Tax debts soar in HCM City


The total tax debts of enterprises, mainly in the real estate sector, in HCMC surged in the first six months of the year, according to a July 20 review conference on tax collection in the first half of 2019.

Speaking at the conference organized by the HCMC Tax Department, Tran Ngoc Tam, director of the department, said that between January and June, the tax debt of eight firms increased to VND3 trillion.

Statistics from the municipal tax department show that real estate and construction enterprises took the lead among tax debtors. These firms’ tax debts reached VND2.4 trillion, accounting for some 52% of the city’s total recoverable tax debts.

Firms with high tax debt rise included the Phu Nhuan House Construction and Business Company, which owes a land use fee of VND1 trillion; the Saigon Development and Investment Corporation, which owes land rent fee of VND444 billion; and the Duc Khai Corporation, which has yet to pay VND389 billion.

In the first six months of the year, tax debts related to land jumped 155% against the figure seen in late 2018 to VND3.4 trillion.

Besides land-related tax debts, multiple firms were burdened with debts of other fees and taxes, typically environmental protection taxes on gasoline and oil. The Xuyen Viet Oil Travel and Transport Trading Company owed VND668 billion in environmental protection tax on oil and gasoline, while the Long Hung Trading and Service Company had a debt of VND243 billion as of May 31.

The debt in terms of unpaid taxes and fees in the city totaled VND6.4 trillion in the first six months of 2019, up 60.6% against the figure recorded in late 2018.

At the conference, Phi Van Tuan, the deputy general director of the General Department of Taxation, said that other cities and provinces were also facing the same problem as HCMC.

Economic growth is on the rise, but some sectors, such as property and construction, are slowing down, or even, have come to a standstill, causing many enterprises to run up debts in land use fees. In addition, many firms have accumulated serious debt in environmental protection tax on oil and gasoline.

“Some provinces saw a few firms owe VND400-500 billion of the environmental protection tax,” Tuan said.

The representative of the General Department of Taxation has proposed the HCMC carefully analyze and re-assess measures and governance of tax collection and the management of tax debts to minimize the volume of tax debts and make tax collection more efficient, according to VietnamPlus.

Apart from adopting more effective solutions, the municipal authorities have been asked to review key firms to urge them to pay debts, and to boost administrative reforms and modernize tax governance.

Revenues from auto, crude oil imports up

Tax revenues from importers of auto and crude oil in the first half of the year increased by over VND21 trillion (US$903 million) year-on-year, accounting for 73.5% of the customs sector’s additional revenue for the period, according to the General Department of Vietnam Customs.

In the six-month period, the customs agency collected more than VND175.5 trillion in tax revenue, up VND28.6 trillion, or 19.4%, from the same period last year. Of the total, the combined tax revenue from crude oil and auto importers reached some VND26.5 trillion.

Specifically, in the first six months of the year, Vietnam spent US$1.63 billion importing 75,310 autos. The tax revenue from the imports was VND21.5 trillion, an increase of 424.77% over the same period last year.

Meanwhile, 4.38 million tons of crude oil worth US$2.07 billion was imported in the period. Crude oil importers paid nearly VND5 trillion in taxes, an increase of 271.5% year-on-year.

The tax revenue from other goods totalled VND149 trillion, up VND7.5 trillion against the first half of last year.

The General Department of Vietnam Customs had set a tax collection target of VND300.5 trillion. However, the minister of finance had asked it to increase the target by 5% to VND315.5 trillion.

The customs agency found it hard to achieve the target due to tax reduction commitments in free trade agreements, such as the ASEAN Trade in Goods Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Therefore, the General Department has issued solutions to facilitate trade and prevent losses, set targets for each unit, and help enterprises remove obstacles in customs clearance procedures.

Thua Thien-Hue to invest 514 million USD to improve irrigation

The central province of Thua Thien-Hue has announced that it will spend 11.94 trillion VND (514 million USD) over the next five years to improve its irrigation system in an effort to better facilitate local agriculture.

Provincial authorities said the investment would stretch from now until 2025 to make sure that 85 percent of the crop fields and aquatic farms receive a regular and sufficient supply of water throughout the dry season.

Dozens of reservoirs in Thua Thien-Hue would receive funding for upgrades in the near future. The authorities reported that 20 out of 56 reservoirs were showing signs of serious degradation and many were leaking water.

The improved irrigation system is also intended to act as stronger protection against frequent flooding in the lower Huong and O Lau rivers. It will also store rain water for urban use.

Local watermelon seeds exported to Japan for first time

Vietnam has exported to Japan its first batch of 8.1 kilograms of watermelon seeds, produced by farmers in the Mekong Delta provinces of Tien Giang and Hau Giang with the support of Loc Troi Group and Japan’s Hagihara Farm Company.

At a press briefing on the export of watermelon seeds to Japan held in HCMC today, July 23, Mai Tan Hoang, deputy head of Loc Troi Group’s research and development board, said after two years of research and a pilot program, local farmers have successfully produced watermelon seeds meeting the high standards required by Japan.

The watermelon seeds were produced in Tien Giang and Hau Giang as they have favorable weather conditions for the production of watermelon seeds.

The seeds had initially been produced in the Central Highlands province of Gia Lai, but the plan failed due to the large gap between daytime and nighttime temperatures, Hoang added.

Tran Viet Truong, one of the two farmers producing watermelon seeds, said the most difficult step during the seed production process is pollination.

Early this year, he had successfully piloted the production of watermelon seeds meeting Japanese standards.

According to Duong Van Chin, director of Loc Troi Group’s Dinh Thanh Agriculture Research Center, the export of watermelon seeds to such a selective market as Japan marks a significant success for the local agriculture sector, as the country can now ship the seeds to new markets.

Loc Troi Chairman and General Director Huynh Van Thon said the event marked a milestone in the improvement of Vietnamese farmers’ seed production capabilities. The group will further intensify cooperation with Hagihara Farm to support farmers.

HCMC tightens control over sale of fake fuels

The People’s Committee of HCMC has directed municipal departments and agencies to tighten control over the sale, import, and production of fuels, aiming to prevent and fight smuggling and trade fraud involving fuels, especially fake ones.

The HCMC Department of Industry and Trade was tasked with tightening regulations on the licensing of solvent-blending and fuel trading firms, and at the same time, checking operations of licensed businesses.

The HCMC Taxation Department must inspect practices of fuel trading firms in fulfilling their tax declarations and obligations. Meanwhile, the city’s Customs Department will have to tightly control customs declarations by such businesses, and promptly prevent possible fuel-trading violations committed by air and sea, as well as at seaports and bonded warehouses.

Further, the HCMC Department of Science and Technology must conduct intensive checks on, or take fuel samples for testing from gas stations in the city, and report any cases of trading suspect fuels to law enforcement agencies for legal action.

Border guards from the city have to carry out more regular patrols and tackle violators who smuggle, stock, transport, manufacture and blend fake fuels at seaports, entrances to rivers and on vessels.

Also, the city police have to work out measures to apprehend fake fuel trading rings, as well as bring to justice the leaders of such rings and facilities for processing and blending fake fuel.

The city has also clarified the role of the HCMC Department of Information and Communications in the fight against fake fuel trading activities. It will have to publicize a list of outlets trading fake or substandard fuels via mass media, and raise public awareness among fuel consumers.

VND2-3 trillion planned to support Thu Thiem residents

Some VND2-3 trillion (US$86-129 million) may be used to support households that were relocated from 4.3 hectares of land outside the approved boundaries of the Thu Thiem New Urban Area development project in HCMC’s District 2.

According to Thanh Nien Online newspaper, the city is consulting with these households regarding the support policy for them.

At a July 19 meeting of the HCMC government on the city’s socioeconomic performance, budget, security and national defense in the first half of the year, HCMC Chairman Nguyen Thanh Phong said the District 2 chairman would meet with each of 331 households affected by the project beginning July 19. The meetings will last for three days.

The city will also act on the Government Inspectorate's conclusions on the Thu Thiem New Urban Area project, Phong added.

A municipal official said the support policy will not put these households at a disadvantage, as the prices of their land lots, which had been taken back to make room for the project, will be calculated based upon current market prices.

The support policy for Thu Thiem residents has been formulated, but the HCMC government is considering supporting them in cash, land lots or houses.

The municipal government will present the support solutions at an extraordinary meeting of the municipal People’s Council, set to take place this month.

Over the last 20 years, HCMC has asked 14,600 households, with more than 60,000 residents in Thu Thiem, An Loi Dong, An Khanh, Binh Khanh and Binh An wards of District 2, to return their land lots to accommodate the mammoth project.

During this period, residents have lodged complaints and filed lawsuits against the city’s compensation, site clearance and resettlement for the project.

27 firms inspected in possible Asanzo origin fraud

The General Department of Vietnam Customs has begun inspections of 27 enterprises involved in a case in which Asanzo Vietnam was accused of selling Chinese electronic products bearing made-in-Vietnam labels.

At a press conference detailing the fight against product origin fraud on July 19, Nguyen Thu Nhieu, deputy head of the Post-Clearance Audit Bureau, under the General Department of Vietnam Customs, said the customs agency received a list of 25 enterprises from press agencies and another list of 26 accessories suppliers of Asanzo, sent by the Ministry of Public Security.

Some enterprises on the two lists are overlapping, so the total number of enterprises to be inspected is 31. Of the total, four companies have been shut down or prosecuted in other cases.

Of the 27 enterprises, the Post-Clearance Audit Bureau will inspect 13 companies and the HCMC Customs Department will investigate the remaining 14 firms.

As for 56 enterprises which distributed Asanzo’s products, only 16 of them are still in business, and the inspections into these firms are still taking place, Nhieu noted.

According to Au Anh Tuan, head of the Customs Supervision and Management Department under the General Department of Vietnam Customs, the customs agency has set up an inspection team to look into the post-clearance procedures of Asanzo and its accessories suppliers. The results will be reported to the Ministry of Finance and the prime minister.

Pros and cons in CBD traffic control need second thought

The HCMC Department of Transport has sent a proposal to the municipal government to restrict passenger vehicles moving into the central business district (CBD) comprising mainly districts 1 and 3 and parts of districts 5 and 10 by setting up 34 tollgates on the streets leading to the quarter. Under the scheme, the government will spend VND250 billion setting up smart tollgates between now and 2021, and each passenger vehicle entering the quarter will then be charged VND30,000-50,000 for a trip into the area.

As stated by the transport department, the project is meant to reduce traffic congestion in the central area, encourage the people to use public transport, protect the environment, and create funds for road maintenance and public transport development. Most of these goals, needless to say, are desirable for all the people, but whether such goals are achievable remains a question mark, while adverse impacts on the people’s livelihood are more obvious.

The scheme submitted to the city government does not make clear, in terms of scientific studies, how the traffic volume could be reduced once the scheme is deployed, how the environment will be improved accordingly, whether the people will switch to using public transport.

The only aspect that can apparently be seen is an increase in revenue for the State budget, which in and by itself is not popular in the general public.

The business cost for transport enterprises will certainly increase, which will finally passed on to the people since those firms will not readily absorb such costs on their own. The living expenses for locals and tourists will also increase due to the toll fees.

It should be noted that HCMC is already the most expensive city in the country, followed by Hanoi and Danang, according to a recent survey conducted by the Vietnam Chamber of Commerce and Industry. In the region, HCMC is also among the 20 most expensive cities in Southeast Asia. Such rankings discourage international tourists from visiting the city.

As stated early on, fighting traffic congestion, protecting the environment and developing the public transport system are desirable, and if imposing toll fees on vehicles entering the city center can help realize such goals, such points must be proven via prudent scientific studies. Such a scheme should not solely be based on the subjective intention of a State agency like the transport department.

Further, the scheme if enacted needs to be accompanied by specific projects to develop public transport means, while authorities should also take measures to ensure that the city will not jump some notches higher among the most expensive cities in the world.

The people’s obligations and benefits should be harmonized, if a scheme to impose new toll fees is to secure popular support.

Approval for ASF-infected pork under probe

The Food Safety Management Board of HCMC has launched a probe into a case in which approval was granted for the transport of pork, which tested positive for African swine fever (ASF), out of Long An Province for sale.

Earlier, inspectors of Long An scrutinizing a business facility owned by Cao Thi Huyen, residing in the province’s Tan Tru District, had found more than 1,100 kilograms of pork, and the pork samples had tested positive for ASF.

Notably, Huyen had immediately showed a quarantine certificate granted by the HCMC management board, saying that 600 kilograms of the pork was quarantined in the city’s Binh Dien wholesale market.

The HCMC Food Safety Management Board, in turn, had asked the Department of Agriculture and Rural Development of Long An to provide further details on the ASF-infected pork to help ascertain the cause.

The management board had on June 30 checked the quarantine certificates for animal products transported out of provincial-level localities for Huyen, including 500 kilograms of pork.

On comparing the relevant documents kept at Binh Dien wholesale market’s Food Safety Management Division, the municipal management board ascertained that Huyen’s pork came from a booth, H1-148, operated by Thai Hong Loan.

The pork was supplied by five slaughtering facilities in Long An, which had all received quarantine certificates from the Animal Health Division of Long An for the transport of animal products out of provincial-level localities.

Accordingly, the municipal Food Safety Management Board on July 21 said that its approval for the pork, based on the quarantine certificates granted by competent provincial agencies and its examination, was on par with prevailing regulations.

Hanoi city aims to improve startup ecosystem

Hanoi is taking measures to tackle difficulties facing local firms, especially newly established small- and medium-sized enterprises (SMEs).

Data of the municipal Department of Planning and Investment show that businesses in the Vietnamese capital have developed in both quantity and quality in recent years.

Hanoi is currently home to about 260,000 companies, ranking second in the country in terms of the number of businesses, and 97 percent of these firms are SMEs. More than 20,000 new companies have been set up annually in the last three years.

There is one company for every 38 local residents on average, 3.7 times higher than the national average, statistics show.

However, there remain several issues posing challenges to businesses’ operations. Only about 0.1 percent of local startups have succeeded in attracting capital from investment funds.

Some economic experts blamed that fact partly on shortcomings in support for SMEs, saying that support programmes and policies haven’t been implemented in a synchronous manner. Although the single-window mechanism for handling administrative procedures has been deployed at multiple levels, procedures still involve different departments and sectors, leading to the slow handling of paperwork.

Additionally, firms still lose time and money in accessing resources for production and business activities such as credit, land, market and support for setting up new companies.

A representative of the Vietnam Agricultural Food and Products Import-Export Joint Stock Company said collateral is one of the biggest difficulties facing businesses when seeking loans. Cumbersome borrowing procedures have also eroded many SMEs’ intention to look for bank lending, forcing them to seek funding from “black” credit sources.

Banks need to take solutions to facilitate enterprises’, especially SMEs’, access to loans, he noted.

Experts said many SMEs have encountered difficulties accessing bank loans because most of them are small and lack concrete operational plans. Low resilience to risks and macro-economic changes has also affected their operational effectiveness, loan use efficiency and capacity of loan repayment.

In particular, the financial capacity of many SMEs is still modest while they still lack financial information transparency and collateral. These are the main reasons affecting their bank credit accessibility, according to experts.

To help local businesses develop, the Hanoi People’s Committee has issued a startup support plan to assist 500 startup projects to develop and 150 startups to commercialise their products by 2025. Among the startups, at least 20 percent are hoped to successfully attract funding from venture capital funds and carry out mergers or acquisitions worth some 500 billion VND (nearly 21.5 million USD).

The city also aims to support the establishment of from 2-3 business incubators or startup spaces, facilitate the formation of from 3-5 private startup investment funds and attract foreign funds to this field.

This plan was adopted at the ninth meeting of the municipal People’s Council in early July. It was built on the basis of the Government’s Decision No. 844/QD-TTg, dated May 18, 2016, which approved the national entrepreneurial ecosystem support plan until 2025.

Support policies under the Hanoi scheme targets individuals and groups of individuals with startup projects; newly established SMEs; organisations supplying services, technical infrastructure and communications to startups; along with Vietnamese and foreign investment funds.

The plan looks to complete the local entrepreneurial ecosystem and create a favourable environment for the formation and development of businesses that can grow fast based on the optimisation of intellectual property, technology and new business models.

The city will tweak mechanisms and policies to support local entrepreneurial activities. In particular, it will assist newly established firms to carry out communications, build their business culture, train human resources, equip themselves with entrepreneurial knowledge and develop infrastructure for their operations.

Kien Giang steps up efforts against IUU fishing

The Mekong Delta province of Kien Giang has taken synchronous measures to fight illegal, unreported and unregulated (IUU) fishing as instructed by the European Commission (EC).

The locality, which has nine coastal districts out of the total 15, aims to soon remove the “yellow card” warning issued by the European Commission (EC) to Vietnam’s fishery sector.

Local competent agencies have teamed up to inspect and monitor fishing boats operating at sea and docking at ports, and encourage their owners, captains and fishermen to observe relevant regulations, according to the provincial Department of Agriculture and Rural Development.


Fishing vessels traversing seaports and estuaries were supervised by border guard stations, with special attention paid to those included in the blacklist and showing signs of violations.

Major Dang Hoang Quan from the Tay Yen Border Guard Station said fishing boats are allowed to set sail only when they submit necessary papers and are fully equipped with navigation devices.

After the Government’s Decree No. 42/2019/ND-CP on administrative fines in the fishery sector came into force on July 5, 2019, Kien Giang established an inspection team to supervise fishing activities at sea and seaports.

On October 23, 2017, the EC issued a "yellow card" warning to Vietnam, after the country failed to demonstrate sufficient progress in the fight against IUU fishing.

Countries that fail to meet EC standards are given a "yellow card", followed by a "green card" if the problems are resolved, or a "red card" if they are not. A red card can lead to a trade ban on fishery products.

According to EC requirements, the Vietnamese seafood sector had to implement nine recommendations, including revisions of the legal framework to ensure compliance with international and regional rules, applicable to the conservation and management of fisheries resources; ensuring the enforcement of the country’s revised laws; and strengthening implementation of international rules and management measures.

The EC also wanted Vietnam to issue sanctions against IUU fishing, which should be written in the revised Law on Fisheries, and give concrete evidence proving Vietnam’s efforts in the fight against IUU fishing.

Property supply expected to increase in H2

The supply of real estate products is expected to surge in the second half of the year but a market bubble is unlikely to form, according to general secretary of the Viet Nam Association of Property Brokers Nguyen Van Dinh.

Selling prices are unlikely to change much as demand remains high.

Dinh told a meeting earlier this week that supply and the number of transactions in the property market in the first six months of the year were reduced from the first half of last year. Decreasing supply in the second quarter was due to tightened credit policies in the real estate market.

“However, demand in the property market was high in the January-June period in the two big cities," he said. "The real estate prices therefore were slightly increased but not overly inflated."

Some property markets which saw strong development in recent years such as Da Nang, Nha Trang, Quang Ninh, Binh Duong and Dong Nai saw decreases in both new supply and the number of transactions.

New products were mainly in Ha Noi and HCM City in the second quarter. The capital city had more than 7,300 new apartments and 400 houses. Most of the new apartments were in the middle market segment with selling prices of VND25 to VND35 million per square metre. There were more than 4,200 successful transactions. Another 900 apartments were sold at prices of less than VND25 million per square metre in the second quarter of the year.

Statistics from the association showed that in the first half of the year, there were more than 50,000 property products offered on the market nationwide. Of which, 32,000 were sold.

The general secretary said some foreign investors appreciated the rate of consumption in Viet Nam’s real estate market. In Viet Nam, it takes 12 to 18 months on average to sell out a property project after it is offered for sale. Meanwhile, it often takes around five years in most foreign markets.

“This is why demand for housing in Viet Nam is huge," he said. "And why it is an attractive market for foreign investors."

HCM City condo market set for 2nd half revival

Vinhomes Grand Park in District 9 will be one of the key factors in the revival of the HCM City apartment market, which had slumped in the first half of 2019, analysts say.

In a series of reports on the city real estate market in the first half and forecasts for the future, most consultancies have identified this project as the likely market driver over the next few months.

CBRE Vietnam, in a report this week, said the second half of the year would see plenty of new supply in the East led by Vinhomes Grandpark in District 9 with over 10,000 units and five new projects in District 2.

Other areas also to become active are the west with AIO City, Akari City and D-Homme and the south with Lovera Vista and subsequent phases of Eco Green Saigon and Sunshine City Saigon.

Over 23,000 units will be launched during the half.

Jones Lang LaSalle made a similar prediction, saying in its first-half report: “Since the prevailing delay in the approval procedure is expected to continue, the projected supply pipeline in 2019 is subject to greater uncertainty and varies between 18,000 and 28,000 units, but the actual number heavily depends on the launching process of the large-scale Vinhomes Grand Park project.”

When asked by Viet Nam News, Vin Group, the developer of Vinhomes Grand Park, said over 2,000 visitors came to the transaction floor on the first day of the project’s launch earlier this month.

Le Thi Thu Trang, director of VI Property, one of 63 distributors of the project, said it was the most eagerly anticipated one in the market at a time when supply is limited.

Nearly 6,000 condos were sold in one day, she said.

The uptake particularly testified to the fact that though demand was huge in the market supply was modest, as the reports said.

CBRE said in the second quarter, due to tardy licensing since last year, new supply continued to drop, falling to the lowest level in the last five years. Only 4,124 units in 10 projects were launched, a 34 per cent decrease year-on-year, and the total new supply in the first half was 8,547.

During the quarter only two new projects held their first launches, The Marq in District 1 and The Signial in District 7, with the remaining eight only launching additional phases, CBRE said.

The Government’s tight control over new developments has forced supply onto a more sustainable path.

Only projects with land use rights approval and construction permits can sell to the public.

Vietnam agriculture aimed at world’s top 15

The government has issued a resolution on encouraging businesses to invest in effective, safe, and sustainable agriculture.

Under the resolution, by 2030 Vietnam’s agriculture will be modernized towards mass production, technological application and innovation to raise productivity, quality, effectiveness, and competitiveness, improving farmers’ living standards, and building rural areas.

By 2030, Vietnam’s agriculture is set to be included in the 15 countries that have the most developed agriculture in the world, while the processing of agricultural produce will be in the top 10 of the world.

According to the new resolution, Vietnam will become a global center of agricultural processing and logistics center of global agricultural trade. Businesses are defined as playing a pivotal role in boosting national agriculture.

Vietnam aims to increase agricultural production growth by 3% per year and growth of agro-forestry-seafood exports by 6-8% per year.

The country will see from 80,000 to 100,000 enterprises operating effectively in agriculture. 

Authorities want banks to give up corporate bond addiction

The Hà Noi Stock Exchange said that Nha Trang Bay Investment and Construction Joint Stock Company successfully issued private corporate bonds worth VNÐ650 billion (US$28.2 million), all of it to the Vi?t Nam Maritime Bank.

The Vi?t Nam Prosperity Bank (VPBank) bought VNÐ925 billion ($40.22 million) worth of bonds issued by the Hoàng Tru?ng Tourism Real Estate Investment Company.

VPBank is among the lenders to have invested a lot in corporate bonds recently. As of March this year it had invested nearly VNÐ15 trillion in bonds, an increase of 69 percent from the end of last year.

Market observers attributed banks’ interest in corporate bonds to their high returns.

They said these bonds usually offer higher interest rates than government bonds or bank deposits with comparable maturities.

Most corporate bonds offer a record 14.45 per cent coupon rate, far higher than the 4-5.5 per cent interest for short-term bank deposits and 8-8.9 per cent for long-term deposits.

According to the Ministry of Finance, companies mobilised VNÐ224 trillion by issuing bonds last year, up 94.5 per cent from the previous year. Liabilities in the market for corporate bonds amounted to VNÐ474.5 trillion at the end of 2018, equivalent to 8.6 per cent of GDP and up 53 per cent from the previous year.

The explosion in corporate bond issuance reflects the appetite for this product.

Bonds are issued by the central and local governments and by corporations.

Corporate bonds are always associated with a higher degree of risk, typically based on the creditworthiness of the companies that offer them.

When you buy a bond, you are lending money to the bond issuer in exchange for a promise to repay the loan amount plus interest at a future date. Bond maturities typically range from 30 days to 30 years.

According to Investopedia, the most well-known risk in the bond market is interest rate risk – the risk that bond prices will fall as interest rates rise. By buying a bond, the bondholder has committed to receiving a fixed rate of return for a set period. Should the market interest rate rise after the bond's purchase, its price will fall accordingly. The bond will then be trading at a discount to reflect the lower return that an investor will make on the bond.

Another risk is that a bond will be called by its issuer. Callable bonds have call provisions, which allow the bond issuer to purchase the bond back from the bondholders and retire the issue. This is usually done when interest rates have fallen substantially since the issue date. Call provisions allow the issuer to retire the old, high-rate bonds and sell low-rate bonds in a bid to lower debt costs.

Bond holders also face the risk of inflation, which deteriorates the returns. This in fact has the greatest effect on fixed bonds, which have a set interest rate from inception.

Experts said because bonds, especially those issued by companies, are considered quite risky the Government could find it necessary to tighten their purchase by banks to mitigate the risk for the sector.

Some 75 per cent of corporate bonds are bought by banks.

The State Bank of Vi?t Nam (SBV) has drafted a circular in place of Circular 36/2014/TT-NHNN reducing the prudential rate for credit institutions and foreign banks.

The draft includes new regulations that aim to restrict lending to high-risk areas including investment in and trading of corporate bonds. These are expected to prevent banks from directly or indirectly buying bonds to restructure existing loans.

In particular, the central bank prohibits them from providing credit for investing in corporate bonds in certain cases.

They include those subject to the Law on Credit Institution’s Article 126, Clause 1, and those that want to use bank loans to buy corporate bonds not yet listed on the stock market or bonds of public companies that are yet to be registered for trading in the market.

The draft also regulates that domestic credit institutions and foreign banks are not allowed to provide credit to customers seeking to buy corporate bonds issued by their own subsidiaries.

Experts said this is not the first time the central bank is seeking to tighten regulations on corporate bond buying by credit institutions and foreign banks.

In June last year the SBV issued Circular No.15/2018/TT-NHNN for the same purpose.

Under this new circular which revises Circular No. 22/2016/TT-NHNN, the central bank also stipulates that for corporate bond purchase, credit institutions including foreign banks must have an internal credit rating system besides a system to rate the bond issuers.

They are also required to issue internal regulations for the purchase of corporate bonds in accordance with current legal regulations. Accordingly, internal supervision regulations on corporate bond purchase, especially bonds issued for the purpose of implementing programmes and projects in areas of potential risk as identified by credit institutions, must be issued to detect risks and violations.

Credit institutions must also issue internal regulations on specifying the areas of potential risks as well as their credit and investment policies on the areas.

In a recent report, the Ministry of Finance also says that it is seeking ways to reduce the corporate bond market’s reliance on banks.

It has drafted measures to develop the corporate bond market, one of which is to strengthen the legal framework for issuance.

Developing credit rating agencies and encouraging companies to use credit rating services will also be given priority to improve buyers’trust in corporate bonds, thus making them attractive.

Development of an investor base in the Vietnamese corporate market would be implemented in ways that will enable professional institutional and individual investors to diversify their investment.

Smooth sailing forecast for forex market in 3rd quarter

Experts think there will be many favourable factors to help keep the foreign exchange market stable in the third quarter of the year.

They expect the exchange to remain steady at VNÐ23,300-23,600 to the dollar.

They point to the State Bank of Vi?t Nam (SBV)’s efforts to intervene in the foreign exchange market whenever it thinks necessary, much of it involving buying the greenback.

They point out other reasons including the improvement in the trade balance and demand for foreign exchange being steady and predictable.

The trade balance is predicted to improve to a surplus estimated at US$1.5 billion thanks to a surge in foreign companies’ exports.

The economy is also in good shape, with growth being steady, inflation low and foreign capital inflows consistent, which would help the foreign exchange market cope with any possible volatility.

Disbursement of foreign direct investment (FDI) is quite high, at an estimated $5.5-6 billion by the end of this quarter.

Portfolio investment is expected to increase sharply thanks to the issue of international bonds by banks.

VPBank, for instance, has successfully raised $300 million through three-year bonds, with BNP Paribas, JP Morgan and Standard Chartered acting as consultants.

TPBank plans to issue tier 2 international bonds worth $200 million this year.

There could be another $200 million in the pipeline.

Several external factors are also likely to keep forex rates steady in the third quarter.

Pressure from the global market on the VNÐ/US$ exchange rate will likely ease after US President Donald Trump and Chinese President Xi Jinping met on the sidelines of the G20 Summit in Japan in late June, which opened the way for the resumption of trade negotiations and reduced the risk of escalation of the trade war between the world’s two biggest economies.

Trump claims the US is in a disadvantageous position in the trade war when the central banks of other countries have continued to ease monetary policy, reduce interest rates and devalue their currencies.

So the US central bank could be put under pressure for its monetary policy and the dollar is unlikely to strengthen. The bank is ready for a rate cut of at least 0.25 percentage points.

Meanwhile, the Vietnamese Government has implemented measures to mitigate the negative impacts of the China-US trade war. It has established a committee to monitor the developments and make policy recommendations and made preparations to ensure steady economic growth.

They include controlling inflation and ensuring flexibility of the exchange rate.

The Government also plans to enhance the competitiveness of the country’s businesses and the investment environment.

HCMC taxman resolved to tax online vendors

The HCMC Tax Department will continue to look for new ways to collect taxes from individuals and organizations selling goods and services on social networks, said Nguyen Nam Binh, the deputy head of the department.

Binh told Lao Dong newspaper that despite the department’s strong efforts towards collecting taxes from online vendors, previous solutions have proved ineffective. Therefore, the department is working out more efficient solutions to force online traders to make tax declarations and payments.

In addition, the Law on Tax Management, which has been approved by the National Assembly, includes provisions on the liability of commercial banks, the information and communications sector, and enterprises to cooperate with tax agencies to tax online stores.

Therefore, the HCMC Tax Department will work closely with banks to check revenues of online vendors, even the small ones.

Tax agencies in districts in the city will team up with the relevant agencies to determine the addresses of online vendors and inform them of their obligation to file and pay taxes. Further, tax agencies will boost the use of e-invoices to improve the management of online stores and prevent them from using cash to evade taxes.

In the middle of last year, the HCMC Tax Department had written to 14,000 providers of goods and services on Google, Facebook and YouTube, with annual revenues of VND100 million each, asking them to pay taxes. However, most of them did not comply.

Nguyen Thanh Tung, the head of the tax office in HCMC’s Tan Phu District, said that the office has collected only VND2 billion in tax arrears from one online vendor since then.

The number of online vendors visiting the tax office of Phu Nhuan District to make tax declarations and payments has also been modest, and the office has suspended collection of taxes from online vendors.

Binh from the HCMC Tax Department admitted that the tax collection was not as efficient as expected.

The department has collected billions of Vietnamese dong from several online stores with high revenues. But, the majority of online vendors have yet to fulfill their tax obligations.

None of the owners of online stores with revenues of millions or billions of Vietnamese dong have made tax declarations and payments as required by law.

According to Binh, it is hard to get information on online vendors. In addition, the most popular method of payment is cash on delivery, which makes it hard for the taxman to track transactions.

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