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Forex rates need to be adjusted: experts

April, 16 2015 09:06:00




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


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

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Vietnam automobile industry faces collapse after Toyota announcement about possible production end

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.

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BIDV negotiates with seven to eight foreign investors

Last update 18:00 | 15/04/2015

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

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Will Vietnam become a production factory for Thai billionaires?

Last update 14:00 | 13/04/2015

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.

What’s next?

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.

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Vietnam aims for larger slice of the global pie

Last update 07:50 | 13/04/2015

VietNamNet Bridge – Until a few years ago major Vietnamese conglomerates were the sole driving influence for investing in international markets and single-handedly reaping the rewards of a global economy.


20150410164258-fpt.jpgHowever, the Foreign Investment Agency (FIA) recently reported that outward investment by Vietnamese small businesses and individuals has picked up considerably as they too – aim for a bigger piece of the economic pie.

According to FIA statistics for calendar year 2014 they issued investment permits and licenses to 109 businesses, 13% of them owned by individuals and 76% were private companies to invest in overseas projects.

Overall Vietnamese investors pumped more than US$1.8 billion into 28 countries principally in ITC, agriculture, forestry, aquaculture and mineral projects –  in Cambodia, Myanmar, Laos, the US and Singapore.

This year, government economists at the FIA have forecast outward investment to set a new milestone, rising up to US$2 billion.

The investment, which began in the 1990s, has principally focused on oil and gas exploration, hydroelectric and reforestation projects of state run enterprises and large conglomerates in Laos, Cambodia and Russia.

Doing business in countries overseas can be extremely complex as the general economic environment is significantly different from Vietnam and investors face many legal hurdles to obtain the proper licenses and permits.

However in recent years investing overseas has become more diversified in large part as a result of efforts by the government to streamline the process of obtaining necessary licenses and permits and provide other consulting services.

Obtaining the necessary licenses and permits is implemented under an – ask and receive – model and still a bit cumbersome but most investors have reported it has been steadily improving.

In particular small business and individual investments in projects in the US and Eastern Europe have been on the rise.  These investments have served as a major source of foreign currency for the nation.

Bui Quang Ngoc, CEO of FPT Corporation recently revealed his company currently does business in 19 countries including the US, UK and Japan along with many countries in Asia such as Laos, Thailand, Cambodia, Singapore  and Myanmar.

Last year, the Group conducted its first overseas merger and acquisition with a Slovakian company named RWE IT, which operates in the electricity and gas field, he said adding that future mergers are planned with an aim of reaching US$2 billion in revenue from overseas operations.

Last year, the conglomerates group wide revenue was VND35,114 billion. The revenue from overseas projects accounted for 10% of the total revenue and grew at a 37% rate, which was much faster than the domestic growth rate of 23%, he added.

Vietnam Dairy Products Joint Stock Company (Vinamilk) also has far-reaching plans to increase its share of the global pie. It now operates dairy plants in New Zealand, Poland, the US and Cambodia.

The company has set a goal of generating revenue of US$3 billion and entering top 50 largest dairy companies in the world by 2017, said its executive director of public relations, Bui Thi Huong.

Hoang Anh Gia Lai (HAGL) Group is one of the largest investors in Myanmar having sunk US$550 million in a HAGL Myanmar Centre commercial real estate project. The group has also spent over US$1 billion in rubber, minerals, hydropower and sugarcane projects.

A number of joint stock commercial banks such as Sacombank, SHB and HDBank have opened branches in Laos, Cambodia and Myanmar, which facilitates investors and others transfer money in and out of Vietnam to other countries.

Nguyen Lien Phuong, director of the LP Vietnam Academy of Entrepreneurs, said investors should seize more opportunities to invest abroad. They should participate in international fairs, fact-finding tours, increase their competitive edge and find out more about the law or rules in global market.

He suggested that the Vietnamese Government should create the most favourable conditions for businesses to invest abroad through legal framework and support programmes to advertise and market domestic products around the globe.

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Auto industry faces risk of collapse

Last update 11:07 | 13/04/2015
The domestic automobile industry faces the risk of collapse, with both consumers and manufacturers shifting to imports, according to the Tuoi tre (Youth) newspaper.
A resident of Ha Noi's Cau Giay District said he had decided to spend more than VND600 million (US$28,570) on a five-seat Mitsubishi Attrage CVT, which is imported from Thailand, despite studying domestically-assembled sedans.

"After testing several domestic cars my friends own, I believe this imported one is more comfortable...and its price is quite reasonable," the unnamed motorist added.

Imported cars have reportedly attracted more buyers recently, thanks to their better quality. In particular, the number of vehicles from Thailand is increasing, given the variety of categories and advantages related to import duties that they offer.

Grasping this trend in the last year, some manufacturers gradually shifted from assembling to importing cars.

Vina Star Motors (VSM), a joint venture of Vietnamese, Japanese and Malaysian firms in the southern province of Binh Duong and a sole distributor of Mitsubishi vehicles in Viet Nam, is one such example.

General Director of VSM Kazuhiro Yamana told Tuoi tre that the company's plant in HCM City's Hiep Binh Chanh District now focuses only on assembling the Pajero Sport, rolling out about 100 vehicles per month, whereas this workshop used to manufacture 410 units every month.

In the last fiscal year, between April 2014 and March 2015, VSM sold 2,530 vehicles of different kinds, with as many as 1,660 autos imported from Thailand and Japan.

"Although the total sales reflect only around 80 per cent of our target, the figure rose by 59 per cent from the previous fiscal year," Yamana pointed out.

VSM has reportedly imported the most number of completely built units (CBUs) among members of the Viet Nam Automobile Manufacturers' Association (VAMA).

Yamana noted that his company had carefully considered importing either CBUs or completely knocked down items for domestic assembly, with the latter having minimised costs for consumers.

Moreover, General Director of Toyota Viet Nam Yoshihisa Maruta said in a meeting earlier this month that his company now "stands at a crossroad", as it will also have to choose between maintaining production or shifting to imports, taking into account that tariffs on CBU imports in Southeast Asia will be zero per cent in the next three years.

In addition, the VAMA revealed that it was unaware of what support policies the Government will take to help automakers continue with their manufacturing operations.

According to the calculations of members of the association, car prices in Viet Nam are some 2.5 times higher than those in other ASEAN member states due to tax-related reasons, and this reduces the competitiveness of domestically-assembled vehicles.

Special consumption taxes alone have caused prices of the assembled cars to cost at least 5 per cent higher than those of CBUs, Yamana revealed.

At a conference held in Ha Noi on April 9, Chairman of the Viet Nam Association of Foreign Invested Enterprises, Nguyen Mai, suggested a reduction in import taxes imposed on car components be offered.

"If these taxes are not lowered, Toyota and several other automobile enterprises will certainly have to turn to imports in the future. They will not be fools by continuing to import components for assembly," he remarked.

According to Mai, Viet Nam has implemented strategies for the automobile industry since 1991, and now manufactures about 120,000 vehicles per year.

In comparison, Thailand also began implementing strategies for this sector in 1991, but manufactures about 2.5 million vehicles and exports 1.45 million units every year.

Furthermore, sources of Tuoi tre estimated that the average price of five-seat cars imported by Viet Nam from Thailand will fall from $24,750 in 2015 to $16,500 in 2018.

An official of the Ministry of Finance told the newspaper that the agency was coordinating with the Ministry of Industry and Trade to seek measures to reduce import taxes on car components.

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Well paid but qualified electronic engineers still in short supply in Vietnam


UPDATED : 04/09/2015 17:25 GMT + 7




Vietnam is now in dire need of competent electronic engineers for the smartphone manufacturing sector, amid efforts to localize by multinationals, even though competitive remuneration is offered to them.

Data on the demand for manpower in the Vietnamese market in the first quarter of 2015 released by management consulting firm Navigos Search showed the need to recruit engineers for the smartphone manufacturing sector accounted for 14 percent of the total.

In the first week of this month, recruitment needs for electronics and smartphone production made up 21 percent of the total recruitment requirements.

General technical engineers – and electronic engineers in particular – are now highly sought after because many leading foreign manufacturers of smartphones have based their plants in Vietnam, according to Navigos Search.

Those manufacturers, like Samsung, LG, and Microsoft, are not only determined to boost the localization of material and part production but they also want to localize human resources.

Employers are now offering attractive salaries to lure electronic engineers, especially when it comes to management positions in that manufacturing sector, the firm said.

Nguyen Thi Van Anh, CEO of Navigos Search, said that her company cannot find enough candidates to recommend to their clients though the current demand for electronic engineers and managerial positions in this sector are huge.

"Employers ask us to find those who can meet the requirements of the immediate work but experienced candidates are hard to come by,” Anh added.

Despite high demand and attractive income, qualified and skilled electronic engineers are extremely difficult to be found at the moment, the head of a firm operating in the field told news website VnEconomy.

"In fact, we find that very few people graduating in electronic engineering in Vietnam meet our requirements, so we are always in dire need of the manpower for this industry," he said.

Most of the engineers trained in Vietnamese schools today are lacking in knowledge, soft skills, and creativity, plus they are very passive, he added.

“So they are by no means able to be a match for employers.”

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What can be learnt in marketing from Vietnamese small-sized, household businesses?


UPDATED : 04/10/2015 14:30 GMT + 7



Nguyen Hoang Anh Dung prepares noodle soup at his stall in District 4, Ho Chi Minh City on March 30, 2015.
Tuoi Tre

Simple but efficient marketing campaigns, with minimal costs, are what Vietnamese small-sized companies and household businesses often use to burnish the image of their brands.

While the public have fed up with clothes-shedding or breast-flaunting images showed off by those working in Vietnamese showbiz for the past years, any new kind of such things may not successfully draw attention for instant fame as intended.

But how about using cartoons to describe exactly what showbiz celebrities did years ago?

A small firm tried it in a recruitment advertisement last week, and the cartoon-style ad really caught public attention – what the company really wanted – at a cost of no more than VND1 million, too cheap for any sort of advertising.

Healthy Vietnam Life Co. Ltd., which sells matcha, or fine powder green tea, said in the ad that the firm is seeking for female employees, whose breasts measure more than 100cm and have not been altered by plastic surgery, to demonstrate how to get 100ml of breast milk for its next campaign.



A part of the cartoon-style recruitment advertisement using the slang word "pomelo" to refer to women's breasts of Healthy Vietnam Life Co. Ltd.

Vietnamese women, aged 18 to 35 and weighing between 55kg and 65kg, are encouraged to join the firm for a salary of VND100 million (US$4,660) a year, according to the ad.

They will have to work four days a week and two hours per day, the ad said.

“If you meet all criteria, contact us to grab the chance to receive VND100 million only with 100ml of your milk,” the ad reads.

Application is open from April 1 to May 1, according to the ad.

As Vietnamese media flock to the firm for interviews after it released the job recruitment, the small company’s cost-effective marketing campaign has achieved its target.

If one wants to learn more about how to stay cheaper in mounting such a campaign, refer to what the ‘coolest noodle stall’ in Ho Chi Minh City has done recently.

Nguyen Hoang Anh Dung, the owner of the noodle stall, immediately won the hearts of local customers and the ‘coolest noodle stall’ title for his bun bo stall with a set of hilariously written rules.

Dung sells bun bo, or Vietnamese noodle soup with beef, at his stall known as “Bun Bo Gan” (noodle soup with beef tendon), as the dish mainly features that part of the cow, along the sidewalk near a condominium in District 4 and he put up a banner with a set of rules on the wall nearby.

The banner, aimed at making anyone who happened to read them could not help but laugh aloud, includes some rules like “We only accept banknotes with face value of VND500,000 at most. No foreign currencies are accepted.”




The first rule is, “Do not be talkative and criticize the store owner on the Internet,” then comes, “This is not Hue-style bun bo. You are not allowed to complain even if it tastes awful. You are required to empty the bowl. You have to pay even though you cannot eat it.”

“When you cannot pay immediately, please leave your home ownership or marriage certificates as collateral. In brief, any kind of paper is accepted, except for the toilet one,” reads the third line.

“If you have read all the rules and your bowl is now freezing cold, we are not to blame for that. Thanh kiu [Thank you],” the fifth rule goes.

The “Bun Bo Gan” stall has become famous since pictures capturing its funny rules surfaced on the Internet last week.

More significantly, Dung said he did it alone without any support from professional marketing agencies.

Old tactics, in new forms, supported by the Internet

According to a senior marketing specialist, the public relations tactic employed by Dung is viral or word of mouth marketing, which businesses, especially small-sized firms, should learn to apply.

It is hard for small-scale businesses to cover publicity and communication costs now as they are soaring, the specialist said.

Consumers have had enough of normal ads via conventional channels like newspapers and TV, he said, adding that even spending a lot of money on advertising is unlikely to be effective without a certain creative message.

Facebook and YouTube have created huge opportunities for enterprises, regardless of their scale, to advertise their brands at very low costs, or even free of charge, he said.

Chances are for everyone so the question is who creates the unique ideas to make people curious, become interested, and then voluntarily share what businesses want.

Tran Bao Minh, general director of IDP International Dairy Joint Stock Co., said that what Dung did might not capture public attention several years ago, when the Internet and media did not really have much impact on social life.

That the local government jumped in and seized Dung’s sign for several days, explaining it was offensive and caused traffic congestion, as it lured people there to see it directly, turned out to fan the public’s curiosity fire.

But it is still a happy-ending story, as officials had to return the sign to Dung amid pressure from both social and conventional media, Minh said.

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  ODA corruption: It’s time for Vietnam to review the system

Last update 08:00 | 10/04/2015

VietNamNet Bridge - "It's a shame," was a comment heard from many experts who spoke to the media about the recent allegations of ODA corruption in Vietnam. Most agreed that anti-corruption measures are ineffective.

Slush funds and bribery scandals







Vietnam’s citing of figures showing the efficient use of ODA has been overshadowed by news about embezzlement of funds in highway projects.

Vietnam should take all possible measures to thwart corruption in projects funded by Japan’s ODA loans; otherwise, Japanese aid will stop, Mori Mutsuya, chief representative of the Japan International Cooperation Agency (JICA) in Vietnam, said at a news briefing in Hanoi on April 1.

Mutsuya said JICA wanted the high-profile JTC graft case to be the last related to projects financed by Japanese aid in Vietnam because if there is yet another case emerging, the Japanese taxpayers would force their government to suspend ODA for Vietnam.

Mutsuya issued the warning when he fielded questions at the news briefing about Japan’s response to bribery allegations in connection with the Japan Transportation Consultants Inc. (JTC) in a railway project in Vietnam.

In March last year, Japanese newspaper Yomiuri Shimbun reported that JTC President Tamio Kakinuma had admitted paying kickbacks to civil servants in Vietnam, Indonesia and Uzbekistan in return for five ODA projects. This company was suspected of having paid illegal payments to five government employees, including a senior official of an office responsible for project administration at Vietnam Railways.

Most recently, the South Korean steel giant Posco has been suspected of setting up a slush fund for highway projects in Vietnam from 2009 to 2012.

Korea Times reported Posco’s managers have been accused of running a slush fund worth 10 billion won ($8.9 million), for the transport projects. The managers were found colluding with local sub-contractors to exaggerate the estimates for highway projects in Vietnam.

Ugly image




Dr. Dang Ngoc Dinh, director of the Center for Community Support Development Studies



"I find it embarrassing when JICA said if it (ODA corruption) happens the third time, they will no longer grant ODA for Vietnam. Every time there is a suspected case of ODA bribery, the world will know more about Vietnam with bad images. We need to seriously re-examine our systems," said Dr. Le Dang Doanh, former chief of the Central Institute for Economic Management.

Dr. Dang Ngoc Dinh, director of the Center for Community Support Development Studies said that such incidents also urge people in the ODA providing countries protest their governments from giving ODA to Vietnam as their tax money is used improperly.

"Such incidents create a bad name for Vietnam, making Vietnam’s transparency and integrity worse. This also affects the development of Vietnam because it will be more difficult for Vietnam to borrow ODA. Also, things like these make Vietnamese people frustrated and disappointed," said Dinh.

Dinh said the latest case of ODA corruption allegation reflects the worrying corruption and bribery situation in Vietnam. Corruption and bribery can be seen in daily life. People have to bribe to send their children to famous schools, they have to pay doctors to be treated well or they have to give money under the table to win contracts or bids.

"Once tiny corruption becomes common, then surely there will be big corruption cases," Dinh said.

Dinh said that ODA is granted by foreign governments to the Vietnamese government at low-interest rates and with a grace period. But ODA is given to specific projects, which are implemented by the companies of both sides. In most cases, the Vietnamese companies are state-owned and the foreign ones are private firms.

"The private companies in Japan, Korea and the United States dare not bribe their countries but in Vietnam, they have to do as the Vietnamese do," Dinh said.

Tight control of ODA




Ms. Le Thi Nga, Vice Chair of the National Assembly Judiciary Committee




Experts noted that all the suspected cases of ODA corruption in Vietnam have been discovered by foreigners. Doanh said the biggest loophole in ODA projects are at the stages of procurement, supervision and contract signing.

"So we have to seriously review the bidding process and the supervisory task. Clearly, the control system has a very large hole, the transparency, internal supervision is ineffective and the use of cash in Vietnam hinders the control of the real income of the officials," Dr. Doanh said.

In other countries, state officials have to prove the origin of the money they have when they buy houses or cars, while Vietnamese officials do not.

"These cases also show that Vietnam’s anti-corruption measures are ineffective and it is time to look at the fact that other countries can detect ODA corruption while we cannot, and we still react very slowly," Dr. Doanh said.

Ms. Le Thi Nga, Vice Chair of the National Assembly Judiciary Committee, said that improving the effective management and use of ODA is very urgent, especially in the current situation of public debt and corruption. The legal framework for ODA management in Vietnam is now at the decree level so the legal effect is low.

Nga suggested the National Assembly issue a law on management and use of ODA and conduct close supervision of ODA to strictly control the efficiency of ODA use, to prevent losses and waste in ODA use and at the same time to use ODA selectively, to have a roadmap to put an end to ODA borrowing in the near future.


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Banks say they have no more bad debts to sell

Last update 10:49 | 06/04/2015

When commercial banks complained at a meeting held in HCM City two weeks ago that they had no more debts to sell as requested, the State Bank replied that it was sure the bad debt ratio was not lower than VND300 trillion.



According to the State Bank, the non-performing loan (NPL) ratio decreased sharply from 4 percent in June 2014 to 3.22 percent on December 31, 2014, or VND127.851 trillion.

Prior to that, on September 29, 2014, answering queries before the National Assembly’s Steering Committee, Governor of the State Bank Nguyen Van Binh for the first time a]]said the NPL had reached VND500 trillion and VND240 trillion had been settled by that time.

Two weeks ago, the State Bank stated that commercial banks have to sell VND100 trillion worth of bad debts to the Vietnam Asset Management Company (VAMC), the institution established to help banks restructure banks’ debts. Every bank received a document from the State Bank which said how much debt it must sell.

Bankers have complained that the NPL amounts they are requested to sell are “too high”, while some said they have no more debts to sell.

It seems that commercial banks have told the truth. Information on the State Bank’s official website shows the total outstanding loans of the banking system had reached VND3.970.548 trillion by December 31, 2014, and that the NPL ratio had decreased significantly from 4 percent in June 2014 to 3.22 percent, or VND127.851 trillion.

If commercial banks sell VND100 trillion to VAMC as requested, they would only have VND28 trillion worth of NPL, which accounts for a very small proportion of the total outstanding loans.

And if the banks’ NPL is as low as reported, there is no need for the State Bank to urge banks to sell debts in such large quantities.

Explaining this, an official of the State Bank said the figures shown on the website are statistics reported by commercial banks. Meanwhile, the figure released by the State Bank’s inspectors is different.

What is the real NPL ratio the State Bank’s inspectors have found?

In October 2011, the State Bank’s Governor said before the National Assembly that the bad debt ratio was approximately 10 percent.

Later, the State Bank’s inspectors, at meetings, said the ratio was around 8 percent.

The figure coincides with the figure about the maximum NPL, at VND300 trillion, the State Bank said at a meeting two weeks ago.

At the end of the meeting, the State Bank promised to discuss with every commercial bank the debt it has to sell.

However, to date, no bank has reached a consensus with the State Bank about the debts it should sell.

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