PM approves Master Plan for Thanh Thuy border gate economic zone

The Prime Minister approved yesterday a master plan for the Thanh Thuy border gate economic zone (EZ) in northern mountainous Ha Giang Province to 2030.

The zone is set to become a trade and tourism complex aimed at promoting international integration and socio-economic development while ensuring national security.

The EZ was expected to have a population of about 35,000 – 40,000 people by 2030, about 60 per cent of whom will be workers.

Seven economic centres are also scheduled to be established, including Thanh Thuy and Lao Chai as the two largest. Tourism sites will also be developed at Lang Ping, Suu and Nam Tha springs along with the Phong Quan and Tay Con Linh protected areas.

Infrastructure development is a key focus for comprehensive development of the EZ. New roads and bridges over the Lo River will be constructed along with upgrades to the portion of National Highway 4 which goes through the zone.

A 110kV-transformer station will be built while Thanh Thuy and Ha Thanh hydroelectric plants will receive upgrades and new power lines will be installed to meet the increased demands for power. Water supply is set to reach 9.500 cu.m per day.

The EZ spreads over an area of more than 28,700ha through seven communes in Vi Xuyen and Phuong Do districts.

Ha Noi aims to meet its tax goal

The capital city Ha Noi is feeling the pressure this year to meet its target of tax contributions to the State budget of VND132 trillion (US$6.28 billion), an increase of 22 per cent over last year.

Phi Van Tuan, head of the municipal tax department, said the goal would be difficult to achieve in the context of the economic downturn in particular and with many businesses forced to trim production due to high interest costs connected to bank financing.

Meeting the goal would require the department to collect 21 per cent more taxes from State-owned enterprises (SOEs) and 29 per cent more from foreign-invested enterprises, while tax collections from the domestic private sector would have to rise by a whopping 36 per cent.

Deputy Minister of Finance Do Hoang Anh Tuan said higher tax collections from the private sector would be particularly difficult since many companies already owed back taxes worth a combined VND1.5 trillion ($71.4 million).

Tuan said businesses have paid VND220 billion ($10.4 million) a year at annual interest of 20 per cent while their profits were only VND75 billion ($3.6 million).

Additional tax collections would be complicated by the effect of tightened public spending on production and business activities, he said. Tighter monetary policies would not only affect the property market but construction, steel production, cement and building materials.

The department has assigned every unit to estimate tax collections to ensure the target and has reviewed the capacity to pay taxes of each district and production and business sector.

The department would audit businesses which make significant tax payments to the State budget, including commercial banks and other credit institutions and telecommunications businesses, which together account for 60 per cent of all of the city's enterprise tax collections.

Firms operating in the real estate sector would also be supervised for their project scale, construction progress and disbursements.

The department would also increase audits at all enterprises to prevent tax fraud.

PM ratifies a master plan for developing agricultural sector

The Prime Minister has approved a master pan for developing the agricultural sector until 2020 with a vision for 2030.

Accordingly, in the ten-year period, the agro-forestry-fisheries sector aims to earn US$40 billion from exports, of which agricultural products are expected to reach US$22 billion, forestry products US$7 billion, seafood products US$11 billion.

With a vision for 2030, the export turnover of the agro-forestry-fisheries sector will increase to US$60 billion, including US$30 billion from farm produce, US$10 billion from forestry products, and US$20 billion from seafood.

The agro-forestry-fisheries sector will achieve an average GDP growth rate of 3.5-4 percent per year with the production value increasing by 4.3-4.7 percent and forest coverage by 44-45 percent by 2020.

To achieve these goals, more land will be reclaimed and allocated for the sector to reach the target of 1.1 million hectares in ten years time.

Fuel dealers brazenly continue selling after losing licenses

Phu Hoang filling station at 3A Bau Cat, in Ho Chi Minh City’s Tan Binh District, was full of consumers despite the requirement that it shut down operation for a year

Though required to stop operation for a year as of February 1, four out of nine fuel dealers that had their licenses revoked last year for selling substandard petrol have been caught remaining operational.

On the morning of February 1, the Phu Hoang filling station at 3A Bau Cat, in Ho Chi Minh City’s Tan Binh District, was full of consumers, though it had been fined VND30 million for selling substandard petrol under the guise of A92- and A95-grade gasoline, and had its license withdrawn.

When asked to arrange a meeting between Tuoi Tre and Do Van Thuat, the station’s owner, the employees said he had been away.

Similarly, the Minh Dat filling station in Binh Chanh District, another company whose license was revoked, is still serving customers as usual. A female employee who refused to be named said her station had been allowed “by the authorities to operate until the unsold petrol stock had been emptied.”

However, she could not elaborate on which agencies had given them the go-ahead to do so.

The Truong Anh filling station in District 12 also continued to operate despite the authorities’ requirement that they shut down.

For its part, the Tan Canh private company in Tan Phu District had its license expire on December 31, 2011, and was banned from renewing the license for one year.

However, the filling station was caught remaining operational on February 1.

Do Thi Ro, who runs the company, told Tuoi Tre that she was just trying to empty the unsold stock.

However, after the talk with Tuoi Tre, Ro immediately asked the employees to close down the station.

Le Manh Ha, deputy chairman of the municipal People’s Committee, said the relevant agencies will conduct check-ups on the violators to see whether or not they have followed the law.

“Any violators refusing to close operation as required will be severely sanctioned, and asked to shut down operations,” Ha said.

Export focus boosts outlook

Despite the global economic slowdown, companies operating in international markets are doing better than those focusing on domestic markets in all major economies, with the exception of China, a new survey has found.

Carried out by Regus, a Belgium-based provider of workspace solutions, the survey covered more than 12,000 firms worldwide.

The survey findings indicate that foreign expansion is good for business and should be considered urgently by domestically-focused companies who do not want to be left behind in fiercely competitive markets.

It said the survey found "a gulf between the outlook of companies already operating internationally – where 80 per cent intend to expand still further – and those solely operating in home markets – where only 42 per cent intend to expand abroad over the next few years."

The findings of the worldwide survey emphasize that "property" and "human resource" are seen the main obstacles in expanding operations to foreign markets..

William Willems, deputy general director of Regus in Australia, New Zealand and Southeast Asia, said the survey should serve as a wake up call for firms focused solely on domestic markets to "find effective and cost-efficient ways of moving cross-border in order to enhance their earnings and spread their risk."

In China, the only exception to major economies in the world, state-sponsored infrastructure investment and development is providing "disproportionate" domestic market opportunity for Chinese firms.

Nevertheless, such infrastructure development would ultimately turn out to be finite, and into the next decade, Chinese firms could to once again be looking for export-led growth.

In Viet Nam, export activities had seen fruitful results in the last year. In the context of rapid international economic development, it was not too difficult for Vietnamese businesses to expand operations to foreign markets, he said.

Cooking gas suppliers call for import tax cut

The Vietnam Gas Association has called on the government and the Ministry of Finance to cut the import tariff slapped on cooking gas from 5 percent to 2 percent, VGA chairman Nguyen Si Thang said Thursday.

The move was made in a bid to reduce the current rising domestic cooking gas prices, which have recently skyrocketed to around to VND425,000-464,280 (roughly US$22) a 12-kilogram cylinder, Thang told Tuoi Tre.

“Each 12-kg cylinder will be sold for VND7,000 lower than the current prices if our proposal is green-lighted.”

Meanwhile, some gas suppliers in Ho Chi Minh City said if the import tax is lowered to 2 percent, retail prices can be reduced by VND8,000-10,000 a cylinder.

Earlier, the import tariff was hiked up from 2 percent to 5 percent, and has been applied since January 1, 2012.

VGA also said it will ask its members to guarantee the reduction of retail prices once the tax has been cut.

“Global price has surpassed the record high of $1,000 a ton, yet is expected to fluctuate even further,” Thang said.

For his part, Luu Duc Huy, deputy head of the Tax Policy Agency under the Ministry of Finance, said the ministry will consider the proposal, and will “soon handle the case if [the proposal] is reasonable.”

“Tax management in 2012 is aimed at boosting price stabilization and curbing inflation,” Huy said.

In related news, the HCMC authorities have recently imposed financial fines on two local gas suppliers for violating the price registering regulation.

Dai Viet Gas and Than Tai Gas have increased their retail prices without registering with the municipal Department of Finance, Nguyen Quoc Chien, head of the agency in charge of pricing under the department, told Tuoi Tre.

“These two suppliers will be fined VND10-30 million each,” Chien said.

Livestock firm opens large feed factory in Ha Nam

The Hong Ha Nutrition Joint stock Co, a private Vietnamese firm, yesterday inaugurated an advanced animal feed production line to raise its capacity to 400,000 tonnes per year, becoming the largest fodder processor in Viet Nam.

The factory is located on a total area of 7ha, at the Dong Van Industrial Zone, Duy Tien District, in the northern Ha Nam Province.

Last year, the enterprise decided to invest more than VND150 billion (US$7.1 million) in the new production line to reach its current capacity, nearly ten times more than the initial capacity of 48,000 tonnes seven years ago.

The event marked a significant milestone as a local private firm reaching such a great capacity, said industrial analysts.

Minister of Industry and Trade Vu Huy Hoang said that market share of the feed processing sector was mainly dominated by foreign-invested enterprises, including the CP Group of Thailand and Cargill of the US.

Therefore, authorities encouraged all economic sectors to tap into this sector. It is essential to map out long-term plans to boost investment of the domestic firms, especially taking bold investments in plantations of corn, soybean and other raw materials.

Hoang confirmed that Viet Nam would further encourage local enterprises to invest in the sector as Viet Nam had advantages in this kind of production.

To ensure the material supply, the factory extended raw material collection, built storehouses near the plantation region and supported farmers to reach a high yield of materials. As well, it managed to import high quality materials not available in the country.

The firm applied the international standard ISO 9001-2008 in production and management. It sold nearly 200,000 tonnes and reached a revenue at VND1.5 trillion ($71.4 million) last year, contributing to the state budget nearly VND7 billion. With the good performance, it is listed among the Top 500 largest private enterprises in Viet Nam.

Business confidence index drops

Vietnam’s business confidence index (BCI) has decreased sharply from 123 points in the third quarter of 2011 to 116 points at present.  

This is the result of a survey conducted by WVB Financial Intelligence Services (WVB Vietnam) from December 15, 2011 to January 16, 2012 at 158 businesses operating in 11 major industries and leading the country in terms of property, total revenue and number of staff.

Nearly 33 percent of respondents predict no major changes in the national economy in 2012. Around 7.6 percent believe that the national economy will get worse and up to 95.6 percent are pessimistic about inflation which will remain at a double-digit rate. Therefore, nearly 30 percent of the businesses will not recruit more employees while 7 percent of the businesses say they will cut staff this year.

Nearly 44 percent of respondents say they do not expect revenue growth in 2012, while 12 percent are worried about a decrease in revenues. However, 65.2 percent of the surveyed businesses still foresee profit growth. Around 28.5 percent think their profit will remain unchanged whereas 6.3 percent of them are worried about decreased profit.

In the survey, 74.5 percent of the businesses say that they continue to face difficulties in accessing capital for business and production activities. Accordingly, 26.7 percent choose to borrow money from banks, 28.2 percent to seek business partners, 14.4 percent to borrow trade credit, 13.4 percent to conduct finance leasing business, 10.9 percent to issue shares and 6.4 percent of issue bonds.

Vietnam Jan’s FDI attraction plunges 98% y-o-y

In January, Vietnam managed to attract foreign-direct investment (FDI) worth US$37.3 million, which is only 2.5 percent of the figure recorded at this time last year, according to the Ministry of Planning and Investment.

During the first month of the year, 25 fresh projects were licensed with a total registered capital of $29.5 million, accounting for 33.8 percent of the total figure. Meanwhile, five licensed projects saw their investments increase by $7.8 million.

FDI disbursement in January was worth $400 million, a 4.8-percent decline against the same period last year.

The manufacturing and processing industry attracted the highest amount of FDI with $26.8 million, followed by the construction sector with $8.4 million.

Ho Chi Minh City topped the list of localities which attracted the highest registered capital -- $13 million, or 44.2 percent of the total figure. It was followed by Thanh Hoa, Ha Nam, and Hung Yen, all in the northern region.

Meanwhile, France was the largest foreign investor in Vietnam, with investment influx worth $10 million, or 34 percent of the total, followed by Japan, Korea, and Singapore.

Last year the Ministry of Planning and Investment set the goal of attracting $16 billion worth of FDI, and $12-billion disbursement in 2012.

SMEs ‘should stay flexible'
 
Small and medium-sized enterprises (SMEs) must diversify their business activities to overcome current economic difficulties, while experts suggest enterprises should maintain a flexible business plan for the year.

After a year fraught with challenges to production and business, Vuong Khiem, owner of a private Ha Noi-based business, said his company must create a flexible plan to trade products to overcome the present economic situation.

Last year, his company, which specialises in components and material for industrial production lines in the cement, steel, agricultural and mining machine sectors, saw a decline in turnover at the end of last year. He must now sell part of his property to finance the company's main operations.

Ha Noi property company director Do Anh Tuan said his company would expand business to the catering and entertainment sectors in 2012.

The company would also seek to collaborate with other businesses to increase the number of property sales, Tuan said.

Meanwhile, Ben Thanh Land Company will continue branching out business activities to the trading and service sectors to create capital for its central operations during the period of reduced economic activity.

Deputy head of the Enterprises Development Department under the Ministry of Planning and Investment Nguyen Trong Hieu, said last year SMEs had a big problem with high interest rates on bank loans, which forced many to borrow money from relatives and friends.

They also faced high prices for materials, electricity, petrol, property rental and exchange rates between the Vietnamese dong and foreign currencies, Hieu said. Also, many had inexperience in corporate management and did not have long-term business plans, lacked market information and material supply sources.

Tran Du Lich, a member of the National Assembly's Financial Supervision Committee, said growth of credit this year would reach 12 per cent, which was a good sign in providing capital for enterprises, including SMEs.

Economic expert Le Dang Doanh said enterprises should have sure-fire plans in business because this year was not suitable for high-risk ventures. Businesses should have flexible business scenarios and should carefully follow the market's development and adjustment accordingly.

Truong Dinh Tuyen, member of the National Financial and Monetary Consulting Council, said enterprises should focus on increasing consumption of their products to raise capital, highlighting consumer potential in the domestic market due to the young population.

Bad debts in HCMC banks on the rise: central bank

The volume of bad debts of Ho Chi Minh City-headquartered credit institutions has increased dramatically over last year, according to a recent report by the State Bank of Vietnam’s HCMC branch.

But the SBV branch did not reveal all details about it.

In particular, a number of credit institutions had the ratio of bad debt, or non performing loans (NPLs), of over 5 percent.

Among them, bad debts in category 5, or irrecoverable debts, also rose, said the report, without citing the details.

Agribank has the highest percentage of bad debts, over 15 percent, among the group of 4 major state-owned commercial banks, including the Bank for Investment and Development of Vietnam (BIDV), the Bank for Foreign Trade of Vietnam (Vietcombank), the Vietnam Bank for Industry and Trade (Vietinbank), and Agribank.

Regarding the joint-stock commercial banks in HCMC, consisting of 16 headquarters, 9 municipal branches and 158 representative offices, the average NPLs ratio was 2.59 percent.

Commercial banks with headquarters outside the city had an average NPLs ratio of 26 percent.

As of November 2011, NPLs ratios of financial companies, financial leasing firms, and People's Credit Fund in HCMC were 16.97 percent, 23.31 percent and 5.46 percent, respectively.

As of August 2011, the total bad debts in the primary, residential and organizational, market of credit institutions were 3.85 percent.

The statistics of SBV branch also showed that, as of October 31, 2011, many banks had operated with less profit or even suffered losses, probably due to unrecoverable debt in the real estate sector.

In 2012, the central bank instructed banks in the city to minimize bad debts incurred to keep the proportion of bad debts in the total outstanding credit below 5 percent.

In December 2011, Tran Minh Tuan, deputy governor of the SBV said at a conference that the publicized bad debt figure did not reflect the true credit risk of the local banking system as credit institutions did not classify debts in accordance with regulations, according to Thanh Nien newspaper.

In 2008, the central bank requested all commercial banks to classify and set aside loan loss provisions according to new standards, which included more than 50 criteria to determine the timing and capability of debt repayments.

However, only three banks, BIDV, Vietcombank and Techcombank, had then followed the central bank’s regulations.

“If new [debt classification] standards are applied, bad debts and loan loss provisions will double or even triple, an unnamed bank CEO gave the reason, saying that high provisions for loan losses will ultimately reduce the banks’ profits,” Tuan said.