Government defers income tax collection to spur spending

Vietnam would lose around VND1 trillion (US$57.3 million) every month if it waives income tax for five months, Deputy Minister of Finance Do Hoang Anh Tuan said The government will delay the collection of personal income tax until the end of May to help stimulate spending amid the global economic crisis.

Personal income including salaries, profit from real estate and stock transactions and other investment returns would not be taxed until May, the government said in a statement posted on its website Monday. The National Assembly will decide then if the payments will be waived completely or just delayed. The economy expanded 6.2 percent in 2008, the slowest pace in nine years, as the global recession cut demand for Vietnamese exports in the US and Japan. The government is targeting 6.5 percent growth for this year. The government said last month it would provide a 30 percent rebate on tax bills from the fourth quarter of last year onwards for small- and medium-sized firms, defined as those having less than VND10 billion (US$572,000) in capital or employing fewer than 300 workers. It will also cut value-added tax by half in February for products like coal, construction materials, engineering equipment used to make other products and automobile parts. The country would lose around VND1 trillion ($57.3 million) every month if it waives income tax for five months, Tuoi Tre newspaper reported on January 13, citing Deputy Minister of Finance Do Hoang Anh Tuan. Non-resident individuals would not have to pay tax on income from financial investments, transactions, copyright and franchising until May, Monday’s statement said. Source: Bloomberg

Read more »

A customer examines the content and usage information of a milk product in District 3. Customers have become increasingly worried about the quality of milk products they are buying. Ho Chi Minh City health authorities and the national quality control agency have traded accusations over the delay in informing the public about the false labeling of protein content in milk products.

The city’s health authorities knew of the discrepancies four months earlier, but only chose to announce it last week. Last Friday, the HCMC Institute of Hygiene and Public Health announced that 37 of the 99 milk samples tested had protein content up to 30 times lower than what was displayed on their labels. The announcement followed growing public concern after the suspension a day earlier of a local firm, Hung Lam Joint Stock Company, for selling five different milk products that had very low levels of protein. Thanh Nien has found that last October, the southern branch of the Vietnam Standard and Consumer Association (VINASTAS) had sent a report to HCMC’s Department of Health to warn about several milk products that had protein content much lower than indicated on the labels. Speaking with Thanh Nien Monday, leaders of both the health department and VINASTAS blamed each other for the delay in announcing the results. Health Department Director Nguyen Van Chau said upon receiving the VINASTAS report, city health authorities had launched inspections [into milk products] and reported back to VINASTAS last December. In the report, the department acknowledged that several dairy products had incorrect protein levels mentioned on their labels. LOW-PROTEIN MILK PRODUCTS Vinacali Co. Ltd.: Intellac milk (400 grams, 500 grams), Supermilk (400 grams), Intellac for malnourished (500 grams) Bich Co Enterprise: Powdered Milk (500 grams), “Ha Lan” powdered milk (500 grams), “Ha Lan” fat milk (500 grams), High-calcium and Nutrition powdered milk (500 grams) Thanh Ngoc Co. Ltd.: New Milk Powdered milk (500 grams), “Ha Lan” fat powdered milk. CMB Ltd. Co.: Gold Weightton powdered milk (400 grams) Hoang Ngoc Enterprise: Titifood powdered milk (400 grams) Hung Lam Joint Stock Company: Calcium Food Milk, Brain Nutrition Food Milk, Mama Food Milk, Height-gain Food Milk, Food Milk for thin people. Nhu Trang Company: Maylac powdered milk Tua Cuong Phat Company: Milk powder, Holland Gold, New Zealand, High Nutritious powdered milk. Dai Hoa Company: Calyx Canxi But Chau said his department could not be blamed for hushing up the test results. “We thought we had informed the public [about those faulty products] through their representative agency [VINASTAS],” Chau said. The head of VINASTAS’ southern office, Nguyen Nam Vinh, confirmed Monday that the city health department had sent the test results to his agency last December. But Vinh slammed the department for neglecting its duty. The department should have expanded its investigations and made public the test results by itself instead of passing the buck to VINASTAS, Vinh said. Thanh Nien found that the city’s health department had also failed to report the problem to the Ministry of Health. Many inspections by the HCMC Institute of Hygiene and Public Health last year had uncovered several low-protein milk products. But the institute only made public those test results last Friday. Institute head Le Hoang Ninh argued that different test results last year would not have stood up to legal scrutiny to penalize any company. The institute had to report back to the Ministry of Health for further action, he said. Experts have said some dairy firms mixed cheap milk materials to package with labels claiming false protein levels to sell at high prices. Such ingredients have a major percentage of fat, no vitamins and very little protein - less than 2 percent compared with the standard of between 11 and 15 percent set by the World Health Organization. Consumers wary After the dubious milk products were made public, consumers have become very anxious about choosing dairy items. Many consumers have even brought with them the list of products to avoid when shopping, a milk vendor in District 3 said. Duong Thi Quynh Trang, the external manager of the Big C supermarket chain, said the firm has withdrawn the blacklisted Dollac 2 product from circulation. Big C has also asked its milk suppliers to send back the test results of their products within 10 days, Trang said. Earlier delays In May 2007, the Health Department blacklisted 10 soy sauce makers whose products contained the carcinogen 3-MCPD. But media investigations later revealed the department had in fact been aware of the problem since 2001 and had discovered at least 20 tainted soy sauce brands in 2005 and 2006 that were never publicized. The press reports infuriated the public, prompting the HCMC Inspectorate to step into action. Nguyen Duc An, the then health department inspector chief was sacked in September 2007. Nguyen The Dung, the former department director, was transferred to another job while his deputy Le Truong Giang was reprimanded. Last month, the Ministry of Interior instructed the HCMC government to revoke the dismissal decision against An. The ministry said the city had flouted regulations by not setting up a panel to review An’s sacking. The ministry also found there were not enough grounds to penalize An for dereliction of duty in overseeing the withdrawal and destruction of 3- MCPD-tainted soy sauce products in 2005 and 2006. Reported by Thanh Nien staff

Read more »

While some large textile and garment firms received enough orders for the first half of this year, smaller ones are still trying to get enough contracts to avoid layoffs, according to the Vietnam Textile and Garment Association Many workers in the garment and textile industry are expected to move from struggling small firms to larger ones as the economic downturn magnifies disparities in wages between the two categories, a union official said.

Vu Ngoc Quyen of the Trade Union of Garment and Textile Workers said while job-hopping is common in the industry, it was not a problem in the past thanks to small differences in salaries. Until six months ago, workers at small firms could do a lot of overtime work, meaning their total income was close to the wages paid by larger companies. But now, with the industry hit hard by the global economic turmoil, small businesses are struggling to maintain sales and their workers can no longer work overtime. With the gap in wages and bonuses gradually increasing, Quyen said it is likely that small companies would face a shortage of workers after Tet (Lunar New Year festival). Successful companies like Nha Be, Phong Phu and Viet Tien pay workers as much as VND2.6 million (US$148) a month on average while smaller firms pay around VND1.8 million ($103). Pham Xuan Hong, deputy chairman of the Vietnam Textile and Garment Association, said while some large firms received enough orders for the first half of this year, smaller ones are still trying to get enough contracts to avoid layoffs. The large companies will pay VND5-6 million as Tet bonuses while the smaller ones are likely to pay just a month’s wage or even less. A human resources manager at a garment and textile company employing 20,000 people, who wished to be unnamed, said his company recruited more than 500 workers in the last quarter of 2008, compared to around 90 a year earlier. But he said many workers applied to his company after their small enterprises closed down. His firm needs to employ 700 more, he said, admitting for the past several years it had been more than 1,500 workers short. But with supply expected to exceed demand, he said his company would focus on recruiting skilled workers after Tet. Tuan Nguyen Nghi, managing director of Nha Be Corp., said since the company has already received enough orders to remain busy for the first six months, recruitment would go on. Other companies’ layoffs give his the opportunity to hire experienced workers. Truong Lam Danh, deputy chairman of the HCMC Labor Union, said while many workers had lost their jobs recently because of the economic downturn, large companies like Viet Tien, Nha Be, Viet Hung and Viet Thinh regularly announce they are hiring. But the Vietnam Textile and Garment Association’s Hong warned: “Workers who want to keep their jobs at large companies or wish to work for them will have to concentrate on their skills since the sector is expected to face more problems.” Source: TBKTSG Online

Read more »

The “notorious” Van Thanh 2 Bridge opened to traffic last Thursday Ho Chi Minh City residents will have a new vantage point to the Lunar New Year’s Eve firework displays when the Khanh Hoi Bridge opens to traffic a day earlier.

The new bridge will connect District 4’s Nguyen Tat Thanh Street with District 1’s Ton Duc Thang Street when it opens on January 24. At 167 meters long and 22 meters wide, the bridge will be able to handle 30-ton trucks and would meet the demand for transporting goods from HCMC’s Saigon River to southeastern provinces, said Vuong Hoang Thanh, deputy head of the East-West Highway and Water Environment Project Management Unit. The unit is tasked with overseeing construction of the bridge. Another bridge belonging to the East-West Highway project and linking districts 1 and 4, the Calmette Bridge, is also set to open next Tuesday, Thanh said. The new Calmette overpass includes an intersection of six streets. Two major sections from District 1’s Calmette Street and District 4’s Doan Van Bo Street are scheduled to be completed on Tuesday, while the remaining sections connecting to the East-West Highway and Thu Thiem underground tunnel will be completed by the year-end. Thanh said the commission of the two new bridges would significantly ease traffic congestion at the city center. ‘Notorious bridge’ also ready The controversy-mired Van Thanh 2 Bridge also opened to traffic last Thursday after being rebuilt for more than a year. The bridge, on Binh Thanh District’s Nguyen Huu Canh Street, is also expected to resolve traffic gridlocks from HCMC to neighboring provinces in a big way, an official said. After being put into operation in 2002, it was found soon after that the bridge was sinking on both sides. In 2007, the city approved a 10-month repair project costing VND141 billion (current US$8 million) to upgrade the road on both sides. The Tan Thuan Bridge 1 in District 4’s Nguyen Tat Thanh Street also opened to traffic last Thursday. Another bridge-opening in the offing is that of the Nguyen Van Cu Bridge over Ben Nghe Canal that connects districts 1, 4, 5 and 8. The section linking districts 1 and 5 with District 4 will open very shortly, while that connecting districts 4 and 8 is scheduled for completion soon after the Tet holidays. The bridge will ease traffic congestion on the Nguyen Tri Phuong, Y and Cha Va bridges. Reported by Phuong Thanh

Read more »

Workers at Saigon 2 Garment Company. Apparel makers anticipate a tough year ahead and want the government to give them a helping hand. The textile and garment industry is demanding government assistance to overcome the export hurdles posed by the recession.

At a meeting organized by the Vietnam National Textile and Garment Group (Vinatex) with Deputy Minister of Industry and Trade Bui Xuan Khu in Ho Chi Minh City Wednesday, apparel exporters suggested that the government should consider introducing a package of three measures. The first is for assisting workers in businesses facing export difficulties or considering layoffs, Le Quoc An, chairman of the group and of the Vietnam Textile and Apparel Association, said. He suggested spending 1 percent of the total garment export earnings. The second, worth VND5 trillion (US$294 million), is for subsidizing exporters’ bank credit. An said the rate offered by banks may have fallen to 12 percent recently but it is still too high at a time of recession. The third measure is for promoting the industry in the international market at a cost of VND50 billion ($2.94 million). Vietnam’s main apparel markets are the US, Japan and the EU. Khu assured them that the government would support the industry since it is a major foreign currency earner. Textiles, in fact, replaced crude oil as the top earner last year at $9.1 billion after the plunge in oil prices. The industry also created more jobs than the others, he said, adding his ministry would submit the package to the government for approval. Shrinking orders An said Vietnam’s apparel producers had less export orders than last year. Foreign businesses were affected the most though they have more orders than local producers, he said. Many of them cut jobs and closed factories because of the economic slump in key markets like the US, Japan, and the EU, he said. He forecast exports to fall 15 percent year-on-year in the first quarter. But he said it is difficult to set a target for the whole year since no one knows when the recession would end. Bui Van Tien, general director of Viet Tien Garment Corporation, said recessions occurred in every decade, adding firms should not worry too much about them. But they should restructure their business and train human resources, he said. The industry would recover soon if apparel producers focused on the home market in addition to their traditional export markets, he assured. Reported by Minh Quang

Read more »

The Ho Chi Minh Stock Exchange moved lower Tuesday over growing concern about negative corporate earnings this year.

VN-Index lost 5.05 points, or 1.62 percent, to close at a 10-day low of 307.13. Of its 175 members, 26 gained and 113 declined. Trading remained quiet, with only 7.7 million shares being traded. “The outlook on corporate earnings is very gloomy, given the current economic situation,” Huynh Anh Tuan, chief executive officer of the Ho Chi Minh City-based SJC Securities, said. “Companies have started to release 2008 earnings and many of them have made losses or missed their profit targets. For those who managed to make some profit, it was because of the gains they made in the first half of 2008. “In addition, people also lost a lot of their confidence in the market after HSBC said the Vietnamese market is no longer investable for overseas investors. “Besides, almost half of January has passed but we are still not yet clear how and when the government is going to implement its US$6 billion stimulus package to boost the economy. So, the market has no momentum.” Dau Tu Chung Khoan (Securities investment) newspaper quoted Kim Long Securities Company Deputy General Director Pham Vinh Thanh as saying, “Companies with a strong cash flow and those not involved in finance are a good choice this year.” He added that petroleum, transport, technology and financial stocks would be his top picks when the market shows signs of recovery, without explaining his choices. How they fared Vinpearl (VPL) lost VND2,500, or 4.17 percent, to close at VND57,500. VFG Investment Joint Stock Company became a major shareholder in the resort operator after buying 5,045,000 shares, or a 5.05 percent stake last month, according to a report on the exchange’s website. Saigon Securities Inc. (SSI), the country’s leading brokerage, slipped VND1,100, or 3.63 percent, to VND29,200. ANZ Bank failed to buy around 1.4 million shares amid a “gloomy market and its low liquidity,” the exchange said on its website. ANZ now holds 18.35 percent in the Hanoi- based brokerage. Thu Duc Trading and Import Export Joint Stock Company (TMC) remained unchanged at VND21,500. The firm said on the exchange’s website that retail investor La Tang Duc bought 242,060 shares, or 6.05 percent, to become a major shareholder. Saigon Fishing Net Joint-Stock Company (SFN), a silk thread and fishing net producer, gained VND400, or 4.2 percent, its most in two weeks, to finish at VND9,900. The HCMC-based company will start buying back 100,000 shares from January 20, according to a stock exchange announcement. “The buyback volume is not huge, but given the daily trading volume of the shares, which is about several thousand a day, this buyback plan could move the stock,” Hoang Thach Lan, chief analyst at HCMC-based SME Securities Company, said. Reported by Hoang Uy

Read more »

An increase of less than 10 percent in retail electricity prices, as proposed by the Ministry of Industry and Trade, will not seriously affect production and daily life, Deputy Minister Do Huu Hao said Tuesday.

The impact of the proposed price hike on the economy and society had been carefully calculated, Hao said. In December, the ministry submitted to the government a proposal to raise retail power prices by less than 10 percent. Pham Manh Thang, head of the Electricity Regulatory of Vietnam, said the Ministry of Finance was assessing the proposal and the increase will be considered alongside the prices of coal and oil used for producing electricity. If the proposal is approved by Prime Minister Nguyen Tan Dung, the new retail power prices will take effect in late February, Thang said. The Ministry of Industry and Trade has proposed the first 50 kilowatt hours of electricity used by families each month be subsidized to minimize the effect of higher power prices on the nation’s poor The current average retail price in Vietnam is VND860 (5 US cents) per kilowatt hour, with power for production costing more than power for household use. Thang said the proposed electricity price increase was expected to wipe 0.05 to 0.07 of a percent off economic growth and push inflation up by 0.25 to 0.3 percent. Power and gasoline are the two products that determine the prices of almost all goods on the market, and both power and gasoline prices should not be raised at this juncture, Lao Dong (Labor) Newspaper quoted economist Dinh Son Hung as saying. Hung said an increase in power prices would undermine efforts to stimulate the economy this year in the face of a global economic slowdown. Nguyen Van Son of the Vietnam Standard and Consumers Association said local consumers would be unhappy with the price increase proposal. The proposal favored power producers and did not mention any efforts by the power industry to lower prices or anything about consumer rights, Son said. Hao said power prices were not being raised to help Electricity of Vietnam (EVN) offset its losses but to encourage investment in new generation capacity. The price increase was necessary to facilitate investment, Hao said, pointing out that electricity costs in Vietnam were lower than those in other Southeast Asian countries. State-owned EVN currently controls all power transmission grids and retail networks, including the Hanoi Electricity Company and Ho Chi Minh City Electricity Company. EVN had previously submitted a plan to the government proposing increases of up to 20 percent in the retail price of electricity. According to the proposal by the Ministry of Industry and Trade, the state will subsidize the first 50 kWh of electricity used by local residents each month to minimize the effect of the price hike on low-income families. Up to 2.5 million poor households in Vietnam use less than 50 kWh of electricity per month, Hao said. He also said from 2010 power prices will be adjusted in accordance with input costs. Hao said his ministry will coordinate with the Ministry of Finance in deciding power price adjustments of 5- 7 percent. Price changes of more than 7 percent will require approval from the prime minister. Vietnam, whose electricity capacity stands at some 15,000 megawatts now, is expected to increase capacity by 4,000MW a year by 2025. Meanwhile, the country now is out of sources for hydroelectricity plants, which need less investment than thermoelectricity or nuclear power plants. Vietnam’s relatively low electricity prices have attracted many steel, cement and chemical production technologies from other countries. Last year, Vietnam’s power demand jumped around 16 percent while supply only rose 12 percent, forcing the government to import electricity from China and rotate power outages across the country. Vietnam plans to generate about 83.3 billion kWh of power this year to support an economy forecast to grow by 6.5 percent. Reported by Ngan Anh – Xuan Toan

Read more »

Swiss and German institutes will help Vietnam train international marketing and export management experts in an attempt to improve the image of local businesses in the global market.

Switzerland-based European Institute of Foreign Trade and German Reutlingen University’s Export Academy will collaborate with TFF (Training For the Future), a Vietnamese business training school, to offer courses from April. A TFF official told Thanh Nien Daily Tuesday the 18-month courses, partly funded by the Swiss government, would offer essential knowledge about marketing and export skills in an international setting. Those who complete the courses will obtain masters degrees in international marketing and export management. Reported by Minh Quang

Read more »

Foreign ministry spokesperson Bui Le Dung on his way to a press briefing. Dung says the job is about the art of balancing both calmness and frankness. Foreign ministry spokesperson shares his thoughts on a job where every word has to be weighed carefully before it is uttered.

Twenty years ago, a 28-year-old graduate of the then Institute of International Relations was excited about heading to New York City as part of the country’s entourage to the United Nations. At the time, Bui Le Dung was the youngest member of the delegation. “That was a very difficult period for us,” Dung recalled in a recent conversation with Thanh Nien. “We were still under the embargo of the United States, and at that time, the American public and its media weren’t leaning towards us.” Now, as the spokesperson of the Ministry of Foreign Affairs, the 48- year-old is virtually the spokesperson for the country, a very familiar face for both international and domestic reporters, doing a job where, he joked, he “would get fired if one word went wrong.” Dung says his official brief is to explain and clarify issues relating to Vietnam that the public and other countries are interested in. In a country where there is no tradition of having spokespersons at every government office at all levels, the job is even tougher and doesn’t begin or end with appearing twice every month in front of the media. “For that five to ten minutes, we have to prepare for weeks and must be able to update information until the last minute,” Dung says. “And by the last minute, I mean from the moment I leave the office to the moment I enter the briefing room.” Dung says he never stops learning something new, and sticks to a longstanding habit of noting down everything he feels necessary. When the former Foreign Affairs Minister Nguyen Co Thach once requested the staff to find a sentence in a speech by the Cambodian King Sihanouk, no one was able to find it except Dung, who happened to have written the sentence down in one of his notebooks. “For me, this job isn’t much different from a soldier entering a battle,” he says. “There have been many times when I’ve had to face provoking questions and the only way you can do it is by staying calm.” And that holds true even when he is frustrated that the facts have been twisted. Speaking for the nation, according to Dung, is really the art of balancing both calmness and frankness, meaning one has to phrase things in a way that addresses the reporters’ questions but also “directs” the news issues. “You have to be flexible in all situations. That’s the trick. Your gestures must reflect what you want to say and that takes a lot of practice.” Dung says he tries to pack his answers with diverse information, though for some issues considered “sensitive,” he must stay very focused and accurate with every single word. Sometimes, this is criticized by reporters as providing “same-same” answers. “I know the White House spokesperson often make jokes during briefings to make things less stressful. I do it as well, but not often. Our culture is different and that doesn’t allow me to go beyond the limit.” Dung says he tries his best not to avoid a single question. “The worst thing you can do in a press briefing is not answer questions.” At home? “The spokesperson is my wife. “She understands my job. Sometimes, I have to wake up at midnight to answer phone calls from reporters but I don’t mind. For reporters, information is like their food. I want to help them provide accurate and fair stories.” Reported by Xuan Danh

Read more »

At least 350 households at the 727 Tran Hung Dao apartment block in District 5 have refused to relocate, citing unsatisfactory compensation. The block is in imminent danger of collapsing. Unsatisfactory compensation and relocation plans are blamed as residents stay on.

Its foundation has sunk and cracks run up and down the walls as though they are ropes used to tie the building to the ground. Residents of the apartment block in Ho Chi Minh City’s District 5 know that their building is crumbling and on the brink of collapse, but they are staying put. The deadline for relocating the residents, so that the 727 Tran Hung Dao apartment block in District 5 could be demolished for a skyscraper to take its place, was April 30 this year. As with other similar projects, inadequate compensation and relocation plans have left residents angry and uncertain about their future. On December 10, the municipal administration issued another dispatch saying the eviction and site clearance of the apartment block, home to 535 households, must be completed by next March at the latest. But so far at least 350 households have declined to move, despite the fact that the block could collapse at any time. Under the relocation plan, each evicted resident would receive compensation of between VND7-8 million (US$412-471) per square meter depending on the floor they live. “The compensation fees for my apartment, covering an area of 25 square meters, would be just around VND200 million ($11,772). How can I buy a new house with that money?” asked a resident on the third floor. Nguyen Van Nha, the block’s deputy manager, pointed out another shortcoming hindering the relocation. As part of the plan, the block residents are set to be moved to the Nguyen Bieu apartment block in the same district. Since each apartment there is nearly double the size of their current residences, evicted residents are being asked to pay for the surplus area which costs between VND23-29 million ($1,350-1,700) per square meter. That means each evicted resident would have to pay an additional VND600 million (about $33,400) each for their new apartment, Nha said, saying this was another reason discouraging hundreds of households in the block from moving. Compensation disputes have also bogged down two other dilapidated apartment blocks in the city. In its December 10 dispatch, the city government mentioned that the buildings on 192 Nam Ky Khoi Nghia Street in District 3 and 289 Tran Hung Dao Street in District 1 will also have to be demolished by March 2009. But 15 households sharing the same walls with the 289 Tran Hung Dao apartment block in an adjacent alley have insisted on staying though the investor has offered to increase their compensation fees to VND90 million ($5,300) from VND69 million ($4,061) per square meter. The investor also promised to provide them with financial assistance of between VND350-450 million ($20,600-26,500) each. Recently, the District 1 government warned it would carry out compulsory eviction of those 15 households if they continued to defy the relocation directive. At the apartment on Nam Ky Khoi Nghia Street in District 3, two evicted households have lodged complaints about unsatisfactory compensation. THE MASS RELOCATION PLAN In a dispatch issued on December 10, the HCMC government said it would spend around VND1.78 trillion (US$104.4 million) for revamping dilapidated apartment buildings with around 2,000 households set for eviction. The Department of Construction is tasked with overseeing the demolition of 20 ramshackle apartment buildings between now and 2010 and ensuring evicted residents are properly housed in new homes. The apartment buildings at 289 Tran Hung Dao Street in District 1, 192 Nam Ky Khoi Nghia Street in District 3 and 727 Tran Hung Dao Street in District 5 will be the first to be demolished. After 2010, another 156 apartment buildings are set to be demolished and some 14,300 households resettled, the dispatch said. Reported by Tran Thanh Binh

Read more »

Early birds at the Hanoi tax office arrive to get a slot number for submitting applications for the permanent tax code. The Personal Income Tax Law will take effect next Thursday as scheduled but the Party Politburo will take the final decision on how it will be enforced, the vice speaker of the Vietnamese parliament said Saturday.

There have been calls for deferment of the law because of its possible impacts in the context of an economic slowdown when the need of the government is to stimulate investment and boost consumer spending. The law stipulates that the taxable income threshold is VND4 million ($238) monthly for both locals and foreigners working in Vietnam, with taxpayers allowed deductions of VND1.6 million (US$95) for each dependent. National Assembly (NA) deputy chairman Nguyen Duc Kien said that the government and the NA would refer three proposals on implementing the law to the Politburo, the decision-making committee of the Communist Party, to make a final decision. Under the first proposal, enforcement of the law will be postponed until July 2009 or January 2010. During that time, the ordinance on high-income people would still take effect but grant a 30 percent reduction. Under the ordinance, people whose monthly income exceeds VND5 million have to pay income tax without any deduction for dependents. Under the second proposal, a one-year waiver will be granted for incomes on capital gains and stock market transactions as well as those on the transfer of contributed capital and interest received on loans. A 30 percent personal income one-year tax cut for households and individuals who had been subjected to the corporate tax earlier is also included in this proposal. The third proposal made by the NA has all taxpayers having their tax payment deferred until next October when the NA convenes its year-end session, for further decisions. But the NA Standing Committee unanimously decided Saturday that the Personal Income Tax law would take effect on January 1, 2009 as approved at its plenary session in November last year. Tong Thi Phong, another NA deputy chair, also said it was unnecessary to convene an extraordinary session to decide upon this issue. The five-day session of the NA Standing Committee wrapped up Saturday in Hanoi. Rush for tax code applications By 4 a.m. on Friday, people were already queuing up at the Hanoi tax office, braving the chilly weather to submit applications to obtain tax codes. Nguyen Thanh Loc, an employee of a Hanoi-based transport and forwarding company, said he had to get up half an hour earlier so that he could be the first to hand in the applications for his firm. To his chagrin, however, he received slot number 28, meaning he could have to wait until the afternoon to have the applications processed. Pham The Dung, who arrived at the tax agency on behalf of an animal feed company, said his lot number was 34 despite the fact that he had come at 5a.m. Both Loc and Dung told Thanh Nien they had to come early because they hadn’t been served during the previous days because of the large crowds. Not as lucky as Loc or Dung, Linh, who represents the Hanoi Natural Science University, said she was not expecting her documents to be processed on that day because she arrived at the office only at 7:15 a.m. “I might as well come tomorrow,” Linh said. Every organization or company is required to hand in their applications by the end of this month so that their personnel are granted a permanent tax code. Each organization has deputed its representatives to carry hundreds of documents to the tax agency where the personnel are understaffed, leading to an overload. Many people have opted to come very early to pick up their slot numbers. Thanh Nien found a person at 3:30 a.m. on Thursday. But many people have complained about the way the Hanoi tax agency has handled their applications, saying it had used only two out of 10 counters to receive them. Only 32 firms were able to submit their documentation in a morning session, they said. Thanh Nien found that there was considerable pushing and shoving among applicants to get to the counter early. The tax office was asking applicants to start from scratch the next day if their paperwork was not accepted within the day, said Nguyen Xuan Hoang, an Amway company employee. Many people have resorted to staying in the queue no matter how hungry and thirsty they were, applicants said. Thanh Nien could not contact senior officials of the Hanoi tax office on Friday for a comment. Reported by Thanh Nien staff

Read more »

An American-Korean consulting team signed Friday a nearly-US$6-million contract with the Vietnamese government to develop a master construction plan for the capital city of Hanoi to 2030, with a vision to 2050.

The team, which comprises experts from the US Perkins Eastman and Korea’s Posco E&C and Jina, is expected to submit their draft plan to Prime Minister Nguyen Tan Dung for approval in June 2010 at the latest. They promised to preserve Hanoi’s 1,000-year-old characteristics in the planning. “The contract is of historical significance as it relates closely to the capital city’s future growth,” Deputy Chairman of Hanoi’s People Committee Phi Thai Binh said at Friday’s signing ceremony. Sub-contractors in the project include the Institute for Architecture, Urban Planning and Rural Development of the Construction Ministry, the Hanoi Construction Planning Institute and other local consultant units. The city officials want Hanoi to develop sustainably as the national political, administrative, cultural, scientific, educational and economic and international trade center in the 21st century. At present, the capital covers a land area of 3,344 square kilometers and has a population of more than six million people. Source: VNA

Read more »

Smuggled tobacco is causing Vietnam to miss out on VND2.5-3 trillion (US$149.48-179.37 million) in state taxes annually, the national tobacco association reported Wednesday.

Around $200 million is also carried out of the country to purchase tobacco each year, Tobacco Association (VTA) said at a conference reviewing efforts to prevent tobacco smuggling and counterfeit tobacco production in 2008. It is estimated that around 731 million tobacco packets have been illegally imported this year, an increase of 15-20 percent year-on-year, VTA reported. The association said 90 percent of illegal tobacco is sold under the brands of Jet and Hero and popularly consumed in localities such as Ho Chi Minh City and Can Tho City in the Mekong Delta. Since 2007, relevant agencies have cracked down on more than 15,000 cases related to illegal and fake tobacco and confiscated over 13 trillion packets of the product. Reported by Trung Bao

Read more »

Employees count money at an Asia Commercial Bank branch in Ho Chi Minh City. The central bank said Vietnam’s commercial banks do not have any direct connections with troubled foreign banks. Vietnamese banks have withdrawn funds from overseas banks to reduce their exposure to the US financial crisis and shifted part of the funds to banks in Singapore and Hong Kong, the government said.

But the government statement did not mention how much money was involved. Prime Minister Nguyen Tan Dung, in a separate statement, also urged the central bank to pursue flexible policies on interest rates, the currency and foreign reserves to ensure liquidity in the banking industry. Governments, central banks and regulators globally are scrambling to protect their markets from the financial tsunami sparked by last month’s collapse of investment bank Lehman Brothers. The impact has been felt mostly in the US and Europe but a number of countries in Asia have sought to assure investors that their banking systems are sound. The State Bank of Vietnam’s Monetary Policy Department, in a statement published on the government’s website at the weekend, said the Vietnamese banking sector is operating normally and that commercial banks do not have any direct connections with troubled foreign banks. In addition, the businesses of two Vietnam-based banks fully owned by HSBC Holdings and Standard Chartered, foreign banks' branches and all joint venture banks in the country are stable, the statement said. Limiting crisis impacts In a statement published by on the central bank’s website Monday, the prime minister asked the central bank to request commercial banks to review their operations to limit the impact of the global financial crisis. He urged the central bank to pursue a tighter monetary policy but maintain flexibility in management of interest rates, exchange rates and foreign reserves to ensure liquidity of the banking system. Dung said local commercial banks may implement measures such as restructuring investment portfolios and withdrawing funds to ensure liquidity after examining their deposits and investments in foreign financial institutions. Banks should also help exporters expand business as a measure to reduce the country's trade deficit, which has ballooned this year owing to the rising cost of imports as inflation surged to double digit levels. The prime minister requested the central bank to establish regulations to merge troubled local banks, the statement said. The central bank must also ask commercial banks to reassess thoroughly loans in “high-risk” fields, including real estate and stock investments. Real estate-related loans by commercial banks account for 9.15 percent of the country's total outstanding loans, online newspaper VnExpress reported last week. The State Bank of Vietnam's reserves rose to $21.9 billion at the end of September from $20.7 billion three months earlier, Governor Nguyen Van Giau said on September 30. The central bank has 82 percent of these reserves deposited with central banks in the US, UK, France, Germany, the International Monetary Fund and other global financial institutions, Giau said. The rest is held in banks with credit ratings of AAA or AA. Interbank rates stable The Vietnam interbank overnight rate, or VNIBOR, was stable at 14 percent and domestic lending rates were also stable, the Monetary Policy Department said. But the average rate for three-month interbank loans edged up to 17.68 percent Monday from 17.5 percent a week ago on stronger demand. "Demand for short-term loans is strong while long-term loans are not preferred as borrowers expect lending rates to ease," a dealer in Hanoi said. The central bank has raised the interest rate it pays to banks for their compulsory reserves against dong deposits from October 1, increasing it to 5 percent from 3.6 percent, to reduce lending rates. Bonds gain Five-year bonds advanced on speculation the central bank will lower the base interest rate by the end of this year. The dong remained unchanged. The yield on the benchmark note fell 16 basis points to 15.83 percent, according to a daily price from 10 banks compiled by Bloomberg. One hundred basis points make a percent. “Investors are passing on the word that the central bank may cut interest rates by the end of the year as the banking system's liquidity has increased,” said Vu Anh Duc, a senior dealer at the fixed-income department of the Hanoi-based Vietnam Bank for Industry and Trade, known as VietinBank. “Banks have reduced borrowing costs and the central bank also wants to bring bond yields down.” Source: TN, Agencies

Read more »