VNA, Rolls-Royce in talks over aircraft engine deal

Vietnam Airlines (VNA) and Rolls-Royce are in talks over the national flag carrier’s plan to buy engines for 14 Airbus A350 aircraft, heard a meeting on Thursday between the Ministry of Transport and Rolls-Royce CEO John Rishton.

At the meeting, the transport ministry also mentioned VNA’s plan to purchase engines for 19 Boeing 787 aircraft and invited Rolls-Royce to join the bidding.

Rishton expressed interest in this plan, describing it as a good chance for Rolls-Royce to cement ties with VNA and Vietnam as a whole.

Many aircraft of the air carrier are currently powered by Rolls-Royce engines.

Aircraft engines made by Rolls-Royce have high reliability and reasonable operating cost. Rolls-Royce often ensures prompt delivery of necessary equipment for aircraft maintenance and repair, said the transport ministry.

Rolls-Royce is a world leader in aircraft engine manufacturing, having supplied engines to over 300 air carriers and 4,000 civil aviation firms.

Vietnam attends Sri Lankan trade show

Six Vietnamese exhibits taking part in the Sri Lankan Home & You Exhibition in Colombo from July 5-7 have drawn special attention from local visitors.

The stands, jointly organised by the Vietnamese embassy and Vietnamese companies, introduced  beautiful images of Vietnamese land, people, culture and tourism as well as the country’s lacquer paintings and souvenirs.

The exhibition attracted 200 stands featuring building materials, timber and agricultural goods, electronic products, handicrafts, gifts, toys, clothes, footwear, home appliances and food from domestic and international businesses.

On the sideline of the event, the Vietnamese Embassy on July 5 held a get-together with a number of Vietnamese businesses and their 50 Sri Lankan partners to seek cooperation opportunities..

Trade counselor Phung Trong Tuan praised Vietnamese enterprises’ participation as a contribution to strengthening bilateral economic and trade ties.

Dealing with trade lawsuits

Despite enjoying impressive export growth over the past five years, Vietnam has been hindered by trade barriers like anti-dumping and anti-subsidy measures imposed by a number of import customers.

According to the Ministry of Industry and Trade’s (MoIT) Competition Authority, trade lawsuits arise from both export growth and economic slowdown.

Vietnam’s ongoing international economic integration means a proactive approach to these disputes is the best option.

The widespread financial and economic crisis has forced down the purchasing power of Vietnam’s key export markets. The fall has inspired some to adopt protective policies designed to shelter their domestic industries.

Vietnam’s key export commodities are employing relatively basic technology with little added value, such as seafood, garments and textiles, footwear, and wood and timber furniture.The success of these commodities is fuelled by low labour costs and the country’s natural advantages.

Price competition has increased the risk of anti-dumping lawsuits. A number of Vietnamese businesses have even engaged in contract price wars with each other, hurting exports more generally and creating more lawsuits.

The Competition Authority says Vietnam’s World Trade Organisation (WTO) comittments mean it must accept its designation as a non-market economy until 2018. The designation disadvantages Vietnamese businesses, as foreign trade investigation agencies use third-hand cost and price statistics instead of using Vietnam’s  own figures to calculate dumping margins.

These calculations often reveal anti-dumping ranges as much higher than the real prices of Vietnamese products, prompting domestic producers in importing countries to file legal challenges.

The MoIT admits that despite the great efforts of exporters and business support units, Vietnamese business capacity for coping with anti-dumping lawsuits remains limited.

Insufficient legal knowledge and anti-dumping regulation misunderstandings exacerbate the problem.

Anti-dumping lawsuits over shrimp, catfish, and leather & footwear exports indicate a rising trend threatening huge losses for Vietnamese businesses already under considerable stress.

The Competition Authority argues that apart from improving their competitiveness, domestic businesses should keep their basic anti-dumping knowledge as up to date as possible, standardise their  accounts, and preserve all data as evidence that could refute any dumping allegations.

Particular attention should be given to market solutions, such as shifting competition by price to competition by quality and diversifying both products and markets.

Vietnam Chamber of Commerce and Industry (VCCI) Vice Chairman Hoang Van Dung warns the number of business disputes will only rise as Vietnam’s international integration proceeds. Arbitration-based dispute settlement is a better option.

Vietnam International Arbitration Centre (VIAC) Chairman Tran Huu Huynh says international arbitration permits disputing parties to specify the organisation serving as arbitrator, the place of arbitration, and the language in which arbitration is undertaken.

Both national and international laws can be employed to settle disputes. The final verdicts issued by arbitrators are recognised and valid in nearly 150 nations.

A concurring Competition Authority representative notes Japanese experiences demonstrate the importance of hiring qualified trade lawyers before initiating any legal action.

New cotton plant will aid garments sector

Work on construction of the Phu Hung cotton plant will start in the central province of Thua Thien-Hue 's Phu Bai Industrial Park this month.

With a total investment of US$12 million, the plant is expected to be put into commercial operation in August next year with an annual capacity of 21,600 spools.

Once completed, the plant will generate jobs for 200 workers and produce 100 percent cotton yarn with average output of 240 tonnes per month.

The development strategy for the garment industry has been approved by the Prime Minister and the Ministry of Industry and Trade for the Central Region, including Quang Nam, Da Nang and Thua Thien-Hue, according to the Vietnam National Textile and Garment Group (Vinatex).

The region is the manufacturing centre of the country's textile industry, and the plant will help it to stay competitive when various free trade agreements are signed, said Vinatex deputy chairman Le Tien Truong, adding the plant would set a national industry standard.

As the driving force behind the Vietnamese textile and garment industry, Vinatex has also formed a joint-venture with Japan 's Itochu Group to develop support industries for the sector.

According to Vinatex, the two sides had come to an agreement to build a US$120 million fibre production plant in the northern province of Nam Dinh's Bao Minh Industrial Zone. The plant will have an annual capacity of 50,000 spools.

Both Vinatex and Itochu Group are in the legal stages with plans to start construction of the plant at the end of this year.

Since last year, multiple foreign fibre, yarn and textile producers had come to Vietnam to seek investment opportunities in textiles, dyeing and material production, Truong said.

Large firms like Hong Kong's Texhong Group, Japan's Toray International Inc and Mitsui Group, Austria's Lenzing Group and China's Sunrise Co Ltd had expressed interest in forming joint ventures with Vinatex, he added.

The Hong Kong-based apparel manufacturer TAL Group late last month revealed plans to boost investment in Vietnam with its second project to produce fabrics, garments and textiles worth around US$200 million.

The Hong Kong clothing producer first entered the local market in 2004 with a US$40 million garment and textile factory in Phuc Khanh Industrial Park in the northern province of Thai Binh.

Vietnam reportedly earned nearly US$8 billion from textile and garment exports in the first half of this year, up 16.8 percent year-on-year, of which US$981 million came from yarn and fibre exports, a rise of 11.9 percent.

However, the country also spent around US$5.4 billion on importing raw materials for the sector, up 21.1 percent against last year.

Experts said that the sector was appealing to global investors who were hoping to foster local production of Vietnamese garment and textile products.

New EU tariff scheme: opportunities and challenges

The revised EU Generalised System of Preferences (GSP) scheme offers lower tariffs, helping goods from developing countries, including Vietnam, gain easier access to the EU market.

These issues were discussed at a recent seminar on the EU’s new GSP rules and opportunities for Vietnam, held in HCM City.

Vietnam is on the list of GSP countries which have seen the number of tax lines enjoying the EU’s generalised scheme of tariff preferences increasing.

The new GSP rules will enter into effect on January 1 next year.

Trade and investment between Vietnam and the EU has grown considerably, with two-way trade turnover increasing by 15-20 percent annually and the EU is now one of Vietnam’s top trade partners.

From 1995-2012, bilateral trade grew nearly 20 times, from US$1.5 billion to US$29 billion.

In 2012 alone, the EU for the first time surpassed the US to become the biggest market for Vietnam’s key export items such as footwear, garments and textiles, seafood, wooden furniture, electronics and consumer goods.

The high level of supplementary assistance and less direct competition mark a prominent point in Vietnam-EU bilateral trade. Vietnam is shifting its export structure by increasing the proportion of high-quality products and fine arts and handicrafts, while reducing average quality products and crude farm produce.

Franz Jessen, EU Ambassador and Head of the EU Delegation to Vietnam attributed the sharp increase in Vietnamese exports to the EU, in part, to benefits from the GSP.

Around 49 percent of Vietnam’s footwear exports have benefited from preferential tariffs under the GSP treatment.

Next year’s new GSP rules will give a further boost to Vietnam’s exports of its traditional goods to the EU market.

Vietnam has taken advantage of preferences from the current GSP rules, but the country should effectively exploit many areas by seizing opportunities from the new scheme, Jessen says.

Analyzing the challenges for Vietnam, Tran Ngoc Quan, Deputy Head of the European Market Department under the Ministry of Industry and Trade (MoIT), said the 15-17 percent rise in the EU graduation criteria in its new GSP scheme will remove many countries, including Vietnam, from the list of nations enjoying the EU’s new GSP rules.

Consequently, the market share of imports from Vietnam is likely to greatly increase and reach the mark at which the country will no longer enjoyed tariff preferences.

In the face of these challenges, businesses need to promote consultations with MoIT and monitor the negotiation process on Vietnam-EU trade, in order to adopt a flexible market strategy and encourage the EU to continue granting preferences from its new GSP scheme.

Former Industry and Trade Minister, Truong Dinh Tuyen said the countries applying GSP for Vietnam include the EU, Japan, Canada, Switzerland and the Customs Union of Russia, Kazakhstan and Belarus.

GSP brings benefits such as low import tariffs, increased production capability, job creation and assured growth.

Thanks to GSP, Vietnam has improved the competitiveness of its products in the export markets in which the EU market accounts for 15 percent, and Japan 10 percent of Vietnam’s total export turnover.

However, certain GSP limitations require Vietnamese businesses to fully grasp criteria such as the rule of origin, graduation criteria and conditions for competition, Tuyen said.

Participants at the seminar said that, in the context of Vietnam’s deeper integration into the world economy, capitalising on advantages from the participation in agreements and regulations will help speed up the economic restructuring process and shift the growth model towards enhancing competitive capacity.

It is essential to make the best of the EU’s GSP rules based on the three basic conditions: where goods fully meet rule of origin; goods are transported directly from beneficiary countries to the EU and evidence on the origin of products must be included, they noted.

Vietnam, EU end fourth FTA round

The fourth round of the EU-Vietnam Free Trade Agreement (EVFTA) negotiations concluded in the Belgian capital, Brussels on July 5.

Vietnam and the European Union (EU) have reiterated the importance of a proposed bilateral free trade agreement and resolved to continue negotiations, with the intention of achieving a positive outcome.

The Vietnamese delegation was led by Deputy Minister of Industry and Trade, Tran Quoc Khanh, while the EU representatives were headed by Mauro Petriccone, Director for Asia and Latin America at the European Commission’s Directorate General for Trade.

Both sides expressed their delight at progress made during the negotiations from July 1-5, which focused upon trade in goods and services, investment, customs co-operation, technical barriers to trade (TBT), sustainable development and legal issues.

The two chief negotiators said that both Vietnam and the EU now have a firm foundation from which to accelerate negotiations on major areas such as goods and services distribution, investment, intellectual property rights and government procurement.

The next round of negotiations is scheduled to be held in Hanoi in November.

Once the FTA is eventually signed, it will benefit Vietnam by fostering trade activities and offering more secure investment for enterprises.

The EU is now Vietnam’s second-largest trade partner and largest importer.

As of January 2013, the EU had 1,810 projects in Vietnam with a total registered capital of US$34.28 billion.

IFC supports Vietnamese businesses

The Vietnam Joint Stock Commerical Bank for Industry and Trade (VietinBank) and the International Finance Organisation (IFC) have signed a US$120 million trade agreement to help Vietnamese businesses enhance their imports and exports.  

The agreement  is within  the framework of the IFC’s Global Trade Finance Program (GTFP), which is being implemented in over 150 countries through more than 500 banks.

It will help promote trade in newly emerging markets through linking local financial organisations with international banks and create conditions for these organisations to supply competitive trade finance services.

The programme will help VietinBank to cover payment risk when granting trade financing to local small and medium-sized enterprises.

In his speech at the signing ceremony on July 5, Nguyen Van Thang, VietinBank Director General, said the capital will facilitate domestic business activities.

Since its launch in Vietnam in 2007, the program has issued more than 570 guarantees for banks worth US$2.5 billion, making the country one of IFC’s top trade finance markets.

In the 2013 fiscal year, it has committed to the provision of US$800 million - a record high guarantee for banks.

Nathalie Louat, IFC's senior manager of financial markets in East Asia and the Pacific, said by supporting banks' capacity to deliver trade finance solutions, IFC has helped businesses to maintain their import-export activities and contribute to ensuring stable growth despite having liquidity difficulties.

As VietinBank’s strategic partner since 2011, IFC currently holds 8.03% of the bank’s equity stake.

Second aircraft spare parts factory to take shape

Japanese firm, Mitsubishi Heavy Industries Ltd will build a second factory in 2014 to manufacture spare parts for the Boeing 777 in Vietnam.

Group officials said on July 5 that the new facility will be located near the original factory in Hanoi.

Meanwhile, the factory in Nagoya, Japan, will manufacture spare parts for the Boeing 787, as Boeing plans to accelerate production of this aircraft.

The factory in Hanoi makes spare parts for the Boeing 737 and employs around 200 Vietnamese workers.

Finance Ministry holds dialogue with Korean businesses

The Ministry of Finance on July 5 organised a dialogue conference with Republic of Korea (RoK) businesses on tax and customs policies and administrative procedures.

Attendees included Deputy Finance Minister Hoang Anh Tuan, RoK ambassador to Vietnam Ju Dae Joo along with Korean entrepreneurs in HCM City and neighbouring localities.

Representatives from the General Department of Taxation of Vietnam (GDTV) gave a brief introduction of tax policy mechanisms issued since September 2012 and new tax policies to be promulgated in the time to come.

They mentioned solutions to ease business difficulties such as extending the payment of corporate income tax and value added tax and reducing land rental.

They also gave a presentation on the Laws on amendments and supplements to some articles of corporate income tax and tax management which were recently approved by the National Assembly.

 Addressing the conference, Deputy Finance Minister Hoang Anh Tuan pledged efforts to create the best possible conditions for foreign-invested businesses including those from the RoK.

The finance sector will consider proposals from businesses to fine-tune tax and customs policies, Tuan said.

The Korean ambassador praised the Vietnamese Government’s efforts to adopt new tax and customs policies and expressed the hope that the annual dialogue conference will help Korean businesses develop on a firmer foundation.

Vietcombank at 445th in world’s top 1,000 banks

The Banker Magazine has placed the Bank for Foreign Trade of Vietnam (Vietcombank) at 445th in its list of the world’s top 1000 banks.

Vietcombank jumped 91 positions from its 2012 ranking, leading all other Vietnamese banks included in the list. Vietcombank has advanced a total of 141 places since 2010.

The bank was third in the five highest ranked Asian banks with the best growth rate in tier 1 capital.

The Banker’s rankings are based on tier 1 capital and criteria including general assets, profit, and bad debts.

The Banker’s annual international bank listings are eagerly anticipated by the world’s finance and banking sector.

The Ministry of Construction and the People’s Committee in the central city of Da Nang have begun construction of four condominium projects for low income earners.

The condominiums are located near Rong and Tran Thi Ly Bridges, and have joint investments by Duc Manh Company and 579 Construction and Investment Company.

The four condominium projects comprise of more than 1,000 apartments, with each apartment over an area of 53.44 square meters, at a total cost of VND500 billion (US$24 million).

Each apartment will cost from VND300-350 million ($14,000-16,486) with two bedrooms, a restroom, a living room and a kitchen.

As per schedule, the four projects will be built within 27 months and buyers will receive the apartments in the third quarter of 2015.

At the groundbreaking ceremony, the investors donated VND100 million to poor families in An Hai Tay Ward of Son Tra District and My An Ward of Ngu Hanh Son District.

HCM City Metro Line 2 Project receives US$500 million loan

Nguyen Van Binh, Governor of State Bank of Vietnam and Tomoyuki Kimura, Country Director of Asia Development Bank, have signed a loan agreement of US$500 million for the construction of the Ben Thanh-Tham Luong Metro Line 2 Project in Ho Chi Minh City.

Metro Line 2 will start from Tay Ninh-An Suong bus station in District 12, and will run through Truong Chinh, Cach Mang Thang 8, Pham Hong Thai, Ham Nghi Streets, Ben Thanh Market, crossing Saigon River and end at Thu Thiem New Urban Area in District 2.

The first phase of the Metro Line will be 11.322 kms, including the underground length of 9.315 kms.

The route will have 11 terminals, including 10 underground stations.

The US$1,375 billion project will be financed by Asian Development Bank, European Investment Bank (EIB) and KFW-German Development Bank and expected to be complete by 2016.

Ministry to penalize contractors of Expressway for delay

The Ministry of Transport will penalise some contractors of Hanoi-Lao Cai Expressway for delays in carrying out the project as per contract terms.

Minister Dinh La Thang has instructed the Vietnam Expressway Services Company (VEC), investor of the project, to verify credentials of the contractors who are running behind schedule.

He has ordered VEC to replace those contractors who are unqualified to construct and complete the project. They will also not be sanctioned any other transport related project in future.

Minister Thang criticized VEC for not taking the initiative earlier to sort out the delay issues which has impeded the progress on the Expressway.

He has ordered the Company to prompt contractors to speed up construction of Yen Bai-Lao Cai and Hanoi-Vinh Phuc stretches to open for traffic at the earliest.

Vietnam's exports to Singapore record unexpected rise

Vietnam's exports to Singapore spiked 23 percent to SGD 1.237 billion SGD (US$ 965 million)  over the first five months of this year.

According to Statistics Singapore, four major product groups recorded export values exceeding SGD 100 million (US$ 78 million) – machinery, equipment and tools; phones and spare parts; paper and paper products; plus glass and glass products.

Rice and seafood exports were also higher than last year's figures.

Vietnam's imports from Singapore fell 2 percent to SGD 5.431 billion (US$ 4.236 billion) during the Jan-May period.

Vietnam primarily imports petroleum and related products; machinery, equipment and tools; paper and industrial products; as well as plastics from the country.

Two-way trade turnover totalled SGD15.8 billion  (USD12.3 billion last year, of which SGD 2 billion  (US$ 1.56 billion) came from Vietnamese exports.

Anti-dumping probe on stainless imports

Vietnam will conduct an anti-dumping investigation on imported cold-rolled stainless steel from mainland China, Malaysia, Indonesia and Taiwan.

Vietnam wll conduct an anti-dumping investigation on imported cold-rolled staniless steel from China, Malaysia, Indonesia and Taiwan.

The decision was announced by the Viet Nam Competition Authority (VCA) under the Ministry of Industry and Trade.

The decision, realised by directive No.4460/QD-BCT signed by deputy minister Tran Quoc Khanh earlier this week, came after a complaint by two local steel makers, POSCO VST Co Ltd and Hoa Binh Inox Joint Stock Company.

The plaintiffs said that steel products from those exporters were being sold at much lower prices than locally manufactured steel.

The investigation will be conducted by the VCA on batches of products imported between April 1, 2012 and March 31, 2013.

Cold-rolled stainless steel is the third commodity Viet Nam has sought anti-dumping duties for, the others being float glass and cooking oil.

Shipping industry faces troubled waters

A number of shipping companies in Vietnam are facing huge losses, some on the brink of bankruptcy, due to lack of clear development strategies.

The Vietnam Maritime Administration published a report about shipping development plan from 2013-2020, with view to 2030. The report said that Vietnam has rapidly grown the number of ships without proper management methods or plans to deal with sudden market changes.

The Baltic Dry Index (BDI) remains at 700 points, 11,793 points lower than 2008. Ship rental costs also sharply declined from USD72,970 to USD7,150 per day, per vessel of standard ship between 60,000 and 80,000 DWT.

In the meantime shipping companies wait for the situation to turn around. Many experts said that when the BDI reaches 3,000 points things will look better for the industry. For now, however, competition for domestic companies remains tough.

The report also pointed out several other shortcomings, such as old ships, or vessel types that are not in demand.

As of this year, about 40% of cargo ships were over 15 years old and do not meet international requirements for maritime safety, which Vietnam has agreed to through international conventions. More than 40 have actually been banned from maritime activities altogether.

The report went on to say, "We should focus on domestic transport and shorter routes. It is unrealistic to expect to create a fleet capable of 8.4-9.6 million DWT by 2015. It is also unreasonable to continue expanding our shipping fleet amid a market with declining demand."

According to the Vietnam Maritime Administration, 40% tonnage of vessels will be cut down so that, by 2015, the total tonnage of the Vietnamese fleet will be reduced to 2.5 million DWT.

As of April, the number of ships was only 570 compared to last year, when it was 1,755. The Vietnam National Shipping Lines (Vinalines) decreased their fleet by 13.

Official pledges more support for farmers

In order to improve farmers’ incomes, it’s necessary to work out detailed policies which will bring about practical benefits instead of vain promises, one official has said.

Nguyen Quoc Cuong, who has just been re-elected Chairman of Vietnam Farmers’ Association, said, “The government’s recent policies and mechanisms have helped rural agricultural development, aiding both farmers and production. But this has not been enough in the eyes of farmers. Now we must hammer out more practical policies that will better their situations."

According to Cuong, the association would focus on vocational technical training. The past programmes implemented were said to be ineffective.

Cuong said that they provide training for one million rural labourers annually, 70% of whom are expected to move to work in other industries, and 30% to remain in agriculture.

"Our focus will be to train farmers in their field and those who receive vocational training will be put in programmes that meet the needs of society," he added.

He emphasised the importance of improving the business practices of agricultural workers and endowing them with a sense of responsibility to the community and the nation.

Le Van Duan, a delegate from Hai Duong Province, noted that prices have been sharply increasing and the value of crops has gone down. "This situation has made it very difficult for agricultural workers. Many do not know how to operate in a changing market and some have even offered to relinquish their land."

Nguyen Thanh Phong, Chairman of An Giang provincial Farmers’ Association said that even though most people in the locality do farm work and have helped ensure national food security, they face many difficulties and are a vulnerable class.

“These people are hard-working. Selling their products has been their biggest obstacle. Since our rice has yet earn a name as a brand on the market, farmers are heavily dependent on middle men to sell their crops," Phong said.

Vu Van Tham, chairman of Quang Nam provincial Farmers’ Association agreed and said that investment in agriculture in this country remains relatively modest.

Vu Thi Lien Chau, Vice Chairwoman of Lai Chau provincial Farmers’ Association, said farmers are in desperate need for more support from from both the government and the free market to reach a higher standard of living and improve in business.

Sales at supermarkets slow due to high prices

Supermarkets are likely to increase prices of many products following recent increases in overhead such as worker pay and petroleum, causing worries among operators that the price hikes may slow sales.

According to Vu Vinh Phu, Chairman of the Hanoi Supermarkets Association, including both recent rises in petrol, one litre of petrol is now VND1,000 more than before. Since most goods bought in supermarkets are transported from the south, petrol prices have an impact on the cost of products.

Wholesalers have proposed increases of as high as 5% to 10% in coming weeks. The dilemma for many supermarket owners is whether to pass on the higher cost to the consumer, which could slow sales, or to take the losses.

A representative from Intimex Hao Nam Supermarket said, "Currently, the prices of many products at supermarkets are higher than they are in street markets. If these costs continue to increase, we may not be able to complete. Right now we are in negotiations with wholesalers for the best prices."

Prices of products such as candies, beverages, fruits and clothes at supermarkets can be as much as 20% higher than those in other markets.   

Vu Thi Hau, Director of Fivimart supermarket chain, said that many supermarkets receive and sell goods on consignment, so if the producers' prices rise they will have no choice but to pass the cost to the customer.

On the other hand, food prices in many traditional markets have also been on the increase.

Heavy cost burdens hindering export

Vietnam’s export performance should have been much better and more effective if the State could cope with infrastructure inadequacy, corruption and policy instability that aggravate cost burdens on exporters, heard a seminar on economic growth in Hanoi on Thursday.

At the seminar held by the World Bank (WB) and the National Committee for International Economic Cooperation on Thursday, Pham Minh Duc from the WB said the nation’s export growth has averaged out an annual rate 17% over two decades.

Exports marked up 34% in 2011, 18% in 2012 and up to 20% in this year’s first quarter regardless of global economic difficulties, he said.

However, these successes are reaching their limits and are encountering lots of barriers right in the country, from the lack of infrastructure to corruption practices that cause the cost to swell up.

According to WB infrastructure expert Paul Vallery, expenses that enterprises are paying for logistics services in Vietnam are too high compared to the global average. Logistics costs in Vietnam account for up to 25% of the country’s gross domestic product (GDP), much higher than the level of 19% of GDP in China or 8-9% in Japan, he remarked.

“If Vietnam could reduce logistics expenses by 1-2% of GDP, its import-export competitiveness should have been much stronger,” he told the seminar.

Expenses for commodity stocktaking and warehousing amounted to US$261 million in 2012 alone, representing up to 15% of total container transport expenses in Vietnam, he estimated. In the meantime, he said, transport congestion and slowness also cost companies as much as US$150 million.

Besides, many local seaports are not yet used at full capacity, he said. Only 18% of the potential of the new deep-water seaports at Cai Mep-Thi Vai is tapped at present, which is projected to rise to 40% in 2020, and this has pushed up the port’s expenses to a staggering US$1.2 billion, he stressed.

Foreign entities must think twice over doing business in Vietnam due to such huge expenses, he insisted.

WB chief economist Deepark Mishra, meanwhile, ascribed the current costly logistics services in Vietnam to the ineffective operation of State-owned enterprises.

At the seminar, Do Xuan Quang, chairman of the Vietnam Logistics Business Association, noticed transport fees account for up to 60% of logistics expenses and that the nation is severely short of warehouses meeting modern criteria.

He pointed out the inadequacy of infrastructure at home. For instance, he said, several ports are built without being connected with passages and industrial parks like Cai Mep, Hiep Phuoc and Cai Lan ports, resulting in a huge waste.

In the report presented at the seminar, the WB proposes Vietnam set up a national committee on trade facilitation to enhance its trade competitiveness. The WB also calls for the nation to improve infrastructure, simplify administrative procedures and join the global value chain to change its export capability for the better.

No fluctuation in deposits despite ceiling rate cut

There has been no sharp fluctuation in bank deposits over the past week after the deposit rate cap was lowered.

The ceiling interest rate for Vietnamese dong deposits with terms of one month to less than six months has been cut from 7.5% to 7%. There is no cap on the interest rates for deposits with terms longer than six months.

Some banks like ACB and Eximbank have brought down the interest rates for one and two-month deposits to below 7%. Meanwhile, the rates for 6-12 month deposits are 7.2-7.5% per year at most banks.

Nguyen Dinh Tung, general director of OCB, said deposit volume had not swung too much to create a trend. Citizens might have foreseen the deposit rate cut and do not feel shocked, he explained.

As for U.S. dollar deposits, he said there had been no marked fluctuation either although the ceiling rate had been slashed to 1.25%. Total deposits in both local and foreign currencies at OCB as of end-June had grown 16% over the same period last year, he told the Daily.

Le Thanh Trung, deputy general director of HDBank, also informed there had been no sudden change in dong deposits.

Most clients are still exploring the market. Some have switched to deposits with terms longer than six months given the forecast that deposit rates would fall further in the near future, he said.

A banker predicted there would be no other interest rate cut this year since inflation had been forecast at 6% and the cap of 7% ensured positive interest rates.

Dang Bao Khanh, general director of SeABank, said that while the deposit rate cap had been reduced, the exchange rate between Vietnamese dong and the U.S. dollar had been adjusted up 1%. Therefore, people still want to keep the greenback in hope of a price rise.

There has been no considerable fluctuation in U.S. dollar deposits at SeABank.

Meanwhile, at HDBank, deposits in the greenback dipped slightly. It is still too soon to tell whether citizens will switch from dong to the U.S. dollar or not, said Trung.

HDBank achieved 15.02% growth in deposits in the first six months.

On the day when the deposit rate cap was lowered, the exchange rate was raised to VND21,036 per U.S. dollar. After that, banks increased their greenback selling prices to the ceiling level of VND21,246.

However, the exchange rate in the free market on Thursday suddenly rose to VND21,600 in the morning and then declined to VND21,580 in the afternoon, versus VND21,400 the preceding day.

The interest rates for the U.S. dollar deposits were 1.25% at all banks. The U.S. dollar deposit rate cut is one of the moves that the central bank has taken to gradually reduce dollarization in Vietnam.

LPG storage investment increased

A liquefied petroleum gas (LPG) cold storage facility with capacity of 84,000 tons is under construction in Long An Province and expected to start operating by the end of 2014 to help stabilize LPG prices.

Speaking to the Daily on the sidelines of the Asian LP Gas Summit 2013 in HCMC on Thursday, Nguyen Si Thang, chairman of the Vietnam Gas Association, said that the US$200-million project is invested by VinaBenny Energy Joint Stock Company. PetroVietnam Gas South Corporation is among shareholders of the enterprise.

Some 20% of the work has been completed and the storage is expected to start operating at the end of 2014 or early 2015, Thang said.

Along with the 60,000-ton cold storage PetroVietnam Gas Corporation launched into operation in March, the two facilities will meet LPG storage and import demands, help stabilize prices and meet increasing demands of local consumers.

Thang said that local demand is expected to hit two million tons of LPG each year by 2017. The nation’s output is 600,000 tons, meeting around 40% of this year’s demand estimated at 1.5 million tons, while the remaining volume will be imported from other countries.

The nation now has two gas production plants in Dinh Co in Ba Ria-Vung Tau Province and Dung Quat in Quang Ngai Province. There are two more gas projects underway, Nghi Son in Thanh Hoa Province and Long Son in Ba Ria-Vung Tau Province.

Government draft vision to 2020 disussed

A seminar was held in Ha Noi on July 3 by the Central Institute for Economic Management (CIEM), the Government Office and the Ministry of Home Affairs to discuss a roadmap for implementation of a Government draft vision to 2020.

This is part of a project funded by the Swedish International Development Cooperation Agency (SIDA) to build a roadmap for the implementation of the Vietnamese Government’s vision.

The draft vision covers issues related to the economic restructuring process in Viet Nam, macroeconomic management and governmental modernization until 2020 with a focus on improving administrative procedures and helping people get easier access to information and services by smart cards.

Paul Collins, an international advisor said the Vietnamese Government’s plan to bring 600 young intellectuals to remote areas shows its determination to narrow the widening gap of development in these localities.

As a middle-income country, he maintained, Viet Nam will receive less ODA funding than before. If the country fails to stimulate economic growth, it will lag behind.

More regulations to handle financial, securities crimes

The Ministries of Justice, Public Security, Finance; Supreme People’s Court and Supreme People’s Procuracy has promulgated Circular 10/2013/TTLT- BTP- BCA- TANDTC-VKSNDTC-BTC to guide the implementation of some articles of the Penal Code.

The Circular covers regulations to handle crimes in tax, financial-accounting, and securities areas.

The Circular is scheduled to take effect since August 15 this year.

Business types benefit from preferential customs

The Ministry of Finance has promulgated the Circular 86/2013/TT-BTC to guide the application of the priority regime in the State management of customs to eligible enterprises.

These enterprises include exporters of agricultural products, aquaculture, garments and footwear and importers of materials for export production; and those certified by the Ministry of Science and Technology as high-tech companies.

Beneficiary enterprises must meet conditions relevant to law observation, tax payment, revenue among others. They must apply accounting standards approved by the Ministry of Finance.

Their annual financial reports are verified by qualified auditing companies. They own no overdue tax debts in two consecutive years.

The new Circular will take effect since August 11, 2013.

Experts urge caution in macro-economy control

Economic experts have warned that Vietnam’s macro-economy must be controlled with caution as the country faces an uphill task to achieve an economic growth of 5.5 percent, in the context of tough economic conditions both globally and domestically.

In late June, Director General of the General Statistics Office Do Thuc reported positive signs in the national economy in the January-June period, with GDP growth rate registering a quarter-on-quarter increase, while the consumer price index inched up a mere 2.4 percent against December 2012, laying a solid foundation to keep inflation below 8 percent this year.

The trade deficit stood at 1.4 billion USD, equivalent to 2.3 percent of exports.

Head of the Industrial Statistics Department Pham Hong Thuy said though the industrial production index increased by only 5.2 percent in the first half of this year, far lower than the 9.7 percent and 8.9 percent in the same period of 2011 and 2010 respectively, it is a fairly positive sign in the current situation. In addition, the industrial sales index for the manufacturing and processing sector rose 7.5 percent from the same period last year, bringing inventories index to single digit.

Nevertheless, with the 4.9 percent GDP growth in the first half of the year, the country must achieve a growth rate of at least 6 percent in the second half in order to fulfil the goal of 5.5 percent set by the National Assembly. This is expected to be a very tough task.

The UN Economic and Social Council forecast that the world economy could only pick up since 2014. The situation is the same in Vietnam , when the essential goal is to control inflation, stabilize macro-economy and strive for a suitable growth rate.

According to analysts, Vietnam is likely to record an economic growth rate of 5.1 - 5.2 percent this year, lower than the 5.5 percent target. However, what is important is the stability of the economy, laying the foundation for a sustainable economic development over the long haul, not the growth rate, they said.

GSO experts said any economic stimulation move is not necessary at this time. Instead, the Government should seek ways to mobilise social investment and drastically shift the growth model away from capital and labour-intensive industries to the sustainable knowledge-based model, and restructure the entire economy.

Samsung seeks lower land rental

Samsung Complex in northern Bac Ninh Province paid VND1.584 trillion (US$79.24 million) in tax last year, according to the provincial People's Committee.

The information was provided in a committee document sent to the People's Council. It asked for financing from the State budget for investment in the infrastructure of Yen Phong 1 Industrial Park to support the company's $1-billion-expanded project.

Samsung has suggested the province help with 50 per cent of the land lease for the expanded project.

According to the People's Committee, the project was expected to boost Samsung's exports by $5 billion per year to about $17 billion, which would contribute to the province's socio-economic development.

The project would also contribute about $27.5 million in tax per year to the State budget while creating jobs for 8,000 people.

According to the General Department of Customs, about VND96 trillion ($4.57 billion) in taxes was collected for the State budget in the first six months of this year, a surge of 5.5 per cent year-on-year and meeting 40.4 per cent of the plan.

Thaco tax deadline extended

The Truong Hai Auto company (Thaco) was allowed to extend their deadline for paying import taxes that are owed to the State, which amount to over VND1.2 trillion (US$75 million), from July 1, 2013 to June 30, 2014.

The approval was given after Thaco reported that it currently has vehicles in stock worth more than VND3.3 trillion ($157 million), and its debts to credit institutions hit almost VND5.6 trillion ($267 million).

The economic situation in Viet Nam and declining global markets have led to a drop in worldwide car sales.

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