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BUSINESS IN BRIEF 16/4
‘Brush up' on US
rules, firms told
More than 100 business representatives took part in a seminar held in HCM City late last week to learn about export opportunities in the US and requirements of the US government's Food and Drug Administration. During the seminar, American experts explained the According to the Viet Nam Trade Promotion Agency, the country's export turnover to the However, speakers noted that Vietnamese exporters could encounter many trade barriers, so they need to know US laws and regulations on imports. Participants also learned about regulations of the FDA as well as other agencies that are in charge of examining the quality of products exported to the US Ha Long Bay no longer a cargo port The northern province of Quang Ninh has officially ceased the loading, unloading and transportation of goods, including clinker, cement and wood chips at Ha Long Bay. All these activities take place at Bai Tu Long Bay. The move is an effort by the local authority to preserve and promote the value of the world natural heritage site in order to serve the province's sustainable socio-economic development. Earlier, to protect Ha Long Bay's natural environment, the province also terminated the transportation of coal at the bay. Coal is transported by covered conveyer belts rather than road. Infrastructure key to downsizing Downtown commercial housing projects may not be converted for other purposes or split into smaller sizes, according to a proposal by the Construction Department. However, projects for which infrastructure had already been completed would be considered for conversion into social housing to be sold for a maximum VND12 million ($572) per square metre. By 2015, it was expected that 20 social housing projects of 21,000 apartments.would be released on to the market. Capital needs to be more competitive The capital city is determined to improve its performance in 2013 following its sharp fall in the provincial competitiveness index (PCI) last year. The capital city dropped 15 places to the 51 st position in the CPI ranking in 2012, due to complaints about its cumbersome administrative procedures, poor management of the real estate market, lack of adequate supports for the business community and labourers and weak FDI attraction. Nguyen The Thao, Chairman of the municipal People's Committee, has requested relevant agencies to clarify the causes behind those problems and work out measures to address them this year. He said the city would take drastic and strict measures to restore its economic growth, tackle difficulties for businesses and boost production and trade. There are seven measure groups in focus, namely supporting the market, dealing with goods in inventory; facilitating access to capital to boost production and trade; effectively implementing fiscal policies; solving difficulties in the real estate market; improving investment, production and trade environment; enhancing information campaigns through the mass media and establishing a steering committee for the measures. In particular, Ha Noi will spare no efforts to improve the quality of public services and speed up the reform of procedures in investment, land, credits, taxation, customs and business registration. The city has organised two dialogues between the authorities, banks and businesses in the locality to listen to investors' needs and demands. Since the beginning of the year, the capital has witnessed positive economic signs. In Q1, the gross regional domestic product (GRDP) expanded 7.5 per cent from the same period last year, with service and agricultural sectors reporting improvements. However, industry and construction plunged and the real estate market showed no signs of recovery. A number of construction projects have been delayed or rescheduled. The Ha Noi People's Committee has asked that land use rights procedures for housing developments be accelerated. Difficulties must be reported to the municipal Department of Natural Resources and Environment before the end of July, the committee said. The department statistics showed 90 per cent of housing projects had not been granted land use rights certificates, some for apartments that had already been handed over to buyers.- Incentives seek to attract rental housing investors Investors in rental accommodation projects might be offered a corporation income tax rate of 10 per cent, instead of the current 20 per cent and bank loans of up to 70 per cent of the total capital of the projects. The rental units could be put up for sale after five years. Rental prices of such projects for workers in industrial zones would reach a maximum of VND35,000 (US$1.70) per square metre per month and those in urban zones VND65,000 ($3.10). Authorities look at impact of Nha Trang constructions Four projects along Nha Trang beach are being investigated amid fears they will detract from the area's natural beauty. They are an amusement park, a tunnel for pedestrians, an underground restaurant and Phu Dong park. The Ministry of Construction was checking that the projects near Engineering firm opens office Howden Group, an international engineering firm, has opened its first representative office in Two seminars were held in Howden's global sales director Ken Robinson said the firm had opened the office to give maximum support to project investors, contractors and sub-contractors in Headquartered in the Noodle maker saves energy Instant noodle maker Colusa-Miliket has become the first company in Adopting the standards allowed the company to save 76,259kWh of electricity and 338 tonnes of coal every year, translating into savings of billions of dong, according to a Colusa-Miliket representative. Opportunities in slumping real estate sector Many foreign firms are looking to invest in The real estate market saw many M&A deals in the first months of the year, such as Thu Duc House's transfer of capital to the VND80 billion (US$3.809 million) Dong Mai – Ha Dong project and the Viet Nam International Township Development Joint Stock Company transferring its In the Those included Korean-Kumho Group's purchase of 50 per cent of the $93.9 million Asiana Airlines complex from Kumho E&C and VinaCapital's sale of the Legend Hotel to Lotte Hotel and Resort Group for $62.5 million. This year many Vietnamese enterprises are transferring projects to other Vietnamese investors, and foreign investors are acquiring projects in Investors with long-term strategies and significant capital would be able to take advantage of the declining market to negotiate better prices, Thin said. Nguyen Quang Cung, deputy chairman of the Viet Nam Association of Building Materials, said M&A deals would help the stagnant market, but estimated that the number of real estate enterprises would need to be reduced by one-third for the market to fully recover. More successful deals were expected to be carried out after investors recovered from capital difficulties, another expert said, adding that ineligible investors would be forced to quit the market after the long stagnation. General director of Hopefluent-Compareal Company Huynh Duy Anh told Thoi Bao Ngan Hang (The Banking Times) that many developers from Hong Kong, mainland While 2011 and 2012 were dominated by deals between Vietnamese enterprises, this year foreign investors were showing greater interest in real estate projects in In the first quarter, foreign investors poured around $249.84 million into the real estate market, accounting for nearly 4.1 per cent of the total foreign direct investment into the country. More serviced apartments go on sale Four new apartment properties (An Phu Plaza, K&T, Somerset Vista and Capri) entered the The 374 new apartments represent an 11 per cent increase over the previous quarter, according to property service company Savills "We have enjoyed a positive response from customers to date," said Feng, adding that many had signed long-term contracts for up to one year. According to Savills Average prices remained at VND500,000 (US$24) per sq.m per month. Currently, about 3,800 serviced apartments from 68 properties are available. An additional two properties with a combined 100 units will likely enter the market this year. The occupancy rate increased by 2 ppts QoQ and 9.5 ppts YoY to hit 86 per cent, while the average rent decreased by 2 per cent QoQ and 3.2 per cent YoY to VND583,000 per sq m per month. Many Grade A projects have decreased their rent to meet the market demand. The average rent of Grade A projects decreased by 3.3 per cent QoQ and 5.6 per cent YoY to VND669,000 per sq m per month. However, Grade A projects have seen increasing occupancy rates since Q1/2012, reaching 85 per cent this quarter, a sharp increase of 5 ppts QoQ and 17.6 ppts YoY. The average rent of Grade B apartments has remained unchanged since Q3/2012 at VND430,000 per sq m per month, up by 1.5 per cent YoY. Q1/2013 was the first time in the last five quarters that the occupancy rate of Grade B fell below 90 per cent, hitting 87.9 per cent. The average rent of Grade C apartments in Q1/2013 was VND318,000 per sq m per month, down by 3.8 per cent QoQ and 4.4 per cent YoY. Even with lower rent, the occupancy rate of Grade C decreased slightly by 0.9 ppt QoQ and 4.8 ppts YoY. The small decrease in rent had a positive effect on demand in Ha Noi, as the number of leased units increased slightly by 2 per cent QoQ and 13 per cent YoY to reach approximately 2,500 units. Demand in Tu Liem and Cau Giay districts, located in western Ha Noi, continued to increase as the number of leased units rose sharply by 18 per cent. About 19 projects are expected from 2013 onwards, of which seven will provide approximately 1,600 units. In 2013, 290 units from three projects are expected to become available. All of these projects are currently in their fit-out stage. Vice Permanent Secretary of the HCM City Party’s Committee Nguyen Van Dua expressed the wish at the April 14 reception for a member of the Communist Party of Brazil Central Committee, Ricardo Alemao Abreu. He added that the city is focusing on infrastructure development, especially in transport, and high-tech sectors. Dua thanked the Brazilian Party and people for sentiments and support for The official expressed his believe that Ricardo Alemao’s visit will contribute to strengthening and expanding the relations between the two Parties as well as between Brazil and HCM City. Sharing Dua’s wish, Ricardo Alemao, who is the International Relations Secretary of the Communist Party of Brazil, said his visit aims to promote the two countries’ cooperation in the fields of economics, trade and culture, which he said, hold huge potential for further development. He pledged that the Communist Party of Brazil will work to encourage Brazilian businesses to invest in The capital city dropped 15 places to the 51 st position in the CPI ranking in 2012, due to complaints about its cumbersome administrative procedures, poor management of the real estate market, lack of adequate supports for the business community and labourers and weak FDI attraction. Nguyen The Thao, Chairman of the municipal People’s Committee, has requested relevant agencies to clarify the causes behind those problems and work out measures to address them this year. He said the city will take drastic and strict measures to restore its economic growth, tackle difficulties for businesses and boost production and trade. There are seven measure groups in focus, namely supporting the market, dealing with goods in inventory; facilitating access to capital to boost production and trade; effectively implementing fiscal policies; solving difficulties in the real estate market; improving investment, production and trade environment; enhancing information campaigns through the mass media and establishing a steering committee for the measures. In particular, The city has organised two dialogues between the authorities, banks and businesses in the locality to listen to investors’ needs and demands. Since the beginning of the year, the capital has witnessed positive economic signs. In Q1, the gross regional domestic product (GRDP) expanded 7.5 percent from the same period last year, with service and agricultural sectors reporting improvements. However, industry and construction plunged and the real estate market showed no signs of recovery. A number of construction projects have been delayed or rescheduled. Preferential credits give strength to poor households The Government has channeled 114 trillion VND (5.4 billion USD) to help 21.4 million poor households fight poverty through networks of the Vietnam Bank for Social Policies (VBSP), according to official statistics. Of the beneficiaries, over 2.9 million households escaped from poverty during the past ten years. Thanks to the preferential credit policy, more than 98,000 labourers have been sent abroad while three million turns of poor students got access to subsidised loans to finance their studies. In addition, over 4.2 million sanitary water and environmental hygiene works and 484,000 houses have been built up. To improve the effectiveness of the policy, the Government has tasked the VBSP to ensure that all poor households who meet certain requirements can access to preferential credit sources. Governor of State Bank of Vietnam Nguyen Van Binh said the central bank will create favourable conditions for the VBSP to acquire preferential capital or official development assistance to ensure its credit abundance. The central bank will also ask State credit organisations to keep 2 percent deposits at the Bank for Social Policies, Binh said.- 5bln USD funded for high-speed railway linking VN, Laos Giant Consolidated Limited has received 5 billion USD of financial assistance from the New Zealand financial institute Rich Banco Berhad to fulfill the construction of a 220km high-speed railway, connecting Savannakhet province with Lao Bao Border Gate on Laos-Vietnam border. The 5 billion USD Fund Syndication Agreement for the Savannakhet-Laobao Railway Project was signed in The railway project is designed to facilitate the transport in This railway is to create better opportunity for trade and goods transport system and reduce transport time, he said. Savannakhet is located on the East-West Corridor linking Vietnam’s tourism potential introduced in The program was launched on April 11 with a video clip showing Mohamad, Director of the Dubai Tourism Department, said he was very impressed by Vietnamese cuisine. “During my coming visit to Nguyen Thi Hong, Deputy Chairwoman of the Ho Chi Minh City People’s Committee, highlighted the recent opening of a new direct air route from She pledged closer cooperation with the Vietnamese Embassy in Realty market still gloomy: CBRE, Savills In their latest report released on April 10 and 11, CB Richard Ellis Vietnam (CBRE) and Savills According to CBRE, the realty market has some advantages such as lower deposit interest rates, decreased gold price, a new relief package of VND30 trillion (US$1.43 billion) and a tax cut proposal. In a recent press brief, Vu Thi Mai, Deputy Minister of Finance, said the government has proposed a tax cut for businesses and investors in this sector. As per the proposal, 50 percent of VAT tax will be cut for social housing investors and 30 percent for businesses, applicable for apartments with less than 70 square meters of living space and cost of less than $15 million per square meter, from July 1, 2013 to June 30, 2014. In addition, businesses and investors in the social housing sector can enjoy a corporate income tax of 20 percent, instead of the current 25 percent, and the value-added tax slapped on home buyers will be slashed from 10 to 5 percent to encourage purchase, the ministry said. The tax break will be applicable from July 1. In Dang Duc Thanh from the Vietnam Chamber of Commerce and Industry said these proposed measures have not touched the core of the problem in the sector as yet. According to Thanh, there should need to change the decree on land planning and rate of land compensation and resettlement. Also, the State Bank of Prime Minister Nguyen Tan Dung has approved adjustments to some transportation projects till 2020. Accordingly, Ho Chi Minh City will build five highways, namely, the HCMC-Long Thanh-Dau Giay highway; the HCMC-Thu Dau Mot-Chon Thanh highway; the HCMC-Moc Bai highway; the Ben Luc-Long Thanh highway; and Bien Hoa-Vung Tau highway. Highway HCMC-Long Thanh-Dau Giay will cover 55km; highway HCMC-Thu Dau Mot-Chon Thanh will cover 69km; highway Ben Luc- Long Thanh about 58km;highway Bien Hoa-Vung Tau will be 76km with six to eight lanes. Highway HCMC-Moc Bai across 55km will be with four to six lanes. Besides, motorways HCMC-Trung Luong will be upgraded and extended by 40km. HCMC will also build 34 new bridges; among them will be nine bridges across Realty projects in According to a report by CB Richard Ellis Vietnam (CBRE) on the realty market in As per the report, most supply was in low-income housing projects while it was far less in the higher-end housing sector. The increase in supply has thus resulted in slight decrease in price. 95 percent of housing apartments cost under $1,000 per square meter. According to CBRE, investors have been more practical when releasing in the market and downed prices to suit low-income earners. CBRE also said that buyers maintain wait-and-see mode as they don’t trust investors’ financial capacity to carry out construction plans as promised. More importantly, average house prices are now 25 times higher than the average income of a laborer, while this figure is only 7 in the EU, and 6.3 and 5.2 in However, CBRE said the retail rental housing market in Positive signs in the market are that the retail rental housing received attention from foreign investors. At present, AeonMall In the future, Vingroup still plays a leading role in the retail market thanks to its two projects Garment, textile show goes hi-tech The latest automated equipment as well as fabrics incorporating state-of-the-art technology are on view at the SaigonTex exhibition that opened yesterday in HCM City. Andrew Kay, managing director of CP Exhibition Hong Kong, one of the organisers, said the expo offered local companies an opportunity to learn about and source foreign Free-On-Board products and materials. The Viet Nam Sai Gon Textile and Garment Industry and Fabric & Garment Accessories Expo is the only textile trade show in the country that has received a certificate of quality from the Global Association of the Exhibition Industry. More than 60 Vietnamese exhibitors, a rise of 20 per cent compared to last year, are taking part this year. Participating companies are from Hoang Ve Dung, deputy general director of the Viet Nam National Textile and Garment Group (Vinatex), said the expo this year had more high-tech products, including automated machinery and fabrics with nano-technology and advanced bacterial protection. During the expo, two seminars will be held. Today, one seminar will discuss how to maximise benefits through Trans-Pacific Partnership trade agreements, and the other seminar will focus on sourcing. The event is expected welcome 8,000 trade visitors this year. The exhibition was organised by the Viet Nam National Textile and Garment Group in collaboration with the Viet Nam Chamber of Commerce and Industry Exhibition Services Co Ltd and CP Exhibitions Hong Kong. It will close on Sunday at the Tan Binh Convention and Exhibition Centre. Cosmetics, wellness products on display An international exhibition and conference on cosmetics, beauty, hair and spas opened yesterday in It will provide beauty specialists with the latest information on industry trends and allow them to network and seek new business opportunities. To be organised at the Saigon Exhibition and Convention Centre until tomorrow, Cosmobeaute Vietnam 2013 has attracted more than 90 local and international exhibitors, displaying new cosmetics, beauty and spa products in addition to advanced equipment and technology that promotes wellness and beauty care. It also includes seminars on beauty and healthcare as well as a hair-do and make-up show by the Organised by Malaysia-based ECMI Trade Fairs S.E.A. Sdn Bhd and the Minh Vi Exhibition and Advertisement Services Co, the event is expected to welcome about 10,000 local and international visitors. Students to teach basic money The campaign, which involves a contest for students at eight universities in Ha Noi and Participants will be encouraged to use social media and other online tools, together with student-led forums, to reach student communities. To help teams put together their programmes from now until the submission deadline on 11 September 2013, participants are required to organise and host a series of ‘Money 101' seminars on campus where they will be able to try out the feasibility of their ideas and programmes with fellow students. Coffee trader signs loan deal to reach export target Standard Chartered Bank (SCB) on Tuesday signed a loan agreement worth US$24 million with the Daklak September 2nd Import-Export Co Ltd (Simexco Daklak), the second largest state-owned coffee trader in Viet Nam. Simexco General Director Le Duc Thong said the loan would help the company achieve its export revenue goal. Louis Taylor, General Director of Standard Chartered Viet Nam, said that the Vietnamese coffee industry had seen spectacular development over the past 20 years and had become one of the main driving forces behind the country's exports. The strategic partnership between SCB and Simexco is evidence of the bank's commitment to sustainable development in Founded in 1993, Simexco Daklak has built up a dynamic purchasing network directly from farms and invested in modern coffee processing factories, staff training and quality control systems in key coffee-growing areas of VN, The statement was made by Deputy Minister of Natural Resources and Environment Nguyen Linh Ngoc at a conference held in Ha Noi yesterday to discuss the two countries' mining cooperation. Experts from nine Australian leading companies specialising in mining equipment and technology services attended the event and provided Australian Ambassador to Viet Nam Hugh Borrowman emphasised that the forum is an important event for national and international leaders to share information on technological development and collaborative opportunities in the field. Jointly held by the Ministry of Industry and Trade, the General Department of Geology and Minerals of Viet Nam and the Australian Competence Network Agency, the event is part of activities to mark the 40th anniversary of diplomatic ties between Australian businesses joining the Ozmine Viet Nam 2013 mining mission are due to undertake site visits and technical meetings at the Viet Nam Coal and Minerals Industries Group (Vinacomin) in northern Quang Ninh province and the Besra Phuoc Son gold mine in central Quang Nam province. Also yesterday, Deputy Prime Minister Vu Van Ninh, Australian Ambassador to Viet Nam Hugh Borrowman and CEO of Qantas Alan Joyce, met in discussion about further cooperation in aviation between the two countries. Ninh said the two countries' relations have expanded efficiently in many sectors including economics, investment, infrastructure, education and culture. He highly valued Qantas and Viet Nam Airlines' long-term strategic cooperation by raising the Australian carrier's investment in Jetstar Pacific Airlines. For his part, Borrowman said He noted that The co-operation between Qantas and Vietnam Airlines is an example of the two countries' close ties in trade and investment, the diplomat added. Qantas has pledged to maintain its long-term cooperation with Vietnam Airlines to promote the country's aviation industry, said Joyce. Forum smooths the way for exports Ministry of Industry and Trade (MoIT), following the framework from the 23rd Viet Nam Expo 2013. Themed "Promoting sustainable export development," the forum focused on exchanging content of common concern for Vietnamese exporters, including market updates, impacts of new policies on exports, and experience sharing in trade and export promotion, in order to help enterprises boost export efficiency. Opening the Forum, VIETRADE's Director General Do Thang Hai emphasised that in 2012, despite economic difficulties, Viet Nam's foreign trade had gained remarkable achievements. Total export turnover was at its highest ever level of US$114.57 billion, representing an increase of 18.2 per cent compared to 2011, helping the country reach a trade surplus of $780 million for the first time in 20 years. Viet Nam profited $29.69 billion from exports in the first quarter of this year, a year-on-year increase of 19.7 per cent. At the forum, local and international experts analysed export opportunities brought by free trade agreements (FTA), especially the Viet Nam-EU FTA. Viet Nam has so far signed eight FTAs with other countries that account for 25 per cent of total global consumption. Tran Thanh Hai, deputy head of the Import-Export Department under the Ministry of Industry and Trade, said FTAs play an important role in boosting Vietnamese exports as they help increase the competitive capacity of Vietnamese products in big markets. However, experts said Vietnamese businesses failed to capitalise on the opening of markets that FTAs bring about, saying many neither understand nor pay due attention to tariff preferences, thus reducing their competitiveness overseas. The Ministry of Industry and Trade is speeding up the negotiation of FTAs, considering it a key solution for increasing exports from now until 2020. In his presentation, Dao Ngoc Chuong, Deputy Director of MoIT's Asia-Pacific Department provided an overview on trade and expectation of Viet Nam's trade with the region in the coming time with special attention given to measures to reduce the excess of imports over exports in major markets. Also at the Forum, Dao Thu Trang, an expert from Germany's Industry and Trade Office in Viet Nam had a detailed presentation on the German market, business chances and necessary attention that needed to be taken regarding this market. Banks to provide loans for Central Highlands progress The State Bank of Viet Nam (SBV) and four other commercial banks have pledged to expand credit activities in the Central Highlands region, Dao Minh Tu1, SBV deputy governor has said. Speaking at a meeting held yesterday in Pleiku City in the Central Highlands province of Gia Lai,Tu said that VietinBank, Vietcombank, BIDV and Agribank would offer loans to investors in agriculture, forestry, tourism, minerals and hydro-power projects. In addition, loans would be given to projects involving long-term industrial trees and plants, such as coffee, pepper and rubber. Preferential interest rates on bank loans would also be extended to residents in the region in an aim to reduce poverty rates, Tu added. State banking leaders and representatives from 50 businesses across the country also took part in the meeting. The event was part of the second investment promotion conference for the Central Highlands region that opens today in Pleiku City. Many business representatives present at the pre-conference meeting yesterday said that interest rates should be cut further, as most of the businesses in the area were small-sized and relied heavily on bank loans. Nguyen Tuan, secretary general of Gia Lai Business Association, explained that most companies in the region needed to maintain cash flow to have capital to maintain business operations. As a result, many farmers preferred making one payment at the end of the loan term rather than every month. This would free up capital that could be used for crop cultivation, Tuan added. According to Tuan, all businesses, especially small- and medium-sized, want to have a lower interest rate on loans, while depositors want to have a higher interest rate on deposits. The Government and SBV, he said, were ensuring that policies work well for both businesses and depositors. "Interest rates fell six times last year, and several times this year they have been at 7.5 per cent. I'm sure this trend will continue if the CPI falls or remains unchanged," he said. As of last year, the Bank of Social Welfare had nearly 20 credit programmes with total credit balance of VND11.664 billion (US$560 million), an increase of nearly 20 per cent compared to 2011. Nearly 260,000 people had access to these low-interest loans. The loans have helped lift 41,703 people out of poverty. More than 81,600 children of poor families received loans for schooling purposes. In addition, the loans helped build 143,000 environmental works in rural areas and more than 54,000 houses for poor families and families that contributed to the country during wartime. More than 1,700 members of these families also have access to loans to enable them to work as guest workers abroad, according to Nguyen Viet Manh, head of the SBV's credit department. The SBV plans to expand low-interest credit and welfare credit programmes in an aim to increase the quality of life of residents, especially ethnic minorities, and to protect the environment and cope with climate change. According to statistics from SBV, as of the end of last year, total credit balance in the Central Highlands region reached VND104.483 trillion ($5 billion), a year-on-year increase of 13.46 per cent. People disappointed by modest drop in fuel prices The latest retail fuel price adjustments did not receive a warm welcome by consumers, as the reduction was small in comparison with recent hikes, which brought prices to a record high just two weeks earlier. In the first three months of 2013, the ministries of Finance and Industry and Trade adjusted fuel price four times and let petrol companies increase their compensation rate from price stabilisation fund. As of March 28, though the price of petrol on the world market has been declining, the price stabilisation fund was exhausted. The ministries then reduced the compensation rate to VND300 per litre. In the most recent price adjustment, on April 9, petrol companies announced a modest decrease of only VND500 per litre for A92, VND450 per litre for kerosene and diesel. Nguyen Anh Tuan, deputy head of the Price Management Department under the Ministry of Finance, said at the regular press conference on April 10 that the price had been adjusted in accordance with regulations. The average world price over a 30-day period was VND415-481 per litre lower than current retail prices. Many economists have said that prices should be further lowered and that the state must ensure the transparency of the fuel pricing mechanism. According to economist Ngo Tri Long, the problem does not stem from the fact the decrease was so small, but the timing. "The pricing of fuel has never been tranparent. Sometimes retail prices are calculated on average 30-day world price, and sometimes it's 20 days. We must make clear on when it is proper to either increase and decrease fuel price." Long said. Economist Pham Chi Lan said, "A decrease of VND500 per litre is nothing compared to the price hikes we've seen recently, such as the increase of VND1,430 per litre on March 28." Lan went on to say that the previous hikes were unreasonable because at a time when world prices were falling. She said that it appeared that the ministries were trying to correct for this, but that the downward adjustment should have gone farther. "The ministries of Finance and Industry and Trade have continually claimed that the fuel pricing is transparent. But they need to be transparent to consumers, not just ministers," Lan added. Economist Le Dang Doanh agreed and said they should make changes to Resolution 84 on the operational mechanism guiding petrol and oil companies. "Consumers have been greatly affected by these sudden increase, only to see a slight decrease afterwards," he said. Establishment of new airlines will require at least VND300 billion The prime minister has signed a decree to stipulate a minimum capital of VND300 billion (USD14.4 million) to set up a new airline, an increase from the current VND200 billion (USD9.52 million). The decision comes in the wake of the dissolution of several local private airlines revealed difficulties for small carriers in the domestic aviation industry. In February this year, Air Mekong had to halt operation of its flights as part of their human resource restructuring. However, according to some news sources, it incurred losses of three to four times its total registered capital of VND600 billion (USD28.57 million). Indochina Airlines, the country’s first private airline, had its license revoked in 2011, only six months after its establishment, also due to large losses, which were reportedly double its registered capital of VND400 billion (USD19.04 million). Meanwhile, Trai Thien Air Cargo was licensed. Under Government Decree 30 on aviation business and transport activities, the capital threshold of VND300 billion will be applied to airlines operating solely domestic routes, while those operating 10 airplanes on international routes must have capital holdings of at least VND700 billion (USD33.6 million). But the regulation also varies depending on the number of aircraft. Carriers operating between 11 and 30 planes for international flights would be required to have at least VND1 trillion, while those with the same number running only domestic flights must have VND600 billion. Carriers with more than 30 planes on international routes must have registered capital of VND1.3 trillion (USD61.9 million), wile those with the same number that run only domestic routes must register VND700 billion (USD33.3 million) Foreign shareholders' capital remains limited at 30% of the total registered capital of any carrier. The decision also stipulates that any airline that does not operate flights within 18 months of being licensed will have their license revoked. The decree is to become effective starting June 1, 2013. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR |
Thứ Hai, 15 tháng 4, 2013
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