Business in brief 06/27

In the first 6 months, many banks and finance companies involved in the Government’s programme to subsidise the interest rates on loans, disbursed more than VND71,300 billion to businesses, organisations and individuals in Ho Chi Minh City with the total amount of subsidised interest reaching VND450 billion. 

VND1,400 billion was allocated long and medium term loans and VND70,000 billion for short-term loans. 

The State Bank of Vietnam’s branch in HCM City conducted a survey of 72 businesses, which showed that after receiving low-interest loans from the Government’s programme, businesses saw a drop in expenditure of over 36 percent. It also decreased the cost of production to 4.6 percent and increased revenues to over 14 percent. 

However, many small and medium enterprises still have not applied for loans from the demand stimulus programme. The HCM City provincial people’s committee guaranteed credit to small and medium enterprises to ensure that they overcome their current difficulties.  

Vietnam’s biggest shopping centre under construction in Hanoi 

The Hanoi Savico Joint Stock Company began the construction of the Hanoi Plaza Savico Shopping Centre in Long Bien District on June 26. 

It will be one of the biggest trade centres in Vietnam covering a total area of 60,000 sq.m. 

The trade centre is 500m far from the Nguyen Van Cu-Ngo Gia Tu-Nguyen Van Linh road, which connects Hanoi to the northern provinces of key economic zones in Bac Ninh, Hung Yen, Hai Duong, Hai Phong and Quang Ninh. 

The trade complex will comprise of a supermarket, top-end shops, Asian and European restaurants, a coffee shop, an entertainment area and offices for lease.  

The total investment is US$25 million and the centre is scheduled for completion in early 2011.  

Vietnamese Rattan Network established 

A Vietnam Rattan Network was established in Hanoi on June 26 by the Vietnam Fine Arts and Handicrafts Association and the Vietnam Centre for Research and Support of Handicrafts Villages. 

The key members of the network consists of the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, the Vietnam Fine Arts and Handicrafts Association, the Vietnam Centre for Research and Support of Handicraft Villages, provincial departments, rattan exporters and importers, and material processing establishments of Vietnam, Laos, Cambodia and Indonesia. 

The Vietnam Rattan Network aims to provide better opportunities for members to share their experiences and develop rattan products in Vietnam to provide a sustainable income for people in rural and mountainous areas. 

The network will enable businesses to cooperate in producing and exporting their products. 

WB approves US$350 million credit package for Vietnam  

The World Bank’s Board of Directors has approved the eighth Poverty Reduction Support Credit (PRSC 8) worth US$350 million for Vietnam to help the country overcome the negative impact of the global economic crisis. 

The decision was made on June 25 following Vietnam’s progress in economic reform. 

The PRSC 8 provides direct budget support to promote the Government’s implementation of the Social Economic Development Plan (SEDP) for the 2006-2010 period.  

“This package is made at a critical time when Vietnam faces economic challenges amidst the global slowdown,” said Victoria Kwakwa, the World Bank’s Country Director for Vietnam. “So far, the government’s stimulus package has had its positive impact on the economy. The proposed operation is processed under the IDA Financial Crisis Response Fast-Track Facility in order to help meet the financing necessary to implement the government’s fiscal stimulus package as well as the reform programme supported by the PRSC operation.” 

The World Bank also envisages a total of more than US$4 billion to support Vietnam’s development over the next two years.  

Agro-forestry-fisheries export value drops by 2.4 percent  

Vietnam earned US$7.62 billion from agro-forestry-fisheries exports in the first six months of this year, a year-on-year decrease of 2.4 percent. 

Most agricultural products went up in volume but down in revenue as prices continued to slump due to the impact of the current global financial crisis, reported the Ministry of Agriculture and Rural Development (MARD). 

Agricultural exports reached US$4.34 billion, equivalent in value to the same period last year, while forestry products dropped by 19 percent to earn just US$1.2 billion. 

Exports of seafood products fared no better during this period, with turnover hitting only US$1.7 billion, down 11 percent from the same period last year. 

Some products, including coffee and tea, were up in volume but down in value.  

Other agricultural products such as rubber, pepper and cashew nuts saw a sharp decrease in value but just a slight drop in volume. 

Rice recorded the highest and steadiest growth with an export turnover of 3.8 million tonnes, fetching US$1.8 billion, a year-on-year increase of 57 percent in volume and nearly 25 percent in value. 

The Philippines remains the largest importer of Vietnamese rice, reaching US$752 million. 

According to the General Statistics Office’s figure, agricultural and seafood production value reached nearly VND97,000 billion in the first six months of this year, increasing by nearly 2.5 percent over the same period last year, the lowest rate for a decade. 

The MARD said that production in the first half of this year was stronger than it might have been if it wasn’t for the government’s efforts to stimulate production and investment.  

AANZFTA goes through 

The Prime Minister has approved the ASEAN - Australia - New Zealand Free Trade Agreement (AANZFTA), under which the Ministry of Agriculture and Rural Development will work with Australia to carry out two projects to analyse the risks of epidemics in animals and how to detect pesticide residues on exported fruits and vegetables. 

The Ministry of Industry and Trade will discuss with the relevant agencies about a plan to keep localities and businesses informed of the content of the agreement. 

The AANZFTA signed in February 27 2009 in Thailand underlines the need for ASEAN members including Vietnam and the Australian and New Zealand governments to promote and economic and trade links in the region. 

Garment and textile sector faces tough times 

Vietnam’s garment and textile sector is finding it difficult to reach its export target of US$9.5 billion this year, according to economic experts. 

The Vice Chairman of the Vietnam Garment and Textile Association, Pham Xuan Hong said that in the first six months of the year, export turnover had only reached US$4 billion, down by 4.7 percent against the same period last year. Export prices are also estimated to have fallen by 10-15 percent compared to last year’s figures.  

Economic analysts also warned that some major import markets have not yet recovered including the US, Europe and Japan.  

Select firms allowed to delay VAT on machinery imports  

Businesses importing machinery in compliance with the government’s stimulus policy can delay value added tax (VAT) payment for 180 days under a decision by the Ministry of Finance on Monday.  

The decision says the VAT deferment will apply to imports of machinery, equipment, components and vehicles used in projects to renovate machinery and improve technology. 

The government is encouraging businesses to invest in machinery and technology under its stimulus package which subsidizes interest rates for two years. 

Businesses obtaining the subsidy can delay paying the VAT for transactions between May 1 and December 31, 2009, according to the decision. 

Businesses less than 365 days old can also benefit from this policy.