VietNamNet Bridge – Nguyen Dinh Cung, director general of the Central Institute for Economic Management, spoke to the Sai gon Economics Time about the next State reform.
What will be the focus for the State Reform this time?
This reform will be totally different from the 1986 reform. The focus of the previous reform was to encourage the development of the private sector. But this time, the focus will switch to the State. It will focus on redefining State functions; position and overall organisational structure – including the executive, legislative, judiciary sectors. It will also address government agencies' internal reforms.
In other words, the reform this time will be comprehensive.
What changes you would like to see?
The Ministry of Culture, Sports and Tourism builds museums, theatres, statues and others. We all know, Viet Nam is short on capital investment, yet we spend VND 10,000 billion to build a museum or build a series of theatres, football pitches in many localities around Ha Noi.
In my opinion, such construction investment was questionable.
If such a tendency keeps going on, overspending will become a heavy burden on tax payers. If there is an imbalance between the State revenue and spending, no doubt, we have to mobilise capital from other sources to fill the gap. So in my opinion, there is no other way to fix this, than to completely reform the functions of state agencies.
Please elaborate on the content of the reform, both in the State and in the marketplace?
Of course, the reform must be conducted in both the State apparatus and the market. But it should start with the State apparatus first.
Though we have a Law on Government Organisation, we seldom hear discussions about what structural changes are needed in the State. There are many overlapping positions that currently bridge different government agencies or functions, this should change. One rule we must follow- the executive branch should be separated from legislative bodies. But in Viet Nam it is not so. Last but not least, we have to reform our administrative tools.
It is important that the State be able to establish a free market ruled by law and based on fairness. At present, there are quite a few contradictions in how the Government intervenes in market prices.
For example, when the price of petrol dropped, taxi companies refused to lower their fares, the government then formed an inspection team and ordered taxi companies to reduce their taxi fares. Why did the government have to interfere in cutting down the taxi fare?
Or why does a delegation from the State Bank of Viet Nam get sent to provinces to promise to give them credit support? These things are against the principle of a market economy.
To further promote the market economy what should be changed?
First of all, there must be a change in our thinking. Secondly, what principles we choose to follow will serve as the foundation for our law making.
For example, if Viet Nam continues to prioritise the State-economy over the market economy, we won't be able to successfully reform or narrow down State owned enterprises.
If we continue to follow the principle of "owned by the people," I don't think that markets, particularly the property market, will see true reform. In a truly market economy, private ownership is essential.
In Viet Nam, at present, both collective ownership and private ownership are still widely practised. I would describe the situation as hindrance on both the State and the private market.
You have said that State should not intervene in market operations, in a recent poll conducted by the Viet Nam Chamber of Commerce and Industry and the World Bank, up to 70 per cent of the respondents expressed their wish to have the government intervention in commodity price control. What's your position on this?
The idea of having a stabilising fund to intervene in the market is wrong. A stabilising fund should be used to control inflation, not the price of a single commodity.
Regrettably, in our present society, whenever the price of an essential commodity goes up, for example, dairy products, people immediately ask for government intervention to lower the price. Such a demand goes against the idea of a market economy.
10/15/2015 3:52:35 PM
(VOV) - A seminar on October 15 was convened in Ho Chi Minh City to develop a strategy and evaluate potential solutions to Vietnam’s looming trade deficit with the Republic of Korea (RoK).
Vietnam’s total commercial and services trade with the Republic of Korea (RoK) surged to US$28.8 billion in 2014 from just US$500 million in 1992, said Deputy Head Le An Hai of the Asia-Pacific Market Department.
“However, trade has been lopsided with Vietnam annually experiencing ever-widening trade deficits,” Hai underscored.
Deputy Director Bui Thi Thanh An of the Trade Promotion Department in turn said for the eight months through August 2015, the country’s imports from the RoK were US$18.6 billion and exports to it US$6.4 billion resulting in a trade deficit of US$12.2 billion.
There was general agreement among those in attendance that a recently signed Free Trade Agreement (FTA) between the two nations would provide some opportunities for expanded exports to the RoK.
A representative of the Ministry of Industry and Trade noted the industries that appear most promising for potential increased exports are clothing, footwear, fresh and processed agricultural products, household goods and processed cereals.
An OceanBank transaction office. The central bank is reducing special control on three banks, including OceanBank. — Photo cafef.vn
HA NOI (VNS) — The State Bank of Viet Nam (SBV) is reducing special control on three banks that it acquired with zero dong thanks to the banks' improving liquidity and business performance.
In the first half this year, under a scheme to restructure the banking system, SBV put OceanBank, GPBank and CB under special surveillance in accordance with the law due to their weak performance and violations after acquiring 100 per cent of their stakes.
Nguyen Huu Nghia, Chief Inspector at the central bank, said after the acquisition, that the commercial banks did not need special loans from the central bank to pay depositors.
Nghia said that the performance of the banks in general had so far been stable and had improved, especially in terms of their liquidity.
The banks' liquidity reserves had so far reached roughly VND11 trillion (US$488.9 million) thanks to a rise in new deposits, of which VND7 trillion ($311.1 million) were from OceanBank, VND3 trillion ($133.3 million) were from GP Bank and VND1 trillion ($44.4 million) came from CB, Nghia said.
According to Nghia, the money was available for the banks to pay depositors and to invest in new business plans.
The significant liquidity reserve status was one of causes that allowed the SBV to start reducing its special supervision on the banks, Nghia said, adding that SBV would allow the commercial banks to resume their lending on several safe sectors.
According to the SBV, besides the improvement in corporate governance, non-performing loans and non-profitable assets of the banks have been also initially handled and retrieved.
The three banks have so far also got direct participation in governance and execution as well as business support from large banks such as Vietcombank and Vietinbank. — VNS
A view of Mong Cai City in Quang Ninh Province. The province has called for more foreign direct investments. — VNA/VNS Photo Nguyen Dan
QUANG NINH (VNS) — The economic zone at the Mong Cai border gate with China has attracted 20 foreign direct investment (FDI) projects with the total registered investment capital of US$1.1 billion and hundreds of domestic investment projects, officials said at a meeting yesterday.
Another 40 projects are seeking investment. They involve transportation, infrastructure, culture, trade, services, health, education, electricity, the environment, agriculture and industry.
Yesterday, the People's Committee of Mong Cai City and Hai Ha District in the northern province of Quang Ninh held a meeting to introduce opportunities to domestic and international investors.
The Mong Cai border gate economic zone was set up in 2012. It covers 121,197 hectares, more than 11 per cent of the province's total area.
The zone is considered an important link with ASEAN and Northeast Asian countries - and southern China in particular.
Nguyen Xuan Ky, secretary of Mong Cai city's Party Committee, said the zone was a driving force for provincial growth.
The northeast province of Quang Ninh introduced a number of projects to southern enterprises at a conference titled ‘Quang Ninh – Potential and Investment Opportunities' held in HCM City on Wednesday.
At the conference, advantages, potential and investment opportunities in Uong Bi City, Ba Che district and Co To Island district were introduced to investors in the south.
Among the projects are a waste water treatment plant in Uong Bi city as well as a high-class resort, a tourism ship terminal and a hi-tech seafood processing line on Co To Island.
Truong Manh Hung, Deputy Head of Quang Ninh's Investment Promotion Agency, affirmed enterprises would be eligible for incentives when investing in infrastructure, health, education, manufacturing and services with a substantial workforce.
Le Huong Giang, Deputy Director of the Ministry of Planning and Investment (MPI)'s South Centre for Investment Promotion, said Quang Ninh is one of the provinces with bold, creative and breakthrough changes in administrative reforms, reorganising growth models, improving business investment environments and enhancing tourism and transport infrastructure investments.
Quang Ninh's Provincial Competitiveness Index (PCI) was in the top five in 2013 and 2014, meaning that more and more companies consider Quang Ninh an attractive investment destination, said Giang.
As of September 2015, the province had attracted foreign investors from 17 countries and territories with a combined registered capital of $5.1 billion.
Domestic investment capital from 2012 to 2014 reached VND68 trillion ($3.3 billion).
In the first nine months of 2015, domestic private investment capital worth nearly VND30 trillion ($1.4 billion) flowed into Quang Ninh with projects from big companies such as Vingroup, Sungroup and BIM Group
This is the first time Quang Ninh has coordinated with the MPI's South Centre for Investment Promotion and the Association of HCM City Enterprises to organise a such conference. — VNS
VietNamNet Bridge - Vietnamese startups have become more and more attractive to angel investors, seed-funds and series A-funds, both domestic and foreign.
In February 2015, the Vietnamese startup community was excited by the news that Hubert Burda Media, one of Germany’s largest media groups, announced its investment in Coc Coc, a Vietnamese search engine, or ‘Vietnam’s Google’.
Vietnam still cannot be compared to Singapore, the country with the most developed startup community and the highest venture capital attractor in South East Asia, which ranks 10th among 20 leading cities in the development of startup ecosystem. However, it has been steadfastly attracting foreign venture capital, especially from Japan, for many years.
Nguyen Manh Dung, chief representative of Japan's CyberAgent Ventures Inc (CAV) in Vietnam and Thailand, commented that the Vietnamese startup community has developed more strongly than ever before.
CAV, plus with Golden Gate Ventures and SBI Holdings, are the typical examples of the second venture investment wave in Vietnam, while IDG Ventures Capital and DFJ VinaCapital represent the first wave which appeared in Vietnam prior to 2007.
An analyst noted that venture funds now show their biggest interest in e-commerce businesses which provide B2C and C2C services. Of B2C businesses, investors have poured money into B2C marketplace (Vatgia, Chodientu, Lamido), Retail B2C (Tiki, Lazada) and Vertical B2C (Thegioididong, Zalora).
In B2C marketplace, CAV injected money into Vatgia, while in Retail B2C (General), it poured capital into Tiki.
Of seven big investment deals made by Japanese investors in 2014, four were made by CAV.
Having been present in Vietnam since late 2008, CAV has invested in 15 Vietnamese firms with disbursed capital of $700,000-1 million for every firm.
These include firms which have received capital for the second time (series and some others which received CAV’s support when ideas were raised, such as the cases of Vexere and Foody. The firms CAV invests in all do business on the basis of internet and mobility.
CAV is seeking opportunities to invest in C2C firms after realizing that the business field has great development potential thanks to the popularity of smart devices.
In September 2014, SBI Holdings Inc together with two Japanese companies - Econtext ASIA Ltd and BEENOS Inc - bought a 33 percent stake of Sen Do, which runs Sendo.vn and 123mua.vn.
In 2013, Sumitomo bought a 30 percent stake of Tiki.vn, an e-commerce firm.
Investors from many other countries have also been eyeing Vietnamese firms. AIA, which previously focused on life insurance, now plans to invest in healthcare technology firms.
AIA joined forces with Nest, a Hong Kong investment institution, to run AIA Accelerator, a program supporting startups that is very well known in Asia.
Experts forecast that the adjustment would not affect the dollar source at commercial banks.
VietNamNet Bridge - ANA Holdings, which operates All Nippon Airways (ANA), is seeking to purchase a strategic stake of Vietnam Airlines.
ANA Holdings may become Vietnam Airlines' strategic shareholder.
ANA Holdings told Financial Times that it intended to invest in a Southeast Asian airline after raising $1.4 billion from issuing stocks in 2012. This is part of its international and regional development strategy. However, its discussion with many airlines was not successful. Last year, ANA Holdings canceled the plan to buy 49% stake in Asian Wings Airways of Myanmar with $25 million.
Vietnam could be an attractive market for ANA. Many Japanese firms have been actively investing in this market, given the need to reduce dependence on China. Direct investment by Japanese companies in Vietnam tripled to $9 billion in the 2011-2014 period, compared to four years earlier, according to the Japanese Trade Promotion Organization (JETRO).
ANA may have many opportunities as the Vietnamese Government is seeking a strategic partner for Vietnam Airlines after the carrier sold a 5% stake to investors in the IPO last year. A source said that Vietnam wanted to sell an additional 20% of shares to a partner.
At the meeting with the Minister of Transport in late September, Vietnam Airline Chairman Pham Viet Thanh said the corporation was negotiating with a big Japanese investor.
At the first shareholders' meeting in March 2015, Vietnam Airlines announced that it would release more than 282 million individual shares (equivalent to 20% of charter capital) to no more than three strategic investors (airlines or financial investors).
The selling prices for strategic investors shall be determined on the basis of commitments of strategic investors, but not less than VND22,300 per share. At this price, Vietnam Airlines can raise nearly VND6,300 billion from the issuance for expanding its fleet.
In related news, the Vietnam Tobacco Corporation (Vinataba) has transferred the entire 29% stake in Sapporo Vietnam (SVL) to Sapporo International Inc. (Japan).
After the deal, SVL has officially become a 100% Japanese owned firm. The value of this deal was not disclosed but according to Nikkei, Sapporo International spent $8.28 million to buy these shares.
According Vinataba, the divestment is to implement the Vietnamese government’s policy on the disinvestment of state-owned groups from non-core businesses.
Sapporo is the oldest beer brand in Japan, which started in 1876 and is now available in 40 countries around the world. Sapporo Vietnam Ltd., a joint venture between Vinataba and Sapporo Holdings was founded in 2010, with a factory in Long An province, which has a designed capacity of 150 million liters of beer/year. Along with the domestic market, Sapporo Premium beer produced in Vietnam is exported to 12 countries worldwide.
Last update 20:35 | 06/10/2015
The completion of the historic Trans-Pacific Partnership agreement on October 5 has received positive response from many countries.
Canadian Prime Minister Stephen Harper at a press conference on the TPP in Ottawa on October 5.
Canadian Prime Minister Stephen Harper said in a speech in Ottawa immediately after the TPP’s signing that all industries and localities of Canada will benefit from the deal, which he described as the biggest trade agreement in history.
The PM also pledged compensation worth 4.3 billion CAD (3.3 billion USD) for farmers who will be affected by the TPP, which requires that Canada opens its market for dairy, egg, chicken, beef, pork, lamb, seafood, log and industrial goods within five years from the time the deal begins to take effect.
The PM affirmed that his Conservative Party will push forward with the implementation of the TPP if they win in the upcoming elections.
The same day, the opposition Liberal Party of Canada, the Canadian Chamber of Commerce, the Canadian Council of Chief Executives and many big economic groups in Canada also welcomed the completion of the TPP.
Blackberry CEO John Chen said the TPP will remove trade barriers and allow Canadian businesses to compete based on product and service quality.
The same day, Mexican Economic Secretary Guajardo Villarreal said the TPP will open up new business opportunities for Mexico in sectors related to the six Asian-Pacific markets which are Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam, which are predicted to enjoy high economic growth in the next 25 years.
He also said the deal will be a model for later trade agreements, adding that Mexico has been able to achieve a balance between national interests and the benefits of so-called sensitive sectors such as automobile and parts, garment and textile and agricultural products.
With the TPP, Mexico will strengthen its foothold in Chile and Peru, its two priority trade partners in Latin America, while expanding its trade ties with Japan, the minister said, citing the ministry’s figures that the 11 other TPP partners account for 72 percent of Mexico’s trade and 55 percent of foreign direct investment flow into the country.
Chilean Foreign Minister Heraldo Muñoz also said Chile will benefit from the TPP.
Speaking from Valparaíso City, the minister hailed the TPP as a global trade deal, which surpasses the Doha negotiation.
He, however, noted that the deal will have to go through the parliament, with one of the most thorny issues being Chile’s biological and pharmaceutical products.
The TPP brings together 12 countries, which are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
After the signing, the document must receive approval from member countries’ governments and parliaments before taking effect.
Once realized, the TPP will become a free trade region of 800-million people, accounting for 30 percent of global trade and about 40 percent of the world’s economy.
Read more: http://dongtalk.com/forums/index.php/topic/51032-many-countries-welcome-tpp-deal-completion/#ixzz3noVkA3jZ
VietNamNet Bridge - Businesses and analysts have questioned the State Bank of Vietnam’s (SBV) statement that it would not devalue the dong any further until the end of 2015.
The Hong Kong Shanghai Banking Corporation (HSBC) believes Vietnam may devalue the dong by 1 percent further to protect Vietnamese competitiveness.
The report released on August 20 by HSBC Vietnam predicted the dong/dollar exchange rate would rise from VND21,800 per dollar to VND22,830 by the end of 2015 and to VND23,300 by the end of 2016.
Analysts said that HSBC, like other financial institutions, has reasons for such a prediction.
“No one can say for sure what the exchange rate will be. Vietnam cannot print the greenback, while SBV is not a powerful agency which can determine the greenback value,” an analyst said.
“The dong/dollar exchange rate will depend on many factors, including the US Federal Reserve’s decision on prime interest rates and the performance of global economies, including China,” he said.
The central bank had to devalue the dong by 3 percent this year, though it promised not to devalue the currency by more than 2 percent.
Dr. Le Dang Doanh, a renowned economist, noted that HSBC based the prediction on the information it collected and analysed.
While declining to comment on HSBC’s prediction, Doanh said there were two important factors to affect the dong/dollar exchange rate in upcoming days – the Chinese yuan price fluctuation and the US FED’s decision on the prime interest rate.
According to Doanh, indexes all show a poor performance of the Chinese economy, which may have been the reason for the Chinese government’s devaluation of its currency.
“The demand in China and the world has decreased sharply, while Chinese supply is very high. The demand for cement and steel, for example, just accounts for 50-60 percent of the supply. Meanwhile, China’s debts are relatively high,” Doanh explained.
“This could be the information HSBC referred to when predicting the moves to be taken by the Vietnamese government,” he said.
“The best attitude for the central bank to have now is to convey the message that it will try to stabilize the exchange rate if there are no abnormal changes,” he said.
Dr Vo Tri Thanh, deputy head of the Central Institute of Economic Management (CIEM), said the scenario of the Chinese government devaluing the yuan sharply and the FED adjusting the interest rate “needs to be considered”, because this would affect Vietnam’s forex policy.
VietNamNet Bridge - The instant noodle market has become saturated after a long period of hot development. However, investors are still pouring more money into the sector.
Analysts noted that the market’s heyday, when the growth rate was high at over 20 percent per annum, is over.
Since 2013, the growth has slowed down to 5 percent. Manufacturers now compete fiercely with each other to obtain larger market shares. The ad pieces about instant noodle products rarely appear on TV and mass media these days.
Some manufacturers advertised that their products are safer than others because their noodles are made of potato and green beans. Others say they do not use toxic colorings for their products. More recently, manufacturers rushed to market new products – noodles with eggs. Meanwhile, a new war of products with spicy and sour flavors has broken out.
Distributors have also joined the instant noodle market with products bearing private brands which sell at 5-10 percent lower prices than popular products.
Experts noted that the technologies used by manufacturers to make instant noodles are nearly the same. The difference are the types of products and marketing methods.
The instant noodle market is remapped every time an enterprise succeeds with its PR campaigns.
The director of an enterprise revealed that his budget on ads account for 60 percent of total marketing and sales costs.
Analysts reported that supermarkets in HCM City now distribute instant noodles bearing 60 different brands, most of which are domestically made. Three largest manufacturers - Vina Acecook, Masan and Asia Food – hold 80 percent of the market share.
Kido Group, a newcomer, has signed a contract on setting up a joint venture with Saigon Ve Wong, while moving ahead with a plan to build four factories throughout the country.
Japanese Nissin has also announced it would continue pouring capital into a factory in Binh Duong province after three years of operation.
Brand Footprint 2014, a report of Kantar Worldpanel, noted that instant noodle is now the largest FMCG (fast moving consumer goods) sector. However, some analysts noted that the vast market worth VND25 trillion a year is saturated. Therefore, they think Kido’s plan to become the third largest manufacturer in the years to come is ‘too ambitious’.
For example, Taiwanese Uni-President still cannot gain success in Vietnam though it has been present here for 14 years and provides a wide range of products. The group is believed to be financially powerful, and makes wheat and seafood.