Investors face tougher financial capacity tests

HA NOI — A new regulation being drafted by the Ministry of Planning and Investment would impose stricter financial capacity requirements on foreign investors.

Disbursement of foreign investment has lagged far behind the commitments made by foreign investors, suggesting that investors without sufficient financial capacity have still been receiving licences from investment authorities, says the director of the ministry's legal department, Pham Manh Dung.

In many cases, Dung added, foreign investors had registered projects without an intention to bring foreign capital into Viet Nam to implement the projects. Instead, they had sought financing in Viet Nam after obtaining an investment licence.

To deal with these issues, the ministry has drafted a decree that would require investment agencies to verify investors' financial capacity, requiring investors to provide confirmation from internationally reliable banks and credit institutions or other investor guarantees on the source of funding for a project.

The decree would also allow for the withdrawal of investment licences after an assessment of financial capacity of an investor, Dung said.

Thousands of foreign-invested projects had been licensed and allocated land, only to remain idle for years, he noted. Some projects in Ba Ria-Vung Tau Province, for instance, had not broken ground a full decade after being licensed.

Without regulations providing for the withdrawal of licences, some provinces have required foreign investors to post a security deposit equal to 5 per cent of the project's total budget in order to keep the land.

The draft decree would authorise municipal and provincial planning and investment departments to set up boards empowered to suspend foreign-invested projects that have not been put into operation as scheduled without a valid explanation for the delay.

Under the draft decree, projects with investment capital in excess of VND300 billion (US$15.4 million) would also have to be examined for compliance with development master plans for industries and localities.

Projects that had a small scale of investment but required large areas of land could also be turned down on the basis of waste, Dung said, with the regulation aiming to make the most efficient uses of available land.

The draft decree would guide the implementation of the 2005 Law on Investment and, if approved, would replace Decree No 108/2006/ND-CP issued in 2006, Dung added. — VNS

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Anti-fraud council set up in Ha Noi

HA NOI — A council responsible for warning and preventing trade fraud, especially in the area of certificates of origin (C/O), made its debut yesterday in Ha Noi.

The past few years had seen an increasing amount of C/O fraud, especially in products which have been subject to anti-dumping tariffs, said the council chairwoman Tran Thi Thu Huong.

The council, under the Viet Nam of Chamber of Commerce and Industry (VCCI), would issue early warnings about suspected C/O fraud, Huong said.

It would work with companies via industry associations, she said, adding that updated information about current trade fraud cases and consultation for specific sectors and export markets as well as training courses would also be provided.

Enterprises should take caution when signing commercial and investment co-operation contracts with partners for products likely to be subject to anti-dumping tariffs, said VCCI vice chairman Pham Gia Tuc.

Council members included representatives from the VCCI, the Ministry of Industry and Trade's Competition Administration Department, the Ministry of Planning and Investment and the General Department of Customs.

More than 11,000 incidents of fake and smuggled goods as well as trade fraud were detected in the capital in the first half of this year, according to the municipal Anti-Smuggling Steering Committee 127.

The completed prosecution of about 5,500 offences resulted in fines totalling VND531 billion (US$28 million). — VNS

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City hosts ports, logistics confab

HCM CITY — The Viet Nam Container Ports and Logistics 2010 conference offers delegates the opportunity to exchange information on port and logistics management and operations amid the global economic recovery.

Speaking at the two-day conference which opened in HCM City yesterday, Vuong Dinh Lam, chairman of the Viet Nam Maritime Administration, set out the ambitious agenda: Foreign and local firms discuss a comprehensive plan to develop shipping and ports in Viet Nam.

In the last two years, despite the economic crisis, port and logistics operations in the country were encouraging due to the Government's effective economic management and the efforts of the maritime sector, he said.

From handling 197 million tonnes of freight in 2008, the sector's output increased to 251 million tonnes last year, he said.

From 1,199 vessels weighing 4.38 million DWT in 2007, the county's fleet increased to 1,598 ships and 6.3 million DWT last year, he said.

The target for the maritime industry by 2020 is to be the largest component of Viet Nam's sea-based economy which is expected to contribute 53 per cent to 55 per cent of GDP, he said.

The Government continues to promote maritime administrative reform and is drafting legal documents and strategies that comply with the country's laws and international conventions, he said.

Vietnamese companies provided an insight into infrastructure and port development around the country to support cargo transport.

Executives from major industry players like Antwerp Port Authority, Maersk Line Asia Pacific, and the International Association of Ports and Harbors, NYK Line Viet Nam, Maersk Viet Nam, Cai Mep International Port, Sai Gon New Port, Global Maritime and Port Services, APL-NOL Viet Nam, and YCH Group gave presentations and held panel discussions.

They were joined by officials from the Ministry of Transport and the Viet Nam Maritime Administration.

There was a pre-conference workshop on Practical Strategies to Optimise Port Operations, Planning and Logistics highlighting strategies for sustainable port development and addressing the demands of efficient container and general purpose terminals. — VNS

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Businesses can do more with support: economist

Vietnamese firms have come through the global economic crisis well and can achieve more with support from the government, economist Pham Chi Lan said.

Lan, a former member of the Prime Minister’s Research Commission, told Tuoi Tre that though the number of businesses in the country rose 12.5 times from 40,000 to 500,000 between 1990 and 1999, the change in political and social perception about their roles only started five years ago, five years after the Enterprise Law too effect.

What is the contribution of Vietnamese entrepreneurs?

Since October 13 has been chosen as the national day for them and not for business in general, it is clear that Vietnam has started to recognize their contributions. The number of businesses, at around six per 1,000 population, is still small compared to other countries where the average rate is 19 per 1,000 people in low-income nations and 29 per 1,000 in middle-income countries.

The fact that more than 1 million jobs have been created, mainly in the private sector, is enough to show the undeniable contributions of Vietnamese entrepreneurs. During the crisis, the number of enterprises going bankrupt and the percentage of workers laid off were very small, making Vietnam one of a handful of countries enjoying positive growth rate during the period.

What kept our businesses afloat during the economic downturn?

It was the national campaign to promote the consumption of domestically-made goods.

But the main problem is that in the campaign policymakers just paid attention to the tip of the iceberg by calling for consumer patriotism and developing the distribution system.

The more important part, support for businesses to adopt global technological and management advances to cut costs and improve quality and packaging, has yet to receive attention.

What are main shortcomings of Vietnamese businesses and entrepreneurs?

Though many Vietnamese entrepreneurs are competent at doing business, they are desperately short of capital.

Since Vietnam does not have enough resources for all, it is allocating most of the resources to state conglomerates. So Vietnam should consider this more carefully so that capital will be redirected to those who operate the most efficiently.

Another problem is that a large part of our resources is channeled into the real-estate and stock markets and not manufacturing due to our administrative system, legal framework, and policy making. So our policymakers are still playing catch-up with the market and not moving ahead of it.

Are the existing incentives enough to promote Vietnamese goods at home?

There are a lot of incentives but they have little effect.

For example, the 15 measures the government announced to support development of small and medium-sized enterprises in 2006-2010 … A survey by the Central Institute for Economic Management found that only 12 of them have been implemented.

[However] even the measures have had little effect since there are only nine municipal credit guarantee funds for small and medium-sized enterprises in the country’s 63 provinces and cities, with just three actually operational.

There are too many policies that require a large number of guiding documents. So the most practical solution is to focus on the implementation and effectiveness of each policy.

To back Vietnamese businesses, what areas should policies focus on?

Dominating the domestic market and then expanding to the global market needs outstanding quality at reasonable prices. So the application of technological advances is the key.

Though we claim that research and development is a priority, the Ministry of Science and Technology returns hundreds of billions of dong [meant for research] to the budget every year since. The research projects receiving ministry funding are also impractical.

So the system should be changed and funding should go directly to businesses who want to take drastic action for their survival.

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Businesses can do more with support: economist

Vietnamese firms have come through the global economic crisis well and can achieve more with support from the government, economist Pham Chi Lan said.

Lan, a former member of the Prime Minister’s Research Commission, told Tuoi Tre that though the number of businesses in the country rose 12.5 times from 40,000 to 500,000 between 1990 and 1999, the change in political and social perception about their roles only started five years ago, five years after the Enterprise Law too effect.

What is the contribution of Vietnamese entrepreneurs?

Since October 13 has been chosen as the national day for them and not for business in general, it is clear that Vietnam has started to recognize their contributions. The number of businesses, at around six per 1,000 population, is still small compared to other countries where the average rate is 19 per 1,000 people in low-income nations and 29 per 1,000 in middle-income countries.

The fact that more than 1 million jobs have been created, mainly in the private sector, is enough to show the undeniable contributions of Vietnamese entrepreneurs. During the crisis, the number of enterprises going bankrupt and the percentage of workers laid off were very small, making Vietnam one of a handful of countries enjoying positive growth rate during the period.

What kept our businesses afloat during the economic downturn?

It was the national campaign to promote the consumption of domestically-made goods.

But the main problem is that in the campaign policymakers just paid attention to the tip of the iceberg by calling for consumer patriotism and developing the distribution system.

The more important part, support for businesses to adopt global technological and management advances to cut costs and improve quality and packaging, has yet to receive attention.

What are main shortcomings of Vietnamese businesses and entrepreneurs?

Though many Vietnamese entrepreneurs are competent at doing business, they are desperately short of capital.

Since Vietnam does not have enough resources for all, it is allocating most of the resources to state conglomerates. So Vietnam should consider this more carefully so that capital will be redirected to those who operate the most efficiently.

Another problem is that a large part of our resources is channeled into the real-estate and stock markets and not manufacturing due to our administrative system, legal framework, and policy making. So our policymakers are still playing catch-up with the market and not moving ahead of it.

Are the existing incentives enough to promote Vietnamese goods at home?

There are a lot of incentives but they have little effect.

For example, the 15 measures the government announced to support development of small and medium-sized enterprises in 2006-2010 … A survey by the Central Institute for Economic Management found that only 12 of them have been implemented.

[However] even the measures have had little effect since there are only nine municipal credit guarantee funds for small and medium-sized enterprises in the country’s 63 provinces and cities, with just three actually operational.

There are too many policies that require a large number of guiding documents. So the most practical solution is to focus on the implementation and effectiveness of each policy.

To back Vietnamese businesses, what areas should policies focus on?

Dominating the domestic market and then expanding to the global market needs outstanding quality at reasonable prices. So the application of technological advances is the key.

Though we claim that research and development is a priority, the Ministry of Science and Technology returns hundreds of billions of dong [meant for research] to the budget every year since. The research projects receiving ministry funding are also impractical.

So the system should be changed and funding should go directly to businesses who want to take drastic action for their survival.

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Shady foreign loan offers raise alarm

HA NOI — The State Bank of Viet Nam has issued a warning that some foreign individuals claiming to represent international institutions have recently approached ministries and municipal authorities, offering low-interest loans and non-refundable aid on condition of receiving a Vietnamese Government guarantee.

Therefore, the State Bank has issued Official Document No 7824/NHNN-TD reminding its branches and credit institutions nationwide to cautiously consider loan offers in accordance with foreign debt regulations.

Credit institutions were also told to work closely with law firms, embassies, credit rating agencies and bank agents to verify the financial capacity and legal capacity of foreign partners before entering any agreement. Credit institutions and central bank branches were also ordered to report all documents pertaining to foreign loan offering to the State Bank no later than December 31.

State Bank branches were further instructed to support municipal authorities in preventing credit risks arising from foreign loan offers. — VNS

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Vietnam’s hi-tech sector still in infancy: expert

Vietnam’s hi-tech industry is still in infancy, so there will be ample room for investment and development.

So Vietnam is in dire need of incentives and legal framework for venture capital funds for the industry, said Arthur Trueger, chairman of venture capital firm Berkeley International Capital Corp, in the 4th annual Technology Business Conference opened Wednesday in Ho Chi Minh City.

The country, therefore, has yet made a strong presence on the global hi-tech industry map despite its potentials.

But improvements are underway.

The country will set up 15 software parks and mobilize funding for training high-tech human resources, said Tran Duc Lai, Information and Communications Minister, told participants at the two-day event hosted by IDG Ventures Vietnam, DFJ VinaCapital, IBM and Strategic Alliance Vietnamese Ventures International.

Vietnam is considered a promising technology market. Last year the sector generated US$6.26 billion, accounting for 7 percent of Vietnam's GDP.

The number of internet users exceeds 22 million, a penetration rate of over 25 percent.

The digital content industry saw a dramatic growth rate of 50 percent with revenues topping $700 million. The software industry also achieved an impressive 40 percent growth rate and revenues of $880 million.

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