Business in brief 18 Feb 2013
Vietnam and San Marino signed an agreement on double tax avoidance between the two governments in Rome, Italy, on February 14. The agreement aims to prevent tax evasion of taxes on income and assets, helping boost bilateral economic cooperation. With its clear and transparent tax regulations, the agreement will create a sound legal environment for both sides to conduct business and investment activity, said Truong Chi Trung, Deputy Finance Minister of Vietnam. It will also help facilitate economic, investment and trade cooperation between the two countries, contributing to tax incentives for foreign investors in Vietnam and opening up economic and investment cooperation between Vietnam and other countries in Europe. Vietnam and San Marino established diplomatic ties in 2007.
Vietnam has become Laos’ biggest foreign investor during the period since the Lao Government first adopted foreign investment incentive policies (1989–2012). Vietnam has so far poured US$4.9 billion into 429 projects in Laos. It is followed by Thailand with 742 projects worth US$4 billion and China with 801 projects valued at US$3.9 billion. The remaining ten biggest foreign investors in Laos include the Republic of Korea (RoK) with a total capitalization of US$748 million, France (US$490 million), Malaysia (US$430 million), Japan (US$428 million), the US (US$150 million), Singapore (US$134 million), and India (US$61 million). The most popular fields for foreign investors are the mining industry (accounting for 27 percent), electricity production (25 percent), agriculture, services, processing, hotels, restaurants, telecommunications, construction, industry, and banking.
Jet-setting Vietnamese travellers made some 3.5 million foreign trips in 2012 representing a year-on-year increase of 20 per cent, according to figures from the Vietnam National Administration for Tourism (VNAT). China, Cambodia and Thailand were the most attractive destinations for Vietnamese travellers, who spent over $3.5 billion on their overseas tours, Vu The Binh, Deputy Chairman of Vietnam Tourism Association, told local media. According to local tour operators, the numbers of Vietnamese booking outbound tours has increased significantly in the past couple of years and their spending on these trips are “relatively high”. Despite this, the amount spent by Vietnamese travellers on their “outbound” trips in 2012 equaled just fifty per cent of the revenues brought by foreign visitors to the country last year. VNAT’s figures revealed that in 2012, Vietnam welcomed 6.8 million foreign visitors, attaining total revenues of nearly $7 billion.
The insurance industry had targeted growth of 10-12 per cent for non-life insurance and 12-14 per cent for life insurance this year, according to the Vietnam Insurance Association. The industry was also expected to reinvest roughly VND100 trillion (US$4.76 billion) this year, up VND9.5 trillion against last year. Insurance Supervisory Authority (ISA) reported that total insurance premiums last year surged 11 per cent against the previous year to VND40.59 trillion ($1.93 billion). Non-life insurance contributed VND22.67 trillion ($1.08 billion), up 10.2 per cent, while life insurance reached VND17.92 trillion ($853.3 million), up 12 per cent.
Demand for office interior furnishing items of foreign buyers will continue growing strongly this year, the Handicraft & Wood Industry Association of HCMC (Hawa) forecasts. Export value of Vietnam’s wooden products in 2012 went up 17.9% against 2011. In particular, export of interior furnishing items for offices recorded a vigorous growth of 45%, accounting for over 6% of the country’s total woodwork export value. Hawa forecasts growth of this year’s export revenue from office interior furnishing items at 25-30%. The association estimates that Vietnam’s export of these products to its key markets would keep rising this year, with export turnover contributed by European, U.S., Chinese and Japanese buyers expected to surge about8-10%, 18%, 15% and 11-12%year-on-year respectively.
The State Bank of Vietnam (SBV) has issued a circular that mandates the formal creation of a national credit information database to give credit institutions an oversight of the industry and to help them achieve efficiency in their internal operations. The circular governs the State Bank’s departments and entities, the SBV branches of provinces and the cities directly under the central government, credit institutions and foreign bank branches, borrowers and other relevant stakeholders. According to an official statement from SBV, the national credit information database aims to support SBV’s role in managing and supervising banking operations in the country, help credit institutions prevent and mitigate risks in their operations and assist borrowers to get access to bank loans, thereby contributing to the socio-economic development. The circular is expected to take effect on 1st of July, 2013.
Can Tho City has initiated a range of construction projects with the aim of transforming itself into the Mekong Delta region’s largest trade center. The city is focusing on major port construction and upgrade projects including Cai Cui, Can Tho, and Tra Noc. It is also developing wholesales markets in Thot Not and Cai Rang districts, building the Tay Nguyen Plaza in Nam Hung Phu urban area, and erecting a 25-storey building in Cai Khe. Can Tho is cooperating with both local and international economic groups and businesses on information, commercial, and international convention centers in Ninh Kieu district. The city’s rural market and mini-supermarket chain projects are continuing. Can Tho City currently prioritizes developing industrial ports, advanced technology facilities, and ecological urban areas.
Prime Minister Nguyen Tan Dung has approved the restructuring plan for the Vietnam National Textile and Garment Group (VINATEX) during the 2013-2015 period to increase the group’s efficiency and competitiveness. Under the scheme, the group will further concentrate on its core businesses, including the manufacturing, sale, import and export of garment and textile products, as well as production and trading of raw materials, spare parts, chemicals, dyes, and equipment for the textiles sector. After the completion of the restructuring plan, the mother corporation will maintain a 100pct stake in four of its subsidiaries, while reducing its stake to 50-65pct in six companies and less than 50pct in 20 others. VINATEX is required to complete the divestment in 37 non-core subsidiaries within the next three years.
Vietnam National Shipping Lines (Vinalines) will dissolve two subsidiaries, let two others go bankrupt and sell out its shares in 37 companies by 2015 under its restructuring plan approved by Deputy Prime Minister Vu Van Ninh on February 4. According to a Government decision approving the plan, Vinalines will focus on three main sectors, namely sea transport, port operation and shipping services. The two subsidiaries to be dissolved under the restructuring plan are Vinalines’ branch in Can Tho City and Southeast Asian Maritime Human Resources Center (Vina-STC). Meanwhile, Vinashin Ocean Shipping Company Limited (Vinashinlines) and VietnamPetrol Shipping Joint Stock Company (Falcon) will file for bankruptcy. Vinalines will divest its capital from 37 companies by 2015 and merge Petrol Marine Trading Company and Vinalines Petrol Company together.
The PM has approved a plan to restructure the Vietnam National Coal and Mineral Industries Group (Vinacomin) in the 2012-2015 period to improve the corporation performance and sustainable development to be environmentally friendly and ensure national energy security. Vinacomin will focus on four main business lines, including the coal industry, mineral- metallurgy industry, industrial explosives, and electrical industry. Under the plan, Vinacomin will be a parent company with 16 dependent entities. The mother corporation will hold 100pct of its stake in five subsidiaries, maintain 65-75pct of the registered capital in nine companies, reduce its stake to 50-65pct in another 11 companies, while owing less than 50pct of registered capital in 11 others. The group will divest itself of nine companies and dissolve two subsidiaries, namely Dong Vong Coal company and Vietnam-Japan Gemstones company, as well as allows for the bankruptcy of Song Ninh-Vinacomin Shipbuilding Co., Ltd.
Phan Dang Tuat, chairman of Saigon Beer, Alcohol and Beverage Corporation (Sabeco), has predicted his firm may face multiple difficulties this year due to the presence of new competitors. In a report to the Ministry of lndustry and Trade on Sabeco’s performance in 2013, Tuat said there would be many challenges for Sabeco this year, such as new rivals, volatile raw material markets and open-market policies that are making the competition in the domestic beer industry more intense. In 2012, Sabeco sold about 1.26 billion liters of Saigon beer, a rise of 8% against 2011. The beer producer paid some VND9 trillion in taxes to the State budget. This year, Sabeco is targeting a sales volume of 1.3 billion liters, an increase of 3% from 2012. The firm will continue its restructuring this year. The beer industry is contributing around USS5-7 billion to the nation’s GDP every year, and employing some 1.5 million workers, including at beer stores, Tuat said.
The Mekong Delta city of Can Tho is implementing plans to build three industrial zones with a total area of 1,400 hectares. They are O Mon (600ha), O Mon Bac (400ha), and Thot Not (400ha). Besides, the city is making land clearance to expand Hung Phu I and II industrial zones, and two other zones in O Mon district. The city will invest in communication infrastructure, a water drainage system, electricity and provide accommodation for residents that have been resettled. Can Tho city’s present industrial zones have attracted 206 projects, including 184 domestic projects and 22 projects with foreign invested capital. In 2012, businesses in the city’s industrial zones grossed $1.87 billion in turnover. Industrial production value was up 3.9 per cent from 2011, reaching $1.365 billion.
The Vung Ro oil refinery’s production capacity in the central coastal province of Phu Yen will increase from 4 million tons to 8 million tons per year, according to chinhphu.vn. The approval was made by Prime Minister Nguyen Tan Dung at the request of the Phu Yen People’s Committee and the Ministry of Planning and Investment. The PM has also agreed in principle to revise the location of the oil refinery project to include a specialized sea port. The province will have to meet the requirements of advanced technology and ensure environmental safety before licenses are issued. The expected US$3.1 billion project is a joint-venture between the UK-based Technostar Management and Russia’s Telloil Group. The Government will allow investors to enjoy several special incentives involving zero export tax and oil distribution.
