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Gov’t debates crack down on smuggled poultry

Deputy Prime Minister Nguyen Thien Nhan said at a meeting in Hanoi recently that a crack down on smuggling of chickens and other poultry would be under a specific project in which responsibilities of individuals and organizations would be clearly defined.

He said that the project should specify clearly all the ways to control smuggling across borders as well as supervision of transport, delivery and consumption of such products.

Colonel Tran Trong Binh, deputy head of the Environment Crime Prevention Department, said that relevant ministries, departments and local communities should constantly monitor and tackle smuggling of chickens.

Besides the Ha Vi Market in Hanoi–the largest chicken market in the northern region, they should also take tough action against smuggling across border areas and places of consumption, he said.

After the Prime Minister called on authorities a few months ago to crack down on illegal chickens which were flooding the domestic market, smuggling reduced to a large extent. However it has sprouted back once again.

According to customs divisions in border areas of Lang Son and Quang Ninh Provinces, chickens are being smuggled in masses into Vietnam since the beginning of the year, 40 percent of which is out of control.

Since September, authorized organs have uncovered 15-18 tons of illegal chickens a week in Ha Vi Market, where chickens are regularized before being sent off as ‘legal products’ to the central and southern regions.

A kilogram of chicken, that is past expiry date, imported from China and South Korea costs only VND15,000-25,000. However in Ha Vi Market this same chicken costs an exorbitant VND70,000-75,000 a kilogram. Consumers are unable to differentiate between this chicken and normal fresh stock.

Nguyen Thi Xuan Thu, deputy minister of Agriculture and Rural Development, said that the ministry is working with related departments to test for chemical residues in such chickens and check nutritional content as well.

EC President calls on structural reforms

President of the European Council (EC) Herman Van Rompuy emphasized the importance of structural reforms in Vietnam in order to achieve sustainable economic development and create a good environment for investors.

Van Rompuy delivered the message at a business luncheon organized by the European Chamber of Commerce in Vietnam (EuroCham) last week for him to provide local and foreign businesses in Vietnam with updates about his trip to the country from October 31 to November 2 and the situation in Europe.

Van Rompuy said the European Union (EU) was seen as “traveling companion” in Vietnam’s path towards its modernization and objective of becoming a newly-industrialized country by 2020.

“Against this positive scenario, I conveyed a strong message on the need to carry out governance and structural reforms to make the economic trend sustainable and attractive for the investors, especially those from the EU,” Van Rompuy said.

Structural reforms require Vietnam to establish a transparent, predictable and stable regulatory framework, free of corruption, according to Van Rompuy.

Van Rompuy believed leaders of Vietnam and HCMC were aware of the necessity of the reforms. He said that at meetings with Vietnamese leaders, they called for the EU to recognize a market economy status for Vietnam as some EU member states expressed their support for this.

“I told them that although they (Vietnam) made much progress, they are not yet there,” Van Rompuy said.

Despite differences between the EU and Vietnam, Van Rompuy evaluated the EU-Vietnam relations as very positive. “We are going deeper and wider: we just signed a Partnership Cooperation Agreement, we are negotiating a Free Trade Agreement (FTA),” he said.

Van Rompuy said the first round of FTA negotiations in Hanoi from October 8 to 12 was positive. “Discussions were held in an open and constructive spirit. Both sides were fully engaged,” he noted.

The FTA is expected to further enhance the EU-Vietnam business relations, offer new business opportunities for both sides and contribute to structural reforms in Vietnam.

“We have to keep the momentum. The FTA is the best tool we have to encourage structural reforms in Vietnam and to achieve improved market access, and a more level-playing field,” Van Rompuy said.

He stressed the FTA would ensure sustainable and predictable access for Vietnamese goods to a market of 500 million European consumers, advanced and green technologies and financial resources from Europe; and the legal certainty for EU investments in this ASEAN market.

“All this could and should assist Vietnam in advancing towards sustainable development,” Van Rompuy said.

To reach the aforesaid goals, Van Rompuy said the EU needed to seek an ambitious agreement with Vietnam that is consistent with other ASEAN individual FTAs as much as possible, and covers trade in goods and services, intellectual property rights, government procurement and other issues.

“FTA negotiations will thus require effort, vision and commitment from both the EU and Vietnam,” Van Rompuy said. He added that this was the third FTA that the EU was negotiating with an ASEAN country after those with Singapore and Malaysia.

Van Rompuy said the EU-Vietnam trade was growing by 20% in 2012 despite the adverse economic cycle and the two sides were expanding their relations on the political and security areas.

Last year saw two-way trade between the EU and Vietnam reach 18 billion euros, with imports from Vietnam amounting to 12.8 billion euros. The EU is the second largest export market for Vietnam after the United States and Vietnam is the EU’s fifth largest trading partner within ASEAN.

Domestic businesses at a disadvantage

The stable growth and considerable contribution of foreign direct investment (FDI) enterprises to the national economy is putting domestic businesses at a disadvantage.

Statistics from the General Department of Vietnam Customs (Vietnam Customs) show FDI enterprises contributed US$51.55 billion,  or 55.16 percent, to the country’s total export turnover of US$93.45 billion in the first ten months of this year.

Among their products achieving high sales revenues were computers and electronics, which increased by 69.3 percent to US$6.1 billion, and telephones and spare parts by 107.6 percent to US$9.93 billion.

In recent months, the Vietnam Customs Import-Export Duty Department says FDI enterprises have maintained stable growth, playing an increasingly important role in Vietnam’s import-export activities.

Nguyen Mai, President of the Vietnam Association of Foreign-Invested Enterprises, puts this down to a high level of professionalism and global distribution networks developed by their parent companies.

FDI enterprises are more dynamic and experienced than domestic businesses in ironing out snags, Mai says.

Another factor, he underlines, is State support for the FDI sector to grow and flourish.

The increasing contribution of FDI enterprises is, however, raising an open question about the poor competitiveness and survival of local enterprises.

Representatives of major businesses are concerned about the possibility of FDI enterprises holding sway over the market.

Nguyen Tien Vy from the Planning Department under the Ministry of Industry and Trade, says that they are importing much more than domestic businesses.

In the first ten months of this year, for example, FDI enterprises in the footwear sector enjoyed a trade surplus of US$2.5 billion but local businesses suffered a trade deficit.

Nguyen Duc Thuan, Chairman of the Vietnam Leather and Footwear Association, says products from foreign-invested enterprises can easily join global value chains because they are supported by major commercial groups and parent companies.

In addition, Thuan says, they also enjoy preferential tax rates in Vietnam, while local enterprises find it difficult to access low-interest bank loans.

The Vietnam Coffee and Cocoa Association says domestic businesses have to pay 13 percent interest rates in Vietnam dong, much higher than FDI enterprises who currently enjoy 4.5-5 percent interest rates in US dollar.

Many exporters are also worried about the possible removal of the grace period for paying taxes, as mentioned in the revised Draft Law and amendments to the Tax Management Law.

They claim that this will put them at a disadvantage to compete with foreign invested enterprises.

Bat Trang pottery traders upset about market management

Hundreds of traders in Hanoi’s Bat Trang pottery market protested on November 5 against the market’s management board for irrational leasing prices and conditions.

All the protestors closed their kiosks and made apologies to their clients for the halt.

The Bat Trang pottery market was built in 2004 in a collaboration between Bat Trang potters and Bat Trang Ceramic Joint- Stock Company or Hapro Bat Trang, currently the market’s management board.

According to their agreement, Hapro Bat Trang had land and villagers contributed capital for the construction of the market, with an initial area of 13.5 square metres per kiosk. Traders signed stall leasing contracts with Bat Trang Co-operative, set up by traders.

Phung Thi Phin, 71, from Bat Trang Village, owner of a stall at the market, said traditionally their kiosks were not separated, and traders had to upgrade their stalls with their own money.

In 2009, when traders’ five-year leasing contracts expired, Hapro Bat Trang requested them to sign new contracts with the company, instead of through intermediaries, at higher prices.

Vietnam Plus cited Nguyen Manh Hung, deputy head of the market’s managing board, a trader at the market, as saying that leasing prices were only from VND200,000-VND300,000 (USD9.58-USD14.38) per booth per month for the first five years. However, the prices reached over VND60,000 (USD2.87) per square metre after 2009.

The traders have thus far refused the new contract.

The situation got worse since October 26 when five traders in the market received notices from the Hanoi-based Dong Tien Thanh Joint Stock Company that it has signed a contract to hire five kiosks in the market.

“They asked us to move by November 5 or they would apply coercive measures,” Hung shared.

All traders at the market were worried and angry when over 50 “gangsters” came to the market on November 2 to intimidate villagers, which was the incident that forced the traders to go on strike.

According to an undisclosed source, Hapro Bat Trang has not yet received payment from traders the last two months as they did not sign a new leasing contract.

After their protest on November 5, local police arrived to ensure security in the area.

On the same afternoon a meeting was held between local traders, Hapro Bat Trang and local authorities to find a solution to the dispute.

Property firms caught in dilemma

Many property firms are now caught in a dilemma after the HCMC authorities announced to revoke foot-dragging projects, while leader of the Ministry of Construction earlier told them to reconsider implementing their projects at the moment.

In particular, the city-based housing projects with slow compensation progress, below 50% of the land areas for the projects, will be cancelled out. In case compensation has been paid to households in half of the land areas, investors still have to demonstrate the ability to carry out the projects.

However, in a recent meeting with realty companies, Minister of Construction Trinh Dinh Dung advised owners of the projects that have not finished site clearance compensation to consider halting their projects as apartment supply is already abundant.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Co., stressed that while the construction ministry was seeking solutions for the property market, the policy of HCMC forced investors to implement their projects or else they would face the axe.

Tran Minh Hoang, chairman of Vinaland, said few projects would get going in the current context. Still, it will be difficult for HCMC to carry out its policy, he said, explaining that it is not easy to find other investors to assign projects at present.

Moreover, he wondered how the State management agencies would handle the projects that had half done the site clearance work.

Audit of many ministries, giant companies in 2013

On November 5, the State Auditor sent the Audit Plan for 2013 to the National Assembly, by which it will assess the current status of public investments, financial management and production efficiency of businesses, state corporations, state-owned commercial banks and other financial institutions.

In 2013, 16 ministries and central agencies will be audited, in addition to the State Bank, under the regular annual audit.

Six state corporations are on the list for scheduled audits including EVN, Petro Vietnam, Coal Mining, Textile, Rubber Industry and Telecommunications.

There are 16 other state-owned groups of enterprises on the list of scheduled audits, including the Vietnam Airlines and Song Da Corporation.

Four commercial banks are on the plan including Joint Stock Commercial Bank for Industry and Trade, Joint Stock Commercial Bank for Foreign Trade, the Bank of Agriculture and Rural Development and the Development Bank.

Meanwhile, the state-run oil and gas giant Petro Vietnam (PVN) has been requested to pay an additional VND11 trillion or US$523.8 million into the state budget, a duty it had previously ‘forgotten to fulfill,’ said the Government Office.

The unsettled budget contribution is from the ‘oil and gas interests’ or profits from the joint-venture VietsoPetro between Vietnam and Russia, according to a bilateral agreement between the two nations.

In June, the Ministry of Finance released a document asking PVN to review and repay the VND21 trillion in the period 2009-2011, but the company hesitated, saying it had adhered to the government’s regulations.

PVN has so far repaid only VND1 trillion out of the total sum.

“PVN must clear the remaining VND10 trillion by the end of this year, and that huge sum of money is very important for the beleaguered state budget this year,” said an official of the Ministry of Finance.

PVN has also been asked to clear a tax payment and an administrative fine worth a combined VND1 trillion by the Ho Chi Minh City Tax Agency.

PVN has failed to pay the special consumption tax of VND503.8 billion that is applied on the condensate product it exploited and sold between 2007 and March 2012, the agency said.

The agency thus requested PVN to clear the tax payment and pay a VND495.2 billion late payment fine.

But PVN has lodged a plea with the Ministry of Finance, saying it does not have to follow the tax agency’s request.

“The exact amount of tax and fine PVN will have to pay will be announced after the ministry has considered the case,” he said.

Chinese potato palmed off as Da Lat produce

Many traders in the central highland city of Da Lat are selling Chinese potatoes as Da Lat homegrown potatoes to fetch a higher price and making it difficult for authorities to maintain a check on this consumer malpractice.

At the Da Lat farm produce market in Trai Mat in Da Lat City, it is no secret how traders make Chinese potatoes appear to look like Da Lat potatoes.

According to one trader, the imported Chinese potato is first washed with water. Then some dry red mud is mixed with water to form a paste. The Chinese potato is soaked in this red mud paste and dried, before it is finally sold in the market in the guise of a Da lat potato.

These potatoes are then palmed off by traders to markets in Ho Chi Minh City and other provinces in the southern region as Da Lat homegrown potatoes, which fetch a higher price than ordinary Chinese potatoes.

Dang Mau Nhi, deputy head of the management board of the Da Lat farm produce market, said that authorities are rather confused as to how they can tackle this situation as there are no regulations in place to handle such cases.

Chinese potato is imported with proper customs documents. Traders admit that they use dried red mud to change the appearance of the Chinese potato, though they don’t openly say they are selling Da Lat potatoes.

Nguyen Van Son, deputy director of the Department of Agriculture and Rural Development in Lam Dong Province, said that there is no legal basis to accuse the traders of wanting to change the outer appearance of the Chinese potato to look like the Da Lat potato, because the potatoes have no stickers on them. Hence it is passed off as a way of marketing their produce.

One way to be sure that they are actually Da Lat potatoes is to mark the annual harvest season which is between January and May.

The outer skin of Da Lat potatoes is very thin, but it is soft and tasty, while Chinese potatoes have a thicker outer skin and are hard and lack taste.

Vietnam economy continues to face difficulties

Around 100,000 businesses are forecast to close between 2011 and 2012. The figure is equal to half of the figures over the entire past two decades since Vietnam adopted the Law on Enterprises, Chairman of the Vietnam Chamber of Industry and Commerce (VCCI), Vu Tien Loc forecast.

Loc further said the enterprises that were still in business were meeting difficulties such as incomprehensive policies, lack of capital and especially a lack of transparency in the business environment.

Major companies have been accused of lacking transparency, which in turn has jeopardised small businesses providing them with services.

Unstable policies are also blamed for the downturn. In a survey with 8,177 enterprises, only 10% said they could predict the changes in macro-economic policies.

However, Loc said what’s most disappointing is that enterprises have not been proactive.

When were asked what preparations they had made for the free trade area between ASEAN and China, when import taxes will be reduced to 0-5%, 42% enterprises in a big business club in HCMC said they were unaware of the impending agreement and 42% said they had heard of the information but haven’t made any plans. Only 16% had made preparations.

According to Loc, the government should help those enterprises that had the greatest potential, not just in difficulties. Because in reality, there are many companies that could only survive due to the support they received and it was a waste to pour money into them.

In the next two years, enterprises may still face the problems in macro-economy along with other issues such as limited access to capital, and gloomy real estate and securities markets, meanwhile foreign investment will slow.

The results of the ninth quarterly EuroCham Business Climate Index survey, conducted in October 2012, show that business confidence and the outlook among European businesses in Vietnam continued to drop to a record low.

The enterprises said the inflation rate, the banking system and the increases in taxes had affected the business environment.

However, the percentage of European enterprises who wanted to increase their investment grew, showing positive signs for the medium-term.

To boost the market, Loc proposed to reduce VAT for consumers.

Curtain up for Ha Noi textiles summit

Deputy Prime Minister Hoang Trung Hai yesterday told the annual conference of the International Textile Manufacturers Federation (ITMF) that the Government wanted the garment and textile sector to play a crucial role in the country’s industrial structure by 2020.

Hai, speaking at the opening of the two-day conference in the capital city, said he appreciated the significance of the Viet Nam Textile and Garment group (Vinatex) joining ITMF.

He said the Prime Minister had already approved a development strategy that focused on strongly improving support industries, producing raw materials and raising added value for textile products. Vinatex, which is co-hosting the conference, was the core of this plan.

Hai said the weaknesses and difficulties facing the local garment and textile sector could be overcome by trying to improve Viet Nam’s role in the international market.

The conference theme, Challenges for the Global Textile Industry Present and Future, reflects the fact that the global textile industry faces a difficult business environment.

The gathering has drawn more than 250 high-level experts from around the world. They will discuss the volatile raw-material markets, sovereign-debt crises, currency disputes, political instabilities, the blocked Doha trade round, looming protectionism, growing world population, demographic changes, and climate change. All have far reaching implications for global textiles.

Hai said the weaknesses and difficulties facing the local garment and textile sector could be overcome by trying to improve Viet Nam’s role in the international market.

In particular, the garment and textile sector was facing a drop in garment and textile contracts due to the global economic downturn, price changes for raw materials, rising input costs and poor design capacity.

Hai said this was due partly to a lack of support industries. Therefore, the conference was an opportunity for domestic spinning and weaving manufacturers to learn and exchange experiences.

Vu Duc Giang, chairman of Vinatex, said after a year’s membership of ITMF, Vinatext had connected directly with textile industry in many countries and had been updated with many new technical advances in the production of yarn and fabric.

He said the conference was an opportunity for Vinatex to introduce Vietnamese garments and textiles to customers around the world and call for investments.

Bashir H.Ali Mohammad, president of ITMF, said Viet Nam’s garment and textile industry took second place in United States market share after China.

Gov’t to issue construction bonds for major traffic projects

According to the Ministry of Transport, the Government will submit to the National Assembly a proposal to issue construction bonds worth VND60 trillion (US$2.88 billion) for two major traffic projects in 2013-2016 by next week.

Of the total capital amount, VND50 trillion will be spent on broadening and upgrading Highway 1A from the north-central province of Ha Tinh to the Mekong Delta city of Can Tho.

The remaining VND10 trillion will be for upgrading of Highway 14 in the Central Highlands.

Earlier, the Government had approved a project put forward by the Ministry of Transport to broaden Highway 1A.

From 2013-2016, the ministry will broaden the 1,054km two-lane Highway 1A to include four lanes at a total cost of VND89.3 trillion (US$4.29 billion).

The ministry is expected to mobilize VND34.5 trillion from businesses via BOT (Build-Operate-Transfer) and PPP (Public Private Partnership) methods and will contribute VND51 trillion from the State budget.

In related news, the Ministry of Construction has approved a project in Hanoi to build an international container port in Gia Lam District.

The 30 hectare Phu Dong International Container Port will be built at an estimated cost of VND100 billion ($4.8 million) near Duong River in Co Bi and Dang Xa Communes in Gia Lam District.

After Phu Dong Port is complete, cargo from seafaring vessels will be transported directly to Phu Dong Port for delivery to provinces in the north.

At present, cargo is transported to Hai Phong Port before being distributed within the northern region.

Cambodia, a potentially lucrative market for Vietnam

Exporting Vietnamese products to Cambodia is beneficial to both countries, however, in order to hold onto this market, Vietnamese firms must remain proactive and consistently advertise their brands and improve quality of their products and services.

In the last few years, Vietnamese exporters have seen Cambodia as a potentially lucrative market for investments and consumer products. Because most consumer goods in Cambodia are imported, Vietnam can easily fulfill this void and offer products of quality, better design and price.

According to Vu Thinh Cuong, commercial counselor of Vietnam in Cambodia, trade between Vietnam and Cambodia reached US$2.8 billion last year, of which trade surplus from Vietnam was around $2 billion.

During the first months of this year, Vietnam intensified trade links with Cambodia. As a result, exports from Vietnam are expected to top $3.5 billion with potential for more consumer goods to flood the market.

A representative of Ba Vi Milk Joint Stock Company said that his company has started to sell their products at Vinamart — the supermarket that specializes in made-in-Vietnam products in Cambodia, since the beginning of the year. The business results achieved in this market have urged the company to increase exports of dairy products to Cambodia.

Tang Quang Trong, sales manager of Dai Dong Tien Plastic Company for Indochina, said that demand for consumer goods in Cambodia is huge and several Vietnamese products already have the upper hand. As for household plastic goods, Vietnamese products surpass Thai products, holding 80 percent of market share. In 2011, revenues of Dai Dong Tien topped VND20 billion from sales in Cambodia. For this purpose alone the company has built a warehouse in Cambodia to increase its distribution network.

The Cambodian market offers many business opportunities for Vietnamese retailers, who have an array of consumer products. At the end of 2010, the first Vietnamese supermarket was established by Z38 Company, a member of Vietnam Businessmen’s Association in Cambodia, which made its debut in Cambodia with an investment of more than $3 million. This supermarket has helped open doors for Vietnamese products to be in easier reach of Cambodian consumers.

In order to develop more distribution channels for Vietnamese products, Saigon Co.op set up its trade center in Phnom Penh. According to Nguyen Thi Hanh, CEO of Saigon Co.op, retail business in Cambodia is very poor hence retailers still have a lot of space to develop. However, when building a retail network, firms should coordinate with a Cambodia-based company for support and guidance.

Currently, Saigon Food Joint Stock Company and Vissan Company have been promoting their sales, established representative offices and retail stores in cities and provinces to serve Cambodian consumers.

After being in the Cambodian market for a few years, the ABC Bakery Company opened four stores with revenues surging by 40 percent annually. The company now plans to open 10 more stores to expand its network.

Although a compliance market, businessmen who enter this market first advise that it takes time and patience to succeed in Cambodia. Saigon Cosmetics Company entered the market a long time ago and has now opened stores in some provinces with revenues growing steadily. However, every year the company still has to register to join brand promotional programs to retain a hold in the Cambodian market, as it constantly faces fierce competition from China, Thailand and Japan. If the company fails to promote its brand, its products will possibly be sidelined or remain unsold in this brutal market.

Doan Xuan Nghi, head of the representative office of Thien Long Group, said that in order to achieve its current revenue of $1 million a year, the company had to consistently join brand promotional programs for nine years. Cambodian consumers are compliant but it does not mean that they will buy anything.

According to Vietnamese firms, trading is extremely vibrant between Vietnam and Cambodia. Firms have shifted from simply buying and selling to joint-venturing and associating to bring their products into this market. Moreover, the Cambodian government allows foreign companies to set up companies, branches, shopping centers, supermarkets, and stores with same benefits as domestic ones. This makes for a favorable environment for Vietnamese firms.

Imported goods from Vietnam have become more diversified and sell at reasonable prices. In many trade fairs, Vietnamese made products sell out soon after being displayed–in a matter of hours.

Firms should however remain cautious and alert, as Cambodia is an open market, and other countries may tap into the market very easily, increasing competition. Thus, firms should promote products professionally, offer attractive designs and packaging and focus on building brand image to be able to compete with products from other countries and to be able to retain their hold on this market.

Increase in trade between Vietnam and Russia

In the first eight months of the year, trade between Vietnam and Russia rose by 49.7 percent to exceed more than US$2.5 billion, according to the Ministry of Economic Development in Russia.

Export turnover from Russia soared 63.8 percent, hitting $1.07 billion while import turnover surged 40.6 percent, touching $1.43 billion.

Last year, trade between the two countries reached $3.06 billion, up 25.2 percent compared to 2010. Of which, exports were $1.33 billion, up 0.3 percent, and imports were $1.72 billion, up 55 percent.

Russia mainly exports machinery, equipment, metal, metallic parts, chemical products, and minerals to Vietnam while importing garments, footwear, farm produce, machinery, equipment, and chemical products from Vietnam.

Oxalis Company promotes cave tours in Quang Binh Province

Nguyen Chau A, director of Oxalis Company, said on Sunday that his company had invited two foreign cave experts to train guides for conducting cave exploration tours in the central province of Quang Binh.

Howard Limbert and his wife are the two foreign cave experts hired by the Oxalis Company to train adventure tour guides and plan specific tourist itineraries for the company.

The two experts are already present in Phong Nha-Ke Bang National Park and will plan the cave tours in consultation with the company to ensure safety for visitors and provide skills to guides to run tours in the tropical forest to explore caves and to trek and climb mountains.

They will help promote cave tourism by guiding American and European companies to make films on the caves in Quang Binh Province.

Mr and Mrs. Limbert and their team have explored caves in Vietnam for the last 20 years and discovered several caves across a stretch of 200 kilometers in Quang Binh Province. They are credited with making Phong Nha-Ke Bang National Park a world natural heritage site.

They have also brought world attention to the Son Dong cave–the largest cave in the world. Son Dong is one of the many caves in Phong Nha-Ke Bang National Park.

The Oxalis Company has its headquarters in Quang Binh Province and specializes in adventure and eco tours in Phong Nha-Ke Bang National Park in Bo Trach District as well as other cave areas in the vicinity of the district.

EU enterprises optimistic about local market

EU enterprises are keen to invest in the Vietnamese market, according to a latest European Chamber of Commerce (EuroCham) survey.

The results showed that 32 percent of the interviewed firms would like to maintain their investment projects in the country.

Those a positive view of their investment plans, up by 7 points compared to the second quarter.

Judging from its macro-economic stability, Vietnam is still a promising destination for European investors.

“We remain hopeful that recent developments including the beginning of negotiations for the Free Trade Agreement (FTA) between Vietnam and the EU will encourage Vietnam to improve its competitiveness and attractiveness and recover from declining business climate,” said EuroCham chairman Preben Hjortlund.

Overseas investment takes a dive

Overseas investment has fallen by 30 percent compared to the first ten months of last year, despite new investment licences having been granted for nearly 70 projects by the end of October 2012.

According to the Ministry of Planning and Investment, the newly-licensed project account for more than US$1.3 billion in registered capital, with three more being approved compared to 2011.

Despite this, overall registered investment capital has dropped by US$664 million, the ministry said.

New overseas investment mostly went into agriculture, wholesale and retail, processing and designing, mineral exploration, food and services sectors, it noted.

During the period, capital for 14 operating projects were raised to US$96 million.

As of October, Vietnamese businesses have pumped US$15 billion into 737 overseas projects. The wholesale and retail sectors attracted the highest number of projects at 133, followed by processing and designing (122 projects), agro-forestry-fishery (98 projects) and mining (96 projects).

In terms of investment, Laos remained the most attractive destination for Vietnamese businesses, with 222 projects as of September. Cambodia ranked second with 127 projects, following by the US, Singapore and the Republic of Korea.

Foreign investors more cautious about Vietnam

Indirect foreign investors have been more hesitant to invest in Vietnam since the beginning of this year, experts said.

“Investment flow to Vietnam seems to be going down,” said To Hai, General Director of Viet Capital Securities Company.

He admitted that most foreign investors have been unsuccessful in their Vietnamese ventures.

According to Nguyen Son, head of the State Securities Commission (SSC) of Vietnam’s Market Development Department, real estate projects, mineral industry and banks are currently in desperate need of large amounts of capital.

Vietnam is facing difficulties in finding foreign capital for investment projects due to inefficient operations. This may be the case through the end of 2013, he added.

He emphasised the necessity to regain the flow of foreign investment, which could foster Vietnam’s economic growth.

Part of the reason is also the global economic downturn, but domestic obstacles also play a major role, he said. One of the major examples is the large percentage of bad debt in the banking system.

“Bad debts must be blamed for hindering the rebounding in the financial market and capital flow,” said Citibank Vietnam General Detector Brett Krause.

Brett assessed that Vietnamese people still lack confidence in the banking sector.

“Even though Vietnam’s banks are triple against Thailand and double against the Philippines, only one fourth of the country’s population has a bank account. This has led to difficulties for those who are responsible for supervising the implementation of monetary policies. The development of competent banks may foster people’s confidence,” he shared.

Meanwhile, Sanjay Kalra, senior resident representative of the International Monetary Fund (IMF) in Vietnam, said it is unacceptable that a bank files bankruptcy because of bad debts. In order to improve the situation, it’s essential to change people’s way of thinking.

He suggested that bad debts should be put in the context of the national economy. In some cases, bad debts must be conveyed to an asset management company but banks must be brave enough to declare their failure.

Regulations on monetary management must be intensified and more strictly implemented. Banks need to follow international norms when making their financial reports as well, he added.

Many other experts proposed increasing foreign ownership in domestic banks.

Inadequacies in the legal system have been another barrier to foreign investment in Vietnam, including cumbersome procedures, the lack of transparency, and a lack of international arbitrary systems.

“Even though Vietnam has renovated its legal system, the legal understanding and implementation at local level is still limited, causing difficulties for foreign investors,” said Seck Yee Chung from Baker & Mckenzie Law Company.

Many enterprises claimed that they are in desperate need of capital to maintain their operations. Nguyen Son responded that derivative securities products, such as Exchange-traded fund or ETF, global depositary receipt or GDR, and pension fund are taking shape in Vietnam.

The SSC said it would have full new accounting and auditing criteria that would be on par with international norms by the end of 2013. This, he said, would lead to a basis for international financial reports, the current fallibility of which are hindering Vietnamese enterprises from getting access to international capital.

Hanoi builds safe vegetable production chain

The People’s Committee of Hanoi has recently passed a $2 million project to build a safe vegetable production chain in Dan Phuong urban district.

 Hanoi builds safe vegetable production chain

The project targets to improve technical infrastructure and modernize technology in production, storage, consumption of vegetables.

It also aims to exploit potentials and advantages of the natural resources and raises the roles and responsibilities of domestic enterprises in safe vegetable production.

In addition, the project hopes to generate jobs and increase incomes for local residents.

The project is expected to produce around 6,000 tonnes of vegetables and fruits per year including 200 tonnes of vegetables, 3,600 tonnes of fruits and roots, and 1,200 tonnes of leaf vegetables.

Production sites will be built in the communes of Phuong Dinh, Dong Thap and Song Phuong with a total area of 760,300 square metres.

Vietnam telecoms to invest in new major undersea Internet cable  

Vietnam’s government has granted permission to domestic Internet providers to invest in a Southeast and East Asia undersea Internet cable, with the aim of improving the country’s Internet speed, news website thesaigontimes.vn reported Thursday.

The military-run telecom company Viettel, FPT telecom company and Hanoi-based CMC Telecom Infrastructure Joint Stock Co., were allowed to invest approximately $40 million into the 10,000-km Asia Pacific Gateway (APG) submarine cable network.

More than half of the investment will come from Viettel.

The $450-million cable will run directly from Malaysia to South Korea and Japan, with links branching off to other countries and territories, including Singapore, Thailand, Vietnam, Hong Kong, Taiwan and China.

In Vietnam, it will land at the central province of Danang.

The network is designed to withstand earthquakes and typhoons, and is expected to become operational in the third quarter of 2014 with a carrying capacity of 15.3 terabits per second, said Nguyen Van Khoa, CEO of FPT telecom company.

He also said the cable will be one of the ways to help his company, set to contribute $10 million, secure and stabilize its network service.

Le Dang Dung, deputy CEO of Viettel, said when investing in an Internet cable, Internet providers can save large sums since they will no longer be forced to lease cables from other providers.

According to a BBC report on July 5, Facebook said it would help fund the project in order to support is growth in South Asia.

Both Viettel and FPT have been investing and using the Asia America Gateway AAG Internet cable, which connects Asian countries and the US and has been operating for roughly four years.

Vietnam, France discuss financial crisis issues

Party officials from Vietnam and France have discussed issues related to the global financial crisis.

The Vietnamese delegation was led by Politburo Member Ta Ngoc Tan, who is Director of the Ho Chi Minh National Academy of Politics and Public Administration (HCMA).

Participants in a seminar in Paris on November 1-2 exchanged views on the failure of Neoliberalism in capitalist countries and other factors behind the global financial crisis.

They analyzed the negative impact of the crisis on the world economy, the existing international political system, social welfare, and people’s living conditions.

HCMA Director Tan Ngoc Tan stressed the need to grasp the latest development trend in the world so that each country can make its own policies and strategies.

Vietnam and France are facing the risk of global economic downturn that may pose new challenges to the movements to ensure equality and social welfare, as well as efforts to protect the legitimate rights of workers.

Prof. Dr. Vu Van Hien, former Director General of Radio the Voice of Vietnam (VOV) and Deputy Chairman of the Party Central Committee’s Theoretical Council, highlighted the significance of the seminar, saying it provided a good opportunity for Vietnam and France to share experience in national development in the face of the global financial crisis.

During the crisis, many problems have emerged, requiring capitalist countries to adapt themselves to the world’s common development trend, he added.

The French delegation informed Vietnamese guests of the current situation in France and measures to boost bilateral cooperation.

They said the successful organization of the seminar is another proof of the two countries’ fruitful cooperation in various fields.

On this occasion, the Vietnamese delegation visited Bordeaux city and worked with the local Communist Party Committee.

Vietnam, Israel step up trade cooperation

The Vietnam-Israel online business meeting opened in two venues in Hanoi and Te l Aviv on November 5.

The event, co-organised by the Ministry of Industry and Trade (MOIT) and the Federation of Israeli Chambers of Commerce, attracted more than 40 businesses operating in various fields such as textile and garments, footwear, fisheries, food, agricultural products and food processing, logistics, healthcare and machinery.

Addressing the event, Ly Quoc Hung, head of the Africa MOIT’s Department for the Africa-West Asia, South Asia Markets said the meeting provides businesses of the two countries with a chance to get closer and grasp a better understanding on each other’s markets and demands, which would strengthen their linkage and cooperation, and contribute to boosting bilateral trade ties.

During the video conference, Hung said both sides are eager to create favourable conditions to foster trade cooperation between the two countries.

Two-way trade between Vietnam and Israel has grown rapidly in the past years, reaching US$375.4 million in 2011 and hit US$320.8 million in the first 9 months of 2012 alone. Of the 2012 figure, Vietnam earned US$217.7 million in export revenues to Israel, twofold higher than that of the same period last year.

Vietnam mainly shipped to Israel seafood, cashew-nut, coffee, footwear, garments, rice and pepper, while importing key products including fertilisers, pesticides, high-tech machinery and equipment, chemicals and medicines.

According to Hung, there is room for Vietnam and Israel to further cooperate, especially in food preservation, agricultural technology, telecommunications, healthcare, waste treatment and diamond manipulation.

Such meetings will help both sides strengthen their cooperation, and should be held more frequently in the future, he added.

(Vietnam Net)

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