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BUSINESS IN BRIEF 4/6
IDA Credits
for better health care, R&D in Vietnam
The World Bank on
May 31 approved two credits from the International Development Association
(IDA) worth US$250 million to
Of the total,
US$150 million will go to the Northeast and Red River Delta Regions Health
System Support (NORRED) Project, which aims to provide better health services
for 15 million people, especially children and women.
It will help
strengthen the capacity of provincial and district hospitals to deliver
better quality hospital services as an alternative to patients seeking care
in
The Fostering
Innovation through Research, Science and Technology (FIRST) Project, which
received funding of US$100 million, will support science, technology and
innovation in
The Project’s main
beneficiaries are R&D institutions and innovative technology enterprises
that invest in R&D.
Spin-offs and
start-up enterprises that are incubated from R&D institutions or
universities will also benefit.
It will support the
establishment of a public-private partnership research laboratory in the
R&D zone of the
The target was
specified during the municipal People’s Committee’s monthly session held to
review the outcomes of the city’s socio-economic development performance and
budget execution in the first half of the year.
According to the
committee, the city still maintained a stable growth rate in the reviewed
period with GRDP estimated to rise 7.5 percent.
Noticeably, the
city’s Consumer Price Index (CPI) in May went down 0.22 percent from April.
Committee Chairman
Nguyen The Thao asked relevant departments and agencies to focus on figuring
out the reasons behind the failure and seek effective measures to fix it.
Taps open
on waste water treatment plant
A waste water
treatment plant with a treatment capacity of 17,650 cubic metres per day has
been opened in the southern
The waste
water treatment plant that opened yesterday in
The plant, the
first of its kind in the province, is financed by the Japan International
Cooperation Agency (JICA). The Binh Duong Water Supply Sewerage Environment
Co Ltd (BIWASE) is in charge of its operation.
The first phase of
the project was funded with a loan of JPY7.77 billion (US$77 million) from
JICA.
JICA will also loan
JPY19.961 billion ($197.95 million) for the second phase, in which a sewer
network in Thu Dau Mot City will be expanded and a waste water treatment plant
will be built in Thuan An Town in the province.
Most household and
industrial waste water in the province is discharged directly into the
environment without first being treated properly.
The plant is
expected to help protect the Sai Gon and Dong Nai rivers, which provide
Fuel
traders petition ministry for another petrol price hike
Domestic petroleum
wholesalers have lobbied the Finance Ministry to approve an increase in
retail prices, claiming they have taken losses despite the recent falls in
the world fuel price.
People queue to buy
petrol at a station on
The proposal was
made right after the ministry approved to cut fuel tariffs from 19 to 18 per
cent and the world oil price had just fallen for the fifth time
consecutively.
Trinh Quang Khanh,
vice chairman of the Vietnam Petroleum Association told newspapers that
petrol importers have been making profits of VND270 per litre on petrol, VND290
per litre on DO oil and VND130 per kilo on FO oil after deducting all taxes
and fees.
Khanh said it was
for this reason that petrol wholesalers have given higher commissions of
VND650-700 or even VND900 per litre to their retailers.
However, the interdisciplinary
team of Industry and Trade and Finance ministries on the petroleum market
issued another rebuttal, saying the higher commissions would help wholesalers
resolve their inventory and pay off interest.
A representative
from the team said the reference price in the Singaporean market - where
He said fuel prices
in the market had increased from US$106 a barrel to $112-113 a barrel since
the beginning of last month.
He added that
petrol enterprises had taken losses of VND150-200 per litre on petrol and
VND200 per litre on oil.
Nguyen Tan Phat,
director of Petrolimex retailer South Sai Gon Trading Company, said
Petrolimex had given a commission of VND670 per litre (including transport
fees) to retailers.
He said other
companies would receive higher commissions if they were located further from
Petrolimex warehouses.
Economist Le Dang
Doanh said fuel wholesalers' profits and losses had not been transparent and
properly announced to the public.
People found it
difficult to check information from petrol enterprises, he added.
The Vietnamese and
Swiss Governments inked an agreement in
The four-year
programme, valued at US$3.89 million, will enhance the skills and capacity of
trade promotion agencies and trade supporting organisations in three regions.
It is expected to
help SMEs improve their efficiency by exporting products with more added
value rather than those with low labour costs.
The programme is
built on the basis of the outcomes of the VIE 61/94 project funded by the
Swiss and Swedish Governments, which focuses on supporting trade promotion
and export development in
Addressing the
signing ceremony, Deputy Minister of Industry and Trade Tran Tuan Anh
affirmed that
He highlighted the
increasingly important role of SMEs and expressed his hope that the programme
will help local firms tackle difficulties in their efforts to increase their
participation in the country’s export development.
Through the Swiss
State Secretariat for Economic Affairs (SECO), the Swiss Government has
supported
In the framework of
its new national strategy for
RoK willing
to share environment experience with Vietnam
Businesses from
Vietnamese
businesses were impressed by the products and environmental solutions RoK
businesses showcased at the exhibition. Many products matched the quality of
those offered by European, Japanese, and American competitors but at much
lower prices.
RoK National
Environment Research Centre Expert Oh Geun Seok said
Hankook Coatin
Director General Kim Gyung Doo said his company—which specialises in
manufacturing shipbuilding and mining industry equipment—is willing to share
experience with and transfer technologies to its Vietnamese counterparts. Its
products are durable and minimize environmental impact.
The Entech
International Exhibition on Energy Technology and Environment is being held
in
BEXCO will hold a
similar exhibition in Busan, the RoK, from September 4–6. Hundreds of Korean
and international businesses are expected to attend the event.
Exports to
In April alone,
Vietnamese exports to this EU member state rose 50 percent to US$421 million.
Major exports are
garments and textiles, footwear, cashew nuts, rubber, and tea.
More
Japanese businesses eye
Japan External
Trade Organisation (JETRO) Managing Director HirotakaYasuzumi believes
In a recent
interview granted to the Vnexpress newswire, Yasuzumi said Japanese
businesses are currently shifting their production bases and material
suppliers from
He said
Yasuzumi warned
support industry deficiencies continue to hamper Japanese investment in
He recommended
Vietnam focus on five support industry areas, including mould manufacturing,
plastic injection and stamping, electrical and electronic components,
machinery equipment, and heat and surface treatment.
The Japanese expert
also suggested replicating a training exchange model involving sending
employees of small and medium-sized enterprises to
Local
steelmakers call for action on anti dumping
Two local
steelmakers have filed a petition with the Vietnam Competition Authority
(VCA) under the Ministry of Industry and Trade (MoIT) saying imported
cold-rolled stainless steel is being dumped on the local market.
The petition by
Posco VST Co Ltd and Hoa Binh Inox Joint Stock Company called for
anti-dumping measures against cold-rolled stained steel imports from mainland
According to
Article 10.4 of Ordinance 20/2001/PL-UBTVQH11 on anti-dumping of goods into
This is the third
time local producers have filed a petition against imported products. The two
previous cases were brought against float glass and vegetable oil imports.
Most stainless
steel items enjoy a zero import tariff, except cross-section, which subjects
to a 10 percent duty, according to Circular 193/2002/TT-BTC dated November
15, 2012 issued by the Ministry of Finance.
In October last
year, the Finance Ministry brought forward the amended version of Circular
157/2011/TT-BTC dated November 14, 2011, raising the duty on cold-rolled
stainless steel imports to 7 percent from the previous 5 percent.
Such an adjustment
was made after Posco VST, the largest cold rolled stainless steel producer in
Belgium’s
East Flanders keen to do business in Vietnam
More than 70
Belgian officials and business representatives have recently met in Gent,
capital of East Flanders province to mark the 40th anniversary of diplomatic
ties between
Vice mayor Geert
Versnick, who is in charge of economics and diplomacy, expressed hope that
Belgian businesses will consider the possibility of investing in the
potential market of Vietnam.
The CEO of Flanders
Investment and Trade (FIT), Claire Tillekaerts, spoke highly of the growing
economic relations between
She cited
In his speech,
Vietnamese ambassador to Belgium Pham Sanh Chau emphasized that the
Vietnam-Belgium friendship has continued to grow and flourish over the past
40 years since the establishment of diplomatic ties in 1973, providing fresh
impetus for closer cooperation in all fields.
Serge Cappon,
Marketing Manager of VK Group, a leading construction enterprise in
Dominique Casier,
Consul General of the Royal Belgian Consulate in
European
enterprises spur investment up in Vietnam
The eleventh
quarterly survey on business climate index of European enterprises conducted
by the European Chamber of Commerce in
After standing
below 50-point levels for three consecutive quarters, this quarter, the index
rose from 48 points to 50 points.
The key indicators
of this development include improved business outlook, increasing revenue and
orders, and optimism about the overall economy.
More than half of
European enterprises participating in the survey are services providers, a
quarter are manufacturers, and the rest are traders and in other sectors.
According to the
report, investment plans have been improving with firms planning to
significantly increase investments at a rate double that of 7 percent in the
last quarter, to 13 percent. Especially, 84 percent of enterprises said that
their orders/ revenue remained stable or had improved.
Nha Trang
fish sauce producers hit by anchovy scarcity
Many traditional
fish-sauce producers in
Nha Trang Fish
Sauce Association currently has 35 members who produce fish sauce in the
traditional way and provide tens of millions of liters of fish sauce to the
domestic and international markets. The main ingredient to make traditional
fish sauce is anchovy. However, this year, anchovy has become scarce, sending
fish sauce producers into a flurry.
Statistics show
that, every year, fish sauce producers in Nha Trang produce more than 20
million liters of fish sauce and require about 15,000 tons of anchovies.
However, until now, they said that they have just bought less than 10 percent
of the required amount of fish. In order to have fish to produce fish sauce,
producers have looked everywhere but still failed to meet requirement, some
were not even able to find any fish at all.
Nguyen Hoai Son,
director of Chau Son Private Company, said that his company needs 800 tons of
anchovies each year, but this year, it only managed to buy a few tons of
anchovies. Thus, two thirds out of 60 fish tanks of the company were left
empty and the company has been perfunctorily operating on the amount of
anchovies it stockpiled since last year.
Mr. Son also said
that despite a shortage of anchovies, his company dares not buy other kinds
of fish because it will affect the quality of the fish sauce.
Experiencing the
same situation, 584 Nha Trang Fisheries Joint Stock Company was also able to
buy 5 percent of 8,000 tons of anchovies it needs to produce 10 million
liters of fish sauce, accounting for one tenth compared to the same period
last year.
Do Huu Viet,
director of 584 Nha Trang Fisheries Joint Stock Company, and chairman of Nha
Trang Fish Sauce Association, said that earlier traders from other provinces
brought fish to the company to sell to them, this year, on the contrary, the
company had to go to Quang Tri, Nghe An, Thanh Hoa, and Ninh Thuan Provinces
but still failed to find any fish.
Due to scarcity of
anchovy, some fish sauce producers had to buy other kinds of fish, causing
the quality of fish sauce to drop which will seriously damage traditional Nha
Trang fish sauce brand name.
According to firms,
a scarcity of anchovy was because fish catching declined. In addition, a huge
amount of anchovies was sold to companies who produce dried anchovies for
export. Although the price of anchovy rose by more than 30 percent, there was
still no anchovy to buy. This situation led to stagnation in production, more
unemployed workers, and a drop in fish sauce supply. Many fish sauce
producers in Nha Trang will possibly be fined for failure to fulfill their
contract.
Artichoke
price in Da Lat triples from last year
According to Ho
Ngoc Dinh, chairman of the Farmers Association of Ward 12 in Da Lat City,
traders recently purchased dried artichokes at a record high price of
VND300,000 per kilogram, triple that from last year.
The price of artichokes
climbed as producers collected them to make products and expand markets.
Due to the high
price, many farmers in
VietJetAir
offers Hanoi-Thailand air ticket for VND450,000
VietJetAir
officially launched a new route on June 1 with seven flights per week between
Flights will depart
from Hanoi at 10.50 am and land in Bangkok’s Suvarnabhumi Airport at 12.40
pm. Return flights will take off at 13.45 pm and arrive in Noi Bai
International Airport at 15.25 pm. VietJetAir has cooperated with the Tourism
Authority of Thailand to promote tourism and trade links between the two
nations and is offering one way tickets on the new route for only VND450,000.
VietJetAir said
that all flights to Bangkok from HCM City and Hanoi use Suvarnabhumi
Airport,the most modern airport in the Thailand, because of its many links to
other well-known destinations in the country as well as convenient 15-20
minute travel to Bangkok city centre via high-speed metro Children flying
with VietJetAir on June 1 will also come face to face with some much-loved
cartoon characters at the airport and receive bags of candyand other gifts
from VietJetAirstewards.
To celebrate
International Children's Day, VietJetAir also presented 100 gifts to children
being treated at Children’s Hospital 2, the
Tan
Son Nhat-Binh Loi outer belt road to open by September
Le Hoang Quan,
chairman of the People’s Committee of Ho Chi Minh City has instructed
execution units of the Tan Son Nhat-Binh Loi outer belt road project to
complete all works and open for traffic the stretch from
He was speaking
with representatives from relevant departments of the City while on an
inspection tour of the ongoing work of the belt road.
He ordered
execution units to speed up the project so as to open the entire route for
traffic at the earliest. After September, more sections will be completed
which will further add to ease in traffic flow.
According to the
South Korean GS Engineering and Construction Group, the investor of the
project, all four bridges including Rach Lang, Binh Loi, Go Dua and four
pedestrian flyovers on the route are complete.
Seventy two percent
of the road is already complete. However, some sections are still incomplete
due to slow site clearance. About 115 households are continuing to refuse to
remove from Tan Binh, Go Vap and Thu Duc District areas.
Chairman Quan
instructed the above districts to hand over vacant land for the project
within June. Go Vap District must coerce with related households to relocate
them from their present houses and complete the first phase of the project in
time.
Mr. Quan also asked
the contractor and execution units of the project to ensure work safety and
environmental hygiene in and around the construction area.
Relevant
departments should plant trees, build parks as well as parking lots along the
route. They should also prevent residents from building impractical houses
such as small, narrow and congested structures in the area.
The 13.7km Tan Son
Nhat-Binh Loi outer belt road begins at
The road then goes
straight over
The 30m wide final
section will run straight to Linh Xuan Intersection in Thu Duc District and
connect with
Tan Son Nhat-Binh
Loi outer belt road is expected to be the most beautiful inner road in the
City. After opening for traffic, it will ease pressure on routes moving from
the central parts of the City to the east of the City.
Economic
reform needs a boost
How to accelerate
economic reform to facilitate business operations was the major theme of a
mid-term business forum which opened in
The event offers
Government officials, domestic and foreign businesses, donors and diplomatic
corps the chance to examine ways to improve
There is growing
concern that
David Whitehead,
president of the Australian business society in
Despite the global
economic slowdown, global foreign direct investment (FDI) has increased
considerably in recent times, and if
At the 2012 Vietnam
Business Forum, VBF also warned that if Myanmar got the most favoured nation
(MFN) status from the US and European Union, its export products such as
garments, footwear and decorations would have highly competitive advantages
compared to similar Vietnamese products.
VBF has received a
great deal of proposals from businesses, expressing concerns about the
slowness in equitising and restructuring State-owned enterprises (SOEs).
Its working groups
even proposed completing a legal framework on the Public-Private Partnership
(PPP) model, citing the fact that the pilot PPP model has not lived up
expectations.
Cumbersome
administrative procedures are hampering investment attraction efforts, and
it’s time to act to support investors, they said.
However, the
Vietnamese economy seems to have bottomed out of the difficult times. The
European Chamber of Commerce in
EuroCham Executive
Director Paul Jewell said that the BCI has experienced incremental
improvements across the indicators, and this is a very healthy sign
demonstrating that European companies are slowly regaining trust in the
Vietnamese market.
He noted that this
is only the half-way and the BCI needs to significantly improve, if
Singaporean
investors keen on Vietnamese market
Singaporean
businesses strongly believe in
The Chief Executive
Officer of International Enterprise (IE)
Teo said the
consumer sector in
This is a good
opportunity for foreign businesses to operate in such fields as education,
safe water and medical care in the country, he emphasized.
To seize the
opportunity,
He argued that the
demand for urban infrastructure construction will increase rapidly when the
population in
At present,
In 2012,
Power
sector set for FDI inflow
A new wave of
foreign direct investment (FDI) is expected to flow into
According to Tata
Power, a subsidiary of the Indian Tata Group, the company has gained a
Vietnamese Government approval to conduct a feasibility study for the Long
Phu 2 thermoelectricity plant in southern
Having received the
green light, the company would now rush to carry out the next steps toward
the project, the firm added.
The Khanh Hoa
Provincial’s People’s Committee also said the 2,640MW Van Phong Thermal Power
Plant 1 has been the subject of negotiations between Japanese Sumitomo Group
and Hanoi Industrial Investment and Construction Corporation (Hanoico).
Sumitomo’s
representative said they had been in talks with the Ministry of Industry and
Trade to sign a build-operate-transfer (BOT) contract in the first quarter of
next year, Thoi Bao Ngan Hang (Banking Times) reports.
Once the contract
is signed, an investment license should be approved in the second quarter of
2014.
Construction work
is scheduled to start in August 2015, with the plant’s opening set for
October 2019.
Ken Robinson,
director of the multinational Howden Group which has officially opened a
representative office in
The group has
provided more than US$1.5 billion worth of facilities, including blowers and
fans, to regulate temperature for power projects in
Experts said
However, many power
sector FDI projects have faced implementation difficulties due to
inappropriate policies. Van Phong Thermal Power Project 1, for example, had
shortcomings in the land lease contract with
Nguyen Chien Thang,
chairman of the provincial People’s Committee told Vietnam Investment Review
the province is committed to ensuring a favourable land hire contract for the
project’s investors. To support this, the Japanese group was asked to provide
a specific project completion timetable to help avoid delays.
Another project,
Hai Duong BOT Thermal Power project is behind schedule due to unresolved
investment agreement issues.
Experts said the
country should produce an effective legal framework to help investors resolve
difficulties in exploring the sector.
Aquatic
exports to
Last year, the
turnover to 25 African countries hit US$150 million, a 38 percent surge from
2011, with key exports including Tra and Ba Sa fish, shrimp and tuna.
According to the
African, West and South Asian Markets Department under the Ministry of
Industry and Trade, Vietnamese exporters have a good opportunity to promote
seafood exports to African countries as the nations have to import numerous
aquatic products to meet their domestic demand and their aquaculture industry
is under-developed.
Vietnamese
exporters are even able to study the possibility of implementing aquaculture
projects in the continent and exporting seafood to surrounding countries.
Moreover, the
profuse domestic supply of Tra fish at stable prices facilitates Vietnamese
exporters’ trade with the continent.
However, Vietnamese
exporters have encountered several difficulties in exporting their products
to the African market.
It takes around 40
days to transport goods from
In easing the
difficulties and stepping up aquatic exports to
They have also been
asked to set up a distribution network with a single price in the continent’s
key markets in order to avoid dumping.
The ministry says
It is followed by
VN-Italy direct
air cargo route to open
A direct air cargo
route linking
This was announced
during a recent press conference at the Vietnamese embassy in
According to the
agreement, during the first phase the two companies will use Airbus 330
freighters to transport goods between the two cities every week beginning in
October this year.
Boeing 747-400F
aircraft will be used in the second phase as of April 2014.
Vietnamese
ambassador to
He said it will
help promote trade, exchange programmes and exports between
Developing
IPs, EZs to attract more FDI
A score of
synchronous measures are needed to develop industrial parks (IPs) and
economic zones (EZs) into attractive destinations for foreign direct
investment (FDI).
These areas play an
important role in socio-economic development by creating jobs, increasing
budget revenues and export earnings, and expanding markets.
More than 280 IPs
and IZs have been established in
Annual FDI capital
poured into IPs and IZs accounts for 40-45 percent of the country’s total
increased registered capital.
Positive results
have also been recorded in attracting FDI attraction to coastal IPs, attracting,
to date, 144 FDI projects with a total capitalization of US$38.4
billion. Forty percent of the total land fund for industrial
production, tourism and services is covered by these projects.
According to
economic experts, the foreign-invested sector at IPs and EZs has made
significant contributions to raising the added value of the industrial
sector. FDI capital invested in IPs and EZs constitutes up to 80 percent of
the FDI capital for
Exports produced in
IPs and EZs grew by 20 percent in 2005 and by 20-30 percent in recent years.
In addition,
businesses in IPs and EZs have generated jobs for two million workers,
including 1.2 million that are employed by FDI businesses.
However, IPs and
EZs have revealed some weaknesses in attracting FDI.
Professor Dr.
Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested
Enterprises, attributes the limitations to imperfect legal frameworks for
controlling IP and EZ operations.
Continually
changing incentive investment policies have also caused many problems for
investors, he added.
National and local
investment promotions for IPz and EZs have failed to attract projects with
high technological value, while poor infrastructure, low quality human
resources, weak connectivity between businesses and unimproved environmental
protection are also a major obstacles to attracting FDI.
Head of the
Overseas Investment Department, Do Nhat Hoang, says many domestic and foreign
investors are currently seeking investment opportunities in IPs and EZs that
will create a strong inflow of revenue.
Thorough
preparations are necessary to seize these major opportunities by developing
IPs and EZs in parallel with socio-economic development and improving the
quality of their technical infrastructure and public amenities.
Proper mechanisms
should also be adopted to facilitate EZ operations based on different
investment models such as Build-Transfer (BT), Build-Operate-Transfer (BOT)
and Public-Private-Partnership (PPP).
All ODA, FDI, State
budget and government bond capital resources should be mobilized to build key
infrastructure projects in EZs in order to stimulate more investment, Hoang
said.
Agreeing with
Hoang’s views, Vu Dai Thang, head of the EZ Management Department, argues
that IPs and EZs should prioritize attracting investment for sectors and
areas that promote advanced and environmentally friendly technologies, in
addition to strengthening connectivity to sharpen the competitive edge and
improve operational efficiency.
It is also
imperative to supervise adherence to legal regulations on environmental
protection and revamp policies and laws to improve working conditions and the
lives of employees at IPz and EZs.
Streamlining administrative
procedures, fine-tuning mechanisms and policies for IPs and EZs, and
enhancing State management is another solution for developing IPz and EZs in
the future, Thang adds.
The Mekong Delta
provinces shipped 237,000 tonnes of tra fish in the first five months of this
year, earning US$ 616 million, down 6 percent from last year’s period.
In the five-month
period, tra fish exports dropped in price and volume in many traditional
markets.
The regional
provinces zoned off 5,700 hectares of water surface for tra fish breeding and
supplied 390,000 tonnes of material tra fish for processing factories.
The Ministry of
Agriculture and Rural Development (MARD) said local breeders still face
difficulties due higher production costs than selling prices and they find it
difficult to access bank loans.
To help the
farmers, the provinces have sent technical staffs to guide them how to
produce tra fish meeting standards for export. They have also encouraged the
breeders to apply new farming methods to raise the fish quality.
VietGap
products to enter traditional markets
High-quality farm
produce such as fruit and vegetables meeting Vietnamese Good Agriculture
Practices (VietGap) standards will make their way into traditional markets in
HCMC under a program intended to increase the competitiveness of traditional
markets.
With a plan to
build up a distribution system for high-quality products, the HCMC Department
of Industry and Trade wants to find stable outlets and improve the prestige
of traditional markets which are struggling to compete with modern
distribution channels, especially convenience stores, said Nguyen Nguyen
Phuong, trade management head at the department.
The department will
work with its counterparts in the 13 Mekong Delta provinces to create
supply-demand connectivity, with these provinces active as suppliers for the
city market, he noted. A conference will be organized in Can Tho next month,
while two others will be held in the Central Highlands
Such a program is
much needed since traditional markets are facing a fierce competition from
the modern retail networks.
Consumption at
traditional markets in HCMC is falling as consumers have shifted to shopping
at air-con supermarkets and convenience stores, according to the department.
Before the program,
the department had launched food safety and hygiene programs at local
markets, with Ben Thanh Market and Hoc Mon wholesale market selected as pilot
venues.
Under the programs,
dining services providers and vendors of fresh foodstuff, fruit and vegetables
are encouraged to make clear origins of goods, pack products and comply with
food safety and hygiene requirements. The programs then will be expanded to
all first-grade markets.
VAMC not
guarantee for stronger credit growth
Vietnam Asset
Management Company (VAMC) is expected to help reduce bad debt, but it is far
from removing the bottleneck currently blocking credit growth, said economist
Ngo Tri Long.
VAMC is designed to
cope with bad debt, reduce risk for banks, and maximize debt recovery. But
bad debt is just taken off the balance sheet, not completely settled, he
noted.
Unlike other
countries, where debt is traded directly, VAMC will buy debts from banks
through the issuance of special bonds.
It remains to be
seen whether any shortcoming would emerge from this process. The process
needs to be transparent and avoid the influence of interest groups, or else
the consequences would be even more severe, he said.
Under the scheme,
debtors whose mortgaged assets are sold to VAMC may apply for new loans if
they have viable business plans. However, “it is unsure whether banks will
grant them loans or not,” he said.
Weak firms will be
required to show viable business plans and mortgage other assets for new
loans. Meanwhile, unhealthy debtors will certainly find it hard to gain
access to new credit.
Therefore, it is
unrealistic to say VAMC is the magic wand to solve the present bad debt
issue, said the economist.
It is feared that
the maximum refinancing of VND40 trillion under the scheme for VAMC
establishment and VND30 trillion worth of loans for homebuyers and low-cost
condo developers may stoke a return of high inflation.
Long said: “VND30
trillion may not be used up, and even VND40 trillion to be supplied through
refinancing can hardly flow into the economy since banks may impose stringent
lending conditions. If so, inflation wouldn’t be a concern.”
However, bad debt
is still there, not yet settled. When such a large sum of money is injected
into the economy, it might lead to certain economic uncertainty, he stressed.
If the property
market got stable five years later, mortgaged assets could be settled.
However, the recovery of the property market heavily depends on how the
economy performs, he noted.
“In other countries,
it takes 5-10 years for the economy to recover. In our country, if the
economy remains uncertain, the real estate market can hardly recover, even 20
years later,” he said.
He stressed the
most fundamental task now was to restructure the economy, but this process
remained to be done. A comprehensive plan should be drawn up first, followed
by detailed plans, but a reverse order is in place.
“If the above
problems remained unresolved five years later, not only the property market
but the entire economy could sink into crisis. Now is the pre-crisis period,
given the weakened purchasing power, low incomes of people, increasingly high
numbers of corporate bankruptcies and bad debt,” said Long.
VAMC would not help
much as long as the crux of the matter remained unresolved, said the
economist.
Solutions
to budget overspending
The assigned tasks
on budget collection, spending and overspending must be resolved by the year
end.
As of May 15, the
total budget collection was estimated at VND268.4 trillion, representing
32.9% of the estimate.
Some sectors and
products posting higher- than- average-rate contributions included crude oil
(meeting 43.1% of the preset target); the FDI sector (38.5%); individual
income tax (38.3%) and fees (34.1%).
However, budget collection
at other fields remained low, of which export and import revenue touched
27.7%; domestic collection was 32.7% including environmental protection tax
of 29.2%; SOEs 31.1%; land fees 23.4%.
Meanwhile, total
budget spending was VND335.6 million, equivalent to 34.4% of the estimate.
Administrative
spending accounted for 70.1% of total expenditure. Development investment was
35.5%. Debt payment was higher than the estimate, at 36.5%.
According to
economic experts, the Government should propose the National Assembly
loosening public debts and increasing budget overspending level to resolve
difficulties for enterprises and support market.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Hai, 3 tháng 6, 2013
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