* On April 13, the Prime Minister issued a written conclusion at a cabinet meeting on foreign currency management and sale of shares by commercial banks to foreign investors, requesting the State Bank of Vietnam to revise and perfect legal documents on foreign exchange (forex) management, with a view to proactively and flexibly managing the forex market according to practical foreign-currency supply and demand, increasing the market’s liquidity, boosting export, reducing trade deficit, bettering the international payment balance and increasing forex reserves.
He assigned the State Bank to draft and submit to the Government for issuance in April a decree amending Decree No. 202/2004/ND-CP, on sanctioning of administrative violations in monetary and banking activities, in the direction of imposing more severe sanctions against violations in forex management and gold trading and introducing penalties against unlawful price quotation, payment and trading, transport and exchange of foreign currencies and gold, including revocation of operation licenses and confiscation of violating assets.
Concurrently, the State Bank will have to enact a circular to strictly control payment, price quotation and advertisement in foreign currencies in the Vietnamese territory; and revise the Regulation on foreign loan borrowing and repayment by enterprises, especially state economic groups and corporations, without governmental guarantee, in the third quarter of 2011.
The State Bank is tasked to cooperate with the Ministry of Industry and Trade and concerned agencies in forming an inter-disciplinary working team to strictly inspect and supervise foreign-currency loans and payments according to a list proposed by the Ministry of Industry and Trade, and to issue new regulations on foreign-currency status of credit institutions licensed for forex operation to lower these institutions’ limit positive and negative total foreign-currency status.
The State Bank is also expected to issue a regulation on the maximum foreign-currency cash amount of USD 5,000 which a resident person on exit is allowed to carry along without having to make customs declaration.
The Prime Minister requested the Ministry of Planning and Investment to direct strict control of the grant of gold trading registration certificates and harsher handling of violations of forex and gold trading regulations.
* Eighty-two large-sized enterprises, mostly foreign-invested ones, have been named by the Ministry of Finance for inspection in 2011 of false loss-making statements for tax dodge.
This move was to realize the ministry’s recent commitment before the National Assembly to launching a comprehensive program to screen and handle enterprises suspected of having committed “transfer pricing” for the purpose of reporting cumulated losses, as much as VND 600 billion for some heavily capitalized enterprises engaged in goods distribution, department stores, transport, construction, health care, fertilizers and foods, for three consecutive years (2007-09) through they have in reality earned and remitted profits to their parent companies.
The ministry also issued official letters requesting cooperation of the Ministry of Foreign Affairs in directing Vietnamese trade commissioners and counselors and embassies overseas to collect relevant information as requested by tax offices to serve the transfer pricing combat.
The ministry issued Circular No. 66 on April 22, 2010, to enhance anti-transfer pricing efforts and proposed the Ministry of Planning and Investment to revoke operation licenses of enterprises which reported losses for many consecutive years but still planned to expand their operation.
Most losses of domestic enterprises could be attributable to the economic downturn and declining domestic purchase power while those reported by foreign-invested enterprises were doubtful for the reason that most of their products are for export to a third country.
* The Association of Vietnamese Insurers has recently called for a more transparent legal framework for the insurance sector, including a set of complete regulations and accounting standards, to be in place by the 1st of July this year (effective date of the revised Law on Insurance Business).
It also urged insurers to reach a general agreement on minimum premiums by the end of April, especially for motor vehicle, construction, cargo and ship hull insurance, in order to depress unfair competition.
A representative from AAA Assurance Co urged insurers to collaborate to develop professional standards, especially technical standards, to raise qualifications and professional skills of insurance companies’ executive officers.
Deputy director of Vien Dong Assurance Company Thai Van Cach noted that the revised law allows domestic insurers to offer reinsurance to foreign enterprises which achieved a good credit rating from an international credit rating agency. This provision should be specifically detailed in order to assure permanent solvency of insurers.
According to the Association, an export insurance pilot program will be carried out during 2011-13, aiming to cover 3 per cent of export turnover.
* The Ministry of Finance has submitted to the Prime Minister for issuance a regulation on financial surveillance of state-owned enterprises and enterprises with state capital.
The regulation would subject parent companies of economic groups and corporations established by the Prime Minister, ministers and provincial-level People’s Committee chairpersons, the State Capital Investment Corporation and other state-invested enterprises to financial surveillance.
Special financial surveillance will be performed by state capital owners in case enterprises make losses, have payable debts exceeding three times their charter capital or untruthfully report their financial status. These enterprises will also be redirected to their main business lines under plans on reorganization of production, business or investment.
* In order to fulfill its duties under National Single Window (NSW) Agreement (concluded on February 9, 2005, in
However, feedbacks from this committee, other Vietnamese standing bodies in charge of NSW and foreign consultants have shown that many obstacles still exist, including slow change in operating manners of state agencies and businesses, lack of cooperation and commitment of state agencies involved in import-export procedures, ineffective application of modern technologies to carrying out procedures and online filing of required documents, absence of standards and procedural steps for obtaining import permits and a mechanism for ensuring accuracy of stored customs documents and modifying documents already filed with customs.
Based on these feedbacks, consultative experts proposed Vietnam to formulate regulations and policies to standardize formalities, control the access to and monitor information technology systems to be applied on a pilot basis to customs clearance, and regulate the cooperation and sharing of information between agencies in charge of NSW and customs offices in order to assure that filing and processing of data and information can be conducted at a sole point.
At present, the Ministry of Finance is negotiating with the
Experts also urged revision to Decree No. 57 dated June 9, 2006, on e-commerce, including a new provision on e-bills of lading and their documentary validity, in order to harmonize it with the Law on E-Transactions and Ministry of Finance Circular No. 222 of November 25, 2009, on pilot application of e-customs procedures, thereby facilitating traders’ commercial transactions under the NSW mechanism.
In their opinion, Decree No. 27 of June 25, 2008, on e-transactions in financial activities, and Circular No. 222, with provisions that only foreign e-signature authentication service providers with Vietnam-based representative offices may authenticate foreign e-signatures and e-documents, might discourage foreign traders that hesitate about using services of Vietnamese providers for high charges from using NSW in doing business in Vietnam.
Other proposals of consultative experts included issuance of regulations on data confidentiality and safety in cross-border transactions and archive of data for NSW Vietnam in service of judicial procedures and proving of facts in court proceedings; adoption of a mechanism for traders to claim compensations to be paid by NSW-operating bodies in case of a system breakdown.
* The Ministry of Industry and Trade has recently proposed imposing excise tax on imported cell phones in order to control imports and limit the trade deficit.
The reason for the proposed inclusion of cell phones into the excise tariff is that the import duty rate on this item which has reached the ceiling level according to the WTO commitments and the ASEAN-China Free Trade Agreement will soon fall to zero per cent.
The ministry also proposed authorities to regulate the import of 3G equipment and cell phones and strictly control sales promotion for luxury cell phones in order to avoid a surge in these imports.
At present, cell phones are classified as an import item subject to import restriction but still account for 9.5 per cent of the total import value.-