Restructuring of State-run firms faces challenges
 
Restructuring of a number of State-owned enterprises has been delayed due to problems of redundant workers, collecting past-due debts and writing down losses, said deputy head of the Government Office and vice chairman of the Steering Committee on Business Renovation and Development, Pham Viet Muon.

Muon told a meeting held here Wednesday by the Government Office and the World Bank that the process of equitising State-owned enterprises (SOEs) has slowed in the past five years.

He said the Government has requested economic groups to submit restructuring plans by March of this year which would be focused on key lines business and plan for divestment from non-core business fields such as banking, real estate development, insurance and securities before 2015. Equitisation of companies was expected to be completed before 2020.

Once operations were totally focused on key lines of business, with improved corporate governance, equitisation plans can be carried out more smoothly, Muon said.

By 2015, the country is expected to have only 692 SOEs that remain wholly State-owned, mostly key economic groups, corporations and major companies involved in fields dominated by State investment. By 2020, this figure is targeted to be reduced to 100.

The listing of equitised companies on the stock market would also help companies become more transparent, improve corporate governance and reduce their dependence on bank loans or State budget financing, Muon said.

Transparency was also a key element in the process of restructuring SOEs, he said.

Viet Nam Posts and Telecommunications Group (VNPT) deputy director Phan Hoang Duc said restructuring should be based on the needs of each business field and each enterprise. The equitisation process also needed to follow specific guidelines for each type of business, with special attention given to workers.

VNPT expected to submit its restructuring plan to the Government during the first quarter of this year, Duc said.

Nguyen Trong Dung, director of Government Office's enterprise renewal department, said that, after 10 years of equitisation, the number of SOEs had been reduced from 5,655 to 1,309.

According to a report released by the World Bank, State-owned enterprises (SOEs) account for only one per cent of the total number of domestic businesses but they hold about 39 per cent of total invested State capital, 45 per cent of total fixed assets and 27 per cent of total outstanding bank loans.

This allocation of resources was not commensurate with their efficiency of operation, causing them to give a lower return on capital than other sectors.

Many SOEs have made the transition to a competitive environment, however, with State-owned garment makers seeing stronger imports and telecoms posting high profits despite tough market competition.

HCMC CPI rise 1.32% in Feb, 12-year 2nd lowest

Ho Chi Minh City’s consumer price index (CPI) this month rose 1.32 percent, the second lowest increase in the last 12 years after that in February, 2009.

The groups of goods with high demand for the Tet (Lunar New Year) holiday, including food and catering services, beverages and tobacco, housing, fuel and construction materials, saw the strongest rise of over 1 percent each.

Among them, food and catering services posted the strongest rise.

The increase in electricity price costs in December 2011 and cooking gas prices recently have directly contributed directly to the rise of fuel groups and related groups of commodities.

However, the price increases of some groups of essential goods for Tet slowed down due to falling demand.

The purchasing power of the city in February reduced declined since the demand had surged in the pre-Tet period, said HCMC Statistics Office.

Specifically, total retail sales this month is are estimated at VND40.7 trillion ($1.95 billion), down 6.3 percent over the previous month, the month of the Tet.

However, this is the 4th consecutive month the CPI in the southern economic hub continued its upward trend.

Hanoi Statistical Office has also announced the CPI rise of 1.45 percent in February.

Major factors causing this increase included the group housing, electricity, water, fuel and building materials. This group CPI increased 2.79 percent compared with January.

The next group includes food and food services (up 2.32 percent), and catering services (up 1.81 percent).

Vietnam's consumer price index (CPI) in February 2012 has earlier forecasted had been forecast to accelerate by 1.5 percent over the previous month based on Leontief-ARIMA models, according to online newspaper NDHMoney.

The forecast said the main reason affecting Vietnam's February CPI rise is the supply- demand relationship. Production is stagnated stagnant, while consumption demand has increased to the highest level in of the year.

The statistics from the General Statistical Office of Vietnam indicated that the industrial production index for January 2012 dropped by 12.9 percent over the previous month, a year-on-year decrease of 2.4 percent.

Meanwhile, the total retail sales of commodities and services for 2011, excluding the price-rise factor in the Tet months, climbed 4 percent over the preceding year.

Prices of food and catering services are reckoned thought to be mainly primarily responsible for the CPI upsurge, of which those of foodstuffs have seen the highest increase due to soaring prices of beef, pork, seafood, poultry and several vegetables which were largely consumed during the Tet.

Also, prices of wine, beer, confectionery, fashion products and toys are on the rise.

In addition, the electricity price increase was allowed in 2011 rather than March 2012.

Its impacts on CPI now come as this product can be used first and paid for later. Also, the steep rise in the global price of cooking gas price has remarkably hit the domestic price remarkably.

ACB, Eximbank raise gold depositing rate 0.5%

Two leading commercial banks, Asia Commercial Joint Stock Bank (ACB) and Vietnam Export-Import Bank (Eximbank), have raised the gold depositing rate by 0.5 percent to 3 percent per year.

This is the first revision of the depositing rate for the precious metal after the most recent adjustment last November.

Accordingly, ACB has raised the rate for gold certificates of the “ACB Golden Day” program from 2.5 percent applied on November 16, 2011 to 3 percent.

For short-term, 1-, 2-, and 3-month, gold certificates, the rates have also surged 0.9 of a percentage point from 1.45-1.55 percent to 2.35-2.45 percent.

The rates for longer terms, 6, 9 and 11 months, remain unchanged at 1.5-1.6 percent.
For Eximbank customers who deposit at least 10 taels of gold (1 tael = 37.5 grams) into the bank will enjoy the annual depositing rate of 3 percent.

The highest depositing rate for gold, 3.5 percent is now offered by the newly merged Saigon Commercial Joint Stock Bank for all the terms.

Vietnam gold prices rose by VND50,000 to VND44.8 million a tael on Tuesday morning.

Saigon Jewelry Co (SJC), Vietnam’s biggest gold trader, quoted at VND44.6 million a tael for bid and VND44.8 million a tael for ask, respectively.

Rong Thang Long gold, a product of the Hanoi-based Bao Tin Minh Chau Co, was trading at VND44.69 million a tael and VND44.79 million a tael for bid and ask, respectively.

In New York trade, spot gold surged $10.2 per ounce against last week to $1,734 an ounce.

Vietnam's central bank continued to keep the dollar midpoint rate at VND20,828 on Tuesday.

It has remained unchanged since December 26, 2011, being the longest stability period since early 2011.

Some commercial banks raised dollar prices today, ranging from VND20,790-20,810 for bid and VND20,850-21,036 for ask, respectively.

HSBC: Vietnamese currency more stable in 2012

Vietnamese currency will be relatively more stable in 2012, the Hongkong and Shanghai Banking Corporation (HSBC) said in its report on the 2012 outlook on Vietnam’s economy, which was announced Monday.

The bank said that Vietnam ’s 2011 growth rate, although impressive at 5.9 percent, stood at a post-2000 low (excluding 2009 financial crisis related growth of 5.3 percent).

While this partly reflected a weakening global environment, domestic conditions were just as much to blame. Inflation was high, rising 18.6 percent year-on-year in 2011. Rising prices and measures to curb them took their toll on the economy, both in the short and long term.

However, macro-economic conditions have stabilised since the turbulent days of early 2011. Inflation decreased to 17.3 percent year-on-year in January, and HSBC expects it to hit single digits by the end of 2012.

Even the dong (VND) has stabilised and a one-off devaluation is no longer priced in. This is thanks to efforts by the State Bank of Vietnam (SBV) to gradually weaken the VND and dampen demand for imports. More encouragingly, after much talk, banking reforms are materialising: three banks merged recently and more are expected to follow suit in 2012.

In contrast to 2011, which began with a sharp weakening of the currency, high inflation, and several tightening measures, HSBC believes 2012 will be relatively stable. Several factors should contribute to this trend: slower inflation, better management of macro-economic policy by the Governor of the SBV, and improved trade and fiscal positions.

The trade deficit is expected to stabilise at US$10 billion  in 2012 (versus $9.8 billionin 2011) and the consolidated Government balance is expected to decelerate to 3.8 percent in 2012 from 3.9 percent in 2011.

The dong has stabilised in recent months. Historically, the VND had come under a lot of pressure during the Lunar New Year due to stronger demand for USD. This reflected a rush towards the end of the year to pay for dollar-denominated loans, with higher demand for imports during Tet. For several reasons, this did not happen in 2011.

Japan fund ups stake in medical instrument maker

Japan-Viet Nam Medical Instrument Co (JVC) has sold 8 million shares to DI Asian Industrial Fund. Added to 2 million shares acquired from JVC President Le Van Huong, the fund currently holds 10 million shares, or a 31-per-cent stake, in the company.

The selling price was not revealed, but JVC shares yesterday closed up 1.7 per cent to VND18,300 per share.

Following the present acquisition, the company will increase its charter capital from VND242 billion (US$11.5 million) to VND322 billion ($15.3 million).-

Bottler Tribeco's board member buys up shares

Struggling beverage bottler Tribeco (TRI) has revealed that a member of its management board, Nguyen Xuan Luan, had registered to buy 6.8 million shares at VND2,300 per share, accounting for 25 per cent of the total shares currently outstanding.

TRI concluded yesterday's session unchanged at only VND1,700 per share. Tribeco may be forced to delist as its equity last year fell to a negative level.

Tribeco has a charter capital of VND275 billion (US$13.1 million). The company's three leading shareholders are animal feed company Uni President, Kinh Do Investment Co Ltd, and Tribeco Binh Duong.

Thai Hoa Group sells stake to pay debts

The Thai Hoa Viet Nam Group (THV) said it will sell an 86.53 per cent stake of Thai Hoa Muong Ang Coffee Co to Maritime Commerce and Sea Transport Co, reducing its equity at the coffee company to 1 per cent.

The group's chairman Nguyen Van An said the transaction would net the company about VND46 billion (US$2.2 million) and it would use the amount to settle debts with the Viet Nam Maritime Bank and invest in a 6,000ha agricultural project in the northern province of Dien Bien.

The maritime company is based in the northern province of Thai Binh.

Shares up as inflation subsides

Shares soared on both of the nation's stock exchanges yesterday on renewed investor hopes that the country might be seeing a subsidence of inflationary pressures and a concomitant easing in interest rates.

High interest rates and tight credit have been seen as crippling the stock market and cramping business growth for the past two years.

But the market could increase strongly in the second and third quarters as single-digit inflation may help the central bank reduce interest rates, said Dominic Scriven, chief executive officer of Dragon Capital, which has just issued an assessment of the Vietnamese stock market.

On the HCM City Stock Exchange yesterday, the VN-Index leaped in value by 2.65 per cent to close at 413.98 points. Advancers outnumbered decliners by a whopping 212-35 with more than 100 stocks hitting their ceiling prices. The value of trades also jumped by over 25 per cent over last Friday to VND684.9 billion (US$3.6 million), as trading volume reached nearly 49 million shares.

The VN-30 also leaped by 3.15 per cent to 465.44 points, with trades in shares tracked by the index accounting for over half of the day's market value. Insurer Bao Viet Holdings (BVH), Vietinbank (CTG), real estate developer Hoang Anh Gia Lai (HAG), steelmaker Hoa Phat (HPG), Sacombank (STB) and Vietcombank (VCB) all hit their ceiling prices. However, Ha Noi-based real estate developer Vincom (VIC) was among the 35 codes to fall.

On the Ha Noi Stock Exchange, the HNX-Index skyrocketed by 4 per cent, closing at 64.27 points. Gainers overwhelmed losers by a margin of 273-30, while the volume of trades surged 43.8 per cent over the previous session to 53.2 million shares. Value soared by 45 per cent to a total of VND439.6 billion ($20.9 million).

With over 13 million shares exchanged, Habubank (HBB) was the most-active share nationwide, closing up by 7 per cent.

The State Securities Commission would introduce extended trading hours on both the Ha Noi and HCM City exchanges beginning March 5, the Sai Gon Economic Times reported yesterday.

Experts discuss solutions to avoid unsynchronized investments

Some experts talk about a possible solution for the problem of haphazard and unsynchronized infrastructure investment in the country.

Doctor Le Dang Doanh, former head of the Central Institute for Economic Management, said the haphazard and unsynchronized infrastructure investment observed countrywide proves that many projects have been approved without adequate consideration for their effectiveness.

In some cases, neither the effectiveness of the projects, nor whether or not investment was actually necessary has been considered, said Doanh.

“As a result, all projects have been considered necessary, while the financial state does not permit investments in every project. In the end, we cannot achieve high economic effectiveness.”

Meanwhile, Doctor Khuat Viet Hung, head of the planning and traffic management department of the University of Transport, said many investment plans in Vietnam are two to three times larger than is feasible for their implementation. “Thus, the plans all sound good, but will never reach completion,” he said.

In other countries, plans are developed based on financial ability, while in Vietnam everything is on the opposite side.

“For instance, we plan to build 10 airports while we only have enough capital for one,” he elaborated.

“Understandably, we will not be able to develop the other infrastructure needed to serve the airports, such as roads to connect the airport with the traffic system.”

It is hard for Vietnam to have synchronized infrastructure development, since different people in different terms approve the plans. Hung called for establishing a planning law, which would stipulate the policies needed to sanction the individuals who approve the plans, in case the plans cannot be implemented.

For his part, Doctor Nguyen Quang Thai, deputy chairman of the Vietnam Science and Economics Association, said the government should select the investment projects that need to be prioritized to receive funding, in order to completely finish the construction and achieve full effectiveness of the projects.

He added that the funding allotment for the investment projects should also be calculated for a three-year term, rather than just one year.

“We also have to develop policies to attract capital from sources other than the state budget.”

Macroeconomic stability to be the key for growth: expert

The world economic picture will continue to be a state of turbulence with hidden dangers in 2012, said renowned economist Le Dang Doanh at a recent conference.

“Robert B. Zoellick, the 11th president of the World Bank Group (WB), said the global economy has fallen into dangerous times,” at the Super Investor Day 2012.

“In addition, Bert Hofman, WB Chief Economist for the East Asia-Pacific region, could not give me the answer to how dangerous the situation really was when I asked him last Tuesday.”

“In my opinion, the biggest issue is how the eurozone crisis could be tackled in an orderly way,” he said.

“Among the three leading economies, US, Japan and China, the coming presidential election will limit the policy maneuverability of President Barack Obama.”

“While the high public debt of Japan will put real pressure on its economic performance, both Japan and China have suffered from the downside of falling world aggregate demand with slower growth and exports.”

“Given this global situation, domestic firms, as many have suggested earlier, should brace for tough times ahead.”

“Locally, I think macroeconomic stability should be considered the key, offering businesses a firm stance in 2012.”

“As the government is expected to cut more spending and investment this year, raising productivity is the key to maintain projected gross domestic product (GDP) growth of 6-6.5 percent.”

“We have some certain advantages as many Indian, Korean, and Japanese enterprises have showed their interest in buying stakes in Vietnamese firms.”

But, as many import products from Asian countries, including some 800 import items from China, will enjoy tax cuts, domestic products will face fiercer competition this year.

Given all solutions proposed and carried out by the government, in my opinion, 12-percent inflation is more possible than the 9-percent targeted by the government.

“The exchange rate between the US dollar and the Vietnamese dong is also a factor to be paid attention to.”

“As the latter devalued by 18.58 percent in 2011, the dong, in fact, appreciated 9 percent against the greenback given the forex rate adjusted only 10.2 percent during the same time.”

“It will be a burden for local exporters this year, especially when the central bank said the forex raise will be adjusted at the most by 3 percent this year,” he said.

With a projected credit growth of 15-17 percent in 2012, compared to 12 percent in 2011, credit constraints for manufacturing sectors will persist.

Recent trade surplus reported in January is, consequently, caused by about 50,000 dissolved firms who had stopped importing raw or semi-processed materials to make export goods.

“Power companies have also reported falling demand in January.”

“So, I think there are around 200,000-300,000 laborers having been laid off due to the mass bankruptcy.”

“As a result, the restructuring of the local economy must be quickened.”

The restructuring of the local economy this year will have its upsides, as consulting and software firms will have more opportunities to join the game.

The relaxing of credit for some segments of the real estate market can help ease the liquidity constraints for both buyers and sellers , and bankers as well.

“Macroeconomic restructuring must be coordinated, mostly important in the level of policymaking and government structure,” Doanh said.

“As the Prime Minister has pledged there would be no bank dissolution this year, and asked all state-owned economic groups to withdraw VND20 trillion from the non-core sector between now and 2015, there will be more room for the private sector to grow.”

“All state-owned enterprises (SOEs) have all been asked to cut operational costs by 5 percent this year, which can also be considered a timely move of the government to tackle their chronic financial discipline problems.”

Super Investors Day 2012, a gathering of 20 speakers - mostly entrepreneurs and economists, is organized in Ho Chi Minh City's Nguyen Du Gym in District 1 on Thursday.

The 12-hour event, hosted by Doanh Nhan magazine, Le Bros Co, Vinabull fund and InfoTV channel, will offer the audience updated information on the international and local macro-economic picture, a general forecast for the economic situation in 2012.

It is a chance for a variety of businesspeople and experts in many fields to share their expertise and experiences so that the audience can pick the topic of their choice to clear or create their own path for doing business this year.
 
Japanese experts call for better project control

Vietnam has not properly controlled the quality of construction projects, said the Japan International Cooperation Agency (JICA) in a meeting recently with the Ministry of Construction.

Speaking at the meeting, Deputy Minister Nguyen Thanh Nghi said construction activities in Vietnam had increased strongly in number, scale and complexity.

There were nearly 50,000 construction works nationwide, with civil projects accounting for 51 percent, while traffic made up 19 percent, industrial 11 percent, irrigation-hydropower 9 percent, and infrastructure projects 10 percent.

With such a high number, Vietnam has now been unable to control the quality of construction works tightly, especially ones in the private sector as the supervision of construction does not work efficiently, said Kato Tsuneo, head of JICA’s consulting team.

He said that the roles between project investors and management units should be separated clearly so that the monitoring of projects could be more efficient.

Tran Chung, a cooperation expert, said Vietnam should pay more attention to the consulting and supervising teams as they directly involve in the supervision of project quality. Currently, the wage for such teams in Vietnam is much lower considering their responsibilities, he said.

To improve the supervision, Nakasuka Satoshi from JICA said Vietnam should improve the testing system for supervising engineers as they needed to be trained well and undergo many national-level qualification tests.
 
Vietnam-India two-way trade increases rapidly

Two-way trade between Vietnam and India has increased almost 20-fold during the past decade, the Indian Consul General has said.

Indian Consul General in Ho Chi Minh City, Abhay Thakur reported this news at a get-together to celebrate the 62nd anniversary of the Republic of India, in Ho Chi Minh City on Feb. 16.

Bilateral trade rose from US$200 million in 2000 to over $1.2 billion in 2006, $2.7 billion in 2010 and $3.9 billion in 2011.

Abhay Thakur affirmed that Vietnam has always been a special and sincere friend of India, in both bilateral ties and at regional forums, adding that Vietnam remains in a strategic position in the foreign priorities under the “Look East” policy of India.

He said India is willing to further strengthen cooperative contents with Vietnam based on the spirit of the “Vietnam-India Strategic Cooperation” that was signed by the two countries in 2007, especially in the fields of business, science and technology and culture.

The total investment of Indian enterprises in Vietnam has now reached more than $771 million and two-way trade between the two countries is expected to hit $7 billion by 2015.

Capital shortage cripples tra fish farming

Many tra fish farmers who have to borrow from banks are facing capital shortage because of steep lending rates, has said the industry association.

Each tra fish farming hectare with total output of 300 tons a year requires about VND6 billion (US$288,184) of investment for every crop, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

As lending rates offered by local banks remain high, businesses have failed to access loans for farming or feed manufacturing projects worth hundreds of billions of Vietnam dong each.

According to the 2012 plan of the Ministry of Agriculture and Rural Development, the Mekong Delta region alone needs some 2.6 billion tra breeder fish for farming in 5,500-6,000 hectares.

Despite difficulties in local and global markets, the agriculture ministry expects tra fish exports to reach US$2 billion this year, or $200 million higher than 2011.

VASEP’s vice chairman Duong Ngoc Minh predicted the seafood industry would thus need around VND26 trillion to achieve the above target.

He warned farmers would suffer a severe lack of long investment funds as banks can only lend them a limited sum.

Despite this gloomy prospect, the tra fish sector has been showing positive signs.

Nguyen Huu Dung, also VASEP’s vice chairman, said last year the industry recorded impressive achievements: improvement on breeding, feed and processing, with over 70 percent of the current tra fish output produced by firms or under cooperation between them and farmers.

Closed production helps firms to be more active in ensuring the quality of input material supply, controlling antibiotic usage and hygiene conditions in farming as well as saving related costs.

Hung Ca Ltd Co. in Thanh Binh District in the Mekong Delta province of Dong Thap where tra fish processors concentrate is an example.

This company last week started constructing two aquaculture feed mills with a total annual output of 400,000 tons that will be commissioned late this year.

Unlike other processors which have to depend on suppliers for input materials, Hung Ca produces its own raw tra fish in a farm of over 400 hectares and plans to increase the area to 412 hectares this year besides launching two new tra fish processing and exporting plants.

The company’s managing director Tran Van Hau thanks to these new processing plants, his company wouldn’t be so much affected by aquaculture feed price volatility as before.

Apart from Hung Ca, several companies, including Vinh Hoan and Hung Vuong, have enough conditions to carry out such a closed production process.

Ninety six businesses receive National Quality Award 2011

The National Quality Award 2011 has been presented to 96 outstanding businesses from 44 cities and provinces throughout the country and two other businesses have been honoured with the Global Performance Excellence Award (GPEA) 2011.

On February 16, the General Department of Standards, Measurements and Quality under the Ministry of Science and Technology, in coordination with the National Quality Award Council, held a press briefing announcing the winners of the two awards.

Out of 96 awarded businesses, 11 received National Quality gold prizes and 85, silver prizes.

At the press briefing, Dr Vu Van Dien, Deputy Head of the General Department of Standards, Measurements and Quality, said that the National Quality Award aims to honour businesses for excellent performance in improving the quality of products and services, and their competitive capacity in the country’s international integration and socio-economic development.

From 1996-2011, nearly 1,400 businesses were presented with the National Quality Award, of which 73 received Certificates of Merit from the Prime Minister and 26 received the GPEA.

Competing for the National Quality Prize helps businesses improve their management activities and product quality. In addition, the prize offers opportunities for the winners to promote their trademark and contributes to improving their competitive capacity in the international economic integration of Vietnam.

The awards ceremony is due to take place in Hanoi on February 26 and will be broadcast live on VTV1 channel.

Investor Day creates opportunities for businesses

Twenty leading economists and entrepreneurs gathered for Investor Day 2012 in HCM City on February 16 to discuss opportunities and prospects for investment in Vietnam.

The event was co-organized by Entrepreneur Magazine, Vinabull Company, Le Bros Company, and Info TV Channel.  

At the event, speakers provided a macroeconomic overview and shared their successful experiences to foster innovations for their business operations.

Economic expert Le Dang Doanh analysed Vietnam’s challenges and opportunities in 2012, saying inflation and bank interest rates will go down and economic restructuring, mostly targeting public investment, banks and State-owned enterprises (SOEs) will be enhanced, - a move that encourages the private sector to invest in infrastructure development projects.

Doanh said the restructuring process will create opportunities for the stock market to rebound, and the economy to attract more investment through merger and acquisition (M & A) deals.

According to the senior expert, economic groups’ divestment from their non-core businesses and the equitisation of SOEs will be boosted to shore up the financial market.

Alan Phan, President and CEO of Viasa Fund, also introduced to participants attractive business and investment channels for 2012. Le Thanh An, the US Consul General in HCM City, delivered a speech on business opportunities with American businesses, while the Chief Representative of Aureos Capital Vietnam presented the current challenges and opportunities in M & As.

Other scholars such as Le Quoc Vinh, President and CEO of the Le Group; Dang Le Nguyen Vu, President and CEO of Trung Nguyen Coffee; and Chu Tien Dung, President of Quang Trung Software Park, also delivered reports on barriers and strategies to overcome difficulties in communications and entertainment, investment opportunities in the information technology industry, and forecasts of the real estate market in 2012, as well as opportunities to make money in the banking and securities sectors.

Vietnam-Angola Business Forum opens

Vietnam will do its utmost to further promote political and economic relations with Angola and create the best conditions for businesses from the two countries to cooperate with each other.

Vice State President Nguyen Thi Doan made the commitment at the Vietnam-Angola Business Forum held in Hanoi on February 16, with the aim of further fostering trade and investment cooperation between the two countries.

Ms Doan emphasized that both Vietnam and Angola are open markets with great potential, providing good opportunities for businesses from both countries to develop their markets in the coming years.

Angolan Vice President Fernando Dias dos Santos said his country considers agriculture a key sector, producing cereals and livestock for the processing industry. Its economy is gradually rebounding, so the country is creating an attractive environment for public and private investments, as well as devising measures and legal tools for strong economic growth.

Mr dos Santos expressed his hope that Angolan businesses will build a strong foundation for national economic development, and that bilateral economic cooperation will progress in the near future.

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, said economic, trade and investment cooperation between Vietnam and Angola has seen significant progress, with 2011 two-way trade turnover reaching around US$100 million. Most of the figure came from Vietnam’s exports, including rice, garments, footwear, machinery equipment and seafood.

The forum witnessed an agreement signed between the Vietnam Construction and Industry Equipment Joint Stock Company and Angola Tamar LDA Corporation to build houses for staff of the Angolan Ministry of Defence worth US$3 billion over five years.

VietShip 2012 to be held in Hanoi late February

Nearly 200 domestic and foreign shipbuilders and maritime groups will take part in an international exhibition in Hanoi from February 28 to March 1.

Two thirds of the participants come from Japan, the Republic of Korea, China, Finland, Poland, the Netherlands, Switzerland, Norway, Singapore, Russia and Spain.

The information was revealed by Nguyen Quoc Anh, deputy director of the Vietnam Shipbuilding Industry Group (Vinashin) at a press conference in Hanoi on February 16, announcing the sixth international exhibition on shipbuilding, marine technology, and transportation (VietShip 2012).

Anh said the exhibition takes place at a time when the global financial slowdown has seriously affected economies, as well as the shipbuilding and maritime transport industries.

He added that several contracts worth a total of around US$100 million will be signed during the event.

Textile firms worried over environment tax

Local textile firms are fretting over the environment taxes levied on plastic bags used as packaging for their export products as the taxes bring them more difficulties while cutting product prices and enhancing competitiveness are being prioritized.

There is currently no clear regulation on tax refund for imported plastic bags used for export again, while locally produced bags are not tax-exempt, said Dang Thi Phuong Dung, general secretary of Vietnam Textile and Apparel Association (Vitas) to the Daily on Wednesday.

Local bag producers are pricing up their products from VND40,000 to VND80,000 or even VND100,000 per kilo, as the absolute tax sum on plastic bags ranges between VND30,000 and VND40,000 a kilo.

While the Government has policies to promote the use of domestic materials, the recently effective Environment Tax Law has accidentally pushed up production costs of textile firms since they have to use plastic bags to serve export.

“The association has received many complaints from the textile companies. Previously, materials used for export products, if levied with import taxes, will be refunded within nine months, while materials for processed products are tax-exempt. But environment taxes must be paid right at the time of import, making it difficult to focus on reducing product prices and boosting competitiveness,” Dung stressed.

She cited a petition from Hung Yen Garment Joint Stock Co. sent to relevant agencies seeking delay and refund of environment taxes for PE bags used for export.

Nguyen Xuan Duong, general director of Hung Yen Co., said that the company used PE plastic bags made from LDPE and LLDPE supplied by local producers or imported to pack their export products.

He estimated Hung Yen Co. alone consumed some six million plastic bags originated in Vietnam for packaging worth US$400,000 last year. The figure is US$600 million as for the whole industry.

As the tax levied on plastic bags almost matches the value of such products, the total tax sum that the garment industry shoulders this year may amount to hundreds of millions of US dollars.

Under Circular 152/2011/TT-BTC effective since early this year, PE plastic bags are imposed environment taxes.

“Such expenses have pushed up the processing costs, and dampening business competitiveness. Meanwhile, to reduce product prices, customers will choose imported goods to replace locally produced PE bags. This will increase trade deficit, impact the trade balance and push local PE bag producers to the verge of bankruptcy, adversely affecting the support policy for domestic material supply,” said Duong in the petition.

Therefore, he proposed the Prime Minister, the Ministry of Finance and the Ministry of Industry and Trade reconsider the environment taxes applied to local PE plastic bags used for packing export apparel products. Specifically, he recommended tax refund or exemption for domestically produced PE bags.
 
HCM City weighs buying unsold apartments for resettlement

The HCMC government is considering buying the unsold apartments of the city-based commercial projects to supplement the municipal resentment housing fund, said the HCMC Real Estate Association (HoREA).

Vice Chairman Nguyen Huu Tin of HCMC had discussed such a policy with the association, said HoREA Chairman Le Hoang Chau at the meeting with the association’s members on Wednesday at the Windsor Plaza Hotel in HCMC. HoREA has also been informed by the city’s construction department of the plan to purchase mid-sized apartments from 40 to 70 square meters each.

HCMC is now in need of building resettlement houses for relocated households to serve the site clearance of the key projects such as Thu Thiem New Urban Area, East-West Highway and Northwest Cu Chi Urban Area. Still, a resettlement housing project will take a couple of years for completion, from site clearance to infrastructure construction.

Meanwhile, property companies have their housing products available but unsold yet. Therefore, the policy, if carried out, will add more units to the city’s resettlement housing fund with much time saved, while property firms are able to sell their products.

Le Chi Hieu, chairman of Thu Duc Housing Development Corporation (Thuduc House), commented this policy would bring good news to the market, as it would help solve the redundancy on the property market.

He said the Government is also an investor in the economy.

The current problem on the market is that the huge demand for housing and the available supply have yet to meet each other.

Chairman Chau of HoREA added the city’s government would ensure profits for project owners, and there is a high possibly that this policy would be deployed. However, it is unknown how many apartments will be bought on this occasion.

Together with the positive reactions, several enterprises were concerned how the municipal authority would pay for apartment purchase as the issues involving the city’s budget are usually associated with cumbersome procedures.

The central management agencies have yet to publicize any official statistics on the unsold apartments on the market yet. Nevertheless, a research of CB Richard Ellis Vietnam (CBRE) show there are over 18,000 unsold units in the so-called mid-end apartment segment alone as of last year’s end.
 
Major transport projects to receive tough scrutiny

At least 15 major transport projects will be carefully audited for the quality of their management and construction.

On February 15, Nguyen Xuan Hao, Chief Inspector of the Ministry of Transport said that the ministry would intensify its inspections of over 15 major construction projects, especially those projects nearing completion.

Major projects which are coming under scrutiny include phase two of the Hanoi Ring Road No.3, the Hanoi-Thai Nguyen Highway and the Noi Bai-Lao Cai Highway.

The construction of the new Noi Bai International Airport Air Traffic Control Tower; the National Highway 32C Viet Tri City bypass and National Highway 32A will also be inspected.

Some other projects set for auditing are Highway 3B (between Xuat Hoa and Po Ma), Highway 37 connecting Tuyen Quang and Deo Khe; the Ho Chi Minh National Highway between Cao Bang and Pac Bo, National Highway 1A between Doc Xay and Thanh Hoa and the Ben Thuy II Bridge in Nghe An.

Towards the end of 2011, Minister of Transport Dinh La Thang also inspected five crucial projects which raised public concern over their poor quality of construction. The projects included the Thang Long Avenue; Cau Gie-Ninh Binh Highway; Thanh Tri Bridge in Hanoi; the south section of Ring Road No.3 in Hanoi and the Ho Chi Minh City-Trung Luong Highway.

Thang condemned several head managers and replaced the contractors to speed up the pace of project construction. On October 4, 2011, Thang dismissed the head manager of the Da Nang Airport project after discovering how far behind its deadline the project was due to the contractors failing to meet their commitments.

fHe was quoted in heated discussions with the project management team as saying, "You’re kidding? Workers in Danang are famous for completing on time, no need to bring workers down from Hanoi. The problem is that you haven’t offered them good enough pay so you’ve failed in employing them.” The contractors were given a week to improve the situation before being replaced.

In March, the ministry of transport will also monitor transportation businesses, travel support services, vocational training, and driving license examinations.
 
Japan offers jobs for more Vietnamese trainees  

Representatives of the Japanese International Training Cooperation Organisation met with various Vietnamese companies on Feb.16 to offer more opportunities for Vietnamese trainees to work in Japan.  
 
The Japanese Organisation will be offering Vietnamese trainees   signed contracts and the opportunity to work overtime during the first year.

Japan has amended its regulations on management of immigrants and expat workers that make it far easier for Vietnamese trainees to work in Japan.

The new regulations also allow trainees to sign labour contracts with Japanese enterprises immediately, instead of after a year’s training.

Trainees will now be able to migrate and work in Japan soon after finishing their training course and enjoy the same rights as domestic workers.

The regulations are also tougher on foreign recruiting agencies and Japanese enterprises in employing foreign trainees, said the Japanese representative.

The change in Japan’s policy for foreign trainees will help increase the number of Vietnamese trainees going to Japan.

As per statistics, Vietnam has sent 30,000 trainees to Japan over the past 17 years and 7,000 people travelled to Japan for training in 2011.

The Japanese Government has promised to receive more Vietnamese trainees, especially those in the agricultural sector, as Japanese enterprises need more workers after the devastating earthquake and tsunami that occurred on March 11 last year.

Long An to revoke licences from long-delayed projects

The Department of Planning and Investment of southern Long An Province plans to ask the provincial People's Committee to revoke the licences of long-delayed projects.

The revoked projects will be transferred to other investors who have sufficient financial competence to carry out their projects.

Phan Thanh Phi, head of the Long An Economic Zone Management Board, said strict management measures by the province had prevented investors from transferring their projects to others.

Investors often do this by either changing capital contributors or through joint-venture contracts or some other kind of cooperation.

According to the department's figure, licences for 34 projects covering a total of more than 12,100ha of land have been revoked since 2009.

Last year, the province cancelled 22 projects with a total area of 1,600ha.

Most delayed and idle projects were located in Duc Hoa, Ben Luc and Can Giuoc districts.

There are 13 projects worth a total investment capital of VND5.2 trillion (US$247.5 million) that have been idle for many years in Ben Luc District.

Similarly, there are dozens of delayed projects in Can Giuoc District.

Besides cancelling long-delayed projects, the province has tried to lure more investment in agricultural, forestry and fishery as well as foodstuff processing industries to take full advantage of its material and labour sources, according to the department.

As for investors, along with investing in garments and textiles, footwear, plastic and engineering industries, many have invested in agro-forestry, fishery and foodstuff processing projects.

Vissan Limited Company, for instance, began construction of a food processing complex in Ben Luc District's Luong Binh Commune late last year.

In the past 20 years, the province was chosen to carry out forest plantation projects by the Government with support of the Japan International Co-operation Agency.

Currently, the province is home to more than 60,000ha of cajeput forest, most of which are now being exploited.

These forests provide great material sources to high-tech agricultural projects, according to Lam Truc Nho, director of Phu An Thanh High Tech Park.

US$400 million to build electricity plant

A plasma converted gas plant to produce electricity, at a total cost of US$400 million, will be built in HCM City by Australian Trisun International Development Company.

Gavin Holland, Technology Director of the Trisun International Development, said that the company will co-ordinate with foreign partners to build a production line in Phase 1, with a design capacity of treating 2,000 tonnes of garbage per day to generate 1.6 million kWh of power, of which 45 percent will be used by the plant and 55 percent will be added to the national grid.

Tu Ngoc An, Chairman of the Management Board of Kien Giang Composite KGC Company, who represents Trisun in Vietnam, said that the plant is expected to create jobs for about 200 workers.

Vietnamese exports to Russia enjoy advantages

Russia has recognised Vietnam as a market economy and Vietnamese goods exported to Russia will enjoy a tariff reduction of between 3-5 percent, says Vietnamese commercial counsellor in Russia Vu Van Quang.

Talking with Thoi Bao Kinh Te Vietnam (Vietnam Economic Times), the trade official said with these advantages, the value of Vietnam’s exports to Russia is expected to rise from US$1.5 billion in 2011 to around US$2.5 billion in 2012 and more than US$3 billion the following year.

The consumption of Vietnamese electronic goods in Russia experienced spectacular growth last year, at about US$400 million. Seafood is another key Vietnamese export to Russia, standing at around 60,000 tonnes annually, he said.

However, Counsellor Quang said Vietnamese businesses should be aware of Russia’s legal system  regarding exports, which is being completed according to a market-oriented economy.

Vietnamese firms must find suitable partners and ensure payments will be made and guarantee that goods will be delivered when signing contracts to avoid potential losses and disputes, he added.

The two countries will negotiate a free trade agreement (FTA) within the framework of the current FTA between Vietnam and the Customs Alliance of Russia, Belarus and Kazakhstan, said Mr Quang.

WTO membership boosts economy
 
Viet Nam has made great strides in all aspects of its economy in the five years since it became a member of the World Trade Organisation, experts told a conference in HCM City last week.

More than 200 economists, policy makers, and business executives attended the conference titled "Five years after joining WTO – integration and development of Vietnamese enterprises" organised by the Communist Party of Viet Nam online newspaper and Industry and Trade newspaper.

After the country acceded to the WTO in 2007, foreign direct investments have risen dramatically as have exports.

The country's exports have virtually doubled in the period to $96.3 billion.

Distribution and retail services have also developed strongly, with the opening of hundreds of convenience stores changing the complexion of the country's retail sector and buying habits of Vietnamese consumers.

Former deputy prime minister Vu Khoan said the WTO membership enabled local companies to enjoy lower import tariffs on machinery, equipment and feedstock, which helps cut production costs and improve their competitiveness.

Opening up of distribution has been an important step in the country's integration into the global economy.

The attendees agreed that the penetration of foreign goods had brought great competitive pressure on local products, but on the other hand consumers could choose from a variety of high-quality products and services at competitive prices.

This had prompted local firms to improve their competitiveness, they said.

But many also pointed out the weaknesses of Viet Nam in its process of integration – like the poor quality of growth, human resources, high trade deficit, and low competitiveness.

The export structure had not changed considerably, with the country still mainly shipping abroad raw materials and labor-intensive products such as garments and footwear, they said.

The Government and businesses therefore needed to take better advantage of opportunities, they said.

The high bank interest rates at the moment was causing difficulties for exporters and services companies and eating into their profits, said Do Ha Nam, chairman of the Viet Nam Coffee and Cocoa Association and general director of Intimex Import-Export JS Company, said.

The Government should reduce the rates, he added.

Agribank appears at the bar

The Bank of Agriculture and Rural Development of Vietnam (Agribank) has been forced to pay VND38,5 billion for Cao Truong Son Company.

Recently, the Hanoi Municipal People’s Court ruled on Cao Truong Son Company’s lawsuit against Agribank.

 In the first instance decision, it forced Agribank to pay Cao Truong Son Company VND38.5 billion under its guarantee obligation. Agribank also had to pay VND170 million for legal fees.

Last June, Cao Truong Son Company had singed two contracts worth more than VND50.1 billion to sell 2,830 tonnes of construction steel to a construction and industry equipment joint stock company. Agribank issued two back letters in case the buyer refuses to liquidate. However, Cao Truong Son company only received VND11,6 billion and asked Agribank to implement its obligation but the bank refused.

Dong Thap to host agriculture festival

The first safe agricultural produce festival based on growing orchards, farming fish in ponds, and animal husbandry will be held in Dong Thap province in April.

The festival, to be held in Cao Lanh City, will create opportunities for farmers to promote their products and seek long-term co-operation and investment agreements, Vo Mai, deputy chairwoman of the Vietnam Gardening Association, said.

It will have six exhibition areas where more than 300 stalls will display safe agricultural products, seedlings, and others.

There will be seminars on safe agricultural produce chains and the use of technology in producing safe products.

More than 10 provinces have registered to participate in the exhibition from April 15 to 20 to be organized by the Vietnam Gardening Association and Rural Economy newspaper together with Dong Thap province.

Ministry to toughen policy to curb haphazard investments

The Ministry of Planning and Investment has consulted the Prime Minister to issue the directive no 1792 to stay firm on curbing the haphazard and unsynchronized investments in the country, Minister Bui Quang Vinh told Tuoi Tre.

Vinh said many localities have approved huge investment plans regardless of knowing if they can afford the money needed.

They just approve the plans, and then started to seek capital, he said.

Under the directive to take effect this year, it is stipulated that localities acquire the adequate capital for the projects before giving them the go-ahead.

If the localities cannot mobilize enough capital for a project, they should put it aside.

If any authorized individual green-lights the projects while the capital problem is unsettled, he will be held personally responsible if the project is delayed or fails to reach completion, Vinh said.

In the past, many provinces have started their investment projects prior to asking for approval from the government. However, under the new regulation, any province wishing to implement investment projects using the government capital will have to seek permission from the Prime Minister before any work is allowed to begin.

“I believe that with this policy change, there will be no haphazard and unsynchronized investments,” Vinh stated.

Vinh added that in the future, the government will announce capital allocation over a five-year term, rather than the current one year.

“It means the government will announce the localities countrywide on the budget allowable for investment in the next five years, which their investment planning should base on.”

Commenting on the incomplete investment projects around the country, the minister said that thanks to the government’s cutting public spending, state capital has been focused on completing many key projects.

The number of projects expected to reach completion this year has amounted to 4,400, much more than previous years.

However, he admitted that many projects still face capital shortage due to haphazard investments.

“We have to accept the fact that many projects will have to be halted, since in order to complete all of the approved projects, we will need a massive capital of VND500 trillion (US$24 million), while the government bond alone can only afford VND180 trillion,” Vinh said.

“Two thirds of the projects will have investment suspended. We have no choice.”

This year the government will develop the capital plan for a three-year term, and the localities can use the allocated capital to boost the completion of the unfinished projects, he said.

“They will also have to limit the approval for new projects.”

Food agency proposes to hoard 1 ml tonnes of rice

The Vietnam Food Association has submitted to the Government a plan to buy 1 million tonnes of rice from farmers for temporary stockpile.

The move is seen as part of efforts to stabilize rice prices in the country.

The association proposed that one million tonnes of rice should be bought from March 15 to April 30 and stored for three months.

It also asked the Government to consider the application of supportive measures in terms of loan interest rates for rice businesses in realizing the move.

Regarding export, the association plans promotion activities to expand markets, eying China . It looks to sell high-quality rice to the neighboring country, starting with the establishment of a Vietnam-China rice traders’ club within the first quarter this year.