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Oct 31 2012

Vietnamese firms, experts call for cutting corporate taxes

vietnamese firms experts call for cutting corporate taxes

Experts and firms in Vietnam are calling for an income tax cut to 20 percent for enterprises by next year to help them survive the ongoing economic slump.

Director of the Minh Dang Quang Law Company in Ho Chi Minh City, Tran Xoa, said with enterprises facing with financial difficulties, lower corporate taxes will help them expand next year and encourage foreign investment.

According to a recent report by the Vietnam Chamber of Commerce and Industry (VCCI), more than 40,000 enterprises had to shut down over the first nine months of this year, up 6.5 percent compared to the same period last year.

Tran Huu Huynh, head of the legal department of the VCCI, said if taxes are lowered to 20 percent from its current rate of 25 percent, around 500,000 enterprises of the country will have chances to increase their invesments and create job opportunitites for more people, local media reported October 25. 

Nguyen Minh Tuan, general director of the Nghia Pincer Company based in HCMC, said enterprises now hope that the government will have taxes reduced to 20 percent as soon as next year instead of waiting until 2020 as had been originally planned.

Tuan said the reduction will allow companies to save on costs, increase production and reduce prices, which will help to spur consumption, leading to an increase in the value added taxes for the state budget.

The government in 2004 reduced corporate income tax from 32 to 28 percent and then cut it to 25 percent in 2009.

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Oct 30 2012

Petrolimex in first deal to supply gasoil, gasoline

petrolimex in first deal to supply gasoil gasoline

Vietnam’s Petrolimex is set to supply gasoil and gasoline for the first time, in a move to expand its trading presence in Asia, industry sources said.

Petrolimex, Vietnam’s top fuel importer and distributor, is usually a net importer of oil products and has not sold gasoil or gasoline before, two of the sources said on Monday.

But the company turned seller for the first time after being awarded a tender by Sri Lanka’s state-owned firm Ceylon Petroleum Corp. for 310,000 barrels of gasoil and gasoline, to be delivered on November 2.

It is unclear where Petrolimex will source the barrels from.

The company has a term contract with suppliers including South Korea’s SK Energy and Hyundai Oilbank, Elico Oil, Unipec, PetroChina and Winson Oil to buy about 6.29 million barrels of gasoil for this year, mainly for domestic use.

While Petrolimex has had a representative office in Singapore since the late 1990s, it set up its subsidiary trading company Petrolimex Singapore in late 2009, and only recently started exploring trading opportunities in gasoil and gasoline, traders said.

Last year, it sold fuel oil for the first time by supplying Bangladesh Petroleum Corp. The company is looking to participate in other tenders to supply the oil products in the near future, a source close to the matter said.

Vietnam’s demand for gasoil, which is used by the country’s agricultural, industrial and transport sectors, has fallen over the past few months as lower economic growth hampered domestic demand.

Petrolimex skipped its quarterly imports of oil products for two consecutive quarters this year.

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Oct 30 2012

Doesn’t add up

doesn%e2%80%99t add up

Experts have qualms about banks’ profit claims

  An employee carries a bag of money behind bundles of Vietnamese dong banknotes at a bank in Hanoi. The government said it is focusing on dealing with the bad debt issue to increase liquidity in the banking system. Photo: Reuters

Credit growth has been low, but some commercial banks have still announced handsome profits, inviting skepticism and concern about the accuracy of the figures.

Experts are repeating a charge they have leveled earlier against the banks, saying they may be hiding some of their bad debts to avoid setting aside large sums as provisions.

VietinBank, the nation’s second largest partly-private lender by assets, has posted a net profit of VND4.5 trillion (US$218 million) in the first nine months, up 10.4 percent over the same period last year. Vietcombank, the third largest partly-private lender, has reported third quarter net profit of more than VND1 trillion, up 5.5 percent from a year ago.

DongA Bank reported a pre-tax profit of over VND1 trillion, gaining nearly 70 percent of its annual target.

Economist Bui Kien Thanh expressed his disbelief in no uncertain terms: “We should not assess business results or the health of Vietnamese banks via their profits. I, and many other people, cannot believe the figures they announce. In the current context of slow credit growth, they cannot earn such big profits, as 70-80 percent of the banks’ profits come from lending.”

By late August, bank deposits were up 11.23 percent for the year while loans had increased by just 1.4 percent, according to the State Bank of Vietnam.

Reiterating the suspicion that the banks are hiding some of their bad debts to avoid setting aside large provisions, Thanh warned that classifying non-performing loans as safe allows banks to pay out high dividends and look appealing to investors, but the practice exposes the economy to huge risks.

“A large bad debt burden will have a negative impact on the economy as a whole. I think it’s necessary to strengthen surveillance to see how banks are classifying loans and dealing with bad debts,” he said.

Economist Tran Du Lich agreed, saying the banks’ profits could not be as high as reported if they had enough provisions.

Many banks have calculated the interest due on their loans to arrive at their profit figures, but the reality is that many of the loans cannot be recouped. The banks have not prepared provisions for these bad loans, he said. “Thus, their profits may be virtual figures.”

The leader of a Hanoi-based commercial bank conceded: “Bad debts stand too high now. If they are calculated strictly, many banks may even suffer losses.”

Bad debts were estimated at 8.6 percent of total loans at the end of March.

Talking with reporters on the sidelines of the ongoing National Assembly session, Deputy Prime Minister Vu Van Ninh said the government is focusing on dealing with the bad debt issue to increase liquidity in the banking system. However, the issue is complicated, so the government has to be careful in taking decisions.

However, one economist who did not want to be named said he was not very worried about the big profit figures. While they may look big, the return on capital ratio is not high. “So, a profit of trillions of dong is quite normal.”

Nguyen Hoang Minh, deputy director of the Ho Chi Minh City Branch of the State Bank of Vietnam, said it is difficult for banks to meet their profit targets this year, given the low credit growth. “Many banks have not focused too much on gaining profits, but rather on ensuring safety and stable development of the whole banking system.”

Credit growth is estimated at some 5 percent this year, he said.

Slow credit expansion prompted the State Bank of Vietnam, in July, to lower its 2012 growth rate target to 8-10 percent from a 15-17 percent projection earlier this year.

As the demand for loans remains low, some banks have turned to small sources of income such as credit card service fees and interest rates on card payments to seek profits.

Meanwhile, Fitch Ratings on Wednesday maintained its ranking for Vietnam’s major banks at “B”, among the lowest in Asia.

“The banking system is vulnerable to macroeconomic shocks, with pressures already mounting on asset quality, earnings and capital at the major Vietnamese banks,” the agency said. It noted again that non-performing loans in the banking system were understated.

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Oct 30 2012

Telling stories in silence

telling stories in silence

A 40-square-kilometer riverine island in the Mekong Delta province of An Giang carries a quiet, profound ambience

  Locals fish in the Tien River off Cu lao Gieng (Gieng Island) in An Giang Province. Photo: Tuoi Tre

It would not be out of place to say that Cu lao Gieng (Gieng Island) has a touch of the divine.

Located in the middle of the Tien River on the border of Dong Thap Province, Cu lao Gieng (Gieng Island) was called Dinh Chau in one of the country’s most famous chorography records, Gia Dinh thanh thong chi (A Chorography of Gia Dinh City –now the southern region of Vietnam).

It was explained that the record’s author, Trinh Hoai Duc, a famous historian of the Nguyen Dynasty (1802-1945), came up with the name because the triangular island’s clean atmosphere, rich soil and abundant produce reminded him of Doanh Chau, one of three islands often mentioned in East Asian legends.

Whether the island is the stuff of legends can be debated, but that it has a predominantly sacred atmosphere becomes evident as one wanders about, constantly encountering pagodas and churches built during the beginning of the 19th century.

A complex of Roman Catholic structures on the island is particularly surprising. The most striking is Cu lao Gieng Church, which some records say was built by a French priest named Gazignol between 1879 and 1889 with construction materials brought in from France.

Cu lao Gieng Church, built in the 19th century, is one of the famous sites on the island. Photo: Tuoi Tre

But other records say construction started in 1850, some 13 years before the famous Saigon Notre-Dame Basilica was built in the center of what is now Ho Chi Minh City. That would make Cu lao Gieng Church the oldest church in southern region.

More than a century later, the cathedral’s structure is almost unchanged as it stands, still and solemn, with an immensely high bell tower, small pointed towers and many other details carrying Romanesque and Gothic architectural designs.

Next to the church is a monastery of the Franciscans, an order of Roman Catholic Church. The building functioned as the friary for the religious group’s members in Mekong Delta provinces and Cambodia between 1872 and 1946.

However, after it was destroyed during the war in 1945, it was abandoned for many years.

Even though it still serves as a venue for meetings of local Franciscans, the monastery carries the look of an old, forgotten relic with its walls covered with green moss.

Then, there is the 138-year-old monastery of Providence Sisters, which was once a place where sisters and priests spent day and night taking care of the elderly, children and patients with incurable diseases. Just like the Franciscan monastery, it now shows signs of wear and tear as well as long-standing neglect.

Other famous Catholic structures on the island are the century-old Rach Sau Church and the St. Francis Church.

It is said that the presence of the Catholic Church on Cu lao Gieng started in 18th century when many Catholics, including French priests, took refuge here, as they tried to escape from the Nguyen Dynasty’s suppression of the religion. Cu lao Gieng is now  considered one of the largest and oldest parishes in the Mekong Delta.

Apart from the churches, the island boasts several pagodas. The most impressive of them is the Phuoc Minh Pagoda, which has a nine-level tower and a three-door gate. Both the structures are built with the same traditional styles found in northern pagodas.

One of the most visited sites on the island is the complex of three graves that have the shapes of squid, fish and tortoise. This is the “tomb” of Ba quan Thuong Dang (three high-ranking officials), located in a place of worship for the ancestors of the Nguyen family who hailed from the central province of Binh Dinh.

Historical records show that Emperor Nguyen Anh (1762-1820) ordered the graves to be built as a memorial for famous general Nguyen Van Thu and his two younger brothers, who were all killed in a battle in 1801. The country was then going through a civil war between the Nguyen Dynasty and the farmer-ruled Tay Son Dynasty (1786-1802).

However, the officials were actually not buried in the graves, as their bodies were lost in the battle that took place at Thi Nai Lake in Binh Dinh. In 1814, the king’s people brought wax dummies to the island and buried them there.

The graves were named Mac – Ly – Quy, Chinese words for squid – fish – tortoise, but read in Vietnamese. The three words also make up a phrase which means “to return in silence.”

That is the kind of place that Cu Lao Gieng is – a place that tells many stories in silence.

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Oct 30 2012

Waffles, waffles and more

waffles waffles and more

  The talented chefs at Caravelle will serve six kinds of freshly baked waffles piping hot from the kitchen. Photo courtesy of Caravelle Hotel

Caravelle Hotel in Ho Chi Minh City has unveiled some interesting culinary programs for November.

The first features waffles served in the hotel’s ground floor Lobby Lounge from November 16 to 22.

The talented chefs at Caravelle will serve six kinds of freshly baked waffles piping hot from the kitchen.

They will include toppings such as warm cherry stew with macadamia ice-cream, sautéed apples and vanilla bean sauce Anglaise, and the simple joys of natural icing sugar and maple syrup.

The price is VND128,000++ for a portion.

At the same time, the hotel’s Reflections Restaurant on the third floor will hold a special US beef promotion showcasing cuts of Black Angus strip loin, beef tenderloin, and rib eye.

Enjoy fresh beef grilled over live coals. Each cut will be priced by weight from 150 to 350 grams, and served with classic steak sauces and a choice of two delicious side dishes.

Prices range from VND450,000++ to VND990,000++ for 150 to 350 gram cuts.

Reflections Restaurant will also present a Ruffino wine dinner to bring the renowned wine flavor to guests on November 21.

The finest Sangiovese grapes from the most exceptional estates in Tuscany together with five courses of delectable gourmet cuisine are all the stars of the Ruffino wine dinner.

Made from grapes grown in the winemaking heart of Italy, Chianti Ruffino is renowned as one of the first wines to cross the country’s border and for its role in introducing Italian wines to the world.

Alan Wong, Ruffino’s brand ambassador in Asia, will represent the winery and the Folonari family at Reflections Restaurant, where guests will sample six vintages from Ruffino’s legendary cellars.

The evening begins with canapés and a welcome drink of Orvieto Classico DOC 2011. A stellar Riserva Ducale Chianti Classico 2007 will be served with the fourth course of roast beef tenderloin with breaded artichokes, smoked potato puree, and tarragon-flavored bacon mushroom ragout.

Price is VND1,480,000 nett per person.

Along with these programs, the Nineteen Restaurant on the ground floor will also lay out a lavish Thanksgiving feast on Thursday, November 22.

The Caravelle’s standout buffet restaurant is extending an invite to foodies, friends and families to partake of the most mouth-watering Thanksgiving dinner in town.

Its chefs are preparing specialties from all over the world, together with a heaping selection of fresh seafood, as-you-like-it action stations serving hearty grilled and barbecued meats, and an overflowing line-up of appetizers, cheeses, soups, salads, and desserts to satisfy your palate.

For traditionalists, there will be a succulent whole roasted turkey with stuffing, giblet and cranberry sauce, garlic potatoes, buttered vegetables, pumpkin pie, and more than enough gravy to go around.

Price is VND1,013,000 per person with a free flow of red, rose and white wines.

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Oct 30 2012

For all the senses

for all the senses

  Senses Restaurant Bar on Mui Ne Beach

Senses Restaurant Bar at Blue Ocean Resort on Mui Ne Beach is a lovely coconut palm thatched roof bungalow nestled between a large swimming pool and the powdery white wind-swept sands of Vietnam’s south-central coast.

We noticed the restaurant while walking along Mui Ne Beach.

Noticing its colorful silk cushion covers on the lounge under big trees in front of the restaurant, we decided to visit for some drinks after a big day out.

We chose a table next to the swimming pool with a view of the coconut garden. It was a Saturday late afternoon and we ordered two fresh coconuts (VND55,000 per one). The cushions were as comfortable as they looked.

This restaurant is not only a place for food and drinks. As the name would suggest, there is something in the atmosphere that helps diners relax, and feel easily connected with the surrounding nature.

The indoor area has only one wall, near the bar. In place of walls, the other three sides have bamboo curtains that were opened to offer nice views of the beach, garden and swimming pool areas.

If one prefers to be outdoors, there is also a terrace next to the swimming pool as well as a lush coconut garden and bungalow with sofas right on the beach.

It is a spacious place to chill out and enjoy the sea breeze and tranquility. We shared a fresh coconut juice and decided to come back for afternoon tea and dinner.

We stayed in a bungalow next to the beach and relaxed with our books and glasses of orange juice while looking at the panorama of Mui Ne Bay, which spreads out until it reaches the faraway white sand dunes dotted with green trees.

The landscape is imposing and both tranquil and very lively. It was a very windy day and the strong waves were perfect for kite surfers. Soon, the horizon was filled with the different colored kites they use to propel themselves across the water.

Deep fried camembert at Senses Restaurant Bar at Blue Ocean Resort in Mui Ne

Senses Restaurant Bar offers menus with both Western and traditional Vietnamese cuisines. At sunset we ordered bo la lot (grilled beef wrapped in wild betal leaves –- VND129,000), deep fried camembert (VND183,000), basa fish with passion fruit cream (VND215,000), and beef with sesame (VND215,000).

For dessert we opted for crepes suzette (VND140,000) and nougatine (VND140,000). We also choose two exotic drinks (papaya lime – VND65,000 and pineapple ginger – VND65,000).

The beef – with a touch of sesame – and the basa with passion fruit cream were excellent, with a good balance of beef and fish with salad mixed with vinegar and boiled cauliflower, beans, and carrots.

We especially liked the bo la lot, which is a traditional Vietnamese dish that features the wonderful flavors of lot leaves covering the meat. Deep fried camembert was also a highlight of the meal: its crunchy texture combined with a soft taste, warm and fatty. The cheese was served with strawberry sauce and pear boiled in red wine and cinnamon.

Nougatine was also another highly recommended dish. The ice cream flavor perfectly matched with the sweet nougat and crunchy sliced almonds.

We met Truong Thi Thu Lieu, the executive chef of the resort who designed the menu. She said she originally studied accounting but her true love was always cooking. She was recruited to work at the Novotel Mui Ne pastry kitchen when the first resort in Mui Ne opened in 1987.

She invited us for some hot pot the next day. She said she had introduced the hot pot to the menu and now planned to add some family-style BBQ options.

“For the hot pot that doesn’t include many vegetables or roots, we add honey instead of sugar to the soup. Then the soup has a gentle tenderness and flavor,” she said.

Seeing the darkness replace the sunset on the bay and starlit sky above the coconut leaves over our heads, I knew I would come back to the place for another relaxing and romantic dinner next time.

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Oct 29 2012

Don’t throw good money after bad

don%e2%80%99t throw good money after bad

Government should support homebuyers instead of backing moves by property developers that have gone wrong

  Unfinished villas are pictured at a development project on the outskirts of Hanoi. Property firms should rescue themselves by cutting prices, experts say. Photo: AFP

The Ministry of Construction and property firms have been seeking greater government support to revive the real estate market, but experts say developers should act on their own to get out of the prolonged slump that they are responsible for in the first place.

Tran Dinh Thien, director of the Vietnam Economics Institute, said Hanoi and Ho Chi Minh City alone had a combined stock of 70,000 apartments that would take up to seven years to clear.

This is the consequence of an investment trend that saw many companies pouring a lot of money into residential projects without thinking about real market demand, he said.

Economist Vu Dinh Anh said capital began to flow into the real estate sector at a fast pace in 2005, particularly in Hanoi and HCMC.

The problem was that most developers focused only on building luxury homes while demand grew strongly in the low-end segment. Most people would need 20 years to save enough money for a low to mid-end apartment, so luxury homes were just completely out of their reach, Anh said.

“Housing inventory expanded as the market was driven by speculation, while the real demand of homebuyers was not met,” he said.

Pham Sy Liem, vice chairman of the Vietnam Construction Federation, said the government has taken measures to improve the property market, but without good results. The State Bank of Vietnam has eased credit policies for property firms this year, while the Ministry of Construction has pushed for the development of housing for low-income earners to revive the market.

Despite these measures, banks are being very cautious about lending to property firms for fear that bad debts could expand. And given the stagnant market, many firms are not keen on taking out more loans, he said.

“Property firms should rescue themselves by cutting prices and reviewing their product portfolio, instead of waiting for support from outside,” Liem said.

The Ministry of Construction last month proposed a series of measures to boost the market, including extending loan payment deadlines and reducing interest rates for developers.

Accept lower profits

Many firms have reduced their prices of their property products by 20-50 percent over the last 12 months or so.

But although property prices have fallen sharply, they are still very high, Liem said.

“Property firms should cooperate with banks that financed their projects earlier to offer homebuyers five to ten year low interest loans, so that the housing inventory can be cleared.”

Liem said developers should also divide and convert large apartments into smaller units, so that they can be bought more easily.

Doan Nguyen Duc, chairman of property firm Hoang Anh Gia Lai, said the only way developers can help the property market turn around is to lower prices and accept smaller profits.

In fact, the government cannot offer more support to property firms because of limited resources amidst the economic slowdown, he said.

His firm has announced that it would sell 620 apartments in HCMC this quarter at VND20 million (US$950) per square meter, 30-50 percent lower than the prices of similar projects.

An expert said the government should not provide real estate firms with cheap loans now, as they struggle with huge debts and a sluggish market.

“If the government pumps more money into property firms, housing supply would continue to rise, and local people would still find it hard to buy homes.

“Therefore, the best way to improve the real estate market is to support the buyers. The state should subsidize banking interest rates for buyers. Then people can access low interest loans for terms of 10-20 years to buy houses,” he said.

No early recovery

Liem said the prospects for any market recovery until early next year were not bright, as the economy is yet to recover.

The government has said Vietnam’s gross domestic product, the broadest measure of the economy, grew 4.73 percent in the first nine months compared to a year ago, more than a percentage point less than the 5.77 percent growth recorded in the same period last year.

“In the current context, what we can do is to think of ways to help real estate firms overcome the slowdown and stay in business. We cannot hope for a strong recovery now.”

Economist Tran Kim Chung said that if the macroeconomic situation does not worsen, the market’s liquidity may improve, especially in the low-priced and small-sized apartment segments.

He even suggested that the market may have already hit the bottom and will recover slowly in the coming months. The real estate market, over the past decade, has seen the cycle of strong growth and slowdown every two years, he said.

However, Chung said, some companies are not likely to last longer than this year and others will have to accept losses when selling homes at low prices in order to service maturing bank loans.

A recent survey by market research firm Nielsen said the health of the economy has become the top concern of Vietnamese consumers.

Worries over the economy have led to consumers tending to save 15 percent of their income while investing only 1 percent, which might limit funds available for real estate purchases, said property research and consulting firm CBRE Vietnam.

The wait-and-see attitude also remains common among potential buyers, which is further intensified by their herd mentality, it said in a recent report.

Looking ahead, in the current buyer’s market, the buyers’ purchasing power and mentality will drive market recovery. The dim economic outlook through 2013 will further dampen their confidence, and the flight to safety will strengthen savings at the expense of investments, the report said.

Cash is available, but does not flow into real estate, it said.

“Consequently, the market is expected to pick up when the economy shows clear signs of improvement.”

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Oct 29 2012

Vietnam at risk of getting stuck in a rut

vietnam at risk of getting stuck in a rut

  Cyclists ride past a large poster advertising luxury cars on a road in Hanoi. Vietnam joined the lower-middle income bracket in 2009. Photo: AFP

Vietnamese coffee farmer Le Thi Do looks up at the five-meter-high (16-foot) ceiling of her six-bedroom, yellow house and then points to a small, squat building next door: “We used to live in that tiny one.”

Do, 71, has been a barometer of Vietnam’s fortunes. As the economy opened in 1986, she switched from growing vegetables to coffee and prospered as the rate of economic growth tripled in five years.

She was able to build a VND160 million home and put nine children through school, two of them going to college.

Then, the boom that benefited Do and millions of others started to slow. Prices of fuel, raw materials and labor soared. Bad debts rose. Growth fell below 7 percent in 2008 for the first time in seven years and could drop to 5.2 percent this year, the government estimates, the slowest since 1999.

“This year has been very difficult for everyone,” said Do, who had to raise pay by 20 percent for harvest pickers to VND120,000 (US$5.75) a day. “We need funds for cultivation, but we have limited access to bank lending. You can get a loan if you have good connections.”

After two decades of development, Vietnam risks falling into the so-called middle-income trap, where rising earnings and costs outpace productivity.

‘Hard part’

“Moving through the middle-income bracket is risky and requires time, political will, perseverance and luck,” said Jonathan Pincus, an economist in Ho Chi Minh City with the Harvard Kennedy School’s Vietnam program. “The government needs to do more to reform the economy and get back to a sustainable higher rate of growth. You have to do the hard part of building institutions, building a legal system, enforcing the rules governing financial institutions.”

Government efforts to curb rising prices and stabilize the dong slowed growth to 4.7 percent in the first nine months of 2012. Inflation eased to a year-on-year pace of 6.48 percent in September from more than 23 percent in August 2011. The currency has risen about 0.9 percent this year against the dollar, after falling more than 7 percent in 2011.

The slowdown has hurt stocks, with the benchmark VN-Index, Asia’s worst performer in 2011, down 18 percent since its peak this year on May 8.

The country faces a challenge that other economies have struggled to overcome. Of 101 middle-income economies in 1960, just 13 attained the World Bank’s high-income bracket by 2008, including Japan, Hong Kong, Singapore, South Korea and Taiwan, according to a report this year from the Washington-based development lender.

Income group

Vietnam joined the lower-middle income bracket in 2009, with gross national income (GNI) per capita rising to $1,260 last year, from $110 two decades earlier, according to the bank’s website. The World Bank classifies lower-middle-income economies as those with GNI per capita of $1,026 to $4,035 and upper-middle income from $4,036 to $12,475.

Once Southeast Asia’s fastest-rising destination for foreign investment, Vietnam risks losing out as other nations in the region become more attractive to investors.

Pledged foreign direct investment to Vietnam fell 28 percent in the first nine months of 2012 from a year earlier, the government says. FDI inflows rose more than 31 percent in Malaysia and Indonesia in 2011 and an estimated 89 percent in neighboring Myanmar, compared with a 7 percent drop in Vietnam, according to the United Nations Conference on Trade and Development.

“The appetite that a lot of global investors have for Myanmar in particular now, but also countries like Indonesia and the Philippines, is based in part on disillusionment about Vietnam’s performance relative to its promise,” said Mark Gillin, a director of AIM Capital Management Ltd. in Ho Chi Minh City. “Given the work ethic and the dynamism of the people here, Vietnam should be doing far better.”

Vietnam dropped 10 places to 75 on the World Economic Forum’s Global Competitive Index this year, swapping places with the Philippines, which rose 10 slots to 65.

Vietnam is still attractive to some external investors, especially as China is getting more expensive, said Pincus at the Harvard Kennedy School. Intel Corp. opened a $1 billion assembly and testing plant in 2010 in Saigon Hi-Tech Park that Rick Howarth, general manager of Intel Products Vietnam, said last month was “ramping up smoothly.”

‘Bite the bullet’

Vietnam isn’t the only country in the region facing a slowdown as Europe’s debt crisis erodes trade. Growth in developing East Asia, excluding Japan and India, will probably ease to an 11-year low of 7.2 percent, from 8.3 percent last year, the World Bank said in an October 8 report.

Still, Vietnam is only at the bottom rung of the middle-income ladder, and must first catch more advanced neighbors, such as Thailand, where GNI per capita last year was $4,420.

“Will Vietnam grow from $1,500 to $5,000 per capita income uninterrupted or will it have to go through the boom and bust cycles?” said Deepak Mishra, World Bank lead economist for Vietnam in Hanoi. “If it wants a smooth transition to an upper- middle-income status, it will have to bite the bullet and credibly restructure its economy.”

In her yellow house in Dak Lak, Do retains the optimism that characterizes many Vietnamese who’ve seen their lives improve since 1986.

 “The situation will gradually get better in the next few years when the global economies recover and the government sorts out problems like the bank lending,” she said. “I’ve seen so many things here improve in the past few decades.”

Oct 29 2012

Inventories not a cause for worry, official says

inventories not a cause for worry official says

Vietnam’s Ministry of Industry and Trade has tried to allay concerns about overwhelming inventories by saying that sales are expected to rise for the rest of the year.

The ministry is not too optimistic, but the buildup of goods is not very serious, Deputy Minister Tran Tuan Anh told legislators at a meeting Tuesday, adding that most inventory levels are within an acceptable range.

He said that even steel stockpiles, though large, are not too high and can be drained when construction activities pick up at the end of the year.

The ministry is creating more barriers to restrict steel imports in an attempt to support local producers, but they have to improve their understanding of the market and upgrade technology to save themselves, Anh said.

Inventories in the manufacturing sector had jumped 20.4 percent from a year earlier as of September 1, the General Statistics Office said in a report early this month.

Stockpiles in cement, steel and plastic products rose the most, by at least 40 percent. Dairy and pharmaceuticals saw smaller increases of 5.8 and 10.5 percent respectively.

The National Assembly’s Economic Committee on Tuesday said the two main challenges for the government in the final three months of the year would be stockpiles and bad debts.

“The higher the inventories, the higher the bad debts,” said Nguyen Van Giau, chairman of the committee. “It’s urgent to reduce inventories to support production and, at the same time, it is a solution to reduce bad debts effectively.”

Vietnam’s government on October 5 ordered the central bank to strengthen discipline in the banking sector and completely “deal with” all weak lenders next year.

The State Bank of Vietnam needs to take timely measures, including those to reduce bad debts, in order to stabilize the banking system and regain the confidence of the public and investors, the government said.

Vietnam’s bad debts had risen to 8.6 percent of total loans in the banking system by the end of March. Many businesses have complained that they are having difficulties clearing their stockpiles and repaying bank loans.

The real estate sector in particular is sitting on huge stock. Experts estimated there are 70,000 unsold units in Hanoi and Ho Chi Minh City. The central bank said property loans account for 5 percent of outstanding loans in Vietnam and it will take measures to reduce real estate-related bad debts.

General Secretary Nguyen Phu Trong of the Communist Party said Monday that settling bad debt in the banking system and easing difficulties for businesses are among the priorities for Vietnam next year.

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Oct 29 2012

Hue airport to close for renovations

hue airport to close for renovations

The Airport Corporation of Vietnam has announced plans to close the historic town of Hue’s Phu Bai International Airport in Thua Thien Hue Province in March next year for runway reparation.

According to the plan, the airport will close for between six and eight months, at which time passengers can use Da Nang International Airport in the nearby Da Nang City, which is located 90 kilometers away.

The Thua Thien Hue People’s Committee has instructed the provincial Department of Culture, Sports and Tourism to inform tourism companies of the plan.

The provincial Department of Transportation will have to make a plan to carry passengers between Da Nang and Thua Thien Hue.

In mid-2011, Phu Bai airport has closed for one month for repairs without early notice, affecting tourism business in the province. During this time, tourism companies spent about VND 25 billion to transport passengers between Da Nang and Thua Thien Hue.

Phu Bai airport serves around 3,000 passengers a day.
On July 24, the airport was closed for ten hours after a gaur from a nearby forest ran amok on the runway before being shot down with an anesthetic. It is said that the bovine died due to an overdose but relevant authorities denied the accusations and blamed its poor health condition.

Hue is home to more than 100 architectural works reflecting the life of Emperors and mandarins under Nguyen dynasty (1802-1945).

Thanks to its historic vestiges, in December 1993, Hue was recognized as a World Cultural Heritage Site by UNESCO.

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