Prime Minister Nguyen Tan Dung (second from right) speaks at a national teleconference discussing the Party Central Committee's 2012 Resolution No.13 on building a synchronised infrastructure system in Ha Noi yesterday. — VNA/VNS Photo Duc Tam
HA NOI (VNS) — Investment in infrastructure development is pivotal to Viet Nam's journey towards becoming an industrial nation by 2020, Prime Minister Nguyen Tan Dung said at a national teleconference discussing the Party Central Committee's 2012 Resolution No.13 on building a synchronised infrastructure system.
Dung said building infrastructure must be appreciated as a strategic necessity if the nation wishes to achieve both a rapid and sustainable development.
He placed the Ministry of Natural Resources and Environment at the helm of the development program-me, putting the ministry in charge of planning land clearance for all infrastructure projects throughout the nation.
"Resolution 13 has been strictly implemented by ministries, sectors and localities nation-wide. Public investment, so far, has been effective in key areas.
"Public – private partnerships have been put to good use in infrastructure development projects. These successes have greatly contributed to socio-economic development, improving people's living conditions, as well as improving national security and defence," Dung said.
To further enhance these successes, PM Dung asked all ministries, sectors and localities to work hard to overcome challenges they may face so as to focus efforts on enhancing collaboration between agencies and enterprises in the implementation of infrastructure construction projects.
Dung also assigned the Ministry of Planning and Investment (MPI) with the mission of calculating how big of a chunk of the State budget will be required over the next five years, from government bonds to Official Development Aid.
A report from the MPI said that in the three years following the issue of Resolution 13, several important infrastructure projects moved forward that improved connectivity between regions, such as the Ho Chi Minh-Trung Luong, Cau Gie-Ninh Binh and Noi Bai-Lao Cai expressways.
In addition, many energy projects have received investment money and support to further the modernization of the national power transmission system.
The PM's speech concluded that, in the last three years, considerable development in all domains - education, health care, science and technology – had been well noted.
Dung, however, warned that if Viet Nam fails to build better infrastructure, it won't sustain the six per cent GDP growth Viet Nam enjoys at present.
"Resolution 13 is a manifestation of the direction charted out by the Party. It has enjoyed support from our people and achieved notable successes in the past three years. We should continue to mobilise and use efficiently all the resources available to continue its progress in the years to come," said Dung. — VNS
Governance and public administration: We are at a standstill
On April 14, the 2015 survey "Provincial Governance and Public Administration Performance Index" (PAPI) conducted by the Vietnam Fatherland Front, Center for Community Support and Development Studies (CECODES) and the United Nations Development Programme (UNDP) was released.
Held for the fourth time, PAPI has become a credible tool for policy monitoring, a mechanism for people to “mark” the provincial governments and express their satisfaction with the job of local governments.PAPI 2014 shows a panorama that is not different in comparison with the starting point four years ago, in 2011.
In the six areas measured: the participation of citizens, transparency, accountability, control of corruption, and provision of public services, the national average score declined in the first field and only slightly increased or remained in the remaining fields. Compared to 2013, the decline was clearer, occurring in five fields, except for provision of public service.
Some worrying matters showed by PAPI four years ago seem to have not been resolved.
Nationally, only 16% of the people knew about land-use planning in their locality, although this has been specified in the Ordinance of Grassroots Democracy, and is one of the most fundamental concerns of the people. This number fell by 20% compared to four years ago.
For half the population, environmental quality is the number one concern. With a quarter of the people, corruption is the most burning issue in society. Food safety and hygiene, drug addiction and traffic accidents are the other issues.
Compared with previous years, petty corruption increased slightly. At least 49% of people said that they had to give a bribe for a job in the public sector and 43% had to give have to bribe at the hospital. At least 33% had to pay black money to get the certificates for land-use rights and 30% had to give money to teachers.
In particular, the majority of people (and almost all in Ha Giang, Dien Bien, Khanh Hoa, Soc Trang) said that the relations with someone in the local government was very important if they wanted to work in government agencies, for example, commune policemen, administrative personnel, or primary teachers.
This is eloquent evidence for the prevalence of the phenomenon of "bribe for positions" from the lowest level of government. Consequently, the administrative apparatus rejects potential candidates who don’t have relations with officials to recruit those of poor qualifications.
Another concern is the inequalities between different groups in society. In the same locality, the poor, the less educated, and minorities tend to assess the quality of public services and other aspects of governance at a lower level. Clearly there is discrimination, and it seems that the citizens who “have power" (through education or income) received a more favorable treatment from the apparatus of government.
Compared with last year, the provinces of Quang Binh, Quang Tri, Vinh Long, Long An, and Ba Ria-Vung Tau still retain their positions in the top group. Vinh Long and Quang Tri made significant progress in scores. In the middle segment, Quang Ngai and Binh Duong also recorded good improvement. Ninh Binh, Ha Nam and Ca Mau were on the weakest team in 2013, but they made significant progress in 2014.
In contrast, Can Tho, Ha Giang, Khanh Hoa, Cao Bang, and Dien Bien are the provinces with the general level of satisfaction of the people declined compared to 2013. Among the five centrally-governed cities (Hanoi, HCM City, Danang, Can Tho and Hai Phong), Da Nang and Ho Chi Minh City stood steady in the top group. Hanoi, Hai Phong and Can Tho were in the bottom half of the table and they declined in the scores.
What is special about Da Nang and Ho Chi Minh City compared to the three other central cities?
The recent strikes by workers in Ho Chi Minh City to protest the Social Insurance Law, locals protesting the project encroaching Dong Nai River, the project to cut down 6,700 trees in Hanoi, and the Son Doong cable car project have all demonstrated a very basic and important principle of good governance: it is that the government needs to consult the people in the drafting of policies, and provide transparent information in a timely manner to people in the process of policy implementation.
If the principle of "people know, people discuss, people do and people check" is only on paper without actually going into life, people's confidence in the government will be shaken, even the conflict between the two parties will happen, because people will not feel that the local authority is theirs, and we then have to pay for huge economic losses caused by inaccurate decisions, and political losses from the government’s loss of the people’s support.
In this context, the project PAPI, through the voices of 13,500 people across the country on the issues closest to them, is a sustained effort giving the people a supervisory role while giving warnings about the shortcomings to the government for timely adjustments.
More than 30 provinces and cities have disseminated the results of PAPI to the district and even commune level, and set up specific projects to work with the data, in order to improve the quality of government operations and improve the satisfaction of the people. This is an encouraging first step.
However, the result of PAPI in the past four years has not shown clear progress. In a world of increasing competition, we are losing precious years and the people do not want to wait any longer.
Dr. Dang Hoang Giang
CECODES Deputy Director
Vietnam is changing rules to allow foreign investors bigger stakes in local banks in its latest move to rebuild a financial sector battered by bad debt, according to the country's prime minister.
"Foreign investors indeed have helped Vietnamese banks a lot, changing them inside out," Duong said. "They are willing to wait as they know there will be time when they can own more."
Construction steel sold in March hit 651,633 tonnes, increasing 160 per cent over last month and by 14.4 per cent compared with the same period last year. — Photo giasatthep
HA NOI (VNS) — The Viet Nam Steel Association (VSA) member companies' domestic steel consumption rose in the first quarter, reaching 2.5 million tones – a 25 per cent increase on the year.
The domestic steel industry produced 2.7 million tonnes in the first quarter, up 17 per cent over last year.
More than half of the steel consumed – 1.29 million tonnes – was construction steel, which saw a year-on-year increase of 10.5 per cent.
Construction steel sold in March hit 651,633 tonnes, increasing 160 per cent over last month and by 14.4 per cent compared with the same period last year.
Nguyen Van Sua, vice chairman of the VSA, attributed the increase in steel consumption to the market's overall growth in March and the first quarter.
The country's gross domestic product (GDP) edged up 6.03 per cent in the first quarter. The industrial and construction sector posted growth of 8.25 per cent.
The Government has promulgated policies to support the country's economic development, including the property market, warming up the construction materials market and helping boost steel consumption, according to the VSA.
Despite positive domestic consumption, the sector exported 390,162 tonnes in the first quarter, a slight decrease compared with 392,132 tonnes in the same period last year.
The domestic steel market would see more change after free trade agreements were signed, economic experts said. They urged the VSA, ministries and agencies to prepare to manage the quality of steel imported to Viet Nam. Trade defence measures were also needed to protect domestic producers.
Enterprises were also advised to improve technology, administrative efforts and competitiveness so they could integrate more effectively in the future. — VNS
The management board of the Bank for Investment and Development of Viet Nam (BIDV) announced its plan to merge with the Mekong Housing Bank (MHB) at a shareholders meeting on April 17.
BIDV Chair Tran Bac Ha at the shareholders' meeting on April 17.
BIDV would issue 336.9 million shares, with a combined value of VND3.369 trillion (US$160.43 million) to complete the merger, with every share of MHB converted into a share of the development bank.
The deal would be implemented with the principle of "maintaining a status quo" to assure that no changes in the business activities of both parties are required.
BIDV Chairman Tran Bac Ha said the merger was part of a Government-adopted plan to restructure the banking system, and it was expected to be completed in late May. The deal was based on spontaneous intentions, as BIDV was aiming for network expansion and MHB at a targeted financial ability enhancement.
"The merger will help us expand networks and customer bases, and intensify capacity in agricultural and rural fields. It will also allow us to enhance our position as a strong financial institution in Viet Nam... with adequate competitiveness to integrate with other banks in the region and the world," the management board's report said.
MHB was among the top 10 banks having the largest networks nationwide, with 44 branches and 185 transaction offices in 35 provinces and cities. Its total asset value is now 110 times as much as that recorded during its establishment in 1997.
"If we only rely on ourselves, it will take seven years to develop a network similar to that of MHB today," said Ha.
The Mekong (Cuu Long) Delta-based MHB had stated earlier this month that the merger was underway, and had shown sustained and healthy development.
Last year, its total assets grew 17.4 per cent year-on-year to about VND45 trillion (US$2.14 billion), and pre-tax profits reached VND162 billion ($7.71 million), reflecting a year-on-year increase of 14 per cent.
Its deposits jumped 14.4 per cent to more than VND37 trillion ($1.76 billion), and outstanding loans expanded by 13.8 per cent to VND30.60 trillion ($1.46 billion) in 2014, with the bad debt ratio pegged at 2.72 per cent at the end of the year.
Chairman Ha told Viet Nam News that BIDV planned to sell a stake of up to 30 per cent to strategic foreign investors in the longer term, and he had shortlisted eight potential partners for negotiations.
The BIDV shareholders meeting had also approved a project to establish a consumer financial company to improve its retail banking operation.
This year, the bank was targeting growth rates of 16.5 per cent for deposits and 16 per cent for lending, and would control its bad debt ratio at less than 2.5 per cent. It also expects to earn VND7.5 trillion ($357.14 million) in gross profits, and pay dividends at 9 per cent.
Last year, its deposits grew 20 per cent year-on-year to VND502 trillion ($23.90 billion) and outstanding loans expanded 19 per cent year-on-year to VND464 trillion ($22.10 billion). Its gross profit was said to be VND6.30 trillion ($300 million), up 19 per cent from the previous year, and the dividend rate was 9.4 per cent.
VietNamNet Bridge - The anticipated loss of revenue of the state budget in 2015 has put pressure on the Ministry of Finance (MOF), which plans to impose higher fees to offset losses.
The increases of fees and charges have been discussed at many state management agency meetings.
MOF has decided to raise the environmental fee on petroleum products sharply by 300 percent.
Petroleum distributors have threatened that they would have to raise retail prices as the higher environmental fee has led to higher production costs.
As a result, Vietnamese still pay high prices for petrol, despite the sharp fall of crude oil and petrol prices in the world market.
Some days ago, the ministry released a decision on collecting up to VND5 million a month from every 400-foot container transported on the Phap Van – Ninh Binh short section of road (20 kilometers).
Since April 8, the new fee levels of VND15,000-120,000 per vehicle have been applied to those using Dong Nai Bridge.
A local newspaper reported that every vehicle in circulation in Vietnam bears 10 different kinds of fees.
Le Dang Doanh, a renowned economist, said that raising fees and charges was one of the measures taken by MOF in an effort to offset the loss of revenue for the state budget in 2015.
The loss of revenue is anticipated by MOF, which points out that the crude oil price fall alone would lead to the loss of VND13 trillion of revenue.
Besides, the official membership of AEC (ASEAN Economic Community) from 2015 will also lead to a decrease in tax collection, because AEC-sourced imports will not bear import taxes.
“With receipt and expense estimates, one can see that no dong from the state budget will be spent on investments. We will have to borrow money for investments. This explains why state agencies are thinking of raising fees,” Doanh said.
Pham Chi Lan, also a renowned economist, has expressed her worries about the possible consequences to be caused by the decisions on raising fees and charges.
“The increases in fees and charges will lead to higher production costs,” Lan said. “If so, Vietnam can no longer maintain its advantage as a country with low production costs as thought by foreign investors.”
Lan said that 80 percent of cities and provinces have budget revenue lower than their expenditures. The investment for development in these localities have been heavily dependent on money from the state budget.
Lan said she fears that the 80 percent of localities may set new kinds of fees and raise existing fees to offset the local budget’s loss of revenue. If so, this would create a burden on local businesses and residents.
Although, the State Bank of Viet Nam at the end of last month had committed to keeping the exchange rate stable, the institute's Deputy Director Nguyen, Duc Do, said at the conference that the market was awaiting an adjustment from the central bank, given the rising dollar rates against many other major currencies. — Photo vietstock.vn
HA NOI (VNS) — Experts have urged the central bank to apply the crawling peg - an exchange rate regime that allows depreciation or appreciation to happen gradually - to help firms develop appropriate business plans.
At a conference organized by the Academy of Finance's Institute of Economics and Finance yesterday, the stronger dollar in the world's financial market and the recent rise in the VND-USD exchange rate in the unofficial market was discussed.
Although, the State Bank of Viet Nam at the end of last month had committed to keeping the exchange rate stable, the institute's Deputy Director Nguyen, Duc Do, said at the conference that the market was awaiting an adjustment from the central bank, given the rising dollar rates against many other major currencies.
Do said the crawling peg regime would be helpful for the economy, where the export potential remained large, adding that this would help firms, especially export firms in foreseeing forex adjustment and develop appropriate business plans.
He added that if a crawling peg was applied, a cap on exchange rate adjustments for a year would become necessary.
According to Le Quoc Phuong, deputy director of the Viet Nam Trade and Industry Information Centre under the Ministry of Industry and Trade, a crawling peg could save the market from possible shocks arising from a huge exchange rate adjustment at one time. In addition, if the exchange rate was kept stable longer term, this might result in speculation.
Phuong stressed that the exchange rate should be adjusted more regularly with mild adjustments that prevent market shocks.
The Vietnamese dong was devalued by 1 per cent from VND21,246 to VND21,458 against the U.S. dollar in January, the first exchange rate adjustment since 2013.
The central bank had pledged that the forex rate would be adjusted by no more than 2 per cent this year. — VNS
UPDATED : 04/14/2015 12:11 GMT + 7
As announced early this month by Yoshihisa Maruta, president of Toyota Motor Vietnam, the Vietnamese unit of the world’s largest carmaker is mulling over putting an end to production and switching to imports in order to enjoy the preferential tax treatment an ASEAN trade pact will offer in the next three years.
ASEAN stands for Association of Southeast Asian Nations, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar, and Vietnam.
According to the road map of the ASEAN Free Trade Area (AFTA), automobiles under ten seats imported from ASEAN countries are entitled to a 50 percent rate this year. The rate will be cut to 40 percent next year, 30 percent the following year, and 0 percent in 2018.
As a result, after forecasting market trends and changes in the import tariffs, many automobile manufacturers have started moving away from assembling to importing since last year.
Locally assembled vehicles are getting more expensive
During a visit to the office of the Vinastar automobile joint venture (VSM) specializing in the production of Mitsubishi vehicles in Thu Duc District, Ho Chi Minh City this April, Tuoi Tre (Youth) reporters found that the parking area accommodated around 200 imported automobiles, whereas there were very few Pajero Sport cars, which were domestically assembled.
Talking to Tuoi Tre, Kazuhiro Yamana, VSM general Director, said his plant, which assembled many kinds of cars in the past, now only assembles Pajero Sport cars with a capacity of about 100 units per month.
In its heyday, the VSM’s plant churned out 410 vehicles each month. However, as business strategies are changing, the VSM has reduced the capacity of the plant.
In fiscal 2014, which started in January 2014 and ended in March 2015, the joint venture sold 2,530 vehicles, including 1,660 vehicles, or 65.6 percent, imported from Thailand and Japan.
VSM is a member of the Vietnam Automobile Manufacturers' Association (VAMA) with the highest ratio of imported cars.
Even when import tariffs increase, they said the price of completely built units (CBUs) will be still cheaper than locally assembled vehicles, which will consequently result in better sales.
"Our goal is to calculate how to fetch vehicles at the lowest price to sell, either CBUs or locally assembled automobiles. Due to various reasons, the five types of CBU we have imported for re-selling in Vietnam are much more affordable than assembled domestically," Yamana said.
Yoshihisa Maruta, president of Toyota Motor Vietnam, said at a meeting to announce the company’s operation plans for 2015 on April 2 that the Japanese carmaker could cease making automobiles in the Southeast Asian nation and import them from other ASEAN countries to enjoy the zero percent import duty in 2018.
Toyota Motor Vietnam currently has to import most of the spare parts for its production in Vietnam, Maruta said, adding that there will soon come the day when importing a complete car from Thailand is cheaper than assembling it domestically.
The Japanese president, who is also chairman of the VAMA, said the year 2018 will be a milestone for the carmaking industry.
The VAMA still does not know if the Vietnamese government will have any kind of supportive policies for specific kinds of car so that its members can focus on producing such specific automobiles for the local market, he said at the meeting.
According to calculations by automobile manufacturers, the price of vehicles assembled in Vietnam is averagely 2.5 times higher than that of their counterparts in other ASEAN countries.
The reason why the price of domestically produced vehicles is too high, reducing their competitiveness as compared to imported automobiles, according to Yamana, is the "weird" calculation of special consumption tax which applies to the production or importation of specific goods and the provision of certain services.
While the tax rate for CBUs is worked out on the basis of the CIF price inclusive of manufacturing, insurance and freight costs, that for locally assembled vehicles is calculated based on the price at which an automobile is sold to the dealer, including business profits, freight charges from the place of production to the agent, and some other expenses such as advertising.
"This methodology of tax calculation makes the price of domestically produced cars at least five percent costlier than CBUs,” he added.
In addition, the risk of a total halt will not only stem from the intention of automotive businesses, but also from consumers’ demand for imported cars, as those CBUs offer them more convenience at a cheaper price.
Rising demand for CBUs
After a long time learning how to drive and joining the test drives of several 4-seat automobiles assembled domestically, V.T., a local customer living in Cau Giay District, Hanoi has decided to buy a Mitsubishi Attrage CVT imported from Thailand at over VND600 million ($27,600).
"After I’ve tested many locally assembled cars of some friends, I feel this imported car is more comfortable and more spacious for utilities such as DVD players with touch screens, leather seats, push-start buttons, smart keys, and fuel economy at a quite affordable price," he told Tuoi Tre.
Recently, foreign-made cars have attracted a larger number of local buyers who think that they have better quality than domestically assembled counterparts.
The General Statistics Office (GSO) of Vietnam in late December last year reported that the Southeast Asian country spent $1.57 billion on importing 72,000 vehicles, up 103.8 percent and 117.3 percent in volume and value compared to 2013.
Both the imported volume and value of foreign-made vehicles were the highest rates ever, the GSO said.
VietNamNet Bridge – The Hanoi-based Bank for Investment and Development of Vietnam (BIDV) hopes to choose a foreign strategic investor later this year or next year, said BIDV Chair Tran Bac Ha on April 14.
BIDV Chair Tran Bac Ha.
"The bank has entered into the stage of negotiation to select investors. There are seven to eight investors on the list," Ha said.
Under the plan passed by the shareholders’ meeting early last year, BIDV will issue additional shares to sell to the selected investor but the total foreign ownership will not exceed 30% of the charter capital. The selling price will be determined by the method of agreement.
Earlier, BIDV said it planned to sell a 25% stake to foreign partners - 15% stake to a foreign strategic partner and 10% to a foreign financial investor.
"The bank’s policy is to select the investors that are appropriate to its business strategy," Ha stressed.
BIDV is a commercial bank with the second largest charter capital in the banking system of Vietnam, reaching more than VND28,112 billion. The State Bank of Vietnam is the representative of state ownership in the bank at the rate of 95.76% of charter capital.
In the first quarter 2015, BIDV obtained VND1,835 billion of pre-tax profit, an increase of 2% compared to the same period last year, completing 24.5% of the yearly plan.
$1 = VND21,100
VietNamNet Bridge - Analysts believe that after swallowing a number of Vietnamese companies, Thai billionaires will take the next steps to turn Vietnam into their production bases from which Thai products will be distributed globally.
Vietnam has become a favorite destination point for many Thai billionaires.
More recently, ThaiBev, the beverage group owned by Charoen Sirivadhanabhakdi, the third richest Thai billionaire with total assets of $11.3 billion, has offered to buy 40 percent of Sabeco, the largest Vietnamese brewery.
With the expected price of VND80,000 per share, ThaiBev would have to pay $1 billion to buy the amount of shares it wants, if the deal succeeds.
Amata, the group which has developed industrial zones in Vietnam over the last 20 years, has announced its plan to invest $5 billion in the new city project in Quang Ninh province.
The project, expected to cover an area of 6,400 hectares and employ 300,000 workers, would be a complex of industrial zones, logistics center, scientific research centers, education establishments and international exhibitions.
Acquiring 49 percent of stakes of Nguyen Kim, a home appliance distribution center is not the final goal for Central Group. The Thai group has revealed its ambition of spending billions of dollars on the projects to process farm and seafood produce in Vietnam for global distribution.
Meanwhile, PTT, the oil and gas group, is moving ahead with its mammoth $22 billion petrochemistry and oil refinery project in Nhon Hoi Economic Zone in Binh Dinh Province of Vietnam.
According to the Ministry of Planning and Investment (MPI), Thailand ranked 10th among the largest foreign investors in Vietnam by March 2015 with 374 licensed projects, capitalized at $6.7 billion.
The Thai registered investment projects are in many important business fields of Vietnam, from processing industry, manufacturing, seafood and farm produce, construction to distribution, accommodation and food services.
Pham Hong Hai, managing director of HSBC Vietnam, thinks that in the next five years, Thai large corporations will turn Vietnam into a production base for Thai branded goods for export to other countries.
Analysts noted that now is the right time for Thai ‘big sharks’ to swallow Vietnamese businesses, which have been operating ineffectively and now have to sell part of their assets as they poured money into too many different business fields. This will give Thai investors a golden opportunity to acquire existing production facilities at reasonable prices.
foreign direct investment in Vietnam has decreased as other ASEAN countries have emerged as formidable rivals.
Therefore, Thai investors have more opportunities to march towards Vietnam, which is not only large market but also the gateway to the southern Chinese market.