Market ignores positive signals

Trades were sluggish during the morning session yesterday on the HCM City Stock Exchange, and the VN-Index tumbled by 1.63 per cent to close at the end of afternoon trading at 442.58 points.

The value of trades dropped 11.5 per cent from Wednesday's level to VND1.15 trillion (US$54.7 million), while volume also fell by 10.2 per cent to 77.7 million shares.

The VN30 declined by 1.2 per cent to 513.46 points, with two-thirds of the 30 leading shares tracked by the index retreat, including several top shares, pushing indices down.

Insurer Bao Viet Holdings (BVH), financial conglomerate Ocean Group (OGC) and Tan Tao Investment Group (ITA) bottomed out, while Vietcombank (VCB) tumbled by 4.4 per cent, Sacombank (STB) declined by 2.8 per cent and real estate developer Hoang Anh Gia Lai (HAG) shed 2.4 per cent.

The head of research and analysis for Kim Eng Securities Co, Michael Kokalari tried to soothe investor worries by giving a positive outlook on the Vietnamese stock market. Looser monetary policies could help boost the market going forward, he said, predicting that the market could gain overall by at least 10 per cent by the end of the year.

Economist Tran Du Lich pointed to the positive sign of declining interest rates and predicted that cash flows could once again pour into the stock market.

On the Ha Noi Stock Exchange yesterday, the HNX-Index also declined by 1.8 per cent to close at 76.15 points. Value totalled VND545.9 billion ($26 million) on a volume of 50.8 million shares. VNDirect Securities Co (VND) replaced Habubank (HBB) as the most-active share with 3.7 million changing hands.

Foreign investors dumped blue chips yesterday, selling a net of VND5.7 billion ($271,400) worth of shares in Vietcombank (VCB) alone. However, about 92 per cent of foreign investor sales were focused on BVH.

Shares down after posting gains

Shares were sluggishly traded during this morning's session despite early gains.

On the HCM City Stock Exchange, the VN-Index slid 0.16 per cent to 449.19 points.

Gainers, however, outnumbered losers by 124-103.

The value of trades dropped 25.6 per cent over yesterday morning's level, reaching VND650.8 billion (US$31 million). Trading volume also fell at the same rate to 43.6 million shares.

The VN30 slightly decreased to 519.59 points. Among the 30 leading shares tracked by the index, although half of them posted gains, the largest shares retreated, pushing indices down.

Vietcombank (VCB) tumbled by 1.2 per cent, while insurer Bao Viet (BVH) lost 1.8 per cent and property developer Vincom (VIC) shed 0.5 per cent.

On the Ha Noi Stock Exchange, the HNX-Index dropped 0.55 per cent to 77.12 points.

Trading totalled VND259.2 billion ($12.3 million) on a volume of nearly 24.5 million shares, reaching only 64.8 per cent of yesterday morning's session in terms of value.

The market will open again at 1 pm.

Exchange rates stay stable

Exchange rates are showing stable development, says financial and banking expert Nguyen Tri Hieu.

The average inter-bank rate of exchange yesterday, as listed by the State Bank of Viet Nam, continued to stay at VND20,828 per US dollar, a level it had maintained for almost all of a six-consecutive-month period since November 24 last year.

Exchange rates on the regular market were showing correlative moves, with commercial banks — including Vietcombank, BIDV, Eximbank and Vietinbank — listing buying rates at around 20,820 dong/dollar and selling rates around 20,870 dong/dollar.

Hieu told Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) that the stable trend was due to significantly increasing State Bank foreign exchange reserves, few fluctuations on the gold market and great differences between the interest rates for dong and dollar, which was making the foreign currency less attractive.

The trend was also backed by central bank measures to stabilise the foreign currency market, positive signs from import-export and declining demand for foreign currencies due to domestic production slowdown, he added.

The National Financial Supervisory Committee (NFSC) said there was a high possibility that stability would continue over the coming months.

Exchange rates would not see strong fluctuations in the short term with abundant supply and small demand for foreign currency, it said, noting that the nation's general payment balance was seeing a surplus of about US$2 billion while international investors were showing greater confidence in the domestic economy.

Hieu warned, however, that there were still many unpredictable factors that could cause fluctuations in the foreign currency market during the remainder of the year, as global prices remain unstable and imports are likely to see sudden changes by the end of the year.

Tai Hui, an economist at Standard Chartered Bank, recently said although the trade deficit had narrowed to $257 million in the first quarter of this year from $1.6 billion in last year's fourth quarter, it was still too early to determine whether the trade balance would continue to improve or not.

He reportedly forecast that the dong would depreciate slightly by 4.3 per cent in 2012.

The NFSC said flexible policies were needed in order to avoid pressure on exchange rates between now and the end of the year and that rates should be kept at "reasonably stable" levels.

The dong should not be floated so as not to negatively affect the Government's efforts in restoring the confidence of business, investors and people in the domestic currency's value and the economy.

On the other hand, the NFSC said with an inflation difference level between Viet Nam and its major trade partners expected to reach 5-7 per cent this year, and with the dong being valued about 5.46 per cent higher than its real value, a fixed exchange rate would affect the competitiveness of domestic goods in the future.

The committee said the current exchange rate could be adjusted in a 3-5 per cent amplitude to facilitate exports, which were expected to see many difficulties.

A Government commitment to maintaining stable exchange rates with low-level adjustments would stimulate short-term capital flows into the country, including finances from foreign direct investment and foreign short-term lending, the NFSC said.

Such capital sources would help increase foreign currency supply and national reserves, which could promptly be withdrawn from Viet Nam in case of fluctuation, posing a risk for the country in the middle term if capital inflows were large-scale compared with national reserves, it noted.

Vinamilk imports 300 cows

Three hundred cows imported from Australia by the Viet Nam Dairy Products JSC (Vinamilk) arrived in HCM City aboard a Malaysia Airlines chartered flight on Tuesday night.

The cows were taken to a company dairy farm in the Central Highlands province of Lam Dong where they will be held separately for a period before being allowed to join the farm's herd.

A Vinamilk spokesperson said the company has invested more than VND700 billion (US$33.5 million) to develop five modern dairy farms in the provinces of Tuyen Quang, Thanh Hoa, Nghe An, Binh Dinh, and Lam Dong, each of which can accommodate 2,000 to 3,000 heads of dairy cows.

Under a five-year plan Vinamilk, which will have 9,500 cows by the end of this year, will increase that number to 28,000 by 2016.

For that, it will invest a further VND1.5 trillion ($714 million) to set up four new farms in the provinces of Tay Ninh, Dak Nong, Ha Tinh, and Thanh Hoa.

It is also looking at co-operation and investment opportunities in Cambodia.

Vinamilk buys some 450 tonnes of fresh milk from farmers every day. For sustainable development, it has been helping them improve the quality of their dairy cows to increase their milking capacity.

The company plans to increase its milk purchase to nearly 600 tonnes by 2016. That will meet 50 per cent of its fresh milk needs for processing.

Landmark Tower, nation's tallest, makes debut

Viet Nam's tallest building, the 346m Keangnam Hanoi Landmark Tower, will be opened at a ceremony tomorrow.

The building, owned by South Korean firm Keangnam, is located 7km west of the capital's central business district.

The tower, built at the cost of more than US$1 billion, occupies 46,054sq.m of land. The tower includes grade-A office space, a five-star hotel, serviced residences and a retail area.

Vinachem targets annual growth of 14.5 per cent

Viet Nam National Chemical Group (Vinachem) plans to reach an average growth rate of 14.5 per cent per year to meet domestic fertilizer demand by 2015.

According to the group's five-year plan, recently approved by the Prime Minister, Vinachem will become a national leader in the production of everyday chemicals and chemical products for agriculture.

The group, which is aiming to boost its average earnings by 17-18 per cent, plans to develop high-tech rubber products and invest in modern technology to produce radial-ply tyres, synthetic-rubber tubes for vehicles and rubber products for the health and food processing sectors.

Vinachem also plans to launch projects involving the processing of aluminium hydroxide to make Cephalosporin antibiotics, with a yearly capacity of 300 tonnes, as well as Vitamin C.

Vietinbank to sell 20% to partner

The Bank for Industry and Trade of Viet Nam (Vietinbank) plans to sell 20 per cent of its shares to a strategic partner in the third or fourth quarter of this year, said Pham Huy Hung, the bank's chairman, at an analysts' meeting yesterday in Ha Noi.

Hung said: "The bank's shares are now below their real value and priced reasonably at between VND30,000 to VND40,000 (US$1.4-$1.9) each."

The chairman said that by late April, the bank's profits stood at VND2 trillion ($95.2 million) and its capital adequacy ratio (CAR) was 11 per cent. The bad debt ratio meanwhile stood at 2 per cent, which Hung said Vietinbank (CTG) was hoping to reduce to 1 per cent by the end of the year.

Vietinbank successfully raised $250 million from an international five-year bond sale with a yield of 8 per cent – a high rate, Hung said.

However, he said investors were still concerned about the economic climate, and the country's credit rating was low. The successful international bond issue was a good sign. Meanwhile, he said a number of solid financial institutions had been forced to raise annual interest rates to between 9-10 per cent.

Although interest rates in US dollars for short-term deposits stand at 2 per cent, it was difficult to mobilise funds for medium- and long-term deposits. That was why Vietinbank decided to issue international bonds to help stabilise domestic foreign currency levels, he added.

The bonds were issued in Europe, Asia and the US, following Government approval in February.

Regarding non-productive loans, the Vietinbank chairman said lending levels in the real estate sector stood at 3.6 per cent, while securities investment rates stood at 0.13 per cent.

When asked about the bank's mergers and acquisitions, Hung said the bank would consider the move, which is in line with a State Bank of Viet Nam directive. However, he said the bank had to ensure shares were appropriatly valued before making a specific decision.

The selling and buying of shares is part of the State's roadmap to divest capital in the bank. State capital would be reduced from 60 per cent to 51 per cent, as instructed by the Prime Minister, the chairman said.

By the first quarter of this year, the bank's total assets stood at VND406 trillion ($19.3 billion), a year-on-year rise of 28 per cent. Meanwhile, its after-tax profits reached VND1.3 trillion, 60 per cent up on the same period last year.

Firms forced to cut costs to remain afloat

As many as 83 major companies and four banks in the country have registered to cut operational costs by some VND13 trillion (US$624 million) in a bid to stay afloat in the economic downturn, the Ministry of Finance said.

The companies have announced their intent to cut management costs by VND3 trillion ($144 million) and other input costs like raw materials and energy by VND9.4 trillion ($451 million), accounting for 24.7 and 75.3 per cent of the total savings, respectively.

Four leading banks, Vietcombank, Vietinbank, Agribank and BIDV will cut a combined VND735 billion ($35 million) of their operational costs. Mekong Housing bank (MHB) has also pledged to cut costs, but has not revealed a figure yet, according to the ministry.

The Government in January asked most State-owned companies and corporations to cut down on costs and lower product prices to improve their competitiveness in the economic downturn.

BaoViet Insurance Group in February was the first firm to register to cut costs by VND145 billion ($6.8 million), while still maintaining its planned annual revenue. Other firms followed such as Viet Nam National Textile and Garment Group (Vinatex) with VND1.1 trillion, Electricity of Viet Nam (EVN) with VND1.8 trillion, House and Urban Development (HUD) with VND125 billion and Viet Nam National Shipping Lines (Vinalines) with VND105 billion. The State Bank of Viet Nam last month ordered five major banks in the country to cut costs by 5 to 10 per cent in order to bring interest rates down.

Drought hits 50,000ha of crop

A drought has affected nearly 50,000ha of crops nationwide, says Dang Duy Hien of the General Department of Irrigation under the Ministry of Agriculture and Rural Development.

Low water levels of rivers have caused a water shortage for irrigation in the central provinces. In the central-northern provinces, the average river water level is sufficient at 2-2.5m. However the irrigation channels across Bac Ninh, Hung Yen and Hai Duong provinces are flowing slow because of construction work on the Bac Hung Hai irrigation and drainage system. Saline intrusions to the water and soil of the Cuu Long (Mekong) Delta provinces of Soc Trang, Bac Lieu and Ca Mau have forced farmers to stop pumping water.

To prevent people from having to buy water at exorbitant prices from private water providers, the Ministry of Agriculture and Rural Development has urged local authorities to operate their water pumping stations at full capacity or to provide water-tanks for people in remote, downstream areas during the dry season. For areas of high salinity, local authorities need to fix salt prevention sluice gates to prevent saline saturation of the fields, the ministry said.

Quang Tri to host mid-year consultative meeting

The Consultative Group (CG) for Vietnam will hold its mid-year meeting in Dong Ha city, the central province of Quang Tri on June 4-5.

The World Bank Vietnam announced on May 16 that the meeting will focus on three topics: a macro-economic update for Vietnam ; breakthroughs and challenges in poverty reduction and major challenges in the application of poverty reduction policies in the central coastal provinces; and managing vulnerability to natural disaster in the central coastal provinces.

Ahead of the CG meeting, Vietnam Business Forum (VBF), a structured and ongoing dialogue linking the Vietnamese Government and business community, will be held on May 29.

The forum will be jointly held by the VBF Consortium in partnership with the Ministry of Planning and Investment and the International Finance Corporation (IFC).

The mid-year VBF will focus on investment climate perception as seen by local and foreign associations, plus discussions about banking and capital markets, infrastructure, investment, trade and education and training.

The CG is a forum where Vietnamese Government and international donors for development can exchange ideas on economic policies, poverty reduction strategies and effective use of ODA.

The meeting was first held in Vietnam in 1999.

Public debt management talks at conference

An international conference on public debt management took place in Hanoi on May 16.

Jointly held by Vietnam’s Ministry of Finance, World Bank (WB) and International Monetary Fund (IMF), the conference drew the attention of leaders of ministries, sectors, people’s committees of cities, provinces nationwide and local financial departments, together with experts on debt management from the international financial organizations of WB, IMF and debt management offices of Thailand and India.

Addressing the event, Deputy Finance Minister Truong Chi Trung said the conference aims to share experiences and lessons from the work of controlling debt in each country, helping participants have an overview of the world’s public debt situation, as well as the importance of debt management to national financial security.

According to experts, the structure of risky debt usually results in illogical economic, fiscal and monetary policies. A poor debt structure is also one of the causes of economic crisis.

Many experts said that public debt management is a necessary tool to achieve macro financial goals in developing countries. It is very important to have coordination between monetary and fiscal policies.

Vietnamese firms should adopt green IT approach: forum

Local firms should consider adopting a green information technology (IT) approach, as it is becoming more popular as a smart solution for modern businesses, said a recent forum in Ho Chi Minh City.

It has been adopted by company managers who want to secure their employee’s health, cut costs, produce eco-friendly products, and protect their family and community, according to the Corporate Social Responsibility (CSR) Calendar Forum on Green IT.

“Green IT, especially in these times of globalization, is not a strange term to manufacturers and consumers. It’s repeated more and more and reaches a large number of audiences via mass media.”

The greening of industries and the creation of green industries are also becoming more popular worldwide.

While the former is related to continuous improvement of resource productivity and environmental performances of all industries, the latter touches on the industrial supplies of environmental goods and services.

On a macro level, regarding policy and strategy making, they will create a global green economy and green growth; while on a micro level, relating to operational models or solutions, they will create suitable production and consumption.

The IT revolution has been a remarkable step by human beings in the 21st century.
“It is undeniable that IT plays a key role throughout whole supply chains and production lines, as well as people’s daily lives.”

But as there are two sides to everything, the negative consequence of IT, including electronic waste (e-waste) resulting from the very short life cycle of products, is mostly ignored.

The next generation will have to pay for what we are throwing away today, said the forum.
The forum also introduced some solutions for minimizing IT’s negative impact.

They include energy saving, 3R in all stages of the life cycle, safe chemical alternatives, and e-waste management.

Rene Van Berkel, head of the Cleaner and Sustainable Production unit under the United Nations Industrial Development Organization (UNIDO), also introduced an effective waste management chain and a systematic approach to this system, and UNIDO’s approach to e-waste management.

The event, which is an effort to address emerging issues and find solutions to the current situation, will also be held in Hanoi on May 17.

Following the latest events promoting topics of Corporate Social Responsibility, the forum is expected to welcome participants from various enterprises and organizations.

The conference is held under the framework of the European Union funded project called “Helping Vietnamese SMEs Adapt and Adopt CSR for Improved Linkages with Global Supply Chains in Sustainable Production”.

It is being carried out by the UNIDO and the Vietnam Chamber of Commerce and Industry (VCCI).

Other implementation partners include the European Chamber of Commerce in Vietnam; the Vietnam Leather and Footwear Association; Vietnam Textile and Apparel Association; Vietnam Electronic Industries Association; Institute of Labor Science and Social Affairs; Directorate for Standards, Metrology and Quality of Vietnam, the National Metal and Materials Technology Centre, Thailand; and Sequa Germany.

Dung Quoc refinery temporarily closes for maintenance

As of today, the Dung Quoc Oil Refinery in the central province of Quang Ngai will be temporarily shut down for maintenance and repairs of problems that have appeared since June 2010.

“The closure is expected to last three to four weeks,” said Nguyen Hoai Giang, CEO of the Binh Son Refining and Petrochemical Co, operator of the US$2.2-billion refinery.

The 6.5-million-tonne-per-year refinery had its preliminary acceptance in June 2010, and is set for final acceptance this July, added Giang.

“After that, Binh Son Co will officially take over the refinery.”

In June 2011, it underwent the first overall maintenance, and resumed operations two months later.

In related news, local fuel wholesalers have recently continued to enjoy high profits as global fuel prices are still on a downward trend.

The WTI crude oil for June delivery in the US dropped to around $94 a barrel during Tuesday’s session, down from the $94.8 a barrel on Monday’s closing.

Import prices of fuel commodities continued the slump initiated early this month, according to Petrolimex, Vietnam’s largest fuel wholesaler.

A92 gasoline settled at $119.02 a barrel on Tuesday session, down by $10 a barrel compared to the rate of late April and early May. Meanwhile, prices of diesel oil and kerosene also slumped to $123-125 a barrel.

With these import prices, the average cost for import within 30 days of A92 petroleum is currently VND500-600 a liter lower than the retail price, which is VND23,300 a liter.

Wholesalers can reap a huge profit of VND1,300 a liter if they have imported fuel within the last week, insiders said.

Vietnam's Sacombank plans $200 mln dollar bond

Vietnam's Sacombank planned to raise $200 million via a dollar bond on overseas markets and proceeds would go to its banking business, the lender said in a statement.

The Ho Chi Minh City-based bank would issue the five-year bond in the second or the third quarter of this year, subject to shareholder approval at a meeting on May 26, the bank said.

Sacombank said it would list the bond on the Singapore stock exchange.

The bond issue would follow VietinBank, Vietnam's largest partly private lender by assets, which became the first bank to have issued a dollar bond on overseas markets this year, raising $250 million at an annual coupon of 8 percent.

Sacombank shares closed up 1.65 percent at 24,600 dong ($1.18) each on Tuesday.

Domestic handicrafts favoured in London

The Vietnamese Embassy along with 70 others in London participated in the International Spring Fair opened on May 15.

The two-day fair provides a good chance for participating countries to introduce their traditional culture through displaying their handicraft products and traditional foods.

Vietnam showcased traditional handicrafts made from silk, brocade, sedge and rattan, and offered foods such as spring rolls, which attracted much attention from visitors.

Many of them had visited Vietnam and reported a deep impression about the country’s land and people.

Zhejiang Export Fair aims for higher two-way trade

The “2012 Zhejiang Export Fair” in Hanoi will be held on May 18 to boost export turnover between Vietnam and China in the future.    

150 pavilions from Zhejiang’s 138 leading companies will display products such as machinery, electronics, construction materials, textiles, and garments.

Dao Ngoc Chuong, Deputy Head of the Asia-Pacific Market Department (APMD) under the Ministry of Industry and Trade (MoIT), said the fair will offer a good opportunity to raise two-way trade turnover between Vietnam and China to US$60 billion by 2015.

Last year’s two-way trade turnover reached US$3 billion, in which Zhejiang province imported cotton, coal, crude oil, rubber, iron ore and plastic materials, valued at US$600 million.

Tuna exporters eye Middle East

Vietnam’s tuna exports to the Middle East reached nearly US$9 million in three months until mid-April, up 16.6 percent compared to the same period last year.

Israel, Sudan and Lebanon are the three biggest importers with a total volume worth US$6.4 million.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam’s tuna exports are likely to pick up to meet the growing orders from the region.  

The VASEP suggested Vietnamese businesses should increase the quality of products to get the upper hand over other competitors.

Thanh Hoa helps Japanese enterprises seek business opportunities

Considering Japanese investors as strategic partners, the central province of Thanh Hoa is urging them to focus on petro-chemistry, electronics, telecommunications and infrastructure areas.   

The request was made by Trinh Van Chien, Chairman of the provincial People’s Committee at a seminar held in Tokyo, Japan on May 15.

In 2011, Chairman Chien said Thanh Hoa was placed 24th among 64 cities and provinces in Vietnam.

It now tops the list of Vietnamese localities that have attracted most foreign direct investment (FDI), with 42 projects worth US$7.2 billion, of which US$6.84 billion or 96.7 percent comes from Japan.

Ho Minh Tuan, a representative of the Embassy of Vietnam in Japan emphasized that despite suffering heavily from its earthquake and tsunami in March 2011, and the impact of the financial crisis in Europe, Japan has still maintained its official development assistance (ODA) to Vietnam.

In 2011, Japan was Vietnam’s leading foreign investor with a registered capital of US$22 billion and its second largest trade partner with two-way trade turnover reaching US$21 billion.

Tuan expressed hope that the seminar will help Japanese investors seek new opportunities in Thanh Hoa province.

Apart from the Tokyo seminar, Thanh Hoa province will hold another investment promotion meeting in Osaka on May 18.    

PM to set a power price frame
    
The Ministry of Finance (MoF) proposed that the Prime Minister revise the draft Law of Price, in which the Government sets the frame of retail power prices and forms a power price structure.
 
“The price frame for power generation, transmission, distribution and wholesale should be managed by the Ministry of Industry and Trade. This would enhance socio-economic development policies and the ability to pay for consumption in different groups of society," The ministry said.
 
The MoF explained that the proposal's aim is to develop the competitive power market. “Creating a price frame for will help prevent enterprises from colluding to set their own prices.”

The MoF also said that market forces will influence wholesale prices. This should mean that there will be more providers and consumers. The Government, they said, only needs to set the frame, and then allow enterprises determine their prices within that frame.

Banks and state-owned enterprises pledge to cut costs    

A total of 83 state-owned enterprises and four banks have promised to cut operating costs by VND13.242 trillion (USD634.49 million) by early May.

State-owned corporations and groups have committed to slash their management expenses by over VND3 trillion (USD143.74 million) in 2012, the Ministry of Finance (MoF) said.

They have also registered to cut spending on materials and energy by over VND9.418 trillion (USD451.26 million) during the year.

As of May 9, four banks pledged to reduce their costs for this year by over VND735 billion (USD35.21 million). The banks making the pledge included Vietcombank, BIDV, Vietinbank and Agribank.

According to the ministry, the Mekong Delta Housing Development Bank (MHB) said they would join the campaign, but had yet to announce their planned cost savings for this year.

The MoF issued a document on January 17 requesting state-owned enterprises to lodge a commitment to cut operating costs with them this year.

Bao Viet Group was the first institution that responded to the campaign. It pledged to cut operating costs by VND145 billion (USD6.94 million) for 2012.

Several other enterprises followed suit including the Vietnam National Textile and Garment Group with VND1.1 trillion (USD52.7 million), Electricity of Vietnam Group with VND1.8 trillion (USD86.24 million), the Vietnam Housing and Urban Development Group with VND125 billion (USD5.98 million), and Vietnam National Shipping Lines with VND105 billion (USD5.03 million).

The ministry has also required banks to slash their operating costs by from 5%-10% in order to heighten efficiency.

Investors avoid getting lost in translation

When a foreign investor does business in Viet Nam, many documents are prepared in more than one language. These documents range from transactional documents like contracts, to corporate documents like minutes and financial reports.

Many foreign investors find it difficult to determine whether a Vietnamese version of their document must be prepared. In general, Vietnamese law does not require a document be in Vietnamese. Parties to a contract can generally conclude their agreement entirely in a foreign language. Under the Civil Code, the language of a contract is subject to the agreement of the parties. For instance, if a contract between a foreign party and a Vietnamese party is made only in English, the contract is valid.

But there is a major exception: documents which must be submitted to Vietnamese authorities must be translated into Vietnamese.

For instance, Circular No 60/2007/TT-BTC of June 2007 stipulates that the language used in tax documents is Vietnamese. In practice, tax authorities interpret this provision broadly to mean that all documents submitted to tax authorities must be in Vietnamese. Consequently, when submitted for tax declaration and other tax procedures, contracts evidencing transactions for which tax payments are made must be in Vietnamese or accompanied by a certified Vietnamese translation.

Besides the tax authorities, there are a number of other cases in which a Vietnamese version of a document is required. Under Article 4 of Decree No 108/2006/ND-CP implementing the Law on Investment, the dossier submitted to Vietnamese State agencies for a foreign-invested project must be in Vietnamese. And if there is any disparity between Vietnamese and foreign language versions, the Vietnamese version governs.

Many foreign investors are aghast at this rule. Investing in Viet Nam with English as their ‘working language', many foreign investors take it for granted that English should be recognised. Negotiations for joint venture agreements and other transactional documents are regularly conducted in English, and translation is usually deemed as a ‘procedural step' when the transaction is concluded and is merely for submission of documents to Vietnamese State agencies. As such, the money and time spent on translation are limited. However, this can be risky to the foreign party if Vietnamese version contains inaccuracies that are unfavourable to them.

Another case in which contract must be in Vietnamese are technology licences. Article 14 of the Law on Technology Transfer provides, "The language of a written technology transfer contract shall be as agreed by the parties, but in the case of a transaction in Viet Nam there must be a contract in Vietnamese. The Vietnamese and the foreign language versions of a contract shall be of equal validity."

However, anyone who has ever worked in translation, particularly between languages as different as English and Vietnamese, knows that, where there is an inconsistency or disparity between two versions, giving both versions equal validity is meaningless.

Many other laws require Vietnamese versions of contracts, including Article 9 of the Law on Posts and Telecommunications; Article 11 of Decree No 48/2010/ND-CP on construction contracts; and Article 7 of Resolution No 19/2008/QH12, setting up the pilot scheme permitting foreign organisations and individuals to acquire and own residential property in Viet Nam. Many of these provisions are silent as to which language is the controlling one, which may allow the parties to designate the controlling version in cases of discrepency.

Other documents which must be translated into Vietnamese, and for which the Vietnamese version may be the governing document, include company charters, accounting documents, minutes of the general shareholders meeting, and minutes of the board of management. Articles 106 and Article 113 of the Law on Enterprises require that minutes be prepared in Vietnamese, although they may also be in a foreign language, with both versions having equal legal validity.

Article 12 of the Law on Accounting provides that "the language used in accounting shall be Vietnamese. In cases in which a foreign language must be used in source documents, records and financial reports in Viet Nam, both Vietnamese language and foreign language versions must be used simultaneously."

Provisions like these in the Law on Enterprises and the Law on Accounting, giving equal validity to Vietnamese and foreign language versions of documents, beg the question of which version prevails when there is inconsistency. In practice, however, State authorities, e.g. tax authorities or courts, are likely to work from the Vietnamese version only, making the Vietnamese version dispositive.

While this is reasonable for non-contractual documents, such as accounting documents, the ‘Vietnamese-version-prevailing' rule may not be entirely reasonable. With respect to provisions not relating to State bureaucratic administration, the controlling language of an agreement should be left up to the parties.

In the meantime, a rule is a rule. Contracting parties should ensure that Vietnamese versions of agreements are as accurate as possible and reflect the meaning conveyed in the foreign language version, since, when a dispute arises, courts, as State agencies, will make reference to Vietnamese versions. Even when the law is silent on the issue of prevailing language or grants both versions equal validity, Vietnamese judges are naturally going to work in their mother tongue.

Nation struggles to achieve GDP growth target    

Vietnam may struggle to realise its economic growth target of 6.5% this year as the national economy expanded by only 4% in the first quarter and is predicted to only grow by 4.5% in the second quarter of the year.

The figures were announced in a supplementary report on the country’s socio-economic development for 2011 and planning for 2012.

The government considers economic growth of 4% in the first quarter of 2012 a reasonable return in face of last year’s inflation and unstable macro-economic situation. However, it is also admitted that economic growth and social security might face dangers if urgent measures were not carried out.

The figures have come as no surprise as President of National Assembly Nguyen Sinh Hung commented at a meeting of the Standing Committee in early May that measures to curb inflation would also affect economic growth.

Minister of Planning and Investment Bui Quang Vinh said at the seventh full session of the National Assembly that GDP in the first quarter this year had been lower than most years, excepting 2009. However, Vinh also said this had been the unavoidable consequence of the need to curb inflation and he supported lowering targeted economic growth to 5.5%.

More than 90pct of seafood businesses need loans

Over 90 percent of seafood businesses need to get VND10-500 billion loans during the second quarter of this year, according to the Vietnam Association of Seafood Exporters and Processors (VASEP).    

Due to lack of capital, dozens of companies in Ho Chi Minh City, Can Tho and other Mekong Delta provinces are operating at one-third of their capacity.

A case in point is Hai Kim Seafood Ltd Company whose president Nguyen Huu Binh claims to have gained no access to bank loans for years.

He warns that thousands of workers are at the risks losing their jobs sooner and later.

Duong Nghia Quoc, Director of the Dong Thap provincial Department of Agriculture and Rural Development, and President of the provincial association of seafood exporters and processors, says the province is sparing no effort to help businesses access bank loans. However, some businesses fail to meet basic requirements.

The State’s decision to lower the ceiling interest rate to less than 15 percent in early May and the Government’s Resolution No13 to reduce loan rates are focused on the agriculture and rural development sector as well as  small-and medium-sized enterprises and businesses involved in export and support industry areas.

Quang Nam attracts more investment from Japan

A conference was held in Tokyo, Japan, on May 16 to promote investment in the central province of Quang Nam.  

The event was jointly hosted by the Quang Nam Provincial People’s Committee, the Ministry of Planning and Investment (MPI), the Vietnamese Embassy in Japan and the ASEAN-Japan Centre.

MPI Deputy Minister Nguyen Van Trung said that as one of the most important investment partners of Vietnam, Japan has invested in 1,700 projects with a total registered capital of US$26 billion across the country.

These projects have helped Vietnamese workers improve their management skills through the use of modern technology and know how to solve social problems in localities.

Trung said that the Vietnamese government will support Japanese businesses in ironing out snags in investment, and urged them to focus on high-tech and energy saving projects.

Ho Minh Tuan, a Vietnamese Embassy official, said Japan’s foreign direct investment (FDI) in Vietnam reached US$2.3 billion in the first quarter of this year, accounting for 88.8 percent of the total amount of funding provided by 26 other countries to Vietnam.

He confirmed that Japanese businesses are always welcome to invest in Quang Nam, especially in Chu Lai Open Economic Zone.

Toyoharu Tsutsui, Chairman of the Japan-Vietnam Cultural Association, highlighted Quang Nam’s potential for developing tourism in Hoi An ancient town and My Son sanctuary, which have been recognized as World Cultural Heritage Sites by UNESCO.

Hoi An has long established its relations with Japan since Japanese merchants came to the town, turning it into a buslting trading port in the 16th and 17th centuries, which were marked with a unique Japanese-style bridge.

He asked Japanese businesses to learn more about the history and culture of Quang Nam to gain more success while investing in the province.

Vietnam’s electronics market further expands

A conference on sustainable development of Vietnam’s electronics and information sector was held in Ho Chi Minh City on May 16.  

Vietnam’s electronics products have been exported to the US,  EU and Africa under many major projects with Canon, Samsung, Nokia and other leading companies.

Vietnam’s electronics industry, though modest in the region, is seeing a fast growth in export turnover and attracting a large amount of funding from foreign investors.