BUSINESS IN BRIEF 1/6
My Thuan Bridge to cost $247m
An investment of VND5.5 trillion (US$247 million) is needed for construction of the proposed cable-stayed bridge My Thuan No 2, according to Project Management Unit No 7 (PMU7).
About VND5,251 billion of the total amount will come from Japan's ODA (Official Development Assistance) loans, and the remaining from the Vietnamese government, which will pay compensation for site clearance of the project.
According to PMU7's proposal, My Thuan Bridge No 2 will be built along 350 metres on the upper section of the existing cable-stayed Bridge My Thuan No 1, with total length of 6.81km and width of 25 metres. The completed bridge will have six lanes.
My Thuan Bridge No 2 is part of the HCM City – Trung Luong – My Thuan – Can Tho Expressway.
The operation of big bridges in the region, including Co Chien, Cao Lanh, and Vam Cong, will overload the existing cable-stayed My Thuan Bridge No. 1, causing traffic congestion, according to PMU7.
The proposal from PMU7 was sent to the Ministry of Transport last week, reports Tuoi Tre (Youth) newspaper.
My Thuan Bridge No 1 is a cable-stayed bridge over the Tien Section of the Mekong River, connecting Cai Be District of Tien Giang Province with Vinh Long City in Vinh Long Province.
Located 120km upstream of the river mouth on the Mekong Delta and 125km from HCM City, My Thuan Bridge No 1 was developed in a joint venture between the Australian and Vietnamese governments.
It is the largest overseas assistance project undertaken by the Australian government, costing US$80 million. Construction was completed in 2000.
SBV announces new circulars for credit institutions
The SBV on May 27 issued Circular 07/2016/TT-NHNN to supplement and amend some articles of Circular 24/2015/TT-NHNN on providing foreign currency loans by credit institutions and foreign bank branches.
Under the new regulations, from June 1, companies who have demands for short-term loans in foreign currency can borrow from banks to satisfy their short-term capital needs.
Borrowers must commit to have sufficient foreign currency revenue from exports to repay the loans.
After getting the loans, borrowers must immediately sell the amount of foreign currency to the lending institutions under the spot foreign exchange trading method, except for the case that the foreign currency will be used to make payments.
This decision will take effect until December 31, this year.
According to the old regulations, commercial banks are not allowed to provide lending in foreign currency to exporters from 31 March this year.
Banking expert Nguyen Tri Hieu said that the decision would help enterprises, especially small- and medium-sized ones, to reduce costs for capital by getting loans in foreign currency at low interest rates, thereby making exports more competitive.
However, he warned that the policy would raise demand of exporters for foreign currency, thus have effects on the stability of the foreign exchange rate in the near future. Therefore, companies should take careful consideration related to foreign exchange rate.
He suggested that the SBV allow commercial banks to increase the interest rates for US dollar deposits to raise the banks' liquidity.
Treasury sells G-bonds worth VND8.2 trillion
The State Treasury offloaded VND8.2 trillion (US$366.8 million) in government bonds on May 26, G-bond auction organiser Ha Noi Stock Exchange (HNX) said.
HNX said the treasure offered bonds worth VND10 trillion -- VND6 trillion-worth five-year term bonds, VND2 trillion-worth 15-year term bonds and VND2 trillion-worth 30-year term bonds.
After the auction, over VND4 trillion in five-year term bonds were offloaded at the coupon rate of 6.18 per cent per annum. The entire VND2 trillion in 15-year term bonds were offloaded at the coupon rate of 7.65 per cent per annum. Owing to the high demand, the treasury offered another VND600 billion in15-year term bonds and sold them all at the same coupon rate.
The treasury also sold over VND1.5 trillion-worth 30 year term bonds at a coupon rate of 8.00 per cent per annum.
Dollars drying up as banks park them abroad
Regulating the use of dollars in the banking sector is again in the news after overseas deposits of the greenback by Vietnamese entities, mostly banks, have skyrocketed.
According to the Việt Nam Institute of Economic and Policy Research, the overseas deposits, previously negligible, had surged to $7.3 billion at the end of the third quarter of last year.
This was believed to have been caused by the State Bank of Việt Nam (SBV)’s policy tightening with respect to banks’ foreign currency transactions.
To stabilise the forex market and reduce dollarisation in the economy, the central bank has applied several measures in recent years to prevent speculation in and hoarding of dollars.
One of the most important of them was to ban banks from offering loans to companies in any other currency except the đồng.
Only companies in need of foreign exchange to pay for imports of goods and services are allowed to borrow in dollars.
The central bank also decided to reduce interest on dollar deposits to zero per cent.
These were aimed at making banks switch from accepting dollar deposits and lending them to buying and selling the greenback.
The efforts have paid off, with the forex rate as well as market becoming rather steady and helping the Government keep a lid on inflation.
But other problems have cropped up.
Since the interest rate was cut to zero, dollar deposits at banks have slumped, threatening their liquidity.
As a result, many banks have been illegally offering interest of 0.5-1 per cent.
The zero interest rate policy is also blamed for a foreign currency drain as banks that are sitting on large dollar reserves, companies possessing the greenback and even individuals are looking for ways to deposit them abroad to make profits.
This is paradoxical since many companies and even banks lack dollars for their business activities, and are forced to borrow from foreign banks at high interest rates.
Many analysts said that the central bank’s decision to bring down dollar deposit interest rates to zero is not appropriate since the country does not have a foreign currency market where US dollar trading is carried out smoothly and efficiently.
But the fact that some banks park their foreign currencies abroad to enjoy profits irks some, who think “it is not fair”.
But banking experts and the State Bank of Việt Nam dismiss this saying it is the normal practice of banks.
Some analysts called for going back to old policies and allowing banks to mobilise foreign currency deposits and lend them.
Some others urged the central bank to review and tweak its policies to make them win-win for all concerned.
One of their suggestions was to extend the de-dollarisation roadmap to ease the burden on businesses.
The process has been too rapid in recent times, they said, adding that the central bank should rethink certain aspects, including the zero interest rate policy.
The country needs large amounts of foreign exchange because most industries rely on imports for raw materials and feedstock, they pointed out.
But the central bank seems to be unmoved and determined to go full speed ahead with the de-dollarisation, instructing banks to scrupulously comply with foreign currency-related policies.
Withdrawing investment from non-core sectors
Vietinbank recently announced plans to sell its stake in the Sài Gòn Commercial Joint Stock Bank (Saigonbank) through an auction.
It will offer 16.875 million shares, equivalent to 5.48 per cent of Saigonbank’s chartered capital.
If the auction is successful it will help the bank pare its ownership of Sài Gòn Bank from the current 10.39 per cent to 4.91 per cent as instructed by the State Bank of Việt Nam through its Circular 36/2014.
The circular stipulates that a bank can own no more than 5 per cent shares in a maximum of two other banks.
Circular 36 regulates prudential ratios for the operations of credit institutions, including foreign, to reduce cross-ownership and manipulation in the banking sector.
The SBV will allow higher than the stipulated 5 per cent ownership in specific cases where it designates banks to either prop up the financial situation or support the restructuring of fragile organisations.
Selling stakes in other banks was also a hot topic at Vietcombank’s annual shareholders meeting in April when many wondered how the bank would achieve it.
Vietcombank leads the banking sector in holding stakes in other lenders, most of which exceed the central bank’s ceiling.
It owns a 7.16 per cent stake in Military Bank, 8.19 per cent in Export and Import Bank, 5.07 per cent in Orient Commercial Bank, 4.3 per cent in Saigonbank and more than 10 per cent in Cement Finance Company.
Vietcombank bosses said the stakes in the three banks would be retained since they were very profitable, though adding this could change depending on their future performance and share prices.
Banks are scrambling to sell shares in other banks because the deadline for it set by the central bank has ended.
The circular took effect on February 1, 2015, and banks were given 15 months to comply with it.
Many banks have yet to do so and petitioned the SBV to extend the deadline, saying it was too tight.
State firms in many other sectors too require to withdraw from non-core sectors, but in the last five years have only achieved 30 per cent of the target.
A finance ministry official said the target for 2016 is nearly VND15.69 trillion (over $697.33 million), but in the first four months only VND659 billion worth of stakes have been divested.
Analysts blame the slow pace on certain reasons, one of which is that the shares of businesses to be sold are not attractive to investors.
Besides, the securities markets have been too volatile for investors’ comfort, they said.
Vietnamese retailers fight to maintain their share of the domestic market
Foreign retailers are turning to the Vietnamese retail market, either investing directly or merging with or acquiring Vietnamese businesses and putting great pressure on domestic companies. The government has outlined strategies to help local retailers improve their competitiveness and establish a stronger foothold at home.
Retail giant Central Group has agreed on a M&A deal to purchase Zalora, the fashion-focused e-commerce site, in Vietnam and Thailand at 10 million USD each.
Before Thailand’s Central Group bought Big C, another Thai group TCC bought Metro Group’s Cash and Carry wholesale chain earlier this year. The transaction included all 19 wholesale stores and its related real estate portfolio for 655 million Euros.
Vietnamese retail enterprises are under threat of losing in the domestic market. The Sai Gon Union of Trading Co-operatives, Saigon Co-op, was involved in the buying of Big C. While the foreign enterprise had more advantages in the acquisition transaction, Saigon Coop has faced a lot of difficulties including obtaining an external investment license.
Over the past 9 years since joining the WTO, Vietnam has almost fully opened the retail sector, but has not yet issued sufficient policies for domestic enterprises in the integration process regarding human resources, market information, and trade mark marketing.
Diep Dung, Chairman of Saigon Co-op, said that they have “suggested the government construct a national strategy for Vietnam’s retail sector development towards 2030. It should focus on developing the 20 top Vietnamese retailers to compete with foreign enterprises. The government will adjust policies and obstacles in foreign mergers and acquisition transactions.”
Beside the government strategy, retail enterprises have to reform and improve their services. According to Nguyen Tan Hoang Hau, Marketing Director of Thien Hoa Electronics and Furniture Shopping Center, the company will “continue to invest in our trademark recognition system and upgrade our electronics supermarkets in Vietnam to improve competitiveness and attract foreign investment.”
Le Thi Thanh Lam, Deputy General Director of Sai Gon Food, said: “we’ll regularly introduce new products. No one can understand the taste of Vietnamese people better than Vietnamese people. We’ll take this advantage to produce suitable products at competitive prices and maintain our foothold.”
As well as retailers, producers will also have to improve product quality and reduce their prices in order to penetrate retail chains in Vietnam and abroad. Foreign retail store operators from Thailand, Japan, and South Korea have expanded their stores in Vietnam and sold an increasing number of foreign products to Vietnamese consumers. Under free trade agreements and Vietnam’s integration commitments, more than 10,000 products will enjoy tax free benefits among ASEAN countries. Another challenge is that some Vietnamese consumers prefer foreign goods at lower prices.
Dinh Thi My Loan, President of Vietnam Retailers’ Association, shared her views: “when the market is more open, enterprises have to review their production and trade plans. We have to produce what the market needs, not sell what we have.”
Economists say Vietnamese enterprises should reform production, trade, and management to produce better products at reasonable prices as the open market has been moving away from the supplier-controlled distribution networks towards retailer- controlled networks.
Coca-Cola beverages to be served aboard
The Vietnamese private airline and Coca-Cola Vietnam signed a deal on May 25 to boost cooperation, including an agreement to paint Coca-Cola’s logo on Vietjet’s new planes and serve Coca-Cola beverages on board.
In a press release on May 25, the Vietnamese carrier said the agreement between the two companies will diversify each other’s service and product lines, thus increasing value-added benefits to the community and society.
The deal follows historic agreements inked between Vietnam and the United States during President Barack Obama’s recent visit to the Southeast Asian country.
Obama left for Japan yesterday after beginning his first visit to Vietnam on Monday, during which Vietnamese and U.S. sides closed deals worth tens of billions of dollars.
Vietjet placed an order to buy 100 planes from Boeing at a cost of $11.3 billion.
The airline and Coca-Cola will together promote co-organized activities, develop and expand mutual sales channels, provide better customer service, and launch co-promotion programs for customers.
“Through this agreement, besides the current nine hot meals and beverages on Vietjet’s flights, passengers will now have more drink choices from the world’s number-one beverage company, Coca-Cola,” said managing director of Vietjet Luu Duc Khanh.
“Vietjet will also soon welcome new aircraft with the Coco-Cola brand livery into the world’s most lively fleet,” he added. “The Coca-Cola brand will fly with Vietjet into domestic and international skies, bringing more air travel opportunities to people in the region.”
According to the agreement, Vietjet and Coca-Cola Vietnam will cooperate in sales activities, promoting both brands through appropriate promotions, events, communication, and more.
The two companies will also cooperate in increasing opportunities of mutual information exchange to promote the cooperation between both companies and deploy customer care activities for up to 150 million passengers on both domestic and international flights.
“Aiming to become one of the most successful U.S. investors in Vietnam, Coca-Cola Vietnam is committed to continuing sustainable development investment to build up an effective and comprehensive value chain in terms of production, business, and community activities,” said Vamsi Mohan, regional director of Coca-Cola Indochina & Myanmar.
“With that vision, we have been looking for the right partner to share our common values with,” he added. “We recognize Vietjet as a company who operates on the passion and desire of success foundation. That is also the values that Coca-Cola appreciates and follows in the company’s business direction.”
Businesses’ engagement needed for agricultural production
The agricultural sector must draw businesses’ more engagement as they will bring new technologies into production to help farmers create competitive products, according to experts.
Speaking at a conference in Hanoi on May 27 on the prospects of Vietnam’s agricultural market in 2016, Nguyen Do Anh Tuan, head of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) under the Ministry of Agriculture and Rural Development, said that in the medium and long term, the sector needs to restructure its products, firstly coffee, rice, pepper and seafood.
It is necessary to overcome consequences of natural disasters and control diseases to boost supplies while ensuring food hygiene and safety, one of the hot issues today, he noted.
Le Van Binh, deputy head of the National Assembly Office’s Department of Economic Affairs, said free trade agreements would open up opportunities for Vietnam to expand its agriproduct export market in the face of technical barriers as well as fierce competition from other countries.
However, climate change and new diseases are posing challenges to Vietnam’s agriculture, he said.
JongHa Bae, FAO Representative in Vietnam, said Vietnam should increase investment in rural infrastructure, develop geographical indications for quality products as well as boost farmers’ adaptability in the integration process.
FPT to work with Japanese printing and education firms
FPT signed contracts with Toppan Printing Co. and Tokyo Shoseki on May 26 in Nagoya during Prime Minister Nguyen Xuan Phuc’s visit to Japan from May 26 to 28.
Toppan Printing and FPT will cooperate in software outsourcing and expand their business in Southeast Asia. The cooperation is expected to bring more orders to FPT for software outsourcing from the company, especially in business process outsourcing (BPO), in which there is competition from China and the Philippines.
The contact between FPT and Tokyo Shoseki is focused on digitizing electronic textbooks for Japan and Vietnam. The Ministry of Education in Japan will pass plans this year to digitize all textbooks in primary school and secondary school by 2020. Signing a contract with Tokyo Shoseki gives FPT a major opportunity to secure orders in this regard.
These are two key sectors where FPT wishes to expand in Japan. Gaining a contact with a large Japanese firm like Toppan Printing will help boost Vietnam’s brand in the BPO field.
Over recent years Japan has been the most important market in FPT’s software exports, which contributes 50 per cent of its revenue. In first four months of this year FPT’s revenue in Japan was its highest ever, increasing 59 per cent year-on-year. FPT now has 4,500 engineers working for Japanese partners.
In 2017 FPT expects the Japanese market will earn it revenue of $200 million and create job opportunities for 8,800 employees in Japan and Vietnam.
Toppan Printing was established in 1900 and is a leader in the printing sector but also involved in many others, such as information technology, electronics, healthcare, and furniture. Tokyo Shoseki was founded in 1909 and is the largest Japanese textbook publisher.
Companies on HNX submit quarterly reports
Three hundred and seventy two of the 379 companies listed on the Hanoi Stock Exchange (HNX) have submitted their financial reports for the first quarter of 2016.
Figures indicate that in the first quarter the 372 companies recorded a combined after-tax profit of VND2.86 trillion ($127.92 million), an increase of about 1 per cent against the same period last year.
Some 319 of the 379 companies (86 per cent) earned a profit, totaling VND3.06 trillion ($136.87 million), an increase of 3.55 per cent against the same period last year. Fifty other companies (14 per cent) incurred losses of VND193 billion ($8.63 million) in total, an increase of 67.97 per cent year-on-year.
Industrial enterprises saw the best performance, with 104 out of 319 enterprises recording profits totaling VND949 billion ($42.44 million), accounting for 31 per cent of the total.
Following were finance companies, with 25 recording profit of VND898 billion ($40.16 million), accounting for 29.3 per cent, then trade and hospitality companies, with 43 recording profit of VND467 billion ($20.88 million), accounting for 15.2 per cent.
The industrial sector also saw the largest amount of losses, with 12 enterprises losing VND65 billion ($2.90 million).
Vietinbank to sell 5.48% of SGB
The Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank - stock code CTG) has released a notice of divestment from the Saigon Bank for Industry and Trade (stock code SGB). SGB’s charter capital is around $138 million, of which more than $14 million, or 10.39 per cent, is held by Vietinbank.
Vietinbank expects to conduct a public auction of nearly 17 million voting shares, or 5.48 per cent of capital, in the second quarter of this year at an initial price of VND10,800 per share.
The divestment is to comply with the provisions of Point B, Item 3, Article 20 of Circular No. 36/2014/TT-NHNN dated November 20, 2014 from the State Bank of Vietnam, which regulates limitations and capital safety ratios in the operations of credit organizations and foreign bank branches.
Garment companies encouraged to use more domestic raw materials
According to the Vietnam Textile and Apparel Association (Vitas), textile and apparel exports in the first four months of this year exceeded US$8.1 billion, up 6.2 percent over the same period last year.
Of which, garments exports topped $6.8 billion, an increase of 6.95 percent; staple fiber exports reached $824 million, an increase of 2.87 percent; raw materials exports were at $273 million, up 4.14 percent; whereas, nonwoven fabrics exports hit $145 million, down 3.97 percent.
Countries participated in the Trans-Pacific Partnership account for 65 percent of Vietnam’s total textile and apparel exports, with the US accounting for 48 percent, and Japan 12 percent. The EU market accounts for 15 percent and South Korea takes about 10 percent.
The representative of Vitas said that although the country’s raw materials exports bring in billions US dollar annually, several garment companies still have to import fabrics for manufacturing of export clothes. Vitas recommended that garment companies and raw material producers should strengthen connection and try each other’s products.
Raw materials producers should focus on meeting requirements for quality, quantity, competitive price, and delivery time. In long term, garment companies should shift from doing outsourcing to making products to export under FOB (free on board), ODM (original design manufacturer) or OBM (original brand manufacturer) modes and cut down exporting via intermediary. Thenceforth, garment and textile companies are able to meet the rules of origin under the TTP and FTA.
Singaporean firm to invest in innovative park in HCM City
The Sembcorp Development company from Singapore has expressed intention to invest in a Vietnam-Singapore Innovative Park in Ho Chi Minh City.
The firm’s general director Kelvin Teo discussed the plan with Chairman of HCM City’s People’s Committee Nguyen Thanh Phong during a working session on May 27.
The general director said the park will need about 50-100 hectares of land near the city’s centre, adding that it differs from other industrial zones in that it will have a commercial centre, research facilities and residential quarters to ensure quality living conditions for scientists and experts.
Once operational, it will attract investors and interdisciplinary experts from all over the world to develop new products, he said.
According to Chairman Nguyen Thanh Phong, the HCM City Hi-tech Park has sufficient conditions to meet Sembcorp Development’s requirements for the project.
He assigned the hi-tech park’s management board and relevant agencies to work with the Singaporean firm on land use procedures.
The city leader also expressed his hope that the firm will invest more in the development of renewable, wind and solar energies in the city.
So far, Sembcorp Development has poured 8.5 billion USD into 7 projects in Vietnam, creating about 160,000 jobs.
VN finds difficulties enforcing environment protection policy: experts
Vietnam will face challenges in implementing policies and laws on environmental protection, especially in industries seeing strong growth, said Nick Thorpe from the People and Nature Reconciliation (PanNature) centre.
Speaking at a seminar themed “Free trade: Investment movement and environmental issue in Vietnam” held by PanNature in Hanoi on May 27, Nick Thorpe highlighted that Vietnam will meet difficulties in abiding by environmental standards regulated in the Trans-Pacific Partnership (TPP) agreement, and those concerning land compensation at the local level.
There are loopholes in Vietnam’s policies on environmental management for businesses, he stressed.
Le Dang Doanh, former Director of the Central Institute for Economic Management, said by joining free trade agreements (FTAs), Vietnam has to commit to ensuring regulations related to indicators on ozone-depleting substances , pollution at sea, transparent cooperation in protecting the environment, and reduction of fishing activities detrimental to fisheries resources.
Doanh suggested building a relevant regulation system, adding that it is necessary to enhance supervision of environmental protection for foreign-invested enterprises.
FDI businesses’ operation ought to obey regulations on management of waste water, dust, and noise – right from the first phases of design and technology selection, to construction and operation, he noted.
According to Do Thanh Bai from the Chemical Society of Vietnam, industries that will most benefit from TPP such as textiles, footwear, and electronics are the most prejudicial sectors to the environment because they use many toxic and persistent chemicals.
Bai underlined the need to carefully select investors, aiming to seek those using environmental friendly technologies.
Vietnam has joined and negotiated 15 FTAs so far, with the TPP officially signed in October last year after five years of negotiation.
The trade pact is said to give Vietnam the chance to upgrade its investment and business environment, attract foreign investment, speed up its restructuring process and shift its growth model.
Vietnam banks allowed to resume dollar loans to exporters
Vietnam’s central bank has permitted commercial lenders to resume dollar loans to export businesses starting June 1, two months after it banned that activity, amid economic difficulties.
In a circular released on May 27, the State Bank of Vietnam said that local banks and subsidiaries of foreign banks are allowed to offer short-term dollar loans to export companies until the end of this year as long as these companies will be able to pay off their debts from their export revenues.
On March 31, the central bank tightened dollar lending in an attempt to prevent dollarization, stipulating that local banks and subsidiaries of foreign banks can only provide foreign-currency loans to importers and businesses with overseas investment.
Vietnam’s economic growth slowed in the first quarter as the country’s income from crude and agriculture production dropped.
Gross domestic product (GDP) rose 5.46% in the first three months from a year earlier, according to the General Statistics Office. That compares with the 7.01% pace in the last quarter of 2015.
Official figures show that more than 28,500 businesses across the country ceased operations in the first five months of this year, a 26% year-on-year increase.
Meanwhile, more than 4,600 businesses completed dissolution procedures in Jan-May, up 20% from the same period last year.
The country has also seen the establishment of more than 44,700 new businesses in the first five months, up 24%.
Taiwan auto parts firms seek to enter Vietnam
Saigon International Autotech & Accessories Show 2016 has kicked off in HCMC’s District 7, with an upsurge in the presence of Taiwanese auto parts companies with plans to enter the domestic market.
According to the organizers, the four-day expo at the Saigon Exhibition and Convention Center (SECC) is attended by around 700 enterprises, up 30% against last year’s event. Foreign exhibitors make up 70% of the total and Taiwanese auto parts firms number more than 50.
Eugene Hsiao, chairman of the Taipei County Auto Parts Association, said Vietnam’s auto market has been expanding, with sales in 2015 totaling 245,000 vehicles. This is why many Taiwanese companies have put their names down to join the 1,000-booth expo to explore business opportunities.
In addition, a number of Taiwanese companies have come to gauge the investment environment before deciding to set up shop in this market.
According to Hsiao, many Taiwanese companies have invested in production facilities in Vietnam but mainly outsourced products for export. Companies in the field are eyeing the Vietnamese market and other ASEAN countries with a combined population of over 600 million consumers.
If Taiwanese auto parts firms invest in Vietnam, they can turn out products for domestic consumption and export to other regional countries with low tariffs, Hsiao said.
He added that Vietnam has advantages in labor costs and incentives for foreign investments.
The major advantage of Taiwan’s auto industry is the large-scale supply chain that helps minimize production costs, he noted.
Taiwan currently has around 2,800 factories producing auto parts. Statistics of the vehicle manufacturing association of Taiwan showed revenue of auto parts reached US$6.8 billion last year.
Biggest software park urged to go public for stronger performance
The company that manages a Ho Chi Minh City-based software development center should undergo a privatization process as soon as possible for the facility to live up to its potential, the city’s Party Committee chief said on May 28.
Once going public, the Quang Trung Software City (QTSC), the operator of the Quang Trung Software Park, will also be able to afford better incomes for its executives and engineers, party committee secretary Dinh La Thang said as he toured the facility in District 12.
During the visit, Thang asked the QTSC director Lam Nguyen Hai Long of his salary. After knowing that Long gets VND24 million (US$1,071) a month, Thang shook his head to show disappointment.
“It is unacceptable for the wage of the director of the leading software park in the country and the region to be so modest,” Thang said.
The party chief said the park director deserves a salary “ten times the current rate,” so that he could feel motivated to work better.
“To this end, you should speed up the privatization process for QTSC,” he concluded.
Founded in 2001, QTSC, 100% owned by the government, is now biggest software park in Vietnam.
Responding to Thang’s privatization request, Long said he “is personally in great support of the idea.”
“But we should follow the state procedure, and can only speed up the process with approval from the government,” the director added.
Thang quickly said “You do not have to wait for any permission, just do it now.”
Thang said as a company in charge of ensuring infrastructure for a software park that makes more than US$220 million worth of products annually, it is unacceptable for QTSC to be prevented from developing just because of state mechanism.
The party chief said QTSC should go public so that private investors can take part in developing the company. “Then you will be able to offer reasonable incomes to attract talents,” he said.
Thang said QTSC is underpaying its staff, which is a hindrance for the company to grow further. The official was also briefed during the visit that an engineer with three years of experience earns VND8 million – VND10 million (US$350-US$450) a month at QTSC, which he said is “too modest company to the high living standard of a software engineer.”
Thang also said QTSC should not just wait for order for software products from the city’s administration.
“You should be active in figuring what software solutions the city is in need and encourage authorities to buy your products,” he said.
“There are many things you can do: the city needs anti-crime software or products that increase transparency in giving construction licenses.
“If you can make products to solve these issues, the city’s authorities will buy immediately.”
Spanning 430,000 square meters, QTSC is accountable for various functions, including software production, exhibition center and accommodation, according to the company’s website.
In 2015, QTSC had 120 tech companies operating and 33 investors, including such big names as HP and IBM.