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Viet Nam-Russia Bank licensed

VNECONOMY updated: 06/11/2006

The State Bank of Viet Nam has granted license for a joint venture between the Bank for Investment and Development of Viet Nam (BIDV) and its Russian partner, JSC Vneshtorbank.

According to BIDV's General Director Tran Bac Ha, Russian President Vladimir Putin is expected to officially inaugurate the Viet Nam-Russia Bank (VRB) in Ha Noi during his stay here for the upcoming Asia-Pacific Economic Cooperation (APEC) Leaders' Meeting in November 2006.

The bank, to be involved in various banking services, will target clients such as Russian investors in Viet Nam, Vietnamese investors in Russia and Viet Nam-Russia joint venture businesses.

Source: Vietnam Agency

Japanese keen on Vietnam’s stock market

VNECONOMY updated: 03/11/2006

A delegation of 11 individual Japanese investors, led by the Japanese stock market consultant Million Millionaires Project Company (TMMP), on Monday came and opened accounts to trade shares at the HCMC Securities Corp. (HSC), an executive of the company said.

The source said this was the first time such a big Japanese delegation came to the company to open accounts. He said Japanese investors, especially individuals, became more interested in the fast growth of the stock market promising good return.

He quoted the TMMP’s director Utsunomiya as saying that “the number of Japanese individual investors is increasing strongly,… and their available funds ready to pour into Vietnam’s stock market could soar up to US$500 million.”

In the coming time, TMMP will continue taking Japanese to invest in Vietnam’s stock market, he said

The Japanese investors have been issued trading codes and are trading on the stock market. They are interested in unlisted corporations’ shares but in the first stage they will just invest in the official stock market to hedge against risks.

Source: SGT Daily

Pepper exports hit record revenue in 10 months

VNECONOMY updated: 06/11/2006

Viet Nam fetched 178 million USD from exporting 112,000 tonnnes of pepper in the first ten months of this year, a record revenue so far for 10 month sales.

The price of pepper for exports is around 2,500 USD per tonnes compared to 1,280 USD in March and is forecasted to keep rising, according to Do Ha Nam, Chairman of the Viet Nam Pepper Association.

Viet Nam currently boasts more than 50,000 ha under pepper trees with a total output of over 100,000 tonnes.

The association has urged farmers to focus on measures to increase productivity and products' quality.

Source: Vietnam Agency

More British enterprises want to do business in Vietnam

VNECONOMY updated: 02/11/2006

In the next five years, Vietnam will become a dynamic economic centre in the region, said Deputy Leader of the House of Commons Nigel Griffiths at a press briefing in Hanoi on October 31. Many British enterprises want to expand their operations and are ready to invest billions of US dollars in Vietnam.

Mr Griffiths said Vietnam has a young dynamic and ambitious labour force and an improving legal environment. Especially, the country is becoming a member of the World Trade Organisation.

The Deputy Leader further said in the next five years, Vietnam will become a dynamic economic centre in the region. Many British enterprises are interested in Vietnam’s shipbuilding, food processing, agricultural and banking sectors. They want to expand their operations and are ready to invest billions of US dollars in Vietnam if the country strongly boosts its administrative reform process.

At the press briefing, senator Nigel Griffiths confirmed that the UK House of Commons will continue to assist and cooperate in strengthening the capacity building of the Vietnam National Assembly. In the next three weeks, Deputy Head of the National Assembly Committee for Foreign Affairs Ton Nu Thi Ninh will lead a National Assembly delegation to pay a working visit to the UK.

During his stay in Vietnam since October 29, Deputy Leader of the House of Commons Nigel Griffiths met with Permanent Deputy Prime Minister Nguyen Sinh Hung and Vice chairman of the National Assembly Nguyen Van Yeu, worked with the State Bank of Vietnam, the Vietnam Chamber of Commerce and Industry, and discussed the role of the National Assembly with some deputies.

From November 1-3, Mr Griffiths will meet vice chairwoman of the Ho Chi Minh City People’s Council Pham Phuong Thao, the Association of British enterprises, and representatives of the UK groups of oil and gas, banking and services in Ho Chi Minh City, and visit Ba Ria-Vung Tau province and the Phu My 3 power plant.

Source: VOV News

The apartment for lease market heating up

VNECONOMY updated: 03/11/2006

As estimated by real estate authorities, the apartment for lease market is heating up due to an increasing demand.

A double-push by integration

High-grade apartments for lease are now considered a special segment in Vietnam’s real estate market. Almost all customers are foreigners, of which most are businesspersons and representatives of non-governmental organizations. Diplomats make up around 15 percent.

Therefore, Vietnam’s comprehensive integration into the world market encourages this market segment to develop, said experts. Particularly, the country will be double-pushed by its WTO’s accession and the APEC Summit.

Foreign investment into the country surged in 2006. Total foreign direct investment (FDI) in the first 10 months of the year reached US$6.48 billion, a year-on-year increase of 41.4 percent, the highest growth rate so far this year, the Ministry of Planning and Investment (MPI) has reported. Experts even forecast a new wave of investment to flow in once Vietnam becomes an official member of WTO in late this year.

Mr. Marc Townsend, Managing Director of CB Richard Ellis (Vietnam) Co., Ltd, a real estate consultancy service provider, believed that the APEC 2006 to be held in Vietnam would not only bring up short-term benefits but also accelerate a new wave of investment which is sustainable and long-term.

After meetings of countries’ leaders, thousands of enterprises from 21 economies will seek opportunities to invest in Vietnam.

Increasing demands

In 1996, when numerous foreign-invested enterprises were licensed, the number of apartments for lease stayed at a mere 408. In 1997 and 1998, when such FDI enterprises came into operation, the figure increased to 927 and 1,073 respectively. In following years, the number of newly-licensed FDI enterprises moderately increased, resulting in a stagnant market of high-grade apartments for lease.

Recent economic achievements, particularly in FDI attraction, however, created a new wave of investment flow into the high-grade apartment for lease market. In 2004 and 2005, the number of apartments for lease stayed at 1,222. The figure is expected to increase by 40 apartments till the end of 2006, and 675 apartments in 2007 since several apartment projects are in their final stages.

According to statistics recently released by CBRE, the rate of high-grade apartment occupancy has reached 98.74 percent. Local leasing fees rank top in Asia at around US$15-55 per square meter. This indicates demands for high-grade apartments for lease in the country will surge, particularly when Vietnam joins the WTO.

Despite on a rise, the supply of apartments for lease in 2007 will hardly meet demands. From 2008 to 2010, the supply is estimated to post a moderate increase (a mere nearly 400) due to low land reserves for apartment projects and low investment. The apartment for lease market is heating up, forecast specialists.

Print version

Member economies of the Asia-Pacific Economic Cooperation (APEC) have got 5,681 projects licensed with a combined capital of over US$41.7 billion in Viet Nam, making up over 73 percent of the nation's foreign direct investment (FDI).

Taiwan leads the 16 APEC investors with 1,542 projects capitalised at US$8.04 billion, representing 27 percent in the number of projects and 19.3 percent in investment capital.

It is followed by Singapore with 447 projects and US$8.03 billion, Japan, 723 projects and US$7.1 billion.
However, Japan leads in terms of disbursed capital as over US$4.7 billion has been put into investment. The world's second largest economy has also signed a joint initiative of cooperation with Viet Nam to improve the competitive edge of the Vietnamese investment climate.

The US has invested some US$2 billion in Viet Nam, which however would reach US$3 billion, ranking seventh among the 74 foreign investors, if investment through a third country is calculated.

APEC investment focused on industries, construction, services and agriculture-forestry.

Ho Chi Minh City, Ha Noi and southern provinces such as Dong Nai and Binh Duong are the largest venues of investment from APEC economies. HCM City leads in the term, attracting over 1,700 valid projects with a combined investment of US$9.8 billion, followed by Ha Noi with 565 projects and US$7.8 billion.

APEC projects such as Intel Product of the US have helped create new industries and new products using advanced sciences and technologies in Viet Nam, a developing economy trying to become industrialised by 2010.

Head of the Overseas Investment Department Phan Huu Thang unveiled a plan to work with the remaining four APEC economies left unnamed in Viet Nam's foreign investment list, namely Papua New Guinea, Mexico, Chile and Peru, to make the list full of APEC names.

The Ministry of Planning and Investment expected to promote investment through diplomatic agencies from the four countries and planned to suggest them to exchange missions of businesses to conduct market surveys.
By hosting the APEC Economic Leaders' Meeting and fully joining the World Trade Organisation (WTO), Viet Nam will confirm its international prestige, said Thang.

The senior investment expert also predicted a wave of investment from APEC economies into Viet Nam for its safe investment climate and opening policies.

Source: Vietnam Agency

Negotiations for WTO: newly unveiled details
16:32' 07/11/2006 (GMT+7)

Vietnamese negotiators at the 12th round of multilateral negotiation.
VietNamNet Bridge – Deputy Minister of Trade Luong Van Tu, Chief Negotiator for Vietnam’s joining of the WTO, has unveiled new details regarding the bilateral and multilateral negotiations.

Negotiations were very tough

One of the most important tasks of the Vietnamese negotiation team was to make its partners recognise Vietnam as a country with a low level of development and an economy in the transitional period.

The paradox exists that though Vietnam’s average income per capita is less than $1,000 (under WTO rules, countries with less than $1,000 in average income per capita are classified as underdeveloped nations), Vietnam was not recognised as an underdeveloped country as the United Nations considers Vietnam a developing nation.

Nevertheless, Vietnam was finally recognised as a country with a low level of economic development which is in a transitional period. This was a very important recognition, as Vietnam will have some more time to transition before it has to implement commitments on the removal of subsidies after joining the WTO.

Though finally recognised as a country with a low economic development level, Vietnam’s partners still set very high bars when negotiating with Vietnam. They highly evaluated Vietnam and were vigilant about the competitiveness of Vietnam-made goods.

When negotiating with Vietnam, partners often brought up the fact that Vietnam exported famous farm produce. Vietnam is the second biggest rice and coffee exporter in the world, the number one pepper exporter, the second biggest cashew nut, and 8th largest tea exporter. Vietnam also ranks 8th in the world in terms of seafood exports

During bilateral negotiations, what Latin American countries said they were most worried about was that Vietnam’s farm produce, including coffee, was selling everywhere in the world.

Tax on pork and beef was one of the toughest issues at the negotiation rounds. The US, Canada, Australia and New Zealand all asked for taxes to be cut to 0-5%, to which Vietnam did not agree.

Husbandry in Vietnam is being carried out mostly on a small scale. Vietnamese farms do not have high competitiveness, while Vietnam has to import livestock breeders and the Government does not subsidise farmers in this field.

Vietnamese negotiators said that with the proposed tax rates of 0-5%, Vietnam’s livestock would not be able to exist. Vietnam said that it aimed to become a developed national economy, and it would not join the WTO at any cost. Finally, the countries agreed to a 4-5% tax cut from the currently applied tariff.

No ‘simple’ issues

28 partners asked Vietnam to sit for negotiations. This was a big number, and gave the negotiators a lot of work to do.

Many partners asked for negotiations because they thought Vietnam was a potential market. Vietnam’s population is 13th highest in the world. It has the labour force of 40mil people. Vietnam is located in an advantageous position favourable for trade development.

At first, some experts thought that the negotiations with China would be simpler as Vietnam and China were members of the ASEAN-China free trade agreement. However, in fact, the negotiations with the neighbouring country were very tense. Tourism, banking and transportation on land were the most ‘sensitive’ issues during the negotiations.

The negotiations were especially tough with the US, despite the fact that the Vietnam – US Bilateral Trade Agreement (BTA) was signed before. Some issues remain unsettled with the BTA: for example, the quota scheme on apparel exports to the US. In addition, the US retains the Jackson Vanik and has not given PNTR to Vietnam.

The last round of negotiations with the US lasted four days and three nights, during which textile and garment subsidisation and taxes on motorbike and automobile parts were discussed.

Heated arguments occured over the Government’s decision 55 on textile and garment industry development. The decision said that the Government would support the development of the garment industry, but the interpreter incorrectly translated the word ‘support’ into ‘subsidise’.

‘Support’ does not mean give money, while ‘subsidise’ implies this meaning, which led to the misunderstanding of US officials. Vietnamese negotiators had to cite many figures to show that Vietnam did not plan to give $4bil to the garment industry in subsidies as the US thought. Vietnam will just offer preferential interest rates when giving loans to textile and garment enterprises which were valued at $5mil.



The President of Harley-Davidson Group asked for the domestic market to be opened to its high-cylinder motorcycles. Prior to that, US President Clinton, during a visit to Vietnam, said that Vietnam would need the motorcycle company’s support when lobbying for PNTR. However, the negotiators said that Vietnam could not open the market to big vehicles due to bad infrastructure. Motorbike accidents kill 10,000 people in Vietnam every year. Finally, Vietnam agreed to open the market one year after Vietnam officially joins the WTO. In the immediate time, this vehicle can be sold to the police and army.

Vietnam has carried out 200 negotiations in the last 11 years. Now it is the eve of its admission to the world’s biggest trade organisation. There were 14 multilateral negotiation rounds. Vietnam had bilateral negotiations with 28 partners and set a record for the number of negotiation rounds.

Phuoc Ha

WTO commitments to be made public prior to Nov 15
16:29' 07/11/2006 (GMT+7)


VietNamNet Bridge – The Prime Minister on November 6 released a dispatch instructing ministries to work urgently in the first days after Vietnam is admitted to the WTO.

The Prime Minister has assigned the Ministries of Trade and Finance to hold a press conference and proclaim the full text of the commitments Vietnam has made regarding tariffs, services and multilateral commitments in Vietnamese prior to November 15, 2006. Meanwhile, the commitments in English must be announced today, November 7, 2006.

The Prime Minister has asked relevant ministries to hurry up and compile documents necessary for joining the WTO to be submitted to the President and National Assembly for approval. The Ministry of Trade has to join forces with relevant ministries to complete the report and submit it to the National Assembly for the approval of the protocol on joining the WTO and other associated documents before November 13. The Ministry of Justice will be in charge of compiling the draft resolution on approving the protocol on joining the WTO and associated documents.

The Prime Minister has authorised the Minister of Trade, on behalf of the Government of Vietnam, to sign the protocol on joining the WTO in Geneva on November 7.

The Ministry of Foreign Affairs will be responsible for following necessary procedures regarding the authorised signing.

Regarding the works that must be completed before Vietnam officially joins the WTO, the Prime Minister has asked the Ministry of Post and Telematics to promulgate legal documents guiding the implementation of the Prime Minister’s decisions on purchasing IT products with state budget sources, which must come in line with Vietnam’s and the WTO’s rules. The enactment must be done before January 1, 2007

The Prime Minister has asked the Ministry of Agriculture and Rural Development to draft the decree guiding the implementation of the Ordinance on Vegetation Quarantine. The compilation must be finished and submitted to the Government prior to January 1, 2007

Phuoc Ha

Investment Law suits WTO rules: MPI
16:48' 07/11/2006 (GMT+7)

VietNamNet Bridge – The Common Investment Law was compiled in the days when Vietnam carried intensive negotiations for joining the WTO. Therefore, the law proves to mesh with the current situation in Vietnam and come in accordance with the WTO’s rules.

Pham Manh Dung, Director of Legal Department under the Ministry of Planning and Investment (MPI) said that the Government wants to be one of the few WTO’s members which have completed legal framework compatible to WTO’s rules right in the first days after it gets WTO membership.

CIL and Unified Enterprise Law (UEL) have been praised as a breakthrough in reforming Vietnam’s business climate since they were brought into life.

Mr Dung said that during the law’s compilation, the drafts all were transferred to the WTO’s Secretariat for consideration. This proved to be a very complicated process, but it was obligatory work, not only because of the negotiations’ requirements, but also of the demand for improving Vietnam’s investment environment.

“CIL must not be outdated, though the law was enacted before the negotiations were wrapped up, as we have considered all the commitments and regulations set by the WTO and Vietnam’s partners during the compilation process,” said Mr Dung.

“No need to adjust the law after Vietnam officially joins the WTO, as the law reflects the spirit of WTO already,” he added.

MPI Minister Vo Hong Phuc believes that the official joining of the WTO will have a positive impact on the implementation of the law. The implementation of CIL and UEL, and of bilateral and multilateral commitments will mean a comprehensive reform of the national economy. This will require Vietnam to change the ways of thinking, and upgrade state management capability.

Mr Dung from MPI stressed that freedom in business and investment, which WTO always targets, has been clearly shown in CIL. The law is Vietnam’s first legal document, in which this spirit is most concrete.

With the new investment law, investors have the right to make investments in all the fields that are not prohibited by the laws. Investors can also decide for themselves on the issues, regarding investment scale and capital. Investors are all equal in accessing land, bank credit, natural resources, and public facilities.


With CIL, investors’ interests can be protected by the state: their capital and assets must not be nationalised or seized by administrative orders. Investors have the right to access international courts and arbitrators in settling disputes.

(Source: TBKTVN)

WTO - a new arena for Vietnam
16:27' 07/11/2006 (GMT+7)


VietNamNet Bridge - Vietnam has set itself the goal of integrating its economy into the global economy. WTO membership will be the culmination of efforts begun in 1995 to obtain this goal, said Carl Thayer, Director of the Defence Studies Forum of the New South Wales University, Australia, a specialist on Vietnam, during a talk with VietNamNet about Vietnam’s WTO membership.

Vietnam will officially become a member of WTO today, November 7, what do you think about this event?

Vietnam has set itself the goal of integrating its economy with the global economy. WTO membership will be culmination of efforts begun in 1995 to obtain this goal. But WTO membership is only the beginning for Vietnam. Vietnam is entering as a 'non-market economy' and will have this status for twelve years unless it rearranges its economy along market lines earlier.



This will mean that exports of textiles, which are very important for Vietnam, could attract anti-dumping measures by the United States and other countries. Nonetheless, Vietnam has demonstrated that it can successfully conclude complex trade agreements with the world's leading countries and the most important multilateral trade organisation.

What will Vietnam benefit from WTO membership?

The biggest advantage is that Vietnam will no longer be subject to discrimination in the export of its goods. Vietnam will be able to enter the markets of 149 other members on an equal basis. Vietnam will also be able to use the WTO dispute resolution mechanism should it become involved in a dispute with another member. Vietnamese exports will now be protected in trade disputes.

The bottom line is that Vietnam will now have access to the global market for the first time on the best possible basis. Vietnam can join with other developing countries in the WTO to jointly press for assistance and special consideration in the application of WTO rules. This will strengthen Vietnam’s capacity to compete internationally.

WTO membership will alter how the Vietnamese market is perceived. It will now become more attractive to foreign investors who are familiar with WTO compliant regimes. Foreign investors will introduce more modern technology and better business practices, this will increase production in Vietnam, develop a local market, and create employment opportunities. The development of a local market will provide the Vietnamese consumer a better choice of higher quality goods and services than previously.

WTO membership will alter the current Vietnamese legal and regulatory framework. This will create an environment for Vietnamese entrepreneurs to use this new framework to enter the competitive local and international markets.

Vietnam’s adherence to WTO transparency provisions and standards will over time promote the rule of law, greater economic transparency and good governance.

At the same time, all of Vietnam’s economic sectors will be able to produce and compete on an equal basis and engage in business planning for the long-term. The state sector, for example, will have to end subsidies. This will encourage more foreign investment in Vietnam and the development of its private sector.

WTO membership will add pressure on Vietnam to step up the equitisation of state-owned enterprises (SOEs). Vietnam will have to divest itself of some state monopolies and end administrative malpractices that resulted from the close association between state and SOE monopolies.

If Vietnam adjusts to WTO-compliant measures it could develop a competitive regional manufacturing base.

What challenges that WTO membership will bring to Vietnam?

There are six major challenges. First, Vietnamese firms are known for poor quality, obsolete technology, high prices, weak distribution networks and deficient knowledge of the legal system. When WTO membership comes into effect, Vietnamese businesses will likely loose market share and enter a period of rapid adjustment.

Second, many Vietnamese enterprises and businesses will be unfamiliar with the new WTO rules and practices. The existing legal and regulatory regime will be modified even more greatly. During the initial period, these businesses will come under severe competition as local managers and employees embark on a steep learning curve to adjust to the new environment. Vietnamese firms risk losing in legal disputes.

Third, the changing of the rules in Vietnam will pose a stiff challenge for Vietnam’s service sector which does not have the capital, technology or business experience of its foreign counterparts. Vietnam’s system of distribution for the national market will be severely challenged by foreign companies.

Fourth, all of Vietnam’s domestic industries will have higher levels of competition. They will have to adjust to produce quality goods and services or go bankrupt. Sectors that have weak competitiveness like services, steel, automobile assembly and agriculture will come under threat. State monopolies like telecommunications and electricity will come under pressure to open up. Vietnamese firms risk being bought up by foreign companies.

Fifth, bankruptcy will raise problems of unemployment and social unrest.. The flow of foreign capital could, in certain circumstances, produce financial instability.

Sixth, rapid change in the Vietnamese economy could continue to produce environmental degradation.

What should Vietnam do to overcome these challenges?

Vietnam will not be able to overcome all of these challenges because it must enter a period of readjustment. Both the Government and Vietnamese businesses must work out a partnership so that domestic enterprises are able to acquire more capital, adopt better management practices and incorporate new technologies in the production process. The Government can improve the investment climate, fund education and training programs, and invest in research and development.

Second, the state must step up the pace of carrying out wholesale administrative reforms to become more efficient or risk becoming an obstacle to Vietnam’s economic development.

Third, the government will have to provide funds and other measures to encourage workers to retrain who have lost jobs due to bankruptcy; and the government must improve social welfare for those affected by unemployment.

Some experts said Vietnam is a rising star in ASEAN, what do you expect ASEAN member countries’ response to Vietnam’s WTO membership?

All of ASEAN will welcome Vietnam's admission to the WTO. The WTO provides a secure trading environment whose rules are universal. WTO membership provides external discipline to assist ASEAN in adopting reforms and meeting world standards.

ASEAN needs to develop greater unity as an economic bloc in order to deal with major economic powers. This means that the least development members must catch up. Trade is one very important measure to assist Vietnam in its economic development and to narrow the gap between it and other members of ASEAN.

(Interviewer: Tran Kien)