The most controversial economic policies in 2011
Last update 27/01/2012 08:22:00 AM (GMT+7)
VietNamNet Bridge – The sharp devaluation of the dong, the continued electricity price increases in the context of the fight against inflation, the tightening on car imports have been cited as the most controversial economic policies in 2011.
1. After two times of increasing, power getting 20.28 percent more expensive
2011 was the first year, when the electricity price increased two times within a year, by 20.28 percent in total. In the first time, the electricity price increased by 15.28 percent on March 1, the sharpest increase since 2006. The price increase once caused shocked to Vietnamese people, who got familiar to the 5-9 percent price increases within a year.
However, they could not imagine that the price would increase once more in the year. On December 19, the Electricity of Vietnam unexpectedly raised the power price by 5 percent, commencing from December 20, 2011, after the government allowed EVN to raise the electricity price by no more than 5 percent each time.
Any power price increases raise debate among the public, because people, of course, do not have to spend more money for power bills, especially in the context of high inflation. A question has been raised that how high the electricity price would be in 2012. Will the price increase by 20 percent after four 5-time price adjustment?
2. MOIT tightens car imports
The Circular No 20 stipulates that since June 26, car import companies must show a lot of types of documents, which importers say they would never get them.
100 car importers signed in a petition to the Ministry of Industry and Trade and the government, complaining that the strict requirements would push them against the wall, and that obtaining the required documents proves to be an “impossible mission”.
However, the petition could not help the car importers. MOIT explained that the new regulation is a necessary policy to put the car market in order. Meanwhile, the ministry’s decision has been described by experts as a wise move to help reduce the trade gap. Private car importers have shifted to other types of business.
3. Petroleum prices keep rising when Vietnam is fighting against inflation
On February 24, the petroleum price unexpected increased to 2100-3550 dong per liter. While people were still being shocked by the news, the petroleum price once more increased by 2000-2800 dong per liter one month later.
As such, diesel, the most important input fuel of production factories, increased by 43.05 percent in price, and petrol, the essential goods for people, saw the price increasing by 29.88 percent.
The sharp increase in the petroleum prices helped make the consumer price index increase hit the peak of 3.32 percent. Meanwhile, the price increases made people think that government agencies fail in their efforts to stabilize the market
4. Vietnamese manufacturers faced tax arrear collection
In mid 2011, customs agencies unexpectedly requested some big automobile manufacturers to pay tax arrears. Honda Vietnam was asked to pay 3340 billion dong, Ford Vietnam 32 billion dong, and Toyota 2.7 billion dong.
At that time, Honda threatened to leave Vietnam.
A lot of petitions were sent to the relevant ministries, saying that the Circular which was issued in 2005, had become out of date and need adjustments. Especially, Japanese embassy also got involved in the case.
Representatives of powerful ministries had to gather to discuss the cases, which then made the final decision that the manufacturers will not have to pay the tax arrears.
Pham Huyen
Private investors not keen on support industries
Last update 27/01/2012 11:07:12 AM (GMT+7)
VietNamNet Bridge – Private-owned businesses pay little attention to support industries because of their small market scale and the absence of incentive policies for this field.
Photo: VOV
While support industries play an important role in the economy, they have not received sufficient attention from the state. In fact, the country has not introduced any long-term measures, considerable investment, or an explicitly favourable legal and business climate for the development of support industries.
Incentives needed
Dr Tran Van Phung, from the Academy of Finance, affirmed the importance of support industries in attracting foreign direct investment (FDI).
Phung cited the fact that developing countries all want to lure FDI from developed countries and especially multi-national corporations, which often look for political stability, cheap labour, and developed support industries when selecting countries for their investment.
Cheap labour is an advantage for Vietnam; however, this advantage is decreasing as labour only makes up a small proportion of total costs. For instance, in the production of home electric appliances and electronics, labour costs account for approximately 10 percent, while costs for spare parts reach nearly 70 percent.
Another expert, Tran Dinh Thien, from the Vietnam Economics Institute, said most developing countries fall into trade deficit as they have to import materials and by-products for domestic assembly. Developing support industries solves the fundamental trade deficit issue in developing countries, he said.
In reality, Vietnam’s state management agencies are gradually recognizing the importance of developing support industries, but are doing so at a snail’s pace.
Dr Truong Thi Chi Binh, an official from the Ministry of Industry and Trade, gave evidence for this. “So far, there has been no state management institution exclusively for support industries. Consequently, there have been few policies and programs on developing the nation’s support industries.”
Too slow
“We have gone too slowly and have squandered too much time not paying due attention to this issue,” said Truong Dinh Tuyen, former Minister for Trade. “It’s high time we took strong action to make up for that.”
Tuyen said the selection of products to develop must be based on criteria such as compliance with the strategy to develop support industries over a long period of time, and having domestic manufacturing and assembling establishments.
Due to limited sources, support enterprises, which are mainly small- and medium-sized, should initially focus on products such as mechanical, electric and electronic spare parts, and on casting moulds.
Tuyen highlighted that only by using sufficiently strong preferential policies can Vietnam develop its support industries in the context of its late entry into the field, its minimal protective barriers and the tough competition it faces.
Dr Binh said that Vietnam has so far attracted major FDI businesses to fill industrial zones and create a surge in industrial value, paying little heed to support enterprises.
The role of associations and state management agencies in assisting support industries is not prominent enough, he added.
Meanwhile, Dr Pham Tien Dat, an expert of corporate finance in the Academy of Banking, underscored the need to invest in a concentrated way.
“State budget is limited. To create focused investment, it’s necessary to set standards and an order of priorities, based on support industry development strategies, in close connection with the strategy to develop science and technology.”
VietNamNet/VOV
Farm exports face tough year
Last update 27/01/2012 05:13:00 PM (GMT+7)
Agricultural exports will face a lot of difficulties next year due to the ongoing global financial crisis and economic downturn, experts say.
Local enterprises should enhance market research, estimate demand and understand clearly their import partners to help them be steady during the difficult time, said Nguyen Quang Binh, director of Chanh Tinh Anh Viet Nam Coffee Co Ltd.
He spoke at a conference jointly organised by the Viet Nam Supply Chain Insight magazine and the Viet Nam Coffee and Cocoa Association in HCM City yesterday.
The difficulties and challenges in the global financial and commodity markets might be bigger and much more difficult to predict next year and this could badly affect the local economy, Binh said.
In the domestic market, some agricultural industries, especially coffee, pepper and cashew, would continue to face financial difficulties next year as the Government would continue with measures to control inflation and cut public investment, he said.
Farm produce prices next year might not be as high as this year, he said, noting that: "When both buyers and sellers are in need of money, the circulation of farm produce will be no longer happen freely and naturally."
In the wake of the economic downturn, importing countries would increase the imposition of barriers to limit imports and strengthen checks on food hygiene and safety, he said.
"I heard that it is possible the EU will regulate market shares and divide exports of some countries to its markets; some Vietnamese items therefore may be pushed out of the list of items that receive preferential treatment when they are exported to the EU," he said.
The market would also set new regulations on label and product quality. Businesses should therefore study carefully the regulations set by importing countries to ensure stable exports, Binh said.
To avoid or minimise risks in the current situation, import and export companies should not expand their portfolio and stretch their management capacity. Instead, they should "shrink their performance, just do what is within their control and can be comfortably managed", he said.
He advised businesses to use trading tools carefully for exchange rate and commodity hedging to prevent severe losses.
Each industry should conduct research on supply and demand in each market during different periods so that credible information was available and the local farm produce market was not affected by rumours, leading to hoarding and selling at the same time, he said.
Tran Luong Thanh Tung, managing director of CFE Commodity Exchange JSC, said most of the country's farm produce was exported as raw material without branding, making for low export values.
Furthermore, local enterprises mainly took part in the low value chain, while the high value chain was outside the country, he said.
He said local businesses should improve their production technologies to add more value for their export items and export at CIF (Cost, Insurance and Freight) prices.
Pham Ngoc Duong, editor-in-chief of the Viet Nam Supply Chain Insight magazine, said despite difficulties in the world economy this year, Viet Nam had enjoyed good earnings from exports of farm produce. The export of cashew, rubber, rice, coffee and other products had increased, he said.
Cashew export revenues, for instance, topped US$1.3 billion, up $150 million over last year.
Viet Nam played an important role in the world food security today, he said.
VNS
Vietnam average monthly wage rises to $185
Last updated: 1/25/2012 16:00
Workers in the finance and insurance industries had the highest average salary last year.
The average monthly wage in Vietnam increased 19.6 percent to VND3.84 million (US$185) last year, according to the labor ministry.
Workers in the finance and insurance industries had the highest average salary of VND5.61 million, followed by those in the telecommunications sector, newswire VnExpress reported last week, citing a survey by the Ministry of Labor, Invalids and Social Affairs.
The agricultural and seafood sectors registered the lowest salary numbers, with their employees earning an average of VND3.78 million and VND3.85 million a month.
According to VnExpress, employees in the state-owned sector earned the highest average salary of VND4.41 million last year, compared to VND3.32 million for those in the private sector.
As for salary variations within sectors, it was highest in foreign-owned companies. The top wage in this sector was 19.3 times higher than the lowest. The difference was eight times in the state sector and 5.5 times in the private sector.
Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan said the income gaps are quite large and should be narrowed.
The salary survey polled 1,660 companies with more than 15,000 employees in 17 major cities and provinces.
Money gets frozen at family’s coffers
Last update 26/01/2012 10:28:00 AM (GMT+7)
VietNamNet Bridge – Gold, dollars and dong kept at the coffers of every Vietnamese family are the valuable resource which has not been effectively exploited.
1000 tons of gold kept among people
According to the World Gold Council, the volume of gold kept by Vietnamese people is about 1000 tons. Meanwhile, Vietnamese agencies estimate that the volume is between 300 and 500 tons. Most recently, when talking about the capital resources, Governor of the State Bank of Vietnam Nguyen Van Binh also said that about 300-500 tons of gold is lying among people.
An expert from the Finance Supervision Council once said that about five billion dollars disappear from the balance sheet every year, which is believed gone to people and being kept at their coffers.
Though the figures vary, experts and government agencies all agree that the capital kept by people is relatively huge, and that the capital has not been put into investment to serve the national economy which is thirsty for capital.
The fact that hundreds of tons of gold, worth billions of dollars, are lying idle at people’s coffers, according to experts, is a big waste of the financial resources. People keep gold at their coffers for many reasons. However, the most popular reason is that they always try to “save up for the rainy days”. In Vietnamese people’s mind, gold is a save shelter, where they can hide themselves in crisis.
A question has been raised that why people do not think of making investment with the gold they have, in order to multiply their assets. In fact, a lot of people once deposited gold at commercial banks, but the profits are not attractive, because the gold deposit interest rates are much lower than dong deposit interest rates.
Meanwhile, when the State shuts down all gold trading floors in order to put gold market in order, gold keepers have lost a “playing field”. Meanwhile, gold has been lying idle at the coffers, while it has not been put into circulation to bring profit.
The power of the people’s resources
When hearing about the huge capital kept among people, economists all say that this should be seen as a good thing.
The huge assets kept among people have people stay firmly in the last few years, when the world’s economy was in crisis.
Tran Thanh Hai, General Director of the Vietnam Gold Investment and Business Corporation, said that the information about the huge gold volume lying among people should be seen as a good thing, not a worry. He said that all the assets, no matter they are lying at businesses or being kept among people, are national assets.
How to use the huge resources?
Hai thinks that in order to exploit the huge resources, the State Bank can come forward and mobilize gold, then mortgages the gold at foreign banks to borrow foreign currencies.
Nguyen Thanh Truc, Chair and General Director of Agribank’s Gold Company, also said that the easiest way to use the huge capital in gold is allowing commercial banks to mobilize capital from the public. The mobilized gold can be deposited at foreign banks, or used as collaterals for foreign currency loans.
“Foreign bankers told me that they would accept gold from Vietnam as the collaterals for dollar loans. If we can mobilize 100 tons of gold from the public, worth 5 billion dollars, we would be able to borrow 4 billion dollars,” Truc said.
Binh has informed that the government has agreed to build up a policy on mobilizing capital from people. The State Bank would mobilize capital from the public through commercial banks. The volume of gold the central bank can mobilize from people would be at least equal to the amount of gold people once deposited at the banking system before, about 130 tons, worth 10 billion dollars.
Hong Quy
Interest rate good news on the way
Last update 26/01/2012 03:39:00 PM (GMT+7)
High lending rates have dampened business performances in 2011. National Financial Supervisory Committee chairman Vu Viet Ngoan told VIR lending rates could plunge by four percentage points to 15-16 per cent per year in 2012 if inflation is at single digit growth.
What are current lending rates?
Lending rates are at around 20 per cent per year for non-priority area loans. I assume the rates could be eased by around four percentage points to 15-16 per cent per year if we succeed in containing inflation at around 9 per cent, per year.
In a better scenario we could bring the rates down to 13-14 per cent, per year through consistently carrying out drastic measures set in Central Resolution 11/NQ-CP in 2011 to curb inflation and stabilise the macroeconomy.
What are the grounds for this assumption?
Provided that the consumer price index (CPI) hiked 9 per cent in 2012 and banks offered deposit rates at around 10.5 per cent per year, depositors will still enjoy benefits as banks can ensure a positive interest rate. Usually, banks spend around 2.5 per cent on operation costs, with their proposed profit rates of 1 to 2 per cent, lending rates may be around 14-15 per cent, per year which would be reasonable. Sliding borrowing costs will stimulate investment, bolster economic growth, hike state budget contributions and create more jobs.
Will the 9 per cent per year inflation hike be realistic?
Though there are different forecasts about world economy in 2012 most international financial institutions share a common view that world economic outlook this year would be darker than that in 2011 with a proposed 2.4-3.2 per cent GDP growth against 2011’s 4 per cent.
Sagging GDP growth, dwindling fuel and material demands could drive down product and material prices in the world marketplace, except crude oil price which is forecast to stay stable, instead of 20 per cent hike last year.
Shrinking world market prices could significantly soothe pressures on Vietnam’s inflation when the country’s total import value in 2011 hit $105.8 billion, tantamount to 89 per cent of GDP. That was why I thought the CPI hike this year could climb to 9 per cent, per year.
Besides inflation, the interest rate is relevant to different other factors like bad debts, liquidation and credit growth. Is that the case?
Non-performing debts of the whole banking system stood at VND71.6 trillion ($3.4 billion) by the end of 2011’s second quarter which was VND20 trillion ($952 million) more than in early 2011. Non-performing debts came to VND85 trillion ($4.04 billion) in the second half of the year.
Soaring bad debts against modest outstanding loan growth indicates degrading credit quality. High liquidity tension has spread from small to big banking entities. Hence, to bring down interest rates, strong measures needed to tackle bad debt and credit quality issues parallel to easing inflation.
The core banking system problem is a mounting lending/mobilising rate which surged from 0.95 in 2008 to 1.01 in 2009 and 2010. It was an estimated 1.02-1.03 in 2011 despite the application of tightening monetary policies.
To ameliorate credit quality multiple tasks need to get done, including further tightening credit sources to ensure 15-17 per cent credit growth for the whole year.
VIR
Year Of The dragon, Year Of Economic Boom?
Last update 24/01/2012 04:00:00 PM (GMT+7)
Vietnamese dragon signifies material, spiritual wealth
Amongst the 12 animals represented on the Chinese calendar, namely the rat, ox, tiger, cat, dragon, snake, horse, goat, monkey, rooster, dog and pig, it is only the dragon that is not real but an imaginary and mythical creature, which nonetheless for the Vietnamese signifies material and spiritual wealth.
A 19th century pottery decorated with a dragon relief work
According to folk lore, the dragon, unicorn, tortoise and phoenix are the oft-mentioned four mythical creatures in tales and legends, with only the tortoise actually existing in the real world today.
Zoologists believe that the tortoise being of small built could have survived for this reason while the other creatures of monster size may have gone extinct for lack of food as their habitat shrunk.
They believe that dragons, unicorns and phoenix really existed millions of years ago as fossils of similar looking creatures have been found, such as the Chinese water dragon, in Indonesia.
Rural people still have superstitious believes such as heavy rains and strong winds are brought about when a dragon flies over their land, or earthquakes and tsunami occur when the dragon awakens from a thousand year sleep!
Legend has it that when Trang Quynh went to China as the King’s envoy, he attended a painting competition. He dipped his figures in an ink slab and scrawled them across the paper, five ‘S’ shaped letters formed. He described them as five dragons and offered the drawing to the Chinese King, who looking at it said they resembled earthworms.
Trang Quynh responded that if the King knew anyone who had actually seen a dragon and could describe its appearance then he would repaint the image once again for the King.
A dragon has been given a different form and appearance in different phases of history. During the Le Dynasty, the dragon had a snake’s body, a unicorn’s head and held an oriental pearl in its mouth. Later during the Ly and Tran Dynasties, its body became shorter and was covered with scales, a beard was shown around its mouth and its nose was as big as an oriental pearl.
Dragon images were formerly used to adorn imperial palaces or on paintings and on embroideries of royal apparel of Kings. Later they were more frequently used on roofs of pagodas and temples and along staircase balustrades in homes of the nobility. Dragons have always been used as relief on embossed works.
There is a belief that royal dragons of the Kings have five toe nails while dragons of the common people have three toe nails. Artists and sculptors find the dragon useful in relief works while jewellery craftsmen use them prolifically in gemstone, gold and diamond ornaments.
Vietnamese believe they are descendants of dragons and fairies, as told in the legend of Lac Long Quan-Au Co. Most countries in the world have created their own animal symbols, like the kangaroo in Australia and the lion in Singapore. Each nation chooses to adopt the good and positive characteristics of their chosen national animal.
Vietnam has two significant symbols, one being the dragon which stands for material wealth and the other the fairy which stands for intellect and the positive spirit of man.
Interestingly the geographical map of Vietnam resembles a dragon, with its mouth open and gnawing towards the mainland instead of sucking water from the East Sea. This is supposedly the reason why geomancers believe that Vietnam should focus on agriculture.
Vietnamese believe that dragons and fairies are their progenitors. There is a supposition that a dragon is an avatar of a snake or carp which had led a pious and religious life for centuries. As a result, people in northern Vietnam usually offer carp to the Kitchen God each year to see the godly family leave for heaven.
No one has ever actually sighted a dragon, but all believe that a dragon symbolises material and spiritual wealth.
2012 is ‘Year of the Dragon’ and Vietnamese people believe it will be a good year in all aspects of life may it be economy, politics or even national defense.
Source: SGGP
New initiatives sought to ride out tough times
Last update 25/01/2012 04:32:00 PM (GMT+7)
The prospect of the domestic property market is forecast to remain glum in the new year. So local developers are finding ways to adjust their business strategies for survival.
Bleak outlook
Last year was a really challenging year for players on the realty market. Most businesses in the sector found it hard to sell their products despite their promotion efforts. In the face of tough market conditions, there have appeared game changers.
HCMC-based Construction and Investment 8 Joint Stock Company (CIC8) is calling for its shareholders to share the difficulties by using last year’s dividends to buy the unsold condos and land lots. Still, CIC8 will pay cash dividends for those not joining the plan over a period of one year with a monthly interest of 2%.
Phat Dat Property Development Corporation set the targets of VND1.1 trillion in sales and VND360 billion in pre-tax profit for all of 2011. But in November last year it had to revise down those respective targets to a meager VND148 billion and VND8 billion.
The dismal market has resulted in multiple companies downsizing their operations and investments or even transferring their projects underway to reduce their exposure to realty market uncertainty. For instance, Phat Dat has cut this year’ investment plan to VND400 billion from the initial VND1.4 trillion.
Venturing into new spheres
Phat Dat has taken industry players by surprise upon its announcement of a plan sent to shareholders that it will join forest and agricultural tree planting projects, a brand new business area for this company.
Chairman and general director Nguyen Van Dat said real estate remains Phat Dat’s core business operation but the company needs to look for new investment channels to prop up its difficult core business. Rubber cultivation is an option under consideration as this promises higher returns under current circumstances, he noted.
Dat said the development of the agricultural industry is encouraged by the Government, so his firm may be able to break even after six to seven years of rubber farming.
Hoang Anh Gia Lai, a well-known property developer, has already got involved in rubber plantation for years. The agricultural sector does not guarantee as high and quick profit as in the property sector but is highly valued for its stability.
Vo Tan Thanh, deputy general director of Phat Dat, stressed that investing in the agriculture sector is a great change for his enterprise. The strategy change will help diversify investments and sources of incomes to temporarily pull the company out of the current woes.
The plan sounds rational but whether leaders of Phat Dat will be able to persuade all shareholders to jump on the bandwagon in an unpredictable economy is unknown.
Exploring local demand
The housing and property management department under the Ministry of Construction has pointed out an imbalance in the housing structure as proven by a shortage of medium and small-sized condos with reasonable prices.
Among the 35,000 apartments completed before 2011 in HCMC, around 37% of them are classified as high-class, 38% as medium-cost and 25% as low-cost.
Le Hoang Chau, chairman of the HCMC Real Estate Association (Horea), said each housing segment has its own customers. The reality is the medium-cost housing segment has been doing good business given strong demand.
Local traders said housing demand remains huge, especially for the medium-cost segment, in big cities. The lackluster property market over the past four years has eroded the confidence of individual secondary investors.
Therefore, numerous investors have managed to focus on medium and small-sized apartment projects, and adjusted existing schemes to meet the actual needs of consumers.
Saigon Thuong Tin Tan Thang Investment Real Estate Joint Stock Company (TTJSC) last week started marketing its Celadon City condo project covering over 82 hectares with about 7,000 units in HCMC’s Tan Phu District. To meet demand, the developer narrows the area of each apartment from 90 square meters to 65 square meters.
Similarly, Thu Duc Housing Development Corporation (Thuduc House) plans to develop low-cost housing projects alongside the medium segment. These small condos cost VND500 million to VND600 million per unit.
Singapore’s CapitaLand is targeting middle-income people for its projects, with an apartment building in District 2 and another in Binh Chanh District.
SGT
Foreign investors wait around Vietnam’s laws
Last update 25/01/2012 08:00:00 AM (GMT+7)
VietNamNet Bridge – Vietnamese law changes very quickly, which makes businessmen and particularly foreign investors to not timely to turn their hand.
This article is written based on the viewpoint of foreign investors in Vietnam, about the things that need to be improved in Vietnam’s business environment. We would like to invite our reader to contribute your opinions to.
In late 2011, foreign institutions released their concerns over Vietnam’s investment climate and foreign investors’ trust on this market.
The World Bank, for example, demoted Vietnam by eight grades in business environment.
In its press release on the issuance of the White Book 2012 on trade, investment and recommendations, the European Chamber of Commerce (Eurocham) said that European businesses’ trust on Vietnam’s business environment has regularly reduced since early 2011.
A survey by Grant Thornton about investment in M&A (mergers and acquisition) in the fourth quarter of 2011 showed pessimistic figures: 51 percent of interviewees were pessimistic in Vietnam’s economic development prospect in 2012, 30 percent higher than the number in May. Only 38 percent of the interviewees said that Vietnam is an attractive destination for investment, a fall by 16 percent.
Why?
Vietnam can become the second Singapore or a fish out of water? It depends on the country’s policy and workforce.
In fact, Vietnamese law changes very quickly and comprehensively so businessmen could not timely turn their hand. The latest example is the plan to amend 16 basic laws on civil and commercial fields though most of the laws were issued in the last 5-6 years. Regulations on import-export, forex management or credit can be change anytime.
In addition, some legal documents are dead right at the time they are issued, for example Decree 01/2010/NĐ-CP dated January 4, 2010, on offering for sale shares individually. Businesses do not know how to implement this decree just because of the shortage of an instruction document.
Legal documents related to business, rights and duties of enterprises are issued late or not be issued while documents on management, operation and report are available a lot. For example, documents that guide the implementation of Vietnam’s service-related commitments to the World Trade Organization (WTO), on contributing capital by intellectual property, on using houses on papers as mortgages are not available while circulars and decisions asking foreign-invested businesses to make reports on monthly, quarterly and annually basis are issued.
Not mentioning the effectiveness of these reports, many foreign investors complain that they may have to hire one or two employees just to make these reports.
The inconsistence of legal documents or guidance documents that annual legal documents is very popular.
Vietnamese law always stipulates on the deadline for state agencies to complete a licensing procedure but in fact, they break the deadline in most cases.
A project normally gets license in six months or longer, even up to one year for complicated cases. Meanwhile, three days is the longest time for establishing a company in Singapore.
In 2008, the Ministry of Construction made a list of procedures for a construction project, with 33 steps (requiring around three years to complete) and suggestions to cut down unnecessary formalities. Now, the procedures are still the same, even being added with planning license under the Urban License Law 2009.
The explanation and application of law by state agencies is sometimes are not based on (or even being contrary) from the law.
For example, if a foreign investor purchases share/capital at a Vietnamese firm, the firm previously only needed to adjust its business license if the investor buys less than 49 percent of shares, but now some provincial Department of Planning and Investment ask the firm to make an investment project to become a foreign-invested firm.
In addition, the qualification of employees at state agencies who deal with business files is also a problem. Many foreign investors expect that these people must be at least law bachelors (to be able to understand and explain the law), or more ideally, to have certain experience in licensing.
Vietnam has opened its door to the world and accepted the common rules of game, so it must behave as a responsible member. In the other words, it should not make it as an exception. Actually, some ways of interpretation and solutions of Vietnam are incomprehensible.
For example, in a commitment on trade and services with WTO, 51 percent is considered the necessary rate in joint venture firms that were established before Vietnam joined the WTO. However, it is interpreted that such committed rate is only applied for joint venture firms; wholly foreign-owned firms still uses the rates of 65-75 percent under the Enterprise Law 2005.
In another example, the Investment Law allows stipulates projects with duration of up to 50 or 70 years but many investment licenses of foreign-invested firms note the duration of just five years or even shorter. Many investors complain that how can they do business with licenses of only five years?
Some people think that foreign investment and foreign-invested firms cause trade deficit, price transfer and they abuse Vietnam’s credit and land resources. However, it is undeniable that Vietnam’s current development is partly contributed by foreign investment. Everything has two sides and it is important that how your ability to restrict the black side.
Those who participated in the annual meeting of the Vietnam Enterprise Forum in December 2011 in Hanoi may still remember the metaphoric example by Dominic Scriven, CEO of Dragon Capital, that Vietnam’s last Javan rhino was dead and Vietnam has only several tens of tigers and elephants. For that reason, Vietnam needs to attach importance to sustainable development; otherwise the remaining tigers and elephants will die too.
Dr. Ngyen Quoc Vinh
Vietnam sees record low in CPI nearing Tet
Last update 24/01/2012 06:00:00 AM (GMT+7)
The estimates for Vietnam’s consumer price index (CPI) in January were just a 1% increase against December 2011.
This is the lowest monthly rise nearing Tet in the last ten years. In past years, the rate has been in between 2 and 3%, according to the General Statistics Office of Vietnam (GSO).
However, the modest rise is not surprising in the context of the current economic situation, with consumers tightening their purse strings.
Garment and footwear products saw the highest rise, of 1.97%, against December 2011.
It is followed by the group of construction materials with 1.71%, presumably from a demand to Tet decoration and renovation.
Alcohol and tobacco saw an increase of 1.17%, and entertainment and tourism services increased by 1.15%.
The group of restaurant and food services grew by 1.01% against December 2011.
CPI of Hanoi in January rose 0.96% compared to the previous month, a relatively small figure when compared with the nearly 2% seen in January, two years ago or the 4% of 2008.
Ho Chi Minh City witnessed a January CPI increase of 0.89% compared to December 2011.
This year, Vietnam targets to reduce CPI growth to a one-digit figure. Do Thuc, Head of the GSO said, the goal is achievable if the country continues implementing the monetary tightening measures set out in the Government's Resolution 11.
Curbing inflation is at the top of the Government's list of priorities for 2012. This concern will also be a driving force behind the decision making mechanisms of the State Bank of Vietnam in terms of setting lending interest rates. Their ultimate aim is to help ease capital shortage for businesses.
Source: Dan tri news