Ministry finds importers of sugar quota for this year
The Ministry of Industry and Trade has found importers of 85,000 tons of sugar that Vietnam has to import as committed to the World Trade Organization (WTO) via a tender.
The tender on Wednesday attracted 22 bidders, including eight companies which process crude sugar into refined products, and 14 firms that use refined sugar for production, the Vietnam Sugar and Sugarcane Association (VSSA) said.
Three of eight firms won the tender for importing 40,000 tons of crude sugar. They are Bien Hoa Sugar Joint Stock Company with 14,444 tons, Thanh Thanh Cong Tay Ninh Joint Stock Company with 14,000 tons and Khanh Hoa Sugar Company with 11,110 tons.
For 45,000 tons of refined sugar import, eight of 14 firms were picked at the tender, with Vietnam Dairy Products JSC (Vinamilk) winning the biggest deal to import 16,000 tons of sugar.
Nguyen Hai, general secretary of VSSA, said this was the first time the ministry had held a tender to select importers of sugar. The association has repeatedly called for it to do so.
The tender was fair for all companies which consume and process sugar in Vietnam to vie for an opportunity to import sugar, Hai said, adding that the ministry is expected to announce the import prices soon.
“VSSA has the information on the bids at the tender but has no authority to publicize it,” he said.
Rice falls after Vietnam secures Philippines contract
Prices of rice and paddy (unhusked rice) on the domestic market have skidded against late last month though Vietnam won a government-to-government contract to provide the Philippines with 150,000 tons of 25% broken rice at a tender on August 31.
Rice and low-grade paddy IR 50404 have dipped by VND200 per kilo against late August to VND6,000-6,100 per kilo and VND4,200-4,300 per kilo, respectively.
Nguyen Thanh Phong, director of Tien Giang-based Van Loi Company, said the volume of rice which Vietnam will sell to the Philippines is much lower than expected, and that exporters have stocked up on large volumes of rice.
“The rice volume which companies can sell at the moment is far higher than that Vietnam will deliver to the Philippines in September and October. Therefore, the falls in paddy and rice prices are inevitable,” he said.
Ngo Ngoc Yen, director of Yen Ngoc rice firm in HCMC, shared Phong’s view, saying that it seems that supply has outpaced demand.
She said high inventories, weak demand, and the additional volume of paddy harvested early from the autumn-winter crop have led rice prices to drop.
Pham Thanh Tho, deputy director of food business at Loc Troi Group, said banks have limited loans for rice companies and demand is lower than projected, causing prices of the commodity to slide.
Moreover, China, which accounts for 35% of Vietnam’s total rice exports, has suspended purchases of long-grain rice from Vietnam, according to local rice exporters. Indonesia, one of Vietnam’s major rice importers in previous years, does not have immediate plans to import the staple food.
The Vietnam Food Association (VFA) has not released updated data about rice exports.
International figures showed Vietnam shipped abroad over three million tons of rice in the year to August 23, down 22% year-on-year, making the country the world’s third biggest rice exporter in the period after India with 6.49 million tons and Thailand with 6.1 million tons.
Credit grows over 9% in Jan-Aug
Credit had expanded by 9.09% as of August 23 compared to end-2015, but settling bad debt remains an uphill battle for lenders, according to a State Bank of Vietnam (SBV) report on banking operations in January-August.
Loan growth in the first eight months of the year was higher than in the same period last year, buoyed by increased lending to the manufacturing and priority sectors to fuel economic growth.
The agricultural and rural development sector had seen outstanding loans from lenders, excluding the Vietnam Bank for Social Policies and Vietnam Development Bank, amounting to VND900 trillion (US$40.3 billion) by the end of August. The sum is 6.64% higher than in end-2015 and represents 18% of the total.
Lending to the real estate and high-risk sectors was monitored but this did not affect bank loans for social housing projects.
According to the SBV, interest rates remained stable. Since the end of April, banks majority owned by the State have cut short-term rates by 0.5 percentage point and adjust medium- and long-term rates to a maximum of 10% per annum.
At present, annual rates of 6-9% are applied to short-term credit and 9-11% to medium- and long-term one.
The bad debt ratio had stood at 2.58% as of June 30, shrinking from 2.78% a month earlier. The central bank report does not provide updates about bad debt by end-August.
Vietnam Asset Management Company (VAMC) and credit institutions have encountered a slew of challenges in the process of dealing with bad debt over the past time. Regulations on the handling of mortgaged assets are inadequate, making it hard to settle bad debt. Legal proceedings against bad debtors are time-consuming, another challenge for settlement of bad debt.
The central bank said in the report that it has petitioned the Prime Minister to order relevant ministries and agencies to remove difficulties to VAMC but it will take time to review and adjust legal documents.
Besides, mortgaged assets registered by debtors are mainly properties but the real estate market has yet to fully recover, which negatively affects the bad debt handling process.
As for losses caused by April’s mass fish deaths in the central coastal provinces of Ha Tinh, Quang Binh, Quang Tri and Thua Thien-Hue, branches of the central bank said nearly 8,900 clients who borrowed a total of VND2.18 trillion from banks have been impacted by the serious environmental incident.
There is no criteria for determining losses of fishermen, businesses, restaurants, hotels and travel agencies.
As of mid-August, banks had given VND299.29 billion to 3,738 customers in the localities to help them cope with the aftermath of the severe environmental incident triggered by harmful industrial waste discharged by the Formosa steel complex in Ha Tinh Province.
Some VND103.07 billion of bank loans taken out by 1,255 customers are kept in the same groups. Meanwhile, lenders cut or exempt interest rates for VND923.67-billion loans of 633 customers, and plan to freeze debt totaling VND891 million owed by 44 customers.
Banks offered preferential loans worth a combined VND208.93 billion to support people and businesses to buy 7,302 tons of seafood.
Growing packaging sector appealing to foreign firms
Vietnam’s packaging industry has turned attractive to foreign enterprises owing to its strong growth potential.
More foreign firms have got involved in the packaging sector in recent years, including via acquisition and merger (M&A) deals. They have bought large volumes of shares in or taken over local packaging firms, Nguyen Van Dong, chairman of the Vietnam Printing Association (VPA), said at a press conference on Tuesday on the 16th international exhibition on packaging and printing machines and equipment (VietnamPack & Print 2016).
Dong took TC plastic packaging company as an example, saying the member of Thailand’s SCG Group has acquired an 80% stake worth US$44 million in Tin Thanh Packaging Joint Stock Co (Batico).
Dong quoted foreign companies as saying that packaging demand in Vietnam is huge as the domestic packaging industry is still underdeveloped while production of goods for local consumption and export is forecast to shoot up. Foreign investors predicted that in the next few years Vietnam’s packaging industry will post annual growth of no lower than 10%.
Dong projected M&A activity in the sector would continue in the coming years. He noted some local firms in the sector feared that the country’s stronger international integration could expose them to fierce competition while their technology and corporate governance are far worse than international investors.
However, Dong said a number of domestic packaging enterprises continue to expand their business operations despite mounting competition.
More than 250 local and foreign enterprises will showcase products, new technologies and services on packaging, printing and food processing at a three-in-one exhibition at the Saigon Exhibition and Convention Center (SECC) in HCMC’s District 7 next month.
The four-day international show, which comprises VietnamPack & Print 2016, VietnamPrint & Label 2016 on printing and labeling and VietnamFoodtech 2016 on food processing, will be opened on October 12.
The event will be jointly organized by Vietnam National Trade Fair and Advertising Company (Vinexad), Taiwanese firm Chan Chao International Co Ltd, Hong Kong-based Yorkers Trade & Marketing Service Co Ltd and Paper Communication & Exhibition Services Co, the Vietnam Packaging Association (Vinpas), and VPA.
Local equitisation, divestment fall short of target: MoF
The State has received VNĐ5.8 trillion (US$256.5 million) from the divestment of State capital in local enterprises in the first eight months of this year, it was announced by the Department of Corporate Finance under the Ministry of Finance (MoF).
The department concluded that the equitisation process of State-owned enterprises and their divestment in non-core business had failed to meet expectations.
The department said the divestment was part of equitisation plans of 48 State-owned enterprises (SOEs) with their equitisation plans approved this year.
It added that the value of these enterprises was some VNĐ32 trillion, of which VNĐ23.2 trillion belonged to the State. Following equitisation, the firms are expected to have charter capital of over VNĐ23 trillion, including VNĐ11 trillion of State capital.
According to the MoF, the equitisation of SOEs and their withdrawal from non-core businesses have fallen short of the target for this year because most of the target companies are large and operate in multiple industries. Clearly, investors seeking to buy stakes in large companies require a lot of time to study them with due diligence.
MoF said the legal framework for equitising and restructuring SOEs is in place, creating favourable conditions for equitisation. However, the ministry would continue to study and roll out policies to facilitate equitisation and restructuring.
The MoF thought it was necessary in the future to speed up restructuring, increase the quality of management and operational efficiency of SOEs and intensify inspections and supervision of the operation of groups and corporations.
It said SOEs must continue divesting capital from their non-core operations, adding that the State would withdraw more capital from targeted enterprises.
Diligence to avoid losses during the equitisation process is the most important requirement for relevant authorities, it said.
The MoF’s Department of Business Finance said the Government should instruct the State Audit of Việt Nam to ascertain the quality of consultancies hired by State companies to advise them on the equitisation process and check the final valuations. It also called for fining companies that have already equitised but failed to list on the stock market.
The ministry said all ministries, industries, localities, economic groups and corporations should consider equitisation as their most important task.
However, the department believed that the operation of some equitised businesses had improved. Among them, Viettel Group, Việt Nam Textile and Garment Group, State Capital Investment Corporation, and Hà Nội and Northern Food Corporation have pulled out nearly VNĐ3 trillion from non-core businesses.
Philips concentrates on medicine technologies in Vietnam
In the framework of Conference on Hospital Management Asia 2016 which took place on September 7 in Ho Chi Minh City, Philips Corporation announced its new business strategies focusing on health technology in Vietnam, aiming to improve people’s health condition and living quality.
Accordingly, the corporation will provide diagnosis methodologies and precise treatment as well as promise to supply new technologies in medicine field to satisfy all healthcare demands of Vietnamese people.
General manager of Philips in the Southeast Asian region Johan Vooren stressed that Vietnam is one of the nations with large number of senior people, accounting 9.5 million old people.
It is estimate that by 2050, the number of people aged 60 will three fold to 32 million people , accounting for 30 percent of the whole country’s population.
Accordingly, medical system is under great pressure with the ratio of doctors and residents being 1.19 doctors to 1,000 people. Escalating cases of non-communicative diseases also contributes to more burden for the health system. These diseases are leading causes of deaths in Vietnam with the mortality rate of 23.9 percent.
$139 million in preferential loans for businesses
Four commercial banks namely Sacombank, Vietinbank, Vietcombank and Agribank yesterday signed an agreement to provide 34 businesses in District 1 with VND3,109 billion (US$139 million) in preferential loans to overcome difficulties and develop production in Ho Chi Minh City.
The signing ceremony was a part of the city’s 2016 program to connect banks and businesses, organized by the District 1 People’s Committee, the State Bank of Vietnam in HCMC, the Department of Industry and Trade.
Last year, the district hosted two such ceremonies to give 57 firms low interest loans with the total capital of VND15,776 billion (US$704 million).
Phan Thiet fish sauce struggles to survive
Phan Thiet fish sauce, a favorite brand name of Vietnamese consumers and a particular product of the central province of Binh Thuan, has recently struggled to survive because of material shortage and stiff competition from giants in the industry.
Phan Thiet city in the province is home to over 100 establishments using traditional method and providing millions of liters of fish sauce in the market annually.
However, they had never faced with such a shortage of material as they have this year. Although anchovy season has started, the establishments have still run around to buy material. Supply meets only 20 percent of demand now.
According to the association, its members processed an average of 15,000 tons of anchovy in 2012. The number however reduced to only 10,000 tons in 2015. At present many of them have no kilogram of the fish to make the sauce.
The material shortage has highly increased anchovy price.
The owner of Muoi Tiep production establishment in Ham Tien ward, Phan Thiet said that an anchovy kilogram was priced VND5,500 last year but surged to the unprofitable level of VND9,000 now.
Moreover, fish sauce makers have met with competition from fish meal processing plants which have also struggled to buy materials.
Chairman of the Phan Thiet Fish Sauce Association Truong Quang Hien said that fish meal plants waited for fishing boats right at ports to purchase all right after they docked.
Traditional fish sauce makers have experienced severe influence from giants in the industry whose products are bottled conveniently for consumers with eye-catching designs.
The association has 44 members but only 6-7 of them have been able to market their products while most of the remaining are in service of large firms.
Mr. Hien said that propaganda should be stepped up to prevent fishermen from catching in the way of eradicating seafood resource including anchovy.
Binh Thuan province should reconsider licensing and management of fish meal plants and specify which types of seafood they can buy.
Members of the association are small and short of connectivity. Hence, he proposed them to link up together to have the same voice and give mutual aid to improve their competitiveness and develop sustainably.
The province People’s Committee should have policies to assist traditional producers to advertise their products domestically and abroad. The establishments should improve their products’ quality to meet standards and register the geographic indication of Phan Thiet fish sauce.
7M shrimp exports to US up 16.3%
Shrimp exports to the US in the first seven months of this year totaled $364.8 million, a 16.3 per cent increase year-on-year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
Exports have risen steadily all year except for a minor fall in June, of 1.57 per cent year-on-year.
In February shrimp exports recorded the highest increase in quantity, of 52.3 per cent compared with February 2015. July saw the highest increase in value, rising 29.4 per cent year-on-year to $65.9 million.
Growth in the US’s shrimp imports from Vietnam continues to be high as those from India, Indonesia, Ecuador, and Thailand become more expensive as the countries face difficulties with input materials. US retailers are accelerating promotion campaigns to increase shrimp consumption.
In the first six months of the year Vietnam was the fourth-largest shrimp exporter to the US, accounting for 12.2 per cent of the total. Vietnam was the only exporter to see quantity and value increase, at 9 per cent and 1 per cent, respectively.
VASEP said that demand for shrimp at restaurants is increasing and will continue to do so towards the end of the year.
On March 10 the International Trade Administration (ITA) announced that the US had set higher anti-dumping duties on Vietnamese warm-water shrimp exports from February 1, 2014 to January 31, 2015. This tenth tariff was 1.78 per cent, or four times higher than the ninth tariff.
Vietnam’s shrimp exports are expected to be over $3 billion this year, up 1.4 per cent compared to 2015, which is positive given the fierce competition. World shrimp production is forecast to fall 10 to 15 per cent, providing even more opportunities to the country’s shrimp exporters. Its four largest shrimp markets, the US, Japan, China and South Korea, are all on the rise.
Vietnam and the US reached a bilateral solution in July to resolve the anti-dumping issue. The free trade agreement (FTA) between Vietnam and South Korea has also had a positive impact on shrimp exports. South Korea committed to importing 10,000 tonnes of shrimp in the first five years after the FTA comes into effect (December 2015). In the next five years it will import 15,000 tonnes at a 0 per cent tariff rate.
VASEP added that most Vietnamese seafood products are seeing good growth. In the first eight months the US, Japan, China and South Korea will also be the largest markets for Vietnamese seafood, accounting for 53.2 per cent of export value. Value has seen sharp increases in China (53.9 per cent) and also increased in the US (11.9 per cent), Thailand (9.9 per cent) and the Netherlands (8.4 per cent).
Ford Vietnam celebrates best-ever August sales
On September 8, Ford Vietnam announced its best-ever August performance with retail sales rising 57 per cent year-on-year to 2,123 vehicles, driven by strong demand across its whole line-up.
EcoSport, Ranger, and Transit led the sales this month, with each leading their respective segments for the month and the full year-to-date alike. Ford remains one of the fastest growing auto brands in Vietnam with year-to-date sales increasing to 18,443 vehicles.
“Consumer confidence remained healthy in August, despite it being the so-called Ghost Month, and demand continued to be strong for Transit, Ranger,and EcoSport, which helped drive our best-ever sales for the month,” said Pham Van Dung, managing director of Ford Vietnam.
The versatile Transit commercial van has been ruling its segment since October 2012, with the August retail sales rising 14 per cent year-on-year, to 586 vehicles. Year-to-date sales have increased 40 per cent to 4,704 units, as business owners and operators across a range of industries continue to appreciate the durability, versatility, and value this high-quality commercial vehicle delivers.
The wide appeal of the EcoSport compact SUV continued in August with retail sales growing 16 per cent since last year to 364 vehicles. Year-to-date, EcoSport sales have risen 30 per cent to 3,106 vehicles, maintaining segment leadership for the month and the full year alike.
The Ranger pickup which continues to account for roughly half of all pickup trucks sold in Vietnam this year soared in August, producing a rise of 172 per cent in retail sales, reaching 1,016 vehicles. Ranger’s year-to-date sales have now increased by 120 per cent, to 9,140 vehicles.
“The Ranger continues to set the benchmark for a versatile and reliable pick-up that suits the needs of such a wide range of Vietnamese customers, whether for work, entertainment, or oftentimes both,” Dung said.
Strong trademark is key to VN success in the UK
A conference on UK-Việt Nam business relations in Ha Noi on September 9 was told that a strong trademark that meets certified international health and environmental standards would bring more Vietnamese commodities to the UK market.
The Trade Promotion Agency – under the Ministry of Industry and Trade – held the event to update the local business community on the National Trademark Programme and support them in building their own trademarks.
Do Kim Lang, director of the agency, reminded the attendants that the UK remains a leading financial hub, the fifth largest economy in the world and the second in Europe. The UK is also one of the largest export markets in the EU.
“As Viet Nam integrates extensively into the world economy and enhances its political and economic position in the global arena, building a strong and prestigious trademark is important to affirm the quality and competitiveness of Vietnamese products and services,” he said.
However, he also acknowledged the fact that Viet Nam has yet to build competitive trademarks, due to poor designs and non-standardised quality of its products. Along with efforts to assist enterprises, the agency, which also acts as the Secretariat of the National Trademark Programme, has called for the engagement of businesses in the programme’s activities as well as the involvement of ministries and sectors in tackling existing problems, he added.
Meanwhile, Nguyen Thị Hong Thuy, from the Commercial Office of the Vietnamese Embassy in the UK, said that the majority of UK firms focus on areas of advanced technology, health care, pharmaceuticals, machinery and equipment rather than basic consumer goods production. Therefore, the UK has a high demand for agro-forestry and fishery products, garments, footwear and handicrafts, which are amongst Viet Nam’s strengths, Thuy said.
The opportunity has not yet been tapped by Vietnamese enterprises, largely due to their poor trademark promotion, she added.
Saby Mishra, CEO of J. Water Thompson Viet Nam , asserted that although the UK has been an open market, products imported to the country are strictly controlled by the world’s highest technical and food safety standards.
He advised Vietnamese firms to pay due attention to ensuring quality, health and environmental standards in their trademark in order to get a foothold in the UK market. Experts at the event also highlighted the need for businesses to create a difference in their products to satisfy customers’ demand, which also enables them to protect and promote their trademarks.
Expedite power plants: Deputy PM
Deputy Prime Minister Trinh Dinh Dung has ordered agencies to quickly complete the thermal power plants being built in the Mekong Delta to meet increasing power demand in the southern region.
“Relevant ministries and local authorities should start operation of the thermal power plants in the Mekong Delta, including Duyen Hai, Long Phu, Song Hau, Tan Phuoc, Long An, Bac Lieu and Vinh Tan, as soon as possible to cope with the serious shortage of electricity in the southern provinces,” he said during a working visit to the Duyên Hai Thermal Centre in the Delta province of Tra Vinh on Thursday.
According to the Viet Nam Electricity Group’s (EVN) projections, the southern region faces an electricity shortage of 10-15 per cent.
“In 2017 EVN will have to generate 5 billion kWh of electricity using diesel in the southern region, and 8.5 billion kWh in 2018-2019,” EVN chairman Duong Quang Thanh said.
But with diesel power being twice as expensive as coal-generated power, the Government has had to compensate EVN for the losses.
Deputy Minister of Industry and Trade Cao Quoc Hung said: “The southern region will receive electricity from the northern and central regions, 15 billion kWh in 2017 to 21 billion kWh in 2019.”
However, since the total capacity of the transmission grid is only 18.5 billion kWh, the Vung Ang – Doc Soi – Pleiku 500kv grid needs to be built.
Deputy PM Dung said that developing thermal power was the most effective measure to ensure energy supply for provinces in the Mekong Delta.
To do this, Dung said it was necessary to push up construction of thermal plans in the Cuu Long (Mekong) to ensure that they operate on schedule and in ways that reduce use of oil at minimal level.
“Relevant ministries and local authorities must review hydropower generation to increase efficiency and protect the environment,” Dung said.
He also instructed the ministries to fix the problems related to energy recycling and renewable energy projects, and agreed to import electricity from countries in the Mekong sub-region.
He instructed the Viet Nam National Coal Mineral Industries Group to carefully conduct an environmental impact study and safety plan for its proposed coal port to feed the Duyen Hai thermal plant.
“The consultancy company must work closely with local authorities. Experienced international consultants should be hired,” he said.
In the meeting with Tra Vinh Province’s leaders, the deputy PM said Tra Vinh would likely be a major important center for developing thermal power not only for the Mekong region but for the entire country.
Tra Vinh has special advantages to develop thermal power plants, so the province must be given priorities to develop the projects of this kind, according to Dung.
“For Tra Vinh, developing thermal power would not only help the province improve revenue for its provincial budget, but also ensure energy for the Mekong Delta and the southern region. In addition, the energy plants would also create employment for thousands of people in Trà Vinh and neighbouring provinces,” Dung said.
VN, US foresee cooperation
Viet Nam and the United States look forward to significant opportunities for economic co-operation, especially in trade and investment, Minister of Planning and Investment Nguyen Chi Dung said this week.
He made the announcement during an investment promotion conference in Washington D.C., the United States capital, beginning Tuesday.
The conference attendees learned that the near future would be especially opportune for bilateral investment co-operation.
US companies alone currently have 820 projects in Viet Nam, with a total investment capital of about US$11 billion, and the United States ranks eighth among 115 countries and territories investing in Viet Nam.
Dung told participants, including US authorities, policy scholars and entrepreneurs, besides representatives of ASEAN nations, that Viet Nam was taking drastic measures toward faster and more sustained development.
Considering enterprise the driving force for future development, Viet Nam is building a stimulative and creative government, which is shifting toward serving businesses instead of managing them.
The country is determined to speed up economic restructuring, renew growth models and enhance the productivity, efficiency and competitiveness of the economy.
It is also striving to complete legal frameworks and boost transparency for investors-so they feel secure about long-term operations-and create more advantageous conditions for them to take part in global value chains.
Dung said the Vietnamese economy was opening more.
The country has signed 12 new-generation free trade agreements (FTAs), and it is expected to enter more FTAs in the future.
Viet Nam has entered the ASEAN Economic Community, and this will provide investors with access to the 600 million-people regional market.
Viet Nam and the United States are also members of Trans-Pacific Partnership (TPP), the biggest trade deal ever that is in the finalising process.
“The partnership is expected to facilitate collaboration between the two countries, promoting their advantages and boosting bilateral relations to a new high that is more profound, substantial and efficient,” Dung said.
“Although the TPP approval process is facing certain obstacles, Viet Nam is resolutely pursuing innovation, integration and development to attract US investors,” he said talking to about 150 representatives of the US business community.
Among the representatives were officials from Coca-Cola, Caterpillar and Mastercard, alongside ExxonMobil, United Technologies Corporation and the American Chamber of Commerce.
Before the conference, Dung has worked with US trade representative Michael Froman, who said that the government of President Barack Obama would continue to urge the US Congress to ratify the TPP in the future.
US-ASEAN Business Council Vice President Marc Mealy told the Voice of Viet Nam that co-operation prospects between Việt Nam and the United States were positive.
Mealy said ASEAN had become more attractive to US companies due to dulling investment outlooks in other parts of the world and Viet Nam’s ongoing foreward-looking reforms.
Dung told reporters that Viet Nam had three major directions to lure investments, especially from the United States: accelerating equitisation of State-owned enterprises (SOEs) and merger and acquisition activities, encouraging start-ups and small- and medium-sized enterprises to develop, and fostering public-private partnership.
During working sessions with World Bank (WB) officials in his visit, Dung said Viet Nam would continue to rationalise public investments, the banking system and SOEs.
In a context that Viet Nam would no longer receive concession loans from the WB’s International Development Association in a near future, as the country had reached a lower middle-income status, Dung recommended that the WB assist Viet Nam in building strategies to attract foreign direct investment.
He also proposed that the WB help Viet Nam build master plans for development and support the country in technology transfer.
Alex van Trotsenburg, Vice President of Development Finance at the WB, said the WB was committed to close collaboration with the Vietnamese government and relevant agencies to extend support in Viet Nam.
Allied Telesis to invest in Saigon Silicon City
It has been unveiled that Allied Telesis signed an agreement on September 9 committing to jointly provide US$50 million of foreign direct investment in Saigon Silicon City.
Purportedly, Allied Telesis is a consortium of high-technology infrastructure in the world, has a long history of experience in research, development, networking and telecommunications solutions.
Details of the agreement are sketchy at best, but presumably the US$50 million is pursuant to a joint venture agreement between Allied Telesis and Silicon Park Joint Stock Company.
In making the announcement, it is also not clear whether Allied Telesis is a US company or in reality is a Japanese Holding Company that has some affiliation with a US company and to what extent the agreement is binding, if at all.
Vietnam announces new tax rule for Uber
Vietnam’s Ministry of Finance has announced a new tax plan for Uber more than a month after withdrawing a controversial rule that required drivers to pay tax on behalf of the ride-hailing company.
In a statement, the finance ministry insisted that Dutch-based Uber B.V close contracts with Vietnamese transportation organizations and individuals in order to run its service in the country.
The involved parties are also required to reach agreements on revenue sharing from the business.
Uber, a smartphone app originally from the U.S. that allows users to hail private cars, was introduced to Vietnam in June 2014.
The app contracts with local car owners to use their own vehicles as private cars for customers, with 20 percent of each ride’s fare going to Uber and the remaining 80 percent going into the driver’s pockets.
According to the finance ministry, Uber is required to pay a total tax of 5 percent, including a 3% value-added tax and a 2% corporate income tax, on revenue generated from rides offered in Vietnam.
Those transportation organizations and drivers who contract with Uber are also required to pay taxes, including a 3% value-added tax and a 1.5% individual income tax.
The finance ministry requested that Uber B.V authorize its Vietnamese unit or another Uber-run entity to declare and pay those taxes on behalf of both the company and its local partners.
In June, the General Department of Taxation under the Ministry of Finance also issued a document specifying the taxpaying rules for Uber and its drivers. The guidance, however, was blasted by experts to be feeble and without benefit to state coffers.
The criticized rule said Uber would only have to declare and pay taxes on the 20 percent share it receives from drivers.
Moreover, as Uber has no representative in Vietnam, the General Department of Taxation has stipulated that the company’s Vietnamese partners claim corporate tax and value-added tax deductions, and pay those taxes, on behalf of Uber.
This means before giving Uber the 20 percent share of revenue, drivers must set aside a sum to pay taxes for the company. Vietnamese partners, however, are still expected to fulfill the tax obligations on their 80 percent share.
The tax plan has been strongly criticized by experts as ineffective and unreasonable.
Uber remains the only mobile app-based transport company in Vietnam to duck business registration and tax obligations, repeatedly remaining reluctant to legalize its operation in the Southeast Asian country.
One of its rivals in Vietnam, Grab, has completed registration and is paying taxes properly.
VNAT lays out plans for tourism growth
The Vietnam National Administration of Tourism (VNAT) has outlined its plans to transform the country’s tourism industry and achieve double digit growth from the North American market.
The strategy was laid out by Ha Van Sieu, deputy director general of VNAT, during a seminar on September 9 in Ho Chi Minh City. In attendance were key personnel of both public and private sector tourism organizations from Vietnam, the US and Canada.
Mr Sieu said the track record for attracting tourism from the North American continent has been dismal in the past, having attracted only 600,000 inbound tourists from the market in 2015.
However, despite the poor showing, he believes there are some things that can be done, which could lead to growth – including developing new tourism products, promoting additional direct flights, more promotional discounts on hotel accommodations and training of human capital to name only a few.
The Caribbean and Cuba, in particular, have been prioritized he stressed, noting that Cuba is strategically positioned to help the country auger and grow its North American tourism base by enabling better air travel arrangements with airlines and facilitating multi-destination marketing in the region.
Regarding investments and partnerships, Mr Sieu told those in attendance that while foreign direct investment would be pursued to build large hotels, there will also be heavy focus on convincing local small Vietnamese companies to invest in the industry.
This, he said, could be achieved by transforming small hotels and private homes to meet the needs of special needs travellers and other groups from North America as well as getting other local smallholders to invest in tourism via restaurants, boutiques, souvenir sales, handicraft shops and the like.
Elaborating on the renewal of human capital, the Deputy Director said tourism and hospitality service development is a key element. The country must better educate the workforce through improved hospitality training especially in the areas of language and interpersonal skills.
Oliver Martin, an expert from the Canadian Tourism Commission in turn suggested that to attract more inbound tourists from North America, travel agencies should shift their emphasis from promoting the larger metropolitan areas to touting the diverse ethnic cultures.
Travel agencies should also veer away from promoting cheap backpacker type travel and street food and focus on catering to the higher income middle class who can afford to travel and stay in the finer hotels and eat at the best restaurants.
These tourists not only spend more money during their travels, they are more likely candidates for repeat visitations, he noted.
Associations eat up subsidies
Vietnam has spent VND14 trillion (USD630 million) on subsidising national associations and unions since the beginning of this year, but much of the spending has proved ineffective said a local expert.
On September 9, National Assembly deputies discussed the draft law on the operations of associations and unions.
Hoang Ngoc Giao, head of Vietnam’s Institute of Policy Research and Law, said that so far this year USD630 million had been spent, double the budget estimates for the Ministry of Education and Training and higher than that for the Ministry of Agriculture and Rural Development.
The total assets of these organisations are worth around VND68 trillion, accounting for 1.7% of the country’s GDP, Giao cited a report from Hanoi National University.
According to Giao, Vietnam has 8,000 associations and unions, and they run on state funding as administrative bodies, adding more pressures to the state budget.
State spending on social organisations like the Women’s Union, Farmers’ Union and Youth Union reached VND1.2 trillion in 2016, double the figure in 2006. Meanwhile, the report also indicated that that expenditure on specific associations like the Red Cross, the Union of Writers and the Vietnam Football Federation haven’t been published since 2010.
Many of the associations and unions operate ineffectively and it is also difficult for the government to manage. There is often operational overlapping, which means easy opportunities to waste the state budget, said National Assembly Deputy Nguyen Sy Cuong.
Cuong clarified that for instance, one official of the Ministry of Industry and Trade who has the right to licence fertiliser also works at the fertiliser producers’ association; or someone who works at both banks and gold association.
Sharing the same opinion with Cuong, Deputy Luu Binh Nhuong, suggested that these organisations should be financially independent to reduce the state budget burden. Only organisations appointed to carry out government projects should receive money.
The draft law on associations and unions was discussed 20 years ago, but it has not yet been issued.
- VIETNAM BUSINESS NEWS JANUARY 27
- VIETNAM BUSINESS NEWS JANUARY 28
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