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NEWS


BUSINESS IN BRIEF 28/5

Vietnam Economic Report 2012 announced
Vietnam’s economic growth rate in 2012 is likely stay at 5.1 percent, the lowest ever since 2000 while the inflation rate will reach 6.2 percent.   

The current growth model is highly dependent on ineffective State-run enterprises, which weakens economic effectiveness, according to the Vietnam Annual Economic Report 2012, released in Hanoi on May 24.

Director of Vietnam Centre for Economic and Policy Research (VCEPR) Dr. Nguyen Duc Thanh said the basic question of the macro-economy is to deal with bad debts in the commercial bank system and create conditions for the market to restructure the enterprises, with the support of bankruptcy and merger and acquisition procedures.

The report, compiled by the (VEPR), said that Vietnam should have a clear view of the new development model and suitable support mechanisms to successfully reform the economy and overcome challenges posed by restructuring.

It provides analysis and comment on three economic restructuring programmes.

It also focuses on public investment, state-owned enterprises and commercial banks, as well as difficulties and shortcomings during the implementation.

Hundreds of thousands of businesses have started to benefit from the Governments tax relief package after a circular guiding the implementation of the policy officially took effect on Wednesday.

The circular was issued to help struggling firms and households overcome financial difficulties. It detailed a series of tax deferrals, reductions and exemptions mainly for small- and medium-sized enterprises (SMEs) and businesses that use a high number of labourers.

According to the new regulations, a six-month extension for value added tax (VAT) payments for this years second quarter has been granted to SMEs. This excludes lottery and stocks, as well as financial, banking and insurance businesses under major corporations. Businesses that use a high number of workers for production and processing of agriculture, aquaculture, textiles, footwear, infrastructure and electrical equipment are also excluded from the extension.

Regarding the VAT deferral, director of the Institute of Financial Strategies and Policies Vu Thang estimated that roughly 400,000 enterprises would enjoy the tax breaks.

The Ministry of Finance has also calculated that some VND4.1 trillion (US$195.2 million) of VAT will be delayed every month so companies will have more working capital for their business performance.

The new circular also mentioned a reduction of land rental payments in 2012 by 50 per cent for service businesses. A 12-month extension for land lease fee payment will be also included in the circular.

In addition, the circular has guided a nine-month extension for corporate income taxes (CIT) backdated to 2011 for SMEs and those with a high number of workers in the production and processing of agriculture, aquaculture, textiles, footwear, infrastructure and electrical equipment.

If CIT payments are not made on time from April 1 to December 31 of this year, the firms will not be fined as the deadline will now be January 2 of next year.

Fishing households will also be exempted from paying taxes on business licences this year those already having paid the tax will be refunded.

Central bank dispels coin recall rumor

The State Bank of Vietnam (SBV) has yet to issue any directive on recalling the Vietnam dong coins, Le Thi Thanh Hang, deputy director of the SBV’s branch in Ho Chi Minh City has confirmed.

The announcement was made after many small traders in Binh Tien market in District 6, and Cho Lon (Lon Market) in District 5 refused to receive payment in coins, following a rumor that the government will withdraw all coins in the market and stop their circulation as of May 27.

“A coal seller refused to take my coin, and other traders just do the same,” said Tuan, a market-goer.

Hang added that in case the coins are slightly damaged or rejected from payment, consumers can use them for purchase at post offices or supermarkets, or exchange for newer ones at banks or the state treasury.

The Vietnamese coins were reinstated in late 2003, under the government’s bid to increase automatic payment for vending machines. The new coins are in denominations of VND200, 500, 1,000, 2,000, and 5,000.

Exciting to see the coins reappear after many years at first, local residents however soon considered them inconvenient as the coins easily out of the pockets or become tarnished.

The SBV has stopped issuing new coins since 2010 due to the rising steel prices, which made it costlier to produce coins than polymer banknotes.

Besides, coins in denominations of VND200 and 500 are of little use amid this time of skyrocketing prices.

Mekong region needs to tap potential

Administrative reform, improved infrastructure and training for quality human resources would help the Mekong (Cuu Long) Delta area attract more investment, experts said at a conference held in HCM City yesterday.

The Cuu Long (Mekong) Delta is known as the countrys key rice-growing and aquatic production and export area. The region annually contributes about 20 per cent to the national gross domestic product (GDP).

However, despite its potential and numerous incentives offered by localities, investment in the region remains very low compared to other region due to infrastructure limitations, a shortage of skilled workers and poor development plans, according to Nguyen Huu Lam, director of the HCM City University of Economics Center for Excellence in Management Development.

Lam said provinces and cities in the area often call for many similar investment projects, some of which are not suitable for their areas. He said every locality should identify its strengths and advantages and seek practical projects to avoid scattered investment.

According to Pham Thanh Khon, vice-director of Department of Planning and Investment of Vinh Long Province, lack of a support industry and business-development services have also driven away investors.

Ha Xuan Anh, chairman of Son Viet Garment Joint Stock Company, said poor infrastructure had caused difficulties for enterprises in distributing their products.

Another significant problem is the lack of qualified staff.

Vo Thanh Thong, deputy chairman of the Can Tho City Peoples Committee, said training had not met the needs of businesses because there had been few linkages between training schools and companies.

Starting from this year, the city plans to improve this situation, according to Thong.

Vocational training schools as well as universities should improve their training quality to improve human-resource quality, Lam said, adding that cities and provinces should also adjust their policies to attract talented people.

"We need to improve institutional structures so they will be more attractive and create a healthy business environment," Khon said.

Local authorities should also regularly organise dialogues with enterprises to learn about their problems, he said.

Lam called for tighter linkages among provinces to exploit the regions advantages, particularly in infrastructure and agriculture.

Many conference participants suggested that the region should focus on investment in projects using high-technology and bio

(5/28/2012 8:15:10 AM)


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