clear things up than any other approach. However, it's not possible for many people who work far apart from one another, or even in different locations, states, or countries. Try telephoning as the next step, if this option is open to you. Speaking on the phone will help you to clarify things much faster than having to email back and forth. And if you really have no other choice, or it simply feels more appropriate for you to reply by email, then be polite and professional in your response. For example:
- Dear Kevin, Thanks for your message. I wasn't really sure how to interpret "Do you think you can muster the will to pull yourself away from the water cooler and start working on the Noxos report? I'm wondering if I'll be forced to reconsider your role here." I have to say that I read it as being quite brusque and lacking in recognition of my professionalism. I am aware that there is a deadline and am on track to meet it; I was merely taking a very short break to refresh before I returned to completing the report. If you are worried about my progress, then I am happy to come/phone and explain where I am up to. Yours, Nelly.
- Or perhaps a more humorous approach (you'll need to work in the right kind of place!): Dear Kevin, Thanks for your perceptive email message. I realize that hanging around the water cooler could be perceived as time-wasting. However, you'll be pleased to know that as a result of my water cooler mini-break of precisely 2 minutes and 23 seconds, I was able to find out that Jim has already worked on the same figures as those in our report and that means I can have it finished by this evening instead of tomorrow morning. I will be happy to forward you the finished report before I leave work this evening. By the way, I love your new shoes; I spotted them under the curtain while I was at the water cooler. Nelly
Reread your reply after you've composed it.
Reread your reply after you've composed it. Reread it at least three times to ensure that you haven't responded with rudeness or sound overly emotional. Maintain a professional and polite tone throughout the email and remove anything from it that is unnecessary or contains assumptions about the other person's state of mind. Keep the email simple, to the point, and without any inflammatory statements. As 101 Email Etiquette Tips suggests, "type unto others as you would them type unto you."
- Consider that you are being an example of politeness by not buying into the rudeness or any insinuations. Stern professionalism is appropriate but name-calling, cursing, accusing, and abusing is not okay; nor is using formatting in such a way as to "appear" aggressive (misuse of exclamation marks, etc.).
Realize that it's fine not to reply sometimes.
Realize that it's fine not to reply sometimes. Sometimes it may just be better the let the rude email go. Perhaps the sender didn't know all the facts, got out of the wrong side of bed that day, or was just not thinking straight for various reasons. If you think that it might be best to just let it go and there is no need for confirmation of what was sent, or no need to answer a question, etc., then consider just letting this one slip into the ether. Act like you never received it, provided you still do the work you're expected to.
Oh my! You're right! That's rude!
Talk to your boss or human resources if there appears to be a pattern of rude emails developing. You should not be subjected to rudeness, harassment, or threats in the workplace. Harassment and threats are actionable, and rudeness is simply something a well-run workplace can do without, or morale is threatened. Keep the emails that concern you as evidence of what you've been subjected to, so that you have a record and can back up what you're saying.
Um, it was the cat's fault... I never sent that...
Keep up your end of the bargain. If in doubt about whether or not to send an email you've written when you're feeling anxious, angry, or annoyed, and you think that your feelings might be too evident in the email, leaving you open to a charge of being rude, press draft or delete. Do not send it until you've had time to think it through. Be an example of polite and professional email usage at all times.

http://www.wikihow.com/Respond-to-Rude-Email-at-Work

Vietnam – News and Regulations

2011-10-21T15:11:00.002+07:00

Massmann, Oliver<OMassmann@duanemorris.com>

Fri, Oct 21, 2011 at 2:47 PM

[Thank you for your interest in this topic. This communication may be considered promotional in nature.]

With Compliments

Oliver Massmann

Rechtsanwalt

General Director – Duane Morris Vietnam LLC

Hanoi Office: 13th Floor, Suite 1307/08 Pacific Place, 83B Ly Thuong Kiet, Hoan Kiem District

Ho Chi Minh City Office: 15th Floor, Suite 1503/04, Saigon Tower, 29 Le Duan Street, District 1

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 PrimeMinister 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 countrystill 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 andforeign 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 shouldbe 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 percentof 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 billionfor 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 LamDong 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 percent 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 powerprice 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 toinput 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-MineralIndustries 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 thecoming 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 inoffloading 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 PetroVietnamPower 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 5.559trillion 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 businessesat 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 investmentin 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 capitaland 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 promotionconference 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 dongand $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 theVietnam 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 commercialcenters, 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 becomean 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 ofskilled 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 synchronousdevelopment 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 percentof 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 tourismwith 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 andentertainment.

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 fromVietnam 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 thenconfirmed 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 workingsession 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 paidthe 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 of29.529 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 Ninhbranch) 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 completedthe 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 becauseKID 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 thenew 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 groupto 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 qualityof 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 submittedto 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 bySOEs 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 percentof 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-stateowned 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 percentof 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 charteredcapital.

MPI believes that the enterprises decided to make investment even when there were not enough conditions to implement projects, when the projectswere 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 groupsand 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 generaldirectors.

…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 25percent. 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 dongin 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 percentthreshold, 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 wasonly 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 timesthan 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 currenteconomic 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 interventionby 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-yearperiods 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 GDPgrowth 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 veryhigh 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 enterprisessome 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 Ministryof 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 demandfor 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 takeninto 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 discretionaryproportion 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 percentcompared 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 planfor 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 estimatedat 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 foreignexchanges.

The Southeast Asian country is expected to incur a trade deficit of $10 billion this year, or 10.5 percent export revenues, better than thetarget 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 October18, 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, acquisitionof 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 $1.5billion 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," FrancoisChavasseau, 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 in1993. 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 businessesare 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 fixingprice 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 ensureliquidity for lenders.

"Mergers and acquisitions are an indispensable trend to raise competitiveness", the central bank said in a statement on Tuesday, though itsaid 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 percentat 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 safetyof 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 environmentpollution 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 ofVietnam.

“As for mining projects, I know some provinces have large-scale mineral deposits, but local authorities have been ‘reshaped’ these minesinto 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 statementsaid.

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 hasordered 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 negativeconsequences 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 mediareports 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 localeconomic 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 hadexploited or exported.”

He urged the government to review all of the mining projects around the country to eliminate those making no economic effectiveness but causingharm to the environment.

The government should also complete the legal documents regarding the extractive industry and develop a proper plan and strategy for themining 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 Hau1 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 andHo 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 PPPproject pilot implementation.

“These are just preliminary assessments. We are teaming with relevant state agencies to draw project records so as to render projects’ overallinvestment 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 thestate 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 projectat different levels.

The experiences of South Korea, one of four nations with high ratio of PPP infrastructure projects in 2010, show that lack of professionalexpertise 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 CooperationDevelopment’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 VanKhoi 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 investmentrecords,” 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 primeministerial 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, withthe 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 beprovided 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 forecastto 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 companiesto 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 strengthof 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 Vietnamesepartners 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 includingagriculture, 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, farmersdo 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 ofpork, 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 marketand 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 comparisonwith 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 dongper 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 purchasechicken, 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 priceshave 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 liveweight 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 heavylosses, 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 theanimal 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 farmingbecause 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 beenextinguished.

According to the Ministry of Agriculture and Rural Development, by mid October, the blue-ear epidemic had broken out in five provinces, includingTien 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 percentof 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 foodproducts 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 dependingon 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 differentkinds, 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 thatthe 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 storesas well.

Truong Thi To Loan from Big C supermarket chain said that the retailer has received an increasingly high number of invitations for foreignfood 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 economicrecession 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 appreciationagainst 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 marketingactivities 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 comprisedof 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 makesausage 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 payerssatisfied 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 beadded 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 GasGroup (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 generalDepartment 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 thethird, 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 Vietcombankfrom 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 continuedtheir 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 Vietnameseenterprises. 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 trilliondong, 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, accordingto 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 copewith 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, electroniccomponents, 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 taxstatements 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 inQ4 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 implementationof 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 babysittingservices 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 Partner

Oliver Massmann

Rechtsanwalt

Vietnam – News and Regulations

2011-10-21T08:47:00.003+07:00

Massmann, Oliver<OMassmann@duanemorris.com>

Fri, Oct 14, 2011 at 3:35 PM

[Thank you for your interest in this topic. This communication may be considered promotional in nature.]

With Compliments

Oliver Massmann

Rechtsanwalt

General Director – Duane Morris Vietnam LLC

Hanoi Office: 13th Floor, Suite 1307/08 Pacific Place, 83B Ly Thuong Kiet, Hoan Kiem District

Ho Chi Minh City Office: 15th Floor, Suite 1503/04, Saigon Tower, 29 Le Duan Street, District 1

INVESTMENT - German Chancellor Merkel at business forum in Vietnam - German investors most interested in clean energy

Photo: AFPGerman investors are most interested in developing renewable energy and high-technology in Vietnam, a forum has heard.

Speaking at the Vietnam – Germany Economic Forum held yesterday in Ho Chi Minh City, Vo Quang Hue, CEO of Bosch Vietnam, said high-technology production was very appealingto German investors.

He said German businesses, which are renowned worldwide for clean and renewable energy, especially solar and wind power, could contribute greatly to boost Vietnam’s economiccompetitiveness.

Oliver Massmann, director of Duane Morris law firm, which has been consulting many German investors, also said most of his customers wanted to invest in renewable energyand high-technology machinery here.

But he said inconsistent implementation and understanding of Vietnam’s law system had prevented many investors from entering the local market.

“Vietnamese people have also missed the chance to access green technology since your legal system lacks regulations about renewable energy,” he said.

He suggested the Vietnamese government should allow foreign investors without any further delay to directly distribute their products in Vietnam to attract more investmentsto the country.

For her part, German President Angela Merkel said Germany wished to work with Vietnam in many sectors including infrastructure and education.

She said the two countries had signed a EUR450 million deal on cooperation in profession training, public health and the environment.

“We need a trustworthy legal framework and a transparent administrative system from Vietnam,” she said.

Vietnam’s Deputy Prime Minister Hoang Trung Hai said Germany had been Vietnam’s biggest commercial partner in the EU with bilateral trade reaching US$4.1 billion last year.

So far this year, German investors have been operating 167 projects with a total investment of $850 million in Vietnam, Hai said.

He urged German and Vietnamese businesses to boost their trade promotion to strengthen bilateral trade.

“Vietnam will provide the most convenient conditions for German businesses to operate here,” he said.

German investors like good laws

VNS

HCM CITY — Visiting German Chancellor Angela Merkel said yesterday that a reliable legal framework was one of the essential conditions forGerman businesses to invest in Viet Nam.

Speaking at the Germany - Viet Nam Economic Forum in HCM City on 12 October, she said German businesses also need a transparent administrativemechanism "without red tape and subsidies," and good infrastructure.

She urged Viet Nam to continue with its open-door policy as well as a privatisation process.

Since investments by German companies would be for the long term and they had advanced technologies, they were in a good position to participatein Viet Nam's modernisation process, she said, citing the example of HCM City's underground project.

Deputy Prime Minister Hoang Trung Hai highlighted the potential opportunities for bilateral co-operation.

"Viet Nam's socio-economic development strategy in 2011-20 focuses on major targets with a stress on quality, effectiveness, sustainability,human-resource development and skilled labour," he said.

Higher priority would be given to investment in projects that use high technology and are environmentally friendly.

Since adopting its renovation policy, Viet Nam had achieved average annual economic growth of 7 per cent in recent years.

The country had managed to contain its high inflation, stabilise the economy, and address businesses' difficulties.

This year actual FDI inflows in the first nine months were US$8.2 billion, a year-on-year increase of 2 per cent.

German investment in Viet Nam remained modest at $850 million in 167 projects, just fifth among EU economies and 24th overall.

Bilateral trade had topped $4.1 billion last year.

"This economic forum is an important event in the German chancellor's working visit to Viet Nam and it also serves as a chance for Viet Namto deliver its messages on trade and investment and its strategic development orientation to German investors and companies," Hai said.

Viet Nam appreciated the economic co-operation extended by Germany, he stressed.

Germany to grant $598m for development projects

VNS

HA NOI — Germany will provide Viet Nam with financial assistance totalling US$598 million for development of infrastructure and human resources,the German Embassy in Ha Noi has announced.

A co-operation agreement was signed on Monday, witnessed by visiting German Chancellor Angela Merkel and Vietnamese Prime Minister NguyenTan Dung, creating the foundation for German assistance to eight bilateral development projects in Viet Nam, a press release from the embassy said.

The assistance would be focused on environmental protection, adaptation to climate change, urban development, energy, job training and healthcare.

German Development Bank KfW will be responsible for disbursing the money to the projects, which come within the framework of the negotiationsbetween the two governments in Bonn in October 2010.

With the assistance, Germany will retain its status as one of the major donors to Viet Nam.

Experts urge higher capital requirement for FIEs

Saigon Times

Local experts have suggested increasing the ratio of foreign capital in foreign-invested projects in Vietnam to at least 80 percent to forceforeign-invested enterprises (FIE) to bear the responsibility for their business in this country.

Nguyen Dinh Cung, vice head of the Central Institute for Economic Management (CIEM), said the high capital requirement would help preventailing FIEs escaping the country and thus leaving bad debts in the local banking system.

Vietnam in the past saw many poorly-performing FIEs disappear while their bad debts in local banks have soared to $80 million.

A number of bank branches in Hai Duong and Phu Tho Province face these bad debts, including one from Kenmark of Taiwan. The company registeredto pour $500 million into Hai Duong but escaped after leaving $50 million in debts at some domestic banks.

For Agribank's Phu Tho branch, four South Korean enterprises fled as they failed to pay debts totalling $12 million. The lender has recoveredjust a modest ratio of the debts by liquidation or leasing their assets.

Do Nhat Hoang, head of the Foreign Investment Agency under the Ministry of Planning and Investment, said FIEs used to be regulated to have30 percent of capital in a project while they could borrow the remaining 70 percent in Vietnam.

The rule was lifted in 2005, allowing all foreign firms to use capital from local sources when required.

The investors are also allowed to use their projects to be developed as collateral for loans. As a result, many lenders are careless in evaluatingtheir assets, giving them an abundance of money to pour into poorly-chosen projects.

According to a local banker, FIEs can enjoy lower lending rates at foreign banks in Vietnam but when they reach local banks for loans, theymight fail to meet high requirements at foreign banks. Therefore, banks should consider their applications carefully, the banker told the Daily on Tuesday.

Hoang of the Foreign Investment Agency said the ministry had suggested reinstating the pre-2005 capital requirement of 30 percent. Meanwhile,Cung of CIEM said the ratio should be raised to at least 80 percent.

"The government's policy is to attract foreign capital into the economy, not invite FIEs here to use domestic funds. It is time for the governmentto tighten foreign investment rules in the country and banks to carefully evaluate foreign-invested projects before lending to the investors," Cung added.

Cung advised authorities to follow the progress of foreign-invested projects. Local authorities should withdraw investment certificates ifFIEs fail to start work within 12 months. Besides, banks should refer to the provincial departments of planningand investment to know about FIEs' scale and capital mobilisation progress while evaluating their projects.

Why is FDI decreasing?

VCCI

Foreign direct investment (FDI) volume reached over US$9.9 billion, just as 72.1 percent as in the same period last year.

The current statistics indicate a sharp decline in the amount of foreign direct investment (FDI) in Vietnam. By the end of September, FDIvolume reached over US$9.9 billion, just as 72.1 percent as in the same period last year.

Economists suggest that the Vietnamese Ministry of Planning and Investment (MPI) and other relevant ministries and institutions need to setup a strategy of attracting FDI and solutions for enterprises involved in this sector so that Vietnam’s economy will achieve its targets in the last months.

Recently, the MPI’s forecast has revealed that by the end of 2011, the expected FDI will be unlikely to reach US$20 billion as planned. Accordingto economic experts, FDI is going to reach only about US$17 billion. Moreover, economic experts also predicted that if the foreign and domestic economies tend to be stagnant as currently, expected FDI will reach a humble number of $15 billion which will showclearly a significant decline.

According to economists, the decline in the flows of FDI is a worldwide phenomenon, not unique to Vietnam. In the widespread economic turmoil,the difficulties of foreign investors are the most important reason for that decline.

As for domestic reasons, necessary conditions to attract the FDI are still stuck at some stages, such as: infrastructure, facilities andquality of human resources which have not met the requirements of international contractors. Furthermore, in this tightened economy, the government has issued many policies to narrow preferences for foreign investors.

According to Bui Quang Vinh, minister of Planning and Investment, Vietnam has to adjust its strategy of attracting FDI and turn it into anew phase with particular criterion.

Specifically, Vietnam should target powerful corporations, which have great potential, high-tech properties and investments in conformitywith Vietnam’s orientation. Nokia Corporation, for example, planned to launch a phone production project in Bac Ninh province, and proposed some preferences from preferential policy for high-tech companies. The leaders of Bac Ninh province also submitted thissuggestion to the government for some special treatments.

Accordingly, the Nokia investor announced to build a factory of 80,000 sq.m in the Vietnam – Singapore Industrial Park (VSIP) of Bac Ninhprovince with the cost of 200 million euros. However, the government generally stated that the preferential policy is applied for Nokia only as an export – processing enterprise. And as for high-tech companies, which successfully reach the standards of high-techcompanies, can apply for the high-tech preferential policy.

By this example, the government has shown that it did analyse and refine projects and investors rather than satisfy most requirements offoreign investors like before.

Moreover, in order to attract inflows of investment, many provinces have to change local planning schemes approved by the government. Thisreally is the potential risk for the sustainable development of Vietnam economy and it also leads to the danger that projects cannot be implemented in practice.

Facing new trends of economy, focal refinement and selective attraction of foreign investors is a curable dose for Vietnam to grasp potentialinvestors with full of capacity; increase the amount of FDI in the future.

Germany supports Vietnam-EU FTA

VOV

Germany supports Vietnam's bids to win European Union recognition as a market economy and its negotiations on signing a free trade agreement(FTA) with the EU, says German Chancellor Angela Merkel.

Germany will continue to support Vietnam in promoting comprehensive cooperation with the EU, Ms Merkel told the Vietnam-Germany economicforum in HCM City on October 12.

She also confirmed that Germany will maintain the provision of official development assistance (ODA) for Vietnam in the coming years, focusingon such areas as sustainable development, environmental protection, health care and vocational training.

She expressed her optimism about the prospect of bilateral economic ties between Germany and Vietnam, saying both countries want to increaseeconomic and trade cooperation.

German businesses are keen to invest in the longer term in Vietnam, Ms Merkel assured forum participants who were representatives of leadingbusinesses, professors, and economic experts from both countries.

She went on to say that German businesses are willing to invest in infrastructure development and human resource training projects in theSoutheast Asian nation.

For his part, deputy prime minister Hoang Trung Hai confirmed that the Vietnamese government wants to expand cooperation with Germany inall areas.

As Vietnam is implementing its 10-year socio-economic development strategy until 2020, it prioritises projects using advanced, environmentally-friendlytechnology, said Hai.

He noted that economic cooperation between Vietnam and Germany has developed significantly in recent years, with two-way trade reaching $4.1billion last year.

However, he said, German investment in Vietnam remains modest. The European nation has invested in 167 projects in Vietnam capitalised at$850 million, ranking 5th among EU investors and 24th among all foreign investors.

He expressed hope that the forum and Chancellor Merkel's visit will open up new opportunities for increasing bilateral economic ties.

Forum participants focused their discussions on urban planning and sustainable development, sustainable industrial production and sustainableinvestment.

Later, Chancellor A. Merkel left HCM City, concluding her official visit to Vietnam at the invitation of prime minister Nguyen Tan Dung.

FDI firms reduce 3.6tr dong losses in Jan-September

Vietbiz24

Tax inspection at 500 FDI (foreign direct investment) enterprises indicated a reduction of over 3.6 trillion dong of their losses in thefirst nine months of this year.

The reduction of losses caused their corporate income tax (CIT) increase by 1.2 trillion dong. As planned, 700 remaining FDI firms will continueto be inspected by tax agencies from now till the end of this year.

To prevent the price transfer, the Ministry of Finance proposed the National Assembly Financial Budget Committee that management agency shouldbe entitled to determine the tax when enterprises have signs of price transfer to evade taxes.

According to deputy minister of finance, Do Hoang Anh Tuan, when investing in Vietnam in the upcoming time foreign enterprises may have tonegotiate with management agencies about the business plans, minimum income or financial standards to prevent price transfer.

PPP projects await private investors

Vietbiz24

PPP projects await private investors

Several public-private partnership (PPP) projects out of a tentative list of 24 ones will be put forth soon to call for private investors,local and foreign alike, the Vietnamese Ministry of Planning and Investment said at a conference here in HCM City on Thursday.

Dang Xuan Quang, deputy director of the ministry’s Foreign Investment Agency, said the 24 PPP projects required total investment capitalof $20 billion, but authorities would sort out some projects only for the trial scheme of promoting PPP projects.

The government will launch these PPP projects on a trial basis within a short period of three to five years, and in its preparations, thegovernment will conduct international tenders to choose consultants and investors for these projects, Quang told the Southeast Asia Private Equity Conference.

Vietnam is in dire need of private investments and the participation of private firms in large-scale projects, he said.

“The government wants to tap the huge private capital resource,” he said.

Quang explained that the country needs at least $160-180 billion for basic infrastructure, half of which should come from the private sector.

There will be an important shift in Vietnam’s investment structure in the near future, making it more sustainable and less dependent on traditionalcapital sources such as official development assistance (ODA) or government bonds. A strong cut in public investments is therefore needed, Quang said.

Answering investors’ questions on the falling foreign direct investment (FDI) flow in the country, Quang said the quality should prevailover quantity.

“This year’s FDI flow has reached $9.9 billion, while FDI disbursements has totalled $8.2 billion to date, and we will try to attract goodFDI projects instead of counting on many projects,” said Quang.

“I think two issues that the government will focus on in the future are how to attract private investments into infrastructure and developthe supporting industry.”

Private investors and regional investment funds at the conference all expected that forthcoming PPP projects should be commercially viable,and that there is a solid foundation for the State and the private sector to cooperate in the long term.

Jonathan Pincus, a well-known economist at the Fulbright Economic Teaching Programme, suggested that there must be harmony in ensuring benefitsfor both the State and the private sector.

“The interest must be balanced,” he said.

ECONOMY - Rising exports help narrow trade gap

VOV

Exports have risen 35.4 percent since the beginning of this year to $70 billion, the Ministry of Industry and Trade (MoIT) told a conferencein HCM City on October 11.

The domestic export sector accounted for $31.9 billion, up by a third, and foreign firms for $38 billion, a growth of 37.5 percent.

The biggest export earners are plastics, textile and garments, footwear, iron and steel, machinery and equipment.

Vietnam's exports to most markets rose. They were 170 percent higher in Africa and 41 percent higher in Asia.

Besides, with imports growing at a much slower rate of 26.9 percent, the country's trade deficit has shrunk to jus 9.8 percent, much lowerthan the government's 16-18 percent target set out in Resolution 11.

Exports during the rest of the year are expected to hit $8 billion every month as a result of the government's measures to curb inflation,lower lending interest rates and maintain stability in the foreign exchange market.

MoIT proposed that the State Bank of Vietnam further reduce lending interest rates for businesses involved in production and trading andgive priority to those buying agri-products for processing and exports.

For its part, the ministry pledged to carry out the National Trade Programme to support exports and start a pilot project for export creditinsurance soon.

TRADE – Vietnam is fastest growing ‘major’ US trade partner

Market Watch

HSBC is forecasting a 73 percent growth in global trade over the next 15 years, up to $43.6 trillion from $27.2 trillion currently.

US trade is seen growing at a slower rate over the period, 62.3 percent, according to the quarterly global trade forecast.

“China is the USA’s most important trading partner in 2010 and will remain the country’s most important partner throughout the period to2025,” according to HSBC.

However, more trade corridors are opening. For instance, US trade with Qatar is expected to grow sharply over the period.

Vietnam is the United States’ fastest growing “major” trade partner. (Major trade partners have measurable trade flow volumes over $1 billion.)

The USA.’s top 10 growing trade corridors, according to HSBC

1. Vietnam

2. Egypt

3. Turkey

4. Poland

5. India

6. UAE

7. Switzerland

8. Russia

9. Brazil

10. China

Steel exports increase sharply

VOV

Vietnam has exported 1.87 million tonnes of steel so far this year, up nearly 44.5 percent over the same period of 2010, announced Pham ChiCuong, Chair of the Vietnam Steel Association (VSA).

Of the figure, about 285,600 tonnes of steel ingot have been shipped abroad while the consumption volume of the product has reduced sharplyin the domestic market.

According to Cuong, the steel export revenue in the past nine months reached $1.3 billion. The increasing volume in steel exports shows apositive sign for the local steel industry, in which the supply currently doubles the demand, he said.

VSA is cooperating with businesses to boost steel export turnover to explore the opportunity arising from the increasing demand for steelin the global market. At present, Vietnamese steel is selling well in many countries, including the US, Thailand, Indonesia and Malaysia.

FINANCE - Vietnam's Dong Drops for Second Day on Trade Deficit; Bonds Gain

Bloomberg

Vietnam's dong held near a two-week low on speculation policy makers will allow the currency to weaken as the nation's trade deficit widens.government bonds gained.

The shortfall jumped to $1 billion last month from a revised $396 million in August, government data show. The exchange rate is under "large"pressure as the nation's foreign-exchange reserves remain "thin," Communist Party general Secretary Nguyen Phu Trong said in the text of a speech posted on the government's website on October 10.

The dong traded at 20,873 per dollar as of 2:50 p.m. in Hanoi, compared with 20,868 yesterday, according to data compiled by Bloomberg. Thecentral bank set the currency's reference rate at 20,668 today, the same as yesterday, according to its website. It weakened the reference rate for the fourth time this month yesterday, from 20,653 on October 10. The local currency is allowed to trade up to1 percent on either side of the fixing.

The central bank may weaken reference rate by less than 1 percent by the end of the year, Marc Djandji and Doan Thi Thu Hoai, analysts atViet Capital Securities Joint-Stock Co. in HCM City, wrote in a research note yesterday.

"The central bank may choose to adjust the official exchange rate on a daily basis rather than a one-time adjustment to avoid a shock," theanalysts wrote.

The yield on Vietnam's five-year bonds fell one basis point, or 0.01 percentage point, to 12.41 percent, according to a daily fixing pricefrom banks compiled by Bloomberg.

Experts say it's impossible to keep exchange rate fluctuation at below 1pct

VnExpress

The official exchange rate fluctuation in recent days is not the thing experts are worried about. However, they have expressed the doubtsabout the feasibility of the government's plan to curb the exchange rate fluctuation at below one percent by the end of the year.

Prior to October 5, the interbank dong/dollar exchange rate announced every day by the State Bank of Vietnam always stayed at 20,628 dongper dollar. However, since October 5, the State Bank has continuously raised the interbank exchange rate to 20,638 dong, then to 20,648 dong, and to 20,653 dong per dollar on October 7.

Commercial banks have immediately raised their quoted exchange rates to the ceiling levels, while the gap between the sale and the purchaseprice has been narrowed. In many cases, the actual dollar prices applied in transactions were higher than the quoted prices.

Commenting about the move by the State Bank to raise the official exchange rate continuously over the last few days, Dr Le Tham Duong fromthe HCM City Banking University, said that the increases have been insignificant which should be seen as an adjustment to "explore the situation".

Regarding the statement by the State Bank of Vietnam that the exchange rate will not fluctuate by more than one percent from now to the endof the year, Duong said that this shows the determination to keep the exchange rate stable. The central bank has every reason to believe that the goal is attainable: Vietnam has the foreign currency reserves worth 16 billion dollars, the surplus in paymentbalance, the positive position of foreign currencies of commercial banks and the controlled outstanding loans in foreign currencies.

However, Duong said, "the exchange rate may bear the influences of many unforeseen factors."

One of the "unforeseen factors", according to Duong, is that despite the determination to force the foreign currency lending (the requiredcompulsory reserve ratio for deposits has been raised), the outstanding loans in foreign currencies keep rising. Meanwhile, the gold prices have been fluctuating heavily with the domestic prices always higher than the world's price. This will prompt gold smuggling,which may push the dong/dollar exchange rate up.

He went on to say that the forecast bad performance of the world's economy would also have bad impacts on the Vietnamese economy and madethe plan to congest the exchange rate fluctuation impossible.

"The pressure on the exchange rate seems to be bigger than the determination and the strength of the central bank. Therefore, the State Bankneeds to keep cautious, or the dollar price would increase, thus badly affecting the plan to fight against the inflation," Duong said.

Le Dang Doanh, a well known economist, has also expressed his worries that the central bank may fail to carry out the plan to control theexchange rate fluctuation.

Doanh said that the foreign currency supply and demand much depends on the import and export, while Vietnam still imports more than exports.Meanwhile, Vietnamese enterprises have borrowed a big amount of dollars (they prefer dollar to dong loans because the dong interest rates are overly high), which would put a hard pressure on the exchange rate.

Also according to Doanh, the dong has lost 22 percent in its value in reality, but the currency still has been overvalued, which is not beneficialfor export.

"It is necessary to force the inflation rate down to keep the exchange rate stable. It will not have much significance if we try to keepthe exchange rate stable in the context of high inflation," Doanh said.

Dr Le Xuan Nghia, deputy Chair of the National Finance Supervision Council, also said that the pressure on the exchange rate is hard. Theoutstanding loans in foreign currencies have reached 30 billion dollars, while the mobilised capital has been 22.5 billion dollars only, which means the gap of 7.5 billion dollars between the lent and the mobilised money.

"7.5 billion dollars is not a big sum, but it would be dangerous if all the loans become mature in the last three months of the year," Nghiawarned.

Vietnam to restructure local banking system, M&A possible

StoxPlus

Vietnam to restructure local banking system, M&A possible

The State Bank Governor Nguyen Van Binh has ordered relevant departments and offices to prepare for restructuring the banking system, includingthe possibility of merger and acquisition of small banks, to ensure the health of the whole banking system, the local online newspaper Saigon Tiep Thi reported.

The central bank may encourage mergers and acquisitions (M&A) of small and inefficient banks, adjust banks’ ownership structures, and standardizethe risk management system to restructure the local banking system, the newspaper detailed.

Restructuring the banking system is the most important task as for now, emphasized Le Xuan Nghia, deputy chairman of the National FinanceSupervision Committee, saying that bad debts of the whole banking sector continued to rise, in which debts in category 5 (loss) accounted for as much as 47%. Bad debts at some banks exceeded shareholders’ equity and may not be recovered, Nghia added.

It is necessary to restructure the banking system, said Vu Ngoc Duy Deputy Director of the Banking Strategy Institute, the State Bank ofVietnam, adding that there is a need to develop a restructuring roadmap, in which merger and acquisition of banks is of much importance. Duy noted that M&A in the banking industry should be conducted basing on scales and operation efficiency of banks.

Vietnam banks association proposes deposit rates cap at 13.5% for big banks

StoxPlus

Vietnam banks association proposes deposit rates cap at 13.5% for big banks

The State Bank of Vietnam, the country’s central bank, is suggested to cap interest rates at 13.5% for big banks while leaving the 14% ratecap unchanged for other small ones to balance the deposit inflows between big and small banks, the local online newspaper Thanh Nien quoted Duong Thu Huong, Secretary General of Vietnam Banks Association (VNBA), as saying.

Small banks found themselves in shortage of funds after the central bank took measures to strictly reinforce the interest rate cap at 14%.Total deposits outflows at these banks were estimated up to tens of trillions of dongs.

The SBV should apply different rate caps for small and big banks, said Tran Dang Khoa, Deputy CEO of SHB, worrying that savings will flowedto big banks, given the same level of interest rates.

However, an unnamed representative of BacA Bank doubted the feasibility of the VNBA’s suggestion, questioning which banks will have to mobilizefunds at 13.5%.

It is difficult to place different rate caps for different banks’ scales, commented Nguyen Thi Nguyet Thu, Deputy CEO of BaoViet Bank, addingthat the SBV is expected to increase the tender winning rates on OMO to help small banks overcome their serious liquidity problems.

Domestic capital too costly, businesses seeking foreign capital

Vietnamese businesses

The overly high interest rates in the domestic capital market, caused by the tightened monetary policies, have prompted businesses to seekcapital from foreign sources.

Foreign sources offer huge capital, reasonable interest rates

In May 2011, the fact that Hoang Anh Gia Lai Group successfully issued 90 million bonds on the international market stirred up the public.The bonds with the fixed interest rates of 9,875 percent, will be matured after five years. Credit Suisse was the only guarantor for the bond issuance.

Explaining the decision to seek foreign capital, Doan Nguyen Duc, President of Hoang Anh Gia Lai, said that the domestic capital is too costly,and he has to seek cheaper capital sources.

Also according to Duc, Hoang Anh Gia Lai’s bonds were issued in accordance with the New York law, which allows enterprises to buy back thebonds within three years since the day of issuance.

Seeking foreign resources is also the way that many banks are following. A lot of domestic banks have called on foreign investors to purchasestakes in order to increase their chartered capital. Calling for foreign investment has been described as a wise move for now, when the stock market seems to be “paralyzed” which does not allow banks to seek more capital.

An Binh Bank two times successfully sold stakes to foreign investors to increase its chartered capital. Especially, in 2008, when the globaleconomy fell into recession, An Binh bank still could sell stakes to foreign partners at high prices.

Maybank, Malaysian biggest bank, purchased 15 percent of the total shares of An Binh Bank at the price which was five times higher than theface value, worth 2138 billion dong.

In mid 2011, the Malaysian bank once again affirmed its commitment to make long term investment in Vietnam, announcing the plan to purchasefive more percent of stakes in order to obtain 20 percent of An Binh Bank’s stakes, the maximum allowed ownership ratio

An Binh Bank has also got 60 billion dong more in capital from the International Financial Corporation (IFC), an arm of the World Bank. IFChas made the investment deal in An Binh Bank to become a shareholder with 10 percent of chartered capital.

In 2010, while banks struggled to mobilize domestic capital to increase their chartered capital to 3 trillion dong as required by the StateBank of Vietnam, some banks successfully sought enough capital prior to December 31, 2010, the deadline by selling stakes to foreign partners.

OCB Bank, for example, sold stakes to French BNP Parisbas, to increase its chartered capital from 2600 billion dong to 3000 billion dong.Meanwhile, Southern Bank has got the approval on increasing capital from 3049 billion dong to 3212 billion dong by selling stakes to Singaporean UOB

VIB and Mekong Bank have also reportedly found several hundreds of capital more by selling stakes to some big financial institutions fromAustralia and Singapore.

Information transparency is the key

In principle, the international capital market is very big, where all businesses can seek capital. However, it is not easy to mobilize capitalin the market

Analysts said that the biggest anxiety of foreign investors, who plan long term investment, is the lack of information transparency.

Therefore, in order to successfully call for foreign investment, domestic enterprises need to create confidence among foreign investors.Investors have the right to know all the information relating to enterprises, both good and bad, so that they can weigh pros and cons before making investment decisions.

Vietnamese banks still can sell their stakes to foreign partners, though it is now the difficult period for Vietnamese bankers. Therefore,experts say foreign investors are always interested in the opportunities to make investment in

RESOURCES – Petrolimex denies putting pressure

Saigon Times Daily

Vietnam National Petroleum Corporation (Petrolimex) insists that it has put no pressure on the Ministry of Finance to adjust the price offuel this year.

The ministry has made a number of changes in the price of fuel in 2011 and a source from the ministry claims Petrolimex is lying.

“Since the beginning of the year, Petrolimex hasn’t proposed increasing or cutting the fuel price despite the current huge gap between localand world prices reaching up to $40 a barrel,” Tran Minh Hai, a representative of Petrolimex said in a statement.

Hai stressed that his company had strictly adhered to the instructions from the Minis try of Finance and Ministry of Industry and Trade.

However, a source from the Ministry of Finance told the Daily that this year the ministry has received four separate petitions from Petrolimexfor raising the fuel retail price or hiking the proportion of money from the price stabilisation fund.

The first document was sent to the ministry on February 16, suggesting increasing the retail price of gasoline by 17 percent-24 percent.

The ministry later decided to increase the price by 2,900 dong to 19,300 dong from 16,400 dongper litre for gasoline and by 3,550 dong to18,300 dong from 14,750 dong per litre for diesel.

After that, the ministry received three other proposals on March 24, April 26 and May 31 from the company and also adjusted the prices accordingly.

The Ministry of Finance asserted that its management and decisions are based on reality, including suggestions for price hikes from fueltraders.

ENERGY – Hanoi needs vnd20.7tln for electricity development in 2011-2015

Stoxplus

Hanoi is estimated to a total capital of VND20.7 trillion for electricity development in the city in the 5 year period from 2011 to 2015,the metropolitan Department Of Industry And Trade said in a meeting on October 12.

In the meeting on electricity development planning held by Hanoi Department Of Industry And Trade, it said the city’s planned budget wasonly VND6.5 trillion and it must raise VND14.2 trillion from other sources. It however, did not mention where to take money from.

The money is projected to build and reconstruct under 220KV electricity system in the area.

It is estimated that Hanoi’s electricity demand will be around 16,196 million kWh in 2015 while the new and recycled electricity capacityfrom solar, waste and biogas will be only more than 600,000 Mwh.

To make the project feasible, People’s Committee of Hanoi City will support landing for approved works and also will consider to supportelectricity distribution. However, it did not elaborate the plan.

POWER - Fast-track approach to power projects

VIR

The new government move will help shorten build-operate-transfer power projects’ pre-licencing preparations.

In light of Document 1604/TTg-KTN, build-operate-transfer (BOT) power projects are eligible to apply some sharp legal clauses.

Accordingly, BOT project developers can apply foreign laws in dispute cases using English language if differences persist in projects’ Vietnameseand English documents.

BOT power projects also enjoy corporate income tax (CIT) exemption in the first four years since they generate incomes, 5 per cent CIT taxin the following nine years and 10 per cent in BOT contracts’ remaining years.

Besides, developers benefiting from land rental exemption and have the right to mortgage the land use rights and relevant assets at creditorganisations and authorised credit agents operating in Vietnam to take loans.

In case land with relevant assets is transferred, the new owners will inherit the land use rights and usage of relevant assets in contracts’remaining time and they must not alter the land use functions.

The Vietnamese government also guarantees the power cost payment obligations of Electricity of Vietnam in power purchase agreements. Thegovernment also stands surety for payment obligations of state groups through BOT contracts for contracts using coal provided by Vinacomin and gas supplied by PetroVietnam.

Gas-fuelled power projects are set to have 20-year terms, while the duration for coal-fired projects is 25 years.

According to experts joining BOT project negotiations, presenting a general frame for BOT power project implementation would create a levelplaying field to developers and shorten the negotiation process.

Deputy Minister of Industry and Trade Hoang Quoc Vuong suggested developers of BOT projects under negotiation focus on power purchase agreementsand BOT project contents which were recently ratified by the government, to facilitate the negotiation process.

Reality shows that the Vung Ang 2 BOT power project developed by Hong Kong-based One Energy and Vietnamese Lilama Group and REE with a capacityof 1,300 megawatts per year, reflected divergences in negotiations between the developer consortium and local ministries and branches.

Most of contract terms were yet to be finalised since many divergences exist between developers and Vietnamese competent state agencies relativeto tax, foreign currency conversion, law changes, compensation methods, infrastructure sharing or water supply contracts.

“The developer gave out too many proposals having no precedents in previously licenced BOT contracts, making state agencies confused abouthow to negotiate,” said a member of the Ministry of Industry and Trade’s BOT power project negotiation team.

“To keep negotiations rolling on, the developer should decide on what further contents to be negotiate based on Document 1604 relative toBOT power project developer rights,” said the expert.

More than $4.6b invested in Son My power centre project

Vietbiz24

The group of investors namely IP (UK), Sojitz (Japan) and Pacific (Vietnam) are building feasibility study report for Son My 1 power projectand common infrastructure for Son My power centre project.

Son My power centre project with a total capacity of 3,000 MW will use liquefied natural gas as input fuel. The project with total investmentof $4.667 billion includes two plants of Son My I and Son My II.

Of which, Son My I power project including five turbines with capacity of 390 MW each will be developed under the BOT (build-operate-transfer)method by investors, which is expected to start operations in 2018-2019.

INFRASTRUCTURE – Japan’s ODA important for building infrastructure

VNS

Official Development Assistance from Japan had played an important role in infrastructure construction, poverty reduction and economic developmentof Vietnam, said National Assembly vice Chairwoman Nguyen Thi Kim Ngan.

She expressed thanks to the government and people of Japan for continuing providing ODA for Vietnam, focusing on infrastructure development,human resources training, environmental protection and coping with climate change.

Ngan made the statement while receiving Chair of the Japan-Vietnam Friendship Parliamentary Alliance Takebe Tsutomu on a visit to Vietnamfrom October 7-11.

Ngan hoped that national assemblies and friendship parliamentary organisations of the two countries would continue increasing exchanges,cooperation and experience sharing for mutual understanding and benefits.

For his part, Tsutomu said the alliance would try its best to enhance the friendship with Vietnam and wished that the younger generationsof the two countries would increase exchanges and mutual understanding.

Contract for building Hai Phong International Port

Vietbiz24

Vietnam National Shipping Lines Corp. (Vinalines) signed the joint contract for building Hai Phong International Port with Japan-based MolnykitCorp. yesterday October 12, 2011.

In details, the two parties planned to start construction the first two harbors of Hai Phong International Port with total investment valueof 30 billion yen in the fourth quarter (Q4) of 2012.

After completion, this will be one of the largest container ports in Vietnam.

At the signing ceremony, Nguyen Canh Viet, Vinalines’ general director stated that the construction works would be conducted in two parts.Part A would be carried out under PPP method (Public Private Partnership), using ODA fund and counterpart capitalworth about $900 million while Part B to be implemented by Vinalines and Japanese investors with total investment capital of $321 million.

Hanoi aims to complete zoning plans by 2015

VIR

One of Hanoi’s major tasks is to complete zoning plans for the entire city by 2015.

Hanoi should make strategic changes in its planning to improve the unsynchronized infrastructure. Many regions of the city have not developedevenly and they lack green space. Therefore, Hanoi’s Municipal Party Committee recently agreed that the major, urgent issue from now until 2015 is to renew the city's zoning plan with a particular focus on technical and social infrastructure.

With the master plan for the development of the capital until 2030, with a vision to 2050, approved, the municipal authorities are now tryingto complete hundreds of zoning plans in the next four years, aiming to build a modern and civilized capital city.

Lack of concrete strategy leads to “empty” urban areas

VIR

Hoang Trong Hanh, former rector of the Hanoi University of Architecture, said that due to lack of strategic planning, the capital's developmenthas been slow. For example, 50-80 per cent of its capital resources for projects have been used as compensation for clearing sites for “the most expensive roads on the planet” such as Kim Lien-O Cho Dua road which has used VND600 billion for site clearance,six times more money than is required to build the actual road.

In addition, poor transport planning has also caused serious traffic congestion in Hanoi. Since the beginning of the year, the city has licensedmore than 24,000 new cars, making up 22 per cent of the newly registered cars in the country. To cope with this situation, municipal authorities have issued regulations to restrict means of transport, but they realize that these are only temporary solutions.

Mr Hanh added that the most worrying issue is “empty urban areas” that lack schools, kindergartens, trees and public spaces. Without a detailedstrategy, there will be major conflicts between Hanoi’s ancient streets and the new urban areas, said Mr Hanh.

After Hanoi expanded its administrative borders, the issue of planning has become more urgent and the time has come to establish an overalllong-term plan to create a modern and civilized capital city. The municipal authorities will have greater responsibilities in the future.

Prime Minister Nguyen Tan Dung has ratified a master plan for Hanoi, aimed at building a modern city with satellite urban areas. This haslaid the foundation for hundreds of detailed zoning projects but the core matter is how to avoid conflicts and overlaps.

In the immediate period, It is therefore necessary to immediately suspend more than 750 projects in Hanoi’s inner and outlying districtsto stop them overlapping before a common plan is drawn up.

Nguyen Doan Hoan, Chairman of the Thach That district People’s Committee, said all communes and agencies in his district have been askedto reconsider projects in various fields in order to implement Hanoi’s common plan.

70 per cent of land for public construction

The Hanoi municipal People’s Committee recently discussed measures to step up the zoning plans for urban construction and management, andconsiders this one of its five key tasks from now to 2015.

Hanoi aims to complete all zoning plans, in which about 70 per cent of land will be allocated for public construction. The city is expectedto complete 17 zoning plans for key urban areas in 2011, and iron out snags related to “empty” urban areas and the present asynchronous technical and social infrastructure.

Hanoi Mayor Nguyen The Thao showed a strong determination to realize all the zoning plans. He said municipal authorities and relevant agenciesare making efforts to touch upon every zoning project in the next four years.

“However, there is a shortage of qualified human resources involved in the zoning plans. Hanoi will coordinate with the University of Architectureto organize short training courses for officers,” he said.

Since it was liberated 57 years ago, Hanoi has implemented seven zoning plans, however, the city still faces numerous challenges. It is expectedthat the Prime Minister’s newly-approved master plan until 2030, with a vision to 2050, will remove obstacles and erase the shortcomings of previous plans.

Under the master plan, the capital city will include a central metropolitan area, five satellite urban areas - Hoa Lac, Son Tay, Xuan Mai,Phu Xuyen and Soc Son - and several towns linked together. It will also have modern infrastructure while still retaining its cultural and traditional heritage sites.

Hanoi’s leaders have shown determination to effectively implement zoning plans and help the city fulfill its set targets for industrializationand modernization a couple of years ahead of schedule, thus establishing a modern and civilized Hanoi.

LEGAL NEWS - HCM City slow e-customs clearance worries businesses

Tuoi Tre

Many import-export businesses are encountering delays in clearing customs at HCM City-based Cat Lai Port due to network congestion in e-customsdeclaration and shortage of equipment for loading/unloading containers.

The businesses said their containers had to stay at the port for several days before the e-customs clearance was completed.

An executive of a customs service provider said his company had received customers' complaints for being tardy in getting customs clearance.

He said the company had recently made customs declaration for four batches of goods, all of which had encountered problems.

"It now takes us 3 days to get the e-customs clearance while we used to need only 1 day," he said.

Nguyen Thong, director of HCM City-based Lien Anh Freight Forwarding Co., said his company also had problems in getting e-customs clearance.

"Whenever we send the e-customs declarations, the network reports error," he said.

An executive of the Customs Department of Saigon Port zone 1 in Cat Lai admitted that the e-customs clearance had been stuck with the networkcongestion during the past three days.

The Internet line was too busy to transmit businesses' data to the customs centre, he said.

He said the congestion was a technical problem and thus was "out of our control."

The businesses added that some equipment for container loading services at the port had been operating on slow progress, delaying the timefor their containers to leave the port by three to four days.

The container lifters occasionally stopped working for even half a day, preventing enterprises from loading or unloading their goods, theysaid.

A business owner said the loading services were often on slow progress.

"There are cases when the businesses have to wait three days to have their containers unloaded," he said.

Commercial Law inconsistent with other laws

VNS

The National Assembly's passage of the Commercial Law in 2005 was a significant event in promoting commerce and a healthy business climate.

However, after nearly seven years in effect, the law has revealed some shortcomings, making it imperative that the law be amended in orderto create the most favourable conditions for commercial development in Vietnam.

For instance, the definitions of terms used in the law, e.g., "business entities", "commercial activities", and "commodities exchanges",are inadequate and unclear, and provisions on penalties, promotions and complaints are incoherent. Overall, the law contains many provisions inconsistent with other laws and regulations.

The concept of "business entities" as defined in Article 6.1 of the Commercial Law is confused and appears to conflict with Article 7. Article6.1 provides that "business entities shall be comprised of economic organisations which have been lawfully established... and have business registration.

"However, an enterprise is already considered lawfully established only if it has been established in accordance with the procedures prescribedby law and have obtained business registration. Yet Article 6.1 also says that "business entities shall consist of economic organisations which conduct commercial activities independently and frequently." This condition is both unclear and unnecessary, asthe law is otherwise silent as how an economic organisation may be judged to have satisfied such a requirement.

Regulations on commodities exchanges are also incomplete. In particular, the Commercial Law only defines some concepts related to commoditiesexchanges and the primary rights and obligations of parties engaged in the trading of goods via a commodities exchange. It does not provide for the organisation, management or operation of commodities exchanges and lacks regulations on the transactions andallocation of risks among parties trading on a commodities exchange. The law is not sufficiently comprehensive to support the development and operation of these markets for goods in Vietnam.

The Commercial Law also provides for remedies for breach of contract. Article 300 defines the remedy as one in which "the aggrieved partyrequires the defaulting party to pay a penalty for breach of contract if so agreed and recorded in the contract." In other words, the remedy is only available if it has been expressly agreed upon by the parties and recorded in the contract. In the case ofa breach, neither party has the right to seek such a remedy from the other unless it is so stipulated in the contract.

Article 301 also limits the damages available, stating, "The penalty rate in respect of any one breach of a contractual obligation or thetotal penalty rate in respect of more than one breach shall be as agreed by the parties in the contract, but shall not exceed 8 per cent of the value of the contractual obligation which is the subject of the breach."

This contradicts Article 422.2 of the Civil Code, which stipulates that "the penalty rate shall be as agreed by the parties" without limitingthe maximum penalty. Lawmakers should revise the limit on damages of 8 per cent of the value of the contractual obligation to be consistent with the Civil Code. It is the nature of a contract that is an agreement between the parties and the parties thereforebear responsibility for setting an applicable penalty rate.

With respect to the right to claim interest in the case of late payment, under Article 306 of the Commercial Law, "the aggrieved party shallhave the right to demand the defaulting party to pay interest on late payment amount at the average interest rate applicable to overdue debts in the market at the time of such payment for the delayed period." However, the Commercial Law offers no detailedguidance on how to determine the average interest rate applicable to overdue debts on the market, or which banks' rates would be used in that calculation.

The Commercial Law should be revised to address these inconsistencies to encourage and promote the healthier and more stable developmentof the economy and of commercial relationships in Vietnam.

Experts urge change to fuel price rule

Tuoi Tre

Insiders of the fuel sector are calling for a change in Decree No 84 which they say are preventing domestic petrol wholesalers from earningprofits.

Under the Ministry of Finance's Circular No 84 which took effect in December 2009, wholesalers' prime cost for petrol is made up of the averageprice paid for petrol imported from Singapore within 30 days, taxes, marketing, distribution costs and a "rationed profit" of VND300 a litre.

With this calculation, the current prime cost of gasoline is higher than the retail price by VND900 a litre. But as the prime cost alreadyincludes the "rationed profit" of VND300 a litre, the real loss of distributors on every litre of gasoline is VND600.

Experts said domestic fuel distributors shouldn't operate with losses considering the price of crude oil has being falling sharply recently.

On October 5, Brent crude oil slumped to only $99.79 a barrel, the lowest price since last February, making the gasoline price in Singapore,which is Vietnam's main supplier, fall to $113.85 a barrel.

Should the prime cost calculation be applied with this imported price instead of the average number of the last 30 consecutive days, localwholesalers' prime cost of gasoline is only VND20,140 a litre, lower than the current retail price by VND660 a litre.

If the average imported gasoline price within the last 10 days is used for calculation, wholesalers still earn a profit of some VND800 alitre as the prime cost will be VND20,000.

Experts thus blamed Decree No 84 for handicapping domestic fuel price adjustment.

An expert said since the world fuel price often fluctuated in a period of seven to ten days, Vietnam would likely miss the chance to adjustfuel retail prices if they had to wait 30 days to get the average imported price.

In fact, consumers have twice missed the chance to enjoy a price cut in June and August because of this shortcoming.

An executive of a fuel analysing company suggested that prime cost should be calculated based on the average imported price in seven daysto enable wholesalers to adjust prices in time with the global fluctuation.

Other experts also said the average time of ten days would be more reasonable.

They also urged the Ministry of Finance to remove the "rationed profit" from the prime cost to increase the transparence when it comes toa comparison between the retail price and prime cost.


	Oliver Massmann Partner

Oliver Massmann

Rechtsanwalt

Vietnam – News and Regulations

2011-10-21T08:46:00.001+07:00

Massmann, Oliver<OMassmann@duanemorris.com>

Fri, Oct 7, 2011 at 4:49 PM

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INTERNATIONAL MONETARY FUND ON VIETNAM - Vietnam Must Avoid a Premature Easing of Policy, IMF Says

Bloomberg

Vietnam may undermine efforts to stabilise the country's economy and currency if it prematurely eases monetary policy, the InternationalMonetary Fund said, as the nation fights the fastest inflation in Asia.

"The risk is that all the hard work they've done this year in trying to re-establish their stabilisation credentials and to try to convincethe population that they have the discipline needed to push through with the macro stabilisation programme gets undone," Benedict Bingham, the IMF's senior resident representative in Vietnam, said in an interview yesterday.

At stake is Vietnam's struggle to regain investor confidence hurt by inflation that's exceeded 20 percent, a widening trade deficit and thenear-bankruptcy of the nation's largest shipbuilder, which signaled risks in the banking industry. Its currency is Asia's weakest performer against the dollar this year after India's rupee.

Vietnam in February passed the so-called Resolution 11, which aimed to fight consumer-price growth and support the currency with tightermonetary and fiscal policies, and Bingham said that economic stabilisation programme isn't complete yet.

"There mustn't be a gap between the headline policy message that they're committed to maintaining this strategy until the job is done, andthe actual implementation of monetary policy," Bingham said in HCM City. "People will pick these signs up, and raise questions about the strategy."

Dong Pressure

The dong weakened 0.2 percent to 20,850 per dollar as of 12:05 p.m. local time, according to data compiled by Bloomberg. It was devaluedfor the fourth time in 15 months on February 11. The VN Index of stocks closed down 0.2 percent.

The State Bank of Vietnam weakened the dong's reference exchange rate today to 20,638 per dollar from 20,628 per dollar, according to itswebsite. It last adjusted the rate on August 24.

The currency is allowed to trade 1 percent on either side of the daily reference rate set by the central bank. On the so- called black market,it can move outside the band.

"We are seeing the dong trading outside of its band, by around 1 percent," said Bingham. "It's not under acute pressure, but it's driftedout."

The central bank earlier this year raised its discount, refinancing and repurchase rates in a bid to stem credit growth, check inflationand steady the economy.

In July, the State Bank of Vietnam bank cut its repurchase rate to 14 percent from 15 percent, and the following month it began pushing commerciallenders to lower their interest rates.

Policy Easing

The central bank will leave interest rates unchanged for now and consider cutting them if price gains slow, the government said in August.

The moves to ease monetary conditions echo efforts in recent months by emerging markets from the Philippines to Brazil to leave rates unchangedor cut borrowing costs, as Europe's debt crisis and the risk of a US contraction dim the outlook for the world economy.

Overnight interbank rates, which the central bank can influence through the supply of liquidity, are about 12 percent to 13 percent, Binghamsaid.

"The central bank's open market operations have left the banking system with an overnight rate below policy rates," he said.

About 49,000 Vietnamese businesses ceased operations or dissolved in January through September, a 22 percent increase on a year earlier,hurt by borrowing costs exceeding 20 percent, Nong Thon Ngay Nay newspaper reported.

Consumer Prices

Vietnamese consumer prices rose 22.42 percent in September from a year earlier, slowing from a 23.02 percent pace in the previous month whileremaining the fastest inflation rate in a basket of 17 Asian economies tracked by Bloomberg.

Vietnam's government has also spent the last year wrestling with the near-bankruptcy of state-owned Vietnam Shipbuilding Industry Group,known as Vinashin.

The company's default on foreign-currency borrowings at the end of 2010 has raised doubts about asset quality at the country's banks, Moody'sInvestors Service said last month. Moody's, Standard & Poor's and Fitch Ratings all cut Vietnam's sovereign debt rating deeper into so-called junk status in 2010.

Vietnam's gross domestic product may rise 5.8 percent in 2011, the slowest pace since 2009, Asian Development Bank data show. The economy,a production hub for companies from Intel Corp. to Honda Motor Co., expanded 6.8 percent in 2010.

INVESTMENT – Foreign investors must have at least 30pct equity in FDI projects to prevent bad debts:FIA proposal

Vietbiz24

The Foreign Investment Agency or FIA (Ministry of Planning and Investment) is proposing to the government to re-apply the provisions of theequity at 30 percent for foreign investors when participating foreign direct investment (FDI) projects in Vietnam in efforts to prevent large bad debts of FDI firms, Do Nhat Hoang, director of FIA said on Tuesday.

On the issue that many FDI firms fled, leaving the bad loans amounting to $80 million for Vietnamese banks, the Thoi Bao Kinh Te Saigon (SaigonEconomic Times) newspaper quoted Do Nhat Hoang as saying that the high bad debt level of FDI firms was due to Vietnam's regulation on 30 percent equity of FDI firms into Vietnam removed from 2005, so foreign investors could contact with local banks for borrowingloans when they entered Vietnam.

However, many banks were not careful in evaluating the loan applications, leading to lending with large amounts of capital into inefficientprojects, Hoang said.

Hoang said FIA is proposing to the government to re-apply the provisions of the equity of a foreign investor at no less than 30 percent ina FDI project as previously defined in 2005.

According to Thoi Bao Kinh Te Saigon, Dr Nguyen Dinh Cung, vice director of the Central Institute for Economic Management also said thatthe State Bank of Vietnam (SBV) should take strict controls over the loans of FDI enterprises.

Dr Cung also suggested that, if a project has been licensed, but exceeding 12 months, it has yet to be deployed or is deployed behind schedulewithout a legitimate reason, state authorities should revoke the investment license.

Donors urge quality public investment

VOV

Donors called on Vietnam to restructure public investment to foster quality growth at a workshop in Hanoi on October 4.

While examining the Ministry of Planning and Investment (MPI)'s five-year socio-economic development draft, most donors supported the country'sprojected annual growth rate of 6.5 percent in the next five years instead of 7 percent. They said the reasonable rate would enable Vietnam to improve social protection policies, increase basic services for the poor and the most vulnerable groups, and createmore jobs.

Eamonn Murphy, the UN Resident Coordinator in Vietnam, said the country should pay attention to equity issues as economic growth alone cannotensure human development.

Rie Vejs Kjeldgaard, ILO representative in Vietnam, applauded issue of labour being pushed to the forefront aimed at reducing the unemploymentrate amongst workers in urban areas to below 4 percent, creating jobs for over 8 million in five years. However, she said more detailed planning needs to be considered.

MPI deputy minister Cao Viet Sinh said the mindset related to public investment needs to be redirected toward decreasing investment and mobilisingnon-budgetary funds from other economic constituents to develop the economy.

According to MPI minister Bui Quang Vinh, public investment has decreased from roughly 42 percent during 2006-2010 to 33 percent in 2011.At the same time, he said there has been too much reliance on the national budget, which increased risks to the economy over a long-term period.

The draft also focuses on curbing inflation, stabilising the macro-economy, maintaining reasonable growth associated with economic restructuring,and facilitating sustainable development by 2013.

The draft will receive further comments from international donors before being finalised and submitted to the National Assembly by the endof October.

ECONOMY – Hanoi's GDP expected to rise 11-12pct in 2012

Vietbiz24

In the first nine months of this year, Hanoi's GDP (Gross Domestic Product) grew 9.4 percent and it is expected to rise 12 percent this year.

The aforementioned information was given at the seminar on implementation of socio-economic development tasks in 2011 and plan for 2012 forHanoi held on October 4.

Also at the seminar, the capital city targeted to reach GDP growth in 2012 at 11-12 percent.

Of which, service growth would be 10.7-11.6 percent, industry-construction at 12.5-13.7 percent and agriculture at 2.7-3.7 percent. The city'sexport turnover growth would be about 15 percent in 2012.

Hanoi would also continue construction of infrastructure framework and carry out the master plan for the city till 2020 and vision till 2030.Under which, the city will continue to develop the social housing projects and speed up the pace of key urban traffic projects such as Ha Dong-Cat Linh railway, Nhon-Hanoi Railway Station, ring road No 1 O Cho Dua-Hoang Cau and roads of Van Cao-Ho Tay, CatLinh-La Thanh-Yen Lang.

Vietnam's 2011 Trade Gap To Narrow To $10b

Reuters

Vietnam's trade deficit this year will narrow to around $10 billion with exports expected to continue along a strong growth path to reach$95 billion by year's end, a staterun newspaper reported on Wednesday.

Imports could rise 23.8 percent to $105 billion, leaving an annual trade gap of 10.5 percent of exports, below a government target of 16percent for 2011, the Capital Security newspaper cited an Industry and trade ministry projection as saying.

The ministry's projection is well below a forecast last month by the Planning and Investment Ministry of $12 billion and also below the government's$14.5 billion target for the deficit.

The newspaper said the annual trade deficit forecast came after JanuarySeptember exports rose 35.4 percent from year earlier to $70.03 billion,based on government data.

Higher prices of agricultural products, raw materials and minerals have contributed to growing export revenue, the newspaper quoted directorNguyen Tien Vi of the trade ministry's Planning Department as saying. For JanuarySeptember trade data click.

Last year, Vietnam's annual trade deficit eased to $12.6 billion, from $12.87 billion in 2009, customs statistics show.

TRADE -Anti-dumping duties on Vietnam’s shoes lifted, but worries exist

Doanh Nhan Saigon

Vietnamese shoes makers now have the opportunities to come back to the EU market, since the anti-dumping duties have been left. However,they still cannot breathe a sigh with relief because big difficulties are still ahead.

In the past, the EU market consumed up to 70 percent of total shoe exports of Vietnam, while the proportion has decreased to 45 percent.This means that the EU is always a big market for Vietnamese shoe makers.

However, the shoe makers are reconsidering their export strategy, thinking about if they should continue relying on the EU as the biggestmarket.

Diep Thanh Kiet, Deputy Chair of the Vietnam Leather and Shoes Association (Lefaso), believes that it would be better for Vietnamese enterprisesto diversify the export markets instead of focusing on the EU market, even though the EU has listed the anti-dumping duties on Vietnam made leather capped shoes.

Vietnam is not the only maker enjoying benefits from the EU’s decision, because the EU has decided to lift the anti-dumping duties on Chineseproducts as well. This means that in the near future, Vietnamese products will have to compete fiercely with Chinese ones in the EU market.

Also, though the anti-dumping duties have been removed, Vietnam is still put under the EU’s monitoring for one year. During that time, ifthe exports of the products which once imposed the anti-dumping duties saw sharp increases, or the average products’ prices decrease, the duty imposition would be resumed.

If so, the EU will have full powers to impose higher duties for longer time while it does not have to conduct any investigation.

Vu Ba Phu, Deputy Head of the Competition Administration Department (CAD), an arm of the Ministry of Industry and Trade, has advised enterprisesnot to gather all strength on only one market, the EU, and that they should consider penetrating other potential markets such as Japan, South Korea or North America.

China, the shoe maker who has the same conditions as Vietnam, has also pushed up its supervision over the exports, to be sure that the exportsto the market will not increase too sharply. Therefore, experts have warned that in the time to come, enterprises may try to export products to the EU through third countries, including Vietnam.

Tran Van Tac, Director of Tuan Viet Shoes Company, said that shoe makers will have to compete with a lot of rivals in the near future, notonly the ones from China. Therefore, Tuan said that enterprises need the support from Lefaso when they have to gather strength and spend most of their time on the production to create the products with more reasonable prices.

Kiet believes that Vietnamese shoe makers should quickly shift from making low cost products to making medium class products and high gradeproducts. In fact, the new business strategy has been applied by many Vietnamese enterprises already.

According to Phu, European consumers always class the products from Asian countries (Vietnam, China, Indonesia, and Thailand) as having thesame quality and characteristics. Therefore, when thinking of applying safeguard measures, the EU always conducts investigations on all the regional countries at the same time.

Therefore, Phu said, instead of trying to obtain big orders, Vietnam should strive for the orders for the products with high values. Besides,they should create differentiations among different products, and associate the products with the commitments in environment protection, social responsibility and intellectual property.

In the first 8 months of 2011, Vietnam exported 4.21 billion dollar worth of footwear products, an increase of 20 percent over the same periodof the last year. 45 percent of exports went to the EU, 29.3 percent to the US, 4.1 percent to Japan, and 21.6 percent to other markets.

FINANCE - Banking system's foreign currency collection touch $809m mark in Jan-Sep

SBV | DVT

The State Bank of Vietnam (SBV) has recently reported that till the end of September, foreign currency collection of the whole banking systemreached $809 million while foreign currency expenditures were $745 million.

According to the report on SBV's website on late October 5, after seven months of implementation of the government's Resolution No 11, tillSeptember 29, the total outstanding loans in foreign currency of the entire banking system decreased $792 million, or 2.71 percent from the end of August 2011.

Meanwhile, the total deposits in foreign currency from the economy posted a rise of 0.07 percent, or $17 million against the end of August2011.

The total deposits of credit institutions from international market as of September 29 decreased $745 million, or 7.52 percent compared tothe end of August due to foreign currency loans in the international market fall due.

Till the end of September, the foreign currency collection ($809 million) was higher than the expenditures for debt repayments ($745 million)of the entire banking system by $64 million, ensuring the sufficient repayment for foreign currency loans that fell due, the central bank said.

In addition, the total savings in foreign currency of Hanoi-based credit institutions till September 29 increased up to 45.1 percent fromthe end of August, 2011, equalling to a rise of $586 million, positively affecting to the forex rate and the foreign currency flows of the economy and the whole banking system.

Interbank overnight interest rate hits 1-month low

Vietbiz24

The interbank average interest rate on September 30 continued to fall from the previous day (September 29) whereby the interbank overnightinterest rate posted the strongest fall of 0.85 percent to 11.31 percent per annum, the lowest level of this term since August 26, 2011, Vietbiz24.com cited the State Bank of Vietnam (SBV) on its website on October 5.

Particularly, the interest rate for terms of 2-weeks, 1-month and 12-months decreased by 0.14-0.25 percent to 13.06 percent per annum, 13.64percent p.a. and 13.75 percent p.a. respectively.

Notably, the interest rate for 3-month term surged 0.54 percent from September 29 to 13.71 percent p.a. while the interest rate for 1-weekand 6-month terms remained unchanged day on day.

As calculated by Vietbiz24.com, in the week between September 26 and 30, the central bank pumped net six trillion dong on open market operations(OMO), down 77.7 percent from the previous week.

Totally in September, SBV made a net injection of 28 trillion dong on OMO.

Vietnam to keep exchange rate stable until year end-cbank

Reuters

Vietnam will aim to keep the exchange rate stable until the end of the year, allowing it to move within a 1 percent band, the central banksaid.

Recent fluctuation of global gold prices, a traditionally strong gold purchase by residents in the last months of the year and domestic goldspeculation have added pressure on the foreign exchange market and exchange rate, the central bank said in a statement released late on Wednesday..

"The State Bank and commercial banks will continue selling foreign currencies for market intervention, meeting fully the economy's necessarydemand for foreign exchange," it said.

A surplus in the balance of international payments, improved state foreign reserves and good liquidity in the banking system will help thecentral bank keep the dollar/dong rate and foreign exchange interest rates stable, the bank said.

On Thursday the central bank sets the mid-point for dollar/dong transactions at 20,648 dong per dollar, down 0.05 percent from 20,638 onWednesday and 20,628 on Tuesday. The Tuesday rate had been kept unchanged since August 24.

Vietnam recorded a surplus of more than $5 billion in its balance of payments at the end of July, after a deficit in the first quarter andhigh surplus in the second quarter, the central bank said.

The surplus came after improvements in Vietnam's current account and the capital and financial accounts, said the statement posted on thecentral bank's web site (www.sbv.gov.vn).

Vietnam reported a current account surplus of $1.3 billion in the first seven months, compared with a deficit of $3.2 billion in the sameperiod last year.

Vietnam's trade deficit narrowed to $403 million from a deficit of $2.94 billion in the second quarter and a deficit of $3.5 billion in thefirst three months, while foreign direct investment at the end of September stood at an estimated $6.1 billion, similar to the same time last year, the central bank said.

Foreign indirect investment at the end of last month rose to $1 billion from $940 million a year ago, the statement added.

Vietnam's trade deficit this year will narrow to around $10 billion with exports expected to continue along a strong growth path to reach$95 billion by year's end, a state-run newspaper reported on Wednesday.

Vietnam State Bank Authorises More Gold Imports As Prices Soar

Vietnamnews

The State Bank of Vietnam has designated businesses that will be allowed to import additional gold in an effort to cool down the domesticprice.

The bank said on Monday that gold price had dropped to its lowest level in weeks to just $1,532.45 per ounce on global markets - from a recordhigh of $1,920 per ounce on September 6 - leading to dramatic fluctuations on the domestic market. The result has been a domestic gold price that has remained for weeks much higher than the world price.

At the same time, the exchange rate between the dong and the US dollar also spiked dramatically on the black market, rising to 21,300 dongper dollar, even as interbank and official rates remained at 20,628 dong and 20,834 dong, respectively.

The new gold imports, by increasing supply, were expected to help stabilise some of these fluctuations.

However, Nguyen Thanh Truc, general director of Agribank Gold Joint Stock Co., warned that gold traders would continue to be able to settheir own prices without management from authorities, and some companies might continue to hold supplies back from the market, contributing to price manipulation.

By late yesterday, DOJI Gold and Germs Group was posting buy/sell prices of 45.05-44.6 5 million dong per tael, while the world spot priceon the London Bullion Market was $1,649.90 an ounce. The black market foreign exchange rate had also eased back to 21,270 dong per US dollar.

Eximbank general director Truong Van Phuoc said that it was necessary to import more gold to cool down the overheated domestic market, notingthat domestic commercial banks were holding a significant quantity of US dollars, so the additional gold imports would not affect foreign currency reserves.

Individuals and organisations who wanted to do business in gold jewellery or artworks would be required to establish enterprises and meetseveral stringent requirements, he added. Meanwhile, the central bank has warned investors to be wary of speculation and manipulation when trading in gold.

ENERGY – IAEA pledges to help VN develop nuclear power

Businessasia.com

Nuclear energy is for not only developed countries but also developing countries like Vietnam which can implement and apply nuclear energyin its economic development, said IAEA Director General Yukiya Amano.

Director General of the International Atomic Energy Agency (IAEA) Amano made this statement to Deputy Prime Minister Vu Van Ninh at a receptionin Hanoi on Oct. 3.

Amano spoke highly of Vietnam’s efforts to apply nuclear energy into socio-economic development and said he believes that Vietnam will soonbe successful in the field.

He said he hoped the cooperation between IAEA and Vietnam will be further accelerated and more effective.

Deputy PM Ninh said Vietnam’s relatively fast economic development has produced an increasing demand for energy and nuclear energy is a solutionthat Vietnam needs in the future.

Vietnam pledges to apply nuclear energy to its socio-economic development for peaceful purposes, said the deputy PM.

He said he hoped IAEA will continue assisting Vietnam in finalizing a law on ensuring nuclear energy safety, building nuclear energy infrastructure,completing management apparatus in the field and sharing experience in applying nuclear energy in socio-economic development.

At another reception for IAEA Director General Amano, in Hanoi on the same day, Foreign Minister Pham Binh Minh asked the IAEA to continueto help Vietnam, especially in the implementation of the nuclear power program to serve the country’s socio-economic development.

Minh spoke highly of IAEA’s role and contributions to coordinating international efforts in promoting the use of nuclear energy for peacefulpurposes and strengthening nuclear safety and security.

He affirmed that while advocating and joining international efforts for nuclear disarmament and nuclear non-proliferation, Vietnam treasurescountries’ legitimate rights to use nuclear energy for peaceful purposes, with safety and security as top priorities.

Amano spoke highly of the cooperation between IAEA and Vietnam and praised the Vietnamese Government’s effort in ensuring nuclear safetyand security as well as using nuclear energy for peaceful purposes.

He also pledged further support to Vietnam in developing nuclear power for peaceful purposes in the future.

POWER -EVN ensures sufficient electricity supply till year-end

Vietbiz24

In the first nine months of this year, Electricity of Vietnam (EVN) has ensured the electricity supply in the southern region during thegas cut period of Nam Con Son plant (from September 15 to 30, 2011).

In Jan-Sept., accumulated electricity output of the whole system reached 81.154 billion kWh, rising 9.2% over the same period last year.

EVN’s electricity production and purchase in Jan-Sept. was estimated at 79.335 billion kWh, up 9.89% year on year, including electricityproduction of 37.343 billion kWh (up 12.49% y-o-y) and electricity purchase of 41.992 billion kWh, a year on year increase of 7.67%.

The group’s commercial electricity was 70.228 billion kWh, up 11%, of which, electricity supply for industry-construction increased 13.67%,power supply for commercial-services was up 9.95% and electricity supply for consumption increased 6.98% on year.

Overall, in the first nine months of this year, the electricity supply has gained more improvements than in 2010 thanks to favorable weatherconditions and more reasonable regulation of electricity load.

Also in Jan-Sept., EVN put into operation eight hydropower turbines in five projects with a total capacity of 1,565 MW.

As expected in October 2011, the load of the whole power system would reach 307.3 million kWh per day with the biggest capacity ranging 16,000-16,300MW. Also in October, the group will suspend PM3 gas supply for maintenance from October 8 to 22, 2011.

To ensure the stable operation of power system, EVN will mobilize maximum resources of coal-fired thermo power, gas turbines and power purchasefrom China.

EVN estimates the power production and purchase in the remaining three months of this year would be 27.3 billion kWh, of which commercialelectricity would be about 24 billion kWh.

Thus, this year, EVN’s electricity production and purchase this year would reach 107 billion kWh, of which, commercial electricity wouldbe 94.2 billion.

EVN to kick off construction on Mong Duong 1 thermo power plant in Oct

Vietbiz24

In its report on investment activities and business production in the first nine months of this year, Electricity of Vietnam (EVN) said thatin October it would start construction on Mong Duong 1 thermo power plant.

This will be the group’s key task in the last quarter of this year together with the kickoff of construction on Duyen Hai 3 thermo powerplant and preparation for the operation of official competitive electricity market as from January 1, 2012.

Mong Duong 1 thermo power plant invested by EVN will be one of two plants of Mong Duong Power Centre under the national electricity developmentscheme during 2006-2015, including vision till 2025 approved by the prime minister.

The plant with total capacity of 1,080 MW, including two turbines, will be built in region 3, Mong Duong ward, Cam Pha town in the northernprovince of Quang Ninh.

On September 15, EVN signed construction contract for the main plant of Mong Duong 1 thermo power plant project under the EPC (Engineering-Procurement-Construction)model with Korea-based Hyundai Engineering and Construction Co.Ltd contractor.

The total contract value is $1.274 billion, including design, supply, installation, trial run, hand-over, maintenance and insurance.

As planned, the first turbine of the plant will be handed over and put into commercial operation after 40 months of construction (in Q1,2015) and the second one after 46 months (in Q3, 2015).

RESOURCES - 2012 LPG consumption to rise 6.8pct on year: PetroVietnam

Platts

Vietnam's LPG consumption in 2012 is expected to rise 6.8 percent year-on-year to 1.257 million mt, according to a report released Wednesdayby state-owned oil and gas company PetroVietnam.

Of the total consumption, it is estimated that 44 percent or 550,000 mt, will be supplied locally while the remaining 56 percent will comefrom imports.

In 2010, PetroVietnam subsidiary PV Gas accounted for over 50 percent of the Vietnamese LPG market of 1.2 million mt. Platts reported September19 that the company plans to raise its local market share to 75-80 percent in the near future.

Nearly 46 percent of the country's LPG demand is met by domestic supplies from Binh Son, a wholly owned subsidiary of PetroVietnam and theoperator of the country's sole 6.5 million mt/year (130,000 b/d) refinery at Dung Quat in Quang Ngai province; and by PV Gas South's 350,000 mt/year Dinh Co gas processing plant in the southern province of Ba Ria Vung Tau.

Meanwhile, in the first 8 months of 2011, Vietnam imported 550,036 mt of LPG, up 36 percent compared with the same period last year, accordingto data released September 20 by the general Department of Vietnam Customs. The total value of the imports was $508 million, up 70.5 percent from the same period in 2010.

For the period, the country's main LPG suppliers were China (220,000 mt or 40 percent of total imports), United Arab Emirates (132,000 mtor 24 percent) and Australia (75,000 mt or 13.6 percent), customs data showed.

"The Vietnamese import the greatest volume of pressurised LPG from ports like Shenzhen and Zhuhai in South China because freight costs aremost economical there," an LPG trader said Wednesday.

Said another LPG trader: "Vietnam does not export that much LPG currently so the increased import volumes are definitely meant to meet growingdomestic demand.

"We haven't seen that many refrigerated LPG sell tenders from PV Gas this year, so local demand must be strengthening with more product keptfor domestic use."

Vietnam's increased LPG import volumes for 2011 come on the back of several outages at the Dung Quat refinery through the year, which haveled to supply problems of LPG in the country.

In late March, the refinery was shut for two weeks of repairs and an "overall check," according to a source at Vietnam's Ministry of Industryand Trade, which watches over the country's oil and gas industry.

The entire refinery was shut again July 15 for maintenance due to to unspecified minor problems and restarted August 29. After the restart,the refinery was expected to return to full capacity about 10 days later, or around September 4, according to Nguyen Hoai Giang, general director of the refinery operator Binh Son Company Limited.

However, Platts reported September 1 that the Dung Quat refinery, which was operating at 60-70 percent of capacity immediately after therestart, would only hit full capacity in mid-September.

Vietnam’s RON 92 gasoline retail price lower than Laos

Vietbiz24

In August, RON 92 gasoline price declined 2.34% from July. In September, the price went down, according to the petroleum market news in Septemberof Vietnam National Petroleum Corp (Petrolimex).

Accordingly, the average price of WTI oil in September reached $85.97 per barrel, down $0.39, or 0.46% from August. The Brent oil averageprice in September reached $109.46 per barrel, down $0.43 or 0.39% month on month.

The retail price of RON 92 gasoline in some regional countries currently according to the forex rate on October 4 as follows:

In Laos (Lao State Fuel Co): 10,580 Kip/liter, equalling to 27,211 dong/liter

In Cambodia (SOKIMEX Co): 5,350 Riels/litter, or 27,322 dong/liter

In Singapore (SPC): 2,030 S$/liter, or 32,131 dong/liter

In China: 7,990 NDT or 25,888 dong/liter.

Thus, the RON 92 gasoline retail price in Vietnam is lower by 6,411 dong/liter than that in Laos, 6,522 dong/liter than Cambodia, 11,331dong/liter than Singapore and lower 5,088 dong/liter than China.

The different retail price of petroleum in each country was attributable to different management mechanism of petroleum of each nation.

EVN owes 10.1tr dong to PetroVietnam: Official

Vietbiz24

Till date, Electricity of Vietnam Group (EVN)’s debts to Vietnam Oil and Gas Group (PetroVietnam – PVN) have amounted to 10.1 trillion dongcompared with the last month’s figure (8 trillion dong), Tran Quoc Viet reported at a 9-month conference briefing s of the Vietnamese Ministry of Trade and Industry on Oct. 3.

Viet expressed his concern that if EVN’s debts payments are not definitely finished, this will impact negatively on the equitization of subsidiariesof PetroVietnam. Meanwhile, as for each coal-fired thermal power project, PVN has to spend a significant amount of capital.

“If this situation lasts long, it will surely cause difficulties for the calling of our capital,” Viet complained.

Deputy Minister of Industry and Trade, Le Duong Quang said that because of too young competitive electricity market of Vietnam, EVN couldnot avoid challenges. Quang suggested the parties should closely discuss together and cooperate with the Government as well as ministries to solve problems for EVN for sake’s common development.

Quang said that EVN’s debts are no longer a new issue because the Government has also directed to deal with this. The nature of electricityprices is not appropriate, leading to the above difficulties.

To date, the EVN has still owed PVN and Vietnam National Coal and Minerals Industries Group (Vinacomin) about 11.1 trillion dong and is alwaysreporting big losses.

In the next plan, Deputy General Director of EVN Nguyen Tan Loc, said in the fourth quarter of this year, EVN is determined to ensure enoughelectricity for socio-economic development. It is expected that EVN will produce and buy a total of 107 billion kWh this year, of which commercial electricity reaches 24 billion kWh in the fourth quarter and 94.2 billion kWh in the whole year.

PROPERTY - Vietnam's once-hot property market cools

AFP

Four years after a real estate boom that saw investors camp out on the streets waiting to pay cash for unbuilt apartments, Vietnam's once-hotproperty market has caught a chill.

High inflation and interest rates along with a government-imposed credit squeeze have led to a fall in prices and other incentives to enticeresidential buyers, while office tenants benefit from a glut of space, experts say.

"The market is really, really, really tough," said Brad Gee, director of property management at the 68-storey Bitexco Financial Tower inHCM City.

The skyscraper opened late last year and now has tenants in more than 40 percent of its office space.

"Obviously we have to drive hard bargains" on rents, but so does everyone else in the market, Gee said.

Monthly rents for top-quality office space in HCM City have dropped to less than half the roughly $100 per square metre ($9.30 per squarefoot) obtainable during the market's peak in 2007-2008, said one leasing manager.

Bitexco and two other recently completed towers also offering prime "Grade A" space have added to what analysts see as an over-supply inthe city, Vietnam's commercial capital of more than seven million people.

The residential sector is also hurting, they say, because of high interest rates as Vietnamese authorities strive to tame soaring inflation.

"The banks are being restricted in lending to property firms, to non-manufacturing industries, and when they are able to lend it can be between20 and 25 percent interest," said Craig Wallace, of property consultants DTZ.

"With that, we cannot produce, we cannot invest in property development," said Le Hoang Chau, chair of the HCM City Real Estate Association.

At the same time prices of luxury apartments in the city fell more than 17 percent between late 2010 and mid-2011, to around $1,500 per squaremetre, according to the organisation.

But while some property is becoming more affordable, many would-be home owners are caught in the credit squeeze, unable to get mortgagesexcept at exorbitant rates.

Thai Quang Trung, manager of research at real estate services firm Jones Lang LaSalle, found himself caught up in the problems that he studies.With apartment rents high, he thought about buying his own home but was deterred by financing concerns.

Trung suspects that many other young people would be in the same situation if they depend on their own salaries to finance a home purchase.

"I'm just going to continue to rent," he said.

Long focused on economic growth, Vietnam in February shifted to stabilising an economy beset by double-digit consumer price rises, dwindlingforeign reserves and a weakening currency.

Measures included higher interest rates, a vow to cut state spending, and an order that growth in credit, or loans, stays below 20 percent.

Economists insist the government must stick to its stabilisation package to control the country's numerous economic imbalances includingan inflation rate that exceeds 20 percent, the highest in Asia.

"The government measures have really hurt the property industry in terms of pushing up interest rates," said Wallace.

Analysts say fewer projects are being launched.

"Obviously we've seen some projects being delayed. They try to avoid being on the market right now," said Trung.

Singapore-based CapitaLand, one of Asia's largest real estate firms, said its first Vietnam residential project The Vista condominium inHCM City - which saw buyers lining up at its launch during the 2007 property boom - was completed on schedule in September.

But Yip said the company was assessing the market before offering units for sale at another high-end development in the city, where the foundationshave already been finished.

For buildings already put on the market during the downturn, developers are offering lower prices, financing incentives and even lucky drawsand furniture, analysts said.

"I think that the real estate market situation will continue to be difficult... for the investors as well as consumers," said Chau, whoseassociation has asked the government to gradually reduce interest rates.

The industry is looking to next year for possible relief.

DTZ's Wallace expressed hope that an easing of some government policies might occur early in 2012, with a drop in interest rates, while Geesaid his "gut feel" was the downturn could last until the first quarter.

Huynh Buu Tran, head of sales and investments for Jones Lang LaSalle, said the market's potential was reflected in Vietnam's steady economicgrowth rate and population of about 86 million, more than 60 percent of whom work.

"A lot of that are young couples, and they all aspire to have their own home," she said. "So fundamentally in the long term I think there'sstill a lot of growth."

INFRASTRUCTURE - Another urban railway project to be submitted for approval in Q4

Dan Tri

Hanoi Urban Railway Management Board announced to complete the detailed project of Nam Thang Long-Tran Hung Dao urban railway route so asto submit the city's government authorities for approval in Q4.

The urban railway route will have total length of 11.5 kilometres, of which there are three overhead stations and seven underground ones,starting from Nam Thang Long (Ciputra urban area) to crossroad of Tran Hung Dao St-Hang Bai St, running through streets of Nguyen Van Huyen, Hoang Quoc Viet, Hoang Hoa Tham, Thuy Khue, Phan Dinh Phung, Hang Giay, Hang Duong, Hang Ngang, Hang Dao, Dinh TienHoang and Hang Bai.

In 2020, the transportation capacity of this urban railway route would be 30,430 passengers per hour and more than 45,000 passengers perhour in 2040.

At present, Hanoi has carried out construction project of Nhon - Hanoi Station urban railway route. The project was expected to finish in2016 with total length of 12.5 kilometres.

Office buildings have difficulty finding tenants

Saigon Times Daily

New office buildings have lowered leasing prices to attract tenants to fill up space given ample supply, said a property market expert.

Adam Bury, head of research and consulting for CB Richard Ellis Vietnam (CBRE), said some new Grade A office buildings needed to reconsidertheir leasing strategies if they wanted to attract clients.

HCM City's tallest building Bitexco Financial Tower, for example, has 37,000 square meters of office for lease, but its occupancy is only35 percent after its opening in November last year. Similarly, Vincom centre on Dong Khoi Street has occupancy of 50 percent among its 80,000 square meters for lease after the building was put into service in April last year.

Some other Grade B office buildings such as REE Tower in District 4, Dragon Tower in Nha Be District and Maritime Bank Tower in District1 that have just come into operation are still looking for tenants.

It normally takes office building owners at least two years to have the total office space filled up, especially when the supply is higherthan the demand like it is now.

Office leasing prices in all grades continued to go down in the third quarter against the previous quarter. The price of Grade A office droppedslightly to $34 per square metre while that of Grades B and C is $18 and $15 respectively, according to CBRE.

This is the 8th quarter in a row to see a drop in office rent in HCM City. Prices of grades A, B and C offices have gone down by around 7percent, 8 percent and 9.5 percent respectively from the same period last year.

Vacancy is still high despite a drop in prices, at around 31 percent for Grade A, 18 percent for Grade B and 10 percent for Grade C. HCMCity now has about 1.8 million square meters of office space for lease in all grades.

Tenants seem to prefer smaller offices of less than 250 square meters each, contributing to a drop in demand, said Bury.

There was some 39,000 square meters of office space occupied in the third quarter and 120,000 square meters in the January-September period.The figures were much lower than 220,000 square meters last year.

The office leasing prices in HCM City might fall further in the future due to current tough market conditions, according to some market observers.

Tokyo to build water purification plant in Hanoi

VOV

A Tokyo based business will establish a joint-venture with a clean water company in Vietnam to build a large-scale water purification plantin Hanoi, announced vice Governor of Tokyo, Naoki Inose, on October 4.

As scheduled, TSS, a clean water company based in Tokyo, and Japan's Metawater Co. Ltd, will co-ordinate with Hanoi Water Supply Companyand a local construction company to set up the joint-venture.

The new plant will be built in 2012 with total investment estimated to reach 10-20 billion yen (equivalent to $130-260 million). Vietnamwill contribute 50 percent of this investment. Currently, the Japan International Cooperation Agency (Jica) is considering a financial contribution to the project. In the initial years of operation, the plant is designed to produce 150,000 cu.m, and will increaseits capacity to 300,000 cu.m by 2020.

TSS will take an active part in the management of the plant and will directly supply the world-standard technology to prevent water loss.

Vice Governor of Tokyo, Naoki Inose said this is the first time local authorities in Japan will directly participate in a clean water supplyproject in a foreign country. Previously, Osaka city got involved in the construction of a water purification plant in HCM City, but only assisted in the field of technology rather than management.

Currently, the clean water demand of Hanoi is estimated at approximately 550,000 cu.m per day. However, the demand is predicted to increaseto 1-1.5 million cu.m per day due to urbanisation and an increase in the number of businesses, leading to a potential risk of lacking clean water supplies.

LEGAL NEWS - Tax changes save small firms time and money

Vietnamplus

The government has approved a general Department of Taxation proposal to extend the declaration of value added tax (VAT) for small- and medium-sizedenterprises (SMEs) and family-run businesses.

Under the Resolution 68/NQ-CP recently released, SMEs will only have to declare VAT every quarter starting January and family-run businessesevery six months. Previously, companies had to declare VAT every month.

Director of the Department of Administrative Reforms under the government Office, Ngo Hai Phan said the extension is part of a tax reformprogramme to help SMEs and family-run businesses pay dues more easily, while saving both time and money by reducing the amount of required paper work.

Phan said that the total VAT paid by most of these small companies is very modest. Therefore, requiring all businesses to declare and paythe tax every month is not necessary and burdensome.

The extension has been popular in other countries. Tax agencies of the Republic of Korea, for example, still supervise tax payments everyquarter or every six months of SMEs with a yearly turnover of less than 46,600 USD.

Phan said the government has also instructed the general Department of Taxation (GDT) to set a tax threshold earlier so that only businesseswhose earnings are above the threshold would have to declare VAT on a defined percentage of their revenue. Those with turnover below the threshold will be allowed to pay a fixed rate for the entire year.

The Department of Administrative Reforms estimated that the new policy would directly affect more than 500,000 companies, 1.8 million family-runbusinesses and millions of employees, as it will help the firms save more than 600 billion VND (30.7 million USD) per year.

Nguyen Khuyen, director of the Tam Thinh Trading Co, a family-run business in the capital's Tay Ho District, said his company previouslyhad to pay roughly 3 million VND in tax declarations every month, while their monthly turnover is only about 40 million VND.

"With the tax declaration extension, our business performance will improve as we can use the savings to pay for other input costs," Khuyensaid.

According to the GDT, SMEs are businesses whose charter capital is less than 10 billion VND. Accounting for 98 percent of all Vietnamesecompanies, SMEs contribute more than 40 percent to the country's GDP and use more than 50 percent of the country's labour force.

The department has so far simplified 271 out of 330 administrative tax procedures, saving 1.9 trillion VND per year (97.4 million USD). Oneof the most significant changes, which took place early this year, is to allow companies to print and use their own invoices. That alone saved 400 billion VND (20.5 million USD) per year.

Preferential import tax rates for Asean products

VnExpress

Automobiles, steel, silver, gold, precious stone, milk, food stuff and many other items from Asean countries will enjoy preferential importtax rates.

The Ministry of Finance is currently conducting a poll on import tax rates on items imported from Asean. Accordingly, those for condensedmilk, liquid milk, and yogurt may either be zero or 5pct. Similarly, cereal products.

The common import tax is zero for cereal products, vegetable and fruit powder and extract, vegetable oil, fruit juice, siro, kid items and5pct for some others. Imported edible salt and sea salt are expected to be taxed at 5pct and ore, coal and crude oil zero.

With respect to petrol products, the Ministry of Finance is proposing 20 percent tax rate for gasoline Ron 97 and Ron 90. Finished oil andpetrol products, however, are taxed at 5pct.

Also, the agency put forward the zero import tax for unprocessed and semi-finished jewellery, precious metal, gold, silver and the like.

The above tax rates are applicable to imports from nine Asean countries including Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Philippines,Singapore and Thailand within three years (2012, 2013 and 2014).

The import tax on nine-seat autos for carrying people is anticipated to be 70pct in 2012, 60pct in 2013 and 50pct in 2014. Specialised carssuch as ambulances, cars to transport prisoners, trucks will be taxed as low as zero-5pct.

It is also revealed that several types of imported automobile will enjoy the preferential zero rate under the tax reduction roadmap till2018. In addition, import tax on all types of autos will be slashed to 70pct after seven years' WTO membership in 2014, 47pct in 2017 and even lower till 2019, according to WTO commitments.

Foreign diplomats urged to re-register for cars

Tuoi Tre

The Ministry of Public Security's Road and Railway Police Department has urged 521 foreign diplomats to re-register for their cars whoseuse has been expired.

According to the department, many diplomatic cars have recently been sold to people who are not eligible for diplomatic immunity to continueto use without re-registration, causing a loss of billions of dongs (VND1 billion = $48,000) in import taxes and registration fees.

The department said those who fail to re-register for their cars would be penalised according to laws.

According to an estimate of the Ministry of Finance, about 1,200 diplomatic cars are being used for wrong purposes or by people who are notentitled to use such cars.

For example, Phu Tho Province's Police Department are detaining 4 cars and 13 motorbikes bearing diplomatic number plates that have beenbought or borrowed by Vietnamese citizens from members of foreign diplomatic agencies in Vietnam.

The Phu Tho police said it had asked the Foreign Ministry to verify the ownerships of these vehicles.

Firm caught red handed

VIR

A big Japanese-backed firm has been hit by giant tax in arrears bills twice due to trade fraud.

Sanyo Ha Asean (SHA), which produces washing machine, refrigerators and air-conditioners, was said by Dong Nai province's Customs Agencyto have to pay VND7.2 billion ($360,000) in tax in arrears for its air-conditioner component packages imported from March to July, last year. So far, SHA has yet to pay back this sum.

The firm, which was unavailable for comment when contacted by Vietnam Investment Review, was reported by the agency to have another electricsfirm, namely Gree Vietnam, disassemble completely-built air-conditioners into separate components outside Vietnam and then import them into the country via Binh Duong and Dong Nai customs offices. Gree Vietnam then resold the components to SHA.

A Dong Nai Customs Agency official explained to Vietnam Investment Review that separated components were subject to much lower import taxrates than completely-built units.

This is not the first time SHA has reportedly resorted to trade fraud. Between 2007-2008, this firm was discovered to have incorrectly declaredtax codes for its sets of imported air-conditioner components. Specifically, the firm must imported sets of components into Vietnam and then reassembled them into completely-built air-conditioners. However, it disassembled the sets into separated componentsand then imported into Vietnam via Dong Nai's customs office in different points of time. However, the firm's actions were detected and it was forced to pay tax in arrears worth total VND66.9 billion ($3.345 million). SHA already paid the sum.

The Ministry of Finance said the firm had not yet fully understood Vietnamese law. However, the customs official said: "It is the firm'simporting separate components into Vietnam to enjoy low tax rates that has reflected a fact that the firm has studied the country's tax law very carefully."

He said the firm should be imposed a heavy penalty.

He added that there had been some other cases similar to SHA's in Dong Nai. All were foreign invested enterprises.

An industry insider told Vietnam Investment Review: "The firm's action is definitely wrong. When doing business, one should follow the market'sregulations, even if the regulations are tough. Doing business also means that we have to pay taxes. Why did the company try to violate the regulations? The answer is that such trade frauds can bring more profits."


	Oliver Massmann Partner

Oliver Massmann

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