New bank establishment not easy

A new commercial joint stock bank must have at least 100 founders, according to a new regulation issued on June 7 by the State Bank of Vietnam (SBV), Vietnam’s central bank.

Decision 24/2007/QD-NHNN, which details regulations for the establishment of a new commercial joint stock bank, states that the new bank must also have at least three member institutions, each with capital valued at a minimum of VND500 billion. New banks must meet the legal requirement of capital, at least VND1 trillion initially, but no less than VND3 trillion by early 2009.

The decision also states that the capital of a new bank must be owned by shareholders, and not be loaned in any form. Each member institution can own a maximum stake of 20% of the bank’s charter capital, and an individual shareholder can hold a maximum 10%.

To ensure the stability and development of new banks in this transition stage, the central bank will allow new bank founders to make transfers to each other five years after the launch of their banks; and other shareholders to transfer their stakes in a bank three years after its founding.

Foreigners cannot serve as a party to the founding of a bank. However, they can purchase the bank’s stake after it begins operations. Apart from the capital requirements, the new decision establishes detailed criteria for human resources, information technology, and business strategy.

Kieu Huu Dung, head of the banking department within the central bank, said that authorities would receive petitions for the establishment of a new bank and consider relevant stakeholders after the new decision came into force. About 24 proposals to create new banks have been sent to the central bank, among them are proposals by big corporations like PetroVietnam, Bao Viet and FPT. The bank will apply the standards of the recent decision, and take six months to examine each file.

Reuters makes Vietnam’s stock prices known worldwide

Reuters, one of the world’s leading news agencies, has launched a new service allowing its customers worldwide to follow prices of HCM City bourse-listed stocks online.

The British news agency earlier brought prices of shares traded on the Hanoi Securities Trading Center online as well, making it easier for overseas investors to instantly track stock price movements in Vietnam.

Edward Haddad, managing director of Reuters for ASEAN, said the new service was added to the Vietnam market information section provided through the Reuters 3000 Xtra product. Customers of Reuters can now watch price movements instantly, and place orders with securities companies in Vietnam through a secure, high-speed order-making system.

Reuters and Thailand’s firm Bisnews AFE have also launched an information service called Bisnews Equities Terminal focusing on Vietnam’s stock market. This product provides updates about local stock indexes, indexes of stock exchanges in the world, forward markets, foreign exchange rates, reports on stock and foreign exchange markets, and Vietnam’s stock market. The service will help securities firms receive orders from foreign countries through Reuters’ secure order-making system.

Big deals expected during U.S. visit

Many big business deals are expected to be signed during President Nguyen Minh Triet’s visit to the U.S. this week, the first by a Vietnamese head of state.

According to Vietnam Chamber of Commerce and Industry (VCCI), Triet is accompanied by a powerful business mission comprising more than 100 top Vietnamese businesses. The big deals may involve Vietnam Airlines and Boeing; Electricity of Vietnam, Chevron and Citibank; Saigon Securities Incorporation and Credit Suisse; and some ministries, IT companies and Microsoft. The biggest deal worth more than US$1.5 billion involves Agribank and Wachovia Bank, Standard Chartered Bank and RZB Bank.

Triet is scheduled to meet the CEOs of more than 100 top U.S. companies in New York, visit the New York Stock Exchange and attend a forum on financial investment in Vietnam organized by AIG and VCCI. He will also witness the signing of contracts between Vietnamese and American businesses and the Trade and Investment Framework Agreement.

Read More

Investors look past corporate tax cuts

The government is planning to lower the corporate income tax rate in a bid to favour investors, but some observers have countered that greater investment incentives should also be taken into consideration।





Scores of foreign invested firms have put their hand up in support of lowering corporate tax rates


Truong Chi Trung, Vice Minister of Finance, said the plan to reduce corporate income tax (CIT) by 3 per cent down to 25 per cent, which would bring Vietnam in line with other countries in the region, was being carefully considered.
Trung said that a number of companies had complained in recent years about the tax being too high, and expressed their belief that maintaining tax level at 28 per cent could adversely impact the business environment.
“The CIT reduction plan, which is expected to become effective in 2008, could cause the state coffers to witness a dramatic drop in revenues,” said Nguyen Van Ninh, head of the General Department of Taxation under the Ministry of Finance.
He estimated CIT collection would provide around VND30 trillion ($1.9 billion) to the state budget this year, around 3 per cent of the country’s GDP.
“If the CIT reduction goes into effect, the state budget could lose around VND3 trillion ($190 million), equivalent to 10 per cent of total CIT revenues,” he said.
“On the other side,” he added, “the business environment will become more and more attractive, resulting in increased investment”.
Ninh said the CIT adjustment was planned within a comprehensive and long-term strategy on tax reshuffles until 2010, and set up in an effort to make the country’s tax system more attractive to investors.
Martin Rama, a lead economist at the World Bank, said the CIT reduction was obviously a positive step forward to attract investors.
“However,” he said, “more importantly, the government should pay special attention to other investment incentives in line with its WTO commitments.”
Rama noted that there remained different standards for foreign and domestic investors, an obstacle that needed to be tackled quickly.
He said Vietnam’s drive to create a favourable business environment was on the right track, resulting in numerous new firms entering the nation’s market.
Ngo Thanh Tung, managing partner of the Vietnam International Law Firm, said the CIT rate was just one factor that foreign investors take into consideration before setting up in Vietnam.
“Other important factors are comfort and ease of infrastructure and administrative procedures,” he highlighted, adding that the assurance of a highly-qualified labour force was a necessity.
Tung commented that the adjusted CIT rate of 25 per cent was lower than that currently applied in China and other regional countries.
“Now is the perfect time for Vietnam to attract foreign investors, but the government must pay due attention to a comprehensive package of reforms regarding not only taxes but also other factors so as to keep foreign investors. The immediate and urgent problem to be settled is the assurance of enough electricity for investors.
“The macro-economic policies are favourable, but implementation at the grassroots levels remains cumbersome,” Tung said.
He said apart from improvements to the investment environment, Vietnam needed to improve living conditions for investors, particularly the diversification of services like entertainment, shopping, healthcare as well as the minimisation of environmental pollution.
By VIR

Read More

Foreign currency reserves at record high

Vietnam has seen record increases in foreign currency reserves in the first half of 2007, due to rising indirect investment in the stock market and a stabilised domestic exchange rate.
State Bank governor Le Duc Thuy said the increases in foreign currency reserves had tripled those of 2006 in the first five months of this year.
“The central bank of Vietnam will continue to invest in foreign currencies in the next few months to meet the target level equal to 20 weeks of imports,” said Thuy.
According to the IMF, Vietnam’s total foreign currency reserves were equal to 12 weeks of imports at the end of last year, reaching the minimum international standard for foreign currency reserves.
The reserve increase helps stabilise the exchange rate between the Vietnamese dong and the US dollar with a fluctuation rate of around one per cent by the end of this year. While the Vietnamese dong fell against the US dollar at the end of 2006 and in the beginning of this year, the interbank nominal effective exchange rate was higher than the real exchange rate for the first time in Vietnam’s history due to the surplus of foreign currency supply.
“Recently, the increase in the national forex reserve has stabilised the exchange rate, narrowing the gap between the interbank nominal effective exchange rate and the rate on the market,” Thuy added.
In January, the State Bank doubled the trading band for the dong-dollar rate. In the first two months of this year, the dong appreciated by about 0.3 per cent against the dollar after declining around 0.9 per cent in 2006.
“One reason for the surplus stems from indirect foreign investment capital which is expected to keep increasing in the last half of this year,” said Thuy.
According to the World Bank’s assessment of Vietnam’s economic development released in June, rising capital inflows complicated the implementation of monetary policy. Vietnam was confronted with what is called an ‘impossible trinity’: simultaneously maintaining a fixed or nearly fixed exchange rate, independent monetary policy and an open capital account. In addition, increasing capital inflows have put pressure on the exchange rate to appreciate. However, the authorities have been unwilling to allow a greater appreciation as it may harm the competitiveness of exports and slow down growth.
Officials have thus intervened in the market by purchasing foreign currency. The dong has, as a result, returned to a slow depreciation. This type of intervention in the foreign exchange market has resulted in a build-up of reserves.
ब्य SGT

Read More

HCMC’s largest shopping center opened to business

Shoppers buy discount luggage at the Parkson Hung Vuong Plaza in HCMC's District 5 on the opening day Friday

By QUOC HUNG



(SGT-HCMC) Hung Vuong Plaza, HCMC’s largest shopping center, started operations in busy District 5 Friday and has since attracted large numbers of shoppers as well as curious window-shoppers.

The US$45-million Hung Vuong Plaza comprises of a luxury commercial complex and two 30-floor blocks with 276 apartments.

The complex, surrounded by Hung Vuong, Ly Thuong Kiet, Nguyen Kim and Pham Huu Chi streets of the vibrant district, has total floor space of nearly 93,000 square meters.

The first eight floors of each block will be for luxury boutiques, entertainment facilities, restaurants, educational and sport facilities and a cineplex.

The project is developed by Saigon Trading Construction Co. 5 and Hung Vuong Corp. with an 18:82 footing.

Tran Le Nguyen, general director of Hung Vuong Corp., said the complex was nearly full with major tenants like Parkson, Megastar Media, ILA and California WOW Xperience. Parkson is the first tenant that opened to business the same day of Hung Vuong Plaza’s inauguration.

This is the third department store in Vietnam and the second one in HCMC of Parkson Corporation Sdn Bhd, a leading shopping mall operator of Malaysia.

The four-story Parkson Hung Vuong Plaza, 1.5 times the size of its current Parkson Saigontourist Plaza in District 1, has total floor space of 24,000 square meters.

The ILA English Training Center has leased more than 1,200 square meters on the fifth floor to open 18 classrooms.

MegaStar, a joint venture between Envoy Media Partners Limited (British Virgin Islands) and Phuong Nam Corporation of Vietnam, will soon open eight cinemas on the seventh and eighth floors. The 9th floor of the commercial area will be home to a swimming pool.

Nguyen said the apartment section of the building would be completed some time this year and that more than 93% of the apartments had been sold out.

Read More

Making an affectionate homeland tour

A tour guide (R) guides foreign tourists to visit Van Mieu-Quoc Tu Giam (Temple of Literature) in Hanoi

The affectionate homeland tour of Ben Thanh Tourist was designed for travelers who have plenty of time for vacations. They can combine traveling in cars and planes.

The 13-day tour, which starts in HCMC, gives tourists an opportunity to enjoy great sunny beaches in a beautiful country for those looking for relaxation, plus learning about the history and culture of Vietnam by visiting royal tombs, temples and world heritage sites.

On the trip that includes 11 provinces and cities in the country, travelers can wallow in the sunshine of beautiful beaches at Mui Ne, Nha Trang, Dai Lanh and My Khe.

It offers a variety of different activities to ensure that all participants will have an enjoyable time. When travelers get worn-out from all the sea sport activities such as water-skiing, jet skiing and snorkeling, the tour operator will arrange other pleasant programs in the ancient city of Hue.

In the city, visitors can witness a performance of nha nhac, the royal music of the former Nguyen Dynasty, and visit cultural heritage sites recognized by the United Nations Educational, Scientific and Cultural Organization (UNESCO). They also can enjoy a boat trip on the Huong River to see the Trang Tien Bridge and enjoy traditional, regal Hue music while releasing flower garlands and colored lanterns to bring good fortune.

After seven days of traveling by car to provinces and cities in southern and central regions including Binh Thuan, Khanh Hoa, Binh Dinh, Danang, Quang Nam, Thua Thien-Hue and Quang Binh, tourists will fly to the capital city of Hanoi from Phu Bai Airport in Hue.

Ben Thanh Tourist allocates six days to explore tourist attractions in the north.

Hanoi is the major destination of the tour with a three-night stay in the city for sightseeing and preparing to visit other destinations such as Halong, Ninh Binh and Ha Tay.

The tour takes in most of the major sites in the capital including Hoan Kiem (restored sword) Lake, Van Mieu-Quoc Tu Giam (Temple of Literature), the National University, Dong Xuan Market, Quan Thanh Temple, West Lake, Tran Quoc Pagoda, and One Pillar Pagoda, among others.

From Hanoi tourists return to HCMC by plane.

The tour costs VND10.5 million per person. The tour offers two ways for visitors to choose their meals. Ben Thanh Tourist can arrange meals for guests during the 13-day excursion or if guests do it by themselves, the tour operator will refund VND1.2 million.

Read More