Paper makers face challenges
 
Viet Nam's paper industry would aim to meet 70 per cent of domestic consumption demand by 2020, according to its development plan. However, the industry would face many challenges in reaching this target, in particular a lack of material, capital and technology.

Experts said that the industry should assert more control over the licensing of paper factories and should manage investments more efficiently during the plan's implementation over the next decade.

The Viet Nam Paper and Pulp Association reported that the industry would require VND95.6 trillion (US$4.57 billion) during the period from 2006-20, including VND87.7 trillion ($4.2 billion) for new factories and VND7.9 trillion ($370 million) for the development of paper-producing forest.

The investment would supply 600,000 tonnes of pulp in 2010 and 1.8 million tonnes of pulp in 2020.

However, during the 2006-11 period, many paper production projects were operated inefficiently and had negatively affected the environment, causing the development plan to stall, the association said.

Nguyen Kim Hue, head of the Information Technology Department at the Cellulose and Paper Industry Institute, said pulp factories lacked wood during the 2006-11 period because forest growers had not offered their product at a reasonable rate.

Banks have been sceptical about the competitive ability of the industry, and have been reluctant to provide it with loans. Only two of eight paper projects developed in 2010 have progressed according to schedule.

Phan Chi Dung, head of the Light Industry Department under the Ministry of Industry and Trade, said Viet Nam has 500 paper producers but almost all of them are small- and medium-sized enterprises using old technology.

But the new development plan has not fixed specific standards to improve the quality and efficiency of production, he said, nor does it provide guidelines for waste treatment.

Dung said one possibility would be to withhold licenses from certain production facilities to ensure the sustainable development of the industry. The plan would be capped at a total capacity of 250,000-400,000 tonnes of pulp per year.

Pham Van Tu, representative of the Viet Nam Paper Corporation, said pulp production factories should not be sited far upstream along rivers to avoid pollution of environment.

All previous development plants had failed and a management team was urgently needed to ensure the implementation of the plan, said Tu, adding that the provinces should grant licences for pulp and paper factories according to the regulations approved by the Government.

At present, average paper consumption world-wide was 4 kilos per person per year, while the average for Vietnamese was around 1 kilo. Ignoring environmental concerns, Viet Nam has the potential to expand its paper market in the future but the industry would need support from the State, said the association.

The State should stabilise tax policy for the paper industry according to World Trade Organisation (WTO) guidelines, said the association. It should also introduce regulations on limiting the use of detergents in paper production.

Vu Ngoc Bao, general secretary of the association, said the State should call on foreign investment to upgrade the processing of pulp and paper production technology.

The State should create favourable conditions for the industry to accumulate capital and create incentives for enterprises and households to develop new seeds in order to improve output, quality and competitiveness of pulp, Bao said.

Saigon Centre's second phase begins

Singaporean property developer Keppel Land and its local partners broke ground yesterday on a US$160 million multipurpose complex in HCM City's District 1.

This development is the second phase of the Saigon Centre at 65 Le Loi Street. The centre is a project by Keppel Land Watco and its Vietnamese partners, the Southern Waterborne Transportation Corporation (SOWATCO) and the Saigon Real Estate Corporation (RESCO).

Once fully completed in 2015, the Saigon Centre Phase 2 will have 45 storeys, according to Choo Chiau Beng, chairman of Keppel Land. There will be seven floors for retail and dining space covering 50,000sq.m, 40,000sq.m of grade A office area and over 200 serviced apartments.

New York-based NBBJ, a leading global architecture and design firm, has been selected as lead designer of the second phase.

The existing 25-storey Saigon Centre, which began operation in 1996, has 89 serviced apartments and three car parking basements apart from around 12,000sq.m of office and retail space.

Keppel Land's portfolio in Viet Nam covers 17 projects in Ha Noi, HCM City, Dong Nai and Vung Tau with a total investment capital of almost $2 billion.

Plastics firm hits record low on market

Viky Plastics Co (VKP) fell to a price of just VND600 (US$0.03) per share yesterday – an incredible low in the history of Viet Nam's stock market for a stock that is otherwise eligible for listing on the HCMC Stock Exchange.

VKP, which has been on the verge of insovlency, has traded at around VND1,000 for the past three months, and, if the downtrend continues, the stock could become waste paper by next week, with over 2,000 shareholders losing their investment in the company.

The third quarter was the 10th consecutive quarter in which VKP incurred losses, with total accrued losses amounting to nearly VND117 billion ($5.6 million). The company's equity has fallen from an initial VND80 billion ($3.8 million) to just VND34.4 billion ($1.6 million).

With total assets of VND268.6 billion ($12.8 million) as of September 30, cash-on-hand totalled only VND1.4 billion ($66,700) with the rest in accounts receivable, inventories and fixed assets (land and equipment).

Meanwhile, the company faces monthly interest payments of over VND2 billion ($95,200) and has received repeated auditor warnings about ambiguous items in its financial reports.

Luu Tien Dung, a lawyer with the Vietnamese law firm YKVN, said there were two scenarios for the company's bankruptcy: VKP's board of directors could declare bankruptcy, or its creditors could filed with a court, claiming that VKP was unable to pay its debts and seeking to force the company into involuntary bankruptcy.

The head of the HCMC Stock Exchange's Listing Management and Appraisal Department, Tran Anh Dao, said the exchange was discussing what to do about VKP shares and would make an announcement when a specific plan had been determined.

VKP's troubles were not only a loss to VKP shareholders but also created a negative image in the eyes of investors about shares listed on the stock exchange.

State enterprises need restructure
 
Experts discussed measures to improve the operational efficiency of State owned groups (SOGs) at a seminar organised by the National Economics University and the University of Economics of HCM City yesterday.

Delegates said SOEs account for around 50 per cent of state-funded investment, 60 per cent of bank credit and 70 per cent of official development assistance, but their return on investment was quite low, with some incurring big losses.

The ineffective use of the State's resources by SOGs affects the quality of growth, development and competitiveness of the economy, they said.

Professor Tran Ngoc Tho said the country should reduce the number of SOGs by liquidating sections of SOGs or even SOGs as a whole if their operations are ineffective.

SOGs must be restructured so that in the next three to five years, the country only has a few of them left to implement tasks that cannot be done by other sectors, he said.

Nguyen Dong Phong, rector of the University of Economics HCM City, said the role of SOGs in the economy as well as their achievements and shortcomings should be reassessed so as to map out development orientations for the future.

He said changes are necessary to improve the management and efficiency of SOGs and ensure greater transparency and higher competitiveness.

The Government should also have regulations to limit investment by SOGs in non-core sectors, he added.

Delegates at the meeting also agreed that the current "priority mechanisms" favouring certain sectors should be removed to create a fair and competitive business environment and make SOGs more competitive.

IZs, support sector link up to push growth
 
Development of industrial clusters and zones (IZs) should be closely linked to the support industry sector, heard attendants at a conference in Ha Noi yesterday.

Jointly held by the Ministry of Planning and Investment's Central Institute for Economic Management (CIEM) and the United Nations Industrial Development Organisation (UNIDO) as part of an ongoing project, the conference was aimed at collecting ideas about how to boost industrial growth.

Tran Kim Hao of CIEM said the country had 260 IZs that provided jobs for around 3.5 million workers.

"However, some localities have developed IZs without strategic planning which has made sustainable development virtually impossible," Hao said.

He added that many support industries had a low localisation rate, despite preferential policies and encouragement.

"The number of support industry enterprises is low, thus increasing reliance on imports," he said.

Prof Nicola Coniglio from UNIDO and the University of Bari in Italy said the growth of a cluster would promote the development of support industries, and vice versa, and small- and-medium-sized enterprises in the clusters would then have opportunities to access investment and advanced production lines.

"Not all agglomerations could be supported and the Government should design a selection mechanism through which the potential clusters –directly or via provincial governments –reveal their interest in a collective initiative aimed at boosting competitiveness," he said.

He suggested analysing clusters while piloting a small number of dynamic clusters, adding that the role of local authorities was fundamental.

Head of EU Defensive Industrial Policy Tea Petrin shared how other countries had implemented policies that promoted competitiveness and renewal.

She said development of IZs needed long-term policies that were regularly reviewed so they could be further enhanced.

Cluster development would also help improve domestic technologies and local economic structure while accelerating industrialisation and resolving other socio-economic issues, she added.

Statistics from the ministry showed that IZs had contributed to the country's industrialisation and modernisation process.

IZs and industrial clusters last year attracted 8,500 projects with more than US$70 billion, creating industrial production value of $20 to 25 billion and accounting for up to 25 per cent of the country's GDP.

Head of CIEM Le Xuan Ba said Viet Nam's sustainable development had been threatened by low competitiveness while the advantages of natural resources and cheap labour costs had been reduced.

"Promulgation of policies on cluster development and a legal framework to develop the network would promote Viet Nam's participation in global production chains," he said.

The project aims to develop policies to promote sustainable development for the country's growth.

Water prices likely to be hiked by 4 times

Nguyen Tien Thoa, head of the ministry’s Price Management Agency, said the new water prices in first-grade and special urban areas such as Hanoi and Ho Chi Minh City would range between VND3,500 and VND18,000 a cubic meter, with the ceiling price four times higher than the current rate.

In the second to fifth-grade urban areas, water is supplied at VND3,000 to VND15,000 a cubic meter, while the band in the rural area was between VND2,000 and VND11,000 a cubic meter, Thoa said.

In the salt marsh and coastal areas, the price of water could be hiked to a maximum rate of VND23,400 a cubic meter due to the substantial expenses incurred in laying the water supply network to cover every household.

But Thoa emphasized that the proposed price structures would be subjected to amendments as the ministry was still collecting feedback on the draft decree.

He said the new prices were established based on the proposals of water suppliers and local authorities, adding a price hike was inevitable since the input costs of chemicals, labor wages and equipments had soared.

“Especially power cost, which accounts for 40 percent of the total production cost, has risen by 15.28 percent this year,” he said.

Thoa said whether the price of water would increase, and how much it would be increased, remained to be decided by the people’s committees of the cities and provinces throughout the country.

“The country’s socio-economic situation and the price index of other commodities will also be taken into account when the new prices are calculated,” he said.

“At a time when the government is trying to curb inflation, it is unlikely that new water price will reach the price cap as proposed by the bill.”

Regarding the public complaints that the water price has increased many times but many water suppliers still griped about losses, he said it was because of the soaring expenses for producing clean water.

“We have tried to balance the interests of the suppliers with that of the customers,” he said.

He said the water suppliers had to gradually cut water losses so that water price could be adjusted in a reasonable manner that could protect the consumers as well as helping the companies to avoid financial losses.

He said the water loss rate for a supply network that had been in use for less than 10 years was expected to be 23 percent, and for those over 10 years of operation, 32 percent.

He pointed out that many localities currently had very low water loss rates, such as the central province of Thua Thien – Hue -- 10 percent, while major cities such as Hanoi and HCMC had much higher rates, up to 35 percent or more, since the water network systems in these metropolises are more than four decades old.

He said the Ministry of Finance would keep a close eye on the water suppliers to help them achieve the targets approved by the Prime Minister.

Accordingly, he said, the water loss rate was targeted to fall to 25 percent in the next five years, and 15 percent in 2025.

“As an encouragement, the suppliers that meet the targets will be allowed to use the money saved from cutting water loss for reinvestment and other incentives,” he said.

Foreign businesses seek opportunities in HCMC

Dozens of businesses from South Korea and the US have visited Ho Chi Minh City to seek business and investment opportunities.

The delegation from the South Korean city of Yongin comprises of businesses specializing in manufacturing and trading IT products, machinery, equipment, transport and chemicals.

On Friday, the Ho Chi Minh City branch of the Vietnam Chamber of Commerce and Industry held a “Vietnam-South Korea Trade Exchange” for the South Korean visitors to meet with local firms.

Earlier, 30 businessmen from San Francisco, USA, who are operating in the fields of construction, textile and garment, energy and healthcare also participated in a trade exchange with Ho Chi Minh City enterprises.

Organized by the Investment and Trade Promotion Center (ITPC) in Ho Chi Minh City , the event aimed to help Vietnamese businesses get more information and seek partners in the US market.

A representative of ITPC said the center will continue to hold trade exchanges for domestic and foreign firms in order to promote business cooperation and exports.

VN, EU negotiate forestry law, partnership

Vietnam and the EU concluded the second round of negotiations for a bilateral forestry law enforcement, governance and trade voluntary partnership agreement, in Hanoi on Friday.

The Vietnamese delegation was led by Ha Cong Tuan, Deputy Head of the General Forestry Department of the Ministry of Agriculture and Rural Development, while the EU side was headed by Hugo Maria Schally, Head of Unit, Directorate General for Environment of the European Commission.

The two sides agreed on the main content and details on the timber legality definition and discussed the main points and principles on the product list to be included in the agreement and the tracking and monitoring system to ensure the legality of timber and timber products.

They also discussed and passed updates on the Voluntary Partnership Agreement (VPA) negotiation roadmap, with the third round of negotiations scheduled for May, 2012 in Brussels .

The EU and Vietnam agreed to start negotiations on a Voluntary Partnership Agreement and Forestry Law Enforcement, Governance and Trade (FLEGT) on August 18, 2010. The agreement is aimed at ensuring the legality of timber and timber products entering the EU market and will help maintain and expand the export of timber and timber products of Vietnamese enterprises to meet changing EU market requirements from March, 2013.

Speaking at a press briefing after the Hanoi negotiations, Tuan said the VPA and FLEGT are compatible with Vietnam’s viewpoints on forest protection and sustainable development of a forestry economy.

Vietnam acknowledged the benefits of forests to mitigating climate change, and the Vietnamese Government has implemented measures to prevent forest reduction and increase forest plantations, Tuan added.

Over the past 20 years, Vietnam has increased forest coverage from 24 percent to 40 percent, he said.

In 2010, Vietnam exported about 11 million cu.m of timber and the country earned 30 percent of its export value of timber products from the EU and 40 percent from the US.

In 2011, Vietnam is expected to earned about $3.8 billion from the export of timber products.

Vietnam hosts trade promotion forum in China

Nearly 200 officials and businesses of Vietnam and China attended a trade promotion forum in China’s Tianjin City on November 25.

Vietnamese ambassador to China Nguyen Van Tho stressed that the fine development of relations between Vietnam and China and Tian Jin in particular is creating favourable conditions for their businesses to increase cooperation in economics, trade and investment.

He quoted statistics as saying Vietnam and China have seen an annual trade growth of 30 percent for the past five years. Bilateral trade value has hit more than US$28 billion since the beginning of 2011, a year-on-year increase of 40 percent.

Notably, Tho said the two countries signed an economic and trade cooperation programme in the 2012-2016 period during the recent visit to China by Party General Secretary Nguyen Phu Trong, laying a legal foundation for strengthening trade ties.

The ambassador called on trade promotion agencies to increase exchanges and seize every chance to expand cooperation for mutual benefit and common development.

Tianjin Vice Mayor Ren Xuefeng confirmed that his city, as one of the leading sci-tech development centres in China, will cooperate closely with Vietnam, especially in research exchange, economics, culture and education so as to build a comprehensive cooperation model in the future.

At the event, Minister and Counsellor Hoang Ngoc Vinh of the Vietnamese Embassy introduced Vietnam’s laws and policies on trade and investment cooperation with foreign partners and answered Chinese businesses’ queries.

The forum was jointly held by the Vietnamese Embassy and the Tianjin administration.

Vietbuild 2011 showcases latest housing technology

Deputy Prime Minister Hoang Trung Hai cut the red ribbon in Hanoi on November 26, inaugurating an international exhibition on construction, building materials, real estate and interior decorations.

Vietbuild ’11 has attracted nearly 400 domestic and foreign businesses from 18 countries and territories, showcasing their products on more than 1,250 stands.  

On the theme of “Vietnam Real Estate 2011”, businesses introduced new solutions to housing construction, using environmentally-friendly and energy-saving technology.

On display are building materials, paints, glass, doors, locks, bulbs, water-proof materials and decorations for houses, villas and top-notch resorts.

The exhibition offers a good chance for Vietnamese businesses to expand cooperative relations with their foreign counterparts through joint investment or technology transfer so as to develop the property market in Vietnam, said Deputy PM Hai.

This is also a good chance for foreign businesses to seek investment opportunities in Vietnam – a market with a high economic growth in the region and the world, he noted.

Vietnam attracts more foreign investment

As many as 52 countries and territories have invested in Vietnam so far this year.  

Hong Kong remains the country’s biggest investor with total registered capital of over US$3 billion, followed by Japan (US$2.1 billion) and Singapore (US$1.6 billion).

Most foreign direct investment (FDI) capital has been poured into Hai Duong and Ba Ria-Vung Tau provinces and Hanoi and Ho Chi Minh City.

Do Nhat Hoang, Head of the Foreign Investment Agency, says FDI is an important resource for developing Vietnam as the country is currently restructuring its economy and cutting down on public investment.

The Government recently issued a resolution to amend a number of investment policies aiming to attract more foreign investment, and the Ministry of Planning and Investment is also supporting foreign businesses investing in Vietnam.

Hanoi helps businesses iron out snags

The capital will stand by its businesses and work out effective solutions to boost production in the last two months of this year and in 2012.  

This was said by the Chairman of the Hanoi Municipal People’s Committee, Nguyen The Thao, at a meeting on November 25 with businesses operating in the city.

Businesses agreed that the city leaders are always ready to help them tackle difficulties, however, they still face an uphill battle due to tighter control on credit and high interest rates that hinder their access to loans.

In addition, Vietnamese producers need policies to support them in producing high quality goods to attract domestic consumers. They need financial aid to move their facilities to the outskirts of the city, pay costly mortgage taxes, conduct research to develop new products and purchase land to build commercial centres.

There is also a shortage of living places for workers at some industrial zones in the city.

Chairman of the Thien Phu Group Board of Directors, Nguyen Son Hai, proposed that the city help businesses obtain bank loans more easily and reform administrative procedures to save time and money.

Tran Van Quang, Director General of the Dong Anh Electrical Equipment Manufacturing Joint Stock Company (EEMC), said the Government should establish concrete policies to encourage Vietnamese people to buy and use Vietnamese goods.

He suggested the Ministry of Planning and Investment change its regulations on bidding so domestic contractors can compete for the large tenders that now force investors to buy products from foreign suppliers.

The Hanoi Mayor said the city’s rapid 10.13 percent growth over 2010 was largely attributed to the contributions by businesses.

The city pledged to review and amend regulations to create more favourable conditions for its citizens and businesses, said Mr Thao.

He urged the State Bank of Vietnam to adjust interest rates making it easier for businesses access credits with priority given to agriculture, rural areas, support industries and export products.

Mr Thao also asked businesses to continue apply modern technologies to improve their capacity, and join hands with the city to surmount their difficulties and maintain production.

Businesses should also cooperate closely with each other for mutual benefit and development, he added.

French businesses hail Vietnam’s investment environment

Vietnam, with its political stability, is one of the most dynamic economies in the region with an abundant, young, and high-quality workforce.

Pierre-Jean Malgouyres, President of the Paris Chamber of Commerce, emphasized this at a workshop on investment opportunities in Vietnam, which was held in Paris on November 24.

He also spoke highly of the Vietnamese government’s efforts to restructure State-owned enterprises, combat corruption, increase competitive edge for the private economic sector, and modernize the banking system for a higher quality of growth.

However, Malgouyres said, Vietnam is facing an economic imbalance and high rates of inflation. Therefore, investors should learn more about Vietnam’s culture and people in order to select skillful workers.

Many French economists and entrepreneurs at the seminar highlighted the investment environment in Vietnam, saying that it will offer good opportunities for foreign businesses, particularly French ones.

Vietnam’s amendments to the Law on Investment and its joining the World Trade Organization has made it a more attractive destination, they said, adding that the administrative procedure for investment registration has been simplified.

In addition, Vietnam plays a central role in the region and can help businesses expand their operation in other Southeast Asian nations, they said.

E-commerce application encouraged in Vietnam

In addition to popularizing and applying e-commerce, Vietnam should build a legal corridor with specific regulations to protect consumers from spam, advertisements, and illegal disclosure of personal information.

Toshihiro Eto from Japanese Ministry of Economy, Trade and Industry made the proposal at an international workshop on boosting Vietnam-Japan cooperation in e-commerce, held in Ho Chi Minh City on November 25. He emphasized the importance of preventing young people from accessing negative material, ensuring fair competition, and supporting small and medium- sized businesses taking part in e-commerce.

Participants in the event agreed that most Vietnamese businesses are only using e-commerce for exchanging emails, advertising their products, and seeking information.

In order to make e-commerce an effective tool, businesses must take advantage of its special applications, they said.

Under the target for 2015, Vietnam will have organizations providing digital signature certification service and will popularize the application of e-commerce among businesses and consumers.

Workshop discusses approaches to EU market

Dak Lak businesses gathered in the Central Highland province of Dak Lak on November 25 to discuss measures to penetrate the European Union (EU) market.

The event was co-organised by the Vietnam Chamber of Commerce and Industry (VCCI) and the European Commission (EC) Delegation to Vietnam.

Addressing the workshop, Jean Jacques Bouflet, Minister – Counselor to the EC Delegation to Vietnam said that Dak Lak businesses should be equipped with knowledge of legal issues, intellectual property, and tariff preferences in order to enter the EU lucrative market.

He added that the EU is a major market which plays an important role in the bilateral trade with Vietnam. It is also a traditional market of Dak Lak, importing coffee, rubber, and other items from the province. However, he said local export businesses have not fully tapped this market’s potential.

Mr. Bouflet emphasized that in the near future, it is necessary for businesses to conduct a survey on the EU market and to develop products with highly competitive advantages which will help businesses overcome trade barriers and limit risks in penetrating the market.

HCM City remains attractive in property development

Ho Chi Minh City has been ranked in Top 10 Asian cities in terms of property development prospects by the US-based Urban Land Institute.

In the Emerging Trends in Real Estate Asia Pacific 2011 report, Vietnam’s southern economic hub was placed sixth, behind Singapore, and the Chinese cities of Shanghai, Hong Kong, Beijing and Guangzhou.

The report provides an outlook on Asia Pacific real estate investment and development trends, real estate finance and capital market and trends by property sector and metropolitan area.

BIDC opens new branch in Cambodia

The Bank for Investment and Development of Cambodia Plc (BIDC), one of three big banks wholly invested by Vietnam, has opened a new branch in Kampong Cham province.

Nguyen Van Hien, General Director of BIDC, said the establishment of BIDC Kampong Cham-the fifth branch in the banking system aims to meet local demand for capital.

BIDC, established in 2009 with the approval of the Vietnamese and Cambodian Governments, is currently listed among the top 4 largest banks in Cambodia with its total assets worth US$450 million.  

France supports key projects in Vietnam

France is ready to support Vietnam in implementing its large projects including a metro system in Hanoi and the Nghi Son oil refinery in Thanh Hoa.  

This was confirmed by French Minister of Economy, Finance and Industry, Francois Baroin, at the opening ceremony of the second summit for Vietnam-France economic development cooperation in Paris on November 24.

Minister Baroin spoke of the public debt crisis in Europe and his government’s measures to control public spending and balance the national financial situation.

For his part, Vietnamese Deputy Minister of Planning and Investment Cao Viet Sinh hailed the constant development of France-Vietnam economic cooperation. France has invested in 336 projects across Vietnam with a total registered capital of nearly US$3 billion.

The two-way trade turnover between the two countries has increased from US$2 billion in 2010 to US$2.5 billion so far this year. France has provided Vietnam with more than US$2 billion in ODA.

Deputy Minister Sinh said Vietnam has achieved a high economic growth rate of 6 percent in 2011 and is set to create favourable conditions for foreign businesses, especially those coming from France.

During the summit event, the Vietnamese delegation had working sessions with the Paris Chamber of Commerce and the French Development Agency (AFD) and attended a business forum with French businesses.

It witnessed the signing of three major credit agreements between France and Vietnam including a credit loan of EUR20 million and a non-refundable aid package of EUR0.5 million, and a memorandum of understanding on the granting of over US$800 million to the construction of Ca Pass Tunnel.

Japan’s Sapporo beer produced in Vietnam

Sapporo Beer Vietnam Ltd Company inaugurated its first factory in Viet Hoa-Duc Hoa 3 industrial zone, southern Long An province, on November 24.

The Sapporo beer factory covering an area of 6.5 hectares is operating with an initial investment of US$75 million, of which more than three quarters come from Japan and the rest from Vietnam.   

It is expected to produce 40 million litres of beer a year in the first stage, 100 million litres in the second stage, and 150 million litres in the third stage.

Vietnam is the third country, after Japan and US that have built Sapporo beer factories.

Tsutomu Kamijo, General Director of Sapporo Holdings of Japan, said with its Sapporo beer trademark dating back to 1876. Japan considers Vietnam a third largest market for beer consumption and export in Asia.

Consultative Group Meeting to be held in Hanoi

Donors will meet in Hanoi on December 6 to review Vietnam’s socio-economic development and discuss ways to accelerate economic restructuring in the country.

High on the agenda of the 2011 Consultative Group (CG) Meeting will be discussions on Vietnam’s macro-economic situation and orientations for 2012.

Donors will give opinions on the country’s economic restructuring programme, including public investment, the restructuring of the financial and banking sector, and the social welfare system.

They will also look at the results of the fourth high-level forum on aid effectiveness to be held in Busan, the Republic of Korea.

A forum on corruption prevention and a Vietnam Business Forum will also be held on this occasion.

At the CG meeting in 2010, donors committed US$7.9 billion in official development assistance to help Vietnam stabilise the macro-economy and implement other development programmes.

Ministries differ on state of fuel distributors

The Ministers of Finance and Industry and Trade brought intrigue to the Q&A session at the ongoing National Assembly meeting yesterday, given their different information on the financial state of the fuel trading sector.

In his Q&A session, Minister of Finance Vuong Dinh Hue affirmed that the Vietnam National Petroleum Corporation, or Petrolimex, the country’s largest fuel distributor with more than 60 percent market share, operated with profits in the period between 2008 and 2010.

But this affirmation was rebutted by Minister of Industry and Trade Vu Huy Hoang, who said the giant fuel wholesaler actually incurred losses from oil and gasoline trading.

Earlier, many delegates called on Hue to clarify the dubious financial state of Petrolimex, since it had repeatedly reported losses but suddenly posted profits in its initial public offering (IPO) last June.

Nguyen Thu Anh, who represents Lam Dong Province, also demanded that the Ministry of Finance publicize the audit results on some fuel distributors to see if the current fuel retail prices are reasonable.

Addressing the NA delegates, Hue frankly said Petrolimex has enjoyed profits, citing audit reports in the three-year period between 2008 and 2010.

Hue said Petrolimex posted a profit of VND913.7 billion (US$43.8 million) in 2008, VND642 billion of which came from fuel trading activities.

In 2009 the distributor earned VND642 billion in profit from fuel trading, while the total profit was VND3.2 trillion.

In 2010, Hue said, fuel trading activities hit Petrolimex with a VND172-billion loss, but it still posted a profit of VND486 billion in other business sectors.

“In general, Petrolimex still reaped profits from fuel trading in those three years,” he concluded.

Hue added that there would never be any losses in the fuel sector if the distributors strictly followed trading regulations and if the foreign exchange rate fluctuation had not occurred earlier this year.

“The Ministry of Finance will publicize audit results on the profits and losses of fuel wholesalers when the audit is complete,” he said.

However, all of the statistics Hue provided seemed unconvincing to Hoang, the Minister of Industry and Trade.

Hoang said Petrolimex enjoyed profits during the 2008 – 2010 period; but incurred losses in the fuel trading sector.

But since Petrolimex has not released details about the losses and profits of each particular sector in its operation, the public have been duped into thinking that the company has gained profits from fuel trading, Hoang explained.

With the two ministers providing inconsistent information, NA Chairman Nguyen Sinh Hung ordered Hue to clarify the losess and profits of the fuel trading activities.

Hue stated that all statistics he had cited were from the audit results.

He reiterated that Petrolimex incurred losses in 2010 and posted both losses and profits in 2008 and 2009.

This, however, is different from his earler statement, when he said Petrolimex earned profits in both 2008 and 2009.

Hue said in the first half of this year, Petrolimex incurred a total loss of VND1.8 trillion from fuel trading.

The exchange rate difference accounted for VND1.43 billion of the loss, since the dong was depreciated by 9.3 percent last March, Hue added.

“If the exchange rate factor is excluded, the loss is only VND520 billion,” he said.

“If the fuel wholesalers had followed the regulations to give a commission of only VND600 a liter to dealers, they would not have incurred such losses.”