April 7 (Bloomberg) -- Treasury Secretary Timothy F. Geithner said European policy makers shouldn’t block U.S. investment funds from their markets and praised recent delays to a planned set of hedge-fund regulations.

“As you consider how to design this important set of reforms, I hope you will keep in mind our shared commitment to create regulatory reform that does not discriminate against foreign firms,” Geithner said in a letter to four European finance ministers released today by the U.S. Treasury.

Europe’s Alternative Investment Fund Management Directive, proposed a year ago, will limit hedge funds’ borrowing, require registration of funds with more than 100 million euros ($134 million) under management and impose limits on pay. One clause would prevent European funds from investing in pools based outside the region.

The letter follows Geithner’s warning last month to European Union financial services commissioner Michel Barnier that the rules would discriminate against U.S. funds. EU finance ministers delayed plans to discuss the planned regulations last month amid concerns that the plans could spark a trade war.

The rules “would discriminate against third-country funds and fund managers by denying them the opportunity to access the EU single market,” because only European firms would be eligible for a “passport,” Geithner said. “It is my hope that this provision will be revised” to grant access to non-European funds, fund managers and custodians, he said.

Geithner sent the letter to U.K. Chancellor of the Exchequer Alistair Darling, French Finance Minister Christine Lagarde, German Finance Minister Wolfgang Schaeuble and Spanish Finance Minister Elena Salgado Mendez. In the letter, he said the U.S. is working on its own proposals to strengthen the regulation of hedge funds, in keeping with international agreements made by Group of 20 nations.

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Bài Mới Hôm Nay

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Gạo không cần nấu

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People in Vietnam can now submit their income tax declaration and conduct customs procedures on the Internet, the Finance Ministry said in a Friday agreement with the state telecommunication company.

The agreement between the ministry and Vietnam Posts and Telecommunication Group (VNPT) aims to digitize the ministry’s public administrative procedures. During the pilot period until December, the ministry will use the digital signature system of VNPT for tax and customs services and then apply the service to all of its public administration procedures when VNPT is licensed to provide the service. Reported by Truong Son

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Tra fish are processed at a facility in the Mekong Delta. The industry has been hard hit at all levels – production, processing and exports. The tra fish industry is bogged down in a stalemate that shows no sign of breaking as farmers choose to abstain from breeding and exporters are hit by falling demand.

According to the Aquaculture Department under the Ministry of Agriculture and Rural Development, the total area for tra fish (pangasius) farming has shrunk 30 percent from a year ago, after farmers hit by huge losses stopped breeding them. In the Mekong Delta province of An Giang, for instance, the current tra fish area is about 1,000 hectares, 400 hectares less than last year. The output in April dropped 20 percent from March to around 25,000 tons. Meanwhile more than 360 hectares of tra fish ponds in Dong Thap Province have been left idle for a year. The tra fish output of the province is expected to drop by 40 percent by the end of September. Shrinking fish farms will lead to raw material shortages for processing enterprises at the end of the year, the Aquaculture Department warns. Tra fish can be farmed throughout the year in the Mekong Delta and farmers start harvesting their crop after six months. Farmers in the region say that after consecutive price drops last year, tra fish prices have recovered to around VND16,000 (US$0.90) recently, which means they no longer suffer huge losses although the profit margin is still very small. But many tra fish farmers say they have lost confidence, and are concerned that if they all start breeding the fish again, prices will fall again as supply increases. Some of them now work for seafood companies and get paid to breed the fish for those companies. As breeders downsize, other businesses in the seafood industry have struggled with falling demand for fish feed and fingerlings. A salesman for a fish feed company, who wished to be unnamed, said sales at his company so far this year have dropped by half compared to the same period last year. “Farmers calculate expenses very carefully as selling prices [of the fish] are not high,” he said. Hoan Thanh, a group of tra fingerling providers in An Giang Province, said it has had to cut back on production. The group said it has sold some 80 million fingerlings this year, a decline of as much as 70 percent over a year ago. Downstream plight The situation is not much better downstream for the tra fish industry with processors and exporters facing their own difficulties. Seafood exports in the first four months fell 6 percent from a year earlier to $1.05 billion as the global recession hurt demand. Tra fish exports alone fell 0.42 percent in volume terms to 161,826 tons, the industry’s first ever contraction. The Ministry of Agriculture and Rural Development said falling demand, together with several allegations in important markets like Russia, Egypt and Italy that Vietnamese tra fish was unsafe, caused many difficulties for local exporters. Russia in April lifted a ban on imports of seafood products from Vietnam that it had imposed last December. Although the market has been reopened, exporters say prices are still low, at around $2 per kilogram of tra fish. Ngo Phuoc Hau, general director of An Giang Fisheries Import and Export Joint Stock Co., said prices for US exports were higher at $3.16 a kilogram. Agifish, as the company is known, said it will increase tra fish shipments to the US this year. However, the company said it could be a difficult task as tra fish would be subject to more stringent inspections by the US Department of Agriculture if the US 2008 Farm Bill is passed. “It’s hard to forecast market prospects,” said Nguyen Dinh Huan, Agifish deputy general director. The company’s exports have dropped about 30 percent compared to a year ago. Source: TBKTSG

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Nobel laureate Paul Krugman said Vietnam needed to bide its time while 'the bigger economies get their act together' Paul Krugman’s advice for Vietnam: don’t lose sight of financial regulation as private business takes off and the “invisible hand” of the market grows stronger.

The Nobel Prize-winning economist said strict regulation of the financial sector and government safety nets would be key to greasing the wheels of Vietnam’s transition to a market-based economy. Speaking at a seminar in Ho Chi Minh City Thursday, The New York Times columnist and Professor at Princeton University said the global economic crisis was “stabilizing” but that there were no clear signs o a full recovery. “Things are getting worse, but they’re getting worse more slowly,” he said, citing less rapid US job losses and a slowdown in the fall of industrial production and exports in key economies. “I don’t think we’ve hit bottom, but the bottom is not too much further below us,” he said. “My big concern is that we don’t hit the bottom and bounce, we hit the bottom and stay there. It’s not obvious where recovery comes from.” He said there was not much Vietnam could do to help itself recover other than to stay smart, hope and wait. Shadow banking Krugman spoke at length of how the deregulation of the US financial sector allowed the shadow banking system to set off the financial crises that transformed into a global economic recession. Institutions that provide the services of banks without banking regulation, including but not limited to hedge funds, money funds and investment banks, have become notorious for their role in the meltdown. This system of institutions, known as the shadow banking sector, held trillions of dollars in the US by 2007. With so much money, the vulnerable and unregulated system in which investments are risky and unprotected, became an integral part of US and global finance. Krugman blamed deregulation that began in the Reagan-Thatcher era for the development. “We had a whole set of precautionary measures coming out of the great depression that were designed to prevent a recurrence of the banking crisis.” Then the world watched in dismay as the banking crisis of 2008 spawned global panic. “We were persuaded after about 1980 that we should have the same kind of free market principles for finance that we had for wheat or airline services,” said Krugman. “It turned out that our grandfathers were right and we were wrong.” The Nobel laureate stood by one of his trademark lines about talking to economists: “Don’t trust anyone under 50,” he said, explaining that anyone brought up in the new school of economics had not been taught the lessons our grandfathers learned. He went on to repeat another one of his mantras: “anything that does what a bank does, anything that has to be rescued in crises the way banks are, should be regulated like a bank.” He said the government officials who oversaw this deregulation, not just bankers, have a lot to answer for. “They liberalized, they deregulated, even as the banking sector was going crazy… in the US, this is bipartisan. The Clinton administration gave the bankers a lot of what they wanted, the Bush administration even more.” Krugman told the mostly-Vietnamese audience to not let the same thing happen here. “If you let a deregulated financial system run wild, it will do very bad things to your economy.” Slap in the face In discussing Vietnam’s situation, Krugman also warned against some of the market’s more exotic trappings. Asked about whether Vietnam should embrace derivatives, he was clear: “Don’t touch them.” He was skeptical of financial innovation in general. Most innovations – other than ATMs and overdraft protection – were geared toward helping institutions evade regulation, he said. Turning back to his rules for the financial sector, he suggested that banks be restricted from operating out of their main line of business. He said any deregulation “needs to be done with great care because you’ll find that when banking system goes wrong it does a lot of damage.” Now that damage has been done, he said the fate of highly trade-dependent, small economies like Vietnam were tightly bound to the world crisis, with their recovery linked directly to a real global recovery. So, what can Vietnam do toward that recovery? “Not a lot under the circumstances,” said Krugman. “Pray that the bigger economies get their act together.” He said things would have to change in New York and London before they changed in Vietnam. Though Vietnam was not responsible for the crisis, Krugman said the country was being “slapped in the face by the invisible hand.” Wryly, he said: “I miss that US$3 trillion that we spent on tax cuts and the war,” positing that if the US hadn’t wasted the funds, the crisis would be less severe. Reported by Jon Dillingham NO QUICK FIXES Thanh Nien Daily spoke with leading economists, entrepreneurs and journalists on the sidelines of a seminar presented by Nobel Prize-winning economist Paul Krugman in Ho Chi Minh City Thursday. Economist Pham Chi Lan Many reliable international economic magazines are saying the crisis has not hit bottom and nobody knows how large it is… for developing countries like Vietnam, the crisis arrived later but will stay longer. I personally think official predictions that Vietnam’s economy will recover by the end of this year are unrealistic. The Ministry of Labor, Invalids and Social Affairs said 300,000-400,000 people have lost their jobs, while trade associations have reported nearly 5,000,000. As the unemployment rate is a critical criterion in assessing the crisis, transparent information is more essential than ever. Krugman’s careful judgments can help governments and policy makers be more objective. They should keep their eyes on the rough road ahead. Vietnam’s US$8 billion stimulus package accounts for about 10 percent of its GDP. However, several representatives at the current National Assembly session are questioning where this money came from and how it will be used. Here, we [need] a clear target and transparent supervision system for stimulus packages. Gian Tu Trung, president of the PACE Institute of Directors This crisis has changed our view of the future… This is a right time for us all to reposition ourselves… I hope Paul Krugman’s presentation will bring a new perspective on all this. Understanding the aim of your journey will definitely help you choose the best path to take to get to the destination. John Yeomans, director of Deloitte Consulting/ICS Pte Ltd. In terms of the different economic systems around the world, you have some that are more under control than others and some that are more free. What we can learn from the seminar and recent history is that there is no perfect system and so my view is we need to look at different systems around the world and pick the best from each. So the policy makers should adapt in making their policies to best suit their situation. Vu Thanh Tu Anh, director of research at the Fulbright Economics Teaching Program I have drawn two important things from the seminar: Firstly, the government’s role of ensuring sound regulations for the financial system, especially for an economy like Vietnam’s, is crucial. Secondly, every country under any political system should have an effective social security system, especially during the economic crisis, as the poor are the most vulnerable to unemployment and other consequences. David Pilling, Asia editor of the Financial Times The government’s role in regulating the economy is crucial and undeniable. However, let’s take the example of China. If people’s creativity is allowed to flourish, it would usually create better results. In this case, the government should ease regulations for the private sector to fairly compete with the state-owned enterprises in the economy. Vietnam has allowed room for the private sector to develop and this should be maintained in the future. However, this is not a case for some to take undue advantage and commit corruption. Reported by Vinh Bao

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These apartments in Hanoi are meant for residents displaced due to projects to construct industrial parks and urban areas. Displaced farmers, food security and the loss of an average of 74,000 hectares of farmland yearly to urban and industrial zones were a few issues heard at a seminar in Hanoi Friday.

The Land Science Association held the event to discuss regulations on land relating to agriculture, farmers and rural areas. Experts blamed industrial parks for devastating surrounding farmland with pollution, while people in rural areas have lost jobs from the farmland shrinkage. Around 500,000 hectares of farmland have been taken for other purposes between 2000 and 2007, said Ton Gia Huyen from the association. This area is equal to 5 percent of the country’s farmland, he added. Many serious problems have cropped up from the revocation of farmland for non-agricultural purposes, he said. A survey at 16 cities and provinces found 89 percent of land being revoked to build residences, industrial parks and infrastructure were farmland, mostly rich rice paddies. “Many industrial parks in several localities have been constructed on farmland although they could have zoned them on mountainous areas or those with poorer soil, because of their advantageous infrastructure,” said Hoang Thi Van Anh from the Land Bureau under the Ministry of Natural Resources and Environment. She named several such industrial parks, including Ba Thien, Quang Minh II and Binh Xuyen in Vinh Phuc Province; VSIP, Que Vo and Nam Son – Hap Linh in Bac Ninh Province; Long Giang in Tien Giang Province and Van Trung in Bac Giang Province. Of these provinces, Vinh Phuc set up three industrial parks in 2007 which cover a total of 865 hectares of good farmland, while three industrial parks at Bac Ninh eliminated 1,940 hectares of farmland in 2007 and 2008. Vu Thi Binh from the Hanoi Agricultural University said Hai Duong Province, which saw its paddy fields decrease 4.8 percent in 2008 from 2005, has suffered a fall of 3.3 percent in its rice output. If land for paddy cultivation continues to plummet, Hai Duong could have a rice shortage, she said. Tran Ngoc Hung, chairman of Vietnam General Construction Association warned the shrinkage of farmland could threaten food security. “Vietnam is one of the countries worst affected from the sea level rising,” he said, adding that the salty water is threatening to spill over and damage millions of hectares of farmland nationwide in the future. “I wonder what our descendents would think about our decision to eliminate millions of hectares of farmland which had been created by our ancestors,” Hung said. Vietnam’s population is estimated at about 86 million and is expected to increase by 1-1.2 percent in the next few decades. Researchers estimated rice demand would jump to 53.2 million tons in 2020 from 47 million tons in 2010. The farmland revocation from 2003 to 2008 has affected 950,000 farmers in more than 627,000 families, the Ministry of Agriculture and Rural Development reported. Between 25-30 percent of these farmers became unemployed or found unstable jobs, leading to a 53 percent decrease in income for these families, the ministry said. Resettlement problem Housing for displaced farmers has been a monumental headache for the families, advocates said. Hung of the construction association said he was “allergic” to the term “resettlement” because the poor quality apartments and houses are not suitable for the displaced residents. He said between 60 and 70 percent of displaced residents in major cities have sold their new accommodations because it was worse than their previous houses or not suitable for living. Hung suggested providing sufficient compensation, equal to market prices, for residents to find their own accommodations instead of compensating less and offering cheap resettlement residences. Anh from the Land Bureau also criticized the farmland compensation rate. “Compensation for farmland is often not enough to buy the same area of farmland in other places, or to help the farmers find other employment,” she said. Phan Van Tho from the Land Bureau said some localities, due to their limited budget, have offered compensation equaling only 30-50 percent of market prices. In many localities, project investors negotiate directly with farmers about the amount of compensation for land revocation. But they have failed to do so in a structured and unified manner, creating compensation differences in a locality, which has also caused complaints, he said. In addition, the resettlement process has not been planned well enough so that those affected could be assured of being provided with equal or better housing than before, said Huyen from the Land Science Association. Tho also said the shortage of funds for housing, land and capital in resettlement is now all too common and serious. Hanoi’s housing and land fund meets only 40 percent of its demand for resettlement, and Ho Chi Minh City’s is 70 percent, he said. Reported by Bao Van – Quang Duan

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Monopoly fuel supplier Vietnam Air Petrol Company has been fined VND3 billion (US$168,300) for cutting off supplies to Jetstar Pacific Airlines without justification on April 1 last year.

The Vietnam Competition Council said at a public hearing Tuesday the petrol company, known better as Vinapco, had abused its monopoly position and flouted the Law of Competition. A senior official of the council, who wished to be unnamed, told Thanh Nien that Vinapco had imposed unfavorable business conditions on its customer since it is aware that commercial airlines cannot turn to another source of supply in the country. The penalty was only cautionary, not punitive, because this was its first violation, another council member said. Vinapco, an affiliate of state-owned Vietnam Airlines, stopped supplying fuel to the Jetstar Pacific fleet on April 1, 2008 as the two sides were arguing over a price increase. The delay grounded 30 flights supposed to carry some 5,000 passengers. The government ordered Vinapco to resume supply, ending the impasse. The carrier said at the time that Vinapco had contracted to charge VND593,000 for a ton of aviation fuel for the whole year. But less than three months after the deal, Vinapco demanded VND750,000. Vinapco said it needed to increase fuel costs to cover the skyrocketing world oil prices, which went past $100 a barrel at that time. When the dispute broke out, Jetstar Pacific was known as Pacific Airlines. The domestic carrier later transformed into the low-cost Jetstar Pacific in May 2008 under an agreement with Australia’s Jetstar Airways. At the hearing on Tuesday the budget airline called for separating Vinapco from its rival Vietnam Airlines. The Vietnam Competition Council said it would forward the proposal to official agencies and tighten control over monopoly services. Vinapco has 30 days to appeal Tuesday’s ruling, which is also the first anticompetitive ruling the Vietnam Competition Council has made. Reported by Xuan Danh

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By David Mildenberg

Feb. 5 (Bloomberg) -- Bank of America Corp., the nation’s largest bank, declined to its lowest level in New York trading since 1984 on concern regulators may seize the company after a $138 billion U.S. bailout package failed to halt the slide.

The bank fell 55 cents, or 12 percent, to $4.15 at 10:44 a.m. in New York Stock Exchange composite trading, and earlier declined as much as 20 percent to its lowest level since October 1984. The stock of the Charlotte, North Carolina-based company has dropped for six days and lost more than two-thirds of its value this year.

The descent follows the U.S. government’s latest infusion of $20 billion in fresh capital and a plan to share losses on $118 billion in mortgages, corporate loans and derivatives. The U.S. previously committed $25 billion to the bank and Merrill Lynch & Co., acquired earlier this year. Bank of America lost $1.79 billion in the fourth quarter, its first deficit since 1991, as more borrowers fell behind on paying their loans.

“Washington is dithering while the banking stocks are going to zero,” said Nancy Bush, an independent bank analyst in Annandale, New Jersey. Trading is being driven by speculation that the government may take over Bank of America and other lenders as part of a plan to bolster the nation’s financial system, she said.

Scott Silvestri, a spokesman for the bank, said the company declined to comment on its stock price.

Tipping Point

“You have got to nationalize the banks,” said Paul Miller, analyst at Friedman, Billings, Ramsey Group Inc. in an interview yesterday, adding that the public may not be ready for Bank of America and Citigroup Inc. to be seized. “We’re past the tipping point, and the government is taking small steps.”

Citigroup, which dropped as much as 8.3 percent today, fell 11 cents, or 3.2 percent, to $3.38.

Bank of America’s risk increased after it acquired Countrywide Financial Corp., the largest U.S. home lender, and Merrill Lynch, the world’s largest brokerage, said David Dietze, president of Point View Financial Services Inc. in Summit, New Jersey, in an interview late yesterday. Merrill lost $15.3 billion in the fourth quarter.

“There is this lurking shadow of nationalization which haunts the banks, but particularly Bank of America,” he said. “It’s pretty spooky.”

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net
Last Updated: February 5, 2009 11:01 EST

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Hanoi’s Department of Labor, Invalids and Social Affairs said the highest annual bonus granted to employees in the capital so far was VND80 million (US$4,500) each.

The employees who will receive the fat bonus work for a foreign-invested beverages company, according to the department. Further details were not available. The average bonus at foreign-invested enterprises in the capital city was VND3.1 million ($177) – a 1.5 percent increase over last year; and the lowest bonus at a foreign-invested firm was VND300,000 a person. Overall, the lowest bonus given in Hanoi this year was VND100,000 a person ($5.71). Only 79 businesses have provided information about bonuses. Source: SGGP

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Lower food, fuel and housing costs are expected to bring consumer prices in Ho Chi Minh City down this month for a second time this year, the local statistics office said.

Prices in Vietnam’s largest city are expected to fall 0.69 percent from October, when prices fell for the first time this year by 0.24 percent. Food prices fell 8.67 percent from October while the cost of housing, utilities and construction materials dropped 5.66 percent from last month, according to the statistics office. Consumer prices in HCMC and Hanoi serve as an early indication of the national inflation figure, due to be published later this month. The government has an inflation target of below 15 percent next year, versus a forecast 24 percent this year. Food prices account for 42.8 percent of the price basket Vietnam uses to calculate inflation while oil products make up less than 3 percent. Source: Bloomberg

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A seminar on the challenges that the global economic crisis poses to Vietnam will be held at the National Economics University in Hanoi today.

The seminar will focus on proposals from Vietnamese entrepreneurs on how best to deal locally with the international financial meltdown. The seminar is co-organized by the National Assembly’s Economic Committee and the Vietnam Chamber of Commerce and Industry, representatives from the National Economics University said. Some 400 scientists, economists and entrepreneurs are expected to analyze the difficulties of the current global and regional macroeconomic turmoil. Organizers said the one-day seminar, chaired by Deputy Prime Minister Nguyen Thien Nhan, would aim to provide suggestions to the National Assembly as to how the government may best handle the problem and regulate economic policy in the near future. Reported by Vu Tho

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Vietnamese fuel traders Sunday lowered retail prices of gasoline by 3 percent, in response to falling global prices, according to a press release from the Ministry of Finance.

Diesel was cut by 3.3 percent and kerosene by 3 percent. The most popular 92-octane gasoline now retails at VND15,500 ($0.94) per liter, down from VND16,000 while 95-octane gasoline is now VND16,000 ($0.97) per liter, down from 16,500. The retail prices of diesel and kerosene have been reduced to VND14,500 ($0.91) and VND16,000 ($0.97) per liter respectively. The cut came as quite a surprise after traders had already slashed gasoline prices by 3 percent on Friday. Diesel had been cut by 2 percent that day. Vietnam, Southeast Asia’s third-largest crude oil producer, still imports most of its oil products due to a lack of refineries. Its first oil refinery in the central province of Quang Ngai is expected to go on stream next February. Reported by Ngan Anh

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