SMEs need to be better audited

Small and medium-sized enterprises should improve their auditing standards if they wish to access much needed capital, a conference in Hanoi heard Thursday.

There are about 450,000 enterprises in the country, according to Dang Van Thanh, chairman of the Vietnam Accounting and Auditing Association.

He said about 96 percent of those firms are SMEs, which contribute about 40 percent of Vietnam's total GDP.

However, he said almost every business in the country faces difficulties accessing credit.

Statistics from the State Bank of Vietnam 's Credit Department showed that just half of the 163,000 non-State enterprises had taken out bank loans, accounting for 27 percent of the country's total debt.

"It means that half of the non-State businesses, most of which are SMEs, are suffering a capital shortage," he said.

Another investigation released by the Ministry of Planning and Investment's Development Department shows that just one-third of SMEs has access to bank loans.

Nguyen Minh Tuan, deputy head of the Vietnam Chamber of Commerce and Industry's Business Development Institute, agreed that accessing credit is a problem for SMEs.

Economist Nguyen Dai Lai said banks pay particular attention to production and business plans and capital ability when they consider loan applications.

"Financial transparency and demonstrating the ability to make a profit are vital for any business that wishes to get credit," Lai said.

To meet bank requirements, participants at the conference were told about the need for independent auditing.

"Independent auditing could increase the reliability and accuracy of businesses' financial reports," Lai said.

Nguyen Thi Huong Nga, ANZ Bank's country head of Credit Risk, said financial reports need auditing certification because it increases confidence in the information provided.

"However, many SMEs are not aware of the importance of auditing in answering capital questions," said Le Thi Hong Len, head of the Association of Chartered Certified Accountants (ACCA) Vietnam.

Nguyen Thanh Trung, general director of Mazars, said financial reports are needed to access long-term credit businesses.

"Auditing is not a compulsory requirement for SME's. However, it is helpful and makes accessing credit easier," he said.

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Vietnam, EU hold ninth PCA negotiation round

Vietnam and the European Union (EU) began the ninth round of negotiations for the Partnership and Cooperation Agreement (PCA) in Brussels Friday.

The Vietnamese delegation to the negotiation is headed by Deputy Foreign Minister Bui Thanh Son and the EU side is headed by James Moran, Director for Asia in the European Commission’s Directorate General for External Relations.

The two sides are expected to deal with existing issues, including a provision regarding “common principles”, especially in the economic sector, and other provisions relating to cooperation in trade and investment, immigration, and dealing with the aftermath of war, mine clearance and law.

The ninth negotiation round, to close on Sept. 13, took place on the threshold of the eighth Asia-Europe Summit expected to open in early October and in the context that Vietnam and the EU are preparing to mark the 20 th anniversary of their diplomatic ties.

In the spirit of cooperation and respect for each other’s position, the two sides reached vital progress in the past eight negotiations with the aim of ending the talks later this year.

Vietnam-EU PCA negotiations, following an EU request, started in early 2008.

 

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Vietnam, EU hold ninth PCA negotiation round

Vietnam and the European Union (EU) began the ninth round of negotiations for the Partnership and Cooperation Agreement (PCA) in Brussels Friday.

The Vietnamese delegation to the negotiation is headed by Deputy Foreign Minister Bui Thanh Son and the EU side is headed by James Moran, Director for Asia in the European Commission’s Directorate General for External Relations.

The two sides are expected to deal with existing issues, including a provision regarding “common principles”, especially in the economic sector, and other provisions relating to cooperation in trade and investment, immigration, and dealing with the aftermath of war, mine clearance and law.

The ninth negotiation round, to close on Sept. 13, took place on the threshold of the eighth Asia-Europe Summit expected to open in early October and in the context that Vietnam and the EU are preparing to mark the 20 th anniversary of their diplomatic ties.

In the spirit of cooperation and respect for each other’s position, the two sides reached vital progress in the past eight negotiations with the aim of ending the talks later this year.

Vietnam-EU PCA negotiations, following an EU request, started in early 2008.

 

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IMF says risks to global growth have intensified

The International Monetary Fund said Friday that downside risks to global recovery have intensified due to recent turbulence in sovereign debt markets and continued weakness in the financial sector.

The IMF, in a briefing note prepared for Group of 20 deputy finance ministers, said global growth had been somewhat stronger than expected during the first half of 2010, "but is projected to slow temporarily during the second half of 2010 and the first half of 2011."

The Fund said European policy actions to calm the euro-zone sovereign debt crisis have eased market concerns.

"Renewed turbulence in sovereign debt markets could precipitate an adverse feedback loop between sovereigns and the financial sector, with spillovers to the real economy through higher bank funding costs, tighter lending conditions, and retrenchment in financial capital flows," it said.

The IMF also cited the U.S. property market as a source of downside risk, with increased foreclosures further pressuring bank balance sheets and possibly causing a reduction in credit available to the economy.

The G20 "surveillance note", prepared for a September 4-5 deputies meeting in Gwangju, South Korea, did not change any of the IMF's official forecasts. The Fund predicts global output will expand 4.6 percent in 2010 and 4.3 percent in 2011, compared to a decline of 0.6 percent in 2009.

The report did not specifically mention currency policies among the G20 members, which include top emerging markets China, India and Brazil. It did, however, say that sustained, healthy recovery in global growth rests on rebalancing of both internal and external demand.

Advanced economies must show a strengthening of private demand and an increase in net exports, while export countries, notably in emerging Asia, must rely more on internal demand and less on exports.

The IMF also called for the rebalancing to include credible plans by advanced economies to cut budget deficits in the future.

"This fiscal adjustment should begin in 2011, even if activity is modestly weaker than presently projected. Fiscal consolidation remains essential for strong, sustained growth over the medium term."

However, the IMF said that if growth threatens to slow appreciably more than expected, G20 countries should resort to monetary measures first, although it acknowledged that such defenses had "become thin". Some countries with budgetary breathing room may be able to temporarily

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More Vietnamese goods head for regional markets

For the first time ASEAN has surpassed the EU in importing Vietnamese goods, reported the Ministry of Industry and Trade.

In July, Vietnam exported US$6.21 billion worth of goods to ASEAN while the export value to the EU was $5.98 billion.

Nguyen Thanh Bien, deputy minister of Industry and Trade, attributed the EU's smaller import consumption to the debt crisis.

Export turnover to ASEAN is expected to hit $8.88 billion by the end of the year while the estimated figure for the EU market will be $10.9 billion, according to export plans from the ministry.

Vietnam will have a difficult time boosting its exports to the Southeast Asian block because Vietnam and ASEAN countries produce similar, competitive commodities.

" Vietnam can capitalise on opportunities to enhance exports to other markets via the free trade agreements with ASEAN nations rather than approaching a strong export growth in the block," said the ministry's multi-lateral trade policy department director Tran Quoc Khanh.

About 13 sectors' export values were higher than 1 billion USD each during the first eight months of the year, reported the ministry. Staple exports include textiles and garments, footwear, wooden furniture, seafood and coffee.

Traditional markets, including the EU, the US , Japan , mainland China and the Republic of Korea , continue to be the largest consumers of Vietnamese exports.

Demand fluctuations in these markets would directly impact Vietnam 's exports, said experts.

Nguyen Son, deputy general secretary of the Vietnam Textile and Apparel Association (Vitas), said the US economy's poor performance in July resulted in lower demand.

Nguyen Ton Quyen, deputy chairman of the Vietnam Timber and Forest Product Association, said Vietnam aims to earn $1.3 billion from wooden furniture exports to major markets this year.

Russia , Eastern Europe, the Middle East, Africa and North America markets have been difficult to penetrate, especially during the global economic crisis.

The textile and garment industry has had difficulty tapping into the Russian market because of the country's high import taxes. Africa has a large amount of demand for clothing, but enterprises have had difficulties negotiating payment methods.

Experts warned local firms about technical barriers in large markets.

New legislation in the US and the EU are likely to have an adverse impact on Vietnamese exports, said experts.

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New challenge for exported bicycles to EU

The revival of Vietnamese bicycle exports is still facing problems despite the European Union removing anti-dumping duties, according to the Ministry of Industry and Trade’s Competition Authority.

The European Commission decided to scrap anti-dumping tariffs on Vietnamese bicycles last July, while many other countries continue to be subject to the duties.

This resulted in the fact that a number of bicycles from other countries are shipped to Vietnam and then exported to the EU under the trademark “Made-in-Vietnam” in order to avoid the market’s anti-dumping duties, Vu Ba Phu, the Deputy Head of the Ministry’s Competition Authority, told a VNA reporter.

If it fails to prevent these illegal actions, the export of bicycles made in Vietnam to the EU would see an unusual “hot” growth, resulting in EU manufacturers requiring the European Commission to take sanctions, he warned.

“At that point, Vietnam ’s bicycles are at risk of being hit by anti-dumping duties again,” he stressed.

He was also concerned that if the EU resumes their sanctions on Vietnamese bikes, it will negatively affect the Vietnamese bicycle industry and damage Vietnam ’s image in international trade circles.

The EU’s decision to end its sanctions on Vietnamese bikes reflects the real developments in the Vietnamese bicycle industry and will benefit a large number of European consumers, said Phu.

“Vietnam will resolutely fight Vietnam being used as middle-ground for exporting bicycles to the EU” in order to protect businesses and ensure the country’s reputation, he stated.

According to the official, the Ministry of Industry and Trade has asked all concerned ministries, department and localities to watch out for such trade fraud as well as closely monitor foreign invested bicycle projects, to prevent any attempt to take advantage of the EU removing anti-dumping duties on Vietnamese bicycles.

“The ministry is willing to cooperate with the EC to conduct investigations and punish cases relating to the illegal shipping of bicycles,” said Phu.

The Vietnam Automobile, Motorcycle and Bicycle Association needs to closely supervise the output of domestic bicycle producers and promptly discover cases of fraud.

 

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Seize post-crisis opportunities to attract FDI: experts

HCMC – Several experts at a seminar in HCMC on Thursday called participants’ attention to the opportunities in the aftermath of the global financial crisis, saying Vietnam is having good advantages to attract foreign direct investment in tough times.

As the global economy has now entered the initial stage of recovery, there has appeared a good chance to draw FDI, especially from the U.S. and Japan, they said at the “Vietnam Economy: Opportunities and Challenges after the Global Financial Crisis” seminar.

“The recovery is just in the initial step,” Pham Do Chi, an economic expert, told the seminar organized by Dau Tu newspaper and the Vietnam Association of Foreign Invested Enterprises.

The world economy is still in difficulty, but “this is also an opportunity for Vietnam to grasp,” he said.

Nguyen Cong Ai, deputy general director of KPMG in Vietnam, agreed on the existing global difficulty, and shared Chi’s view that the difficult time would also present a good opportunity for Vietnam to attract foreign investors, especially from the U.S.

As a consulting firm catering to investors, Ai noted how foreign investors were still showing interest in Vietnam.

“Some U.S. enterprises realized difficulties in their own economy, so they have landed in other countries like China, India and Vietnam for investment or outsourcing to reduce their business costs,” he said.

In this scenario, Vietnam has its own advantages, Ai said.

“In China, the investment costs are increasing strongly lately, so it is not a good choice for investors,” he said. Meanwhile, Vietnam is as a good destination owing to political stability and fast-growing economy, he commented.

He said some American investors of late have come to KPMG for consultancy about Vietnam.

Meanwhile, Nguyen Tri Dung, who has assisted many Japanese enterprises to invest in Vietnam in recent years, said some big Japanese enterprises were also showing keen interest in Vietnam’s fast economic growth.

“When given good conditions, many more Japanese investors will come to Vietnam, especially big corporations,” he said.

Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, suggested fine-tuning on the part of Vietnam to attract good FDI only.

He remarked the FDI flow into the country continued increasing, but “Vietnam needs to have better control and should reject projects with outdated technology and using unskilled labor.” He warned against those projects finding their way into Vietnam after being rejected by China.

Mai also urged the country to speed up infrastructure construction, accelerate administrative reform and develop the human resource to attract multinational corporations.

To attract hi-tech projects, he said, the country needs high-quality labor force and an adequate system of socio-technical infrastructure to meet foreign investors’ requirements.

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