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Official Gazette

Wednesday, March 29, 2023

Policy digest May 2013

Updated: 14:36’ - 27/05/2013

* Comprehensive planning suggested for energy development: Vietnam should make as soon as possible a master plan for the national energy system, said President of the Vietnam Energy Association (VEA) Tran Viet Ngai at a forum on energy and oil investment and sustainable development held in Hanoi on May 9.

Ngai emphasized that if the energy sector failed to solve the issue of prices of energy for production which he referred to as unreasonable, it would be difficult to draw foreign investors into build-operate-transfer (BOT) projects.

The VEA suggested that the Government approve electricity planning after completing primary energy plans for coal, oil and renewable energies. Every energy plan should have an orientation up to 10 years.

Due to the country’s high growth rate of 5-8 percent per annum, it would have to import coal for electricity production by 2015, forcing it to depend on the world energy prices. To respond to this issue, head of the Institute of Energy Science Doan Van Binh suggested expanding exploration and exploitation of both domestic and foreign energy resources, including developing renewable energies and a competitive energy market for more competitive prices of energy for production.

* Foreign investors to be allowed to hold larger stakes in domestic firms: In an effort to attract more foreign capital, the cap of foreign holding in listed companies may be lifted to over 49 percent and become more flexible in securities firms, according to the State Securities Commission (SSC).

Under regulations expected to be issued soon, if foreign investors wish to hold over 49 percent of brokerage companies, they will have to buy the entire stakes of these companies.

A SSC official told Dau Tu Chung Khoan (Securities Investment) newspaper that the Government was expected to approve amendments to Decision No. 55/2009/QD-TTg concerning foreign ownership on the securities market. Accordingly, foreign investors may be allowed to hold over 49 percent of shares without voting rights in a number of listed companies. Their applications will be considered based on types of company and demand of listed companies.

Foreign investors may also be able to own 50-99 percent of shares of securities companies if both sides can reach agreement. However, the SSC will approve single cases rather than apply a rule to the entire market.

The SSC, along with the stock exchanges and the Vietnam Securities Depository, is developing new products, such as real estate investment fund and exchange-traded fund certificates.

* State asset management body to be established, given tax break: The Vietnam Asset Management Company (VAMC) will be established later this month, said Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council. VAMC is the sole wholly state-owned company to focus on settling non-performing loans (NPL). It will be placed under the management of the State Bank of Vietnam (SBV) rather than the Ministry of Finance and funds used for NPL settlement will not come from the central budget.

Nghia said the NPL settlement must be based on the principle that commercial banks would have to sell NPL or else they would face inspection by SBV. However, there should be regulations on outstanding debt balance, from which banks must sell NPL to VAMC.

Before VAMV officially commences its operation, banks are still required to sell NPL based on their current book value. Assets also have to remain under these banks’ management.

Banks may also receive and use special bonds issued by SBV as collaterals to borrow money in open-market operations. When VAMC sells its assets, it will retain 15 percent of proceeds and transfer the remainder (85 percent) to commercial banks, which then have to give the bonds back to SBV.

According to a Government proposal recently nodded by the National Assembly (NA)’s Finance and Budget Committee, VAMC will be exempt from value-added tax (VAT) on loan security amounts it sells and corporate income tax (CIT) on incomes it earns from the NPL settlement after the NA passes amendments to VAT and CIT laws.

* Nation to encourage foreign home buyers: Regulations on foreigners’ rights to buy houses in Vietnam would be further loosened, announced by the Ministry of Construction in a review of the current regulations.

The policy allowing foreigners to buy houses was first introduced in 2009 in the NA’s Resolution No. 19. However, the strict limitations on property ownership and transfer rights have discouraged foreigners from entering the property market. The ministry’s statistics showed that after four years, only 121 foreigners own houses in the country while overseas Vietnamese owners number around 400.

According to Construction Deputy Minister Nguyen Tran Nam, the loosening of regulations for foreign house buyers would somehow help prevent the concentration of people with the same nationality in one place, which was important for social security. He added that the percentage of apartments in a building to be sold to foreigners bearing the same nationality would be capped. The ministry will also consider whether foreigners should be allowed to buy low-priced houses, or be restricted to certain properties. 

Regarding the policy for overseas Vietnamese to own houses in Vietnam, Nam said regulations were already favorable. Currently, overseas Vietnamese having Vietnamese citizenship and those who do not have citizenship but have investment or businesses in the country are allowed to buy houses in Vietnam like domestic Vietnamese. Only those without Vietnamese citizenship or investments in the country are limited to buying just one apartment.

On May 4, the Hanoi People’s Committee issued Decision No. 13 to allow foreigners in the city to be granted house ownership certificates. A foreigner is currently allowed to own one property only.

According to the Construction Ministry, the policy to allow foreigners to buy houses in Vietnam would be adjusted in the amended Housing Law, which would be submitted to the NA for passage in 2014 and expected to take effect in 2015.    

* Temporary imports for re-export, goods brought into export-processing zones to be subject to special customs control: The General Department of Customs (GDC) is expected to enhance the surveillance of businesses importing materials and supplies for export production, processing or conducting temporary import for re-export, focusing on classifying high-risk ones.

Customs offices will intensify the collection of information on goods temporarily imported for re-export, transferred through border gates, brought into or out of export-processing zones and bonded warehouses, especially those for which customs procedures are carried out at different places and imported foods, for special control.

According to Finance Deputy Minister Do Hoang Anh Tuan, the customs sector will be geared up toward making customs procedures more transparent for shorter clearance time, at least equal to that of regional countries.

Under recent Finance Ministry Decision No. 808/QD-BTC, 22 customs procedures will be simplified, one put out and one newly introduced. The only one new procedure is for e-signature registration which requires that e-signatures to be used in e-customs clearance be public-key digital signatures certified by customs offices as compatible with the e-customs data processing system. GDC will publish a list of e-signature certification service providers which can provide these digital signatures.

GDC has been listing businesses with good customs law observance history as those eligible for customs clearance priority.

* Tourist businesses to get tax incentives: The Ministry of Culture, Sports and Tourism has proposed the Government to give 50 percent reduction and exemption of value-added tax or 50 percent reduction of corporate income tax in 2013 for tourist and commercial service businesses so that they could actively participate in the national demand stimulation programs.

The ministry reasoned that the tourist and commercial service sectors have recently seen a sharp decline in their competitiveness due to increase in prices of essential inputs such as petrol, electricity and land lease rates, and longed for a financial boost from the central government.

* More value-added tax incentives for border-gate economic zones: The Ministry of Finance is working on amendments to mechanisms and policies applicable to border-gate economic zones, especially value-added tax (VAT) incentives, in order to prevent these zones from taking advantage of these incentives to commit tax frauds or evasion.

According to the ministry, goods and services produced or provided or consumed in these zones; those imported from overseas into these zones; and those exported from these zones abroad will not be subject to VAT.

Some goods items brought from inland Vietnam or from other functional sections in border-gate economic zones into non-tariff zones and exempted from export and customs procedures (liquors and alcoholic drinks, cigarettes, cell phones, etc.) will not be exempt from VAT.

Investors and enterprises in border-gate economic zones may enjoy import duty exemption for five years for materials, supplies and machinery parts which are not available at home and imported for investment projects in these zones.-


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