Last update 09:47 | 20/10/2014
VietNamNet Bridge – Taiwanese-invested Formosa Iron and Steel Co., Ltd. based in Ha Tinh Province, in central Vietnam, has asked for the Ministry of Transport’s permission to establish its own steel-transport fleet in Vietnam.
According to Formosa’s petition sent to the Ministry of Transport, Ha Tinh province, the National Maritime Administration and the Board of Management of the Ha Tinh Economic Zone, after building two blast furnaces, each year the company would produce 7.1 million tons of finished steel products. It would need to have a fleet to transport such a high volume of steel products in Vietnam.
The company said that at least three million tons of steel products would be consumed in Vietnam, mainly in HCM City and Hanoi.
Formosa is a wholly-foreign owned firm. According to Article 6 of Decree No. 140/2007 / ND-CP detailing the Commercial Law regarding business conditions for logistics services, foreign firms offering maritime transport services are only allowed to establish joint-venture company fleets, in which the capital contribution ratio of foreign investors shall not exceed 49%.
However, in its petition, Formosa explained that its fleet would only transport its own steel products, so the fleet would not affect the business activities of other carriers.
Last update 17:00 | 20/10/2014
VietNamNet Bridge – Corporations have many methods to bleed the national budget’s dry: evading tax, declaring inaccurate taxable income, delaying tax payments, and committing trade fraud.
The Vietnam Coal and Mineral Industries Group (Vinacomin), for instance, has once again asked the state for tax and fee reductions on mined coal, citing huge losses due to overly high taxes and fees.
Analysts, however, says that Vinacomin often asks the state to reduce its taxes and fees when it encounters difficulties.
Last year, for example, the government cut the company’s coal export tariff to 10 percent from 13 percent, amid public opposition.
Vinacomin enjoyed its tax cut, but the government had to raise export tariffs in an effort to restrict exports in order to store coal for domestic use.
In late 2013, Vinacomin also asked the state for reduction and exemption of many kinds of taxes on their bauxite exploitation and processing projects in the Central Highlands, even though the company had been given many tax incentives.
In another case last year, Vinashin, the shipbuilder, asked the state for VAT and import tariff cuts. Most recently, Vinalines, the shipping firm, has asked for preferential port fees.
The loose management of state agencies has been exploited by enterprises seeking to squeeze money from state coffers.
A number of fraudulent VAT refund cases, for instance, have been discovered recently, worth billions of dong in each case.
In late 2013, the Kien Giang provincial police discovered fraud in a VAT refund case in one locality. A sum of VND109.4 billion had been refunded to a business declaring an export deal worth VND1.094 trillion, which they found existed only on paper.
And in December 2013, HCM City police uncovered five cases of smuggling and tax evasion. Of these, the taxes appropriated by the Saigon Food Technology Company totalled nearly VND100 billion.
Cao Anh Tuan, deputy general director of the General Department of Taxation, said that taxation bodies had inspected more than 39,000 businesses by the end of September, forcing businesses to pay VND7.4 trillion in additional taxes.
Of the 39,637 businesses inspected in the first eight months of 2014, the taxation bodies found signs of transfer pricing at 1,938 enterprises.
Not only have taxpayers been found breaking the law, but tax officers have also appropriated state money or lent a hand to taxpayers to commit fraud.
In late 2013, authorities discovered that HCM City’s District 1 Taxation Sub-department had kept VND1.441 trillion worth of taxes in its coffers that should have transferred to the state budget.
Last update 09:18 | 13/10/2014
VietNamNet Bridge – Both multinationals and major local companies have increased salaries by nearly the same rate this year, a survey by Mercer, a global provider of human resource services and its associate in Viet Nam, Talentnet Corporation, has found.
While the former pays 10.4 per cent higher, it is 10.5 per cent for domestic giants.
Hoa Nguyen, leader of Mercer Remuneration Surveys and Human Resource Consulting at Talentnet, speaking at a seminar in HCM City yesterday (Monday), said with not much change in business conditions and lower inflation forecast, the salary increase, nearly the same as last year, is expected to be at the same rate next year too.
The pharmaceutical, consumer goods, and chemicals industries were the top three in terms of salary hikes – at around 11 per cent — since they are not being impacted as much as others by the economic situation.
Real estate and banking saw the lowest salary increases of 8.4 per cent and 8.9 per cent due to difficult business conditions.
The survey pointed out that the difference in base salaries paid by multinational and Vietnamese companies remained high at 30 per cent, she said, adding that the difference gradually widen from professional to executive levels.
To attract talent from multinationals, local firms are willing at this juncture to pay out of their salary range for high-level positions.
However, it would take a number of years before big local companies' pay catches up with multinational companies', Hoa said.
For now, to attract, motivate, and retain the best employees, local companies often use long-term incentives such as stock offers and stock options.
When it came to paying bonuses, banking and oil and mining topped (22.7 per cent and 17.7 per cent relatively) with big local companies paying more than multinationals.
Trading and technology were the two sectors with the lowest bonuses.
The employee turnover rate last year decreased by 2 -3 per cent, with multinationals having lower rates than local companies (12.2 per cent versus 17.1 per cent), she said.
Multinational companies have in fact had the lowest rate for the last five years.
The highest turnover was in pharmaceuticals, consumer goods, and insurance due to a shortage of talent.
The jobs of sales managers, sales executives, and marketing managers remained, as they have for long, the hottest, with companies having difficulty recruiting personnel and keeping them for long.
During periods of tough market conditions, sales managers are more important to businesses than marketing specialists since they directly bring revenues to the company.
A total of 473 multinational and local companies with more than 164,790 employees in various industries took part in the survey.
Last year's survey had polled 418 companies.
The increase in the number of Vietnamese companies taking part in the survey indicates their more serious attitude towards remuneration and desire to improve their salary budget more effectively and know exactly how competitive their salaries are compared to the market.
Godelieve Kroonenberg, Mercer's market business leader, ASEAN Information Solutions, said more flexibility in benefits, flexibility in pay mix, and more tailored communications with employees could be key to retaining employees for Vietnamese firms.
October, 14 2014 09:13:00
Capital flow to Viet Nam has increased sharply recently, especially after the purchase of Metro Cash & Carry Viet Nam by Thailand's Berli Jucker, for US$879 million, earlier this month. — Photo tamnhin
by Van Dat
HCM CITY (VNS) — The recent increase in investment flows from Thai enterprises has shown that Viet Nam is vital for Thailand's economy, especially after the ASEAN Economic Community comes into effect in 2015.
Recent information from the Thailand Board of Investment shows that the country's outward investment in ASEAN-member countries has undergone an upward trend since 2007, with last year's investment at US$4.5 billion, equal to Thailand's investment in the EU.
Most of the Thai investment in ASEAN was in Singapore, Indonesia, Viet Nam and Myanmar, according to Chokedee Kaewsang, deputy secretary general of the Thailand Board of Investment.
With more than US$1.4 billion between 2009 and 2013, Viet Nam was ranked third in receiving investment from Thai enterprises, after Singapore and Indonesia.
Capital flow to Viet Nam has increased sharply recently, especially after the purchase of Metro Cash & Carry Viet Nam by Thailand's Berli Jucker, for US$879 million, earlier this month.
In addition, the Thai-owned Robins department store made its Viet Nam debut in Ha Noi in April. It will also open a 12,000-square-metre store in HCM City's Crescent Mall shopping center in District 7 in November.
It also plans to open stores in other major cities, including Hai Phong, Da Nang, and Can Tho in the Mekong Delta.
Several other Thai enterprises which have invested in Viet Nam have also decided to accelerate their investments.
Amata Corporation, Thailand's largest industrial estate developer, which built a 70- sq.km2 industrial city in Thailand 25 years ago, has decided to build a modern and integrated city industrial estate, Amata Long Thanh, in Dong Nai Province covering 1,285 hectares.
According to a report in the Bangkok Post, the corporation has signed a cooperative agreement with Dong Nai Province's People's Committee to develop the US$530 million industrial estate.
With the ASEAN Economic Community taking effect next year, Thai investors are anxious to take advantage of the Vietnamese government's ambitious drive to increase economic growth to more than 8 per cent annually.
Twenty years ago, Amata built the Bien Hoa Industrial Estate in Dong Nai Province, and is now eyeing more opportunities in Viet Nam.
Two other Thai giants, Siam Cement Group and CP, which have had success investing in Viet Nam, also have plans to expand, according to the Viet Nam Chamber of Commerce and Industry.
Early this month, the US$22 billion Victory petrochemical and oil refinery project funded by Thailand's oil firm PTT and its strategic partner Saudi Aramco was approved.
The project will be located in central province of Binh Dinh.
Many Thai investors say they prefer Viet Nam to Cambodia, Laos PDR or Myanmar because of the country's political and economic stability and its geographical position near the sea.
Panpimon Suwannapongse, Thai Consul-General to HCM City, who recently organised a trip with Vietnamese provincial administrators along the Southern Economic Corridor, said that Thailand sees Viet Nam as important because of its long coastline, which makes it convenient to transport goods by boat.
In the Mekong sub-region, Viet Nam is the end-point of many major roads and the Mekong River, where goods can be easily transported to the Thai mainland.
Viet Nam's export potential and the coming single market in the ASEAN Economic Community are other factors as well.
Suwannapongse said that Viet Nam and Thailand also plans to support less-developed countries such as Cambodia, Laos, and Myanmar.
Panat Krairojananan, CEO at Surint Omya Viet Nam, said that Thai businesspeople who have been working in Viet Nam for several years said it is much more convenient to export goods to the US from Viet Nam. He added that Thai companies could export commodities from Viet Nam through Route R1.
"Thai businesspeople plan to pour cash into Viet Nam for a long time. Previously, only a few Thai companies had entered Viet Nam, but now there are many more," he said.
Because of fears of economic stability at home, Thailand also wants to invest in a country like Viet Nam that can share investment risks.
Similarity in culture and a predominantly young population of 90 million are other factors that have influenced Thai interest in Viet Nam.
"Although infrastructure in Viet Nam is still not complete, it is a good time for us to come. More companies from other countries will arrive in the future, and it will become more competitive for us," he said.
The Thai CEO said his company, Surint Omya Viet Nam, which has two factories producing calcium carbonate, will open another facility in northern Viet Nam.
Tran Huu Phuoc, deputy chairman of Long An Province's People's Committee, who visited Thailand with other provincial leaders on the recent trip on Route R1, said that Thai enterprises wanted to invest in Long An Province as well.
Phuoc added that there was still great potential for industrial, trade and tourism cooperation between the two countries. — VNS
October, 14 2014 09:15:42
A worker operates a packing line at theThang Long Tobacco Co Ltd. Experts say Viet Nam should raise special consumption taxes on goods like liquor and tobacco. — VNA/VNS Photo Lam Khanh
HA NOI (VNS) — Viet Nam should increase special consumption taxes on goods like liquor and tobacco in "reasonable" increments over several years so as to discourage smuggling and other forms of illicit trade, experts have said.
Speaking to Viet Nam News on the sidelines of the recent 11th Asia-Pacific Tax Forum, they said that a gradual rise would also reduce the impact on consumers.
The experts were referring to increases to the special consumption tax on liquor, beer and tobacco that have been proposed in draft amendments to the Law on Special Consumption Tax.
The draft law, now under discussion, is expected to be approved this year and come into force on July 1, 2015. It seeks to hike the tax on tobacco from 65 per cent to 70 per cent on January 1, 2016, and to 75 per cent in 2019.
The tax on beer will be increased from 50 per cent to 55 per cent on July 1, 2015, to 60 per cent in 2017 and 65 per cent in 2018.
The special consumption tax on liquor with alcohol content of above 20 per cent will be raised from 50 per cent to 65 per cent and that on liquor with less than 20 degrees would be increased from 25 per cent to 35 per cent.
Daniel Witt, president of the International Tax and Investment Centre, said that gradual tax adjustments with carefully-planned roadmaps are required to avoid creating a shock and increasing smuggling and illicit trade.
"The Government of Viet Nam's approach is in the right direction," he said.
But he said "The 10 per cent increase is too high and should be set at just 5 per cent annually, the same increase proposed for beer. Again, all products should have the same, gradual tax increase."
Higher upfront increases could risk incentivising smuggling and shifting consumption to the black market as consumers would substitute consumption to other products that had not experienced the large tax increase, which would pose risks to Government revenue, he added.
Agreeing, Stephane Gripon, general director of Diageo Viet Nam, said: "The proposed increases are substantive and could have significant impacts on legitimate business if not implemented in a reasonable way.
"We are concerned that any excessive increase in tax will only lead to widespread unrecorded and untaxed alcohol."
He said the hikes should not begin before 2016 and should be phased over three or four years. More importantly, he said, this should be done equally for all alcoholic beverages – beers, wines, spirits – over the same period of time.
He suggested an increase of 5 per cent per year from 2015 to 2017.
Rob Preece, lecturer in excise at the University of Canberra, Australia, said one of the causes for increasing black market trade was that the penalties were too small, and many people would be willing to take the risk to earn high profits.
"The principle is slow adjustment to minimise unintended consequences," he said.
Witt said efficient co-ordination between relevant authorities, including police, tax and customs officials as well as the health ministry was critical to addressing the issue.
"Tax policy and rates should be neutral," he said, adding that tax increases should not hurt competitiveness. ‘Neutral' refers to a level that will not force businesses to change their economic routines to accommodate the tax.
Striking a balance in revenue, employment, investment, consumption and production was important, other experts said.
The forum heard that a two-year study into the development of excise tax policy in the context of the ASEAN Economic Community 2015 was to come out this year. This is expected to provide Viet Nam as well as its ASEAN neighbours with a roadmap to modernise excise taxation and ensure more stable revenue and consumption. — VNS
Last update 17:00 | 09/10/2014
VietNamNet Bridge – Commercial banks will be forced to stop providing consumer loans if they don’t have finance companies of their own, under a draft document being compiled by the State Bank of Vietnam.
The draft has attracted special attention from bankers as most of them now want to develop retail banking services after a long period of providing loans to businesses.
The central bank, when compiling the legal document, said it was necessary to separate consumer lending from banking operations and put lending under the management of finance companies.
This would also help make clear the responsibilities to be taken by finance institutions, while commercial banks can only take limited responsibility for their contributed capital.
However, analysts have warned that the regulation, if realistic, would do more harm than good. Bankers understand that subprime customers are not their subjects. And if finance companies are put under commercial banks, this would push commercial banks into subprime lending.
Do Thien Anh Tuan, a lecturer of the Fulbright Economics Teaching Program (FETP), noted that the splitting of consumer lending from commercial banks was not used in many other countries. Providing consumer credit is usually a basic operation of retail banks.
An economist noted that commercial banks need to be given the right to decide whether to set up finance companies of their own, depending on their business strategy.
HDBank and VPBank have bought two finance companies to implement their specific business plans, with the focus on targeted clients.
OCB does not intend to set up a finance company, though it is also planning to develop retail banking services.
The economist said the central bank, by setting up the regulation, has tried to pave the way for restructuring of finance companies, most of which are in bad condition.
He noted that the deal of Western Bank merging with PetroVietnam Finance Company (PVFC) to form PVcomBank was a “typically perfect mission”.
Non-bank finance institutions, including finance companies, are a part of the government’s financial system restructuring project.
What will happen if the draft regulation turns out to be successful? The economist said there would be a new wave of finance companies, and many merger & acquisition deals.
According to the State Bank, there are 17 finance companies and 41 commercial banks operating in Vietnam.
The banks will have to set up finance companies themselves or take over existing finance companies. However, it would be difficult to do both.
Under the government’s Decree No 141, a finance company must have the minimum legal capital of VND500 billion.
This means that a bank will have to have VND500 billion to own a finance company, which is believed to affect bank cash flow and safety indexes.
Last update 20:00 | 10/10/2014
VietNamNet Bridge – Vietnam and Russia are actively negotiating a free trade agreement between Vietnam and the Customs Union (Russia, Belarus, Kazakhstan).
Once the agreement is signed it will help fulfil a target for raising Vietnam-Russia bilateral trade to US$7 billion in 2015 and US$10 billion in 2020.
The statement was made by Doan Duy Khuong, Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) at the Vietnam-Russia Business Forum in Hanoi on October 6.
Khuong said businesses from the two countries play a leading role in promoting bilateral economic and trade cooperation, helping to consolidate and develop friendship ties.
In recent years, economic, trade, industry and investment cooperation between the two countries have been developing strongly. Two-way trade turnover hit nearly US$4 billion last year and nearly US$2 billion in the first seven months of this year.
VCCI is willing to cooperate with Russian trade representative offices and trade promotion agencies to accelerate bilateral meetings, Khuong stressed.
Russian ambassador to Vietnam, Andrey G.Kovtun said Russia-Vietnam relations have developed dynamically in recent years. Vietnam is among prioritised countries in Russia’s foreign-policy orientations in Asia-Pacific region.
The forum will help expand bilateral coordination between businesses and diversify comprehensive strategic partnership.
The forum involved 25 Russia’s leading businesses which want to seek Vietnamese partners in the fields of information technology, information and telecommunications, biotechnology, new materials, nanotechnology, health care, pharmaceuticals, environment, energy, automation, automobile industry, metallurgy, oil and gas.
By Dave Brown • October 10, 2014
BENTLEY Motors launches its first dealership in Vietnam next month.
The new operation is situated in Vietnam’s commercially dynamic and fast-growing capital city of Hanoi. The new dealership will offer customers the full Bentley model range as well as aftersales service and the company’s branded luxury goods.
Known as the ‘City of Lakes’, and with a metropolitan area population of over 6.2 million people, Hanoi has established itself as an important international centre for culture, finance and manufacturing.
The dealership is located in the new district of Nam Tu Liem – a new commercial and financial centre in the city. Kevin Rose, member of the board for sales, marketing and aftersales for Bentley Motors, said: ‘We look forward to working in Hanoi and the already high level of enthusiasm for Bentley from potential customers is an encouraging starting point.
‘We have a strong partner in CT-Wearnes Vietnam who combines an in-depth knowledge of business in Vietnam with a long and successful track record of luxury automotive retailing in the region, notably with Bentley.
Bentley is making strong progress in the key Asia Pacific region with a 49 per cent rise in customer deliveries achieved in the first nine months of 2014 and we’re confident Bentley Hanoi will contribute to this positive performance.’
Bentley Motors now has 14 authorised dealers in the Asia Pacific region and 194 worldwide operating in 55 countries. At the quarter three point of 2014, global deliveries increased by 19 per cent, to 7,786 cars, up from 6,516 cars in the first nine months of 2013.
06/10/2014 20: 54
(TBTCO)-State Bank (SBV) recently issued statements about the results of monetary policy operations and banking operations in September and 9 months beginning in 2014. Accordingly, 9 credit hours increased 7.26%, much higher than the 4.5 percent last August.
In September, lending increased by 2.76%
Specifically, to date 30/9, system-wide credit surged 7.26% compared to the end of 2013. Earlier, in late August, the Deputy Governor of SBV Nguyen Thi Hong said credit growth as of 26/8 only reached 4.5% compared to the end of 2013.
As such, credit in September has skyrocketed, the increase in September was twice as high the increase of 5 months (1.31 percent). Calculations according to the debt of the SBV announced, from 27/8 to 30/9 had almost 96,000 billion are brought to market, raising the total debt of the economy and over 3,730,474 billion.
The overwhelming credit growth in the last few days, and months late is quite often seen on the credit market in recent years. Recently, answering questions at 9/29/UBTVQH, SBV Governor Nguyen Van Binh said credit growth to the end of September reached approximately 7% and confirmed the ability to hit the target credit growth 12-14% in 2014.
The operating results of 9 months of the year, the SBV said was "operating flexibility, uniform monetary policy tools, including mainly through open market operations to regulate the money supply appropriately, willing to provide capital for the economy, liquidity support for the TCTD...".
Until 30 September 2014, total liquidity increased 10.73 percent, raising capital rose 11.01% (of which mobilized by the USD rose 12.37%, raised in foreign currency rose 2.78 percent) compared with late 2013; the liquidity of the TCTD continues to be ensured and excess, the interbank market rates decrease and stabilize at a low level.
According to SBV, currently using the mobilizing and lending interest rate in USD fell 0.5-1.5% per year compared to the end of 2013. The interest of old loans continue to be the TCTD positively reduced. To date 18/9/2014, outstanding loans in VND interest over 15% per year amounting to 4.25% of the total outstanding loans for USD, decreased 6.3% compared to the proportion of the end of 2013; outstanding loans have interest rates above 13% per year constitute 12.16% of total outstanding loans in VND, down 19.72% proportion compared to the end of 2013. These figures have not changed much in recent two months.
Exchange rate away from the ceiling to allow
About rates, until 30/9, inter-bank trading rates around 21,260 USD/USD, listed on the buying and selling of commercial banks about 21,195-$ 21,245, lower USD/far from the limit allowed. The gold market in September 2014 is relatively stable, the price of gold in the country vary in line with gold prices on the international market.
The first days of October, the exchange rate has considerably increased the volatility. However, in an interview on October 6, the Deputy Governor Nguyen Thi Hong has confirmed the SBV will not adjust rates of interbank average.
About bad debt, SBV said are "synchronous solutions deployment to curb bad debt increase, which directed the TCTD strengthens the quote up and use risk reserve to handle the bad debt, making the solutions to improve credit quality to limit new bad debt incurred; VAMC conducted reviews, classifying bad debts acquired to take measures for proper disposal in accordance with the law ".
Direction and solutions to SME's also nothing new in addition to "continue operating monetary policy and flexibly works closely with fiscal policy aimed at controlling inflation as its objectives, the macroeconomic stability, support economic growth at reasonable ratesensures the liquidity of the TCTD and economy; flexible operating open-market operations, interest rates and the exchange rate at a level consistent with macroeconomic developments, currency, especially of inflation; deployed credit solutions contribute to difficulty boosting production, business development, supply of capital for the economy; continue to accelerate the restructuring of the system processor, TCTD bad debt aimed at healthy operation of the TCTD, safety system ".
Last update 07:50 | 08/10/2014
VietNamNet Bridge – Despite low occupancy rates and a drop in the number of Chinese tourists in May and June, high-end hotels in Viet Nam showed increases in room rates and revenue per room in the first half of the year, according to consulting firm Grant Thornton Vietnam.
Pullman Hanoi hotel. — Photo vneconomy
The company said in its report released on Tuesday that RevPAR (revenue per available room) of 4-and 5-star in the first half of the year increased by 1.7 per cent compared with the growth of 4.2 per cent in the same period last year. It grew from $56.6 to $57.6.
This increase was affected by a significant rise in average room rates of 7.9 per cent, which was much higher than the 0.1 per cent increase in the first half of the year. On the other hand, the occupancy rate overall experienced a major drop of 5.7 per cent in the first half.
Compared with the performance of the first half of 2013, RevPAR of 4-star hotels significantly fell by 13.8 per cent while RevPAR of 5-star hotels continued to increase by 3.3 per cent.
An increase in RevPAR of 5-star hotels might be attributed to an increase of 5.1 per cent in average occupancy rates in the first half of the year, according to the report.
In addition, 5-star hotels in the north also experienced an increase in RevPAR by 25.8 per cent in the first six months of 2014, compared to the same period last year.
By region, the growth rate from the first half of 2013 to the first half of 2014 was 7 per cent for the north, 10.7 per cent for the central region and the Highlands, and 8.8 per cent for the south.
There was a significant growth in overall average room rates of 7.9 per cent in the first half of 2014 for high-end lodging (3 to 5 star) in Viet Nam, which was higher than the growth of 0.1 per cent in the first half of 2013.
Regarding the average room rate by star ranking, both 4- and 5-Star hotels experienced a drop of 6.6 per cent and 1.9 per cent, respectively, in the first six months of 2014.
There was a significant increase in average room rates in the north, and the central region and the Highlands, by 15.6 and 9.1 per cent, respectively, in the first half of 2014.
This was due to a significant increase in average room rate of international hotel brands in these two locations, by 47.5 and 43.7 per cent, respectively.
With a slower growth rate, the south also experienced an increase in average room rate by 2.7 per cent in the first six months of 2014, compared with the same period last year.
Overall average occupancy rate of 3- to 5- star hotels in the first half of 2014 decreased significantly to 60.4 per cent from 64.1 per cent in the first half of 2013 dropping by 5.7 per cent.
A decrease in average occupancy rate could be attributed to the East Sea tension in the second quarter and also by an increase in the number of new rooms in main destinations, including Ha Noi, which gained three additional 3- to 4-star hotels with 200 rooms in the first quarter of 2014.