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Gloomy picture on youth employment

The global labour market and youth employment were the major themes of a seminar held in Hanoi on November 29 by the Vietnam Development Information Center (VDIC), World Bank (WB).

José Manuel Salazar-Xirinachs, ILO Executive Director for Employment touched upon global employment challenges, saying that the world is likely to see a worse employment outlook in 2012 and 2013, with an estimated unemployment rising by over 6 percent.

About 90 percent of over 1.2 billion people aged between 15 and 24 (or 17 percent of the world’s population) are living in developing countries, more than 55 percent of them in Asia.
There is a serious youth employment crisis with 75 million young people currently unemployed worldwide, Xirinachs warned.

He said that unemployment varies from region to region with Southeast Asia having a lower rate than the European Union and Latin America in the 2008-2012 period.

According the ILO Executive Director, unemployment rates have been declining gradually in the US and Japan, but rising in Europe, especially since the second half of 2011.

He raised concerns over youth unemployment rates, citing that there were 22.9 million fewer employed youth in 2012 than in 2007.

He also predicted that energy-efficiency and green growth models are transforming production and labour market, creating opportunities for the youths to get steady jobs but requiring them to train hard to meet marker needs.

Prof. Keijiro Otsuka from Japan National Graduate Institute for Policy Studies said that substantial job creation is needed to cope with population growth.

The ongoing Euro debt crisis has weakened the global economy and many firms have reduced employment without offering new jobs, he noted.

In his view, jobs and incomes of low-skilled workers are declining in developed countries because low-skilled tasks are outsourced to developing countries, resulting in a wage gap between skilled and unskilled workers in both developed and developing nations.

Otsuka suggested educational reforms to reduce job mismatches in the manufacturing and service sectors which are experiencing rapid growth.

Vietnam has taken measures to lower unemployment rate, especially among the youth. According to the Ministry of Labour, Invalids and Social Affairs (MOLISA), more than 8 million jobs have been created since 2006, about 40 percent for young workers.

However, the number of unemployed youth remains high, accounting for 51 percent of the country’s total unemployment rate. It’s worth noting that the unemployment rate among female workers is much higher than males.

State Bank may apply ceiling lending interest rates this year

The Government has requested the State Bank of Vietnam (SBV) to apply more flexible policies to facilitate enterprises’ access to bank loans by the end of the year.

The information was released at the Government’s regular meeting on November 29, which was presided over by Prime Minister Nguyen Tan Dung.

As a result, the Government has put in place requirements that the SBV to consider the application of a cap on lending interest rates as well as lowering lending rates in December to provide some support businesses in need of credit.

However, the Government also emphasised that the policies should be designed in a way that will not increase inflation.

The SBV was also requested an increase of the foreign currency reserve, a speed up the restructuring of commercial banks, especially for those banks in trouble and to deal with the bad debt issue.

According to Chairman of the Government Office, Vu Duc Dam, the country’s inflation rate may be kept at 7.5% this year if the country successfully implemented proposed measures.

Dam cited data by the General Statistics Office (GSO), which indicated that inflation had climbed to 6.52% by the end of November from the end 2011. According to their estimates and predictions, inflation for December may be les than 1%.

If the country stays on the right track it could meet its target for reducing inflation this year, he said.

“When inflation falls it obviously leads to a decrease in interest rates,” he emphasised.

He shared that in other periods when interest rates were rather high and the Government demanded a cut in interest rates, there were voices raised that the Government should not interfere and let the economy develop according to market rules.

But he reiterated his opinion that Vietnam is still in a transitional period economically and the regulation of interest rates and several other macroeconomic issues are of great importance.

Slow sales means big discounts on new clothing

Garment and textile companies are now rushing to offer big discounts to attract customers, even for their new products, due to sluggish sales.

Many companies have launched the discounts as high as 90% on several brands to clear inventory.

The local garment market has seen thousands of new designs this season, but this year many of them are being sold 15-30% cheaper than the same period last year. Meanwhile, the producers have been spending more on materials and labour.

Many companies have launched the discounts as high as 90% on several brands to clear inventory.

Viet Fashion Corporation has introduced 300 new designs with two major brands, Ninomaxx and N&M, at 188 shops nationwide. The products range from VND100,000-150,000 (USD4.76-7.1) each, and were made to be affordable.

Viet Thy Company has also launched more than 100 new designs, double last year’s figure. Nguyen Thi Anh, Business Manager of the company, said, “With these new designs customers will have a much wider selection on a tight budget. Viet Thy products’ prices are VND79,000-349,000 (USD3.76-16.6) each, down 20% against 2011.”

Foci has unveiled 300 new designs that are priced at 50% from last year. The average price for each product is VND128,000 (USD6.1) compared to VND168,000 (USD5.95) last year. Focis has expanded online services and allows customers to change their bought products within 30 days.

Blue Exchange has offered special discounts for several designs at just VND50,000 – 59,000 (USD2.38-.2.8) Meanwhile, Viet Thy is preparing a 40-50% discounts early December and sell many products at only VND40,000-50,000.

70 securities firms may be shut down 

It is essential to curtail over 70 weak securities companies, said the Chairman of Ho Chi Minh City Stock Exchange (HoSE), Tran Dac Sinh.

Sinh said, with Vietnam’s current market size, it should only contain about 30 securities companies instead of the current 105.

Most of the companies were established under the growth during the economic bubble in the Vietnamese securities market, but had a weak capital base and bad management. Once the economic slump hit their shortcomings were exposed.

Though the State Securities Commission, under the Ministry of Finance, issued a number of directives to ensure the firms’ safety, Sinh said weak firms should be eliminated, adding that with a simpler stock market, management agencies will be able to do their job better.

In the plan to boost the domestic stock market, HoSE is now studying exchange-traded funds (ETF) and covered warrants. Sinh said he is waiting for the regulations and directives on how to set up ETFs. They will also send their study on covered warrants to the State Securities Commission for approval early next year.

Currently, VN30 is the strongest index in the market. It makes up 70% of market capitalisation, 80% HoSE’s market capitalization and, they hope, will attract many investors.

The State Securities Commission is planning to raise the margin lending ratio from 40% to 50% to stimulate the market. Sinh said the solution is good but Government should carefully consider all implications before implementing any policy.

Nation to remain manufacturing hotspot

Vietnam is expected to move into the top 10 most competitive nations for manufacturing in next five years.

According to a Global Manufacturing Competitiveness Index report released by Deloitte Touche Tohmatsu and the US Council on Competitiveness, Vietnam will jump from its current global ranking of 18th to 10th.

The report is based on the responses of more than 550 senior manufacturing executives worldwide to a wide-ranging survey discussing the current business environment and manufacturing sector global competitiveness.

This is the second time this report has been released and the first time Vietnam is ranked among the most competitive nations for manufacturing.

Executives said access to talented workers was the top indicator of competitiveness, followed by a country’s trade, financial and tax policies, and then the cost of labour and materials, supplier network, legal and regulatory system, physical infrastructure, energy cost and policies and local market attractive.

Currently, China is the most competitive and is expected to hold that distinction five years from now, followed by India, Brazil and Germany. In South East Asia, Vietnam is the second most competitive manufacturing nation, following Singapore but ahead of Thailand, Malaysia and Indonesia.

“Frontier markets in Asia such as Vietnam and Indonesia are on the rise,” said Tim Hanley, Deloitte Touche Tohmatsu’s global leader of manufacturing.

“The global CEO survey results echo the view that while China and India are still prominent in discussions, manufacturers are turning their focus to these frontier markets for growth to capture both the growing local consumer demand and to serve as strategic manufacturing hubs in the global value chain,” he added.

Foreign direct investment inflows into Vietnam are currently on a downward trend amid the challenging domestic economy and global economic troubles. However, the responses of executives in this report underscore the attractiveness of Vietnam for manufacturing investors in the long-term.

Several multinational companies have recently announced huge investments in Vietnam. Samsung Electronics this month got an investment certificate for investing additional $830 million in Vietnam. Back to April, Nokia broke ground of its USD320 million mobile-phone factory in Bac Ninh province, not far from Samsung’s manufacturing site.

Coca-Cola last month announced plans to invest an additional USD300 million in Vietnam, raising total investment capital of this company in the country to USD500 million.

“Vietnam is an important growth market in Asia-Pacific as we work to achieve our 2020 vision goal of doubling system revenues this decade,” Muhtar Kent, chief executive officer of Coca-Cola Company, said during a visit to Hanoi.

“Vietnam’s economy has maintained healthy growth in recent years and this new financial commitment is more than an investment in Coca-Cola’s expansion in Vietnam, it is also an important acknowledgement of our belief in the long-term potential of this key market,” he added.

Japan’s Fuji Xerox, a manufacturer of copiers, multifunction devices and printers, in August also decided to build a USD110 million manufacturing facility in Haiphong.

Fuji Xerox said it chose Vietnam because of the country’s steady progress toward industrialisation.

“The country is advantageous as it has industries such as information equipment manufacturers in a concentrated manner, as well as an extensive land transportation network connecting the country with China, Thailand and other ASEAN nations, which will facilitate Fuji Xerox in establishing supply chains,” the company said in an announcement.

Firms blamed for choosing personal relationships over efficiency

Vietnamese enterprises tend to pay too much attention to developing personal relations instead of their technology and administration, leading to poor results, experts said.

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) said at a press conference to introduce the Consortium of Vietnam Business Forum (VBF) 2012 that business environment in the country had yet to encourage enterprises to enhance their competitiveness.

He said that most enterprises spent too much time on developing relations rather than focusing on improving their technology and administration. This resulted in a large number of local companies filing for bankruptcy despite foreign-invested companies being able to develop despite the economic difficulties.

Alain Cany, Co-chairman of VBF Consortium, said after nearly 30 years of renewal, Vietnam was regarded as a country that had great development potential but it still lacked skills to manage enterprises.

Even though the country’s productivity had remarkably improved, its enterprise management capacity was well below par, he emphasised.

According to Cany, Vietnam’s business environment remained unstable due to capital shortages and a heavy dependence on banks.

Vietnamese businesses get bank loans by guaranteeing their assets while banks seem not to pay enough attention to their business capacity to make a profit prior to providing the loan. When opportunities to access low-interest loans become narrower, Vietnamese enterprises should improve their management capacity, along with making better preparations for the worst case in case of bank bankruptcy, he recommended.

“One reason why FDI firms operate more effectively than Vietnamese ones is that they borrow less, have good management capacity and well-developed recruitment policies,” Cany noted.

Vu Tien Loc said that even though the country has seen a considerable decrease in inflation and the trade deficit, enterprises are still facing a lot of unexpected difficulties. FDI firms have better competitiveness amid economic difficulties due to their more competent management.

Vietnamese small-and-medium sized enterprises (SMEs) seem to have better management capacity than larger ones, Loc assessed.

Long-term tight monetary policies may drive firms to bankruptcy

Concerning the upcoming Vietnam Business Forum scheduled for December 2, Cany said that partners will share a dialogue with the government and make suitable recommendations to deal with banking crisis and support SMEs.

He said that Vietnam has applied tight monetary policies for a period and has achieved positive results. However, he said that such policies should not be maintained for a long time as it could result in more enterprises filing for bankruptcy in the time to come.

Loc said that recommendations would focus on three major issues, maintaining macroeconomic stability, saving and supporting enterprises and enhancing corporate management competency.

Phu Yen tourism potentials untapped

Despite being the host of the National Tourism Year 2011 with many scenic spots, beautiful beaches and tourist attractions, Phu Yen Province is still having a lot of its tourism potentials untapped.

This was a view shared by tour operators in HCMC and tourism officials of Phu Yen at a conference on Phu Yen tourism promotion held in the city on Thursday.

In 2010, Phu Yen welcomed 350,000 tourist arrivals. With a massive investment in the tourism year, the number of tourists rose to 500,000 in 2011.

This year, the tourist number has not exceeded half a million. “Phu Yen has potentials but it is hard to bring visitors there,” said tour operators in HCMC.

To unlock the tourism potentials of Phu Yen, tour operators said there should be a large-scale promotion program to attract tourists and better investment in roads, sanitation and utilities at tourist destinations. The Phu Yen-based companies need a price policy soon so that partners in HCMC can develop products, do promotions and sell tours.

Nguyen Huu Tho, chairman of the Vietnam Tourism Association, said one of the disadvantages of Phu Yen was its great distance from HCMC, pushing up the cost of operating tours. In the current difficult situation, the Phu Yen Department of Culture, Sports and Tourism should organize a big promotion program lasting about two years to stimulate tour sales and advertising.

Nguyen Minh Quyen, deputy director of Ben Thanh Tourist Travel Service Center, said Phu Yen not only should introduce its services to travel companies but also needs to join hands with airlines and service suppliers to draw up a plan to develop tourism.

“If the province cooperated with air carriers having tens of thousands of promotional tickets, prices of local services would go down and we could sell tours,” he said.

Tour operators proposed Phu Yen invest more in traffic and sanitation at tourist sites so that they could bring tourists there.

For instance, the road leading to Da Dia Rock Reef, one of the most famous attractions of Phu Yen, is still bumpy, making 45-seat passenger coaches unable to travel on it. Phu Yen Beach is beautiful, but it lack piers for tourists to safely get on and off cruise ships

“I once brought tourists to Da Dia Rock Reef for camping on a full-moon night. They really enjoyed the trip but this great feeling was incomplete because there was too much trash around. This must be addressed,” said Vu Hoang Long, director of 3T Travel Co., specializing in camping tours.

Representatives of many travel firms said Phu Yen should focus more on camping tours rather than only attracting tourists to luxury hotels and restaurants because many other localities near HCMC already have this type of service.

TV energy labeling scheme delay proposed

Labs and producers are planning to seek approval to delay a scheme to label televisions as meeting energy-efficiency standards as they find it hard to start the scheme early next year as required by authorities.

Household appliances must carry energy-efficiency labels before they are launched onto the market from January 1, 2013.

Hoang Lam, deputy director of the Quality Assurance and Testing Center 3, or Quatest 3, one of the organizations assigned to test household appliance products, said energy efficiency standards for TVs are not yet available. Therefore, Quatest is having difficulty testing televisions, Lam said.

Lam expected the Ministry of Industry and Trade to extend  the schedule to glue energy-saving labels to TVs and a number of other products, instead of January 1, he said. It is because many items will not be tested for labeling in a timely manner, he said.

Lam noted the implementation schedule starting from early January has piled pressure on his agency given the rising testing demand of local TV makers.

The test facilities of Quatest 3 lack technical capabilities to verify a number of items on the compulsory list in need of carrying the labels.

They are striving to enhance their capabilities, purchasing testing equipment and sending staff abroad for training. However, the complicated criteria have taken a lot of time for testing and have led to low efficiency.

Furthermore, it is difficult for the lab to meet the surging number of local enterprises. Overloads happen at times at Quatest 3, Lam said, adding he is concerned that companies will rush to his agency.

Similarly, those firms with their products subject to the labeling scheme also said the schedule could not be met. It is infeasible to do so without any energy efficiency standards for televisions, they stressed.

Some foreign-invested companies have already drafted a petition to seek approval from the General Department of Energy under the industry ministry for a 12-month postponement. But they have yet to send the petition to the department.

Banks move on soft home loans

As the property market has yet to recover and real estate sales by banks are still facing challenges, local lenders have continued to launch preferential home credit programs but with certain conditions.

Orient Commercial Bank has expanded a home loan program with rates from 13.5% per annum, or a three-percentage-point reduction. However, individual borrowers must have stable income of no less than VND12 million a month while business households must have operated for at least two years.

The bank offers the longest term of 15 years for this credit program and the maximum disbursement for a client is VND1.5 billion.

HDBank, meanwhile, offers the lowest rate for home loans at 8.6% per annum in the first three months. There is VND1 trillion worth of home credits available at this bank.

Eximbank on Thursday also announced a VND5 trillion credit program for customers having demands to buy or repair homes. Eximbank will fix the lending rate at 12% per annum in the first two years and after that, lending rate will be deposit rate of 13 months plus 2.5 percentage points. Loans amount up to 70% of guarantee asset value.

Large banks such as Vietcombank, VietinBank and BIDV have expanded home credit programs since June with rates hovering around 12% per year in the first three to six months. After that, these lenders will negotiate with borrowers to figure out new rates.

In fact, banks apply low lending rates for home loans only at the start of the term and customers then have to pay interest rates following rates on the market. Attractive rates of 8-10% per year actually are just a way to lure customers.

Therefore, the lending rate calculation formula after the preferential period should be read carefully.

For example, Eximbank applies a rate of 12% in the first two years but after that, the lending rate will be a deposit rate of 13 months plus 2.5 percentage points. If the deposit rate in the third year is 12%, customers will be subject to a rate of 14.5% per annum.

VietinBank lends VND6.2 trillion to EVN

Vietnam Bank for Industry and Trade (VietinBank) and Vietnam Electricity Group (EVN) on Thursday signed a VND6.2-trillion credit contract to finance Duyen Hai 3 thermal power plant.

According to VietinBank’s statement released on Thursday, the credit will help EVN pay for its engineering, procurement and construction (EPC) contract and settle fees of foreign credit contracts serving construction of the project. This loan comes with a term of 120 months, including 48 months of grace, and is 100% guaranteed by the Ministry of Finance.

As a key national project, Duyen Hai 3 thermal power plant in the Mekong Delta province of Tra Vinh has a designed capacity of 1,200 MW. The project is expected to cost VND28 trillion.

EVN general director Pham Le Thanh said that the state-owned group will speed up investment in power projects in the 2011-2015 period with total investments averaging out at VND80 trillion each year. EVN has mobilized capital from many local and foreign credit institutions for these projects.

Economic picture remains dismal

The economic situation in general and production-business in particular so far have not brightened as forecast by a report the Government submitted to the National Assembly (NA).

This is a common view of economic administrators at the monthly meeting on socio-economic performance held by the Ministry of Planning and Investment on Tuesday.

Deputy Minister of Planning and Investment Dao Quang Thu said: “Production, business and investment improved in November, but the general picture is still gloomy.”

“Many problems remain unsolved. Resolution 13 issued in May has not done much to help enterprises,” said Thu after he listened to the reports of ministries and localities.

The inventory index of the processing-manufacturing sector as of November 11 had risen 20.9% over the same period last year. The index has fallen compared to October thanks to strong growth in export of cell phones and smart phones.

Such an inventory level, albeit high, is understandable as enterprises are storing up goods for the upcoming Tet holiday, said Nguyen Thanh Hoa, deputy director of the Planning Department under the Ministry of Industry and Trade.

However, Thu expressed his skepticism, questioning: “The NA said the October report (of the Government) was unfaithfully colored in pink. Is this actually the case?”

State budget collection is facing problems and the number of newly-registered businesses keeps dropping, but the number of bankrupt companies was not reported, he stressed.

Nguyen Van Tu, deputy director of the Hanoi Department of Planning and Investment, said enterprises in the city found it difficult to access bank loans due to surging bad debts.

The key solution of Hanoi, according to Tu, is to rescue the property market with a huge volume of unsold products. “If this market collapsed, it would be very dangerous,” he said, warning that loan sharks were emerging.

Trinh Huu Thang, director of the planning department of Bac Giang, said more than 100 companies in the province had suspended operations. In addition, a lot of exporters have got away for owing tax debts to Tan Thanh and Moc Bai border gates.

He informed 97% of the Bac Giang-based firms are small and medium enterprises and all of them are experiencing hardship. Many factories in the province have been seized by banks.

Rice export price falls

The offering price of rice exports has dropped by US$10 per ton within the last four days due to a shortage of large contracts, according to rice traders.

Specifically, the offering price of 5% broken rice was US$430-440 per ton on Monday, which is US$115 lower than rice of the same grade of Thailand. Meanwhile, India’s 5% broken rice is offered at around US$425-435 a ton.

The price of Vietnam’s 25% broken rice has also fallen by US$10 per ton from Friday to US$400-410 per ton compared to US$530-540 of Thailand.

According to rice supplier Lien Hiep in Tien Giang Province, the price of grade-one rice material is VND7,500 per kilo while that of rice of lower grades was VND7,200-7,300. The material rice price has declined by VND500 per kilogram from two weeks ago although the rice quality is really high.

Le Truong Son, general director of rice exporter Docimexco in Dong Thap Province, said that the price decline resulted from the small number of contracts, with exporters mainly making shipments to Indonesia and Malaysia. The Chinese market, Vietnam’s biggest rice importer, is also quiet.

According to the Vietnam Food Association, exporting firms delivered 381,000 tons of rice worth US$177 million from November 1-22. Besides, Vietnam’s total rice export until November 22 was 6.8 million tons with a FOB value of US$3.05 billion.

Chinese bikes overwhelm city expo

The Vietnam International Trade Fair 2012 (Vietnam Expo 2012) opening on Wednesday at Saigon Exhibition & Convention Center in HCMC attracts the participation of many bicycle and bicycle part manufacturers from China.

Some 20 Chinese enterprises are displaying their products and technologies for bicycles, electric bicycles and bicycle spare parts at the four-day event to seek local distributors for their products in Vietnam.

These bicycle producers come to the event under the arrangement of the China Bicycle Association (CBA) and the China Council for Promotion of International Trade Shanghai (CCPIT Shanghai) with an aim to encourage Chinese bicycle makers to look for potential foreign markets.

Stanley, head of the international division at CCPIT Shanghai, said this was the second time Chinese bicycle and bicycle part manufacturers had participated in Vietnam Expo.

“Bicycles and sports bikes that Chinese firms brought to the fair last year drew much attention from Vietnamese enterprises and consumers. Therefore, we continue to send Chinese bike producers to the event so that they can access the Vietnamese bicycle market, where the majority of citizens are traveling by motorcycles,” he said.

Si Mu Zhang, general director of Tianjin City Seven Rainbow Bicycle Co. Ltd., informed his company already had a sales agent in Haiphong City. The firm attends Vietnam Expo 2012 to seek a distributor in HCMC.

Zhang’s company brings to the event 32 models of Oicaima bicycles, 23 of which were ordered by local consumers and enterprises on the morning of the opening day. He hoped the bicycle products of his company would successfully penetrate the HCMC market.

Yang Xu Zhao, director of the Chinese-invested electric bicycle company PSY Vietnam, said his firm joined the fair to survey the market. At present, PSY Vietnam is building an electric bicycle factory in Tan Kim Industrial Park in Long An, which will start operation next year.

Vietnam Expo 2012 features 250 enterprises from 20 countries and territories like Taiwan, South Korea, Malaysia, Belarus and China. The event this year welcomes the first-time participation of Indian enterprises with 20 booths displaying farm products, handicrafts and household utensils.

The fair also showcases electronics products, traffic means and components, interior and exterior furnishing items and household utensils among others.  It is organized by the Vietnam International Trade Fair and Advertising Company (VINEXAD).

Chances for export to Russia not easy to grab

Russia will lower many import tariffs on Vietnamese items to zero once a free trade agreement is signed between the two countries, but several obstacles may prevent Vietnamese firms from enjoying such a preferential treatment.

Under its commitment to the World Trade Organization (WTO), Russia has to reduce the average import tax rate to 7.8%, versus 10% in 2011.

Upon its WTO participation in August 2012, the country cut over 30% of its tariff lines. Another 30% will be brought down three years later.

Russia applies tariff-rate quota to beef, pork and poultry. Beef imports under quota are subject to a tariff of 15% while imports above quota face a rate of 50%. The respective tariffs for poultry are 25% and 80%.

The country will have to slash the average tariff on farm products from 13.2% to 10.8%. The tariff on rice will be lowered by two-thirds.

Meanwhile, the import tariffs on many others such as aqua products electrical appliances, clothing products and leather items will be slashed strongly.

Vietnamese exporters will only have to pay 75% of the most favored nation (MFN) tariffs on the preference items as Vietnam is subject to Russia’s system of preferential tariffs for least developed and developing countries.

Speaking at a workshop on potentials for trading with Russia and the EU held in HCMC on Wednesday, Kardo Sysoev Alexander, representative of the Russian trade office in Vietnam, said Vietnam would enjoy more incentives after signing a free trade agreement with the Customs Union grouping Russia, Belarus and Kazakhstan.

This FTA will bring down import tariffs to zero. The two sides will start talks over this FTA in the first quarter of 2013 and signing is scheduled for two years later.

However, preferential tariffs will not push up demand for goods and services in Russia, but Vietnamese enterprises should get well prepared to make good use of them, said Alexander.

Duong Hoang Minh, deputy director of the Europe Market Department under the Ministry of Industry and Trade, said local exporters complained they had difficulties in payment when doing business with Russian partners.

If enterprises carefully negotiate contracts, they will be able to seize the chances from the Russian market. However, language barrier is hindering contract negotiation.

Nguyen Gia Hao from the Vietnam International Arbitration Center remarked 60% of trade disputes were caused by loosely-written contracts. Moreover, local enterprises lack information about foreign partners and markets and fail to predict price changes at the time of delivery.

Vietnamese exporters also complain about administrative procedures in Russia. The Russian government is making effort to reform administrative procedures, focusing on tax and customs procedures, said Minh.

US$35 mil. for Thu Thiem exhibition center

HCMC in the first quarter of 2013 will begin construction of an exhibition center for showcasing zoning plans in Thu Thiem new urban area with total investment capital of some US$35 million to put it into operation in 2015.

Nguyen Van Hiep, director of the management and construction board of the center project, informed the Daily of the plan on Wednesday.

According to a staff member of France’s Deso Defrain-Souquet, the company that won the first prize in a contest on the exhibition center’s design, Deso will next week ink an agreement on the basic design and construction drawing design with the center’s management and construction board.

The firm will complete the designs in three months’ time before the city opens bidding to choose a contractor for the project.

The project is located at the future Thu Thiem Square along the Saigon River.

The five-floor center covers a total area of 18,000 square meters which will be used for displaying zoning plans and other functions. It will be friendly to the environment, having energy-saving functions and able to adapt to climate change.

As per a decision ratified by the municipal authorities in May, the ground floor of the center is for introducing the history of forming and developing urban areas in the city along with architectural relics, preservation works and zoning plans over different periods.

The second floor will feature zoning plans on socio-economic industries, transport, natural resources, environment, commercial network and services. The third floor will introduce zoning plans on key economic zones, new urban areas, industrial parks, export processing zones and investment projects under the form of build-operate-transfer or build-transfer.

The fourth and fifth floors will be set aside for halls, office areas, libraries and a model of the 930-hectare city center.

Unsold properties could be turned into schools, hospitals

In the future, HCMC may turn unoccupied commercial apartment projects into low-cost housing projects, schools or hospitals if they are consistent with the planning.

In 2013, the HCMC Party Committee will continue to help real estate firms remove difficulties due to the volume of unsold property products, mostly low-rise houses and apartments, said HCMC Party chief Le Thanh Hai at the closing session of the 12th Party meeting on Wednesday.

He emphasized the city would review each property project to deal with inventory of this special type of product in 2013.

“The municipal departments should make further studies and rescue the property market rather than giving up. Letting the city’s market freeze for many years is unacceptable,” said Hai.

Property prices out of the reach of buyers and massive investment without consideration of the market’s digestion are now the two biggest bottlenecks in the property market of not only HCMC but also the whole country. Unfreezing the property market will save the building material industry and help tackle bad debts, said experts.

In regards to investment stimulus, Hai stated it costs less to upgrade production equipment and technology in the current tough times.

Therefore, the city next year will continue to offer favorable conditions for all economic sectors to access funds for equipment renewal and technological innovation, helping them overcome difficulties and reducing unemployment.

Moreover, the municipal authorities will ask the 17 corporations managed by the HCMC government to expand their retail networks across the nation to prevent them from being swallowed up by foreign companies.

This year the city has spent around VND217 trillion on overall development. In 2013, the total budget for social development is estimated at VND255 trillion, equal to 37% of the city’s GDP.

HoREA proposes apartment-for-rent model

The HCMC Real Estate Association has proposed to develop apartments for rent in the long-term housing development strategy as a solution for solving current difficulties of the apartment market.

Apartments for rent should be the indispensable housing model in urban areas as this segment has a high potential, but the market is lacking this model, said Le Hoang Chau, chairman of HoREA.

Chau said that the national housing strategy should have a program of developing low-cost apartments for rent with a monthly rent of some VND2 million per unit to meet the high accommodation demand.

If this is achieved, it will help change the old habit of owning a house, according to Chau.

In fact, there are some property firms which are sounding out the market in the apartment-for-rent segment with a couple of projects in Tan Binh and Binh Tan districts.

Specifically, Le Thanh Co. has recently announced that it would launched apartments for rent targeting medium-income earners with a package price of VND240 million for an apartment in a 15-year term. Similarly, C.T Group also has Bee Home as an apartment-for-rent project.

However, there are not enough legal corridors for this new model, especially an ownership certificate for a limited term.

The point is that how the State will create a mechanism to encourage enterprises to develop apartment-for-rent projects, a type of investment which takes a long time to recover capital.

Officials urge control on shadow banking services

Senior officials in the financial and securities sectors have warned against shadow banking operations, urging authorities to take actions to cope with this practice.

Vu Viet Ngoan, chairman of Vietnam’s National Financial Supervisory Committee (NFSC), and vice chairman Nguyen Doan Hung of the State Securities Commission (SSC) underscored the need to get tough on those non-banking institutions participating in lending operations.

“Bond trading, securities repo and margin contracts at securities firms are in fact lending deals with investors, with huge amounts of money flowing into this channel,” Hung told a press briefing after the East Asia financial stability conference wrapped up in Hanoi on Wednesday.

Hung said the situation was going unchecked and that it might spiral out of control if no action was taken to cope. Derivative transactions in the securities market, he believed, are actually shadow banking activities.

“The Ministry of Finance has provided detailed instructions on margin transactions, but there are no rules governing repo transactions while bond and share trading under the form of such a transaction is abundant on the market,” Hung said. Therefore, he said, SSC is seeking ways to check cash flows via the aforesaid channels.

Ngoan added: “Derivative transactions and those in the securities market as mentioned by Hung are legal activities based on the Law of Securities and relevant regulations.”

But the transactions are not governed by the Banking Law and the Law of Credit Institutions while the nature of repo and margin deals is to provide loans, Ngoan pointed out. This is why these derivative activities must be controlled by the Law of Credit Institutions.

Ngoan noted that not only in Vietnam, non-banking financial institutions in the world also carry out hefty derivative lending activities on unofficial banking markets. He cited recent statistics as showing that the value of such transactions on global markets is about US$67 trillion.

State IT investment deemed not proportionate

Purchasing information technology (IT) products by the Government is spreading thinly and is heavily focusing on hardware items and this has hindered e-government deployment at home, local experts said.

A report of the IT Department under the Ministry of Information and Communications shows that the Government last year spent some VND1.25 trillion purchasing IT products, with hardware products costing up to VND904 billion while software products and services cost only VND351 billion.

Nguyen The Trung, vice chairman of the Danang Software Enterprises Association and general director of DTT Group, said the Government’s investment has only focused on hardware infrastructure and equipments like computers rather than software and service to allow for operation of an e-government system with online services targeting local residents.

As per statistics of Gartner, the structure for IT investment in many other countries includes 56% set aside for IT services, 18% for software and 26% for hardware. If this is the general norm, Vietnam’s State investment in IT is deemed not proportionate.

“This is an unreasonable investment structure going against the common trend in the world,” Trung noted.

Experts in the IT industry, meanwhile, said local State agencies have yet to draw up proper investment strategies in reality.

Besides, there are overlapping IT projects conducted by both localities and industries, making the IT system fail to connect with one another, causing difficulties in application as well as investment waste, they said.

Even software investment also contains several problems which make ministry-level, provincial-level and local agencies investing in software products unable to connect together.

Echoing Trung’s view, Chu Tien Dung, chairman of the HCMC Computer Association, noticed the absence of strategic plans for IT applications at mid-level State agencies has resulted in an asynchronous road map for IT applications.

In other words, local agencies are investing into IT activities in a fragmented manner, he stressed.

Japan explores Vietnam market

A delegation from the Tokyo Chamber of Commerce and Industry (TCCI) has arrived in Vietnam to visit a couple of small and medium enterprises (SME) to sound out cooperation prospects.

Mariko Kitagawa, president of Tsukishima Soko Co., said members of the group were mainly SMEs, so they had come here to explore the possibility of doing business with Vietnamese SMEs.

Tsukishima Soko active in infrastructure and logistics sectors has been joining hands with Vietnam’s TRA-SAS Co., a sea transport services firm.

The visiting Japanese businesses on Wednesday visited Tan Thuan Dong Port to learn about the port’s warehouse system and then work with TRA-SAS. Members are representatives of Japanese SMEs operating in different sectors such as passenger transport, hotel, restaurant, consulting and advertising.

Nguyen Van Quy, chairman of TRA-SAS, said Japan had a policy of helping SMEs seek cooperation and business opportunities in many different countries like Vietnam, and that his offered a good chance for Vietnamese firms to build business links with these businesses.

French-funded fishing boat monitoring facility in place

The Directorate of Fisheries has put into operation a fishing boat monitoring center as one of the main components of a fishery project using France’s official development assistance (ODA) loans.

The 13.9-million-euro project uses Movimar satellite technology to keep track of fishing boats, fishing grounds and marine resources. Components of the project include the monitoring center based at the Directorate of Fisheries, two regional centers – one in Haiphong and the other in Vung Tau, and an equipment installation and maintenance center. There will be some 3,000 offshore fishing boats in 28 coastal provinces.

The modernly equipped monitoring center will track activities of fishing boats and receive information about emergencies, rescues, accidents, piracies and fishing operations.

The project is aimed at improving management of fishing boats, strengthening forecasting capacity, increasing the efficiency of fishing operations and protecting marine resources.

The project will also improve the quality of weather forecasting at seas, and help fishermen cushion damages caused by natural disasters. The monitoring center can also help detect foreign boats that violate Vietnam’s territorial waters.

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