Four oil refineries due to enter operation by 2030
Vietnam aims to have four oil refineries fully operational by 2030 capable of processing 16-20 million tons of crude oil per annum by 2020.
The Ministry of Planning and Investment made the announcement at a recent meeting, discussing the orientations of the oil refinery industry and projects for coastal socio-economic development along with adaptation to climate change.
The project is expected to incrementally increase the capacity of the Nghi Son Oil Refinery and Petrochemical Complex to 10 million tonnes per year in the 2013-2020 period.
Dung Quat Oil refinery’s capacity will be increased from its current annual 6.56 million tonnes to 10 million tonnes while three Ethanol plants will gradually step up production to 300 million litres per year.
Plans for the 2021-2030 period for the Long Son and Vung Ro oil refineries will further elevate capacity to 10 million tonnes and 8 million tonnes per year respectively, bringing total capacity to 38 million tons per year.
Zero tax levied on two Cambodian import items
The Ministry of Industry and Trade (MoIT) has decided to impose a zero tax rate on rice and dried tobacco leaves imported from Cambodia over 2014-2015.
Under a MoIT circular dated February 24, 2014, the ministry set the annual quotas for imported rice and tobacco leaves, with 3,000 tonnes each.
Companies can register for 0% tax at customs offices from February 24, 2014 to December 31, 2015.
To enjoy the preferential tariff, Vietnamese businesses must present the certificate of origin (C/O) form S issued by the Cambodian Ministry of Commerce or relevant authorized agencies.
Those that import dried tobacco leaves also need an import license issued by the MoIT.
Vietnam Post operates express package trucks
The Vietnam Post Corporation (VN Post) on March 9 launched its north-south express mailer truck service to better meet the rising demand for delivering a large volume of commodities in a safer manner.
VN Post General Director Do Ngoc Binh said the service is a move towards rearranging the postal transport network to operate more efficiently in the future.
The company provides two or three specialised postal vans everyday for the Hanoi-Ho Chi Minh City route (60 hours per trip) and one or two such trucks from Hanoi to Da Nang city (30 hours per trip).
The first express package trucks departed for Da Nang at 7:30 am and HCM City at 10:00 am on the day.
Mining Vietnam 2014 showcases advanced technologies
A wide range of advanced global technologies and modern equipment in the field of mining will be introduced at t he second International Mining and Minerals Recovery Exhibition (Mining Vietnam 2014) scheduled for March 11-13 at the International Centre for Exhibition (ICE) in Hanoi.
Apart from showcasing products, machinery, equipment and technologies, Mining Vietnam 2014 will offer visitors a chance to access advanced global mining technologies to improve their operations, increase the value of their products and enhance their competitiveness while seeking updated information about the market, partners and development trends of the Vietnamese and global mining industries through connection programmes to be held by trade promotion organisations and relevant ministries and sectors of Vietnam and some foreign organisations.
During the exhibition, technical training programmes will be held and visitors can see trial operations of some types of equipment on site; specialized workshops will also be organised to allow participants to share knowledge and experiences about how to ensure safety of underground mining activities, optimize processing, protect the environment and restore natural resources after extraction.
In the coming time, Vietnam is forecast to consume a very large amount of coal for economic development, especially such sectors as electricity, iron, steel and cement, the Ministry of Industry and Trade's Vietnam Economic News reported.
In its plan to develop the coal sector to 2020 with a vision towards 2030, Vietnam set targets for the domestic output of commercial coal to reach 50-55 million tonnes by 2015, 60-65 million tonnes by 2020 and over 75 million tonnes by 2030 (in 2013, the output reached about 40 million tonnes).
Investment in the extraction and processing of other kinds of minerals is forecast to increase. From now to 2020, about US$1 billion, including both domestic and foreign investment, will be invested in the extraction of gold, bronze, nickel and the extraction and processing of serpentine, barite, graphite, fluorite and diatomite, according to the paper.
The extraction and processing of minerals have expanded, raising the demand for modern equipment, machinery and technologies as well as advanced solutions to ensure the sustainable development of the coal industry while at the same time protecting the environment and saving natural resources.
Mining Vietnam 2014 to be organised by the VCCI Exhibition Service Company Limited in association with the UK’s All World Exhibition Alliance is believed to create a specialised forum for mining businesses to update themselves on new technologies which can help them enhance the efficiency of their operations.
Mining Vietnam 2014 has been supported by ministries and sectors such as the Ministry of Industry and Trade, the Ministry of Natural Resources and Environment, the Vietnam Chamber of Commerce and Industry (VCCI), the Vietnam National Coal and Mineral Industries Group (Vinacomin) as well as overseas partners of the organisers.
The first exhibition of this kind, Mining Vietnam 2012, attracted the participation of 126 domestic and foreign businesses. So far, about 80 percent of these companies have confirmed their participation in Mining Vietnam 2014. Exhibitors from foreign countries such as Australia, China, Czech Republic, the Republic of Korea, Germany, Poland and the UK have signed contracts to be present at strategic pavilions of the exhibition to attract visitors.
VietinBank to loan $7.8m to textile firm
The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) will lend Thien An Thinh Textile and Garment Joint Stock Company VND161 billion, or US$7.8 million.
An agreement to this effect was signed in the central province of Thua Thien Hue on March 5.
The loan is to build a fibre plant to meet the export demand and production of garments and textiles under the Vietnam National Textile and Garment Group (Vinatex)'s target.
The construction of plant was kicked off in the Phu Bai Industrial Zone on the same day. It expected to become operational in Q1 2015. Once completed, the plant plans to recruit 150 workers and will provide fibre materials for the local garment and textile industry.
Tra Vinh's Jan-Feb exports reach US$57.5 million
The southern province of Tra Vinh earned nearly US$57.5 million from exports in the first two months of this year, up 81.5 per cent year-on-year.
Of the recorded revenue, footwear products were the major contributors with US$36 million, followed by seafood with over US$11 million, and rice with US$4.4 million.
The province has adopted various measures to promote business and production in order to realise its target of earning US$325 million from exports this year, a year-on-year increase of 7.1 per cent.
In addition, it has focused on cultivating 50,000 hectares of high-quality rice and diversifying varieties for aquaculture, while also boosting trade promotion and providing market information to the local producers and exporters.
German firms explore opportunities in Viet Nam
German businesses are keen to collaborate with Vietnamese partners involved in the production of chemicals and additives.
This observation was revealed at a Germany-Vietnam business forum held by the Germany Chamber of Industry and Trade in HCM City, on Thursday.
Business executives discussed collaboration to expand their firms' production, open representative offices, and expand the market share of German businesses in Vietnam.
The event provides an opportunity for the local companies to establish new joint ventures, access new sources of investment, and gather useful information on the European market.
By the end of 2013, Germany, Vietnam's 22nd largest investor, had invested in more than 200 projects in the country, with a registered capital of over US$1.1 billion.
Equitable distribution of integration gains urged
Viet Nam should ensure more equitable distribution of global integration benefits as it negotiates key international and regional agreements, an Australian trade official said yesterday.
Michael Wilson of Australia's Department of Foreign Affairs and Trade said at a meeting that Viet Nam should also ensure that negotiations happened in tandem with setting up a proper public-investment framework and appropriate mechanisms for market operations.
He said that since Viet Nam joined the World Trade Organisation in 2007, the governments of Australia and Britain had launched a technical assistance programme titled Beyond the World Trade Organisation, to help Viet Nam manage ongoing economic integration and the transition to a market economy.
At the meeting, which summarised the programme's results and lessons learned, Wilson highlighted its achievements. These included policy development and implementation, improved linkage between domestic and international markets and stronger voices for business associations.
Wilson said that as part of efforts to strengthen the market economy in Viet Nam, the programme had also contributed to the formulation and revision of key legislation, including the revised Land Law and Law on Prices.
It also included projects delivering supports to grassroot levels, including farmers and household businesses.
Deputy Minister of Industry and Trade Nguyen Cam Tu said that the opportunities that international integration could bring had led Viet Nam to seek support from donors and partners.
The first phase of the Beyond WTO programme from 2007-08 helped the Government of Viet Nam develop an action plan and develop high level action plans.
The second phase of the programme from 2009 until this month, implemented key activities of the plan.
So far, 48 projects related to different fields such as law making, exporting and supporting farmers, have disbursed US$11.67 million or 90 per cent of about $13 million in approved donor support. This benefited ministries, Government agencies, business associations and also enterprises and farmers.
Deputy Minister Tu said Viet Nam wanted to speed up the improvement of its legal framework, especially areas involved in international integration.
VN forecast to return to fast growth
A healthier banking sector with reduced non-performing loans and increased exports will enable Viet Nam to grow at 5.4 per cent this year, the Institute of Chartered Accountants in England and Wales has said in a report.
The rate will speed up in 2015 and 2016, with growth hitting 5.7 per cent, according to the Economic Insight: South East Asia report released yesterday.
The institute does a quarterly review of Southeast Asian economies with a focus on Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam.
Robust growth would come on the back of the country becoming more open to international investors, which would help attract capital into the economy, it said.
Increases in government spending, partially thanks to the privatisation of state-owned assets, were also expected to support growth rates over the next few years.
Demands on energy would continue to grow with the economic boom and Viet Nam could soon join its neighbours in becoming a net energy importer.
In many ASEAN countries, demand for energy was growing at a faster pace than domestic production and continued economic expansion could well mean these economies becoming increasingly dependent on international energy markets to meet their needs.
This would make countries vulnerable to unexpected price movements which could have an effect on inflation.
However, falling global oil prices between 2014 and 2016 – and the entrance of Iran into the global energy market - should help mitigate inflation in the region.
Douglas McWilliams, ICAEW chief economist and executive chairman of The Centre for Economics and Business Research said: "Economic growth in Viet Nam is set to accelerate as relatively cheap labour, a disciplined labour force and improving conditions for investors continue to attract new capital. As long as this cost advantage remains, the country will benefit from strong growth and investor appeal."
Food inflation was also expected to rise in countries like Malaysia, Indonesia and the Philippines in light of the devastation of agricultural land in the Philippines because of typhoon Haiyan, and the ending of food and fuel subsidies in Indonesia and Malaysia, the report said.
But healthier global harvests had taken some of the strain off the global supply of food, and this should help alleviate some of the food price increases seen in the past two years that had impacted the working and middle classes.
Across the region, ASEAN governments were expected to remain focused on reining in public spending to reduce debt levels and boost investor confidence in the region.
This was the main reason why countries like Malaysia and Indonesia had progressively cut key subsidies to reassure investors of their countries' financial credibility.
But this meant there was a realistic risk of tax increases in the short term.
"Balancing public spending with responsible budgeting is important for ASEAN governments, particularly as US stimulus tapering means local governments are competing for capital against developed markets offering greater returns," Mark Billington, regional director, ICAEW South East Asia, said.
"Though there may be some short-term pain, the long-term advantage is that by redirecting funds to long-term infrastructure and capacity development – for example in Indonesia –countries will be better prepared for long-term growth and prosperity."
Da Nang marks 2014 as Entrepreneurship Year
The central city of Da Nang has decided to observe 2014 as its Entrepreneurship Year.
This is one of the solutions to ease enterprises' difficulties and also a key measure for the city to achieve a GDP growth of 9 to 9.5 per cent this year.
The 2014 Entrepreneurship Year is expected to generate momentum for the city's business and production activities. It will also contribute to making Da Nang a large socio-economic hub in the central region and an important driving force for development in the region and the Central Highlands.
Penny stocks dominate Jan-Feb market rally
Several stocks witnessed huge gains within the first two months of the current year along with market rally and improved liquidity.
According to statistics revealed by Dau Tu Chung Khoan (Securities Investment), among the listed stocks on both the national exchanges, 230 codes increased at a rate of more than 30 per cent.
Out of the 230 codes, 169 hiked by around 30 per cent, 54 others by roughly 50 per cent, and eight even advanced more than 100 per cent, which is much higher than the average market growth rate.
In the first two months of the current year, the VN-Index on the southern bourse increased 16 per cent over the last year's closing value, which is equivalent to more than 73 per cent of the growth rate of the last full year. Meanwhile, the HNX-Index on the Ha Noi Exchange gained 22 per cent.
Notably, penny stocks dominated the market with significant growth.
The shares of the VNECO 8 Electricity Construction Joint Stock Company (VE8) jumped from VND2,700 (US$0.12) to VND6,600 ($0.31), or a rise of 144.4 per cent, which was attributed to the reported profit during the fourth quarter last year, after being put under warning from April to August due to reported losses.
The Ha Tinh Book and Equipment Education Joint Stock Company (HBE) jumped 140 per cent to reach VND10,100 ($0.48) and the Construction&Development Service Company of Quang Nam Post and Telecommunications (QCC), a penny stock, also posed a growth of 138 per cent to reach VND5,000 ($0.23) per share.
The shares of the coal sector also experienced bullish movement after shifting from losses to profits during 2013.
The Coc Sau Coal Joint Stock Company (TC6) advanced 127.78 per cent to reach VND9,000 ($0.42) per share with VND97.17 billion ($4.6 million) profit reported during the fourth quarter last year after recording losses for nine consecutive months.
The real estate stocks remained stable in the first two months this year with many stocks increasing more than 50 per cent, such as the Nam Bay Bay Investment Company (NBB), Ha Do Group (HDG), and Hoa Binh Real Estate Company (HBC).
Blue chips, despite optimistic business results, recorded a milder growth rate, partly due to their already high market prices.
Stock analysts have pointed out that investors still preferred blue chips as they aimed for long-term profits while speculative stocks were often targeted by risk-takers.
Securities firms also warned investors about risks when speculative stocks had remained bullish for several months.
VN industry packs great potential
A population of over 90 million and rapid development of its food processing, beverage, and pharmaceutical industries mean Viet Nam offers huge opportunities for packaging manufacturers all over the world, experts said.
"Packaging, like other industries in Viet Nam, is developing strongly and modernising," Tran Viet Dung, deputy director of the Viet Nam Chamber of Commerce and Industry Exhibition Service, which organised the International Processing, Filling and Packaging Exhibition and Conference (Propak 2014) in HCM City recently, said.
"Many recent foreign direct investment projects are in the fields of food processing, beverages, cosmetics, and medicines, offering much opportunity for the industry."
Quoting a figure from the Viet Nam Plastic Association, he said the domestic plastic packaging industry was growing at an average annual rate of over 25 per cent. HCM City alone had around 10,000 manufacturers
According to industry executives who took part in Propak 2014, Viet Nam is one of the top 10 packaged food markets in all of Asia.
At a conference organised during the exhibition, Vera Fritsche, market and exhibitions manager, packaging machinery, food processing machinery at the German Engineering Federation, said the Vietnamese packaging industry was poised to further develop and listed many reasons for it.
"The country has a fast growing food and beverage industry and is a big exporter of foodstuff," she said.
Demand for processed and packaged food would continue to rise because of the ongoing urbanisation, a young and growing population, increasing incomes, and modern retail structures, she said, adding that increasing demand for hygienically produced food of high quality was another reason.
Tunyarut Junkarn, head of the department of food packaging at Thailand's Kasetsart University agreed with her, saying "there is still room for the Vietnamese packaging industry to grow."
Seeing the potential, nearly 500 companies from 28 nations and territories have come to the exhibition looking for business opportunities.
Fritsche said the Vietnamese packaging industry depends on imported machines and that was the reason why she led a delegation of 25 German companies to the exhibition.
In the first 11 months of last year, Viet Nam spent 45.5 million euros (US$62 million) to import food packaging machines and plastic and rubber producing machines from Germany alone.
Italy has sent 12 companies and Taiwan, 18 companies.
A Japanese executive said his company sold many packaging machines to Vietnamese companies and he found the market had developed greatly since 2007.
An Indian company said last year it sold 220 machines to Vietnamese companies and hoped for more sales this year.
In 2013 sales of alcoholic drinks grew by 14.3 per cent and soft drinks sales by 15 per cent.
The retail and food processing industries have grown at an average of over 10 per cent annually in recent years.
Work begins on $1.3b thermal power plant in Binh Thuan
Construction begins tomorrow on a thermal power plant in the central province of Binh Thuan that is expected to alleviate power shortages in the area.
The US$1.36 billion Vinh Tan 4 thermal power plant, with a capacity of 1,200 MW, was invested in by Electricity of Viet Nam (EVN) and its foreign partners.
The first turbine is expected to operate in 2017 and the second in 2018.
The plant is expected to add 7.2 billion kWh to the national grid every year, according to EVN.
The project is part of the Vinh Tan Power Centre, which includes four thermal power plants with a combined capacity of more than 5,600 MW.
The plant will use a thermal technology that is environmentally friendly, meeting Vietnamese and international standards on emissions.
EVN said it was now speeding up the construction of Vinh Tan Port by the end of this month to facilitate coal transport from the northern province of Quang Ninh to meet coal demand for the operation of the Vinh Tan 4 plant.
This year, EVN has begun operating several power plants, including the first turbine of the Vinh Tan 2 thermal power plant and the second turbine of the Hai Phong 2 power plant.
Last month, it also began construction on the Thai Binh thermal power plant in the northern province of Thai Binh. It has a capacity of 600MW and annual electricity production of 3.6 billion kWh.
Covering an area of 115ha, the $1.27-billion project consists of two turbines. The first turbine is scheduled to begin generating power in 2017, and the second in 2018, according to EVN.
EVN also plans to build Da Nhim this year. The Duyen Hai and Thac Mo hydropower plants will also be expanded.
In the first two months of the year, the country consumed 18.3 billion kWh, a rise of 8.6 per cent compared to the same period last year, according to EVN.
Power consumption is expected to continue to rise this month and in the upcoming dry season.
Inventory index soars on low consumption
The inventory index of the manufacturing and processing industry in February rose 1.8 per cent over last month and 12.7 per cent year-on-year increase, stated the Industry and Trade Ministry.
According to figures released by the ministry, the inventory indices of the pharmaceutical, milk processing, steel, and footwear sectors were at high level of 25 to 104 per cent.
The Index of Industrial Production (IIP) during February saw a 15 per cent increase as compared to the same month last year.
Viet Nam's IIP in the first two months of this year rose 5.4 per cent against the corresponding period last year, while the industrial consumption reduced 2.8 per cent.
The ministry has noted that the high inventory was due to low consumption. For instance, steel consumption in the two-month period was only 300,000 tonnes, reducing 30 per cent over the same period last year. Its inventory was up 40 per cent during the same period.
The ministry emphasized that it has taken steps such as providing support to businesses and farmers to sell their products and resolve difficulties related to production.
In addition, it urged the enterprises to adopt measures to promote sales.
It added that inventory has always been a matter of concern. The government has made it mandatory for the ministries and localities to reduce inventory to the targeted level, while the ministry has promulgated a plan to save businesses and promote exports.
UAE laps up Vietnamese goods in 2013
Viet Nam's exports to the United Arab Emirates (UAE) last year surpassed US$4 billion for the first time, nearly doubling the figure seen one year earlier.
Further, the statistics indicated that exports of cell phones and spare parts to the UAE rose 128 per cent to $3.42 billion, accounting for 83 per cent of Viet Nam's exports to this market and placing them first among export destinations, according to officials at the Ministry of Industry and Trade's Africa, West Asia, South Asia Market Department.
This was followed by electronics and components, earning $210 million, textile and garments ($84 million), footwear ($60 million), pepper ($55.3 million) and seafood ($47 million).
The UAE is now Viet Nam's largest trade partner in West Asia and 17th largest export market in the world.
Two-way trade turnover developed significantly over the past few years, rising from $550 million in 2008 to $2.38 billion in 2012, up 82 per cent compared to 2011. In 2012, Viet Nam's exports to the UAE exceeded $2 billion.
The UAE is not only a promising export market for Vietnamese companies, but also an effective gateway for local firms to penetrate into other countries in the Middle East and Africa, said Vietnamese Trade Counsellor in Dubai Ngo Hai Hoan.
Besides traditional items, Hoan urged Vietnamese businesses to encourage exports to the Middle East of agriculture products such as tea, coffee, and construction materials, as well as fruits and vegetables.
Local livestock sector to up competitiveness
Viet Nam's livestock sector has many issues to resolve to improve competitiveness when the local market opens under international trade agreements in the coming time, according to experts.
Nguyen Thanh Son, director of the Livestock Department under the Ministry of Agriculture and Rural Development, said to successfully integrate into the world economy, the local livestock industry must resolve the issues of poor sustainable development in the number and quality of heads of cattle and poultry products.
In addition, the sector has also lacked cooperation in production and consumption in the market, so economic efficiency is low, he stated.
Meanwhile, Nguyen Dang Vang, chairman of the Viet Nam Livestock Association, noted that the livestock sector must cut production costs. If it does not, it will not be able to compete with imported meat in the coming period because imported meat will benefit from low production costs and low tariffs under future trade agreements, and of course, meat importers will charge low prices, reported thoibaokinhdoanh.vn online newspaper.
Tong Xuan Chinh, deputy director of the Livestock Department, said Viet Nam would sign many trade agreements in the future, including the TPP, AFTA and FTA with Australia, so the sector should make plans to deal with challenges posed by these agreements.
Initially, the sector should open the local market to imported products to avoid risks, Chinh remarked. When people start habitually using frozen meat products instead of fresh meat, the livestock sector should restructure itself to improve its competitiveness.
In the coming period, the sector should focus on processing poultry products. The sector should also stabilise the price of animal feed, produce a greater variety of cattle and poultry and apply advanced technology to production methods to reduce the prices of products.
The Livestock Department plans to encourage enterprises and research institutes to import and develop many varieties of meat for the local market, Chinh added.Experts predict a bright future for local stocks
The Vietnamese stock markets performed well last year and, and with the improving economic fundamentals, the trend is expected to continue this year, experts told a seminar in HCM City last Saturday.
The benchmark VN-Index gained 22 per cent last year, the highest annual increase since 2009, Ong Seng Yeow, research executive director at Maybank Kim Eng told the seminar on foreign capital flows and the Vietnamese stock market.
Last year the Government took many measures to combat inflation and stabilise the economy, impressing foreign investors, he said.
Though the investors pulled out between June and August following news about the US's tapering of its quantitative easing – referring to printing of dollars ostensibly to combat recession — foreign capital flows into the Vietnamese stock markets still went up by 54 per cent last year, he said.
While many emerging economies' currencies fell sharply against the US dollar, which created a perception of instability around emerging markets, Viet Nam's currency remained very stable, he said.
Nam has basically outshone other Asian emerging markets in terms of economic and political stability, and this has attracted a lot of investors to the country, he said.
The Government's economic initiatives to shore up investors'confidence, like increasing the foreign ownership limit in companies, equitisation of State firms, and restructuring of banks, have pushed up the stock markets strongly this year, he said.
Thanks to improving economic fundamentals, foreign investors have increased investments in Viet Nam's stock markets, with ETFs (exchange-traded funds) in Viet Nam surging in the first two months, he said.
"The potential for the Vietnamese stock market is very good at this moment," he said, adding that the VN-Index might reach 590-600 points by the end of this year.
The relatively low price-to-earnings ratios of Vietnamese firms compared with their regional counterparts and persistent profit growth at businesses would continue to attract foreign portfolio investors, he said.
However, the growth is not likely to match that of last year, especially in the first half of this year, he said. The VN-Index has gained around 15 per cent so far. "All of the initiatives like SOE equitisation and banking restructure will take some time. It will not happen overnight but we are optimistic that in the medium- and long-run, the growth trend is unlikely to fall behind what we saw in 2013."
Latex traders seek VAT clarifications
Rubber trading companies have asked the Ministry of Finance to issue clearer guidance regarding payment of the value added tax (VAT) on pre-processed latex.
According to officials at the Viet Rubber Association (VRA), there is a need to clarify regulations stated in Article 10 and Article 5 in Circular 219/2013/TT-BTC dated 31 December 2013 guiding the Law on Value Added Tax and the Amended Law on Value Added Tax, as well as to amend provisions in the Law on Value Added Tax.
Clause 6, Article 10 says the VAT for pre-processed latex is 5 per cent. However, Clause 5, Article 5 states that several non-processed or pre-processed agro-products are not charged the VAT.
One of VRA's arguments, as they seek clarification, is that there are discrepancies in current regulations, such as which party is responsible for paying the VAT if both seller and buyer of pre-processed latex register for tax deduction payments.
Many latex trading companies in HCM City are uncertain about the VAT declaration when they purchase latex from other companies in neighbouring provinces, said Nguyen Hoang Vinh, director of Hoang Dung Trading Co Ltd, as quoted by Thoi Bao Kinh Te Viet Nam (Vietnam Economics Times).
In the first two months of 2014, the departments of tax in the southern provinces of Binh Duong and Binh Phuoc declared that pre-processed latex traded between companies must be charged a VAT with an invoice.
However, according to Tran Thi Le Nga, Deputy Head of HCM City's Department of Tax, as cited by Thoi Bao Kinh Te Viet Nam, pre-processed latex sold by a company that registers for tax deduction payments would not charge the VAT, regardless of whether buyers receive tax deductions. In cases where these products are not subject to the tax, companies would receive refunds or deductions in the next term of tax payments.
Nga also said in such cases the HCM City Department of Tax would send an enquiry to the Ministry of Finance about VAT questions so they might receive guidance in explaining these regulations to businesses.
Additionally, the Viet Nam Rubber Association asked the ministry for more specific definitions of pre-processed latex, to make it easier for businesses to declare the VAT.
Tax solutions play an important role in supporting and helping rubber companies to overcome difficulties. By the end of last year, the Ministry of Finance (MOF) issued a circular reducing export tax rates on both natural and synthetic rubber exports, which went into effect on December 26, 2013. Accordingly, the export tariff on all rubber exports is now fixed at 1 per cent, instead of the previous 3-5 per cent.
The ministry's move followed pressure from the rubber industry, which was experiencing large amounts of unsold stocks during a period of falling selling prices. Last year, the production and export of rubber faced difficulties, resulting in a sharp fall in prices.
In the first two months of this year, Viet Nam's total rubber exports were estimated at 104,000 tonnes, valued at US$215 million, which was down 25.4 per cent in volume and 43.3 per cent in value from the same period last year, according to the Ministry of Agriculture and Rural Development (MARD).
Also, the country's rubber imports in January-February were estimated at 43,000 tonnes with a value of $92 million, down 12.2 percent in volume and 24.6 percent in value from the same period last year. Thus, Viet Nam's rubber sector enjoyed a trade surplus of $123 million in the first two months of this year.
Credit growth remains modest
Despite banks' efforts to lower lending interest rates, credit growth in HCM City remained at a modest 1 per cent in February, according to the State Bank of Viet Nam.
Nguyen Hoang Minh, the director of the city branch of the central bank, said this continues a trend established in recent years with most firms remaining reluctant to borrow in the early part of the year.
Pham Huy Khang, general director of Sacombank, said in the first two months of the year the bank's credit growth increased by only 1 per cent year-on-year while deposits grew by 6 per cent.
He expected the situation to improve in the second quarter when businesses would have production and business plans and require funds.
Tran Ngoc Tam, deputy general director of NamA Bank, admitting that credit growth at his bank was also very low, said the interest rate is not the major issue for most companies since it is now stable and even lower than in 2006-07.
But they are reluctant to borrow from banks because they are still unsure about doing business in the difficult economic situation, he added.
Minh said banks are busy settling bad debts and afraid of new bad debts arising.
But Nguyen Van Binh, governor of the State Bank of Viet Nam, said the central bank branch in the city should instruct banks to soon find ways to step up lending if they want to achieve the year's credit growth target of 12-14 per cent.
"The banking sector needs to take the initiative in making supply meet demand," Binh said at a meeting with local banks late last month.
They should consider further lowering loan interest rates to enable more companies to borrow.
He suggested that the interest rate on short-term loans should be cut to 7-8 per cent and on medium-term loans, to 10 per cent.
The interest rate on loans to be provided to businesses participating in the city's price-stabilisation programme should be slashed to 5 per cent, he said.
Minh listed some of the efforts his office was making to help the banking sector achieve the yearly target.
Khang of Sacombank said his bank would continue to provide active support to customers — both corporate and individual — especially small and medium-sized enterprises, household businesses, and small traders.
Construction work commences on Can Tho highway upgrade
Work to upgrade and expand a section of Highway 91, which shapes part of a transport project linking Cambodia with Viet Nam, got underway in the Mekong Delta city of Can Tho yesterday.
The section, running through the provinces of Kien Giang and An Giang, will be 11metres wide and 28 kilometres long with two vehicle lanes when it is completed in 22 months.
The Build-Operate-Transfer (BOT) project worth nearly VND1.6 trillion (roughly US$75.2 million) was expected to shorten travel distance for goods and passengers between Can Tho, An Giang and Kien Giang, Vice Chairman of the municipal People's Committee Dao Anh Dung said.
Director of the Sonadezi Industrial Zone Development Company Do Thi Thu Hang said as an investor, her company pledged to do its utmost to ensure the progress as well as the quality of the project.
As the largest city in the granary-labelled delta, Can Tho has set a goal of becoming an industrial hub in the region by 2015, with industry accounting for 46.9 percent of its local economy.
The city has trade relationships with over 80 countries and territories from across the world. Besides traditional markets in Japan, the US and the EU, the city has also expanded its export markets to the Middle East, North Africa and Eastern Europe.
Economic indicators show steady growth
Viet Nam's activity indicators continued to show slow but steady improvement in February, with foreign direct investment rising steadily, ANZ said in a report.
The external position remained robust since FDI continued to be the bulwark of the economy.
As of February some 122 projects worth US$830.9 million have been licensed, while 41 existing projects added $708.8 million to their investment.
The country posted a small trade surplus of $244 million. Preliminary figures from customs show a year-on-year increase in exports and imports of 34.3 per cent and 49.2 per cent respectively, reflecting distortions caused by Tet (the Lunar New Year) celebrations in February.
In February alone there was a trade deficit of $1.2b, offsetting the revised trade surplus of $1.44billion in January.
Considering the steady flow of FDI into the manufacturing sector, exports and imports would continue to rise together, benefitting from the improvement in developed economies.
Industrial production (IP) rose by 7.9 per cent in January-February. Manufacturing, which accounts for 70 per cent of the IP index, remained solid.
But despite muted domestic consumption, IP continued to benefit from FDI-related export production.
Vietnam-Germany direct air route anniversary marked
Vietnam Airlines’ office in Germany recently held a ceremony to mark the 10 th anniversary of the Vietnam-Germany direct air route. This is part of the annual Berlin International Tourism Fair – the largest of its kind in the world.
Germany is one of the most important markets of Vietnam Airlines, a member of the SkyTeam airline alliance, said Manager Nguyen Quoc Phuong.
Despite fierce competition last year, the national flag carrier has reaped impressive outcomes in Germany in terms of revenue and the volume of passengers, Phuong said.
The airline has now raised the frequency to eight flights from only three per week 10 years ago.
It expects to further increase the frequency with the use of modern models like B787-9 and A350.
Speaking at the ceremony, Ambassador Nguyen Thi Hoang Anh said the participation by Vietnamese tourism companies in the fair manifests the growth of the industry.
Joining such a major event is one of the best ways to popularise the country and the industry to foreign friends, she said.
International trade fair bound for Dien Bien
The northwestern mountain province of Dien Bien will play host to an international trade fair from March 25-31.
The event is part of a national trade promotion programme and marks the upcoming 60th anniversary of the Dien Bien Phu Victory over French colonialism.
Participating businesses will showcase a variety of agricultural, industrial and hand-made products on nearly 400 stalls.
Dien Bien province alone will introduce visitors to many of its specialties such as Shan Tuyet tea, fragrance rice and coffee.
The fair aims to help businesses boost trade promotion, advertise products and services, and seek partnerships with foreign counterparts from Laos, China, Thailand, and other ASEAN countries.
Mekong Delta shrimp exports aim for US$2.55 billion
Mekong Delta provinces plan to earn US$2.55 billion from shrimp exports, US$50 million higher than last years’ revenue.
Ca Mau province is likely to take the lead in shrimp exports, which are predicted to fetch US$1.1 billion.
To achieve the set target, Mekong Delta provinces are expanding shrimp breeding areas to 596,000ha, mostly in coastal regions of Ca Mau, Bac Lieu, Kien Giang, Soc Trang and Tra Vinh.
They are applying non-chemical breeding techniques to ensure the best quality of aquatic products. Plans are in place to upgrade irrigation networks, focusing on waste treatment and increasing the supply of clean water.
Local farmers in some provinces were provided with new varieties and VND500 billion in preferential loans to develop their shrimp breeding activity.
In 2013, the Mekong Delta region had more than 588,000ha of shrimp breeding area, and produced nearly 380,000 tonnes of shrimp, contributing 92% and 79.8% in terms of area and output, respectively, to the country’s total figures.
Last years’ shrimp export turnover was valued at US$2.5 billion. In the first two months of this year, its export earnings hit over US$430 million.
Virginia increases trade ties with Vietnam
Virginia wants to work closely with Vietnam to further develop their economic, trade, investment and education ties, governor Terry McAuliffe has said.
The governor of the US State of Virginia expressed his wish at a reception for Vietnamese ambassador Nguyen Quoc Cuong, who visited the State recently.
To meet the goal, McAuliffe said both sides need to increase visit exchanges and bring into full play the role of the Vietnamese community in Virginia.
For his part, Cuong welcomed the governor’s proposal and vowed to cooperate closely with Virginia to strengthen economic and trade ties between the two sides.
Both host and guest noted with satisfaction the impressive growth in bilateral trade, reaching nearly US$30 billion in 2013, of which agricultural trade rose more than 60% over the last two years.
Cuong invited McAuliffe and business people of Virginia to visit Vietnam to explore investment opportunities there. His invitation was accepted by the governor with pleasure.
The same day, ambassador Cuong attended and delivered a speech at a Virginia seminar on agricultural trade.
He spoke of the growing process of trade liberalisation in the Asia-Pacific and Southeast Asian regions, and proposed Virginia’s business people support trade liberalisation efforts, especially the Trans-Pacific Partnership (TPP), to make use of new opportunities in bilateral trade ties.
With a population of more than 8 million, Virginia gains annual GDP revenue of US$423 billion, ranking ninth among 50 states in the US.