Foreign diplomats evade tax on sale of used cars

This Mercedes S500 was imported tax-free by a Myanmarese diplomat and sold without paying the applicable taxes when he left the country at the end of his tenure

Photo: Tuoi Tre

Foreign diplomats in Vietnam, who are allowed to import vehicles tax-free, are increasingly selling their cars illegally when they leave the country at the end of their tenure.

If they do not re-export the vehicles, the diplomats are required to pay the applicable taxes and get them registered afresh before selling them in the country.

Their failure to do so is costing the government large sums of money in lost taxes. Normally, if a car costing $100,000 is imported, it will attract import tax of $83,000, special consumption tax of $91,500, and VAT of $27,450.

Statistics from the General Customs Department show that 1,158 diplomatic cars belonging to officials who have finished their tenure have yet to be registered for re-export or sale in Vietnam.

The city Customs Department said while some 200 diplomats who imported cars have left the country, their vehicles have yet to be registered for re-export or local sale.

A senior customs official, who wished to remain unnamed, said most diplomats import German or US cars costing several hundred thousand to a million dollars, adding the taxes on them will VND1 billion-2 billion ($51,400-102,800) on average.

A HCMC street view

Tuoi Tre tracked down some of the cars sold to locals by departing diplomats.

A Bentley, worth VND4.5 billion, is owned by a Nguyen Dinh Chinh Street resident. It was registered in 2009 for Soe Myat Myat, an attaché at the Myanmar embassy in Hanoi.

An S500 Mercedes belonging to Aung Kyaw Moe, another Myanmarese official, was registered three years ago. Though he sold it before returning home recently, it remains registered in his name.

A Mercedes S63AMG, previously owned by Okan K. Abdul Hameed of the Iraqi embassy but sold to a Vietnamese, remains registered in Hameed’s name though he has left the country.

Volavong Ourakone of the Laos embassy sold his Mercedes S550 last year to a person living on Tran Huy Lieu Street in Phu Nhuan District, but without doing the official sale procedures.

Tuoi Tre also discovered that Kimhean Yeav, a commercial counselor at the Cambodian embassy who has returned home, sold his Infiniti illegally.

To resolve the problem, the Customs Department has suggested that when foreign diplomats end their terms in Vietnam, the police and local registry will revoke their car number plates and registration.

The Ministry of Finance, on the other hand, wants all the taxes that were exempt originally automatically levied once a diplomat completes his or her tenure.

The ministry has also drafted a circular requiring buyers of second-hand diplomatic cars to possess sale and registration papers. Unregistered cars will be seized.

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Thai scholars: Vietnam, a country of opportunities

Thailand attracts 360,000 Vietnamese tourists each year

Photo: Tuoi Tre

The Thai scholar circle has extolled Vietnam as a country with favorable investment environment, saying they believed in further development of the bilateral cooperative relationship, despite challenges.

At a seminar on the Thailand-Vietnam relationship held in Bangkok, Thailand, Tuesday, adviser Wittaya Supatanakul from Thammasat University’s Centre for Research and Development of Cambodia, Laos, Myanmar and Vietnam, highlighted the strengths of Vietnam, which he called a country of opportunities.

Vietnam has a big market with more than 87 million consumers, high purchasing power and cheap production and labour costs, while sharing cultural similarities with Thailand, said Wittaya, adding that Vietnam enjoys political stability and an investment encouragement policy and welcomes small and medium-sized enterprises to do business in the country.

On Vietnam’s investment environment, Wittaya said Vietnam offers foreign entrepreneurs and investors the benefits of social security and public order.

Its government policies welcome investors and facilitate necessary procedures while its industrial zones offer one-stop-shop services and openings in various fields, he said.

Nguyen Hong Quang from the Hanoi’s East Asia Institute presented a report on, “The Vietnam-Siam relationship in the 17 th and 18th century: a common picture on the two countries’ relationship and Vietnamese people’s way of looking at Siam ”.

At present, Thailand ranks tenth among more than 100 countries and territories investing in Vietnam with 216 projects totalling more than US$5.7 billion. Two-way trade exceeded $6.1 billion last year and the neighbouring countries are striving to raise bilateral trade value to $10 billion.

The seminar was jointly held by the Ministry of Foreign Affairs’ East Asia Department and Thammasat University ’s East Asia Research Institute of Thailand.

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Measures considered to curb trade deficit

Customs officials check imported goods at the customs b ranch in Gia Lam District, on the outskirts of Ha Noi. — VNA/VNS Photo Pham Hau

HCM CITY — Senior economists have argued for reduced investment in State-owned firms and strong development of supporting industries as key measures to help reduce the nation's rising trade deficit.

At a two-day conference in HCM City ending yesterday , Bui Truong Giang and Pham Sy An of theViet Nam Economics Institute highlighted the challenges involved in controlling the trade deficit.

In the first eight months of 2010, Viet Nam's exports were worth US$43.4 billion, while its import turnover was $52 billion, causing the trade deficit to register a year-on-year increase of 34.4 per cent.

"This figure is much higher than recorded in previous years except 2008," said Giang.

This meant that the Government's goal of keeping the trade deficit to less than 20 per cent of the total export value was hard to realise, he said.

Giang also noted that trade deficit was a long-term problem.

He said the deficit had been a regular feature of the economy over the last 10 years, but it had become "more serious" after Viet Nam's entry into the World Trade Organisation (WTO).

"These changes have created an unstable situation as well as high risks for the economy," he said.

An agreed with Giang, adding that the long-term, an increasing trade deficit could drain the central bank's foreign currency reserves and weaken its ability to intervene in the foreign exchange market.

"The serious trade deficit would also increase the economy's debt accumulation with outside economies and bring the domestic economy closer to a debt crisis," he said.

"Around the world, it has been seen that an economy with fixed forex policies and big trade deficits are more prone to face monetary crises," Giang said.

In the long-term, an increasing trade deficit could destabilise foreign currency markets and compromise the independence of the nation's monetary policy as it would be forced to focus on ways to keep the forex rate within set targets, he said.

The current trade deficit could not be settled immediately, and it needed to be tackled with specific strategies and several focused measures, he added.

Long-term measures

Giang and An suggested some long-term measures which they hoped would help reduce the trade deficit in coming years.

The Government should reduce investments in State-owned enterprises (SOEs), while further accelerating SOE equitisation to ensure that they operate according to market principles. In other words, SOEs must be treated on par with other firms.

The Government should also do away with protection and preferential treatment for SOEs involved in production and trade of essential goods.

These support policies would benefit protected enterprises and essential goods producers but harm enterprises that use their products by increasing production costs, and this would in turn affect the overall competitiveness of domestic products, the economists argued.

The Government should have a clear and comprehensive strategy to effectively develop the supporting industry in order to reduce the import of accessories, they said.

Development of infrastructure and the labour force, further administrative reforms and a flexible foreign exchange rate policy were necessary tasks for reducing the national trade deficit and protecting foreign currency reserves, the economists added. — VNS

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North in deficit as south runs surplus

HA NOI — Ha Noi's trade deficit reached nearly US$10 billion, while HCM City reaped a trade surplus of about $300 million in the first nine months of this year, statistics offices in the two cities stated.

In Ha Noi, the trade deficit doubled in export value, the statistics office reported, adding that in the first nine months of this year, the city was expected to earn an export revenue of $5.5 billion, a year-on-year increase of 19.5 per cent. Meanwhile, the import value rose by 18.2 per cent to $15.5 billion.

In September alone, Ha Noi's trade gap waspredicted to hit $1.08 billion, up $70 million over August. Export revenue was expected to drop 0.3 per cent against the previous month to $680 million, while import turnover was expected to rise 1.3 per cent to $1.76 billion.

"It is easy to understand why Ha Noi has a big trade gap. It is a large developing city with a high demand for machinery, equipment, accessories and materials for construction projects," said an official from the statistics office's trade section.

In the first nine months of the year, huge sums were spent on imported luxury goods such as cars, wine, cigarettes and interior furnishings, she said.

The Ha Noi Statistics Office earlier forecast that the capital would suffer a trade deficit of $13.8 billion in 2010, with exports earning just $7.6 billion and imports $21.4 billion.

From January to September 2010, HCM City's import turnover is estimated to reach nearly $15.5 billion, a year-on-year increase of 12.6 per cent. Its export value is predicted to reach $15.8 billion, representing a year-on-year increase of just 1 per cent.

In the coming months, export turnover should rise as market demand would typically rise in the last months of the year, the city's Statistics Office stated. Although HCM City experienced a trade surplus, the office reported that exporters were encountering persistent difficulties.

Officials said the price of raw materials was increasing, which would affect exporters' competitiveness. They also said the city was suffering a shortage of skilled workers and that some industries were facing material shortages, both of which were hitting exports.

In September alone, the city's export revenue month-on-month dropped 9.7 per cent to $1.7 billion. — VNS

Meanwhile, the decrease in gold and crude export volumes also contributed to the fall in the city's total export value, officials said. — VNS

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Air Mekong set for launch

HA NOI — The Mekong Airlines Joint Stock Company (Air Mekong) yesterday announced it would begin operating eight flights per day to destinations around the country on October 9.

Doan Quoc Viet, Air Mekong chairman, said Air Mekong would offer two service classes, including deluxe and economy, on its four CRJ-900 Bombardier jets.

The company had a total capital of VND300 billion (US$15.4 million) from its parent, the BIM Group based in Ha Long City, Quang Ninh Province, Viet said.

"SkyWest Inc, the holding company for SkyWest Airlines in the United States, is looking to acquire a 30 -percent stake in Air Mekong," he said yesterday. "The acquisition is waiting for approval from State authorities."

Skywest currently provided pilots and airplane engineers to Air Mekong, he said.

"The Civil Aviation Administration of Viet Nam will finish its checks and appraisals of Air Mekong's operations on September 30 for it to begin operation next month," said a representative of the administration.

Air Mekong's management board believed it could compete with other large carriers, such as Vietnam Airlines and Jestar Pacific, because it planned to develop routes that the larger carriers still ignored, Viet said.

Air Mekong begins selling tickets today at 200 points of sale nationwide.

The airline was offering a promotional programme until November 9, 2011 to sell 1,000 tickets with prices ranging from VND400,000 and VND1.2 million ($20.5-$61.5) for flights on all its domestic routes, said Truong Thanh Vu, Air Mekong Director of Trade and Service.

The airline would sell tickets directly at sales points or via its website and customer care centres. Many payment options were available, including credit cards, ATM cards or at banks, Viet said.

The airline is scheduled to fly from Ha Noi and HCM City to Da Nang, Nha Trang, Da Lat and Phu Quoc. It will also offer flights from HCM City to Con Dao, Buon Ma Thuot, Hai Phong and Vinh.

In July, the airline received delivery of four made-in-Canada Bombardier CRJ 900 aircraft owned by Skywest Leasing Inc of the US. Each aircraft has 95 business and economy-class seats. — VNS

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Tourist arrivals expected to top 5 million this year

Tourists visit HCM City. The Viet Nam National Administration of Tourism expects the country will welcome about 5 million visitors this year, which is almost 1 million higher than the initial annual target. —VNA/VNS Photo Thanh Vu

HCM CITY — The strong recovery of the inbound sector in recent months made the Viet Nam National Administration of Tourism (VNAT) confident it can surpass its annual target and receive 5 million foreign visitors this year.

The original target was 4.2 million international visitors, a year – on-year increase of 10 per cent, said VNAT director Nguyen Van Tuan.

"The sector will surely hit the 4.2 million target two months early," Tuan said.

"The tourism industry is highly sensitive to economic and financial changes," he said, noting that the global economic downturn last year had caused a significant decrease in the number of foreign visitors to Viet Nam.

And this year, along with the economic recovery, foreign arrivals had also increased strongly, he said.

Strengthening large scale promotions in key markets like France, the US, China, South Korea, Japan and ASEAN countries have also proved effective with the number of visitors from these markets increasing sharply.

Moreover, the unstable political situation in Thailand earlier this year made many visitors from Western Europe and North America shift their holiday destination to other countries including Viet Nam.

Tuan said that the tourism sector will continue to promote the country's image abroad with travel promotion programmes in potential markets like China, Northeast Asia, ASEAN and Western Europe.

The country welcomed over 3.8 million international visitors last year, down 11.5 per cent from the previous year. International arrivals in the first eight months of this year reached 3.3 million, up 35.2 per cent over the same period last year.

Viet Nam's tourism turnover in the first eight months of this year was VND64 trillion (US$3.28 billion), a year-on-year increase of 37.13 per cent, meeting 80 per cent of the annual plan, according to the VNAT. — VNS

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Nation must ‘ensure balanced development'

by Mi Bong

Tam Binh Street in HCM City's Thu Duc District is flooded after heavy rains. Experts say Viet Nam should take more steps to minimise the impacts of climate change when formulating its socio-economic plans. — VNA/VNS Photo Trang Duong

HCM CITY — Viet Nam should ensure that its economic and social needs are balanced, and that its development vision is long-term, experts said at a conference in HCM City on Tuesday.

While agreeing that the priority should be accorded in coming years to maintaining macroeconomic stability and sustaining the growth momentum, both national and international experts said this cannot be achieved at the expense of the natural environment.

The impacts of climate change on socio-economic development were also discussed at the two-day seminar organised by the United Nations Development Programme, Viet Nam's Academy of Social Science and the Committee for Economic Affairs of the National Assembly.

Do Hoai Nam, chairman of the Viet Nam Academy of Social Science, said the nation should develop long-term strategies that take into consideration the world economic situation in the future and its likely impacts on the Vietnamese economy.

Referring to the overall socio-economic development goals for the 2011-15 period with a vision to 2020, Nam said key tasks included inflation control, effective implementation of monetary and fiscal policies, land law amendments, and policies for developing high-quality human resources.

"A social security system that covers the entire country, especially its remote areas, is also vitally important," he said.

He called on the State Bank of Viet Nam to follow a cautious monetary policy to control credit growth and money supply. The central bank should also continue improving its capacity to supervise the financial-monetary system effectively, he added.

Climate change

Measures to protect the environment and cope with climate change were vital for sustainable economic development, he said.

Nam also stressed the important role of State management in the economic restructuring process.

John Hendra, United Nations Resident Coordinator in Viet Nam said in the current domestic and international context, achieving the two objectives of stability and growth required monitoring of all relevant indicators, including inflation, exchange rate, the level and structure of public debt, and the amount of foreign reserves.

"While we all recognise the importance of macroeconomic stability and growth, it is also important to recall that sound development is one that balances economic and social needs," he said.

He also spoke of the need to strengthen links between the National Assembly and research institutions, academic circles and individual experts.

In the first nine months of this year, Viet Nam has seen some recovery from the economic downturn. The GDP grew by 6.4 per cent in the second quarter, up from 5.83 per cent in the first, with sustained high monthly industrial output growth rates of over 14 per cent compared to the same period of last year, the seminar noted.

Inflation has cooled down in the second and third quarter. The accumulative inflation rate was 4.99 per cent till the end of August, possibly enabling the containment of annual inflation rate within the target range of 8-8.5 per cent.

Deficit concerns

However, the lending rate of over 13 per cent has created difficulties for businesses in a market that is not expanding rapidly, speakers noted.

Macroeconomic stability could be threatened if inflation is extended alongside increased pressure of trade deficit, foreign exchange and possible widening of the budget deficit, according to the speakers.

Over the last 10 years, public investments, including State budget investments and investments by State-owned enterprises have increased significantly, absorbing a lot of credit and making it very difficult to curb budget deficit, experts noted.

Vo Dai Luoc of the Viet Nam Asia-Pacific Economic Centre suggested that Viet Nam prioritises development of the private sector as a key motivating force for national economic development; and also ensure greater transparency in its financial system.

Nguyen Minh Phong of the Ha Noi-based Academy of Economic and Social Development Research said the adjustment of exchange rates effected in the recent past was necessary and correct as a measure to curb inflation.

He said that in the coming time, there was a need to adjust the exchange rate flexibly according to market situations. Businesses need to watch out for exchange rate fluctuations and accommodate them in their dealings to avoid losses, he said. — VNS

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