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Vietnam News

Sources from "Saigon Times" Vietnam


Sources from "Thanhnien" Vietnam






The Trans-Pacific Partnership Agreement Just Won’t Die



What’s next for remittances to Vietnam?

Reference exchange rate remains unchanged



Vietnam’s economy gradually approaches the value chain

Vietnam-EU trade up 16.2 per cent in five months



South Korean investment tops $50 billion

Viet Nam looks to private sector to fund infrastructure



Vietnamese real estate market continues showing irresistible appeal to foreign investors

Real estate nudges up in May



Binh Thuan boasts great potential for solar power development

Trung Nam Group to join renewable energy sector



Decree set to tackle transfer pricing

New decree on car imports sends conflicting message



Dr. Oliver Massmann PhD

International Attorney at Law
Certified Financial Accountant and Auditor
General Director of Duane Morris LLC
Partner of Duane Morris LLP
Member to the Supervisory Board of PetroVietnam Insurance Holdings Joint Stock Company




The Trans-Pacific Partnership Agreement Just Won’t Die



New Zealand and other signatories are quietly reviving the neoliberal trade deal, confident the political winds in the U.S. will shift.

Months ago, the just-inaugurated President Trump signed a memorandum pulling the United States out of the agreement, following an election season in which the TPP had served as a bipartisan whipping boy. News outlets the world over proclaimed the deal dead. The leader of the largest remaining signatory, Japanese Prime Minister Shinzō Abe, appeared to sum up the prevailing sentiment when he told reporters after Trump’s win that “the TPP would be meaningless” without the world’s largest economy.

Never count a good neoliberal trade deal out. The agreement’s architects have been determined to electrify the TPP’s moribund body back to life, and appear to have succeeded—complete with a plan to get the United States’ elusive signature.

At a trade forum hosted by Asia Pacific Economic Cooperation (APEC) in Vietnam in late May, the 11 signatories—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—got together to discuss the future of the TPP. They came away from the two-day summit with an agreement to keep the deal alive.

U.S. Trade Representative Robert Lighthzier was none too happy, and maintained that the U.S. was out of the agreement for good. “The United States pulled out of the TPP and it’s not going to change that decision,” he said at a news conference.

The rest of the TPP signatories don’t seem to be buying that, however. Various stakeholders have made clear they’re negotiating the deal under the assumption that the political winds in the United States will shift.

“There’s a collective interest in maintaining the agreement in a way that the U.S. could sign up to in the future,” New Zealand Prime Minister Bill English told Radio New Zealand on May 17. He also told current affairs program Q+A that it was important to keep those features negotiated by the United States in the deal, as “it increases the likelihood that the U.S. would be incentivized to join it later.”

Following the talks in Vietnam, Australian trade minister Steven Ciobo told reporters “It may not suit U.S. interests at this point in time to be part of the TPP, but circumstances might change in the future.”

The strategy seems clear: With a President Trump and a U.S. voting public that dislikes the TPP, trying to involve the United States in the negotiations now isn’t politically viable. Instead, the remaining 11 countries will keep the deal alive and wage a war of attrition, waiting for Trump to leave and be replaced by another Republican or centrist Democrat, who will promptly attempt to ratify it.

How did the deal go from dead in the water to viable in just four short months? Much of the push has come from New Zealand, whose center-right National government played a leading role in forging the deal. After Trump’s January 23 presidential memorandum the agreement’s signatories scrambled to find some way to ensure the seven years they had spent negotiating the deal wasn’t for nought. Australia and New Zealand floated the idea of urging China and other Asian countries to join.

On February 7, Stephen Jacobi, executive director of the New Zealand International Business Forum and former head of the USNZ Council—an organization that worked with the New Zealand government to promote the TPP—gave a speech to the Asia Forum in which he suggested “some quiet diplomacy … to see if the remaining 11 parties, or a subset of them, see merit in amending TPP to take account of U.S. withdrawal.” Over the past few months, New Zealand trade minister Todd McClay embarked on a whirlwind tour of TPP signatories in order to convince them to stay the course. One stop was the May 17 trip to Japan with Prime Minister English, which earned them a commitment from Abe to an “early realization of TPP.”

All of this culminated in the signatories’ decision in Vietnam to keep the TPP going—complete with the not-so-hidden strategy of leaving the door open for a future U.S. president to come on board.

The success of that strategy isn’t a foregone conclusion. While those in favor of luring back the United States want the text to remain essentially identical, both for the sake of avoiding another round of protracted negotiations and as a way to entice the United States to rejoin, there isn’t a consensus. Canadian officials said following the Vietnam meeting that the deal would have to change significantly without the United States, as did Malaysia’s trade minister.

Various experts have expressed skepticism that under international law, the text can simply remain the same. “At the end of the day you have to create a whole new legal text,” Lauren Bosma, a trade expert at lobbying firm Albright Stonebridge, told Foreign Policy. “You can’t just strike the United States out of it.”

The problem there is that renegotiation of the treaty is fraught with uncertainty. The agreement required a careful balancing of the 12 original signatories' original demands, taking years to negotiate before the United States pulled out. Reopening the negotiations could result in another tortuous process that ultimately dooms the agreement.

The New Zealand election in September 2017 could also throw a wrench in the works of the TPP revival. The agreement faces opposition from the country’s Labour Party, its Green Party and New Zealand First, a quasi-nationalist, often anti-immigrant party. While the most recent polling shows the National Party being able to form a government with the support of its usual coalition partners, a lot can change between now and September. It was only a little more than a month ago that National was neck and neck with a Labour-Greens coalition, with New Zealand First the potential decider of which party will form the next government. If National finds it needs New Zealand First’s support again to form a government by September, it may have to end up giving up on the TPP.

Nonetheless, the TPP has been counted out before, and it’s proved surprisingly resilient, as this latest episode proves. One factor that will be key is continued widespread public resistance to the TPP, particularly as the agreement still hasn't been ratified by nine of the signatories. The agreement triggered multiple protests worldwide. In the United States, groups like Public Citizen, Sierra Club and Our Revolution used an inside-outside approach to fight the agreement, pairing high-profile protests (like the disruptions of the 2016 Democratic National Convention) with internal pressure from progressive Democrats.

It was such pressure that forced Hillary Clinton to change her stance on the agreement (however disingenuously), while GOP voters’ hostility to the agreement continues to make supporting it unpalatable to Republican lawmakers. This public opposition will need to continue if Americans, and the rest of the world, want to see the TPP shuffle off this mortal coil—for good, this time.


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What’s next for remittances to Vietnam?



Global economic and political conditions cast doubt on the inflows, which have been an important source of capital for Vietnam.

Vietnam is still in the list of top remittance recipients, but experts are uncertain about the future considering recent economic and political developments in the world.

According to World Bank’s estimates, during 2016, Vietnam received around $13.4 billion from overseas, up 3 percent from 2015.

The Washington-based bank noted that remittances to developing countries, in general, fell for a second consecutive year in 2016, a trend not seen in three decades.

For Vietnam, over the past 25 years, the flow of overseas funds has increased around 100-fold, from $140 million in 1993 to approximately $13.4 billion in 2016, according to latest data released in May by the World Bank.

Last year, remittances made up for 6.7 percent of the country’s gross domestic product.

The US has been the largest source of remittances for Vietnam, accounting for around 60 percent of all remittance inflows last year, as calculated by VnExpress International based on several estimates.

But there are uncertainties ahead. Credit Suisse, in its report released in March this year, warned of a possible slowdown in 2017, given global economic and tighter border controls imposed by the Trump administration.

Analysts said remittances could be affected by the recent hike in interest rates in the US, which means senders can earn good profits by keeping money in the US

In recent years, the purpose of using remittances shifts from family support to business investments, real estate and savings, Atish Shrestha, the regional director for Cambodia, Laos and Vietnam at Western Union, told VnExpress International via email.

As such, the logic of holding on to their money makes sense, Shrestha said.

He added that while economic and political conditions in the send countries may weaken remittance inflows to Vietnam, the growing number of Vietnamese migrants working abroad may help to offset these effects.

In 2016, the number of Vietnamese who went to work abroad hit 126,300, exceeding the projection by over 26 percent, and up nearly 10 percent from the previous year, according to the Department of Overseas Labour.

Vietnam’s major source of remittances, aside from North America, are Australia and European countries, according to Western Union.


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Reference exchange rate remains unchanged




The State Bank of Vietnam retained its reference VND/USD exchange rate at 22,408 VND/USD on June 14, unchanged from June 12.

With the current +/- 3 percent VND/USD trading band, the ceiling exchange rate is 23,080 VND per USD and the floor rate is 21,736 VND per USD.

At opening hours, major commercial banks made slight changes to their rates.

Vietcombank adjusted its buying and selling rates up by 5 VND to 22,665 VND and 22,735 VND, per USD.

BIDV also offered the same buying and selling rates at 22,665 VND and 22,735 VND, up 5 VND, per USD.

Techcombank maintained its buying and selling rates at 22,630 VND and 22,740 VND, per USD.


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Vietnam’s economy gradually approaches the value chain

Nhip Cau Dau Tu


Once again, globalisation is mentioned as a game that Vietnam cannot be an outsider. If ten years ago, Vietnam missed the integration train, the question now is where Vietnam is in that train.

Rice and shrimp go to global market

On May 25th, the website for market research and analysis on economic and business areas (Vibiz) under Global Yoilo Joint Stock Company announced the survey results showing that 64 percent of the rice on the market is Vietnamese rice but named under foreign brands with the aim to increase profits, and that 535 of Vietnamese consumers prefer rice from Thailand, Cambodia, and Japan. In addition, although there are nearly 67 types of rice in the market, consumers only choose 21 types to be named in Vietnamese.

This is indeed a sad news for a country that considers itself having strengths in rice. However, if further comparing with the information mentioning that Vietnamese rice immediately after being imported was renamed by the importing enterprises in order to be sold in local supermarkets or exported, we must accept a bitter fact that the disadvantage of Vietnamese rice in both domestic and foreign markets is due to the fail to create the brand. Vietnam is just a country for cheap rice, and sometimes the sales to Africa were even refused.

Talking to Nhip Cau Dau Tu newspaper, Dr Dao The Anh, deputy director of the Institute for Food Plants (Ministry of Agriculture and Rural Development) said that Vietnam currently has Co May rice being sold at nearly the same price as of foreign rice, or glutinous rice branded Nep Cai Hoa Vang being sold relatively well. In order to do so, these businesses have had to build their own material zones, and set standards from seeding, care technology to post-harvest technology. Unfortunately, not many businesses can do as what these two units have done.

The reason for the rice sadness can be analysed according to the production value chain theory. At present, farmers choose to breed, care and harvest in traditional way. Traders buy in massive volume, just pay attention to price, and sell to exporters. As a result, commercialised rice is mixed and can only compete by reducing price, putting stress on farmers to such a degree that they cannot survive if they grow rice. It means that the activities in the rice grain value chain is scattered and individual.

In other words, Vietnam has not built a complete value chain for rice, which is a paradox for a country with rice being strategic exporting product.

The case of Co May rice continued to be mentioned by Dr Anh as a bright spot. According to the expert, this business sent staff to go abroad to study and analyse the demand of the markets, from which make order with farmers. This is a long-term way. He expected that the State will support farmers, and at least untie businesses from the constraints of rice export conditions.

The unordered situation in bringing Vietnamese rice to the global market is also seen in seafood exports. The rejected orders of frozen shrimps due to excessive antibiotic residues or the difficulties of tra fish when the US demanded for investigation of pond and feeds standards, etc. show the weakness of the goods that Vietnam takes part in most of the stages of the production value chain.

Getting 22 USD from a 100 USD pair of shoes

According to the Organisation for Economic Cooperation and Development (OECD), the proportion of added value in the manufacturing and processing sector of foreign investment firms currently accounts for about 48.8 percent of Vietnam’s total exports. Meanwhile, the proportion of added value in exports of domestic firms only accounts for 12.7 percent. A story which was repeatedly mentioned during the recent visit to the US by prime minister Nguyen Xuan Phuc also clearly shows this status quo. Specifically, Vietnam only benefits 22 USD from a pair of shoes which is priced at 100 USD. This number is particularly large, as there are up to 138 Nike pairs of shoes exported from Vietnam to the US.

Dr Le Xuan Sang, deputy Head of the Vietnam Institute of Economics said that in his visit to China six years ago, China was the factory for iPhone and people said that for each iPhone worth approximately 1,000 USD, Chinese received one USD. This value included the value of Chinese supporting industries. Dr Sang added that, compared to the exports of Samsung in 2015 of over 30 billion USD, the contribution of Vietnam was only about 20 billion USD, meaning that Vietnam’s contribution to the value chain of Samsung was even lower than the case of Chinese outsourcing iPhone.

Report of the International Financial Corporation (IFC) stated that only 21 percent of Vietnamese enterprises have joined the global supply chain. This number is much lower than neighbouring countries’, and even less than half of Malaysia’s. The involvement of Vietnam in the value chain is still at an early stage, mainly through outsourcing and assembling to capitalise low-cost labour while it is not yet involved in more important processes which require more intelligence and high capital content.

This is a risky situation because the advantage of cheap labour can be easily lost when people use more robots and technologythe spirit of the 4.0 technology revolution. Thus, what should Vietnam do? According to Dr Sang, every business wants to be more active and have more capital but it is uneasy if they do not have sufficient time and skills. The Trans-Pacific Partnership (TPP) is a great motivation to overcome this. The TPP’s constraints, such as the requirements of certification of origin, will help Vietnam go deeper in the value chain, thereby seeking better options.

Meanwhile, in economic expert Bui Kien Thanh’s point of view, the question is that why Vietnam does not actively make changes to hold the initiatives and get more benefits in the global game. Since the current weaknesses and the good points of TPP have been seen, why do we have to wait for the signature on TPP to make change?

More than 100 years ago, Indochina Governor general evaluated that Vietnamese people have superior ability compared to other countries in the region they are skilled workers and skilled soldiers. If so, the approach of Dr Sang seems to be more realistic. Nevertheless, with or without TPP, change is inevitable, simply because Vietnam can hardly get out of being an outsourcing country if it only follows the orders of foreign bosses without developing other capabilities such as design, marketing, and market development, etc. Assessing the globalisation, the World Bank said that globalisation is not the problem but the matter is the way people manage this process. It will be unfortunate for any country which is resistant to change or cannot catch up with this management mechanism.



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Vietnam-EU trade up 16.2 per cent in five months


Two-way trade between Vietnam and the European Union (EU) grew 16.2 per cent year-on-year in the first five months of 2017, according to the Ministry of Industry and Trade.

Of the figure, Vietnam’s exports to the EU rose 4.2 per cent, mostly apparel, footwear, agro-forestry-aquatic products and computers, while its imports from the EU up 14 per cent, including machinery, equipment, pharmaceuticals and dairy products.

The country’s major importers were Germany, the UK, France, Italy, the Netherlands and Spain.

Exporters hope that the EU-Vietnam Free Trade Agreement (EVFTA), which is expected to take effect in 2018, will increase Vietnam’s exports to the bloc by 50 per cent by 2020.

The ministry said in order to navigate the demanding EU market, domestic firms must overcome technical barriers by meeting strict requirements regarding food safety and hygiene and origin traceability.

First Counsellor of the EU Delegation to Vietnam Miriam Garcia Ferrer said through the EVFTA, the EU could help Vietnam improve trademark and product quality.



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South Korean investment tops $50 billion



$50.5 billion invested in 5,773 projects accounts for 30.8 per cent of all foreign direct investment in Vietnam.

South Korean investments in Vietnam had surpassed $50 billion by the end of 2016, making it the largest foreign investor in the country, according to the Korean Trade Investment Promotion Agency (KOTRA).

The $50.5 billion invested by South Korean enterprises accounted for 30.8 per cent of all foreign direct investment in Vietnam, with 5,773 projects.

Seventy-one per cent of capital went to manufacturing and processing, following by real estate with 14.8 per cent and construction with 5.4 per cent.

Japan ranked second, with $42.4 billion in investment, then Singapore with $38.2 billion, Taiwan (China) with $31.8 billion, and the British Virgin Islands with $20.4 billion.

Many South Korean companies have arrived in Vietnam in recent times with the aim of taking advantage of its developing economy. A representative from KOTRA said that Vietnam’s economy is stable thanks to foreign investors pushing investments.

Bilateral trade between Vietnam and South Korea is expected to reach $70 billion by 2020 due to the Vietnam-South Korea Free Trade Agreement (VKFTA), which came into effect one year ago.

From 2017, 18 items will be subject to tariff reductions under the VKFTA, with trade value between the two countries expected to increase and become more balanced as a result.

According to Mr. Le An Hai, Deputy Head of the Ministry of Industry and Trade’s Asian Market Department, based upon the commitments made in the VKFTA, in the years to come the two countries will improve both their economic and political relationship.

Vietnam is to focus on introducing preferential mechanisms for South Korea while South Korea will continue to open up its market to Vietnamese goods, according to Mr. Hai.



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Viet Nam looks to private sector to fund infrastructure


A need to fund infrastructure projects vital to expanding Viet Nam’s economy and boosting connectivity is pushing its government to turn to the private sector for support.

Viet Nam has made a strong commitment to infrastructure spending in recent years, with investments averaging 5.7 per cent of GDP, according to the Asian Development Bank (ADB) – a figure second only to China’s in the region and triple the outlays of Malaysia, Thailand, Indonesia and the Philippines.

This commitment is set to continue in the medium term: according to the Ministry of Planning and Investment, Viet Nam needs some $480bn to fund urgent infrastructure investments by 2020, with more projects in the pipeline in the following decade.

Among the key projects is construction of a planned US$13bn, 10-lane road spanning 1800 km between Ha Noi in the north and HCM City in the south. It will be the largest road project to date and boost connectivity substantially along the country’s north-south spine.

Other key projects include building 11 power stations with a combined generation capacity of 13.2 GW, intercity and intracity rail networks, and at least 1380 km of additional highways.

Low private buy-in

While investment levels are high as Viet Nam seeks to reinforce its national infrastructure backbone, the share of development funding coming from the private sector is low.

According to ADB estimates, private investment in Viet Nam’s infrastructure could be less than 10 per cent of the national total, compared to as much as 30 per cent in India.

Reasons for this low participation include the long-term nature of such projects, where returns on investments take far longer than those in other sectors, such as property.

The need for more private funding of infrastructure should become more pressing in the coming years, with the ADB estimating that the state budget will be able to fund just one-third of the $480bn in planned spending by the end of the decade.

Capital markets needed for financing

To better tap private funding, Viet Nam needs to deepen its capital market structure, according to a report published last month by consultancy McKinsey.

The report said Viet Nam – along with several other Asian countries – should do more to tap private savings to help finance infrastructure expansion and ease reliance on the public sector.

Of the 12 countries covered in the report, Viet Nam ranked last for both development maturity and the size of the local market as a share of GDP: capital markets in Japan for example were valued at some 400 per cent of GDP to Viet Nam’s 50 per cent. Such gaps put Viet Nam at a disadvantage when seeking to mobilise private sector finance for infrastructure investments, the study said.

Increased liquidity in the sovereign bond market would allow the state to better harness private sector finance, it said, but would require a shift to larger sales of benchmark bonds, rather than the current mix of different outstanding bonds that are only rarely traded.

One proposed avenue to increased infrastructure funding is pension funds. Though of only limited scale at present, in time these could be grown into a source of development finance, as in many other countries, according to Tyler Cheung, director of the institutional client division at ACB Securities, a full service brokerage firm.

“Through tax incentives to invest in pension schemes, a new pool of funding could be developed in the capital market, while also easing pressure on the banking sector,” Cheung told OBG. “Not only will this help shift a burden from the state to individuals, it can also fund long-term projects such as infrastructure and logistics.”

Easing pressure on the banking sector

High dependence on banks for funding makes broadening the capital markets base increasingly important, according to Pham Hong Hai, CEO of HSBC Viet Nam.

“Developing the capital market is critical for Viet Nam,” he told OBG. “Banks are supporting 70-80 per cent of capital requirements today. This is too much, and they won’t be able to handle this in the long run.”

Scaling back government reliance on local banks to raise funds for infrastructure would also free up liquidity for lending to the private sector, which at times struggles to obtain credit.

A deeper capital markets pool would both increase liquidity in the economy and allow some of the funding to flow into much-needed infrastructure investment. — Oxford Business Group

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Vietnamese real estate market continues showing irresistible appeal to foreign investors


The Vietnamese real estate market continues to attract capital from regional foreign investors, mostly through mergers and acquisitions.

Stephen Wyatt, country head for Jones Lang LaSalle Vietnam, said that in 2017 M&A in real estate may increase very sharply and reach record levels. As the company observed, billions of dollars are just waiting to be poured into the market in most segments, with a focus on apartments, offices, hotels, and industrial real estate.

Since the beginning of the year, there have been several big M&As in the field. In March, Singaporean company Keppel Land bought the entire stake (16 per cent) of Southern Waterborne Transport Corporation (Sowatco) in Saigon Centre for VND845.9 billion ($37.3 million) through subsidiary Krystal Investments Pte., Ltd.

Also in the same month, Hong Kong Land from Hong Kong became the strategic partner of Ho Chi Minh City Infrastructure Investment Joint Stock Company (CII) in developing residential housing in Thu Thiem New Urban Area.

Japanese investors are also increasing involvement in Vietnam. Last September, Kajima, one of the four biggest contractors in Japan, set up a 50:50 joint venture with Indochina Capital to invest $1 billion in 10 years. At first the joint venture is going to focus on residential units, hotels, and resorts in Hanoi, Ho Chi Minh City, and Danang. Keisuke Koshijima, senior executive officer and general manager of the overseas division at Kajima Corporation, called Vietnam Kojima’s key market in the region.

Besides the residential and commercial segments, industrial real estate also attracted heavy interest from foreign investors. CFLD Vietnam Real Estate Development Co., Ltd. (CFLD Vietnam), a subsidiary of China Fortune Land Development Co. (CFLD), said it plans to build dozens of industrial cities mostly in Southeast Asia, where Vietnam is an important destination.

In January last year the company worked with the Dong Nai People’s Committee to find investment opportunities. In September, CFLD Vietnam signed a memorandum of understanding with Tin Nghia Corporation to build a New Industry City (NIC) in Ong Keo Industry Park, which is located in Dong Nai, east of Ho Chi Minh City.

In April 2017, the company spent $65 million through subsidiaries CFLD Investment 27 Pte., Ltd. and CFLD Investment 28 Pte., Ltd. to buy over 70 per cent of Dai Phuoc Lotus, also in Dong Nai, from VinaLand Limited and VinaCapital’s Vietnam Opportunity Fund.

Masataka Sam Yoshida, senior executive for Vietnam at Tokyo-based M&A consultancy company Recof, said that Japanese investors are now more interested in the Vietnamese real estate market and are more willing to accept associated risks. Many experts said that the newfound propensity to take risks is due to the optimistic macroeconomic outlook of the country. Also, political stability and the stable currency are further incentives.

Meanwhile, the profitability of commercial projects is higher in Vietnam than in other countries. For example, office space rental in Vietnam can return a profit of 8-10 per cent a year, while the figure is 4-6 per cent in Singapore.

Duong Thuy Dung, CBRE Vietnam’s head of market research, said that the most popular way for foreign investors to join the Vietnamese real estate market is through setting up joint ventures with domestic companies to take advantage of their land reserves and connections in the field.

They will contribute to the joint venture with their financial capabilities and experience gained in more developed markets. Another method is to set up a 100 per cent foreign-owned subsidiary then buy a project or stake in a Vietnamese real estate developer.

Observers say that M&A is the way to increase liquidity for the market as well as save costs and time for investors.


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Real estate nudges up in May


Real estate sales in May rose slightly month-on-month, compared with the first quarter this year, according to the Ministry of Construction’s Management Agency for Housing and Real Estate Market.

Successful transactions were mostly in the mid- and hi-end segments, while affordable ones were not sold owing to their limited supply.

During the month, Hà Nội recorded nearly 1,200 successful deals, up by some 14 per cent against last month, raising the five-month volume to about 5,400.

In the southern metropolis HCM City, nearly 1,300 deals were reached, marking a 12 per cent increase. Between January and May, up to 5,870 transactions were successful.

Brokers said successful deals were mostly those located near downtown. Buyers also take into account transport convenience, facilities, apartment design, payment progress and the appreciation value.

In Hà Nội, major sales were predominant in the southwest, such as The Golden Palm in Thanh Xuân, Gelexia Riverside in Hoàng Mai and Gemek Premium in Hà Đông, which have synchronous infrastructure.

Hi-end projects in HCM City also sold well, such as Vinhomes Golden River Ba Son in District 1 and Hà Đô Centrosa Garden in district 10.

Low-rise housing in Lucasta Khang Điền in District 2 and Thủ Thiêm Garden in District 9 saw considerable sales.

Tourism and resort properties in coastal localities, such as Đà Nẵng City, Nha Trang City in central coastal Khánh Hòa Province and Phú Quốc in southern Kiên Giang Province, have become attractive to investors at home and abroad.

Unsold properties nationwide were valued at about VNĐ27.89 trillion (US$1.23 billion), as of late May, down 10 per cent from the end of 2016. The figure declined VNĐ474 billion ($20.87 million) from April.

Unsold land for housing accounted for more than 3.37 million square metres worth VNĐ13.2 trillion ($581.33 million), the biggest proportion of total unsold property value.

It was followed by low-rise housing (3,492 units worth VNĐ7.38 trillion or $325 million), condominium apartments (3,325 units worth VNĐ4.83 trillion or $212.7 million), and land for commercial purposes (648,140 square metres worth VNĐ2.48 trillion or $109.2 million).

Although unsold properties continued to decrease, the rate of decrease slowed down. Most of the unsold land is part of uptown projects lacking infrastructure, the management department said.

The value of unsold real estate in Hà Nội was still higher than in HCM City in May. It was estimated at VNĐ5.45 trillion ($240 million) in Hà Nội and VNĐ5.18 trillion ($228.13 million) in HCM City, down VNĐ23 billion ($1 million) and VNĐ100 billion (4.4 million) from April, respectively.

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Binh Thuan boasts great potential for solar power development


Five solar power projects worth over VND14.8 trillion (US$651.2 million) have been approved to invest in the central coastal province of Binh Thuan as of May 2017.

They included a 200MW plant covering 309 hectares in Thien Nghiep commune, Phan Thiet city, and a 150MW plant in Bac Binh district and Phan Thiet city with a total area of 211 ha.

Dry climate and sunny weather, especially in the northern area, are advantages allowing Binh Thuan to develop solar power apart from wind power mills. 

Many investors are interested in investing in the field in the locality.

The provincial People’s Committee has approved studies for investment in 30 other solar electricity projects in the locality, with two of which, Eco Seido and Da Mi solar plants, which have respective capacity of 40 MW and 47 MW, getting  approval from the Ministry of Industry and Trade.

Binh Thuan has 40 locations that have been planned to call for investment for developing solar power projects, mainly in Bac Binh, Tuy Phong and Ham Tan districts.

According to Chairman of the provincial People’s Committee Nguyen Ngoc Hai, the local authorities encourage the mobilisation of capital from economic sectors to fully tap the locality’s advantages of natural and energy resources. 

The locality is calling for investment into developing clean energy in connection with key economic sectors, towards realising its goal of becoming an energy centre by 2020, with a total capacity of over 12,000 MW. 

As scheduled, by 2030, Binh Thuan is likely to attract solar electricity projects with a combined capacity of over 4,000 MW. The locality is hoped to become a clean energy centre in the future.


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Trung Nam Group to join renewable energy sector


On June 10, Trung Nam Construction Investment Corporation (Trung Nam Group) and Trung Nam Wind Power Joint Stock Company signed contracts with partners to implement wind and solar power projects in the central province of Ninh Thuan.

The future partners of Trung Nam Group in these projects are prestigious contractors in and outside the country, including Lilama 45.3 Joint Stock Company, Green Cosmos Marketing Pte Ltd., and especially Enercon and Syntegra Solar, two giants specialising in wind and solar power equipment provision.

Nguyen Tam Tien, general director of Trung Nam Group, noted that the collaboration with these two energy giants from Germany proves the high determination of the investors to implement the projects. According to him, the investors have rejected out-dated technologies from several foreign countries and levelled up the quality of investment package with high initial installation costs.

“These two Germany-based contractors are considered the Mercedes of the wind and solar energy industry due to their certified reputation. With the high quality, low-cost operation, long-term insurance, and high performance offered by the contractors, Trung Nam Group believes that the projects will efficiently come into operation and contribute to the budget of Ninh Thuan after their first phase is completed next year,” said Tien.

The collaboration of Trung Nam Group with Enercon and Syntegra Solar is expected to exploit the potential and advantages of Ninh Thuan in wind and solar power sectors. It also marks a milestone in bilateral economic partnership between Vietnam and Germany, paving the way for future collaboration in renewable energy development.

The construction of the Trung Nam wind power plant began in August 2016 with the total investment of VND3.96 trillion ($174.5 million). The factory is set to have a capacity of 90-100 MW, generating 286 million kWh of energy. Phase I of this project is scheduled to be completed in the third quarter of 2018, while phase II will be finished in the second quarter of 2019.

Trung Nam Group is also conducting a feasibility study of a solar power project as part of the wind power project. The company said it may develop a 515 MW solar power project in Ninh Thuan.

Wind and solar power projects carried out by Trung Nam Group are expected to set the foundation for future integration projects in renewables in Ninh Thuan. Besides, according to investors, these projects will encourage other national and international investors to take advantage of renewable and clean energy in order to reduce environmental pollution caused by fossil fuel usage, and to support the model of energy usage provided by the Vietnamese government.

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Decree set to tackle transfer pricing



Coming into force in May 2017, Decree No. 20/2017/ND-CP on tax administration of enterprises having transactions with related parties has laid a legal foundation to better control transfer pricing and prevent losses of state budget revenues.

Nguyen Thi Lan Anh, Deputy Director of the General Department of Taxation’s Inspectorate Department, told the Hai Quan (Customs) online that the regulations under Decree No. 20 were built on the basis of promoting effective regulations in the past, remedying some bottlenecks, and updating and adding new management solutions adopted in the Action Plan on Base Erosion and Profit Shifting.

In order to collect sufficient tax information of multinational corporations, Decree No. 20 requires enterprises to prepare their transaction price determination dossiers at three levels, including master file containing information about global corporations, local file and country-by-country profit report of an ultimate parent company.

These dossiers will help improve tax authorities’ risk management for transfer prices and reduce the burden of compliance costs for taxpayers through coordination in information exchange among countries, Lan Anh said.

In addition, a taxpayer must prepare a country-by-country profit report in cases it has an overseas ultimate parent company and the company is required to submit this report to the tax agency in the host country, or the taxpayer is an ultimate parent company operating in Vietnam and generating at least VND 18 trillion in global consolidated revenue.

Lan Anh said the requirement for a parent company headquartered in Vietnam having a global consolidated revenue of at least VND 18 trillion to make a country-by-country profit report was made from research and international experience. Currently, this figure in many countries is about EUR 750 million.

According to Decree No. 20, tax agencies may assess tax in cases taxpayers fail to provide or sufficiently provide information; provide insufficient information required in the related-party transaction price determination dossier; or use inaccurate or untruthful information about independent transactions to carry out comparability analysis, declare and determine prices of related-party transactions, or rely on materials, data and evidencing documents which are unlawful, invalid or are of unclear origin to determine the price, profit ratio or profit distribution rate for related-party transactions.

The Decree also sets out several principles to determine the prices of related-party transactions as well as factors determining comparability and specific methods for determining related-party transactions, which will be further guided by the Ministry of Finance.


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New decree on car imports sends conflicting message




In contrast to the usual encouragement of industrial localisation and job creation for Vietnamese citizens in developing the manufacturing industry and supporting industries, the draft decree on conditions for auto manufacturing, assembling, importing, and maintenance and warranty business recently uploaded on the website of the Ministry of Industry and Trade (MoIT) to gather public opnion, is “loosening” restrictions on the import of completely-built units (CBUs).

The general public and industry insiders were taken by surprise by the regulations on the import of CBUs outlined in the draft decree on conditions for auto manufacturing, assembling, importing, and maintenance and warranty business (“the draft”) developed by MoIT and the Ministry of Transportation (MoT) in coordination with other related agencies and offices.

Overly lax conditions

Article 5 of the draft stipulates that “enterprises engaged in the automotive manufacturing, assembling, and importing business must be responsible for the recalling and disposition of defective vehicles.” However, Article 21 removes the right of importers to demand accountability from manufacturers over the recall of defective units. Specifically, the draft only requests that importers “file written commitment with MoIT in fulfilling their responsibilities in the warranty, maintenance, recall, and recollection of imported cars.”

Meanwhile, according to the website of Vietnam Register, the recall must be executed by the manufacturers, both domestic and foreign, through their authorised agencies. No commercial importers are allowed to initiate recalling efforts.

On this matter, Tran Ba Duong, Chair of Truong Hai Auto Corporation (THACO), said it is unprecedented for a trading company that is not a representative of any manufacturer to initiate product recall due to defects, since such companies merely act as the intermediary in the recall.

Studies of the global automotive industry also point to the practice where government or governmental agencies directly request the manufacturers to issue recalls. Toyota Japan has even been fined for $16.4 million for failure to disclose information with the intention to delay a recall.

In 2016, THACO, an assembly and distribution partner to Mazda, reported a Check Engine Light defect on the Mazda 3 model. It was only after Mazda, for multiple times, delegated experts to review, assess, and collect information on the reported defect that they decided on a recall in Vietnam.

“Without permission from the manufacturer, THACO cannot initiate a recall even if we want to, due to technical and safety issues,” said Duong.

Commenting on the Draft loosening up the requirements on warranty, maintenance, and recall for imported CBUs, Le Ngoc Duc, CEO of Hyundai Thanh Cong Corporation, echoed the sentiment, saying there is no way a distributor can start a recall without the manufacturer’s consent.

“The National Assembly classified the automotive industry as one subject to conditions prescribed by the laws due to concerns over assuring the safety of users and road participants. The essential factor is to protect consumers’ rights. There needs to be coherent policies on automotive warranty, maintenance, and recall so that the vehicles satisfy technical requirements before taking to the roads, as well as ensure the safety of people and the society,” remarked Duc.

Lacking in fairness

The Vietnam Automobile Manufacturers’ Association (VAMA) proposed three categories of documents that automotive trading companies must obtain. They are: (1) authorisation by the manufacturer for import, distribution as well as the provision of warranty and maintenance services, and recall; (2) technical support agreement; (3) authorised parts and components provision agreement.

“The draft stipulates that car importers must be responsible for the provision of warranty and maintenance services as well as the recall of products. However, these activities must be carried out in accordance with the manufacturer’s permission and instructions and importers are not allowed to act on their own will. The aforementioned documents are to protect consumers’ rights and assure safety for the vehicles through providing technically appropriate maintenance, replacement with brand-guaranteed components and parts, as well as product recall upon the manufacturer’s request,” said Toru Kinoshita, chair of VAMA.

According to a suggestion by Hyundai-Thanh Cong, there needs to be requirements for the importers to attain Certificates of Quality (CQ) provided by the manufacturers in order to assure the quality of the vehicles circulating on the market. This is also to avoid cases where cars produced experimentally, not meeting quality standards, are imported into Vietnam and circulated on the market, while consumers often lack access to adequate information to demand their rights.

“Domestically manufactured vehicles are required to attain CQ for 100 per cent domestically assembled vehicles. Therefore, CBUs must also satisfy this requirement to ensure fairness,” said Duc.

Only the manufacturer possesses precise knowledge of the systematic errors incurring in the design and production process. The diagnosis of defects related to the details, parts, and components as well as how to fix them can only be carried out by the manufacturer, with their adequate tools, equipment, and technical knowledge.

Notably, in a recent assessment of the automotive industry, MoIT remarked that MoT’s current regulations regarding quality control for imported cars have yet to hold manufacturers accountable for the protection of consumer’ rights and the environment in activities such as warranty, maintenance, recall due to defects, and collection of disposed products. The regulations on quality control of imported cars are currently not as strict and comprehensive as those imposed on domestically manufactured and assembled vehicles.

Therefore, despite the opinion that additional requirements for importers in terms of documents would be taxing and limiting the freedom to do business, it is evident that no manufacturer could entrust its reputation and quality to a profit-driven distributor.

Unrestricted automotive imports until the end of 2017

Another point considered “odd” in the draft is permitting unauthorised importers of passenger cars of nine seats or below until the end of 2017.

Circular No.20/2011/TT-BCT of MoIT on additional procedures to import passenger cars of nine seats or below, which requires authorisation from manufacturers, has been effective since May 12, 2011. However, MoIT is repeatedly pushing back the deadline to stop the operation of unauthorised importers.

In June 2014, MoIT issued Public Letter No.4582/BCT/XNK allowing unauthorised importers until May 28, 2015. The reason was that a reported number of 2,000 vehicles, valued at $17.75 million, had been imported before the issuance of Circular 20. In mid-2017, MoIT again prolonged the process until the end of 2017.

According to experts, the extension given to these unauthorised importers causes confusion and is perceived unfair amongst compliant industry players.

These “liberating” regulations for CBU imports are introduced against the backdrop that the Vietnamese government wants to attract investments from renowned international car manufacturers and to increase production capacity in Vietnam in order to prevent the economy from sinking further into trade deficit.


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