Ha Long builds oil-rig ship

The Ha Long Shipbuilding Company Ltd signed a contract with the Netherlands' Damen Shipyard Group to build a platform supply vessel for the later.— Photo VNA

Ha Long Shipbuilding Company Ltd has begun building a platform supply vessel, PSV 3300, for the Netherlands' Damen Shipyard Group, in the northern coastal Quang Ninh province.

The ship, designed by Damen, specialises in servicing offshore oil rigs and can assist in fire-fighting and oil collection.

The 80m-long and 16.2m-wide vessel has a 728sqm main deck and deadweight of 3,500 tonnes. It can travel at 13.5 nautical miles per hour and operate continuously for 28 days at sea.

Only a limited number of shipbuilders in the world are capable of building the PSV 3300 series.

Last December, the Ha Long Company, an affiliate of the State-owned Shipbuilding Industry Corporation (SBIC) , completed building four tugs for the Damen Group.

The Dutch company formally began its co-operation with SBIC, formerly known as Vietnam Shipbuilding Corporation or Vinashin, more than a decade ago.

Israeli firm to build textile plant in Binh Dinh

Israel's Delta Galil Industries Ltd will build a textile-dyeing-garment plant in the central province of Binh Dinh.

The US$13 million plant will cover an area of 18,000 square metres in the provincial Cat Trinh Commune, Phu Cat District.

The plant's goal is to earn $30 million per year, equivalent to 1.3 million products.

The people's committee of Binh Dinh Province licenced Delta Galil Industries in January.

HCM City Expo heads off to Cambodia, Myanmar

The HCM City Investment and Trade Promotion Centre (ITPC) will hold a trade, services and tourism expo (HCM City Expo 2015) in Cambodia and Myanmar.

The event aims to boost Viet Nam's exports to countries in the ASEAN block, said Pho Nam Phuong, ITPC's director.

The expos in Cambodia will be held from April 1-5 in Battambang.

The expo will feature 150 trade booths from about 90 enterprises. It aims to expand trade and help Vietnamese enterprises research the Cambodian market and seek investment opportunities in the northwest of the country.

The expo in Myanmar will be held in Yangon from May 20 -24. More than 100 booths will represent about 80 enterprises.

This is the fourth times ITPC has held a trade and investment promotion event in Myanmar.

The HCM City Expo in Cambodia and Myanmar will also contain trade and investment promotion programmes.

Con Dao to develop power projects

The southern-coastal province of Ba Ria – Vung Tau has approved a master plan for power development on Con Dao Island that calls for power generation to grow 23.4 per cent each year between 2015 and 2020.

Diesel oil will continue to be the main material for power generation along with liquefied natural gas, wind and solar energy.

Total capital to develop power generation and a transmission grid for Con Dao will be VND2 trillion (US$95 million).

There will be two other power investment projects: Con Dao Wind Power Plant with capacity of 4MW and a Solar Power Plant with capacity of 5MW, to be built for a total of VND645 billion ($31 million).

"Power plays the most important role in developing tourism, production and other services on Con Dao island," Nguyen Van Dung, deputy chairman of Con Dao island People's Committee, was quoted as saying in Tin Tuc (News) newspaper.

Power supply on the island has met only half of demand, with two power-generating mills run by diesel oil. Many big and luxury hotels have their own power generators.

"If local residents develop more tourism services with mini hotels and hostels, we won't be able to meet power demand," Dung said.

All households on the island now have access to power, with 48 per cent used for daily usage and 31 per cent for tourism and services, with nearly 1,900 customers.

Diesel prices account for 85 per cent of the power prices on Con Dao island.

One litre of diesel can generate 3kW at a price of VND15,000 (0.7 cent) but local residents pay the same price as the mainland, VND2,000 for 1kW.

"Therefore, the more we generate, the more we lose," Doan Van Tranh, director of Con Dao power, said.

Last year, the power sector on the island lost VND46 billion ($2.1 million) compared to the average loss of VND33 billion ($1.6 million).

Kim Thi Anh, owner of Tri Ky restaurant, who has lived on Con Dao for 30 years, said: "In the past, my restaurant had to pay around VND15-17 million for power each month. Since we can pay the same price as the mainland, we only pay around VND5 million each month."

"The quality of power is better than before and if we lose power, it only lasts five to 10 minutes," she added.

The Con Dao power sector has set a goal this year to generate 11 million kWh, an increase of six per cent compared with 2014.

SMEs need support to compete globally

Small and medium-sized enterprises (SMEs) in the support industry need better support policies to enhance competitiveness and participate in the global value chain, experts stated.

They added that the profit margins of SMEs remain modest.

Statistics showed that the average profitability ratio of SMEs in HCM City is just 1.8 per cent in comparison with the figure of 6.9 per cent in the industry sector; reflecting that SMEs are struggling and the Government's support policies are not working as expected.

According to Huynh Van Minh, chairman of the HCM City Business Association, SMEs are encountering complicated administrative procedures and have difficulty accessing credit.

He said that although the city has policies for providing capital support to SMEs, they remain worried about the fluctuations in interest rates, urging for more appropriate and stable interest rates to encourage investments.

Last year's figures from the Viet Nam Association of SMEs showed that only 32 per cent of SMEs nationwide have access to credit.

In addition, there is a shortage of information for SMEs involved in the integration process, which confuses companies and keeps them from grasping any opportunity.

Hang Vay Chi, chairman of Viet Huong Joint Stock Company, said a support fund should be set up to provide preferential loans to SMEs.

Besides difficult capital access, SMEs in the support industry have also failed to keep pace with technological advances and their poor competitiveness will fail them in the race with foreign countries, according to Huynh Thanh Dien from HCM City Economics University.

Experts also demanded that support policies on land and infrastructure should be formulated.

There are around 500,000 SMEs in Viet Nam, making up for more than 90 per cent of the total number of companies throughout the country.

Vietnam- a global market leader for coffee

Speakers at a conference in Buon Ma Thuot City revealed on March 11 that in 2014 Vietnam shipped US$3.4 billion of coffee to more than 60 countries, making it the second largest international exporter.

Vietnam currently cultivates more than 640,000 ha of coffee, accounting for nearly one-fifth of the global coffee production volume, and tops the world in terms of Robusta coffee production.

However, the coffee industry still faces numerous obstacles, including unstable development, increasing areas of old and stunted coffee trees, weak management capacity and outdated processing technology.

Minister of Agriculture and Rural Development Cao Duc Phat, who presided over the conference in Buon Me Thuot city said he hoped those in attendance would devise proper solutions for ensuring the sustainable development of the industry.

Ha Nam provincial People’s Committee Chairman Mai Tien Dung has affirmed the province’s willingness to give priority to Japanese businesses, particularly those in the support industry.

At a March 11 meeting with a delegation from Japan’s Hiroshima prefecture, Dung said the province has been improving infrastructure to facilitate Japanese businesses and that they would be provided the best of conditions.

Head of the Hiroshima delegation spoke highly of Ha Nam’s business climate and said that they look forward to doing increased levels of business in the province in the future.

Currently Japan is the leading investor in the province with more than 447.5 million invested in 37 projects.

Banks announce further interest rate cuts

Resuming operations after Tet, many commercial banks are continuing to cut deposit interest rates, owing to good liquidity and low inflation.

Agribank cut annual rates last week for some terms by 0.2 to 0.4 percentage points.

Accordingly, the highest rate applied for deposits of more than 18 months in the bank is 6.3 per cent yearly, down 0.2 percentage points from the previous rate. Deposits with 4 to 6 month terms and six to 12 month terms have also been reduced by 0.3 and 0.4 percentage points to 5.3 and 5.4 per cent, respectively.

Eximbank also posted a new deposit rate of 6.1 per cent per year last week for 12-month term deposits, reflecting a significant drop of 0.28 percentage points. The bank's six to 11-month term deposit rates also fell 0.1 to 0.18 percentage points a year and the one-month term deposit rate slipped marginally by 0.08 percentage points a year.

Techcombank also cut deposit rates by 0.1 to 0.3 percentage points a year, while the Saigon Commercial Bank (SCB) trimmed its deposit rates by 0.1 to 0.2 percentage points a year. According to an SCB representative, the deposit rates are likely to fall further in the future.

Rates at BacA Bank, which often lists the highest rate in the banking system, also fell last week for its long-term deposits from 7.9 per cent to 7.65 per cent.

According to a report from the General Statistics Office, the consumer price index (CPI) in February dropped 0.05 per cent, compared with January and 0.25 per cent compared to last December. Declining inflation has provided very favourable conditions for interest rates cuts, while still maintaining rates sufficiently attractive to maintain deposits.

Currently, the deposit interest rate gap between large-sized and small-sized banks remains stable at roughly 1.5 per cent annually, depending on the deposit's terms. Small-sized banks often have to offer higher rates than large-sized banks' to lure depositors.

According to the latest survey on business trends at credit institutions and foreign banks' branches during the first quarter of this year, liquidity in the banking system has continuously improved. Roughly 89 per cent of surveyed credit institutions said their liquidity had improved from last year and is currently in a good condition. Strong liquidity will continue to be maintained this year as well.

Under the survey, the institutions also anticipate their deposits will rise by 4.5 per cent on average during the first quarter this year and surge by 14.35 per cent for the entire year.

Given the current context, it is expected there will be more lending rate cuts going forward.

Last week, HSBC had also expressed the view that the State Bank of Viet Nam's (SBV's) monetary moves in recent years, particularly its open market operations (OMO), will determine whether the interest rate is likely to be trimmed further in the coming months.

According to HSBC, the real interest rate has in fact increased during the recent months; and the bank therefore predicted that SBV is likely to cut the OMO by another 0.5 per cent to 4.5 per cent by the end of the year.

SBV also expects to cut annual rates for medium- and long-term loans by 1 to 1.5 percentage points this year.

Furniture, home accessories expo opens

The Viet Nam International Furniture and Home Accessories Fair opened yesterday in HCM City.

VIFA-EXPO 2015, which actually combines two annual wooden furniture fairs — VIFA and EXPO — has seen an increase of 25 per cent and 42 per cent in terms of the number of exhibitors and scale from last year, Nguyen Quoc Khanh, chairman of the Handicraft and Wood Industry Association of HCM City (Hawa), said.

There are 177 exhibitors who have put up 900 booths, including 31 foreign exhibitors from 17 countries and territories, up 89 per cent, he said.

Products on display include wooden products (accounting for 73.7 per cent), handicrafts (2.6 per cent), interior accessories (15.4 per cent), and support industry products (8.3 per cent).

The fair will feature seminars on improving the quality of human-resource training in the wood industry and on opportunities and challenges in exporting wood products to the US.

To serve international visitors, estimated at around 3,000, the association has signed an agreement with the Tourism Association of HCM City to assist them with hotels, transport, visas, travel, and others, Khanh said.

Speaking at the opening ceremony, Deputy Minister of Industry and Trade Tran Tuan Anh said that despite the global economic difficulties, Viet Nam's wooden furniture industry achieved US$6.2 billion in exports last year, a year-on-year increase of 11.5 per cent.

VIFA -EXPO 2015 offers an opportunity for trade promotion by bringing local and international companies together for more trade co-operation and exchange, he said.

Organised by the HCM City Department of Industry and Trade and Hawa, the fair will remain open until March 14 at the Sai Gon Convention and Exhibition Centre. Only the final day is for the public.

Tran Trung Hau and Pham Ngoc Quynh Giao, students of Ton Duc Thang University, have won the first prize in the 2014-15 Hoa Mai (Apricot Blossom) furniture design competition, organisers announced yesterday.

Organised by Hawa, the 12th edition of the competition for young talent to generate new ideas to boost the furniture industry, had attracted 244 entries from university students, company workers, and freelance designers nation-wide. The winning works are on display at the VIFA-EXPO.

For the first time, Hawa has chosen eight winning works from the Hoa Mai contest from 2010 to 2013 for display at the International Furniture Fair of Singapore (IFFS) from March 13 to 16.

The move aims to promote Vietnamese furniture designs abroad as well as create opportunities for young Vietnamese designers to exchange information with famous international designers, Khanh said.

Fostering innovation is essential: workshop

Fostering a culture of innovation is essential to improve productivity, including embracing technological advances in production and management, said business operation expert Nguyen Dang Tien.

Vietnam relied on its low-cost labour and material input as its competitive edge, a strategy that will falter as the country integrates into the global economy, especially with the advent of the ASEAN Economic Community and the implementation of free trade agreements this year, General Director of Le & Associate Ngo Dinh Duc told a workshop in Ho Chi Minh City on March 11.

According to the General Statistics Office, Vietnam’s labour productivity has been on the rise, averaging 3.7 percent between 2005 and 2014, but remains below that of other ASEAN nations - at only one-eighteenth of Singapore’s, one-sixth of Malaysia’s, and one-third of Thailand’s.

The low efficiency rate could be linked to the poor quality of the workforce, trainings and management, experts said.

The workshop was co-hosted by the Business Association of High-Quality Vietnamese Products and the Leading Business Club.-

The outcomes of the 2014 Knowledge Sharing Programme (KSP), launched by the Republic of Korea (RoK) to share experience in socio-economic development with Vietnam, were announced at a conference held in Hanoi on March 11.

Vietnam is one of the first partner nations of the programme as a result of the bilateral cooperation between the two countries.

The KSP was designed to help its partner nations build and upgrade the capacity of their government officials and agencies in policy management by giving consultations on and support for policy implementation.

Speaking at the ceremony, Deputy Minister of Planning and Investment Nguyen The Phuong hailed the outcomes, saying they will serve as a reference for Vietnam in drafting policies for the country’s socio-economic development.

He noted that through learning from the RoK’s experience, Vietnam has rolled out appropriate orientations for the country’s economic development designed to encourage strong and sustainable growth and promote international integration.

RoK Ambassador to Vietnam Jun Dea Joo said the programme aims to offer helpful recommendations to policy-makers in shaping policies on socio-economic development strategies, managing economic crises, developing human resources, and speeding up industrialisation and export promotion.

He stressed that the KSP will be useful for the Vietnamese Government as the country faces challenges in restructuring its financial sector and developing its infrastructure system.

The diplomat affirmed that his country will continue assisting and sharing its experience with Vietnam.

In 2014, research on the framework of the programme focused on policies for sustainable regional economic development – specifically in the two key economic hubs, the Red River Delta and the Southeast – with a major focus on the effectiveness of growth strategies, the use of policy tools to ensure sustainable environment, regional-level agricultural restructuring, improvements in resettlement procedures, and arising issues from the urbanisation process.

Launched in 2004 by the RoK’s Ministry of Strategy and Finance, the KSP covered the national energy policy, joining the global supply chain, social housing development and building the Law on Environment Protection.

Dak Lak conference maps out coffee sector’s future growth

Vietnam will maintain its total coffee farming area at around 600,000 hectares from now to 2020, focusing mainly on the four Central Highland localities of Dak Lak (190,000ha), Lam Dong (150,000ha), Dak Nong (115,000ha) and Gia Lai (75,000ha).

Nguyen Van Hoa, Deputy Head of the Ministry of Agriculture and Rural Development’s Department of Cultivation, revealed the plan during a conference on sustainable development of the coffee sector in Dak Lak on March 11 as part of the ongoing fifth Buon Ma Thuot Coffee Festival.

The area used to cultivate new varieties will be raised to 40 percent of the total coffee crop, he said. Meanwhile, good agricultural practices (GAP) will be applied in 80 percent of the coffee area and 80 percent of fresh coffee output is expected to meet national quality standards by 2020, added Hoa.

Geographical indications (GI) will be built for high-quality coffee areas to boost their reputation.

Further favourable conditions will be created for farmers and enterprises to invest in storing and processing coffee, ensuring a high technical standard and raising the proportion of wet processed coffee to over 30 percent in 2020.

According to Hoa, 100 percent of coffee processing facilities for export are expected to meet national standards in 2020, while over 80 percent of coffee production will be shipped directly to consumers and processors abroad.

The official also revealed that a number of solutions will be proposed to the Prime Minister regarding planning, science and technology application, human resources training, and international cooperation.

Participants at the conference also pointed to the coffee sector’s limitations, including unplanned expansion of farming area growth, poor management of quality, and loose production connections.

HCM City banks offer soft loans to meet lending target

Banks in HCM City are vying with one another to offer preferential loans in an effort to achieve the year's credit growth target of 13-15 percent.

Analysts say that many banks consider the target set by the State Bank of Vietnam as rather stiff and so have begun to make efforts right at the start of the year.

Nam A Bank, for instance, recently unveiled a 2 trillion VND (94.14 million USD) credit package at 6 percent interest for corporates and 6.4 percent for individual borrowers.

In January HDBank announced loans at a mere 3.8 percent interest for the first six months for those borrowing between 500 million VND (23,534 USD) and 2 billion USD (94,135 USD).

Viet Capital Bank recently earmarked 1 trillion VND at a rate of 6.5 percent for start-ups involved in production and distribution.

It has unveiled a 2 trillion VND package for personal loans at 7.5 percent and simple lending procedures.

At ABBank, individual customers wanting to get long- and medium-term loans can get them at 8 percent for the first 12 months under a 1 trillion VND package.

Vu Thu Hang, an ABBank executive, said the bank expected long- and medium-term loans to enable individual customers to achieve their business plans and personal consumption needs, thus encouraging production and trading activities.

Banks have also simplified procedures to ensure quick disbursement of credit.

A spokesperson for a bank situated in HCM City's Tan Binh district, who asked not to be named, said lowering lending rates did hit banks' profits but providing services to borrowers will boost their earnings.

A central bank official also said that with the fierce competition among banks for good customers, those who want to win must have quality services first followed by preferential interest rates.

Phan Dinh Tue, Deputy General Director of Sacombank, agreed, saying that in addition to having reasonable interest rates banks must have policies and mechanisms and utility products to ensure best care for their customers.

The banks' efforts seem to be paying off, with credit growth in HCM City significantly improving from the negative situation in the same period in previous years.

Deputy Director of the SBV's office in the city, Nguyen Hoang Minh, told Tuoi Tre newspaper that in the first two months of the year the city banking sector's credit grew by 1.1 percent, much higher than in recent years.

"Banks are making efforts to cut costs to be able to further slash interest rates on long- and medium-term loans by 1-1.5 percent as required by the SBV governor.

"At present some banks are offering long- and medium-term loans at around 9 percent."

VN strives for trade balance by 2020

Việt Nam, in its 2011-2020 strategy, sets a target of achieving a balance of trade in 2020, Minister of Industry and Trade Vũ Huy Hoàng said.  

“It will require great efforts from both Government and businesses to reach that goal,” Minister Hoàng said at an online dialogue via the Government Web Portal on January 6.

According to the minister, in 2011 Việt Nam’s balance of trade was remarkably improved with an export turnover reaching US $96.3 billion, up 33% against the previous year.

The country’s trade deficit was over US $9.5 billion, down 25% compared to the previous year and equivalent to 9.9% of total export revenues.

This is an encouraging result, however, it will be difficult to maintain this figure in the coming years, Minister Hoàng noted.

He said that Việt Nam has always been a country suffering a trade deficit, as it has to import machinery, equipment, fuel and materials and other essential goods for daily use.

“We will have to continue imports if we don’t have a strong enough manufacturing and mechanical industry, lack support industries and prefer foreign goods to locally made ones,” he said.

AFD supports hydraulic infrastructure development

The French Development Agency (AFD) in Vietnam has provided a concessional loan of 18.8 million euros for the development of hydraulic infrastructure and a grant of 300,000 euros for strengthening of capacity for water resources management in the country.

According to a statement released by AFD last Friday, Jean-Noël Poirier, ambassador of France to Vietnam, Truong Chi Trung, deputy minister of Finance of Vietnam and Rémi Genevey, director of AFD in Vietnam, signed the two financing agreements which are expected to be conducted in Binh Dinh and Hung Yen provinces.

Since 1994, AFD has contributed to the financing of a number of hydraulic infrastructure projects and the strengthening of capacity for water management in the country.

This project is in line with the AFD’s strategy in which climate issues are considered a key factor for its orientation, both in terms of attenuation and adaptation. The project aims to develop a participatory irrigation management approach, which is a condition for exploitation of irrigation systems. The project will concern a surface of 7,000 ha and 114,000 people in beneficiary provinces.

AFD, the main operator of France’s official development assistance (ODA), is actively involved in Vietnam since 1994. The cumulated ODA financing of AFD to Vietnam has amounted to 1.6 billion euros for 79 projects.

PIT on homes for rent down

Those renting out their homes to students and factory workers are required to pay a personal income tax of 2% instead of 5%, according to a new guidance document of the General Department of Taxation.

In its Document 615/TCT-TNCN sent to the provincial tax offices, the department makes clear two kinds of property leasing, hence two different tax rates.

The 2% tax is applicable to landlords who rent out their houses to students and workers and those providing short-term lodging for travelers also enjoy the same rate.

Those leasing out assets including houses, land, warehouses, vehicles, equipment without operators, and other assets excluding services are subject to a tax rate of 5%.

According to the department, the guidance came out given the lack of a circular guiding the implementation of the income tax laws. The Government has issued Decree 12/2015/ND-CP, with effect from January 1 this year, providing detailed guidelines for the amended tax laws.

A tax official who asked not to be named told the Daily that those tax rates might be made official in the forthcoming circular.

The HCMC Department of Tax is applying the tax rates of 2% and 5%.

Operational firms up slightly in Vietnam

There had been 488,148 enterprises operational nationwide by January 31 this year, up 1.1% against the end of last year, according to a report by the Ministry of Finance.

Experts said the figures released by the ministry are more accurate than those by the Ministry of Planning and Investment and the General Statistics Office as these enterprises were paying taxes to the State.

“Improving production and trading of the business community have made significant contributions to State budget revenues,” Deputy Minister of Finance Nguyen Huu Chi said in the report.

According to the report, Viettel Group posted year-on-year sales growth of 20% and pre-tax profit growth of 10.5% last year while the respective growth rates of MobiFone were 1.4% and 5.2%.

Though crude oil prices on global markets have fallen by half, the budget revenue from crude oil in January and February was VND11.6 trillion, dropping by only 20.2% against the same period last year.

The ministry said the world’s oil price plunge has slowed since the middle of February but the price still stays low, at US$49-54 per barrel.

The export price of Vietnamese crude oil averaged out at US$57.5 per barrel in the first two months of this year, much lower than US$100 per barrel as expected earlier.

Despite a decline in budget revenues from crude oil, a large amount collected from State-owned enterprises (SOEs) led to a sharp increase in State budget revenues. The State budget revenue in the January-February period was around VND151.87 trillion, rising by over 17% year-on-year.

The tax payment by Vietcombank, VietinBank, BIDV and Agribank rose by 43% year-on-year while the State budget contributions by automobile production and assembly enterprises soared more than 30%.

Tax and fee collections from domestic sources in the first two months increased 24.7% year-on-year, with collections from SOEs up 29.3%, foreign-invested firms rising by 16.1%, and personal income tax up 9.6%.

The tax and fee collections from imports and exports after value-added tax (VAT) deductions grew 10.6% year-on-year to VND22.4 trillion.

Up to 55 out of the country’s 63 cities and provinces reported higher State budget revenue collections in the first two months than the same period last year.

SOEs to face sanctions on slow divestment

The HCMC government has urged State-owned enterprises (SOEs) in the city to speed up divestment from non-core business operations, saying punitive sanctions would be imposed on delays.

At a meeting on SOEs last week, Le Ngoc Thuy Trang, head of corporate finance at the HCMC Department of Finance, said the process of SOEs pulling out of non-core investments is tardy.

In a talk with the Daily early last month, Huynh Trung Lam, deputy head of the city’s committee for enterprise reform, said 15 businesses under the city government were required to withdraw around VND3.82 trillion from non-core investments in the banking, stock, insurance, real estate and investment fund management sectors in 2014 and 2015. However, a mere 15% of the amount had been taken back as of the end of last year.

In 2013, the amount divested by SOEs of HCMC was small as well, at a mere VND30 billion.

Speaking at the meeting, HCMC vice chairman Le Manh Ha requested SOEs to focus on getting back capital from non-core business operations in quarters two and three, so that the task could be be done by year-end. The city will tell the enterprises to make a pledge on a divestment process and will impose punitive sanctions on any failures to comply, he added.

As of last year, there had been 107 enterprises under the city government, with 15 of them being restructured. Total revenues of the remaining 92 enterprises reached a little more than VND73 trillion last year, down 15.63% from the previous year, and paid about VND9.94 trillion in taxes.

According to the HCMC Tax Department’s report released at the meeting, corporate income tax payments by foreign-invested enterprises picked up 18% last year but the amount paid by SOEs of HCMC declined.

Budget housing developers may enjoy longer loan terms

Developers of budget housing projects may obtain concessional loans at Vietnam Bank for Social Policies with a maximum term of 20 years, according to a draft Government decree on development and management of low-cost housing.

The Ministry of Construction is getting comments on this draft decree before presenting it to the Government. The decree, if passed, will come into force on July 1, replacing Decree 188/2013/ND-CP issued in late 2013.

Under clause 12 of the draft decree, such loans would be extended to enterprises and cooperatives building homes for lease or sale, households and individuals with the same purpose, and enterprises and cooperatives constructing homes for their staff.

To get access to concessional loans, budget housing projects must secure approval from the competent authorrites and have land readied. Besides, they should be responsible for site clearance and compensation.

To borrow, they should obtain a construction license and a maximum loan should equal 70% of the estimated cost of a project and be no more than 70% of the value of collateral.

The maximum lending term is 20 years for for-rent housing projects while that of hire-purchase projects is 10 years and that of for-sale projects is five years.

Lending rates would be proposed by the Vietnam Bank for Social Policies and decided by the Prime Minister.

Speaking to the Daily, the deputy director of a property firm based in HCMC said compared to Decree 188/2013/ND-CP, the draft decree has clearer provisions and some more incentives for home developers but few regulatory breakthroughs can be found.

However, he added it is easy to develop budget housing but difficult to sell as commercial housing projects now also offer affordable prices and smaller unit sizes.

Meanwhile, the requirements to rent and buy budget homes are normally strict and complicated, making it hard for many projects to find buyers.

This has discouraged many private enterprises and individuals from investing in this housing segment. Investors tend to build low-cost commercial homes since they can be easily sold, according to him.

Sources of funding for economic development in the country are reaching their limits, according to economic expert Luu Bich Ho.

Ho, former director of the Development Strategy Institute, said at a recent seminar in Hanoi that huge public debt and spending have led to a depletion of State funds for economic development. Last year State capital dropped 13% and accounted for a mere 13% of total investment capital in the economy.

State-owned enterprises (SOEs) now make up around 8% of total investment capital in the economy. According to Ho, the State corporate sector has little capital left for investment and many SOEs are struggling with bad debts.

A research group of the National Economics University forecast investment capital of the State sector could fall 10% this year while it rose 11.3% last year.

Just 16.6% of last year’s total investment was sourced from the foreign direct investment (FDI) sector but it accounted for nearly 68% of the country’s total export revenues and over 70% of the nation’s industrial output value. The problem is the added value of locally manufactured goods in the FDI sector was too low, at 15-20%.

Official development assistance (ODA) capital has also approached the limits, according to Ho.

“Only capital from the private sector and the public has not yet been fully tapped,” he added.

Nevertheless, the private sector with dozens of thousands of enterprises going bust each month is struggling with huge financial difficulties though they have hefty demand for funds to improve competitiveness.

Access to bank loans should be made easier for the sector and in doing so, banks will have to settle bad debt and boost the restructuring process while enterprises should draw up and implement new market development and competitiveness improvement strategies.

The amount of gold held by the population is estimated at 400 to 1,000 tons, equivalent to US$16-40 billion at the current world gold price. If there is a breakthrough policy and the business environment is improved, some of the volume can be channeled into business activity.

“But people’s confidence has waned,” he said.

As a consequence, a viable solution to the problem is to focus more on improving and effectively implementing institutions of a market economy, and changing the growth model via economic restructuring.

Ho however is not optimistic, expressing concerns over the old mechanism. An equal playing field for all economic sectors is not yet available, with the State corporate sector still embraced as the leading force in the economy.

In quest of transparency

Vietnam Electricity Group (EVN) and the Ministry of Industry and Trade have been trying to show the inevitability of a new round of power price hikes from March 16 as approved by the Government, but what has been explained is not convincing enough.

EVN’s deputy general director Dinh Quang Tri said the average hike of 7.5% would help offset rising input costs, especially of coal and gas, the two main fuels for power generation. This is one of the reasons heard at a meeting last week between the Prime Minister and relevant agencies and EVN before the approval was given.

At the meeting, the industry ministry proposed revising up the electricity price by 7.5%, 8.5% or 9.5%, and the first got the nod. Though the 7.5% spike could bring extra revenue of VND13 trillion and additional profit of VND1.5 trillion to the State-owned group this year, Tri said, this profit accounts for a mere 1% of the group’s equity while the normal profit margin should be 3%, which means the power price should be increased by 12.8%.

EVN presented certain figures to make the case. However, the monopoly in the power industry did not make clear the elements that constitute the power price, including production cost and efficiency of its corporate governance.

The profit of VND1.5 trillion is below EVN’s expectations, but it is huge for many private enterprises which are still wrestling with losses amid a slow recovery of the economy.   

The Business Registration Agency under the Ministry of Planning and Investment pointed out the difficulties faced by the local business community in a recent report. In the first two months of this year, more than 16,000 enterprises were dissolved and suspended while the number of business startups in the period was a little more than 13,760.

Businesses said they were not surprised at the power price hike from mid-March but demanded transparency so that they could draw up business plans and weather the protracted economic woes.

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