Fuel wholesale traders owe VND192 billion in taxes

The General Department of Customs on Wednesday announced a total tax debt of over VND192 trillion owed by nine out of 13 fuel wholesale traders.

Speaking at a press briefing in Hanoi on Wednesday, Nguyen Van Can, deputy head of the customs agency, said that most of the debts were overdue and were of two types of duties, temporary import for re-export and import for domestic consumption.

Petrolimex was the biggest debtor with a tax arrear of over VND82.6 billion in temporary import for re-export tax and over VND49.3 billion in import duties.

Military Petroleum Corporation came next with a VND50-billion debt in the former kind of tax and VND487 million in the latter, followed by Vinapco Company with VND42 billion and VND47 billion, and PetroVietnam Oil Corporation with VND15 billion and VND8.7 billion respectively.

Vinalines and Hiep Phuoc Power Co. Ltd. did not have tax debts. Saigon Petro Company had no overdue debt but its new debt is VND112 billion. Petrolimex Aviation Fuel Joint Stock Company has a new debt of VND25 billion.

The numbers are announced as local customs officers are looking into temporary import for re-export of commodities in general and petroleum and oil products in particular to fight tax evasion and trafficking.

There has been an increasing number of enterprises taking advantage of loopholes in temporary import rules to import goods for domestic use and evade taxes, Can said.

For oil and gas products, checking import purposes is not easy as there are many kinds of petroleum and oil. Besides, products imported for re-export are kept in the same tank with those for domestic use. As a result, importers find it easier in evading taxes or bringing the products into the domestic market.

The customs agency has suggested halting the practice of temporary import for re-export of fuel products by sea and mending loopholes in formalities.

For example, enterprises have to ensure the same import and export volume as registered on orders. Otherwise, customs officers will collect value-added taxes on lots consumed on the local market. They will also sue enterprises for illicit trade if the re-exported volume is not the same at the imported volume.

The customs agency in the coming time will review all sea and road lines to prevent frauds in temporary import for re-export and take drastic measures against cases related to the oil and gas sector, Can said.

EVN sells low-price power to farmers

Southern Power Corporation under Vietnam Electricity Group (EVN) has announced that it will sell power to farmers in An Giang Province at a lower price compared to the normal price by subsidizing the price for pumping stations.

According to the corporation, EVN will sell power to farmers in this Mekong Delta province at a price VND300 per kWh lower than the normal rate to help farmers cut production costs.

Selling low-price power to pumping stations will help farmers in An Giang Province save on an amount of VND200 billion each year compared to diesel pumps, reduce production costs and increase profits.

There have been 940 pumping stations developed in An Giang since 2008, raising the total number of power pumping stations in the province to nearly 1,500 which serve irrigation for over 255,000 hectares of rice, equivalent to 91% of farmland there.

Tax audits focus on transfer pricing

At least 20 per cent of annual tax audit activities in the 2012-15 period would be devoted to transfer pricing, according to survey results released by Ernst&Young Viet Nam in HCM City yesterday.

The "2012 Global Transfer Pricing Tax Authority Survey" says such activities would focus on four main areas: labour-intensive industries; automotive industry; pharmaceutical industry; and export processing enterprises in garments, textiles and footwear industries.

The survey report said, "all companies in Viet Nam are likely to be subjected to be on the examination list."

However, it said, Vietnamese auditors would give high priority to inspect firms that have reported losses for consecutive years, but continued to expand during the period.

Companies having manufacturing contracts but reporting losses or those with significant related-party transactions would also be inspected, said Nitin Jain, Partner, Tax&Advisory Services and National Transfer Pricing Leader for Ernst&Young Viet Nam.

Vietnamese tax authorities would also focus on companies under suspicion of abusing transfer pricing or have significant tax dues, he said, adding that the list included companies that have not been audited for multiple years and were entitled to tax incentives.

Out of 48 countries and territories surveyed, Ernst&Young found that Viet Nam was the only one that had no advance pricing agreement.

"This was an advanced step and it is a good time for Viet Nam to apply this method now. By the end October, the country would have regulations relating to it," the report said.

In terms of human resources, the survey found that like other countries, Vietnamese authorities were setting up a centralised transfer pricing team that would develop transfer pricing policies, monitor implementation of the rules and participate in transfer pricing audits.

Tax authorities in large localities have also been developing separate teams for transfer pricing administration and audit.

In 2011, auditors found that 900 companies had abused transfer pricing, the survey report said.
 
Asian airports may get private backing

The public-private shared airport ownership model should be encouraged in the Asia-Pacific region to prepare for an expected aviation boom, experts say.

Speaking at the two-day "Southeast Asia Airport Expansion Summit 2012" that opened in HCM City yesterday, Jeff Scheferman, CEO of the U.S-based ADC & HAS Airports Worldwide predicted that the Asia-Pacific region would record the highest growth in the world for the next two decades at around 6.8 per cent each year.

This will present stiff challenges for Southeast Asia as airport demand outstrips supply, there is a lack of airport expertise and governments are cash strapped.

Therefore, private sector involvement should be seen a solution for the government's development needs, he said.

Public-private ownership has become common in many developed countries over the past 25 years, but it is still new for this region, Scheferman said.

He said the private sector would be able to provide financing, operational expertise and efficient airports (in design and operation). This would help meet growing traffic demand, facilitate technology transfer and boost economic development, he added. According to Schef-erman, transfer of ownership takes place under three categories.

For publicly listed firms and IPOs, ownership will be widely distributed with the participation of domestic retail investors.

Under trade or freehold sales, full ownership will be transferred to corporate investors of joint ventures.

In the third type, where joint ventures are established or strategic partners selected, the government retains an interest in the airport with the remainder owned by private sector.

When no ownership is transferred, two types of transactions are involved.

Under lease/concession, build-operate-transfer (BOT)/build-own-operate-transfer (BOOT)/build-to-order (BTO) deals, the concessionaire operates the airport, owns and operates facilities for a time to recover investments plus a return or the government retains ownership of some or all of infrastructure.

When management contracts are awarded, the government approves concessionaire's operating budget and the operator receives fees based on performance of services, he said, adding that in some cases, the contractor takes an equity stake.

"Shared ownership with private sector would keep airports competitive and attract the most number of airlines, enable technology transfer and the adoption of international best practices," Scheferman said.

In addition, private investors can often raise capital more effectively, streamline decision-making and procurement processes, according to Scheferman.

"Private interests are better placed to negotiate with airport users, employees incentives are directly tied to airport performance and the public sector can focus more on regulation and supervision," he added.

Seventy delegates including government officials, airport operators, airport developers, architects, designers, investment firms, solution providers and consultants attended the meeting.

Viet Nam now has 94 planes (42 of which have been bought) and 21 airports. By 2020, the country will increase the number of planes to 140-150 (with 70-80 bought and others leased) and have five more airports. Ten of the 26 will be international airports.

In the 2006-2011 period, passenger throughput had an annual growth rate of 17 per cent while cargo throughput grew by 33 per cent.

By 2014, Viet Nam is projected to be the world's 3rd fastest growing market for international passengers and freight, and the 2nd fastest for domestic passengers.

Farmers join world trend to go ‘green'
 
The restructuring of Viet Nam's agriculture sector to become more adaptable to climate change is one of the top priorities in the country's socio-economic development plan between 2011-20, Prime Minister Nguyen Tan Dung said yesterday.

Speaking at the ongoing 2nd Global Conference on Agriculture, Food Security and Climate Change, the PM re-emphasised Viet Nam's efforts in restructuring its agriculture sector. These include the application of progressive technology, integrating agricultural production with processing and discovering output markets, and environmental protection.

"We're willing to work with other countries and international agencies to implement green agricultural models so we can learn from other partners," Dung said.

The leader also said the country faced enormous challenges in maintaining food security and ensuring export levels while mitigating the effects of climate change and rising sea levels.

PM Dung hoped that Viet Nam would continue to receive further support from other countries and international organisations to ensure food production and its current level of rice export, which accounts for one fifth of the world's rice export volume.

On Wednesday, Oxfam released a report suggesting that food price increases would worsen due to extreme weather caused by climate change devastating food production.

The report examines the impact of extreme weather scenarios on food prices in 2030. A nationwide drought in India and extensive flooding across Southeast Asia could cause the world market price of rice to increase by 22 per cent.

Viet Nam shares continue to fall
 
Shares extended their losing streak during yesterday's session, following concerns over economic growth potential. Under a draft plan for the nation's economy, the Ministry of Planning and Investment announced it would target economic growth next year of only 6 per cent.

Meanwhile, gross domestic product (GDP) grew by only 4.8 per cent in the first nine months of this year, the ministry said, a figure that was expected to rise to 5.3-5.6 per cent by the end of the year. Inflation for the year was expected to reach 7-8 per cent.

"While the economic growth targets can be achieved, curbing inflation at only 7-8 per cent is rather unrealistic," commented ACB Securities Co analyst Cao Tan Phat. "The prices of goods will probably start to rise again at the end of this quarter along with moves by major world economies to loosen monetary policies."

Reaching the growth targets, he added, would depend a great deal on the banking system's capacity to tackle bad debt and facilitate new lending.

"Investors will remain cautious as indices are approaching their resistance levels," Phat said, noting that many were waiting on results of the State Bank of Viet Nam's inspection of Sacombank (STB) following takeover rumours and rapidly declining profits.

On the HCM City Stock Exchange yesterday, the VN-Index closed down by nearly 1.4 per cent to 393.41 points. Over half of listed stocks tumbled. Trading was sluggish, with only 33.4 million shares changing hands, worth a combined total of VND541.7 billion (US$25.7 million).

Blue chips weighed on the market, sending the VN30 Index down by 1.24 per cent to 463.63 points. Only three out of the 30 leading shares tracked by the index managed to post gains, including logistics firm Gemadept (GMD), food processor Bourbon Tay Ninh (SBT) and property developer Vingroup (VIC). Meanwhile, 23 others retreated, most notably insurer Bao Viet Holdings (BVH), which plunged to its floor price of VND28,100 per share.

On the Ha Noi Stock Exchange, the HNX-Index also shed 1 per cent to close at 60.32 points. The value of trades totalled a mere VND216.9 billion ($10.3 million), declining 26.4 per cent from the previous trading day, on a volume of 24.2 million shares. Losers outnumbered gainers by 124-54. The HNX30 Index, tracking the bourse's 30 leading stocks by market capitalisation and liquidity, dropped 1.5 per cent to 112.12 points.

Exports to Egypt top $200m in seven months

Viet Nam's export turnover to Egypt reached US$201 million in the first seven months of the year, said Viet Nam Ambassador to Egypt Dao Thanh Chung.

Chung said the country's exports to Egypt in 2010 amounted to $200 million while last year's were $280 million, adding that Vietnamese enterprises have brought considerable volumes of goods into the market.

Viet Nam's main export items to Egypt have been rice, wooden furniture, consumption goods and seafood.

The latest report from the Ministry of Industry and Trade showed that Egypt has been the fourth largest country which imported Vietnamese goods among 67 countries having trade relations with Viet Nam.

Viet Nam has imported materials serving for production with a yearly average turnover of $20 million.

However, the ministry said that trade has not been up to the two countries' potentials despite increasing export turnover over the past few years.

Chung urged Vietnamese businesses to penetrate further into the market.

He said the embassy would support and create favourable conditions for businesses to promote their trade in Egypt as well as expanding the range of export items available.

Egypt has been in need of agricultural products, cloth, electronics, mobile phones, machines and equipment.

He added that the two countries should establish a Viet Nam-Egypt Business Council to promote trade, investment and co-operation.

The two countries aimed to bring their bilateral trade to $500 million.

Weed sprayers need licences

People must now have certification to use certain plant protection substances.

This is one of the new regulations in the draft law on plant protection and quarantine.

Experts from the Ministry of Agriculture and Rural Development said that this was the first time people using limited-use plant protection substances needed to have documentation.

Nguyen Xuan Hong, director of the ministry's Department of Plant Protection, said that plant protection substances were not well monitored as 90 per cent of the substances were imported from China, making it difficult and time-consuming to check their ingredients.

"Although the ministry has warned farmers about the dangers of limited-use substances, there are many cheap substances available illegally that they use regularly to heighten productivity without thinking about the consequences," he said.

The new regulations will help raise farmers' awareness about the substances as they will attend mandatory training courses after receiving cards and certificates, he added.

Plant protection substances can sometimes be necessary for agricultural production. If the substances are used properly in a limited time period, they do not have a significant effect on the environment.

To limit the abuse of these substances, which pollutes the environment and affects people's health, farmers should be trained to use them properly and issued certificates when they demonstrate they are able to do so.

Thus the draft law regulated that the farmers must be issued cards or certificates to use these plant protection substances.

However, about 60 per cent of the country's population earns a living by farm work, so a great number of people use the substances. Implementing mandatory training may well be difficult, particularly when it affects the farmers' production process, said Hong.

Importing higher tax revenue

Easing import procedures is being proposed to boost tax revenue.

The General Department of Customs (GDC) has made a series of proposals benefiting import-export businesses with a view to hiking tax revenue.

In 2012, the customs sector was assigned to collect VND223.9 trillion ($47.4 billion) taxes. Of this, VND80.5 trillion ($3.8 billion) will come from import-export duty and excise tax and VND143.4 trillion ($6.8 billion) from value added tax.

However, in the year ending August, the GDC just collected VND125.8 trillion ($6 billion) taxes, tantamount to 56.2 per cent of the projection and down 11.8 per cent on-year.

To avoid import export tax collections falling short of projections the GDC had sent proposals to the government, ministries of Industry and Trade (MoIT) and Finance (MoF) asking to loosen some regulations on import of luxurious items which are being tightened to abate trade deficit.

Accordingly, the GDC proposed revising MoIT’s Circular 20/2011/TT-BCT of May 12, 2011 stipulating additional import procedures for brand-new cars of nine seats and below. Particularly, the GDC asked to remove a regulation requiring car importers to show evidence they were authorised dealers of genuine car manufacturers or traders.

The GDC argued the move would help allow more car importers and dealers to join the market while boosting supplies of imported cars with a wider variety of brands.

The customs sector also proposed easing regulations towards import of alcohol, cosmetics and mobile phones into Vietnam by abolishing MoIT’s Notice 197/2011/TB-BCT regulating import procedures of alcohol, cosmetics and handsets into Vietnam.

To avoid tax evasion, the GDC suggested revising policies governing temporary import-reexport of goods, including petroleum products.

A GDC senior official said in the past months a number of petroleum traders had imported products in the form of temporary import-reexport. They later sold petroleum products in the domestic market to gain extra profits instead of reexporting the products as proposed.

To tackle the situation the GDC had proposed immediately levy taxes on petroleum products to prevent firms from cashing in on tax incentives towards temporary import-reexport goods.

Customs sector statistics show that Vietnam exported 6.27 million tonnes of crude oil in the first eight months of 2012, generating over $5.5 billion in export value, up 9.3 per cent in volume and value against the same period in 2011.

In respect to petroleum import, total import value came to $6.3 billion in the period, sliding 12.3 per cent in volume and 6.9 per cent in value on-year.

Sinking completely-built unit (CBU) car imports was most critical in the year ending August. Accordingly, Vietnam imported a total 18,027 CBU cars valued at $384 million, tantamount to 40 per cent of projection in volume and plunging over 50 per cent in value on-year.

Of them, cars less than nine seats accounted for 9,509 units valued at $99 million, shedding 56.3 per cent in volume and 50.7 per cent in value on-year. With around 80 per cent import duty and 45-55 per cent excise tax these declining CBU car volumes meant a big dent to state budget.

A fruity end to agricultural produce manipulators

Foreign traders manipulating the agricultural produce market are under the  microscope.

From May 2011 until present a number of foreign traders have come to Vietnam to purchase agricultural produce on a large scale and these cases have become increasingly complex.

Apart from helping farmers sell products more quickly with better prices not a few cases have proven illegal, causing losses to farmers and agricultural production and creating market troubles, according to head of Ministry of Industry and Trade’s (MoIT) Domestic Market Department Vo Van Quyen.

A common business trick performed by foreign traders is buying products at abnormally high prices.

This led to farmers rushing into enlarging areas grown with these products, breaking regional production planning, hurting the environment and depleting natural resources.

After driving up prices to unrealistic levels, these foreign traders abruptly stopped buying the products, causing a nosedive in product prices and placing farmers in a pickle.

Besides, foreign traders buying items massively regardless of size, quality and associated factors had cast a dent on Vietnamese products’ reputation in the world marketplace.

“These activities have created a mess in the market and hurt farmers, while causing detrimental impacts on social security,” said Quyen.

Director Nguyen Minh Toai at Can Tho City Department of Industry and Trade in the Mekong Delta echoed Quyen’s comments.

He said in the recent past many foreign traders came to purchase rice of Can Tho firms. Then, they required firms to fill half of these batches with lower grade rice varieties. These batches then could not pass checks by import country’s quality control bodies, local firms had to ‘swallow a bitter pill’ but they could not report the case and seek support from competent state agencies.

Planting Japanese violet sweet potatoes was another case. At the time the price of this product escalated, farmers in southern Vinh Long province’s Binh Minh district came to Can Tho leasing land to grow the product. These farmers later caught a big loss when foreign traders abruptly turned their back on the product.

Latest statistics show that Ben Tre province is now home to 70,000 hectares coconut areas, up 15,000ha against mid 2011, according to the provincial People’s Committee deputy chairman Cao Van Trong.

That was partly because at time when a dozen of coconuts fetched VND150,000 ($7), farmers rushed into growing coconut trees. They then suffered when foreign traders stopped buying the product and a dozen of coconuts dropped to VND15,000, one-tenths of former price. To rescue farmer, the provincial management had decided to support farmers VND1.5 million ($71) per hectare of coconut trees.

MoIT deputy minister Ho Thi Kim Thoa said legal documents regulating foreign traders’ activities were relatively comprehensive and these some afore-mentioned cases stemmed from careless governance by some local governments.

Hence, in the coming period the MoIT would join efforts with relevant ministries, sectors and localities to foster management and ramp up propagation to make farmers aware and avoid getting involved in illegal cases.

Besides, promoting using contracts in transactions among farmers to enhance legality is also a must to minimise negative phenomena.

Car importers feel the heat

Firms are crying for help from state agencies to radically settle the car import dilemma.

The Ministry of Industry and Trade (MoIT) took a positive move allowing import businesses to continue importing shipments of brand-new cars from nine seats or less in volumes and types as per contract terms signed before the enactment of Circular 20/2011/TT-BCT and having payment documents prior to May 12, 2011.

The MoIT issued Circular 20/2011/TT-BCT dated May 12, 2011, effective from June 26, 2011, stipulating additional procedures for imported cars from nine seats or less to protect consumer interests and safety of road traffic.

However, car importers are crying for further MoIT assistance.

A representative of a car trading firm based in Hanoi’s Thanh Tri district said the MoIT’s recent regulations triggered many concerns to firms already bogged down in difficulties with car import procedures. The firm was an example.

“Our car import contract signed on February, 2011 before the enactment of Circular 20 remains unsettled and almost 20 months have past. During that long period the global car market witnessed profound changes. Some car models as in the signed contracts were not manufactured any more and some models would come out of vogue at this time with poor sale perspective,” said the representative.

“Hence, to help firm ride out of difficulties, we want the MoIT to give us the right to revise imported car volumes and types but with the same import value to meet market needs,” he added.

Similarly, a representative from trading firm based in Haiphong city Kylin GX voiced concerns over firms’ huge inventory amid limited cash flows and flat auto market business.

“To engage in imports, we need a long-term plan. Irrespective of the sum we paid for our partner, our company ought to prepare in human resources, warehouse and most importantly tax payments when cars reach Vietnamese ports to pass customs check points,” said the company’s director Nguyen The Hung.

Hung then argued the MoIT’s proposed regulation demanding all car import shipments in this respect to reach Vietnamese ports within three months after MoIT enactment of guiding decrees would be impractical.
The representative of a car firm not facing similar woes as those in above said cases because it got an authorised paper from genuine car manufacturers assumed this move should have been taken after the enactment of Circular 20 more than a year ago to ease firms’ difficulties.

From its part, a MoIT’s representative said the ministry got proposals from firms asking not to follow Circular 20 regulations in case the car import shipments completed payment prior to Circular 20 enactment and car reached Vietnamese port after July 24, 2011.

The MoIT, after working with competent agencies, sent a report to the prime minister. On July 25 the MoIT got instruction from Deputy Prime Minister Hoang Trung Hai approving in principle with MoIT proposals.

The MoIT is working with relevant ministries and departments to get the government instruction guiding documents soon in place.

Alstom launches latest smart solutions at CIGRE 2012

Alstom has actively participated in the biennial worldwide forum of the electrical power industry, CIGRE, in Paris between August 27-31.

During this edition, Alstom showcased its latest innovative solutions for the power grid of the future, notably across five product launches.

Alstom develops smart grid systems by interconnecting all equipment and players on the grid, supergrid projects by transporting large amounts of electricity across energy highways, and new-generation digital substations instantly analysing and regulating the electricity passing through the substation.

To support its customers in deploying these technologies, Alstom provides services and support through network consulting, condition monitoring analysis and knowledge management.

“CIGRE 2012 is a great opportunity for us to highlight our smart solutions, as we commit ourselves to a sustainable future and take our next step in building the smart grid of tomorrow,” said Alstom Grid president Grégoire Poux-Guillaume.

“The new solutions we present are at the forefront of today’s challenges in energy and the environment, making our customers’ grids more reliable, clean and smart. ”

CIGRE 2012 was a key opportunity for Alstom and its customers to discuss the future deployment of High Voltage Direct Current (HVDC) in transmission grids.

A long established expert in the HVDC field, Alstom is already producing HVDC technologies through Line Commutated Converter (LCC) and Voltage Source Converter (VSC) to connect offshore wind farms to the mainstream grid and to build the super grids of tomorrow, the energy highways for future long-distance transmission.

Alstom has notably built the Ningdong-Shandong 660 kV transmission scheme in China and is currently working on the Rio Madeira project in Brazil, the world’s longest HVDC link.

Most recently Svenska Kraftnät selected Alstom’s Voltage Source Converter technology, HVDC MaxSineTM, for the South-West link project in Sweden.

Discussions at the CIGRE 2012 centered on the industry’s current challenges - the reduction of global CO2 emission through increasing integration of renewable energy sources, the need to respond to growing energy demand in all economies, the push to interconnect national electrical grids across long distances to develop international energy exchanges, and finally, the challenge of integrating new digital technologies (Smart Control Room, automated functionalities and seamless telecommunications).

Alstom is a global leader in the world of power generation, power transmission and rail infrastructure and sets the benchmark for innovative and environmentally friendly technologies.

Alstom builds the fastest train and the highest capacity automated metro in the world, provides turnkey integrated power plant solutions and associated services for a wide variety of energy sources, including hydro, nuclear, gas, coal and wind, and it offers a wide range of solutions for power transmission, with a focus on smart grids. The group employs 92,000 people in around 100countries. It had sales of €20 billion and booked close to €22 billion in orders in 2011/12.

Alstom Grid has over 100 years of expertise in electrical grids. Whether for utilities or electro-intensive industries or facilitating the trading of energy, Alstom Grid brings power to its customers’ projects.

Alstom Grid ranks among the top three in electrical transmission sector with an annual sales turnover of more than €4 billion. It has 20,000 employees and over 90 manufacturing and engineering sites worldwide.

Vietnam haltingly pushes toward economic restructuring  

The Government will only keep five to seven key State-owned groups in a bid to create an even playing field for the private sector.

The Ministry of Construction proposed to halt a pilot programme for running Housing and Urban Development Holdings (HUD) and Vietnam Industrial Construction Group (VNIC) as corporations after over two years.

The head of the Government Office, Vu Duc Dam, said the Government is still evaluating the results of these cases.

He went on to say that the Government will only keep five to seven out of 11 State-owned groups, namely those that play important roles in social life such as petroleum corporation or telecommunication groups.

"Government responsibility for State-owned groups will actually increase, even as the number of groups decreases." he said, adding that, "In this way, the individuals responsible for any mismanagement will be clearer in the future."

Because the restructuring policy is still under review, the direction of other groups remains undecided.

A report issued by the NA's Economic Committee pointed out the shortcomings of State-owned groups, saying that they are obstacles to financial restructuring and prevent potential private sector investment in profitable markets.

According to the report, "This situation has led to unfairness in competition for smaller private enterprises and lack of development in certain economic sectors. Investment opportunities and exploitation of Vietnamese markets has been difficult for private enterprises. Because of their regulatory tools and virtual monopolies they stand in the way of private investment and cause corruption, fraud and investment in non-core businesses. At the same time, many private enterprises develop quickly, not by innovation, but by exploiting natural resources and a relatively cheap workforce, without respect to regulations and workers' rights."

The report recommended that State-owned groups only invest in areas which provide public service or can help repair defects in the economy. It also suggested that the Government gradually withdraw its role as business investors in the economy to create more varied and vibrant domestic commerce.

In general terms, the report said that any broad economic model should consider the private sector as the main engine for growth in order to create an even and fair playing field for business.

Vietnamese motorways prove short, but costly  

An official report from the Ministry of Construction showed the average length of motorways in Vietnam are less than 100 km; however, their costs are much higher than comparable roads in China, Europe and Africa.

Investment unit costs for four-lane motorways are 1.4 times higher than in China, while Vietnam’s six-lane highway investments are 1.74 times higher than China.

Investment unit costs for Vietnam’s six-lane motorways are 1.63 times higher than that of European countries such as Germany, Portugal and Hungary.

The ministry has completed the report on investment unit costs for motorways for submission to the Prime Minister. In the report, the ministry proposes an average investment unit cost of 4-lane highways of USD15.91 million per km.

The investment for the delta regions is USD16.63 million/km, while the figure for the midland and central regions is USD9.42 million/km and USD10.56 million/km respectively.

This is the first official report on the investment unit costs for motorways in Vietnam based on figures sourced by the Ministry of Transport. Earlier, reports of the similar kind were often based on assessments by contractors and real construction conditions.

Vietnam’s highest investment unit costs were on the Trung Luong-My Thuan, My Thuan-Can Tho and Long Thanh-Dau Giay roads at USD17-22 million/km; and the Ben Luc-Long Thanh route at USD37 million/km.

According to the Ministry of Construction, most Vietnamese highways run for less than 100 km, however, they include overpasses, lighting and slip roads.

The higher costs have been attributed to difficult terrain and geological conditions. Meanwhile, slow site clearance has also increased investments.

HCM City launches mobile sales to assist the poor

As many as 25 enterprises in Ho Chi Minh City are taking part in a mobile discount sales program in the city’s seven districts to partly help ease economic difficulties for poor working people.

Goods sold on the spot in the districts of Cu Chi, Hoc Mon, Can Gio, Binh Chanh, Nha Be, Go Vap and No.8 are offered discount rates ranging from 5-49%.

Mobile sales is one of activities in the 2012 promotion campaign month, under which goods with discount are sold directly to residents, especially workers.

Saigon Co.op, a major seller, is planning to conduct 200 mobile sales trips nationwide, including 80 in Ho Chi Minh City. In each trip, a volume of goods valuing VND50-80 million will be offered.

MDF sector is on the climb

Foreign enterprises are chopping into local wood supplies to set up their own medium density fiberboard (MDF) manufacturing plants in Vietnam.

Tran Ngoc Thuan, general director of Vietnam Rubber Group, said Vietnam used around one million cubic metres of MDF annually, 70 per cent of which had to be imported.

To serve the local potential market, MDF VRG Dongwha’s $125 million MDF manufacturing plant, Asia’s biggest, has just kicked into gear in southern Binh Phuoc province’s Minh Hung III Industrial Park.

Work on the 38.46 hectare plant started in June 2010 and it has a designed capacity of 35,000 tonnes of formaline, 54,000 tonnes UF resin and 300,000 cubic metres of MDF.

“This is the biggest MDF plant in Asia with equipment and production lines imported from Europe,” said Le Minh Chau, chairman of MDF VRG Dongwha, whose 49 per cent is owned by Vietnam Rubber Group and 51 per cent by Korea-based Dongwha Group.

The plant’s main products are a series type of MDF, especially thin MDF products which have not been manufactured in any other MDF plants in Vietnam yet, said Chau.

After two months of production testing, the plant reached 80 per cent of its full capacity of 300,000 cubic metres of MDF. Moreover, the plant’s products are also exported to the US, Japan, India and Middle East.

MDF VRG Dongwha plant utilises abundant sources of rubber trees, as well as acacia, eucalyptus, pine in Vietnam.

Most raw materials for production were domestically supplied from southern and Central Highland areas, except methanol for formaline production, said Tran Ngoc Thanh, vice director of MDF VRG Dongwha.

According to MDF VRG Dongwha, its revenue in 2012 is expected to achieve VND900 billion ($43 million) and around VND1.5 trillion ($72 million) annually.

Veco, a joint venture between Japan’s Sumitomo Forestry and Sumitomo Forestry Singapore, also started commercial production of its $110 particle board plant in Vietnam in May, 2012.

This facility applies an integrated particleboard line capable of producing 250,000 cubic metres of particleboard from low value wood annually, covering 20 hectares in southern Long An province’s Phu An Thanh Industrial Park.

Long An, particularly, has a abundant forested melaleuca, the main material for our plant’s production, said Soichiro Kitamura, CEO of Veco.

Vietnam Rubber Group has set up a wood production and processing development strategy aiming to raise its MDF manufacturing capacity up to 500,000 cubic metres by 2015 to meet the local demand and for export.

Land issues see highways run into road blocks

Land clearance woes have taken the timeline for the $1.24 billion Noi Bai-Lao Cai expressway’s A1 bidding package to breaking point.

A1 bidding package, handled by South Korean contractor Posco E&C, involves building 3.1 kilometre highway section crossing Nam Viem commune in Vinh Phuc province’s Phuc Yen town.

The Noi Bai-Lao Cai expressway spans over 245km in the first phase crossing Hanoi and northern, Vinh Phuc, Phu Tho, Yen Bai and Lao Cai provinces. The construction involves eight bidding packages and A1 package is one of the packages seeing worst construction pace.

Construction at A1 package was kicked-start three years ago in July 2009, but site clearance problems mean it will not meet the October 31 deadline.

Most recently, on August 9 the developer Vietnam Expressway Corporation (VEC) had to resort to support from Phuc Yen Town People’s Committee to resume construction at A1 package after a 18 month delay.

“We are like sitting on fire as there is no assurance local residents will not further bother the project after the withdrawal of Phuc Yen town’s competent forces,” said VEC deputy general director Nguyen Van Nhi.

In reality, the contractor’s failures in resuming construction at A1 package in March and early August 2011 showed that local residents could return to construction site any time, deterring contractor efforts from resuming construction works.

Local people, allegedly dissatisfied with the local government’s land compensation costs, took actions to hamper construction from June, 2011 although earlier they had agreed to hand over the site to the contractor, so preventing the contractor from bringing materials and machinery to the construction site.

Consequently, the entire 3.1km section with part of the road-bed being paved is left vacant, triggering great concerns for the developer and contractor.

“Apart from hurting the entire project’s progress, the developer faces a series of complex repercussions,” said Nhi.

In fact, the A1 package case is not unique. Local residents taking actions to hurt progress of big highway projects have become increasingly commonplace. Construction at many sections of Ho Chi Minh City-Long Thanh-Dau Giay expressway in the south was continually disrupted by local people.

According to former chief at the Steering Committee for Transport Sector Key Projects Nguyen Ngoc Long, mega road projects worth billions of US dollars and using vast space were being treated the same as applied to small infrastructure projects worth several hundred thousand US dollars when it came to land compensation issue.

“No specific investment capital and land acquisition mechanisms to get major highway projects rolling means delays and big losses for the economy,” said VEC’s general director Mai Tuan Anh.