State firms get ultimatum

The Government on Monday officially promulgated a resolution asking State-owned groups and corporations to complete a capital withdrawal from non-core investments by 2015.

Accordingly, these groups and corporations would have to ensure market principles, transparency and retain State-owned capital and assets at the highest level.

The Government said this was considered an important step to restructure State-owned enterprises, especially those invested in risky sectors such as real estate, banking, finance and insurance.

The groups and corporations would have to map out restructuring plans including capital divestment from non-core businesses. They would also have to withdraw investment from joint ventures and associated companies which do not relate to main businesses.

Organisations involved in these risky ventures have been required to promptly submit their plans for approval. Those involved in less risky investments would be allowed to divest gradually.

Ministries and provincial People's Committees have been assigned to consider and approve the capital withdrawal plans after receiving permission from the Ministry of Finance.

The ministry has been asked to send supervisors to State-owned groups and corporations to check their use of State capital and capital withdrawal processes during their restructuring.

Statistics from the Party Committee for Central Businesses Bloc showed that 21 out of 31 State-owned groups and corporations have expanded to non-core business areas, using a total of around VND22.6 trillion (over US$1 billion).

Among those, Song Da Holdings Group invested VND6.94 trillion ($330.47 million), VND2.3 trillion ($109 million) higher than its registered capital; PetroVietnam, around VND5.4 trillion ($257 million), accounting for 83 per cent of its capital and Electricity of Viet Nam (EVN), nearly VND2.1 trillion ($100 million). EVN has suffered a loss of VND10 trillion ($476 million).

Most of the groups and corporations said their non-core investments were at an acceptable rate of 30 per cent lower than their charter capital. The non-core investments of PetroVietnam account for 3.7 per cent of its charter capital, while the rate was 2.8 per cent for EVN.

Viet Nam National Coal and Mineral Industries (Vinacomin) recently decided to withdraw from its non-core investments, equalling VND115.8 billion ($5.5 million) in four companies including Viet Nam National Aviation Insurance Company, BIDV Expressway Development Company, Hai Ha Economic Zone Development and Investment Company and Long Thanh Development and Investment Joint Stock Company.

On the same day, PetroVietnam proposed to retain its holdings from 18-20 per cent in PetroVietnam Finance Corporation and PetroVietnam Insurance Corporation as they said the companies were necessary for its operations.

However, PetroVietnam's chairman Phung Dinh Thuc said the group would withdraw all investment from the companies if the Prime Minister does not approve the proposal.

EVN dissolves hydroelectric affiliates

Electricity of Viet Nam (EVN) has finalised the dissolution of Dong Nai Hydro-power Joint Stock Co and is considering the dissolution plan for five remaining affiliates, the company says.

The five units are Ban Ve, Thu Bon, An Khe-Ka Nak, Se San 4 and Srepok hydroelectric companies.

EVN did not announce the reason for dissolving six companies at the moment, an official from EVN told the Viet Nam News yesterday.

EVN had also submitted its development strategy till 2020, restructuring plan for 2011-15 and business and production and development investment plan for 2011-15 to the Prime Minister and Ministry of Industry and Trade (MoIT) for consideration .

The company said in its business report for the first six months of this year that after a one-year pilot operation the competitive electricity market had officially been operational since July 1, making the initial transition to a market operation mechanism.

Up to 29 power plants under 22 power generation companies with a total capacity of 9,035MW were expected to be involved in the competitive electricity market.

In the first half of this year, EVN's electricity production and purchase was estimated at 56.475 billion kWh, up 11 per cent year-on-year. Of the total, EVN produced 24.777 billion kWh, making up 43.9 per cent.

During the period, it had also started operation on four turbines with a total capacity of 746.5MW, including the first and the second turbines of Dong Nai 4 hydropower plant (340MW), the first turbine of Kanak hydropower plant (6.5MW) and the fifth turbine of Son La hydropower plant (400MW).

EVN said that in July it would generate electricity for the second turbine of the Kanak hydropower plant in the Central Highlands province of Gia Lai and start a reservoir for Ban Chat hydropower plant in the mountainous province of Lai Chau.

More import competition looms

The Business Association of High-Quality Vietnamese Goods will organise many programmes to promote and develop markets for Vietnamese products at home and abroad.

Vu Kim Hanh, the association's chairwoman, said 2015 would be a year of reckoning for many local firms when goods imported from ASEAN countries and China would enjoy zero tariffs under the ASEAN-China Free Trade Agreement.

"Time is running out for Vietnamese businesses to consolidate their position in the domestic market," Hanh said.

Meanwhile, companies should link up with each other to establish and widen distribution systems so that Vietnamese goods can penetrate ASEAN and Chinese markets, she said.

With regard to the domestic market, Ho Duc Minh, the association's office manager, said they would implement the second phase of a programme to link producers and traders at traditional markets in the country.

Compared to the first phase, the second phase would increase the number of participating firms and expand the programme to more sectors, Minh told a press conference in HCM City yesterday.

Enterprises in the garment and textile and footwear sectors would receive some support in entering and sustaining their presence in traditional markets, he said.

The association has also developed a plan to help Vietnamese high quality goods to better exploit the potential of ASEAN+1 markets.

On Monday, the association signed a co-operation agreement with the C.T Group to promote and distribute Vietnamese goods in Myanmar.

Under the agreement, the association will introduce prestigious and strong brands to the C.T Group, which will map out strategy to distribute the goods in Myanmar systematically, and build prestige for Vietnamese products in the country.

Tran Kim Chung, president of the C.T Group, said that in the initial stages, the group would bear the promotion and advertising costs and the enterprises would pledge to provide high quality goods at reasonable prices.

"With a population of 60 million, Myanmar has high demand for many kinds of consumer goods and the market presents great potential for Vietnamese products," Chung said.

Over the last three years, C.T Group has established a strong distribution network in Myanmar, establishing relations with most supermarkets, wholesale markets and large distributors there.

The group so far has introduced 34 Vietnamese brands, mainly processed food, cosmetics and fashion products.

C.T Group plans to build a "Viet Nam House" in Myanmar's capital. The 30-40 storey building will include a hotel, a trading center, offices and an area to display Vietnamese goods.

"Besides Myanmar, China is another potential market for Vietnamese goods," said Nguyen Lam Vien, the association's deputy chairman and general director of Vinamit.

The association would support domestic firms to access this market officially, he said.

He recommended that Vietnamese firms think of exporting their goods officially to China so that their market penetration can be sustained. "As of now, most Vietnamese firms sell their products to China via border trade, which is not stable and carries significant risk," he said.

Non-bank lenders face tax

Under Article 5.8 of the Law on Value-Added Tax, lending and other credit services are not subject to VAT. Decree No 121/2011/ND-CP of December 2011, in Article 1.5, further defines credit services to include loans; discount of valuable papers; guarantees; financial leasing; issuance of credit cards; domestic and international factoring services; and other credit forms in accordance with the laws.

In light of these provisions, many non-banking or non-credit enterprises with money to lend have asserted that the interest income from those transactions is VAT exempt.

Contrary to this position, however, the Government Office issued Official Letter No 608/VPCP – KTTH on February 4. The letter provided that only "credit services" as defined under the Law of Credit Organisations were exempt from VAT. The letter discouraged non-credit enterprises from implementing credit services and state that such enterprises which have income from credit services would be liable to VAT on those services.

While an official letter is merely an interpretation of the law and does not have legal effect, it is nevertheless persuasive in its interpretation and will likely be effective in making non-credit enterprises with interest income liable for VAT. No other legal documents or regulations are available to clarify the situation.

Big C opens first store in Delta

French supermarket chain Big C opened its 19th outlet in the country on Thursday in Can Tho City.

The outlet in Cai Rang District, the first in the Mekong Delta region, covers more than 6,000sq.m and sells nearly 40,000 items ranging from foods and household utensils to cosmetics, 95 per cent of them locally made. It creates jobs for nearly 500 local employees.

Meanwhile, The HCM City People's Committee and Department of Industry and Trade have added the Big C supermarket chain to the list of enterprises participating in the city's price stabilisation programme.

Until March 31, 2013, pork and a number of goods carrying Big C's own "Wow" label, including fish sauce, cooking oil, rice, processed food and notebooks will be sold under the programme at Big C stores citywide.

Currently, Big C has 19 stores nationwide, with five in HCM City, including Big C An Lac, Big C Hoang Van Thu and Big C Go Vap.

Lotte invests in shopping centre

The Lotte Viet Nam Shopping company has invested US$30 million in building the Lotte Mart Da Nang, chairman of South Korea Lotte Group Shin Dong-bin said in a working visit in central Da Nang city.

The shopping centre, which began construction on an area of 10,000sq.m last year, will be the third centre of its kind in Viet Nam after HCM City.

The group plans to increase its investment in Da Nang with a series projects of resorts, duty free shops at Da Nang Airport and cruise service in coming years.

As scheduled, the group will set to build a 10-ha entertainment and shopping centre – the biggest in Da Nang. It's expected that the Lotte Group will invest in 25 projects in Viet Nam by 2018.

Doosan sells generators to Saudis

A Doosan Heavy Industries Vietnam (Doosan vina) factory last Friday exported 1,700 tonnes of steam generators (HRSG) to Saudi Arabia.

HRSG is an energy recovery heat exchanger system that recovers heat from hot gas and helps save energy. The plant has exported 5,000 tonnes of its equipment so far.

Binh Duong FDI up sharply

The southern province of Binh Duong has licensed 108 new and existing foreign direct investment (FDI) projects with total capital of US$2.83 billion so far this year.

The figure doubled the same period last year, bringing the whole number of FDI projects in the province to 2,070 with a combined investment capital of $16.83 billion.

Tran Van Lieu, director of the provincial industrial zone management board, attributed the good results to its efforts on infrastructure improvement, job training, urban development, and good policies.-

Trade with Myanmar rises 65%

Two-way trade between Viet Nam and Myanmar for the first six month was estimated to reach US$130 million, up 65.6 per cent against the same period last year, according to the General Department of Customs.

Out of this total, Viet Nam exported $50 million to Myanmar, a year-on-year increase of 36.3 per cent, and imported $80 million, up 91.2 per cent.

Viet Nam is Myanmar's 13th largest source of goods. The top five biggest exporters to Myanmar include Singapore, mainland China, Japan, Thailand and Indonesia.-

Businesses ignore risk management

More businesses in the country should employ risk management strategies to avoid sudden losses in profits and struggles with liquidity, a state securities official said on Monday.

Nguyen Doan Hung, deputy chairman of the State Securities Commission said that many enterprises had ignored the important role of risk management, which had left them vulnerable to the negative impact of economic uncertainties.

Hung spoke at a ceremony held by Ernst & Young Viet Nam in HCM City to introduce a new manual on risk-management strategies.

The book, produced under a technical-support agreement between the SSC and Ernst & Young Viet Nam, is expected to help companies re-evaluate their risk-management process in the proper way.

Phan Dinh Chuong, deputy general director of Ernst&Young Viet Nam, said that very few local businesses had worked out an overall risk-management framework, although some enterprises had risk-management approaches in certain areas.

From May 2 to June 15, Ernst&Young conducted a survey of 155 companies, including those involved in finance, real estate and construction, consumer goods, and agriculture and industry.

Thiry-five per cent of respondents said they had no official risk-management policy. Only 16 per cent of the surveyed businesses said the members of management boards and high-ranking managers had received professional training in risk management.

According to the respondents, the top contributors to business risks were the Government's regulations and policies; competition and the general market; personnel administration and business efficiency; bank interest rates; foreign exchange rates between the Vietnamese dong and the US dollar; inflation fluctuation; and credit and liquidity.

Chuong told companies that they should employ legal staff to keep a close eye on policy changes.

The survey showed that up to 78 per cent of respondents said they had plans to improve their risk-management approaches in the next two years, as they had now recognised the benefits.

Respondents also said that one of their top concerns in coming years would be risks related to their business strategies, including in merger and acquisitions and opportunities that arise due market changes.

"Companies need to consider risk management as an essential activity in their business strategies," said Chuong. "Business efficiency and shareholder value will improve if risk management is conducted more effectively."

Sea safety forum launches

The 13th Asia-Pacific Heads of Maritime Safety Agencies Forum (APHoMSA) opened yesterday in the central coastal city of Nha Trang with attendance of over 70 representatives from throughout the region.

The three-day event marks the first time Viet Nam has hosted the forum, which has been organised by the Viet Nam Maritime Administration.

The forum will address the implementation of the international maritime labour convention, State management of seaports and the system of information technology for maritime assistance in each country, while seeking initiatives to promote development of the maritime industry in line with international standards of maritime safety, security and oceanic environmental protection.

The agenda also includes discussion of the technical co-operation programmes of the International Maritime Organisation and other technical co-operation strategy of APHoMSA in the future.

Deputy Minister of Transport Nguyen Van Cong told the opening ceremony that Viet Nam and other countries in the Asia-Pacific needed to enhance co-operation to cope with problems concerning maritime safety, environmental protection and search and rescue. Viet Nam pledges to actively and comprehensively take part in the APHoMSA, said the deputy minister.

The Asia-Pacific Economic Cooperation (APEC) forum's member economies possess 40 per cent of the global shipping fleet and account for 50 per cent of crews.

Electricity price likely to be adjusted quarterly: ministry

Local electricity price will be properly adjusted once every three months, said a senior state official.

The price will go up or down if it meets required conditions following the competitive electricity market mechanism, said Dang Huy Cuong, director of Electricity Regulatory Department under the Ministry of Industry and Trade at a recent press conference.

"The adjustment of electricity prices by the Electricity of Vietnam Group (EVN) is in full compliance with the ministry’s Decision No.24 and Circular No.31, giving detailed guidance on operating the local electricity market," he said.

On July 1, EVN increased the average electricity price by 5 percent, or some VND65 per kWh, from VND1,304 to VND1,369 per kWh.

EVN said the input parameters used as the basis for the increase include the rise in prices of coal for electricity production, gas for the Ca Mau power plant, world oil prices, and the exchange rate between the Vietnam dong and US dollar.

With the rising price of electricity, EVN's electricity sales are forecast to increase VND3.71 trillion. The amount will be used to offset the increased price of coal and a portion of the electricity generation costs of the previous year.

Deputy Minister of Industry and Trade Nguyen Nam Hai told Thoi Bao Kinh Te Sai Gon newspaper that the future increase in electricity prices will be decided by both the Ministry of Trade and Industry and EVN in a careful manner.

It is likely that electricity prices will also be reduced, and not necessarily just go up quarterly, he said.

“Although the 5 percent price increase is within the law, EVN did not necessarily do a good job of explaining it to the public,” said Vu Duc Dam, chair of the Government Office in a recent government working session in Hanoi.

The latest power price hike was assessed as being a responsible decision by EVN, despite the fact they had claimed they would not raise power prices in the near future.

Under the government’s new guidelines, commodities such as petroleum, electricity and other essential goods will be established by the market mechanism, so as to encourage economic development.

EVN said the power price hike was carefully considered to avoid affecting small businesses, but admitted that a 5 percent price hike will have a knock-on effect on the market.

The price hike has generated uncertainty among the public, and is putting additional burden on small businesses.

Small businesses are trying to save as much as possible to mitigate the effect of the 5 percent price hike.

Business owners will also face more difficulties as they cannot raise rise sale prices to offset rising production costs in the face of rising unsold stocks.

According to EVN, after a one-year pilot operation, the competitive electricity market has officially been in operation since July 1, marking the initial transition from the current mechanism to market operation mechanism.

In the first half of this year, EVN’s electricity production and purchase was estimated at 56.475 billion kWh, rising 10.98 percent from the same period last year, including the group’s power production of 24.777 billion kWh, accounting for 43.9 percent.

Local commercial electricity sales increased 11.83 percent from the same period last year, of which, electricity for industry and construction saw a rise of 10.98 percent year-on-year, trade-service a rise of 17.98 percent and management and consumption of people was up 12.06 percent on year.

The group also said that from Jan-Jun, it completed 16,220 500kV power grid projects, 43 110kV projects, and kicked off construction on 15,500 220kV power grid projects.

Artichoke kingdom on verge of emptying

Many farmers in the Central Highlands province of Lam Dong’s Da Lat City, the country's largest artichoke cultivation area, have been clearing their crops to make room for other plants and flowers, which they hope will yield higher economic effectiveness.

The vegetable, useful in making teas, herbal medicines, and certain culinary products, was once considered a ‘gold mine’ for local farmers, but now has seen the areas of its crops gradually narrowed.

There are only some 50 hectares of artichoke crops left around the city, an enormous decline of 75 percent compared to 1998, according to the municipal economics bureau.

In late May, after years of growing the vegetable, Le Van Dat resorted to emptying his 10,000-square-meter artichoke crop to switch to gerberas.

“Artichoke is no longer attractive to farmers as it yields poor income, while the crop takes as long as 10 months to mature,” said Dat.

A number of other farmers have done the same with their artichoke fields to seek better revenues from other crops.

“Farmers can only pocket VND15 million in profits from each artichoke field,” said Pham Van Kien, another artichoke grower.

“Meanwhile, if they grow chrysanthemum on that same area of field, they can reap profits from three harvests a year of a whopping VND20 million each.”

Ho Ngoc Dinh, chairman of the Farmer Association of Ward 12, which has the largest crop of artichoke in Da Lat, said farmers used to be able to sell the products at high prices, despite low input costs, years ago.

“Things have completely changed today, and the growing areas have narrowed, input cost has soared, and prices have slumped,” he said.

Nguyen Duc Cu, former deputy head of the city’s economics bureau, said the small market for the vegetable is the main cause for the disappearance of artichoke in Da Lat.

“Artichoke buds are consumed mostly by the domestic market, but there are very few consumers of this delicacy,” said Cu.

“Da Lat produces around 3,000 tons of fresh artichoke annually, but only a very small proportion of these are sold for customers to use as food, and the remaining go to tea and herbal medicine makers in HCMC,” he added.

Some city-based restaurants said artichoke soup, a specialty of the city, usually attracts few customers due to its expensive price.

“Only well-off customers order this dish,” they said.

Meanwhile, Dao Van Toan, deputy head of the Plant Protection Agency, has a different concern.

“The reduction of artichoke crops in Da Lat will affect the source of material for more than 10 artichoke-product manufacturers in the city,” he said.

Chinese man buys huge land plots in Binh Thuan

The People’s Committee of the southern province of Binh Thuan has prevented a Chinese investor from obtaining a license to grow blue dragon fruits on a large area of land the company has purchased.

In late 2011 Chinese national Zhong Heng Shan, chairman and director of the Nguyen Long Son Co Ltd, a subsidiary of China’s Nguyen Hinh Group, inked a contract with Pham Phu Thanh to receive 100ha of agricultural land in Ham Chinh Commune of Ham Thuan Bac District, and another 10,000-square-meter plot in Ham Duc Commune.

The two, however, became involved in a dispute over the land transfer. But while the dispute has yet to be resolved, Zhong has submitted a document to the provincial people’s committee to seek permission to import equipment and machinery to begin production on the land.

Zhong said in the document that he had transferred VND13.5 billion to Thanh to complete the contract, but the Vietnamese man has still refused to hand over the real-estate papers and the construction and investment licenses.

Thus, Nguyen Long Son Co called for intervention from local authorities and proposed to be allowed to grow blue dragon fruit on the 100-hectare plot in Ham Chinh and build plants and offices on the plot in Ham Duc.

However, Thanh told a different story.

Thanh said he has so far received only VND10.5 billion from Zhong, while he has already handed over all of the relevant papers to him.

He added that Nguyen Long Son Co was initially formed by him on December 30, 2011, with total registered capital of VND90 billion. Thanh held a 20 percent stake of the company, worth VND18 billion, and a man called Vu Duy Tam accounted for the remaining VND72 billion.

Two months later, on February 28, 2012, the company registered to add two more shareholders from China -- Huang Bi Qiu and Zhong Heng Shan. Qiu then took a 30 percent stake, and Zhong 40 percent.

As Thanh and Tam both reduced their shares to a modest 5 percent stake each, the company has fully come under the management of Zhong.

However, it is the presence of the two Chinese men that prevents the company from getting the investment license, as the provincial people’s committee said the company has now become a foreign-invested one.

Under current law, if the investors want to set up plants, they have to do it inside the province-based industrial parks, the committee said.

New e-commerce solution for local enterprises

While electronic commerce, commonly known as e-commerce, has become a familiar trading solution amid this golden age of the Internet, most businesses in Vietnam have yet to take a good advantage of this channel, with technical issues said to be the main hindrance.

“Only 33 percent of businesses with an Internet connection at their headquarters have their own websites,” said Tran Vinh Nhung, deputy head of the Ho Chi Minh City Department of Industry and Trade at a media conference regarding e-commerce solution held Tuesday in the city.

Minh said the number of business websites only increased slightly, leaving a huge potential for e-commerce to grow.

Developing e-commerce in Vietnam is also a government policy, which was stated in Resolution No 1 issued last June, according to Tran Huu Linh, head of the Vietnam E-commerce and Information Technology Agency (VECITA) under the Ministry of Industry and Trade.

The resolution has paved a roadmap for e-commerce development between 2012 and 2015, with focus on increasing online trading and payment activities, as well as providing an adequate personnel training campaign for the e-commerce sector, he said.

Linh added that building and operating a website to sell products on the Internet is very important to help businesses increase sales, especially during these hard times.

“More than 14.5 percent of businesses asked in a recent survey blame unsold inventory as their main economic difficulties, while 11.7 percent said they faced obstacles connected with business locations,” he said, citing figures from the General Department of Statistics.

Running an online store may help solve the unsold stock and space problems, but businesses wishing to make use of this channel are likely to encounter another difficulty -- the technical barrier.

Speaking at the conference, the Center for E-commerce Development (EcomViet) under the Ministry of Industry and Trade asserted that its new solution, a website-creator service, can help removing these barriers.

“The eKip solution will help businesses build a website for selling their products online within just 30 seconds after they register on our website,” said EcomViet deputy director Nguyen Ky Minh.

Minh said customers will not have to worry about web programming, online payment method, online marketing and advertising, or security solution thanks to the service.

“Customers will have a complete, all-in-one online store, and can now enjoy a 15-day trial free of charge,” he said.

Minh added that EcomViet has joined hands with other e-commerce partners such as VNG Corporation, operator of the Vietnamese social network ZingMe, NovaAds, and FSC Vietnam to launch a promotional package worth VND6 billion to assist customers.

“eKip is a purely Vietnamese solution and our mission is to help more local businesses approach the e-commerce market and save their time and money in boosting operations,” he said.

Ironing out economic snags in Mekong Delta

The Mekong Delta provinces of Can Tho, An Giang, Kien Giang and Ca Mau have not made any breakthroughs in utilizing local natural resources for economic development.

The main target of the Mekong Delta key economic region, which includes these four provinces, is to fully tap the strength of each locality, as well as the entire region.

Covering more than 16,000 square kilometers (44 percent of the Mekong Delta region) and with a population of nearly 6.3 million (36 percent of its total population), these provinces are the region's industrial, training and technology transfer centre.

They have so far attracted 108 valid projects with a total registered investment of nearly US$4.78 billion, making up 45.6 percent of the region’s total investment capital.

Despite some significant achievements in the past three years, they have yet to iron out snags in maintaining sustainable growth and gaining a leg up on competition since the use of its land and labour resources is still far from matching the huge potential of the region.

Chairman of the Can Tho municipal People’s Committee Nguyen Thanh Son cites a number of difficulties, including a low starting point, poor infrastructure and limited support from the central agencies.

The Mekong Delta region is the "rice bowl" of the country, which helps ensure national food security and social welfare. However, agricultural development remains dependent on traditional farming practices as well as at the whim of the weather.

There are plans afoot to scale down agricultural production and gradually shift to other industries and services. Over the past 20 years, the local agricultural sector has mainly exported raw products because of poor planning management, not to mention inefficient transport facilities.

Judging by the current situation, the four above-mentioned provinces should join efforts to make the Mekong Delta become a dynamic economic, social and cultural region on par with other regions in the country. The focus will be on building new rural areas to adapt to climate change and rising sea levels.

Vuong Binh Thanh, chairman of the An Giang provincial People’s Committee, says that there must be proper policies to help the region develop sustainably.

According to economic experts, the Mekong Delta region as a whole should restructure its economy by reducing agricultural production and shifting to other industries and services to ensure sustainable development.

Nation goes int'l to develop modern urban areas

The Vietnamese Government encourages ministries, agencies and localities to learn from other countries’ urban development models to ensure the process meets sustainable development requirements.

Deputy Prime Minister Hoang Trung Hai made the statement at a seminar themed “Sustainable Cities – Challenges and Opportunities”, jointly held by Siemens Vietnam Ltd., Co. and the Vietnam Chamber of Commerce and Industry (VCCI) on July 10.

Minister of Construction Trinh Dinh Dung said the process of urbanization in Vietnam has been improved and driven socio-economic development.

He said Vietnam has the highest urbanization rate in Southeast Asia. The urban population is accounting for 34 percent of the nation’s population and the figure will be 45 percent in 2020 due to an annual growth rate of 3-4 percent.

However, development should not only meet people’s spiritual and material demands, but also limit its impacts on the environment, Minister Dung said.

Meanwhile, VCCI Chairman Vu Tien Loc said businesses, as a driving force for cities’ development, have recognized their role in cooperating with authorities and related agencies to develop urban areas in a sustainable way.

Lothar Herrmann, ASEAN-Pacific Siemens CEO said that Siemens’ services and system will offer sustainable solutions for cities, including those in Vietnam, which are confronting challenges in many fields, such as transport, housing, public street lighting, health care provision, energy, water supply and security.

HSBC: Vietnam to enjoy rapid trade growth in 15 years

Vietnam is expected to see rapid trade growth in the next 15 years, announced the Hong Kong Shanghai Banking Corporation (HSBC) on July 10.

According to HSBC’s Global Connections Report, Vietnam’s total trade value from 2012 to 2026 will rise by 187 percent, close to double the increase in global trade.

Growth is forecast to be 8.2 percent in the next five years and then at a similar pace to 2021, before slowing like its Asian peers in 2022-26 to around 5.3 percent.

According to the HSBC Trade Confidence Index, confidence amongst Vietnamese international businesses remains stable and relatively high. Indexed scores of 116, 115 and 115 have been recorded since the first half of 2011.

Despite an 8 percent contraction since the second half of 2011, 80 percent of respondents still expect to see trade volumes remain stable or grow in the next six months.

The survey shows that in the near term, intra-regional trade will remain critical for Vietnamese businesses now and over the next six months.

Vietnam’s major export partners are the main trading nations of the world, including the US, Japan, China and Germany. Export growths to all these markets are expected to remain strong with the US being the largest by some distance, at 6.6 percent overall.

Exports to Japan are forecast to enjoy a growth of around 6 percent while export growth to China is expected to be particularly strong at over 10 percent, reflecting the growth in intra-regional trade.

Over 7,700 businesses stop operating in first five months

7,745 businesses in Hanoi had stopped operating by the end of May 2012.

The figure was released at the fifth meeting of the Hanoi municipal People’s Council on July 10.

Deputy Chairman of the Hanoi municipal People’s Committee, Nguyen Van Suu, said that the city’s Gross Regional Domestic Product (GRDP) in the fist six months of this year rose by 7.6 percent, which is lower than the yearly set target.

However, he said, the economy has shown positive signs of recovery with GDP growth in the second quarter reaching 7.9 percent, higher than the first quarter’s figure of 7.3 percent.

According to Suu, local businesses are facing numerous difficulties due to high interest rates, increasing input costs, weak purchasing power and rising inventories.

He raised concerns about the frozen real estate market. In addition, the consumer price index (CPI) still remains high, while banks’ bad debt ratio is tending to rise.

The number of foreign direct investment (FDI) projects in the first half of this year also saw a decline compared to the same period last year, Suu added.

Issues related to land use, transport projects, irrigation networks, culture and tourism plans, and information technology applications were also discussed at the meeting.

HCM City endeavors to use ODA effectively

Ho Chi Minh City will make its efforts to better the implementation of projects using official development assistance (ODA), funded by foreign countries and Japan in particular, to ensure their effectiveness.
 
The Secretary of the municipal Party Committee, Le Thanh Hai, made the commitment at the July 9 talks with Yasuaki Tanizaki, Japanese Ambassador to Vietnam, in HCM City.

Hai spoke highly of Japanese ODA, which he said, has brought about a facelift for the country’s southern economic hub with a range of new infrastructure, notably the East - West avenue project (now Vo Van Kiet avenue) and metro No. 1 project, which will be launched in the coming time.

Hai said he hopes Japan will continue supporting the city during its process of implementing ODA projects.

Tanizaki said Japan is keen to enhance cooperation with Vietnam for the country’s industrialisation and modernisation, especially in building infrastructure.

The diplomat said he believes Japan will keep on providing ODA for Vietnam’s development.

Retail sales rise 19.8 percent in 6 months

Retail sales of goods and services in the first six months of 2012 reached more than 1, 14 trillion, up 18.8 percent compared to the same period last year, according to the Ministry of Industry and Trade (MoIT).

Of the total figure, 27 percent come from the tourism sector, 22.8 percent from services and 20.6 percent from hotels and restaurants.

This is, in part, thanks to the implementation of some solutions to stabilize prices, iron out snags in production, ensure the balance between supply-demand and improve social welfare.

Vietnam’s economic transparency under strict scrutiny

International partners are paying greater attention to transparency in Vietnam’s socio-economic development before they make decisions on investment and cooperation.

According to the recent survey “Vietnam in Transition: Changing Attitudes towards the Market and the State 2011” (CAMS 2011), jointly conducted by the Vietnam Chamber of Commerce and Industry (VCCI) and the World Bank (WB), transparency is one of the most important criteria in the market economy. It plays a key role in establishing organizational principles and administrative management goals. However, there is growing concern over transparency in Vietnam’s socio-economic situation.

Dr. Dau Tuan Anh, Deputy Head of the VCCI Legal Department, says around 92 percent of participants in the CAMS 2011 survey, mostly media workers, researchers, diplomats and international organization staff, emphasized the need to ensure transparency in drafting plans and implementing State policies.

The survey shows that transparency in making and implementing policies is still low. Dr. Tuan Anh says most Vietnamese people are not fully aware of how important transparency is to the policy making process.

Sharing this view, leading economist Le Dang Doanh says international partners are familiar with transparency in the global market but now they are facing an unpleasant lack of transparency in Vietnam.
The Provincial People’s Committees, as well as ministries, and other agencies, are pessimistic about the transparency situation in Vietnam, which is bringing to bear upon them, Doanh says.

In the current context of deeper international integration, people and civil organizations in both Vietnam and abroad are not satisfied with the transparency situation in the country.

Dr. Nguyen Tran Bat, Chairman and General Director of Investconsult Group, says Vietnam’s transparency in almost all sectors is being closely scrutinized from different angles by the outside world.

Bat elaborates that before deciding to invest in Vietnam, investors must know facts and figures such as per capita GDP, purchasing power, and consumer demand in different areas across the country. If investors do not have this important information confirmed by the Government, they cannot devise an investment strategy nor do business in Vietnam. Transparency requires accurate and adequate information on all relevant factors to help properly assess investment risks, he adds.

Deputy Minister of Planning and Investment Dang Huy Dong says transparency in the national economy will have a significant impact on attracting foreign direct investment (FDI), especially when Vietnam gives priority to the development of the FDI sector on an equal footing with other economic sectors.

He considers the FDI, private and State-owned sectors the three key pillars that make it possible for Vietnam to achieve an average annual economic growth of around 7 percent.

To attract more FDI, Nguyen Xuan Trung from the Vietnam Academy of Social Sciences (VASS) claims it is essential to have a synchronous and transparent legal system to ensure strict implementation of policies at all levels. He also underlines that legal guidance must be issued promptly and comprehensively to avoid “exceptional cases”.

Country Director of Asia Development Bank (ADB) in Vietnam, Tomoyuki Kimura, emphasizes that increased transparency regarding the financial activities of State-owned enterprises (SOEs) will be an obvious signal that the Vietnamese Government is really committed to pushing through reforms.

Vietnam must improve its transparency if it wants to build partnerships and consolidate investor trust, he adds.

Vietnam motor show attracts well-known trademarks

The 8th Vietnam motor show will take place at the Giang Vo Exhibition and Fair Centre in Hanoi from September 26 to 30.

The annual event will attract most members of the Vietnam Automobile & Manufacturer’s Association (VAMA), such as Ford, Honda, Mercedes, Mitsubishi, Suzuki and Toyota, as well as Audi, BMW, Land Rover, Luxgen, Porsche, and Renault.

In addition, there will be more than 100 stands displaying automobile spare parts, support industries and other services.

The event will provide a good chance for customers to access the latest automobile models and technologies and for managers, law-makers, and experts to discuss issues related to manufacturing, and assembly lines, taxes, fees and development policies.

This year’s show will be organized by CIS Vietnam Advertising and Exhibition JSC and Le & Brothers Co., Ltd (LeBros).

Hanoi assesses growth targets
 
The capital city's gross domestic product (GDP) increased by 7.6% in the first six months of the year, 1.7 times higher than the nation's GDP, which grew at 4.5%, the city announced yesterday on the first day of a five-day meeting of the municipal People's Council that started yesterday.

Based on the results, the council will be looking at ways to help reach the city's development goals for the rest of the year, while approving six plans in the fields of traffic, tourism, culture, water drainage, irrigation and land use towards the year 2020.

The vice chairman of the municipal People's Committee Nguyen Van Suu said export turnover reached US$4.8 billion, 7.2% higher than the same period last year, while import turnover fell 8.6% to US$11.5 billion and the Consumer Price Index (CPI) in June decreased by 0.17%.

However, difficulties in agricultural and industrial production and illegal construction projects and land use remained, he said.

Chairman of the National Assembly Nguyen Sinh Hung said these results served as a solid base to implement the city's targets for the whole year and ensure social security.

He said the city should implement effective methods to tackle shortcomings.

Chairwoman of the municipal People's Council Ngo Thi Doan Thanh said deputies should pay attention to working out practical measures.

Suu said the city would focus on assisting enterprises with difficulties they faced in production and trading activities.

Measures to minimise violations on urbanisation plans and construction projects, and to improve the effectiveness of state investment and ensure social security would be worked out, she said.

Nearly VND1.95 trillion (US$92.5 million) is expected to be funnelled into building bridges, installing traffic-monitoring equipment and enlarging roads to ease traffic jams in Hanoi between 2012-15.

Deputy chairman of the municipal people's committee Nguyen Van Khoi said traffic jams regularly occurred during rush hours in inner districts such as Dong Da, Thanh Xuan and Hai Ba Trung, having a negative impact on people's lives. The city planned to tackle at least 27 traffic jam hotspots and lessen the duration of traffic jams by 40%.

He said major measures had been put forward in a target programme to reach these goals.

Specifically, a system of 240 new cameras and traffic lights will be installed at busy traffic intersections to supervise traffic jams and road violations.

The city will also develop a digital map and database to assess the seriousness and duration of traffic jams so effective adjustments can be made to traffic lights and control systems.

There are also plans for 10 flyovers and eight bridges crossing the city's rivers during the five-year period, and 60 roads and streets will be improved and enlarged.

Traffic on 25 streets in inner districts will continue to be re-routed, and relevant authorities will raise public awareness regarding traffic laws to improve safety.

Disbursement on ODA projects to be stepped up
 
Ministries, branches and localities should strictly implement works on nine World Bank-funded projects while pledging to promptly make disbursement for the projects, bringing them out of the slow-disbursement list by 2012.

Deputy Prime Minister Hoang Trung Hai made this statement while chairing a meeting with the Ministries of Transport, Planning and Investment, Finance, Construction, Natural Resources and Environment, and Agriculture and Rural Development, on July 10 in Hanoi.

The meeting aimed to seek measures to remove obstacles and accelerate the progress of the nine projects included in the list of slow-disbursement projects in 2012.

These nine projects are on water supply systems, information technology development, environment sanitation in coastal cities, agricultural competitiveness, land management systems, urban transport, modernisation of financial information systems, quality assurance for school education and modernisation of the tax system.

The Deputy Prime Minister requested related ministries, branches and localities to review and handle problems arising in the process of implementing the projects. At the same time, the projects management bodies should upgrade the capacity of the projects’ management boards, while being fully responsible and closely directing and supervising the project’s implementation and disbursement process.

Victoria Kwakwa, World Bank Country Director in Vietnam, said that besides progress seen in several projects such as the projects on environment sanitation in coastal cities, land management system and financial information system modernisation, many other projects are facing slackness.

In particularly, the project on urban transport in Hanoi that could be canceled due to slow disbursement, she added.

The Ministry of Planning and Investment has been confided to coordinate with the government’s ODA management agencies to work with the WB on the issues relating to capital extension and supplementation for the projects.

Banks support enterprises to buy rice for stockpile

Financial institutions in Vietnam have decided to support enterprises that will be purchasing rice from the summer-fall harvest for stockpiling. In a bid to assist enterprises, the State Bank of Vietnam on July 9 sent a dispatch to the Vietnam Export-Import Commercial Bank (Eximbank), asking it to provide funds to companies that are ready to purchase rice for stockpiling from the summer-fall crop.

As per the dispatch, enterprises who are appointed by the Vietnam Food Association will stockpile around 150,000 tons of rice as per government policy and will subsequently enjoy zero percent interest rate.

On the same day, Bank for Investment and Development, Commercial Bank for Foreign Trade, Vietnam Commercial Bank for Industry and Trade, and Vietnam Bank for Agriculture and Rural Development provided special loans at 12 percent interest rate to small and medium enterprises in Tan Binh District in Ho Chi Minh City.

These enterprises are in the fields of garments and textile, mechanics, export, medicine and construction material, and have borrowed a total of VND92.6 billion (US$ 4,443,000).