* Special office to better manage foreign investment: A national steering committee for foreign direct investment (FDI) will be established soon under a strategy for FDI attraction through 2020 initiated by the Ministry of Planning and Investment (MPI). The committee, which will replace the decentralized model, will be composed of a Deputy Prime Minister as its chairman, the MPI Minister as its deputy chairman and representatives of various ministries and sectors.
According to MPI Deputy Minister Dao Quang Thu, the committee will resolve investors’ difficulties which ministries and local administrations could not settle. Localities will also have a special department for FDI promotion, licensing and management to work on a one-stop-shop basis and obtain exact FDI figures in their localities.
This model will help quickly settle investment procedures and solve problems related to investment projects.
FDI in the country was managed wholly by the central government until 2004 when the Government issued Resolution No. 08/2004/ND-CP, on decentralized administration of FDI between central and local governments, giving localities more power in calling for, licensing and managing FDI. However, the decentralized model revealed some shortcomings as work on attracting investment in localities was sometimes not in line with wider regions’ planning.
* Short selling to be curbed with heavier fines: The State Securities Commission (SSC) will increase surveillance of and penalties for illegal short selling activities, prohibiting stock brokers from providing short selling services to clients, as it views short selling as a market destruction activity or even a crime.
According to SSC chairman Vu Bang, any securities companies violating this prohibition would have their brokerage operations suspended for up to two months. Violating individual brokers would have their practice certificates revoked.
Current penalties are not heavy enough to deter violations, which have become increasingly sophisticated and complex and are difficult to detect, said Vu Bang. Buying or selling transactions have usually been made on the accounts of brokers and the Vietnam Securities Depository could hardly detect them.
Legal experts have urged investors to improve their knowledge of the securities law when using derivatives contracts since this area of the market is still governed by an insufficient legal framework.
* Dutiable import/export value declarations no longer required: Dutiable value declarations would no longer be required to be filled in (though declarations must still be made in import/export declaration forms) for imports and exports without purchase and sale contracts, of which the dutiable value is determined according to declared value, and for goods not subject to determination of dutiable value.
Goods to be exempt from dutiable value declaration also include duty-free imports; imported materials for export production; special-use machinery, equipment and tools temporarily imported for re-export or temporarily exported for re-import within a given period; goods imported to be processed for foreign parties or exported overseas for processing for Vietnamese parties and subsequently re-imported under processing contracts; and goods imported to create fixed assets of investment promotion projects or ODA-funded projects.
* Solutions to bail out ailing businesses: Vietnam Chamber of Commerce and Industry general secretary Pham Thi Thu Hang has recently announced the Chamber’s recommendations to help businesses get out of the distress state, preventing them from falling into bankruptcy.
The recommended solutions include intensifying supports in terms of outlets and input elements (materials and fuels) for manufacturers and avoiding abuse of corporate income tax incentives; adopting and implementing more practical trade promotion policies for seeking export markets and consolidating domestic markets, and concretizing these policies into specific programs to provide businesses with financial supports for circulating goods in remote and mountainous areas, and discounting prices of goods in stock for low-income consumers; and facilitating businesses’ access to credit by encouraging banks to provide businesses with more trust- and credit rating-based loans.
* Proactive administration solutions aim to keep inflation at eight per cent: The Ministry of Planning and Investment has recently proposed three major solutions to proactively curbing inflation in the last quarter of the year on the basis of its consideration of the necessity to control price-forming elements and determine selling prices of essential goods. The Ministry will also take measures to supervise the observance of regulations on price registration and posting and sale of goods at posted prices, and penalize pricing violations.
The Ministry affirmed the postponed adjustment of four types of service charge rates set or controlled by the State, including: medical examination and treatment service charge rates; school and tuition fees; daily-life clean water charge rates; and state-subsidized bus fares. These charges and fees as well as prices of main production input materials and fuels would be adjusted according to carefully designed schedules and surveys of price hike impacts on production and people’s life.
* Remedies to inhibit cross-ownership practices resolved: The Government, in its September regular meeting resolution, urged the State Bank to gear up the handling of ailing banks and take more drastic measures to clean up cross-ownership practices in the banking system.
There exist three types of cross-ownership form which pose risks of worsening the situation of non-performing loans (NPL), including ownership by state-run commercial banks in joint-stock commercial banks, ownership by joint-stock commercial banks in one another, and ownership in joint-stock commercial banks by state groups and corporations and private businesses.
In order to step up the banking restructuring, the State Bank should urge the withdrawal, voluntary or involuntary, of capital by non-bank businesses or banks themselves from joint-stock commercial banks, and step by step compel all credit institutions to list on the stock market to ensure transparency and stop the flow of money into “backyard” companies of banks’ major shareholders with zero-percent interest.
Bui Huy Tho, head of the Supervision Policy Research and Coordination Commission of the National Financial Supervision Committee suggested the expeditious formulation of a national mechanism for NPL settlement and a more effective mechanism for credit guarantees of the Vietnam Development Bank for small- and medium-sized businesses. Pending the complete settlement of NPL, businesses which meet difficulties but can still produce and market their products may be considered for debt rescheduling and new loans.
Other banking experts recommended further improvement of the internal credit rating within the system of commercial banks for credit quality management and unification of criteria for debt classification and risk offsetting.
* Perfecting competition regulations to effectively control merger and acquisition: Fast-growing merger and acquisition (M&A) activities have constituted a reasonable model for restructuring businesses, especially those on the brink of bankruptcy. In recent years, the annual growth rate of M&A deals in the country has reached around 30 per cent.
However, M&A deals might affect the free market with risks of monopoly and suppression of fair competition if they are not controlled properly and are abused by shark companies.
Despite many relevant laws regulating M&A activities, including the Competition Law, the Investment Law, the Enterprise Law and the Securities Law, there is so far no regulation governing “vertical” M&A deals which has recently appeared in a growing number in which manufacturing companies buy input material suppliers or distributing companies in order to take advantage of existing supply sources or distribution systems for cutting costs.
Foreign experts suggested prompt issuance of more specific regulations on reporting on large M&A deals which lead to considerable market share changes, monopoly risks, and assessments of impacts of M&A deals, especially transnational ones, on product prices and quality and market stability.
According to the Vietnam Competition Authority (VCA), at present if the aggregate market share as a result of an M&A deal reaches between 30-50 percent, involved businesses are obliged to report it to the VCA. Failing to do so, they may face a fine equal to 1-10 percent of the total turnover they earn before the deal.
* Goods banned from temporary import for re-export listed: In furtherance of the Prime Minister’s Directive No. 23/CT-TTg of September 7, 2012, the Ministry of Industry and Trade has recently published three provisional lists of goods banned or suspended from temporary import for re-export, border-gate transfer and consignment to bonded warehouses.
Goods to be banned from temporary import for re-export and border-gate transfer include hazardous wastes (lead accumulators, electronic microchips, etc.); plastic scraps and discarded materials; refrigerating equipment using Chlorofluorocarbon (CFC); pre-substances banned from export or import under treaties to which Vietnam is a contracting party.
Goods to be suspended from temporary import for re-export, border-gate transfer and consignment to bonded warehouses include used consumer goods and frozen cattle and poultry innards and by-products.
The third list enumerates other frozen foods (cattle meat, poultry meat and aquatic products of all kinds) which require permits of the Ministry of Industry and Trade for temporary import for re-export.
* Regulations to be revised to lure investment in science and technology: In order to improve the financial mechanism, mobilize more foreign investments and avoid thinned-out investment in science and technology, the Ministry of Science and Technology (MOST) is planning to revise seven circulars. These circulars deal with formulation of annual science and technology plans of sectors and localities; management and use of non-business funds for science and technology; allocation of task-based regular operation funds for science and technology institutions and pilot funding mechanism for ultimate products of a number of scientific and technological tasks; contents, norms and procedures for payment and settlement of scientific and technological costs.
The MOST will also issue some new regulations concerning management and use of the national science and technology development fund and national technological renewal fund; valuation of intellectual assets; and guidance on periodical reports on performance of scientific and technological tasks.
The Law on Science and Technology will be revised to include mechanisms and policies to encourage businesses to invest in scientific research and technological renewal and development.-