Merger results in the creation of Vietnam Airports Corporation

The Minister of Transport has just issued a decision on the establishment of Vietnam Airports Corporation from a merger of three corporations: the Northern Airports, Middle Airports and Southern Airports Corporations.
 
Under Decision No. 238/QĐ-BGTVT, Vietnam Airports Corporation will operate as a one-member limited company with a chartered capital totalling VND 7,743 billion.

The company will be responsible for the management of 20 civil airports nation-wide, including 6 international airports.

In addition to their financial, management and operational responsibilities, the corporation will also offer other services, such as the distribution of petrol and running duty-free outlets.

Nguyen Anh Hung, former chairman of Southern Airports, is set to be appointed as chairman of corporation's boards of directors.

Currently, many airports in Vietnam are suffering losses. According to the Northern Airports Corporation, five airports under its management take yearly losses, including Dong Hoi in Quang Binh, Vinh in Nghe An, Cat Bi in Haiphong and Na San in Son La and Dien Bien.

Investor optimism lifts indices
 
Renewed investor appetites outweighed profit-taking pressures, lifting indices on the nation's stock exchanges yesterday.

"Investors remain cautious even though they believe the rallying trend will continue," said Ha Noi-based independent analyst Pham Viet Hung, noting that trading volume remained low on both exchanges.

Hung said current cash inflows were mainly short-term and overall economic and business conditions continued to be problematic.

On the HCM City Stock Exchange yesterday, the value of trades declined 6 per cent from Monday's level to just VND637 billion (US$30.3 million), on a volume of about 36.5 million shares. But the VN-Index rebound from Monday's losses, closing up by 1.19 per cent to 400.26 points, while the VN30 Index of leading shares rose by 0.89 per cent to close at 450.22 points.

Among shares included in the VN30, real estate developers Hoang Anh Gia Lai (HAG), Tan Tao Investment and Industry (ITA) and Kinh Bac City Development (KBC), as well as financial conglomerate Ocean Group (OGC), all rose to their ceiling prices.

Sacombank, despite being the market's most-active share with over 1.8 million trade, bottomed out following the announcement late last week of credit ratings from S&P and Moody's. STB closed yesterday at VND19,900 ($0.95) per share.

On the Ha Noi Stock Exchange, the HNX-Index gained 0.82 per cent to conclude the session at 61.54 points, with advancers outnumbering decliners by 143-74. The value of trades was up 8 per cent over the previous session, totalling VND294.2 billion ($14 million) on a volume of 36 million shares.

PetroVietnam Construction (PVX) was the most-active share nationwide with 3.4 million shares exchanged, closing up 3.8 per cent to VND8,200 per share.

Foreign investors continued to put money into the market, picking up a combined net of VND64 billion ($3 million) worth of shares on both bourses yesterday. Last week, this sector was also responsible for a total net buy of VND400 billion ($19 million).

Positive information supporting further market gains could be news that Prime Minister had asked the central bank to find ways to ease credit to securities investors.

Brokerages urge delay to trading hours extension
 
The HCM City Stock Exchange late last week rejected rumours circulating in the media that daily trading hours would be extended as early as February 20.

The exchange said it was still waiting on a higher-level response before making an official decision to go ahead, while Ha Noi Stock Exchange officials said any extension in trading hours would depend on what course was taken on the southern bourse.

Bao Viet Securities Co general director Nhu Dinh Hoa said his firm was prepared for the longer trading hours but expressed doubts over whether now was an advantageous time to make the change. It might merely cause firms to shoulder more costs at a time market scale remained small and investors were showing little interest.

Tran Huu Chung, brokerage director of Sai Gon-Ha Noi Securities Co, warned that longer trading hours might cause additional investor fatigue in an already gloomy market situation and would make it difficult for financial services to be carried out after 3pm, the cut-off time for banks to make interbank money transfers.

Chung said the change would make it more difficult for brokerages to complete transaction procedures in a timely manner and would increase their costs.

"We think that the change should be considered when the market recovers or after June 30 of this year," he said.

However, An Phat Securities Co general director Tran Thien Ha said afternoon trading hours would give individual investors more flexibility to trade and securities companies more opportunities to increase brokerage revenues

"There are opinions saying an increase in trading time will cost market members more but I don't think so," said Ha. "On the contrary, transactions taking place only in the morning means that investors and securities firms are squandering money."

With current trading hours, most staff could finish their work in the morning, while securities companies were paying wages for them for the entire day, he said.

"We have proposed the extension to market regulators since 2009," said Tan Viet Securities chairman Nguyen Van Dung, who added that the change would help increase share liquidity and help investors eliminate the disadvantage of time zone differences.

"Only slight improvements could be expected in the present difficult context, but clearer effects will be seen when the economy stabilises, the health of enterprises improves and the market becomes busier," Dung said.

State Bank allocates credit growth rates

The State Bank of Viet Nam (SBV) officially announced yesterday the rates of credit growth allocated for commercial banks this year.

Under Direction No 01 issued by the SBV Governor Nguyen Van Binh, four credit institutions and bank groups are allocated credit growth rates from zero to 17 per cent this year.

Of this, commercial banks and credit institutions will be allocated growth based on the health of the organisation and their performance last year. Institutions will be classified into four groups based on SBV criteria, with well-performing lenders classed in group A and weaker lenders in group D.

Specifically, group A will be allocated the highest credit growth of 17 per cent for the year; group B, 15 per cent; group C, 8 per cent and group D, zero per cent.

After six months, the central bank will review such allocations and may adjust the growth rates to meet monetary policy goals.

However, the list of the four groups of banks and credit institutions has not been revealed yet.

Last year, the SBV issued a general rate of under 20 per cent for all banks.

On the same day, SBV Governor Binh also issued Document 674/NHNN-CSTT requiring banks and credit institutions to control their credit activities for 2012.

The State Bank requested that foreign banks' branches and credit institutions formulate their own plan and closely control credit growth for the whole year of 2012 (including an exchange rate adjustment factor) on the basis of this credit growth target announced by the SBV.

Based on the credit growth plan in 2012, credit institutions are required to develop and implement credit growth for every quarter, assigning the credit growth plan for each quarter, as well as the whole year, to their transaction offices while sending it to the SBV municipal and provincial branches for credit management.

Banks and credit institutions are set to send their reports on business targets of 2012 to the SBV Monetary Policy Department before February 29, 2012.

The SBV also defined that the total outstanding credit includes the credit in line with Item 14 of Article 4 of the Law on Credit Institutions and Circular No 21/2010/TT-NHNN dated August 10, 2010. This item also includes corporate bond purchasing balance (excluding bonds issued by credit institutions) and outstanding loans through entrusted funds from other non- credit institutions.

The central bank also requested that credit institutions and banks continue controlling their loans to discouraged sectors.

In particular, the proportion of loans made for discouraged sectors must be restrained at less than 16 per cent of each bank's total outstanding loans for 2012.

The discouraged fields include securities investment and trading, consumption and real estate projects.

However, several cases will still be given priority to accessing banks' loans, such as workers wanting to purchase shares from Initial Public Offerings of their equitising companies; house-owners wanting to repair or make mortgages on their monthly salary and constructions of apartments and houses for low-income families and workers in industrial, processing or economic zones.

In case credit institutions or banks make loans exceeding the credit growth rates of 16 per cent to discouraged sectors, they will be forced to make their reserves requirement ratio on Vietnamese dong doubled while other restrictions on their operations are applied, the SBV said.

VN-S’pore venture to build observatory in Thu Thiem

HCMC’s government has given the green light to a Vietnam-Singapore joint venture to develop an 86-story observatory tower in Thu Thiem New Urban Area, 18 stories taller than the current skyscraper in the city.

The city’s tallest building at the moment is the 68-story Bitexco Financial Tower in the downtown area.

The observatory tower to be built by Vietnam’s Tien Phuoc Co. Ltd. and Singapore’s Keppel Land will be two levels lower than originally planned, said Nguyen Anh Tuan, head of the Investment and Construction Authority for Thu Thiem  Urban Area (Thu Thiem ICA).

Thu Thiem ICA has submitted to the city government a scheme for increasing the total space of construction in Thu Thiem from 5.5 million to seven million square meters. If the scheme gets approval this March, it will create a foundation to lure investors into the new town on Thu Thiem Peninsula, Tuan told the Daily on the sidelines of a meeting with the French consulting firm Defrain Souquet Associes (Deso) in HCMC on Thursday.

There are now three projects approved for development in Thu Thiem by Tien Phuoc-Keppel Land, GS Engineering & Construction and VIJA PowerSource Corp. Earlier, the city government decided to scrap the Thu Thiem Software Park project of TA Associates Vietnam due to three years of delays.

Thu Thiem ICA is working with the investor to liquidate the contract and revoke the investment certificate. Another investor will be found to replace it.

Together with the foreign investors, a local firm named Dai Quang Minh Investment Joint Stock Co. is making a detailed plan of scale 1/500 to invest in infrastructure in the southern low-rise residential area. The project is expected for commencement late this year.

In addition, the city’s authority has given approval in principle for Saigontourist to build a hotel and resort complex with 500 rooms and other facilities in a site surrounded by Ca Tre Canal. Saigontourist is seeking to adjust up the number of hotel rooms to 2,300-2,500, something which the consulting service provider Sasaki Associates said will impact the overall planning of Thu Thiem New Urban Area.

Several local investors are seeking no-bid contracts for investment projects in the area but Thu Thiem ICA is weighing between inviting competitive tenders and awarding no-bid contracts, Tuan said. The granting of no-bid contracts will help save time but investors may suspect transparency, he said.

As planned, Thu Thiem New Urban Area will take shape by 2015. Still, the troubled property market has discouraged investors.

At the meeting on Thursday, Deso introduced the planning of the central square and riverside park in Thu Thiem and took comments from related agencies.

The project is designed with six specific areas for political, cultural and daily activities. The total budget for the project is estimated at US$80 million.
 
 IFC hands over business forum operations

The International Finance Corporation (IFC), a member of the World Bank Group, has handed over running of the Viet Nam Business Forum, a forum for semi-annual dialogue with the Government, to its members comprised of foreign and domestic business associations.

The IFC had set up and run it for more than a decade, facilitating reforms that brought down barriers, increased transparency in business, and encouraged investment.

The members, 14 local and international business associations and chambers of commerce – the chambers of commerce of Japan, Singapore, Hong Kong, Australia, Canada, Europe, Korea, Nordic countries, and the US, the Viet Nam Chamber of Commerce and Industry, Leather and Footwear Association, and Ha Noi Young Business Association – will collectively take over the day-to-day functioning.

"This new start highlights a natural extension of our role, which is to represent the business community in working with the Vietnamese Government to remove constraints to the private sector's ability to do business and create jobs," Christopher Twomey, Chairman of the American Chamber of Commerce in Viet Nam, said.

The forum's seven working groups – on banking, infrastructure, capital markets, manufacturing and distribution, education, tourism, and mining – will continue to meet with government counterparts on a regular basis.

"We highly appreciate that the business community will be taking ownership of this initiative and we will continue to support its contribution to improving the investment climate in Viet Nam," Minister of Planning and Investment Bui Quang Vinh said.

The World Bank and IFC will continue to co-chair the forum.

Simon Andrews, IFC Regional Manager, Viet Nam, Cambodia, Lao PDR, and Thailand, said: "Now that the dialogue process is well established, the forum should be driven by the business community to further promote the discussions and ensure its long-term sustainability."

The forum has served as a model for similar IFC-supported public-private sector dialogue in Cambodia and Lao PDR.

International cards now allowed at SCB’s ATMs

Holders of six popular international cards namely VISA, MasterCard, American Express, JCB, Diner Club and CUP can now withdraw cash from the ATM system of Saigon Commercial Bank (SCB).

This program is carried out by SCB in coordination with Vietcombank and Smartlink Card Services Co. to create conveniences for holders of international cards via ATMs, the bank said in a statement. SCB is one of the first seven banks to roll out such services.

Unlike before when the bank’s ATMs only accepted certain international cards, the ATM system of SCB and the member banks of Smartlink can now provide money to holders of these international cards.

Cardholders can perform transactions at over 11,000 ATMs of SCB and the member banks of Smartlink, Banknetvn and VNBC, as well as pay for goods and services via the point of sale (POS) network of SCB and the three aforesaid card networks.

At present, SCB does not charge cash withdrawal fees on cardholders making intra-network transactions or at ATMs of the member banks of the card alliances. Other ATM transaction fees such as balance checks, money transfers, first card issuance, and transaction verifications are exempted.

SCB also provides balance inquiry services via the E-banking channel, including Internet Banking and SMS Banking.

Frauds take HCM City consumers for a ride

There were 1,200 cases of price-related violations in HCM City last year, almost double the 2010 number, the HCM City Market Watch Department told a review meeting last week.

They included failure to list prices, listing in foreign currencies, and selling at higher than indicated prices, and the department slapped total fines of VND5.2 billion ($250,000) on violators.

The violators were mostly operating in the consumer goods, food, construction materials, cosmetics, household appliances, spare parts, and toys sectors.

The department conducted more than 15,000 inspections last year, uncovering 10,812 violations – half higher than in the previous year – like selling fake and imitation goods, frauds, intellectual property violations, and illegal import and transport of foreign goods.

The offenders were becoming more sophisticated and their violations were becoming harder to detect, the department said.

The laws do not cover the entire gamut of violations, allowing some offenders to get away.

Besides, the administrations of some markets like Sai Gon Square, An Dong, and Ben Thanh do not co-operate with market management teams to crack down on fake goods.

Nguyen Thi Hong, deputy chairwoman of the city People's Committee, said the department needs to co-operate with district agencies to crack down in time on speculators and check price hikes.

Le Van Lieu, deputy head of the Market Management Department, said this year his agency would co-ordinate with others to monitor food hygiene and safety, especially of products like alcohol, soft drinks, milk, oil, and processed foods.

Lotte Group taps local TV shopping market

South Korea’s Lotte Group has entered Vietnam’s TV shopping market by launching on Thursday Lotte DatViet Homeshopping Co. Ltd., a joint venture with local partner DatViet VAC Group Holdings.

The US$6-million joint venture, with the Korean group’s subsidiary Lotte Homeshoping holding a 85% stake, made its first public appearance at a ceremony held at the Intercontinental Asiana Saigon hotel in HCMC.

The company will provide consumers with new shopping conveniences by building a true supermarket on television, said Yong Ho Shin, general director of Lotte Datviet Homeshopping.

He told Daily that sale programs of Lotte DatViet Homeshopping will be aired around the clock from February 10 on TV shopping channel VCTV14 of Vietnam Cable Television, as well as on HTVC of HCMC Television.

The company said that storage facilities will be located in Hanoi and HCMC, and customers will be served via the toll-free telephone number 1800-1533. Goods delivery will be free of charge within two days after order.

Lotte DatViet will also provide after-sale services, prestigious and convenient guidance and maintenance with refund/exchange policy within seven days.

With its capability and investment, Lotte DatViet’s shopping programs will bring the practical efficiency to local viewers, and consumers as well as domestic manufacturers and distributors in Vietnam, according to a statement of the joint venture.

As domestic goods are to make up a committed 95% proportion, the joint venture said it would build a network of local manufacturers and suppliers nationwide. It will be an effective connector between manufacturers and consumers, playing an important role in the immature retail industry in Vietnam.

Lotte is the fifth largest conglomerate in South Korea with its total revenue of US$63.4 billion in 2010 and it has entered Vietnam with brands including Lotte Mart, Lotteria, Lotte Cinema, and Lotte Pie.

Lotte Homeshopping has constantly led the online retail market in South Korea since its establishment in 2001.

Meanwhile, DatViet VAC is one of the leading media and communication groups in Vietnam with nine member companies.

Retail sector escapes global gloom
 
Viet Nam's retail sector seems relatively sheltered from the global economic meltdown, with 120 supermarket outlets and shopping malls set to open this year, double the number as last year.
Vinatextmart will lead the list with 43 of them.

Co.opmart will open 12 outlets and 18 of its Co.opfood shops.

After covering HCM City with a network of 80 outlets, food company Vissan plans to expand this year to neighbouring provinces.

Lottemart has received licences for two outlets in the central city of Da Nang and southern province of Dong Nai. The South Korea supermarket chain hopes to open 60 outlets by 2020.

Giant French retailer Big C has 18 outlets in Viet Nam but continues to expand.

The expansion plans come even as a report by Irish online market research site Research and Markets last November rated Viet Nam as one of the five retail markets making the highest profits in the world, saying that a modern retail system would play an increasingly significant role in the country.

The turnover of the modern retail channel continues to rise sharply, thought to be at the expense of traditional markets. For instance, during Tet, turnover at most supermarkets increased by 20 – 40 per cent, but plunged at wet markets.

According to figures from the Ministry of Trade and Industry, there are 700 supermarkets, 120 shopping malls, and 1,000 convenience stores in Viet Nam. But they only account for a 20 per cent market share yet.

The retail system, however, mostly focuses on the middle class, as made clear by their slogans like "Budget price for every household," "Friend of every family," "In hand with workers," and others.

"We are targeting customers with a monthly income of VND5-15 million," Pham Thi Quynh Ny, marketing director of Vinatextmart, said.

The supermarket will only begin to look upmarket when demand in the lower segment peaks.

Most retailers are still reluctant to look at luxury brands because selling them requires huge capital, experience, and professional skills.

Project takes off to expand Phu Yen airport

A project to expand Tuy Hoa Airport in central Phu Yen Province was officially launched during a ceremony held by the Ministry of Transport on Saturday.

The project, worth VND353 billion (more than US$16.8 million), will include construction of a runway and landing area as well as a new passenger terminal.

Aiming to raise the airport's capacity to be able to handle 300 passengers an hour during peak periods, the project is scheduled to be completed by September 2 next year.

Ongoing work is also expected to raise the airport's capacity to be able to handle more than 850,000 passengers annually by 2020.

The airport's terminal, parking lots, roads and other facilities were designed following the International Civil Aviation Organisation's standards.

The project is implemented by the Airport Construction Company under the Ministry of Defence.

The 678-ha Tuy Hoa Airport was built by the US Army in the 1960s during the American War.

Cai Mep petrochemical plant set to begin operations

PetroVietnam Drilling Mud Joint Stock Co will put a petrochemical plant in the Cai Mep Industrial Zone into operation in the second quarter of this year. The corporation is expected to develop new products with materials from the petrochemical industry.

Unsynchronized infrastructure development in Phu Quoc airport

While the Phu Quoc International Airport in Kien Giang Province is likely to reach completion by the year’s end, infrastructure works around it have come to a halt due to capital shortage.

Work on the runways, hangars, and terminals are 65 percent complete, and the project will become operational on schedule, the investor representative said.

The VND16.2 trillion (US$810 million) airport, located in Duong To Commune, Phu Quoc District, will replace the existing Phu Quoc Airport 10 km away.

Unlike the rapid working pace at the airport, however, no sign of construction can be seen on the sites of the infrastructure projects around it.

These days, no workers are spotted on the construction site to build the main 20-km route connecting the north and south ends of the district from Duong Dong Town to Suoi Lon Bridge, and the bulldozers are left unused.

“The constructors worked on the site for only a few months, and have since disappeared,” said Nguyen Van Sang, a local.

Work on the Cua Can – Ganh Dau road had also ceased before much had been done.

Nguyen Trung Thanh, from the construction team No 2 of TRACO -- and in charge of the Duong Dong – An Thoi road, said they could not begin working on the site since the investor had failed to complete the site clearance tasks.

“We have mobilized 100 cranes and bulldozers from the mainland to Phu Quoc island to prepare for construction, and it is extremely wasteful as work has been suspended,” said Thanh.

For his part, Dao Huy Hiep, head of planning and finance of the provincial Department of Transport, admitted to Tuoi Tre that the construction of all transport projects funded by government bond have been suspended.

“The capital shortage, and investors’ debts to constructors are the main causes,” said Hiep.

The unsynchronized electrification on Phu Quoc Island, compared to the airport’s completion is also a nuisance to investors.

At present, the island is yet to be able to use the national power system, so generating electricity is left to diesel-fueled generators, which produce power at exorbitant prices.

Vo Van Thanh, deputy director of Phu Quoc Tourism JSC, lamented that the price of power on Phu Quoc is as high as VND6,525 a kWh.

“While our hotel only has 43 rooms, the power bill is already as high as VND150 million a month,” he said.

“The high power price has made accommodation fees in Phu Quoc much higher than in other tourism places.”

Meanwhile, the installation of a 110kV underground electricity cable from Ha Tien to Phu Quoc has yet to begin.

“The project will be completed no sooner than 2013,” said Truong Tan Luc, director of Kien Giang Electricity.

According to the Prime Minister’s directive No 633, Phu Quoc Island is intended to be developed into a world-class tourism center.

However, seven years after the plan was implemented, the island has yet to be able to make full use of its potential for development .

According to the management board for the investment and development of Phu Quoc Island, there are currently only 9 tourism projects operating on the island, while 14 others are under construction.

Last year Phu Quoc welcomed around 351,000 tourists, 78,000 of which were international holidaymakers.

An investor who planned to build a restaurant-hotel complex on Phu Quoc said he has yet to have the project begun, due to the undeveloped infrastructure on the island.

“The island’s infrastructure still cannot meet our demands,” he said.

For his part, Le Van Thi, chairman of Kien Giang People’s Committee, said the government will continue to allocate government bonds to fund the projects on Phu Quoc this year.

“We will prioritize this capital source to clear debts with contractors, and complete the roads connecting local traffic with Phu Quoc Airport,” he said.

No more funds for firms eligible for equitisation

The Government will not provide more capital for enterprises eligible for equitisation, including those in which the State will continue to hold a 50 per cent stake, a Ministry of Finance's circular warns.

Circular No 202/2011/TT-BTC, which will take effect from February 15, says valuation must be made of a firm before equitisation in accordance with existing laws.

When equitising a State corporation or economic group, the valuation of subsidiaries in in which it holds entire equity must also be done in accordance with this circular's regulations and simultaneously with the valuation of the parent company.

If a firm's debts exceed its assets, it will have to draw up a restructuring plan together with its debtors and debt-settlement companies in order to transform into an equitised company. If restructuring a company is not feasible, other actions prescribed by the law will be considered.

Firms which have a total asset value of VND30 billion (US$1.43 million) and above, or a State capital value of VND10 billion ($476,000) and more, are to hire consulting institutions to define their value.

The Ministry of Finance says valuation of enterprises can be done based on their asset values or money flows, but notes that a firm's valuation results made public can't be lower than the figure defined by its total assets.

The circular also requires the assessment of a company's finances and enterprise value to be done in an open and transparent manner, and the State's interests to be protected.

"If relevant organisations and individuals, when dealing with financial affairs and evaluating firms, do not obey regulations and cause damages or losses to State assets, they will have take administrative responsibility, compensate or bare criminal proceedings," it stipulates.

The process of equitising to transform 100-per-cent State-owned firms into joint stock companies began in 2008 to create a level playing field. 4,000 public enterprises have been equitised, with another 1,000 to be transformed in 2011-15, leaving 650 by 2015.

The Government has instructed all State enterprises to register for equitisation in the period, and many have embarked on the process.

Seminar discusses role of social networks in businesses

A seminar on the role of social networks in businesses will be held at the French Cultural Centre, L’Espace, on February 15.  

It aims to introduce social networks which have been explored by businesses to develop and use communications in an effective way to avoid risks.

Dr. Marc Divine, Associate Professor of Marketing at IAE Paris, Ha Anh Tuan, director of Vinalink Media Joint Stock Company, and other scholars will speak of the rapid development of social networks which can change the relationship between companies and their customers.

Divine’s presentation will be focused on marketing and communications skills in social media, especially a new career called Community Management.

Tuan will talk about ways to apply social media effectively, especially conventional methods which are being used by Vietnamese businesses.

Social media have become a key tool for businesses to interact with their customers and also for customers to interact with each other.

There are different types of social networks such as Skyrock, Viadeo, Linkedln, and Facebook. To use them effectively, businesses are required to have a good command of each kind.

Vinamilk's export value hits record high in January

Vietnam Dairy Products Joint Stock Company (Vinamilk) has announced that its export value hit a record high of US$22.3 million in January 2012, up five times against the same month of last year.

Of the products, condensed milk increased by 33 times in revenue, yogurt by 1.87 times, Ridielac nutrition powder by two times, fresh milk by four times and Dielac powdered milk by four times.

Vinamilk products are now on sale in 16 nations over the world, including the US, Australia, Canada, Russia, Turkey, Iraq, Kuwait, Sri Lanka, the Philippines, the Republic of Korea and Cambodia.

In 2011, Vinamilk’s export turnover reached more than US$140 million, up 72 percent from a year earlier.

To boost exports, Vinamilk not only maintains its traditional markets but also looks for new ones.

US$4.5 billion invested in Vietnam petrochemical complex

A US$4.5 billion contract has been signed for Vietnam's first petrochemical complex in Long Son oil and gas industrial zone in the southern province of Ba Ria-Vung Tau.

Signitories to the deal were Siam Cement Group, Thai Plastic and Chemicals, Qatar Petroleum International, Vietnam Oil and Gas Group (PetroVietnam) and Vietnam National Chemical Corporation (Vinachem).

Accordingly, Siam Cement Group will hold a 28 percent share, Thai Plastic and Chemicals, 18 percent, while the other three partners will secure the remaining stake.

The complex is expected to begin operation within the next four years to produce packaging items, plastic tubes, electrical equipment, automobile components and other utility products.

Ba Ria-Vung Tau to host first int’l seaport festival

Prime Minister Nguyen Tan Dung has authorized the southern province of Ba Ria-Vung Tau to host the 2012 International Seaport Festival.

The festival is scheduled to take place from April 27-29 with a variety of activities, including a carnival program, an amateur golf tournament, a sea, ship and island photography exhibition, an international seminar on seaport development and investment, and music and dance performances.

The event aims to implement the Government’s policy on Vietnam’s maritime economic development strategy and raise public awareness of the country’s sea and island sovereignty. It will also highlight the leading role of the maritime sector in Vietnam’s national economy, security and national defence.

The Government leader asked Ba Ria-Vung Tau province to cooperate with relevant agencies to organize the festival in a safe and effective manner.

He also urged the Ministry of Culture, Sports and Tourism to work with other ministries and bodies to introduce regulations on festival management for his consideration and approval as soon as possible.

Mekong Delta exports 65,000 tonnes of tra fish

Mekong Delta provinces have exported 65,000 tonnes of tra fish since the beginning of 2012, earning US$195 million.

The region is expected to ship 600,000 tonnes of the fish abroad by the end of this year, equivalent to last year’s figure.

Under the guidelines of the Ministry of Agriculture and Rural Development, the region will focus on increasing the quality of tra fish for export. The Mekong Delta provinces of Dong Thap, An Giang, Tien Giang, Vinh Long, Hau Giang and Ben Tre, along with Can Tho city, will expand their breeding area to 6,000 hectares.

These localities are making zoning plans to develop material production areas and upgrade breeding farms in line with international standards to meet the requirements of Vietnam’s tra import markets.

SMEs to benefit from financial support policy

A scientific seminar on providing credit for small-and-medium-sized enterprises (SMEs) was held in Ho Chi Minh City on February 11.

The event was jointly held by the Institute of Financial Strategy and Policy under the Ministry of Finance and the Marketing and Finance University.

Participants in the seminar analyzed the real situation of SMEs in operation and worked out measures to help them get preferential credit loans.

In 2011, Vietnam had more than 500,000 SMEs, accounting for 98 percent of the country’s total number of businesses and making up more than 40 percent of GDP. The SMEs have made remarkable contributions to developing the national economy and generating millions of new jobs each year.

However, there remained drawbacks in certain enterprises, such as poor management capacity, weak competitiveness, out-of-date technology and low-quality products. Moreover, they said, most SMEs did not pay due attention to legal matters and State policies and surely they will run the risk of failing in the face of economic fluctuations.

Coal supplier to propose higher prices

Vietnam Coal and Mineral Industry Group (Vinacomin) will propose increasing coal prices as current prices can only cover 60 percent -70 percent of the production cost.

According to Bui Van Khich, deputy general director of the group, the production cost of coal now reaches VND1 million per ton, while coal is now sold to electricity generators for a mere VND600,000 a ton after several price increases.

The cheap coal supply causes many difficulties for Vinacomin.

The Government has earlier approved a plan to gradually adjust domestic coal prices in accordance with the market to generate profits for reinvestment.

“There must be another coal price increase in 2012,” Khich said.

“Last year we suggested an increase of 10 percent – 15 percent, and the level of 5 percent was approved. We’ll continue to make proposals this year, and another increase of 30 percent – 40 percent is necessary to offset the production cost.”

According to a report of the Ministry of Industry and Trade, coal consumption in January was 2.8 million tons, a drop of 10.8 percent year-on-year.

Vinacomin expected to export 13.5 million tons of coal in 2012 at the average price of US$100 per ton, and planned to steadily reduce the export volume in the following years.

Khich explained if coal prices for power production were not increased this year, Vinacomin would run into more difficulties.

He said the Electricity of Vietnam (EVN) still owed Vinacomin VND1 trillion for power and coal supply.

Regarding the project to construct a coal transshipment port in the southern region, Vinacomin said it was working with a foreign consultancy group on surveying a location for the project and would send a report to the Government this month.

The amount of imported coal from now to 2015 is estimated at over 40 million tons per year, and will jump to 200 million tons in 2020.

The thermal power plants in the Mekong Delta will import 15 million tons a year, while other thermal power centers like Van Phong, Vinh Tan and Son My will need 6 million - 13 million tons of imported coal every year.

Vietnam aims to raise its coal output to 55 million - 58 million tons in 2015 from an estimated 48.9 million tons this year in an effort to meet demand for fast-growing electricity production, the government said.

Output is projected to rise to more than 75 million tons by 2030 thanks to the exploitation of new sites.

Electricity demand is growing at 7 percent - 10 percent a year and Vietnam is having trouble ensuring supply.

Coal will be a major fuel for electricity over the next five years and will account for 47 percent of power generation by 2020.

Vietnam has estimated total coal reserves at 48.7 billion tons by 2011, a government coal development plan said.

In 2020, exploitation will probably start in the Red River Delta, which is estimated to have reserves of 39.4 billion tons, nearly five times larger than the country’s main coal site in the northeastern region, the plan said.

However, mining coal in the Red River Delta would be controversial because it is a big rice-producing area and densely populated, and locals are worried about the environmental impact.

Manufacturers decry dubious environmental tax rules

With the Environmental Protection Tax Law providing unclear regulation on what kind of plastic bags are to be taxed, the tax agencies have collected tariffs from many plastic manufacturers whose products may not be subject to the new tax rules.

At the press briefing held by the Vietnamese Plastic Association (VPA) last week, many plastic bag and packaging manufacturers said that plastic bags and packaging of many varieties are being taxed, putting their production into a tough spot.

As of January 1, 2012, a tax rate of up to VND50,000 (US$2.4) is imposed on every kilogram of plastic bags from HDPE, LDPE or LLDPE, with the government aiming at a 40-percent reduction of their use at supermarkets and shopping centers nationwide by 2015.

Meanwhile, bags that are already packed with the products and those “meeting environmentally-friendly standards” are exempt from the tax.

With such vague and generalized regulation, it will be hard for tax collectors and tax payers to see eye to eye, VPA said.

Pham Trung Cang, CEO of Tan Dai Hung Co, said his company is making the environmentally-friendly bags from PP and BOPP plastics for exports, and fertilizer bags from PP and PE for local fertilizer plants.

“However, according to the tax agencies’ understanding of the environmental tax rule, all of the above products are taxed VND40,000 a kilogram,” Cang said.

“Tax officials impose tariffs on all products containing PE in the product component, or those belonging to the packaging category.

“This is a case of tax over-collection.”

Cang said with his company capable of producing 8,000 tons of packaging a year, the total collected tax could be as much as VND320 billion.

The company also had to supply its products to fertilizer and chemical makers at higher prices. Consequently, his customers said they would switch to imported products for lower prices, Cang lamented.

Nguyen Xuan Hung, director of Tien Thanh packaging maker, said due to taxation, his products are now being sold at prices nearly double those produced by Thai and Chinese rivals imported to Vietnam.

“Will we be able to survive?” he said.

Nguyen Van Kha, CEO of Tien Hung JSC, attributed the lack of circulars providing guidance on the Environmental Protection Tax Law to the fact that tax agencies in different localities understand the rules differently.

Thus, they just collect the tax first, and any complaints or issues are dealt with later, Kha said.

A plastic manufacturer said he had called the Ministry of Natural Resources and Environment to ask for the particular standards in order for a material to be deemed “environmentally-friendly” as stated in the ministry’s tax regulations.

“However, the ministry said it has yet to know what the specified standards are,” he said.

“Even the ministry does not know, so how can agencies of lower levels?”

Plastic bags and packaging makers said they are willing to pay tax for the sake of protecting the environment, but the regulations should be clearer.

Ho Duc Lam, deputy chairman of VPA, said the association will continue to petition the relevant agencies to ease manufacturers’ difficulties.

“Specifically, VPA suggested that plastic packaging be temporarily exempted from the environmental protection tax until the rules become more complete,” Lam said.