Three foreign currency regulations violators fined

The State Bank of Vietnam yesterday imposed hefty fines on FPT University, Ngoc Long Gold Processing Co, and My Phuong Co for breaching violations on foreign currency management.

Accordingly, Hanoi-based Ngoc Long Co was fine VND100 million for offending the regulation regarding trading and paying in foreign currency.

The company also had the traded sum of US$12,195 confiscated.

FPT University, a private information technology university headquartered in Hanoi, was also penalized for quoting its tuitions for some courses in US dollars.

The central bank imposed a VND500-million fine on the university, ordering it to stop listing, advertising, or announcing school fees in dollars.

Private gold trader My Phuong, located in Hanoi’s Dong Da District, was caught red-handed selling $1,000 to a customer.

For this violation on trading foreign currency, the company was fined VND50 million and asked to sell the confiscated money to a commercial bank licensed to trade the greenback.

October 21, the government issued a new decree which established higher fines for violations in the financial sector.

Accordingly, the penalties imposed on quoting prices of goods and services in foreign currencies were increased by 7 times, to VND500 million (US$24,300).

Making payments in foreign currencies or gold and other violations of gold trading regulations are now subject to a fine of VND50-100 million, while in the past these violations went without penalty.

November’s CPI edged up 0.39% m-o-m: GSO

Vietnam's consumer price index (CPI) in November is estimated to have increased 0.39 percent from October and 19.83 percent year on year, according to Vietnam’s General Statistical Office (GSO).

After slowing down for the last three consecutive months, from 0.93 percent to 0.82 percent and 0.36 percent, the country's CPI started to pick up again in November, bringing the CPI rise in the first 11 months of this year to 17.5 percent.

The Government has set the limit for this year’s CPI rise at 18 percent.

The average CPI in the first 11 months soared 18.62 percent year on year.

The price index of restaurant and catering service groups, accounting for the biggest proportion in the basket for CPI calculation, posted a rise of 0.56 percent from October; of which the food group increased 3.25 percent while foodstuff decreased 0.26 percent and restaurant group rose by 0.43 percent on month.

The price of the housing and building materials groups, including house rental, electricity, water, fuel and construction materials, increased 0.12 percent.

The expense for education still increased by 0.8 percent.

Together with the fall of the foodstuff group, three other groups also saw month on month decreases in CPI, such as the transport group (0.01 percent), post and telecommunications (0.01 percent), and culture, entertainment, and tourism (0.02 percent).

The group with the highest CPI rise in the month was garment and textile, hat and footwear, at 0.65 percent.

Also in the month, the gold price increased 0.27 percent while the US dollar price surged 0.69 percent.

The CPI rise in November in Hanoi and Ho Chi Minh City, Vietnam’s two biggest cities, was 0.29 percent and 0.28 percent respectively, while those in some other localities were higher, including 0.53 percent in central Da Nang City and 0.73 percent in the Mekong Delta’s Vinh Long Province.

Hanoi's CPI in November increased 0.29 percent from the previous month and 18.49 percent over the same period last year, taking the capital city's CPI this year to 16.36 percent, according to Hanoi Statistics Office.

As many as four groups in the capital saw higher rises than the average against the previous month, including garment and textile, headwear and footwear (0.75 percent), education (0.44 percent), and other goods and services (0.74 percent).

The group consisting of equipments and household appliances saw the highest rise, at 0.88 percent.

Two items saw CPI decreases over the last month including transport (0.23 percent), and post and telecommunications (0.02 percent).

In November, the gold price in Hanoi increased 0.11 percent month on month and 32.62 percent on the year, while the respective rises of the US dollar were 0.68 percent and 2.26 percent.

Inflation remains the biggest macroeconomic challenge for Vietnam in the next year as it is affecting acceleration of the reform program, Paul Gruenwald, ANZ chief economist for the Asia Pacific, said at a recent conference in Hanoi.

"We forecast Vietnam's inflation will remain at two digits in 2012. Price stability is still the biggest macroeconomic challenge in the future," he said.

The main risk in this situation is that a premature loosening of monetary policy will lead to faster credit growth, which will in turn cause further inflation. In addition, higher global prices will exacerbate the impact of inflation.

Paul said that Vietnam's inflation had peaked in August, but inflationary pressure still remains due to the risk of a poorly timed monetary loosening policy.

According to ANZ, Vietnam had the highest inflation rate among Asian countries as of October this year, at nearly 21.6 percent, much higher than the closest countries, namely India (9.7 percent), and China (6.1 percent).

Paul calculated that, amongst Asian countries except Japan, the dong lost the most value against the US dollar, at approximately 6 percent in 2011, and over 5 percent in 2010.

Vietnam set a target to bring the inflation rate below two digits next year, according to the socioeconomic development plan in 2012 recently passed by Congress.

However, Paul said that it would take more time, together with tight fiscal and monetary policies, to achieve this goal.

The country's inflation rates will be very hard to pull down to a one digit level in the next year if policy-makers continue to discuss growth issues, said Dr Tran Dinh Thien, from the Vietnam Institute of Economics, at the conference.

Thien said that inflation in Vietnam has become a "chronic" disease.

"We have attempted to fight against inflation in the past few years, but inflation has still returned as an outdated economic structure," Thien said.

Both experts agreed that only economic structural reforms could help Vietnam fight against inflation in a sustainable way.

ADB lends $310 mln to Vietnam Mekong Delta power plant

The Asian Development Bank (ADB) said on Thursday it has approved a $309.9 million loan for a new power plant in Vietnam's Mekong Delta, the country's production hub for rice, fish and shrimp and other agro-products.

The construction of the 750-megawatt gas-fired O Mon IV plant is to be completed by June 2016 and is projected to cost $793.5 million, the ADB said in a statement.

The plant is located outside the southern city of Can Tho, considered the capital of the Mekong Delta in the country's south. The ADB described the southern region as "energy-starved".

Germany's KfW will contribute $370 million and state utility Vietnam Electricity group and the Vietnamese government will provide $113.6 million, the statement said.

Vietnam's power consumption has been growing 15 percent a year over the past decade, and will continue rising at a double-digit pace in the near future, the bank said.

Vietnam will need around $48.8 billion from now until 2020 to build power plants and bring generation capacity to 75,000 megawatts, according to the government's electricity master plan through 2020.

Japanese market wide open to local businesses

The Vietnam-Japan Economic Partnership Agreement (VJEPA) proves that the Japanese market is open wide to Vietnamese businesses, a conference heard yesterday.

Under the VJEPA, which took effect in October 2009, Vietnam has enjoyed a trade surplus with Japan during the last two years, while many Vietnamese producers have grabbed the chance to boost their growth in this strict market.

The statement was made at the joint conference held yesterday by the Ho Chi Minh City Department of Industry and Trade and the HCMC Institute for Development Studies to evaluate the impacts of the VJEPA on the country’s economy.

Speaking at the conference, Bui Huy Son, head of the Ministry of Industry and Trade’s Asia – Pacific Agency, said Vietnam has enjoyed a trade surplus worth $150 million to Japan in the first ten months of this year.

“Imports stood at $8.4 billion while exports reaped $8.54 billion,” he said.

For his part, Huynh Khanh Hiep, deputy director of the municipal Department of Industry and Trade, said that after the economic slowdown in 2009, the city’s export turnover to Japan recovered in 2010 with a 21.5-percent rise, topping US$1.81 billion.

Hiep said Japan remains the city’s second largest exporting market after the US.
Textiles and garments topped the list of export staples by earnings, which brought home $445.8 million last year, he added.

Meanwhile, Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Processors, said seafood also accounted for a large proportion in the country’s exports to Japan.

Hoe said Vietnam has shipped a total of 748,122 tons of seafood worth $4.9 billion to Japan in the year to October -- a 3.9-percent rise in volume and a 23.6-percent increase in value over the same period last year.

“Seafood export turnover to Japan is expected to reach a record $6 billion this year,” he said, adding that Vietnamese frozen shrimp exports to Japan were worth $1.7 billion, making Vietnam one of the three largest exporters to Japan.

Tadashi Kikuchi, economic attaché to the Japanese Consulate General in HCMC, said the two countries’ bilateral trade revenue this year has experienced a 20 percent year-on-year increase.

“Vietnamese exports to Japan will continue rising in years to come,” he said.

Kikuchi said that, in order to further exploit the Japanese market, Vietnamese businesses have to develop long-run strategies, and to build and maintain long-term contacts with Japanese partners.

“Exporters should also increase their market research in Japan to study the Japanese business culture,” he advised.

Mai Dinh Kiem, director of Saigon Carpet Co, said local businesses had to have good knowledge of Japan’s contemporary popular product designs to enter and grow in the market.

“[Businesses] should also embed Vietnamese cultural values in their products,” Kiem said, adding that the products must be clean and environmental-friendly.

Nguyen Thoai Hong, deputy CEO of Vinh Khanh Cable Plastic Co, stated that keeping promises is the most crucial factor in doing business with Japanese partners.

Thus, he advised, Vietnamese should keep their word even when they may incur losses due to unexpected incidents.

Hong said there were cases when his company failed to manufacture the products on time due to a power shortage.

“To ensure the delivery time as contracted with the Japanese partners, we had to export the products via airlines instead of shipping, even though this increased expenses,” he said.

Sonof the Asia – Pacific Agency said Japanese importers also set many high requirements regarding environmental-friendliness, manufacturing facilities, and production ability.

“Thus, Vietnamese businesses have to put forth a serious effort to enter and develop in this market,” he concluded.

Catfish workers hurt by material shortage

Catfish processing workers in the Mekong Delta provinces have recently been left with little work, since the industry is facing a severe raw materials shortage.

Hundreds of workers at the Hung Vuong Chau Au seafood processing plant in Tien Giang have had to leave the plant as early as 3pm some days since there are not enough raw materials for them to stay longer, a recent report by Saigon Tiep Thi newspaper said.

Phan Thi Yen Dam, the plant’s foreperson, said that never in her eight years of experience in the industry has she seen such severe shortages.

“Our plant used to process as many as 200 tons of catfish a day, but the figure has dropped to only 100 tons over the last month,” she said.

For his part, Trung, a worker, lamented that the short material supply would accordingly reduce his income.

“We have to process 100 to 120 kilograms of products between 5am and 6pm everyday to earn a monthly wage of VND6 million,” he said.

“But since October, we have had to stop working around 3pm, and daily income has thus dropped by VND40,000 a day compared with the usual amount.”

Workers have also been forced to work just five days a week, making matters even worse..

But those working for Hung Vuong Chau Au still have better luck than their peers at other processing facilities such as Ngoc Ha, Hiep Long, Viet Phu, and An Phat, who only work four days a week.

This drop in working days has cut their monthly wages from VND6 million to a mere VND2 million.

“There was a time when I even had to work only two days a week,” a worker in the An Phat processing plant said.

“I can only receive 70 percent of the basic wage on every day-off, and earn less than VND2 million a month.”

To temporarily deal with the challenge, many plants have resorted to using undersized catfish of less than 800 grams for workers to continue their work.

Meanwhile, with their payment calculations based on the number of products they can process, many workers have had to compete with each other by showing up at the plants early to grab more fish.

If I’m late by just a couple of minutes, there will not be many fish for me,” Thuong, a worker, said.

Thuong added that since he lives 10 kilometers away from the plant, he has to get up at 4am to make sure he doesn’t fall far behind the queue to get the fish.

Nguyen Van Ky, director of Agifish An Giang Seafood JSC, said that while the company used to have 250 tons of materials for processing everyday, there have recently only been 150 tons to work with.

He said most catfish processing plant in the Delta are suffering from the shortage.

“Some even have to stay closed or operate at 50 percent capacity,” he said, adding that Agifish An Giang itself had to cut production and reduce labor wages.

Duong Ngoc Minh, deputy chairman of the Vietnam Association of Seafood Exporters and Processors, admitted that the short material supply has put many catfish processors in a tough spot.

“Around 70 percent of the small processors are affected by this shortage,” Minh said.
With their plants running below capacity, many processors are facing heavy expense burdens.

The director of a catfish processing company said his plant has managed to gather enough materials for only four days of processing over the last few months.

But the company still had to spend full-week expenses on power, administrative, maintenance costs and labor wages, he lamented.

“We have considered halting production to cut expenses.”

Garment sector most likely to achieve export target

The garment sector is most likely to reach its yearly target of US$13 billion in export this year, according to the Vietnam Textile and Apparel Association.

The association said its members have so far this year exported US$10 billion and they are expected to ship aboard products valued at US$3 billion in the remaining months of this year.

Apart from the EU, Japan, Russia and the Middle East, the US remains a key market for Vietnamese garment makers in the coming time, the association added.

ASEAN bankers to meet in HCM City

The ASEAN Bankers Forum 2011 will be held in Ho Chi Minh City on December 7-8 themed “Retail banking: Identifying key successful factors and the role of technology in building banks’ competitive edge.”

The forum will be organised by the International Data Group (IDG), the State Bank of Vietnam (SBV), the Vietnam Banking Association and Deposit Insurance of Vietnam.

Banking leaders, technological directors, financial experts and suppliers of information technology solutions for banks at home and abroad will discuss major issues of common concern for banks, current development trends of the banking system and effective applications of IT to build a modern banking system in Vietnam.

Microfinancial handbook introduced in Vietnam

The State Bank of Vietnam (SBV) and the Asian Development Bank (ADB) introduced a microfinancial handbook in Hanoi on November 24.

The four-part handbook is part of the ADB’s technical project on officialising microfinancial institutions, which launched in December 2009 with the aim of improving the capacity of Vietnamese microfinancial institutions and providing stable microfinancial services for poor people, especially those living in rural areas.

Speaking at the event, ADB country Director Andrew Head said the operation of microfinancial institutions in Vietnam is important tools for helping the poor. Therefore, ADB has held many seminars and training courses in this connection.

He pledged further support for the Vietnamese government to build strategy for development of microfinancial institutions in the ten-year period (2010-2020).

ADB will launch a program to help Vietnam go ahead with a market economy and modernize the financial system for its sustainable economic development, he said.

Tra fish exports in Mekong Delta reach US$1.4 billion

Provinces in the Mekong Delta have exported 487,000 tonnes of tra fish over the past ten months, fetching US$1.47 billion or more than 30 percent of total export earnings.  

The current price of tra fish is VND27,500-VND28,300 per kilo, VND2,000 higher than in October.

These provinces are applying new models of fish breeding in line with the standards of the Vietnamese Good Agricultural Practices (VietGAP), the Global Good Agricultural Practices, the Safe Quality Food (SQF) and the Hazard Analysis and Critical Control Points.

HCM City hosts Chief Financial Officers forum 2011

Nearly 300 delegates from international financial and accounting organizations gathered in Ho Chi Minh City on November 23 to discuss issues related to corporate finance administration and Asia’s economic prospects.

The event, held by the Japan Association for Chief Financial Officers and the Vietnam Club of Chief Financial Officers, aimed to prepare Asian chief financial officers for a new phase of development.

Participants in the forum included business directors and senior financial personnel.

The world’s leading finance experts delivered keynote speeches on the Finance and Accounting Skills Standard, finance shifts, and risk management.

Norway continues to help Vietnam’s fisheries

Minister of Agriculture and Rural Development Cao Duc Phat and Norwegian Minister of Agriculture and Food Lars Peder Brekk signed an agreement for the third phase of a project to improve aquacultural capacity in Vietnam, in Hanoi on November 24.

The document was signed during the Norwegian minister’s visit to Vietnam on the occasion of the two countries’ 40 th anniversary of diplomatic ties.

Under the agreement, the Norwegian government will provide $2 million aid to the Research Institute for Aquaculture No. 1 to implement the third phase of the project, lasting from 2011-2015.

Earlier, the Norwegian government granted $3.7 million for the institute to implement the first and second phases of the project from 1999 to 2008.

Head of the institute Le Thanh Luu said training courses were conducted in the first and second phases to improve the capacity of Vietnamese staff in the agricultural sector, especially in aquaculture.

In talks held earlier with Minister Lars Peder Brekk, Minister Cao Duc Phat acknowledged the remarkable support of the Norwegian government through ODA projects and bilateral and multilateral cooperation programmes.

He also asked Norway to consider funding more projects in Vietnam and expects the Norwegian government will continue to support ODA projects on technical cooperation and training for managers and researchers in Vietnamese agriculture.

On the occasion, Minister Phat invited the Norwegian side to attend the second global conference on agriculture, food security and climate change, to be held in Vietnam next March.

Vissan kicks off food processing complex

Vissan Co., Ltd. on Wednesday started construction of a food processing complex in the Mekong Delta province of Long An to replace its inner-city facilities that are being shut down.

The complex covers 22.4 hectares with total investment capital of US$150 million and Vissan will pour US$100 million into the first phase between now and 2015.

The project is believed to be the nation’s largest industrial complex in the sector of food processing with a closed process from purchase, slaughter to processing and packing. It also includes a spice processing factory as well as a warehouse system which meets domestic and international standards on food safety, said Van Duc Muoi, general director of Vissan.

Cattle and poultry slaughter plants and meat processing factory will be completed by 2015. The meatpacking plants can slaughter 360 pigs, 60 cows and 2,000 poultry an hour while the meat processing factory is set to produce 75,000 tons of meat a year.

A freezing storage system and sewage treatment plant will be put into operation by 2015.

Located in Long An’s Ben Luc District, 40km from HCMC, the plant’s location is considered less favorable than the old meatpacking plant in HCMC’s Binh Thanh District. However, enormous capacity will make up for shipping costs, Muoi noted.

In the second phase, the complex will provide 60,000 tons of pork, 21,000 tons of cattle, 6,000 tons of poultry and 75,000 processed food products annually.

The industrial complex will be equipped with state-of-the-art facilities and advanced technology, Muoi added.
 
HAGL kicks off sugar complex in Laos

Hoang Anh Gia Lai Group (HAGL) on Tuesday commenced construction of a sugar and sugarcane industrial cluster in Attapeu Province in the neighboring country of Laos under the witness of the two countries’ leaders as well as strategic investors and international investment funds.

The industrial cluster comprises a sugar plant with a daily crushing capacity of 7,000 tons of sugarcane, a 30-megawatt thermal power plant utilizing bagasse, an ethanol factory and a fertilizer plant with annual capacity of 30,000 and 50,000 tons respectively.

Material for the sugar plant will be sourced from the sugarcane planting area covering 12,000 hectares, some 8,000 of which is owned by HAGL and the remainder cultivated by local farmers with the group’s support in strain, technique, equipment and consumption.

Chairman Doan Nguyen Duc of HAGL said every hectare of the sugarcane area can produce over 100 tons per year worth US$5,000-6,000 thanks to the use of new strains imported from Thailand and the ideal soil conditions.

HAGL planned to invest about US$100 million in the sugar industrial cluster and sugarcane farms. Half of the capital comes from Bank for Investment and Development of Vietnam (BIDV).

The project will be executed in ten months and the facilities will be up and running in September next year when the first sugarcane crop is harvested.

Apart from this sugar industrial cluster, HAGL Group has also invested a large mount of money in rubber planting and hydropower projects in Laos, mostly in the Southern province of Attapeu that shares the border with Gia Lai and Kontum provinces in Vietnam. In addition, the group is preparing the technical infrastructure to exploit an iron ore and a copper ore in Sekong Province, also in southern Laos and north of Attapeu.

On Tuesday also marked the official opening of the four-star Hoang Anh Attapeu Hotel with 100 rooms invested by HAGL in Attapeu Town.

* HAGL on Tuesday handed over to the authorities of Attapeu province a primary school and a general hospital with 200 beds and sufficient modern equipment so as for the locality to better the people’s living in term of healthcare and education.

The facilities are part of the social welfare program worth US$35 million deployed by HAGL to contribute to the socio-economic development of the local province where the group is operating.

At the handover ceremony, HAGL made a proposal to Laos Deputy Prime Minister Somsavat Lengsavad to consider allowing the group to develop a rubber planting zone in Sekong. This project would create a legal environment for HAGL to further invest in two airports in Attapeu and Houaphan in order to improve the traffic connection between the Southern region of Laos and the outside world.

With multiple constructions and projects, HAGL Group has contributed to the drastic changes in Attapeu Province and become the biggest Vietnamese investor in Laos with pledged capital of US$960 million.
 
Trading floors closing due to ailing property market

Quiet trading on the property market has hindered not only project investors but also trading floors and brokerage centers.

There are no official statistics on how many of the 319 real estate trading floors and centers in HCMC have closed due to the frozen property market. However, insiders insist that it is a substantial figure.

Taking the area on Tran Nao Street in District 2 as an example, trading floors and brokerage centers used to be mushrooming a few years ago when the property market was booming. However, these service centers are disappearing fast due to the market meltdown.

Apart from the offices of real estate firms located there, the number of trading floors left can be counted on both hands.

The director of a property trading floor that was formerly situated in Tran Nao said the slump in market transactions had resulted in capital shortage of multiple floors, forcing them to narrow or wind up their businesses.

Another brokerage service provider which shut down recently also stressed the property market in District 2 was saturated. Also, the market trend to focus on the apartment segment makes it more difficult to seek clients.

The director of a District 1-based trading floor said there are few large-scale and prestigious centers that remain operational. Most trading floors focus on brokerage service, leading to the lack of consultancy, pricing, auditing and management service providers.

The director insists a medium-scale trading center needs VND300-400 million a month to cover the costs of rent and laborers. Given the commission percentage of 2-3% for an apartment, the trading floor must have 20 successful transactions per month just to break even.

However, at the moment traders would be delighted to secure 5-10 transactions a month, said the sales director of a real estate firm in Binh Chanh.

At a seminar on the property market on Wednesday in HCMC, Marc Townsend, managing director of CB Richard Ellis Vietnam, said no one could predict how low the market would fall given the discount pressure in the last ten quarters in all segments, from office buildings to apartments.

According to a market survey by Cushman & Wakefield, there will be 13,000 apartments launched onto the market by the year-end, an amount enough to meet the demand of buyers for the next three years.
 
Vietcombank divests stake in Shinhan Vina

Bank for Foreign Trade of Vietnam (Vietcombank) has divested capital in Shinhan Vina Bank and made a hefty profit from the deal, allowing the latter to be merged into Shinhan Vietnam Bank.

The board of directors of Vietcombank last week approved to transfer its 50% stake in Shinhan Vina Bank to Shinhan Bank as its South Korean partner in the joint venture bank. Vietcombank enjoyed a lofty profit of roughly VND1.3 trillion from the initial book-value contribution of VND589.39 billion.

Earlier on November 11, the central bank’s governor Nguyen Van Binh also signed a decision allowing Vietcombank to sell the 50% stake in Shinhan Vina Bank to Shinhan Bank. At the same time, the central bank permitted merging Shinhan Vina Bank into Shinhan Vietnam Bank.

All branches of Shinhan Vina Bank in Hanoi, Dong Nai and Binh Duong provinces will belong to Shinhan Vietnam Bank, which has raised its chartered capital to VND4.55 trillion thanks to the support from Shinhan Bank.

Shinhan Vina was established in 1993 with chartered capital of US$75 million, with paid-in capital contributed by Vietcombank and two other South Korean partners Korea First Bank and Daewoo Securities Co. Their respective stakes were 50%, 40% and 10%.

After that, Shinhan Financial Group acquired South Korean partners’ stakes and changed the bank into Shinhan Vina in 2001 with its total assets reaching some US$500 million.

A senior executive of Vietcombank confirmed to the Daily that his bank had received the payment from Shinhan Vietnam Bank.

The huge profit has been accounted into this year’s profit of Vietcombank, the second biggest bank in the country in terms of market capitalization on the local stock market. Meanwhile, the initial investment amount will be treated as part of the lender’s chartered capital.

This year saw Vietcombank undergoing two big divestment deals, the other one being the transfer of its 30% stake in Gia Dinh Commercial Bank. It has also sold a 15% stake to Japan’s Mizuho Bank as its strategic partner.

The banker commented that this is a win-win deal for both the seller and the buyer, especially when Vietcombank wants to withdraw money invested outside to mobilize all resources to cope with fast-changing financial landscape.

Similarly, Shinhan could concentrate all resources on a bank only instead of investing in both a 100% foreign-invested bank and a joint venture at the same time.

According to the central bank, Vietcombank’s two deals to transfer stakes to foreign partners have replenished a considerable resource of foreign currency, partly helping to ease the severe shortage of the U.S. dollars among lenders at home.
 
Logistics firms losing out to foreign rivals

The Vietnamese Ship Owners’ Association (VSA) has asked the relevant authorities to tighten the granting of licenses to foreign ship owners who are squeezing out local logistics companies.

For loose cargo and container transportation, local ships are qualified for serving domestic routes but there is little room left for them due to the overwhelming presence of foreign competitors, said Do Xuan Quynh, general secretary of VSA.

The Ministry of Transport last week held a meeting on this issue and came to the conclusion that it will not issue more licenses to foreign ships operating on local routes provided that local ships can meet the demand.

Trinh Minh Hien, head of the Legislation Department of the transport ministry, asserted that such a move does not violate Vietnam’s commitment as a World Trade Organization member.

In fact, Article 7 of Vietnam’s Maritime Code stipulates that local ships are prioritized to transport cargo and passengers on local routes. Therefore, only when local ships are unable to meet the demand can foreign ships take over.

Protecting local ship owners is normal in other countries, especially in cases of super-heavy goods or liquid gas transportation.

Deputy minister of transport Nguyen Hong Truong said that in future, the ministry will only grant licenses with six-month validity to foreign ship owners.