BUSINESS IN BRIEF 1/9

Bigger incentives proposed to spur supporting industries

Southern province Ba Ria-Vung Tau is sourcing a variety of incentives to attract investors to its efforts to develop supporting industries.

Provincial authorities recently finalised and submitted to relevant government agencies a project on setting up a specialised mechanical engineering industrial park (IP) to be positioned in provincial Chau Duc district.

The provincial management is calling for their new IP to be given similar incentives to those of another specialised IP which was reported to be positioned in the Dinh Vu-Cat Hai Economic Zone in northern Haiphong port city.

This means provincial projects involving in supporting industry development would benefit from equal incentives as applied to areas facing hardships for socioeconomic development or special investment encouragement fields.

The southern province also sources similar incentives for businesses venturing on industrial park infrastructure development to attract supporting industries.

Incentive recipients under the proposal are projects covering aforesaid fields irrespective of the fact the projects are new or expanded.

Besides, the province also proposes not forming a specific council to appraise incentives for supporting industry items as regulated in prime ministerial Decision 12/2011/QD-TTg presenting policies for development of several supporting industries.

Provincial People’s Committee Deputy Chairman Ho Van Nien articulated the need to simplify recognition of supporting industry businesses qualified for the incentives.

Accordingly, the provincial People’s Committee and IP Authority shall be given the right to recognise supporting industry businesses when granting investment certificates for businesses producing items listed in prime ministerial Decision 1483/QD-TTg enacted in August 2011.

For products outside the list, the Ministry of Industry and Trade shall present specific criteria and decentralise IP Authority to consider recognising supporting industry businesses when granting investment certificates.

The province also recommends not appraising environmental impact assessment reports of supporting industry projects presented by small and medium size enterprises (except areas likely to cause environmental contamination like painting, welding or plating) because these specialised IPs feature ready-built standard waste-water treatment facilities.

Earlier, Haiphong and Ba Ria-Vung Tau were assigned by the government to work on building specialised IPs earmarked for mechanical manufacturing and electronic development to attract foreign investors, particularly those coming from Japan.

In early July 2013, prime minister approved ‘Industrialisation strategy within Vietnam-Japan cooperative framework to 2020 with vision towards 2030’.

The strategy focuses on improving the production capacity of six key industries including electronics, agricultural machinery, agro and seafood processing, shipbuilding, environment, energy efficient, and automobile and part production.

It aims to promote technology upgrades, raise labour expertise, and hone Vietnam’s industrial competitiveness on the world markets.

Experts assumed that these key industries, albeit hosting vast numbers of businesses and making significant contributions to the economy, have reported modest profitability and businesses in these sectors are mainly busy with processing or making raw products with low value addition.

Underdeveloped supporting industries are cited as the largest challenge to Japanese investors doing business in Vietnam. Vietnam is strong in export but the profit rate remains modest not commensurate with the country’s actual potential due to low-paced supporting industries, according to Kyoshiro Ichikawa, a Vietnam-Japan Joint Initiative Working Team leader.

Vung Tau swoops into top ten

Vung Tau is now ranked in the top ten of Vietnam’s fastest growing cities.

Located in the southern province of Ba Ria-Vung Tau, Vung Tau is 120 kilometres from Ho Chi Minh City and is the province’s economic, tourism, and cultural centre. It is also well known for domestic oil production.

Vung Tau is home to over 400,000 people and is a very scenic destination with beautiful beaches and many cultural and historical sites, making it a popular tourist destination. This growth led to it taking over from Ba Ria as the province’s administrative hub.

In 2011, the city’s per capita income, not including oil and gas, was $6,060 and it was aimed at $10,600 with an 18 per cent annual growth by 2015.

Vung Tau Municipal People’s Committee Chairman Phan Hoa Binh said that by 2020, the city planned to raise nearly $5 billion for development programmes.

Procedures still concern realty developers

Time-consuming administrative procedures are one of the problems faced by both local and foreign companies, especially those in the real estate sector, heard a seminar on administrative reform.

At the seminar, which looked into the procedures for investment projects and was held by the HCMC branch of the Vietnam Chamber of Commerce and Industry (VCCI) last Friday, VCCI said a survey of some 8,000 enterprises nationwide identified tax procedures as a headache.

Up to 33% of respondents said tax procedures are making life hard for them. Meanwhile, procedures in the land, natural resources and environment fields came in second with some 29%, followed by business registration and investment certification procedures with about 15%, according to the survey.

Respondents said procedures on land, investment and construction are the toughest to handle. In investment preparations alone, different provinces have different regulations, the survey found.

According to Pham Gia Tuc, vice chairman of the administrative procedures reform consulting council, multiple companies and associations complained the current investment procedures have rendered their business operations inefficient.

Tran Thi Bach Van, director of Tri Tue Company, cited an example in which her company had asked for permission to build an apartment project in HCMC’s Binh Thanh District by mobilizing capital from homebuyers but it has failed to go ahead with the project after a decade of struggling with the procedures.

The document submitted by Van’s enterprise was transferred from the city’s Planning and Architecture Department to Binh Thanh District and then to the city’s government for approval.

The document would continue to be transferred to the district government and go back to the architecture and planning department for consideration once more before getting a nod for execution, she said.

Kinh Do ventures into instant noodle market

Confectionery producer Kinh Do Corporation will launch its own instant noodle product next month, making a foray into this fast growing market.

Kinh Do said in its second-quarter financial report that the production of instant noodle was going well and the product would be introduced in the third quarter via its existing confectionery distribution system.

Speaking to the Daily, a representative of Kinh Do said the launch date could be next month. This is part of the firm’s food and taste strategy.

In the strategy, Kinh Do would launch spices after instant noodle.

Statistics of the World Instant Noodles Association released in April show Vietnam ranks fourth in terms of instant noodle consumption with 5.1 million packets sold last year. Instant noodle consumption has posted two-digit growth for many years.

According to unofficial statistics, Vietnam has around 50 instant noodle producers with the big names including Acecook, Masan and Vifon.

Project transfers, forex subject to CIT

The Ministry of Finance has proposed imposing a corporate income tax (CIT) rate of 22% on a number of activities of enterprises starting in 2014, including income from exchange rate difference, project transfer, transfer of participating right of investment project and transfer of the right of minerals exploration, exploitation and processing.

This is part of the draft decree regulating some articles of the Law on Corporate Income Tax (CIT) and the law amending and supplementing a number of articles of the Law on CIT. Enterprises are expected to be subject to the rules from January 1, 2014.

The Ministry of Finance is fielding suggestions for the draft decree before submitting it to the Government. Aside from income from production, goods and service trading, the ministry has suggested that local enterprises will have to pay taxes for other incomes such as savings interest, loan interest and foreign currency sales.

Taxes have been imposed on savings and loan interest of enterprises given current regulations. The most noteworthy change in the draft is imposing the CIT on the exchange rate differences from revaluation of liabilities payable with origin from foreign currencies at the end of the fiscal year (excluding exchange rate differences arising during the basic construction investment process to form fixed assets that such fixed assets have not been included in production and business) and exchange rate differences arising during the tax period.

The ministry has also proposed CIT on income from capital transfer, including income from the transfer of part or the whole of the capital amount invested in an enterprise, even in case of sales of enterprises, transfer of securities and other forms of transfer of capital as prescribed by law, income from the right to own or use assets, including earned copyright royalties in any form and earned royalties from intellectual property rights and income from technology transfer under the laws and asset lease in any form.

Recovered bad debts which have been written off, payable debts of unidentifiable creditors and omitted income from previous years’ business activities to be discovered will be also subject to the tax.

The National Assembly has approved slashing the CIT to 22% against the current level of 25% starting January 1, 2014.

Da Nang – Vietnam’s new economic dragon

The central city of Da Nang has been praised as Vietnam’s new economic dragon for its steady growth and global integration.

The compliment was made in an article by Bruno Philip Da Nang, nouveau dragon économique du Vietnam ( Da Nang , Vietnam ’s new economic dragon) published on August 26 in Le Monde – a French daily newspaper

The article began by describing the unique architectural features of the Rong (Dragon) Bridge, which illustrates the legendary creature heading towards the sea, and commenting that it reflects the unstoppable development of the third largest economic hub in the country (after Hanoi and Ho Chi Minh City).

The article noted that between 2002 and 2012, Da Nang posted a strong average growth rate of 12.7 percent. The city is the terminal destination of the East-West Economic Corridor (EWEC) which passes through ASEAN nations including Myanmar , Thailand , Laos and Vietnam .

The author wrote that the development of Da Nang is based on the expansion of industrialisation and exploration of its tourism potential.

Scores of economic zones have been set up in the outskirts, while luxurious hotels line the white sand beaches along the blue sea.

Last year, the city welcomed over 2,659,000 tourists, including 603,000 foreigners.

The port of Da Nang is also playing a major role in the area’s development. Over the past five years, the cargo flow has increased by 10 percent a year.

French investor Christian Leroux, whose Dacotex Group in Da Nang’s Hoa Khanh industrial zone now employs as many as 2,500 Vietnamese workers, has declared that he would invest in the city again without any hesitation.

Local labor productivity just half of ASEAN average

Vietnam’s labor efficiency only reaches some 61.4% of the average level of the ASEAN region, heard a seminar in HCMC on Monday.

The local labor productivity is only higher than that of Myanmar and Cambodia, but trails far behind that in other nations, equivalent to only 12% and 22% of that of Singapore and Malaysia respectively, said Bui Sy Loi, deputy head of the NA Committee on Social Affairs.

At the seminar on policies for job promotion and sustainable employment organized by the National Assembly (NA) Standing Committee in HCMC on Monday, Loi said that the physicality of local workers was at a low level in terms of height, weight and endurance and thus they failed to meet working intensity in line with international criteria.

In the meantime, working disciplines of Vietnamese employees are much weaker than their counterparts in other ASEAN countries, he added.

Labor productivity in the nation’s economy remains poor, with working efficiency in the agricultural sector only equal to one-third of that of the industrial sector. This is proven by the fact that workers in the agricultural area account for up to 48.7% of the total number of local workforce but only generate 24.3% of gross domestic product (GDP) for the country. In 2011, the number of workers in the local agricultural production was pretty high, at up to 64% of the total.

Trieu Thi Nai, vice chairwoman of the NA Ethnic Council, noticed that workers in mountainous areas heavily depend on the State supporting policies, as many of them who were given basic vocational training on cultivation and livestock farming have failed to apply their skills due to difficulties in seeking outlets for the products.

She therefore called for the NA to make thorough considerations to map out policies suitable for mountainous workers to drastically tackle the labor problems faced by the country at present.

Fund managers find it hard to call for indirect capital

Although foreign fund managers have been trying to promote investment opportunities in Vietnam to investors worldwide, indirect capital into Vietnam via investment funds remain low.

Andy Ho, managing director of VinaCapital with US$1.5 billion of assets under management in Vietnam, said that he has met many investors in the U.S. and Europe to lure funds for the country over the past two years. However, foreign investors have yet to give positive feedbacks.

“They said that they needed more time to see whether the economy in Vietnam would be better,” Ho said.

Foreigners’ massive capital withdrawal out of emerging markets has caused challenges for fund managers in mobilizing capital for the Vietnam market. However, VinaCapital still has over US$100 million in cash to invest in the country, Ho added.

Mekong Capital, a fund management firm that mobilizes capital for private and unlisted enterprises in Vietnam, has also reached out to many investors over the past three years but the enterprise has not yet been able to set up a new fund so far.

However, foreign fund managers still pin high hopes in prospects of the economy and local enterprises.

Chris Freund, founding partner of Mekong Capital, said that Vietnam’s main advantage compared to other developing countries in the region is the possibility of the country becoming a member of the Trans-Pacific Partnership (TPP). This is attracting a lot of foreign interest.

Another advantage of the country is that it is more of a level playing field than the Philippines and Indonesia because in markets like the Philippines and Indonesia, there are a small number of family groups that control large parts of the economy, whereas Vietnam is typically more fragmented.

Nguyen Xuan Minh, director of Vietnam Asset Management (VAM), said that foreign investors have showed signs of returning to Vietnam in recent time.

“Six months or a year go, the investors had no intentions to invest in Vietnam. But recently, they have been more interested in the market and asked VAM for market information,” Minh said.

VAM will hold a meeting with Singaporean investors who are seeking investment opportunities in Vietnam in September.

Since early this year, foreign investors have poured additional capital into funds under VAM management but the volume is still low. Vietnam is going to be a TPP member while stock prices in the country are cheap compared to Indonesia and the Philippines. Therefore, this is a good time to invest in the local stock market as the hardest period has been over and the macro economy is stabilizing gradually, Minh said.

VAM expects to complete procedures to establish a fund for European investors in the next three months. Then, the fund manager will meet the investors to call for investment capital into Vietnam, Minh added.

Jan-Aug FDI capital almost meets full-year target

The nation’s foreign direct investment (FDI) capital reached US$12.63 billion between January and August, up 19.5% year-on-year and nearly fulfilling the full-year target at US$13-14 billion, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

A report of the department showed that both newly registered and additional FDI capital increased during the period.

Nearly 770 new projects were granted investment licenses with total registered capital of more than US$7.4 billion, up 12.2% year-on-year, and nearly 300 other projects expanded investment capital for an additional investment of US$5.22 billion, a 31.7% year-on-year increase.

Analysts said that the nation is possible to reach this year’s FDI capital attraction target in the remaining four months of 2013 or even surpass this target.

FDI disbursement hit US$7.56 billion during the period, up 3.8% compared to the same period last year, which was also not far from the full-year target of US$10.5-11 billion.

Industrial processing and manufacturing still attracted much attention from foreign investors, accounting for 85.7% of the newly-registered capital with 370 new projects worth US$10.8 billion. Real estate sector followed with over US$588 million, or 4.7% of total capital.

The agency also said that FDI enterprises fared well in the period. Exports in the FDI sector were estimated at US$56.1 billion in the period, an increase of 21.7% year-on-year. If excluding crude oil, the respective figures will be US$51.2 billion and a 26% year-on-year rise.

Japan remained the largest of Vietnam’s 47 foreign investors with US$4.35 billion, or 34.5% of the total, followed by Singapore with US$3.78 billion (29.9%) and Russia with US$1 billion (8.1%).

HCM City to open major traffic projects

A number of important traffic projects in HCMC will be put into use from now until the year-end to ease traffic congestion at the city’s gateways.

According to HCMC Department of Transport, the steel overpasses at Ba Thang Hai-Nguyen Tri Phuong and Cong Hoa-Hoang Hoa Tham intersections will open to traffic from today, followed by the overpasses at National Highway 1A-Provincial Road 10 and National Highway 1A-Provincial Road 10B on Friday.

The eastern outer belt road’s section from Dong Van Cong Street to Rach Chiec Bridge will be ready for use on Saturday.

Another important project is Tan Son Nhat-Binh Loi-outer ring road (the section from Nguyen Thai Son intersection to Binh Trieu Bridge) and Saigon 2 Bridge which will open to traffic on September 28. Meanwhile, the city will put into use Saigon 2 Bridge on November 2.

The aforementioned projects lying at the city’s gateways will help reduce congestion at those places when put into use.

This year, HCMC focuses on 16 new major traffic projects, 12 projects transferred from last year, six projects using the budget and six others using official development assistance (ODA) loans.

The city will take over VND3 trillion from the budget to implement 16 traffic projects this year while more than VND145 trillion sourced from off-budget funds and ODA loans will be needed for major projects.

Property expert says progressive tax the wrong cure

Although imposing progressive tax on slow-moving property projects is expected to create pressure and make investors accelerate projects, such a policy is seen a devastating blow to many players at a time the market is seen very frail, said a property expert.

Nguyen Van Duc, vice chairman of the HCMC Real Estate Association, told the Daily that the current situation was in a dilemma.

While the Ministry of Construction recommends infeasible projects to stand still as more products will only cause a glut, the Ministry of Natural Resources and Environment wants enterprises to implement their projects to avoid wasting land. Each ministry views the situation from its own perspective to show power, he said.

“The market now can be likened to a bike, some want to keep on riding, others want to stop,” he said.

According to Duc, enterprises do not want to keep their land sites unused but surely want to execute projects, bring out products and recover capital, especially in the current situation.

If progressive tax is imposed, there will be two possibilities. Enterprises will either pay tax as they are unable to do anything on their land sites in unfavorable conditions, or will sell out properties to banks or foreign investors.

Both possibilities are disadvantageous to enterprises as no one wants to set aside VND40-50 bil. to have a land site and then pay interests for it each day, and it is also certain that no one wants to bring out unsalable products.

Duc said that despite feeling impatient when land sites of projects were wasted, management agencies should take into full consideration the property market as well as situations of enterprises.

It is true that there are many projects abandoned after being constructed halfway, but it is much more wasteful if projects are finished and then left unused, according to Duc.

The frozen market is the key problem as many projects cannot be kicked off in the absence of buyers.

Although many regard the solution of imposing progressive tax as an effective cure which can replace administrative measures when projects are left idle, Duc said that different diseases did not have one cure but many different cures.

With a market which is deep in trouble like now, what the market will be in the next few years, whether it will recover or enterprises will go bankrupt en masse are unanswered questions.

He compared the market to a frail patient who should take medicine to recover before getting out of bed. Therefore, any new procedure and tax should wait for the property market to recover first, he added.

Trung Nam to relinquish hydropower plants

Trung Nam Group is seeking to transfer stakes in hydropower plants Dong Nai 2, Krong No 2 and Krong No 3 due to the lower-than-expected returns and prolonged risks.

Dang Cong Chuan, deputy general director of Trung Nam Group, told the Daily on Monday that the group has become less enthusiastic about hydropower projects due to costly investments while the economic efficiency is not as high as before.

Trung Nam will sell part of its ownership in Dong Nai 2 hydropower plant project in which the group holds a 90% stake worth nearly VND3 trillion. The project is expected to start electricity generation later this year.

Meanwhile, the group is seeking partners to sell stakes in Krong No 2 and Krong No 3 projects under construction. Trung Nam started work on the projects several years ago but failed to put them into operation at the end of 2012 as scheduled due to difficulties in capital mobilization.

Each hydropower plant project costs around VND1 trillion, of which 30% is funded by the investor and the remaining 70% is funded by bank loans. It will take the investor 10 to 14 years to recover capital while profits cannot compensate for the interest sum and prolonged risks.

A week ago, Hoang Anh Gia Lai Company announced to sell six hydropower projects, saying that the sector was not as profitable as rubber planting or real estate.

Do Duc Quan, head of the hydroelectricity division of the General Department of Energy, said that investors are not interested in hydropower projects any longer as banks’ rising lending rates have pushed up investment expenses.

Meanwhile, hydropower plants, especially medium and large projects with capacity over 30MW, usually reach low sales price at only VND700-800 per kWh during negotiations with Electricity of Vietnam. As investment costs have increased, electricity sales prices must be from VND1,000 a kWh to help secure profits for project investors.

Chairman of the Vietnam Energy Association Tran Viet Ngai said that there are just a few locations for hydropower exploitation that can secure capital recovery. Those with high profitability have been virtually exploited already.

In addition, the State has policies to stop investment in medium and small hydropower projects from now to 2017. Therefore, investors should gradually withdraw from low-profit schemes, Ngai added.

Intertek adds new testing laboratory in Hanoi

The UK-based Intertek has just opened a new apparel/textiles testing laboratory in Hanoi to support the growing textile and garment industry in northern Vietnam.

The new lab performs textile testing for dimensional stability, colorfastness and seam strength, among others. The lab also supports full testing capability meeting U.S. Consumer Product Safety Improvement Act (CPSIA) requirements.

Thanh Nam Nguyen, a senior executive of the company, said that the Hanoi apparel testing laboratory is the most recent addition to Intertek’s global network of 45 textile and footwear laboratories worldwide.

In addition to testing, Intertek also offers many other services for textile, footwear and apparel customers, including chemical management, inspections, certification, auditing, safety and compliance training, quality assurance and risk management.

The company now has a network of more than 1,000 laboratories and offices and over 35,000 people in more than 100 countries in the world.

Numerous Vietnam-Russia projects in the offing

A host of investment projects by Russian investors will be prioritized and fast-tracked for implementation in Vietnam in the coming time, according to an agreement between the two countries signed in HCMC on Friday.

Minutes of a meeting between Vietnam’s Deputy Minister of Industry and Trade Le Duong Quang and Russia’s Deputy Minister of Economic Development Likhachev Alexcy Evegenievich were signed on Friday, with both sides pledging to make conditions easier for their enterprises to strengthen cooperation. The signing took place before the inauguration of the HCMC branch of the Russian Trade Office.

The list of the aforesaid bilateral cooperation schemes includes a project to construct a titanium plant in Vietnam as proposed by Russia-based VSMPO-AVISMA Group and Vietnam National Coal and Mineral Industries Group.

As per the list, Vietnam also suggests Russia’s Inter RAO Group to consider joining the construction of Song Hau 3 and Vung Ang 3 power plants. The Russian company, meanwhile, has keen interest in building the Quang Trach 2 thermo-power plant.

Vietnam will give priority to Russia’s Power Machines Company as a candidate to build Quang Trach 1 and Song Hau 1 thermo-power plants via biddings. This Russian investor will also be given priority in a plan to modernize the Hoa Binh hydropower plant as long as the quality of its equipment is ensured.

Vietnam also wants the involvement of Russia’s company Uralvagonzavod in a project to construct a train factory with a designed capacity of 2,000 carriages with total investment of some US$100 million. In addition, Russia’s GeoProMining Company is now looking for partnerships with local partners to build a titan plant in the south-central coastal province of Binh Thuan as part of an overall development plan of the local titan production industry.

Before signing the minutes, Quang reported there were a total of 92 Russian-invested projects in Vietnam as of this July with total registered capital of some US$2 billion, ranking 18th among foreign nations and territories making investments in the country. Russia is also the third most favorite destination for Vietnam’s outbound investment with 17 projects totaling roughly US$2.4 billion, he said.

In the meantime, bilateral trade has more than quadrupled between 2007 and 2012, which is expected to reach US$4 billion this year and up to US$20 billion by 2020, according to the Russian deputy minister, Evegenievich.

Of this year’s expected trade value of US$4 billion, Vietnam will earn up to US$3 billion from shipments of seafood, rubber, tea and fruits. Russia, meanwhile, mainly exports steel, iron, machinery and equipment, and fertilizer to Vietnam, he added.

Two negotiation rounds have been completed for the signing of the free trade agreement between Vietnam and the customs alliance of Russia, Belarus and Kazakhstan, with the third round scheduled for September in Belarus.

Upon the customs alliance’s entry, Vietnam enjoy soft tariffs as low as 5%, 3% or even 0% compared to the current 10% when shipping products to these three countries, Evegenievich remarked.

Viettel, IBM cooperate to provide 3G service in Cameroon

The Vietnamese-Cameroonian joint venture Viettel Cameroon S.A.R.L has agreed to use IBM Smarter Computing solution software to create a 3G data service infrastructure in the African nation.

The new IT platform will help provide advanced mobile services to millions of subscribers in the country.

Cameroon is home to about 20 million people, while the mobile penetration rate is about 49 percent. Mobiles are used mostly for voice calls and less for advanced data applications due to infrastructure limitations. The introduction of integrated 3G data services is expected to attract up to six million new subscribers.

Phung Van Cuong, Chief Information Officer of the Viettel Group, said that the IBM Smarter Computing solution will unleash new services in Cameroon, allowing a customer to make a video call while surfing the Internet, chat online, play interactive games with friends and connect to multimedia apps through tablet devices.

Viettel Cameroon S.A.R.L is a joint company between the military-run telecoms provider Viettel and Bestinver Cameroon S.A.R.L. This joint venture is the largest telecommunications company in the African country, with 6,000 employees and a network covering 81 percent of Cameroon’s area.-

Khanh Hoa targets 2.4 billion USD in export by 2020

The central province of Khanh Hoa has set itself the target of reaching 2.4 billion USD in export revenues by 2020 with an annual export growth rate averaging at least 12 percent.

Under the province’s forthcoming export-import strategy, it will strive to run a trade surplus of 300-500 million USD each year.

During the timeframe, the locality will continue its focus on potential sectors for development, such as ship building, seafood processing, garments and textiles and handicrafts.

Khanh Hoa has prepared a string of solutions to expand the market and promote local brand names as well as investing in infrastructure and services for exports.

To fulfill the objectives, the province will upgrade the Cam Ranh International Airport and the Cam Ranh seaport to become a centre of marine and aviation services of the southern central region.

Last year, Khanh Hoa’s export earnings exceeded 1 billion USD with a trade surplus surpassing 500 million USD. In the first seven months of this year, the province shipped abroad nearly 740 million USD worth of goods, including ships, seafood, garments and textiles, coffee and wood products.-

Venture capitalists swoop on IT expo

Venture capitalists from IDG Ventures, DFJ VinaCapital, Right Ventures, Sequoia Ventures, Unitus Impact and other investment firms are booked to participate in the upcoming Vietnam Consumer Digital World Expo 2013, event organisers say.

VCW 2013, will be held on August 30-September 1 at Riverside Palace Convention, 360D Ben Van Don street, District 4, Ho Chi Minh City.

The 200-booth show, organised by International Data Group (IDG), will feature more than 100 exhibitors from Vietnam and many other countries. IDG said investors and IT buyers would also join the event.

The exhibits include hardware, software and IT applications, office equipment, digital sound equipment, mobile devices, traditional digital equipment and games.

According to IDG, the most attractive products include Qualcomm-chip smartphones, Lenovo tablets, Hasee, Tianbo, Gotech, Vmax, Uc-Logic; sound products by Koss and Philips; Pentax and GoPro digital cameras and entertainment application packages by Musicwave, Guinness, Music Code, Jarguar Suhyoung and other firms.

The 18th annual VCW also showcases mobile application trends. Mobile applications are rapidly developing and creating numerous jobs for programmers and software developers. IDG expects the show would update Vietnamese programmers and developers about the latest worldwide developments.

Along with the exhibition, IDG will hold the Demo ASEAN Forum. Demo has been a launch pad for emerging technologies and trends worldwide for over 22 years, and this is the first Demo ASEAN event to be hosted by Vietnam.

The three-day showcase and conference will highlight new IT products. The event is set to provide a blend of new IT product demonstrations and networking with other innovative peers, decision makers, and especially sought-after venture capitalists. The event promises to offer a close-up look at the latest trend-setting technologies.

VCW 2013’s main sponsor is Qualcomm, a leading manufacturer of smartphone and tablet chips. At the show, Qualcomm, HTC, LG, Nokia, QMobile, Mobistar will exhibit their latest smartphones and tablets that feature a Qualcomm Snapdragon chip.

Online database clarifies firm records

On-line registration and information services for business enterprises, including e-signature and e-payment capabilities, were recently launched  through the National Business Registration Portal (NBRP), according to the Agency for Business Registration under the Ministry of Planning and Investment.

People, enterprises and investors now can easily find information about any domestic business entity incorporated under the Enterprise Law on the portal. “This is very significant to the development of the business community,” said Bui Anh Tuan, deputy director general of the Agency for Business Registration. He noted that present and prospective business partners would be able to verify the identity of any enterprise, its business lines, its owners and their shares, the legal representatives of the enterprise as well as review annual financial statements easily and inexpensively.

The portal is a part of the National Business Registration System – a computerised system running in 65 business registration offices nationwide since 2010. As of July 2013, registered information for more than 780,000 enterprises, including over 150,000 annual financial statements of shareholding companies have been made publicly accessible through the NBRP in Vietnamese and English.

Thanks to the information that the system offers, the Agency for Business Registration announced that some banks had already signed information procurement agreements to collect information on borrowers. Such access to enterprise information helps reduce business risks.

From April to August 14, there were 41,828 visits to the NBRP for seeking information of enterprises and guidance for the establishment of businesses in Vietnam. Tuan said during the past four months, 453 enterprises had successfully registered for business through the online system, which he described as a positive result.

“In the first stage, local business registration offices and enterprises will need time to get familiar with the online registration function,” Tuan said. “Obviously, online business registration is more convenient and advanced than the traditional model. I do believe that this new model will be popular in the near future.”

Since 2008, institutional collaboration between Ministries of Planning and Investment, Ministry of Finance, Ministry of Public Security and the General Statistics Office resulted in each registered enterprise being given a unique identification code recognised nationwide.

For the first time, electronic links for data have been shared between the Ministry of Planning and Investment and Ministry of Finance, and the government has also implemented one-stop-shop registration which is conducted using a consolidated form for business, tax and enterprise seal registration. Over 600 staff at 65 provincial business registration offices use the same computerised work flows that have increased their efficiency. In 2012, 47 per cent of business registrations were conducted within two days and 39 per cent of registrations were conducted in 3-5 days and these statistics are improving.

Tuan said the agency was also working to add information about foreign invested enterprises, science and technology institutions, financial institutions and household businesses in the NBRS. “In the future, the system will contain all the necessary legal information about businesses operating in the country,” he said.

Foreign investors snub power generation sector

Vietnam’s policy to purchase power at low prices and hold a controlling stake in state-owned power projects has discouraged many foreign  investors in the power sector.

Vu Van Hau, project manager of investment consulting firm Vietnam Invest Network told VIR that the firm had since early this year worked with more than 20 power investors from France, Germany, the Netherlands, the UK, the US, Japan and South Korea, who wanted to both buy and invest into Vietnam’s power projects.

“But after exploring Vietnam’s power market, the investors decided to wait. They are waiting for the market to be opened wider,” Hau said, referring to Vietnam’s current policy to purchase power at low prices from power generators, and allow foreign investors to acquire a maximum 49 per cent stake in state-owned power projects.

A firm source said that since 2011, a major Norwegian firm had sought opportunities to acquire hydropower plants of at least 50 megawatts in Vietnam and had worked with the state-run Electricity of Vietnam (EVN) and other state-owned enterprises (SOEs).

However, as of yet no deals had inked so far. The 49 per cent stake cap for foreign enterprises in state owned hydropower projects was cited as the reluctance to invest.

Additionally, power purchasing prices from monopoly electricity provider EVN, are three or four times lower on average than regional neighbours such as Thailand and Malaysia.

The Norwegians were looking to own at least a 50 per cent stake in hydropower projects, but also wanted to see higher power purchasing price levels from EVN.

“If the Vietnamese government maintains this 51 per cent stake, many foreign investors will not invest into Vietnam’s power industry because they cannot play a decisive role in implementing projects,” said Tran Trong Binh, senior attorney from France’s Hanoi-based international law firm Audier Partners Vietnam LLC.

Binh told VIR that under the existing Investment Law, foreign investors can build power projects with 100 per cent of their capital. “But the power purchasing prices are too low, making it hard for foreign investors to earn a profit and meaning EVN maintains a monopoly in power distribution and price setting,” he said.

“In order to create a level playing field for private and state firms, the state should hold onto key projects and allow private firms to invest in other projects which will generate more employment and tax revenue,” Binh added.

EVN increased electricity prices by 5 per cent on August 1, despite the Government Office’s Chairman and Minister Vu Duc Dam telling the press just two days earlier that EVN must seek feedback for any power price hike plan.

However, according to Dam, Vietnam could not raise electricity prices as this would have a detrimental effect on people’s lives.

“Sooner or later, Vietnam will have to have a competitive power market and a roadmap for such a market is gradually being implemented,” Dam said.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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