Vietnam - News and Regulations

Vietnam - The only country on earth which walks the talk?



Vietnam supports its citizens via PIT exemption for 6 month

(Authors: Oliver Massmann, Giles Cooper, Partners at Duane Morris Vietnam LLC)



Given the financial crises and its results for the financial markets Vietnam was like every other country thinking about a solution which boosts the economy and encourages investments. Based on these aims Vietnam became aware of the fact that displayable money is needed.



Most people of Vietnam have a job but they are still too poor to spend their money without any reasonable care. Investors watch the market carefully before they place their money into a county’s market.



Therefore the National Assembly came to the conclusion that the easiest way of supporting its citizens could be achieved by an exemption of their duty to pay Personal Income Tax (“PIT”). For this reason Vietnam decided as first and only country in the world to exempt its citizens from the PIT for 6 month.



The basic idea behind the PIT deferral resulting in a surplus of money is that the surplus of money will stir people into spending their money and so boost the market. In order to that a mobilization of the capital needed for investment will be arranged.



For this purpose a governmental bond worth of 20,000 billion VND was issued as well which should stimulate the development of transportation, healthcare and other kinds of investment projects.



In addition, the National Assembly decided to amend the GDP growth target for 2009 to 5% and the CPC ratio of less than 10% as well as export increase of 3% and the national budget's over-expenditure of less than 7%.



The PIT exemption stipulates the deferment of PIT from 1 January to 30 June 2009. To guarantee the achievement of the underlying aims the exemption is applicable to nearly the whole income which is normally assessable. The beneficiaries are resident and non-resident persons.



In the case of residents the exemption covers business activities, salaries and wages, income resulting from capital investments or transfers as well as its security transfers, royalty or franchise activities, inheritance and any kind of gifts.



In contrast, the non-residents just benefit from the tax exemption of their income from capital investments and capital transfers (including security transfers). The reason for this is crystal clear: They do not deal with business activities in Vietnam but abroad. For this reason the different treatment is no disadvantage.



Beyond that, PIT exemption shall probably continue from 1 July 2009 to the end of 2009.



Formally this proposition has already been advertised by circular 2009 27/2009TT-BTC dated on 6 February 2009. Finally it has been granted by the decision of the National Assembly which agreed in the afternoon of 19 June 2009 to the idea of the exemption.



The whole process will have a huge influence on Vietnam’s market development.

In fact, Vietnam is the only country on earth which exempted all its citizens from the duty to pay income tax. In contrast to other governments the Vietnamese government walks the talk. Its decision is unique in the world and shows how the government is willing to back up its country. This should be appreciated from all citizens as well as from the investors which enjoy the benefits.









INSURANCE - ACE Life's Q3 revenue up 64pct



ACE Life Insurance Ltd Co (ACE Life) has recently officially reported business results with a growth of 64 percent in insurance premium in Q3.

Totally, ACE Life's total premium in Jan-Sep reached nearly 319 billion dong, up 54 percent against the same period last year.

Along with impressive business results, ACE Life also reached high contract maintenance ratio. The ratio of cancelled contracts accounted for only 3 percent.DTCHK





HEAVY INDUSTRY - Finally, Tata Steel gets land in Vietnam for $5b project



Decision to allocate 725 hectares comes after a long delay.

After two years of waiting, Tata Steel will get alternative land in Vietnam for building a 4.5 million tonne a year steel plant with an investment of $5 billion. The board of Vung Anh Economic Park has proposed allocation of 725 hectares to Tata Steel and its Vietnamese partners in the central province of Ha Tinh.

Tata Steel's spokesperson told Business Standard the proposal had been accepted by the company. Under the proposal, 700 hectares would be used for construction of a steel plant with a designed capacity of 4.5 million tonnes a year, Indronil Sengupta, Tata Steel's executive manager of projects in Southeast Asia told Vietnamese media.

The Indian steel maker has a 65 percent stake in the venture, while Vietnam's Steel Corporation and Vietnam Cement Industries Corporation hold 30 percent and 5 percent, respectively. Under the terms, the steel venture was supposed to get a 30 percent stake in the Thach Khe iron ore mines.

The venture had been dogged by delay in acquiring land and tying secure supplies of iron ore. A memorandum of understanding for the project was signed in May 2007 and the joint venture (JV) agreement was reached in August 2008. The land that had been identified by Tata Steel was given away to a Taiwanese company. The JV wanted a 2.2 km stretch of shoreline. Tata and its Vietnamese partners have completed procedures for the project and were waiting for an investment licence.

Tata Steel officials earlier said it would take at least 30 months to complete the first phase of the project. Sources said the first phase would be completed by 2012, the second by 2013-2014 and the third by 2017-2018. Implementation of the third phase will also depend on the market situation and operational conditions of the Thach Khe mine.

The company plans to start with a cold rolled mill (CRM), as it will take time to develop the mine. Until it can achieve backward integration by establishing a plant to make hot rolled coils, the CRM plant will source the raw material locally.BS



POWER - Electricity surcharge in year end predicted to surge



Electricity of Vietnam Group (EVN) lately announced that from now to the end of the year, there would be a sharp increase in electricity surcharge in the end of this year, together with the development growth of industrial sectors. It's predicted that in year end, the average output of the national power network may reach 245-247 million KWh per day and the maximum capacity of 13,100-13,400 MW.

In order to meet the power demands of the whole country and to prepare water reserve for the dry season of 2010, EVN has asked the hydropower plants in the northern region to closely follow the hydro-metrological forecast to limit the exploitation works in order to retain the highest water level, especially in the end of November; and to maximise the working capacity of other coal-fed, gas-fuelled power plants.

In the first ten months of this year, the total power output that EVN has produced and purchased from other plants outside EVN's network was posted at 69.795 trillion KWh, fulfilling 85.85 percent of the year plan. In details, the total electricity output supplied by EVN's member companies was 47.478 trillion KWh, up 7.04 percent year-on-year; and the electricity purchased from EVN non-member power plants of 22.31 billion KWh, increasing by 25.76 percent against the same period of last year, in which those purchased from China was 2.302 billion KWh, up 17.2 percent.DT







TELECOM INFRASTRUCTURE - EVN Telecom officially launches new marine cable system



Vietnam Electricity Telecommunication Co (EVN Telecom) on November 6 officially launched the inter-Asia submarine optical cable system (IACS).

IACS is the trans-Asia marine cable system that EVN Telecom directly cooperated with India-based TATA Communication Co. The system offers a data transmission speed of 3.84Tbit/second.

The project's initial investment capital was posted at $200 million, in which EVN Telecom contributed $50 million.

The total length of the system was 6,800 kilometres, connecting Singapore, Vietnam, the Philippines, Hong Kong and Japan. In Vietnam, the system hooks into the national network in the southern coastal province of Ba Ria-Vung Tau with the initial usage capacity of EVN Telecom of 50Gbps.TBKT