Vietnam tax authorities come under fire for naming, shaming defaulters

This week tax offices in Hanoi and Ho Chi Minh City released lists of hundreds of businesses with huge overdue taxes in an effort to shame them into paying the money.

They also threatened to block bank accounts or invalidate invoices of businesses that fail to pay up and hand over their cases to the police.

The move, a part of the Ministry of Finance's efforts to reduce back taxes estimated at VND72 trillion (US$3.24 billion) currently, seems effective so far with some businesses reportedly scrambling to pay.

However, the move has caused resentment among many companies and annoyed economists.

They said it is "unfair" that tax authorities go after private businesses, while the tax agencies themselves and many other state agencies get away scot-free with debts they owe businesses, especially tax refunds and payment for public construction works.

Ngo Tri Long, an economist, said government agencies and local governments sit on the money they owe contractors of public projects for years, causing financial trouble for many companies, but none of the officials responsible for this have been named or punished.

He quoted a 2013 report by the Ministry of Planning and Investment as saying the debts related to construction had risen to VND91 trillion ($4 billion).

Statistics from the General Department of Taxation showed that the government owed businesses nearly VND17.24 trillion ($776.33 million) in tax refunds as of last year.

Nguyen Thai Son, vice chairman of the Ho Chi Minh City Tax Agents Club, said though the law states that tax agencies have to pay interest when they delay tax refunds to businesses, they rarely do.

Nguyen Thi Thu Trang, finance manager of HCMC-based interior construction company C.N.D Aluminum Glass, said when her company delayed payment of taxes, it was slapped with interest much higher than bank rates.

But the tax offices themselves did not pay any fines in a similar situation, even in case of delays lasting years and amounts involving billions of dong, she said.

"It is extremely unreasonable and unfair to businesses."

Despite their resentment, businesses rarely dare take legal action against official agencies, Long said.

In Vietnam, laws are not enforced strictly and people rely on personal contacts to do business; so businesses tend to fear state agencies, he explained.

Another economist, Do Thien Anh Tuan, agreed, saying that in many countries when a state agency owes them money, companies can go to court.

"It is a pity that our laws are not that good."

Vietnam bans banks with high bad debts from expanding

Commercial banks in Vietnam are not allowed to expand their networks until they can keep bad debts under 3 percent of total outstanding loans, a new rule indicative of the government's increased resolve to address its toxic debt problem.

The deadline for banks to reduce their bad debts is October 1.

Lenders missing that deadline will not be licensed to add more branches or install new ATMs, the State Bank of Vietnam said in a statement on Wednesday.

It is unclear if the expansion restriction will be lifted next year.

Bad debts in Vietnam's banking system were estimated at 3.59 percent in February, slightly up from 3.25 percent in December last year.

The central bank has continuously affirmed its commitment to bring that level down to 3 percent by the end of the year.

In one of the bank's efforts, local lenders were ordered to sell their bad debts to its asset management company VAMC by September.

VAMC, which was established in July 2013, planned to buy around VND80 trillion ($3.6 billion) of bad debts from commercial lenders this year.

BIDV, the second-biggest partly private bank by assets, was asked to sell the largest amount, around VND8 trillion ($360.31 million), local media reported.

Life insurers break records in Vietnam - but from a very, very low base

Life insurance premiums in Vietnam are on track for yet another record year, but industry observers say the gains are coming from a very low base and that foreign insurers have yet to truly crack the market despite dominating the sector.

Premiums from life insurance plans are expected to rise 15 percent to a record 31.5 trillion dong ($1.45 billion) this year, or 3.3 times the value in 2007, finance ministry data shows. Still, the number of life insurance policies totalled just 5.96 million at the end of April - that's less than the population of the capital Hanoi. State television estimates 90 percent of the country's 90 million people do not have life insurance policies.

It will take a few more years before insurers make more substantial headway into the market. Most households still have low understanding and awareness of insurance policies, and despite a rising middle class, most can yet afford coverage, BMI Research said in a report last month.

Trinh Van Anh, 24, a manager at an international school in Hanoi, has no life insurance and hasn't thought of getting one, even though her monthly salary of about $1,000 is higher than most of her peers. "There's no one telling me to get one," she said. "No one knows what life insurance covers, what it gives the policy holder, or what the benefits are."

By 2019, at least one of the major players may achieve significant success in developing and distributing micro-insurance products among the lower-income population, according to BMI. Prudential, AIA, Manulife and Dai-ichi currently dominate the market. Baoviet Life, a unit of Baoviet Holdings, is the only domestic player, and the market's second-biggest player after Prudential.

Central province to promote swiftlet nest products

A workshop was held in Nha Trang city on July 10 to identify ways to boost the production of salangane nests – a delicacy from the central province Khanh Hoa.

The event, held by the Khanh Hoa Salangane Nest Company and the Ministry of Science and Technology, was attended by nearly 100 delegates, including officials, scientific and technological experts, and salangane researchers.

Speakers underscored the necessity of in-depth studies on how to sustainably raise salanganes, a species of swiftlets, and harvest their nests. They also highlighted the potential impacts of climate change and human activities, and suggested solutions to protect the species.

Prof. Dr Mai Dinh Yen from the Hanoi-based Vietnam National University said Khanh Hoa needed to conduct comprehensive studies on the local salangane species and build reserves where the bird can breed in peace without human interference, which is crucial for the species’ survival and the economic success of nest products, especially at the national level.

Director of the Khanh Hoa company Le Huu Hoang called upon coastal localities throughout the country to devise investment strategies and consider developing breeding sites for salangane in favourable areas, helping Khanh Hoa expand salangane breeding and nest harvesting.

The workshop was part of the on-going 2015 Nha Trang Sea Festival, which ends on July 14.

The salangane lives in caves on limestone cliffs and makes nests using its own saliva. The nest is a popular but an expensive traditional dish which is believed to have health benefits.

Khanh Hoa is home to the largest salangane population in Vietnam.

The Khanh Hoa Salangane Nest Company, tasked with developing and harvesting salangane nests, now owns 169 salangane caves on 32 islands.

In 2014, it harvested more than 3.38 tonnes of salangane nests, the main ingredient in a number of products that are exported to 21 countries and territories around the world.

RCEP agreement impacts on Vietnam highlighted

Impacts of the Regional Comprehensive Economic Partnership (RCEP) on the Vietnamese economy were unveiled at a conference held in Ho Chi Minh City on July 10.

RCEP is a free trade agreement among the ASEAN bloc and six other partners: China, Japan, the Republic of Korea, Australia, New Zealand and India. RCEP negotiations were officially launched by leaders of the 16 participating nations in 2012.

Speaking at the conference, Vice Director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh highlighted that RCEP is relevant to Vietnam’s outlook on fostering economic integration with comprehensive economic reforms.

Pham Binh An, Director of the WTO Integration Support Centre in Ho Chi Minh City, said the RCEP pact stipulates drastic reductions on trade tariffs, which will have major positive influences on Vietnam as the country is experiencing a trade deficit with some of the regional nations.

Vietnamese enterprises need to map out effective import-export strategies, he underscored, saying RCEP commits to cut down a raft of tariffs, restructuring trade among well-developed countries in the region.

He added that RCEP is a crucial institution in international economic integration, affecting 48 percent of the global population and 30 percent of the international economic productivity.

Experts at the conference agreed that Vietnam is proactively joining international integration through participating in RCEP and other free trade agreements. The country is fostering joint-ventures while furthering trade with foreign partners and encouraging the establishment of multinational corporations.

Apart from 10 signed free trade pacts, Vietnam is pushing negotiations for the Europe- Vietnam Free Trade Agreement (EVFTA) and Trans-Pacific Partnership Agreement forward.

Livestock farming efficiency promoted

Authorities and experts came together in Hanoi on July 9 to discussed how to improve the quality and efficiency of livestock production in the second half of 2015.

The event, organised by the Ministry of Agricultural and Rural Development, reviewed the implementation of the restructuring of livestock production and discuss future action points.

Director of the Ministry’s National Institute of Animal Sciences Nguyen Thanh Son highlighted the sector’s challenges in terms of productivity, quality and price, and called for the application of technology in stockbreeding.

Son also pointed out the lack of linkages between farmers and businesses, poor food safety and hygiene, and cumbersome administrative procedures.

Meanwhile, President of the Vietnam Animal Feed Association (VietFeed) Le Ba Lich underlined the financial difficulties businesses in the sector faced, and suggested more demand-oriented research be conducted.

Director of the Ho Chi Minh City Department of Agricultural and Rural Development Nguyen Phuoc Trung stressed the significance of the quality of stockbreeding and production scale in improving productivity and product quality.

The city offered a number of incentives for farmers to apply science and technologies in order to reduce costs in livestock production, Trung said.

Minister Cao Duc Phat called for a change in mindset among stakeholders to boost the sector’s restructuring process, thus enhancing its competitiveness and integration into regional and global markets.

The sector should focus on productivity and quality in order to meet consumption and export demands, the Minister said, adding that the application of science and technology should also be fostered in the production process to reduce costs, while also ensuring food safety and hygiene.

Statistics published by the Ministry’s Department of Livestock show that the sector has grown by 4.8% over the past six months, meeting domestic demand in full and partly fulfilling its export targets.

Hong Kong boosts cooperation with Vietnamese enterprises

Hong Kong enterprises want to cooperate with Vietnam in developing brand names and creating eye-catching product designs to improve competitiveness.

The announcement was released by Shirley Wong, Director, Indochina, Hong Kong Trade Development Council (HKTDC) at a seminar in Ho Chi Minh City on July 9.

Shirley Wong said that the Hong Kong Special Administrative Region always strongly supports the development of creative industries. This is the strength of Hong Kong enterprises.

Vietnam ranks third among footwear exporters

Vietnam ranks third among world footwear exporters in terms of value, only after China and Italy, according to the Vietnam Leather and Footwear Association (Lefaso).

The country is also among top four largest footwear producers, trailing by China, India and Brazil.

A number of free trade agreements which are likely to come into effect soon will also open more opportunities for the footwear and handbag industry of Vietnam to penetrate potential markets.

Lefaso said that after Vietnam joins the Trans-Pacific Partnership (TPP) agreement, current taxes of 3.5-57.4% will be cut down to zero, helping footwear businesses boost their exports.

However, the biggest challenge for the sector is that the product quality of some businesses does not meet export requirements. Other obstacles include low qualification of human resources and shortage of a material area.

Lefaso will hold an export promotion conference on July 15 with the aim of raising production and export capacity of domestic businesses.

The conference is within the framework of the 2015 national promotional programme to introduce the capacity of Vietnam footwear and handbag exporters to the world.

Vietnam industry lags behind potential

Modern industry in Vietnam mainly revolved around assembling parts and components, said Dr. Pham Xuan Duong, permanent deputy head of the Party Central Committee's Commission for Economic Affairs.

Duong told delegates at a workshop on July 8 in Hanoi that this failed to match expectations for national industrialisation.

The event was held to collect inputs for the development of a national strategy for industry development.

Duong said since "doi moi" was initiated in 1986, Vietnamese production had risen 24 times.

However, he said, lack of a complete development plan after the country's official integration into the World Trade Organisation (WTO) in 2007 and conflicts between the different development strategies for different sectors had hindered industrial growth.

Duong said in industry, production of materials boosted the growth of other industries, especially manufacturing, information technology, electronics, culture, services, tourism, agriculture-forestry-animal husbandry and export-oriented farm produce processing.

He added that developing industry would help lower trade deficit, help stabilise the macro-economy, reduce exports of unprocessed natural resources, including raw minerals, and increase the added value of products.

Further, it would also help attract foreign investment, create employment and encourage the taking of initiatives to protect the environment.

At the workshop, participants discussed what materials should be selected for focused development in Viet Nam and analysed good practices round the world that could be introduced into the country.

They also analysed the needs and demand for materials for industrial production in both local and foreign businesses.

Scientists at the workshop made several recommendations for a policy to develop the materials industry from now to 2025 with a vision to 2035, underscoring the important roles of State-owed businesses, scientific-technological research institutions and banks.

Dr. Doan Dinh Phuong, from the Vietnam Academy of Science and Technology, called for increased investment in research and development and training.

He said the Government should select a number of research institutions and producers to develop strategic materials that could serve both military and civil purposes, including titanium and steel compounds, special alloys, and photonic and electronic materials.

The Government should also give preferential treatment to producers who made advanced materials, he added.

Professor Dinh Van Phong from Hanoi University of Technology said if there was sufficient investment, Vietnam was capable of producing highly skilled experts.

Phong suggested long-term training programmes should cover everything in the process of making goods - from research to final production.

He also suggested a link between universities and research institutes and producers.

"This link will bring researchers down to earth, learning about real issues," he said.

Recommendations made at the workshop, Vietnam materials industry - dynamics, needs and supply capacity, will be collected as inputs for a report the committee will send to the Political Bureau, Party Central Committee Secretariat and related agencies to help in producing a strategy to develop industry.

New challenges require livestock overhaul

Viet Nam's livestock sector needs to prepare for several trade agreements expected to create huge challenges for farmers and enterprises.

This was the subject of meeting by Government officials and experts about restructuring the sector in the final months of the year in Ha Noi on Thursday.

Despite meat productivity increasing by at least four per cent this year compared to 2013, many obstacles remain unresolved.

The biggest are productivity and the cost of meat. Viet Nam produces much less meat than other countries, but it is also more expensive.

"We have the second largest number of farm ducks in the world and the fifth biggest number of pigs, yet productivity is nowhere close to the international average," said the Minister of Agriculture and Rural Development, Cao Duc Phat, at the meeting.

"The fear is that when the trade agreements come into effect and the tariff rate is brought down to zero, imported meat products will instantly flood our market," he added.

One of another three major challenges threatening domestic animal raising include the loose co-operation between authorities, enterprises and farmers in the production chain, said National Institute of Animal Sciences Director Nguyen Thanh Son.

"Antibiotics and growth stimulants are still found in domestic meat, limit the chances of exporting meat products," Son added.

The overly complicated red tape was also blamed for the sluggish development of the breeding sector.

Recently, a report that farmers had to pay up to 14 different kinds of taxes to raise a single chicken made the headlines throughout Viet Nam.

The taxes cover quarantine work on the chickens and even on the trucks that deliver the birds. There are also taxes on the number of eggs laid and on the meat produced.

"Such red tape is very disturbing to the development of the sector," Son said.

To solve all those challenges, the livestock sector should restructure to produce competitive, high-quality products for the global market, said Minister Phat.

He added that the restructuring should begin with a change of mindset.

The chairman of the Viet Nam Animal Feed Association, Le Ba Lich, agreed, adding that authorities at all levels still thought the breeding sector was meant to serve domestic demand only.

"This mindset should be changed, especially when Viet Nam is signing numerous free-trade agreements," Lich added.

The Trans-Pacific Partnership (TPP) and the ASEAN Free Trade Area (AFTA) are trade pacts that aim to fully eliminate tariffs on many imported goods, including those from Viet Nam.

"If the husbandry sector wants to join the global stage following the signing of these agreements, its products have to compete in quality and price," said Lich.

Deputy Minister of Agriculture and Rural Development Vu Van Tam suggested that the Department of Livestock (DoL) and the Department of Animal Health (DoAH) be more active in promoting development of the sector.

He said DoL had to build a market database for farmers and enterprises so that they make timely adjustments to their production.

Meanwhile, the DoAH was asked to make efforts not only in disease prevention in livestock, but also in reducing farming costs.

Meanwhile, Lich criticised the Ministry of Agriculture and Rural Development for being ignorant about reality.

"It kept repeating that enterprises should be the leading force in reconstruction, yet no Vietnamese enterprise was strong enough to do this," Lich said.

He said that most domestic enterprises in the breeding sector had the capital of only about VND5 billion (US$227,000) compared to the $100 million animal feed factory backed by a foreign company in Hai Duong.

Additionally, a lack of co-operation in the production chain was long acknowledged by the Ministry, yet the question of how to further link parts of the chain remained unanswered.

"The Ministry should research the mechanisms to promote co-ordination between production and distribution," Lich said.

Provincial hospitals adopt hi-tech tools

Many provincial general hospitals have successfully adopted advanced techniques learnt from major HCM City hospitals in the two years since a programme for the purpose got underway.

The first phase of the programme aimed at improving the diagnostic and treatment capacity of provincial-level hospitals began in 2013, Nguyen Tan Binh, director of the city Department of Health, said.

In the south, six major hospitals in HCM City have been entrusted with providing training and transferring medical techniques to 14 hospitals in southern provinces.

The Hospital for Traumatology and Orthopaedics, Gia Dinh People's Hospital, Tu Du Obstetrics Hospital, Children's Hospital No.1, Children's Hospital No.2, and Oncology Hospital have transferred 250 medical techniques in the two years.

The provincial hospitals now perform most of these techniques, Binh told a meeting held in HCM City yesterday.

The number of people treated at these hospitals has increased significantly, easing the overload at HCM City hospitals, he said.

A shortage of medical officials and doctors at hospitals around the Cuu Long (Mekong) Delta hindered their learning of new techniques.

While there are an average of seven doctors per 10,000 population in Viet Nam, the delta has only 4.6.

Health of Minister Nguyen Thi Kim Tien said the programme would be expanded to another 13 cities and provinces that have yet to join the programme.

In all, 14 major hospitals – the other eight being in Ha Noi and Hue — have transferred to 48 hospitals across the country medical techniques in five fields in which patient demand is overwhelming, she said, listing cardiology, traumatology, oncology, obstetrics, and paediatrics.

"Teaching these techniques plays a key role in improving the quality of diagnosis and treatment at provincial hospitals and easing crowding at major hospitals."

People's Hospital 115, Binh Dan Hospital, Eye Hospital, and the Hospital of Haematology and Blood Transfusion in HCM City will be added in the second phase of the project between 2016 and 2020, according to the city Department of Health.

Cement consumption up

Domestic cement consumption has improved even as Vietnamese cement exports have been faced with competitive pressure from neighbouring countries.

Statistics from the construction ministry showed that in the first half of the year, the country's cement consumption was estimated at 34.16 million tonnes, posting a 6 per cent year-on-year rise and meeting 47 per cent of the whole year's target. Of this, domestic consumption was 5 per cent higher than the same period last year, reaching 25.97 million tonnes. Viet Nam shipped 8.19 million tonnes of cement to foreign markets, representing 8 per cent year-on-year increase.

Last month alone, cement consumption was estimated at 5.68 million tonnes, or 12 per cent higher than the corresponding period last year, including 4.63 million tonnes in local market and 1.05 million tonnes for exports.

The ministry said the exports of cement and clinker in H1 decreased in comparison with the previous years due to difficult conditions in some import markets, especially Bangladesh. However, domestic consumption has been on an increasing trend.

Nguyen Quang Cung, chairman of Viet Nam Cement Association, observed that there was no concern about the cement consumption in the 2015-16 period thanks to a rising domestic demand.

This year alone, domestic cement consumption was estimated to increase to 5 million tonnes, Cung said.

Cung said cement consumption in the domestic market has risen thanks to improvement in the real estate market, while rural infrastructures have been actively developed.

The ministry calculated that cement consumption this year will reach 72-74 million tonnes, increasing 1.5-2 per cent over last year. Of this, local consumption will be 53-54 million tonnes, while 19-20 tonnes will be exported.

This year, the country will have two new projects, including Song Lam 2, with the capacity of 0.6 million tonnes a year, and Cong Thanh Cement, with 3.6 million tonnes a year capacity. This will bring the country's total cement production lines to 76, with 81.56 million tonnes designed capacity.

Viet Nam's cement sector has been listed as one of top 5 in the world in terms of capacity, after China, India, Iran, and the US.

Cement supply next year is expected to meet domestic consumption demands and 15-16 million tonnes for exports each year, in addition to a reserve of 10-15 per cent to stabilise the market, especially the southern region.

He added there would not be any new cement project in 2016. However, a number of major projects would be carried out during the 2017-18 period.

Viet Nam to gain from regional FTAs

Viet Nam would gain substantially from the Regional Comprehensive Economic Partnership (RCEP), which is still under negotiation, a workshop heard in HCM City yesterday.

Pham Binh An, director of the HCM City WTO Affairs Consultation Centre, said that 10 ASEAN countries and six countries with which ASEAN has existing free trade agreements (Japan, Korea, Australia, New Zealand, India and China) were negotiating the content of the RCEP, which may be finalised by the end of this year.

RCEP would create the world's largest trading bloc, he said.

It would be a comprehensive, high-quality economic cooperation model and would remove barriers to establish a favourable environment for investment and trade activities in the region, he said.

Unlike the Trans Pacific Partnership (TPP), RCEP focuses primarily on trade, including trade in goods, and trade in services and investment. TPP also includes provisions on public purchases and intellectual property, for example.

The RCEP targets creating a broad and deep engagement with significant improvements over the existing ASEAN+1 FTAs. It also seeks to achieve a modern and comprehensive trade agreement among members.

An said that more trade barriers would fall, helping Viet Nam, which has a rather large trade deficit with this region.

Dinh Thu Hang from the Central Institute for Economic Management (CIEM) said, like other FTAs, RCEP would open new opportunities for Viet Nam to expand export markets via tariff reductions, import input materials, and machinery and equipment at cheaper costs.

Vietnamese firms would be able to participate in the region's value and production chains and exchange technical expertise with other countries.

However, competitive pressure from countries that have similar export structures to Viet Nam will pose challenges to companies, as Viet Nam still mainly exports raw products at a low processing rate.

An increase in non-trade barriers with partner countries had caused difficulties for local exporters, she said.

Vo Tri Thanh, deputy director of the CIEM, said overall, the country would enjoy more benefits than losses, noting that the level of benefits also depend on commitments under the free trade agreement.

As the FTA is still under negotiation, there is still no information about how the 16 parties of RCEP would open their markets.

He suggested that businesses kept up to date about FTAs so they could capitalise on new opportunities and prepare to cope with challenges.

They should also understand the mechanisms for solving trade disputes to protect their legitimate interests.

Firms must focus on improving competitiveness of their products and be more active in taking part in the region's value chain.

The workshop was organised by the HCM City WTO Affairs Consultation Centre, in collaboration with the EU-MUTRAP project and the Central Institute for Economic Management.

Binh Duong adopts online tax payments

The southern province of Binh Duong plans to organise programmes to show local companies how to pay their taxes online, officials said at a regular meeting with local Japanese companies yesterday.

The commitment was made after many Japanese companies raised concerns about the new tax payment method.

Most of the companies said they were worried that they did not have enough time to apply the new method.

Tran Van Nam, chairman of the provincial People's Committee, said that a seminar on online tax payments would be organised from now to the end of July so that local officials could understand the difficulties that companies faced when using online tax payments.

Companies would also be guided on how to correctly pay taxes online.

Online tax payments are scheduled to be implemented nationwide in September.

According to Binh Duong's Tax Department, between 50 per cent and 90 per cent of companies in major cities like Ha Noi and HCM City are paying taxes online. The scale in Binh Duong, however, is only 15 per cent.

The province is ranked 57th out of 63 provinces and cities implementing online tax payments.

In addition to online tax payments, Japanese companies also raised concerns about the new Enterprise Law and other issues including customs, social insurance, labour, infrastructure and investment.

Most of their concerns would be resolved soon, the province's authorities said.

In an attempt to improve the local investment environment, Binh Duong Province holds regular meetings with companies.

In the first half of this year, the province attracted over US$1 billion, representing 101 per cent of the annual target.

Of the total, 102 projects are new and 66 projects have added capital.

Japan is the biggest foreign investor in the province with 231 projects, worth a total of $4.86 billion.

To attract more investment, the province has improved infrastructure and human resource training.

Viet Nam Railway to equitise subsidiaries as part of reforms

More than 20 Viet Nam Railway companies will be equitised this year, marking the key provision of the corporation's efforts to complete its comprehensive restructuring plan.

The equitisation is aimed at creating a self-motivating business model and mobilise financial resources to update the sector.

The companies, including Ha Noi and Sai Gon railways, railway infrastructure management companies and Di An and Gia Lam train companies, will officially operate under the joint stock model beginning January 1, 2016.

According to the restructuring, Di An Train Company will be the first to be equitised on September 30. Meanwhile, the value of Ha Noi and Sai Gon railways and Gia Lam Train Company will be set in March, while the remaining companies' values will be determined in December.

The domestic railway has operated for more than 100 years, though it is struggling due to out of date technology and services, in comparison with other industries in Viet Nam. Officials note that its great advantage is its nearly 40,000 workers.

In a recent talk show on television, Chairman of the Viet Nam Railway Corporation Tran Ngoc Thanh said the renovation of trains, stations, bridges, roads and signal information systems should be carried out at the same time.

"We have determined that the equitisation will seek to become a transparently-operated business and an equal environment for the various economic sectors that take part in this transport," said Thanh.

Small brokers fear intra-day trading will lose them clients

The requirement that securities brokers must have equity/charter capital of at least VND800 billion (US$36.7 million) to be eligible to provide intra-day trading services is troubling small brokers who are afraid of losing customers to the big ones.

A draft circular, which is prepared to replace Circular No 74/2011-TT-BTC dated June 1, 2011, on the guidelines of securities trading, will allow investors to buy and sell a single share listing in the same trading day (intra-day trading).

However, the draft also stipulates strict conditions for securities companies who are permitted to provide this service.

The broker company must have equity capital or charter capital of VND800 billion; full appropriate reserves to hedge share declines; and a working capital ratio of at least 220 per cent in the last 12 months.

Also, it must not have incurred losses in the previous two years.

The companies must also not have undergone any process related to mergers, consolidation or dissolution or have been placed under control, special control status or suspension by a competent authority.

Under these conditions, there are about 15 companies qualified to provide this service. Leaders of small brokers are raising concerns about losing clients to bigger ones if they are not permitted to offer the intra-day trading service.

The big 15 occupy about 80 per cent of brokerage market shares. However, about 80 other brokers are at risk of losing the remaining 20 per cent of market shares if their customers flee.

At a recent meeting of the Vietnam Association of Securities Business, Hoang Hai Anh, chairwoman cum CEO of PetroVietnam Securities Inc (PSI), said the draft should give priority to risk management of companies rather than equity/charter capital condition.

She suggested removing the equity/charter capital requirement and focusing on conditions of financial safety standards and financial statements.

Phan Quoc Huynh, deputy chairman of the association, said the State Securities Commission could make regulations that allowed securities businesses to support each other to implement intra-day trading.

"Banks also need merger and acquisition to raise capital, let alone securities brokers," Huynh said in the meeting.

The State Securities Commission is collecting opinions from market participants regarding the draft.

International Dairy Products to use SAP-ERP solution

The International Dairy Products Joint Stock Co. (IDP) has signed a cooperation agreement with CSC Viet Nam, Hewlett-Packard (HP) and SAP Company to implement the SAP-ERP integrated solution running on HANA platform.

It will also use the Vistex price management solution to maximize the company's operations and improve productivity.

IDP is the first company in Viet Nam to use the solution. It will begin implementation in December.

SAP HANA combines database, data processing, and application platform capabilities in-memory.

The platform provides libraries for predictive, planning, text processing, spatial, and business analytics.

Firm fined for providing games without approved content

The Ministry of Information and Communications has fined VTC Online Co. Ltd VND60 million (more than US$2,700) for providing online games with unapproved content.

The multiplayer games were provided on the servers of the company. The penalty was imposed in line with regulations in Decree 174, issued in November 2013, on handling administrative violations related to the post, telecommunications, technology and radio frequencies.

On June 30, the ministry had sent letters to provincial departments and online game providers asking them to ensure that the management, provision and use of online games in Viet Nam was in compliance with the law.

Savills Vietnam: 60,000 new apartments to enter city market

Savills Vietnam has projected that the HCMC real estate market will have nearly 60,000 more apartments in the next two years.

In the second quarter of this year, 11 new projects and new phases of eight operational projects were launched, providing a total of over 9,700 units for the market. This represented an increase of 47% quarter-on-quarter and 138% year-on-year, said Nguyen Thi Van Khanh, associate director of Savills Vietnam’s Advisory Services in HCMC.

Khanh gave the figures at a news briefing held in HCMC on Wednesday to announce the property service provider’s report on real estate in the city in the second quarter.

The second quarter had the highest amount of newly-launched supply in the last five years, according to the report.

By the end of the quarter, there were around 26,000 available apartments in the primary market, surging 27% quarter-on-quarter and 72% year-on-year.

Quarter two saw District 2 achieving the most sales with 28% of total transactions, followed by Binh Thanh District with a 15% share. Grade B sales volume had a strong rise of 44% quarter-on-quarter while Grade C maintained stable performance.

Recently-launched housing projects have offered a wide range of products such as options in terms of size, bedroom and use. There have been more projects with good standards, sufficient facilities and infrastructure.

Savills Vietnam said end-users are encouraged by competitive mortgage rates and good payment schemes, while small investors are confident in the good rental yield in HCMC.

The company predicted there would be 59,200 new units from 90 existing and future projects are expected enter the market from the second half of this year to 2017.

Experts warned that the property market in HCMC would face an oversupply if the new apartments were not distributed properly.

At a recent meeting of the HCMC Real Estate Association (HoREA), Le Huu Nghia, director of Le Thanh Commercial Construction Co., said the number of homebuyers had increased 50% compared to the years when the real estate market was in difficulty. But the supply of luxury apartments has been up to 500% higher than demand.

However, Khanh of Savills Vietnam said demand has recovered significantly compared to more than a year ago.

The report of Savills Vietnam revealed the overall absorption rate was 19%, a fall of two percentage points quarter-on-quarter but up two percentage points year-on-year. Last quarter, some 5,000 units were sold, rising by17% quarter-on-quarter and 96% year-on-year, the highest transaction volume since the fourth quarter of 2010.

A report of Cushman & Wakefield Vietnam on the property market in the second quarter showed that low-cost apartments remained attractive to buyers and the demand for luxury and medium-cost units is forecast to increase owing to the participation of more real estate investors in the market.

The revised Housing Law that eases conditions for foreigners to own apartments in Vietnam and loosened credit with reasonable interest for homebuyers will help the market attract more buyers.

Property investors said they have signed contracts to sell apartments to expatriates since the new law came into force on July 1.

A Singaporean man, who has lived in HCMC since 2011 in District 2, told the Daily that he wants to buy an apartment in District 7 or in Thu Thiem Urban Area in District 2 to lease it out to foreigners in HCMC.

Speaking at a business luncheon of the European Chamber of Commerce in Vietnam (EuroCham) in HCMC on Wednesday, CBRE Vietnam’s director of office services Greg Ohan said foreign property investors are keen to follow new infrastructure developments such as metro lines and airport projects.

Apartments near metro lines are attractive to foreign investors, Ohan stressed.

But many foreigners fear that they would have trouble if regulations on foreign property ownership in Vietnam change in the future.

Korean firm acquires Nam An Securities

South Korea-based Shinhan Investment Corporation has become the owner of Nam An Securities Company after it got approval of the State Securities Commission of Vietnam (SSC) to buy 100% of the brokerage, according to the Hochiminh Stock Exchange’s website.

The seven biggest shareholders of Nam An including chairwoman Huynh Kim Thong sold all shares of the company to Shinhan Investment Corporation. The SSC allowed the Korean investor to transform Nam An into a one-member limited liability company.

Nam An has registered capital of VND140 billion and is the second securities firm in Vietnam wholly owned by a foreign enterprise.  

In February, Que Huong Liberty Corporation and shareholder Tran Hong Van offloaded their entire stakes of 14.46% and 28.4% respectively at Nam An to two other shareholders, Huynh Kim Toi and Huynh Kim Thong.

At present, as many as 90 securities companies are operating in Vietnam and 40 of them have been invested by foreign shareholders. Over 10 firms have 49% foreign ownership while Maybank Kim Eng Securities Company is a 100% foreign-invested firm.

The Government’s Decree 60/2015/ND- CP 1 allows a foreign ownership increase to 100% at domestic securities firms from September.

Foreign investors wanting to raise their holding at local brokerages to 100% can submit applications to the SSC for consideration. The agency will approve applications meeting requirements when the decree takes effect.   

Compared to Decree 58, Decree 60 removes many barriers to foreign investors keen to own shares of domestic securities companies.   

Decree 58 only allows foreigners to either hold a 49% stake at a Vietnamese brokerage or set up a 100% foreign-owned company. The old decree does not permit foreign investors to hold stakes of over 49% to 99% at local securities enterprises.

High interest rates hit local firms

Higher inflation and interest rates in Vietnam than many other countries have placed local businesses in a disadvantageous position, according to a report of the Party Central Committee’s Economic Commission.

The report showed Vietnam’s inflation has averaged out at 7.9% per annum in the past 14 years compared to 2.32% in China and 2.60% in Thailand.

Despite woes in 2008, China and Thailand have quickly curbed inflation at around 2% in the past two years. Last year, Vietnam’s consumer price index (CPI) rose 1.84% as in Thailand and China.

Therefore, inflation control should be one of the priorities for Vietnam in the coming years, the committee noted.

Lending rates in Vietnam have surged in recent times, higher than 10%, compared to the 2-4% range enjoyed by China and Thailand in the past 10 years.

Though lending rates have been adjusted down to 8.5-9.5% since 2013, they are still higher than those in the two countries. The difference in interest rates will undermine foreign exchange rate stabilization.

In the coming time, monetary stability in Vietnam requires interest rate reductions, inflation controls and foreign exchange rate stability.

Fiscal policy is vital for monetary stability. Effective controls on budget revenue and spending are the key to the effective implementation of fiscal and monetary policies.

The committee noted fiscal policy should not be haphazard.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR