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BUSINESS
IN BRIEF 2/10
Vinamilk
expands its herd with 400 cows from Australia
Vietnam Dairy
Products JSC (Vinamilk) received a shipment of four hundred dairy cows from
The shipment is the
first of a planned 3,000 cow expansion coinciding with an increase in the
number of its dairy farms in Tay Ninh, Ha Tinh and Thanh Hoa from the current
four to nine.
By the end of 2015,
Vinamilk aims to increase its annual production capacity to 50 million litres
of milk, meeting 40% of the nation’s domestic milk demand.
The Vietnamese
Embassy held a seminar in
At the event,
Ambassador Le Thi Tuyet Mai briefed participants on
She also provided
an overview of the recent visits to
At the event,
representatives of travel agencies also presented a portfolio of attractive
tour packages along with samplings of home-made traditional Vietnamese
cuisine.
Lord Mayor of
London Fiona Woolf has called for further development of trade ties between
The main tasks of
London financial centre is to promote investment and trade in all fields,
especially in service and the centre is eager to support investment attraction
and boost Vietnamese exports, she said.
Ms Fiona Woolf
expressed delight at the upcoming visit to
Meanwhile, the
Although several
The
Lord Mayor of
During an upcoming
visit to
As the second
female Lord Mayor of
She expressed
desire that the forthcoming visit will give Vietnamese businesses the chance
to enhance trade links with their
The Ministry of
Industry and Trade (MoIT) Trade Promotion Department hosted a seminar
in
The scheme, using
non-refundable official development assistance (ODA) from the Swiss
Government, is being implemented in Hai Phong, Danang and Can Tho during the
2013-2016 period.
Miroslav Delaporte,
Chief Representative of the Swiss State Secretariat for Economic Affairs
(SECO) in
Proposals to
enhance local businesses’ export capacity were also put forth based on the
localities’ trade promotion efforts. The proposals include a score of
measures to support the export potential of enterprises operating in the
selected sectors.
According to Deputy
Minister of Industry and Trade Nguyen Cam Tu,
The joint efforts
made by export businesses and Vietnam’s active participation in free trade
agreement negotiations with its trade partners has markedly contributed to
boosting exports, Tu noted.
Property
market shows positive signal
Real estate
business is currently ranked second in attracting foreign investors, said the
Vietnam Business Forum Magazine (VBF).
According to the
Ministry of Planning and Investment, as of 20th August, 2014, Vietnam
attracted 992 newly licensed projects with a total registered capital of
US$7.246 billion (up 29 percent over the same period in 2013), along with
US$2,985 billion of additional capital for 349 on-going projects.
The total
registered capital in real estate projects of foreign investors this year has
been up to US$10.232 billion.
There are many
opportunities to trade on the real estate market, but the chances are for
those with strong financial potential. At present, it is very difficult to
access the medium and long- term loans from banks even with the high interest
rates of 13 to 13.5 percent per year.
Currently, more
than 70 percent of real estate investment capital comes from the banks or
their major customers.
The total real
estate loans in the country are estimated at about more than VND260 trillion,
accounting for 8 percent of the total outstanding loans of the whole banking
system.
Wood and
timber exports hit US$4.41 billion
There is an upward
trend in shipping the products to major markets, including the
By the end of
August, the US, China and Japan were the top three importers of Vietnam’s
wood and timber products, accounting for 62.33% of its total export earnings.
In nine months,
local businesses imported nearly US$1.74 billion worth of wood materials, up
61% against the same period last year. Four major suppliers are
Investors
return to stock market
Both foreign and
domestic investors have returned to Vietnamese stock market this year as the
economy has showed recovery signs after a downturn beginning 2007, according
to Saigon Securities Incorporation.
Since early this
year, a large amount of foreign currencies have been invested in the stock
market.
Over 400 foreign
investors attended the Gateway to Vietnam 2014 conference in September, a
platform for domestic and international financial investors as well as local
enterprises to look for new cooperation opportunities.
Mr. Francis
G.Rodilosso, representative of Van Eck--the largest exchange traded fund in
the
However, the
Vietnamese market is attractive partly thanks to political and Vietnamese
dong stability. Besides, inflation rate has been curbed below 5 percent and
investment environment has become more dynamic, he added.
Bloomberg
statistics shows that foreign investment funds purchased a net volume of over
US$277 million in the
They have created a
net purchase of VND1.3 trillion for the last couples of weeks this year.
According to local
stock companies, foreign sector has concentrated on purchase of stocks in
real estate, oil and gas fields and blue-chips.
They might broaden
purchase of shares from small and medium companies with good liquidity, said
Rong Viet Securities Company.
Positives signs in
the stock market have not only lured foreign but also domestic investors as
there are not many choices for residents to find positive investment
channels.
Profit from savings
has much fallen. Savings interest rates have been very low especially in
short terms, said Mr. Yun Hang, director of the emerging market division of
the Korea Investment and Securities.
Meantime, VN-Index
was up 20 percent last year. This year, it has increased 25 and is forecast
to hit 650 points in the rest months. Investors should buy stocks for higher
profit than savings, he said.
Mr. Nguyen Hoang
Minh, deputy director of the State Bank of
Leisure cash has
been invested in other channels including stocks instead of savings as
earlier, especially after banks continuously cut deposit interest rates, he
noted.
Bad debt
casts shadow over banking restructure
Some economists
have pointed out that the biggest obstacle in the ongoing banking restructure
effort is the problem of bad debt.
The Vietnamese
banking system has been carrying out its policy of banking restructure for
three years, along with the restructure of public investment and state-owned
enterprises (SOEs). According to experts, the restructuring process has
brought the country considerable benefits. However, some roadblocks remain.
In those three
years, nine weak banks have been merged without intervention by the State
Bank of
Some economists
have pointed out that the biggest obstacle in the ongoing banking restructure
effort is the problem of bad debt.
The establishment
of the Vietnam Asset Management Company (VAMC) is also important. The company
has helped to speed up the settlement of bad debt after banking restructure.
By the end of July this year, VAMC will have bought nearly VND54 trillion
(USD2.57 billion) worth of bad debt.
As of June 2014,
Liquidity in the
banking system has also improved since the restructuring process. Both
deposit and lending interest rates have been cut, creating better access to
credit.
Despite these
improvements, many economists say the biggest difficulty after banks are
restructured is the lingering bad debt.
To add to the
problem, there has been contradictory numbers released about the amount of
bad debt within the system. The most-used statistic is a rate of 10.3%, which
is considered manageable and better than many other foreign countries.
However, some economists warn that there is an urgent need to work out the
rate more precisely and create a more specific plan to settle the bad debt.
According to Dr.
Nguyen Duc Thanh, director of the Viet Nam Centre for Economic and Policy
Research, during the three-year banking restructure process, only the role of
VAMC has been clearly defined, and both long and short-term solutions for the
bad deb problem remain vague.
Thanh added that
the bad debt settlement does not depend solely on VAMC, which buys bad debt
by special bonds with five-year terms. If VAMC cannot settle the debts, they
are returned back to the banking system.
Moreover,
restructuring has not been going as well with the public investment and SOEs.
This has had a great affect the efficiency of the banking restructure. He
explained that up to 60% of bad debt comes from SOEs, and if their
restructuring process does not get better, the bad debt problem will remain
unchanged.
Foreign
visitor arrivals up
The number of
domestic tourists hit 32.4 million during the same period, an increase of 7.6
per cent, according to the Viet Nam National Administration of Tourism
(VNAT).
Tourism has
generated VND179 trillion (US$8.44 billion) so far this year, a year-on-year
rise of 19.24 per cent.
The launch of a
brand new hydro-plane service earlier this month linking Ha Noi and Ha Long
Bay, a World Natural Heritage site, is expected to attract more tourists to
the country.
The Hai Au Aviation
Joint Stock Company has scheduled one to three flights between Ha Noi and Ha
Long City per day, and five to ten daily sightseeing flights over Ha Long
Bay.
The company is
planning to open new routes from
During the
nine-month period, Ha Noi received nearly 1.5 million tourists, up 17.1 per
cent year-on-year.
SBV
circular regulates consumer lending
The State Bank of
Viet Nam (SBV) recently released a draft circular on consumer lending
following the setting up by commercial banks of subsidiary finance companies
for the purpose.
The circular aims
to specify and limit risks on consumer loans of commercial banks to
non-standard clients, including those with either low incomes or credit
scores, or with no credit history.
According to SBV,
there are currently no specific legal regulations on finance companies'
consumer lending, which is becoming increasingly important to the country's
socio-economic development and is helping to raise people's living standards.
Commercial banks
and finance companies are the two major providers of consumer lending in
In recent years,
several commercial banks have set up subsidiaries for consumer lending,
including HDBank, which bought Viet-SG Finance Company, and VPBank, which
purchased Viet Nam Coal-Mineral Finance Company.
Also, a number of
foreign companies with experience in consumer credit were likewise setting up
finance companies for consumer lending in
According to the
draft, recently released for comment, finance companies will be allowed to
provide consumer lending through hire-purchase arrangements, overdraft via
credit cards and issuance of buyers' passes.
The draft also said
the interest rates would be based on agreements between finance companies and
consumers which, in turn, would be based on consumers' solvency and
compliance with the SBV regulations on interest rates.
Interest rates on
overdue debts must be made public and will not be allowed to exceed 150 per
cent of the interest rate for consumer lending that had been agreed on in the
lending contracts.
BKAV
launches first online web directory in VN
BKAV Corporation,
The website, the
first of its kind of in
BKAV said the site
would help internet users to find addresses to which they have daily access
in secure settings. "We have provided the service to several customers
before officially launching it, and we have received much positive
feedback," said Bach Thanh Le, vice chairman of the BKAV IT department.
Le added that the
site was designed to meet the increasing demand for web-based online
services, which would soon be replacing application-based online services.
Established in
1995, BKAV is
Bright
future seen for E-commerce
Online shopping has
developed strongly in
Revenue of the
e-commerce sector increased year-by-year, reaching US$2.2 billion last year.
The value is estimated to hit more than $4 billion by 2015.
Besides e-commerce
companies, manufacturing firms have also sold their products via their
websites.
In addition, a
large number of individuals are taking part in selling goods through their
social media pages.
Goods sold via the
internet are diverse, ranging from factory-made to home-made ones.
Compared to open
shops, selling goods via the Internet saves costs and does not require large
investment capital.
Nguyen Quang Huy,
chairman and general director of Caganu Retailer Group, for instance, said
his company had obtained a high growth rate since joining the e-commerce
market in June last year, adding that it planned to expand services to many
other cities and provinces nationwide.
But while
e-commerce had seen significant growth, many Vietnamese consumers had not
participated in online shopping because of security fears and complicated
shopping online procedures, he said.
In addition, some
e-commerce sites delivered low-quality products that are not in line with
what is introduced on websites, discouraging consumers to make purchases
online.
Do Ngoc Binh,
chairman of the Viet Nam Post Corporation, said that 38 per cent of its
surveyed respondents complained about late delivery.
The e-commerce
market would expand more quickly if existing problems were solved, Binh said.
The Ministry of
Industry and Trade had promoted regulations stipulating e-commerce
operations, Linh said, adding that it was collecting opinions for a draft
circular on managing operations of e-commerce websites, including social
media.
The move aimed to
support the development of the e-commerce market in the coming time, he said.
To promote online
shopping, the department in collaboration with the
During the day,
consumers would enjoy special discounts and free shipping costs and other
incentives from participating businesses when they purchase items online,
Linh said.
This is the first
time such a large-scale event has been organised in
CEO Group's
listing fetches profits
Multi-industry
company CEO Group (CEO) had a successful debut yesterday on the Ha Noi Stock
Exchange, hitting the ceiling price of VND15,000 (US$0.7) with 2.6 million
shares changing hands.
The CEO Group is
mainly involved in real estate and education. It owns 16 projects in Ha Noi
and the provinces of Ha
In the first six
months of this year, its revenue and net profit climbed 125 per cent and 145
per cent year over year, reaching VND100.5 billion ($4.7 million) and VND15.4
billion ($726,000), respectively. Sales from the real estate sector accounted
for 67 per cent of the total revenue.
The company plans
to start the sale of three projects next month, hoping to reap remarkable
profit for the remaining period of the year.
According to its
Chairman Doan Van Binh, the CEO Group used primarily its own capital for
developing business. Therefore, the amount of its bank loans is relatively
low so far, reaching VND50 billion ($2.3 million).
Hoang Son, head of
analysis of MB Securities Company, valued CEO's shares at VND16,000 to
VND18,000 per unit. "It is suitable for both short-term and long-term
investment," he said.
CEO's charter
capital is VND343 billion ($16.1 million), and the company expects to
increase its charter capital up to VND2 trillion ($94.3 million) within the
next three to five years.
Winners of
e-commerce website contest announced
The
For prestigious
website and most transparent information, lingo.vn won the prize; megabuy.vn
won for best individual information protection policy; zalora.vn for best
contract signing policy; pvionline.com.vn for most creative website; and
vietjetair.com got the most votes from users.
The contest had
attracted 200 websites providing e-commerce services, having a.vn domain
name, and being been in business since before 2013.
VECITA, Ministry of
Industry and Trade agency, organised VietWeb 2014 in collaboration with the
The organisers said
Vietweb also sought to promote online shopping.
Fisheries
group seeks export assistance
The Viet Nam
Pangasius Association has asked the Ministry of Agriculture and Rural
Development to continue negotiating with the Customs Union of Russia,
Currently, only
certain firms are allowed to export, creating animosity from those who
cannot.
Five Vietnamese tra
and basa processors have taken advantage of the removal of the temporary
suspension of seafood imports to the market. However, others were not able to
capitalise on the end of the Russian ban.
Electric
bike with iPhone link sold for $4,285
Terra Motors
Corporation of
The 4000i
motorcycle, the first of its kind in
A 4000i has been
sold at VND89.99 million (US$4,285), and its owner was awarded free
maintenance for nine instances in three years.
Kia to
increase prices of three car models
Thaco Kia will
raise the prices of Kia Morning,
The officials also
said the company would be reducing the promotion programmes for Kia Sorento
and K3, as well as other imported cars, next month. They explained that the
company had offered different preferential and promotions programs for
customers in the second and third quarter this year.
Last month, Thaco
Kia sold 913 cars, the highest sale figure in the past four months, because
of high demand for Morning, Sorento and K3.
Vinpearl
Resort Phu Quoc to open in early November
Vingroup has
announced it will officially inaugurate its five-star resort in the
The resort is
spread over 300 ha and will include a five-star hotel, villas, an
entertainment centre and a 27-hole golf course. It also boasts a 1,500
square-metre convention centre, capable of accommodating over 1,000 people.
Vingroup is also
set to build an entertainment complex in Nha Trang which includes indoor and
outdoor games, a water park and a aquarium zone with sea creatures from the
Economists demand
reporting of non-wage incomes of leaders of state-run corporations
Economists believe
that the Ministry of Industry and Trade should require state-run corporations
and groups to make public extra-salary incomes of their leaders.
Economist Ngo Tri
Long said the ministry recently only reported the monthly wages of leaders of
corporations and groups. According to Long, these wages, not mentioning
extra-salary incomes gives a skewed picture of their earnings, as much of
their income is earned through methods other than collecting salary.
Long said that it
is important to know be transparent about the extra-salary incomes of
leaders, and that tax agencies should scrutinise them.
Economist Le Dang
Doanh said Vocarimex reported profits in 2013 much higher than other
corporations and groups, even though it has a much smaller revenue and number
of employees.
According to the
financial report of Vorcatimex, in 2013 the revenues of the whole year were
more than VND4.1 trillion. However, management cost of the company more than
VND66.9 billion, bringing the net profit to just VND48.4 billion.
According to Doanh,
it is good news that the ministry released a report on the monthly incomes of
the leaders of state-run corporations, since these businesses have a great
impact on the nation's economy, but the ministry needs to take further steps
to guarantee transparency.
Deputy Nguyen Thi
Kha, a member of the Committee on Social Affairs of the National Assembly,
said that the wages of leaders of state-run businesses must be in line with
their companies' profits.
Kha also demanded
that the ministry audit the profits and wages at these firms to ascertain
whether earnings are fair or not, then publicly announced the incomes.
Three major
challenges of economy
The Vietnamese
economy is facing three major challenges, namely low credit growth, slow pace
of non-performing loan settlement, and sluggish business and production,
according to former Deputy Minister of Planning and Investment Cao Viet Sinh.
Although credit
growth rose steadily from 3.15% in July to 4.08% in August and 6.62% in
September this year, capital has not been effectively pumped into the
economy. As a result, it is hard to expect strong growth.
Meanwhile, banks’
non-performing loans tend to increase mainly due to low credit growth and
slow settlement of bad debts. For instance, the ratio rose from 3.61% at the
end of 2013 to 4.07% last May and even 4.17% in June.
So far this year,
the Viet Nam Asset Management Company purchased around VND 19,600 billion of
bad debts compared to the preset target of VND 70-100 trillion for 2014
alone.
For business community,
the former Deputy Minister said he really feels worried as the number of
dissolved and suspended enterprises went up 13.8% , equivalent to 48,330
enterprises, against the previous year.
The number of
newly-established businesses and registered capital volume have not much
improved, he added.
To overcome the
above challenges, the Government has tasked inferior levels to realize a
series of solutions to facilitate production and business while stepping up
the implementation of the Master plan to restructure the economy.
The General
Statistics Office has reported that the economy expanded 5.62% in the first
nine months of 2014.The figure, as Mr. Sinh commented, goes beyond
expectations.
Specifically, the
GDP climbed from 5.09 percent in the first quarter to 5.42% and 6.19% in the
second and third quarters, respectively, according to the statistics agency.
The index of
industrial production also rose on the quarterly basis, from 5.3% in the
first quarter to 6.9% in the second quarter and 7.7% in the July-September
period.
Other positive
signals include increases in both foreign direct investment inflow (reaching
US$8.9 billion, up 3.2%) and official development assistance (US$4.1 billion,
up 10% compared to the same period last year).
Purchasing
power sees slight increase
The total retail
sales of goods and services reached VND244.5 trillion (US$11.6 billion) in
September, an increase of 0.7% over August, a year-on-year increase of 9.1%,
according to the General Statistics Office (GSO).
In September, the
total retail sale of goods reached VND186.1 trillion (US$8.8 billion), 0.9%
higher than last month and 10.4% higher than the same period last year.
Sales of items on
culture, education and worship reached VND2.9 trillion (US$136.3 million), an
increase of 2.9% over last month that achieved the highest growth in sales.
Meanwhile, hotel,
restaurant and service sectors reached VND31.3 trillion (US$1.6 billion), a
month-on-month decrease of 0.9% but a year-on-year increase of 9.5%.
In the first nine
months of this year, the total retail sales value of goods and services
reached VND2,145 trillion (US$107 billion), up 11.1% over the same period
last year.
Over the past nine
months, foreign-invested enterprises posted the highest revenue rise of 21.6%,
followed by the local private sector, with 11.1%. Notably, State-owned
companies saw an 8.4% slump in total retail sales.
According to the
GSO, commodity prices were quite stable over past months, and for this
reason, the purchasing power of Vietnamese residents has registered a slight
increase.
VCA
anti-dumping ruling too sluggish
The process that
led to
On September 5,
The process to
arrive at this decision, according to the investigating Vietnam Competition
Authority (VCA) revealed several weaknesses both in regulations and agency
capability.
According to the
anti-dumping law passed in 2004 by the National Assembly’s Standing
Committee, the time between the start of investigation and the preliminary
decision should not exceed five months and a preliminary tax rate would be
applied for four months.
The regulation
therefore led to a window existing between the end of the preliminary period
and the final decision for importers to continue exporting steel into
“Firms waited for
the preliminary tax to become invalid to import stainless steel from the
three investigated countries and one territory in huge volumes,” said Pham
Chau Giang, head of the investigation team, citing the General Department of
Vietnam Customs.
If the regulations
were not changed, the VCA would be forced to conclude any investigation
within nine months, which was too short a time frame, she said.
A second weakness
is the disagreement between Vietnamese and WTO regulations in technical
matters such as determining the dumping margin and injury and investigation
procedures. The incongruence significantly slowed down the process.
A third weakness,
which resulted in firms, especially those from China, getting a better tax
rate than they deserved, is agreements between these countries to recognise
each other as market economies. The agreements disallowed
The final weakness
is the investigation agency’s lack of experience. “Our people need an
understanding not only in the field but also of the way foreign firms work,”
said Giang. Checking the data provided by a foreign firm proved difficult
especially when the firm used a different language and system of accounting,
she explained.
ANZ bids
SSI farewell
Saigon Securities
Inc. (SSI) has announced that ANZ plans to sell the bank’s entire stake in
the local brokerage after seven years as strategic shareholder.
ANZ will divest
more than 61 million shares, or 17.51 per cent through a negotiated sale,
according to a statement just released by SSI.
ANZ has made
significant contributions to the development of SSI, particularly in terms of
expanding its client network, and the brokerage house said its relationship
with the bank remains ‘good’. The exit is merely a new move in ANZ’s business
strategy to focus more on the commercial banking sector.
SSI chairman and
CEO Nguyen Duy Hung and his younger brother Nguyen Hong
The divestment will
open up room for other foreign investors to step in, as the foreign ownership
cap has kept any further investment into SSI closed off. A government
decision to raise the foreign ownership cap is still pending.
Hung claimed that,
“ANZ’s exit will not affect our business. Many foreign investors want to join
us as foreign strategic investors, but have been unable because of the
ownership cap.”
SSI is the biggest
securities firm in Vietnam in terms of registered capital with VND3.538
trillion ($167 million) as of the end of June and the second largest in terms
of aggregate market share with 10.7 per cent by the end of the first half of
this year.
French
emergency service firms hunt for opportunities
Many top French
firms are hunting investment and business opportunities in the civil and
security industry in
Last week nine
leading French search, rescue and emergency service firms came to
When asked by VIR
whether Airbus Helicopters would consider constructing a factory in Vietnam,
Airbus Helicopters sales promotion manager Benoit Terral said “Why not? We
are discussing to have a major project about flying ambulances with the
government. We want to create a flying ambulance network in
“We have lots of
expectations in the Vietnamese market, because its quantity of helicopters
remains quite low. We will have lots of things to do here. We have had some
big partners here like Vietnam Airlines (more than 20 helicopters) and
several small private partners,” he added.
Airbus Helicopters
under the Airbus Group is the world’s number one helicopter manufacturer. It
has over 3,000 customers in 150 countries.
Meanwhile,
Aquasure’s country manager Vietnam David Tran said his company had developed
clean water treatment systems which would be particularly useful in emergency
situations.
“They are simple
and easy to operate even at the commune level. In
For Piriou, its
regional manager Stephane Doll also said
As
“We are seeking
partners in
Thales’ business
development manager Thomas Queteville also said Thales wanted to expand
business to
“We are discussing
possibilities for us to distribute their products in
French Ambassador
to Vietnam Jean-Noel Poirier said civil and security co-operation had been
prioritised by
“So the need for
efficient and modern facilities is a major priority for the country,” Poirier
said.
“French
technologies are critically needed in Vietnam, because the country’s
increasing economic development, increasing impact of climate change and
natural calamities also mean more risk of fires and accidents,” said Doan Huu
Thang, vice director of the Ministry of Public Security’s Department of
Prevention, Emergency-Rescue and Firefighting.
He reported that
during 2009-2013,
VWS gets
nod to expand Da Phuoc
The HCMC government
has allowed Vietnam Waste Solutions (VWS) to raise the capacity of its Da
Phuoc Integrated Waste Management Facility to 10,000 tons of garbage per day.
Currently, the Da
Phuoc facility in Binh Chanh District takes in around 3,000 tons of waste per
day and handles it by burying, recycling and producing compost fertilizer.
According to the
city’s plan, the third landfill in Phuoc Hiep Waste Treatment Complex in Cu
Chi District will stop operating by March 31 next year and garbage normally
transported to the landfill will then be moved to Da Phuoc complex for
treatment.
The city government
calculates that Da Phuoc facility can receive an additional amount of 2,000
tons of garbage a day.
Therefore, the
municipal government has adjusted the investment certificate of VWS so that
the company can raise the designed capacity of Da Phuoc to 10,000 tons per
day.
The actual amount
of garbage the facility takes in each day will be based on a contract which
VWS and the HCMC Department of Natural Resources and Environment will sign.
In the coming time,
the city’s Department of Transport will make it easier for trucks to
transport garbage to Da Phuoc.
It will limit the
number of other vehicles running on National Highway 50 during the time those
trucks operate, which are between 8:30 a.m. and 10:30 a.m., between 2 p.m.
and 4 p.m., and between 6 p.m. and 6 a.m. of the next day.
The city also
requires VWS to quickly make a new environment impact report given the
additional amount of garbage which will be taken to Da Phuoc.
In early 2012, Da
Phuoc opened its park for public viewing so that residents can visit the
largest waste complex of the country, which covers an area of 128 hectares
and costs an investment of more than US$100 million.
Vice tax
gets nod from NA Standing Committee
The National
Assembly Standing Committee has given the thumbs-up to the government’s
proposal to raise the special consumption tax on cigarettes, beer and
spirits.
The move is aimed
at limiting consumption of these products and generating more revenue for the
state budget.
At last week’s
National Assembly Standing Committee meeting, Minister of Finance Dinh Tien
Dung proposed an amendment to the Law on Special Consumption Tax (SCT) under
which rate hikes would be applied to cigarettes and beer (see box 1). He said
the SCT on wine and spirits over 20 proof would increase from the current 50
to 65 per cent, and 25 to 35 per cent for wine and spirits less than 20
proof.
These SCT increases
will be further discussed at the 13th National Assembly’s eighth session
slated for this October-November.
“We need to
increase the SCT on these products to limit their consumption and help raise
funds for the state budget, which is facing mounting difficulties,” said
Phung Quoc Hien, head of the National Assembly’s Finance and Budget
Committee. “During the 2015-2018 period,
National Assembly
Vice Chairman Uong Chu Luu said he totally agreed with this proposal. “But we
must take into account the effect on enterprises.”
Luu’s view was
echoed by the whole National Assembly Standing Committee, including National
Assembly vice chairwomen Nguyen Thi Kim Ngan and Tong Thi Phong, who both
said the SCT increase was vital to helping bolster the state budget.
According to the
government’s report on the amendment, the SCT increase would supply a major
source of revenue to the state budget (see
The report noted
that
According to the
Ministry of Health,
The report also
said alcohol abuse was a major health concern, and added that it also
contributed to social disorder, crime and traffic accidents.
However, Deputy
Minister of Industry and Trade Do Thang Hai disagreed with the proposal,
saying that a roadmap was need for the SCT to increase gradually, as sudden
increases would hurt enterprises.
“For example,
increasing the SCT on cigarettes will likely lead to more smuggling, which is
already causing a $200 million loss per year to annual producers. It will
also affect enterprises’ revenue and industry employees,” he said.
Nguyen Van Viet,
chairman of the Vietnam Beer-Alcohol-Beverage Association (VBA) told VIR in a
recent interview that beer makers were extremely worried that domestic beer
firms would lose even greater market position if the newly proposed SCT is
passed into law.
Viet said the
increased SCT would make consumers unhappy. “Vietnamese people prefer
domestic beer such as
“If the SCT rates
increase, foreign enterprises will feel little effect because their customers
are generally higher income earners, while domestic beer firms supply all
walks of life including low and middle-income earners. Domestic firms’ sales
may fall if their prices after the SCT increase are less affordable,” Viet
said.
“Policy makers
should take a long-term perspective to the SCT and raise the tax step by
step. A previous skyrocketing increase of 15 per cent could cripple domestic
beer firms,” stressed Viet.
A cigarette expert
from a foreign tobacco brand in
He said the total
current tax imposed on cigarettes came to 75-80 per cent after SCT, VAT and
import tax are all accounted for.
“Undoubtedly firms
will struggle if the SCT is increased,” he affirmed.
Banyan Tree
enjoys fruit from its Laguna Lang Co development
While many
second-home developers in the coastal central region are struggling with low
demand from local buyers,
Laguna Lang Co, a
wholly-owned subsidiary of Banyan Tree in
The Laguna Lang Co
project spans 280 hectares in Lang Co Bay in Thua Thien-Hue province. Banyan
Tree plans to develop the project along the same lines as its famous Laguna
Phuket in
The
The first ten units
of Block 1 opened for sale at the soft launch event with a special early bird
price of $265,000. Construction on the first block recently started and will
be soon followed by the opening of Block 2.
“Not one of the
home buyers was Vietnamese,” exclaimed Phan Y Nhi, director of sales and
marketing of property at Laguna Lang Co.
As well as the
“No Vietnamese has
ever bought a second-home at our integrated resort,” Nhi noted. In other
words, she said, the Singaporean developer had not yet focused on marketing
the offer of a second-home lifestyle to the Vietnamese market. Instead, the
marketing campaign is focused on international markets, via Banyan Tree’s
channels throughout
“Banyan Tree is a
famous brand in
What Laguna Lang Co
does is different from other second-home developers in the central region,
who mainly rely on demand from domestic buyers.
Vietnam’s
second-home market boomed in 2006-2009, when dozens of projects popped up
along the coast of Danang and Hoi An, including the Hyatt Regency Danang,
Ocean Villas, Vinpearl, Sun Villas, and The Dune.
But when the
economy - and particularly the real estate market - fell on hard times,
domestic demand for second homes plummeted. Meanwhile, developers also
struggled to sell the villas to foreigners.
According to the
latest report from property consultancy CBRE, the current unsold stock of
second-home villas in Danang for example is nearly 400 units. No new projects
have been launched in the city since the first quarter 2013 because of unsold
stocks.
Nhi said the
launching of
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Tư, 1 tháng 10, 2014
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