ASEAN be more united: Vietnamese diplomat

09:09' 31/07/2007 (GMT+7)

VietNamNet Bridge – A Vietnamese senior official urged the ASEAN to bolster solidarity and unity while raising its cooperation efficiency in order to achieve regional integrity and a regional community. Addressing the 40th ASEAN Ministerial Meeting (AMM-40), Deputy Foreign Minister Le Cong Phung stressed that ASEAN needs to be more active and dynamic in its relations with other counterparts while improving cooperation with dialogue partners. The group needs to uphold its leading role in the regional cooperation process to which it was the initiator, including ASEAN+3, East Asia Summit (EAS), and ASEAN Regional Forum (ARF), and should work as a driving force behind other regional integration process in the Asia-Pacific region, he said. In his speech, Deputy FM Phung emphasised the extreme importance of narrowing the development gap in the course of establishing the ASEAN Community. He highlighted the results of the second IAI Development and Cooperation Forum in Hanoi and said these outcomes have contributed to building a new strategy to address the development disparity and better the implementation of the Initiative on ASEAN Integration (IAI) in the future. Deputy FM Phung called on all ASEAN member countries, dialogue partners, regional and international organisations and private sectors to take active part in the group's endeavours to narrow the development gap within the bloc. (Source: VNA, VIet Nam Net)

Vietnam tops Asian hairdressing contest

16:33' 31/07/2007 (GMT+7)

Bui Duc Thinh’s moment of victory VietNamNet Bridge – Defeating seven other contestants, Vietnamese hair designer Bui Duc Thinh won the highest prize at the 2007 Asian Hairdressing-Davines contest held on July 29 at the HCM City Opera House. Bui Duc Thinh recorded the highest score, 36.83. Finishing second was Vietnamese Japanese candidate Dung My Tran with a total score of 34.85. These two winners will represent Asia at the upcoming final of World Style Contest 2007 to be held this October in Barcelona, Spain. Bui Duc Thinh is 21 years of age and comes from the northern city of Hai Phong. “I think my understanding of the current worldwide trends in everyday-style hair designs helped me to acquit myself well,” said the winner. (Source: Tuoi Tre, Viet Nam Net)

The $500mil hotel to change hands?

17:05' 31/07/2007 (GMT+7)

VietNamNet Bridge – The Kanagawa-Vietnam Economic Exchange Association has sent a letter to the Hanoi People’s Committee, announcing its intention of setting up a company in Singapore in charge of running the project on the five-star hotel on the X2 position on Pham Hung road, which Riviera and CSK Finance got the investment rights for in March 2007. A design by Riviera (File photo) When asked to comment about the decision, the Hanoi Planning and Investment Department said that the establishment of a company in Singapore, named SPC, would change the investment legal entity, the investment country and other factors which were accepted by Hanoi authorities in Decision No 1051 dated March 20, 2007. The change of the investor (Singaporean instead of Japanese) does not come in line with the Hanoi authority’s policy regarding the Japanese investor, and thus may raise a complicated lawsuit. According to the department, the construction of a five-star hotel on X2 position (Pham Hung Road, near the national convention centre – a very advantageous position) is an important work to commemorate the 1,000th anniversary of Thang Long-Hanoi. Hanoi authorities chose Riviera and CSK Finance as the project investors out of a lot of other candidates based on the strategic relationship between Vietnam and Japan and the commitments the investors made to the city authorities. Any changes to the project must be approved by the Hanoi People’s Committee in writing. However, the Hanoi People’s Committee, in Document No 3670 dated July 9, 2007, stated that the letter sent by the Kanagawa association was not legal enough to be considered for approval. The letter on the change of investor was signed by Kouhei Suzuki on behalf of the Kanagawa- Vietnam association. Meanwhile, in a communiqué dated December 12, 2006, Riviera and CSK Finance, the official investors of the five-star hotel project, only authorised the association to deal with the Hanoi People’s Committee and relevant agencies to promote investment procedures. The document did not state that the association could act on behalf of them in issues relating to the content of the project. While waiting for the Hanoi People’s Committee to make a final decision, in order to ensure the planned construction pace (construction begins in September 2007 is to be completed in the second quarter of 2010 at the latest), Riviera and CSK Finance still have to fulfill their commitments from before. According to the Hanoi Planning and Investment Department, the project implementation of Riviera and CSK Finance has been going slowly since they got the right to run this project. The investors asked for a delay in presenting the document of guaranteeing the project’s implementation, which should be seen as a break of commitment. Under the city’s regulations, investors must complete the procedures for getting the investment certificate in the second quarter of 2007. However, the work has not been done yet. The investors have asked for a delay in submitting necessary documents for getting the investment certificate to August 3, 2007 instead of July 30, and the ground breaking ceremony will also be delayed to September 20, 2007. If Riviera and CSK Finance still delay the showing of the guarantee for the project’s implementation, it is likely that the city authorities will consider revoking the decision on choosing the two groups as the investors. If so, there will be two scenarios. First, Hanoi will ask the Japanese Embassy to introduce another Japanese investor who can run the project with the same conditions stipulated for the two previously chosen investors. Second, Hanoi will organise public bidding to select investors for the project. To date, the only sum of money Riviera and CSK Finance have paid to Hanoi authorities since they were chosen as the project investors was $3mil in non-refundable aid for the city. Meanwhile, the investors will have to pay the remaining 2.5mil ($5.5mil of non-refundable aid in total) right after they get the investment certificate for the hotel project on the X2 position. As committed, the investors also have the responsibility of paying the sum of $50mil to the Hanoi Treasury as a guarantee for implementing the project (10% of the suggested total investment capital of the project). Moreover, within 30 days after the investors sign the contract on leasing land, investors have to pay the whole sum of money for leasing land for 50 years (the unit price is VND140,000/sq m/year). The hotel projected to be built on X2 position on Pham Hung Road has the total space area of 4ha, and investment capital of $500mil, 18 storeys and 550 5-star hotel rooms. The transfer of investment projects is not prohibited under current law; it is stipulated in provisions 65 and 66 of Decree 108 dated in 2006, guiding the implementation of the 2005 Investment Law. However, the Government has not promulgated detailed regulations on the conditions and procedures for projects using land. Viet Nam Net

Tourism development: conflict of interest

15:37' 31/07/2007 (GMT+7)

Hoi An ancient town attracts many Japanese visitors but only 8% of the tour guides in the town can speak Japanese. VietNamNet Bridge – Vice head of the Vietnam National Administration of Tourism (VNAT) Pham Tu has told the press that the tourism sector may have to ‘flexibly dodge the law’ to develop and in the long term, the sector possibly has to petition law makers to amend the laws. 16 Korean illegal tour guides expelled Local travel firms may lose Asian markets The tourism sector is facing a very problematic situation – seriously lacking tour guides. In the past, travel firms could ‘make full use’ of different sources of human resources to employ as tour guides but now, they are facing big barriers, which are legal regulations. Pham Tu admitted that there was a fierce contradiction between the development of tourism and administrative rules. Vietnam currently has around 5,750 tour guides, a very modest number. It is more problematic when the number of Japanese tourists coming to Vietnam ranks third of all with more than 50,000 people a year but only 8% of tour guides can speak Japanese. As a result, travel firms have to hire illegal foreign tour guides. The chief tourism inspector also said that tourism inspectors had found 40 illegal foreign tour guides in Hanoi within one month of inspection there and 20 of them had been expelled. According to Pham Tu, Vietnam’s tourism sector is being hindered by many barriers of human resources, infrastructure, administrative mechanism and even serious conflicts of many interests. In terms of human resources, Vietnam has ten schools for tourism, which can’t meet the real need of the tourism market in terms of either quantity or quality. While the Vietnam National Administration of Tourism (VNAT) said that travel companies don’t invest in training, travel firms say that if the VNAT can’t do that job how can they? Urgent measures to draw foreign visitors: opening international airports in Hai Phong, Nha Trang and Da Lat; allowing right-handed steering wheel cars from Southeast Asian countries to come to Vietnam; exempting visas for visitors from key tourism markets of Vietnam like European Union member countries, Russia, and Australia; and not organising large-scale and costly festivals; allowing travel firms to employ foreign tour guides. Regarding tourism infrastructure, the system of hotels in Vietnam is small and scattered. The country doesn’t have any hotel which has 1,000 rooms. However, even when investors want to build a big hotel, they can’t find a plot of land that is large enough. The central province of Khanh Hoa currently has 8,000 luxurious rooms but its airport and railway stations are too small. Especially, while the development of tourism requires visa exemptions and environmental protection, Vietnam still maintains the visa mechanism with many tourism markets. The VNAT has many times petitioned to strike this mechanism but it still exists. This is why foreign travelers hesitate to come and return to Vietnam. (Source: Lao dong, Viet Nam Net)

Beach beautiful, but travelers don’t loosen purse-strings

16:55' 30/07/2007 (GMT+7)

VietNamNet Bridge – Vietnam has many beautiful beaches, among which, Da Nang beach has been recognised by the US Forbes magazine as one of the most wonderful beaches on the planet. However, this is not enough to lure travelers and persuade them to spend money. While people in the world now tend to travel by sea, the number of foreign tourists coming by cruise ship to Vietnam remains modest. It is estimated that European travelers spend 50-70% of their time in Vietnam relaxing on beaches. According to Truong Nam Thang, Director of OSC travel firm, most foreign tourists stay in HCM City for one night only, and then travel to the central region to enjoy the fresh atmosphere and wonderful beaches there. Statistics of the Vietnam National Administration of Tourism (VNAT) show that Vietnamese sea areas attract 70% of foreign tourists. Lacking… ways to beaches While people in the world now tend to travel by sea, the number of foreign tourists coming by cruise ship to Vietnam remains modest. According to VNAT, the number of foreign cruise tourists just accounts for 6% of the total number of travelers visiting Vietnam. The tourists only stay in Vietnam for two or three days on average; therefore, they do not have much time for sightseeing, entertainment and shopping. Most of the cruise ships dock at merchandise ports, while there are not specialised ports for tourism ships in Vietnam. Many big ships cannot go far into the port, while travelers have to be ferried ashore, which takes time and discourages tourists. The Institute for Transport Development Strategy under the Ministry of Transport has acknowledged that the seaport development strategy does not mention the port system for tourism. An official said that the situation would be improved once the ministry drew up a plan on developing a port system modern and capable enough to receive big cruise ships at key tourism points like Ha Long Bay, Hue, Da Nang and Nha Trang city, HCM City, Vung Tau and Phu Quoc Island. Beaches beautiful, but still need advertisement Analysts have said that Vietnam has never paid appropriate attention to the advertisement of its seas and beaches. In fact, VNAT published bulletins with special issues on Vietnam’s sea landscapes, but they just provided general information. Vietnam has never participated in conferences and trade fairs with the focus on sea traveling and cruise traveling. Only recently, when working with the US CNN television, did VNAT mention advertisement for Vietnam’s seas and beaches with Ha Long Bay being the focus. The strategy on tourism development by 2010 and vision to 2020 also did not mention sea travel development. Meanwhile, Vietnam now has to compete with regional countries including Thailand, Indonesia and Malaysia in terms of attracting tourists. Director of the Tourism Department of Binh Thuan Ngo Minh Chinh has asked VNAT to build standards for types of sea travel: which sea areas should be reserved for rehabilitation travel, which ones for sea sports and entertainment, and which for open air sea travel. Local authorities would refer to the standards to programme their tourism development strategy. VNAT plans to submit to the Government a project on sea and island travel development by 2010 with a vision to 2020. One day, Vietnam will also have its trademarks for sea travel as other regional countries have, like Indonesia’s Bali and Thailand’s Phuket. (Source: Tuoi tre, Viet Nam Net)

HSTC’s strict requirements to create sub-licences?

17:11' 30/07/2007 (GMT+7)

VietNamNet Bridge – Newly set up securities companies have expressed concerns since hearing the news that the HCM City Securities Trading Centre (HSTC) will inspect their capabilities before granting HSTC membership. HSTC has set up a new rule, under which securities companies, after getting operation licences, must go through a process of being inspected in terms of technical conditions and material facilities before getting HSTC membership. A council to be established by the trading centre will examine the companies to find out if they are technically capable of being granted membership. What worries securities companies most is that the new regulation by HSTC will create the ‘ask-and-grant’ mechanism and the so called ‘sub-licence’, a big social problem that needs to be cleared up. Meanwhile, HSTC’s Deputy Director Le Hai Tra affirmed that HSTC acted within its authorised power and in accordance with international practice. Mr Tra said that a licenced securities company did not automatically become a member of HSTC. He said that the New York Stock Exchange only recognised the membership of 1,336 securities companies out the several tens of thousands of securities companies in the US. “It is not difficult to give more tables and seats for securities companies’ staffs at the centre. However, we need to examine securities companies to see if they can meet requirements in terms of technology, service quality and a lot of other requirements,” said Mr Tra. However, the explanation by Mr Tra does not help dispel the worries of securities companies. A lot of questions have been raised: Why didn’t HSTC inspect the securities companies which were set up before? Will the previously established companies be inspected? The chairman of a big general corporation which is applying to set up a securities company belonging to the corporation wondered if HSTC was setting stricter regulations because it wanted to stop licencing new companies. It is clear that the announcement by HSTC on setting up stricter requirements on new securities companies has put investors, who are applying to establish 50 securities companies, on the edge. Securities companies have to do a lot of things to get an operation licence, and after getting the licence, they still have to exert more effort to get HSTC membership, which they called a kind of ‘sub-licence’. If a company cannot be granted membership, it means that it will go bankrupt, because no client will use the services of companies which are not recognised by HSTC. Yen Trang, Viet Nam Net

US$ deposit interest rates and loaning up, why?

16:59' 30/07/2007 (GMT+7)

VietNamNet Bridge – Since mid March 2007, many joint stock banks have raised interest rates on US$ deposits by 0.05-0.57% per annum. Outstanding loans in US$ have also grown more rapidly than VND loans with the growth rates of 19% and 13%, respectively. Joint stock banks: lacking capital in foreign currencies US$ deposit interest rates and loaning up, why? The raising of US$ deposit interest rates was initiated by joint stock banks, especially banks in Hanoi like Military Bank, VIB and Techcombank. The move later was followed by HCM City-based banks like Phuong Nam and Nam A. Other banks, though they have not adjusted interest rates, have launched promotional programmes in order to attract capital in US$. Why are Vietnamese banks still raising deposit interest rates while the US FED has decided to maintain the US$ interest rate at 5.25% (the rate is expected to remain unchanged until the year’s end) and there are no big fluctuations in the international market? Analysts have said that local banks have to raise deposit interest rates because they lack capital in foreign currencies. In general, in Hanoi, the proportion of mobilised capital in use is not high, at 61.3%; however, the figure is high among joint stock banks, at 82%. The liabilities in foreign currencies of eight joint stock banks in Hanoi are VND12.9tril, while the assets have reached VND13.7tril. Since the end of 2006, joint stock banks have been largely unsuccessful at raising mobilised capital. In Hanoi, the mobilised capital in foreign currencies has even decreased by 2%. Joint stock banks have not been able to mobilise much capital in foreign currencies from the public because people prefer depositing in VND to get more interest. Meanwhile, companies which can supply big sums of foreign currencies only have relations with state owned banks. In order to raise more capital in foreign currencies, joint stock banks have no other choice than raising deposit interest rates. Enterprises prefer loans in US$? The growth rate of loaning in US$ remains relatively high because of two reasons. First, enterprises try to import more goods and it is the time for disbursement for big projects. However, many experts say that this is not the main reason behind the interest rate increases. As for big projects, disbursement always goes in accordance with a scheduled roadmap, while it does not come in the second quarter only. Moreover, enterprises that have high demand for capital in foreign currencies contact state owned banks rather than joint stock banks. Meanwhile, state owned banks all said that the demand for foreign currencies had not increased considerably in the last three months, and that they could still supply enough foreign currencies. In fact, state owned banks have not raised their US$ deposit interest rates. As for the demand for foreign currencies to make payments for import deals, bankers have said that the demand always decreases to the deepest low in the second quarter and that the demand only increases at the end of the third quarter. Bank officials have pointed out that loaning in US$ increases because enterprises prefer borrowing in foreign currencies. It is to enterprises’ advantages to borrow in foreign currencies in comparison with VND, and in the current context of the exchange rate. The sharp increase of loaning in foreign currencies has raised doubts about loaning to the wrong subjects. Under current regulations, credit institutions can only provide loans in foreign currencies to clients which have turnovers in foreign currencies for paying debts, and clients which do not have turnovers in foreign currencies but have permission from banks to sell foreign currencies for paying debts and can show contracts on buying foreign currencies. As for banks, they are ready to lend money, no matter in VND or foreign currencies, if they can make profit on the deals. The director of a bank even said that banks could get more profit when lending in foreign currencies as enterprises use derivative products of banks, from which banks can collect fees. State owned banks drawn into the game? Though only joint stock banks have joined the move of raising deposit interest rates, state owned banks may get involved in the game. State owned banks are considering raising interest rates because they fear that joint stock banks will attract their traditional clients. The escalating deposit interest rates will certainly lead to the increase of lending interest rates. This will make credit contracts signed in previous years difficult to be disbursed (medium- and long-term interest rates are never fixed, but always floating). Meanwhile, expenses for paying debts in the medium term will be higher for the credit contracts signed at this moment. Experts have also warned that the increased interest rates would be a burden on small- and medium-size enterprises, a sector that plays a decisive role in export growth and national economic development. (Source: Lao dong, Viet Nam Net)