VietNam Business: companies

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Thursday, February 24, 2011

VN to open up booming express delivery market

HA NOI — As part of its accession plans in the World Trade Organisation, Viet Nam has committed to liberalising the express delivery market to level the playing field for both local and foreign express delivery companies.

Viet Nam plans to open its market in 2012 to allow joint-ventures to be made with 51-per- cent foreign investment capital or to establish wholly-foreign companies in the next five years, according to Paul Needham, chief editor of CEP-Research, the first internet portal specialised on the courier, express and postal market.

The country's revenue in express delivery has grown steadily from US$50 million in 2007 to around $200 million in 2010. In urban areas where the abundance of enterprises means express delivery is in high demand, expenditure is estimated to reach between VND10-100 million per unit (US$512-$5,120).

According to HCM City's Department of Planning and Investment, the increasing number of businesses joining in express delivery service are not yet accounted for.

Big domestic and foreign companies including VNPost Express, Saigon Post, Viettel, and multi-nationals like TNT, DHL, FedEx and UPS are operating in a joint-venture model.

These companies are more powerful in technology and finance than the remaining small-scale companies in the country.

Meanwhile, companies with domestic prestige like Tin Thanh, Netco, Nasco, Hop Nhat, 247 Express and 365 Express account for 20 per cent of the market share.

The domestic companies are experienced with long-term development from three to 10 years; however, they are unable to compete with foreign express delivery companies who have powerful international networks.

The country's exports are expected to reach 8.8 per cent in 2010 and the swift movement of goods both domestically and internationally is key to facilitating and enhancing economic growth that will generate more opportunities for express delivery services.

The four leading express delivery companies, DHL, TNT, FedEx and UPS, have expanded their network in Southeast Asia in order to get a firm foothold in this market.

They have invested in their network, equipment and services as well as expanded their aviation network in Singapore, Indonesia, Malaysia, Thailand and recently Viet Nam – a newly emerging market.

International express delivery companies have entered the logistics services market, which has been growing quickly in Viet Nam.

Onno Boots, regional managing director of TNT Southeast Asia and India, said "Viet Nam has tremendous growth potential and occupies a strategic position in Asian trade being so close to China."

In Southeast Asia and Viet Nam, TNT has been expanding its network and service in a unique way. It has focused its efforts on developing a cost efficient road network service that links seven countries and 127 cities across Southeast Asia and China, including Viet Nam – a total distance of more than 7,650km.

Its unique road network is linked to its air network, thereby enabling customers to choose from a wider variety of transports that suit their needs – by air, road or a combination of both.

Today, TNT has launched an expanded and newly-designed integrated air and road hub located at ICD My Dinh, Ha Noi, to handle soaring freight volumes. — VNS

Saturday, January 29, 2011

Chaos marks cooking gas market

A decree regulating the price of cooking gas, which became effective
earlier this month, has failed to contain chaos on the market in HCM
City.

Earlier this month, following a global gas price
hike, domestic gas-trading companies raised prices by 14,000-15,000 VND
for each 12-kilo cylinder, with prices around 272,000 VND a cylinder.

Many customers in HCM City are paying 275,000 VND for a 12-kilo
cylinder from Sai Gon Petro and VT gas, and 280,000 VND for Total gas.

Gas-trading companies have conceded that they did a poor job of managing sale prices offered by retail agents.

Retail shops are reportedly selling cooking gas at prices higher than that specified by gas companies.

Currently, most gas companies sell products via wholesale agents, who
then sell to other agents and retail shops on the basis of a buy-sell
contract.

This can lead to one business being an agent for different brands of gas.

While gas companies can only manage gas prices at wholesale agents,
retail prices to end-users are decided by agents and retail shops.

Since every gas company has its own policy for their agents, agents
will focus on promoting gas products that offer higher profits.

Le Thi Anh Man, deputy general director of the Sai Gon Petro Gas Co,
said some 650 retail shops had signed contracts to sell gas produced by
her company.

However, the company faces difficulties in price management of these retail agents.

If her company forced retailers to strictly follow the company's
regulations, the agents would shift to another company, she said.

However, several gas agents have even filled cooking gas canisters and
sold fake products, according to gas production companies.

One customer in Go Vap District said she discovered that she had
purchased a fake gas canister as the gas was empty after 18 days of use
instead of one month.

Late last month, police discovered
many gas cylinders with a weight much lower than that listed on the
cylinder at Tin Nghia II gas establishment in the southern province
of Binh Duong .

The country has more than 80 gas-trading
companies, but only 60 of them have a registered trademark for their
empty gas cylinders.

Local task forces said fake gas accounts for 30 per cent of the total gas volume being marketed in Vietnam .

To avoid buying fake gas cylinders, customers must examine canisters to
see if they are lighter than normal, have unclear logos or an
inconsistent colour on the seal, according to the Market Management
Department of HCM City./.

Tax changes to save firms money

The General Department of Taxation (GDT) is mulling a tax reform
programme that will help small- and medium-sized enterprises (SMEs) pay
dues more easily while saving time and money by reducing the amount of
paper work required.

Under the programme, the GDT will
set a tax threshold. Firms whose revenue turnover is below the stated
threshold will be exempted from paying value-added tax.

The taxes levied, which include value-added and special consumption
taxes, will be declared and paid every quarter instead of once a month,
as is the case now.

Businesses whose earnings are above
the exemption level but below the VAT threshold, will have two ways of
calculating the tax owed.

They will be able to declare
value-added and income taxes on a defined percentage of their revenue or
they will be allowed to pay a fixed rate for the entire year.

The GDT expects to submit the new tax procedures to the Government and
Ministry of Finance for approval next year as part of a general tax
reform administrative programme.

If approved, the new
policies will directly affect more than 290,000 companies, 1.8 million
family-run businesses and millions of workers who pay income tax, while
helping to save about 600 billion VND (30.7 million USD) per year.

According to the GDT, SMEs have a total turnover of less than 300
billion VND (15.4 million USD) each. SMEs account for 92 percent of all
Vietnamese companies, but pay just 24 percent of the total corporate
income tax amount.

The GDT has simplified 271 out of 330
administrative tax procedures, which has helped to save 1.9 trillion VND
per year (97.4 million USD). One of the most significant changes was to
allow companies to print and use their own invoices, which alone helped
to save 400 billion VND (20.5 million USD) per year.

Meanwhile, the GDT is modifying 24 new draft amendments and supplements to Circular 130 relating to corporate income tax.

The GDT said that under the current Corporate Income Tax Law, companies
were allowed to deduct losses caused by natural disasters, epidemics
and force majeure from their tax bills if they do not receive
compensation.

The new draft circular requires businesses
who lose property to contact the tax office directly about losses
incurred. Companies must state their property's value and the value of
the goods lost according to the valuation council.

They must also state what insurance compensation they had received or were likely to receive and the insurance companies used.

Those records must be certified by commune-level police or the ward or commune people's committee chairman.

The draft states that a firm must state what losses have been incurred
from fines or breach of contract. These costs will be tax deductible./.

Tax changes to save firms money

A worker operates a paper rolling machine at Xuan Duc Joint Stock Company, considered a small- and medium-sized business. — VNA/VNS Photo Pham Do

HA NOI — The General Department of Taxation (GDT) is mulling a tax reform programme that will help small- and medium-sized enterprises (SMEs) pay dues more easily while saving time and money by reducing the amount of paper work required.

Under the programme, the GDT will set a tax threshold. Firms whose revenue turnover is below the stated threshold will be exempted from paying value-added tax.

The taxes levied, which include value-added and special consumption taxes, will be declared and paid every quarter instead of once a month, as is the case now.

Businesses whose earnings are above the exemption level but below the VAT threshold, will have two ways of calculating the tax owed.

They will be able to declare value-added and income taxes on a defined percentage of their revenue or they will be allowed to pay a fixed rate for the entire year.

The GDT expects to submit the new tax procedures to the Government and Ministry of Finance for approval next year as part of a general tax reform administrative programme.

If approved, the new policies will directly affect more than 290,000 companies, 1.8 million family-run businesses and millions of workers who pay income tax, while helping to save about VND600 billion (US$30.7 million) per year.

According to the GDT, SMEs have a total turnover of less than VND300 billion ($15.4 million) each. SMEs account for 92 per cent of all Vietnamese companies, but pay just 24 per cent of the total corporate income tax amount.

The GDT has simplified 271 out of 330 administrative tax procedures, which has helped to save VND1.9 trillion per year ($97.4 million). One of the most significant changes was to allow companies to print and use their own invoices, which alone helped to save VND400 billion ($20.5 million) per year.

Corporate income tax

Meanwhile, the GDT is modifying 24 new draft amendments and supplements to Circular 130 relating to corporate income tax.

The GDT said that under the current Corporate Income Tax Law, companies were allowed to deduct losses caused by natural disasters, epidemics and force majeure from their tax bills if they do not receive compensation.

The new draft circular requires businesses who lose property to contact the tax office directly about losses incurred. Companies must state their property's value and the value of the goods lost according to the valuation council.

They must also state what insurance compensation they had received or were likely to receive and the insurance companies used.

Those records must be certified by commune-level police or the ward or commune people's committee chairman.

The draft states that a firm must state what losses have been incurred from fines or breach of contract. These costs will be tax deductible. — VNS

Tuesday, January 25, 2011

Vietnam orders 150 firms to register prices

Vietnam orders 150 firms to register prices The Ministry of Finance has named 150 companies that must register their prices with the authorities, including major foreign-owned dairy firms.

The list of companies was published Thursday on the government website.

It named seven dairy firms, including foreign producers like Friesland Campina, Nestlé, Mead Johnson, Meiji and 3A Pharma, the official distributor of Abbott in Vietnam.

Also on the list are eight cement producers, 18 steel companies, eight sugar producers, 10 animal feed manufacturers and five liquefied petroleum gas (LPG) traders.

These companies will be required to register their prices when they launch a new product for the first time or whenever ordered to do so by the authorities.

Previous regulations required only companies with 50 percent state capital to register their prices with the authorities.

Last month foreign milk companies and the ambassadors of Australia, Canada, New Zealand, the US and the EU raised their concerns about the new price control effort. They said it would affect Vietnam’s commitments as a WTO member and warned that it could also hinder foreign investment.

Nguyen Tien Thoa, head of the Price Management Department at the Ministry of Finance, said the new regulation does not break any WTO commitments.

He said it is in accordance with a previous government decree that lists milk as one of the commodities whose prices must be kept stable.

Saturday, January 22, 2011

Hundreds of companies told to register prices

HCMC – The Ministry of Finance has announced on its website a list of more than 150 companies that are required to register prices for their products in compliance with a circular on price stabilization.

The listed companies must register with the authorities the prices of their products, including imports in accordance with Circular No.122/2010/TT-BTC issued on August 12, and are obliged to stick to the registered prices.

In the list, there are seven companies providing dairy products for children under six, including FrieslandCampina Vietnam, Nestlé Vietnam Ltd., Mead Johnson Nutrition Vietnam and Meiji Vietnam.

The list also comprises many manufacturers of cement, steel, liquefied petroleum gas, chemical fertilizer, plant protection chemical, veterinary medicine, salt, and sugar, and service providers like seaports and aviation.

The ministry said it had made the list of the companies and sent announcements to them before the circular took effect on October 1.

The full list is available on the ministry’s website at http://www.mof.gov.vn/portal/pls/portal/docs/1080266.DOC.

Earlier, Nguyen Tien Thoa, director of the ministry’s Price Management Department, was quoted on the Government’s website in September as saying that the circular did not contradict the country’s commitments to the World Trade Organization. The comment was made after foreign-invested companies and some ambassadors to Vietnam complained that the price management regulations would discourage investors.

Wednesday, January 12, 2011

UK port operators seek opportunities

HA NOI — Situated at the crossroads of maritime trade lanes with a coastline stretching 3,260 kilometres, Viet Nam has undeniably favourable conditions for developing its maritime industry.

British Ambassador Mark Kent emphasised this opportunity during the UK – Viet Nam Partnership in Ports seminar held yesterday in Ha Noi. The event was part of a three-day trip made by representatives from 10 UK's leading companies in port operation and development.

"British companies such as those involved in this mission are keen to forge partnerships that will help to identify and implement solutions aimed at improving the operating capacity of Vietnamese ports in the process of national industrialisation and modernisation," the ambassador said. Marine transport has played an important role in the country's economic growth and in its efforts to become an industrialised country by 2010, said Deputy Minister of Transport Do Hong Truong.

The Government has crafted policies to encourage domestic and foreign individuals and organisations to invest in Viet Nam's seaport infrastructure, he said.

During the event, the UK seaport operators shared experiences in port operation as well as exchanged knowledge and potential co-operation opportunities with around 60 Vietnamese and foreign companies operating in the port field.

Prime Minister Nguyen Tan Dung has approved the Viet Nam Seaport Development Master Plan, which calls for a total investment of between VND360 trillion (US$18.5 billion) and VND440 trillion ($22.5 billion) by 2020. Under the plan, the estimated volume of goods transported annually via the seaport system will be 500-600 million tonnes by 2015, 900-1,000 million tonnes by 2020 and 2,100 million tonnes by 2030.

To achieve that number, the plan will focus on developing several international-standard deep-water ports that can receive large ships, especially the international Van Phong transit port in central Khanh Hoa Province designed to receive container ships ranging between 9,000 and 15,000 TEU (twenty-foot equivalent unit). — VNS

Sunday, December 26, 2010

Financial firms jostle for slice of credit pie

Personal credit is no longer a “big earner” for the banks only, as
financial companies are rushing to cash in on this market, say industry
insiders.

Statistics show that Vietnam is now
home to 17 financial companies, which have been established by domestic
and foreign-invested groups and corporations. These financial companies
provide loans enabling consumers to buy cars and houses, similar to
services provided by the banks.

To improve their
competitiveness, financial firms have continuously released new products
onto the market, based on the business advantages of their parent
companies, expanded their limits on loans, adjusted deadlines for
payments and linked up with the suppliers of consumer goods to serve
their clients better.

For this reason, a large
number of consumers prefer the products provided by financial companies,
although their interest rates are 1.2-1.7 percent higher than those
offered by the banks.

The Prudential Finance
Company, an arm of the Prudential Insurance Group, is well known for its
loans without collateral, based on valid insurance policies. The limit
and duration of the loans are directly proportional to the value and
period of the insurance policies. The company also provides its product
online and by telephone to save time and transaction costs for clients.

Credit for house buyers provided by the PetroVietnam
Finance Corporation (PVFC) is seen as safer than similar products
provided by the banks. When clients sign a loan contract, they also sign
an insurance policy with the life insurance company ACE Life, to keep
ownership of the mortgaged assets. If there are defaults, ACE Life will
pay the remainder of the loan to PVFC.

For the
Hadico Financial Company, under the Hanoi Housing Development and
Investment Corporation, a repayment period of up to 30 years is an
advantage for its loans for house purchases.

Foreign-invested financial firms are also emerging as big rivals to the
banks. Boasting global networks, these companies have teamed up with
major producers to offer consumers non-profit loans to boost
consumption.

Many major banks, including the Asian
Commercial Bank (ACB), the Sai Gon Thuong Tin Commercial Bank
(Sacombank) and the Dong A Bank (DongABank) plan to set up financial
companies to tap into the personal credit market, but none of them have
begun to operate yet.

A number of other banks have
also unveiled their plans to put capital into multinational financial
firms to improve their competitiveness in the personal credit market./.

Saturday, December 25, 2010

New regulations out for business invoices

Businesses will be allowed to continue to use Ministry of Finance issued invoices until the end of first quarter next year, according to a newly issued instruction of Deputy Prime Minister Nguyen Sinh Hung.

The instruction amended the January 1 deadline in an attempt to deal with obstacles raised through the implementation of Decree No 51/2010/ND-CP, which allows most companies to print their own invoices instead of having to obtain them from official agencies.

The extension will help save money for those who bought the invoices from the Ministry of Finance but would not have used them prior to December 31 2010.

Under the instruction, Hung also agreed in principle with the Finance Ministry's proposal to continue selling ‘red' invoices to small-sized businesses and those in poor areas, who cannot afford to print invoices, until the end of next year.

These invoices serve as official proof of commercial transactions for tax and other purposes. However, small businesses will have to print their own invoices as of 2012.

The new instruction also stated that vouchers used in banking and marine services, which meet international regulations, will also be recognized for purposes of taxation.

According to current regulations, the vouchers are not recognized as invoices so banking and marine transportation businesses are still required to obtain ‘red' invoices to pay tax, wasting both time and money. More than 350,000 companies are expected to become eligible to print their own invoices.

Director of the General Taxation Office's Policy Department Cao Anh Tuan said besides providing greater freedom to companies to do business, the new policy would completely change business invoice usage.

It would also save the Government some of the costs it incurs in printing the invoices, while companies would not have to go through the rigmarole of obtaining them, Tuan said.

However, analysts warned there could be difficulties during the process.

Careful monitoring of the printing process was imperative to eliminate the possibility of fraud by print companies, they said.

Tax offices were set for a hard time as thousands of enterprises would register to print their own invoices, they added.

Friday, December 24, 2010

New regulations out for business invoices

HA NOI — Businesses will be allowed to continue to use Ministry of Finance issued invoices until the end of first quarter next year, according to a newly issued instruction of Deputy Prime Minister Nguyen Sinh Hung.

The extension will help save money for those who bought the invoices from the Ministry of Finance but would not have used them prior to December 31 2010.

Under the instruction, Hung also agreed in principle with the finance ministry's proposal to continue selling ‘red' invoices to small-sized businesses and those in poor areas, who cannot afford to print invoices, until the end of next year. These invoices serve as official proof of commercial transactions for tax and other purposes. However, small businesses will have to print their own invoices as of 2012.

The new instruction also stated that vouchers used in banking and marine services, which meet international regulations, will also be recognised for purposes of taxation. According to current regulations, the vouchers are not recognised as invoices so banking and marine transportation businesses are still required to obtain ‘red' invoices to pay tax, wasting both time and money. More than 350,000 companies are expected to become eligible to print their own invoices.

It would also save the Government some of the costs it incurs in printing the invoices, while companies would not have to go through the rigmarole of obtaining them, Tuan said.

However, analysts warned there could be difficulties during the process.

Careful monitoring of the printing process was imperative to eliminate the possibility of fraud by print companies, they said.

Tax offices were set for a hard time as thousands of enterprises would register to print their own invoices, they added. — VNS

Tuesday, December 21, 2010

Japan business confidence rises, but doubts remain

Photo: AFP

TOKYO - Japanese business confidence has improved for a sixth straight quarter but companies are expecting a gloomy end of the year amid increased global economic uncertainty, the Bank of Japan said Wednesday.

Sentiment among major manufacturers rose to a higher-than-expected reading of 8 in September from 1 in June, according to the central bank's closely watched Tankan survey of more than 11,000 firms.

The latest figure shows that optimists still outweigh pessimists among major manufacturers in terms of their view of Japan's economic climate, in only the second positive reading since June 2008.

But the forecast for the December survey is for a reading of minus 1, suggesting that companies expect conditions to sharply worsen in the months ahead as Japan remains beset by deflation and the effects of a strong yen.

"Companies are very cautious about the economy towards the year-end," noted Naoki Murakami, chief economist at Monex Securities.

In particular there was "increasing uncertainty about the world economy and the (Japanese) government's dull responses to the chain reaction of the yen's rise and stock price falls."

The strong yen has hurt exporters, making their goods more expensive and eroding companies' overseas profits when repatriated. Videogame giant Nintendo on Wednesday more than halved earlier profit forecasts, citing yen strength.

Exports, a crucial driver for Japan's growth, expanded at their slowest pace this year in August, as the impact of the yen's strength and softening overseas demand illustrated the risks threatening a fragile recovery.

A strong domestic currency also makes imports cheaper, helping prolong a damaging deflationary cycle where consumers hold off on purchases in the hope of further price drops, clouding future corporate investment.

The reading was made with companies expecting an exchange rate of 89.44 yen to the dollar, higher than in the previous survey but much lower than current levels, which if sustained will further erode confidence.

Japan stepped into the currency markets in September for the first time since 2004 in a bid to stem the yen's strength after it hit a 15-year high against the dollar, and has repeatedly warned it is ready to do so again.

"Many (negative) factors are piling up," said Takeshi Minami, economist at Norinchukin Research Institute. "Considering exports and consumer spending are unlikely to be a strong driving force, the economy will be at a standstill."

Japan's economy expanded by an annualized 1.5 percent in the April-June period, sharply lower than the previous quarter's 5.0 percent.

Prime Minister Naoto Kan Monday ordered a supplementary budget for fresh stimulus measures be put together to shore up the flagging economy, after he recently announced 915 billion yen package to add jobs and boost growth.

The Tankan figures are looked at closely by the central bank when formulating monetary policy, and it has come under heavy government pressure recently to do more to help boost the economy.

"The outcome of the latest Tankan will prompt the BoJ to go for additional monetary easing," said Murakami.

The upbeat September reading among big firms was helped by higher automobile demand ahead of the expiration of government stimulus incentives for green car purchases, said Minami.

But including all industries such as medium and small-sized manufacturers and non-manufacturers, the outlook was gloomy at a reading of minus 10.

The index, which measures the percentage of firms that think business conditions are good minus those that believe they are bad, hit a record low of minus 58 in March 2009.

Wednesday, December 15, 2010

Securities companies do extra work to survive

Securities companies have chosen to gear their operation to other businesses such as real estate development, financial services or overseas investment to survive amidst the prolonged gloomy situation.

The President of the Trang An Securities Co Executive Council, Le Ho Khoi, explained the company’s investment of almost 15 percent of a property project as an extra source of incomes from 2012 when it is inaugurated.

Project “Complex Building of services, trade and electronic assembly workshop”, consisting of 15 stories on a compound of over 5,000 square meters, has a total investment of VND200 billion (US$10.2 million). It is mainly invested by the Fortika Joint Stock Co.

Another giant, the An Binh Securities Co, together with two other affiliates of the An Binh holding company, has signed an agreement on strategic cooperation with the Vietnam Aviation Insurance Joint Stock Co (VNI) to develop new financial services.

Some other leading companies in this field have decided to try their chances abroad with a plan to open overseas branches.

The Sacombank Securities Joint Stock Co (SBS) is preparing a plan to enter into a joint venture with the Lao Development Bank (LDB) to set up a securities company in Laos named Lanexang Securities Public Co Limited, or SBS-Laos.

SBS said the establishment of the SBS-Laos, scheduled for the fourth quarter of this year, would offer an opportunity for investors from the two countries and contribute to economic development in both countries, especially Laos, which is making great efforts to open their market.

After reaching its peak of 1,300 points in late 2007, the stock market in Vietnam began the falling trend due to the negative impacts of the global economic crisis and domestic difficulties.

Despite great efforts made by the State Securities Commission, the market has still been painting a dim picture with VN-Index fluctuating between 400 and 450 points. The situation has forced a number of securities companies to gear to other businesses for survival.

Experts remain pessimistic about the market fate, saying there were no signs of taking off for the market in the near future.

Friday, December 10, 2010

Finance sector e-treasury to be set up in 2020

HA NOI — An e-treasury of the State, in which all activities will be carried out with modern information technologies, will be set up by 2020, according to a financial sector insider.

The e-treasury would help cut 50 per cent of costs and 90 per cent of work in tax agencies would be automated, Dang Duc Mai, head of the IT and Financial Statistics Department said.

The financial sector plans for all of the Ministry of Finance's units in all provinces and cities to have a website by 2015. All information of the sector's processes relating to taxpayers and companies will be published and about 60 per cent of all financial transactions will take place online. In additon, almost all tax payments will be made online.

Le Hong Hai, deputy director of General Tax Department under the ministry said it was necessary to apply information technologies to all activities of the financial sector because the number of transactions and processes are increasing.

Recently, she said, there were about 3 million tax codes supplied to companies and enterprises. Personal tax code numbers were more than 7 million and are projected to reach 10 million by 2015.

Mai said that to successfully reach the target, one of the most important methods will be mobilising human resources. Another crucial method is developing infrastructure.

This year, the sector will start online tax declaration. The programme has been modelled by 1,000 companies in four cities including Ha Noi, HCM City, Da Nang and Ba Ria-Vung Tau. Every month, 20,000 tax declarations are sent to the ministry. Online tax declaration is expected to be used by 20,000 companies in 19 provinces and cities beginning now through 2011. — VNS

Thursday, December 9, 2010

Personal gains drive profit mismatch

Auditors find listed firms in Vietnam overstating or underplaying profits to serve different agendas

Investors check stock prices at Orient Securities Corporation in Ho Chi Minh City. Experts said investors need to read financial reports of listed companies carefully before making a decision.

Inflated and deflated profit figures do not hold huge major surprises for auditors, but the extent of discrepancy discovered recently with several listed companies has raised doubts over the transparency and accuracy of financial reports in Vietnam.

Investors and economists said the gaps were not likely to be oversights, but deliberate actions with an agenda.

Sacombank’s net profit in the first six months was revised down 35.5 percent by auditors, from VND1.17 trillion (US$60 million) to VND755 billion ($38.7 million).

Profits reported by Vietinbank were also adjusted significantly to VND1.65 trillion ($84.6 million) from VND2.37 trillion ($121.6 million) after audit. The bank said it had not included salary payments and certain losses in its report, hence the gap.

Meanwhile, property developer Quoc Cuong Gia Lai was found to report less profits than it should have. The company posted a half-year profit of VND9.7 billion while the audited figure was VND86.2 billion.

While the company explained that it decided to leave more than VND76.5 billion earned by selling a project for the upcoming third quarter report, many investors were skeptical. Listed companies are required to report all information that can affect share prices.

Economist Le Dat Chi of the Ho Chi Minh City Economics University said discrepancies between audits and financial reports of companies could not be taken lightly as something “accidental”.

It’s unacceptable that a head accountant at a bank or a large company fails to complete a financial report properly, he said.

If there are discrepancies in the figures, it means businesses have their own agenda, Chi said. Some companies may want to “save” parts of their profits for a later announcement to attract investors while others do so for some insider trading scheme. Delaying the announcement can give managers and board members some time to purchase more shares before they rise.

“In a market that lacks transparency, it’s definitely possible to hide profits for personal interest,” he said.

Experts said while some insiders may benefit from financial disclosures, a number of shareholders can be negatively affected if they, for instance, decided to sell shares without knowing that the company had actually earned higher profits.

Vietnam began to require public companies to disclose their half-yearly financial reports this year.

These reports, however, are not treated like the annual reports. Auditors only use it to caution businesses about what does not seem right so that due corrections can be made by the end of the year.

Economist Nguyen Van Thuan, head of the financial and banking department at the HCMC Open University, said half-year financial reports follow less stringent procedures than year-end reports, making it easy for companies to hide part of their profits and losses.

However, if the hidden parts are too large, it means the company is not being honest with its shareholders, and this can affect its reputation, Thuan said.

He said while waiting for the authorities to tighten control over financial reports, investors should “protect themselves” by checking the reporting carefully and comparing recent and past figures. A sudden rise or fall must be justified properly, he said.

Investors can also avoid risks by “staying away from shares of companies that engage in inaccurate reporting or try to delay publicizing their reports,” he said.

Economist Nguyen Thi Loan of HCMC Banking University agreed that investors need to equip themselves with skills to read and understand financial reports and audit reports.

It’s also necessary to check the credibility of the auditing firms chosen by businesses, Loan said.

Financial reports provide information based on which investment decisions are made and thus their accuracy is really important. If businesses, for any purposes, try to either exaggerate or understate their profits, the State Securities Commission must take punitive measures, she added.

Nguyen Doan Hung, vice chairman of the State Securities Commission, said the commission would continue to oversee the disclosure of information on the stock market to protect investors.

Violators will be fined in order to maintain investor confidence and keep their interest, Hung said at a recent conference.

Chi believed the authorities should be stricter with dishonest companies.

“If businesses are allowed to report however they like with whatever discrepancy, even the righteous ones will report wrongly for their own benefits,” Chi said. “This is really dangerous for a young stock market like Vietnam.”

With September coming to an end, local businesses will soon announce their financial reports for the third quarter.

As the stock market is still sluggish, some listed companies will want to sharpen up their reports in order to drive their shares up, Chi said.

Investors should be cautious with these quarterly reports as they will not be audited, he warned.

Wednesday, December 8, 2010

Experience shared to make IPOs less exclusive

Photo: Reuters

Issuing shares in Vietnam differed from procedures in other countries as Vietnamese companies offered shares exclusively to existing shareholders rather than seeking new ones, said State Securities Commission at a conference in Hanoi on Thursday.

The SSC drew attention to this distinction at the at the "Steps preparing for a successful IPO of enterprises" conference jointly held by itself, the business and financial news Bloomberg and Singapore's Mileage Communications Group.

When collecting opinions of existing shareholders, almost all investors volunteered to buy additional shares, which led to successes for the majority of share issuers, said Bui Hoang Hai, deputy director of the SSC.

"This can be considered a method to force existing shareholders to buy additional shares," he added.

In other nations, shares are usually auctioned off to new shareholders, the public or strategic investors. To ensure success, issuers must then be transparent with all financial information and reports to demonstrate their potential and improve their image in the eyes of investors, Hai said.

Vietnamese enterprises actually did not pay much attention to how best to attract investors so as to make IPO successfully, he said.

To prepare for IPO, most companies only submit a prospectus and documents to meet the minimum requirements. "To make a successful IPO, companies need to map out long-term strategies," Hai said.

Nguyen Ngoc Canh, director of SSC's international co-operation department, said in the context of the slowed local stock market, firms were faced with many difficulties for their IPO despite profitable company performance.

Canh emphasized the crucial role professional consultants and securities firms play in helping issuers create transparent and comprehensive documents and financial reports as well as advising better management and business strategies.

"Issuers could publicize information in a timely manner and investors could understand more about their businesses, as a result they could auction shares or make IPO effectively," Canh said.

Yah Boh Tiong, chairman of Mileage Communications Group, advised firms to facilitate strong communication with shareholders, raise investor awareness of company profiles and business performance.

Strategies to improve companies' images should be undertaken carefully throughout three phases, including before IPO, leading up to IPO and post-IPO, Tiong said.

Chairman of the Singapore Securities Investors Association David Gerald said that it was essential to create knowledgeable investors through education and information, promote corporate transparency and corporate governance and safeguard investors' rights.

"Good corporate governance practices translate into good corporate performance," he said.

According to the SSC, the aggregate value of all shares issued to the public, employees, strategic partners and those auctioned at stock exchanges by companies in the first half of this year reached about VND74.96 trillion (US$3.84 billion).

The conference drew about 100 businessmen, security companies, as well as local and international experts.

Sunday, December 5, 2010

Experience shared to make IPOs less exclusive

Issuing shares in Vietnam differed from procedures in other countries
as Vietnamese companies offered shares exclusively to existing
shareholders rather than seeking new ones, said deputy director of the
State Securities Commission Bui Hoang Hai at the "Steps preparing for a
successful IPO of enterprises" conference in Hanoi on Sept. 23.

The SSC drew attention to this distinction at the conference jointly
held by itself, the business and financial news Bloomberg and
Singapore 's Mileage Communications Group.

When
collecting opinions of existing shareholders, almost all investors
volunteered to buy additional shares, which led to successes for the
majority of share issuers, Hai said. "This can be considered a method to
force existing shareholders to buy additional shares," he added.

In other nations, shares are usually auctioned off to new
shareholders, the public or strategic investors. To ensure success,
issuers must then be transparent with all financial information and
reports to demonstrate their potential and improve their image in the
eyes of investors, Hai said.

Vietnamese enterprises
actually did not pay much attention to how best to attract investors so
as to make IPO successfully, he said.

To prepare for
IPO, most companies only submit a prospectus and documents to meet the
minimum requirements. "To make a successful IPO, companies need to map
out long-term strategies," Hai said.

Nguyen Ngoc
Canh, director of SSC's international co-operation department, said in
the context of the slowed local stock market, firms were faced with many
difficulties for their IPO despite profitable company performance.

Canh emphasised the crucial role professional consultants and
securities firms play in helping issuers create transparent and
comprehensive documents and financial reports as well as advising better
management and business strategies.

"Issuers could
publicise information in a timely manner and investors could understand
more about their businesses, as a result they could auction shares or
make IPO effectively," Canh said.

Yah Boh Tiong,
chairman of Mileage Communications Group, advised firms to faciliate
strong communication with shareholders, raise investor awareness of
company profiles and business performance.

Strategies to improve companies' images should be undertaken carefully
throughout three phases, including before IPO, leading up to IPO and
post-IPO, Tiong said.

Chairman of the Singapore
Securities Investors Association David Gerald said that it was essential
to create knowledgeable investors through education and information,
promote corporate transparency and corporate governance and safeguard
investors' rights.

"Good corporate governance practices translate into good corporate performance," he said.

According to the SSC, the aggregate value of all shares issued to the
public, employees, strategic partners and those auctioned at stock
exchanges by companies in the first half of this year reached about
74.96 trillion VND (3.84 billion USD).

The conference drew about 100 businessmen, security companies, as well as local and international experts./.

Monday, November 8, 2010

Singapore’s oil and gas firms explore business tie-ups

Vietnamese and Singaporean businesses at the networking luncheon in HCMC on Monday - Photo: Mong Binh

HCMC - Executives of 18 Singapore companies in the oil and gas, and marine sectors on Monday began their trip to southern Vietnam to explore prospects for business cooperation with local counterparts, according to International Enterprise (IE) Singapore.

Jason Lim, HCMC Center Director of IE Singapore, said IE Singapore was leading the largest mission in the sectors to Vietnam to study the business environment and to explore opportunities for Singapore companies to join hands with Vietnamese partners.

“Singapore has a strong pool of service providers in the offshore and marine sectors that can provide support for the whole sector such as in offshore construction, ship building, repair and fabrication works,” Lim said.

Lim told the Daily that as for the downstream sub-segment, Singapore companies offered services in plant design, construction, and maintenance amongst various other engineering works.

One of the most recent oil and gas ventures in Vietnam is between Singapore’s EOC Group and Vietnam’s PV Trans for a floating production, storage and offloading vessel project, which materialized in January 2010.

IE Singapore invited speakers from Mayer Brown, Ernst & Young and Indo-Trans Keppel Logistics to share their expertise and experiences in doing business in Vietnam at a networking luncheon in HCMC on Monday.

During the three-day trip, the delegates will also attend meetings with prominent Vietnamese enterprises and visit a foreign-invested project, Strategic Marine in Ba Ria-Vung Tau Province, to get first-hand knowledge of the operating environment in Vietnam.

Asked whether the major delegation will signal significant shift of Singaporean firms’ investments in Vietnam, Lim confirmed that Singapore companies would continue to invest in Vietnam’s property and infrastructure development.

“There is a good match between Singapore’s expertise in urban and infrastructure development and Vietnam’s rising demand for quality housing and infrastructure,” Lim said.

He said IE Singapore as a government agency tasked with helping Singapore companies invest in overseas markets and promote international trade, would work harder to facilitate more collaboration between Singapore and Vietnam businesses.

“Such partnerships can be in the sectors where there has traditionally been strong engagement, as well as in upcoming sectors such as oil and gas where we see growing interest,” Lim said.

“Vietnam expects to see strong economic growth estimated to reach 6.5 to 7% in 2010. Along with this, growth typically results in an increase in cargo movements, be it domestic or international,” he added.

Singapore’s cumulative projects and registered investment capital in Vietnam stood at 832 and US$17.795 billion respectively as of August 20, 2010. Vietnam was Singapore’s 14th largest trading partner, with bilateral trade expanding at a stable compound annual growth rate of 6.6% over the past five years to reach S$13.4 billion last year.

Bilateral trade between the two countries in the first seven months of this year was S$7.6 billion over the S$7.2 billion in the same period last year. Singapore exports petroleum products, civil engineering equipment parts among other to Vietnam.

Friday, November 5, 2010

IT firms fail to invest in R&D

Photo: Reuters

Most Vietnamese IT firms have failed to make adequate investment in research and development due to limited financial capacity and a lack of skilled personnel, said HCMC Computer Association chairman Chu Tien Dung.

In the past 10 years, firms focused on creating IT products to meet short-term market demands rather than properly investing in research and development (R&D), Dung said.

Domestic IT businesses that took on outsourcing work from foreign partners found it difficult to make sufficient investment in R&D because most of them were small and medium-sized, said Vietsoftware chairman of the board Tran Luong Son.

Some of the companies realised the importance of R&D but due to insufficient financial capacity, their R&D investment had yet to bring satisfactory results, he said.

While investing in R&D seems to be difficult for small IT firms, several larger enterprises have invested in R&D, resulting in new production technologies and unique products that have played a decisive factor in sharpening their competitiveness.

TMA Solutions, a large software outsourcing company, recently opened its first R&D centre in the Quang Trung Software Park in HCMC to expand its business in training, mobile service and business solutions.

Chairman of TMA Solutions Nguyen Huu Le said the company accepted outsourcing contracts from foreign companies over the past 12 years and also executed R&D projects under contracts with foreign partners.

"To date, TMA has accumulated good experience in innovation technologies from these projects and we can produce many items in Vietnam," he said.

Mobile provider Viettel also established an R&D centre to develop new telecommunication equipment. The company has developed a USB with integrated 3G, the VT1000-3G, and plans to put it on the market by the end of the year.

CMC Group has also announced that it will set aside US$2 million to research or acquire new technology.

Establishing R&D centres in Vietnam, however, still faced tax barriers and difficulties with equipment testing procedures, Le said, adding that it took his company three years to complete all relevant procedures.

Le suggested the Government should offer incentives for R&D projects.

Dung agreed. He said that Vietnamese ICT companies were seeing big opportunities in technology transfer from global IT companies as they move their R&D centres to Vietnam to cut costs.

Several local outsourcing companies have seen a chance to receive R&D centres from foreign partners. The centres brought comprehensive technology and increased profits for local outsourcing companies, he noted.

To encourage more enterprises to shift to R&D, Dung suggested the Government rethink its tax policy for ICT companies that invested in R&D projects or R&D labs.

Monday, November 1, 2010

4G licenses to be granted to five firms

Photo: AFP

The Ministry of Information and Communications (MIC) has approved the applications of five companies seeking to run the Fourth Generation Mobile Network.

Under the license, these companies, which include Vietnam Post and Telecommunications Group (VNPT), Viettel Telecom, FPT Telecom, CMC and VTC, will be allowed to operate the 4G network over a trial period of 12 months.

4G, which refers to the fourth generation of cellular wireless standards, is a successor to the 2G and 3G networks. The nomenclature of the generations generally refers to a change in the fundamental nature of the service, non-backwards compatible transmission technology and new frequency bands.

According to telecom experts, using 4G will improve broadband significantly in comparison with 2G and 3G.

4G allows data to be transmitted at a higher speed of 1GB per second while in a static state and 100 MB per second in a mobile state. With its large broadband, the 4G also permits data, sound and mobile pictures to be transmitted in very high quality in a short time.

The 4G application will be used in teleconferences, online entertainment and for broadband Internet access.

Currently, several high technologies including Long-term Evolution, Ultra Mobile Broadband and WiMAX II have been considered pre-technologies for 4G. These technologies will be fundamental to building 4G standards.

MIC's Telecommunication Department director Pham Hong Hai said that after the one-year trial periods, companies will be required to participate in a frequency bid in order to be granted a 4G license under the Telecommunications Law. After receiving the license, they will be able to transfer frequency bands.

The MIC will organize a conference to gather telecom companies' opinions upon the 4G implementation in Vietnam soon.

Saturday, October 23, 2010

Analytica expo 2011 to be held in HCM City

Domestic and foreign companies will display their products on laboratory
technology, analysis, biotechnology and diagnostics at the Analytica
Vietnam 2011 to be held in Ho Chi Minh City from April 7-9.

The exhibition, the second of its kind in Vietnam , will be
coorganised by Munich Exhibition Company of Germany and the National
Agency for Science and Technology Information (NASATI), according to
information released at a press briefing held in HCM City on
September 9 by the Ministry of Science and Technology.

Advanced equipment and technologies used in areas such as chemical,
electronics, pharmaceuticals, health care and environment will be
showcased at 250 booths at the event.

Within the
framework of the event, there will be a two-day seminar, during which
the world’s leading scientists will present latest themes in related
industries and exchange experiences as well as achievements in science.
The seminar is expected to see the participation of about 300 scientists
from countries worldwide, including Italy , Germany , China , Japan
and Singapore .

Especially, research institutes
and laboratories will have chance to update information about the
international standard ISO 17025.

According to Phung
Minh Lai, deputy head of NASATI, the exhibition will offer domestic and
foreign enterprises an opportunity to seek out partners and expand
their business while contributing to the fulfilment of several
national targets, including 10 percent to 15 percent growth rate in the
chemical industry each year, and building self-production capacity in
areas like petrochemistry and chemical products in agriculture and
pharmaceuticals.

Nicole Klammer, Director of
Analytica Asia, said over 15 German companies and eight French
enterprises have confirmed their participation at the exhibition while a
number of other leading companies across the world have registered.

The first Analytica Vietnam held in 2009 attracted 74 companies from 11 nations worldwide./.

Thursday, February 24, 2011

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