VietNam Business

Thursday, October 28, 2010

Expert proposes drastic reform of economic policy

Vo Dai Luoc addresses the seminar on problems of and solutions for the Vietnamese economy - Photo: Kinh Luan

HCMC – A high-profile economic expert on Wednesday called for drastic changes to the country’s economic policy, saying a new approach in policy making was required to ensure sustainable development.

Vo Dai Luoc, a professor who is doing research on the economic strategy for the next ten years as requested by the State, told a seminar at the Saigon Times Group that Vietnam was facing problems of trade and budget deficits, bad loans, and especially inefficient public investment.

The economic policy should be more open in the years to come as a way to leverage sustainable development, he told the seminar on problems and solutions for the local economy.

The reason behind these problems is that the economy’s growth engine remains unchanged, as it is based on export-oriented manufacturing and the leading role mandated to the state sector.

“I am not among those who support the idea that state-owned enterprises play the key role in economic development, and I think that we should make some breakthrough in changing this policy,” he said.

Luoc called on policymakers to make changes to the policy and mechanism because the country has seen a high growth rate but it is still not sustainable.

South Korea, as he pointed out, is probably the best current example of a developing economy making leaps and bounds into the realm of the most advanced.

“Vietnamese policymakers should take it as an example, and be aware that, with labor costs rising, the country needs to follow suit,” he said.

He suggested that the Government give a more open, thriving and vibrant economic environment to the special economic zones, allow them to utilize an economic management system that is especially conducive to business and has yet to exist in the rest of the country.

He also advised that local enterprises should not compete with China in industrialization. “Instead, they should try to find a different way, choose what are their competitive advantages in industries and services,” said Luoc.

“But I fear the kind of commitment needed can’t be created by Government initiatives alone,” he added, hinting at the responsibility of the business community as well.

Post-crisis opportunities, challenges highlighted

Photo: AFP

Numerous managers, economists and businesspeople gathered at a seminar in Ho Chi Minh City Thurday to discuss the opportunities and challenges as well as Vietnam’s policies and measures after the economic crisis.

Co-hosted by the Vietnam Investment Review (VIR) and the Association of Foreign-invested Enterprises, the seminar also served as a forum for the delegates to analyse the factors affecting the flow of investment and trade.

VIR’s Editor-in-Chief Nguyen Anh Tuan said that the global financial crisis had many adverse impacts on Vietnam in terms of exports, foreign direct investment (FDI), the stock market, international tourism and other fields.

However, Vietnam has managed to stave off the worst of the economic recession and stabilise its macro-economy thanks to concerted efforts by the government and the business community, he said.

Professor Nguyen Mai noted that FDI is considered the brightest spot in the country’s economic picture over the past two years, but Vietnam needs to improve the quality of this capital source.

While discussing the knock on effects on the stock market, the Vice Chairman of the State Securities Commission Nguyen Doan Hung emphasised the need to stabilise the market before implementing long-term targets, including enhancing the quality of auditing, information and corporate administration, tightening the supervision and protection of investments and dealing properly with securities companies suffering losses.

Dr. Le Xuan Nghia, the Vice Chairman of the National Financial Supervisory Committee, said that Vietnam is likely to face more monetary risks in the medium term, citing its foreign exchange rates.

The slow recovery of the global economy could hamper the flow of capital into Vietnam , worsen the depreciation of the Vietnamese dong and weaken the country’s international balance of payments, said Nghia.

PetroVietnam signs agreement with 3 foreign banks

Representatives of PetroVietnam and three foreign banks sign the ISDA agreements in Hanoi on Thursday - Photo: Thanh Huong

HANOI – PetroVietnam on Thursday signed three agreements with BNP Paribas, Sumitomo Mitsui Banking and Standard Chartered Bank in Hanoi to set up principles for future derivatives transactions as a way to hedge against risks of forex rates and commodities prices among others.

The national oil and gas group said the contracts signed were a protocol of ISDA Master Agreement 2002 compiled by the International Swaps and Derivatives Association, Inc.

Nguyen Tien Dung, deputy general director of PetroVietnam, said the signing would help the group limit negative impacts from forex changes, prevent risks in terms of interest rate, exchange rate, and commodity prices and diversify the group’s financial activities.

The use of derivatives tools would enable PetroVietnam to meet the huge need of large capital for its projects, as well as save costs and time in financial management.

ISDA is the largest international commercial financial institution worldwide in terms of the number of members. Signing an ISDA Master agreement is a must for all sides before conducting any derivatives transaction for standardization of legal procedures. All parties in an ISDA agreement do not need to study many procedures to save cost and time whenever there is a derivatives transaction among them.

Bitexco calls southern retailers northward

A view of The Garden shopping mall in Hanoi - Photo: Thanh Hang

HCMC - The Garden Investment and Trade Sole Member Company, a subsidiary of Bitexco Group, on Thursday met with retailers in HCMC to lure them to the retail component of The Garden project in Hanoi.

It was the first time the company had marketed the development in HCMC, it said. The Garden is the My Dinh area which is a new administrative and economic center for the capital city.

The Garden was launched in June last year, with residential, office and retail sections.

The developer told some 70 retailers in an event at the Caravelle Hotel in downtown HCMC on Thursday that six storeys and three basements providing 57,000 square meters in the project were large enough to suit everyone’s needs, including sections for entertainment, food and beverage, fashion, fitness, restaurant, cinema and café terrace.

Robin Neo Chow Hee, managing director of The Garden shopping mall, said the Vietnam retail market is set for strong growth, offering many opportunities. The growing demand for goods and services would create different segments for retailers.

Hee said foreign retailers have been interested in the market because of the country’s political stability and projected retail growth over the next three to five years.

The Garden is the first Bitexco Group shopping center development in Hanoi. The group is also developing Bitexco Financial Tower surrounded by Hai Trieu, Ngo Duc Ke and Ho Tung Mau streets in HCMC’s commercial district.

The 68-floor tower is planned to be on the market by mid-October this year with some 8,000 square meters for retail.

Seminar seeks to increase handicraft exports to Japan

Vietnamese ceramic products will be the highlight of a week-long festival in the southern province of Binh Duong in September

Photo: Tuoi Tre

Vietnamese businesses need to pay more attention to designing and creating unique handicraft products in order to boost exports to the Japanese market and increase their competitiveness over rivals from China, India and Myanmar, say Japanese experts.

At a seminar on increasing handicraft exports to the Japanese market, held in Hanoi Thursday, Setsuko Okura, Managing Director of the Japanese company Osmic Ltd, said that after becoming more competitive and attractive, many Vietnamese handicrafts have become popular in the Japanese market.

The use of Vietnam’s embroidered bags has also become trendy with young Japanese people.

She stated that in recent years, the design of Vietnamese ceramic and lacquer products has been vastly improved. However, to penetrate deeper into the Japanese market, Vietnamese handicrafts must ensure two factors: design and price.

According to Takata, a leading Japanese designer, besides these two factors, Vietnam’s handicraft products must be unique and decorative.

He suggested that the Vietnamese government should introduce strategies to train designers and encourage Vietnamese students to study design in Japan to ascertain Japanese consumers’ tastes.

At the seminar, several Japanese experts chose 10 Vietnamese handicraft producers to attend an exhibition themed “Lifestyle Vietnam ” in Tokyo from November 30 to December 9 this year.

According to the Ministry of Industry and Trade, Japan is one of Vietnam ’s major handicraft importers and is expected to import US$150 million worth of Vietnamese handicrafts this year, accounting for 4 percent of the country’s total handicraft import value.

Vietnam’s growth faces unclean energy threat: Finnish minister

Vietnam’s growth faces unclean energy threat: Finnish minister Vietnam’s economy will face a serious sustainable development challenge if it does not adopt clean and efficient energy practices, Finnish labor minister Anni Sinnemäki said early this week.

Sinnemäki, who was leading a Finnish business delegation on a visit to Vietnam this week, said Vietnam, as one of ten countries where climate change would have the most serious impacts, should consider alternatives as it develops.

“I am very impressed with the economic growth here in Vietnam but worried for people who have suffered the impact of climate change,” the minister said in a meeting of Vietnamese and Finnish businesses, also attended by her Vietnamese counterpart Nguyen Thi Kim Ngan.

Production and consumption have increased around the globe while the “biocapacity” of the planet has decreased, creating an ecological and environmental imbalance on earth, she said.

Climate change was a challenge not for Vietnam and its government but for the entire world and all the governments, said the minister.

Sinnemäki said the Vietnamese government’s policy to support and encourage local businesses to achieve energy efficiency in production was a good measure to fight climate change.

Vietnamese labor minister Ngan said Vietnam was on the recovery road after the global crisis and needed modern and energy efficient technologies to develop sustainably.

She said the use of old technologies in production was a trend in the country that it had a bearing on climate change.

The Vietnamese government has asked local businesses to choose clean and energy efficient solutions, and called on foreign investors to introduce and transfer modern technologies to Vietnam, Ngan said.

Sinnemäki said Finland has been one of the world’s leading countries in developing clean and energy efficient technologies for decades and would share this with local businesses.

Santtu Hulkkonen, executive director of Cleantech Finland, said Finnish businesses considered Vietnam a potential market and some companies like Kemira have been present here for years, seeking new opportunities.

Cleantech Finland is a collective of 2,000 firms that specialize in many areas including energy efficiency, clean industrial processes, renewable energy, waste management and wastewater treatment.

The group said in a statement that Vietnam has a large demand for wastewater treatment and environmentally friendly energy sources.

Emissions from fossil fuel combustion and wastewater released by industrial processes have damaged the environment and affected people’s lives, the group said.

Hulkkonen told Thanh Nien Weekly Finnish firms were at present involved in ten projects, worth about 100 million euros, that deal with transferring clean and energy efficient technologies to Vietnam. About 13 to 20 other projects worth 40 to 50 million euros were about to be implemented, he said.