Business in brief 27 May, 2013
VHG to delist if restructuring fails
Beleaguered Viet Han Investment and Production (VHG) would delist if its restructuring plan failed, according to the company’s recent annual meeting.
The board of directors would assess the possibility of success of the restructure and, at the same time, choose a reasonable time to delist, if necessary, so the maximum benefits to shareholders would be assured.
The company has 25 million shares listed on the HCM City Stock Exchange.
Under the restructuring plan, VHG will probably be split, merged or establish new subsidiaries. It will have to transfer assets and shares in subsidiaries and associates to other entities.
The company will also settle and liquidate its projects, such as D’Evelyn Tower Da Nang, D’Evelyn Beach Quang Nam, Dong Giang Rubber Quang Nam, some mineral, recycled plastics and fertilisers projects.
Last year, it planned to established a VND100 billion (US$4.7 million) limited liability company to manage the rubber project. Previously in 2011, the company invested 65 per cent in a VND100 billion partnership in the D’Evelyn Beach Quang Nam.
Of the above projects, the most expensive was D’evelyn Tower Da Nang, which was expected to cost the company VND850 billion ($40.4 million). It was kicked off in 2010 and VHG has poured in VND108 billion ($5.1 million) so far.
Prior to the annual shareholder meeting, the company had said it hoped the transfer of its projects and assets would account for 50 per cent of this year’s revenue.
VHG has targeted a revenue of just VND200 billion ($9.5 million) for 2013. It also expects losses would narrow to VND20 billion ($952,300) compared to VND36 billion ($1.7 million) last year. VHG shares closed yesterday at the ceiling price of VND4,000 ($0.19).
US steel producers make dumping claim
After welded steel pipes and steel wire garment hangers, now welded stainless pressure pipe from Viet Nam continue to face charges of dumping in the US.
The Viet Nam Competition Authority under the Ministry of Industry and Trade on Monday said three US stainless pipe producers - Bristol Metals LP, Felker Brothers Corp and Outokumpu Stainless Pipe Inc- have filed a trade petition with the US International Trade Commission (USITC) and the US Commerce Department (DOC) seeking to impose anti-dumping duties against welded stainless pressure pipe from Malaysia, Thailand and Viet Nam.
Last year, imports of steel pipe from Viet Nam amounted to 4,627 net tonnes, worth US$16.3 million, and took 6.61 per cent of US import market share, the filing said.
The petition alleges dumping margins of 15 to 17 per cent for Malaysia, 13 to 15 per cent for Thailand, and 70 to 71 per cent for Viet Nam, according to Bristol Metals.
The ITC will hold a hearing on June 6 and make a preliminary determination by July 1, Bristol Metals said.
The action marks the third steel-related trade case against Vietnamese steel products filed in the US since 2011.
In the past two years, the domestic steel industry faced five anti-dumping lawsuits and two anti-subsidy ones from the US, Brazil, Thailand and Indonesia.
However, US ITC announced late last year that after investigation, it found welded carbon-quality steel pipes imported from Viet Nam caused neither injury nor losses to the US steel pipe industry. Therefore, it said the US would not impose anti-dumping duties on them.
According to Tran Tuan Nghiep, director of Huu Lien Asia Corporation, a defendant in last year’s lawsuit against Viet Nam welded carbon-quality steel pipes, price competition in the steel market is fierce and if Vietnamese steel is subject to more and more anti-dumping and anti-subsidy tariffs, it could lose an important market.
Bio-fuel system installation to be sped up
Deputy minister of Industry and Trade Le Duong Quang has asked petrol producers and agencies to speed up the distribution of E5 bio-fuel to meet a deadline set by the Prime Minister.
According to the PM Decision 53/2012/QD-TTg, the E5 bio-fuel (traditional petrol mixed with 5 per cent ethanol) will be rolled out on national scale by the end of 2015.
Seven cities and provinces including Ha Noi, central Da Nang City and HCM City will take the lead in developing the fuel.
Deputy director of the ministry’s Science and Technology Department Nguyen Phu Cuong said that except for PetroVietnam Corporation (PVN) and Sai Gon Petro, most petrol and oil enterprises had not actively developed distribution.
Deputy general director Nguyen Sinh Khang from PVN said the Government had only issued preferential policies to encourage bio-fuel production but had not supported a distribution system.
In fact, only 175 out of 12,000 petrol stations nationwide sell E5 bio-fuel. These are owned by PVN and Sai Gon Petro. Meanwhile, Petrolimex, a petrol supplier accounting for 50 per cent of the domestic market share, has made no investment.
Explaining the tardiness, a representative from Petrolimex said the corporation was studying investment plans to choose the most efficient because investment in bio-fuel distribution required a huge amount of money.
Despite the tardiness by petrol producers, deputy minister Quang told producers and relevant agencies to enhance co-operation and jointly tackle difficulties.
He said the deadline should not be extended because national energy security and the livelihoods of cassava growers all depended on popularising bio fuel.
He ordered companies to detail their investment plans and submit them to the ministry before June 5.
The deputy minister also asked the Domestic Market Department to study petrol trading management to create favourable conditions for bio-fuel production and distribution.
PVN representative also asked the Government and Ministry of Finance to exempt import taxes imposed on equipment for fuel storage, transportation and mixture.
It also asked the Government to reduce or exempt bio fuel from environment taxes because it was an environmentally friendly product.
To promote the consumption of E5 bio-fuel, local producers suggested that people’s awareness of benefits of the product should be raised through a national programme.
Power plant contract to be completed
Japan’s Sumitomo Group has fast-tracked negotiations on a build-operate-transfer (BOT) contract for the Van Phong coal-fired power plant, and an agreement on the project is expected to be made with the Ministry of Industry and Trade in the first quarter of next year.
Once the BOT is signed, an investment licence should be approved in the second quarter of 2014, with construction work scheduled to start in August 2015 and the plant’s opening set for October 2019.
The project was initially proposed in 2006 and has a planned capacity of 2,640MW. The plant will be located in the Van Phong Economic Zone in central coastal Khanh Hoa Province’s Ninh Hoa Town.
Covering an area of more than 350 ha, the project would cost more than US$2 billion.
Nguyen Chien Thang, chairman of the provincial People’s Committee told the Vietnam Investment Review that work was delayed due to issues related to the land hire contract with the province and negotiations for an agreement on how much Electricity of Viet Nam (EVN) will pay for the power supplies.
Thang said the province committed to ensuring a favourable land hire contract for the project’s investors. However, the Japanese group was asked to provide a specific timetable on the completion of the project to help avoiding delays.
The province has spent about VND150 billion ($7.2 million) on land compensation and site clearance for the project since 2010.
The plant would supply power to EVN, using coal imported from Australia and other countries.
The BOT power plant would comprise two 660 MW boiler turbine generator units.
Once licensed, the plant would be the second Sumitomo-invested power project in Viet Nam, following the Phu My 2.2 power plant in southern Ba Ria-Vung Tau province, which was jointly built by Sumitomo, Japan’s TEPCO Company and French firm EDF Energy.
It’s cool to be green: consumers
Green activities are all the rage in HCM City, with consumers increasingly voting with their pocketbooks against environmentally irresponsible companies and producers.
The growing public awareness about green issues, however, has not occurred without support from the city government.
In fact, the city authority has been a leader in launching green consumption campaigns, with the first organised in 2010.
The annual event, which attracts nearly 2,000 volunteers, is only one of many green activities that the city has been promoting in recent years.
Nguyen Thi Hong, vice chairwoman of the city’s People’s Committee, said the city had urged consumers to buy products from companies that follow environmental regulations and produce safe, healthy products.
To improve their ecological footprint, many companies have begun to use renewable energy and power-saving devices, and to produce more organic and natural products.
Ho Quynh Hung, chairman of Dien Quang Lamp Joint Stock Company, said that local consumers would boycott companies that did not make environmentally friendly products.
To meet demand, Dien Quang has updated its technology and products as well as its production methods, he said.
The effort has extended beyond the business sector, with several campaigns directed at youth.
Lotus University’s Green Jobs We Choose forum and Green Empowering Contest, for example, are events that help young people find jobs in companies that cause the least damage to the environment.
Bayer Viet Nam is also aiming for the youth market, working with Tri Viet Company and the Organisation for Life&Learning for Environment and Community (Live&Learn) to produce the book "What is Wrong with the Earth?"
The book notes that "superheroes are not necessarily powerful people, but those people who do small things to make great things every day".
In the industrial sector, the city is taking steps to classify solid waste at the source, according to the Department of Natural Resources and Environment.
A number of local supermarkets, trade centres and several residential areas are required to separate solid waste so that more of it could be recycled.
Recycling also was part of a roofing project for the Ho Phuong Kindergarten in Binh Chanh District.
The organiser of Earth Hour 2013, in collaboration with Tetra Pak Viet Nam, Dong Tien Paper and Packaging Company and Tam Tan Quy Company, helped to recycle 8,000 milk cartons to produce 200 shingles that cover nearly 300 sq. metres of the school’s roof.
EuroCham kicks off Green Biz activities
This year’s Green Biz activities organised by EuroCham include field trips for students to learn about sustainable business practices and the shift from a "brown to green economy", the business chamber has announced.
Green-Biz activities, which will take place from May to September, will focus on real, practical challenges and outcomes, according to Preben Hjortland, EuroCham’s chairman.
The main activities and conference for Green Biz 2013 will be held in Ha Noi from September 19-20. It will bring together stakeholders who will give presentations and take part in debates and network-sharing events.
Woodwork processors cut imports
Many companies in the local woodwork industry have halved the volumes of imported timber to minimise their inventories and ease pressure for bank loans.
Due to economic woes, woodwork processors were now importing input materials every quarter or small batches in line with each order instead of importing enough for a whole year’s production.
This was stated by Huynh Quang Thanh, chairman of the Binh Duong Wood Processing Association and director of Hiep Long Woodwork Company, while speaking with the Saigon Times Online.
The gloomy situation in the first four months of the year is largely responsible for slowing down the imports.
Many enterprises failed to get bank loans while others who did were charged with high lending rates. This means members in the industry have had to scale down imports of input materials to avoid paying huge interest sums in the current tough business conditions, added Thanh.
He noticed numerous members had slashed material imports by over 50 per cent against the same period last year.
According to the director of a woodwork exporting company in HCM City, interest sums for bank loans alone make up more than 30 per cent of total production costs at his firm.
In fact, owing to difficult business, input material imports of the whole industry have slumped in recent years as processors seek to buy more materials locally, the Viet Nam Timber and Forest Product Association (Vietforest) reports.
For instance, imported processed materials for the woodwork industry from 2005 to 2010 accounted for up to 80-90 per cent of the total. However, this fell to only 66 per cent in 2012.
Latest data from the Ministry of Industry and Trade in the first three months of the year shows that Viet Nam imported more than US$314 million worth of timber and products, a decrease of 5.22 per cent year-on-year.
In March alone, the import value of this kind of product reached $113.2 million, tumbling 14.43 per cent from the same period last year.
Real estate body tips revival
The Viet Nam Real Estate Association (VNREA) will continue to help its members overcome difficulties, advise and seek policy support from the Government, and promote market transparency, officials said yesterday.
Speaking on the sidelines of an exhibition on "Housing for True Demand," which is part of a series of events celebrating the association’s 10th anniversary, property developers said that in the near future, businesses are likely to focus on developing social and low-income housing, taking advantage of preferential policies in place for this segment.
The three-day exhibition is being attended by many big property firms including Hoang Quan, Thu Duc House, Thanh Binh and the Housing and Urban Development Corporation.
Association officials said the event would help property developers nationwide popularise their projects and attract domestic as well as foreign investment.
It would also give property firms an opportunity to promote their brand and prospective customers to make choices based on quality information.
Meanwhile, developers can speed up sales and mobilise capital for ongoing or new projects, the officials said.
The exhibition also offers the possibility of linking enterprises with banks in order to improve credit access for both enterprises and prospective home buyers, helping the stagnant property market move ahead, they added.
A grand ceremony with the attendance of Deputy Prime Minister Hoang Trung Hai and other dignitaries including the Governor of the State Bank of Viet Nam Nguyen Van Binh and senior officials of the Ministry of Construction and the HCM City administration will be held this morning to mark VNREA’s 10th anniversary.
Later in the day, officials of the Construction Ministry, the central bank, relevant agencies, industry insiders and experts will gather at a seminar that will seek solutions for solving the problem of unsold property inventory under the Government’s Resolution 02/NQ-CP.
The seminar will also focus on ongoing challenges as well as opportunities.
VNREA deputy chairman Truong Anh Tuan, who is also chairman of the Hoang Quan Real Estate Corporation, said yesterday that many businesses will now focus on developing social and low cost housing to take full advantage of preferential policies for this segment, including reductions in VAT and corporate income tax, preferential interest rates and other measures.
Following the Government resolution, his company will convert four commercial housing projects in HCM City, Can Tho, Vinh Long and Binh Thuan to social housing projects. This year, it will launch 1,000 low cost apartments and 2,000 social houses, Tuan said.
VNREA officials said that at the end of the seminar, several agreements will be signed among leading credit institutions like Agribank, Trustbank, and BIDV to implement the resolution that seeks to revive the property market.
Total housing space in Viet Nam has more than doubled since 1999 from 709 million sq.m to 1.6 billion sq.m at present. During this period, per-capita housing space has doubled from 9.68 sq.m to 19.2 sq.m, according to VNREA.
S Korean Aerospace officials arrive
Representatives from Korean Aerospace Industries in South Korea have arrived in central Da Nang city to study the possibility of setting up a factory producing spare parts for planes.
According to local newspaper Dau tu (Investment), the board of the Da Nang high-tech zone said the factory would produce parts for the European Aeronautical Defence and Space Company N.V, the parent company of Airbus.
The size of the factory and investment has not been revealed.
If realised, this will be the second factory to manufacture spare parts for airplanes in the country after MHI Aerospace Viet Nam Ltd Co invested by Japan’s Mitsubishi group.-
Government bond rates continue to fall
The yield on Government two-year bonds declined 33 points to reach a record low of 6.8 per cent on Tuesday, Ha Noi Stock Exchange announced. Yields on other bonds also had significant falls.
Specifically, three-year and five-year bond yields reduced by 27 and 21 points to 7.23 per cent and 8.23 per cent.
Bonds worth a total of VND5 trillion (US$238 million) found buyers on Tuesday.
Meanwhile, the yield on 28-day term treasury bills (T-bills) on Tuesday continued to decrease 20 points to 2.5 per cent a year. This follows a fall of 2.7 per cent a day earlier.
The State Bank of Viet Nam sold VND10 trillion ($476.1 million) of T-bills in only two days.
It was the first issuance of 28-day T-bills after two months of interruption. On Monday, the coupon rate of 52-week T-bills dropped 47 basis points to 6.03 per cent.
A banking official told website ttvn.vn that interest rates remained on a downward trend due to the central bank’s recent operational policies.
In addition, another two major factors affected rates. First, the volume of bonds and T-bills maturing in the last two weeks of this month amounted to more than VND38 trillion ($1.8 billion), creating a cash surplus, which forced credit institutions to reinvest.
Second, Vietinbank (CTG) has collected nearly $750 million from the sale of its shares (more than 644 million units) to the Japanese Bank of Tokyo Mitsubishi UFJ Ltd.
Property investor seeks partners
Pacific Property and Infrastructure Development Joint Stock Company (PPI) is calling for investment into its two property projects in HCM City’s Thu Duc District.
The projects are the riverside complex Water Garden covering over two hectares and a 2,400-square-metre apartment project, PPI Tower, which will have 80 apartments and 8,000 square metres for office space.
Pham Duc Tan, chairman of PPI, said land had been cleared for the projects and investment procedures finished, but due to difficulties in the property market and difficulty in assessing capital sources, the firm was incapable of carrying out those projects on its own.
Therefore, PPI had called for investors who had financial capabilities and wanted to co-operate with PPI to develop them. Partners can choose suitable cooperation models, but the prior solution is to set up a joint venture, Tan said.-
Work begins on tourism complex
Delta-Valley Binh Thuan Co Ltd has started work on the US$400 million Thung Lung Dai Duong (Ocean Valley) tourism complex in the south central province of Binh Thuan.
The project covers a total area of about 985ha in Tien Thanh commune and will provide entertainment spaces, parks, golf courses, restaurants, hotels, villas and trade complexes. It is expected to create 3,000 jobs when open.
Suppliers attend food safety course
Thousands of customers and food suppliers are learning about food safety at a mobile demonstration facility set up at Metro Cash&Carry Viet Nam stores in HCM City.
The demo facility will stay for two weeks at each of Metro’s stores and then will tour around the country. It is expected that 30,000 customers, employees, suppliers and students will take part in the training from now until 2014.
Launched last year, the training sessions are organised by the German Investment and Development Agency, Metro Cash&Carry Viet Nam, and Assist, a non-profit organisation.-
Malaysia Airlines offers package
Malaysia Airlines is offering package tours for three days and two nights to travellers from Kuala Lumpur to HCM City at US$292 from now until August 31.
Each tour covers a two-way economy class flights, airport tax and transfer and accommodation at Equatorial Hotel and daily breakfast. The airline operates three flights a day to HCM City.
Economy class and business class tickets for its flights from HCM City to Kuala Lumpur cost $136 and $331, respectively, from now until May 31.
Iron ore needed for local production
The Viet Nam Steel Association (VSA) recently proposed that the export of iron ore be halted in order to ensure the adequacy of raw materials available for domestic production.
The association said that several furnaces had been forced to stop due to a shortage of ore.
There are 14 furnaces in the country, with a total production capacity of 3.8 million tonnes of cast iron per year. However, output last year reached only 500,000 tonnes.
Next year the demand for iron ore from the Viet Nam Steel Corporation alone is estimated at 2.2 million tonnes, about 820,000 tonnes of which will need to be bought from outside sources.
In response to the VSA’s proposal, the Ministry of Industry and Trade said that the export of iron ore was aimed at clearing high inventories and tackling difficulties facing enterprises, according the Viet Nam Economic Times newspaper.
Due to the country’s current economic difficulties, the Government deemed the policy of allowing the export of iron ore to be appropriate.
The ministry said that many furnace building projects in the country have fallen behind schedule, resulting in an imbalance between mining output and consumption capacity in the domestic market.
They added that if domestic steel producers committed to collecting all inventories of iron ore in the country, then the exporting would be stopped.
Currently, iron ore from mines in over ten provinces are already reserved for domestic production.
To limit the export of iron ore, the export tax has been increased to 40 per cent.
HCM City sees drastic drop in FDI
According to the Ho Chi Minh City Statistics Department, there were 130 foreign direct investment projects licensed until May 15 in the City with a total registered capital of US$158 million, of which chartered capital was at $105.1 million.
The figures also showed that 40 projects increased an additional investment of $204.1 million. Thus, the total newly registered and additional investment capital touched $362.1 million, much lower than that of $698.2 million in the same period last year.
Singapore remained the biggest investor with 20 projects at a total investment capital of $64.9 million. Japan followed with 42 projects at an investment of $16.3 million; South Korea with 17 projects at $10.4 million; Holland with 3 projects at $20.3 million; Germany with 3 projects at $21.1 million; and Australia with 5 projects at $10.2 million.
Property price drops heavily
A report on property price index by Savills Vietnam showed that house price in Hanoi and Ho Chi Minh Cities has dropped by 27 percent and 22 percent respectively, compared to its highest price in the second quarter of 2011.
Hanoi house price index was at 108.3 points in the first quarter of this year, a drop of 6.4 points compared to the previous quarter, and a drop of 16.7 points year-on-year. The index has declined for seven consecutive quarters by nearly 22 percent after hitting a record high of 138.7 points in the second quarter of 2011.
Average house price in Hanoi, including new projects, has fallen 27 percent since second quarter of 2011 as new housing projects offered low price while existing projects also lowered their price.
Meanwhile, Ho Chi Minh City house price index stood at 89.2 points in the first quarter of this year, down 0.4 points compared to the previous quarter and 3 points year-on-year. Average house price slid by 22 percent but trading volume rose 2 percent compared to previous quarter and 25 percent year-on-year.
Doubts on joint-ventures with FDI companies
A shortage of capital, poor technology, unprofessional administration, along with market difficulties have urged local firms to establish joint ventures with foreign companies to resolve these problem, however, most firms mainly focus on how to escape difficulties without calculating on keeping ownership.
According to income statement of 2012 of Ninh Van Bay Travel Real Estate Joint Stock Company, although the company revenues nearly hit VND205.96 billion, up 117 percent compared to the previous year, its margin was minus, as the economic slump has put some projects of the company behind schedule. This is the second consecutive year this company has reported a loss.
Recently, Hoang Anh Dung, CEO of Ninh Van Bay, cheerfully shared that his company had found a lifebuoy in Recapital Investment Pte.Ltd. The Singapore partner bought 35.87 percent stake in Ninh Van Bay for VND225 billion for the latter to pay for bank interest; return its loan of US$2 million to foreign partners; spend VND10 billion for Six Saigon River projects; VND32 billion for Emeralda Hoi An project; and VND140 billion for Emeralda Ninh Binh to finish construction for this resort to officially open in May.
Cooperating with foreign companies is currently a common trend for many Vietnamese companies amid this present financial crunch, poor technology, and poor resistance against economic recession.
Firms said that even when restructuring, their operations hardly improved but by associating with foreign companies, their problems will be resolved immediately. However, in these business deals, instead of caring about limiting ownership ratio of foreign companies to keep decision-making powers for themselves, firms were optimistic of the handshake that will help them not to face with difficulties but increase potential to expand market share to their partners’ markets.
Therefore, in past few years, there were many market-shaking business deals, such as the largest cement cooperation in South East Asia, Semen Gresik, of Indonesia bought 70 percent stake of Thang Long Cement Joint Stock Company; Thailand’s Siam Cement Group purchased 85 percent stake of tile producer Prime Group at a cost of nearly VND5 trillion; India’s Fortis Healthcare International bought 65 percent stake of Hoan My Medical Group; Korea’s Lotte Group bought all stake of Minh Van Company and Unicharm Co., Ltd, and owned upto 95 percent of chartered capital of Diana Vietnam Joint Stock Company.
With support from foreign partners, local firms have been over joyous because they can increase the company’s chartered capital and solve imminent problems. Nevertheless, experts and associations concerned that foreign companies will take over market share in manufacturing industry, causing bad effect to the country’s socioeconomic development.
According to Vietnam Association for Building Materials, amid the context that the scheme for cement industry has been broken and has redundant production, instead of restructuring cement companies to form bigger cement complexes to increase competitiveness and gain foothold in local market, some firms sold almost of their stakes to foreign businesses.
At this moment, firms only see imminent benefits. However, in the long term, when foreign companies take over local ones, it will cause serious effects to both environment and border security as each cement plant connects closely with national security. Moreover, many projects were built on rare limestone area, and if sold to foreign companies, national resources will be lost.
Meanwhile, Truong Phu Chien, CEO of Bibica Joint Stock Company, frankly admitted his company’s mistake in cooperating with Lotte for five years as the latter has been showing intentions to turn Bibica into its subsidiary. According to Mr. Chien, when establishing joint-venture with foreign companies, local companies should not sell more than 34 percent stake to prevent their companies from foreignization.
Earlier, when asking Lotte to become its partner, Bibica longed for comprehensive cooperation on management, technology, technique, and import and export. However, after coordinating for five years, Lotte started to demand Bibica add its name before the latter’s name.
Experts said that, buying Bibica’s stake was the shortest way for Lotte to enter Vietnamese confectionery market without spending money to build plants. Lotte will simply produce at Bibica Mien Dong factory and exploit distribution network of more than 20,000 stores built by Bibica. However, as Lotte’s stake in Bibica merely touched 38 percent, Bibica still holds decision-making powers. The latter is planning not to continue to cooperate with Lotte when the contract ends this year.
As for companies who sold more than 40 percent stake to foreign companies, the exit narrowed. In future, there will be more Vietnamese companies who lose ownership and become just hired employees in their own companies.
State Audit reveals wrongdoings in the banking system
A report from the State Audit of Vietnam has disclosed various wrongdoings of the banking system last year, including interest rates in the interbank market that were higher than those of the black market.
Despite the efforts of the State Bank of Vietnam inflation in 2012 was higher than the NA’s goal. Moreover, enterprises are still in need of capital and bad debts continue to mount.
Several credit institutions have violated regulations on refinancing services but have not been dealt with. For example, North Asia Bank and Great Trust Bank were found to have committed violations in the first nine months 2011, but the SBV only established a supervisor team in late November 2011.
SBV also showed lax management over the interbank market which resulted in ludicrously high interest rates.
Though the regulated annual rate was 14%, several transactions in October 2011 were recorded as having annual interest rates of up to 30%, while some transactions in November saw rates as high as 37.5%.
The report also pointed out that some banks have not followed proper procedures when giving loans, including the Bank for Investment and Development of Vietnam (BIDV) and Mekong Housing Bank (MHB). These two banks still incur high rate of bad debt; 2.96% at BIDV and 2.49% at MHB.
Vietnam Banks for Social Policies (VBSP) also did not follow proper lending procedures for disadvantaged people, and gave away benefits to the wrong customers.
The VBSP’s capital for preferential lending activities requested by the state has also been widely criticised for its activities.
NA deputies propose removal of spending cap on advertising
Many National Assembly (NA) deputies proposed removing the cap on corporate advertising funding instead of increasing it to 15% of corporate expenses from current 10%.
The NA has recently held a working session to discuss the draft amended Law on Corporate Income Tax which suggests an increase in the cap to 15%. However, a number of NA deputies disagreed for various reasons.
Deputy Truong Trong Nghia, from HCM City, said lawmakers should remove the cap because, while 10% or 15% may be a reasonable amount for larger companies, smaller ones may have to spend from 20%-40% of their budgets on advertising.
Deputy Nguyen Ngoc Hoa, also from HCM City, agreed, saying that any enterprises often make careful consideration before deciding how much to spend on advertising. He added that companies should be empowered to decide on their own the best amount to spend on advertising and how best to balance their expenses.
Some deputies suggested calculating the cap based on the revenues of enterprises instead of on their total expenses as is done currently in order to ensure transparency.
“Corporate advertising and promotion programmes have fostered the development of the advertising industry which has contributed to the state budget as it is subject to several types of taxes, including corporate income taxe,” Hoa commented.
Sharing the same view, deputy Nguyen Thi Nguyet Huong, from Hanoi said even though the proposed increase in the cap from current 10% to 15% is a positive move, the cap has unwittingly hindered sales.
“We do suggest removing the cap. If we have no better choices and are compelled to continue to apply a cap, the regulation should be amended in accordance with international norms,” said deputy Pham Huy Hung from Hanoi.
Deputy Tran Quang Chieu, from Nam Dinh Province, said the proposed cap at 15% is unreasonable, as it may be sustainable for foreign companies but several small domestic firms may not be able to spend that much.
Meanwhile, Deputy Prime Minister, Vu Van Ninh, said the removal of the cap has the potential to create favourable conditions for foreign companies to take advantage and increase the prices of their goods and services.
A recent survey by the NA’s Committee for Finance and Budget showed that the majority of members of the committee supported the increase in the cap to 15%. They also proposed supplementing the draft law with a roadmap towards the eventual removal of the cap in accordance with international regulations so as to attract investment.
Foreigners may have more options for owning property in Vietnam
Foreign individuals and organisations may be allowed to buy villas and detached houses in Vietnam, not only apartments as at present.
This is among the revisions of the Law on Housing proposed by the Ministry of Construction. The ministry plans to submit the revisions to the National Assembly for approval.
Under the ministry’s recommendations, Vietnamese people who live in foreign countries will be granted with land ownership right to build houses, just as those living in the country. Meanwhile, foreign-invested enterprises will be allowed to re-lease property. They would also be able to buy and own working offices in Vietnam.
According to Deputy Minister of Construction, Nguyen Tran Nam, the ministry has set up a task force to revise the Law on Housing and the Law on Real Estate Business for submission to the National Assembly by the end of 2014. He expected that, if approved, the revised laws will take effect from 2015.
The Ministry of Construction has also asked provincial People’s Committee to outline a housing development plan for one year, five years and a long-term plan to prepare necessary resources while avoiding massive investment.
In 2008, the National Assembly issued Resolution 19, which allowed foreign individuals to buy accommodation in Vietnam for 5-year trial period.
Under the resolution, foreigners who directly invest in the country or were employed by Vietnamese firms as managers were allowed to buy apartments.
Mekong Delta pins hope on bumper rice crop
The Mekong Delta’s total rice output is expected to reach 9.3 million tonnes in the 2013 summer-autumn crop, said the Ministry of Agriculture and Rural Development (MARD) at a conference in Can Tho city on May 23.
The region also targets more than 4.6 million tonnes of husked rice, including 3.1 million tonnes for trade, it said.
According to the ministry, the country’s rice bowl has more than 1.8 hectares for the ongoing summer-autumn rice crop, representing a decrease of over 6,400 hectares. By May 8, more than 1.1 million hectares have been filled, accounting for over 62 percent of the plan.
In an effort to stabilise rice price and ensure minimum profits for farmers, the MARD has mapped out a plan on 2013 summer-autumn crop rice reserves to be submitted to the Prime Minister.
Under the plan, the ministry proposed purchasing 1 million tonnes of rice for reserves, or 30 percent of total output reaped in the 2013 summer-autumn crop, within two months, beginning from June 15.
According to the Vietnam Food Association, by May 16, Vietnam shipped abroad 2.4 million tonnes of rice, up 11.5 percent in volume and 4.85 percent in value.
The country signed contracts to export 4.42 million tonnes of rice, of which nearly 2.4 million tonnes have been handed over to customers.
Meanwhile, the rice volume for domestic consumption is expected to hit 8 million tonnes in 2013, excluding an inventory of 787,000 tonnes from the previous year.
The MARD said that Vietnamese rice will continue facing difficulties in 2013 as import demands of several Asian countries are forecast to sharply fall and increasing competitions among exporters, with newly emerging rivals such as India and Myanmar.-
Huge benefits from licenced software usage
A new Software Alliance BSA and the business school INSEAD study has found that increasing use of properly licenced software delivers huge economic benefits.
The study confirms that increasing use of licenced software corresponds to substantial positive gains in gross domestic product (GDP), and that the economic stimulus effect of properly licensed software is significantly greater than that of pirated software.
Accordingly, properly licenced software would deliver $50 million in additional economic value as a 1 per cent increase in use of licensed software would generate an estimated $87 million in national production, compared to $37 million from a similar increase in pirated software.
“This study confirms that licensed software is not just good for firms — it is an important driver of national economic growth. Government, law enforcement, and industry in Vietnam should take every opportunity to reap these potential gains by reducing piracy and promoting use of properly licensed software,” said BSA’s Asia-Pacific senior marketing director Roland Chan.
The study also finds that each additional dollar invested in properly licensed software has an estimated return on investment (ROI) of $94 compared to a $9 return from each additional dollar worth of pirated software put into use.
Another finding was that increasing licenced software use globally by 1 per cent would inject an estimated $73 billion into the world economy, compared to $20 billion from pirated software — a difference of $53 billion.
Besides, on a dollar-for-dollar basis, the return on investment from using properly licensed software is greatest in developing economies — $437 in extra GDP, on average.
“Previous studies have shown that value-added services delivered with properly licensed software help firms reduce costs and increase their productivity. This report goes one step further to ascertain the impact of software use on national production,” said Eduardo Rodriguez-Montemayor, a senior research fellow at INSEAD eLab
The study also highlights the need for governments and enterprises to take actions if they want to embrace the economic opportunities presented by licensed software use.
The study entitled Competitive Advantage: The Economic Impact of Properly Licensed Software is a groundbreaking analysis that draws on data from 95 economies – of which 15 are from the Asia-Pacific – to demonstrate the benefits to national economies of using fully licenced software.
500 businesses take part in Hanoi promotional activities
Hanoi is planning to launch major promotional activities involving 500 businesses in the hope of stimulating consumer demand.
The businesses operate in the fields of food, beverage, essential goods, fashion, garments and textiles, footwear, household devices, interior decoration, arts and handicrafts, automobile, motorbike, hotel and restaurant service.
The capital city plans to spend 3 billion VND, including about 1.2 billion VND from the city budget, on the promotional activities.
Participating businesses will sell goods at golden places around Hanoi with discount rates of 15-50 percent. Specially, during the promotion month, there will be two “gold days” on November 16 and 17 with special promotional activities.
As a preparation for the promotion month, a programme to learn about the Hanoi promotion month will take place from July to September and online discount goods to be sold from November 1 to 15.
Phu Quoc Economic Zone established
The Phu Quoc Economic Zone was officially established in southern Kien Giang province on May 22, according to the Prime Minister’s Decision No.31/2013/QĐ-TTg.
The Decision will take effect on July 10, 2013, turning Phu Quoc into a 59,000 hectare coastal economic zone (EZ).
The EZ will include Phu Quoc island district; Duong Dong and An Thoi towns; and the eight communes of Cua Can, Ganh Dau, Bai Thom, Ham Ninh, Cua Duong, Duong To, Tho Chau and Hon Thom.
It will also comprise a tarriff zone and a non-tariff zone that includes An Thoi port and Phu Quoc airport.
