What has Vietnam gained after 10 years of WTO membership?
While foreign experts say that Vietnam gained more than it lost after joining the World Trade Organization (WTO), some Vietnamese experts say the opposite.
Pascal Lamy, former Director General of WTO
Speaking to Tri Thuc Tre on May 15, Pascal Lamy, former Director General of WTO, stuck to his opinion that Vietnam has gained more than it lost as a WTO member.
Vietnam has been a member of WTO for the last 10 years, during which it has gained great achievements. Lamy said that Vietnam is a success story as it can fully exploit its comparative advantages.
The advantages, as Lamy pointed out, are the high quality of the labor force and productivity. The industries where Vietnam has advantages include electronics, textile & garments, and farm produce.
Vietnam has been developing strongly thanks to expansion of relationships and reform policies, while the market opening has brought big benefits.
Looking back on Lamy’s comments in the past to the local press in 2007, when Vietnam officially because a WTO member, and in 2010, he has had a consistent opinion.
Huynh The Du from the Fulbright Economics Teaching Program (FETP), however, commented that in the last 10 years, Vietnam has lost in the home market.
The expert thinks that Vietnam has suffered from the so-called Dutch disease. Vietnam does not lack capital as a huge amount of money has been pumped into the economy, but the money has been flowing into property speculation, thus distorting the national economy.
The view has been advocated by other experts, including Vo Dai Luoc, former head of the Vietnam Economics Institute.
Imports/exports have been increasing but the achievements belong to foreign invested enterprises, not Vietnamese.
“Though exports from Vietnam have higher technology content and the products are more diverse, the products’ added value remains modest,” said Vo Tri Thanh from the Central Institute of Economic Management (CIEM).
Regarding the trade deficit, Thanh said the situation has improved after 10 years of WTO membership, but the ratio of trade deficit to GDP and on total import/export turnover remains low.
While other WTO member countries can take full advantage of WTO membership to export their goods to Vietnam, Vietnam still cannot fully exploit opportunities to export products to other WTO member countries.
“The WTO member status has exposed Vietnam’s weak points,” Thanh commented.
Meanwhile, Le Huy Khoi from the Trade Research Institute, said Vietnam’s average GDP growth rate in the last 10 years was lower than that in the pre-WTO period.
Kim Chi, VNN
Thứ Hai, 22 tháng 5, 2017
Ho Chi Minh City estate official ‘rescues’ buildings violating construction permits
Le Van Tan, an official at the Land Registration Office of District 7, looks through T.’s papers at his company, April 27, 2017.
With the help of around VND100 million (US$4,400) and a good connection, a hotel built in violation of its permit can be ‘legitimized’ in Ho Chi Minh City.
Last month, T., an estate developer in Ho Chi Minh City, had planned on taking over a small hotel on Nguyen Thi Thap Street in District 7.
According to the building’s construction permit, the hotel is licensed to include one ground floor, one mezzanine, three floors and a partial roof.
However, its previous owner had rebuilt the mezzanine and transformed it into a full floor, with the roof walled to add additional rooms.
Unwilling to demolish the illegal parts of the building, T. got in touch with a ‘broker’ to help him legitimize its papers.
T. met up with a so-called ‘broker’ going by the name of Nam, who advised him to ‘take a shortcut’ with a promise that “if you’re willing to pay, your papers will be done in no time, 100 percent guaranteed.”
Nam introduced T. to Vu Thuy Duong, director of Thai Duong Land, a real estate and construction services company based in District 7.
Scanning through T.’s papers, Duong reassured the man that he could handle the issue, as he had some strings he could pull at the Land Registration Office of District 7.
“You can proceed with the purchase, then send me the files after they’ve been notarized, so I can have my minions sketch the building plan,” Duong instructed his client. “After that, I will escort you myself to the district authorities to submit the files. You can keep the original copy. Just send me photos of those files so I can forward to the official in charge.”
Duong demanded VND150 million ($6,600) for the deal, 50 percent of which was to be paid once the files were submitted, and the rest once the mission was accomplished.
After T.’s continued requests to meet the official in charge of processing his papers, Duong agreed to set up an appointment between him and Le Van Tan, an official of the Land Registration Office of Distrct 7.
“It’s out of respect that he agrees to meet you,” Duong said. “Tan’s not in the same league as us. He is putting his career at risk even by sitting down with us. It cost him a fortune to get into that position, so the money he gets for legitimizing a house is not worth the risk.”
At 11:00 am, Tan arrived at the designated location for the meeting and began looking through the papers handed to him by T.
“I already told you that I can get this done,” Tan assured T. “Some serious violations may have to be pulled down, but I can pull some strings to have them left intact.”
Duong said that Tan was the official directly in charge of approving T.’s papers, and that it is entirely in his decision whether the papers are ‘right’ or ‘wrong.’
On April 28, T. visited Tan in his office at the headquarters of District 7’s administration, but was told to wait for him at a nearby coffee store as “the bosses are around.”
Despite his earlier confirmation that he could get the paperwork done, this time Tan said the house T. was about to buy had some serious violations.
“I could skip a few violations if the house was in an alley, but this one’s right at the front,” Tan explained. “Your files will have to go to my boss for approval.”
Tan admitted that he had worked with Duong many times to legitimize multiple house papers.
“I only agree to do it when I know I can,” Tan said. “I can help you with the home’s violations in construction, but I can’t help you with the paperwork to purchase the house.”
When T. complained about having to pay Duong VND150 million ($6,600) for the deal, Tan said the price was a bit too high.
“You should bargain it down a bit, around VND100 million would be reasonable,” Tan suggested.
Tan said he gets VND50 million ($2,200) for his part, but he did not pocket the whole sum for himself.
“I clearly have to share it with my colleagues in charge of receiving and screening the files, and with those who can help speed up the process,” Tan explained. “And then there’s also my boss.”
TUOI TRE NEWS
Chủ Nhật, 21 tháng 5, 2017
Vietnam female player tops Asia chess championships
Vo Thi Kim Phung took the lead of the Asian Continental Chess Championships’ Women’s Category in China on May 19.
Vo Thi Kim Phung
Phung beat Indian Ramesh Babu Vaishali in the eighth round to lead with seven points. She will meet Mary Ann Gomes of India in the next round.
Guliskhan Nakhbayeva of Kazakhstan and Gomes are second and third with 6.5 points and 5.5 points, respectively.
Two other Vietnamese masters Hoang Thi Bao Tram and Pham Le Thao Nguyen sit in fifth and sixth place. Tram tied with Lei Tingjie of China, while Nguyen drew with Gomes in the seventh round. They now both have 5.5 points.
Tram will face Nakhbayeva of Kazakhstan, while Nguyen will play with Swati Ghate of India in the ninth round.
In the Open Category, Vidit Santosh Gujrathi of India leads. He crushed Jinshi Bai of China in the eighth round, leaving him with six points. Gujrathi will next meet Yu Yangyi of China.
Vietnamese representatives, Nguyen Ngoc Truong Son and Tran Tuan Minh are in 18th and 19th place.
Car market to see changes with new regulations
The domestic market will open more widely to foreign cars as enterprises now will not be required to submit as many documents as they did before, as stipulated in Circular No 20/2011.
The Ministry of Industry and Trade (MOIT) has opened the draft decree on conditions for automobile trade, manufacturing, assembling, import and maintenance.
The most important provision of the draft is the removal of the requirement on manufacturers’ authorization certificates as stipulated in Circular No 20/2011.
The circular states that importers of unused cars with nine seats or less, besides performing current import procedures, must be designated or authorized by official carmakers or dealers as their distributors in Vietnam.
The circular had been criticized by car dealers, who said it ‘distorted’ the Vietnamese car market.
Car imports will have to get car import codes from MOIT, and in order to do so, will only need to submit business registration certificates, or investment certificates and documents to prove that they have maintenance units that satisfy requirements.
Bui Xuan Truong from Anycar Vietnam said since June 2011, when Circular 20 took effects, his company, like many other car dealers, have had to stop business.
However, as the requirement on manufacturers’ authorization certificates is removed, Anycar is considering resuming the business.
The representative of another car company said that since March 9, MOIT has not required the certificates on car maintenance units granted by the Ministry of Transport.
“We will look for different supply sources so as to bring to diverse Vietnamese products to satisfy Vietnamese requirements at reasonable prices,” he said, adding that once authorized importers have to compete with other car dealers, they will have to cut car prices and improve services.
An analyst commented that the removal of the requirement on manufacturers’ authorization certificates will stop market control by authorized importers. In general, one manufacturer authorizes one car import company. If the company does not have to compete with others, it will control car prices and consumers won’t have the opportunity to buy cars at low prices.
Some government officials have warned that if the requirement is removed, foreign cars will arrive in Vietnam in large numbers, which will do harm to the domestic market.
However, Nguyen Thi Hien from Toyota Vietnam, in charge of distributing used cars, does not think so.
“If more enterprises are allowed to import cars for domestic sale, car prices will be more competitive, thus bringing more choices to customers,” Hien said.
Since November 2016, car trading has been listed as a conditional business field. However, to date, management agencies still have not released any document about the conditions.
Mai Chi, VNN
Tentative banks slow hi-tech agricultural credit package
There is a VND130-140 trillion ($5.72-$6.16 billion) credit package for hi-tech agricultural projects, however, few firms have been able to access it due to cautious banks.
The guidance on the VND100 trillion ($4.4 billion) credit package for hi-tech agricultural projects was issued by the Ministry of Agriculture and Rural Development (MARD) and the State Bank of Vietnam (SBV). With the participation of nearly a dozen banks, the credit package’s value has increased to VND130-140 trillion ($5.72-$6.16 billion).
However, according to a source of VIR, only a handful of firms can get disbursement from this credit package. Agribank is the leading lending, having provided loans for 18 firms and hi-tech agricultural projects. Many firms said that the banks’ lending procedures are strict, although MARD’s criteria are quite simple.
Responding to firms’ complaints, many banks said that they wish to provide capital for hi-tech agricultural projects, but only a few applicants meet their criteria.
Talking with VIR’s reporters, Nguyen Thi Phuong, deputy general director of Agribank, said that, “When agreeing to finance a firm’s project, banks become project investors. Thus, banks have a vested interest in ensuring that the firms themselves are efficient and the projects feasible and capable of recovering the investment capital in the future.”
Similarly, Nguyen Duc Huong, senior advisor of LienVietPostBank, said that banks have surplus capital and are looking for good projects. If firms have feasible projects with a high likelihood capacity of recovering capital, then garnering investment capital is a simple problem.
Feasibility is key
What firms usually complain about the most when submitting application for loans is the collateral for their projects, because agricultural lands have low value, while the assets on these lands and factories are not considered collateral. Nevertheless, many banks insist that if the projects are feasible enough, they do not ask for collateral.
“We do not require collateral, we just look at the projects’ feasibility and risks involved during all stages of investment, manufacturing, consumption, and the capacity to recover capital,” Phuong said.
Previously, many hi-tech agriculture projects, such as the hi-tech egg processing plant of DTK Phu Tho Co., Ltd, and Ba Huan Co., Ltd, have borrowed hundreds of billion VND from banks without collateral.
To approach these loans, firms have to be transparent and publicise all relevant information, as well as invite banks to participate in the project from the beginning, from the stage of planning, to supervising the projects’ construction, cash flows management, and selling the products.
Nguyen Duy Hung, chairman of The PAN Group, said that if a project has capital but fails to determine the products and market, the possibility of failure is high.
“The foundation for an investment decision in hi-tech agricultural projects is market demand, and only high-value agricultural products can apply hi-technology to the production, as the production cost for these products is much higher than usual,” Hung said.
It is rumoured that many firms are racing to implement hi-tech agriculture projects with the aim of borrowing from the credit package, although the feasibility of recovering capital is not verified.
The market for agricultural products is not stable, while hi-tech agricultural products usually have high selling price, thus, it is more difficult for firms to sell their products.
Therefore, if banks decide to lend too easily, it may lead to huge consequences for firms and banks.
Thứ Sáu, 19 tháng 5, 2017
Transnationals dominate Vietnam personal care market
Large transnational companies have rapidly taken control of the manufacturing and retail beauty and personal care segments of the Vietnam economy, say leading market analysts.
At a recent conference in Ho Chi Minh City, the analysts said the reason is in large part due to lack of investment by domestic sector companies in research and development as well as the latest technologies among other things.
Deputy chair of the Vietnam Essential Oils, Aromatherapy and Cosmetics Association, Nguyen Van Minh said the domestic sector has only a 10% market share though they could easily compete with transnationals in terms of quality but for the lack of equity or debt capital.
Mr Minh said there are only 14 domestic sector manufactures operating in the country. He noted that Korean transnationals hold a 30% market share followed by those from the EU (23%), Japan (17%) and Thailand (13%).
The US and other countries account for the remaining 7%, he added, but the market is dynamic and market shares can change quickly.
According to the latest estimates by market research company Mintel, the personal care retail market in Vietnam is thought to be worth US$1.78 billion, a figure that should grow to US$2.35 billion in the near term.
Although the market is not large by international standards, its rapid expansion is creating opportunities in most personal care categories including body care, colour cosmetics, facial care, soap, fragrances, bath, hair care and sun care.
The growing demand for organic personal care items such as those for natural hair care, skin care and cosmetic products is expected to ignite growth in the personal care market over the short term.
Increasing consumer disposable incomes coupled with changing lifestyles has contributed to the rising demand for chemical-free skin and hair care products by Vietnamese consumers, other analysts at the conference noted.
Consumers are aware of the ability of natural ingredients to provide anti-oxidation properties and improve skin immunity and now with more money in their pockets—that is a major factor fuelling market growth.
Consumers are moving away from petroleum based products in favour of natural products, said Huynh Ky Tran, director of Lan Hao-Thorakao Cosmetic Company, noting that this gives domestic companies an advantage over foreign competitors.
Vietnam agriculture produces many plants that are perfect for the manufacturing segment such as aloe, citronella, saffron, grapefruit and soapberry that his company uses to make their personal care products.
Transnationals have much higher manufacturing and transportation costs than we have in Vietnam, said Mr Tran. The fact that we can buy natural products locally at favourable prices and our manufacturing costs are not as high gives us a competitive advantage in the local market.
Where the 14 companies comprising the domestic sector come up short is in terms of equity or debt capital for investing in research and development as well as modernized machinery and equipment incorporating the latest technological advances.
The domestic sector companies also skimp on marketing expenses and as a result lose out on sales.
Consequently, most of the domestic sector manufacturers produce facial and hand cleansers that are targeted at low income consumers who base their purchasing decisions almost entirely on cost.
A sizeable proportion of domestic manufacturers products, probably around 60%, said Mr Tran, are also exported to poor African countries and low income markets in Laos and Cambodia.