By P. Thao | dtinews.vn | May 18, 2012 08:43 PM

The National Assembly's Committee for Finance and Budget has turned down government's plans to exempt VAT tax, corporate income taxes and personal income taxes for 2012.

Personal tax exemptions were already introduced in August 2011

It reasoned that in August 2011, the government had issued Resolution 8 which provided a 50% VAT and income tax exemption in 2011 for landlords who rent rooms to workers, students or for use as private kindergarten classes on the condition that prices remain reasonable in a bid to assist business in difficulties.

However the results of these decisions had not been fully evaluated. In addition, it had proved hard to monitor the prices offered by those benefiting from the resolution.

Reviewing the implementation of Resolution 8, the government said it had exempted VND3 billion (USD144,000) in VAT for 100 enterprises and VND7 billion (USD335,000) for 25,000 landlords.

The 50% corporate tax reduction for enterprises that provided meals for shift workers, had cut VND2 billion (USD96,000) in costs for 150 businesses.

Previously in early May, the government announced its bailout packages for enterprises in difficulties. The government decided to cut corporation income tax by 30% for small and medium-size businesses, excluding those operating in lotteries, real estate, securities or insurance areas.

The government also planned to exempt taxes in 2012 for landlords who rent rooms to workers, students or for use as private kindergarten classes on the condition that prices remain reasonable.

http://dongtalk.com/forums/showthread.php?t=23271

Last update 18/05/2012 01:59:00 PM (GMT+7)

VietNamNet Bridge – A lot of businesses’ managers, and team leaders have also joined the army of unemployed people who get unemployment benefits.

People register their unemployment

Unskilled workers or officers are believed to be the biggest sufferers in the economic crisis, because they are the first targets of the lay-off plans that enterprises would carry out to cut down expenses. However, in fact, qualified officers and experienced managers have also become redundant.

Director watches TV to kill time

According to Dr Dang Quang Dieu from the Vietnam Labor Federation, Vietnam is seriously lacking senior managers and qualified workers. However, the high quality manpower proves to be very choosy about jobs. If they cannot find good jobs which can bring high income, they would rather accept to stay redundant and wait for their new opportunities, than accepting simple jobs with moderate income.

Besides, Dieu said, about 12,000 businesses, mostly the ones in industrial zones and export processing zones had to stop operation or got dissolved in the first quarter of 2012. This means that the CEOs and senior managers of the enterprises have also become redundant like unskilled workers, and they have met big difficulties.

Both reasons have explained why the number of high ranking executives, who have become unemployed, has been on the increase.

The Hanoi Job Center has confirmed that a lot of people, who once held the important positions at enterprises, also came to register their unemployment in April. They have given up the jobs because their companies decided to scale down the production and dismiss the staff to cut down expenses.

These include the brand director of a big cosmetics company, who got 30 million dong in salary at work, not including allowances and commissions, and the managing director of a construction company, who got 40-50 million dong a month.

Both of them decided to resign from the posts after their companies cut down the labor force in a plan to cut down expenses.

“They have many opportunities to find new jobs, but they still decided to stay off work after a long period of working and bearing pressure from the jobs. They have registered unemployment to get unemployment benefit which would help them live while waiting for new opportunities,” said Nguyen Thi Kim Loan, Head of the Unemployment Insurance Division of the Hanoi Job Center.

One of the men who came to register his unemployment in late April was a man, 28, who was a finance director.

The high bank loan interest rates put big difficulties for his company and lead to the business stagnation. 40 percent of the company’s staff was sacked. The man was not among the 40 percent, but he still decided to resign from the post.

His daily main works are watching TVs, surfing on Internet and playing sports.

Big unemployment benefits for “big guys”

Also according to Loan, 63 percent of the people registering their unemployment were unskilled workers, while the other 35 percent have university or junior college degrees, or they are high quality workers.

Of the 35 percent of unemployed with university and junior college degrees, 10 percent were once the experts or managers of small and medium enterprises. There were also the bosses of relatively big enterprises.

A project chief coordinator of a foreign invested project reportedly received 2000 dollars a month, or 42 million dong. However, he has become unemployed after the project terminated. With the high salary of 42 million dong, he now gets the high unemployment benefit of 9.96 million dong a month.

Meanwhile, in Vietnam, those people who have the monthly income of 10 million dong are considered high income earners. As such, the unemployment benefits of many people are the dream of many other working people.

Source: Lao dong

http://dongtalk.com/forums/showthread.php?t=23254

Last update 18/05/2012 08:07:00 AM (GMT+7)

VietNamNet Bridge – Vietnam has a trade promotion agency, in charge of running national trade promotion program, aiming to help Vietnamese exporters reach out to the world market. However, the agency remains helpless with “hand and foot bound.”

Budget on decrease, jobs on increase

While the export turnover has been increasing steadily by 30 percent per annum in recent years, the budget on trade promotion activities has been decreasing continuously from 170 billion in 2009 to 120 billion dong in 2010 and then to 55 billion dong in 2011.

Do Thang Hai, Head of the Vietnam Trade Promotion Agency (Vietrade), said the national trade promotion program has been budgeted 43.93 billion dong for 2012, or just equal to 0.0022 percent of the export turnover. The level is equal to 1/50 of the world’s average rate, and just can satisfy 1/7 of the enterprises’ demand.

Also according to Hai, a paradox exists that while the budget has lessened, Vietrade has been assigned two more tasks. It not only is in charge of helping promote exports, but also has to boost trade in the domestic market, mountainous areas and ensure the high trade growth rates in all the markets.

Some experts think that despite the lower budget for trade promotion, Vietnam’s exports have still been increasing steadily in recent years, therefore, no need to spend more money on trade promotion activities.

However, a representative from the Vietnam Pepper Association, stressed that Vietnam needs to maintain trade promotion activities, saying that one should not expect to see immediate effects.

“You carry out trade promotion campaigns this year, but you may only be able to obtain export orders after some more years,” he said.

Despite the economic crisis, Vietnam’s export turnover still increased by 33 percent in 2011, which should be seen as the result of the trade promotion activities carried out in previous years. The sharp cut of the budget for trade promotion activities would make Vietnamese enterprises suffer.

Boosting exports should be the focus

The Prime Minister has instructed at the recent regular government meeting that ministries need to focus on helping enterprises overcome difficulties, while one of the solutions is to allocate higher budget for trade promotion activities and expand the export markets.

However, businesses have said that the government needs to release a “more detailed message” which says that it’s necessary to focus on expanding the export markets.

“It’s impossible to boost domestic consumption in the context of tightened credit and investments,” said Pham Chi Cuong, Chair of the Vietnam Steel Association.

“The only way out for steel manufacturing is to boost exports,” he added.

General Director of a garment company frankly said that he really wants to expand the domestic market share, but his main markets are foreign markets. Therefore, in order to ease the current difficulties, the company needs to boost exports and it needs the support to do that.

In other countries in the world, the trade promotion agencies only focus on boosting exports. Meanwhile, in Vietnam, though having a modest budget, Vietrade has to take on too many works.

Long term programs needed

Experts have pointed out that Vietnam needs long term trade promotion programs. However, with the current financial mechanism, businesses can only draw up short term programs.

Hai of Vietrade said that under the current mechanism, Vietrade has to submit the trade promotion program for the next year to the Ministry of Finance on July 1 every year. The ministry would submit the program to the National Assembly for approval. In general, the plan gets approval in late November at the National Assembly’s session. After that, the ministry would release a notice on the program on March of the next year, and would only disburse money from September.

Source: TBKTVN

http://dongtalk.com/forums/showthread.php?t=23258

Updated May, 17 2012 10:46:00

HA NOI — Exchange rates are showing stable development, says financial and banking expert Nguyen Tri Hieu.

The average inter-bank rate of exchange yesterday, as listed by the State Bank of Viet Nam, continued to stay at VND20,828 per US dollar, a level it had maintained for almost all of a six-consecutive-month period since November 24 last year.

Exchange rates on the regular market were showing correlative moves, with commercial banks — including Vietcombank, BIDV, Eximbank and Vietinbank — listing buying rates at around 20,820 dong/dollar and selling rates around 20,870 dong/dollar.

Hieu told Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) that the stable trend was due to significantly increasing State Bank foreign exchange reserves, few fluctuations on the gold market and great differences between the interest rates for dong and dollar, which was making the foreign currency less attractive.

The trend was also backed by central bank measures to stabilise the foreign currency market, positive signs from import-export and declining demand for foreign currencies due to domestic production slowdown, he added.

The National Financial Supervisory Committee (NFSC) said there was a high possibility that stability would continue over the coming months.

Exchange rates would not see strong fluctuations in the short term with abundant supply and small demand for foreign currency, it said, noting that the nation's general payment balance was seeing a surplus of about US$2 billion while international investors were showing greater confidence in the domestic economy.

Hieu warned, however, that there were still many unpredictable factors that could cause fluctuations in the foreign currency market during the remainder of the year, as global prices remain unstable and imports are likely to see sudden changes by the end of the year.

Tai Hui, an economist at Standard Chartered Bank, recently said although the trade deficit had narrowed to $257 million in the first quarter of this year from $1.6 billion in last year's fourth quarter, it was still too early to determine whether the trade balance would continue to improve or not.

He reportedly forecast that the dong would depreciate slightly by 4.3 per cent in 2012.

The NFSC said flexible policies were needed in order to avoid pressure on exchange rates between now and the end of the year and that rates should be kept at "reasonably stable" levels.

The dong should not be floated so as not to negatively affect the Government's efforts in restoring the confidence of business, investors and people in the domestic currency's value and the economy.

On the other hand, the NFSC said with an inflation difference level between Viet Nam and its major trade partners expected to reach 5-7 per cent this year, and with the dong being valued about 5.46 per cent higher than its real value, a fixed exchange rate would affect the competitiveness of domestic goods in the future.

The committee said the current exchange rate could be adjusted in a 3-5 per cent amplitude to facilitate exports, which were expected to see many difficulties.

A Government commitment to maintaining stable exchange rates with low-level adjustments would stimulate short-term capital flows into the country, including finances from foreign direct investment and foreign short-term lending, the NFSC said.

Such capital sources would help increase foreign currency supply and national reserves, which could promptly be withdrawn from Viet Nam in case of fluctuation, posing a risk for the country in the middle term if capital inflows were large-scale compared with national reserves, it noted. — VNS

http://dongtalk.com/forums/showthread.php?t=23246

By Bich Diep | dtinews.vn | May 17, 2012 02:54 PM

The Prime Minister has appointed another deputy governor to the State Bank of Vietnam (SBV) to accelerate restructuring in the banking sector.

Dao Minh Tu, newly-appointed Deputy Governor of SBV

Dao Minh Tu will be the sixth deputy governor of the SBV, beginning May 15, 2012.

Other SBV deputy governors include Nguyen Dong Tien, Le Minh Hung, Tran Minh Tuan, Dang Thanh Binh and Nguyen Toan Thang.

Various international organisations have been recommending that Vietnam set a comprehensive programme for the restructuring of the banking sector for some time.

In order to meet this target, they say, it is vital that the country has both capital and competent human resources.

According to the country's road map for restructuring of the banking system, banks have been put into categories. Category number 3 are given from the second quarter of this year until the end of next year to complete their restructuring plans. The target for this group is to achieve credit growth rate of 8% in 2012.

Between 2013 and 2015, the country will focus on enhancing the efficiency of banks and strive to increase the level of at least 1 or 2 of them to the highest rated in the region.

Another goal is that by 2015, at least four financial institutions will be eligible to compete in the regional market. By 2020, one or two institutions are expected to be listed among the largest financial institutions in the Southeast Asia.

http://dongtalk.com/forums/showthread.php?t=23251

Last update 17/05/2012 12:42:00 PM (GMT+7)

VietNamNet Bridge – Vietnamese freight and forwarding enterprises, which are smaller, less experienced and less known than foreign companies, have been facing big challenges since Vietnam has opened its market since January 2012.

According to Do Ngoc Binh, General Director of VNPost, in the past, when Vietnam did not open its market to foreigners, foreign firms had to cooperate with domestic enterprises, if they wanted to do business in Vietnam. However, as Vietnam opened its market since January 11, 2012, foreigners would set up 100 percent foreign legal entities in Vietnam.

Nearly all freight & forwarding firms with global networks have been present in Vietnam already, under the modes of joint ventures or joint stock companies. Three out of the four big guys, who have been doing business in Vietnam, teamed up with domestic partners to set up companies.

TNT, for example, teamed up with Vietrans to form up a joint venture, DHL joined forces with the Vietnam Post and Telecommunication Group, while UPS and P&T Express set up a joint stock company.

Only Fedex still has been operating under the mode of BCC (business cooperation contract), cooperating with domestic companies. Recently, Fedex has stopped the financial contract with VNPost to joint forces with private businesses.

Meanwhile, according to Binh, though there are many domestic freight and forwarding firms, the firms remain weak if compared with the experience and economic potentials of foreign firms. Therefore, the hard pressure on domestic firms in the market opening period has been anticipated.

Also according to Binh, domestic firms would be competitive in terms of domestic deliveries, but they would inferior with foreign groups which have the networks reaching out to many places in the world.

However, Binh has warned that Vietnamese firms should look out for foreigners in the domestic delivery market segment. At present, foreigners still have not paid much attention to the domestic market because of the low profits. However, they may be interested in the market segment as well some days. If so, the pressure on domestic firms would be even harder.

Experts have also said that Vietnamese companies should gather strength to heighten their competitiveness, while focusing on some certain customer segments.

“Most of the clients now belong to B2C (business to customer) segment. This is the segment which can develop strongly and should be the target for Vietnamese firms,” Binh said.

Besides, the rapid development of e-commerce environment has also opened new ways of doing business for domestic firms – providing the services of carrying cargoes, products for online sale channels.

Luong Ngoc Hai, General Director of Viettel Post, has affirmed that domestic firms need to combine efforts to overcome the difficult period together. He said the cooperation would not only allow reducing the investment capital, but also to enlarge the post networks and increase the carrying frequency.

However, Hai has admitted that barriers have been existing to prevent enterprises from cooperating with each other.

“Big enterprises may think that small businesses live off big enterprises. Meanwhile, small businesses would rely on big businesses and do not want to make investment to expand networks,” Hai said.

Nevertheless, there has been no sign showing that foreign firms would set up 100 percent foreign owned legal entities in Vietnam right now.

A representative of DHL, a partner in the DHL-VNPT Express), has said that the joint venture contract lasts 10 years, and the two partners have gone a half way of five years. In principle, they would go together in the other five-year path.

Source: TBKTSG

http://dongtalk.com/forums/showthread.php?t=23235

Vietnamplus, dtinews.vn | May 16, 2012 04:56 PM

A total of 83 state-owned enterprises and four banks have promised to cut operating costs by VND13.242 trillion (USD634.49 million) by early May.

State-owned enterprises urged to cut costs

State-owned corporations and groups have committed to slash their management expenses by over VND3 trillion (USD143.74 million) in 2012, the Ministry of Finance (MoF) said.

They have also registered to cut spending on materials and energy by over VND9.418 trillion (USD451.26 million) during the year.

As of May 9, four banks pledged to reduce their costs for this year by over VND735 billion (USD35.21 million). The banks making the pledge included Vietcombank, BIDV, Vietinbank and Agribank.

According to the ministry, the Mekong Delta Housing Development Bank (MHB) said they would join the campaign, but had yet to announce their planned cost savings for this year.

The MoF issued a document on January 17 requesting state-owned enterprises to lodge a commitment to cut operating costs with them this year.

Bao Viet Group was the first institution that responded to the campaign. It pledged to cut operating costs by VND145 billion (USD6.94 million) for 2012.

Several other enterprises followed suit including the Vietnam National Textile and Garment Group with VND1.1 trillion (USD52.7 million), Electricity of Vietnam Group with VND1.8 trillion (USD86.24 million), the Vietnam Housing and Urban Development Group with VND125 billion (USD5.98 million), and Vietnam National Shipping Lines with VND105 billion (USD5.03 million).

The ministry has also required banks to slash their operating costs by from 5%-10% in order to heighten efficiency.

http://dongtalk.com/forums/showthread.php?t=23213

Last update 16/05/2012 12:52:00 PM (GMT+7)

VietNamNet Bridge – The Ministry of Transport plans to inject 100 trillion dong in the Vietnam National Shipping Lines (Vinalines) to rescue the big shipping corporation which has been caught in a shoal. However, experts have expressed their doubts about the rescue plan.

Vinalines gets embarrassed with difficulties

Vinalines, the biggest Vietnamese shipping corporation, has reportedly bogged down in difficulties. While the number of orders is on the decrease in the context of the global economic crisis, Vinalines’ fleet, which comprises of old ships, has become less competitive. Meanwhile, it still spent a lot of money to buy old ships to… leave them idle.

Since 2007, Vinalines, like other shipping firms, have been put on red alert as the number of orders has been decreasing dramatically and the shipping fees have been decreasing. Experts could not see any opportunities for Vinalines, with its old fleet, named in the Tokyo-MOU black list, to make profits from shipping services.

By the end of 2011, Vinalines had reportedly had 154 ships with the total tonnage of 3.4 million tons, accounting for 45 percent of the total tonnage of the national fleet. Most of them are dry cargo ships, while there are few oil tanker and container ships.

Vinalines, though established as a shipping corporation, has been putting its ships for lease because of the weak competition. This has resulted in the instability in cooperation and the big losses incurred by subsidiaries.

Vosco, for example, reportedly incurred the net loss of 60 billion dong in the first quarter of 2012. In order to ease the loss, it has to sell Dai Viet ship, 37,432 DWT, built in South Korea, to a partner in Singapore, and liquidate Song Tien Ship.

Meanwhile, Vitranschart, in an effort to settle urgent financial problems, had to sell Phuong Dong 1, Phuong Dong 3 and VTC Star in 2011. It plans to sell VTC Light and Vien Dong 3 in 2012 to ease difficulties.

In 2011, Vinaship liquidated three ships out of the fleet of 14 ships, of which fours are over 25 years old.

Rescuing Vinalines, how?

A huge package of 100 trillion dong is expected to be injected in Vinalines from now to 2020 to revive the shipping corporation, which was once the pride of Vietnamese maritime industry.

Under the plan, 30 trillion dong would be disbursed in 2012-2015, so that Vinalines can buy 67 more ships. Meanwhile, it is expected that Vinalines would buy 95 more ships in 2016-2020. As such, the total investment capital for the period would reach 70 trillion dong.

With the plan, the Ministry of Transport cherishes an ambitious plan to increase the total tonnage of Vinalines’ fleet to 15 million tons at least.

However, the ministry’s plan has been described as a “far-away” plan with many unattainable goals.

Vietnam is following a plan to modernize the fleet under which the total tonnage would reach 8.5-9.5 million tons by 2015 and 11.5-13.5 million tons by 2020. However, an expert has pointed out that it’s impossible to increase the capacity to 15 million tons just after several years. Spending a lot of money to buy new ships does not mean that the shipping capacity would be improved. Meanwhile, it’s still unclear where the money for buying ships would come from.

Dr Nguyen Van Thu, former Head of the Transport Programming and Management Institute, also said that after many years of making investment, the total tonnage of the Vietnamese fleet has not reached the 7 million ton threshold; therefore, it seems to be impossible to raise the shipping capacity to 15 million in just some more years.

Source: TBKTVN

http://dongtalk.com/forums/showthread.php?t=23196

Last update 16/05/2012 02:28:00 PM (GMT+7)

VietNamNet Bridge – The stable dong/dollar exchange rate has prompted businesses to borrow in dollar instead of dong in order to enjoy low interest rates. Banks have also confirmed that the credit growth has been seen mostly in dollar lending.

The State Bank of Vietnam on May 2, 2012 released the Circular 03 in an effort to restrict the lending in foreign currencies to encourage enterprises to buy domestic goods. The bank has recently extended the validity of the circular until the end of December 2012.

However, experts believe that it’s the right time to amend the circular to make its provisions suitable to the business specific characteristics of export companies.

Dollar loans still favored

The stable dong/dollar exchange rate has lifted the worry of the businesses that borrow capital in dollars. This has also prompted other businesses to borrow dollars to enjoy low interest rates.

Though the dong lending interest rate has been lowered to 15 percent, dong capital remains very costly. As dollar loans can be obtained at the interest rates of 6-7 percent per annum only, it’s understandable why businesses still prefer dollar loans to dong.

The decision by the State Bank to extend the validity of the circular has been applauded by commercial banks. Tran Xuan Quang, Deputy General Director of Maritime Bank said this would help businesses much, allowing them to reduce the capital costs when they can borrow capital at low interest rates in the context of stabilized exchange rate.

As such, export enterprises can borrow foreign currencies to import goods, or use dong to buy foreign currencies from the State Bank to import goods, i.e. they have more choices for financial solutions to better their business performance.

The exchange rate tendency

At present, the foreign currency reserves are profuse, while the banks’ liquidity is very good. However, if the exchange rate would fluctuate in the future remains a question.

Dr Le Xuan Nghia, a well known economist, said while the dollar price in the world tends to appreciate thanks to the recovery of the US economy, the dollar price in Vietnam tends to decrease because of the sharp falls of the imports in the context of the production stagnation. Therefore, the current account balance deficit is low.

Meanwhile, the capital balance does not change significantly. Therefore, experts have every reason to believe that the international payment balance may see the surplus of several billions of dollars. As such, one can expect no big changes in the exchange rate in 2012.

However, Dr Le Dat Chi from the HCM City Economics University said the exchange rate would also depend on the gold market management of the State Bank and the demand stimulus policies.

If the domestic gold price is much higher than the international price, this would put a pressure on the exchange rate. This explains why the dong/dollar exchange rate remains an unknown in the reports of foreign financial institutions.

Though agreeing that the restriction on dollar lending would help ease the dollarization, a serious and chronic disease of the national economy, they have pointed out that the Circular No. 03 would put difficulties for enterprises.

In Vietnam, there are a lot of purely import or purely export enterprises. Meanwhile, the circular said export enterprises cannot borrow dollars if they do not need dollars to make payment for imports, but mostly buy materials from domestic sources. Only the enterprises which import materials to make products for exports, can borrow dollars at low costs.

This would lead to the decreases of export enterprises’ profits, thus annulling the business driving force of export enterprises.

Source: Saigon Dau tu

http://dongtalk.com/forums/showthread.php?t=23195

May 15, 2012

VietFinanceNews.com - The Vietnamese dong currency is rising, so exchange rate adjustments may be in store, said economic experts of the National Institute for Finance at a conference in Hanoi last week.

According to analyses by experts, the dong has strengthened by 23.8% against the U.S. dollar and by 5.7% against the basket of currencies of the country’s major trading partners.

The exchange rate has stayed quite stable on the market as exporters have steadily sold the U.S. dollar to banks. The dong and dollar selling prices at times are on a par with or even lower than those set by the State Bank of Vietnam.

The greenback has been in decline against other currencies in recent years, leading to the lower rise of the dong against the basket of hard currencies.

However, according to experts, the pressure of stabilizing the exchange rate still remains a challenge for policymakers.

Inflation is seen falling towards the year-end given tight monetary and fiscal policies. The State Bank of Vietnam may be forced to adjust the exchange rate slightly to support export, reduce trade deficit and improve the balance of payments and foreign reserves.

After the exchange rate was adjusted last February to make the dong drop by 8.5% against the U.S. dollar, the rate has been kept unchanged since then.

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