BUSINESS IN BRIEF 11/5

Ministry rejects fuel price hike proposal

The Ministry of Finance has turned down a fuel retail price hike proposal by fuel wholesalers, saying they should keep the current prices unchanged despite input costs higher than selling prices.

The Price Management Department under the ministry sent the request to the Vietnam National Petroleum Group (Petrolimex) and Dong Thap Petroleum Trading Import Export Company (Petimex).

The department said the 30-day average price of most fuel products had inched up compared to the 30-day average taken into account for gasoline, diesel oil and kerosene price increases on April 22. However, as global prices dropped last week, wholesalers should refrain from proceeding with any price spikes.

In the coming time, the department will coordinate with the Ministry of Industry and Trade to follow new developments on the market for timely intervention.

Petrolimex and Petimex on Monday sent business reports to the ministry, pointing out the differences between retail and base prices. However, the ministry rejected their price hike proposal.

On April 22, local fuel trading enterprises adjusted up the price of A92 gasoline to a record high of VND24,900 a liter while prices of diesel oil and kerosene also moved up.

Meanwhile, as per the base price calculation published on the website of the Vietnam Petroleum Association (Vinpa) on Monday, the 30-day average price (from April 5 to May 5) increased, so the base prices of gasoline, diesel oil and kerosene are now higher than retail prices.

Traders claimed they are losing VND306 for every liter of gasoline sold, followed by diesel oil with VND184 a liter and kerosene with VND144 a liter. However, heavy fuel oil earns them VND30 for every kilo sold.

Meanwhile, enterprises who act as general gasoline agents flourished in the first three months of this year.

Saigon Fuel Joint Stock Company posted a net profit of nearly VND8.2 billion in its first quarter, rocketing nearly 500% against the same period of 2013. The rise of remuneration offered by wholesalers was attributed to the firm’s hefty profit rise.

Materials Petroleum Joint Stock Company also reported an after-tax profit of over VND7.4 billion, a 31.5% year-on-year increase.

Petrolimex has yet to announce the first quarter financial report. However, Tran Ngoc Nam, deputy general director of Petrolimex, told the Daily on May 7 that the company saw a mild loss in the main business scope - oil and gas trading.

Petrolimex as a public company is expected to announce the report in the middle of this month as regulated.

Petrolimex’s announced losses turn out to be profits

Petrolimex saw profits of $40.4 million from its petroleum business in 2013, despite consecutively reporting losses in the sector.

According to the updated 2013 business result sent to shareholders, Vietnam National Petroleum Corporation (Petrolimex) saw a pre-tax profit of VND2.021 trillion ($96.2 million) and after-tax profit of VND1.578 trillion ($75.14 million).

For its domestic petroleum business, the corporation achieved pre-tax profits of nearly VND850 billion ($40.4 million).

Previously, Petrolimex announced it had reached consolidated pre-tax profits of VND2 trillion ($95.2 million) for 2013, of which profits from petroleum amounted to VND768 billion ($36.5 million). Given the most updated report, profits from this sector rose VND80 billion ($3.8 million) against the previous report.

Petrolimex deputy general director Tran Ngoc Nam said the difference in profits is because the first reported figure was only an estimation.

“This first number was quoted from January 12, and therefore we had not yet had enough time to do our final accounting,” he told VNExpress.net.

This high level of profit seen from Petrolimex raises many questions, when looking back to 2013, it consistently lobbied to increase its petroleum price due to losses.

Specifically, it raised the petroleum price four times last year, to an end of year price of VND2.640 per liter.

In 2014, Petrolimex anticipates consolidated revenue of VND200 trillion, of which pre-tax profits are expected to reach VND2 trillion ($95.2 million), down very slightly against last year.

As of December 31, 2013, the total consolidated assets of corporation stayed at VND57.454 trillion ($2.735 billion), up by 4 per cent against 2012.

As of December 31, 2013, the total consolidated assets of the corporation were valued at VND57.454 trillion ($2.74 billion), up 4 per cent against 2012.

Vinafood 2’s loose management at fault for massive losses

As Vietnam’s largest state-owned rice exporter, Southern Food Corporation Limited (Vinafood 2) enjoys numerous incentives from the state while its many member companies are submerged in losses, reported dantri.com.vn.

Vinafood 2 consists of 44 member companies, of which 14 are under its direct management.

By the end of 2013, half of these 14 businesses posted nearly VND1 trillion ($47.6 million) in cumulative losses and irrevocable debts, according to Vinafood 2 reports.

Specifically, Tra Vinh Food Company reported losses of VND134 billion ($6.4 million), An Giang Food and Foodstuff Company VND83 billion ($3.9 million), Bac Lieu Food Company VND42 billion ($2 million), and Tien Giang Food and Agricultural Products Company VND25 billion ($1.2 million).

Poor management is believed to be a major reason behind Vinafood 2 member’s huge outstanding debt in the amount of VND420 billion ($20 million)

Specifically, in late 2012, member Vinh Long Food signed contracts to export 94,000 tonnes of sliced cassava for two other businesses with delivery slated for June 2013. The Thinh Phat Kon Tum Company was responsible for supplying the products.

This deal was questionable, as Vinh Long Food advanced money before receiving the products, got staff members to forge invoices showing receipt of the goods and allowed Thinh Phat Kon Tum staff to sell off products resulting in losses of VND130 billion ($6.2 million).

Other member companies under Vinafood 2 signed contracts to sell rice to Ho Chi Minh City-based Vo Thi Thu Ha Trade – Import Export Company Limited and its two subsidiaries, Tan Hoa Loc and Binh Loi Limited, that are still unpaid for.

As of this time, Vo Thi Thu Ha Limited also owes VND174 billion ($8.3 million) to Vinh Long Food, VND160 billion ($7.6 million) to Hau Giang Food, VND47 billion ($2.2 million) to Dong Thap Food, and VND26 billion ($1.2 million) to Soc Trang Food.

In late April 2014, Vinafood 2 filed a lawsuit against Vo Thi Thu Ha Limited in the People’s Court of Ho Chi Minh City’s Phu Nhuan District, looking to recoup these owed amounts.

Three out of seven of Vinafood 2’s loss-making member firms were put under financial supervision because of these losses.

These firms used short-term bank loans for long-term investments which they are reportedly having trouble paying back.

For instance, Tra Vinh Company, with cumulative losses of VND134 billion ($6.3 million), took out VND82 billion ($3.9 million) in short-term loans for long-term investments.

“This has brought the company’s total debt/equity ratio to VND629 billion ($30 million)/minus VND18.5 billion ($880,000), clearly showing the inability to pay back its debts as well as a fundamental disregard for effective finance amid a difficult time in the market,” said a Vinafood 2 report.

An Giang Food and Foodstuff and Bac Lieu Food face the same issues and Tien Giang and Tra Vinh Foodstuff and Agricultural Products reportedly have plans to suspend their operations.

Despite finding numerous cases of wrongdoing by its subsidiaries, Vinafood 2’s penalties have not been harsh enough. They have been limited to internal chiding, which has allowed the situation to persist.

According to Vinafood 2 former general director Truong Thanh Phong, a combination of factors are behind its subsidiaries repeated losses, most notably a lack of responsibility from their management.

On the Vinafood 2 case, head of the Enterprise Management Department at the Ministry of Agriculture and Rural Development (MARD) Do Van Nam said recently, “The ministry is investigating these consistent losses and we will release an official statement on the case early next week.”

“After making clear Vinafood 2’s receivables, MARD will urge its management to work on plans to speed up its recouping of debts as the company is a state corporation with MARD as the state’s capital representative,” Nam explained.

KPMG appointed to advise Orient Commercial Bank on risk transformation

Ho Chi Minh City-based Orient Commercial Joint Stock Bank has recently appointed KPMG Limited, a leading professional audit, tax, advisory services firm, to advise it on a risk transformation project. This appointment comes as part of Orient Bank’s ongoing efforts to enhance governance and risk management policies and processes.

The project will enable the bank to move towards international best practice and standards of risk management and will also assist the bank in ensuring that it complies with risk management regulations handed down from the State Bank of Vietnam.

The bank (OCB), with support and guidance from its strategic partner BNP Paribas, has already established various risk management policies, processes and procedures.

The bank’s management, however, recognises the need for constant improvement to stay competitive in a market which is becoming increasingly complex and in an economy and regulatory environment which are constantly developing and changing.

After an extensive assessment process, the management of the bank came to the decision that KPMG was the right firm for them to work with on this important project.

Using a team of local and regional resources, KPMG will work with the bank to make enhancements in relation to credit, market and operational risk management as well as to the overall risk management structures and processes in place at the bank.

“The appointment of KPMG shows the pro-activeness and foresight of OCB’s senior management to comply not just with local requirements, but to work towards the best practice risk management standards employed by banks in more developed and complex markets. Through enhancing risk management the bank will improve stakeholder value and, in a more general sense, contribute to the ongoing strengthening of the banking sector in Vietnam,” said head of Advisory at KPMG Limited John Ditty.

Chairman and CEO of KPMG Limited Warrick Cleine, who attended the signing ceremony last week added that KPMG’s depth and breadth of experience in the Vietnamese banking sector was a key reason why KPMG was appointed.

It is expected that the initial engagement will last for a period of between 9 – 12 months.

Developers of workers’ accommodation to get incentives

A proposed new decree will offer incentives to people building housing for workers, Minister of Construction Trinh Dinh Dung has said.

He made the statement while taking a delegation of officials to workers’ dormitories in Ho Chi Minh City on May 7.

The group visited a workers’ dormitory at the Tan Thuan Processing Zone in District 7 built by the South Saigon Development Corporation (Sadeco). Its 520 rooms accommodate around 1,700 workers, and the complex has lots of facilities.

Each worker pays VND300,000 (US$15) per month including electricity and water charges.

Sadeco executives sought more tax breaks.

Dung told them that Decree 188 on development of social housing would offer loans at 5 percent interest, personal income tax exemption, and assistance with design and planning to encourage people to build housing for workers.

But to get these benefits, investors have to build standard accommodation as regulated, he said.

The team also visited two housing blocks in Linh Trung Ward, Thu Duc District, with 27 and 24 rooms rented out to workers.

The minister appreciated the two landlords for providing decent accommodation for a worker at a reasonable VND500,000 rent per month.

He admitted that many workers in industrial parks and export processing zones have to make do with substandard accommodation and lack of facilities.

The landlords told him that if they can get low-interest loans and support from the government, they would enlarge their buildings to provide more rooms to workers.

Nguyen Tuyet Anh, one of them, said local authorities should temporarily register workers’ children so that they can go to school.

Dung said closer coordination is needed between the government and investors to build more housing for workers.

Central bank, district leaders arrange bank credit for businesses

Eight commercial banks signed a contract May 8 with 45 businesses in Binh Thanh District, Ho Chi Minh City, to lend VND1.1 trillion (US$52.2 million) at 6-8 percent.

The deals were struck at a meeting arranged by the State Bank of Vietnam’s city branch and the district People’s Committee to link up lenders and businesses.

The eight banks are Sacombank, Vietcombank, ABBank, BIDV, Agribank, Eximbank, DongA Bank and ACB.

The central bank has organized nine such meetings this year, according to Nguyen Hoang Minh, deputy director of the branch.

These programs have yielded VND6.5 trillion in preferential loans to 270 enterprises, 21 home-based production units, and four cooperatives in nine districts.

Bank lending in the city grew by 1.47 percent in the first four months compared to 0.62 percent for the country as a whole, he added.

Aman Group announces leadership changes

Aman Group, the holding company of the international luxury resort collection Amanresorts, last week announced its visionary founder, Adrian Zecha, had decided to step down from his position as chairman and CEO.

Johan Eliasch, a global business leader with extensive brand-building expertise, has been appointed chairman of the Aman Group and Vladislav Doronin, a world-class developer of high- end residential and commercial properties and a leading investor, has been appointed CEO.

“We are grateful for Adrian Zecha’s outstanding achievements and we are committed to extending his legacy to build on Amanresorts’ foundation as a luxury global resort brand,” said Johan Eliasch. “As someone who is very familiar with the distinctive Aman experience, I am excited to take on this role as chairman.”

The group’s new CEO, Vladislav Doronin said, “The Aman Group’s philosophy is to immerse guests in a unique and personal experience. As lead investor and CEO, I am dedicated to ensuring that the organization has the necessary resources to sustain and enhance its position as an industry pioneer. The future holds great promise for this iconic brand.”

Founded in 1988, Aman Group operates 26 luxury resort properties under the Aman brand in 18 countries. Each of its one-of-a-kind properties features locally-sourced materials, reflecting the resort’s natural surroundings and the traditions of local cultures in Thailand, Bhutan, Cambodia, China, France, Greece, India, Indonesia, Italy, Laos, Montenegro, Morocco, Philippines, Sri Lanka, Turkey, Turks & Caicos Islands, the US and Vietnam.

In Vietnam, Aman Group launched a top-grade Amanoi resort in Ninh Hai district in the south-central province of Ninh Thuan in October 2013.

Launching of phase I world-class workshop system and logistic centre in Haiphong

Third-party logistics provider Damco and Vietnamese warehouse owner Construction and Mechanic JSC (HTM) have opened a new warehouse in northern Vietnam to support key fashion and retail customers whose sourcing patterns are centred there.

The long-term HTM - Damco partnership will lead to the development of Hai Thanh workshop area with more than 20,000 square metres over the next three years.

Hai Thanh workshop area phase I and Damco logistics centre in Duong Kinh district in the northern port city of Haiphong began construction in 2011 with total investment of $25 million.

The project targets foreign investors operating in ancillary industries, and industries that have little effect to environment. Under the plan, in 2015 the Hai Thanh warehouse project will complete its entire infrastructure and it is expected to come on stream from 2016.

The new warehouse will enable Damco to play a dual role as a warehousing and distribution hub as well as a gateway to attract customers who are actively trading to and from South China via this corridor – a key focus for Damco’s future development in northern Vietnam.

Located in Haiphong, the third largest city of Vietnam and northern Vietnam’s most important seaport with its deep-water anchorage and large maritime facilities, the warehouse offers a total combined space of 7,000 square metres.

It reaches high international standards and is well positioned to support increased volumes and offer modern safety, security and fire-fighting systems.

A key focus during construction and operation is the reduction of carbon emissions in accordance with Damco’s environmental policy.

The Haiphong warehouse will provide customers with access to key services such as inventory management, order processing, RF scanning, bar coding, vendor and carrier. It also offers value-added services such as cross-border and inland trucking.

Damco established a branch office in Haiphong a few years ago and the current investment in expanding the company’s warehousing footprint is a clear sign of the positive expectations about the growth of this economic area.

Marco Civardi, Area managing director of Damco Vietnam/Cambodia said, “The inauguration of the Damco Haiphong’s warehouse is an important landmark in Damco’s long history in Vietnam, further consolidating the company’s strategy in this country.”

The aim of Damco is to continue providing supply chain management solutions that match its customers’ increasing volumes, while aiming to outperform market growth in ocean and air products on defined trade-lanes and industry verticals.

“Key for us also will be the growth of our domestic business such as customs clearance and trucking services, together with our planned warehousing footprint expansion. The latter is based on new business opportunities related to our business and contract logistics customers,” Civardi added.

HTM’s president Dao Manh Sen shared “As a port and industrial city with rosy potential for development of port logistics services, Haiphong is the most favourable destination for foreign investors in Vietnam. In that spirit, HTM’s strategy is to become a professional provider of workshop, warehouses and logistics services.”

Damco has invested significantly in state-of-the-art warehouse management systems and processes to raise productivity and increase efficiency, directly benefitting customers’ supply chains.

Customers now get visibility on the status of their products as they pass through the consolidation process in the warehouse, as well as when they are packed into the container and shipped to the port.

Damco is a pioneer in the logistics sector in Vietnam with more than 400 employees and has been operating and investing in the country for more than 20 years.

HTM was established in 2002 with main fields of investment in industrial zones and urban zones infrastructure, seaport logistics and construction. HTM aims to create favourable conditions for local and foreign investors to develop business through providing modern, synchronised and infrastructure and professional customer services.

Quang Ngai revokes IP license

Quang Ngai People’s Committee just decided to return nearly VND1 billion ($47,600) to Tan Tao Group after its license for building the Pho Phong Industrial Park project was revoked.

Tan Tao Group received the investment certificate to develop the park in Duc Pho district, Quang Ngai province, in 2009.

However, the group was not able to start construction until 2012 and even had its investment certificate withdrawn for the delay.

The aforementioned sum to be returned to Tan Tao is for geological research, planning and an environmental appraisal report conducted by the company.

Once the money is returned, Tan Tao will have to return all the original legal documents for the above items and documentation to confirm they accepted the transfer of those items to the Quang Ngai Industrial Park Management Board.

Together with the decision to return VND1 billion to Tan Tao, the Quang Ngai People’s Committee also requested the local Industrial Park Management Board to be in charge of efficiently using the items Tan Tao transfers over.

All these items will be provided to the project’s investor, once a new one is found.

Pho Phong Industrial Park is not the only project invested in by Tan Tao Group in Quang Ngai. The group is also the investor of the Vina Universal Film Studio and the Universal Paradise Trading and Service Complex.

In June 2010, local authorities decided to revoke the license of the film studio project, which was originally registered as a $50 million investment. The $57 million complex started work in 2008 but has seen very slow progress.

The complex will include areas for trade, services, luxury villas and a sports complex.

Tan Tao is among the largest private groups in Vietnam. It operates in a number of fields ranging from property to power generation, water supply and education.

The developer has eight other industrial parks in the works including Tan Duc, Tan Tao, Kien Luong, and Ha Nam. The group is now also working on a giant 4,000 megawatt power project in southern Kien Giang province.

Jasmine rice price surges on high demand

Domestic prices of jasmine rice and paddy have increased strongly owing to higher demand and lower supply, local rice traders said.

Ngo Ngoc Yen, director of HCMC-based Yen Ngoc Company, said that prices of jasmine paddy in the Mekong Delta had been up by VND300-500 per kilogram in the past week.

OM 4900 paddy is now sold at VND5,200-5,300 (24.6-25 U.S. cents) per kilo and jasmine paddy costs VND5,300-5,400 per kilo.

Nguyen Thanh Tho, a rice trader at Ba Dac Market in Tien Giang Province, said that prices of the OM 4900 rice and jasmine rice were around VND9,600-10,500 and VND10,100-10,500 per kilo respectively, increasing by VND400-500 per kilo.

Pham Thai Binh, director of Trung An Co. Ltd in the Mekong Delta City of Can Tho, ascribed the price rises to the limited supply of jasmine rice while demand for this product, particularly of foreign markets in Southeast Asia and Africa, had jumped recently.

Binh predicted prices of jasmine rice and paddy to continue increasing, partly because the coming summer-autumn crop will not produce large output.

The export price of jasmine rice has grown by US$20-30 per ton to US$520-530.

The Vietnam Food Association (VFA) said its member companies had exported some US$689 million worth of around 1.7 million tons of rice at FOB prices as of the end of last month. Last month alone, they shipped around 351,000 tons of rice with 30% of it jasmine rice.

Hydrofoil operators want clear roadmap for service resumption

The hydrofoil operators on the HCMC-Vung Tau route have proposed the Government and the Ministry of Transport set out a clear roadmap and conditions for them to resume operations.

The proposal came more than three months after all hydrofoil services between the two cities were suspended for safety checks following a fire on a Vina Express boat en route from HCMC to Vung Tau.

Bui Cong Trung, chairman of Vina Express, told the Daily that replacing old hydrofoils with new ones would require much time to find appropriate hydrofoils for the waterways of HCMC and Vung Tau cities.

“It takes at least nine months to one year to look for suitable hydrofoil designs, excluding the time for boat building and delivery. Therefore, the company needs two to three years to develop a new hydrofoil fleet,” Trung said.

However, Trung said as Vina Express had spent big repairing and replacing engines of its current hydrofoils, the company did not have much money left to invest in a new fleet.

Trung was concerned that it took the company at least 10 years to recover the investment in buying new hydrofoils as more people would choose to travel between HCMC and Vung Tau City via the HCMC-Long Thanh-Dau Giay Expressway thanks to lower fares.

Tran Quoc Hieu, deputy director of Petro Express, also voiced concerns over new investments in new hydrofoils as a hydrofoil cost tens of billions of dong. But any fare hikes would force passengers to walk away.

“The travel time between HCMC and Vung Tau by expressway and hydrofoil are almost the same but the bus fare is lower, so new investments in hydrofoils could not easily guarantee profits as before,” Hieu said.

Commenting on the Ministry of Transport’s argument that fixing technical problems of old hydrofoils were just temporary and situational, Trung of Vina Express said that the faults detected on the current hydrofoils were minor and could be fixed easily.

Therefore, the operators want to use their existing hydrofoils for five more years so that they will be able to recover repair costs and have enough time to invest in new boats.

However, inspectors of the ministry said allowing the current hydrofoils to continue operating for some more years should be decided based on regulations on the time limit for hydrofoils which the Government will issue, probably later this year.

The inspectors have suggested that the current hydrofoils should be allowed for operation for only two more years and that the operators should seek ways to invest in new hydrofoils as soon as possible.

The ministry has reported to the Government about the matter.

Fertilizer imports fall sharply

Fertilizer imports plunged in value in the first four months of this year and enterprises attributed this sharp decline to falling prices on global markets.

Figures of the Ministry of Agriculture and Rural Development indicated that Vietnam imported more than one million tons of fertilizer products worth US$330 million from January to April, down 6.6% in volume and almost 27.5% in value year-on-year. Most of the fertilizer imports were from China.

The ministry said around 22,000 tons of the total volume was urea fertilizer worth US$7.4 million, down 64% in volume and 69% in value while SA fertilizer made up 300,000 tons worth US$42 million, declining 1.8% in volume and 33% in value.

Reality showed import prices of fertilizer products tumbled in the January-April period but retail prices on the domestic did not move in the same direction.

Nguyen Minh Dang, director of Minh Dang Agricultural Materials Trading Company based in Can Tho, said that his company sold a 50-kilo bag at VND380,000-390,000 (US$18-18.5), VND10,000 higher than in the autumn-winter crop late last year.

Nguyen Thi Chien, director of Hai Chien Company in Tien Giang Province, said that her company retailed urea fertilizer for VND380,000-390,000 per 50-kilo bag and DAP fertilizer for VND510,000-520,000 per bag.

However, fertilizer products were sold at VND10,000-20,000 per bag higher during the peak periods of sowing for this year’s winter-spring and summer-autumn crops compared to the average prices that traders have applied since early this year.

Apparel exporters face strict environmental criteria

A small number of local exporters can meet the stringent requirements for environmental sustainability that Vietnam’s key export markets are applying to this product, Vietnam National Textile and Garment Group (Vinatex) has warned.

Deputy general director Dang Vu Hung of Vinatex told a conference on environmental criteria for garments and textiles in HCMC on Monday that only 5-10% of the 200 affiliates of the group could meet those criteria that more foreign importers were placing an emphasis on.

“Meeting the criteria for environmental sustainability is considered as a passport for Vietnamese enterprises to send their goods to foreign markets. However, just a few local companies can do this,” Hung said.

Hung recalled the ‘laissez-passer’ for Vietnamese apparel enterprises in previous years was social corporate responsibility but importers were urging exporters to follow environmental requirements.

The criteria for environmental sustainability covered green production and wastewater treatment for finished products as well as dust and byproduct treatment for materials. “If local exporters did not meet these requirements, they would be kicked out of foreign markets,” Hung said.

Hung said Vinatex had targeted to have 30-40% of its member companies able to meet the environmental criteria by 2020. To realize this goal, the group will earmark 15% of its annual investment funding of VND8-10 trillion (US$380-475 million) for improving the wastewater treatment systems and working environment at the companies.

Le Quoc An, former chairman of the Vietnam Textile and Garment Association, projected two development scenarios of completing a chain for materials and finished products and adding value to the sector by brand building, design enhancement and distribution expansion.

Vietnam will have to turn out at least 5-6 billion meters of cloth every year in the coming 10 years to meet rising demand of apparel producers and support increasing exports. Apparel shipments are expected to double in the next decade.

Tra fish exporters to rely on VN Pangasius

Seafood enterprises will have to obtain a confirmation of signed contracts from the Vietnam Pangasius Association (VN Pangasius) for their tra fish exports from June 30 this year as regulated in a new decree of the Government.

Decree 36/2014/ND-CP says tra fish exporters will have to seek approval of VN Pangasius for the deals they have signed with their customers before they are allowed to deliver the fish.

The association will check to see if enterprises have met all the requirements provided in the decree or not and customs officers will depend on the confirmation by VN Pangasius to complete clearance procedures for the exporters.

The decree clarifies exporters must have fish farms located in the already-zoned areas approved by the Ministry of Agriculture and Rural Development and meet the criteria for fish processing and exporting. It also requires trade agreements between processing enterprises and the households and cooperatives that supply the fish.

If the processors and fish farmers do not have any trade agreement, VN Pangasius will decide the export price of fish and arrange agreements for the two sides to avoid a situation in which exporters sell tra fillets at much higher prices than they offer to farmers.

From December 31, 2015, owners of tra fish farms will have to meet Vietnamese Good Agriculture Practices (VietGAP) or related global standards such as GlobalGAP and ASC as stated by the decree.

As usual, Norway, Sweden, Germany and Belgium set requirements for Vietnamese tra fish in line with the standards of the Aquaculture Stewardship Council (ASC), which was established by the WWF and the Dutch Sustainable Trade Initiative in 2009. Meanwhile, GlobalGAP is usually applied to the product by the countries in North America.

The new decree also regulates an ice topping rate of lower than 10% for every one kilogram of tra fish fillets or that local exporters should meet the relevant standards of importing countries.

In the past, Russia temporarily stopped imports of Vietnamese tra fish fillets due to high ice rates, reportedly at 30% per kilogram.

Bentley unveils official dealership in Vietnam

Bentley Motors has announced its first dealership in Vietnam as Bentley Hanoi and the first showroom for the luxury car brand is scheduled for opening in the capital city in the second quarter of this year.

According to distributors of imported automobiles in Vietnam, after the Bentley Hanoi showroom is inaugurated in Tu Liem District as planned, the British automaker is expected to open its maintenance center in Hanoi.

Bentley has been actually providing maintenance service for the owners of its cars in Hanoi since early this year.

In 2011, a facility was put in place in HCMC to provide repair and maintenance services and genuine parts of Bentley cars.

4 ex-VietinBank bankers prosecuted in $48.2 mln lending scandal

The Supreme People’s Procuracy has prosecuted four ex-bankers at a VietinBank branch in Hanoi and 13 others for their offenses in an economic case in which the branch wrongly gave loans totaling  US$48.2 million, causing a loss of over $19 million several years ago.

The four former banking officers include Tran Kim Hoa, 53, former deputy director of the VietinBank’s Dong Anh District branch, Nguyen Xuan Thuy, 40, ex-head of the branch’s Bac Thang Long transaction office, and two branch’s credit officers: Dinh Cong Khanh, 34, and Ho Thi Kim Ngan, 26.

Most prominent among the other 13 defendants is Nguyen Thanh Hung, 44, director of Thuy Tien Construction One-Member Co Ltd, who colluced with many other defendants to make false documents to get a huge amount of loans from the branch.

The four ex-bankers have been charged violating regulations on lending at credit institutions, while the other 13 defendants have been indicted with counterfeiting materials of agencies and organizations, and swindling to appropriate property.

According to the indictment issued by the Supreme People’s Procuracy, from March 2008 to October 2011, Hung and his accomplices used fake documents and the legal status of 16 companies to sign 149 credit contracts with the branch to get loans totaling over VND1,016 billion (US$48.2 million).

On February 2, 2012, when the illegal lending was uncovered, Hung and his accomplices failed to pay a total debt of VND412 billion ($19.56 million), including about VND30 billion worth of interest.

Tran Kim Hoa, former deputy director of the branch, knew that all the 16 companies were unqualified for loans, but still directed Thuy to guide Hung’s employees to forge sales contracts, business plan, financial statements and other documents to make these companies eligible for loans, according to the indictment.

Hoa then approved the lending and during the disbursement of the loans, the above credit officers (Khanh and Ngan) did not examine how the loans have been used by the borrowers, the indictment said.

Besra cashes in on $12 million gold customs tax refund

By Nguyen Trang Canada’s Besra Gold Inc. will avoid nearly $12 million in tax arrears following after-clearance inspection results conducted by the General Department of Customs on its two gold mines in Vietnam.

The Ministry of Finance last week sent a formal notification to the company that an export tax assessment totalling $12 million against the Bong Mieu Gold Mining Company and Phuoc Son Gold Company had been repealed.

“The tax assessment had been hanging over us for more than a year, causing the company significant hardship. Our ability to import supplies and equipment was suspended for a period, as was our ability to export gold. Additionally, the $12 million assessment kept investors away and limited our access to credit facilities. With the ruling now behind us, we can now rebuild our production in Vietnam,” said Besra CEO John Seton.

The General Department of Customs (GDC) claimed in April last year that Besra’s Phuoc Son and Bong Mieu gold companies operating in Quang Nam province, needed to pay VND250 billion (approximately $12 million) in export duties.

In Vietnam, 9999 ‘four-nine’ exported gold does not attract any export duty. The GDC claimed that during 2011 and 2012, several shipments did not meet the 9999 quality threshold and was therefore liable to a 10 per cent tax.

Bong Mieu was asked to pay VND47 billion ($2.26 million) and Phuoc Son VND202.6 billion ($9.7 million), according to the GDC.

In a document sent to Besra, the GDC said that to enjoy an export tax rate of zero per cent, exported gold must have an assessment certificate that ensured it met the threshold. The regulations for certification were set out under Decree 20/2006/ND-CP detailing the provisions of the Commercial Law on the provision of commercial assessment services.

However, when investigating Phuoc Son Gold Mining Company, the department claimed that the company’s certificates had not fallen under the provisions of the decree on gold content. In mid-April, Besra filed a formal complaint seeking to have the assessment withdrawn because it had not violated any regulations.

Although refining in Vietnam is significantly more expensive than in Switzerland, Bersa engaged ACB Bank to refine their gold to 9999 gold.

ACB provided Besra with a certificate from Quatest 3, a company under the Ministry of Science and Technology – Vietnam’s largest and most reputable tester, who certified their exported gold as four nine standard.

Delta plans to swap rice for higher-value crops

Authorities in the Cuu Long (Mekong) River Delta are planning to switch from low-yield rice to higher-value crops like maize, sesame, peanut, soybean, and others on 112,000ha by 2015, the Crop Production Department has said.

As part of a master plan on restructuring agriculture to ensure sustainable development, they would also seek to use 3.8 million hectares of arable land in the most effective manner, diversify crops, and mitigate the pressure to consume rice amid export hurdles, Pham Van Du, deputy director of the department, told a meeting in Tien Giang Province yesterday.

With the spring-summer and summer-autumn crops usually plagued by low productivity, local authorities should encourage farmers to plant other, more lucrative crops instead, he said.

Based on local factors, they should advice farmers on what crops to grow, he said.

Last year other crops were grown on 87,314ha of low-yield rice fields in the region, with Dong Thap Province leading the way with 30,725ha, followed by Soc Trang and Tra Vinh, he said.

The switch has fetched farmers higher profits in recent times, he said.

Growing sesame on rice fields has enabled farmers in Dong Thap to earn profits of VND25.3 million (US$1,199) per hectare, much higher than from rice cultivation, which yields only around VND2.45 million ($116.2), he added.

Growing soybean, maize, and lotus in rotation on rice fields has also fetched higher profits than rice, according to the Dong Thap Department of Agriculture and Rural Development.

Farmers in Can Tho, Kien Giang, Long An, and Bac Lieu earn more since they plant sesame, soybean, maize, peanut, and other crops in their paddies, the meeting heard.

But delegates warned that the biggest problem is to ensure steady outlets for the new crops failing which farmers would return to rice.

Minister of Agriculture and Rural Development Cao Duc Phat urged local authorities to instruct farmers to grow crops whose demand is known.

He also told them to focus on switching from low-yield rice to maize since there is a big demand for the crop.

"Now we produce 5.2 million tonnes of maize. Last year, the country imported 2.3 million tonnes...and the demand is increasing to meet the needs of the livestock and seafood industries."

But as for switching to sesame, chili, dragon fruit, or watermelon, farmers should be careful since their prices would no longer be high if there is an increase in supply, he said.

He called on relevant agencies and research institutes to come out with a "technical package" on instructing farmers in planting new crops.

His ministry would work to accelerate implementation of the Government's policies for supporting farmers switching from low-yield rice to other crops and provide funding to train them, he said.

Local authorities should strive to establish links between farmers and companies to ensure outlets for crops, he added.

VAMC tackles challenges of buying bad debts

Agreement and sharing are critical in the current stage of handling purchased bad debts in Viet Nam, which helps save enterprises, avoid clashes and losses for all related parties.

Vice President of the Viet Nam Asset Management (VAMC) Nguyen Quoc Hung told Viet Nam News in a telephone interview yesterday, in a response to rumours that the company still faces issues in handling purchased debts.

The asset manager, which was formed last July to acquire bad debts, has purchased about VND45 trillion (US$2.13 billion) of bad debts, of which the principal debt was an estimated VND37.68 trillion ($1.78 billion).

Hung claimed that VAMC plans to restructure VND14.7 trillion ($696.68 million) of bad debts by 145 borrowers that have not gone bankrupt and to collect debts, sell collaterals and take legal actions against VND6.8 trillion ($322.27 million) of debts by 343 borrowers.

"We are definitely working to handle debts in the best possible manner, but it is not as easy as it sounds," Hung noted. "We could not apply practices in Malaysia or South Korea to handle bad debts in Viet Nam because these countries have different frameworks and different social situations."

Hung noted that VAMC will set time and space for borrowers to think, to cooperate and to voluntarily hand out assets before it takes immediate action against them. Initially, there were three borrowers who understood the message and were willing to comply.

"Of course, agreements take time," he added.

The vice president also stressed that timing and pricing sales of collaterals were challenges.

"Who will buy if we sell high, who will incur losses if we sell low? When will be the right time to act?" Hung questioned.

Industry experts suggested that related parties should share risks and economic values, or handling bad debts will come to a complete standstill.

If VAMC has to legally handle bad debts, it requires the collaboration of security forces, legal bodies and state administration units.

In the meantime, VAMC is waiting for guidance from the Ministry of Justice to legally conduct sales of collaterals.

According to the State Bank of Viet Nam, bad debts by the end of February accounted for approximately 9 per cent of the total loans. Handling bad debts, according to experts, is the definitive task that must be attended to in 2014-2015.

Prime Minister Nguyen Tan Dung set up an inter-disciplinary steering board to lead the mammoth projects of restructuring credit institutions by 2015 and solving bad debts of the system.

"The establishment of the committee shows a strong determination and commitment of the Government to deal with bad debts," Hung added.

The board is designated to advise the Prime Minister to implement and coordinate measures to reschedule and solve bad debts of the banking system. Also, the board will help ministries and municipal bodies supervise, detect and handle issues emerging from the policy practices related to bad debts at credit institutions.

Viet Nam's banking restructuring plan towards 2015 was initiated last April in the provision of improving the resilience of the money system, which is one of the three key reforms of the economy besides state-owned enterprises reform and public investment reform.

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

Petrolimex, Vinafood 2, Bentley, Besra, bad debts
 
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