Green growth is achievable

Pursuing green growth may seem a daunting task, but it is achievable if countries tackle political and economic constraints, a World Bank report argues.

The report titled Inclusive Green Growth: The Pathway to Sustainable Development, released in Ha Noi today, says that going green is necessary and actually affordable, debunking the myth the approach is a luxury most countries cannot afford.

"All countries, rich and poor, have opportunities to green their growth," the report says.

The report challenges governments to not only measure what is being produced but taken into consideration what is being used up and polluted in the process.

It says natural capital, including farmland, minerals, rivers and oceans, should be treated as sustainable accounts.

At a green growth seminar to launch the report, World Bank experts and the Vietnamese policy makers discussed how to adapt the green-growth concept in Viet Nam.

S&P revises VN’s credit rating outlook to stable

Standard & Poor's Ratings Services (S&P) has revised the outlook on Vietnam to stable from negative.

The revision is due to the government’s successful drive to bring down sky-high inflation, according to AFP.

“The outlook revision reflects our assessment of a reduction in the risks to macroeconomic and financial stability in Vietnam” due to this tight credit policy, said the agency’s statement.

Vietnam last year had to switch its focus from economic growth to stabilization to deal with soaring inflation, price hikes, and other challenges, including shrinking foreign reserves, an expanding trade deficit and the devaluation pressure for its currency, the Vietnam dong.

“By continuously rising interest rates throughout the year 2011, the government reined in inflation from the peak of 23 percent last August to 8.34 percent year-on-year this May,” according to AFP, citing S&P statement.

Key indicators such as credit growth, the level of foreign exchange reserves, and domestic currency interest rates have improved over the past 18 months.

"We expect Vietnam to maintain these improvements as the government has expressed its intention to keep price stability high on its policy priorities," said Standard & Poor's credit analyst Kim Eng Tan.

“The stable outlook on the ratings reflects our view that Vietnam will maintain an appropriately tight economic policy stance until there are clear signs of macroeconomic instability receding, including sustained single-digit rates of inflation.”

“This would allow fiscal, external, and economic indicators to remain close to current levels or improve over the next two to three years.”

However, fiscal tightening has also caused economic growth to slow to 4.0 percent in the first quarter of 2012, the weakest pace in three years, forcing the central bank to slash interest rates three times this year already.

Vietnam’s economy grew 5.9 percent last year, just below the six percent target. The government is aiming for a 6.0 to 6.5 percent expansion this year.

The ratings agency, on the other hand, reaffirmed the 'BB-' long-term and 'B' short-term sovereign credit ratings for the Southeast Asian country.

The ratings on Vietnam reflect the country's low-income economy, its weak fiscal position, a developing monetary and financial framework, and the possibility that its evolving policy framework could weaken sovereign risk indicators.

S&P has also revised the outlooks on Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and Bank for Investment and Development of Vietnam (BIDV) to stable from negative.

At the same time, S&P affirmed its 'B+/B' issuer credit ratings on both the banks. It also revised the ASEAN scale ratings on BIDV to 'axBB/axB' from 'axBB-/axB'.

“We revised the outlook on the two banks following a similar sovereign rating action on Vietnam (BB-/Stable/B; axBB+/axB) earlier today.”

“The ratings on Vietinbank and BIDV are one notch above the banks' respective stand-alone credit profiles, reflecting the banks' "high systemic importance" in Vietnam's banking system; and our assessment of a "highly supportive" government, which qualifies for a one-notch rating uplift from the banks' stand-alone credit profile of 'b'.”

The credit ratings agency also announced that its rating and outlook on Vietnam National Coal and Mineral Industries Holding Corp (Vinacomin), at “BB-/Negative”, are not affected by the sovereign rating action on Vietnam.

“We are not revising the outlook on Vinacomin because the rating and outlook on the company primarily reflect its stand-alone credit profile of 'bb-'.”

“We believe there is a "low" likelihood of extraordinary government support in the event of financial distress, as defined in our criteria for rating government-related entities."

"Our view is based on the "limited" importance Vinacomin's creditworthiness represents to the government.”

S&P also threatened that there is a one in three chance the rating on Vinacomin could be lowered in the next 12 months if the company's operating cash flows weaken because of increasing domestic sales at government-regulated prices.

“Vinacomin will have to rely more on debt to fund its significant capital expenditure program if cash flows weaken. This could lead the company's credit protection measures or liquidity to deteriorate.”

Taxes unlikely to be cut: finance minister

While local businesses have long yearned for a tax cut to assist them amid the myriad of financial and operational difficulties currently facing them, Minister of Finance Vuong Dinh Hue said there is little likelihood that any tax relief will be released.

“The government should slash corporate income tax from 25 percent to 20 percent,” said delegate Tran Du Lich from Ho Chi Minh City at a National Assembly discussion yesterday.

“The taxes must be reduced, and now is the time when the cut will bring in the most effective results,” he urged.

Sharing his view, Nguyen Cao Phuc, who represents Quang Ngai province, called on the government to cut value-added tax to reduce goods prices, and boost consumption, helping businesses to clear their stock.

Meanwhile, delegate Nguyen Cao Son from Hoa Binh Province proposed that the lending interest rate be lowered to below 10 percent a year to enable businesses to access loans and increase competitiveness.

In response to the delegates’ proposals, Minister of Finance Vuong Dinh Hue said it is difficult to cut the said taxes at the moment.

“The ministry has researched the VAT tax in more than 111 nations, and there are 87 countries whose VAT rate is between 12 and 25 percent, while the rate in Vietnam is only 10 percent,” the minister told the meeting.

“If VAT tax is reduced by 50 percent, the state budget collection will also drop by VND15 trillion, and there is no other collection to cover for this loss,” he said.

“On the other hand, we did cut VAT in 2009 but businesses didn’t reduce selling prices to help consumers.

“So, we will consider cutting taxes in only certain segments.”

Regarding the corporate income tax (CIT), Hue said there is already a roadmap to reduce the rate to 20 percent.

“But the average global rate is 27 percent, and the current 27 percent rate imposed on local businesses is considered low,” said Hue.

“Lowering the CIT to 20 percent will also cost the state budget collection a huge VND20 trillion.”

However, Hue added that “the National Assembly can announce that CIT next year will be cut to 22 – 23 percent.”

M&As an investment channel and measure for economic restructuring

The recent increasing number of Mergers and Acquisitions (M&A) deals indicates that it is not only an investment channel but also a measure for business restructuring and improving their operation.    

Addressing a forum in Ho Chi Minh City on June 7, Deputy Minister of Planning and Investment Dang Huy Dong affirmed that authorities are paying special attention to M&A activities in Vietnam. He expressed his belief that the meeting will point out advantages and challenges facing M&As in Vietnam, draw on useful experience and discuss related legal issues to help policymakers complete the legal framework to facilitate M&A activities in the future.

Themed, “creating synergies,” the forum offers the chance for Vietnamese businesses to introduce M&A potential to their partners, investment funds, especially those from Japan which are seeking investment opportunities in Vietnam. It is also a platform for participants to share their experiences in M&A activities.

Speakers made an in-depth analysis of major M&A deals, the restructuring of the banking system, takeover and anti-takeover, strategies to create synergies, and post-M&A issues.

According to M&A research organizations, Vietnam now ranks eighth among Asia-Pacific nations which are bustling with M&A deal valued at US$4.7 billion last year, a sharp increase compared to US$1.7 billion in 2010. In the first quarter of 2012, the figure reached US$1.5 billion, accounting for 1.6 percent of total value in the Asia-Pacific region (excluding Japan).

M&A activities are predicted to rise 30 percent in the coming time with financial, banking, consumer and real estate being most attractive sectors.

Settling bad debts: money is not all that matters

Dealing with bad debts requires a large amount of money but this is not a decisive factor.
   
In response to the idea that if the State spends about VND100 trillion to tackle bad debts, the problem will be solved, Pham Manh Thuong, Deputy General Director of the Debt and Asset Trading Corporation (DATC), says it will depend on how to get to the root of the matter.

He proposes the State set up a national debt settling organization as an intermediary tool for imposing effective sanctions against those businesses incurring bad debts and encouraging private investors to trade debts on a larger scale.

Thuong says the settlement of bad debts should aim not only to improve banks’ liquidity and stabilize their operations but also to help the indebted businesses restore their production and pay their debts.

Using banks to clear the books is not a cure-all when it comes to dealing with bad debts, he argues.

With total bad debts worth VND100 trillion, he suggests, the State would rather settle one third of them only.

Bad debts are of different sorts and need to be analysed independently. They usually account for 20-30 percent of account outstanding (with mortgage loans) and 5-10 percent (with non-mortgage loans), Thuong says.

When buying bad debts, the State can issue 5-7 year bonds for banks selling their bad debts in addition to paying in cash. These bonds can be rediscounted when necessary.

Thuong also insists on setting up a fund for deal with bad debts and implementing the economic restructuring to affirm the State intervention in the issue. In his opinion, it will help improve public and investor trust and create a special resource of funding to deal with bad debts on a large scale.

According to statistics, State-owned enterprises (SOEs) owe 70 percent of total bad debts to commercial banks. Therefore, an effective settlement of bad debts will help restructure banks and SOEs at the same time.

The State should assign DATC to manage the fund, he says.

DATC will use the fund to buy bad debts before seeking the best ways to deal with them, Thuong says, adding that the Corporation will help potential businesses recover and stabilize their operations by restructuring their financial and operational management.

294 reputable export businesses announced

The list of 294 reputable export businesses in 2011 was announced by the Ministry of Industry and Trade (MoIT) on June 8.

Tran Thanh Hai, Deputy Head of the Import-Export Department under the MoIT said this is aimed at honouring reputable trademarks of Vietnamese products and services on domestic and international markets as well as creating conditions for foreign businesses to promote cooperative investment in an effective way.

He expressed his hope that reputable exporters will continue to secure a firm foothold among the international business community.

All the listed companies were credited for neither losing profits in 2010 and 2011, nor violate Vietnamese laws and international business laws to face any complaints about their trade frauds. In addition, they all strictly followed export contracts to the letter and fulfilled their tax payment duties.

Their exports in 2011 achieved about US$20 million in terms of footwear, US$15 million (garment), US$10 million (coffee, seafood), US$8 million (timber products), US$6 million (rice and cashew nuts), US$5 million (unprocessed rubber), US$4 million (pepper), US$2 million (vegetables and fruit), and US$1 million (tea).

The list of export businesses are updated at www.moit.gov.vn.

In 2010, there were 284 reputable export businesses, including 49 companies involved in seafood production, 38 in garment manufacturing, 32 in rice shipment and 27 in rubber plantation.

Nippon Steel Engineering rep.office opens in HCM City

A representative office of the Japanese Nippon Steel Engineering (NSE) Group officially opened in Ho Chi Minh City on June 7.

The Japanese group which specializes in supplying energy facilities, pipelines and steelmaking equipment for architecture projects has set up its rep.offices in China, India, Brazil and other countries in Southeast Asia and Europe.

The group has engaged in steel import-export and manufacturing activities in Vietnam for 10 years. Last year it built a factory to produce steel pipes in Ba Ria-Vung Tau province.

NSE President, Takahashi Makoto said the group plans to raise its turnover from overseas by 40 percent and highly values Vietnam’s potential market.

Japan’s consul general to HCM City, Hinda Harumitsu congratulated NSE on opening its office and revealed that 570 Japanese businesses are operating in the city.

Vietnam, Venezuela make energy saving bulbs

Vietnam’s Dien Quang Lamp joint stock company (JSC) and Venezuela’s industrial petroleum and gas group have turned out their first test products following the recent signing of an agreement on the production of energy saving bulbs.
 
Under the framework of the agreement, the two companies have set up a joint venture factory named Vietven.

The factory, which covers 80,000 quarter meters in Paraguana industrial zone, Venenuela, is designed to produce 74 million bulbs a year. According to plan, it will officially go into operation next month.

Dien Quang’s JSC has invested more than US$300 million in the project.

HCM City: 143 FDI projects licensed in five months

Since early this year, the Ho Chi Minh City Department of Planning and Investment has granted licenses to 143 FDI projects, valued at US$180 million in total.
    
With more capital added to 35 projects already in operation, the total amount of FDI funding has reached US$470 million, a four fold increase compared to the same period last year.

Singapore has taken the lead with more than $94 million, followed by Japan with $20.5 million.

Most newly-licensed projects are in the automobile, and science and technology sectors, with only a few projects focused on real estate, financial and banking sectors.

Improving quality of audit reports under discussion

The fourth tripartite seminar was held in the northern province of Ninh Binh on June 7 to improve the quality of audit reports between Vietnam, Laos and Cambodia.  

At the seminar, experts shared the experiences of each country in making and issuing audit reports, and discussed solutions to improve the quality of audits and deal with delays of auditing information.

They also noted that the activities of State auditors in Vietnam, Laos and Cambodia and the quality of their audit reports are still far from meeting the requirements.

The three countries’ auditors have failed to operate different forms of audits and work out a long-term auditing plan to tackle current affairs of public concern, they said.

Dung Quat EZ licenses four large projects

Four new projects totalling more than VND46 trillion (US$2.2 billion) have recently been licensed by the Dung Quat Economic Zone (EZ) Management Board in the central province of Quang Ngai.      

They include the US$2 billion Dung Quat thermal power plant invested by Semcorp Utilities from Singapore, the VND3.8 trillion industrial-service-urban zone by the Vietnam-Singapore IZ Company, and two seaports worth a total of VND1.4 trillion.

In addition, the Dung Quat EZ has received increasing foreign investment from the Republic of Korea, Singapore and Japan.

So far the zone has licensed 114 projects.

Danang hosts banking and investment conference

More than 200 domestic and foreign bankers, creditors and property developers from 16 countries around the world gathered at a banking and investment conference in Danang on June 7-8.

The event provided a good chance for domestic and foreign businesses to access information about investment opportunities in real estate, tourism, retail, banking, infrastructure and energy in Vietnam, particularly in Danang.

It offered a special session for Danang leaders to introduce the city’s investment environment and opportunities, as well as incentive policies.

Located in Central Vietnam, the city has achieved quite high economic growth in recent years and ranked high on the provincial competition index. With various hi-tech parks taking shape, Danang is seen as a centre to technology developers.

Van Huu Chien, Chairman of the Danang municipal People’s Committee, said useful information presented at the conference will help businesses invest effectively.

Danang will promote investment activities to facilitate business operations in the city, Chien assured participants.

Rice exports increase sharply in May

Vietnam’s rice exports in May reached 788,296 tonnes, a record high since January 2010, says the Import Export Department under the Ministry of Industry and Trade.

The figure showed an increase of 12 percent over last year’s same month. Total rice shipments in the past five months were about 2.5 million tonnes.

With a sharp increase in rice exports in recent months, Vietnam is expected to achieve its set target of 6.5 million tonnes by the end of 2012.

Although China is currently Vietnam’s largest rice importer, many businesses are planning to export rice to Ivory Coast, Ghana and Senegal.

Da Nang pulls foreign cash

The central city of Da Nang has granted 14 new foreign direct investment (FDI) projects with a total investment of US$71.5 million in the first five months of the year, the deputy head of the People's Committee secretariat, Nguyen Van Khoa told a press conference this week.

The city also has seen six projects increasing investment capital worth $36.6 million so far this year.

"The city's industrial production value grew to nearly VND5.6 trillion ($266 million) during five months, a 6.2-per cent increase in comparison with the same period last year," he added. He also said the industrial production of FDI projects recovered in the second quarter with a growth of 14.2 per cent.

In a latest report of the city, Da Nang attracted 218 FDI projects with a capital of $3.45 billion.

At the conference, the city's administration also reported that the tourism sector hosted over 1 million tourist arrivals, of which 313,000 were foreign tourists, in the first five months of the year, earning a revenue of VND2.33 trillion ($111 million).

A record number of 360,000 tourists flocked to the city over the course of just two days of the International Fireworks Competition on April 29-30.

However, in the real estate sector – a major revenue of the city, has been stagnated.

The chairman of the municipal People's Committee, Van Huu Chien said the city earned nearly VND500 billion ($24 million) from land-use taxes – 13.5 per cent of the city's revenue of VND3,700 trillion ($176 million) in the first five months.

The city has created 13,500 jobs so far.

FDI from S Koreans falls 51%
 
Investment from South Korea, Viet Nam's second largest source, declined by 51 per cent in the first five months of the year due to the world economic downturn, a Viet Nam Korea dialogue heard on Wednesday.

According to the Ministry of Planning and Investment (MPI), as many as 58 projects from Korean investors were registered in the period with total investment capital of US$220 million.

In addition, with $35 million raised by existing projects, the total investment of Korean businesses in Viet Nam in the first five months of 2012 came to $255 million, down 51 per cent per cent year on year.

Korean investors in the same period of 2011 pumped a combined $522 million into Viet Nam, accounting for 11.2 per cent of total FDI in this time.

Head of the Korean Department of Economic Relations Kim Chang Kyu said the workshop aims to give Korean investors a chance to meet with local authorities and voice their concerns about difficulties they have encountered in doing businesses in Viet Nam.

Kyu said Viet Nam and Korea should strengthen their bilateral relations as businesses are considering the country as one of the favoured investment destinations in the coming time, especially in high tech and supporting industries.

According to Kyu, Viet Nam is also considered as one of the most attractive countries in Asia in terms of production and manufacturing.

Most questions raised at the workshop, organised by the Korean Chamber of Commerce (Kocham), related to taxes preferential for foreign investors, tax exemptions and personal income taxes.

Korean investors were also concerned about the declining import tax of some complete built products that compete with those made in Viet Nam by Korean producers.

Representatives from Viet Nam authorities said they would gather information and reply at the next meeting, scheduled for this July.

Kocham President Kim Jai Woo said Viet Nam should further improve its investment environment, especially in the context of ongoing economic difficulties.

According to the head of MPI's Foreign Investment Agency Do Nhat Hoang, Korean businesses up to now have invested a total of $23.93 billion into 3,020 projects in Viet Nam, ranked second after Japan.

The largest investments have gone to the manufacturing sector at 47 per cent, followed by the real estate sector at 28 per cent, construction at 9 per cent and the rest 6 per cent, to retail, hospitality, logistics and showbiz.

HCM City has the largest amount of Korean projects with 822, followed by Ha Noi with 606, Binh Duong, 460 and Dong Nai, 256.

Most of Korea's largest conglomerates already came to Vietnam such as Samsung, Kumho, Huyndai, Posco, LG and Lotte.

Within two decades, bilateral relations between Viet Nam and Korea have achieved remarkable progress. Trade turnover between the two countries, which reached only $500 million in 1992, increased 26 times to $13.7 billion in 2010 and $18.1 billion in 2011.

Binh Duong launches new Thailand-US joint project

The factory for the TBC-Ball Beverage Can Viet Nam Limited Company, a Thai-American joint venture, began operating yesterday in Binh Duong Province.

The US$50 million factory's construction was completed in nine months on eight hectares in the province's Viet Nam – Singapore Industrial Park Expansion area in Tan Uyen District.

The factory is expected to initially supply a total of 850 million beverage cans annually to Viet Nam's market and to other countries in Southeast Asia.

The factory is expected to produce 500 million cans this year, and 750 million next year.

According to initial information from investors, investment funds will be increased by US$10 million in the second phase of the project.

The factory, which is a 50-50 joint venture between US-based Ball Corporation and Berli Jucker of Thailand, is the most energy-efficient and environmentally friendly factory built by either company, according to investors.

Khun Charoen Sirivadhanabhakdi, chairman of the board of directors of Berli Jucker Public Company Limited, and owner of Thai Beverage Can, said the group wanted to expand investment because Viet Nam had a great growth potential.

The Berli Jucker Corporation has more than 1,000 Vietnamese employees.

Securities firms see profit

Up to 22 of the 26 listed securities companies reported profits in the first quarter of this year, led by Sai Gon Securities Inc (SSI) who posted a pre-tax profit of VND205 billion (US$9.8 million) during the period.

On the other end of spectrum, Sacombank Securities Co (SBS) topped the losers with an after-tax loss of VND660 billion ($31.4 million). Last year, it also posted a total loss of VND798 billion ($38 million), lifting its total accumulated loss by the end of March to over VND1.42 trillion ($67.6 million), exceeding its charter capital.

Currently, only SME Securities Co (SME) has yet to submit the quarter financial report.

Company targets earnings

Dien Hong Printing (DHI) targets to achieve VND19 billion (US$904,700) in revenue and a net profit of VND3.4 billion. Dividends this year will probably be paid at 10 per cent.

Meanwhile, last year's revenue reached VND15.6 billion, accounting for only 62 per cent of the previous year's figure, and it posted a loss of VND4.1 billion. Therefore, the management board asked shareholders not to pay dividends for last year.-

Firm to increase capital

Song Hong Construction (ICG) will increase its charter capital from VND200 billion (US$9.5 million) to VND400 billion ($19 million). The decision was made during its recent shareholder meeting. However, the company failed to give a specific time for the increase. Meanwhile, its current charter capital will remain unchanged until the end of this year.

Song Hong aims to earn VND118.3 billion ($5.63 million) in revenue and VND23.4 billion in gross profit this year. Dividends are expected to be paid at 8 per cent.

The major source of company profit is the Kim Lien B4 project, expected to bring about a VND23 billion ($1.09 million) profit.

However, due to the upheavals in the real estate market, Song Hong will reschedule or sell some projects.

Property developer merges

Property developer FLC (FLC) plans to merge with its affiliate FLC Land by issuing 60.18 million shares to swap for 51 million FLC Land shares – equivalent to a 1:1.18 ratio of exchange.

After the merger, FLC's charter capital will increase to VND771.8 billion (US$36.7 million), while total assets reach VND2 trillion.

Accordingly, FLC is said to benefit VND160 billion ($7.6 million) from the sale of the FLC Landmark Tower project.

However, company bank loans after merger will be approximately VND200 billion ($9.5 million).

FLC's shareholder meeting has approved this year's dividend payment at 15 per cent.-

Unqualified auditors to quit ministry

The Ministry of Finance plans to remove the names of several companies from its list of qualified auditing-service companies.

Auditing companies that fail to notify the ministry within one year that they are operating will be taken off the list.

Those that will be removed also include companies that do not have enough conditions to operate, as well as those that do not perform their duties, such as annually reporting their activities and their lists of auditors.

In addition, auditing companies that violate State laws on examinations and inspections will also be removed from the list.

The Finance Ministry posts the list of qualified auditing companies on its website each year.-

Hainan-Cua Lo sea tourism planned

The Nghe An Province People's Committee has revealed that some US and Hong Kong investors wanted to invest in an international high-grade resort and tourism complex in Cua Lo Town.

They also plan to open a sea tourism route from China's Hainan Province to the locality.

The two sides have been discussing implementation of the process.

Capital set to host Indonesian forum

The first Indonesian Trade, Tourism and Investment Forum, with the theme of "Indonesia-Viet Nam: Partnership for Prosperity", will be held in the capital next Monday.

Co-organised by the Indonesian Embassy and the Viet Nam Chamber of Commerce and Industry, the two-day forum would be an excellent opportunity for the two countries to further strengthen bilateral relations.

Restructure economy, says expert

Viet Nam had to dramatically restructure the economy to overcome the ongoing crisis, director of the Viet Nam Economics Institute Tran Dinh Thien said at the opening of the Viet Nam Investment and Banking Conference here yesterday.

Thien, who is a member of the National Monetary Consultancy Council, said the country should restructure a series of sectors, including public investment, the commercial banking system and State-owned businesses and groups.

"I think the Government will strongly regroup State-owned businesses and groups in two or three years as well as set up mechanism to better control the economy," Thien said.

"State-owned enterprises have been given too many priorities and funds, which created huge risks when they failed," he said.

Thien said economists had suggested the Government strictly control State-owned groups. For example, he said there must be a tight ruling to deter the groups from pouring money into fields outside their core lines of business.

In the past, the Government allowed groups to invest 30 per cent of their capital in non-core industries.

The Viet Nam Shipbuilding Industry Group (Vinashin), which widely invested in finance, thermo-power plants, insurance and steel outside shipbuilding, is now heavily indebted.

The two-day conference has drawn more than 200 entrepreneurs and representatives of domestic and foreign banks and finance agencies.