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BUSINESS IN BRIEF 23/5

 Restructured Viettel to concentrate on core business; SME owners determined to succeed; Moody's rating for VietinBank ‘stable'; Vinacomin clarifies tax confusion

16th ASEAN cocoa producers meeting opens in HCM City

The 16th meeting of the National Focal Points for ASEAN Cocoa Club (ACC) on the Joint Scheme for ASEAN Cooperation in Agricultural and Forest Products Promotion is taking place in HCM City on May 22-23.

During the conference, delegates from ASEAN nations will discuss ways to implement Good Agricultural Practices (GAP) for growing cocoa trees, as well as ensuring food safety and controlling cocoa tree diseases.

Reports will also be delivered on the Common Effective Preferential Tariff (CEPT) Scheme, non-tariff barriers and the results of a pilot project on growing cocoa in Indonesia and Malaysia.

Nguyen Van Hoa, Deputy Head of the Cultivation Department under the Vietnam Ministry of Agriculture and Rural Development, said that cocoa is a new crop in Vietnam that has only been grown in the country since 2000.

So far, around 25,000 hectares of cocoa have been planted in the Central Highlands, southeastern region, and some Mekong River Delta provinces.

Vietnam aims to increase its area cultivated in cocoa tress to 35,000 hectares by 2015 and 50,000 ha by 2020, with the goal of producing 26,000 tonnes of cocoa.

Partnerships key to infrastructure

Investments under the public-private partnership (PPP) model would be encouraged in HCM City to develop key technical infrastructure projects, a Sai Gon Giai Phong (Liberated Sai Gon) report has said.

In its Saturday edition, the daily said that the municipal administration had sought permission from relevant ministries and agencies to invite PPP investments for major transport infrastructure projects.

The projects deemed suitable for PPP investments include the Rach Chiec Bridge on the eastern outer belt road, which links the road with the Ha Noi Highway, a bus terminal at Cho Lon, and two water loss reduction projects.

The city has called for all sectors to participate in the development of technical infrastructure systems under Build-Transfer (BT), Build-Operate-Transfer (BOT) and other forms of investment.

Such investments have seen several infrastructure works completed, like the King Duong Vuong Road, the Rach Chiec Bridge and Phu My, thus making important contributions to the city's socio-economic development.

However, Bui Xuan Cuong, director of the municipal transport department, said BT and BOT investments were no longer attractive to investors for several reasons, so the city had to seek other investment models.

Under the PPP model, the private party provides a public service or project and assumes substantial financial, technical and operational risks.

For its part, the Government's contribution to a PPP may also be in kind (notably the transfer of existing assets).

In projects for public good, the Government may provide a capital subsidy in the form of a one-time grant, so as to make it more attractive to the private investors.

In some other cases, the Government may support the project by providing revenue subsidies, including tax breaks.

Given these advantages, the city administration had proposed that a series of technical infrastructure projects be developed using the PPP model, Cuong said.

Although this plan is still on paper, it has been welcomed by many companies since they expect to receive significant support from the State when they participate in the projects.

Some companies have said that the legal aspects of the State's participation in the PPP model had to be clarified to make it more feasible and attractive.

Le Binh, general director of the HCMC Infrastructure Investment Joint Stock Company, said the State should have specific regulations on the guarantee it provided for enterprises to borrow capital from official development assistance (ODA) sources.

He said if joint stock companies were facilitated in getting early returns for their investments, they would find it easier to raise capital through various means.

Binh also suggested the State organise tenders for PPP projects and ensure their quality as well as availability of their investment capital.

Restructured Viettel to concentrate on core business

Viettel corporation's charter capital will be doubled to VND100 trillion (US$4.7 billion) after restucturing, reports VnExpress online.

The corporation is required to withdraw all of its capital from financial investment, but it will be allowed to invest in other projects such as broadcasting in radio and television.

The decision to restructure the Telecom Corporation (Viettel) between 2013-15 was recently approved by the Prime Minister.

Under the restructuring project, apart from its telecoms services, IT and telecoms spare-part production, Viettel will be permitted to invest in broadcasting and postal sectors.

A Viettel representative said the corporation considered the broadcasting industry to be core business thanks to its available telecommunication infrastructure and information technology.

Recently, the corporation was granted a licence by the Ministry of Information and Communications to provide a cable TV service.

In addition, Viettel is also involved in the trading and retail distribution of telecoms products, information technology, finance, banking and real estate industries.

With the expansion of business sectors, from now to 2015, Viettel's charter capital will be lifted to VND100 trillion.

However, the corporation is asked to withdraw its investments from five businesses, including Viettel Technologies Corporation, Vinaconex Commercial Development JSC, EVN International JSC, Vinaconex – Viettel Finance JSC, and Coecoo Rubber Industry JSC.

In addition, it must merge EVN Telecommunications to Viettel's parent company.

In 2012, Viettel's revenue reached VND140 billion, up 18.5 per cent compared to the previous year.

SME owners determined to succeed

The latest survey from Regus, the world's largest provider of work places, shows that up to 89 per cent of Vietnamese entrepreneurs from small and medium-sized enterprises (SMEs) would continue to pursue a business career if they had a chance to redo things.

The survey questioned 26,000 managers and entrepreneurs in 90 countries. The global average of the same index is 85 per cent. Accordingly, regardless of the current challenges that Vietnamese SMEs face, it seems that the entrepreneurs are still determined to develop their own businesses.

Up to 92 per cent of Vietnamese people in business think that the current economic situation is the largest barrier to establishing companies, followed by challenging administrative procedures (agreed by 83 per cent) and the overwhelming power of some big players in the market (agreed by 77 per cent).

More than half of Vietnamese respondents also mentioned the restrictions in approaching capital sources and lack of Government support as severe obstacles for developing a business.

Serge Dupaux, director of Regus Viet Nam, said that Vietnamese SMEs were playing a more important role in the current economic situation as large enterprises were experiencing some withdrawals in the market.

Meanwhile, Nguyen Xuan Anh, chief executive officer of Deli International Solutions, said that SMEs with simple organisational structures and high adaptability would play a key role in stimulating the economy.

Moody's rating for VietinBank ‘stable'

Moody's Investors Service yesterday affirmed the debt and deposit ratings of the Viet Nam Bank for Industry and Trade (VietinBank) as B2 in local currency and B3 in foreign currency. The outlook on the bank's ratings is stable.

At the same time, Moody's raised Vietinbank's baseline credit assessment (BCA) to b3 from caa1 following the capital transfer from the Bank of Tokyo Mitsubishi UFJ, which acquired a 19.73 per cent ownership in VietinBank for VND15.5 trillion (US$743 million).

This leaves VietinBank with the highest BCA among Moody's-rated banks in Viet Nam.

According to Moody's, the completion of the transaction with the Bank of Tokyo Mitsubishi UFJ results in a substantial increase in VietinBank's Tier 1 capital ratio, to 14 per cent from 9.34 per cent as of March 2013.

"This injection of fresh, measurable capital in the bank gives us confidence that the transaction has distanced VietinBank from the risk of requiring external assistance in the near term to remain economically solvent," Moody's stated.

Moody's said the affirmation on VietinBank's debt and deposit ratings reflected its assessment that the probability that support would be provided by the Vietnamese Government (B2 stable) in a systemic crisis was still very high, given the presence of the Government ownership and VietinBank's market share of 12.53 per cent of the banking system loans and 11.23 per cent in terms of system deposits as of the end of 2012.

The Government stake would be diluted to about 64.46 per cent after the transaction with the Bank of Tokyo Mitsubishi UFJ.

Nevertheless, the Government would continue to exert considerable influence on VietinBank through its majority interest.

This Moody's rating on VietinBank concluded the review for an upgrade that was announced on January 16, 2013.

Vinacomin clarifies tax confusion

The Viet Nam National Coal-Mineral Industries Holding Corp (Vinacomin) has clarified a statement on the export of aluminum oxide (alumina).

It has said that a zero tariff would apply, but that it did not extend to the export of aluminum ore, for which tariffs of 15-40 per cent were applicable.

The comment followed opinions arising after the two bauxite projects, Tan Rai and Nhan Co plants in the Central Highlands, were reported to be efficient at conference late last week, Viet Nam Economic Times reported.

The opinion was that the economic efficiency was due to the group enjoyed zero preferential tax in the export of aluminum ore. This caused misunderstanding, Vinacomin said.

Under Resolution 710/2008/UBTVQH12, the tariffs of 15-40 per cent were applied for iron ore and aluminum ore, not for alumina.

According to Vinacomin, alumina with code 2818.20.00 attracted zero export tax. Big alumina exporting countries, such as Brazil, India and Australia, applied the same rate.

Alumina is different in nature to aluminum ore. Alumina is a product of the extracting and refining of aluminum ore.

During bauxite mining, the group must also pay environmental tax, value added tax, corporate income tax and natural resource use tax.

At the conference late last week, Vinacomin said that the bauxite mining plants in the Central Highlands were socio-economically efficient and environmentally safe.

Officials off to Thailand to boost tourism

Twenty-five Thai and Vietnamese officials headed by the Royal Consul General in HCM City visited southern Viet Nam yesterday on their way to Bangkok to promote tourism activities.

Accompanied by Vietnamese and Thai media, the officials aim to promote the sustainability of tourism in the ASEAN Economic Community through 2015.

The Thai Royal Consul General in HCM City, Panpimon Suwannapongse, travelled with Pham Thanh Tuoi, Chairman of the Ca Mau Province People's Committee, Tran Kim Mai, Vice Chairwoman of Tien Giang Province's People's Committee and Dao Anh Dung, Vice Chairman of Can Tho Ciy's People's Committee

Leaders of other localities in the Mekong (Cuu Long) Delta along the tourism economic corridor were also present.

The corridor is located along coastal route R10 that connects the Trat province of Thailand to the border of Cambodia through Koh Kong.

It goes along the Thai coastline to Kampot and Kep of Cambodia, and then links to the border through Ha Tien and ends at southernmost Ca Mau Province in Viet Nam.

Thailand considers the southern coastal route linking Cambodia and Viet Nam to be important for economic cooperation and development.

Beginning from HCM City, the officials stopped at Can Tho, Ca Mau and Kien Giang Province. They then plan to visit Sihanoukville and Koh Kong in Cambodia on their way to other stops.

At each province in both countries, the participants will learn about the area's economic potential and opportunities.

The Gross Domestic Product of the five provinces combined is one-fifth of Thai GDP.

Thailand also wants to open a sea route from the Thailand Gulf to Viet Nam's Ca Mau province.

According to an official from Thai Trade Center in HCM City, trade volume between the two countries has increased 20 per cent each year in recent years. Thai investment in Viet Nam ranks 10th among other countries.

Thailand also wants to promote investment in small-and medium-sized enterprises in Viet Nam, especially in the Mekong Delta's agricultural sector, fishery and food processing.

Thai investment is now mostly for infrastructure for industrial zones, new urban centers and hotels, and facilities for tourism and industry in southeast Dong Nai and Binh Duong provinces, and HCM City and Ha Noi.

With further investment along the corridor, Ca Mau is expected to become an important economic area in the Mekong Delta and a business gate for the ASEAN member nations.

PVF shareholders approve merger plan

A shareholder meeting on Saturday of PetroVietnam Finance Corp (PVF) resolved that the company would merge with Western Bank to form a new institution.

The new entity was expected to have an equity of VND9 trillion (US$428.6 million) and total asset value of VND100 trillion ($4.8 billion).

Western Bank's shareholders also approved the plan late last month, which was believed to help build an entity with adequate resources for developing banking services and major energy projects.

The two sides pledged to continue normal operations, maintain current business relations and assure the rights and interests of relevant organsations and individuals, including their customers, suppliers and agents.

PVF chairman Nguyen Dinh Lam told online newspaper VnExpress.net that the scheme was just waiting for the State Bank of Viet Nam's approval, adding that Western Bank's financial situation had been cleaned up although it had previously been exposed to significant bad debts.

Industry insiders said the greatest advantage of the merger bank would be the network since PVF, under the brand name of the oil and gas industry, had advantages in financing economic groups, while Western Bank had quite a large network in the Cuu Long (Mekong) Delta region.

After the merger, the 78 per cent stake which Viet Nam National Oil and Gas Group (PetroVietnam) was holding at its affiliate PVF would fall to 52 per cent at the new entity.

PetroVietnam general director Do Van Hau said the parent company would then sell more stakes to further reduce its equity in PVF following a capital withdrawal road map, but he affirmed that the group would continue to be "a firm stay" for the merger bank.

"We have over VND10 trillion ($476.2 million) deposited in a PVF account and don't have any plans to change this amount even after the merger," he said.

According to the law, PVF share listings would be terminated after the merger. The company's shares are currently being traded at around VND8,500 ($0.4) on the HCM City Stock Exchange.

The equity of the new bank corresponded to 900 million shares worth VND10,000 ($0.47) each and the possibility of listing these shares on the stock market was still under consideration, according to the PVF management board.

Non-banking financial corporation PVF had planned to become a banking institution for two years and merging with Western Bank was the easiest way for it to do so.

For Western Bank, which had been facing liquidity troubles, merging with the PVF offered a means to save itself from bankruptcy, industry insiders said.

Constipated credit flows stunt enterprises

Improving credit flows between banks and enterprises was important at a time when bad debts remained uncleared and businesses were struggling, a seminar in Ha Noi heard yesterday.

Economist Tran Dinh Thien said that first-quarter domestic economic indices showed uncertain prospects for economic recovery this year.

Two factors decisive for recovering growth and stability were weaker than those in the past years, he said, pointing out that total lending grew only 0.03 per cent while budget revenues and spending had reached 16.6 per cent and 18.5 per cent, respectively, of the quotas allocated for the whole year.

Purchasing power was extremely weak with the consumer price index (CPI) declining 0.19 per cent in March and edging up only 0.02 per cent in April.

The index of industrial production (IIP) expanded 4.9 per cent in the first quarter, lower than the 5.9-per-cent rise in the same period last year.

For the first time, the number of closed-down enterprises nearly equalled the number of newly-registered businesses, reaching 15,300 and 15,700, respectively.

Last month, total deposits at credit institutions increased 5.34 per cent over the end of last year while their combined lending expanded only 1.4 per cent.

Thien said that recent deposit interest-rate cuts hadn't helped much in easing firms' access to loans, suggesting the Government immediately apply a ceiling lending rate instead of setting the current deposit cap (of 7.5 per cent).

The State Bank of Viet Nam Credit Department director, Nguyen Viet Manh, said many enterprises still failed to manage loans, although lending rates had declined because they didn't meet banks' standards. Proving the ability to pay debts was necessary for firms to improve the situation.

Economic expert Dang Duc Son urged firms to enhance management of resources, especially balancing cash flows, to cope with capital limits.

Solving bad debts should continue to be a top priority and restructuring economic groups should be a focus for the country to facilitate lending, Thien said.

SeaBank general director Dang Bao Khanh said that the bank would continue to offer small – and medium-sized enterprises an interest rate of 9.9 per cent within a preferential lending package worth VND2 trillion ($95.2 million) in this year, a programme it applied since March 15.

SCB introduces online term deposits

Standard Chartered Bank Viet Nam has launched online term deposits, allowing customers to make daily term deposits at the highest interest rates and make unlimited withdrawals.

The service is suitable for employee banking and priority banking clients who regularly make term deposits. It is available in VND, AUD, GBP, EUR, SGD and USD with minimum opening balance of 1,000 in a Foreign Monetary Unit or VND10 million (US$476).

VPBank, VCCorp enter partnership

The Viet Nam Prosperity Joint Stock Commercial Bank (VPBank) and the Viet Nam Communications Corporation (VCCorp) recently signed a strategic agreement in Ha Noi aimed at providing better services to their customers.

Under the agreement, the two sides will work together to promote communications, develop brands, and integrate e-commerce, financial and technological solutions to improve the quality of their service.

The agreement would allow both sides to take advantage of each other's strengths and improve operations and efficiency for customers, said VPBank General Director Nguyen Duc Vinh.

VPBank is committed to creating favourable conditions for VCCorp and its customers to access and use the bank's services with the most preferential service charges.-

Banana profits ripen

Farmers from the Mekong Delta are earning high profits from bananas exported to China. Nguyen Hoang Bac, a trader from Dong Thang Commune in Can Tho City's Thoi Lai District, said he had hired 20 to 30 workers to purchase 15 to 20 tonnes of bananas from plantations in the region each day. The bananas, which were bought for VND3,300 (US$0.16) to VND6,000 ($0.29) per cluster, were packed into containers before being exported to China through border trading. Bac said a large volume of bananas had also been exported to China from HCM City. A farmer can earn profits of VND12 million to VND15 million on 1ha of banana cultivation, he said.

Domestic rice exports hit $1 billion

Viet Nam exported 2,385 million tonnes of rice by the middle of this month, reaching a revenue of more than US$1 billion so far this year, said the Viet Nam Food Association (VFA).

The figures have the country meeting 30 per cent of its rice export targets, which are set at 7.5 million tonnes this year.

Last year, the country exported 7.72 million tonnes of rice.

Market data showed that global rice exports have been stagnant due to abundant supplies from major rice exporters around the world.

Domestic rice value, in line with the global trend, has been falling. The International Rice Research Institute forecast that India, the world's largest rice exporter, would ship only 7 million tonnes of rice this year, 32 per cent less than the record high of 10.25 million tonnes last year.

Thailand is forecast to export more rice, at 8.5 to 9 million tonnes of rice this year, higher than the level of 6.95 million tonnes last year. Viet Nam's rice exports are expected to top 7 million tonnes this year.

Another forecast from the US Department of Agriculture said India would export 9 million tonnes of rice this year.

According to VFA, higher quality broken rice is sold at VND7,550 -7,650 per kilo while lower grades sell for VND7,250-7,350 and as low as VND7,050-7,150 per kilo.

The Food and Agriculture Organisation (FAO) forecast world rice productivity would increase by 2.1 per cent this year to 497.7 million tonnes. Rice inventories would reach 171.8 million tonnes due to a surplus of supplies over demand.

Circular finally issued to guide implementation of amended IP law

Law 36/2009/QH 12 dated June 29, 2009, amends and supplements a number of Articles of Law on Intellectual Property 2005 (Law on Intellectual Property) and provides some new amended regulations on establishment of industrial property rights, including, inter alia, regulations on rights to registration of a collective mark, certification mark in respect of the geographical name or other signs indicating the geographical origin of special products from Viet Nam, the first-to-file principle, time limits for examination of the applications for registration of IP objects. Accordingly, a number of Articles of Decree No. 103/2006/ND-CP, guiding the implementation of a number of Articles of the Law on Intellectual Property have been amended and supplemented under Decree No. 122/2010/ND-CP dated 31 December 2010 (Decree 103). In connection with such amendments and supplementations, the Ministry of Science and Technology has issued Circular No. 05/2013/TT-BKHCN dated February 20, 2013, amending and supplementing a number of Articles of Circular No. 01/2007/TT-BKHCN dated February 14, 2007, guiding the implementation of Decree 103, amended and supplemented under Circular No. 13/2011/TT-BKHCN dated July 30, 2010, and Circular No 18/2011/TT-BKHCN dated July 27,2011.

Under Circular 05, the application for registration of a certification mark certifying the geographical origin of the products, or collective mark, certification mark containing a geographical name or other signs indicating the geographical origin of the local special products, requires a geographical map certified by and a letter of consent from the local People's Committee of the city, province directly under the central authority. And regarding the signs indicating the geographical origin of a product, it is specified that such signs may be local geographical names (including official or common names currently or historically used), local symbols (including images of local maps, typical works, famous landscapes, etc) or other relevant signs used for special products from the locality, plants or animals grown at the locality or products manufactured from such plants or animals, products exploited from the natural resources at the locality, products of the developed industries of the locality.

Regarding the time limits for examination of applications for registration of IP objects, Circular 05 clarifies that the time period served for the applicant to respond to a official notification shall not be counted to the time limit for examination of a registration application, and such time period is counted from the issuing date of the notification to the submitting date of the response, or the time period fixed in the notification, including permitted extension time.

Circular 05 also provides details for application of the first-to-file principle in respect of patent applications, industrial applications and trademark applications which have been determined to satisfy the patentable conditions or registration requirements, respectively (complied applications). Namely, for checking the priority in respect of the relating complied patent applications for the purpose of applying , it is required to do the patent search upon, but not limit to, the mandatory patent information resource in respect of all patent applications received by the National Office of Intellectual Property ("NOIP") up to the time of the checking, which have the same ICP (counting to the third index) and sooner filing date or priority date (if applicable) in comparison with the ones of the patent applications in question, and have not yet been published or have been published with the publication date later than filing date or priority date of the patent application in question.

(i) In checking the priority for the application of the first-to-file principle for complied industrial design applications, it is required to do the industrial design search upon, but not limit to, the mandatory industrial design information resource in respect of all industrial design applications received by the NOIP up to the time of checking, having the publication date, filing date or priority date (if applicable) sooner than filing date or priority date (if applicable) of the industrial design application in question; all industrial design applications and patents for industrial design published by other organizations, countries within the time of 25 years prior to the filing date or priority date (if applicable) of the industrial design application in question; and other industrial design information collected and kept by the NOIP. (ii) In checking the priority for the application of the first-to-file principle for complied trademark applications, it is required to do the trademark search upon the trademark information in respect of all trademark applications received by the NOIP, having the publication date, filing date or priority date (if applicable) sooner than filing date or priority date (if applicable) of the trademark application in question.

The Circular 05 comes into effect from 5 April 2013.

SBV gives assurance that VAMC to be approved

Prime Minister Nguyen Tan Dung yesterday approved a plan to set up the Vietnam Asset Management Company (VAMC) and a decree on its organisational structure and activities.

The company, therefore, would be likely to go into operation in the second quarter.

Under the plan, VAMC is a one-member limited company, 100 per cent State-owned and subject to the Government's management and supervision. VAMC has charter capital funded by the SBV.

The company will issue bonds to buy debts of credit institutions who can use the bonds to access refinancing loans of the central bank.

Through its debt purchase process, VAMC will ease debt repayment pressure; support firms to overcome their temporary financial difficulties. These firms' debt schedules can be adjusted or their overdue interests can be reduced or exempted.

With special authorities, VAMC will also co-ordinate with other relevant ministries and agencies to help firms deal with legal and tax policy difficulties.

With the VAMC participation, the process to cope with guarantee assets of credit institutions will be speeded up. Investors will be also allowed to take part in the process as the assets will be bid for according to market rules.

According to the central bank, local firms that sell non-performing loans to the VAMC can still borrow funds from commercial banks.

Bird's nest farming to be regulated

The first decree dealing with the farming of edible nests built by swifts using their saliva will impose conditions on the farms' location, maintenance and the use of sounds to lure the birds.

At a meeting organised by the Ministry of Agriculture and Rural Development in HCM City yesterday, several enterprises, agriculture officials and experts agreed on the need for regulations to enable better management of the industry.

The regulations would also provide a greater sense of security for enterprises, they said.

Farming swifts for their edible nests has developed strongly in Viet Nam since 2007, mostly in HCM City and other southern and central provinces, said Nguyen Duc Trong, deputy head of the Department of Livestock Production.

However, there was no legal framework or development guidelines that would enable the new industry to develop in a sustainable manner, he said, explaining the ministry's rationale for drafting a decree.

The draft decree stipulates conditions that cover the location, the use of sound to lure the birds, hygiene, disease control, as well as other aspects of exploitation.

Participants expressed basic agreement with the contents of the draft decree, but said it should have details to be effective.

According to the draft decree, birdhouses that are built after the decree takes effect should comply with local zoning plans or obtain approval from local authorities.

It also encourages the building of birdhouses far from residential areas, hospitals, schools and markets.

But Tran Quang Cui, deputy director of the southern Kien Giang Province Department of Agriculture and Rural Development, said, "the ministry should regulate that birdhouses must be located far from residential areas, hospitals and schools and markets, instead of just encouraging enterprises to do so."

Many other participants agreed with Cui that conditions for the location of birdhouses should be mandatory.

Delegates also agreed that those birdhouses that were built before having the decree must be upgraded to minimise negative health and environment impacts, and wanted the decree to stipulate clearly how the upgrade should be done and the time period in which it should be done.

The draft decree stipulates that the sounds used to lure the birds should not exceed 70dBA between 6am and 9pm, and 55dBA in the hours thereafter.

Many delegates disagreed with this provision, saying the condition should only apply to the hours between 9pm and 6am, and there was no need to regulate the sound during daytime.

Huynh Phuoc Trung, deputy director of the HCM City Department of Agriculture and Rural Development, asked the Veterinary Department to issue guidelines on dealing with diseases to help localities and breeders.

Do Tu Quan, general director of the Cuu Long Phi Joint Stock Company, said that to export the edible nests to foreign markets, the products must meet requirements set by importing countries, like having legal certificate for swifts breeding as well as certification that the nests from the farms are fit for consumption and have export permits.

However, all these conditions are not covered by the draft decree, she said.

Deputy Minister Vu Van Tam said the ministry would work further on the decree to help enterprises meet requirements set by importing countries and facilitate exports of the edible nests.

The ministry would collect all opinions from delegates and promulgate the official decree as soon as possible to help develop the industry in a sustainable manner, he said.

With its favourable weather, Viet Nam has good potential for farming swifts for their nests, according to Dang Pham Minh Loan, general director of theYen Viet Joint Stock Company.

Currently, Thailand, Malaysia and Thailand are the world's biggest suppliers, accounting for 80-90 per cent of the world output.

Viet Nam is said to have about 700 enterprises and households engaged in breeding swifts in 1,500 birdhouses, producing around 10 tonnes of bird's nests a year.

Firms seek Mexican deals

The Viet Nam Embassy in Mexico is organising a business matching meeting between Vietnamese firms and 150 Mexican companies on June 6.

The event may be a good chance for domestic firms to meet and seek new business opportunities.

Viet Nam's exports to Mexico continue to grow, with the value last year estimated to pass USS$1 billion. Among key exports were footwear, seafood, coffee, and garments and textiles.

Work starts on Big C Ha Long

Construction of Big C Ha Long, a trade centre and supermarket complex, began yesterday in the northern province of Quang Ninh.

Capitalised at US$18.6 million, the 20,000sq.m complex is expected to be finished within 14 months.

Speaking at the ground-breaking ceremony, provincial People's Committee vice chairman Nguyen Van Thanh said that the complex's opening would help to better meet increasing demand of local consumers.

Trade deficit hits US$830 million in May’s first half

The first two weeks of May have seen Vietnam earn US$5.11 billion from exports, but spend US$5.94 billion on imports.

According to the latest Vietnam General Department of Customs statistics, trade turnover from May 1–15 totalled US$11.06 billion, up 5.4% from two weeks earlier.

It has brought Vietnam’s trade value to US$89.94 billion thus far this year, a year-on-year increase of 16.8%. Exports contributed US$44.21 billion, up 16.4%, while imports increased 17.1% to nearly US$45.73 billion.

At the end of May’s first fortnight, Vietnam faced a US$1.51 billion trade deficit equivalent to 3.4% of its total import-export turnover.

Some export commodities declined in value, including vehicles, machinery, and steel. Key exports like garments and footwear enjoyed sharp increases of up US$50 million and US$33.5 million respectively.

Foreign direct investment (FDI) businesses contributed US$3.14 billion to the reviewed period’s export revenue, 6.5% percent lower than in the second half of April 2013. Over five months, they have earned US$26.36 billion from exports, representing a year-on-year increase of 27.9% and accounting for 59.6% of Vietnam’s total export value.

The FDI sector imported goods worth US$3.37 billion in May’s first half, increasing its five-month import value by 26.4% from a year earlier to US$25.4 billion. This constituted 5% of the country’s total import spending.   

A step towards bad debt settlement

The Prime Minister has decided to establish the Vietnam Asset Management Company (VAMC) in an effort to settle bad debts that are hampering banking and business operations.

Under a decision signed on May 21, VAMC will operate in the second quarter of 2013 in the form of a wholly State owned single member limited liability company and under the supervision of the State Bank of Vietnam (SBV).

The company will issue special bonds to purchase debts from credit organisations. Businesses that owe banks are allowed to access new loans after selling their debts to VAMC.

Bad debt is considered the biggest obstacle to banking and business operations. Businesses cannot access new loans unless they pay back their debts. Meanwhile, banks find it difficult to disburse their huge deposits despite subsequent interest rate cuts.

In a report presented at the ongoing National Assembly session, the government said the bad debt ratio has decreased considerably to 7.6 percent.

However, former SBV governor Cao Si Kiem told the media on May 21 that the rate remains high, and if the issue is not addressed immediately, it will be a bottleneck in credit disbursement.

According to Kiem, VAMC cannot shoulder the burden alone, and the ball is still in banks’ and businesses’ court.

“Bad debt will be run up again if it is not settled within five years,” he warned. “The crux of the matter is addressing the quality and health of businesses. Inefficient businesses will be eliminated from the market.”

Economic expert Dr Nguyen Tri Hieu noted that bad debt is a thorny problem for interest rate adjustments.

“The current widening gap between deposit and lending interest rates is the result of bad debt. If the matter is not tackled completely, banks will have to put their invisible fund on hold that eventually widens the rate gap.”

 Dr Vu Dinh Anh, another economic expert, said VAMC’s bad debt settlement is just the tip of the iceberg, and the bottom line is restructuring the economy.

At the press briefing, Nguyen Thi Hong, an SBV official, reported that the number of businesses that declared bankruptcy or suspended operations remains high, and banks are reluctant to offer subprime loans due to substantial risks.  

RoK businesses seek opportunities in HCM City, Danang

A business forum was held in Ho Chi Minh City on May 21 for Vietnamese and Republic of Korean enterprises to meet and seek partners and investment opportunities.

The event was held on the occasion of the arrival of a RoK business delegation, as a joint effort of the Vietnam Chamber of Commerce and Industry in HCM City and the Korean Small and Medium Business Corporation (SBC).

The Korean guests, who operate in manufacturing machinery, electrical home appliance and building materials and chemicals, are visiting the southern economic hub to study the local business-investment environment.

*** Representatives from the Korean Aerospace Industries, the Republic of Korea, has arrived in central Danang city to study the possibility of setting up a factory producing spare parts for planes.

Local newspaper Dau tu (Investment) cited the management board of the Danang high-tech zone as saying that such a factory will produce parts for the European Aeronautical Defence and Space Company N.V, the parent company of Airbus, adding that representatives of EADS also arrived in Danang at the same time.

The scale of the factory and investment has not been revealed. However, the newspaper reported that in 2010 the Korean Aerospace Industries had proposed a similar project in the locality.

The company wanted to set up a joint venture with Vietnam Airlines to carry out the project. But now, it will implement the project on its own and the selected location for the factory will be the Danang High-Tech Park.

If realised, this will be the second factory to manufacture spare parts for airplanes in the country. The first one was the MHI Aerospace Vietnam Ltd. Company invested by Japan’s Mitsubishi group. MHI , located in the Thang Long industrial park in Hanoi , was granted a licence in January 2008 with a total registered capitalisation of US$7 million.     

CPI down in Hanoi, HCM City

May’s consumer price index (CPI) in both Ho Chi Minh City and Hanoi declined by 0.16% and 0.22 % respectively from the levels of the previous month.

This is the third successive month the CPI has tumbled in the two cities.

Food and drink prices in Ho Chi Minh City, especially in relation to eating out, increased slightly, while culture, entertainment, and tourism services saw moderate declines of 0.09%. Healthcare prices also slipped down by 0.02%.

Hanoi’s transportation costs saw the highest decrease of 0.78%, followed by food and drink (down by 0.49%), postage and telecommunications (down by 0.3%), and restaurants, utilities, and building materials (down by 0.04%).

Hanoi Statistics Office Head Cong Xuan Mui said the CPI’s decline in the capital city can be credited to low consumer demand in spite of the month’s long holiday.

April's three consecutive petrol price cuts also contributed to the CPI’s downward trend.

Hanoi is planning to launch major promotional sales involving 500 businesses in the hope of stimulating local consumer demand.

ASEAN agricultural standards promoted

Delegates from eight Southeast Asian countries are gathering at the 4th Expert Working Group Meeting on ASEAN’s Good Agricultural Practices (EWG ASEAN GAP), held in Hanoi over May 21–24.

The event, hosted by the Vietnam Ministry of Agriculture and Rural Development, focuses on strategic action plans promoting ASEAN GAP during the 2013–2016 period. It aims to strengthen ASEAN GAP application collaboration between regional countries and encourage additional involvement by the private sector, civil society, and non-governmental organisations.

ASEAN GAP pilot projects have been implemented on several of the region’s farms. These pioneers hope to receive ASEAN GAP certificates by 2015.

ASEAN agricultural experts discussed measures to ensure fruit and vegetable hygiene and safety and reviewed the implementation of GAP fruit and vegetable policies in ASEAN member nations.    

India, Vietnam boost trade exchange

A business exchange programme was held in Hanoi on May 20 with the aim of helping Vietnamese and India businesses to seek investment and trade opportunities.

The event was co-organised by the Indian Embassy in Vietnam , the Haryana Chamber of Commerce and Industry (HCCI) and the Vietnam Chamber of Commerce and Industry (VCCI).

In his speech, Indian Ambassador Ranjit Rae highlighted the time-honoured friendship and long-standing cooperation between the two nations while saying that India is now one of Vietnam’s ten biggest trade partners.

In 2012, despite facing global economic difficulties, bilateral trade achieved relatively high growth. In the first four months of 2013 it reached more than US$1.8 billion and is expected to exceed US$5 billion by the end of this year.

However, the two countries’ economic and trade relations are still far from matching their potential and strengths, Rae affirmed, saying that he hopes through the exchange programme, businesses will understand more about their partners to create more specific cooperation programmes to intensify investment, thus stimulating bilateral economic growth.

Deputy Head of the African, West and South Asian Markets Department under the Ministry of Industry and Trade, Tran Quang Huy, praised the effective cooperation between Vietnam and India over the years and reiterated Vietnam’s consistent policy of fostering ties with India within bilateral and multilateral frameworks.

Vietnam is also becoming an important trade and investment partner to India and is one of priorities in the latter’s “Look East” Policy, Huy said.

Deputy PM encourages Thai investment in Vietnam

Vietnam hopes that the Thai government will encourage more Thai businesses to invest in Vietnam’s central region, especially the East-West Economic Corridor.

Deputy Prime Minister Nguyen Thien Nhan expressed his hope at a meeting with Thai PM Yingluck Shinawatra in Chieng Mai on May 20 on the sidelines of the ongoing 2nd Asia-Pacific Water Summit (APWS).

He also proposed that the Thai government and Yingluck herself share experience and support Vietnam in successfully hosting the second Mekong River Commission (MRC) Summit in 2014.

Both host and guest noted with satisfaction the growing ties of the friendship and comprehensive cooperation between the two nations in all fields, from politics, security, and national defense to trade, investment, culture, and social affairs, especially following the second joint Vietnam-Thailand Cabinet meeting in October 2012.

Nhan said that the upcoming Thai visits by Party General Secretary Nguyen Phu Trong and Prime Minister Nguyen Tan Dung, as well as the third joint Cabinet meeting this year will add fresh impetus to bilateral relations.

He welcomed Thailand’s initiative to host the 2nd APWS which he said has offered a good opportunity for regional participating nations to devise effective measures to protect and use water resources sustainably.

Yingluck and Nhan also discussed regional and international issues of mutual concern. They exchanged issues relating to Vietnamese guest workers in Thailand and agreed to speed up the negotiation and signing of a Memorandum of Understanding on labour cooperation between the two countries.

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

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