Exports to Brazil surge by 160% in first eight months

HA NOI — Exports to Brazil reached US$296 million in the first eight months of the year, an increase of 160 per cent over the same period last year, according to the Vietnamese trade office there.

Key exports included building materials, industrial products, footwear, garments and rubber products, the office said.

The Ministry of Industry and Trade attributed the sizeable increase to success in exporting cement, steel, pottery and electrical products to the Brazilian market, helping offset declines in traditional exports like seafood and footwear in the third quarter caused by difficulties in complying with new Brazilian regulations.

Cement exports to the South American nation totalled over $36 million during the period, while steel exports racked up over $7 million, helping Viet Nam generate a trade surplus with Brazil of nearly $15.6 million for the year so far.

Viet Nam's exports to Brazil had the advantages of reasonable price and quality in a market with a population of 190 million and a growing per-capita income, said the director of the export promotion centre under the ministry's Trade Promotion Agency (Vietrade), Le Xuan Duong.

However, Duong said, Viet Nam's footwear and garment sectors had yet to fulfil their export potential to Brazil.

Brazilian footwear products already held the lion's share of the Latin American market and were exported to 141 countries worldwide, so Viet Nam hoped to use Brazil as a gateway for Vietnamese footwear to enter other markets in the region, Duong said.

But a number of export products, including seafood and footwear, were facing the risk of additional technical barriers imposed by Brazil, he added. Vietnamese seafood exports to Brazil were currently halted for investigation of breeding and processing conditions and food safety standards.

Vietrade said that to further exploit trade opportunities in Brazil, Vietnamese businesses should better research the market and focus on more value-added products such as electronic components and consumer goods.

Two-way trade between Viet Nam and Brazil surged roughly 60 per cent per year on average between 2005-08, Vietrade said, while the total reached $564 million last year, double 2007's figure. — VNS

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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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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

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Work begins on city's first metro

HA NOI — Construction has kicked off on Ha Noi's first light metro line.

The US$1billion line will run from Nhon in Tu Liem District to Ha Noi's Railway Station in Hoan Kiem District. The metro line is the largest public transportation project that the city has ever undertaken.

Prime Minister Nguyen Tan Dung highlighted the project's importance during a speech at the groundbreaking ceremony on Saturday. He said the new metro line would aid the capital city's construction and development, while increasing the city's public transportation capacity and easing traffic congestion in the inner city.

He also urged the municipal authorities to join with relevant agencies to expedite other public transport projects.

The 12.5km Nhon-Ha Noi Railway Station section is part of metro route No3, which will be 20km in length. The pilot is one of five metro lines approved by the Prime Minister as part of the city transportation development plan that will be completed by 2020. Ha Noi would develop three more light metro routes in the future, said Ha Noi People's Committee Chairman Nguyen The Thao.

Thao said upon its completion, the metro line, which is expected to carry 300,000 passengers a day, would improve the city's public transport capacity and ease the heavy traffic congestion in the city's western area.

Unlocking the gridlock

The rapid increase in the number of two-wheeled and four-wheeled vehicles have seriously hampered the city's transportation infrastructure.

Traffic jams are common in the city's inner district, especially in the East-West corridor linking Nhon to the city centre, reports Ha Noi Moi (new Ha Noi) newspaper.

A tunnel boring machine (TBM) will be used to build the line's tunnel, which will mitigate the impacts of the project's construction.

There will be 12 stations along the line. Each four-carriage metro is capable of serving more than 900 passengers and will be able to travel at a maximum speed of 80 km per hour. Total travel time is expected to take about 20 minutes.

The metro line is slated to be operational by late 2015 and will be built with consultancy services from France's Systra - International Consulting Engineers for Rail and Urban Transport. — VNS

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First phase of Ha Noi bridge finished

The first phase of the Vinh Tuy Bridge has been completed in time for the 1,000th anniversary celebrations of Thang Long-Ha Noi. — VNA/VNS Photo Anh Ton

HA NOI — Deputy Prime Minister Hoang Trung Hai inaugurated Vinh Tuy Bridge's first phase yesterday in Ha Noi.

The bridge is set to be the widest bridge in Viet Nam and is one of the major construction projects that is celebrating the 1,000th anniversary of Thang Long-Ha Noi.

Construction of the bridge kicked off in 2005. The bridge is the first major project financed by the municipal People's Committee with VND3.6 trillion (US$185 million) in total investment capital.

Hai said he highly valued the effort put forward by municipal leaders, the Ministry of Transport, the Ministry of Construction and related agencies.

He spoke highly of the contributions made by workers and residents, who have overcome difficulties to build the bridge.

Hai said this was an extremely important project and the bridge was a developmental milestone that would promote the city's industrialisation and modernisation as well as the Hong (Red) River region.

"This is an event that marks the maturity and development of Viet Nam's bridge construction sector," Hai said.

He instructed the capital to begin the second construction phase.

The bridge, which opened for public use last September, is one of seven Hong (Red) River crossings, which will help ease congestion in the capital. It will also reduce traffic flow and contribute to the completion of the city's Ring Road No 2.

The bridge has four lanes for traffic. About 34,000 vehicles now can cross the bridge and approximately 72,000 vehicles per day will be able to use the structure by 2020. — VNS

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Vietnam must address concern dong may slide: IMF

Vietnam must work to address expectations its currency will depreciate further, according to the International Monetary Fund’s representative in the country.

The Southeast Asian nation faces an “embedded expectation of a declining trend in the dong,” Benedict Bingham, the IMF’s senior resident representative in Hanoi, said in prepared comments for a presentation. It was delivered at a seminar in Ho Chi Minh City on Sept. 21 organized by a National Assembly committee, and posted on the IMF’s website this week.

Vietnam’s central bank devalued the dong last month for the third time in the past year, citing the need to curb the trade deficit. Further pressure on the currency “would be negative” for financial stability, Fitch Ratings said in July when it lowered the nation’s debt rating.

The state of the country’s foreign-exchange market has “undermined confidence in the dong” in part because it has “increased transaction costs and uncertainty for Vietnamese businesses,” Bingham said. The currency market has also “impaired Vietnam’s standing among international investors,” he said.

The State Bank of Vietnam weakened the dong’s reference exchange rate by 2 percent on Aug. 18 to 18,932 per dollar. The currency can fluctuate 3 percent on either side of the figure.

Concerns about an overheating economy, the balance of payments and a high inflation rate will probably “keep the currency under stress,” Capital Economics Ltd. analysts said in a research note sent yesterday, predicting an exchange rate of 20,400 per dollar by the end of 2011.

The Vietnamese have shifted from dong to US dollar assets or into gold because of expectations of dong devaluations, the IMF said in a report this month.

Vietnam’s financial system has faced excessive volatility, Bingham said. A lack of transparency has hurt confidence in the country’s macroeconomic management, partly due to a reluctance to adjust the central bank’s benchmark interest rate, he said. The benchmark was left unchanged at 8 percent for the ninth consecutive month in September.

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Vietnam must address concern dong may slide: IMF

Vietnam must work to address expectations its currency will depreciate further, according to the International Monetary Fund’s representative in the country.

The Southeast Asian nation faces an “embedded expectation of a declining trend in the dong,” Benedict Bingham, the IMF’s senior resident representative in Hanoi, said in prepared comments for a presentation. It was delivered at a seminar in Ho Chi Minh City on Sept. 21 organized by a National Assembly committee, and posted on the IMF’s website this week.

Vietnam’s central bank devalued the dong last month for the third time in the past year, citing the need to curb the trade deficit. Further pressure on the currency “would be negative” for financial stability, Fitch Ratings said in July when it lowered the nation’s debt rating.

The state of the country’s foreign-exchange market has “undermined confidence in the dong” in part because it has “increased transaction costs and uncertainty for Vietnamese businesses,” Bingham said. The currency market has also “impaired Vietnam’s standing among international investors,” he said.

The State Bank of Vietnam weakened the dong’s reference exchange rate by 2 percent on Aug. 18 to 18,932 per dollar. The currency can fluctuate 3 percent on either side of the figure.

Concerns about an overheating economy, the balance of payments and a high inflation rate will probably “keep the currency under stress,” Capital Economics Ltd. analysts said in a research note sent yesterday, predicting an exchange rate of 20,400 per dollar by the end of 2011.

The Vietnamese have shifted from dong to US dollar assets or into gold because of expectations of dong devaluations, the IMF said in a report this month.

Vietnam’s financial system has faced excessive volatility, Bingham said. A lack of transparency has hurt confidence in the country’s macroeconomic management, partly due to a reluctance to adjust the central bank’s benchmark interest rate, he said. The benchmark was left unchanged at 8 percent for the ninth consecutive month in September.

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