Japanese underpin waste water project

A waste water treatment system for seven districts in Ha Noi will be constructed with funding provided by the Japanese Government.

An agreement on the loan for the Yen Xa Wastewater Treatment System was signed between the Ha Noi People's Committee and representatives from Japanese International Co-operation Agency (JICA) on Friday in the capital.

The 66.7 billion Yen (US$740 million) project will be managed by the Ha Noi People's Committee. Investment capital includes 56.1 billion Yen ($623 million) in official development assistance and 10.6 billion Yen ($117 million) from the Vietnamese side.

The Yen Xa treatment facility will be built in Thanh Liet commune, Thanh Tri district, in an area of 13 hectares. It will treat waste water from 900,000 residents living in Ba Dinh, Dong Da, Thanh Xuan, Hoang Mai, Ha Dong, Thanh Tri and Tu Liem districts.
The system will be constructed between 2013 and 2020.

Interior-decor market looks to create sustainable future
 
Prices for home-decor items are expected to be remain about the same this year, according to the president of one of the fastest-growing home-decor companies in the country.

Commenting about trends in the market, August Wingardh, head of UMA Viet Nam, said that more products reflecting contemporary styles would be available.

He noted that sustainable, environmentally friendly products would become increasingly important, including items that have energy-savings or recyclable features.

Consumers will continue to favour traditional styles.

Windgardh said the company had seen its turnover double year-on-year since its establishment in 2007. Despite the economic crisis, the company's sales last year increased by 30 per cent compared to 2011.

He predicted that the Vietnamese interior-decor market would recover in the near future, but warned that companies must consolidate their status in the market by developing stronger brands.

Domestic software firms bemoan skewed tax breaks
 
Local software makers are bemoaning current VAT incentives which appear to be proving a double-edged sword that only benefit foreign firms.

According to Le Hong Ha, director of Ha Thang Company, people may think that software firms are reaping the benefits of VAT exemption, but that doesn't seem to be the case.

Under the current taxation regulations, if an enterprise is VAT exempt, they cannot claim refunds on any overheads they incur apart from input costs.

However, enterprises that do pay VAT on materials may claim tax refunds on all overheads.

This means that software firms that are VAT exempt are unable to claim back the 10 per cent VAT they pay on rent, electricity and machinery, etc.

As a result, production costs are high.

Ha said he wished to see more software firms added to the list of business fields subject to zero per cent VAT.

Sources said that the Ministry of Finance, which is reconsidering the policy, may still impose a 10 per cent tax on the software firms whose products are consumed domestically, and zero per cent on the firms that export their products.

If the solution is approved, the ministry would still be able to collect some tax and software firms would be able to enjoy tax incentives to develop.

Tran Trong Thanh, president of VINAPO, complained that corporate income tax incentives only benefited foreign firms, while domestic companies had no way of taking advantage of the policy.

According to Thanh, it was necessary to classify two groups of technology companies. The first one should include companies that develop technology and create added value. The second should include import companies that trade foreign technology.

With the current corporate income tax incentive policy, companies which import technology into Viet Nam would have the chance to carry out transfer pricing and enjoy the benefits.

Corporate income tax incentives do not have much significance to domestic technology firms. They usually make losses in the first 3-5 years of operations, so corporate income tax doesn't affect them.

Under the current policy, IT companies enjoy corporate income tax exemption for the first four years, pay 5 per cent for the next nine years and 10 per cent in the next two years.

However, Thanh said that in order to enjoy the tax incentives, firms needed to prove that they could meet the criteria to be recognised as technology firms. The criteria included the number of staff and workers with higher education degrees.

The requirements, according to Thanh, were too strict. "Even Facebook, Apple and Dell could not meet the requirements to be recognised as technology firms because their directors do not have university degrees," he said.

No respite for Ha Noi real estate

The Ha Noi real estate sector continued to be frozen in Q4/2012, according to a market report by Cushman and Wakefield Viet Nam (C&W).

Grade A apartments are now being offered for around VND48 million (US$2,300) per square metre, while grade B and C apartments are selling for VND17-33 million ($817-1,590) per square metre.

To stimulate demand, many investors are offering credit support packages with low interest rates. Some are even offering unfinished apartments in order to reduce prices by VND5-7 million ($240-337) per square metre.

However, these moves have failed to motivate new purchases, so the market's liquidity was still low, C&W said.

There are currently about 11,500 apartments for sale in the primary market: around 4,000 high-end apartments and 6,500 mid-range ones.

About 100 apartments from three operational projects have been brought onto the market this quarter, mainly in grade B and C categories.

In Q4, new projects will be unveiled such as the Discovery Complex and Hado Park View in Cau Giay District and Skyline in Hai Ba Trung District.

Many projects are still under construction, threatening to worsen the oversupply problem. These include Mandarin Garden (1008 units), D'Palais de Louis (242 units), Mulberry Lane (1,478 units), Golden Land Building (730 units) and Golden Palace Me Tri (1,000 units).

Streamlining key to PPP progression

The lack of a comprehensive legal framework is the major obstacle to adopting the public-private partnership model of investment, a workshop heard in HCM City yesterday.

The conference, organised by USAID's Viet Nam Competitiveness Initiative and the Ministry of Planning and Investment, was aimed at collecting opinions to improve this very framework to enable more PPP investment.

Delegates, who came from private companies and State agencies, agreed that PPP was an important and useful investment model.

But besides the legal inadequacies, the Government's lack of experience and shortage of funds also prevented investors, especially foreigners, from taking part in PPP projects in Viet Nam, they said.

Several individual issues were discussed, like making approval of PPP projects more efficient and less time-consuming.

Lam Hung Kien, head of southern Soc Trang Province's industrial zones, said: "It takes time to approve a PPP project — sometimes one year – even when it is very urgent."

He also wanted investment in infrastructure at industrial zones, which is now out of the purview of PPP, to be included, saying his and other Cuu Long (Mekong) Delta provinces badly needed it, especially in coastal areas.

Other delegates called for increasing the 30 per cent rate that the Government contributes to PPP projects.

"This rate must be flexible," they said further.

They also complained that many provisions in Decision No 71, which regulates PPP works, are confusing and cause misunderstanding among investors, especially foreigners.

The Ministry of Planning and Investment, admitting there were many shortcomings, said PPP was still in the trial stage and needed time to be improved.

"Decision No 71 was drawn up when there were any PPP projects in the country.

"Moreover, local governments have not been actively co-operating with the ministry to implement this new model."

The proposed amendments would sort out most of the issues, it promised.

"We are gathering opinions from investors, ministries, and others to amend Decision 71," Le Van Tang, head of the ministry's Public Procurement Management Agency, said.

"The draft will be submitted to the Government in April.

"We plan to draft a decree after implementing five trial projects, and after that we will draft a law on PPP."

In future the Government would contribute 49 per cent to PPP projects if the draft is approved, he said.

"The amendments will be radical and comprehensive, ensuring a good investment environment," he promised.

PPP describes a business venture funded and operated through a partnership of government and the private sector.

Exports to India soar in 2012
 
Viet Nam is estimated to have exported over $1.77 billion worth of goods to India in 2012, 16 per cent surge on the previous year, according to the Viet Nam General Department of Customs.

The five staples recording the highest value were mobile phones and components ($444 million); machinery and equipment ($224 million); natural rubber ($118 million); computer and electronics ($142 million) and coffee ($53 million). These five groups of products also accounted for 65 per cent of the country's total export turnover to India.

However, some items experienced an export value slump with ore and other minerals; iron and steel witnessing the biggest decreases at 95 per cent and 68 per cent to only $1.17 million and $36.5 million, respectively.

According to the Viet Nam Trade Office in India, with a population of 1.2 billion mostly comprised of middle – and low-income earners, India is a promising market for Viet Nam due to its similar consumption demands.

Experts from the Export-Import Department said India has a large import demand for Viet Nam's tea, coffee, cashew nut and pepper for re-export purposes. The country also needs a significant amount of natural rubber for its large-scale production of car tyres for domestic consumption and export.

However, to make full use of the ASEAN-India Free Trade Agreement, Vietnamese businesses should intensify market study efforts to seek new partners. They should also carefully study customs procedures as well as other information about the market, experts said.

Besides trade, the two countries' bilateral co-operation in investment has also developed significantly in recent years.

Viet Nam has become an attractive investment destination for Indian investors, according to the ministry's African, West Asian and South Asian Markets Department.

In 2012 alone, Indian businesses pumped $19.35 million into 10 new projects in Viet Nam. The latest addition has brought total Indian investment capital in Viet Nam up to $252.4 million.

Metalworks to be shown in Hanover

The leading global trade show for metalworking, EMO Hanover 2013, will take place in Hanover, Germany this year from September 16 to 21 to showcase "Intelligence in production".

Viet Nam will become an attractive investment spot for the metalworking industry due to the low cost of labour and plentiful resources, predicted Christoph Miller, managing director of EMO Hannover under the German Machine Tool Builders' Association.

The show is expected to attract more Vietnamese visitors this year than ever before. More than 1,600 companies from 34 different countries have already registered, including 328 from Asia, a 10 per cent increase over last year.

Military Bank leads in profitability

In 2012, for the first time, Military Bank saw the highest profit of all commercial joint stock banks.

It surpassed Asia Commercial Bank (ACB), Viet Nam Export Import Commercial JS Bank (Eximbank), Viet Nam Technological and Commercial Joint Stock Bank (Techcombank) and Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank).

By the end of last year, the bank gained about VND3 trillion (US$144 million) in profits before tax, the highest in absolute value amongst commercial joint stock banks (excluding state-owned banks and banks with a dominant stake held by the state).

Although it has less charter capital and equity than other banks, the MB's credit growth rose 27 per cent this year, higher than the predicted 21-22 per cent.

New fund will help firms to issue affordable bonds

Vietnamese enterprises that want to raise funds from bond issues now can seek guarantees from the Credit Guarantee and Investment Facility (CGIF).

The news was revealed by Nguyen Ba Toan, deputy director general of the International Co-operation Department under the Ministry of Finance.

This fund would provide Vietnamese firms with a credit support mechanism, making it easier for firms to issue bonds at a reasonable cost, Toan said at a seminar introducing the fund, a key component of the Asian Bond Market Initiative endorsed by the ASEAN+3 Finance Ministers Meeting in 2003.

Rather than seeking guarantees from normal financial institutions, which would increase risk and uncertainty for the State budget, firms would be able to get similar certification from the new fund.

CGIF, which went live in July, is a trust fund with a total capital contribution of US$700 million from the 10 members of the Association of Southeast Asia Nations (ASEAN) together with China, Japan, South Korea (ASEAN+3) and the Asian Development Bank.

The fund aims to provide credit guarantees for local currency denominated bonds issued by investment grade companies in the ASEAN+3 countries.

"Under the guarantee of CGIF, the credit ratings of the enterprises that want to issue bonds will be enhanced, thus helping reduce the issuance cost and facilitate companies' access to the regional bond market," said CGIF vice president Boo Hock Khoo.

Many Vietnamese companies are eager to issue bonds, especially in international markets, but the lack of support mechanisms –no credit rating agencies, no benchmark bond yield curve and no information on the secondary market – makes it difficult for them to do so.

CGIF chief executive officer Kiyoshi Nishimura said Vietnamese financial institutions often gave priority to State enterprises when providing guarantees for corporate bond issues, but in CGIF's policy, State companies and private firms would receive equal treatment.

Boo Hock Khoo, the fund's vice chairman, said one of the main factors limiting the ability of Vietnamese companies to sell bonds in international markets was that their credit ratings used to be no higher than the national credit rating, which is currently B.

However, Khoo said CGIF could help Vietnamese companies overcome this barrier because the fund had its own credit rating group. Viet Nam's several large enterprises all had the ability to get underwriting from CGIF, he said.

According to CGIF's regulations, businesses seeking the fund's guarantees must obtain a credit rating on their debts from either a local or international rating agency. The facility will take into account criteria such as corporate good governance, management and business feasibility before granting the guarantee.

The maximum credit guarantee for a country was currently capped at $140 million a transaction and the ceiling on the currency was $280 million.

Bonds, issued in foreign currency for a 10-year term, were required to have normal or financial risk insurance, Khoo said.

Steel giant hurries projects
 
The Viet Nam Steel Corporation is hastening construction its new plant in northern Lao Cai Province as well as the second phase of its Thai Nguyen Iron and Steel Co expansion project.

As scheduled, the former would be completed by the end of the year and the latter to begin operations by June.

The two key projects would help increase the corporation's competitiveness next year, said Minister of Industry and Trade Vu Huy Hoang.

He added that the ministry was working with relevant agencies to ensure the timely completion of the Thai Nguyen project.

At an industry conference this week, Hoang urged Viet Nam Steel to focus on renewing technology to conserve energy and to reduce costs and pollution. He also called for concerted efforts towards an appropriate production plan for the current year.

According to Viet Nam Steel deputy director Vu Ba On, the company has targeted to produce 1.4 million tonnes of steel billet this year, an increase of 12 per cent over 2012, and another 2.5 million tonnes of rolled steel, an increase of over 7.5 per cent.

To meet the targets, the corporation has called for Government policies to stimulate demand in the construction industry and lower borrowing costs, On said.

He said that stronger technical barriers were also needed to prevent further imports of low-quality steel and protect domestic producers from unfair competition.

The corporation's output of steel billet last year reached nearly 1.3 million tonnes, an increase of 5.2 per cent over the previous year, yet only about 260,000 tonnes were sold.

Rolling steel output meanwhile rose by 9.5 per cent to 340,274 tonnes, while demand reached nearly 295,000 tonnes

On said that last year was the most difficult year for the nation's steel industry due to the frozen real estate market and resulting slowdown in the construction industry.

Sumitomo to build major coal-plant

Japan-based Sumitomo Corporation has applied for an investment licence to build a coal-fired thermoelectric plant in the central province of Khanh Hoa, which would become the largest of its kind in Viet Nam.

The 1,320 MW plant would be erected in the Van Phong Economic Zone in Ninh Hoa Town, Ninh Phuoc Commune. Its construction would cost US$2 billion under a build-operate-transfer (BOT) contract with a 25-year term, according to the zone's management board.

The first turbine is expected to begin generating power in 2017, with a second one to be added a year later. The plant will supply power to Electricity of Viet Nam (EVN), using coal imported from Australia and other countries, the board said.

Rice research institute encouraged to innovate

Deputy Prime Minister Nguyen Thien Nhan urged the Mekong Delta Rice Research Institute to create new varieties of the staple grain.

During his visit yesterday to the facility in Thoi Lai District, Can Tho City, Nhan also asked the institute's leaders to rename it Viet Nam Institute for Rice Research in order to convey more accurately that rice is the country's national crop.

For over the past 35 years, the institute has been a leading research unit of the Ministry of Agriculture and Rural Development. Its scientists have been praised for their vital contributions to national agricultural production and rural development.

The institute has created 132 rice varieties, of which 63 become popular.

Its research work has focused on varieties particularly susceptible to climate change, seawater rising and salt intrusion.

Out of 6.8 million hectares of rice grown nation-wide, 3.5 million hectares are cultivated with varieties produced by the institute.

As a result, the country's rice output has seen a year-to-year increase of over 2 million tonnes, earning an added value of VND12 trillion (US$576 million).

The institute's leaders raised concern, however, over their limited financial resources, which have led to the quit of highly qualified personnel.

During his visit to the southwestern region, Deputy PM Nhan also examined an experimental rice-growing model in Soc Trang Province that uses salinity-prone varieties.

Poor infrastructure discourages Can Tho tourism development

Can Tho City is currently facing a shortage of modern and large-scale entertainment places or tourist-friendly souvenirs.

According to the municipal Department of Culture, Sports and Tourism, the city currently has around 190 hotels offering 4,799 rooms. Of the total, 59 are from one to four-star hotels.

The city now has 11 tourism sites and entertainment places with six places providing accommodation services such as My Khanh tourism site in Phong Dien District.

Travel firms in the city provided accommodation services for 1,180 tourists last year, up 13% from a year earlier.

International travel firms provided inbound tours for 14,000 foreign tourists and outbound tours for 11,000 people in 2012.

The city’s tourism industry had an estimated revenues of VND850 billion (USD40.7 million) last year, up 12% from the previous year.

Dang Tan Hung, the department’s Deputy Director, however, said most of tourism sites in the city are small-sized and operating independently without any proper cooperation.

“The city still lack modern large-scale entertainment places as well as typical specialties. Tourism promotion is still inefficient as well,” Hung emphasised.

Le Hung Dung, Vice Chairman of the municipal People’s Committee said the number of welcomed tourists to the city and its tourism revenues in 2012 were still modest.

More efforts should be made to work out efficient measures to boost tourism development in the time to come, he urged.

The city targets to welcome 1.25 million tourists this year, including over 210,000 foreign tourists. The industry’s revenues are expected to reach VND970 billion (USD46.5 million) during the year.

Dang Tan Hung, Deputy Director of the municipal Department of Culture, Sports and Tourism said the agency will request the city’s culture centre and Tay Do theatre to cooperate with travel firms and hotels to organise suitable art performances for tourists in the time to come.

They will hold festivals to honour local specialities and introduce typical products as souvenirs.

The department will conduct studies of tourism sites in order to select those with the most potential for further development.

They will consider a plan to turn Cai Rang floating market into a tourism destination, he noted.

The department has proposed the Ministry of Culture, Sports and Tourism to draft policies to encourage investment in tourism nationwide and organise tourism promotion programmes at local and national levels, he added.

Government faces tax collection challenge

The General Department of Taxation has revealed that they are facing difficulties recovering debts of VND45 trillion (USD2 billion) from enterprises nationwide.

The Department of Taxation in Ba Ria-Vung Tau Province requested to write off tax debts for 1,999 cases of missing or dead business owners. The total debt has reached VND10 billion but the department did not provide detailed documents for each case.

In some provinces such as Nam Dinh or Thai Binh, many cooperatives have disappeared or shut down after collecting taxes from the farmers.

Trinh Hoang Co, Head of the Debt Management and Tax Recovery Department said bad debts in 2012 reached VND6.2 trillion, increased VND1.3 trillion compared to 2011 and accounted for 14% of the total tax debts. Most of the debts were from dissolved or bankrupted enterprises, or missing or dead owners. These debts would be waved.

"The department of taxation would only forgive the debts for owners that were able to provide detailed documents on their situation. Business owners that don't have death certificates or enterprises that didn’t make tax returns and tax declarations before they went into bankruptcy still have to pay their debts." Co said.

Moreover, the amount of tax debts that are still waiting to be written off, been granted extended deadlines or offered reductions amounted to VND4.5 trillion, accounting for 10% of the total debts. According to the General Department of Taxation, debts of state-owned enterprises, FDI enterprises and private enterprises totaled VND35.5 trillion.

Many enterprises filed documents when two rounds of tax debts extension and reduction were implemented in 2012. However 90% of them were unqualified and many made up lies to ask for extensions.

"Some enterprises bombarded us with documents. They kept re-sending the files after we refused their requests. There is one enterprise who sent files 11 times and we still had to give them feedback each time." he said.

As of November 20, 2012, taxation departments enforced tax payment for 19,000 debtors with VND8.8 trillion, including 10,000 enterprises whose debts were 90 days past the deadline. Some even tried to disperse their assets.

Bui Van Nam, Chief of the General Department of Taxation said they have tried many methods in order to collect the debts but was a hard task due to the economic downturn.

The taxation departments will tighten their monitoring over big enterprises to prevent illegal transfer pricing practices. Other industries would also be put under scrutiny are mining, real estate and tourism.

State-owned group CEOs face dismissal for holding company losses

CEOs of state-owned economic groups will be dismissed if they let their holding companies suffer losses for two consecutive years, according to a draft decree produced by the Ministry of Planning and Investment (MPI).

Under the draft decree on state-owned corporations and groups, for a holding company which is a state-owned one-member limited firm, the Ministry of Planning and Investment or provincial People’s Committee will decide on the dismissal or early termination of an employment contract before schedule with its CEO.

The draft decree also stipulates CEOs which fail to attain their return on equity (ROE) target for two consecutive years would also face dismissal. In cases where the holding company makes both profit and losses, but can’t fulfill their set ROE goal, the CEO will also get the sack.

However, in cases where losses or ROE target failures have been approved by authorities; expected losses due to investment expansion and technological upgrades of the holding company, the CEO will not be subject to the dismissal.

The sack is also imposed on CEOs where a company goes bankrupt without official approval of the decision. CEOs who fail to fulfill tasks or targets set by their company Members’ Council or for continual violations of council resolutions will also be dismissed.

According to the draft decree, holding company charters must specifically regulate the standards and conditions to become a CEO, and such positions should not offer contracts for longer than five years.

Property firms hit the wall

Nearly 18,000 real estate and construction companies faced losses, went bankrupt or closed last year because of the challenging economic situation in the country.
 
Of this number, the Ministry of Construction said that nearly 15,300 companies faced losses.

The number of companies that stopped operations or went bankrupt totalled more than 2,600, a year-on-year increase of 9.4 percent.

This figure included more than 2,100 construction companies and 527 companies trading in real estate.

The situation was not much better for corporations managed by the ministry, with many of its companies' faring worse in 2012 than in the previous year.

Total production value as well as investment value and turnover were lower than the targets set in 2012 and in the previous year.

The ministry said the construction sector last year faced many challenges as the market continued to be stagnant, while inventory of property stacked up to a high level.

Moreover, real estate prices fell in all property segments, leading to company losses and bankruptcies.In Hanoi, about 1,800 transactions worth VND6.1 trillion were carried out on 94 transaction floors.

Meanwhile, 129 floors in HCM City reported about 4,000 transactions in 2012, with total value of more than VND11 trillion.

Inventories totalled nearly 2,400 apartments in Hanoi and 10,100 apartments in HCM City.

Experts predict that conditions will remain tough for the market this year, and inventory will remain high.

Thanh Hoa oyster farmers face huge losses

Falling oyster prices and mounting inventories have been troubling oyster farmers in Thanh Hoa Province’s Hau Loc District as they are unable to recoup hundreds of billions of VND.

Despite much lower prices, farmers have still been unable to sell tens of thousands of tonnes of oysters, yet still have to repay their loans.

In Da Loc Commune, the largest oyster growing area in Hau Loc, farmers have yet to find buyers.

According to local authorities, the commune has planned to use 436 hectares of coastal land for oyster breeding, over 300 hectares of which has already been cultivated. Around 6,000 tonnes of oysters worth over VND100 billion (USD4.8 million) in the commune are still unsold.

Normally the majority of oysters grown here are for export. However, due to economic downturn, it has been hard for farmers to find viable export markets. As a result they have been forced to sell domestically since late last year. But domestic sales are modest, most buyers being restaurants and food shops.

Even though prices have fallen to around VND14,000 (USD.07) per kilo, down from between VND24,000-25,000 (USD1.15-USD1.19) per kilo last year, sales remain slow.

Typically growers invest around VND800 million (USD38,332) per a hectare of oyster fields, and can harvest from 40-50 tonnes of oyster from one hectare. The current low prices and slow sales have put the growers in a position where they are incurring losses.

Vu Van Dinh, Vice Chairman of Da Loc Communal People’s Committee said, “Local oyster growers are struggling to find markets for their products. Farmers have yet to find any solution and are in desperate need of help.”

Nguyen Thi Hoa from Da Loc Commune’s Yen Dong Hamlet, said her family has one hectare of mature oysters but have not been able to sell them for more than a year.

"Before we were waiting for the prices to rise, but now, we can't even sell with the reduced prices. We are in trouble and unable to pay our debts," she said.

The same situation exists in other communes in the district such as Minh Loc, Hoa Loc and Hung Loc.

Nguyen Van Hoang, Chairman of the district People’s Committee said, “Local farmers have anywhere from 20,000-30,000 tonnes of unsold oysters. We’re trying to boost domestic sales to ease farmer’s financial burdens.”

According to Hoang, authorities in Hau Loc District are calling on enterprises in Vung Tau City to invest in building a seafood processing plant. The provincial government has approved the project but the implementation poses its own difficulties due to substandard transport infrastructure and the district’s insufficient budget.

The Ministry of Agriculture and Rural Development has given approval to a plan to set up agencies that specialise in oyster quality control in order to find export markets in Europe, he added.

Auto market recovers before Tet

The local automobile market has seen signs of recovery before the Lunar New Year holiday, or Tet, as customer demand has increased compared to previous months.

Some dealers of Toyota Vietnam and Honda Vietnam said that demand has picked up sharply and their customers are not able to take cars until after Tet or later.

According to Toyota Vietnam, there were 581 Camry cars produced last month, of which 563 cars were sold. As the automaker has signed around 400 Camry car sale contracts, customers will have to wait until March or April to receive their automobiles.

Similarly, Honda Vietnam saw its sale volume in December tripling that in previous months. Notably, the CR-V model is now not available at some dealers of Honda Vietnam and customers may have to wait for the new version of this model after Tet.

For Ford Vietnam, December saw the strongest monthly sale of the year with 726 automobiles sold.

Explaining the sale pickups, some car manufacturers said that the demand is usually high in the run up to Tet. However, these figures were lower than previous years as difficulties still remained on the domestic market.

Besides, the demand has outpaced supply as some manufacturers have scaled down production. Toyota Vietnam and Ford Vietnam have run just-in-time business to prevent inventories.

Meanwhile, some auto dealers said that the market has seen signs of recovery partly because the Government has canceled the scheme of collecting personal vehicle restriction fees.

The market for used cars has also warmed up after a year of staying quiet. Most dealers noticed that the demand has increased after the registration fee is cut to 2% from the previous rate of 12%.

Tran Duy Phu, owner of An Phu Gia auto showroom, saw around 10 customers looking for used cars in the past two weeks. However, his showroom has halted used car business given sluggish trade last year.

Although the demand for used cars has increased, it is still low compared to previous years, Phu said.

Export growth hindered by three bottlenecks

Vietnam’s export growth is being hindered by three bottlenecks, namely poor electricity and telecom infrastructure, inefficient port systems and inadequate supporting services of export certification organizations.

Foreign enterprises describe these three issues as the greatest hindrances to export, while local firms complain about shoddy traffic infrastructure.

Other factors like tariffs, difficult access to commercial loans and cumbersome administrative procedures also inhibit export growth, says the Vietnam Industrial Investment Report by the Ministry of Planning and Investment.

About 28% of the foreign investors joining the survey said electricity infrastructure was the main impediment to their export.

Some 54% of exporters have certified products or production processes. A half of them (26.9%) have products certified by domestic agencies and organizations.

The report states that the biggest obstacles to export come from within the economy rather than external factors, including falling demand for products made in Vietnam and export prices. Local enterprises often face more problems than foreign-invested ones because the latter mainly export to their parent firms or partners overseas.

Vietnam-EU FTA not for substandard commodities

The forthcoming free trade agreement (FTA) between Vietnam and Europe Union will help reduce up to 90% of tariff lines on Vietnamese exports to EU to zero but this market accepts high-quality commodities only, heard a seminar in Danang on Wednesday.

According to the seminar held by the EU-funded Multilateral Trade Assistance Project (EU-Mutrap) in coordination with the Vietnam Chamber of Commerce and Industry’s Danang branch, EU is one of partners seeking the highest criteria on food safety and hygiene, labor and environmental protection. Therefore, to benefit from the FTA between the two sides, Vietnamese enterprises will have to strengthen their competitive capability as well as products’ quality.

At another seminar in HCMC on December 22, 2012, Claudio Dordi, chief consultant of EU-Mutrap, said this technical assistance project will keep Vietnamese firms updated on technical standards to boost their exports to the EU. Besides, he said, the project will provide market information to help Vietnamese products satisfy EU consumers’ demand.

Supposing that Vietnamese enterprises can meet EU technical criteria, they will also be unable to win the confidence of the EU market if failing to offer goods ensuring health safety and satisfy their choosy demand, the expert noted.

Moreover, according to the seminar in Danang, consultants of the EU-Mutrap project also noted difficulties for Vietnam when deploying commitments of the FTA, including applying a 0% tax rate for most of products imported from EU.

Specially, Vietnam will have to open services markets and apply transparent regulations on business management and investment, they stated.

These consultants advised local relevant authorities and entities to consider the possible challenges to avoid negative outcomes accordingly.

Meanwhile, the European Chamber of Commerce in Vietnam (EuroCham) said the agreement will benefit both Vietnam and EU in terms of bilateral trade. For instance, the agency said, the two sides will soon conclude commitments on market opening, and removing tariffs, technical barriers and anti-dumping problems.

Import tax reduction in line with the FTA will facilitate Vietnamese exporters to accelerate exports to EU, especially products facing fierce competition from foreign rivals like China and others that have yet to clinch an FTA with EU.

On October 8, 2012, the first round of the bilateral FTA negotiations officially started in Hanoi, with four rounds of talks set for this year.

EU now is one of Vietnam’s leading partners in terms of trade and investment. In 2012 it emerged as the largest importer of Vietnamese products with total value of US$20.3 billion, marking up 22.5% year-on-year and accounting for 17.7% of the country’s total.

Vietnam-EU cooperation relationship has entered a new phase since the signing of the Partnership and Cooperation Agreement (PCA) in June 2012. PCA has opened up great chances for establishing a more liberal trade area, eliminating barriers and enhancing trading and investment conditions for both sides.

Intercontinental Danang gets five-star status

The Vietnam National Administration of Tourism (VNAT) has recognized the Intercontinental Danang Sun Peninsula as a five-star resort.

The Intercontinental Danang Sun Peninsula nestled in the hills of Danang’s Son Tra Peninsula was put into operation last June. The resort is attractive to those who want to seek new experiences and relax in luxurious rooms overlooking the sea.

Invested by Sun Group, the Intercontinental Danang Sun Peninsula, one of the most luxurious resorts in Asia, consists of 197 guest rooms of low-rise blocks and bungalow villas, swimming pools, restaurants, bar, spa and other amenities.

With the recognition of the Intercontinental Danang Sun Peninsula as a five-star resort, Danang City has had eight five-star hotels and resorts with 2,041 rooms.

HCM City wants to extend tramway project’s route

HCMC authorities are seeking approval from the Ministry of Transport to extend the route of the tramway No.1 project to Binh Thanh District’s Tan Cang area instead of having it end at Ben Thanh Market as planned earlier.

The proposal is an effort of the local government to further develop commuter transport service as the adjusted scheme for the tramway is still aligned with the 1/2000 scale of an urban zoning plan on a total area of 930 hectares for the city’s center.

Under the initial design, the tramway No.1 will link Ben Thanh Market in District 1 with Mien Tay Coach in District 6, stretching 12.2 kilometers along Vo Van Kiet Boulevard. However, after completing the detailed zoning plan of the heart of the city, the municipal authorities want to lengthen the route to Tan Cang to attract more passengers to use the public transport facility. In the future, the tramway might be connected with Thanh Da Peninsula to serve tour visitors to the city.

At a meeting of the HCMC Department of Transport in HCMC on Tuesday, Minister of Transport Dinh La Thang urged the local government to accelerate the zoning plan to pave the way for the project’s construction.

In 2008, the city’s government clinched an agreement with a consortium of two investors, Thanh Danh Construction & Trading Limited Co. and Malaysia’s Titanium Management Co., to carry out the project.

But both sides had failed to share the same voice in talks three years ago over financial issues including total investment capital, resulting in the project’s suspension, and the city has been seeking new investors since then. Site clearance process of the tramway scheme running along Tau Hu Canal has been complete as of now.

While awaiting new investors for the scheme, the city has opened a bus rapid transit route connecting Ben Thanh Market with Mien Tay Coach running along Vo Van Kiet Boulevard to help ease severe traffic congestion in central areas, especially those routes from Ben Thanh Market to District 6.

Energy labeling deadline extended to June

The deadline for producers and importers of household and industrial electrical appliances to get energy labels for their products is extended to the end of this June under a new decision of the Government instead of early this year.

The new decision, coded 03/2013/QD-TTg and issued on Monday, specifies that from July 1, household electrical appliances will be subject to mandatory energy labeling.

These items include fluorescent lamps, magnetic and electronic ballasts, electric cookers, electric fans, air conditioners and top-loading washing machines. Certain industrial electrical equipment like distribution transformers and electric motors will also have to carry energy labels before they are launched onto the market from this date.

Meanwhile, refrigerators, TV sets and front-loading washing machines will have to comply with this regulation from January 1, 2014.

According to the new decision, production and import of household electrical products with energy efficiency lower than the regulated minimum level will be banned from January 1, 2015, instead of January 1, 2014 as stipulated in Decision 51/2011/QD-TTg dated September 12, 2012.

Cu Huy Quang, a senior official from the Office of Energy Efficiency and Conservation under the Ministry of Industry and Trade, told the Daily that the office had received applications for energy labeling submitted by 80% of enterprises nationwide.

Big producers and importers will be granted energy labels in this January and February. In later months, small firms with thousands of product lines will get energy labels, he said.

Provinces blamed for realty market problems

Localities, especially Hanoi and HCMC, have licensed real estate projects of their own free will, leading to an oversupply and spelling much trouble for the market, said Tran Ngoc Hung, president of the Vietnam Federation of Civil Engineering Associations.

In addition to reviews and strict controls, he suggested the Ministry of Construction consider canceling certain projects and do the job directly rather than assigning it to local authorities.

It may lead to delays and compromises when local authorities are assigned to review property projects because it is local governments that have granted certificates for such projects and investors have spent a lot on the projects, said Hung at a review conference of the construction industry.

Apart from rampant project licensing, construction quality was also a concern raised by the delegates attending the conference. Minister of Construction Trinh Dinh Dung said there were some 51,600 construction works nationwide in 2012, 0.08% of which had accidents.

“The quality of many projects is low. Although they do not collapse, their quality is poor,” Dung said.

To solve the aforementioned problems, property projects must soon publicize their scale, investment capital and development progress, said Hung. In big cities like Hanoi, HCMC and Danang, it is necessary to form inspection teams under the construction ministry in collaboration with local people’s councils and associations.

The authorities should issue a decree on houses for rent. Moreover, there must be priority policies for investors in this segment because the demand for houses for rent is very high, said Hung.

Sharing this view, Minister Dung said the ministry this year would continue to improve mechanisms and policies for the construction industry, tighten management and supervision, especially of the State-funded projects, and boost construction efficiency.

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