Highway fund hits opposition

HA NOI — The use of petrol taxes as a funding source for the Ministry of Transport's proposed national road maintainance fund continues to stir controversy, even though the ministry's latest proposal does not call for additional taxes for the next five years.

While the estimated annual need for road maintenance totals VND5.1 trillion (US$261.5 million) for highways and VND6 trillion ($307.7 million) for local roads, current funding sources meet just half of the demand for highways and even less for local roads, according to Minister of Transport Ho Nghia Dung.

The latest ministry proposal includes two options which would aim to mobilise financial resources to better manage and maintain road systems nationwide.

The first option would propose the immediate establishment of the fund at central and provincial levels. The funding for the first five to ten years would be sourced from the State budget, tolls and current petrol taxes.

After ten years, which would see the eradication of all road toll stations, the fund would be sustained by higher petrol prices and vehicle registration fees.

Toll stations would be eliminated to reduce traffic jams, eliminate corruption and cut administrative costs, said Nguyen Van Quyen, deputy head of the Directorate for Roads of Viet Nam.

The collection of additional petrol taxes would offset VND200 billion ($10 million) in costs related to the operation of road toll stations, said Quyen.

The second option would eliminate petrol taxes as a source of funds for road maintenance, but the ministry would delay establishment of the fund for at least five more years.

Dung said that the ministry continued to receive public comments on the fund proposal and that the ministry was committed to an appropriate roadmap to ensure the proper functioning of the fund without negative social impacts.

The ministry initially began circulating its draft decree on the road maintenance fund back in April for ministry and industry comments.

The first draft proposed new petrol taxes, vehicle registration fees, and levies on high fuel-consuming vehicles, but the proposal of a new fuel tax of VND1,000 ($0.05) per litre of petrol and VND800 per litre of diesel fuel was met with fierce opposition.

"With taxes and fees already accounting for as much as 30-35 per cent of petrol prices in Viet Nam, adding road maintenance fees, then environmental fees and resources fee, etc., a litre of petrol would carry too many taxes and fees," said economist Ngo Tri Long.

"A vehicle in Viet Nam is already burdened with various fees that haven't been clearly justified," said Dr Pham Xuan Mai from the HCM City University of Technology. "Besides, few high-quality roads have been built and many others are in bad condition, causing breakdowns for vehicles."

Hoang Duc Hau from the Viet Nam Bridge and Road Association also opposed the road maintenance fund proposal, calling it unfeasible for remote and mountainous areas.

Either of the latest options proposed by the ministry would cost the State about VND1.1 trillion ($51.3 million) in buying up toll collection rights at six privately-operated road toll stations, admitted Quyen, noting that 29 road toll stations on highways and another 26 on other roads would be slated for closure.

It would cost the State another VND100 billion ($5 million) to repay the debts of investors in toll stations, he added, and the jobs of nearly 2,900 toll booth employees would be lost. — VNS

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IMF says risks to global growth have intensified

The International Monetary Fund said Friday that downside risks to global recovery have intensified due to recent turbulence in sovereign debt markets and continued weakness in the financial sector.

The IMF, in a briefing note prepared for Group of 20 deputy finance ministers, said global growth had been somewhat stronger than expected during the first half of 2010, "but is projected to slow temporarily during the second half of 2010 and the first half of 2011."

The Fund said European policy actions to calm the euro-zone sovereign debt crisis have eased market concerns.

"Renewed turbulence in sovereign debt markets could precipitate an adverse feedback loop between sovereigns and the financial sector, with spillovers to the real economy through higher bank funding costs, tighter lending conditions, and retrenchment in financial capital flows," it said.

The IMF also cited the U.S. property market as a source of downside risk, with increased foreclosures further pressuring bank balance sheets and possibly causing a reduction in credit available to the economy.

The G20 "surveillance note", prepared for a September 4-5 deputies meeting in Gwangju, South Korea, did not change any of the IMF's official forecasts. The Fund predicts global output will expand 4.6 percent in 2010 and 4.3 percent in 2011, compared to a decline of 0.6 percent in 2009.

The report did not specifically mention currency policies among the G20 members, which include top emerging markets China, India and Brazil. It did, however, say that sustained, healthy recovery in global growth rests on rebalancing of both internal and external demand.

Advanced economies must show a strengthening of private demand and an increase in net exports, while export countries, notably in emerging Asia, must rely more on internal demand and less on exports.

The IMF also called for the rebalancing to include credible plans by advanced economies to cut budget deficits in the future.

"This fiscal adjustment should begin in 2011, even if activity is modestly weaker than presently projected. Fiscal consolidation remains essential for strong, sustained growth over the medium term."

However, the IMF said that if growth threatens to slow appreciably more than expected, G20 countries should resort to monetary measures first, although it acknowledged that such defenses had "become thin". Some countries with budgetary breathing room may be able to temporarily

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Fund sees bargains arise in growing Vietnam, Romania

Templeton Asset Management's Mark Mobius has said he sees big bargain-hunting opportunities in Vietnam and Romania due to good growth prospects, with a large potential in their equity markets.

Mobius, a prominent emerging markets fund manager who oversees about US$40 billion in assets, said he does not see an asset bubble appearing in Asian shares, but investors should watch out for volatility and instability in emerging economies.

The fund manager oversees the Romanian government's compensation fund – Fondul Proprietatea – with a size of 4 billion euro ($5.13 billion) in assets, or about 20 percent of the market capitalization of Romania's stock market.

"We'll be investing probably most heavily in raw materials, oil, gas as well as electric power, because of big demand for electric power in the country," Mobius, executive chairman of Templeton Emerging Markets Group, told a news conference.

The Romanian fund is diversified, with the largest holdings in oil companies. The fund also invests in gas and gas transmission companies and property firms, he said.

Templeton is also looking to invest steadily in Vietnam, Mobius said.

"Vietnam's stock market is now down from the peak in '07 and there is a good opportunity now because of low prices," he said.

Mobius said Vietnam's population is increasing by 1 percent a year and the country's stock market is growing at a good pace.

Vietnam has a weighting of 7 percent in the Templeton Frontier Markets Fund, with total assets under management of $442.45 million as of July 31.

The fund sharply outperformed the benchmark over the past year, producing a return of 21.8 percent against the benchmark of 4.8 percent.

"We've been investing in a pretty wide variety of companies (in Vietnam). Liquidity is very difficult and small, so it takes patience," Mobius said.

He said he has been looking at property and harbor firms.

The fund manger was in Vietnam last week to also look at furniture companies.

Templeton does not see an asset bubble occurring in Asian shares, but sees it as hard to avoid volatility in emerging markets.

Investors must be ready for volatility and must be patient, Mobius said.

"We try to encourage people to buy when things look bad when markets are down, because as you can see the recoveries in these bear markets can be very rapid," he said.

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Fund sees bargains arise in growing Vietnam, Romania

Templeton Asset Management's Mark Mobius said on Sep.3 he sees big
bargain-hunting opportunities in Vietnam and Romania due to good growth
prospects, with a large potential in their equity markets.

Mobius, a prominent emerging markets fund manager who oversees about 40
billion USD in assets, said he does not see an asset bubble appearing
in Asian shares, but investors should watch out for volatility and
instability in emerging economies.

The fund manager
oversees the Romanian government's compensation fund – Fondul
Proprietatea – with a size of 4 billion euro (5.13 billion USD) in
assets, or about 20 percent of the market capitalisation of Romania
's stock market.

"We'll be investing probably most heavily
in raw materials, oil, gas as well as electric power, because of big
demand for electric power in the country," Mobius, executive chairman of
Templeton Emerging Markets Group, told a news conference.

The Romanian fund is diversified, with the largest holdings in oil
companies. The fund also invests in gas and gas transmission companies
and property firms, he said.

Templeton is also looking to invest steadily in Vietnam , Mobius said.

" Vietnam 's stock market is now down from the peak in '07 and there
is a good opportunity now because of low prices," he said.

Mobius said Vietnam 's population is increasing by 1 percent a year
and the country's stock market is growing at a good pace.

Vietnam has a weighting of 7 percent in the Templeton Frontier
Markets Fund, with total assets under management of 442.45 million USD
as of July 31.

The fund sharply outperformed the benchmark
over the past year, producing a return of 21.8 percent against the
benchmark of 4.8 percent.

"We've been investing in a
pretty wide variety of companies (in Vietnam ). Liquidity is very
difficult and small, so it takes patience," Mobius said.

He said he has been looking at property and harbour firms.

The fund manger was in Vietnam last week to also look at furniture companies.

Templeton does not see an asset bubble occurring in Asian shares, but sees it as hard to avoid volatility in emerging markets.

Investors must be ready for volatility and must be patient, Mobius said.

"We try to encourage people to buy when things look bad when markets
are down, because as you can see the recoveries in these bear markets
can be very rapid," he said./.

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Compensation czar takes charge of $20 bln BP fund

Kenneth Feinberg, administrator of the BP Deepwater Horizon Disaster Victim Compensation Fund, testifies before the House Commerce, Trade, and Consumer Protection Subcommittee hearing on ''The BP Oil Spill And Gulf Coast Tourism'' on Capitol Hill in Washington in this July 27, 2010

Photo: Reuters

A $20 billion compensation fund for economic victims of the BP Gulf oil spill opens for business on Monday amid accusations that the rules established by its administrator are unfair.

Kenneth Feinberg who will run the fund said those who sustained financial loss because of the spill could claim for damages and he promised claimants more generous treatment than they would get if they sued the energy giant for damages.

"The goal here is to try and explain to eligible claimants: 'It is not in your interest to tie up yourself and the courts in years of uncertain protracted litigation when ... there is a more efficient quick alternative'" Feinberg told a news conference on Sunday.

"The goal will be to pay any individual claim within 48 hours of the claim being finalized and seven days for any business claim," he said.

BP set up the fund in June under pressure from the White House to come up with a remedy for the losses sustained in the fishing, tourism and other industries on the Gulf of Mexico coast because of the leak that began in April and was capped in July.

Feinberg was named its administrator because of the reputation for fairness he acquired administering the 9/11 fund and determining executive pay for companies bailed out by the government during the recession.

But the spill fund may provide an even tougher challenge, according to insurance experts who said calculating claims for businesses would be particularly difficult.

For the next six months, anyone claiming an emergency payment can also sue BP at a future date but beyond that period claimants would forfeit the right file against the company, Feinberg said.

The position is controversial. Florida's Attorney General Bill McCollum issued a statement last week saying the ruling favors BP and weakens provisions advocated by state attorney generals along the coast.

'Less generous'

"The current process appears to be even less generous to Floridians than the BP process. Such an outcome is completely unacceptable," McCollum said in a statement.

In his defense, Feinberg said the idea for the cut-off point was his rather than BP's.

"I am beholden to neither the administration nor BP. I am entirely independent," Feinberg said, adding that entry into the compensation process was voluntary.

He said no decision had been taken on whether people who claimed after the six-month window would be able to sue other companies involved with the rig that exploded April 20, killing 11 workers and triggering the spill.

So far, BP has paid $375 million in compensation, Feinberg said, though that money was separate from the $20 billion.

Even so, a flood of new claimants were expected to hit the 35 offices set up in the five coastal states of Texas, Louisiana, Mississippi, Alabama and Florida when they opened for business.

Claimants could also apply by mail and online at www.gulfcoastclaimsfacility.com.

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