VietNam Business

Tuesday, January 11, 2011

Lawmakers strike cautious note about high inflation

Lawmakers strike cautious note about high inflation Vietnam’s economic expansion must be accompanied by efforts to control public debt and inflation, legislators said.

According to a government report released at a meeting of the National Assembly’s Standing Committee on Saturday, most of the economic targets set for this year will be achieved, including an annual inflation rate of 8 percent and a 6.7 percent growth in gross domestic product.

The government also projected an economic expansion of 7-7.5 percent and 7 percent inflation for next year.

But Phung Quoc Hien, chairman of the NA’s Finance and Budget Committee, said keeping inflation at 7-8 percent a year should not be seen as a triumph.

“An economic growth of 6.7 percent would be more meaningful if inflation is controlled at a low level,” Hien said. “Other countries have inflation rates of 2-3 percent and they have already made efforts to control prices because they consider such rates too high.”

Vietnam has set its annual inflation target at 7-8 percent for several years and “this has to be reconsidered,” he said.

The Finance and Budget Committee said trade deficit and public debt expansions also posed problems to the economy.

Vietnam’s public debt is expected to reach 52.6 percent of the GDP this year and then expand to 57.1 percent in 2011, according to the government report.

Many legislators said they are concerned that these ratios pose grave threats to the safety of the economy.

Ha Van Hien, chairman of the Economy Committee, said the problem is that, while debt is expanding, it has not been used effectively.

Truong Thi Mai, chairwoman of the Social Affairs Committee, said she's worried about Vietnam's future: the national debt is huge and the country’s GDP growth has been forecast to slow down after 2020.

The government has set a budget deficit target at 5.5 percent of GDP for 2011, but the Finance and Budget Committee requested the target to be lowered to 5 percent only, or VND120 trillion.

Vietnam plans to raise minimum wage to from VND730,000 to VND830,000 a month in May of next year. The government estimated that VND27 trillion from its budget will be use to finance the plan.

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Lawmakers strike cautious note about high inflation

Lawmakers strike cautious note about high inflation Vietnam’s economic expansion must be accompanied by efforts to control public debt and inflation, legislators said.

According to a government report released at a meeting of the National Assembly’s Standing Committee on Saturday, most of the economic targets set for this year will be achieved, including an annual inflation rate of 8 percent and a 6.7 percent growth in gross domestic product.

The government also projected an economic expansion of 7-7.5 percent and 7 percent inflation for next year.

But Phung Quoc Hien, chairman of the NA’s Finance and Budget Committee, said keeping inflation at 7-8 percent a year should not be seen as a triumph.

“An economic growth of 6.7 percent would be more meaningful if inflation is controlled at a low level,” Hien said. “Other countries have inflation rates of 2-3 percent and they have already made efforts to control prices because they consider such rates too high.”

Vietnam has set its annual inflation target at 7-8 percent for several years and “this has to be reconsidered,” he said.

The Finance and Budget Committee said trade deficit and public debt expansions also posed problems to the economy.

Vietnam’s public debt is expected to reach 52.6 percent of the GDP this year and then expand to 57.1 percent in 2011, according to the government report.

Many legislators said they are concerned that these ratios pose grave threats to the safety of the economy.

Ha Van Hien, chairman of the Economy Committee, said the problem is that, while debt is expanding, it has not been used effectively.

Truong Thi Mai, chairwoman of the Social Affairs Committee, said she's worried about Vietnam's future: the national debt is huge and the country’s GDP growth has been forecast to slow down after 2020.

The government has set a budget deficit target at 5.5 percent of GDP for 2011, but the Finance and Budget Committee requested the target to be lowered to 5 percent only, or VND120 trillion.

Vietnam plans to raise minimum wage to from VND730,000 to VND830,000 a month in May of next year. The government estimated that VND27 trillion from its budget will be use to finance the plan.

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Vietnam set to face serious power shortage in 2013

Vietnam set to face serious power shortage in 2013 Vietnam will face critical power shortages in 2013 and 2014 as demand for electricity in the country is growing at a fast pace, a government official said Saturday.

Drastic measures need to be taken soon to speed up the construction of new power plants, Minister Nguyen Xuan Phuc, head of the government office, said in a meeting of the National Assembly’s Standing Committee.

“Power prices should also be reviewed to attract investment for power plant projects from all sectors,” he said.

The government said power demand will increase by 15 percent next year. If local production and power purchases from China and Laos go ahead as planned, the demand can be met. However, if one new power project is delayed or weather conditions are not favorable, there will be shortages.

According to a report by the NA Economic Committee, most power projects scheduled for completion in 2010-2011 have faced delays. The committee said out of 51 projects it had inspected, only five were on schedule.

Experts have said the lack of rain this year has put huge pressure on power production in Vietnam. However, the main reason for Vietnam’s power woes is delays in the construction of new power projects.

The Vietnam Energy Association also said current power prices of around 5 US cents per kilowatt-hour don't encourage investment into the sector, as manufacturers only earn profits at prices of about 7-8 cents per kWh.

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EU, Vietnam say to start talks on free-trade pact soon

European Commission President Jose Manuel Barroso (R) shakes hands with Vietnam's Prime Minister Nguyen Tan Dung before their meeting at the EU Commission headquarters in Brussels on Monday - Photo: Reuters

BRUSSELS - The European Union and Vietnam will start negotiations on a free trade pact soon, EU and Vietnamese leaders said on Monday, fuelling Vietnamese hopes of being recognized by the EU as a free market economy.

Vietnamese Prime Minister Nguyen Tan Dung said free trade talks should also lead to an end to contentious EU import duties on Vietnamese-made shoes and greater access for Vietnam to the EU’s consumer markets under the EU’s Generalized System of Preferences for developing states.

“With the result obtained on Tuesday, the recognition by the European Union of Vietnam as a market economy ... will be agreed soon,” the Prime Minister told journalists after a meeting with Jose Manuel Barroso, President of the EU’s executive Commission.

The EU and Vietnam will launch free trade talks “as soon as possible”, Barroso said.

The two leaders met on the first day of a two-day summit of EU and Asian heads of state, which will address global financial governance issues, IMF voting rights, security issues, climate change and international trade.

Since talks for a global trade accord stalled at the World Trade Organization in 2006, the European Union has pursued bilateral trade accords, notably with Asian trading powers.

The bloc will this week sign its first bilateral free trade pact -- with South Korea -- and hopes to seal a deal with India this year.

With efforts frustrated for a regional trade accord with the ten-state Association of Southeast Asian Nations, the EU is considering individual pacts with Vietnam, Singapore and Malaysia.

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Monday, January 10, 2011

Vietnam creative industry still in infancy

HCMC – Vietnam’s creative industry has remained weak since local companies have yet to pay due attention to creativity as an essential part in the production process, industry experts said at a seminar in HCMC.

Edward Gomez, design consultant at multinational Global Sources, told the “How Designs Influence Business Results” seminar last week, “To draw customers’ attention, the products should have typical and creative designs as well as useful functions.”

But local enterprises have not concentrated much on this aspect.

Tran Ngoc Danh, managing director of Arts & Design School, conceded local companies had not invested much in pattern designs because it required all sorts of things but finished products could not compete with those made in China, Thailand and Malaysia.

Creativity in Vietnam has been growing in the fields of advertising, fashion design, publishing, music, television and radio, but not interior decoration and industrial product design.

According to a survey carried out last December by Synovate Business Consulting, a global market research company, the creative industry contributes 7% of the world’s gross domestic product (GDP) and forecast 3% growth per year.

The seminar was organized by the British Council Vietnam and the HCMC Investment and Trade Promotion Center following the successful seminar “E-Technology Applications in Advertising and Communications”.

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Expert calls for publicity campaign for GM crops

HCMC - The director of an institute of biotechnology in the Philippines insisted Vietnam have a proper campaign to inform of the public of the economic benefits of genetically modified (GM) crops and address concerns about this biotechnology.

“We need an information campaign to clarify the science behind the technology,” Reynaldo V. Ebora, director of the National Institute of Molecular Biology and Biotechnology at the University of the Philippines Los Banos College, told the Daily before he left Vietnam over the weekend.

Ebora was in Vietnam for about one week to share his know-how and experience in biotechnology at conferences entitled “Vietnam Biotech: Growing the Future” which were co-hosted by the U.S. embassy and the Ministry of Agriculture and Rural Development (MARD) in HCMC, Hanoi and Vinh Phuc.

Ebora said available analyses and scientific studies on food safety and proteins proved GM crops including corn were as safe for use as conventional products, and there had not been problems reported since the commercial introduction of agricultural biotech in 1996.

Sources showed biotech crops were planted on 134 million hectares in 25 countries and territories last year, making up 9% of the world’s agricultural land and 16 of them being developed nations.

More than 14 million farmers all over the world plant crops enhanced with biotech and approximately 90% of them live in developing countries. Last year saw soya produced in this way account for 77% of the global output of this crop, cotton for 49% and corn for 26%.

Despite the increasing output of biotech crops, Ebora said there were some confusing reports against the biotechnology. He explained there were concerns being raised because of toxin – a term used for a particular protein in the GM process.

“This is actually not a toxin to human, but it is a toxin to a specific group of insects,” Ebora said, furthering that this endotoxin was aimed at helping the crops be resistant to insects including the corn borer.

Farmers will have to count on insecticide spraying to control their crop quality if they do not grow biotech crops, and this is not good for the consumers and the environment. “We know that insecticide residue still remains in the plants and causes environmental problems,” Ebora said.

Ebora underlined the importance of properly addressing those aforesaid concerns in preparation for commercial production of GM crops after testing, as the Philippines did to encourage farmers to adopt the technology and the public to accept it.

There were concerns about GM crops, primarily from the consumers about safety when the Philippines introduced the biotech in 1999 and began commercial production in 2003. But the country has helped the public well understand the technology.

“The way we have done is to basically engage in dialogues.” Ebora said “The government and the technology developers have to exert extra efforts to explain what the technology is about and look at the science behind it.”

Ebora said prior to commercial production of GM crops in the Philippines, scientists of the Philippines had participated in a series of seminars to discuss with the non-governmental organizations about any concerns and to inform the public of the benefits of the biotech.

More farmers and producers in the Philippines have used the technology because they find a better alternative for their yields, which can grow up to 37% compared to conventional crops depending on the areas. This results in an increase in net income for them.

Higher yields and reduced production costs brought about the global net economic value of some US$9.2 billion to growers of biotech crops in 2008, with more than half of which going to farmers in developing countries.

Vietnam has trialed cultivation of biotech maize under the supervision of MARD, and this ministry expects to approve large-scale commercial fields next year.

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Tour operators await visa fee exemption advice

HCMC – Many tour operators are still waiting for guidelines from the tourism authorities regarding the exemption of visa fees for tourists following the approval of the Government, and have yet to send the good news to their overseas partners.

Under a new decision last week, the Government agreed to exempt visa fees for international visitors in the last quarter of this year as a way to further bolster the hospitality industry despite its better-than-expected performance so far. However, the incentive is extended to only those visitors who purchase package tours offered by international travel firms who have registered to join the national marketing campaign in 2010 named Vietnam – Your Destination.

Travel agencies said they would announce the incentive to partners right upon the guidance.

“We will send the news to partners when we receive the guidance from the Vietnam National Administration of Tourism (VNAT) because the similar rule last year was complicated for tourists,” said Hoang Huu Loc, deputy director of Saigontourist Travel Service Co.

Loc told the Daily on Monday that visa fee exemption would help the tourism sector woo more visitors as visitors can save US$25 per person. In last year’s program, many tourists catered to by Saigontourist, especially French and German travelers, had received the benefits.

“In a time of tough competition, overseas partners will be happy if we can lower tour prices but we need more time to promote the program to buyers,” he said.

Tu Quy Thanh, director of Lien Bang Travelink, has the same view with Loc but his company has informed overseas partners of the incentive.

“We don’t have time so we send the new rule to partners first and then update the guidance later,” he said.

According to him, it is difficult to woo visitors from long-haul destinations like Europe in the rest of the year because the incentive was announced too late.

“But it’s good news because we have more tourists to travel by groups. We will inform the partners as soon as possible,” said Nguyen Minh Quyen, deputy director of Ben Thanh Tourist Travel Service Center.

Loc from Saigontourist expects the company can make the procedures for tourists in the last two months of this year as it needs time to have the guidance from VNAT and feedback from overseas travel agents.

VNAT has reported more than 383,000 foreign visitors to the country in September, bringing the total number of foreign arrivals to over 3.73 million in the year to date, up 34.2% year on year. The country’s tourism expects to receive five million foreign visitors this year.

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