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BUSINESS IN BRIEF 27-12Sustainable fishing slashes poverty

Thousands of poor people have risen above the poverty line in the last seven years thanks to sustainable fisheries, deputy minister of Agriculture and Rural Development Vu Van Tam said yesterday.

He was addressing a conference to wrap up the second phase of the Fisheries Sector Support Programme funded by the Danish Government.

The programme aimed to help poor farmers understand how to operate sustainable fisheries, from growing fish to processing and marketing.

“Over 40,000 beneficiaries of the programme have escaped from poverty,” Tam said.

The programme’s second phase, conducted in 2006 in eight poor provinces including Son La, Dak Lak, Quang Ninh and Nghe An, focused on improving capacity management, diversifying products and improving post-harvest quality control.

Each poor household that participated in the programme saw its yearly income increase from an average of VND5.9 million (US$280) in 2010 to VND8.4 million ($400) this year, he said.

Director of northern Son La Province’s Agriculture and Rural Development Ha Quyet Nghi said that people in the mountainous area had previously been unfamiliar with raising fish. But now, the province had six fish-breeding groups and planned to set 40 stations for sturgeon farming.

Danish Ambassador John Nielsen appreciated the two countries’ co-operation in developing the fisheries sector, describing the programme as “a success story”.

“This provides a foundation for the two countries to move forward to new forms of co-operation based on commercial partnership for mutual benefits,” he said.

But although Viet Nam is the third-largest seafood exporter in the world, with $6.1 billion in export revenue, the country still needs to improve its fishery products’ quality to meet the stringent requirements of major importers such as Europe and America, he said.

Since 1993, the Danish Government has supported the Vietnamese fishery sector with grants totaling more than $100 million.

Currently, Viet Nam receives over $60 million in grants from Denmark each year through development projects and support programmes.

ADB grants $251m loans to Viet Nam

Nguyen Van Binh, Governor of the State Bank of Viet Nam and Tomoyuki Kimura, Country Director of the Asian Development Bank (ADB) in Viet Nam, yesterday signed three loan agreements totalling US$251 million in Ha Noi.

The loans are aimed at helping Viet Nam streng-then education quality, ensuring a reliable electricity supply and improving flood and drought management and mitigation.

“Viet Nam’s future growth will depend on a labour force skilled enough to meet the needs of the job market and a reliable electricity supply to meet rapidly growing energy demands,” said Kumara. “It also needs funds to mitigate risks posed by floods and droughts.”

A $90 million con-cessional loan from the ADB’s Asian Development Fund for the Second Upper Secondary Education Development Project will help improve the readiness of upper secondary school graduates for tertiary and vocational career development. This will be achieved by enhancing the quality of upper-secondary education to meet international standards, improving access to upper-secondary education for disadvantaged groups, including girls and ethnic students, and strengthening the management of upper-secondary education.

Another $110.19 million loan represents the second tranche of a $730 million power transmission investment programme to Viet Nam that the ADB approved in December 2011. The loan partially supports the implementation of the seventh National Power Development Master Plan to ensure supply to industrial, commercial and residential consumers.

The project also supports Viet Nam’s efforts to improve the operations of the National Power Transmission Corporation. The Agence Francaise de Developpment (AFD) will co-finance the project with 75 million euros (more than $99 million).

In addition, to help Viet Nam improve flood and drought management and reduce economic losses, the ADB provided a loan of $45 million, while the Australian Agency for International Development (AusAID) offered a grant of $5.9 million.

To improve flood and drought preparedness, the project will link infrastructure upgrades in Dong Thap and Tien Giang provinces in the Mekong Delta with community-based disaster-risk management and enhanced regional forecasting.

On the same day, the Vietnamese Ministry of Planning and Investment and the South Korean Embassy also signed an agreement for South Korea to lend Viet Nam US$1.2 billion, which will be disbursed for projects during 2012-15.

The agreement will focus on boosting the development of the transport and drainage systems as well as recyclable energy, information and technology, health care, capacity building and agricultural and rural development.

Bui Quang Vinh, Minister of Planning and Investment, said the Vietnamese Government appreciated South Korea’s growing support despite the global economic difficulties.

South Korea is currently the second largest investor in Viet Nam out of a total of 96 countries and territories with investment projects in the country.

HCM City districts call for delayed projects to be cancelled

Five districts have proposed to the HCM City administration that they cancel several dozen real estate and public works projects that have been unduly delayed.

A Tuoi Tre (The Youth) report said last week that most of the delayed projects are located in new and upgraded residential areas.

Local authorities in outskirts districts, meanwhile, said they did not have the funds and other conditions needed to carry out several projects like parks and other public works.

The District 10 People’s Committee says there are several projects that affect the daily life and interests of residents that should be scrapped.

These include high-rise apartment complexes that cover existing residential areas in wards 1, 2 and 15 that are difficult to clear, and the project to enlarge the Sai Gon Trade Centre which would affect the interests of 750 households and is, therefore, not feasible.

It has also several projects whose feasibility has been reassessed, including projects to enlarge a park and expand three schools. These would adversely affect the interests of 500 households and should not be continued, local authorities said.

They also said that while persisting with high-rise projects planned at the site of old and badly rundown apartment complexes like Ngo Gia Tu and An Quang, the city should cancel plans for new, high-rise residential areas and allow current residents to upgrade their houses by themselves.

Tan Binh District plans to build 21 high-rise apartments and upgrade residential areas that have been on paper since 2008. These projects affect the lives of more than 3,000 households and should be cancelled, local authorities have suggested.

In Tan Phu District, several existing residential areas have been earmarked for parks, apartment complexes or industrial areas. At the same time, the district has a lot of land taken up by factories that have been defunct for a long time as well as land where factories have not been built as planned.

District authorities are proposing that the city moves the site of planned parks, apartment complexes and industrial areas from the existing residential areas to sites that have been left idle for a long time.

The District 8 People’s Committee says projects most delayed in their locality are parks and a “secure corridor” along the Ong Lon River and the Doi, Te Ong Nho, Hiep An and Du canals.

The longest delay has occurred in the area between Doi canal and Pham The Hien Street, from ward 1 to ward 7.

Thousands of households have been impacted by the park project being carried out along the Doi canal for the ten years or so. The affected people do not know when they will receive compensation for relocation so that they can build new lives.

The district also plans to build several dozen auxiliary streets, public works and schools that will affect many households. These projects have been delayed by 10 to 20 years, but the district wants to keep them because they have to do with maintaining traffic flows and green spaces.

The District 8 People’s Committee said it has been allowed to issue temporary building permits to residents in areas where projects have been delayed for a long time, but this was not a practical option in the long run.

It proposed that the city allows temporary building permits issued for households in project areas to be turned into official permits if the projects have been delayed for five years or more. Households in such areas should be considered eligible to receive title to their homes.

The committee has also said that in areas where a decision has been taken to revoke land, erstwhile residents should be allowed to rebuild their houses of the same size as the existing ones instead of being restricted to carrying out repairs.

The city should also introduce specific time limits for payment of land compensation so as to prevent inordinate delays by project investors, the committee said.

The District 2 People’s Committee has proposed that the city identifies key projects and priority infrastructure areas that need investment.

The municipal administration should also devise a plan to check the rate of progress made by projects so that timely adjustments, including the revoking of licenses, can be made in case the investor is deemed incapable of continuing to implement the project, the committee said.

Self-knowledge key to success in business

Knowledge of one’s strengths, willingness to take risks and flexibility are key factors in starting and running a business of one’s own, experts said at a seminar on Friday.

Organised by the Business Start-up Support Centre in HCM City along with the YUP Institute and Young Business Association, the seminar brought together more than 300 entrepreneurs and wannabe entrepreneurs.

Dang Le Nguyen Vu, chairman and CEO of Trung Nguyen Coffee Co., said that when setting up a business, young people should identify their strengths clearly.

They should also play a lot of attention to making a feasible business plan that considers human resources, distribution, sales and financial management, he said.

Decision making skills and risk management systems were indispensable for success he added.

“It is important to remember that failure is common for start-up businesses, but lessons learnt from the failure matters most in becoming a successful businessperson,” Vu said.

Other experts at the seminar said market research kept an important role since it could help potential enterprises and entrepreneurs identify existing and potential demand to arrange for supplies and decide on the pricing.

Ly Truong Chien, president of the Tri Tri Group, said budding entrepreneurs could choose many ways to set up their own business. Some could choose to run a franchise and others could decide to develop a personal brand, he said. He noted that most entrepreneurs wanted to use the franchise model to open a business. “The important thing is that they should learn to quickly adapt to frequent changes in the business as well as social environments, because these carry both risks as well as opportunities,” he noted.

He cited marketing guru Philip Kotler as saying if, after five years, “you run your business in the same way as you do now, you’re going to be out of business”.

Seminar participants had opportunities to learn from the experiences of successful businesses including VNG Joint-Stock Co, Chewy Junior brand and Help Corporation.

Ta Minh Tuan, general director of Help Corporation, started with “zero”. However, he was determined to realise his aspirations and overcame difficulties in maintaining and developing ideas.

His company now has more than 70 employees, including 35 doctors and 15 nurses. The healthcare at home business has reached all 24 districts in HCM City.

In 2011, the Ministry of Health listed his company in the directory of high quality medicine and pharmacy businesses. He has also won a national award for this work

Many experts at the seminar said despite the challenges that loom 2013, next year would be an appropriate time for young people to start up their own businesses, especially because a a large number of firms had been dissolved or stopped production this year.

Since the beginning of this year, the Business Start-Up Support Centre in HCM City has received 520 applications for its business incubator programme.

The programme, managed and operated by the centre, aims to support start-up businesses with facilities and help with financing. Of the applications received, the highest number targeted IT businesses, followed by manufacturing, agricultural-produce trading and service industries.

Agro-forestry and aquatic exports earn US$27.5 billion

The total export volume of agro-forestry and aquatic products in 2012 was estimated at US$27.5 billion, up 9.7 percent over last year, according to the Ministry of Agriculture and Rural Development.

Judging from its US$16.9 billion spending on imports, the agricultural sector has a trade surplus of US$10.6 billion thanks to a sharp increase in export earnings from coffee, tea, pepper, cashew nuts, and other key items.

Seafood alone has earned US$6.15 billion, showing a year-on-year increase of 0.7 percent.

Large importers of Vietnamese coffee are the US, Germany and Indonesia.

Aquaculture sector calls for more investment

As much as VND301 billion (about US$14 million) will be needed to further propel the development of the aquaculture sector in 2013.

The General Department of Fisheries under the Ministry of Agriculture and Rural Development announced the amount at its year-end meeting in Hanoi on December 25.

In 2013, the sector will step up inspection of inputs for production, multiply the model of fishing teams, modernise the fleet and encourage private enterprises to participate in breeding, said Deputy Minister cum Head of the Department Vu Van Tam.

Tam underscored that the sector’s key task in 2013 is to continue its sustainable development with more value-added products and restructuring its production with focus placed on items of the highest competitiveness.

The sector also set out other goals such as increasing aquaculture area and output and seafood catch.

In 2012, the total output of aquatic products reached an estimated 5,876,000 tonnes, up 8.8 percent compared with the set goal. Exports brought home US$6.12 billion, representing 94.2 percent in comparison with the set plan and equivalent to the 2011’s figure.

RoK among HCM City’s top investors

A December 25 meeting marking the 20th anniversary of bilateral diplomatic ties between Vietnam and the Republic of Korea (RoK) has announced the RoK is now the fourth largest foreign investor in Ho Chi Minh City.

Hua Ngoc Thuan – Vice Chairman of the HCM City People’s Committee – reviewed recent productive developments in Vietnamese-RoK relations across fields including politics, trade, investment, culture, and tourism.

HCM City has become a leader in strengthening the Vietnamese-RoK relationship, with 2011’s two-way trade turnover reaching nearly US$18 billion.

That figure was estimated at more than US$17 billion after the first ten months of this year and is expected to hit US$20 billion by 2015.

The RoK ranked third in terms of foreign investment in HCM City over the past 11 months, recording US$24.6 billion in total capitalisation.

RoK Consul-General in HCM City Oh Jae Hack expressed his pleasure at the mutually beneficial bilateral relationship, noting the potential for cooperation created by reciprocated trust and understanding.

Two Laotian imports granted tax exemption

The rice and raw tobacco material commodity groups imported from Laos will be granted a zero tax rate from January 1, 2013.

According to the Ministry of Industry and Trade’s (MoIT) circular, the tax-exempted imports passing through border gates must have certificates (C/O form S)  issued by authorised Lao agencies.

Vietnamese businesses are allowed to import the two commodities from Laos according to their tariff rate quota.

The newly-issued circular will be valid until December 31, 2013.

Int’l trade fair opens in Nghe An

The Nghe An provincial People’s Committee has organised an international trade fair in Vinh City on December 25.

The event falls under the framework of the 16th meeting of Vietnamese, Lao, and Cambodian provinces using the No. 8 and No. 12 roads.

Around 150 Vietnamese, Lao, and Thai businesses are displaying their wares at 300 stalls.

The fair, until December 30, is a valuable opportunity for local and foreign businesses to boost cooperation in trade, investment, and tourism.

Vietnam inaugurates Cambodia’s largest fertilizer factory

Vietnam’s Five Star International Group began operating Cambodia’s largest fertilizer factory on December 25.

The project was undertaken as part of the cooperative framework between the Vietnamese and Cambodian Governments.

The factory’s construction, the largest of its kind in Cambodia, started in 2009 with US$80 million of total investment capital.

In its first phase of operation, the factory will be capable of producing 350,000 tonnes of fertilizer annually.

In his speech at the inauguration ceremony, Cambodian Prime Minister Hun Sen said the factory will help agricultural development—the sector employing 80 percent of Cambodia’s labour force.

The construction is an element of Cambodia’s agriculture and processing industry development strategy with the aim of exporting one million tonnes of rice by 2015, he noted.

Hun Sen emphasised the factory will create jobs for thousands of local labourers, support fertilizer production, and could earn the nation significant foreign currency through fertilizer exports.

The factory is scheduled to reach an annual capacity of 800,000 tonnes of fertilizer during its second phase, serving both domestic and export demand.

Foreign direct investment pledges go down

Foreign direct investment (FDI) pledges into Vietnam this year decreased 18 percent to US$ 12.7 billion due to the global economic slowdown, according to the Ministry of Planning and Investment.

This amount includes US$7.8 billion in registered capital for 1,097 new projects and US$4.9 billion in additional registered capital for 406 existing projects.

This year’s FDI inflow inched down by 5 percent against last year to US$10.5 billion.

Director of the Ministry’s Foreign Investment Agency Do Nhat Hoang said that FDI in the manufacturing and processing sectors- the focal points of Vietnam’s FDI attraction policy – had increased remarkably this year.

According to the ministry, manufacturing and processing were the most attractive industries to foreign investors this year with a registered capital of US$8.9 billion, accounting for 70 percent of the country’s total registered capital.

Several large projects are taking shape in these industries, including a US$ 870 million electronic components project supervised by Taiwan’s Wintek and a US$830 million mobile phone project for Samsung of the Republic of Korea.

The real estate industry followed closely behind with US$1.8 billion, 14.5 percent of the country’s total registered capital.

Japan was reported to remain the largest investor with total registered capital of more than US$ 4 billion, followed by the Republic of Korea, Hong Kong and Singapore.

The southern province of Binh Duong was the most attractive destination to foreign investors this year with more than US$1.63 billion, making up 20.9 percent of the country’s total registered capital.

It was followed by the northern city of Haiphong, the capital city of Hanoi and the southern province of Dong Nai, with more than US$1.11 billion, US$618.8 million and US$468.7 million, respectively.

Planning and Investment Minister Bui Quang Vinh said that the country’s goal for FDI pledges next year would be US$14-15 billion, of which US$10-11 billion would be disbursed.

As the continuous global economic slowdown could affect the country’s FDI attraction target, experts recommended that the country intensify administrative procedures to ease investors’ spirits.

Human resource development, especially in the areas of science and technology, could also make the country more attractive to foreign investors, experts said.

Vietnam-Brazil trade revenue estimated to hit US$1.76 billion

The Vietnam Trade Office (VTO) in Brazil has reported total two-way trade turnover between Vietnam and Brazil hit US$1.76 billion in 2012, 14.5 percent higher than the same period last year.

The value of Vietnamese exports to Brazil has increased 18.9 percent to US$710 million against 2011, while imports from Brazil rose 11.9 percent to US1.05 billion.

Vietnamese export commodities that enjoyed remarkable growth included telephones and associated parts (141.5 percent), footwear (95.2 percent), machines and accessories (54.5 percent), and garments and textiles (22.7 percent).

Its main Brazilian imports spanned cattle feed, cotton, tobacco, and garment and footwear materials.

The VTO estimates the bilateral trade revenue will surpass US$2 billion in 2013, with Vietnamese exports climbing to US$800 million.

WB helps build first transformer station in Hanoi

The Hanoi Power Corporation (EVN Hanoi) began construction on the Gia Lam 2 110 KV transformer station and power line on December 24.

The VND99.9 billion project is included in Hanoi’s 2011-2015 planning list – approved by the Ministry of Industry and Trade on August 29, 2011.

EVN Hanoi Director Tran Duc Hung told the project’s launch ceremony it will be built on 3.174 square metres of land in Gia Lam district.

The first transformer is scheduled for installation in 2013 while the second will follow in 2016.

The transformer station will be equipped with modern facilities and advanced equipment and supervised by Supervisory Control and Data Acquisition (SCADA).

WB Country Energy Coordinator Franz Gerner elaborated on the project’s objectives, highlighting the need to ensure transparency, respect environmental and societal safety concerns, and improve the quality of Hanoi’s power supply. He also asked Hanoi to resolve issues relating to land clearance and resettlement.

The transformer station project is part of the Distribution Efficiency Project (DEP) with a total capitalization of US$724.8 million, the largest funded by the World Bank (WB) thus far.

WB is committed to fostering favourable conditions for investors to implement the project in a timely and efficient manner.

When operational in 2013, the transformer station will improve electricity quality and provide sufficient power to Gia Lam district and its neighbouring urban areas in Hanoi.

The project has been carried out at five power corporations in 40 provinces and cities across the country.

Exports to Spain on the upswing

The country’s exports to Spain in the first nine months of the year showed a sharp increase of 23 percent to EUR1.3 billion, compared to the same period last year.

In the meantime, its imports from Spain were down 3.9 percent to EUR151 million.

Vietnam exported mainly machinery and spare parts, electronics, footwear, garment and textile products, seafood, rubber, coffee and pharmaceuticals to Spain.

It earned EUR1.41 billion from last year’s total exports.

The two-way trade turnover between the two countries showed a year-on-year increase of 33.4 percent.

Kien Giang welcomes over 3.8 million tourists

The southern province of Kien Giang has welcomed more than 3.8 million of tourirsts so far this year, up 3.25 percent compared to last year’s figure.

Kien Giang has a lot of beautiful islands and beaches and historical relics which are attractive to tourists. But, there is still a shortage of professional guides at their services.

Although its total revenues from hotel and tourism services hit more than VND381 billion,  the province is focusing on creating unique tourism products to lure more local and foreign visitors next year.

Vietnam one of attractive destinations for tourists in 2013

Vietnam ranked second in the list of attractive destinations for foreign tourists in 2013, according to a recent survey conducted by the United States Tour Operators Association (USTOA).

The results were announced at the USTOA’s annual conference in Hawaii on December 25.

Myanmar, Vietnam, and India are three most-favoured destinations, followed by Peru, Cambodia, Brazil, China, Colombia, Costa Rica, and Ecuador.

In the USTOA’s 2012 survey, Vietnam tops India, Ecuador, and China in the list of emerging tourist attractions.

Since the beginning of this year, Vietnam has welcomed more than 6.6 million foreign visitors, up 9.6 percent over last year.

The USTOA consists of major travel agents and tourism service providers around the globe.

Danang int’l airport welcomes over 3.2 million tourists

Danang International Airport, one of the world’s most busiest airports, has welcomed more than 3.2 million tourists to Vietnam this year.

The airport serves three domestic carriers namely Vietnam Airlines, Jetstar Pacific Airlines, and Vietjet Airlines, and six foreign airlines – Silk Air Asia, Korean Air, Air Asia, Asian Airlines, China Eastern Airlines, and Shanghai Airlines.

Since the beginning of this year, Danang airport received 27,000 flights, up 5,000 compared to the previous year. It is expected to welcome 3.5 million visitors on 28,000 flights in 2013.

Its full-swing operation actively helps promote the central city’s development in the process of international integration.

Groupon Company assures customers of credible service

Nhom Mua Groupon Company and its website www.nhommua.com,   resumed operations on December 24, after disrupting services two times in September and early December, which fueled customers’ concerns over validity of vouchers already bought from the company.

Nguyen Thi Thanh Van, one of the directors, said the company promises to protect the rights of its customers and partners, which is their most important goal.

The company will liquidate all signed contracts to resolve financial matters and ensure the rights of customers with all valid vouchers still usable.

The ‘Deal-of-the-Day’ company is trying to contact all clients and partners via email, letter and telephone to assure them that all transactions will be conducted normally as before and vouchers with valid dates will still be usable.

In September and early December, the company’s website became inaccessible and the company’s headquarters were sealed by the Economic Police for further inspection, after its founder and former director, Tom Tran, was suspected of embezzling company assets and conducting several non-transparent internal transactions.

Ministry of Construction tackles the building permit problems

The Ministry of Construction (MoC) has issued directives to simplify administrative procedures for building permits.

After September’s Decree 64 on regulations to issuing building permits, some have raised concerns over some of the shortcomings of the decree.

In order to solve these problems, the MoC has issued a directive stating that only private residential estates which have more than 250 square metres of floor space or more than three stories will have to submit construction design files.

The Decree 64 also said that the house design of the constructions and individual houses in urban area must comply with the city detailed planning on the scale of 1/500. However, because of the different jurisdictions and their differing regulations, enforcement of these decrees may prove difficult.

Trinh Dinh Dung, Minister of Construction said that if the urban areas already have basic infrastructure, then localities should be able to choose those which permits to allow and reject.

Despite the shortcomings pointed out by some, Decree 64 was aimed at creating favourable conditions for investors, making it easier to receive building permits.

Provincial level authorities can grant permits to buildings that have more than 20 floors for each major phase of the construction.

The decree also sets up rules to prevent agencies from asking unneeded documents. The decree said that the agencies can only request the required documents one time, without lagging the process on by continually asking for more.

If the investors want to change building designs in general keeping with the original architectural design, a new building permit would not be required.

Quang Ninh Province cracks down on stagnant projects

Quang Ninh Province will revoke 179 delayed projects, stopping investors from hiring land in order to change the ownership right transfer to earn profits.

The authorities have decided to withdraw around 15,859 hectares from land lease decisions and project plans.

Although many investors rented the land for nine to ten years, they haven’t taken any action to implement their projects. This has damaged the local economy because most of the allocated lands are converted agricultural and forestry lands.

The worst offenders include a tourism and commercial centre project operated by Hong Gai Tourist and Service Company and a three-star hotel project under the Viet My – Ha Long JSC, both of which are located in Bai Chay Ward.

Some big investors have sold their projects, earning tens of billions of VND in profits.

Nguyen Van Doc, Chairman of Quang Ninh Province’s People Committee said, “Investors complained about difficult site clearance tasks but didn’t or were unable to carry out the project when they received the land.”

The authorities have decided to tighten controls to prevent incapable investors from renting land and are determined to create a healthy investment environment.

Many investors have attempted to lobby or threaten the authorities after the announcement to withdraw the land from stagnant projects.

Doc said start from 2013, investors would have to deposit 20% of the total project capital in a bank. This money would receive normal interest rates and the authorities would disburse the money in accordance with the progress of construction.

If the investors do not carry out the project, the money would go to the province’s budget.

In 2013, Quang Ninh Province will also put more land and projects that relate to land-use up for bidding.

Doc said the authorities would try to create the most favourable conditions for investors and asked for a proper working attitude in return.

 58,000 businesses in Hanoi report losses

Up to 57,866 of 81,592 enterprises in Hanoi which have submitted their corporate income tax declarations reported losses in 2012.

According to the Hanoi People’s Committee, global economic difficulties have seriously affected the city’s budget revenues.

More than 12,249 companies in Hanoi have halted operations so far this year. Among those, 420 dissolved; 5,273 halted their business activities and 6,556 disappeared without trace.

Since early this year, the city collected VND2.23 trillion (USD106 million) in taxes owed by 19,382 companies. The municipal Department of Taxation have worked with the police to deal with 111 local companies who still owe VND51.3 billion (USD2.44 million) in taxes.

By mid-December, Hanoi had collected VND121.26 trillion (USD5.76 billion) in taxes, fulfilling 82.9% of the year plan set by the city People’s Council.

Experts: Low CPI not a positive sign

Although the low consumer price index (CPI) rise in December has helped curb the nation’s inflation rate, experts said that this is not an optimistic sign as origins of high inflation have yet to be solved.

According to statistics of the General Department of Statistics announced on Monday, the nation’s CPI this month has increased 0.27% month-on-month, bringing the CPI rise this year to 6.81%. This figure is lower than the target of 8% of the Government.

Nine out of 11 commodity groups have risen in prices. The food-foodstuff, restaurant and catering group, which is the most weighted in the basket for CPI calculation, has increased 0.28% against November with food, foodstuff and dining services up 0.13%, 0.28% and 0.4% respectively.

The group of apparel and footwear has posted up the biggest rise of 1.17%. Other seven groups have reported slight rises between 0.32% and 0.9% while the two remaining groups, traffic and post and telecom, have declined by 0.43% and 0.02% respectively.

Many groups have increased strongly against last year and been higher than the average level. For example, medicine and heath services have surged over 45%, of which healthcare services up 63.5%. Education has jumped 16.9% and house and building materials has increased nearly 9.2%.

Economic expert Ngo Tri Long told the Daily that low inflation is not a positive sign as the falling buying power is the cause of the low CPI rate.

People usually mention several reasons for the low CPI this year, including the stable exchange rate attributed to macro policies.

However, three are only three main reasons, namely falling demand, huge stockpile and a steady decline of global prices since the end of 2011.

Low CPI is not an optimistic sign as origins of high inflation have yet to be solved. And it seems that the cycle of two years of high inflation followed by one year of low inflation is repeating itself, Long said.

Notably, the continuous fall of the food and foodstuff group, which accounts for up to 40% of the CPI calculation basket, has driven down this year’s CPI. This has hurt incomes of farmers. Meanwhile, price indices in rural areas are higher than in cities as non-agricultural products have surged in prices.

Price stabilization programs take place in big cities only while farmers are those suffering difficulties. Therefore, farmers receive little benefits from these programs, Long added.

Chance to rescue economy gets slimmer

Vietnam’s economy is experiencing the toughest time in a decade, but the policy room for the country to maneuver in order to overcome this critical situation is getting smaller.

The gross domestic product (GDP) growth this year is estimated at 5.03%, the lowest rate since 2000, according to figures released by the General Statistics Office (GSO). The previous lowest level was recorded at 5.32% in 2009, when Vietnam launched a stimulus package worth US$8 billion to save the economy.

Do Thuc, director general of GSO, described this year’s GDP growth as “reasonable” in the context that the country is focusing efforts on inflation control and macroeconomic stabilization.

The average consumer price index (CPI) rise this year is 9.21% higher than last year (See related story on Page 3).

As such, the two basic indicators as calculated by Vietnam are both lower than the figures released by the World Bank. The global lender says Vietnam’s core inflation excluding food picks up 11% and GDP grows 5.2%.

The Government has requested banks to lower deposit rates to 8% and is seeking ways to rescue the real estate market. However, economists have a different view.

Nguyen Dinh Cung, vice president of the Central Institute for Economic Management, said the current situation in Vietnam did not allow traditional solutions proposed by many management agencies to be implemented.

In particular, it is impossible to boost aggregate demand by increasing public spending and public investment as the State budget is facing troubles, he said.

Moreover, promoting credit growth in the context of rising bad debt and mounting inventory is quite a difficult task. As for corporate income tax and value-added tax cut, this solution has almost reached its limit.

Besides, it is very hard to reduce supply through technical barriers given the integration commitments. Meanwhile, public investment and State-owned enterprise (SOE) restructuring will not bring about effects anytime soon.

“In short, we are left with not so many chances to stimulate the economy in the traditional way. On the other hand, the proposals for a financial package to stimulate the economy are very wrong,” he said.

The stimulus package in 2009 resulted in a vicious circle of instability with high inflation in the years after that, he stressed.

Tran Dinh Thien, director of the Vietnam Institute for Economics, said the current moves showed that Vietnam did not really keen on dealing with bad debts, the most important factor making the economy paralyzed.

“When the actual bad debt ratio has yet to be determined, how can we know how much is needed to cope with it?” he wondered.

He expressed a concern that not so many enterprises and banks could survive until 2015, when bad debt will be completely settled as committed by the Government.

“There is one ad hoc solution that the State should adopt immediately, which is to repay the total capital construction debt of VND91 trillion that local governments owe to enterprises,” he suggested.

However, it is not easy to do so as the State budget collection is experiencing difficulties and government bond issuance is fixed at VND45 trillion per year.

Unfortunately, the two most important pillars namely land ownership and SOE reform do not receive due attention, Thien said.

When asked how long it would take for Vietnam to overcome the current economic situation, Deepak Mishra, chief economist of the World Bank in Vietnam, said what matters is not “how long”, but “in which way”.

He said: “It would happen when Vietnam is able to establish economic institutions run by technocrats and experts with necessary skills.”

Ministry seeks tax breaks for businesses

The Ministry of Finance has proposed many preferential policies for small and medium-sized enterprises (SMEs), including tax reductions and payment extensions, to help them survive 2013 that is expected to remain tough for enterprises,.

The ministry has submitted to the Government 21 solutions aimed to remove difficulties for businesses, focusing on SMEs and the agricultural and rural sector.

Specifically, the ministry asks for a six-month extension for corporate income tax payments of SMEs in the first quarter of 2013 and three-month extensions for payments in the second and the third quarter.

SMEs are those having fewer than 200 full-time employees and annual revenue of less than VND20 billion, excluding banking-finance, insurance and lottery firms and those providing goods and services subject to special consumption tax.

The ministry seeks similar tax payment extensions for enterprises with more than 300 employees operating in the fields of manufacturing-processing, agro-forestry-fisheries, textile-garment, leather-footwear and socioeconomic infrastructure development.

In addition, the ministry proposes a six-month extension for value-added tax payments of these enterprises in January, February and March 2013.

Agribusinesses and farmers will also enjoy many preferential policies next year.

In particular, a 50% reduction in land rents in 2013 and 2014 are proposed as land rents in 2011 and 2012 were multiplied under a decision released in late 2010. After being halved, if land rents were still two times higher than the amounts paid in 2010, they would be further cut until they are equal to twice the sums in 2010.

Tens of thousands of farming households that rent land for agro-forestry-fisheries and salt production will receive this support and be able to continue farming, says the finance ministry.

The ministry also proposes the Government request Vietnam Bank for Agriculture and Rural Development to offer loans to seafood enterprises so that they can buy aqua feeds to serve production.

Moreover, the ministry suggests an extension of 12-36 months for export loans that the State gives to exporters of vegetables and aqua products in order to help farmers sell their products at better prices.

Tra fish exports continue to decrease in Q4

In the last months of the year had continued to decrease, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).

Exports of tra fish, also known as pangasius, to five of the country’s eight main markets fell, including the EU, ASEAN, Mexico, Brazil and Saudi Arabia.

Only exports to Hong Kong saw significant gains in the first 11 months, rising 40 per cent over the same period last year.

In total, Viet Nam’s tra fish exports dropped by 2.4 per cent compared to last year.

Over 12,000 Hanoian businesses sink in 2012

The economic recession has killed 12,249 enterprises in Ha Noi this year and had a severe impact on State Budget revenue, according to the city’s People’s Committee.

These included 420 that dissolved and 5,273 that halted business activities.

When declaring corporate income tax, 57,866 enterprises in Ha Noi posted losses, accounting for 71 per cent of those that submitted tax declarations.

Municipal authorities are working with police to collect outstanding taxes.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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