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BUSINESS IN BRIEF 9/6

 Delta urged to stockpile rice to keep price stable; Sugar inventory continues to rise; Convenience shop popularity threatens local supermarkets; Mining companies see licenses revoked; Bentley to open sale agent in Vietnam

Delta urged to stockpile rice to keep price stable

Prime Minister Nguyen Tan Dung has issued a decision asking provinces and major cities in the Mekong Delta to buy and stockpile a million tonnes of rice during the summer-autumn crop from June 15 to July 31.

The move aimed to help farmers control their harvest schedule and prevent prices from falling further, a plan similar to the for the previous winter-spring crop, he said.

He asked the Vietnam Food Association to coordinate with people’s committees to all crate rice purchase quotas for traders in accordance with rice output from each locality, following market prices.

Dealers would be supported with State budget finance, which would fully cover interest rates for bank loans to buy rice within three months from June 15.

The Ministry of Finance and the State Bank of Vietnam were to be responsible for guiding the financial support.

Relevant ministries and agencies were tasked to supervise the rice stockpile and ensure it was conducted efficiently and according to regulations.

The Mekong Delta is expected to reap 9.3 million tonnes of paddy rice, equivalent to around 4.6 million tonnes of milled rice.

Currently, paddy rice sells for 3,800-4.00 VND (0.18 - 0.19 USD) per kilo, down 1,00VND (0.05 USD) from the start of the previous crop.

HCM City banks rethink rate cuts as deposits decline

Money flow into several banks in HCM City has reduced significantly, prompting them to reconsider plans to reduce deposit interest rates so as to keep their customers, industry observers say.

The HCM City General Statistics Office says deposits by city residents were down 5 per cent in May over April.

An official with the State Bank of Viet Nam's branch in HCM City, who declined to be named, also said that city residents' deposits at 14 commercial banks reduced in May after some major banks decided to cut their deposit interest rates.

Banking experts say that although the central bank's deposit interest rate cap remains unchanged, some major commercial banks have cut their rates significantly so that they can further slash their lending interest rates and increase credit growth rates, helping troubled enterprises.

The reduction in deposit interest rates has made many people hesitate about keeping their savings with the banks.

Some banks saw a reduction in deposits despite keeping their interest rates unchanged because many people withdrew their money expecting it to go down further. They invested their savings instead in gold and securities.

"Banks should not lower their deposit interest rates in order to lower their lending interest rates whenever companies complain about borrowing costs. Capital mobilisation becomes difficult if the deposit interest rates are reduce to a very low level," said a senior official of a commercial bank in the city.

Economist Le Dang Doanh, former head of the Central Institute of Economic Management, also said that while lowering the deposit interest rates was necessary to reduce the lending rate, a too strong reduction in the former would push depositors to withdraw their funds and invest elsewhere.

A steep cut in deposit interest rates can also impact the foreign exchange rate if the Vietnamese dong were to depreciate further, he said.

To help enterprises settle their capital-related problems, banks can be proactive in reducing lending rates without resorting to lowering deposit interest rates, said Dr. Vu Viet Ngoan, chairman of the Financial Supervisory Committee.

Cao Sy Kiem, member of the National Monetary and Financial Policy Advisory Council, said that the current gap between lending and deposit interest rates was still large at 4-5 per cent, so the former could still be lowered by 1-2 per cent without reducing the latter.

Sugar inventory continues to rise

Sugar inventories increased to nearly 600,000 tonnes by the end of May, about 222,410 tonnes higher than in the same period last year.

The figures were made known by the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade.

The ministry said that the sugar stock had been increasing since March because of slow consumption and excess supply from sugar processing plants. Output far exceeded that of previous years.

Sugar plants across the country processed more than 15.8 million tonnes of sugarcane to turn out nearly 1.5 million tonnes of sugar, even though domestic sugar consumption is only 100,000 tonnes a month.

The next sugarcane crop will bring in 200,000 tonnes of processed sugar by October, not taking into account smuggled sugar coming in from Thailand.

US trade ties get a boost

Vietnamese Ambassador to the US Nguyen Quoc Cuong toured the states of Illinois and Missouri to seek support for Viet Nam-US economic and trade ties on Tuesday.

The diplomat delivered a speech at a plenary session of the Illinois House of Representatives highlighting the bright prospects of Viet Nam-US relations in economics, trade and investment as the two joined negotiations for the Trans-Pacific Strategic Economic Partnership Agreement (TPP).

The ambassador also met with the mayors of Columbia and Springfield and the chairman of the Illinois Chamber of Commerce.

Addressing the Viet Nam – Missouri Business Forum, Cuong briefed Missouri businesspeople on Viet Nam's socio-economic development and policies to attract foreign investment, especially in high technology, biotechnology and human resources.

MobiFone sets up info line

MobiFone has set up an information service in five languages (English, Chinese, South Korean, Japanese and Khmer).

Customers can call 9393 to find out about service package registration, 3G services, guidelines for international calls and messaging services, buying and registering SIM cards and payment methods using international cards.

Convenience shop popularity threatens local supermarkets

Convenience shops in HCM City are giving traditional markets and even supermarkets a run for their money as they become more popular with local residents.

Le Ngoc Dao, deputy director of the city's Department of the Industry and Trade, told online newspaper VnExpress.net that convenience shops had many advantages including clearly stated labels on the origin of food and products, a top consumer concern.

Their prime locations, often near local areas or industrial and processing zones, have also contributed to their popularity.

Because of the proximity to their homes or jobs, many customers say the shops help them save money and time. In addition, a diversity of goods can be found at the shops.

The shops are especially useful in rainy weather and on days of high tides when roads may be flooded, according to a resident in District 7.

Dao said the shops also offer vehicle parking, are cleaner than traditional markets, and require no bargaining. Some of them deliver goods to customers' doors.

To investors, convenience shops have been a good choice in time of recession.

A trader at one supermarket, who spoke on condition of anonymity, conceded that a supermarket could bring high profits, but noted that the initial investment of about VND50 billion (US$2.3 million) was high, and that profits came only five years after opening.

In contrast, it takes only VND2-4 billion ($95,000-190,000) to open a convenience shop, and profits come after only one year.

Dao said that HCM City authorities were encouraging companies to develop convenience shops in rural areas, and limit their development in the city centre.

She said the city was also developing standards for these kind of shops, and would submit the guidelines to the Ministry of Industry and Trade for approval.

She said that one of the standards would possibly require that each shop be at least 150sq.m and sell about 2,000 products.

Products sold at convenience stores vary from shop to shop.

Currently, HCM City has about 475 convenience shops, including brands like Family Mart, B&B, Circle K, Day–Night and New Cho.

About 40 companies have invested in these shops, which are relatively new to the country. Seventy to 80 per cent of products sold at the shops are made in Viet Nam.

Mining companies see licenses revoked

Authorities in the Central Highlands province of Lam Dong yesterday decided to revoke 32 expired mining licences in Lam Ha and Lac Duong districts.

The sites have been mostly used to exploit sand, clay and building stone.

The mine owners have been reminded to restore the environment in the exploited areas.

Agencies plan to reassess petrol stations

Officials from the Industry and Trade Ministry said yesterday that petrol stations would see tightened regulation and those not meeting regulations would have their business licenses revoked.

The Ministry organised an emergency meeting with the media in the aftermath of a fire that broke out at a Tran Hung Dao Street petrol station on Monday and lasted for five hours.

Media reports circulated about petrol stations on National Highway 20 bribing traffic police in Dong Nai and Lam Dong provinces, as well as illegal trading and mixing substandard petrol in Quang Ninh Province.

As for the Tran Hung Dao petrol station, the ministry said Ha Noi had removed it from the list of public/commercial petrol stations in 2012. This means the station was not allowed to sell petrol to the public and could only sell petrol to military compacanies and units.

The Ministry asked relevant agencies to reassess petrol stations, especially those located near storage facilities, ports and major transportation routes.

Market watch offices would step up fines for petrol stations that reportedly received bribes from drivers who violated traffic laws.

Ha Noi has about 50 petrol stations that are not included in the city development plan.

Vietnam selects reliable exporters

The Ministry of Industry and Trade has just announced a list of 307 reliable Vietnamese exporters for the 2012-2013 period.

The selection is an annual event initiated by the ministry since 2004. It aims to promote Vietnamese exporters to foreigner partners.

Selected enterprises for the 2012-2013 period needed to meet several criteria, including having direct export operations, being profitable between 2011 and 2012, strictly completing contracts with foreign partners, fulfilling their tax payments and meeting export revenue quotas set for their industries.

The country’s two major export industries of rice and seafood took the lead for having 45 selected enterprises each; followed by garment and textile industry with 37 and the rubber industry with 34.

Other selected exporters included fruits and vegetables with 20, tea and cashew nuts with 16 each, coffee with 14 and pepper with 12.

Mobile phone and related spare parts; handbags, backpacks, purses, hats and umbrellas; and glass and glass products had two selected exporters.

Apartment service fees surge

The Ha Noi People's Committee has approved new rates for services in apartment buildings. The minimum rate is fixed at VND800,000 (US$38) per 100sq. m and the maximum rate for the same area is VND1.65 million ($79).

This rate, four times higher than the previous one, applies only to buildings with elevators. For those with only staircases, the rates will be VND450,000 and VND500,000 per 100sq. m.

The service prices exclude extra services like swimming pools, tennis courts and saunas.

The new regulation takes effect this month and is valid until next May.

The committee also said that any buildings that receive revenue from providing services within the building complex must decrease their service prices. The management board of each building will set the price for the building. If this causes disputes between managers and households, district People's Committees will settle them, the committee said in Decree 3431/QD-UBND, issued last week.

The new rates were based on a survey by the city's Construction Department. However, some people still objected to the increase.

Chu Huong, a resident of Trung Yen Building in Tu Liem District, said she was surprised to read about the increase.

"I currently pay VND150,000 ($7.2) per month. If the rate is applied, I will have to pay VND400,000-500,000 ($19-24) for the same services. It's unreasonable," Huong said.

Nguyen Ha, 45, a resident of the Keangnam building, said his apartment building already applied a service rate of VND1.65 million per 100sq.m, so the new regulation had no affect on him or his neighbours.

"Residents of Keangnam have already paid the highest rate for several years," Ha said. "We asked the building management board to lower the price but they said they could not." The price depended on the building's investors, he said, so the regulation only served as a reference point for residents.

Bentley to open sale agent in Vietnam

British car brand Bentley plans to set up a sale agent in Vietnam thanks to the growing number of luxury cars in the Southeast Asian country.

The official distributer of Bentley in Vietnam also represents of Lamborghini supercar in the Vietnamese market.

The presence of Bentley sale agent in Vietnam will offer a comprehensive service for local buyers.

Bentley is the most popular luxury car brand in Vietnam with a variety of designs and versions, ranging from Arnage R Mulliner 2007 to GT Speed.

The average price for Bentley cars in Europe is around US$300.000.

TPP challenges to garment sector

Domestic garment makers will have to meet the “Yarn Forward” Rule of Origin of the Trans-Pacific Partnership (TPP) Agreement if they want to enjoy tax preferences.

The rule requires the TPP nation to use a TPP member-produced yarn in textiles in order to receive duty-free access.

This rule will exert a big impact on Vietnam’s garment sector as 90% of garment accessories are imported, mostly from non-TPP countries, experts said at a workshop in Tien Giang province on June 7.

To achieve future steady growth, they said the garment sector needs to develop the support industry to produce materials to replace imports.

It needs to upgrade the design industry and narrow down outsourcing to increase the localization rate, and reduce imports, production costs, and dependence on overseas partners.

Experts suggested that the government renew the national garment development strategy by introducing new policies for garments and re-planning industrial parks designed for the garment sector, especially textile and dyeing.

Local businesses were advised to develop supply chain networks to export markets, particularly the US, improve the added value of garments, and exploit the domestic market.

Garments are one of Vietnam’s leading hard currency earners. Last year, they generated nearly US$20 billion in revenue, including US$17 billion from exports. The US accounted for half of the total, followed by European countries, Japan and the Republic of Korea.

UK Minister’s visit boosts trade ties

UK Minister of Trade and Investment Lord Green will visit Vietnam next week to strengthen UK-Vietnam trade and investment ties, according to the British Embassy in Hanoi.

During his visit, Lord Green will discuss ways in which the UK can support urban development plans in Ho Chi Minh City, including work on an urban railway system, the new Thu Thiem Central Business District and Long Thanh international hub airport.

He will share experience in rejuvenating inner city areas in the UK over the years, offering great ideas and examples of how urban development can transform places and lives.

Lord Green’s visit will also be a chance to share the UK’s experience in successfully delivering the London 2012 Olympics and Para-Olympics - the world’s largest sporting events - with the Vietnamese Government as they prepare for the 2019 Asian Games (ASIAD).

The embassy quoted Ambassador Antony Stokes, saying “We set ourselves ambitious targets to boost trade and investment under the 2010 Strategic Partnership Agreement. Now in the 40th year of Vietnam – UK diplomatic relations, this high level visit will stimulate further growth and support flagship commercial projects.”

The UK and Vietnam committed to increasing bilateral trade as part of their Strategic Partnership Agreement and Lord Green will have the chance to discuss with Vietnamese officials and British businesses how this already good relationship can be further enhanced.

In Hanoi, Lord Green is scheduled to meet with Prime Minister Nguyen Tan Dung and hold working sessions with the Ministry of Industry and Trade and the Ministry of Culture, Sports and Tourism. He will witness the signing of an agreement for a UK-funded project “Enhancing the effectiveness of intellectual property rights enforcement in Vietnam”.

While in HCM City, he will chair a roundtable discussion with local administration officials and witness the signing of two Memorandums of Understanding by the British Business Group Vietnam and the UK’s Child Exploitation and Online Protection Centre and the Council of British Chambers of Commerce in Europe.  

Vietnam pursues growth model transformations

Vietnam and other representatives of the Forum for East Asia-Latin America Cooperation (FEALAC) shared experience in transforming the growth model in Hanoi on June 6.

Despite maintaining remarkable growth in the wake of the global financial crisis, some East Asian and Latin American countries still face immediate and long-term,challenges that require renewing their models for sustainable development.

The Ministry of Foreign Affairs’ Economic Department said the potential for economic restructuring and growth model cooperation between Vietnam and FEALAC member nations is huge.

Multilateral ties between Vietnam and FEALAC’s members have gradually strengthened, with some even developing into strategic partnerships.

Several Latin American countries have joined  China, Japan, the Republic of Korea, and ASEAN members in representing Vietnam’s leading trading partners and major sources of foreign direct investment (FDI).

Vietnam and its Latin American partners have established a cooperative framework comprising mechanisms for inter-governmental committee and business coordination, trade agreements, and trade, investment, and finance treaties.

Vietnam can learn from FEALAC’s comparatively successful response to the 2008–2009 global economic recession while it can share its Doi Moi (Renewal) experiences over the past 27 years

After two years of economic restructuring,Vietnam has secured macroeconomic stability, reducing inflation to under 7 percent in 2012 and continuing to keep it in check in 2013..

FEALAC members need to expand multilateral cooperation in a manner that takes advantage of individual countries’ strengths.

Chilean Ambassador to Vietnam Fernando Urrutia emphasised the importance of Southeast Asian and Latin American regional cooperation on sustainable development. But the idiosyncrasies of what specific countries require must all be taken into consideration.

A transparent multilateral system facilitating experience exchanges and coordinating responses to pressing concerns can only assist sustainable development.

Members should open their markets, share information, and transfer technology.

Venezuelan Ambassador to Vietnam Jorge Rondon Uzcategui said the economic and financial difficulties besieging industrialized countries force emerging nations to reinforce their friendships, prioritise multi-faceted cooperation, and use their individual resources in a manner that benefits general development.

In this context, regional organisations promoting international integration should be more active in encouraging business cooperation, he said..

FEALAC member countries’ socio-economic development successes demonstrate dynamic and reliable growth is possible without falling prey to the middle income trap.

The recent international economic turmoil is a stark reminder that historically successful growth models are not sure bets and must be updated, tailored, or even dispensed with if found to be unsuitable in a rapidly changing world.

Businesses capitalize on China fair

Vietnamese businesses now consider the annual China Kunming Import and Export Fair as one of the year’s most important, says Vietnamese Deputy Prime Minister Vu Van Ninh.

Ninh made the acknowledgement at a June 6 ceremony opening the first China-South Asia Expo and the 21st China Kunming Import and Export Fair in Yunnan province.

The Chinese Government authorised Yunnan’sconcurrent China-South Asia Expo in an effort to tighten economic and trade cooperation between China and its regional neighbours.

Ninh noted that the economic and trade ties between Vietnam and China have grown and flourished over the years. China remains Vietnam’s leading trading partner, with two-way trade value reaching US$41.1 billion last year, up 15.2 percent against 2011’s figure.

Both sides have actively promoted Vietnam-based investment cooperation in thermal power plants, industrial works, and infrastructure construction.

They have also speeded up joint cooperation projects along the Vietnam-China economic corridor.

He stressed that the trade ties between their localities have developed remarkably, with the value exceeding US$1 billion last year.

Vietnamese businesses used more than 180 exhibition pavilions to display products spanning fine arts and handicrafts, foodstuffs, beverages, and footwear.

The Deputy PM affirmed the importance of the China-South Asia Expo and China Kunming Import and Export Fair, saying their promotional activities contribute to strengthening economic and trade relationships between Vietnam, South Asian nations, and China in general, and Vietnamese provinces and Yunnan in particular.

The event will run through to June 10.

Phu My Fertiliser granted licence in Myanmar

Phu My Fertiliser (listed on the HCM City Stock Exchange as DPM) received approval from Myanmar authorities to open a representative office in Yangon.

DPM plans to work with its partners in Myanmar to boost exports and trade promotion programmes between the two countries.

Myanmar's demand for fertiliser was currently around 1.5 million tonnes per year and would increase in the future, DPM stated.-

Bao Viet promises over $48.5 million in dividends

Financial and insurance group Bao Viet (BVH) pledged to pay dividends of 15 per cent with a total value of up to VND1.02 trillion (US$48.5 million).

The last day for registration will be June 17 and dividends will be distributed on July 17.

The Ministry of Finance will enjoy more than VND720 billion ($34.2 million) of dividends as the ministry holds almost 71 per cent in the group.

Vingroup sells Vincom Centre for $470 million

Vingroup has sold Vincom Centre ‘A' for US$ 470 million to the Viet Nam Infrastructure and Property Development Group (VIPD).

Under the deal, Vingroup transferred its entire capital in Future Company, one of its members, which owns Vincom Centre ‘A' in the most central area of HCM City. Vincom Centre is a high-end real-estate complex with 15 floors containing a shopping centre and a five-star luxury hotel.

Credit Suisse buys 13.64% of Hoang Anh Gia Lai

Credit Suisse (Hong Kong) Limited announced it had purchased over 73.3 million shares of property developer Hoang Anh Gia Lai (HAG).

The deal was for the purpose of hedging transactions it had entered into with its off-shore clients, the business said earlier this week.

The amount of shares/fund certificates held by Credit Suisse Hong Kong after the transaction is equal to 13.64 per cent of Hoang Anh Gia Lai's outstanding shares.

It made Credit Suisse the second-largest shareholder after Doan Nguyen Duc, the Vietnamese company's chairman.

Before the transaction, the investor held only 12 per cent of HAG shares.

VietJetAir unveils two new Airbus planes

VietJetAir early this week added two new Airbus A320-200 aircraft to its fleet to meet the growing demand in the peak season.

The two new aircraft will help VietJetAir schedule 1,600 flights over the summer. The airline plans to expand its domestic network and add more international routes later this year.

The carrier has also inked a deal with Airbus to utilise the company's "Sharklet" technology – a special wing-tip device that allows the new Airbus A320 to fly faster and save on fuel costs.-

Best brands to be honoured with Gold Star Award

Top Viet Nam brands, singled out for quality and efficiency of operations as well as a high sense of social responsibility, will be honoured with the Gold Star Award.

The awards ceremony will be held in Ha Noi on September 2, the Central Committee of the Viet Nam Youth Federation and the Viet Nam Young Entrepreneurs Association announced on Tuesday.

The award will be given to outstanding members of the business community in cities and provinces across the country, leading brands in specific sectors and major products that have an impact on the national competitive capacity.

TienPhong Bank allowed to trade new types of bonds

TienPhong Joint Stock Commercial Bank (TienPhong Bank) got approval from the State Bank of Viet Nam (SBV) to trade government and corporate bonds on the domestic market on Tuesday.

TienPhong Bank was set up by three major shareholders: FPT Corporation, Mobifone and Viet Nam National Reinsurance Corporation (Vinare). DOJI Gold and Gemstone Group is currently also a major shareholder.

Thai Nguyen targets $4-5 billion in FDI

The northern province of Thai Nguyen has set a target of attracting up to US$5 billion in foreign direct investment (FDI) this year.

The announcement was made by provincial People's Committee chairman Duong Ngoc Long.

This amount of FDI would help the province better ensure its socio-economic development growth against a backdrop of decreasing capital from domestic investors, Long said.

In order to achieve the ambitious goal, provincial authorities will focus on speeding up administrative reform, perfecting infrastructure and developing industrial zones to provide foreign investors with adequate "fresh land" as well as improving quality of human resources, Long declared.

Statistics from the provincial Department of Planning and Investment showed that more than 100 organisations and businesses have come to survey the investment and business environment here.

About 10 domestic and foreign businesses and organisations visited the province in the first quarter of this year.

Earlier in March, the South Korean Samsung Group began the construction of a $3.2 billion high-tech complex in the province.

When completed, the area will house Samsung's largest mobile phone factory, which is expected to provide jobs for thousands of local people.

It will also contribute tens of billions of dollars to the country's annual export turnover, while boosting the development of the electronics support industry in the northern region of Viet Nam.

Recently, six projects providing components for the complex have been licensed with capital totalling $100 million.

Used car import taxes rise again

The Government has hiked import taxes on used cars for the second time in three months following a circular released by the Prime Minister.

Cars of nine seats or fewer and an engine displacement of less than 1,000cc will see import tariffs rise by US$800 to $5,000 by June 26.

Meanwhile, used cars with a cylinder capacity of between 1,000-1,500cc will see taxes lifted to $10,000.

The previous hike in April saw the tariffs lifted significantly to $4,200 and $9,600 respectively.

According to the Ministry of Finance, the latest adjustment will narrow the gap between import tax on used cars and brand new cars, especially in the compact car division.

In March, Deputy Prime Minister Hoang Trung Hai asked the Ministry of Finance to review the import tax on used cars in a bid to restrain importers from disguising brand new vehicles as old ones in order to avoid higher tax rates.

It followed a proposal from local automaker Thaco Group, who reported that companies were fraudulently importing cars with small engines to fall into the lowest tax bracket.

According to recent regulations, in order to be defined as second-hand, used cars must have been registered in a foreign country for at least six months before being exported to Viet Nam and they must have a minimum mileage of 10,000km.

Thaco claimed that many importers disguised brand new cars as used ones by adjusting the mileage counters to over 10,000km and changing import documentation, allowing them to avoid the 70 per cent tax imposed on new cars.

Kia Morning cars assembled by Thaco in Viet Nam bear a $4,500 special consumption tax plus $2,500 of import tax for parts and accessories.

"That means fraud is resulting in unfair competition between imported cars and locally assembled cars, especially of the brand that we are assembling," said Thaco's CEO Tran Ba Duong.

Viet Nam imported 4,000 cars worth $60 million in May, bringing the total car imports in the first five months of the year to 14,000 units, worth $247 million, according the General Office of Statistics.

The January-May imports represented a year-on-year increase of 13 per cent in import volume and 3.5 per cent in value, the office said.

Car importers and traders said the April 1 cut in registration fees had encouraged buyers, along with the loosened credits for automobiles.

According to the Ministry of Finance, Viet Nam imported 27,000 cars in 2012, down 50 per cent year-on-year.

US anti-subsidy tax on Vietnamese shrimp unreasonable

Shrimp export companies have raised objection against a preliminary decision by the US Department of Commerce (DOC) to impose anti-subsidy tax of upto 5.08-7.05 percent on warm water shrimps from Vietnam, calling it unfair and unreasonable.

According to the DOC preliminary decision, Minh Phu Company and Nha Trang Seafood Company will have to suffer tax of 5.08 percent and 7.05 percent respectively for receiving subsidies from the Vietnamese Government. The rate will be 6.07 percent for other companies in the country.

The Vietnam Association of Seafood Exporters and Producers (VASEP) said that it is unfair because Vietnamese businesses have not received subsidies from the Government for the last several years.

The decision will directly affect the lives of 600,000 breeders together with workers at shrimp processing plants.

Le Van Quang, chairman of the Minh Phu Company, said that the high tax imposed will cause losses for them, especially at a time when exports are facing a lot of difficulties.

He said that shrimp companies have been self-motivated in their operations and do not receive subsidies from the State.

The People’s Committee in the Mekong Delta province of Ca Mau said that shrimp farming and export is backbone of the province. They are targeting US$1 billion in shrimp export turnover this year.

The US market plays an important role in shrimp exports from this region. As a result, tax increase will cause much difficulty for businesses and breeders.

Ca Mau authorities will coordinate with related ministries, departments, VASEP and businesses to prove the above preliminary decision irrational.

DOC is expected to give their final decision on the anti-subsidy tax on August 10.

VASEP and authorized organs are also working with lawyers to minimize the tax rate.

Businesses said that some policies have been proposed to assist shrimp breeders, who have been badly hit by diseases. For instance, a hectare of dead shrimp will be assisted with VND20 million (US$953).

Some preferential policies to boost shrimp processing and breeding have been announced but are still on paper. In fact, none of them have enjoyed any preferential policies.

Vo Hong Ngoan, a shrimp breeder in Vinh Trach Dong Commune in Bac Lieu City, said that they are stricken due to consecutive diseases which have killed hundreds of hectares of shrimps for the last two years.

Several of them do not dare to continue farming because the diseases have still not been curbed.

Ngoan said that they need authorized organs to help control the diseases in breeding shrimps and provide chemicals to sterilize the environment to prevent further damage.

DOC’s final decision has not been given but shrimp prices have dropped by VND2,000-5,000 a kilogram in the Mekong Delta compared to the time before DOC announced their preliminary decision.

VietinBank sues Vung Ro port operator for debt delay

The branch of Vietnam Joint Stock Commercial Bank for Industry (VietinBank) in Phu Yen Province has petitioned the provincial authorities to sue Vung Ro Port Limited Company for its delay in repaying VND13.7 billion (USD652,380) in debts.

According to the petition, the branch has requested the company to pay its debt, including both the principal sum and interest. The firm pledged to use the loan between 2011 and 2012, however, it failed to repay the debt on schedule.

The People’s Court of Tuy Hoa City said that they were dealing with the case.

The deadline for Vung Ro Port Company’s debt settlement is July 25 this year. If it fails to meet the deadline VietinBank Phu Yen will ask the court to sell the company’s collateral that it put up for getting the loan.

Earlier, the Phu Yen People’s Committee decided to suspend Nguyen Minh, director of the company for actions that had led to huge losses to the firm.

To have business capital, Minh had used the state-owned capital as collateral to get a VND300-billion loan from two commercial banks without seeking approval from the provincial People’s Committee.

Inspections also showed unusual signs in co-operation between the company and Dai Loc Production and Trading Ltd. Company in Binh Duong Province, including the transfer of the state-owned capital for Dai Loc.

Between 2008 and 2012, Vung Ro owed VND54 billion to Dai Loc, but later, it gave Dai Loc VND107.6 billion, offering a chance for it to appropriate the state-owned capital for its business activities. Dai Loc now still owes VND50 billion to Vung Ro, but since become insolvent.

The local People’s Committee has requested Minh to revoke the debt owed by Dai Loc no later than July 13. If Minh fails to do this, the committee will send the case to the police for criminal proceedings.

Dung Quat EZ targets US$12 billion of fresh FDI

Dung Quat Economic Zone (EZ) seeks to lure over US$12 billion from now to 2015, according to Quang Ngai Province at an investment promotion conference held in HCMC on Wednesday.

Pham Nhu So, vice chairman of the provincial government, informed 111 projects had obtained investment certificates for development in the economic zone, with total pledged capital of over US$8.5 billion, of which US$5 billion had been realized.

The province sets a high target for investment in Dung Quat EZ, regardless of the falling foreign direct investment (FDI) inflow, because many large-scale projects are being promoted for implementation in this zone, he said.

For example, the project for expansion of Dung Quat Oil Refinery with its capacity raised from 6.5 million to 10 million tons per year is being promoted by the owner Binh Son Oil Refinery and Petrochemical Company. Such a project should cost billions of U.S. dollars, said So, who is also head of the Dung Quat EZ Authority.

Earlier, Binh Son estimated the cost of this project would be around US$2 billion.

In addition, a steel plant with a capacity of seven million tons a year costing about US$4.5 billion will be deployed soon by JFE Steel of Japan.

Other major projects include an Indian-invested pulp mill with an annual capacity of 150,000 tons and a 1,200-MW thermal power plant worth some US$2 billion invested by Sembcorp of Singapore, the last named having been awarded a license last week during Prime Minister Nguyen Tan Dung’s visit.

Vietnam-Singapore Industrial Park Joint Venture Co. (VSIP) is developing the urban, industrial and service complex VSIP Quang Ngai, assisting the province in investment attraction.

VSIP Quang Ngai will cover more than 1,700 hectares, including 600 hectares of industrial space in Dung Quat EZ to be developed in the first phase.

Enterprises renting workshops in this area will enjoy corporate income tax exemptions in the first four years and 50% tax reductions in the following nine years.

VSIP Quang Ngai will attract such industries as food-beverage, fast-moving consumer goods, electronic parts assembly and others serving the gas & oil and chemicals sectors.

The Government has put Dung Quat EZ in the list of six key EZs with priority to receive investment funds. Therefore, the province’s infrastructure will be improved in order to attract investors.

With the nod from the Prime Minister, Dung Quat EZ will be expanded by four times to become a multi-sector EZ rather than focusing on only heavy industries. The expansion will offer more job opportunities for local workers as well as those in nearby provinces, said So.

In addition to incentives offered by the Government, the province has prepared cleared sites to lure domestic and foreign investors. Quang Ngai is striving to become a modern industrial province by 2020, said Cao Khoa, chairman of the province.

So far, Quang Ngai has licensed 282 projects with total registered capital of VND192 trillion, including 22 FDI projects worth nearly US$4 billion.

Monetary policy needs focuses: IMF

Experts from the International Monetary Fund (IMF) have suggested the State Bank of Vietnam (SBV) simplify monetary policy targets and stay focused.

Monetary policy should be oriented toward ensuring a low and stable inflation rate, the experts said in one of their conclusions made after an IMF delegation visited Vietnam in late April.

If such policy was in place, it would guarantee an environment with a higher level of predictability, which in turn allows companies and household businesses to easily make plans for investment, employment, saving and spending, they said.

They noted low inflation will benefit the poor and the elderly on limited and fixed incomes.

Vietnam’s monetary policy has long been designed for multiple goals at a time, such as economic growth stimulus, exchange rate stabilization and inflation control. Nonetheless, these goals contradict one another, thus failing to produce expected results, according to the IMF mission.

For example, the flexible monetary policy through rapid credit expansion can stimulate the economy to grow but it also leads to costs and inflation surging.

Vietnamese policymakers are actually facing challenges in many areas. The greatest of them, they said, is the need to protect the economy from economic and financial volatility and improve growth potentials to become an emerging economy.

The economy needs to map out strong strategies and make great efforts to successfully solve those challenges, they said, adding the policy should be aimed at curbing inflation, boosting foreign reserves and maintaining fiscal discipline through gradual budget deficit reductions.

The restructuring of the banking system and State-owned enterprises should be accelerated to minimize the impact of economic volatility and bring the economy back on the path of high, healthy and sustainable growth.

IMF proposed the SBV gradually eradicate direct controls on the banking system, such as setting interest rate caps and credit growth quotas, and using short-term interest rates to send policy signals to the market.

To enhance effects of policy signals and improve results, the central bank should give its viewpoint on the economy and explain the foundation for policy making. Clear and effective communication will direct the market to take the path the policy wants.

The Government and SBV should continue to strengthen and restore the banking system, and restructure State-owned enterprises to improve their operational efficacy. These two objectives are closely related because State-owned enterprises play an important role in the economy and are big clients of banks, partly responsible for the current bad debt situation, according to IMF.

Moreover, the central bank should further perfect its management and inspections to keep bad debt from arising in the future.

In the coming time, SBV will cope with the pressure of further easing monetary policy and in the context of high inflationary pressure and weak credit, interest rate cuts will bring modest effects while risk of inflation remains considerable, says IMF.

Manufacturing PMI falls back into contraction

The seasonally adjusted Vietnam Manufacturing Purchasing Managers’ Index (PMI) published by HSBC on Monday posted below the neutral 50.0 mark for the first time since February.

The index went down to 48.8 from 51.0 in April, as May saw levels of output, new orders and employment of the Vietnam manufacturing sector all slip back into contraction following modest gains in the previous two months.

The Vietnam Manufacturing PMI unveils data collected from monthly surveys on operating conditions in the local manufacturing sector. The reading above 50.0 points to improvement in business conditions, while that below 50.0 indicates a decline.

More than a quarter of respondents reported lower output levels in May due to the drop in new order intakes. Some ascribed falling output volumes to their intention to reduce inventory holdings.

The domestic market remained the main drag on manufacturing performance, whereas levels of new export business continued their modest recovery. New export order inflows have now improved in each of the past three months, with the latest rate of growth the quickest since April 2012.

Trinh Nguyen, Asia Economist at HSBC, remarked: “Vietnam’s economic recovery process is very fragile and continues to be dragged down by lackluster domestic demand.”

“Unless the issue of bad debt in the financial system is resolved, low appetite for consumption and investment will continue to weigh on Vietnam’s growth potential,” she stated.

In May, job losses were reported for the second time in four months, as companies maintained a cautious approach to hiring. As well as subdued demand, companies linked the cut in payroll numbers to cost control initiatives.

This also played a role in purchasing and stock-holding decisions, leading to lower levels of both pre- and post-production inventories and a modest scaling back of input buying volumes.

“The contraction of employment and output in the manufacturing sector is representative of overall economic activity in Vietnam,” said Trinh Nguyen. She added that “improved external demand in the U.S. provides some buffer but the still-weak global manufacturing data suggests that external headwinds are strong.”

On the price front, May data signaled that inflationary pressure remained relatively mild in the manufacturing sector. Although average input costs increased for the fifth successive month, the rate of inflation was the weakest during that sequence.

Average output charges, meanwhile, were broadly unchanged last month, as competitive pressures stifled the pricing power of manufacturers. The vast majority of companies (almost 84%) reported no change in factory gate prices.

As per the May survey, there remained a degree of available capacity at both manufacturers and their suppliers. Because of weaker new order inflows, backlogs of work at Vietnam manufacturers contracted at one of the sharpest rates in the survey history.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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