Support industry has development potential
 
Viet Nam's support industry has been urged to expand and capitalise on the opportunities created by foreign firms establishing manufacturing and assembling facilities in the country.

The comment was made by Reed Tradex Deputy Managing Director Duangdej Yuaikwarmdee during a conference on the country's support industry held in the capital city on Wednesday.

Businesses that produce parts to support manufacturing play an important role in the production process, but many Vietnamese firms have failed to win contracts to supply parts to foreign-invested manufacturing projects.

Yuaikwarmdee said that continued economic integration into the ASEAN community had made trade in machinery, technology and other products easier, and this helped speed up the development of Viet Nam's industry and trade sectors.

However, rising competition from other countries in the region with promising industrial capacities, also required the country to further improve its support industry, he said.

A large gap remained in terms of capacities between domestic firms in support industry and those from regional countries, said Dao Thu Vinh, deputy director of the Ha Noi Department of Industry and Trade.

Few local firms have won contracts to supply foreign-invested enterprises in Viet Nam while those that have been successful in securing contracts supply the most basic of parts, Vinh said.

Without greater efforts, she warned, the domestic firms would likely to lose their home market to competitors from regional countries.

Viet Nam Association of Machinery Industry chairman Nguyen Van Thu suggested the domestic enterprises take initiatives in seeking orders for support industry products from foreign companies.

Local firms in the sector were also urged to continue to improve management capacities and invest in technical innovation to ensure higher quality products that better meet the demands of foreign enterprises.

Securing contracts as parts suppliers for foreign companies would not only help local businesses have more capital to reinvest in sharpening their internal capacities but also helped Vietnamese businesses to expand their foot-hold in the global production chain, he said.

Meanwhile, more Government incentives for firms in the sector were also necessary, the chairman said.

The Government has offered favourable conditions for investment in support industry for both foreign and domestic investors.

Support industry manufacturing projects are advertised for free on the Ministry of Industry and Trade's website and some are eligible for financial assistance, while getting opportunities to join supply networks, recruit labourers and use facilities at industrial parks.

Local firms in the sector did not have to pay import duties on feed stock and other raw materials for production and scientific research.

Italian companies urged to invest in Viet Nam

Italian firms should develop their business in Viet Nam because of the country's tremendous growth potential, a forum organised with Italian funding heard in HCM City yesterday.

Patrick Gilabert, UNIDO Country Representative, described Viet Nam as one of the best countries for long-term growth with an expected (real per capita) GDP growth rate in 2010 – 50 of 6.4 per cent.

He told the Enterprise Partnerships for Development Forum: "A high investment rate, high economic growth rate, and large population make the country top the list of nations with the highest growth potential in the 21st century."

Viet Nam's population, which was 89 million in 2010, is expected to rise to 112 million in 2050. Its working age population is expected to grow until around 2035.

Tran Dinh Thien, director of the Viet Nam Institute of Economics, admitted to executives from more than 40 Italian firms, who are here for the first time to study investment and market opportunities, that Viet Nam was still facing many challenges.

Its first quarter GDP growth was just 4 per cent and the projected growth for the next was 4.5 per cent.

Businesses were in serious decline, the number of those bankrupt or closed had increased sharply, most firms had dramatically cut production.

But the ongoing economic restructure would enable effective integration with the world economy.

The country had advantages like the availability of natural resources, long coastline, and a young and dynamic labour force.

It had massive potential in tourism, especially at the high-end.

Lorenzo Angeloni, the Italian ambassador to Viet Nam, said Italian businesses could share their experience with their Vietnamese counterparts, and co-operation with them would help Vietnamese firms get access to new technologies and Italian brand names.

As the forum goes on through Saturday, delegates will hear about Viet Nam's customs regulations, tariffs, and logistics issues.

The visitors will go to several garment and textile, footwear, and furniture factories, and meet with potential partners at business-to-business sessions.

The forum is being organised within the framework of the "SME Cluster Development" co-operation project funded by Italy and implemented by the United Nations Industrial Development Organisation, the Ministry of Planning and Investment, the Confederation of Italian Industries, and the Italian Trade Commission.

The project is aimed at supporting the development of small and medium-sized enterprises (SMEs) in Viet Nam and the internationalisation of Italian SMEs through the promotion of trade, production, and technical co-operation agreements between firms from the two countries.

It has a specific focus on disseminating the experiences and best practices of Italian "industrial districts" in Viet Nam and on promoting institutional agreements among Italian and Vietnamese industry associations, educational institutions, technical and service centres.

Technical assistance has been provided through consultancy by experienced international professionals to around 80 Vietnamese companies in the sectors of textile and clothing, footwear and leather products, and furniture.

The comprehensive knowledge acquired by companies and sector institutions through this process is now available to support and guide the selection of potential partnerships between firms from the two countries.

Forum urges energy diversification
 
Viet Nam must diversify energy resources to ensure energy security as the power demand for socio-economic development increases, experts at an international energy forum said.

The forum was part of an exposition on Viet Nam's energy development, entitled VE Expo 2012, co-organised recently by the Viet Nam Energy Association (VEA) and the Viet Nam Chamber of Commerce and Industry.

With the topic "Energy of Viet Nam – 25 years of renovation and development" it reviewed the 25 years of renovation and development of the energy industry in the country.

Ho Thi Kim Thoa, deputy minister of Industry and Trade, said energy was an important factor for the country's development. The Government paid great attention to policies to bolster energy development.

With the fast growth of the economy, demand on energy also increased strongly, causing difficulties in supply. Thus, besides the current energy resources, Viet Nam had to develop recycled and new energy resources. Especially, we needed to focus on solutions to use energy effectively and save it, Thoa said.

Under the national electricity development plan for the period 2011-20 with orientation to 2030, it was expected that the national power demand would increase 14-16 per cent per annum on average, a report released by the expo's organisation board said.

Viet Nam would likely generate 194-210 billion kWh by 2015 and 330-362 billion kWh by 2020 and 695-834 billion kWh by 2030, the report said.

Nguyen Viet Ngai, VEA chairman said the expo was a good opportunity for foreign and local companies to introduce, exchange and access new and advanced technologies in energy generation and was also a chance to boost co-ordination among the firms, promote trade, expand markets and seek partners.

The forum attracted nearly 200 international and domestic participants, mainly discussing solutions to develop energy infrastructure synchronically in Viet Nam during 2012-20, focusing on development of renewable and nuclear energy. Renewable resources include wind, biological and solar power.

As an effort to help increase the energy supply by 2020, Viet Nam plans to build two nuclear power plants in the central coastal province of Ninh Thuan. Ninh Thuan 1 nuclear power plant will be undertaken with Russia and Ninh Thuan 2 is expected to be jointly implemented with Japan, each with two reactors having a total capacity of 4,000MW.

On the sidelines of the event, Junichi Kawahata, deputy director of the nuclear project department Power System Company-Hitachi Global, shared experiences of Japan for nuclear power development in Viet Nam.

"Nuclear power is a complicated sector, requiring high technology and qualified human resources. It also needs tight co-operation with local companies and work forces, and especially our technologies must be localised in order to ensure the success of a nuclear electricity project," Kawahata said.

With an aim to share Japan's experiences with Viet Nam, Hitachi co-ordinated with the universities of technology and electricity last year to carry out training programmes in the sector.

However, Hitachi alone could not satisfy all demands for human resources for the sector, Kawahata said. At present, the Japanese Government and its scientific and technological associations had promoted training programmes on nuclear power with Viet Nam.

The firm was now negotiating with domestic enterprises to co-operate, transfer technologies and jointly implement the project if the company became the contractor for the project, Kawahata.

Hitachi has joined with the American firm GE to develop the advanced boiling water reactor with high safety standards.

Under the Vietnamese Government plan, Ninh Thuan 2 would be put into operation by 2020. To realise the target, it should be built in 2017 and procedures on the project appraisal, investment licence should be implemented in 2014 due to the project's complication.

Thus, it required reaching an agreement between Viet Nam and Japan by 2014.

Malaysian group hosts IT forum

Around 200 delegates and 64 businesses from Viet Nam and Malaysia gathered at an information and communication technology (ICT) forum in HCM City yesterday to seek cooperative opportunities.

The event was jointly organised by the Malaysia Trade External Development Corporation (MATRADE) and the Quang Trung Software Park.

Addressing the event, Deputy Minister of Information and Communications Nguyen Minh Hong said cooperation between Malaysia, which owns infrastructure, expertise and a broadband network, and Viet Nam, with an abundant supply of manpower and a promising market, would help raise each side's strength and competitiveness in the global market.

According to Le Thai Hy, director of the municipal Department of Information and Communications, Viet Nam's IT sector has maintained stable growth in past years. In HCM City alone, the sector earns nearly US$2.5 billion a year.

Regarding the development of e-government, Zalian Mohamed Noh, Service Development Director of MSC company, a leading IT business in Malaysia, said Viet Nam should assign the project to major cities and provinces before spreading it nationwide.

At the event, Viet Nam's TMA software company along with its Malaysian partner Nextgrid inked a deal with online payment service provider iPay88, under which a mobile payment system will be set up across Southeast Asia using TMA Nextgrid technology via iPay88.

WTO procedures resolve disputes

The use of World Trade Organisation (WTO) dispute settlement was considered one of the effective legal tools to help exporters protect their legitimate interests in US anti-dumping and countervailing duty proceedings.

Addressing a conference in the capital yesterday organised to help domestic exporters understand the tool better, Deputy General Secretary of the Viet Nam Chamber of Commerce and Industry Tran Huu Huynh said that the Vietnamese Government and its exporters had used it successfully for the first time during 2010 in the case against the US over anti-dumping measures on frozen shrimps.

However, Huynh said, though WTO dispute settlement is government-to-government, implementation usually requires participation of company respondents.

"Domestic exporters and associations therefore should actively take part in anti-dumping proceedings," Huynh stressed.

Lawyer William H Barringer said success in anti-dumping proceedings usually required participation in all three forums of the US Department of Commerce (DOC), the US Court of International Trade Organisation (CIT) and the WTO.

"Generally, a single forum is inadequate to resolve complex overlapping issues of fact, domestic law and WTO jurisprudence," he said.

Therefore, before challenging US law issues at the CIT and challenging WTO inconsistencies, it was necessary to create an adequate factual and legal record before the DOC on which to base further appeals.

Barringer recommended that a key issue in anti-dumping was determining mandatory respondents based on sampling rather than on the largest export volume.

Work on soft drink bottling plant begins in Quang Nam

Work started on a soft drinks plant in Chu Lai Industrial Zone in the central province of Quang Nam on Tuesday.

The VND2 trillion (US$95.2 million) Tan Nhat Phat Group plant will be equipped with advanced technology and occupy a 27 ha site.

Construction will be in two phases. The first phase, from 2012 to 2013, will include a plant with a production capacity of 300 million litre per year.

Over the 2016-20 period, production capacity will rise to 600 million litres per year.

New terminal facilitates faster sea transport

The Cai Mep International Terminal has achieved a record capacity of 183 berth moves per hour, supplying faster loading and unloading cargo service to vessels harboured in Viet Nam to and from the US and Europe.

With such a capacity, more than 183 containers of all sizes can be loaded or uploaded each hour. In the first month of operation, in December of last year, the terminal had 125 berth moves per hour.

During the past six months of operation, the terminal accommodated 151 vessels for 351,000 TEUs (twenty-foot equivalent unit) load. Located in Ba Ria - Vung Tau Province, 50km away from HCM City, the port has a capacity of 1.1 billion TEUs, a 600m-long wharf and a 14m-deep channel.

Ministry hikes import tax on petrol by up to 4%

The Ministry of Finance issued yesterday a circular to ask petrol importers to follow the new import tariffs.

Under the new circular, import taxes levied on various kind of gasoline will be raised from their current 2 per cent to 4 per cent.

The circular also stipulates that import taxes on diesel fuel for cars will increase from 2 per cent to 3 per cent and other fuel will rise to 5 per cent. This circular took effect from yesterday and replaced the one from May 10, 2012.-

City's supply of premium office space rises

Only 9,000 square meters of grade A office space will be added to the market in HCM City this year, much lower than the 84,000sq.m planned by developers due to delays, according to property service firm CBRE Vietnam.

Five buildings, including Times Square and Le Meridien, were planned to be completed in 2012, but some face delays.

CBRE's office services director Greg Ohan in fact predicted only one or two of them to be finished this year.

"As occupancy levels rise and new supply is delayed, the grade A market appears to be approaching a ‘short term' bottom," he said.-

Bank inks deal with IFC, BNP Paribas

Orient Commercial Bank (OCB), the International Finance Corporation (IFC) and French banking giant   yesterday signed an agreement for a credit facility of US$25 million in HCM City.

With this contract, OCB will be provided US$25 million, including $15 million from IFC (a member of the World Bank group) and $10 million from co-sponsor BNP Paribas (France), OCB's strategic partner.

The total amount will be reserved for SMEs, and OCB will set aside $5 million to serve SMEs owned or managed by women.

This programme will help to promote women's role in the development of the national economy in particular and society in general.

"This sponsorship of IFC and BNP Paribas, along with OCB's advantages, will help to boost business loans, facilitating SME access to funding. We will mainly focus on sectors such as manufacturing, import–export, trade, services and agriculture, giving priority to projects in environmental protection to minimise the effects of pollution and to ensure cleaner and greener operation environment for businesses and the community at large.

"We believe that, supported by the credibility and global experience of IFC and our strategic partner BNP Paribas, OCB will be a close companion of enterprises to overcome difficulties, and achieve stability and development," the OCB's CEO, Nguyen Dinh Tung, said.

Simon Andrews, regional Director of IFC (for Viet Nam, Cambodia, Laos and Thailand) said that they hoped that through this cooperation with OCB, "we can introduce a new loan product in international credit which other local banks can follow."

The co-operation between OCB and IFC was established in 2011 through the Global Trade Finance Programme, through which IFC has issued a trade guarantee up to $20 million, supporting OCB in managing trade finance risks while working with import–export businesses in Viet Nam.

The extension of another $25 million credit will increase the total credit to $45 million.

Deputy PM urges transport work

More attention should be paid to resolving land clearance problems in key transport projects, said Deputy Prime Minister Hoang Trung Hai said on Wednesday.

Hai, who is also head of the State Steering Committee on Key Transport Projects, urged the committee to take drastic measures to speed up the many projects in urban and suburban areas that had become mired in disputes.

He also asked relevant agencies in Ha Noi and HCM City to quickly relocate residents from areas that were holding up projects.

The committee agreed that problems relating to land clearance, disbursement of funds and investment procurement were still major reasons for the tardiness of many key transport projects.

They said a number of ODA-funded project had been held up over compensation payments for land acquisition and tightened financial conditions. Projects such as HCM Highway, Yen Vien-Cai Lan Railway and a ship canal to Hau River had fallen behind schedule because they were funded by Government's bond sales, which had not performed well.

Hai said it was vital to attract private investment in major infrastructure projects.

"It's crucial to set up mechanisms for better project management and implementation so that investors can see the results and be encouraged to pour more money into transport schemes," he said.

The Ministry of Transport has been asked to set up an office to oversee the implementation of projects under the format of Build-Operate-Transfer (BOT), Build-Transfer (BT) and Public-Private-Partnership (PPP).

Meanwhile, the Ministry of Construction plans to inspect the disbursement of funds and the implementation of projects. Nearly completed projects will be given funding priority, the Deputy Prime Minister said.

According to reports given to the committee, work on major projects such as Noi Bai International Airport's Terminal 2, Cai Mep-Thi Vai Port, HCM City-Long Thanh-Dau Giay Highway, Cau Gie-Ninh Binh Highway, Phu Quoc Airport and Ha Noi's Ring Road No3 were on schedule

Projects due to kick off this year include Lach Huyen Port, Nam Can Bridge, Ben Luc-Long Thanh Highway, Da Nang-Quang Ngai Highway and Cao Lanh Bridge.

PM asks the WB for more support

Rather than rush the country's growth rate, Viet Nam's goal should be to stabilise the economy, said Prime Minister Nguyen Tan Dung yesterday when asking the World Bank country director Victoria Kwakwa to continue the organisation's support for the country.

The country expected to keep inflation at 8 per cent this year (compared to 18 per cent last year) and limit overspending to 4.8 per cent of the gross domestic product (GDP), he said.

Viet Nam targeted 5.6-5.8 per cent growth in 2012 and would increase it to more than 6 per cent next year when inflation was expected to decrease to below 6 per cent.

Dung also said the Government was conducting an economic reform which would focus on public investment, State enterprises, and the banking system.

The Government leader expected the World Bank to support Viet Nam in pursuing development goals, provide policy consultancy and share experience in dealing with bank bad debts. It also hoped for an increased foreign investment and the implementation of key traffic projects.

The World Bank country director appreciated Viet Nam's policies to curb inflation over the past year. However, she suggested the country focus on helping enterprises, improving production and trade, improving technology application in production, and creating more jobs.

Kwakwa said Viet Nam should enhance its control over public investment to improve its effectiveness.

She confirmed that the World Bank would always co-operate with and support Viet Nam in its development process.

The World Bank earlier announced it would allocate US$4.2 billion for a five-year (2012-16) strategy to support the country.

Major equipment contract for thermoelectricity plant signed

A contract for the design and supply of equipment and technological services for the Thai Binh 2 Thermoelectricity Plant Project was signed in Ha Noi earlier this week.

The contract, worth more than US$826 million, was signed between the PetroVietnam Construction Joint Stock Corporation (PVC) and the Sojitz-Daelim contractors (SDC).

Speaking at the signing ceremony, general director of the PVC Vu Duc Thuan said the contract included equipment supply and a detailed design for the turbine and generator areas. It also gave technical consultancy and guidance for the equipment installation and pilot operation.

As expected, the duration of the contract between the PVC and SDC will ensure compliance with the signed engineering-procurement-construction (EPC) contract.

The Thai Binh 2 Thermoelectricity Plant, with the capacity of 1,200 MW and a total investment of US$1.6 billion, is expected to commence operation in 2015 with output of about 6.7 billion kWh per year.

The plant located in the My Loc Commune, Thai Thuy District in the northern province of Thai Binh.

SMEs promised full support to join China’s int’l fair

Local small and medium-sized enterprises (SMEs) putting their names down to join the China International Small and Medium Enterprises Fair 2012 (CISMEF) in September will be subsidized full expenses of participation, the organizers said on Wednesday.

The financial support package covers all expenses, from decoration to promotion during the event scheduled for September 22 to 25, said the organizers comprised of the HCMC Investment and Trade Promotion Center (ITPC) and the Trade Promotion Department.

Vietnam plans to take over 50 local firms to the Chinese fair, with their products and services to be showcased on around 3,000 square meters at the China Import & Export Fair Pazhou Complex in Guangzhou City, said Bui Thi Thanh An, deputy head of the Trade Promotion Department.

An told a press briefing in HCMC on Wednesday that the fair is open to all local SMEs active in agro-products, processed food, essential goods, machinery, electronic products, home appliances and others but they need to register for the participation as soon as possible.

At the fair, the local organizers will also supply information on HCMC and potential cooperation chances with the city in terms of investment and tourism to appeal to Chinese partners.

This year Vietnam and Ecuador will join CISMEF for the ninth time as the co-organizers. The 100,000-square-meter fair has a total 5,000 booths meeting international standards. Of those, 4,000 stands are for food, electronic components, energy-saving and environmentally friendly products.

Upon the invitation of China’s Government, the Vietnamese Government has assigned the Trade Promotion Department under the Ministry of Industry and Trade as the co-organizer to work with relevant authorities to attract local enterprises to the event.

For further information, interested companies can contact the export supporting center of the Trade Promotion Department, 20 Ly Thuong Kiet Street, Hoan Kiem District in Hanoi, tel. 04 3936 4792, ext. 116.

Minister says careful in fuel price adjustment

The Ministry of Finance has given careful consideration to fuel price adjustment, as seen in its decision to inch down retail fuel price by VND300-600 per liter from 3:30 pm on Wednesday, said Minister Vuong Dinh Hue.

The price of popular A92 gasoline dropped VND600 to VND22,700 per liter while that of diesel oil fell VND400 to VND21,300 a liter. Kerosene and fuel oil prices went down VND300 to VND21,100 and VND18,900 respectively.

The ministry has reported the Prime Minister that price difference between local and global gasoline levels was over VND900 a liter. The Government leader decided to increase the import tariff by two percentage points equivalent to some VND300 per liter and cut VND600 on the current price in an effort to ease the price difference.

Minister Hue said it was true that fuel traders earned VND1,700-1,800 per liter at the current time. However, the price must be counted on one-month basis.

Moreover, fuel traders can not stick to the global price level going up and down daily as they must store the inventories for long periods.

As for diesel oil, the ministry raised the tax rate by one percentage point as the country consumed a large amount of this fuel for production activities. The difference between local and international price was smaller, at VND600 a liter, leaving it a price decline of VND400 per liter.

Price adjustment, therefore, has been taken into very careful consideration, Hue said.

“If there is a rise in the world fuel price, we must mark up the local level to maintain a suitable margin between the base price and selling price. If the price goes higher, the Government will slash taxes in an attempt to keep production costs and consumer spending at an affordable level,” said Hue.

If the world fuel price inch down, the government will consider recovering tariff collection. When all related factors are taken into account, the local fuel price will be revised in line with the global trend.

This is the second time in a month local fuel price have been adjusted down due to the global downtrend. Early this month, the price of A92 gasoline was inched down VDN500 per liter while that of diesel oil posted a VND300 decrease per liter.

Siemens penetrates medical testing sector

Siemens Healthcare has introduced its medical testing sales department, marking a series of activities to promote the sale of medical testing equipments in Vietnam, a market which Siemens expects to have a high growth.

Etienne Szivo, Executive Vice President of Siemens’ Healthcare sector for ASEAN, Korea and Pacific, said that the firm would also provide technical supporting services for hospitals in Vietnam.

Siemens will build consulting and sales teams for clinics and hospitals instead of distributing products for agents like before.

“Perhaps we are the leading supplier of imaging diagnosis equipments in Vietnam, but we have just started to penetrate the medical testing sector and yet to grow as strongly as other suppliers,” Szivo told the Daily on Wednesday on the sidelines of the Siemens Healthcare Day 2012 in HCMC.

Siemens introduced several testing equipments for immunity, diabetes and hematology at this event which attracted around 300 technicians and doctors.

According to Szivo, among Asian countries, China, Japan and India are big markets of Siemens Healthcare, but Vietnam is expected to have a high growth.

“Vietnam is one of the countries that we have pledged a long-term investment. Siemens Healthcare has set a target of obtaining a two-digit sales growth here,” he said.

Coffee business’ bitter after taste

Pham Khanh Hiep, a senior coffee expert, said Vietnamese coffee often incurred disadvantages during transactions in London and New York coffee trading floors since local exporters could not grasp trading rules.

Luong Van Tu, Vietnam Coffee-Cocoa Association (Vicofa) chairman, said many exporters did not opt for legal advice when signing export contracts or resolving disputes and they need to redress this situation.

To limit risks when making transactions with futures contracts, Vicofa secretary Nguyen Viet Vinh suggested firms get support from legal and international trade experts.

“Establishing model contracts and doing trade as per international practices are urgent needs for Vietnam’s coffee industry,” Vinh said.

Cafecontrol general director Nguyen Nam Hai said Vietnamese firms had made their mark in the global market.

For instance, Intimex Ho Chi Minh City or Dak Lak-based Simexco made deals directly with world coffee roasting and grinding companies without going through intermediaries. These firms, therefore, could sell products at good rates and are less dependent on market situations.

“But, not many firms do so. Most are doing futures contracts which are risky,” said Hai.

Simexco director Le Duc Thong said prestige was important to directly sell products to world coffee roasting and grinding firms.

Through selling directly to foreign coffee firms, Simexco earns $50-100 per tonne of export coffee more compared to exporting through middlemen and takes the initiative in output market.

Meanwhile scores of firms, doing transactions with futures contracts via middlemen, face going bust due to strong market fluctuations, said Thong.
In 2011-2012 coffee season (from September 2011 to March 2012) Vietnam shipped abroad 700,00 tonnes of coffee of which 13 foreign-invested firms exported 200,000 tonnes.

WB calls for prudence in economy driving

The World Bank (WB) has just warned that Vietnam should prudently weigh the two goals of stabilizing the macro-economy and stimulating the economic growth on the verge of downturn.

Victoria Kwakwa, WB country director for Vietnam, said that the economy has no choice but to either grow or remain stable. The country leaders must balance these two objectives and this is a challenge for Vietnam.

“Previously, we said economic stability is the main target, and now economic stability needs greater focus,” she said.

WB chief economist added: “Growth and inflation are not a tap to turn on and off at any time. It is a game of balance.”

Such a warning is given when the Government has recently issued Resolution 13 with a VND29-trillion bailout package to support the economy that only grew 4% in the first quarter, the lowest level in the same period of many years, except 2009.

This move of the Government is in response to the stagnant economy as a result of Resolution 11 released in February last year.

Kwakwa observed that the macro-economic indices are going in the right direction thanks to Resolution 11, but inflation of over 10% is still high. Therefore, it is not a right time to remove all macro-economic stabilization policies.

In the East Asia and Pacific Economic Update report released on Wednesday, WB said the near-term policy challenge for Vietnam is to maintain macro-economic stability and restore confidence among investors, while addressing longer-term structural reforms.

In addition, the global lender suggested Vietnam should return to a more sustainable macro-economic environment while laying the foundations for greater efficiency and productivity to drive medium- and long-term growth.

The report remarked macro-economic stability remains the top priority of the Government. The economic growth is estimated at 5.7% and the year-end inflation is forecast to drop to below 10%.

For 2012, the budget deficit is expected to widen to 6% of the GDP. The global financial institution said maintaining the fiscal discipline should be a priority to help relieve the burden on the monetary policy as the economy begins to stabilize, and to help maintain debt sustainability over the medium-term.

The report stated the largest source of uncertainty to debt sustainability comes from State-owned enterprises, whose implicit obligations are not captured under the Government and the Government-guaranteed debt statistics. No reliable estimate of such liabilities is available, which limits the Government’s ability to manage associated risks.

Commenting on the case of Vinalines, Kwakwa said: “When the Vinashin incident occurred, people said that there would be similar cases. Now, it is true that there are other Vinashins. This is a great problem of the State economic sector.”

Therefore, the Government needs to take further actions to restructure State-owned enterprises to hedge against the risks to the financial sector and the entire economy, she said.

Bid to reduce non-bidding public projects

The prevalent Bidding Law should be changed now to help cut the number of non-bidding packages accounting for up to 75% of the total number of public projects in the last three years alone, the Ministry of Planning and Investment told a seminar on the Trans-Pacific Partnership (TPP) agreement in Hanoi on Wednesday.

At the seminar, deputy head Nguyen Dang Truong of the ministry’s Bidding Management Department said total capital of non-bidding packages of projects funded by the State budget amounted to 45% of the total value. As such, few projects were selected via public bidding while the number of appointed ones based on the ‘ask-give’ mechanism was much bigger, Truong noted.

In fact, specific regulations on bidding and non-bidding cases are already present in the existing Bidding Law.

For consulting service packages, the law only allows project owners to appoint contractors for projects of less than VND500 million each. Meanwhile, it only lets project owners select partners by themselves for other schemes worth below VND1 billion.

However, the application of the law has changed considerably given the economic downturn over the past few years.

To stimulate investment to prop up the economic slump in 2009, the Government allowed provinces to decide on contractors for urgent schemes. As a result, the number of non-bidding projects, including both urgent and non-urgent ones, has sharply risen since then, with many of them worth up to hundreds of billions of dong each in adjusted value.

Now the law is put under consideration for revision in line with international trade agreements as well as the changing local bidding environment. Future TPP foreign partners of Vietnam commented that the scope in which local firms have the right to appoint contractors is too large compared to other nations, Truong stated.

The law should be revised soon or it will get outdated or even violate international treaties that Vietnam will be involved in as a TTP member in the near future, he added.