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BUSINESS
IN BRIEF 29/3
Anti-dumping
duty imposed on VN bicycle tyres
The information was
provided by the Viet Nam Competition Authority under the Ministry of Industry
and Trade on March 25.
An anti-dumping
duty of US$0.59 per kilogram has been imposed on Kenda Rubber (
The duty will be
effective from the date of the Brazilian Ministry's decision and will be
applicable for five years.
Bicycle tyres
imported from
Repsol
lubricants enter
Repsol lubricants
entered
According to the
Industry and Trade online newspaper, these products are used by cars and
motorcycles and also in industrial operations. Repsol SA has a presence in
over 70 countries, including several Asian markets such as
Lubro Corp said it
is building a nationwide distribution network. Repsol SA is based in
Government
bonds fetch over 6 trillion VND
The State Treasury
mobilised over 6 trillion VND (282 million USD) in Government bonds through a
tender organised by the Hanoi Stock Exchange on March 27.
The bonds on offer
are worth 10 trillion VND (470 million USD) in total, including those of
three-, five-, and ten-year terms.
The money mobilised
includes 3.3 trillion VND (155 million USD) in three-year bonds with an
annual interest rate of 6.1 percent, as well as 950 billion VND (44.6 million
USD) and 2 trillion VND (94 million USD) in five- and ten-year bonds with
7.13 and 8.7 percent, respectively.
The State Treasury
has so far this year mobilised nearly 69 trillion VND in Government bonds via
tender.-
Rice
exports reach 1.31 million tonnes in Q1
In March alone, the
country shipped 524,000 tonnes, grossing US$243 million in export revenue.
The average export
price of rice bumped up 8% compared to Q1 of 2013 to US$486.5 per tonne.
With these positive
results, the
The Vietnam Food
Association (VFA) forecasts that
At present, the
price of dried paddy at stores in the Mekong River Delta is hovering around
VND5,250-5,350 per kilo while the price of long-grain paddy is holding steady
at about VND5,550-5,650 per kilo.
The price of 5%
broken rice ranges from VND7,750-7,850 per kilo while 15% broken rice varies
from VND7,500-7,600 per kilo and 25% broken rice at VND7,250 -7,350 per kilo,
depending on locality.
Vietnam-Indonesia
trade predicted to reach US$10 bil
The prediction was
made by experts at a March 27 seminar in
Investment and
Trade Promotion Centre (ITPC) Director Pho Nam Phuong, affirmed
Last year,
Both nations agreed
to set up a sub-commission on Food and Energy Security Cooperation (JCFESC)
in 2014 under the framework of the Joint Commission for Economic, Scientific
and Technical Cooperation (JCESTC). Accordingly,
Ari Satria,
Director of Market Development and Export Information under
130 businesses
to attend MTA Hanoi 2014
Some of the best
and latest new equipment and technologies which are suitable for developed
industry are going on display in
More than 130
businesses from 19 countries and territories around the globe have registered
to participate in the exhibition.
“Production
in northern
Conference
seeks ways to help SMEs access capital
A public-private
dialogue under the Asia-Pacific Cooperation (APEC) took place in
The two-day event,
held by the Ministry of Industry and Trade (MOIT) in conjunction with the
APEC Secretariat, aims to strengthen mutual understanding between the private
sector and the Government, thus enhancing their coordination efficiency.
According to MOIT
Deputy Minister Le Duong Quang, support policies to help SMEs and VSEs
overcome barriers in their access to capital are crucial for the viability
and development of the firms, especially in developing APEC countries.
Currently, more
than 90% of businesses in
Meanwhile,
Indonesian Deputy Minister of Cooperatives and SMEs ChoirulDjamhari held that
in order to help the firms overcome capital difficulties, the commercial
banks should give them at least 20% of their total investment, while
convincing commercial banks to adopt more preferential policies for loans for
production rather than consumption.
Ha Thu Giang,
Deputy Head of the state credit policy office of the State Bank of Vietnam
(SVB), said since May 2012, the SVB has cut the interest rate for short-term
loans in VND for SMEs eight times, from 15% to 8% currently.
At the same time, Professor
Andrew Terry from
He also stressed
the importance of a stable macro-economy and an effective finance base for
SMEs and VSEs’ smoother access to capital.
Vietnam,
RoK share audit, inspection experience
The Government
Inspectorate of Vietnam held talks in Hanoi on March 27 with a delegation
from the Republic of Korea (RoK)’s Board of Audit and Inspection (BAI) to
share their experiences in directing and managing inspection work.
Deputy Inspector
General Le Tien Hao stressed the talks are a valuable opportunity for the two
bodies to foster their friendship and collaboration as well as realize the
goals as stated in their memorandum of understanding.
Hao said he hopes
that the two sides will check, evaluate and amend the signed cooperation
agreement, and invited the BAI’s chairman to visit
BAI Secretary
General Kim Young-ho said this is a good chance to bring the friendship and
affiliation between the two agencies on a par with the Vietnam-RoK strategic
cooperative partnership.
Both sides also
discussed orientations to intensify their linkup in the coming time and
organise training courses in the RoK to improve Vietnamese inspectors’
capability in tackling complaints and denouncements.
South African
Ambassador Kgomotso Ruth Magau has said
Addressing a
Vietnam-South Africa trade and investment promotion conference in
The event, jointly
organised by the
The event also
updated Vietnamese businesses with information on the trade and investment
policies of
Representatives
from about 20 South African firms at the event also introduced their business
in various fields such as information technology, communications, mining,
equipment, chemicals, cosmetics and food.
According to Nguyen
Tan Thanh, Director of the VCCI -
In the future,
Seminar
discusses exports to Japan
The event also
helped local enterprises to learn more about trade policies and share
experiences of doing business in demanding markets.
Ministry of
Industry and Trade (MoIT) Trade Promotion Agency Deputy Head Ta Hoang Linh
said that
However, the
country has high standards in agriculture and industry, a complicated
distribution system and technical barriers towards food products.
At the seminar,
experts urged businesses to learn more about Japanese culture and business
customs. In particular, they should learn about regulations on food safety
and hygiene to provide high quality products and reduce the quarantine
period.
It is imperative to
fully utilize
Deputy PM
visits VSIP Bac Ninh
Deputy Prime
Minister Hoang Trung Hai has highlighted Vietnam-Singapore Industrial Park
(VSIP) Bac Ninh’s capacity for building infrastructural facilities and
attracting major global investors and trademarks.
During his March 27
working session to VSIP Bac Ninh, Hai said that there should be measures to
accelerate the progress of VSIP Bac Ninh construction in the second phase,
develop urban areas and build houses for workers.
He asked the
province to facilitate investors’ operations, affirming that the Vietnamese
Government will focus on implementing administrative reforms, creating a
favourable environment to attract investors to Bac Ninh and
VSIP Bac Ninh, in
northern
With a uniform and
modern infrastructure, VSIP Bac Ninh has attracted 50 major investors
including Nokia, PepsiCo, Foster, and Mapletree to lease land and build
workshops.
US$1.09 billion,
mostly from FDI enterprises has been invested in Bac Ninh so far. The
industrial park has generated 17,000 jobs until March 2014 and is expected to
provide approximately 20,000 more later this year.
APA – an
effective remedy against transfer pricing
Enforcing the
Advance Pricing Agreement (APA) mechanism is considered an effective solution
for combating transfer pricing which has been reportedly increasing among
multinational corporations (MNCs) in
At a recent seminar
in
Transfer pricing is
a hot issue that has garnered the great attention of taxation agencies throughout
the world, because MNCs can directly affect the allocation of profits to
individual countries by increasing or decreasing the price they charge each
other, even though the profits of the group as a whole remain unchanged.
Many countries
including the
In late 2013 the
Vietnamese Ministry of Finance issued a circular, guiding APA implementation,
creating an important legal corridor for preventing tax evasion and
minimizing disputes about market price evaluation in related-party
transactions.
Colin Clavey, a
senior consultant on APA of the International Financial Corporation, and
Sabine Wahl, an independent consultant, shared experience in reaching viable
APA deals, saying both tax agencies and tax payers must prepare necessary
conditions before negotiations.
Businesses should
have meetings and consultations before submitting an APA dossier to the tax
agency. Receiving the dossier, it is the tax agency’s task to study the
payers’ economic, trading and tax payment reports in order to come up with
proper negotiation plans.
When the two sides
agree on price levels, provisions, and payment methods, they can then proceed
to enter into agreements to apply the APA, Clavey and Wahl concluded.
Arcotia
Hasidimitris, a World Bank expert, said to realize APAs, the General
Department of Taxation should build databases, gain experience in transfer
pricing, and train officials to better understand about the field and methods
to negotiate with tax payers.
Hasidimitris
suggested
However, Yoshiyuki
Nakagawa, a Japan International Cooperation Agency (JICA) expert, advised
He warned
International
trade fair attracts businesses
As many as 180
local and foreign businesses are showcasing and promoting their products and
services at an international trade fair which opened in Dien Bien province on
March 26.
On display at
nearly 400 stands are handicrafts, processed industrial products, household
utensils, electronics, information technology, and fashions.
The five-day fair
offers participating businesses the chance to seek partnerships and expand
overseas outlets, especially in
The fair, held by the
VNEXPO International Exhibition Fair Company, is part of the national key
trade promotion programme for 2014.
Policy
recommendations for new growth model
The proposal was
made by Professor Tran Tho Dat, Vice Rector of the
The Vice Rector of
the
However, after the
economic recession in 2009, growth slowed down significantly and has yet to
pick up much speed, he said.
“Success may only
be reached by shifting to a new growth model that is based on the efficiency
of mobilising resources to improve industrial competitiveness, technological
standards and productivity,” the Professor said.
He also claimed
that increasing links between domestic enterprises and multi-national groups
is a sound way to reach this goal.
At the seminar,
economic experts also put forth a number of policy recommendations to further
improve the role of foreign direct investment (FDI) and create a new sustainable
growth momentum for
Although
According to
Professor Kenichi Ohno from Japan’s National Graduate Institute for Policy
Studies (GRIPS), despite a remarkable structure shift from agriculture to
industry in the past two decades, Vietnam’s added production value only
reached 19.7% in 2010, much lower than those of Thailand, the Republic of
Korea (RoK), Malaysia and Indonesia.
The country’s
industrialisation remains modest compared to other Asian nations such as
However, the
Japanese expert also acknowledged the Vietnamese Government’s efforts in
cooperating with the private sector to create higher internal value.
Vietnam needs to
have a FDI marketing strategy, build the capacity for domestic enterprises
and increase collaboration between foreign and local firms while
improving logistics services and industrial human resources, he stressed.
Ho Chi Minh
City’s GDP up 7.7 percent in Q1
Chairman of the
municipal People’s Committee Le Hoang Quan made the remark at a recent
meeting to review the city’s socio-economic and cultural situation in the
reviewed period and discuss ways to implement tasks and key measures for the
second quarter.
According to a
report presented by the municipal Department of Planning and Investment, the
city’s consumer price index (CPI) in the first three months of the year
increased by 0.18 percent from last December and 1.15 percent over the same
period last year.
The city’s budget
collection reached 60.49 trillion VND (2.84 billion USD) or 26.49 percent of
this year’s plan, a year-on-year surge of 16.07 percent.
The service sector
jumped 8.9 percent, making up 60.5 percent of the GDP while the industry and
construction sector posted 6.1 percent growth, 38.8 percent.
For the whole
quarter, the city’s retail sales and service revenue was estimated at 152.65
trillion VND ( 7.17 billion USD), a year-on-year hike of 12.1 percent.
The city granted
investment licenses to 75 projects with a total registered capital of 690
million USD, up 19.1 percent from the corresponding period last year, thanks
to the locality’s efforts in reforming administrative formalities and FDI
attraction policies.
However, the export
turnover was estimated at only 6.34 trillion USD, a year-on-year drop of 7
percent as the crude oil exports fell 12.8 percent in volume and 3.3 percent
in value.
The drop also
resulted from the city’s shortcomings and barriers in customs formalities,
which shied some local enterprises to surrounding localities.
At the meeting,
Chairman Quan asked relevant agencies to focus on checking administrative
formalities and putting forth remedies.
In the second
quarter, the city will focus on tackling local enterprises’ difficulties and
supporting their production and business.-
FDI inflow
drops off in first quarter
Newly registered
and added foreign direct investment capital (FDI) tumbled to 3.3 billion USD
in the first quarter of this year, down by 49.6 percent compared to the same
period in 2013, according to the General Statistics Office.
However, the
country's disbursement of FDI in the first quarter rose 5.6 percent against
the same period last year to 2.85 billion USD. During the period, processing
and manufacturing was the most attractive sector to foreign investors,
accounting for 2.33 billion USD or 69.9 percent of the country's FDI inflow.
Real estate followed with 288.3 million USD, accounting for 8.6 percent.
The
Domestic experts
recently forecasted that the strong flow of FDI into
Chairman of the
Vietnam Association of Foreign Invested Enterprises Nguyen Mai stated that
the global economy was on the mend, and successful businesses were scurrying
to find lucrative investments.
Mai noted that
universally, they considered
However, the
Government must improve FDI related policies, they said.
Deputy Director of
the Ministry of Planning and Investment's Foreign Investment Agency, Nguyen
Noi, emphasised that drastic measures to improve the business environment
would be undertaken. Most notably, measures would be adopted to simplify
customs formalities and streamline procedures to establish businesses, he
reported.
The ministry is
also gathering recommendations on the revised draft Law on Investment, which
is expected to create a more transparent investment climate by amending and
adding new administrative procedures and addressing the difficulties in
gauging investment performance.-
During a meeting of
the National Steering Committee for Money Laundering Prevention and Control
on March 27 in Hanoi, SVB Deputy Governor Vietnam Dang Thanh Binh said FATF
lauded Vietnam ’s significant progress in improving its anti-money laundering
and counter-terrorist financing regime.
At its working
session with Vietnam ’s authorised agencies in mid-February, 2014, FATF’s
international cooperation review group said Vietnam has established the legal
and regulatory framework to realise commitments set forth in its action plan
regarding the fixing of deficiencies that the FATF had identified in October
2010, he said.
Established in
1989, FATF is an inter-governmental body aiming to set standards and promote
effective implementation of legal, regulatory and operational measures for
combating money laundering, terrorist financing and other related threats to
the integrity of international financial system.
FATF network has
expanded to 34 member countries, two observation countries and five regional
organisations.
Seminar discusses green growth in Hai Phong
A workshop to seek
measures to promote green growth in port cities in Vietnam was held in the
northern port city of Hai Phong on March 27.
The event was
jointly organised by the International for Union Conservation of Nature
(IUCN), Mangroves for the Future (MFF) and the municipal People’s Committee.
At the workshop,
participants exchanged points of view on the matter, while discussing plans
to implement the National Strategy on Green Growth in Vietnam and Hai Phong
in the coming time.
Attendees agreed
that green growth is an important part of sustainable development as it
contributes to reducing pressure on the environment and ensuring decent
living conditions for people.
According to
Municipal Party Committee Secretary Nguyen Van Thanh, though Hai Phong’s
economic growth has doubled over the last two decades, the city still needs
to work hard to solve serious challenges caused by environmental pollution.
He said the city is
making every effort to make it become a green and modern city by 2020 by
implementing a series of measures, which focus on restructuring and
innovating growth models, applying advanced technologies in production,
intensifying environmental protection, and pushing closer international
cooperation in the field.
IUCN and MFF are
working closely with Hai Phong to seek nature-based measures to deal with
environmental challenges and climate change facing the city.
Hai Phong, the
third largest city in Vietnam, plays an important role in the country’s sea
transport network. It is striving to become a green port city by 2020.
Livestock export potential untapped: experts
Vietnam's livestock
industry, while relatively well developed, has not been able to take
advantage of its export potential, experts have say.
So far, the
industry has only succeeded in exporting small volumes of fresh and processed
livestock products, they told the Thoi Bao Kinh Doanh newspaper.
Nguyen Dang Vang,
chairman of the Vietnam Livestock Association, said export livestock
enterprises have mainly exported suckling pigs and salted duck eggs to Hong
Kong and Malaysia apart from several varieties of meat to China via border
trade.
No official
statistics on the volume of meat product exports are available, but Vang said
that on average, Vietnam exports 35,000 tonnes of pork to China every year,
accounting for 1 percent of the national total pork export.
Vang said some
enterprises have developed large-scale farms with a self-contained processing
system, but most of their output is for the local market and only a small
volume is exported.
The Vissan Co.
Ltd., one of the leading food processing and production firms in Vietnam, has
set an export development strategy, but it is yet to execute it well,
industry insiders say.
Vissan General
Director Tran Tan An said that his company has exported its products to some
markets like Singapore, Australia, the Republic of Korea, Russia, and North
America, but these did not make up big volumes.
Their exports
include frozen meat, processed meat, sausage, lean pork paste and canned
meat, An said.
Very few livestock
industry products are being shipped to potential markets like Russia, the US
and Australia, he said. So far, it has only sent grilled pork paste and lean
port paste to these countries. Other key products of the company, including
sausage and canned meat, can also be exported to regional countries, such as
Cambodia and Myanmar, An said.
A livestock
industry expert who did not want to be named said that Vietnam has ample
opportunities to export its products. He noted that the country used to
export pork to East European countries.
Now, markets across
the world, particularly Japan and China, have a great demand for meat and egg
products, he said. However, while the country has plentiful supply of these
products, their quality and competitiveness present an export challenge, he
added.
In Vietnam,
households constitute the main production unit in the livestock industry,
supplying 90 percent of domestic meat consumption. There are few enterprises
engaging in large-scale production with quality standards that can satisfy
importing countries, the expert said.
Vang noted that the
production process in livestock enterprises is not self-contained, increasing
costs significantly. The production cost of meat in Vietnam is 1.4 times that
in the US. Hence Vietnamese meat products are less competitive in the
international market, he said.
An remarked that
existing policies have failed to create favourable conditions for the
livestock industry to increase its exports.
Vietnam has been a
member of the World Trade Organisation for a long time now, but regulations
and standards related to veterinary care and food hygiene and safety in
Vietnam are not in accordance with standards set by the importing countries,
An said.
The Thoi Bao Kinh
Doanh report cited several industry insiders as saying the state should issue
effective policies to encourage exports of fresh and processed meat and eggs.
Without this
enterprises would not have the incentive to renew the production process with
modern technology and seek export markets while reducing the less profitable
border gate trade, they said.-
Shrimp
prices rise as supply declines
Shrimp prices have
reached a record high since Tet (Lunar New Year) due to a lack of supply.
This is a
record-high price, said Tran Van Duong, a farmer who lives in An Minh
District in Kien Giang Province. With this price, farmers can earn VND60-80
million ($2,900-3,800) per ha despite the low productivity of extensive
farming methods they are now using.
The price has
increased because the harvest area is still small as this is only the
beginning yield of this prawn crop.
Nguyen Quang Minh,
director of Kien Cuong Seafood in Kien Giang, said the company had not bought
enough fish, and had only 20-30 per cent of its maximum productivity.
The company had to
switch to processing squid and other frozen fish to ensure jobs for workers,
he added.
According to
several enterprises, the situation will continue for one to two months until
farmers collect all their shrimp at the end of the harvest.
The price for
prawns in the Cuu Long (Mekong) Delta provinces of Kien Giang and Ca Mau has
risen by VND10,000 ($0.47) to VND305,000-310,000 ($14.46-14.7) per kilo for a
package of 20; VND250,000 ($11.86) for a package of 30; and VND230,000
($10.9) for a package of 40.
PM
instructs good rice stockpiling in Mekong Delta
Prime Minister
Nguyen Tan Dung has instructed agencies to implement the government’s program
to stockpile one million tons of winter spring rice in order to prevent
further price drops in the Mekong Delta.
He ordered the
Ministry of Agriculture and Rural Development to work with the Vietnam Food
Association and provinces in the Mekong Delta to supervise and speed up
stockpiling according to regulations. They will report to the government in
case of any difficulty receiving assistance.
The Vietnam Food
Association will choose businesses with good financial ability and warehouse
system to stock the rice. The State Bank is ordered to instruct commercial
banks to loan rice stockpiling companies.
Commercial banks
will provide loans at a preferential interest rate of 7 percent in six months
beginning March 20. The State Bank will sponsor businesses with 100 percent
of interest rate in the first four months.
The Government’s
rice stockpiling program began March 15 and will last until April 30.
Rice prices have
slightly increased right after the Prime Minister’s decision, according to
Sai Gon Giai Phong Newspaper. It recently reduced again.
Traders paid only
VND 4,100-4,200 a kilogram of fresh rice, a decrease of VND200 over last
week.
Businesses have
reduced purchase due to export demand fall. These businesses implemented the
program too slowly.
Some companies
refused to purchase contracts to consume rice in large scale paddy fields.
Docimexco Company
contracted with Tan Hong District Cooperative, Dong Thap Province for
consumption of 746 hectares of winter spring rice. However the company has
refused to do so when 210 households in the cooperative reap their rice.
A HCMC-based
company has also not kept their promise to purchase 100 hectares of high
quality rice in Binh Minh Cooperative, Thanh Binh District.
The company wanted
farmers to delay the harvest time until April but rice fields have ripened
forcing farmers to sell at low prices.
Vinacomin
still optimistic about bauxite projects despite losses
The Ministry of
Industry and Trade and Vietnam National Coal and Mineral Industries Group
(Vinacomin) have expressed optimism over Tan Rai and Nhan Co bauxite
projects, saying they would fare well even though they cannot avoid losses in
future.
Quoting a report
the ministry has sent to a supervision team of the National Assembly Standing
Committee recently, Nguyen Thanh Son, director of the management unit for Red
River Delta coal projects, said Vinacomin would have to pay the annual
interest of VND600 billion each year for Tan Rai project alone in 2014 and
2015. Meanwhile, Nhan Co project needs more funding with an average interest
rate of 6.31% per annum, higher than that for Tan Rai.
“However, Vinacomin
has drawn up plans to settle the loans,” the report said.
Investment capital
for the two projects has soared by 35-40%, with capital for Tan Rai rocketing
from VND10.9 trillion to VND14.8 trillion and that of Nhan Co ballooning from
VND11.3 trillion to VND16.8 trillion. Over 70% of the total amount is sourced
from credit, of which around US$600 million is guaranteed by the Government.
Tan Rai is expected
to turn out 540,000 tons of alumina this year, 83% of the designed capacity,
and 650,000 tons of alumina next year, its full capacity, the report said.
Vinacomin is still
optimistic about the situation although the alumina price is below US$300 per
ton, lower than the earlier estimated US$370. The ministry and Vinacomin said
prices would move up in near future.
However, Tan Rai
project is predicted to rack up losses of VND176 billion this year and VND252
billion next year and generate a modest profit of over VND9 billion in 2016.
Between 2017 and 2020, the project may earn VND100-200 billion a year.
Meanwhile, Nhan Co
would suffer losses from 2015 to 2020, losing around VND500 billion a year.
The ministry and
Vinacomin insisted that the projects would bring about positive results if
they got incentives in terms of environment protection fee, value added tax
and natural resources tax. They also asked for a reduction of investment
capital in a sludge holding system, which has promoted concerns about its
safety.
Son did not give
comments on the report. However, Son told the Daily that he found
shortcomings during the running of production lines in his survey at the two
projects late February.
Nhan Co certainly
cannot meet the progress as expected by Vinacomin. Given losses until 2020,
Nhan Co project should be suspended, Son added.
DNV GL
explores opportunities in maritime, oil, gas industries
DNV GL, a global
ship classification society and one of the world’s leading risk and
sustainability service providers, is continuing hiring more employees and
develop local expertise to tap new opportunities in this emerging market.
The keynote was
underscored by Henrik O. Madsen, group president & chief executive
officer of DNV GL, last week at an official inauguration of the company’s new
office in downtown HCMC. The event, which was attended by Crown Prince Haakon
of Norway and Norwegian Minister of Trade and Fisheries Monica Mæland, was
part of the program of the Norwegian trade delegation visiting Vietnam last
week.
Madsen said that
DNV GL was represented at the big shipyards from Haiphong in the north of
Vietnam to Vung Tau in the south, and had some 60 employees in Vung Tau and
HCMC, with almost all of them Vietnamese nationals.
“DNV GL will
continue to employ and develop local expertise in Vietnam. Not least because
we firmly believe that the shipbuilding industry will recover, and the oil
and gas industry will develop further, in the years to come,” Madsen said.
“With a strong base
in the traditional maritime and oil & gas business, we are also venturing
into new and exciting areas together with our many partners here in Vietnam.”
He gave an example
that DNV GL was in collaboration with the Vietnamese Ministry of Transport
and other industrial players to develop sea transportation alternatives to
make the domestic transportation system more sustainable and efficient.
Gas was another
area of interest for DNV GL in this market of more than 90 million people.
“Vietnam needs natural gas to fuel economic growth. That implies a need to
develop infrastructure fast. DNV GL is ready to support in any way possible,
and we are already in talks with PV Gas on this matter,” Madsen said.
“The growth of
Vietnam’s oil and gas industry in recent years has been astonishing. We
believe this growth will continue and will drive the need for more local
expertise and knowledge.”
Electricity is also
an area of great potential for DNV GL. “With Vietnamese authorities now
embarking on a major reform of electricity markets, numerous Norwegian
businesses including DNV GL have experience and know-how that is highly
relevant throughout the value chain,” Madsen clarified.
Madsen described
Vietnam as “a country with abundant opportunities for Norwegian businesses.”
He recommended clearer framework conditions for international businesses in
Vietnam as they together with a Vietnam-EFTA (the European Free Trade
Association that is in negotiations and groups Iceland, Norway, Switzerland,
and Liechtenstein) will be conducive to strengthened collaboration between
Vietnamese and Norwegian businesses.
DNV GL has been
present in Vietnam since 1995 and has seen Vietnam as a strong emerging
market for its services in the maritime and oil & gas industries. The new
office in HCMC’s district 1 is expected to consolidate the operations of its
business areas regarding maritime, oil and gas and business assurance under
one roof.
The open concept
office is expected to foster closer collaboration and working efficiencies
between the employees of both DNV and GL which merged in September last year.
New central
bank rule feared to hold back bank sector restructuring
Legal changes
provided in a new central bank circular are feared to have a negative impact
on the progress of the already-slow banking sector restructuring, according
to an updated report by Bao Viet Securities Company (BVSC).
The central bank
last week issued Circular 09/2014/TT-NHNN amending and supplementing a number
of provisions in Circular 02/2013/TT-NHNN on classification of assets, and
amount, method and use of risk provisions at local banks and foreign bank
branches.
Bankers have in
recent days shared the concern expressed by BVSC in the report released on
March 21.
The report says
whether banks will be able to get back on their own feet depends largely on
the pace and efficiency of the restructuring of the banking sector,
particularly on how Vietnam Asset Management Company operates and how
Circular 02 is executed.
The latest circular
allows for a rescheduling of the implementation of a couple of provisions in
Circular 02 until next year, a move which the report says will erode the
market confidence in central bank policies.
Circular 02 has
brought hopes on stronger reforms of debt classification, risk management,
settlement of bad debt, and improvement of transparency in banking sector
operations. However, the central bank earlier decided to delay execution of
this very circular for one year beginning on June 1, 2013.
Circular 02 has
been hailed as an effective tool to force banks to properly and sufficiently
determine bad debt and thus paint a true picture of the health of each and
every bank and the banking system as a whole. All this will lead banks to
operate in line with international risk management standards and practices.
The end result will
be to help the banking system grow in a safe and sustainable way.
The new Circular 09
is believed to result in bad-debt-hit banks feeling less pressure to sell
their debt to the Vietnam Asset Management Company (VAMC).
The actual goal of
the establishment of VAMC is to transfer bad debt from banks to this firm and
keep it there until the economy gets better, so whether VAMC operates as well
as expected hinges largely on the exact and adequate assessment of bad debt
in the banking sector. VAMC would use this assessment as a basis for drawing
up a roadmap to buy bad debt from banks and issue bonds to fund such debt
purchases.
Once banks have the
opportunity to delay restructuring debt and disclosing bad debt, VAMC will
find it tough to buy bad debt from banks. Therefore, VAMV may resort to
reports by the central bank’s chief inspector and banks themselves to map out
debt purchase and bond issuance plans.
A rescheduling or
delay of implementation of regulations often leaves huge impact on businesses
and banks.
Last year, after
Circular 02 came out, banks had to increase risk provisions and gradually
scale up the ratio of risk provisions to total outstanding loans to have
backup funds to cope with bad debt in an effective way. In fact, banks
actively used their risk provision funds to deal with bad debt and sold
certain bad debt to VAMC.
By the end of last
year 20 banks had sold VND38.9 trillion worth of bad debt to VAMC. Profits before
tax at banks slid a staggering 29% year on year in the first quarter of last
year but the situation improved a little bit in the second and third quarters
just after Circular 02 was delayed from implementation for the first time.
However, their pre-tax profits continued the downward spiral in the final
quarter of last year, falling 10% versus a year earlier.
The BVSC report
notes the delay of the rule’s implementation would help ease the pressure
from huge bad debt at banks, thereby allowing the banking system to have more
time to improve their creditworthiness in compliance with Circular 02 and
avoid a shocking upsurge in bad debt and a drastic plunge in profit. But the
report stresses it would take far more time to restructure the banking
system.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Sáu, 28 tháng 3, 2014
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