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Vietnam News




Lawyer in Vietnam Dr. Oliver Massmann – Solar Power Development in Vietnam – what you must know:



Worries still remain as SBV is likely to pour to the market nearly 700tr dong

Reference exchange rate up 5 dong



Minister optimistic about achieving economic growth target

Cutting regular spending, not raising taxes, will reduce public debt



Large-scale investments promise FDI breakthrough

Toyoda Gosei builds fourth airbag manufacturing plants in Vietnam



KAHUNA Ho Tram Strip condotel and villa project launched

Firms consider pulling out of social housing projects



Vietnam’s sole oil refinery hoping to strike it rich with $85 million stake sale

$9 billion Nghi Son refinery and petrochemical complex about to start operating



Finance Ministry wants 1pct tax on transfer price in M&A deals

PM urges removal of business barriers



Dr. Oliver Massmann

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



1. What can you tell me about the policies Vietnam now has in place to support solar development?

The legal framework is almost complete. I expect the solar PPA template will be issued within this year so that the investors have full guidance to develop projects in Vietnam. However, as I see from the recent draft solar PPA, it repeats the same mistakes in other renewable PPAs that make projects not bankable. This issue needs to be sorted out soon so that solar development will be on fast track in near future.

2. Total PV installations in Vietnam are still quite low — what has been holding back development?

Because the latest Prime Minister’s Decision promulgating solar FIT was only issued on 11 April 2017. In addition, solar energy is still expensive and less stable throughout the year compared with other sources of energy. Bankability of the PPA is also a worth-noting issue.

Bankability of PPAs has been achieved for other power projects in the past in Vietnam. We are now working on solutions for the solar power sector. It can be done.

3. How do you see the solar market evolving through the end of this decade, both in terms of manufacturing and project development?

I foresee a rapid development in the sector. This is due to the Government’s change of focus on clean energy and environment protection policies. I can see many foreign investors visiting Vietnam recently to look for investment opportunities and many of them have managed to reach a deal with local partners.

4. Where are the opportunities in Vietnamese PV and how should prospective investors and developers approach the market?

Vietnam is an untapped market for solar. The Government offers many good incentives to attract foreign investment, for example, exemption of land rental within 3 years from the operation date, CIT 10%, etc. Investors and developers should first establish close contact with local authorities and conduct careful due diligence on local partners. BOT is the most recommended investment form. In addition, investors and developers may consider taking part in different segments such as equipment supply, solar panels manufacturing, or assembling, etc.

5. What can you tell me about the availability of financing?

IFC and ADB are the most active financiers. Local banks are also more and more interested in lending to renewable projects in general and solar projects in particular. However, due to poor performance and credit of EVN, the financing resources are still limited. We recommend MIGA (Multilateral Investment Guarantee Agency) support for on-grid utility scale solar power projects (above 50 MW).


If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under  This e-mail address is being protected from spambots. You need JavaScript enabled to view it , Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much! 

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  Worries still remain as SBV is likely to pour to the market nearly 700tr dong

Thoi Bao Kinh Doanh

 Recently, the government has asked the State Bank of Vietnam (SBV) to calculate the ability to raise the credit growth target for the whole year to 21-22 percent instead of 18%. If this goal can be achieved, this is the year that marks the return after seven years of credit growth at less than 20%.

As per the National Financial Supervisory Commission (NFSC), during August 14-18, interbank interest rates may increase slightly 0.3-0.5 percentage points in terms but as of August 25, interbank interest rates gradually decreased to 1-1.3%.

As per NFSC’s assessment, the current interest rates in the interbank market are still relatively low and are similar to the same period of 2016. It is forecasted that the low interest rates will maintain in Q3/2017.

The State Bank issued 15 trillion dong worth of T-bills via outright method with 7-day term and 0.3 percent interest rates. During August 21-25, there were 21 trillion dong matured T-bills under outright method. generally, the State Bank net withdrew six trillion dong during the week.

As per NFSC, it is expected that at the end of this week, there will have 15 trillion dong matured T-bills under outright method while T-bill interest rate still maintains at record low level of 0.3-0.4%.

The plentiful liquidity of the banking system along with flexible operating policies, stable lending rates, even the downward trend of interest rates in some priority sectors, etc. are positive factors that support the economy and the credit growth target.

Earlier, in the government’s regular meeting in July, the prime minister asked to raise the whole year credit growth target to at least 20%. If this target is completed, this year will be the first year since 2010 that credit growth is more than 20%.

With the prime minister’s aforementioned suggestion, if this year’s credit growth reaches the highest level of 22%, that means a four percent increase in capital from the initial estimate (at 18%), equal to about 220 trillion dong.

As per the estimate of economic experts, the total outstanding loans to the economy at the end of 2016 was about 5,500 trillion dong, equal to the growth rate of 22 percent in the aforementioned assumption, which may have an additional of about 1,210 trillion dong this year.

NFSC’s data show that in the first seven months of this year, credit has grown about 9.3%. Following the aforementioned growth direction of 22%, there will have about 698.5 trillion dong additional capital to accrue in the last five months of the year.

Many credit experts said since the beginning of this year, credit has grown quite strongly in terms of outstanding loans especially consumer credit and real estate credit. Meanwhile, in production sector, many businesses still have difficulties in assessing loans.

As per the data of the Business Registration Department under the Ministry of Planning and Investment, in the real estate business sector, in January-August, the number of newly established businesses were 3,156 units (up 65.8%) and the registered capital was 217.139 trillion dong (up 62.8%)

That means real estate is showing signs of prospering again. Therefore, the massive increase in credit may cause real estate sector to absorb the most capital not business and production sector.

Dr Vo Tri Thanh, former deputy Head of the National Economic Research Institute (NERI) said the total real estate outstanding loans are about eight percent out of the total credit but consumer loans are mostly real estate loans. If that is included, the figure must be more than 10%.

Interbank interest rates are currently relatively low and tend to decrease in the near future, but with the likelihood of adjusting lending rate to achieve the credit growth target under the requirement of the prime minister, the State Bank is likely to pour to the market nearly 700 trillion dong.

The end of the year is the time when the demand for real estate booms, especially the low-cost housing segment and resort real estate. The people’s consumer loans to purchase houses have increased rapidly over the last period and is expected to continue rising sharply in the last five months of the year.

So, is there any other way to limit the flow of money into real estate? As per economic experts, money from bank from now until the end of the year, though unwilling, is still most likely to run partly into real estate. Therefore, the State Bank must have monetary tightening policies to divest this capital flow to the right target. Only by doing so can the economy really be supported.

It is known that the State Bank has directed functional departments to tighten control over outstanding loans in potentially risky areas such as real estate, BOT and securities. For example, in Directive 01/2017, the State Bank requires commercial banks to regularly review and assess the lending to potentially risky areas such as real estate credit, loans secured by real estate, credit for large customer groups, etc. to set appropriate management criteria, ensuring safety and efficiency in operation.


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Reference exchange rate up 5 dong

Tin Tuc

 The daily reference dong/US dollar exchange rate set by the State Bank of Vietnam (SBV) on August 31 was 22,438 dong, up five dong from the previous day.

With the current trading band of +/- 3 percent, the ceiling rate applied by commercial banks on August 31 is 22,116 dong and the floor rate is 21,770 dong per US dollar.

Exchange rate at commercial banks almost saw no change.

Vietcombank kept both rates unchanged from a day ago at 22,695 dong (buying) and 22,765 dong (selling).

BIDV also maintained the same rates as on August 30 at 22,695 dong (buying) and 22,765 dong (selling).

Similarly, both rates at Techcombank were kept unchanged for the third consecutive day at 22,680 dong (buying) and 22,775 dong (selling) per US dollar.


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 Minister optimistic about achieving economic growth target


 Minister and Chair of the government Office Mai Tien Dung said the economic performance in the January-August period is very positive, raising hope about achieving the target of 6.7 percent economic growth this year.

During a press conference following the monthly government’s meeting in Hanoi on August 30, Dung said the government and the prime minister have drastically directed ministries and agencies concerned to remove difficulties for enterprises. The government held a specialised meeting on law building, with cutting unnecessary business procedures high on the agenda.

The ministries of finance and transport were assigned to review legal regulations on BOT tolls and cut specialised inspection fees for exports-imports. Currently 35 percent of exports and imports are subject to such inspection, he said, adding that the government has required cutting the rate to 15 percent.

Dung added that ministries, agencies and localities should study proposals raised by the Ministry of Planning and Investment (MoPI) and the Vietnam Chamber of Commerce and Industry on cutting and amending nearly 2,000 business conditions.

In order to achieve a 6.7 percent growth, Dung said the agricultural sector should expand by 3.05 percent. He noted that agro-forestry-fisheries exporters could bring home 35 billion USD compared to the planned 33 billion USD thanks to favourable weather conditions.

In industry, electricity production and manufacturing and processing have been performing well. Moreover, disbursement for projects has been sped up while interest rates dropped by 0.5 percent and credit growth hit 21-22 percent.

According to the MoPI, as of August 21, credit increased by 10.06 percent from December 2016. Inter-bank interest rates are on a declining trend, the foreign exchange market has stabilised and liquidity has improved.


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Cutting regular spending, not raising taxes, will reduce public debt


While the Ministry of Finance (MOF) is seeking approval for tax hikes to increase the state budget revenue, economists point out that only reasonable government spending will help ease the budget deficit.

MOF plans to raise the VAT (valued added tax) rate from 10 percent to 12 percent, impose luxury tax on soft drinks, and increase personal income tax on Vietlott lottery winners.

MOF said that EU countries impose a VAT rate of 19 percent, and OECD countries 18 percent. The ministry believes that it is necessary to increase the tax rate to come in line with international practice.

Similarly, when attempting to tax 30 percent on lottery winners, MOF explained that the 10 percent tax rate in Vietnam is low compared with the tax that lottery jackpot winners in the US have to pay.

MOF said that Laos, Cambodia, France, the Netherlands and Hungary all impose taxes on soft drinks.

Some months ago, the ministry proposed raising the environmental protection tax to VND8,000 per litre, saying that the tax is even lower than the tax in South Korea and Cambodia, while the petrol price in Vietnam is lower than the price in Singapore, Hong Kong and Laos.

However, analysts said that it is necessary to have a comprehensive view on taxes, and review income per capita and social conditions in Vietnam, rather than just look at tax rates.

Dinh Tuan Minh, a renowned economist, said when planning any tax hike, policymakers need to find out how the changes would affect people and society.

“MOF needs to show the possible positive and negative impact of the moves. For example, what will happen if the VAT rate is raised to 12 percent,” he said.

However, when asked how the VAT increase affects revenue of the state budget, a representative of the Tax Policy Department said the department will only make calculations if the tax amendment plan is put on the National Assembly’s working agenda.

HCM City Securities Company estimates that if the VAT rate is raised to 12 percent, the state budget would collect VND59 trillion more and revenue from VAT collection would account for 33 percent of total revenue.

Economists emphasized that what Vietnam needs to pay attention now is the public spending. Minh commented that the government seems to be meeting difficulties in cutting regular expenditures.



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Many large-scale investment projects and cooperation agreements have been signed for the near future, promising a breakthrough in foreign direct investment (FDI) attraction in Vietnam.

Just in the last 10 days, numerous investment cooperation agreements have been signed within the framework of Party General Secretary Nguyen Phu Trong’s visit to Indonesia and Myanmar and Prime Minister Nguyen Xuan Phuc’s visit to Thailand.

One of these is the agreement between PT Intra Asia (Indonesia) and Hong Phat Coal and Resources to build a port for coal import in Vietnam. The project is expected to have up to $1 billion investment and capacity of 15 – 20 million tonnes per year, helping cut the cost of transporting imported coal from Indonesia.

“The construction of the port will help the sustainable development of exporting coal from Indonesia to Vietnam and secure the input for thermal electricity plant”, said Lutfi Ismail, chairman of PT Intra.

Another agreement was signed between Thailand’s Superblock PCL and a Vietnamese partner to develop renewable energy in Vietnam. Superblock PCL, one of the largest renewable energy producer in Southeast Asia, plans to invest up to THB20 billion ($602 million) each year to expand production inside and outside the country to meet the increasing demand for clean energy.

In the next 3-4 years, Superblock PCL will increase their capacity to around 2,000 megawatts, 700MW of which will be contributed by wind power projects in Vietnam. Superblock PCL has not ruled out the possibility of investing in solar power, either.

Other notable agreements signed during the PM’s visit to Thailand include a legal agreement to implement Quang Tri buil-operate-transfer (BOT) thermal power project between Vietnam’s General Department of Energy under the Ministry of Industry and Trade and Thailand’s EGAT International Co., Ltd. (EGATi), a memorandum between Vietnam Oil and Gas Group (PetroVietnam) and SCG (Thailand) Co., Ltd. on promoting the Long Son petrochemical complex in the southern province of Ba Ria-Vung Tau, and cooperation in research and development of other petrochemical projects in Vietnam.

Additionally, there were also memorandums signed between SCG and PetroVietnam's subsidiaries such as Binh Son Refining and Petrochemical Co., Ltd., PetroVietnam Ca Mau Fertilizer JSC, PetroVietnam Fertilizer and Chemicals Corporation.


According to the latest data of Foreign Investment Agency under the Ministry of Planning and Investment, in the first eight months of 2017, the total amount of FDI registered in Vietnam was $23.36 billion, increasing 45.1 per cent compared to the same period in 2016.

Out of this amount, newly registered investments amounted to $13.45 billion, increasing 37.4 per cent, capital increase amounted to $6.4 billion, and capital contributed through share purchases was $3.5 billion, increasing 101.3 per cent compared to the same period in 2016. 


Of the abovementioned projects, at least two carry a billion-dollar price tag. The Quang Tri BOT thermal power project is expected to start construction in mid-2019 with $2.2 billion capital. The Long Son petrochemical complex project has $5.4 billion investment capital, with 71 per cent contributed by SCG.

The completion of these agreements will contribute a lot to Vietnam’s FDI flows.

Many economic experts have said that even without the Trans Pacific-Partnership (TPP), Vietnam is still very attractive to foreign investors thanks to the numerous recently signed trade agreements and ceaseless efforts to improve the business environment.

In a recent report, PwC predicted: “In the future, low cost business environment and great economic potential will continue to make Vietnam an attractive destination to foreign investors.”



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 Toyoda Gosei Co., Ltd. has released plans on its website to build the fourth airbag manufacturing plant in the northern city of Haiphong to meet the growing demand as safety regulations become more stringent in regions around the world.

The plant named Toyoda Gosei Haiphong Co., Ltd. has a total investment capital sum of $24.6 million. The construction is expected to start in March 2018 and the plant is expected to start production of airbag parts and steering wheels in July 2019 for export to final airbag assembly plants in Japan, North America, Europe, and other regions.

In 2004, Toyoda Gosei established the first plant to manufacture airbag parts with the investment capital of $74.95 million. To date, Toyoda Gosei has three plants in operation in Haiphong's Nomura Industrial Zone.

In 2016, the plants’ production capacity was 14.5 million airbag parts and 2.2 million steering wheels. The figures are expected to reach 23 million airbag parts and 3.2 million steering wheels by 2023.

Established in 1949 and headquartered in Kiyosu, Aichi Prefecture, Japan, Toyoda Gosei is a leading specialty manufacturer of rubber and plastic automotive parts and LEDs. Today, Toyoda Gosei Group provides a variety of high-quality products internationally, with a network of approximately 100 plants and offices in 18 countries and regions.

Airbags and other safety system products are a key business segment for Toyoda Gosei and the company is moving to strengthen its global production capacities.

Earlier in November 2016, South Korean Kolon Industries Inc. and leaders of the Binh Duong People’s Committee signed a memorandum of understanding (MoU) to confirm the South Korean firm’s investment plan to develop a $1-billion factory manufacturing airbags and industrial fabric for automobile tires in the southern province of Binh Duong.

In the framework of the event, a representative of Kolon Industries announced a land lease contract with Investment and Industrial Development Corporation (Becamex IDC). Accordingly, Kolon Industries will rent a 42-hectare area in Becamex IDC’s expanded Bau Bang Industrial Park to construct the factory.

According to Kolon Industries’ plan, the investment capital of $1 billion will be disbursed in three phases. The first phase, with a total investment capital of $220 million, will be disbursed in 2017-2018, and the second phase will be finished by 2026 with $600 million. The $1-billion mark will be hit sometime after 2026.


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 The Ho Tram Project Company Ltd (HTP), a wholly-owned subsidiary of Asian Coast Development Ltd, has introduced its KAHUNA Ho Tram Strip condotel and villa project in Ba Ria-Vung Tau Province to potential investors.

HTP said in a statement that KAHUNA Ho Tram Strip is a key resort development comprising 164 condotel units in a 12-storey tower, 36 double key villas and eight beach front villas, all for long-term lease. Investment costs range from US$88,800 for a one-bedroom standard unit to US$400,000 for a penthouse and from US$350,000 to US$900,000 for a villa.

HTP said it guarantees a return of 8% per annum for two years of net lease cost. Following this, lessees benefit from a 60/40 net rental revenue share for the remaining eight years of the rental pool agreement. Besides, they enjoy 21 room nights per annum in the resort.

Named after the legendary waves of Hawaii, the KAHUNA Ho Tram Strip captures the essence of a beachside holiday experience. Executive chairman of HTP Michael Kelly said the condotel and villa development features a design inspired by a luxury cruise liner with sleek nautical lines.

HTP leads the development of the Ho Tram Strip on 164 hectares along 2.2 kilometers of beachfront in the southern province of Ba Ria-Vung Tau. The company said with over US$1.1 billion deployed and forward deployed capital, the Ho Tram Strip is the largest foreign invested tourism development undertaken in Vietnam and among the largest private equity investments into the country from the U.S.

KAHUNA is the fifth phase of the Ho Tram Strip development. The multi-billion-dollar Ho Tram Strip also includes the existing 541-room 5-star Grand Hotel, 559-room 5-star Beach Club under construction, Greg Norman-designed Bluffs Golf Course and Gallery Villas residential development.

HTP plans to develop a private international airport in the vicinity of the Ho Tram Strip and the other parts of the 164 hectare land for a water park, amphitheatre, wellness center, theme park and many more facilities.



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The massive stimulus package of VNĐ30 trillion (US$1.32 billion), introduced in 2013 to encourage social housing development in Việt Nam and revitalise the listless real estate sector, has been entirely disbursed. However, with the expiry of the attractive interest rates, many businesses are contemplating pulling out of the social housing market while the demands show no signs of flagging.

In a recent conference on measures to kick-start the real estate market towards the end of 2017, Vũ Văn Phấn, deputy head of the Ministry of Construction’s Housing and Real Estate Market Management Department, admitted that there have been cases where businesses asked to withdraw from social housing projects.

In April, the National Assembly allocated VNĐ2 trillion ($87.9 million) to the construction of houses for contributors to the revolutionary cause as well as social housing projects, with more than half of the figure (VNĐ1.160 trillion) reserved for the latter purpose meant to be the continuation of the now expired stimulus package, but this amount is “still too little and not enough,” Phấn said. He also added that the construction ministry is asking the government for more financial support for social housing businesses as well as homebuyers, but that remains a distant vision.

Prime Minister Nguyễn Xuân Phúc signed a decision dictating the interest rate for social housing loans in 2017 at 4.8 per cent a year – even lower than the 5 per cent interest rate in the now expired stimulus package. But, it is reported that no allocation from the state budget has been made available to commercial banks, so in reality, nobody has really benefitted from this policy.

The blockages

Trương Anh Tuấn, Chairman of the board of Hoàng Quân Group, a Southern-based real estate corporation, said that their original plan was to implement 20 social housing projects throughout the country. However, since there are no longer any stimulus packages for businesses or homebuyers, the company has to postpone the schedule of many projects.

The lack of capital also caused the company to fail to hand over finished apartments to customers in time as per the contracts. To continue with construction, in addition to what capital the company has at its disposal, it has to seek loans from commercial banks at commercial rates and mobilise capital from the stock market. Nevertheless, the majority of Hoàng Quân Group’s social housing projects still fall behind schedule.

According to existing regulations, housing projects are required to set out 20 per cent of the project land for social housing. The new law is considered “fairly flexible” in this regard as it allows businesses to contribute through land, apartments, or monetary means, if the project’s total area is less than 10ha. The last form of contribution is the preferred option for most businesses.

Lê Hoàng Châu, Chairman of HCM City Real Estate Association (HOREA), said that the social housing land fund must be “managed and used effectively”. The revenue generated from this fund should be reserved for the development of social housing projects as per each locality’s planning, and should not be used “for any other purpose.” The association recommended the city focus its resources as well as call on the involvement of real estate businesses to implement affordable or social housing projects, to serve the “growing but largely unmet demands” from middle-and-low income demographics, civil servants, manual workers and immigrants.

Furthermore, according to Châu, the law states that the fund for the development of social housing projects can come from “official development assistance or preferential loans from donors”, which he said “is a highly potent source of funding”, however, up until now, there hasn’t been any guidance for this mechanism.

According to Trần Trọng Tuấn, head of HCM City’s Department of Transport, the loan package is meant to ‘stimulate’ this oft-overlooked market as well as “plant the seeds” for the further development of social housing projects, and “the package is not meant to last forever”. In the long term, existing laws must be observed in full, especially making use of housing credit funds to support social housing programmes.

“The main issue, first and foremost, is money, the mechanisms and institutions are available, we just need to implement Decree 101/2015 and Law on Housing then the social housing programme will roll on smoothly. This measure is the steady and sustainable one, not just temporary stimulus packages,” Tuấn said.


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The operator of Vietnam's only oil refinery is planning to sell a 4 percent stake this November, and expects to raise nearly VND1.93 trillion ($84.8 million) from the offering, Bloomberg reported.

Nguyen Hoai Giang, chairman of the Binh Son Refining and Petrochemical Company, said in a recent report that it is waiting for government approval to sell 132 million shares for VND14,600 each on November 7.

Another 49 percent stake in the Dung Quat Refinery will go on sale next year, he said.

Dozens of companies have shown interest in the share sale, including Spain's Repsol SA, World Petroleum Corporation in the U.S. and Vietnam’s state-owned fuel giant Petrolimex.

“The sale is open to both local and international investors, but we will give priority to partners that operate in the same industry and can help us to become bigger and more efficient,” he said, as cited by Bloomberg.

Binh Son was valued at VND72.88 trillion ($3.2 billion) at the end of 2015, with the state holding a 60 percent stake, according to a trade ministry report released more than two months ago.

The company has projected revenue this year to reach VND62.4 trillion, down 17 percent from 2016 due to an expected drop in crude oil prices and maintenance work.

Its refinery in the central province of Quang Ngai meets around a third of Vietnam’s demand for fuel and oil products, and has the capacity to process 6.5 million tons of crude oil a year.

The company is planning to expand to meet as much as 45 percent of domestic demand by 2022.

Vietnam's government last week also announced plans to sell a 3.33 percent stake in dairy giant Vinamilk this October, reducing the government state to 36 percent, Reuters reported.

The company put a 9 percent stake up for sale last year, but only 5.4 percent was purchased due to investment "limitations", said Nguyen Duc Chi, chairman of the State Capital Investment Corporation, the government's shareholding company.


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 Nghi Son refinery and petrochemical complex’s preparations for its debut in the fourth quarter of 2017 have been completed, so the complex is in a rush to finish all minor remaining tasks for a perfect launch on time.

Nghi Son refinery and petrochemical complex is jointly invested by Vietnam Oil and Gas Group (PetroVietnam), Kuwait Petroleum International (KPI), Idemitsu Kosan Co., Ltd., and Mitsui Chemicals, Inc.

The construction started in July 2013 and has been basically finished and handed over to Nghi Son Refinery and Petrochemical LLC (NSRP) by now. Currently, the complex is testing some of its components parts.

As scheduled, Nghi Son complex will be put into official operation from the fourth quarter of 2017. Accordingly, every month, NSRP will welcome three crude oil tankers from KPC.

With the annual capacity of 10 million tonnes (about 200,000 barrels of oil per day), Nghi Son refinery will meet 40 per cent of domestic oil and gas demand and export millions of tonnes of petrochemical products, such as benzen, paraxylen, and polypropylene.

On August 20, the huge crude oil tanker Millenium arrived at the single point mooring (SPM) of Nghi son complex and pumped 14,000 cubic metres of crude oil through 35 kilometres of pipelines to Nghi Son complex’s tanks. Each tank has a volume of 120,000 cubic metres. It is forecasted that filling up all the tanks may take about three days.

Dinh Van Ngoc, deputy general director of NSRP, said that this is the first time a Vietnamese refinery welcomed such a huge crude oil tanker, which makes Nghi Son a milestone marking the strong development of the Vietnamese seaport industry.

On July 26, the Thanh Hoa Department of Technology and Science established an inspector team to overview the “nuclear radiation safety” of Nghi Son complex and it has done well to keep to the stipulated standards.

Also, on August 8, after the inspection, Vice Chairman of the Thanh Hoa People’s Committee Nguyen Duc Quyen concluded that Nghi Son complex has been following state regulations on environment protection, including wastewater, solid waste, emissions, and noise.

Especially, besides the standardised sewage system, Nghi Son complex also regularly checks its wastewater by taking water samples three times a day for analysis in the distributed control system (DCS) system. All the indicators will be reflected in the screen of the system to show abnormalities in the wastewater.

Licensed in 2008, Nghi Son complex has a total investment capital sum of $9 billion. Of this PetroVietnam has a 25.1 per cent stake, KPI 35.1 per cent, Idemitsu Kosan 35.1 per cent, and Mitsui Chemical International 4.7 per cent. 


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 Finance Ministry wants 1pct tax on transfer price in M&A deals


 In an effort to prevent involved parties from evading tax by inaccurately declaring profits from M&A deals, MOF plans to tax one percent on the transfer price, to be applied to businesses, and one percent on income, to be applied to individuals.

The current CIT Law stipulates that the government determines tax rates on capital transfer deals made by foreign institutions that have no presence in Vietnam.

However, in Decree 12/2015, the government has not set a specific percentage tax rate. Therefore, MOT has set a temporary tax rate of 20 percent on income.

A problem has arisen that the majority of foreign institutions declared transfer prices equal to cost prices so as to avoid tax. In principle, if they don’t make a profit, they don’t have to pay CIT.

Meanwhile, Vietnam still finds it difficult to check transfer prices. This explains why in recent M&A deals, Vietnam’s taxation agencies could only collect tax on the difference of exchange rates between the time of transfer and time of capital contribution.

To make it easier to control tax collection and avoid loss of revenue for the state budget, MOF believes that it would be better to impose the same tax rate of one percent on revenue. The tax rate would be applied to both foreign institutions with or without resident offices in Vietnam.

The tax duties for transfer deals in the oil & gas sector will be shown in another specific document to be released by MOF.

Many large M&A deals have been made recently, including the transfer of Metro Cash & Carry distribution chain in Vietnam to TCC Group and the takeover of Big C by Central Group. Most recently, Siam City Cement acquired a stake in LafargeHolcim, a cement manufacturer.

Sources said that taxation bodies finally were able to collect trillions of dong in tax from investors in the deals, but they could only do this after many arguments and discussions with involved parties.

The big difficulty was that the legal entities which conducted the transfer deals were outside the Vietnamese territory.

An official of the HCM City Taxation Agency admitted that most foreign institutions declared wrong prices, but the taxation agency still had to accept the deals because it could not prove if the declaration was wrong.

MOF is also facing the same problem with transfer deals made by individuals. Under current law, the taxable income in capital transfer deals equals the selling price minus (buying price + related costs). However, taxation agencies find it difficult to discover the transfer price and related costs.


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  At the cabinet meeting on lawmaking held on August 22, Prime Minister Nguyen Xuan Phuc again asked ministries to quickly remove unreasonable or unnecessary business conditions which are costing enterprises dearly and seriously hurting the Government’s efforts to improve the business environment.

At the meeting, the Ministry of Planning and Investment (MPI) reported that business are  now facing 4,284 business and investment conditions and requirements in 243 conditional business lines governed in 237 legal documents.

A report on business conditions prepared by the Central Institute for Economic Management (CIEM) reveals that there are 30 conditional business lines in the transport sector but their sub-lines are actually 63. The numbers are respectively 20 and 60 in the finance sector; 16 and 52 in the health sector; 8 and 31 in the banking sector; and 17 and 26 in the construction sector, etc.

Many business conditions, also called sub-licenses, are complex, overlapping or unreasonable, largely confusing businesses in compliance, experts agreed, saying in many cases, businesses are even unable to comply with those regulations. A typical example is the requirement under Government Decree 86 of 2014 for vehicles to have a badge when running even in case they do not operate for commercial purpose. To be granted a badge, an enterprise must possess a transportation business license which, however, will not be granted to an enterprise with foreign capital making up over 51 percent. As a result, many foreign-invested enterprises which have their own car fleet for internal transportation cannot comply with this regulation and become reluctant violators of law.

Speaking about irrational business conditions, Cao Minh Truc, a member of the Board of Directors of Empire Group, the investor of the Coco Bay Da Nang project, cited the regulations that require a five-star hotel to have a tennis court under national standards on five-star hotel grading. Truc said there was no reason for her group’s hotel to have a tennis court as it is located near a golf course and its guests mostly play golf. The regulations also say a five-star hotel must have a spa. But, Truc said, legally there is no spa business in Vietnam yet, there is only “massage”. As a result, her hotel had to send staff members who have international spa practitioner certificates to a massage training course to get the required certificate. Such training not only cost businesses more but was irrelevant to spa therapists, Truc said.

Another CIEM report estimated that businesses have to annually spend VND 14.3 trillion (over USD 641 million) and around 28.6 million workdays to comply with specialized management requirements which are scattered in 414 legal documents, including 30 laws and ordinances, 97 decrees and 284 circulars. The number of commodities subject to specialized management hit some 100,000.

The fact that a single commodity item was managed by two or three ministries was consuming businesses a lot of time, energy and cost, Pham Duc Binh, Thanh Binh Joint Stock Company General Director lamented, citing aquatic feeds like fish powder was subject to not only animal quarantine but also aquatic quarantine as well quality inspection by various ministries with numerous papers and formalities.

Dam Dang Sanh, Director of Dam Dang Vinh Enterprise, a dairy product importer in Hanoi, said a dairy product must obtain food safety certificates from both the Ministry of Health and Ministry of Industry and Trade, apart from an animal quarantine certificate from the Ministry of Agriculture and Rural Development. The samples taken for testing to obtain these certificates were expensive, accounting for around 1 percent of the total value of the goods, Sanh said, citing for every 100 boxes of milk products, almost one was used for such testing, let alone testing expenses. This was just for a product with single ingredient, Sanh stressed, saying the testing would be much more complex for a multiple-ingredient product.

To show how sub-licenses could burden businesses, the American Chamber of Commerce in Vietnam (AmCham) gave an example of production of chocolate cakes using 12 imported materials, which means the producer has to apply for 12 import permits with 12 separate dossiers plus a dossier for certification of product quality declaration. In other words, a chocolate cake must “carry on its back” 13 permits. The requirements for import permits and product quality declaration certification were overlapping, AmCham representative Tran Ngoc Han told the Ho Chi Minh City Law daily. When the producer only changed some minor input materials which did not affect the product quality, it still had to apply for a new permit. This increased production costs and delayed production plans of businesses, Han said.

But that was not all. Businesses also had to wait for a long time to get a permit. Under Government Decree 38 of 2012 which details the Law on Food Safety, management authorities must give a reply to an application dossier within 15 working days for ordinary food or 30 working days for micronutrient-fortified food. In many cases, some days before this time limit expires, applicants would receive a request to modify their dossiers, often not only once but many times. And with each modification, this time limit would be re-counted from the beginning, said Nguyen Hoai Nam, Deputy General Secretary of Vietnam Association of Seafood Exporters and Producers.

“Authorities would make requests based on certain standards, often excessive ones,” he said.

Nam attributed this to the absence of clear criteria for appraisal, resulting in arbitrary appraisal decisions based on personal opinions rather than regulations.

To save time, businesses had to hire private services, costing them as much as VND 900 billion (roughly USD 40 million) each year, Nam told the Ho Chi Minh City Law daily.

To address the problem, CIEM Deputy Head Phan Duc Hieu recommended establishing an independent body to remove unreasonable regulations since it would not be easy for management authorities to voluntarily eliminate business conditions, which are regarded as a state management tool.

At the cabinet meeting on lawmaking, the Ministry of Planning and Investment (MPI) suggested eliminating 1,930 irrelevant business conditions and requirements, including 1,336 conditions on production capacity; 302 on finance; 120 on business modes; 85 on business locations; and 80 on planning.

The Ministry also recommended removing all conditions on personnel, except in some professions requiring high qualifications and experiences such as doctor or auditor.

It proposed the Government to shift from pre-registration inspection to post-registration inspection management and to risk-based management to increase effectiveness and reduce costs, allowing businesses themselves to examine products and declare their regulation conformity.

The Ministry suggested adopting business management standards and practices of the Organization of Economic Cooperation and Development to replace pre-inspection conditions with safety standards and regulations (occupational safety, fire and explosion safety, product and goods quality, etc.) and to issue detailed guidelines for compliance.

It also recommended establishing an information system on businesses and their products, which provides information on businesses’ law compliance and product origin traceability.

The Vietnam Chamber of Commerce and Industry (VCCI) also proposed annulling 56 conditions and modifying another four in the industry and trade sector. The numbers are respectively 27 and 4 in the transport sector; and 13 and 5 in the science and technology sector.

Making conclusions at the meeting, Prime Minister Phuc asked ministries to study the VCCI’s and CIEM’s proposals to review the existing business conditions to remove, reduce or revise irrelevant or unnecessary ones. Ministries should work closely with MPI and VCCI and consult businesses and investors to ensure consistency in the proposed amendments. Such revision should be done along with the revision of investment and business laws, the Prime Minister said, suggesting the issuance of a government decree or prime minister directive to control investment and business conditions.


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