Provinces swing axe at parks

Binh Thuan and Lam Dong provinces have axed slow moving and inefficient industrial zones from their development plans until 2015.

Central Binh Thuan province proposed to remove 11 industrial zones (IZs) covering 430 hectares from its master plan, while Lam Dong will halt industrial clusters and highlight inefficient industrial zones.

This move was made in response to Directive 07/CT-TTg dated March 2, 2012 regarding enhancing economic zones’ management efficiency.

Tran Van Nhut, director of Binh Thuan Provincial Department of Industry and Trade, said the province would reduce its IZs from 40 to 29 and downsize some IZs from their current plans such as Mui Ne, Tan Lap, Vu Hoa, Me Pu IZs.

Nhut said under Decision 105/2009/QD-TTg, IZs must be in the approved development plans and they must be fulfilled with a 30 per cent ratio of available land for lease after one year’s operation.

However, most industrial complexes in Binh Thuan did not meet these requirements. La Gi IZ was a typical example. It was awarded to South Korea-based Asian Development Company in 2007, but was not carried out and the province was forced to revoke its investment certificate last year.

The province’s Duc Linh district has six IZs with 26ha, and after 10 years of attracting investments, these areas have yet to have facilities developed. These IZs are facing the chop.

Binh Thuan Provincial People’s Committee Chairman Le Tien Phuong said there were many difficulties in attracting investments at those IZs because development planning was poor.

Meanwhile, investment certificates of five IZs in Central Highland’s Lam Dong province - Da The, Ha Lam, Loc An, Da Rsal and Loc Tien also face withdrawals due to the IZs’ failure to lure investments during 2012-2015.

Lam Dong authorities reported land clearance problems and a shortage of infrastructure were also given as reasons for their proposal to stop operations of the five IZs.

Unhealthy local economy is well on road to recovery

The economy is showing vital signs of a recovery. The Ministry of Planning and Investment (MPI) last week reported the industrial production (IIP) index for August rose 4.1 per cent against July, when the IIP climbed only 3.1 per cent on-month.

In this year’s first eight months, many industrial sectors witnessed significant on-year production growth, like telecommunication equipment (64.1 per cent), vehicle component (43.8 per cent) and electronic spare-parts (29.1 per cent). Also, more than 6,100 enterprises were established in August, up 3.32 per cent on-month, with total registered capital of VND73.6 trillion ($3.54 billion), up 161.33 per cent on-month.

And the number of enterprises closed and stopped operations reduced by 3.1 per cent on-month to 5,141. Meanwhile, the total retail and service sales value increased 0.7 per cent on-month in August compared to only 0.1 per cent in July. Total import turnover in August was estimated to be $10 billion, up 3.5 per cent against July.

Japan International Cooperation Agency vice president Hiroto Arakawa last week told MPI deputy minister Cao Viet Sinh he was upbeat about Vietnam’s existing macro-economic figures and the government’s macro-monitoring.

“Japanese investors are optimistic about Vietnam’s economic prospects. Amid the global economic crisis, such figures show the government’s economic achievements,” Arakawa said.
Sinh said that the most economically difficult period had elapsed and local production has been gradually recovering.

Vietnam Automobile Manufacturers’ Association said its 18 member companies’ sales had risen since June. In July, they sold 7,433 vehicles, up 13 per cent from June. Specifically GM Vietnam’s sales rose from 262 in June to 471 in July, while the respective figures for Mercedes-Benz Vietnam were 155 and 200, and for Toyota Vietnam were 1662 and 1727, and for Ford Vietnam were 437 and 470.

According to Global Intelligence Alliance’s Business Perspectives on Emerging Markets 2012-2017 online survey conducted in April-May 2012 amongst business managers at 431 large and mid-sized companies and organisations worldwide, Vietnam was ranked seventh in the world’s top 30 emerging economies. The country is favoured amongst consumer and retail, logistics as well as energy and resources industry players.

MasterCard Worldwide Index of Consumer Confidence for 2012’s first half released in mid-August said consumers in Vietnam were the most optimistic about the country’s economic outlook, with 77.2 index points.

“Despite concerns over the troubled global economy around the world and a challenging business environment closer to home, we are anticipating rapid trade growth in Vietnam over the next 15 years. HSBC’s Global Connections Report [released in July, 2012] estimates total trade will rise to the tune of around 187 per cent between now and 2026,” said Huynh Buu Quang, head of HSBC Vietnam commercial banking.

“Confidence amongst Vietnamese international businesses remains stable, and relatively high. Indexed scores of 116, 115 and 115 have been recorded since 2011’s half,” said the MasterCard report.

Business production still in a fix

Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) rose to a three-month high in August, but still signals the deterioration in business conditions, says HSBC.
    
According to a recent joint report by the Hong Kong and Shanghai Banking Corporation (HSBC) and the Markit Economics Company, Vietnam’s PMI posted at 47.9 in August, up from 43.6 in July, indicating the continued worsening of the manufacturing sector.

However, the latest index reading only represented a modest rate of deterioration, and the weakest since May.

The report showed that manufacturing output decreased further in August, albeit at the lowest rate in four months. In line with the trend for manufacturing, the rate of new work reduction eased from the previous month. The latest decrease was the fourth in as many months, but only modest.

New export orders also fell during the month, but at a slower rate than for overall new work. Companies generally attributed the decline in total new business to weak demand from both domestic and external markets.

Such a fall in new business prompted companies to downsize the workforce to maintain production. It was the third cut in successive months but generally speaking only marginal.

HSBC said that buying decreased again in August, although at a much lower rate than in July, and fewer input purchases contributed to the continuing drop in inventories for August. Meanwhile, companies reported that supplier capacity was little tested over the month and vendor lead times shortened, which was reflected in the sufficient availability of inputs at supplier venues due to softer demand.

Vietnamese producers also faced rising input costs during August, ending a two-month period of decline. Respondents to the latest survey commented on the higher prices for a range of raw materials, however, the input price inflation rate was relatively modest. Despite the rise in costs, companies continued to lower some of their fees tariffs. The latest cut to factory gate charges was the fourth in as many months, but much less than those in June and July. Companies that reduced their selling prices did so partly due to competitive pressure.

"While business conditions in Vietnam remain challenging, the slowdown in the manufacturing deterioration rate suggests that the economy is likely to gradually recover" in the fourth quarter, said HSBC Asia economist Trinh Nguyen.

Trinh Nguyen predicted that Vietnam's GDP growth will likely slow to 5.1 percent this year, compared to 5.9 percent last year, but rising inflation will prevent the central bank from cutting interest rates to stimulate the economy, which may mean turning to administrative measures to boost spending.

Over VND35 billion more for trade promotion

Minister of Industry and Trade Vu Huy Hoang has approved the 2nd phase of the 2012 national trade promotion programme worth nearly VND35.5 billion.    

The promotions will be targeted at export-oriented trade, and the domestic market, as well as trade activities in mountains, borders, and islands with priority to be given to big national plans.

For export-oriented trade, the programme will continue focusing on Vietnam’s participation in domestic and overseas trade expos, attracting foreign enterprises to explore the Vietnamese market, holding international conferences on export products in Vietnam, and training staff in charge of trade promotion.

The Ministry has so far approved two phases of the national trade promotion programme for this year, with a total of 90 schemes involved and costing VND79.4 billion.

It will cooperate with relevant ministries, agencies, and craft associations to work on the third phase of the programme this year.

Over 5 million tonnes of rice exported in eight months

Vietnam has exported more than 5.1 million tonnes of rice since the beginning of this year, earning over US$2.26 billion, according to the Vietnam Food Association (VFA).    

In August alone, the country exported 928,175 tonnes, valued at US$398.56 million.

Rice prices are rising on the domestic market, hovering around VND5,800-6,200 per kilogram in the Mekong Delta, Vietnam’s largest rice basket.

Unhusked five-percent broken rice is being sold at VND8,900-9,000/kg, while unhusked 15-percent and 25-percent broken rice are trading at VND8,500-8,700/kg and VND8,200-8,300/kg, respectively.

The Asian Development Bank (ADB) recently announced that Vietnam and Thailand are the two major suppliers of rice to Africa.

The bank predicted that Vietnam will become the world’s third largest rice exporter within the next decade, after Thailand and India.

Squid, octopus exports not yet highly competitive

Despite a sharp increase in its  mollusc exports to the US, Vietnam remains at a greater disadvantage than other countries, said the Vietnam Association of Seafood Exporters and Producers (VASEP).   

In the first seven months of this year, the total export earnings from squid and octopus increased by 33 percent compared to the same period last year. However, the monthly growth was not steady, hovering somewhere between 14-79 percent from March to July.

This was, in part, put down to the quality of products.

Vietnam is placed 16th among major exporters of mollusc to the US.

Vietnam to be major wool manufacturing hub

Vietnam can become a big wool production centre in the world, according to the AustralianWool Innovation –AWI.    

One reason cited by AWI director in charge of urban fashion, Kelly McAvoy, is that labour cost in China is high, making wool manufacturers shift their companies to other countries.

AWI product development and commercialisation general manager, Jimmy Jackson, said Vietnam has a large textile industry processing cotton, polyester and acrylic products with a semi-skilled workforce and is quite capable of producing wool products on a large scale.

Labour cost in Vietnam is about US$185-200 a month, far cheaper than that in China, now up to US$800-US$900.

Jackson said another strength is that Vietnam has pre-existing trade routes to Europe and Russia, helping Australian wool easily access other cold climate countries.

AWI director in charge of developing markets, Rajesh Bahl said there is a plan afoot to invest more in wool production and marketing to meet increasing demand from middle class in Europe and the US for high quality warm clothes.

Nearly 2000 enterprises back on track

Nearly 2000 enterprises returned operation in June and July, according to the Deputy Finance Minister Do Hoang Anh Tuan.    

He cited some positive signals as a 5.5 percent increase in their payment of VAT in July compared to the previous month and a rise in the number of profit-making enterprises from 2.42 percent in the first quarter to 2.8 percent in the second quarter.

Tuan said the financial sector has decided to extend the time for income tax and VAT payment by nearly 100,000 enterprises, estimated at VND11,000 million.

A three-percent reduction in income tax has applied to both small and medium sized businesses as of July, he added.

National Day celebrations in focus

Many tourism sites in Vietnam have attracted a large numbers of holiday-goers and tourists.  

Ha Quang Long, Director of the Quang Ninh provincial Department of Culture, Sports and Tourism, says tourist arrivals in Ha Long Bay in recent days have risen more than 30 percent compared to a year earlier and 90 percent of hotel rooms and tourism ships have been booked in advance.

Tourism sites such as Cat Ba and Do Son in Haiphong have received more than 10,000 visitors. Tourism ships at Binh Wharf are in full operation.

From September 1-3, the ancient capital city of Hue received nearly 20,000 visitors, including nearly 1,000 foreigners. Tourism sites, such as Royal Palace, Thien Mu pagoda, Huyen Tran cultural centre, Chin Ham historical relics site, Hue gardens, Phuoc Tich ancient village, and Thanh Toan bridge were overcrowded with both domestic and foreign tourists.

During these holidays, tourist arrivals in Danang rose by 15-20 percent over normal days as travel agents offered many promotional tours and programmes. For example, Vietdatravel has launched domestic tours at prices which are 49 percent lower than usual.

Travel agents in coordination with hotels, restaurants and aviation agencies have offered many promotional and discount programmes to attract visitors.

Binh Thuan province claims that as many as 180,000 tourists, including 61,000 foreigners, came to Ham Tien-Mui Ne, and Hon Rom in Phan Thiet City from August 29-September 3.

Nguyen Van Khoa, President of the Binh Thuan Provincial Tourism Association, says huge crowds of foreigners flocked to Phan Thiet to attend the International Hot Air Balloon Festival.

Since early this year, the island district of Con Dao in Ba Ria-Vung Tau province has welcomed more than 61,000 visitors, up 40 percent, and earned VND186 billion, up 106 percent compared to the same period last year.

Building materials makers struggle
 
The Viet Nam Building Material Association has had some proposals to solve current difficulties in production and business for local building material enterprises, said an official in the association.

In the first eight months of this year, the building material industry faced many challenges, including price increases in input materials, high production costs, slow sales, high inventories and abrupt termination of production in some factories, said Tran Van Huynh, the association chairman.

Those difficulties were caused by high inflation, cuts in public funding, credit tightening policies, reductions in purchasing power and lulls in the real estate market, he said.

Therefore, the association had some proposals to support enterprises in solving their difficulties and putting an end to bankruptcy for building material producers, he said.

The Government should have policies on encouraging domestic construction projects to use locally produced building material products, instead of importing products from outside Viet Nam.

The Ministry of Construction should create a programme for importing and exporting building materials for Viet Nam and also promote exports of these products to potential markets in Africa, the Middle East and Latin America.

Now, the general plan of development for the building material industry in Viet Nam differed in many ways from similar plans in provinces, Huynh said, so the ministry should supply concrete guidance for the building material industry development at provinces following the national plan on development, especially major products such as cement, building pottery and ceramic products, building glass products and ceramic tiles.

The ministry should also work with banks to restructure debts of building material enterprises and then create favourable conditions for the enterprises in getting loans for production.

Co-operation between the ministry and the association should be promoted to have synchronous statistics on production and business of the building material industry and offer the association the chance to join the industry's development plan, he said.

Construction minister Trinh Dinh Dung agreed with those proposals and he said the enterprises should review them to see if there were any problems.

Factory orders hit three-month high

The HSBC Viet Nam Manufacturing Purchasing Managers' Index (PMI), based on sub-indexes of new orders, output, employment, suppliers' delivery times and stock of items purchased, was 47.9 in August, up from 43.6 in July.

An index reading above 50 indicates an overall rise in that variable; below 50, an overall decrease.

"While business conditions in Viet Nam remain challenging, the slowdown of the rate of manufacturing deterioration suggests that economic activities will likely gradually recover in the fourth quarter," said Trinh Nguyen, Asia economist at HSBC.

New orders of purchases slumped to 47.7, although the pace of contraction was much less than the previous month of 41.1.

New export orders almost hit the 50 mark, rising to 49.3 in August from 48 in July. This suggests that despite the global slowdown, demand for Vietnamese goods is still holding up, according to the HSBC report.

The employment sub-index, which hit 49.8, is a significant improvement from July's drop to 46.9.

HSBC said this meant that while managers slightly reduced the number of jobs in August, they were not anticipating the business environment to worsen significantly.

The index for stocks of purchases mirrors this sentiment: deterioration slowed to 45.8 from 37.6.

While sales continued to be weak due to high competition and low demand, the quantity of purchases did not drop significantly.

The trend of the PMI suggests that a recovery period might be ahead, but the rise in input prices could dampen some of the resurgent momentum.

The average input prices rose in August, ending a two-month period of decline, but there was a gap between input and output prices, which means manufacturers have been unable to pass on some of the higher costs to consumers due to low demand.

While the latest August headline CPI figure slowed to 5 per cent year-on-year from 5.5 per cent in July, this was partly caused by an effect from the high prices recorded in the previous year.

On a month-to-month seasonally adjusted basis, headline inflation rose 0.9 per cent from 0.2 per cent in July.

The significant jump parallels with the uptick of the PMI input prices. Core inflation, excluding food and energy, rose to 8.8 per cent year-on-year from 8.1 per cent in July.

On a trend basis, inflationary pressures are rising.

The stabilisation of the PMI index, following recent weakness, confirms the recovery of domestic demand. Thus, domestic consumption is expected to recover slightly towards year-end, especially with the credit expansion filtering through the economy.

There was increases in exports and imports in August (the number is just an estimate based on the first 15 days of custom data).

Exports climbed to 13 per cent year-on-year from 1.6 per cent in July. This was supported by strong electronics and computer exports.

The import number was also encouraging, rising 8 per cent year-on-year from 12.8 per cent in July.

Although tourists continue to arrive in high numbers and restaurants are filled with patrons in such places as HCM City, a closer look reveals construction sites have stalled and car sales have declined.

The economy is still expanding but at a much slower pace than before. The August year-to-date retail sales print mirrors this phenomenon.

Year-on-year growth slowed to 24 per cent in August from 24.6 per cent in July, according to the monthly Viet Nam at a Glance report for HSBC Global Research, which was also released yesterday.

"While the recent arrest of a Vietnamese tycoon, Nguyen Duc Kien, stoked some concerns of an economic meltdown and a banking crisis, we believe the economy is robust enough to handle the ongoing de-leveraging process," the HSBC report said.

Exports continue to generate high income for the economy and the service sector remains resilient.

The drag coming from inefficient SOEs and slowing real estate sales should be corrected once the SBV speeds up its banking sector restructuring process.

The overinvestment in real estate and non-profitable businesses needs to be adjusted, and the sooner policy-makers get actively involved, the faster the economic engine will run, according to the HSBC report.

With the big drag, the private sector is still pulling its weight.

Policy-makers need to stabilise the economy as well as increase productivity.

The SBV has shown its commitment to a brighter future in Viet Nam by curbing credit growth in 2011 and launching a banking-sector reform process.

However, what it will do with the bad debts remains unknown, as the central bank is employing an ad hoc process.

The recent action to put pressure on banks to trim balance sheets and become more transparent with non-performing loan ratio problem (closer to 8.6-10 per cent of total lending in 2012, up from 2 per cent in 2010) bodes well for the prospect of more reforms, according to the report.

Additionally, the hesitancy of the central bank to pump out cheap credit to boost growth, as it had previously done, boosts its credibility.

The amount pumped out through open market operations has slowed significantly, although there was a slight pick-up recently to ease liquidity conditions.

"Thus, we are optimistic that the Vietnamese government will ultimately do what's good for the economy. Policy makers have proven in the past that they are willing to address challenges when they need to. This requires a more patient approach to reform, which mops up bad debt and creates an economic system that rewards productive behaviours," the report said.

The report expects Viet Nam's economy to expand by 5.1 per cent in 2012.

Da Nang firms call for loan guarantees

Companies in the central city of Da Nang want the Government to create a loan guarantee fund to enable them to access bank credit.

Small and medium businesses (SMEs), considered an important engine for job growth and economic development world-wide, generally face the constraint of lack of funds, and SMEs in Da Nang are no exception.

Dr Ho Ky Minh, director of the Da Nang Socio-economic Research and Development Institute, said the central region had 735 companies, most of them SMEs. "Of them only 205 now have the resources to continue to do business normally; the rest are in distress," he revealed.

Two-thirds of them said they found it hard to borrow from banks because the process was too complicated, interest rates were unaffordable, and many did not have assets to be used as collateral.

"Some already have loans that are overdue or soon falling due," he said.

Van Huu Thiet of the Da Nang Small and Medium-sized Enterprises Association said companies should be given easy access to bank loans at stable and reasonable interest rates.

Banks said they were ready to lend at reasonable interest rate if the companies satisfy the loans conditions and have good projects to ensure safety and effectiveness.

In view of their difficulty in getting loans, companies called for setting up a loan guarantee fund.

Vo Minh, director of the State Bank of Viet Nam's Da Nang branch, said the biggest difficulty was raising the capital required for this.

The city government realised the need for it and made plans several times, but the fund was yet to materialise because of the hurdles it faced in raising capital, he said.

"The government plans to call on banks in the region to contribute to the fund and expects the plan to be soon achieved," he said.

Many firms in the central region also hope to issue bonds to raise funds.

But Le Diep, director of Vietcombank's branch in Da Nang, said this would not be an easy task since the Government only allows certain businesses to do so.

Ministry issues new corporate tax rules

The Ministry of Finance has issued a number of new corporate income tax regulations. Circular No 123/2012/TT-BTC, issued on July 27, guides the implementation of the Law on Corporate Income Tax and Decree No 124/2008/ND-CP of December 2008. Under the new circular, an enterprise facing changes to corporate tax incentives during a taxable period may (i) continue to apply existing incentives in the current year (less than 12 months), or (ii) apply the standard tax rate in the current year and enjoy new incentives in the subsequent tax year.

In addition, income from the transfer of real estate projects not associated with a transfer of land use rights, and income from the transfer of project implementation rights and rights to explore, exploit and process minerals, must be separately accounted and declared and is subject to a corporate tax rate of 25 per cent. Such income is not entitled to tax incentives nor can it be offset against taxable income or losses in other business operations. Income from a project transfer with attached land use or land lease rights is classified under the circular as income from a real estate transfer.

Also under the circular, enterprises collecting money from customers and unable to determine corresponding expenses must declare and temporarily pay corporate tax equal to 1 per cent of the collected sum. Advance payments on leases of assets can either be allocated across the years for which the rent has been paid or wholly recognised as revenue of the current year. For tools and equipment which are not recognised as fixed assets, asset acquisition costs can be accounted as operational expenses in a given period not to exceed two years.

Enterprises receiving in-kind contributions or asset transfers as a result of corporate division, separation, consolidation, or merger may depreciate those assets and write off the depreciation casts according to the re-evaluated cost of the asset. This does not apply to land use rights, which cannot be depreciated.

In a provision pertaining only to golf course operators, revenue from the sale of pre-paid tickets or membership cards for a number of years shall be divided by the number of years and the proportional sum declared in each year.

The new circular takes effect September 10 and applies to the taxable period of 2012. It replaces Circular No 130/2008/TT-BTC of December 2008, Circular No 177/2009/TT-BTC of September 2009, Circular No 40/2010/TT-BTC of March 2010 and Circular No 18/2011/TT-BTC of February 2011.

New law to govern advertising

The National Assembly last June passed the new Law on Advertising, which replaces the 2001 Ordinance on Advertising. Under the new law, the following categories of goods and services are barred from advertising: (i) tobacco; (ii) alcoholic beverages of 15 proof or more; (iii) milk products replacing mother's milk for children under 24 months old, as well as dietary supplements for children under six months old, feeding bottles and artificial nipples; (iv) prescription medicines; (v) products claiming aphrodisiac properties, (vi) guns and ammunition for hunting or sports, as well as products and goods stimulating violence, and (vii) other goods and services prohibited from advertising as regulated by the Government.

No advertising of goods and services can include false statements or statements that deliberately cause confusion; direct comparison of price, quality, or effectiveness with other products and services of the same type; or words such as "best", "unique", "number one", or other words with similar meaning without legal documents to prove the claim as regulated by the Ministry of Culture, Sports and Tourism.

The Law on Advertising also stipulates that advertisers of medicines must receive a permit. Advertisements of cosmetics, foods and food additives are also subject to various requirements of publishing ingredients and/or compliance with quality standards.

A newspaper may not sell advertisements in excess of 15 per cent of its total page space, while a magazine may not sell in excess of 20 per cent of its total page space. Advertising inserts are not subject to these limitations, but may only be published after notification to relevant authorities at least 30 days prior to the first publishing date of the insert.

Likewise, advertising on radio or television many not exceed 10 per cent of total broadcasting time in a day, except for advertising on channels or programmes dedicated to home shopping. This limit falls to 5 per cent for pay television channels. The law also includes provisions on online and "pop-up" advertising.

For advertisements via SMS and email, there must be prior consent of the recipients. IAdvertising via SMS can only take place between 7am and 10pm, and a single phone number or email address cannot receive more than three SMS or email messages within 24 hours unless otherwise agreed.

Chapter IV of Advertising Law stipulates several matters related to advertisements of foreign organisations and individuals in Viet Nam, foreign investment and co-operation in advertising and representative offices of foreign advertising agencies in Viet Nam.

The Law on Advertising abolishes provisions in the Ordinance on Advertising restricting the operation of foreign marketing agencies, consistent with the nation's WTO commitments. The new law takes effect next January 1.

Bank offers e-payment option for insurance

Vietcombank has launched a promotional campaign for customers paying insurance on its internet banking and ATM systems in the period from September 1 to November 29 with an aim to accelerate e-payment in this field.

Accordingly, five life insurance companies including Prudential Viet Nam, AIA Viet Nam, Dai-chi Viet Nam, ACE and South Korean Life Insurance have co-operated with the bank to implement the programme. Customers would have to sign up for an ATM card or register for internet banking and VCB-SMS banking at the bank to pay their insurance online.

The first 20 customers to pay their insurance fees every day would have VND50,000 added to their account. Vietcombank has partnered with the highest number of insurance partners in Viet Nam in the e-payment sector.

Trade fair oversees $4.7m million in new contracts

The international trade fair wrapped up in southern Can Tho City on Monday with VND100 billion (US$4.7 million) worth of goods sold and contracts signed.

In addition, businesses both inside and outside the country opened 26 retail establishments and agencies in the Mekong Delta region while 120 memoranda of understanding and contracts were signed at the fair.

The fair, hosted by the Ministry of Industry and Trade in co-ordination with the city's authorities under the theme "New Products and Technology for Demands and Exports Stimulus", attracted 400 booths from domestic and international businesses.

Construction begins on $4.7m Ba Dao bridge

Construction of the $4.76 million Ba Dao bridge started on Sunday in Na Hang Town, in the northern province of Tuyen Quang.

The funding for the 10-span bridge crossing the Gam River came from Government bonds and the provincial budget.

When it goes into operation in 2014, the bridge will connect Highway 279 and Highway 2C, improve traffic congestion and help the region's economic development.

Foreign traders distort agricultural market

Poor regulation of foreign traders coming to Viet Nam to buy agricultural produce, sometimes illegally, is causing volatility in prices and a disruptive effect on farmers.

Vo Van Quyen, director of the Ministry of Industry and Trade's Domestic Market Department, said since May last year there has been an influx of foreign traders who bought large volumes of agricultural produce.

Many of them come on tourist visas, he said.

But their massive purchases push up the prices of some items and lead to a partial shortage.

Quyen said the higher prices persuade farmers to rush to plant a crop or farm fish, subverting local authorities' plans.

Some of the traders then stopped buying, sending prices tumbling, he said.

Besides, many of the purchases were made without consideration for quality, which affected the prestige of Vietnamese agricultural produce in the world market, he said.

Nguyen Minh Toai, director of the Can Tho city Department of Industry and Trade, said many farmers have become destitute after foreign traders unilaterally terminated contracts or cut prices.

It has happened with crops like coconut, watermelon, pineapple, aromatic banana, and purple sweet potato, he added.

Cao Van Trong, deputy chairman of the Ben Tre People's Committee, said the area under coconut in the province has expanded by 15,000ha since the middle of last year to 70,000ha.

With foreign traders buying dry coconut, prices of the nut jumped to VND150,000 per dozen early last year, inducing farmers to plant more trees, he said. But when the purchases stopped in the middle of last year the prices collapsed to VND15,000, he said.

The province has decided to provide farmers a subsidy of VND1.5 million per ha of coconut, he said.

Deputy Minister of Industry and Trade Ho Thi Kim Thoa said the country has had enough laws to regulate trading by foreigners, but some official agencies have failed to enforce them.

The ministry would crack down on illegal foreign traders and educate farmers about the risks involved in trading with them, she said.

"Farmers have traditionally been doing business with cash and verbal contracts, not with paperwork, and this should change since legal contracts are a must, especially in the context of global economic integration," she said.

The ministry has implemented a pilot project to train farmers in signing contracts to sell their products.

The farmers have taken to it very well, creating a good foundation for expanding the project, she said.

 Faster settlements cheer traders
 
Shares rallied on both national stock exchanges on the first day of a new settlement application called Trade Plus Three, or T+3.

Investors can now sell shares from their portfolios only three days after they buy them, instead of having to wait four days as before. The move is expected to help boost the liquidity of stocks.

Analysts estimated market liquidity could increase by 20-30 per cent.

According to the State Securities Commission's head of market development Nguyen Son, implementing T+3 would easily let the exchanges open a half hour later at 1.30pm, which would give investors a break to review their transactions.

Meanwhile, Son also said that it was difficult to further shorten the time of payment.

On the HCM City Stock Exchange, the VN-Index rebounded by 1.53 per cent to reach 402.08 points. Market sentiment was positive, with around half of listed stocks gaining value.

As more than 29.6 million shares changed hands, the value of trades totalled VND453.4 billion (US$21.5 million).

Of the 30 top shares tracked by the VN30, only five shares retreated.

Meanwhile, five others hit their daily increase limit, including food processors Masan Group (MSN) and Bourbon Tay Ninh (SBT), construction firms HCM City Infrastructure Investment Co (CII) and Tan Tao (ITA) and steelmaker Hoa Sen Group (HSG).

Bank stocks no longer suffer from heavy sells. Vietinbank (CTG), Vietcombank (VCB) and Military Bank (MBB) advanced between 0.7-1.6 per cent.

The VN30 added 1.6 per cent to 472.78 points.

The benchmark HNX-Index on the Ha Noi Stock Exchange also edged up 0.36 per cent, standing at 61.65 points.

Market value reached VND214.94 billion ($10.2 million) with a volume of 23.5 million shares.

However, the HNX30, representing the northern bourse's leading shares in terms of capitalisation and liquidity, concluded yesterday's session down 0.1 per cent to 116.42 points.

On the metal trading market, gold prices rose again after the national holiday. Some large gold shops in Ha Noi revealed that more people came to sell gold recently as the price suddenly exceeded VND45 million per tael.

They said the amount of gold sold by people from last weekend accounted for 70-80 per cent of trading volume, as opposed to the balance between buying and selling the previous week.

The gold price posted yesterday reached around VND45.15 million per tael. One tael equals 1.2 ounces.

Also yesterday, Hong Kong Shanghai Banking Corp (HSBC) released the Purchasing Managers' Index of the Vietnamese manufacturing industry, which saw an increase from 43.6 points in July to 47.9 points in August.

However, business operation was still showing signs of declining, the HSBC report said. Meanwhile, the bank predicted economic activities would recover in the fourth quarter.

French hospital ill health

The family of a Hanoi man who had died following treatment at French-invested FV Hospital in Ho Chi Minh City, is pressing for criminal charges to be laid against the doctor allegedly at fault.

Mai Thi Thu Trang, the daughter of Mai Trung Kien who died on August 11 as a result of an appendectomy misdiagnosis by FV doctor Le Duc Tuan, told VIR she sent a request to the city police on August 31, one day after the hospital’s representatives met with her family to find a solution to the case.

Trang said the FV representatives had shown an uncooperative attitude in contrast to earlier positive noises, in which they accepted responsibility for the case and sent apologies to her family.

Trang said after her father’s death, the doctor came to meet her family confessing that his failure to make right diagnoses resulted in wrong treatments and this caused the death. FV executive director Pham Thi Thanh Mai accepted responsibility and FV general director Jean Marcel Guillon pledged to make a public apology via the media for this medical malpractice. However, this cooperative attitude was not seen on August 30.

According to Trang, her 57-year-old father was brought to FV with symptoms of appendicitis on August 8. The family told doctors he used to have heart disease and was taking anticoagulation medicine. An appendectomy was then performed. Two days later, Kien complained of chest and abdominal pains, but FV doctors did not conduct scans. Instead, they tested Kien’s blood and diagnosed him with a heart attack. FV then transferred him to Tam Duc heart hospital next door, where doctors found that his appendectomy had internal bleeding and he was in critical conditions due to blood loss. He was brought back to FV immediately for another medical operation, but his heart stopped before surgery could happen.

After his death, FV sent all documents of the case to the Ho Chi Minh City Department of Health, which was supposed to set up an ad hoc panel to make investigations. The panel concluded on August 29 that the reason of the death was internal bleeding after surgery and the hospital failed to make timely diagnoses and treatments on this internal bleeding.

Nguyen Thi Le Thu, FV hospital’s business development director, declined to comment on the case when contacted by VIR on August 31 after Trang sent her family’s request to the police.

Fraudsters leave black footprint

Fraudulent insurance claims hitting a record high are driving up premiums.

Nguyen Lan Anh, legal manager of life insurance company Prudential Vietnam, said the company had paid a huge amount for insurance claims in 2011, but that was not the full story.

“When verifying compensation requirements from customers, we discovered many insurance fraud practices such as faking medical reports or creating false hospital evidence. Insurance fraud is increasing and insurance scams get more sophisticated,” she said.

Phung Dac Loc, general secretary of the Association of Vietnam Insurers (AVI), said insurance fraud in developed countries was statistically measured to account for 10 per cent of the total compensation value. “In Vietnam, the Ministry of Finance detailed insurance scams in just five biggest insurers accounted for more than 10 per cent of total compensation value in 2010.”

Loc said most fraudulent behaviours were in vehicle insurance and personal insurance.

AAA Assurance’s general director Do Thi Kim Lien said AAA Assurance had established a fraud investigation agency to fight insurance fraud.

“Although the agency works hard it can’t stop sophisticated and crafty behaviours appropriating insurance compensation money,” she said.

During 2011 to mid-2012, the agency detected 30 insurance scams valued VND5 billion ($240,000). Especially, there have been hundreds of vehicle insurance scams at AAA Assurance.

“After getting into an accident, the fraudster cheats the insurance agency to buy one vehicle insurance policy with the beginning day of expiration before the date of the accident or asks policemen to falsify the date of the accident,” Lien said, adding that insurance fraud in Vietnam was getting more serious than in other countries due to slight penalties.

Under Item 3 of Article 15 of Decree 41/2009/ND-CP, insurance administrative violations shall be fined VND70 million ($3,300). However, violators are only fined if they already receive insurance compensation.

Lien said such a regulation would not deter violations. Furthermore, she stressed, uncompleted insurance scams should also be considered insurance fraud.

According to AVI, non-life insurance claims in the first half of 2012 totally hit VND4,109 billion ($198 million) or an insurance loss ratio of 35.69 per cent on average, higher than that in 2011’s first half which was 33.3 per cent.

The highest loss ratios were mostly in equipment and machine insurance with 70.38 per cent, followed by vehicle insurance with 49.38 per cent and health and accident insurance with 48.95 per cent. Enterprises which had the highest loss ratios were Australia-backed QBE with 168.04 per cent, Hung Vuong with 85.64 per cent, Taipei-backed Fubon with over 77 per cent, US-backed Liberty with over 65 per cent and local company Bao Minh with over 47 per cent, according to AVI.

Qataris open door to property opportunities

Qatari Diar is undertaking various real estate development projects in joint ventures with local governments in Vietnam.

One of Qatar’s leading real estate companies is eyeing up Vietnam. Vietnamese ambassador to Qatar Le Hong Phan was quoted by Qatar’s Gulf Times that negotiations with Doha Qatari Diar Real Estate Company were progressing to establish various multi-purpose facilities, including residential and commercial projects and some hotels in Vietnam through joint ventures.

“There have already been agreements on mutual co-operation and steps are being taken to work on the projects,” Phan said.

From Doha, Phan confirmed the news with VIR in Hanoi, adding that he saw the great potential from Qatari investors in the Vietnamese market. According to the Gulf Times, Qatar was planning to invest up to $4 billion in projects in Vietnam, including setting up of a labour centre to train workers before they travel to new jobs in the Gulf, as well as a range of other economic and cultural projects.

“Qatari Diar is undertaking various real estate development projects in joint ventures with local governments in Vietnam. This would dramatically increase the number of Vietnamese workers coming to Qatar,” he said.

Qatari Diar Real Estate Company was established in 2005 by the Qatar Investment Authority, the sovereign wealth fund of Qatar.

In November 2009, Qatari Diar reached another significant milestone in its history with the establishment of the Qatar Railways Development Company.

Parallel to its significant infrastructure developments within Qatar, the company has been committed since its founding to bringing the Qatari Diar vision, one for real estate that improves quality of life and contributes to the community onto the international stage.

According to company’s website, as of January 2012, Qatari Diar is capitalised at $4 billion and has more than 49 projects under development or planning in Qatar and in 29 countries around the world with a combined value of over $35 billion.

Apart from the real estate sector, a labour training centre will be established in Vietnam to equip the workforce for undertaking jobs in Gulf Co-operation Council countries.

“Still, the number of the Vietnamese labour force in Qatar is very modest that now amounts to about 500 persons. However, the number is increasing year after year,” Phan said.

Currently Qatar is involved in a $4.5 billion petrochemical project in Vietnam with 25 per cent of the total shares while Qatar Airway also added Vietnam into its destinations since 2011.

VNN/VNA/VIR/SGT/Dtinews/VOV/VNS/SGGP