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In a statement released by the Ministry of Finance Monday, Hoang Thach Cement Co. was found to increase prices by 18.2% from late last year while its input costs rose only 14.4%. Similarly, Hoang Mai Cement Joint Stock Co. raised cement prices by 18.9% compared to an input cost increase of 16.3%.
Viet Phap Joint Stock Co. also raised feed prices by 8.2% against a production cost increase of nearly 6.5%. Urea fertilizer prices of PetroVietnam Fertilizer and Chemicals Corp. picked up 25% while input costs grew a mere 9.2%.
The ministry, after an inspection into seven necessities on the local market, found that sugar was the only commodity to fall in price while the prices of six other necessities, including liquefied petroleum gas (LPG), cement, building steel, feed and dairy products, increased.
The ministry also said that the enterprises had yet to comply with regulations in price listing and registration, especially LPG firms.
200 industries affected amid credit crunch
Up to 200 realty-related industries , both in production and service, have been badly affected as banks are tightening lending for the real estate sector to meet the government’s requirement in limiting non-production loans.
In early March, the State Bank of Vietnam (SBV) ordered that commercial banks have to gradually reduce loans to non-manufacturing sectors (mainly real estate, personal consumer and securities) to 22 percent of the total outstanding loans by 30 June to curb inflation.
Since then, many construction projects have halted.
Do Duy Thai, CEO of Thep Viet Corporation (Pomina), said the tightening credit policy has caused difficulties to certain production sectors related to real estate.
Taking the steel industry as an example, Thai said that many steel manufacturers have been forced to cut production as the total consumption has fallen by 50 percent year-on-year.
He said his workers in Pomina now had to work only 10 days a month due to lack of contracts.
A number of real estate projects have been suspended and have stopped ordering steel, he explained.
Vo Quoc Thang, chairman of Dong Tam Long An Corporation, said the tightening policy is spreading negative impacts on as many as 200 industries.
Those included manufacturers in the fields of glasses, cements, bricks and wood.
“Many factories have to cut production, or even shut down, and a lot of workers have lost their job,” he said.
For a solution, Thai proposed the central bank only restrict credit for newly-launched projects, or projects related to site clearance and infrastructure construction.
As for construction projects that have been underway, he said the central bank should loosen its policy to enable these to continue so that related industries will not be affected and workers saved from unemployment.
Noodle maker told to revise ‘color-changing’ ad
The Vietnam Food Administration (VFA) Tuesday demanded Masan Food to change some words in a TV commercial that its competitor said misleads viewers into thinking that any instant noodle other than Tien Vua is unsafe.
Nguyen Thanh Phong, deputy head of VFA, said his unit has granted a license to the ad where Masan Food’s Tien Vua instant noodle is shown and compared to another unnamed noodle.
While the soup in the Tien Vua bowl remains unchanged in color, the soup in the other bowl turns dark yellow, suggesting that it contains coloring, which is harmful to health.
According to competitor Acecook Vietnam, the color change cannot be put down to coloring and not can be considered synonymous with health risks.
As for VFA’s Phong, he maintained the ad content does not violate legal regulations but since the ad might be misleading, VFA has asked for some amendments.
Phong also said there have recently been many cases where other manufacturers were asked to change their ads due to vague and inaccurate contents.
But the current regulations stipulate a fine of only VND5-10 million (US$250-500) on the violated ads, which he said is not strict enough.
Boot’s on the other foot
Economic vulnerabilities have driven scores of footwear firms into dire straits.
Leather shoe firm An Thinh had to outsource part of its orders to VitcoShoes - in Ho Chi Minh City - to be able to fulfill export contracts on time since it faced a dearth of workers.
Scores of footwear firms are struggling with a host of difficulties.
According to Ho Chi Minh City Leather and Footwear Association general secretary Nguyen Van Khanh, Vietnam’s export footwear firms faced high lending rates, worker shortages, insufficient local materials and escalating input costs.
“Businesses complain they are in a critical situation as export orders are piling up but they are cautious in signing contracts due to lack of workers,” Khanh said.
Low pay of around VND2-3 million ($97-$145) per month was ascribed the core reason why the footwear sector faces chronic labour shortages. Besides, the sector incurs a high rate of labour turnover of around 30 per cent per year partly due to its seasonal features.
Director of Duy Hung Footwear Company, in Binh Duong province’s Song Than 1 Industrial Zone, Ha Duy Hung attributed escalating materials costs against slightly increased product prices to firms’ difficulties in hiking labourer wages.
“Our company offers workers around VND3 million per month, however, the labourers are frequently in and out,” Hung said.
Reality shows that the price of imported materials hiked 20-30 per cent a year, however export orders’ rate rose slightly only though footwear firms asked for price hikes three times with a slight increase of 2-3 per cent each time.
“Foreign clients said they could not accept price hike proposals from Vietnamese firms since their local market does not face inflation threat and the customers are unwilling to pay more. They even said they will place orders with other countries if local firms charge them higher,” Khanh said.
HCMC unveils Vietnam’s first five-star cruise-ship
Ho Chi Minh City’s 76 Shipbuilding Co .Ltd and tourist agency Heritage Line Co. Ltd have unveiled their five-star cruise ship, Jahan, the first of its kind in Vietnam.
70 m long, 12,8 m wide, Jahan has 26 rooms, a swimming pool, a restaurant and an entertainment area.
The ship cost US$4 million to build ad will offer tours from Sai Gon to Cambodia’s Siem Reap and later, to Mekong Delta provinces.
US considers Vietnam its potential market
The US Department of Commerce (DOC) has added Vietnam to its list of “next tier” market where businesses have increasing opportunities in five years.
The information was affirmed by the Geneva-based Vietnam Mission to the United Nations, the World Trade Organization and other international organizations.
The mission cited the US 2011 National Export Strategy, saying that the five markets are Colombia, Indonesia, Saudi Arabia, Turkey, and Vietnam.
The strategy focuses on enhanced export promotion, including trade missions and commercial advocacy activities; increased export financing; technical assistance; and market development to create optimal policies and regulations in the Next Tier markets to drive growth in key and emerging sectors, such as clean energy.
In addition, the US will try to reduce trade barriers for US businesses operating in these markets.
According to the DOC, the country’s export revenues rose 17 percent against 2009 to reach US$1.84 trillion, the highest increase in 20 years.
Imports to Vietnam must have certificates of origin
Starting on July 1, fruits and vegetables imported to Vietnam need certificates of origin (COs), announced Deputy Minister of Agriculture and Rural Development, Diep Kinh Tan, at a press briefing on June 30.
Deputy Minister Tan said that the requirement of COs for imports to Vietnam goes in line with the country’s commitments to the World Trade Organisation (WTO), showing equal treatment among WTO members.
Vietnamese exports must also follow strict regulations before entering foreign markets, he added.
According to Nguyen Nhu Tiep, Deputy Head of the Seafood, Farm and Forestry Produce
Quality Control Department, it is important to require COs from all products imported to Vietnam to ensure food hygiene and safety.
By June 30, four countries namely the US, Canada, Australia and Thailand had registered to follow COs regulations of Vietnam.
Nearly 1 million foreign arrivals visit Hanoi in first six months
Hanoi welcomed approximately 1 million foreign arrivals in the first half of the year, said Mai Tien Dung, Deputy Director of the capital city’s Department of Culture, Sports and Tourism.
Most of them came from China, Australia and Japan.
In the reviewed period, Vietnam received around 2.96 million foreign arrivals, a year-on-year increase of 18.1 percent, the General Statistics Office reported.
Nearly 1.77 million tourists came for a holiday (up 11.2 percent), about 493,000 for business purposes (down 1.7 percent), and 513,000 for visits to relatives (up 77.6 percent) over the same period last year.
Tourists coming by plane amounted to 2.5 million, 23.8 percent higher than last year’s figure, while visitors travelling by sea and land decreased by 15.2 and 4.5 percent, respectively.
Vietnam Airlines uses local fuel
Vietnam Airlines has decided to use Jet A1 fuel from the Dung Quat Oil Refinery for its fleets from June 30, said the general director of the Binh Son Refining and Petrochemical Co., Nguyen Hoai Giang.
The refinery this year is expected to produce about 400,000 tonnes of Jet A1, meeting roughly 40 percent of Vietnam Airlines’ demand.
The Binh Son Co., which manages the Dung Quat refinery, received international qualified certificates from the Norway DNV Register in March this year.
Since last August, it has sold 20,000 tonnes of the fuel to domestic and international airliens.
Vietsovpetro discovers oil near Bach Ho field
Vietsovpetro has found oil in Mioxen layer in the northeastern part of Bach Ho oilfield offshore southern Vietnam, said its Geological Deputy General Director Tran Hoi.
The discovery is of special significance to Vietsovpetro, a joint venture between the Vietnam National Oil and Gas Group (PetroVietnam) and Russia's JSC Zarubezhneft, on its 30th founding anniversary, said Hoi.
The oil flow of around 4,560 barrels a day was discovered at the depth of 3,377-3,396m in lot 09-1 which is located separatedly from Bach Ho oil field which is under production.
At present, Vietsovpetro is making an assessment for the new oil reserve and an exploitation scheme, he added./.
Corporation plans 190 mln USD electronic chip factory
The Sai Gon Industry Corporation (CNS) announced its plan to build an integrated circuit manufacturing plant worth 190 million USD at a seminar in Ho Chi Minh City on June 30.
The project was placed on the list of national key programmes by the Ministry of Science and Technology.
At the seminar, hosted by the corporation itself, CNS called on the Government to adopt preferential policies regarding tax, investment capital and expert employment for its realisation of the project.
Nguyen Van Dua, Permanent Deputy Secretary of the HCM City Party Committee, underlined the significance of the project, which, he said, is to contribute to the country’s industrial development.
The seminar, which drew some 60 domestic and foreign professors, experts and businesses, provided an overall picture on the semi-conductor industry in the world and Vietnam in particular.
It voiced the need to build electronic chip production plants in the country during the process of industrialisation and modernisation.
RoK bank funds solar power project
The Export-Import Bank of the Republic of Korea (Korea Eximbank) has approved a 12 million USD loan for a solar power generation project in the central province of Quang Binh.
An agreement on the loan was signed between the Korea Eximbank and the provincial People’s Committee on June 30.
The 13.6 mln USD project includes the construction of solar energy generating facilities to benefit 1,514 households in the districts of Le Thuy, Quang Ninh, Bo Trach and Minh Hoa, where are unreachable by the national power grid.
Additionally, the project will help supply power for 41 schools, 13 ranger stations, two communal People’s Committees and eight cultural houses in 10 local remote communes.
The project is scheduled for completion by 2013.
American of VN origin boosts environment investment
The Da Phuoc waste treatment complex, capable of treating half of wastes discharged in the most populous Ho Chi Minh City, is considered the largest and most modern model in Vietnam.
The facility, invested by a Vietnamese American named David Duong in 2004, has surprised visitors with its clean and green environment in such a huge waste dumping ground which collects some 3,000 tonnes of wastes a day.
“It is thanks to the production chain which meets US standards on green and environmentally-friendly technology”, said the investor, who has experienced nearly 30 years of successful career in waste treatment in the world’s largest economy.
Following the success of the Da Phuoc project, the Vietnam Waste Solutions company, of which he is the director, has been accredited by the Government to invest in a 700 million USD facility on waste treatment with green technology in the Mekong Delta province of Long An.
The project has been designed to treat assorted wastes, including dangerous and hospital wastes and waste electrical and electronic equipment (WEEE) with green technology. The 1,740 ha facility will be capable of meeting demand for waste treatment from Ho Chi Minh City and the key southern economic zone.
Duong said “I always confide myself that wherever you go you should remember your origin. It is the reason for my return to Vietnam to invest in environmental solutions which have made me successful in the US soil”.
The California Waste Solutions (CWS) in the US, of which he is the President of the Managerial Board and CEO, took the 37 th place in the Waste Age magazine’s ranking for the US top 100 in the waste transportation and treatment industry.
Japan to consider accepting Vietnamese nurses, caregivers
The Japanese government is weighing plans to accept Vietnamese nurses and caregivers for positions in Japan, expanding a program currently open to only Indonesians and Filipinos under economic partnership agreements.
According to the Nikkei daily, an official decision about accepting Vietnamese nurses and caregivers is expected by September's end, the deadline for negotiations between Japan and Vietnam to revise their economic partnership pact.
The newspaper said Japan is expected to solicit around 200 nurses and caregivers from Vietnam annually, with the first group to arrive starting in fiscal 2013. Like their Indonesian and Filipino counterparts, the Vietnamese personnel would eventually be required to take national examinations to obtain Japanese licences in their fields.
Japan will also strengthen Japanese-language education programme for candidates before they arrive.
The Health and Welfare Ministry predicts Japan will face a shortage of up to 200,000 nurses and 1.27 million caregivers in 2025 as the population ages.
Cement producers eye West African market
Africa, especially its western regions, is fast becoming a profitable market for Vietnamese cement manufacturers due to high demand and limited production capacity, according to domestic traders.
The cement market in West Africa has undergone difficult times in recent years with high prices and little supply.
Foreign companies such as Vicat, French Amida and Swiss Stucky have managed to carve out successful footholds for themselves in the struggling market, despite many regional countries still encounter cement shortages.
Cement prices have been escalating due to speculation in Togo, the country currently needs around 50,000 tonnes of cement per month.
Mali consumes around 1-1.2 million tonnes of cement annually.
Niger needs around 300,000 tonnes of cement per year, national manufacturer is only capable of producing around 80,000 tonnes.
In Benin, a country with high cement production, prices are level at around US$148 per tonne.
Many other countries are also struggling to cope with demand and supply going opposite ways.
Meanwhile, according to experts, the Vietnamese cement industry has targeted the production of around 60 million tonnes of cement to placate a domestic demand of around 55 million tonnes, causing domestic companies to struggle in finding and expanding their markets, several having successfully found thresholds in Africa.
The Thang Long Cement Company has been one of the lucky ones.
In January this year, the company exported 25,000 tonnes of cement to Africa, its second export in May reaching 33,000 tonnes.
The Cam Pha Cement Company has also exported cement to Africa, starting off by exporting products to Mozambique two years ago. The company has since signed a contract to export around 40,000 tonnes of cement to Africa.
VietGAP chosen for Tra fish export certification
Vietnam’s General Directorate of Fisheries has decided to use VietGAP (Good Agricultural Practice) standards for certification of Tra fish for export, paving the way for exporters to later acquire certification from international agencies.
Representatives in the aquaculture industry also agreed with the decision. As the directorate provides free support and certification in line with VietGAP standards for local farmers, they can save more costs compared to GlobalGAP, ASC (Aquaculture Stewardship Council) for minimizing key environmental and social impacts, or SQF (Safe Quality Food) 1000.
Speaking at a seminar on Vietnam’s sustainable aquaculture certification systems in HCMC early this week, General Directorate of Fisheries vice head Pham Anh Tuan said consumers in different markets give priority to various certificates, such as GlobalGAP in Western Europe and the U.S. and ASC in Northern Europe. Meanwhile, consumers in Eastern Europe and Africa have no requirements for such certification.
The certificates are only concerned with the main issues of environment protection, food hygiene and safety, social responsibility and product origin. “The VietGAP certificate includes all of these issues and it will help exporters upgrade to other certificates easily,” Tuan said.
Nguyen Viet Thang, chairman of the Vietnam Fisheries Society, said all the standards of non-governmental organizations (NGOs) are actually based on clean aquaculture criteria of the Food and Agriculture Organization but NGOs attach importance to different criteria.
“Vietnamese Tra fish exporters having applied the VietGAP only have to improve environmental criteria to get an ASC certification. Therefore, certification fees will be lower,” Thang explained.
Nguyen Huu Dung, vice chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP), said Vietnam last year had around 6,000 hectares under Tra fish farming with total output of 1.35 million tons. The farming areas are mostly in Ben Tre, Tien Giang, Dong Thap and An Giang, which makes the VietGAP application simple.
The Ministry of Agriculture and Rural Development in 2006 issued a decision requiring at least 50% of seafood farming area in Vietnam meeting GAP or other international standards by 2010.
However, the nation has yet to apply VietGAP standards so far while local businesses are facing pressure of achieving international standards.
Italian machine producers sound out the market
A trade mission representing 11 Italian machinery manufacturers will showcase their products at the Vietnam Machine Tools and Automation Exhibition (MTA 2011) in HCMC on July 5-8 in a bid to explore business opportunities.
The companies provide machines and tools for mechanical and metallic engineering, Marco Saladini, director of the Italian Trade Commission in Vietnam, said at a news conference in HCMC on Wednesday.
Five of these Italian manufacturers have joined previous MTA expos, while two other companies had found partners in Vietnam.
Saladini said Italian machine tool exports to Vietnam last year decreased by 33% to 12 million euros from 18 million euros in 2009. The reduction was partly caused by financial issues and the tough competition in Vietnam, Saladini said.
However, Italian machine tools still maintained their stable market share in Vietnam at 4% in the 2005-2009 period.
Regarding investment, Saladini told the Daily that many companies producing parts and components are considering following Piaggio’s footsteps to enter Vietnam.
Currently, Italy has 39 investment projects in Vietnam with total pledged capital of more than US$187 million, according to the Ministry of Planning and Investment.
Gov’t passes changes to air pact with Australia
The Government has endorsed a revised air services pact with Australia, enabling airlines of the two countries to operate many more flights to and from Vietnam.
The document of approval was signed by Deputy Prime Minister Pham Gia Khiem earlier this month, less than six months after Australia and Vietnam struck a memorandum of understanding (MOU) for changes to the pact they inked in July 1995.
The key changes include 3,300 extra seats a week that airlines of Australia and Vietnam can provide between the two countries. The MOU details these airlines can perform 14 weekly flights, equivalent to some 4,200 seats to and from Australia’s main gateway destinations of Sydney, Melbourne, Brisbane and Perth, or an increase of around 1,200 seats.
Australian and Vietnamese carriers are allowed to serve seven weekly flights or about 2,100 seats to and from those destinations if the flights stop over at the non-gateway Australian airports of Adelaide, Darwin or Cairns. They can drop off and pick up passengers in Hong Kong as part of their services between Australia and Vietnam.
Jetstar Airways now uses the Airbus A320 aircraft for its four weekly flights between Darwin and HCMC on Mondays, Tuesdays, Thursdays and Saturdays. Earlier this month, Vietnam Airlines raised frequencies to Melbourne and Sydney cities to 14 flights a week, including two more on the Hanoi-HCMC-Melbourne and one more on the Hanoi-HCMC-Sydney routes.
Authorities of Australia and Vietnam began negotiations in 2010 before they finalized and signed the MOU early this year. The Ministry of Foreign Affairs has been told to inform Australia of the Vietnamese Government’s approval for changes to the aviation pact.
Inflation to turn single-digit in next year’s Q2: StanChart
Standard Chartered Bank said in a study on Asia’s economy issued on June 28 that Vietnam’s inflation would return to the single-digit territory in the second quarter next year.
The bank’s researchers said Vietnam’s month-on-month inflation hit 3.3% in April, the highest since May 2008, and this reflected a combination of the currency devaluation in February and power tariff increases in April.
“With global food and energy prices stabilizing, we believe the worst is over in terms of month-on-month inflation, but year-on-year inflation is likely to surge further in the months ahead due to the base effect. We expect headline year-on-year inflation to peak in August at around 23%,” said the report.
The country’s consumer price index (CPI) in June is expected to increase 1.09%, half of May’s CPI growth. By June, the CPI rises by 13.29% from late 2010 and 20.82% year-on-year, according to the report in the section titled “Vietnam: From Half-Empty to Half-Full.”
To curb high inflation, the central bank has raised its refinancing rate to 14% from 9% at the start of the year, and introduced other credit-tightening measures. The central bank has pledged to maintain tight monetary policy until price stability is restored.
Whether it raises the refinancing rate further will depend on the market reaction to upcoming inflation data and the need to protect the exchange rate, said the bank. “However, we do not expect interest rates to be reduced materially until inflation eases significantly.”
Regarding foreign exchange, the bank said the measures taken by the central bank had achieved early success as the forex market had stabilized.
Therefore, researchers at the bank said, “We recently pushed back our call for the next Vietnam dong devaluation to 2012 from the third quarter this year, reflecting our expectation that the Government will keep the current monetary stabilization measures in place through the second half.”
However, the bank raised concern on Vietnam’s balance of payments. The recent widening of the trade deficit to US$1.7 billion in May was caused by a surge in commodity imports. Given the experience of the exploding trade deficit in 2008, there are concerns that a further widening of the deficit could prompt renewed pressure to devalue the currency, said the report.
“We see a low probability of a repeat of 2008, but given Vietnam’s delicate balance of payments position, we are not ready to declare an all-clear on the Vietnam dong just yet.
“The authorities’ austerity measures so far have been appropriate and have helped to provide stability. However, we will be watchful of how this tightening is unwound in 2012 as inflation eases. We expect depreciation pressures to return in 2012.”
While many people are concerned that austerity measures to curb inflation would make the country’s economy slow down, the bank looks at the bright side of the measures.
“While monetary austerity measures may cool growth in the near term, low inflation and forex stability are critical to attracting foreign direct investment. As a result, short-term weakness in growth is probably a price worth paying.”
Binh Duong lists 32 firms in ‘green book’
Thirty-two enterprises in the southern province of Binh Duong were listed in a ‘green book’ on Wednesday for having performed well in regards to environmental protection in the production process.
Vo Thi Ngoc Hanh, vice director of the province’s Department of Natural Resources and Environment, told the Daily on Wednesday the ‘green book’ was aimed at encouraging enterprises to increase environmentally friendly activities and performance.
“This is the first time the province has announced a ‘green book’. We also expect to announce a book for excelling enterprises every year to encourage them to obey the environment protection law in the province,” she said.
Some enterprises were singled out for good environmental practices in the book such as Kirin Acecook Vietnam, Saigon Tan Tec Company Limited, Roussel Vietnam, and Procter & Gamble Vietnam.
Door to open to social housing policy
Under existing laws, social housing owners are illegible to sell and rent their houses. A violation was currently unveiled in Hanoi’s Ha Dong district associated with a social housing project for low-paid people.
Accordingly, owner Cao Thi Loan sold her apartment at the residential complex for low-income people which she just bought to buyer Nguyen Thi Thanh Tam to catch in profits of around VND500 million ($24,000). The case was later detected when the buyer repaired the flat.
Hanoi People’s Committee asked developer Vinaconex Xuan Mai Concrete and Construction Joint Stock Company to join efforts with the police and construction bodies to scrutinise the case and take back the flat.
The city’s agencies, however, could not cancel the house purchase contract in light of existing regulations though in the above-said case the violation was apparent. Accordingly, Decree 71/2010/ND-CP dated June 23, 2010 detailing and guiding the implementation of the Housing Law only regulates contract suspension and does not mention contract cancellation.
Besides, Circular 36/2009/TT-BXD dated November 16, 2009 guiding sale, lease and management of low-paid housing and the leasing and purchase contract models enclosed to the circular did not contain any articles about contract cancellations.
After the government made public a series of policies on social housing, former deputy minister of Natural Resources and Environment Dang Hung Vo warned of the negative phenomena which may arise associated with state-subsided low-paid housing projects.
Under current regulations, buyers of social housing projects are labourers from assorted economic sectors satisfying set requirements and actually need accommodations. The ‘sellers’ are construction firm managers and local construction department executives.
To address negative phenomena relevant to social housing projects, Vo suggested increasing transparency in appraising buyer records, enhancing sellers’ accountability and allowing the community to involve in the appraisal process.
Reality shows that around two years after the government launched social housing development programmes, over 520 such projects were reportedly registered. However, just over 10 per cent of these projects got off the ground, according to Ministry of Construction’s Department of Housing and Property Market Management head Nguyen Manh Ha despite the fact that developers of housing projects benefit from many incentives such as land rent exemption for social housing areas and corporate income tax exemption in four years since they generate taxable incomes.
HDBank cuts deal with Licogi, Sovico Holdings
HCMC Housing Development Bank, or HDBank, on Tuesday signed an agreement with Infrastructure Development and Construction Corp. (Licogi) and Sovico Holdings for cooperation in various areas.
Under the deal, HDBank and Licogi will become strategic partners, and the bank will give preferential credits and banking services to the latter. The two sides will also establish certain joint investment projects.
HDBank will give preferential loans to Licogi and its subsidiaries, and create convenience for Licogi’s partners and staff to use services of the bank at reasonable fees.
Meanwhile, according to the tripartite agreement, Licogi will be a strategic partner of Sovico Holdings to jointly invest in or develop projects of mutual interest. Sovico Holdings will create convenience for HDBank and Licogi to participate in projects invested by Sovico.
Used cars hit with higher taxes
Prime Minister Nguyen Tan Dung on Wednesday approved the issue of a new import tax rate for used passenger cars with fewer than 15 seats.
As of August 15, passenger cars of less than 10 seats, with less than 1.0 litre cylindrical capacity, will be levied a fixed tax of US$3,500 while those with cylindrical capacities ranging from 1.0 to 1.5 litres, will be subject to a fixed tax of $8,000.
The 10-15 seat passenger cars with cylindrical capacities of 2.0 litres or less will be subject to a fixed tax of $9,500. A car with a cylindrical capacity of between 2.0 litres to 3.0 litres will be subject to a fixed tax of $13,000 while a car with a cylindrical capacity larger than 3.0 litres, will be levied at $17,000.
The Prime Minister has allowed the Ministry of Finance to increase or reduce the number of imported vehicles within a 20 per cent range and within World Trade Organisation regulations.
Both 6-9 seat sedan and multi-purpose vehicles are forecast to be heavily affected by new fixed tax rates, which are likely to raise domestic prices, especially those of luxury vehicles.
The PM has additionally permitted the Ministry of Finance to keep a tight grip on car imports with the aim of curbing trade fraud, the number of cars on the road and import values.
The new decision 36/2011/QD-TTG will replace existing regulations based on the promulgation of fixed taxes on used cars enacted in March 28, 2006.
Retailers, officials debate causes of high inflation
Inflation in June reached its lowest monthly rate of increase since the beginning of the year, easing some of the financial burden on households struggling with rapidly rising prices for food and other necessities. Many families are still wondering what caused prices to skyrocket in recent months.
A number of economic experts have pointed the finger at the nation's cumbersome product distribution systems.
Nguyen Loc An, deputy head of the Domestic Market Policy Department under the Ministry of Industry and Trade, agreed that Viet Nam's distribution systems were still weak, with many middlemen that added to costs and made it difficult to control the price and quality of products.
The head of the Price Management Department under the Ministry of Finance, Nguyen Tien Thoa, also insisted that intermediary wholesalers had directly caused the high inflation in recent months.
Before reaching the retail market, a product went through five or six intermediary agents, each of which added to the ultimate price, Thoa said.
Viet Nam Steel Association Chairman Nguyen Tien Nghi refused, however, to blame wholesalers for recent high inflation.
"That's unreasonable," said Nghi. "Ten years ago, that may have been right, but it isn't now. No one has evidence to prove that."
Nghi blamed rising prices on rising fuel and transportation costs and soaring prices of raw materials, which were frequently based on global prices.
Foreign exchange rates were also having an enormous impact on domestic prices, he added, with the Viet Nam dong being devalued against the dollar multiple times last year and early this year.
Vu Thi Hau, deputy director of the Nhat Nam Co which operates the Fivimart supermarket chain, supported this view.
"Many of the products in our supermarkets, such as home appliances, are directly affected by the US dollar exchange rate because they are imported," Hau said.
Explaining why the price of food continued to see steep increases in June, Hau pointed again to raw material shortages.
"For instance, there is a pork shortage, so the price has gone up. Diseases and natural disasters have also pushed up the price of food."
Pointing also to rapidly rising energy costs, Hau strongly disagreed that distributors were responsible for price increases.
Ministry of Industry and Trade senior expert Pham Tat Thang also said distribution systems were not the main reason for inflation. Prices were rising worldwide, and Viet Nam could not escape this influence, Thang said.
Prices would not be able to remain at the same level when all the costs of bringing goods to market, from wages to property rentals to transportation, were all soaring to new highs, he said.
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