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BUSINESS IN BRIEF 24/2
E&Y
upbeats about VN’s economic prospect
There
is an optimistic prospect for the Vietnamese economy in the coming time. With
growth held down to about 5% in 2012 and 2013, policy makers will target
faster expansion from 2014.
According
to the Rapid-Growth Markets Forecast of the Ernst & Young (E&Y), Viet
Nam ranked 4th among 25 countries which have fastest growth rates and are
vulnerable to seven risks namely current account, external debt, government
debt, inflation, growth in credit to GDP, import cover, and currency change
over year.
The
growth rate is set to pick up to the 7% target by 2016 thanks to the
Government’s effort to reduce the fiscal deficit and use lower inflation to
bring down borrowing costs.
The
multinational professional services firm reported that CPI inflation would
stand at 6.5%; current account balance (% of GDP) 1.6%; exchange per US$
(year average) 21,508 in 2014 and 22,000 in 2015.
E&Y
said that a strong rebound in FDI commitments will underpin the financing of
the external deficit that is expected to reappear from 2015.
This
will calm concerns about the stability of the Vietnamese Dong (VND) that have
resulted from low reserves.
FDI
will promote a shift away from textiles and agriculture, the decline of which
lie behind the widening trade gap in Q4, 2013.
With
capital inflows stabilizing the VND, inflation will continue to subside,
ensuring a return to real wage growth in 2014-17.
Businesses,
State urged to cooperate when joining TPP
The
State and business community should solidly work hand in hand to elevate the
competiveness of Vietnamese goods in the international market, in light of
signing the TPP.
The
Trans Pacific Partnership (TPP) Agreement, which is currently in the final
stages of negotiations, is expected to create both opportunities and
challenges for
The 12
member nation’s expansive market is expected to account for over 40% of the
global GDP and 30% of global trade.
Many economists
are predicting that the TPP may be signed this year and say that businesses
should be actively equipping themselves with knowledge and necessary capacity
to achieve good results in this expanded playground.
Dr
Nguyen Duc Kien, Vice Chairman of the National Assembly Committee for
Economic Affairs said that
However,
to join the playground, businesses need to do their due diligence and improve
their knowledge of the international market place.
Dr
Kien said that many Vietnamese only see the advantages in joining the
international integration process. But the fact shows that there are a number
of significant challenges.
For
example, the Vietnamese garment and textile businesses will witness
spectacular growth in the
Kien
also said that a requirement of joining the TPP, is that businesses should
accept the fact that they have to open up the door for commodities from other
nations to enter the Vietnamese market – for which they may not be able to
compete.
Therefore,
the state and business community should closely cooperate in devising
policies to help Vietnamese products compete in the international market at
the reasonable prices.
Another
of the challenges which
Minister
of Planning and Investment Bui Quang Vinh said the TPP offers
“If
Through
various TPP mechanisms, the Vietnamese markets will open up to other member nation,
which has the potential to result in an expansion of foreign investment
inflow into the country.
One of
the dilemmas the TPP presents to
One of
the conditions of the TPP, however, is that
One of
the practical solutions to this problem is for
Additionally,
Therefore,
as a consequence of joining TPP,
In
2013, Viet Nam imported US$4 billion worth of animal feed and other major raw
materials because its agricultural land has been producing rice rather than
animal feed for years.
The
country exported $3 billion worth of rice in the same year.
With
1,000 pigs on his farm, Tran Quang Trung in Thong Nhat District, the southern
"I
have to import 100 per cent of the soybeans and acid amine, but half of the
maize grains and fish paste are bought from the domestic market," he
said.
Trung's
farm is typical of the Vietnamese animal husbandry industry, where 70 per
cent of animal food is imported.
Last
year, the country spent $3 billion on imported animal feed and another $1
billion on raw materials including maize, soybeans and wheat for animal feed.
In
January this year, 582,000 tonnes of maize, worth $150 million, were
imported, a six-fold increase in quality and 4.6 times the value compared
with the same period last year.
"
"This
is the result of a deviation from agricultural production that has been
underway for a long time.
Animal
feed has been imported for many years, but the authorities have yet to find a
solution, despite the fact that
Lich
suggested that
But
there is an opportunity for
"From
a country that once suffered widespread starvation,
Bamboo,
rattan sector face short supply of materials and capital
Although
it has the potential for development,
Luu
Duy Dan, chairman of the Viet Nam Trade Villages Association, attributed the
lackadaisical performance to poor strategic planning in the domestic
handicraft sector while talking with Thoi bao Kinh doanh (The Business Times)
newspaper.
The
indigenous development of the craft businesses, backward technology and
poorly-designed products made it difficult for Vietnamese bamboo and rattan
items to compete with products from other countries in international markets,
he explained.
Dan
said poorly designed policies and schemes for raw material development for
the sector also led to problems in the production of bamboo and rattan
products, including training, labour problems and environmental pollution.
Currently,
materials for bamboo and rattan products are being gradually exhausted. Many
firms may have to import materials to fuel their production. So far, there is
no feasible programme to resolve the situation.
Importing
materials from foreign countries, including
In
addition, the growing area of bamboo and neohouseaua are often located far
from the producers, thus increasing the cost of transportation.
Nguyen
Van Trung, director of Hoa Son Handicraft Ltd Co, noted that most of the
Vietnamese bamboo and rattan items for export were interior decoration
products that are not as competitive as products from other regional
countries.
In
addition, investments in the domestic craft businesses remain subdued. The
businesses are poor in applying modern technology, leading to products with
low added value. About 95 per cent of locally made products are produced in
craft villages. Most of them are small-sized businesses with limits on
competitiveness and innovative capacity.
A
representative of a craft village from former nothern Ha Tay Province
remarked that despite high demand in the market, especially for high-quality
products, craft businesses are unable to further invest in expanding their
production. They also face difficulties in accessing loans from banks.
According
to the Import-Export Department of the Ministry of Industry and Trade (MoIT),
most of the handicraft businesses are small-sized and do not have sufficient
capital to upgrade their technology and expand their production scale.
As a
result, their product designs are poor and not competitive in both the
domestic and the international markets.
Industry
insiders add that the shortage of capital and raw materials is still a large
challenge for the domestic bamboo and rattan processing industry.
Nguyen
Ton Quyen, general secretary of the Viet Nam Timber and Forest Products
Association, said the association has formulated policies to develop the
sector, however, to resolve the existing problems there still is a need for
raw material planning, tax preferences and bank loans.
The
Ministry of Agriculture and Rural Development noted that the country is now
home to more than 2,000 craft villages. Out of these, the highest number is
that of bamboo and rattan craft villages.
Currently,
the sector contributed about US$300 million to the country's total export
turnover per year, as
Vietnamese
pharmaceuticals eye Cambodian market
Vietnamese
pharmaceutical production has been strongly developed in recent years. It has
accounted for 50 percent of
Vietnamese
medical drugs have been exported to neighbouring
A
representative of Phnom Penh-based F.D.Pharma Col, Ltd said apart from
traditional markets such as
The
company’s import revenue from
However,
due to limited investment in marketing, Vietnamese medicines in the market
are struggling to compete strongly with those from
Additionally,
a range of difficulties regarding international payment has hindered
Vietnamese companies from expanding their operations in
According
to Nguyen Quoc Dinh, Chairman of Management Board and Deputy General Director
of Imexpharm Pharmaceutical JSC, since the end of 2012, his company has
successfully accessed the Cambodian market.
However,
as fake and low-quality products have also flooded into the country and
payment risks have grown, the company currently has no plan to expand its
operation this year and will instead focus on maintaining its momentum from
2013, he said.
Apart
from Imexpharm, other companies such as DHG Pharmaceutical JSC and Domesco
Medical Import-Export JSC are also furthering their reach in the neighbouring
country.-
Fast
moving consumer goods firms report high profits
The
2013 financial reports of many fast moving consumer goods (FMCG) firms
released to date indicate that they have gained fairly good profits compared
to 2012 in spite of high sales expenses and production costs, according to
The Saigon Times Daily.
The
financial report of Lix Detergent Joint-Stock Company shows that sales and
service revenues in the fourth quarter and the whole 2013 increased by 5
percent and 10 percent respectively over the corresponding periods of 2012.
However,
the company had to shoulder growing costs, with the production cost rising
more than 4.8 precent and sales expenses up 22.7 percent. Yet its net profits
of 2013 reached more than 68.7 billion VND (3.23 million USD), a rise of 15
percent year-on-year.
Other
listed enterprises such as Net Detergent Joint-Stock Company enjoyed similar
results. Its financial report for the last quarter of 2013, pending auditing,
shows that the total sales and service revenues rose 3.6 percent over 2012.
Even
though the production cost did not fluctuate, the company had to spend more on
sale expenses and management costs by 23.9 percent and 17.9 percent
respectively compared to 2012. Overall still, its net profits reached 56.76
billion VND in 2013, a rise of nearly 700 million VND compared to 2012.
For
Tuong An Vegetable Oil Joint-Stock Company, its net profits reflected in its
financial report are over 65.58 billion VND, a rise of 3.1 percent compared
to 2012 despite growing sales costs. The report also indicates that the
production cost in 2013 rose by over 6 percent year-on-year.
Vinamilk
Joint-Stock Company, as a giant in the FMCG sector, also reported higher
sales expenses and production cost.
According
to Mai Kieu Lien, General Director of Vinamilk, the company’s net profits of
the fourth quarter dropped by 10.8 percent compared to the same period of
2012, but its net profits for the whole 2013 reached 6.53 trillion VND in
2013, a rise of 12.2 percent year-on-year.
Tax
policy reform supports economic growth: analysis
Tax
solutions played an important role in supporting and facilitating enterprises
to overcome difficulties, become stabilised and improve businesses in 2013.
With
the same targets for 2014, tax policy will continue to be studied, more
aggressively reformed and supplemented to solve problems for enterprises,
supporting economic growth. Analysis by the Vietnam Business Forum, the
weekly magazine of the Vietnam Chamber of Commerce and Industry (VCCI).
Being
effective from January 1, 2014, the amended Corporate Income Tax (CIT) Law
has more regulations to create higher preferences for enterprises,
attractions and investment incentives. For example, CIT is reduced to 22
percent (from 25 percent), enterprises having total earning of under 20
billion VND (950,000 USD) per year had a tax rate of 20 percent from July 1,
2013. These factors help enterprises to be capitalised for re-investment.
Besides, CIT reduction will improve competition capacity of
Apart
from CIT reduction, the amended CIT also controls and adjusts advertisement
and promotion costs from 10 percent to 15 percent of total cost, which is
highly accepted by enterprises.
“FDI
enterprises mostly benefit from these preferences. But, in the development of
the market, if enterprises’ products are well known by customers, enterprises
must have big promotions and large advertisement campaigns,” said Mac Quoc
Anh, Vice President and General Secretary of the Hanoi Association of Small
and Medium Enterprises.
Being
recognised as a breakthrough, the Law amending and supplementing Value Added
Tax Law (VAT Law) also adds some products and services to un-taxed products
and services. This amendment reduces costs for taxpayers. Furthermore, it
helps reduce procedures, declarations and simplifies tax management
activities.
According
to assessment of the General Department of Taxation, the current number of
450,000 enterprises is expected to increase in the near future. In order to
restrict some enterprises using transparent policy in establishing
enterprises to trade receipts, using invoices to discount or have tax refund,
leading to bad effects on the business environment, the law amending and
supplementing the Law of Value Added Tax adds regulations: Enterprises with
revenues from 1 billion VND and above per year will be applied VAT discount
method, and ones with less than 1 billion VND will have to pay VAT directly
and use sale invoice since January 1, 2014, and are not allowed to use VAT
invoices.
Besides
these new regulations to support, solve difficulties and create facilities for
enterprises, some unreasonable points still exist and authorities should
continue to repair and make these regulations really be practical.
According
to some enterprises, together with final accounts of enterprises CIT,
annually the Ministry of Finance publishes circulars guiding retroactive for
previous taxes which make difficulties for enterprises, or problems relating
to procedures of VAT refunds, excise tax, costs, etc.
“Authorities
need to guide more specifically to prevent tax fraud; and for some real
cases, they also should create facilities for enterprises,” said Nguyen Thi
Cuc, head of the Council of Tax Advisors.
In
2014, the two new amended and supplemented laws are implemented with
favourable policies and tax incentives. Ngo Huu Loi, Director of Tax Policy
Department, Ministry of Finance, said that although some guides need
repairing, the formerly and being effective tax policy are designed to reduce
administrative procedures, costs for tax payers.
However,
in order to actively deal with challenges and take advantages of
opportunities, enterprises need have appropriate business strategy, and take
this current experience for more steady steps ensuring competitive capacity.
Under
the request of the Vietnam General Department of Taxation, tax departments
need propagate and explain to enterprises and co-operatives methods of
applying VAT and guide them to solutions of sales invoice orders to use from
January 1st 2014.
For
cases of using direct methods and not using VAT invoice, tax agencies must
recheck enterprises not using discount methods, and if the inappropriate use
of VAT invoices is discovered, they must have right solution methods
following regulations of laws.-
Public
opinion defeats controversial flat bill
Apartment
owners are welcoming the removal of a proposed plan to limit ownership of
apartments to just 70 years.
According
to the Housing and Real Estate Market Management Department under the
Ministry of Construction, the body which is revising the Law on Housing, the
removal was the result of strong public opinion on the issue.
Nguyen
Van Manh, a Hanoian living in the Trung Hoa Nhan Chinh apartment building
said that the limitation on ownership had been hugely unpopular.
Many
of those who are already living in residential apartments registered their
concerns that the properties they have bought using their savings would have
to be returned to the government after a fixed period.
According
to Pham Sy Liem, deputy chairman of the Vietnam Federation of Civil
Engineering Association, the Ministry of Construction had aimed to decrease
the price of apartments.
Liem
said that a regulation insisting that property be forfeited after a number of
years would only lead to buyers shunning apartments and choosing to buy
houses with no fixed period of ownership.
Liem
claimed the regulation would discriminate against residential apartments,
saying that the limited period of ownership, if approved, should also be
applied to houses as well.
“Despite
the government encouraging people in cities to live in apartment buildings,
the regulation would have had the opposite effect,” he said. He added that in
many other countries apartments were actually given priority because they
saved land.
Liem
added that the regulation may have emerged from difficulties in
re-constructing old buildings, but said it should not add to the current
difficulties facing real estate inventories.
However
Nguyen Van Duc, deputy director of Dat Lanh Real Estate agreed with the
proposal, claiming that the average lifespan of a building should be set at
70 years.
“Reality
from other countries like
Moreover,
Duc said that if the lifespan of apartment buildings was limited to 70 years,
the land use tax would be less, and the price of apartments would become more
affordable.
Former
deputy minister of Natural Resources and Environment Dang Hung Vo said the
limitation was a measure to protect the rights of buyers because it can help
reduce the price of apartments, solving the housing issue for low-income
earners.
However,
Vo urged that a detailed roadmap was needed for the regulation.
“The
important thing is to change people’s awareness and thinking about buying
apartments,” he said, “It’s necessary for them to understand that owning an
apartment is for only a limited amount of time and the government should have
clear regulations on the people’s rights after they return their old
apartments.”
Huawei
launches three new products in Vietnam
The
leading mobile phone manufacturer, Huawei, yesterday officially introduced
three new products to the Vietnamese market: smartphone Huawei Ascend G610,
smartphone Huawei Y320 and the MediaPad 7 Youth tablet.
The
launch of Huawei’s three new products is part of the company’s strategic
investment and development plan for the medium and low range IT products
market segment in
A
recent study by Mediacells showed that of the 17.22 million smartphones
projected to be sold in
Acknowledging
this trend, Huawei decided to develop a line of multi-functional smartphones
at a reasonable price-point to satisfy the demand of many Vietnamese
consumers.
In
2013, the launch of Huawei’s Ascend G700, the first product within the medium
smartphone segment, was well received by consumers. The new Ascend G610 has
similar functions but retails at an even lower price of VND3.99 million. The
phone has a Quad-core 1.2GHz processor, and a five-inch touch screen with qHD
definition and runs on the latest Android 4.2 operating system. With 1GB RAM
memory, Ascend G610 is able to run the latest applications and games smoothly
while maintaining a stable multitask experience.
For
even greater value for money, Huawei’s new Ascend Y320 is one of the
best-priced smartphones on the market. For just VND1.89 million, customers
get the benefit of a sizable four inch touch screen with dual core processor
that helps to increase web browsing speed. The Y320’s extensive app store can
satisfy the demand of tech-lovers while the phone has a stylish and
contemporary design and is easy to use.
As
well as the two new smartphone products, Huawei launched its mid-range tablet
the MediaPad 7 Youth, with dual core 1.6GHz. Weighing 350g with a width of
9.9mm, the tablet is a compact yet sturdy and powerful choice. A seven-inch
vivid touch screen with 1024x600pixel definition provides a wonderful
movie-watching experience. In addition, software such as Word, Excel and
Powerpoint is provided with the device allowing users to view and edit
documents. The 4100mAh battery provides five hours continuous life for
watching movies With a competitive price of VND3.99 million, MediaPad 7 Youth
is an ideal choice for technology fans.
“Huawei
has realised the potential of the mid-range smartphone market in
Huawei’s
three new products will be distributed by FPT to mobile retailers nationwide.
Customers will receive the products faster and more conveniently with quality
after-sale-service. The launch of these three products also marks the
beginning of a partnerwhip between Huawei and FPT which was signed in
January. Consumers can now experience these three new products at Tran Anh
media mart, Hoang Ha Mobile World and many mobile phone retailers nationwide.
Many
projects launch apartment sales
With
positive signals on the real estate market since last year’s second half,
some property enterprises are preparing to launch apartments to grasp
business opportunities in the early months of the year.
Phu My
Hung Corporation said it would offer
Phu My
Hung has not announced the selling price but said the apartments were for
medium-income earners and affordable to buyers with financial supports from
banks.
Also
in Saigon South, The Park Residence located on Nguyen Huu Tho Street with
around 1,000 apartments of 52-73 square meters each has been put up for
sales. The selling prices of such apartments start from VND700 million per
unit.
The
Park Residence’s investor is receiving bookings and will finish the project
in 2016.
Meanwhile,
in District 6, Him Lam Land Company is about to sell apartments of the Him
Lam Cho Lon project located near the district’s administrative center. The
project supplying around 1,400 apartments is almost finished.
Khang
Dien House Trading and Investment Joint Stock Company is going to launch the
sale of Mega Residence townhouses in District 9.
Khang
Dien will sound out the market by offering for sale around 160 adjoining
houses at a price starting from VND13.5 million per square meter, or some
VND1.99 billion per unit.
With its
location near HCMC-Long Thanh-Dau Giay Expressway and the belt road and
especially a price equivalent to that of an apartment, the investor expects
to attract many buyers to Mega Residence in the coming time.
Besides,
there are many other projects offering apartments for sale such as Lexington
Residence in District 2 at around VND20.6 million per square meter,
PARCSpring in District 2 at VND17.4 million, Sunview Town in Thu Duc District
at VND11.2 million and An Phu 2 in District 8 at VND16.8 million.
According
to Cushman & Wakefield, the apartment sales volume was better last
quarter, mainly in the budget segment having selling prices hovering around
VND15 million per square meter.
Cushman
& Wakefield forecast the price might continue to decline this year.
In
related news, property enterprises said they would develop projects based on
their existing land and would not spread investments this year like before.
According
to Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, the
company will start the year with a small apartment project having around 150
units in Go Vap District and develop infrastructure for a townhouse project
in Hoc Mon District.
Duc
said that these were the two final projects on the company’s land left. More
projects will be carried out when it can find partners with financial
capabilities, he added.
Luong
Tri Thin, general director of Dat Xanh Group, said Dat Xanh would not invest
in individual apartment projects but develop clusters like small urban areas
of 10-20 hectares each. It will be in charge of all investment stages, from
investment to construction and distribution.
Dat
Xanh earned VND66 billion in profit last year, doubling that of the previous
year.
Statistics
of the HCMC Department of Construction showed that around 5,000 among the
apartment inventory of nearly 14,500 units found buyers last year.
According
to market observers, the market will continue to incline towards buyers this
year. Finished projects would be more attractive to customers than those
under construction.
Hepza
sets up job placement center
The
HCMC Export Processing Zones and Industrial Parks Authority (Hepza) has
established a job placement and assistance center for enterprises operating
in such zones, said Ho Xuan Lam, office manager of Hepza.
The
new job placement center will not only supply labor and organize training
course for laborers, but also conduct surveys and provide information on the
labor market for enterprises in need, he said.
Many
garment enterprises in HCMC are still in dire need of workers owing to the
increasing number of orders placed by foreign customers. Nguyen Vo Minh Thu,
head of the Labor Management Division under Hepza, said garment and packaging
enterprises in such zones are currently seeking to recruit some 8,000 workers.
Lukoil
withdraws from oil project over poor prospects
Lukoil
Overseas Vietnam B.V, an arm of
Nguyen
Quoc Thap, deputy general director of Vietnam National Oil and Gas Group
(PVN), confirmed the news in a talk with the Daily on Thursday. However, he
did not reveal the contract value of the offshore block.
Lukoil
Overseas Vietnam B.V bought a 50% interest in the project in April 2011.
Commenting
on Lukoil’s withdrawal from the Block MVHN-02 contract, PVN general director
Do Van Hau said it was normal for a company like Lukoil to withdraw when an
exploration contract proved to be commercially unviable.
Vietsovpetro,
an oil joint venture between PVN and
Other
Russian oil and gas companies like Gazprom and Rosneft are also involved in
oil and gas exploration and exploitation operations in
Gazprom
E&P International holds a 49% interest in Block 05-2 and Block 05-3
production sharing contracts, which saw the first commercial gas pumped on
October 4, 2013.
Rosneft
is a party in Block 06-1 gas exploration contract and Nam Con Son gas
pipeline.
PVN is
looking to extract 26.63 million tons of oil equivalent and obtain total
revenues of around VND673 trillion, well above the VND666 trillion target
assigned by the Government.
Binh
Duong opens IPAC
An
opening ceremony of the Integrated Political Administration Center (IPAC) of
Binh Duong province was held on February 17.
The
IPAC complex consists of two, 20-story identical buildings covering 20
hectares of land. It is located in the heart of Binh Duong New City.
The construction includes office buildings for provincial departments and
organizations, works for central agencies, guesthouse, a four-star
international conference center and other facilities.
The
project started in 2012 at a total cost of VND1, 400 billion. It will be open
for operation on February 20.
The
local authorities announced during the ceremony the Binh Duong New City will
be expanding in the near future.
The
area is 30 km. away from Ho Chi Minh City and will expand to 4,000 hectares
of land. It has become an industrial, urban service complex.
Roads,
highways, bridges and metro services linking the province to Ho Chi Minh
City, Dong Nai Province, and neighboring areas will start construction this
year.
Binh
Duong acquired US$1.32 billion in foreign investment and contributed
VND30,000 billion to the provincial budget in 2013.
Central
bank’s city branch reports overspending at Tet
The
central bank’s HCMC branch reported overspending of over VND34 trillion in
January due to the increasing cash demand for payments, wages, bonuses and
cash reserves at ATMs during the Lunar New Year holiday, or Tet.
According
to a report of the HCMC government, banks in the city provided sufficient
capital for enterprises to manufacture Tet products and stabilize the market,
and met enterprises’ cash demand for wage and bonus payments.
Before
Tet, to meet the money withdrawal demand of employees, especially workers,
the central bank’s HCMC branch asked banks in the city to supply more money
for ATMs even when those machines still had VND200-300 million available.
According
to banks, they provided more money for ATMs and encouraged enterprises at
industrial parks and export processing zones to pay wages for their workers
in cash to avoid ATM overload.
New
challenges for timber exports to EU
Vietnamese
timber exports to the EU will face new requirements, including proof that the
sources of timber and timber products are not illegally harvested in the near
future.
The
new requirements were hammered out in bilateral negotiations between Vietnam
and the EU for the Voluntary Partnership Agreement (VPA) that are expected to
conclude by the end of this year.
The EU
Timber Regulation that took effect last last March as well as the Voluntary
Partnership Agreements (VPA) are the two-part EU Action Plan of Forest Law
Enforcement, Governance and Trade (FLEGT), which is the EU's initiative to
combat illegal logging and improve forest protection. Vietnam is one of EU's
pioneer FLEGT partners in Asia.
The
first part of the EU FLEGT Action Plan came into effect in May 2003, and sets
out measures to minimise the risk of illegally harvested timber and timber
products being placed on the EU market. This is a result of the fact that as
much as 19% of timber imports to the EU are allegedly from illegal sources.
In
order to better prepare for their business in the EU market and ensure that
their products are accepted for import, Vietnamese exporters must buy legal
timber, document the source and check their products against the list of
products covered by the EU's timber regulations.
A
country that has a Voluntary Partnership Agreement and an operational
FLEGT-licensing system based on that agreement can issue FLEGT licenses,
verifying products as legal.
Vietnam
officially entered into the FLEGT negotiations in May 2010. To date, three
rounds of negotiations have taken place. As part of the negotiation process,
technical sessions, stakeholder consultations and technical support have
being conducted with the aim of concluding negotiations for an EU-Vietnam
Voluntary Partnership Agreement (VPA) by the end of 2014.
As
part of the effort, three new EU-funded projects worth EUR3 million were
launched on February 18 in Hanoi. The aim is to support Vietnam and
neighbouring countries in combating illegal logging and to promote the trade
of legal timber and timber products as well as improve sustainable use of
forests in Vietnam.
“These
projects are to support non-governmental organisations as well as small and
medium-sized enterprises to contribute to the negotiation and participate in
the implementation of the FLEGT’s VPA,” said the head of the EU Delegation to
Vietnam, Ambassador Franz Jessen.
Last
year, Vietnam took in USD5.5 million from timber and timber product exports,
up 15.24% from the previous year.
During
the first eleven months of last year, the US was Vietnam’s largest timber and
timber products export market, with revenues of USD1.79 million, up 10.26%
from the year before. It was followed by China, with revenues of over
USD882,000, up 34.64% on year and Japan with revenues of over USD743,000, up
20.97%.
European
countries, including the UK, Canada, Germany and France accounted for 9.48%
of Vietnam’s timber export markets during the period.
State-owned
giants to be audited in 2014
It is
expected that 184 companies will be audited in 2014, including 43 state-owned
corporations and groups, according to the State Audit of Vietnam.
The
number of firms selected for audit this year is 35 more than in 2013.
This
year's list includes big state-owned corporations and groups such as
military-run Telecommunications Group (Viettel), Bao Viet Group, Vietnam
Cement Industry Corporation (Vichem), Petrolimex Joint Stock Insurance
Company (PJICO), the Debt and Asset Trading Corporation (DATC), among others.
The
audits will focus on assessment of overall financial conditions and the
effectiveness of production, business and non-core investments, particularly
concerning the restructuring of state-owned corporations, groups and
commercial banks.
After
the audits, the State Audit of Vietnam will submit their proposals for better
implementing the restructuring to the government and the National Assembly,
said Nguyen Huu Van, head of the State Audit of Vietnam.
The
audits will be carried out more carefully, with extra attention paid to
collect evidences for violations, including corruption at companies.
Van
admitted the low quality of a number of previous audits. He said that, after
finishing 51 among 149 audits in 2013, the State Audit of Vietnam proposed
settling on compensations of VND8.963 trillion (USD428 million), which added
VND1.39 trillion to the state budget.
The
agency also recommended dealing with wrongdoings of 54 organisations and
agencies as well as 13 individuals.
TPP
opportunities attract FDI to Vietnam
Foreign
companies have continued pouring investment into Vietnam to take advantage of
the expected opportunities presented by the Trans-Pacific Partnership
agreement (TPP), said a local economist.
Expected
opportunities presented by the TPP agreement help to attract more FDI to
Vietnam
According
to Dr. Nguyen Dinh Cung, head of the Central Institute for Economic
Management (CIEM), the signing of TPP is hoped to bring many trade and
investment opportunities to Vietnam. The wave FDI coming into the country has
been progressing in recent years and is expected to continue for years to
come after the agreement is signed.
Professor
Nguyen Mai, former Deputy Minister of Planning and Investment, said the
higher FDI can be attributed to an improved business climate and political
stability in Vietnam along with lower interest rates and better
infrastructure.
After
the World Bank released its report, “Doing Business 2014”, which showed the
investment climate in the country had lost ground compared to last year, the
prime minister urged miniseries, agencies and localities to make
improvements.
This
year, Samsung plans to produce 230-240 million mobile phones in Vietnam.
Other large firms also plan to set up research and development centres in
Vietnam, which may help to boost the development of supporting industries.
The
Foreign Investment Agency predicted that Vietnam would attract a total FDI of
USD22 billion, including both the newly-registered and added capital, equal
to that of 2013. Of that amount USD13-14 billion is expected to be disbursed.
In
January, about USD400 million came in from foreign investors, Singapore
contributing the most, with 132.65 million.
EY:
Vietnam’s GDP growth rate strong in 2014
Ernst
& Young (EY) in its latest rapid-growth markets (RGMs) report forecasts
Vietnam’s economy to develop strongly in 2014 with a growth rate of 5.4% and
reach a peak of 7% in 2016.
With
growth held down to about 5% in 2012 and 2013, policymakers will target
faster expansion from 2014. They are gradually reducing the fiscal deficit
and using lower inflation to bring down borrowing costs. The growth rate is
set to pick up to the 7% target by 2016, the report said.
However,
the upturn will be slow this year, with rising imports offsetting the impact
of stronger export growth, and public sector inefficiency blunting the
investment recovery.
A
strong rebound in foreign direct investment (FDI) commitments will underpin
the financing of the external deficit that is expected to reappear from 2015.
This will calm concerns about the stability of the dong that have resulted
from low reserves.
FDI
will promote a shift away from textiles and agriculture, the decline of which
lie behind the widening trade gap in the fourth quarter of 2013, EY
commented.
Inflation
will continue to subside, ensuring a return to real wage growth between 2014
and 2017. This will strengthen domestic demand and ease social tensions.
However,
the investment recovery will be slowed this year because interest rates will
fall only gradually, reflecting lingering inflation fears and banks’ caution
as they continue to build up bad-debt provisions.
E&Y
also expected 25 RGMs as a whole this year with growth over 5% in 2015. But
markets may react negatively to the global monetary tightening expected this
year and this would limit growth over the next couple of years.
In
addition, as the U.S. begins its tapering of quantitative easing, and with
many RGM currencies still under pressure, the risk of capital flight and a
sharp slowdown has increased.
In
this scenario, gross domestic growth in RGMs falls to 3.7% and 2.8% in 2014
and 2015 respectively. As RGMs falter, growth in advanced economies also
decelerates due to weaker external demand and increased volatility in
financial markets.
Ministry
mulls HCMC-Dong Nai railway construction
The
Ministry of Transport on Thursday agreed to develop part of the HCMC-Dong Nai
railway before 2020 as this railway link is deemed to be of paramount
importance to regional transport.
At a
meeting with transport consulting firm Tedi South on Thursday, Deputy
Minister Nguyen Ngoc Dong noted that the railway from HCMC to Dong Nai
Province’s Trang Bom Town via Binh Duong’s Di An Town would be developed in
phases. Dong said that this railway will have strong positive impacts on
transport demands in HCMC and the two neighboring provinces, so it must be
developed soon.
However,
due to financial constraints, the first stretch from HCMC’s Hoa Hung Station
to Di An will be developed first, before the year 2020, he said.
The
whole railway will be 47.7 kilometers long, and includes one section
stretching 6.5km from Trang Bom to Phuoc Tan Station, and the next from Phuoc
Tan to Hoa Hung covering 41.2km, with 21.6km of elevated track, according to
Tedi South. Along the railway will be 15 stations in all.
Dong
at the working session asked Vietnam Railway to conduct studies on the scale
and technical specifications of the project, as well as to work with local
authorities on preparations for the project execution.
The
first section from Hoa Hung Station in HCMC to Di An will be developed
between now and 2020. This section includes an elevated part from Hoa Hung
Station to Binh Trieu Bridge. The remaining section will be developed after
2021.
Earlier,
this project has been included in the list of projects financed by official
development assistance loans from Japan, and Vietnam Railway has worked with
Japan External Trade Organization over the funding. Tedi South has then
worked with Japanese partners to prepare an investment plan for the project
costing some US$550 million.
When
in place, this railway will facilitate passenger transport between HCMC and
other southeastern provinces, and will be connected to the proposed Bien
Hoa-Vung Tau railway in the future.
New
law to end capital contribution conflicts
A new
draft of the Enterprise Law looks to scale down litigation over capital
contributions by requiring limited liability companies to finalise their
obligations to submit chartered capital within 90 days as opposed to the
previous law which mandated three years.
“The
move is aimed at cleaning up chartered capital declarations of firms when
they conduct business registration procedures. Alongside this regulation, to
facilitate better operations, the procedures of hiking capital are also
simplified in the draft,” said Phan Duc Hieu, deputy head of the Business
Environment Department under the Central Institute for Economic Management, a
member of the group that wrote the revised law.
For a
long time the three year period to contribute chartered capital has resulted
in numerous disputes. One example is the on-going lawsuit between Vietnam
Fumigation Joint Stock Company (VFC) and General Import Export Company 3
(Centrimex); the latter was merged to Fococev Foodstuff and Investment Company.
The
companies pooled capital to found Hai Yen Company Limited in 2006 to build
Novotel Nha Trang Hotel. The offspring had chartered capital of VND60 billion
($2.8 million); of this, 67 per cent came from VFC and 33 per cent from
Centrimex.
The
two also envisioned later raising Hai Yen’s chartered capital to VND90
billion ($4.2 million).
After
the deadline for capital contribution, Centrimex only transferred VND5.77
billion, 30 per cent of its total obligation.
To
avoid the hotel project from being revoked VFC pumped more capital into Hai
Yen Limited, said general director Truong Cong Cu.
VFC
then asked the Khanh Hoa Provincial Court to handle the case. The company has
paid 93.6 per cent of the funds needed for Hai Yen’s VND90 billion chartered
capital, well above its 67 per cent commitment.
“The
dispute has resulted in us impossible to count the profit from hotel business
as VFC profit though the hotel has been operating since November 2008,” said
Cu.
Also
because of the dispute over capital contribution, Hai Yen has been unable to
source bank loans surpassing its chartered capital.
This
kind of case is quite common. Lawyer Cao Ba Khoat, director of consulting
firm K & Associates said the period of three years to complete capital
contribution was too long and one of the main causes of legal disputes.
“In
many cases, disputes are over one member not fulfilling their end of the
bargain though the deadline is still pending. Companies are arguing that
benefits and obligations are based on real input capital and not
commitments,” said Khoat.
Khoat
added that in other cases companies’ founding members were refusing their
obligations, arguing that capital contributions have not been kept.
There
have also been cases where firms intentionally exaggerated their capital
contributions as business registration offices find it difficult to check
these numbers since company members are solely responsible for keeping their
commitments.
The
current law poses great difficulties to ensuring companies’ chartered capital
is what they announced it would be.
Source:
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Chủ Nhật, 23 tháng 2, 2014
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