Huge hotel project in BR-VT remains stalled after years

The Saigon Atlantic Hotel project worth up to US$4.1 billion in Ba Ria-Vung Tau Province has remained stalled due largely to site clearance and land rental problems, although the project owner obtained a license seven years ago.

Last week, leaders of Ba Ria-Vung Tau had a meeting with relevant departments and agencies to discuss ways to remove difficulties and get the project restarted.

The provincial government will work with the investor, U.S.-based Winvest LLC, first to assess its capability and ask it to soon finish doing the 1/500 scale planning used as a basis for authorities to determine land rent.

The Saigon Atlantic Hotel project covers 297 hectares in wards 11 and 12 of Vung Tau City and over 600 hectares of sea surface.

The province was originally expected to hand over 100 hectares of land in 2009 so that the project could be kicked off within the year.

Between April 2007 and June 2008, the investor advanced VND98 billion in land rent to the province to facilitate site clearance and compensation for affected families. However, the investor was not given the cleared site as promised.

Ba Ria-Vung Tau has so far cleared 214.9 hectares and paid VND261 billion in compensation, with VND163 billion sourced from the budget and the rest from the investor’s advanced rents. The compensation cost for the remaining 82.4 hectares is estimated at over VND600 billion.

According to the provincial Department of Planning and Investment, the biggest hindrance is that the province is facing financial constraints in paying site clearance compensation, and has to rely on advance land rent payments by the investor. But this is also where a new problem emerges, as the rent level has picked up over the years.

As per law, the investor is required to pay land rent when the site is handed over, and in this case November 2012. This has placed the investor at a disadvantage as the rate at the time was much higher than the level it should have deserved in 2007 and 2008.

The rent differential between two points of time, according to calculations of the province, amounts to VND800 billion.

The investor expects to pay the rent level applied in 2007 and 2008, which is beyond jurisdiction of the provincial government.

Therefore, the local authorities will ask the Ministry of Finance to offer special land rent to the Saigon Atlantic Hotel.

According to a source, due to unfinished site compensation, many households have not relocated.

Under the investor’s original plan, the project has a five-star hotel, recreational facilities, a golf course, a shopping area, sport facilities and villas.

Inter-bank rates tend to rise

The average interest rates on the inter-bank market last week rose for all tenures, according to the central bank’s report.

The overnight interest rate inched up 0.63 percentage point on average against the previous week. The respective rates of one-week and one-month loans rose by 0.48 and 0.22 percentage point per year, Vietnamplus reports.

According to the central bank, the mobilization and lending rates in Vietnam dong were stable and credit institutions have strictly complied with the interest rate regulation.

The rates of demand deposits and deposits of less than one month ranged between 0.8% and 1% per year. Deposits of less than six months, 6-12 months and over 12 months carried the rates of 5-6%, 6-7.5% and 7.5-8.1% respectively.

Meanwhile, the lending rates offered to priority enterprises in the sectors of agriculture, rural development, export and supporting industries as well as small and medium enterprises and hi-tech ones averaged out at 7-8% per year. The lending rates offered to enterprises in other sectors ranged between 9-10% for short-term loans and VND10.5-12% for medium- and long-term loans.

Besides, banks continued offering preferential rates of 6-7% per year on loans to enterprises with healthy finance and feasible business plans.

With U.S. dollar loans, the overnight rate stayed at 0.18% per year and the one-week rate picked up 0.03 percentage point from the previous week. However, the average rates of one-month, three-month and six-month loans dropped by 0.02, 0.04 and 0.24 percentage point respectively.

The borrowing rates in dollar average out at 0.25% per year for deposits by corporate clients and 1% for individuals. Meanwhile, short-term loans saw the rates set at 3-6% and the rates of medium- and long-term loans were 5.5-7%.

Expressway opens to all autos next week

After opening new approach roads leading to the HCMC-Long Thanh section of the HCMC-Long Thanh-Dau Giay Expressway, from August 28 all kinds of automobile will be allowed to run on the road instead of only light automobiles of under ten tons as previously announced.

According to Vietnam Expressway Corporation (VEC), the developer of the expressway, the company will inaugurate two new roads leading to Belt Road No. 2 and close two old ones. The new roads help shorten the distance by 4 kilometers compared to the old routes.

Regarding toll collection applied to automobiles above ten tons, Vietnam Expressway Investment and Development Corporation said it is waiting for instruction from the Ministry of Finance and will inform drivers in the coming time.

The expressway’s 20-kilometer section starts at Belt Road No. 2 and ends at National Highway 51. The remaining section stretching 30 kilometers from Long Thanh to Dau Giay is still under construction.

It is estimated that at the end of 2015, the whole HCMC-Long Thanh-Dau Giay Expressway will be completed.

No recalled Ford autos shipped to Vietnam

Ford Motor Company has made an announcement to recall up to 163,000 autos in the world to fix certain technical problems, but none of the erroneous vehicles have been shipped to Vietnam, according to Ford Vietnam.

Over 160,000 units equipped with 2.0L engines of 2013-2014 Ford Escape and Ford Focus ST have been recalled due to bad wiring that can disrupt signals to the powertrain control module, thus undermining engine performance.

In Vietnam, the manufacture of Ford Escape came to a halt early this year while that of Ford Focus still continues. Ford Vietnam said these models are not affected by the recall.

Other 1,300 crossovers of 2015 Lincoln MKC have been also recalled due to air bubbles between layers of the windshield. Ford said the defect could get worsened under high temperatures and may pose a danger for drivers.

Finally, some 1,900 vans of 2015 Transit have been recalled due to brake fluid leaks and sliding doors without epoxy reinforcement that could open in the event of a side-impact crash. However, the Transit models in Vietnam are not influenced either.

Up to now, there has been no report on any accidents or injuries linked to these technical problems.

Workshop seeks ways to stabilise exports to US, EU

Local exporters need to proactively meet requirements of their import markets, particularly the provision of full, clear, and accurate information of their products, in order to secure stable sales in the US and EU markets, experts have said.

They came with the advice at a workshop to identify risks of exporting goods to the US and EU markets held in Ho Chi Minh City on August 21.

Meanwhile, Deputy Minister of Industry and Trade Tran Tuan Anh called on businesses themselves to seek effective methods to overcome barriers installed by these markets.

According to the official, Vietnam’s export turnover recorded an average growth of 15 percent in the first eight months of 2014, with stability seen in the US, EU and Japanese markets.

However, commercial and technical barriers and respective business customs remain big hurdles, requiring local businesses to make greater efforts.

In recent time, several export items of Vietnam have been recalled in the US and EU markets, mainly due to their failure to meet technical and safety requirements.

Japanese medical device firm runs plant in Dong Nai

Paramount Bed Vietnam Co., Ltd officially put its factory in southern Dong Nai province into operation on August 21.

As a subsidiary of Japan’s Paramount Bed Group, a major manufacturer and distributor of hospital and nursing care supplies, Paramount Bed Vietnam is running on an area of 3ha at Long Duc industrial park.

According to the firm’s representatives, their plant, built at a cost of over 7 million USD, will provide about 350 tonnes of hospital equipment like beds, trolleys, cabinets and dining tables for patients among others a year.

All these products will be exported to Japan.

This is Paramount Group’s third plant of its kind in Asia. Earlier, the group has set up its plants in Indonesia and China to churn out similar products.

Dong Nai has hosted over 170 Japanese enterprises which have so far poured in a total capital of over 3.1 billion USD.

So far this year, the province has attracted over 920 million USD of foreign direct investment (FDI) capital.

Local authorities have asserted that the province will create all possible conditions for Paramount Bed Vietnam to effectively operate in the coming time.

FTAs bring more opportunities for plastic businesses

Free trade agreements (FTAs) have opened up opportunities for Vietnamese plastic businesses to expand their export markets, the Vietnam Economic News reported.

According to the newspaper, the Vietnamese plastic industry needs to build production connectivity to help businesses tap and secure market positions, aimed at obtaining sustainable development in the long run.

The country exported plastic products worth an estimated 992.12 million USD in the first half of 2014, up 17.61 percent from the same period last year.

Japan remained the biggest importer of Vietnamese plastic products. It shipped plastic products worth 245.98 million USD from Vietnam in the first half of this year, accounting for 25 percent of Vietnam ’s plastic exports in that period, up 25.11 percent from the same period last year.

The US was the second biggest importer with a total import value of 125.5 million USD in the first half of this year, accounting for 12.65 percent of Vietnam ’s plastic exports in that period and up 38.69 percent from the same period last year.

The EU market provided many opportunities for Vietnamese plastic businesses. Importers highly appreciated the quality of Vietnamese plastic products so their orders to Vietnamese exporters grew in value. Vietnamese plastic exports to Germany were 55.97 million USD in the first half of this year, up 6.26 percent from the same period of 2013, while those to the Netherlands amounted to 50.97 million USD, up 19.96 percent. Plastic exports to EU markets grew 3-6.1 percent per year.

India is expected to be a promising market for Vietnamese plastic products in the future. The demand for plastic products in Indian industries increased and the demand for packaging in India soared considerably. The boom in infrastructure, agricultural modernisation, rising incomes and the concentration of population in urban areas also increased the demand for industrial and civil plastic products.

Vietnam Plastics Association Chairman Ho Duc Lam said that the plastic industry focused on both quality and quantity to serve for exports. Vietnamese plastic exports in 2014 are expected to grow 13.5-16.5 percent over 2013.

In the context of economic integration, Vietnamese plastic businesses need to renovate technology, improve product quality and design and learn about the market’s new trends. They need to modernise technology and production lines, focus on developing environmentally friendly products,

In the long term, Vietnamese businesses need to build production connectivity to form major product supply chains, giving priority to product quality improvement, Lam said.

Dong Nai among five leading exporters in Vietnam

The southern province of Dong Nai is among the country’s top five leading localities in export with its Jan-August turnover estimated at over 8.1 billion USD, a year-on-year increase of 14.5 percent.

In August alone, the locality raked in nearly 1.2 billion USD from exports, the highest level since the beginning of this year.

The success was significantly attributed to efforts by local authorities in organising trade and investment promotion activities in several countries, said Le Van Danh, Director of the provincial Department of Industry and Trade.

Through these activities, local enterprises, especially those producing textiles, footwear and fibre, set up partnerships and signed long-term orders to ship their goods abroad, he noted.

To realise its export target set for the year, Danh said local authorities will continue to increase promotion activities as well as create all possible conditions for enterprises to bring their ware to new markets such as Africa, the Middle East and South America.

From now to 2015, Dong Nai will focus on the markets of Cambodia, Japan, the Republic of Korea, India, Australia, Chile, Myanmar, Sri Lanka and the United Arab Emirates (UAE), which have great demand of the locality’s key products.

The department will regularly hold meetings with firms to swiftly address difficulties facing them in export.

Mekong Delta seeks to capitalise on global integration

Businesspeople and authorities in 13 Mekong Delta cities and provinces shared opportunities and obstacles arising from the global integration at a conference in Can Tho city on August 21.

Speaking at the event, Deputy Foreign Minister Bui Thanh Son urged them to update knowledge and information to make them highly competitive, both at home and abroad.

The conference was a platform for participants to suggest ideas for the sake of sustainable development, he said.

Businesses need to advance professionally between now and 2015, from human resources to management, said Director of the Centre for Economics and Policy Research under the National Economics University Nguyen Duc Thanh.

Under the auspices of the Hanns Seidel Foundation of Germany, the event will run until August 22.

Lao Cai halts temporary import, re-export via Ban Vuoc gate

The People’s Committee of the northern province of Lao Cai, which borders China, has decided to halt temporary import and re-export activities through its Ban Vuoc auxiliary border gate from August 22.

Under Decision 1336/QD-UBND issued by the provincial People’s Committee on May 21, 2014, goods were allowed to be temporarily imported and re-exported to China via Ban Vuoc auxiliary border gate and Muong Khuong border gate.

According to the committee, the decision comes as temporary and re-export activities have since then exposed infrastructure weaknesses at the gate, evidenced by storage capacity, as well as custom clearance incompetence.

The move also aims to ease overload in Ban Vuoc border gate which was sparked by a large volume of goods subject to these activities, said the committee.

The local Industry and Trade Department reported that during only two months of pilot implementation, as many as 1,589 containers of goods were temporarily imported and re-exported through Muong Khuong and Ban Vuoc gates, with a total value of 88 million USD.

Meanwhile, a number of domestic companies voiced their complaints to the Prime Minister and relevant authorised agencies as the temporarily imported and re-exported goods blocked their exports of farm produce to China through Ban Vuoc gate.-

Major cocoa material area to be built in Dong Nai

Trong Duc Cocoa Co., Ltd in southern Dong Nai province plans to work with local farmers on developing a 1,000-ha specialised area for farming cacao alternating with cashew trees in the locality, so as to meet its growing demand of raw materials for processing.

According to the company’s director Dang Truong Khanh, his firm will ink agreements with agricultural cooperatives in the districts of Dinh Quan, Tan Phu, Thong Nhat and Xuan Loc to provide local farmer with equipment and technologies for processing cacao and cashew fruits.

The company will then purchase the partly processed fruit at a higher price than the market price.

Apart from the major products of cocoa powder, wine and chocolate, the company intends to produce several other products such as juice from fresh cacao and cashew fruit in the future, Khanh stated.

According to Khanh, his firm has an increasing demand of raw materials for production, with an estimated volume of about 3,600 tonnes per year, while existing cacao area in Dong Nai can supply only 625 tonnes.

To ensure the quality of materials for processing, the enterprise has encouraged local farmers to cultivate the crops in line with the globally-recognised UTZ quality control programme, which stands for fostering sustainable farming and bettering opportunities for farmers.

As many as 79 cacao growing households in Dong Nai have received their certification from the programme so far.

The cacao plantation area in Vietnam has increased to 22,000 ha from 9,000 ha in 2007, providing 5,000 tonnes of dried beans in 2013. The country plans to have 50,000 ha under cacao cultivation and produce about 100,000 tonnes of fermented beans by 2020.-

Vietnam expects to earn 1 billion USD from pepper exports

Pepper has high export potential with export turnover target of 1 billion USD this year. However, a long-term strategy to enhance the value added to this commodity is needed, the Vietnam Economic News reported.

In the first seven months of the year, pepper maintained steady growth in terms of quantity and price with exports reaching 119,000 tonnes, up by 29 percent compared to the same period last year, export value reaching 862 million USD up by 46.1 percent, and export prices up by 10.6 percent.

Vietnam’s largest pepper import markets are US, Singapore, the United Arab Emirates and India, consuming about 46 percent of Vietnam’s pepper exports.

According to the Vietnam Pepper Association (VPA), by the end of 2014, Vietnam’s pepper exports will exceed the target of 1 billion USD with exports hitting about 125,000-130,000 tonnes. Average pepper price in the Central Highlands and the South East were up to 188,000 VND per kg in July, higher from 42,000- 55,000 VND per kg compared with the beginning months of the year due to increased global pepper prices.

According to the Vietnam Pepper Association, pepper production under GAP standards is an urgent requirement for domestic pepper producers to ensure sustainable pepper export growth in the future.

Currently, Vietnam’s pepper has been sold to more than 90 countries and territories and has consolidated its foothold in the world pepper market. According to the International Pepper Community (IPC), that the total pepper supply in 2014 plus inventory is relatively small due to 15-20 percent decrease in pepper yield seen in some large pepper exporters such as India and Indonesia.

According to the Ministry of Industry and Trade, pepper is placed in the commodity group with high export potential. However, the local pepper processing technology should be renovated in order to improve the value added to pepper exports.

Under a newly appoved plan to 2020 with a vision toward 2030, Vietnam’s pepper plantation area will be maintained at 50,000 hectares with an output of 140,000 tonnes in total.

According to the plan, high-quality pepper products will reach 90 percent. For product structure, black pepper will make up 70 percent while the rest will go for white pepper.

The plan aims to earn 1.2-1.3 billion USD from pepper exports by 2020.

Measures to strengthen blue dragon export

The price of dragon fruit in the central province of Binh Thuan , the country's largest blue dragon fruit cultivation area, has recently fallen significantly, the Communist Party of Vietnam Online Newspaper reported on August 20.

Over the past time, the blue dragon cultivation area has increased rapidly in our country’s provinces and cities. Some countries and territories also started growing the fruit. So Vietnam ’s blue dragon will have to compete fiercely with the same kind of fruit grown in the regional countries.

Moreover, the quality of fruit is also challenged by some diseases, leading to reduce export value in the coming time when foreign markets require strict standards.

To export Vietnam ’s blue dragon with high value, it has to overcome barriers about food safety and plant quarantine. These are two strict requirements from demanding customers. We have to meet requirements for food safety. For example, if importers detect residues exceeding permitted level, they will destroy or return the fruit.

Each country has a different quarantine requirement for the import and export of fresh consumable commodities which we have to meet. For US market, for example, we have to follow strict rules issued by the Animal and Plant Health Inspection Service (APHIS). All shipments imported to the country must go through irradiation treatment to ensure decontamination. The Japanese and the Republic of Korea ’s markets, require that the products have to be treated with hot steam technology to eradicate pests and insects. These are the technical barriers that Vietnamese exporters have to navigate.

In Vietnam , a disease known as brown spot appeared in 2010, a fungus that thrives on flowers and fruits and is very difficult to prevent with no identified fungicide being significantly effective. The disease usually appears in rainy season with about a 20-30 percent chance of the entire country’s crop at risk from acquiring the disease and with a clear visible presence immediately disqualifying the fruit from the export market.

By the end of 2013 there were 3,566 hectares affected in just three provinces; Binh Thuan province with 1,266 hectares, Tien Giang with 1,500 hectares and Long An with 800 hectares, causing considerable losses to the producers.

The Plant Protection Department (PPD) warned farmers not abuse pesticides in disease prevention; instead, farmers should use methods of cultivation, care, irrigation and fertilization for the blue dragon as wisely as possible and to use the method of bundling to limit injury by insects and diseases. More importantly, it must produce blue dragon to VietGAP standards. Binh Thuan province has planned to cultivate 7,300 hectares of the fruit under the VietGAP mode.

Tien Giang and Long An provinces are also developing VietGAP production models. Although the scale is small, the farmers are clearly aware of disease prevention problems and the need to ensure quality for food safety, a prerequisite for export.

To meet the stringent market and country requirements on food safety and plant quarantine, farmers must produce in a sustainable manner to the VietGAP standard. Partners in the value chain will become more willing to promote and sell the fruit on the international market, providing better returns for the producers.

VNR kicks off restructuring process

After a tremendous effort, the restructuring plan of state-owned Vietnam Railways Corporation – one of Vietnam’s most in-difficulty state corporations – has officially kicked-off.

The state-owned enterprise (VNR) recently submitted its member business restructuring plan to the Ministry of Transport (MoT) for the period 2014-2015, which highlighted the goal of restructuring of two major members – the Hanoi and Saigon railway transport companies – before the end of next year.

According to the plan, the two railway transport firms, which are VNR’s primary revenue and profit earners, will be changed from financially dependent units into one-member limited liability companies with VNR holding their entire chartered capital. The conversion is slated for completion before the end of this year.

Regarding the shake-up plan, VNR said it would restructure another two companies who are locomotive operators, Di An Train Limited and Gia Lam Train Factory in two stages.

In stage 1, another VNR member Railway Rubber Enterprise will be merged with Gia Lam Train Factory, which will then be separated from its current parent the Hanoi Railway Passenger Transport Company before turning into a limited company controlled by VNR. According to the government, this task must be fulfilled by year-end.

Stage 2 will see Di An Train and Gia Lam Train equitised before the end of 2015.

Also as part of its overall restructuring plan, VNR hopes to turn 20 railway infrastructure management businesses into railway infrastructure maintenance joint stock companies, including 15 railway bridge maintenance and five railway signal and information units. This task must also be completed by the end of next year.

To raise capital for its core service lines, VNR has asked the MoT’s permission to entirely divest from 10 joint stock companies, sell all but 30 per cent of three joint stock companies, and sell all but 20 per cent at the Transport Investment and Construction Consultant Joint Stock Company.

VNE expects capital divestment at the aforementioned units to be completed within this year.

VNR’s stake in these joint companies has been valuated at around VND286 billion ($13.6 million), including VND85.7 billion ($4.08 million) at seven member companies with VNR’s stake in these companies averaging 64 per cent.

VNR’s stake in 21 affiliated firms was reported at VND200 billion ($9.6 million), averaging VND28.9 billion ($1.3 million) per firm. In the year’s first half, VNR received VND15.8 billion ($752,000) in dividends from these firms.

“This would be a crucial step towards realising parent company VNR’s initial public offering target in 2016,” said chairman Tran Ngoc Thanh.

Deputy Minister of Transport Nguyen Ngoc Dong has commented that “spurring the equitisation process of member companies will be VNR’s most urgent task in 2016 and “compared to the equitisation pace of other state-owned enterprises in the transport sector (slated for completion before the end of next year), VNR’s is expected to take place a year later, so drastic measures are needed to avoid any further delays.”

Cumbersome and ineffective organisational structures are reportedly the main reason for VNR’s poor performance, despite its position as the exclusive railway operator in Vietnam.

VNR employees also reportedly have the lowest average per capita among companies in the transport sector.

This year VNR was assigned by the MoT to reach VND5.211 trillion ($248 million) in total revenue and other income and VND59 billion ($2.8 million) in pretax profits.

“These figures will serve as a base to evaluate the operational efficiency of VNR’s management this year – a transitional time in restructuring the railway sector leader,” said an MoT Business Management Department executive.

Vietnam ends contract with Chinese contractors who unilaterally quit power project

The operator of a multimillion-dollar hydropower project in Vietnam’s Central Highlands announced Wednesday it had terminated an agreement with two Chinese contractors for their failing to carry out the work as committed.

A joint venture between Hydrochina Huadong Engineering Corporation and China Railway Construction Co Ltd broke ground on the VND5.74 trillion ($270.36 million) Thuong Kon Tum project in 2009, but asked to end the contract in May when all construction units of the project were behind schedule.

The contractors even abandoned construction in spite of beingrepeatedly reprimanded by the project operator, Vinh Son Song Hinh Hydropower JSC (VSH).

The Vietnamese company said it had “rescinded the contract with the Chinese side.”

VSH attributed the contract cancelation to the tardy construction progress and the failure to meet commitments of the two Chinese firms.

Previously the contractors asked for unreasonable conditions when developing the project, one of the largest hydropower plants in the Central Highlands province of Kon Tum.

The Chinese venture won a tender for building the penstock, which regulates the water flow, of the project at VND1.61 trillion ($75.78 million), only 44 percent of the prices bid by other contractors.

However, during construction, the contractors repeatedly demanded additional expenses worth up to VND800 billion ($37.65 million), which the Vietnamese investor rejected.

As their clamor for money was unheard, the Chinese firms ceased construction and announced that it would end the contract for “inevitable reasons” in a document sent to the Vietnamese side on May 25.

The companies have since withdrawn their workforce and machinery back to China, leaving the construction site an abandoned zone.

It is not uncommon for Chinese contractors to join tenders offered by Vietnam at dirt cheap prices to win contracts. Once construction starts, the Chinese firms will gradually ask for out-of-contract additional costs to make up for the low bidding prices.

NA members want new enterprise law to allow closer supervision of businesses

While granting enterprises freedom in doing business, the new Law on Enterprises may include regulations that manage such “freedom”.

Last week the National Assembly proposed that the draft amendment to the Law on Enterprises include text that allows the examination of enterprises after they receive their business registration certificates and become operational.

This is because under the draft, the certificates will not detail out an enterprises’ business sectors and professions. Such details must currently be declared in an enterprise dossier when applying for a certificate.

Enterprises are currently allowed to operate only in the professions and sectors written on their specifically requested investment certificate. If they want to add an additional sector or profession, they have to undergo the entire licensing process again, which obviously causes major headaches for firms eager to exploit new business opportunities.

“In-line with the Constitution, which allows companies to do business in any sector and profession not banned by law, under the new law expected to be adopted this November, you have the right to sell both pho and coffee, but how you are operating should be managed. The new law must have a mechanism to manage enterprises’ performance,” said National Assembly Chairman Nguyen Sinh Hung.

“Enterprises can bend the law to do business. For example, they can open a karaoke palour, but then open a dance hall or bar. Thus, who will manage them if they keep changing their business?” said National Assembly Judiciary Committee Chairman Nguyen Van Hien.

Mai Thi Anh Tuyet, the National Assembly deputy representing An Giang province, said that currently the state only managed enterprises’ business registration, but not their performance.

“Consequently, many enterprises have evaded tax and conducted illegal transfer pricing, greatly diminishing the state coffers,” she added.

Late last year, South Korea’s Keangnam Vina was found to be involved in a number of scandals related to transfer pricing. It admitted using the sometimes illegal business method to save and/or make $58 million.

Last year in Dong Nai province, cloth-maker Hualon Corporation, a joint venture between Malaysia, Taiwan and the British Virgin Islands, was found to have imported machinery for less than $400,000. However, the firm reported to the local tax agency that it had cost nearly $16 million. The firm has also reported consecutive losses over the last 20 years in Vietnam.

National Assembly Vice Chairman Uong Chu Luu said he was also disheartened by enterprises’ continued tax evasion.

“I could not imagine that the inspections (in 2012 by the State Audit of Vietnam) of only 8 per cent of state-owned enterprises uncovered tax avoidance of VND3 trillion ($142.8 million). Those same inspections, of only 0.31 per cent of non-state enterprises, showed that VND765 billion ($36.4 million) in taxes has been dodged.”

National Assembly deputy Tran Hoang Ngan, representing Ho Chi Minh City, also stressed the need for a mechanism in the new law to examine enterprises after they become operational.

“Last year Vietnam had around 621,000 registered enterprises, of which only 356,000 were known to be operating. The status of the remainder is unknown, because the state can’t manage them,” Ngan said.

HPG expansion to make it Vietnam's biggest steel producer

Leading steel producer Hoa Phat Group (HOSE:HPG) plans to expand its capacity to become Vietnam’s biggest steel firm within the next two years.

After construction on the third phase of its VND3 trillion ($142.2 million) integrated steel complex is completed in the next year-and-a-half, HPG’s annual capacity will rise to two million tonnes from the current 1.15 million tonnes, enabling the firm to surpass Pomina (HOSE:POM), which has a current capacity of 1.6 million tonnes.

HPG earned net profit of VND1.874 trillion ($88.8 million) in the first half of 2014 on revenues of VND13.339 trillion ($632.2 million), up 85 per cent and 60 per cent on-year. Its sales in the period were 445,000 tonnes, up 37.74 per cent.

Also in the first half, HPG led the domestic steel market with 18 per cent market share, and started exporting its product to many countries in ASEAN. In June it became the first Vietnamese steel producer to supply steel products to Australia.

ASEAN tariff reduction not lower car prices as expectation

Although ASEAN auto tariff rate has fallen from 60 percent to 50 percent on less than 25 seat types since early 2014 but Vietnamese consumers’ dream of purchase cars at low prices has not come true due to the outrageously high taxes and fees set by importers. Those taxes make the cost of getting a car often increase as high as twice or triple the original price.

Domestic car prices are found 1.5 time higher than that in Asia and as high as triple the US.

Freelance businessman Nguyen Trung Quang in Tan Phu District, Ho Chi Minh City has decided to buy an import Toyota Camry 2.5Q and its cost in the US is around US$22,000.

However, Mr. Quang has purchased the car from an auto import company at US$60,000 including tariff, exercise, value added taxes and an extra of nearly ten kinds of fees including registration fee, road toll, fees for license plate and premiums.

Thailand and Indonesia have recently introduced a lot of low cost cars of around US$10,000 per 1-1.5 liter engine car of brands such as Mitsubishi Mirage, Daihatsu Ayla and Honda Brio Satya. In Vietnam, importers charge VND100-300 million higher than the original price.

For instance, a Toyota Yaris E is priced US$17,700 (VND400 million) abroad. It escalates to VND661 million after being imported. The price of a domestically assembled Suzuki Swift is VND550 million, VND200 million higher that in Thailand.

According to the Industrial Policy and Strategy Institute under the Ministry of Industry and Trade, costlier production fee and higher exercise tax make the prices of less than nine seat cars higher than that in other Asian nations.

In addition, high selling prices set by the importers also make heavy consumers’ dream.

For instance, after importing a high class car at US$33,000, businesses sell it at US$121,000 earning $12,394 (VND260 million).

Another high class modal is imported at $40,000 and sold at VND3 million, bringing the importers US$11,805 (VND250 million) per car.

Ten items make over US$58 billion in exports

Ten items earned US$58.34 billion from exports, accounting for 69.5% of the nation’s total export turnover over the past seven months of the year.

Phones and accessories ranked first with US$13.33 billion, a year-on-year increase of 15.41%, followed by garment with US$11.5 billion, up 19.54% and footwear with US$5.78 billion, up 22.46%.

Computers, electronics and spare parts came fourth with a turnover of US$5.53 billion. Crude oil raked fifth with US$4.77 billion, up 11.97% and aquatic products US$4.27 billion, up 26.71%.

Other items joined the US$1 billion export clubs such as machines, equipment and spare parts US$4.13 billion, up 24.02%, timber US$3.38 billion, up 14.19%, vehicles and accessories US$3.32 billion, up 9.93% and US$2.33 billion, up 22.63%.

Vietnamese banks race to open branches overseas

Many Vietnamese banks have been racing to open branches in other countries to increase their competitiveness and facilitate Vietnamese companies’ overseas investments.

After getting the approval from the State Bank of Vietnam (SBV), Ho Chi Minh City Housing Development Bank (HDBank) said that it was competing procedures to open a representative office in Myanmar, scheduled to be active by the end of the year.

Myanmar promises to be an attractive place for investors, particularly for Vietnamese companies that are already doing business in the country. Not only HDBank, but a number of others are making plans to expand into Myanmar.

Vietnam Bank for Investment and Development (BIDV) and Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) have both been licensed to set up their offices in the neighbouring country.

In September of 2011, Vietinbank became the first Vietnamese bank to set up operations in Germany. The bank also opened a branch in Lao, and has plans for further expansion this year.

According to Phan Huy Khang, general director of Saigon Thuong Tin Commercial Joint Stock Bank, Vietnamese banks are also open to certain risks when operating abroad. They must compete with local banks and even other Vietnamese banks in the same country.

Experts say that expanding operations in foreign countries will help banks to open up new markets and opportunities as well diversify their products. This would also help Vietnamese companies, many of which are also expanding into neighboring countries.

Dr. Le Dang Dat, from University of Economics, Ho Chi Minh City, however, warned that the State Bank of Vietnam should keep close scrutiny over the financial capacity of banks which invest abroad so as to mitigate risks for banks and their customers. Dat added that Vietnamese banks should improve their risk management systems in general.

Circular on tax for foreign organizations, individuals in Vietnam

The Ministry of Finance has issued  Circular No. 103/2014/TT-BTC  guiding tax levied on foreign organizations and individuals operating business in Vietnam or receiving incomes in Vietnam.

Revenues from business, machines and insurance leasing, construction and installation without the supply of raw materials, machinery and equipment will be subject to a value-added tax rate of 5%.

For production, transportation and services in association with products, construction and installation with the supply of raw materials, machinery and equipment, the rate is 3% and other business activities, the rate is 2%.

The trade  distribution, goods supply, materials, supplies, machinery and equipment; distribution and goods supply, materials,

supplies,machinery and equipment in accordance with service in Vietnam will be subject to a corporate income tax of 1%; for services, equipment leasing, insurance, oil rig rent, the tax is 5%; for production, business, transportation (including shipping, air transport), it is 2%; for the transfer of securities, certificates of deposit, foreign reinsurance, and reinsurance commission, the rate is 0.1%.

Companies attempt to gain from preferential policy for fishermen

The Ministry of Agriculture and Rural Development refused requests from seafood companies for low-interest loans for the importation of old fishing ships.

The Duc Khai Corporation and Tri Viet Seafood Company have been asking for permission to use the preferential loan policy for fishermen, designed to help fishermen continue their offshore expeditions, to import hundreds of second-hand fishing boats.

According to the request sent by Tri Viet, they intend to import 72 ships from the US, Japan, South Korea and Australia to provinces in the Mekong Delta this year. The proposal confirmed that these ships were less than 15 years old, but the paperwork indicated they were older.

Similarly, the Duc Khai Corporation wanted to take out loans at an interest rate of 1% to import 100 30-year-old ships. The Ministry of Agriculture and Rural Development pointed out that the proposal did not meet the requirements. Regulations state that, in order to get preferential loans, investors can only import ships 8 years old or less.

Deputy Minister Vu Van Tam also pointed out that, despite the ambitious proposal, the Duc Khai Corporation had not made any plans for investment, or seafood exploitation.

Tam said they needed a proper monitoring mechanism to avoid such situations. "Investors should have to register their plans with communal authorities. The communal authorities should inspect and review all the information before submitting the plan to provincial authorities."

Several experts have also said that enterprises should invest in seafood processing and distribution instead of the importation of more ships.

Vietnam looks for ways to regulate gambling for citizens

Vietnamese authorities have a couple options on the table for the efficient regulation of legal casino gambling for Vietnamese citizens, including a possible requirement to verify income.

Recently the Ministry of Finance (MoF) proposed that the government allow Vietnamese citizens aged 21 or over to visit casinos.

However, in order to better control the operations of casinos and and prevent social harms related to the industry, Vietnamese authorities are considering making it necessary for citizens to prove their monthly incomes before entering a casino.

An anonymous official from the MoF said they had proposed that the government divide Vietnamese gamblers into two groups. Frequent gamblers would have to prove a minimum monthly income of VND15 million, while others would have to prove they have equivalent assets which could be used as collateral.

Nguyen Truong Son, chairman of the Bao Son Group, said that casino managers should learn from the experience of golf course operators, who require players to pay for membership.

However, some warned of the possible pitfalls in such a policy. Professor Ha Ton Vinh, who studies the field, said.“It’s no easy task to verify incomes, as some may try to find loopholes, such as taking out loans in order to falsely inflate their incomes.”

He suggested that collecting entrance fees could be a good way to minimise risks. Currently, he said, Singapore is the only country that collects such fees, which usually reaches SGD2,000 per year for locals.

Vinh suggested, that for Vietnam, the fees should be in the range of USD50 to USD100. The MoF would negotiate with investors over any such entrance fee requirement, he added.

He went on to suggest that other steps might be taken to mitigate harmful social effects, such as the MoF assigning special envoys to casinos to verify gamblers.

Vietnam launches modern hybrid rice research centre

A modern hybrid rice research centre was inducted in Nam Dinh Province, which is expected to help mitigate Vietnam’s dependence on imports.

The launching ceremony was held on the morning of August 14 in Tan Thinh Commune of northern Nam Dinh Province.

The centre covers of four hectares, and was built at a cost of over VND30 billion (USD1.41 million) by Syngenta Group. This is the first modern rice research centre built and operated by an international group in Vietnam.

It is equipped with the most modern facilities to serve scientific research on rice hybridisation.

Dr. Nguyen Thi Thanh Thuy, deputy director of the Ministry of Agriculture and Rural Development (MARD) Department of Science, Technology and Environment, said that currently Vietnam has around 7.8 million hectares of land devoted to rice cultivation, including around 700,000 hectares for hybrids.

“Despite being a major rice exporter, Vietnam has only been able to produce between 30% and 40% of available rice hybrid. This is not enough to satisfy domestic demand, and creates a need for imports,” Thuy noted.

She added that hybrid rice varieties are expected to play an important role in world agriculture in the near future because of their higher productivity, better quality and resistance to climate change. As a result, according to her, it will be necessary to improve the capacity to produce hybrid rice in order to create stable domestic supply as well as improve rice output and quality.

“The establishment of the centre will help Vietnamese researchers and scientists cooperate and gain access to gene sources from around the world, as well as apply modern technologies in agriculture. We expect that Vietnam will become an exporter of hybrid rice varieties in the future,” she added.

Gloverson Moro, head of R&D Asia-Pacific at Syngenta said, “We decided to build the centre in Nam Dinh because the province holds certain advantages for rice production, and is a heart of rice production in northern Vietnam. We chose Vietnam because it is a second biggest rice exporter in the world and the importance of rice here goes without saying. We want to generate high-quality hybrid rice varieties for Vietnam and the world.”

Phase one of the project involves importing rice varieties from centres operated by Syngenta from around the world. To date, two hybrid rice varieties are under development, and the centre is expected to produce two to three high-quality hybrids by 2017.

The second phase is expected to be realised in 2017.

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