Free trade deals give boost to Vietnam exports

Photo: AFP

Import tariff cuts under free trade agreements signed with several countries in the region have helped boost Vietnam’s exports this year.

Vietnam concluded a bilateral FTA with Japan last year and has multilateral FTAs with other countries like China, Korea, Japan, Australia, and New Zealand signed under the aegis of ASEAN of which it is a member.

Around 21 percent, 79 percent, 28 percent, and 13 percent of Vietnam’s exports to China, Korea, Japan, and ASEAN member nations enjoy tax cuts under FTAs.

Saigon 3 Garment Co’s exports to Japan have surged 20 percent to US$55 million, its chairman, Pham Xuan Hong, said.

Agreements between Southeast Asian countries and Korea that cut taxes on textile and apparel products from 13 percent and 8 percent have driven Vietnam’s export earnings in the year to date to $220 million, up 60 percent, Le Van Dao, general secretary of the Vietnam Textile and Apparel Association, said.

The deal with Korea, which has also seen seafood import taxes cut from 20-28 percent to 13-20 percent, has lifted exports.

Tax on Vietnamese fruit exports to China, which used to be 12-24 percent, has been abolished, helping exporters gain a foothold there, Huynh Quang Dau, deputy chairman of the Vietnam Fruit Association (Vinafruit), said without elaborating.

However, Vietnamese businesses have not made optimum use of the FTAs.

While some actively promote their products in these countries, many wait for contracts to “drop in their laps,” Hong of Saigon 3 Garment said.

It is foreign firms who are searching for potential Vietnamese partners, he added.

Technical barriers, mostly related to product origin declarations, packaging, and labeling standards, are still keeping Vietnamese fruits out of to China, Vinafruit said.

But Le Quang Lam, deputy head of the Ministry of Industry and Trade’s Multilateral Trade Policy Department, said they are important issues to which Vietnamese exporters must pay attention when taxes come down.

However, the websites of the ministry, Ho Chi Minh City Trade Promotion Center, Vietnam Chamber of Commerce and Industry, and many business associations do not have updated or information about FTAs and are not user-friendly.

Only the National Committee for International Economic Cooperation’s website at www.nciec.gov.vn/index.nciec??242 is reasonably useful.

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Negotiations begin for Vietnam-Russia trade deal

Vietnam began negotiations for a Free Trade Agreement with the Customs Union of Russia, Belarus and Kazakhstan in Hanoi Monday.

An FTA between the two sides will bring huge mutual economic, trade, and investment benefits, a Ministry of Industry and Trade official said on the sidelines of the meeting.

This first meeting is an important step towards the agreement, Dang Hoang Hai, head of the ministry’s European Department, said.

Russia sees Vietnam as a gateway to Asian countries, especially ASEAN members, he said.

An FTA will help Vietnam push agricultural, seafood, and garment products to Russia, he added.

Russia exports fertilizers, oil and gas, atomic energy, heavy industrial goods, and automobiles to Vietnam.

Bilateral trade is estimated to rise to US$3 billion next year and $10 billion in future, a significant figure considering Vietnam’s trade with the EU is less than $10 billion.

To promote Vietnam’s strategic partnership with Russia, leaders form the two sides have agreed to sign an FTA in the near future.

Negotiations will cover three main issues: customs barriers, services and investment, and intellectual property.

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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

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State urges petrol dealers: ‘buy local'

HA NOI — The Ministry of Industry and Trade has asked PetroVietnam and the Dung Quat Oil Refinery to work directly with domestic petrol dealers, particularly Petrol-imex, to reduce reliance on imports.

Viet Nam National Oil and Gas Group (Petro-Vietnam) and the refinery must report preliminary plans for production, consumption and stock of Dung Quat's products by Friday, the ministry said.

PetroVietnam and the refinery should also work out a detailed plan for production in 2011, the ministry said. It also called on the firms to boost consumption of the refinery's products, including petrol for airplanes, on the domestic market as early as possible.

Nine out of 11

So far, nine out of 11 petrol importers in Viet Nam buy the refinery's products. In the first nine months of this year, the refinery's petrol and oil sold on the domestic market accounted for 35 per cent of the total volume sold.

Viet Nam National Petroleum Corporation (Petrol-imex), which has a 50 per cent share of the domestic petrol and oil market, consumed 28 per cent of the refinery's total output of petrol and oil.

However, domestic petrol consumption is 10 per cent lower than predictions for this year, while production at the refinery was now exceeding the year's plan by 25 per cent, Pham Dinh Thuc, PetroVietnam's general director, said.

Fourth quarter

In the fourth quarter of this year, the refinery is expected to produce about 1.9 million tonnes of petrol, while domestic petrol distributors such as PVOil, Petec and Petrolimex have registered to buy just 430,000 tonnes from the refinery.

As a result, stockpiles have reached 75,000 tonnes and are predicted to reach 727,000 tonnes by the end of the year.

Domestic importers should revise their signed contracts to import fuel and buy up the difference from Dung Quat, Thuc said. — VNS

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Viet Nam, Russia, Kazakhstan and Belarus plan free trade agreement

HA NOI — The first meeting of a working group to prepare a free-trade agreement between Viet Nam and Russia, Belarus and Kazakhstan was held here yesterday.

The agreement is expected to bring benefits to an area covering 20 million square kilometres, with a population of 253 million people and a GDP of US$1,505 billion.

The head of the Vietnamese delegation, Dang Hoang Hai, Deputy Director General of the European Department of the Ministry of Industry and Trade, said the group would focus on the terms of references.

"These must cover the impacts of the agreement, including difficulties and challenges during negotiations as well as specific tasks for each member of the working group," said Hai.

"It will take time for members to conduct research and collect data before coming up with their impact assessment," continued Hai.

He expressed confidence that the agreement would bring benefits to Viet Nam and the Russian Federation, particularly in the fields of customs duties, investment services, business and trade.

It is forecast two-way trade will reach $10 billion in the years following the signing of the agreement.

Viet Nam's main exports to the Russian Federation are agricultural products. In turn, it imports fertilisers, oil, gas, energy, heavy industry products and a utomobiles.

The Alliance of Customs from Russia, Belarus and Kazarkhstan is led by Ms E E Mairova, Deputy Director of the Department for Trade Negotiation at the Russian Economics Ministry. — VNS

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Market predicted to ebb this week

HCMC – Stock brokers hold a downbeat view over the local stock market this week, saying the market would suffer a mild decline as profit-taking pressure might increase at around the 460-point level. The VN-Index is expected to move within a narrow range between 445 and 465 points.

The market corrected in the last session of last week after three rising days in a row. Throughout the week, however, the VN-Index gained 7.55 points, or 1.67%, against the previous week to end at 459.26.

Closing the week, the number of advancers was still modest with 53 stocks rising compared to 189 others losing ground. Liquidity remained low, averaging out at 37.9 million shares worth VND975 billion per session, rising by 1.9% in volume but dropping by 3.4% in value.

APEC Securities Co. noted that large caps rallied sharply during the week due to high demands of foreign investors while penny stocks kept moving down.

“Although the U.S. market enjoyed another rising week, the local market stayed dull as investors were waiting for financial reports of listed firms in the third quarter. They were also pessimistic at declines of most small and medium caps last week,” APEC said.

APEC estimated that the market would not escape the narrow range between 445 and 465 points this week. “Investors should acquire stocks with good fundamentals if the VN-Index drops to below 450 points,” it suggested.

Vietnam International Securities Co. (VIS) said complicated developments on the world market were not strong enough to support investor sentiment last week. “Buyers only accepted low prices given lack of supporting news and cash flow signs. It is notable that trading volume is rather low recently, suggesting that supplies of cheap shares are running dry,” VIS said. 

Foreign participation, meanwhile, surged strongly against previous weeks and the investors were net buyers for around 17.8 million shares worth VND703 billion.

“Foreigners now play an important role in movement of the VN-Index and will help prevent a sharp downturn within the next few days,” VIS said.

HCMC Securities Corp. (HSC) said the VN-Index, nevertheless, gained some eight points last week and sentiment seems to have improved somewhat, helped by the very active buying by some foreigner investors. “The general feeling is that once support from this side subsides, prices might fall back again and therefore we see short-term players taking profit at levels above 460 points,”

“We do not expect sentiment to change dramatically over the coming week. A number of large caps will continue to do well, while the overall picture is likely to show little excitement,” HSC added.

The Hanoi market performed worse than its southern counterpart with three losing sessions. The HNX-Index lost 4.12 points, or 3.27%, from the week earlier to close at 121.69. The market’s liquidity improved slightly with the average daily volume of 30.2 million shares worth VND692 billion, increasing by 6.3% and 4.8% against the previous week respectively. VIS predicted the market would move flat again this week. LienVietBank,

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Visa fee exemption takes effect

Samurai to take local travelers to Japan on chartered flight

HCMC – The visa fee exemption policy took effect on Sunday after the Vietnam National Administration of Tourism (VNAT) had issued guidelines on the policy over weekend.

In a document signed by VNAT’s deputy head Nguyen Manh Cuong, the tourism agency said the exemption of visa fees would be granted between Sunday and December 31 to international visitors.

However, the incentive is limited to only those tourists who buy packaged tours from international travel companies who have registered to join the country’s tourism marketing campaign named Viet Nam – Your Destination. Tourists can find such companies at www.impressivevietnam.vn

The central Government late of last month announced the new policy for international travelers to the country following a request from the Ministry of Culture, Sports and Tourism.

Travelers who purchase “Vietnam – Your destination” program’s tours but make their tours after December 31 will not be entitled to visa fee exemption.

The country received more than 383,000 foreign visitors last month, bringing the total number of foreign arrivals to over 3.73 million in the January – September period, up 34.2% year on year.

* HCMC- based Samurai Travel Joint-Stock Company in December will take local travelers to Japan on a chartered flight. The company has promised the cheaper tour prices compared to normal prices because Samurai and APEX travel have cooperated to bring Japanese tourists to Vietnam on the plane.

APEX will handle inbound tours for Japanese travelers to the country.

Samurai’s director Nguyen Van Thanh told the Daily that the outbound tour would start in HCMC on December 28 to take tourists to attractions in Nikko and to celebrate the New Year holiday in Tokyo and other sites. The six-day tour costs US$1,999 per person.

He said tourists would save hundreds of U.S dollars as the two companies have leased the flight for both inbound and outbound travelers.

Thanh said his company was seeking cooperation with other travel companies in HCMC to attract local travelers to the special tour. Samurai and APEX have plans for similar tours on this Lunar New Year holiday.

Tourists can contact the company at 40 Mac Thi Buoi Street, District 1 or via the telephone number 08 3 825 1076 for further information.

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