Trang 59 : Lack of government support blamed as morefirms shut The number of companies shutting up shop rose last year whilefewer new ones were incorporated, reflecting the poor business
Trang 1Bài 58: Tourist turns to sustainable tourism
When Frédéric Tiberghien Frédo first visited Vietnam 20 years ago
as a tourist, he wanted to see more of the country
He was already linked to the country, being born to a Frenchfather and Vietnamese mother, but he lost both of them in anaccident in France when he was young, and was raised by hismaternal grandmother, according to a 2011 report in the KienThuc (Knowledge) online newspaper He worked as a carpenterand a horse keeper in France and England before deciding to visithis mother's native country
In his fifties now, he is no longer a tourist Vietnam has becomehome And, he is known as Frédo Binh
Frédo's transformation from a curious tourist to a charmed oneand to a tour operator himself has been accompanied by amotivation to preserve the country's beauty, the culture of itsethnic minority residents and improve the living standards ofcommunities in a sustainable manner
Over the years he has initiated community projects in manylocalities in the northern highlands
In Cao Bang Province, he established a small museum introducinglocal culture to foreign tourists In Lao Cai Province, he built abridge that made it easier and safer for children to attend school
In Yen Bai Province, he founded a nursery school and acommunity "culture house." He has also helped improve sanitaryfacilities like toilets and septic tanks at various localities
His most impressive achievement, however, is probably the tourism project he began in 2006 in Yen Bai Province's Ngoi TuVillage, which is home to Dao ethnic families
eco-Because of the project, locals are able to augment their incomesfrom farming by participating in the tourism industry They have
Trang 2Many villagers have become professional tour guides able tospeak foreign languages.
"It is slow but lastingly effective to promote Vietnam's imagethrough sustainable tourism," Frédo told the An ninh thu do(Capital security) newspaper
"Green tourism is not only about sustaining the environmentwhere it happens, but also about how local culture is conveyed tovisitors," he said
When he first arrived in Vietnam and visited Hanoi's famous OldQuarter, he felt the "depth of the culture of the peaceful country."
In 1994, he took adventurous trips to the northern highlands on aMinsk a motorbike produced in Belarus During those trips, he wasnot only charmed by the beautiful landscape but also the culture
of ethnic minority people he met
"Then I suddenly thought about doing tourism to earn a living,"
Trang 3Years later, he came upon Ngoi Tu Village on the banks of theThac Ba Lake in Vu Linh Commune He was totally captivated bythe scenery and the way local people preserved their traditionsand customs.
So, he bought a stilt house there and developed it into an lodge that can accommodate 60 people
eco-Once again, he invited local people to join him in the eco-tourismproject He taught them French and English He also sent them toHanoi, where they were trained in being tour guides as well asother aspects of the hospitality industry
He also worked to raise their awareness about protectingenvironment and their culture, and earning a living in sustainableways
Speaking about his project, Luong Xuan Hoi, secretary of Vu LinhCommune's Party Unit, said local people's life has changed a lotsince they began participating in tourism
Previously, it was not easy for them to earn more than VND2million ($94.65) a month, as they only did farm work, but now,that has changed
The way Frédo has done tourism, moreover, has contributed tothe preservation of local culture, the official said
Frédo himself has changed a lot over the years
He can speak both Vietnamese and the Dao people's languagefluently Although he is based in Hanoi, he visits and stays in the
Trang 4village often, and has learnt a lot about the Dao culture, from themeaning of pillars in their traditional houses to the practice ofburning incense and offering chicken to the spirits before buildinghouses.
He loves in particular the festival that Dao people celebrate at thebeginning of the spring to mark the start of a new rice season
"It is a beautiful aspect of culture," he said "People thank theplants, heaven and the earth for giving them a good life andharvest."
He regularly takes his 10-year-old son to Ngoi Tu, where the boyplays with local children And, like his father, he has learnt tospeak Vietnamese and the Dao language very well Frédo isdivorced and has two children
Trang 5Trang 59 : Lack of government support blamed as more
firms shut
The number of companies shutting up shop rose last year whilefewer new ones were incorporated, reflecting the poor businessenvironment and the government's failure to support business.According to a recent report by the Vietnam Chamber ofCommerce and Industry (VCCI), the number of businesses thatshut down or suspended operations increased by 6.29 percentlast year to over 54,200
Most of them were in the finance, banking, and real estate
The number of newly established firms declined by 9.9 percent to69,900 Their total registered capital was estimated at VND467.3trillion (US$22.3 billion), also down 9.9 percent from 2011
Vietnam now has just 300,000 firms, compared to nearly 700,000during the past decade
Most of firms operating in Vietnam now are mainlymicroenterprises, which have less than 10 employees, and smallones with 10-50 workers
In 2011 some 39 percent of medium-sized companies reducedtheir staff size and became small firms while 5 percent of smallfirms became microenterprises
The average number of staff in a Vietnamese firm decreased to
34 in 2011 from 74 in 2002
Pham Thi Thu Hang, general secretary of the VCCI, said Vietnamlacks medium-sized and large enterprises that take part in theglobal supply chains
Only 2.1 percent of firms are medium-sized, the report said
Ineffective measures
Trang 6The VCCI blamed the situation on the poor
business environment and the
government's ineffective support
measures, which benefit only large firms
According to the Doing Business 2013
report by the World Bank, Vietnam ranks
99th out of 185 economies for ease of
doing business
The VCCI said the country's business
environment has not improved much over
the past decade and remains below
average
Administrative procedures, despite being
reformed for many years, still remain
tortuous, hindering businesses, Vu Quoc
Tuan, chairman of the Vietnam Handicraft
Village Association, said
The government has proposed amendments to the tax law to cutcorporate income tax and also reduced interest rates to helpbusinesses
But companies said the measures have not really worked sincetheir biggest difficulty now is to liquidate inventories, not high tax
or interest rates Some 73 percent of firms polled by the VCCI saidlarge inventories were their biggest concern
The Ministry of Finance last week announced plans to cutcorporate income tax to 22 percent on January 1 next year fromthe current 25 percent It plans to bring it down further to 20percent in 2016-20
However, the 22 percent rate would apply earlier to small andmedium-sized enterprises from July as they are most vulnerable inthe depressed economy, Deputy Minister of Finance Vu Thi Maisaid
Trang 7The ministry has also announced a 30-50 percent cut in valueadded tax for developers of affordable housing from July Mai saidthey play an important role in helping low-income buyers andbringing greater liquidity to the property market.
Nguyen Nhan Phuong, chairman of the Association of Small andMedium-Sized Enterprises of Bac Ninh Province, said the taxreduction would not benefit small and medium-sized firms thatare already in deep trouble It benefits only firms with soundoperation that are making profits, he said
"Most of the weak companies, which should have receivedsupport from the government, will not benefit because they have
no profits to pay taxes," he explained
Small and medium-sized firms now find it hard to sell theirproducts, and the government should help them study andupdate them on foreign markets, he said
Many companies, whose products can be competitive in foreignmarkets, have not been able to enter them, he added
Meanwhile, the State Bank of Vietnam has cut lowered themaximum deposit rate to 7.5 percent from 8 percent, the first cutthis year following six in 2012, raising expectations of cuts inlending rates
But economist Le Tham Duong said interest rate cuts no longerexcite expectations for the economy
"Why will firms borrow when demand is weak and inventoriesremain high?" he asked
Tran Thi Hong, director of electrical home appliances makerPhuong Hong, said interest rates, despite being cut, remain toohigh especially for small firms
Her company's bank loans carry over 12 percent interest, but allare short-term, since she does not dare make long-term credit
Trang 8decisions now "We will borrow only when the rates go below 9percent," she said.
The VCCI suggested that the government should support firms byminimizing the import of unnecessary products, thus boostingdemand for domestic products
Trang 9Trang 60 : Chinese imports monopolize major vegetable
market
Cho Lon in Ho Chi Minh City, famous as Vietnam's Chinatown, arepository of Chinese culture, has a rival
The Hoa Dinh Market, around 30 kilometers from Hanoi, could well
be hailed as another Chinatown
The market in Bac Ninh Province is one of the biggest agriculturalproduce suppliers in the country, and most of its products comefrom across the border
It used to trade in local products which were famous nationwide,but many farmers since the late 1990s have left their fields andswitched to trading Chinese produce which are several timescheaper than local ones and thus earns them bigger profits
A major problem with this is the lack of official supervision of thewhole process The imports are not taxed or checked for safety The market trades between 200 and 400 tons of all kinds ofvegetables every day, providing stock for distributors and vendors
to sell to consumers in smaller markets in Hanoi and otherprovinces, as also down south in Ho Chi Minh City
"A hundred percent Chinese You won't find a Vietnamese thing,"said a trader named The
The owns a warehouse of around 300 square meters that stores60-70 tons of garlic and onions in packages labeled with no otherlanguage but Chinese, and it is among many such warehouses inthe bustling market
He told undercover Thanh Nien reporter to feel safe taking stock
from his store, as "the Chinese have special preservation methodsand their produce can be stored for a long time without gettingrotten."
The produce is transported from Tan Thanh border gate in LangSon Province, around 100 kilometers away, after it is imported
Trang 10An area more than 60,000 square meters (around 15 acres) nearthe border, three times larger than Hanoi's major wholesalemarket Long Bien, is used to gather the imported produce beforethey are picked up by trucks.
Customs figures compiled over the first five months this yearshow that Chinese carrots and potatoes are priced betweenVND3,500-3,700 (around US16 cents), between two to three timescheaper than prices in Hanoi markets
Chinese raw produce imports to Vietnam are exempt from tariffsand trade in fresh vegetables is free of value-added tax
Nam, a dealer at the border who owns trucks that deliver theChinese produce to Bac Ninh, said suppliers like The would resellthem at prices many times higher
"They can pocket VND140-150 million ($6,640-7,110) a trip (ofaround 30 tons)
"That is not to mention times when prices of Chinese producedrop even lower, and traders with large pockets would store a lot
of these, waiting for prices to go up and make even biggerprofits."
Vendors buying from The would accept the prices as they can mixthe products with local ones and tell buyers that they areVietnamese produce so that they can charge higher prices Somevendors do not even bother to mix them, and just sell Chineseimports as locally produced fruits and vegetables
They said the Chinese imports are not only cheaper, but also lookbetter because they are big, plump and smooth, though they donot smell as good as locally grown produce
Nam said dealers like him also have their own way to increaseprofit by overloading their trucks, usually up to three times itsdesigned capacity
A 10-ton truck would carry 30-35 tons "The more we can carry,the more money we make."
Trang 11The trucks usually leave the border at night and arrive early in themorning, and traders in Bac Ninh are charged VND220,000 ($10)
a ton for the delivery
Trucks coming from around the country to buy the stock alsoarrive at night
Nguyen Van Cuong, head of Vo Cuong ward in the province'scapital town, also named Bac Ninh, said many local farmers havebecome rich pretty fast with trade in Chinese produce Somefamilies have been able to buy their own trucks for transportingthe goods, he said
Cuong said there are around 20 major household businesses thathave become prominent in the region
They earn between VND2-3 billion ($95,000-142,300) a year,locals said Vietnam's per capita GDP in 2012 was $1,596
Numerous uncounted small traders also make more than $5,000 ayear, they said
Cuong said that when local crops are out of season, between 80
to 90 percent of the supply at the market is brought from Chinathrough Tan Thanh border gate
Bac Ninh market managers said the traders almost alwaysmanaged to produce legal import documents and qualitycertificates for their stock So far this year, they have imposedfines of VND8 million for the import of eight tons of garlic ofunclear origin which they seized
But Nam said the inspections do not prove a thing as customsofficials are already bribed to let the cargo pass without closeinspection, and the traders can "buy necessary papers later."
Toxic stuff
Authorities in the Central Highlands town of Da Lat in Junedumped 26 tons of potatoes from China after samples testedpositive for excessive levels of a toxic insecticide calledchlorpyrifos, although the owner had produced adequate safetycertificates during earlier inspections
Trang 12Surveillance over two years showed the trader had beenimporting potatoes from China and local vendors were mixingthese with local produce to cheat consumers
In May this year, a wholesale market on the outskirts of Ho ChiMinh City banned traders from selling Chinese ginger after testsfound high levels of adicarb, a highly poisonous carbamatepesticide, in a sample
Official figures say that Vietnam imported around 150,000 tons ofChinese produce in the first four months this year, mostly garlic,onions and apples
A report on the website of the Ministry of Industry and Tradeearlier this month cited experts as saying Vietnam has a muchsmaller cultivation area than China and cannot engage in thesame large-scale intensive farming
Hence local prices cannot compete with Chinese imports, theysaid
Trang 13Trang62: In Vietnam, unsustainable ‘modernization’ too
much for sanitation services
Huynh Thanh Long said he and his neighbors close all their doorsand windows whenever they are at home but that doesn’t keepthe awful stink from the Ba Bo Canal out of the house
“Pollution often forms a thick layer of foam on the surface of theflowing water,” said the resident of Ho Chi Minh City’s Thu DucDistrict
According to the city’s anti-inundation
center, pollution in the canal is a
combination of wastewater from residential
areas and industrial zones upstream
Pollution in big cities is common in
Vietnam, threatening public health and
sustainable growth, experts say
Vietweek recently reported serious
pollution in Hanoi’s rivers, the result of
untreated wastewater being discharged from series of new urbanareas built without wastewater treatment facilities
“Over the last 20 years, the government of Vietnam has madeconsiderable progress on the provision of wastewater services inurban areas, investing nearly US$250 million annually in recentyears,” said Le Duy Hung, a senior urban specialist in Hanoi
“However, keeping pace with rapid urbanization is challengingand it is estimated that $8.3 billion will be required to providewastewater services to Vietnam’s urban population between nowand 2025,” Hung, who is also a leading researcher at the WorldBank’s Vietnam Urban Wastewater Review, wrote in a reportreleased on January 20
The report focuses on the specific challenges that Vietnam faces
as a result of increasing environmental pollution associated withrapid urbanization It also evaluates the performance of thewastewater sector in Vietnam
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Trang 14It found that although 60 percent of households dispose ofwastewater through a public sewerage system, much of this goes
to the drainage system with only 10 percent of the wastewatertreated
Hung said estimated economic losses resulting from poorsanitation stood at $780 million per year, or 1.3 percent of thecountry’s GDP
“Financing needs are still very high, estimated at $8.3 billion forsewerage services to an estimated urban population of 36 million
by 2025,” he said
Industrialization problem
Apart from untreated wastewater from residential areas, pollutionalso comes from industrial zones, threatening public health andsustainable growth
Recently, many farmers in HCMC’s Cu Chi District complained thatthey do not have water for nearly 400 hectares (988 acres) of ricedue to pollution in the Thai Cai and An Ha canals
They accused the SEPZONE - Linh Trung 3 Industrial Zone ofdischarging untreated wastewater to pollute the canal
Vietnam’s first industrial parks opened in 1991 as part of thedoi moi reform movement, and there are currently more than 189
industrial parks and 878 export processing zones nationwide in 57
of the country’s total 63 cities and provinces
Vo Thanh Thu of the Vietnam Chamber of Commerce andIndustry’s international trade policy advisory committee said thatrapid industrialization over the past 20 years had led to a boom inindustrial parks and export processing zones
However, it has also led to serious pollution, leading to conflictswith local residents
“Only half have established waste treatment plants,” Thu said at
a recent seminar on the issue, organized by the People andNature Reconciliation (PanNature) a Vietnamese non-profitorganization
Trang 15Thu said that toxic waste is discharged without treatment,causing serious pollution to the environment.
The committee urged the government to review industrial parkand export processing zone zoning plans and encouragedagencies to cooperate to improve the monitoring of environmentregulations
The region’s rapid urbanization is an engine of economic growthbut poor quality sanitation leads to unsustainable development,with economic losses of 1.3, 1.5 and 2.3 percent of GDP inVietnam, the Philippines and Indonesia, respectively
“Worldwide, about 2.5 billion people lack adequate sanitation and
660 million of them live in East Asia and the Pacific Region,” saidCharles Feinstein, World Bank sector manager for energy andwater
“Inadequate sanitation takes a tremendous toll on the quality ofpeoples’ lives, the environment, and the economy,” he said “Butthe good news is investments in sanitation yield high returns.”According to the report, poor sanitation has a significant impact
on public health in the region including chronic poor healthcaused by diarrheal disease and an increased risk of diseaseepidemics such as cholera
It calls for developing people-centered policies, promoting effective technical solutions, developing sustainable institutions
Trang 16cost-Returns on sanitation investments are also high.
Worldwide, every US dollar invested in sanitation yields $5.50 inreturn in terms of economic benefits
In East Asia, this rate of return is even higher, with every USdollar spent yielding $8 in return, according to the World HealthOrganization
Trang 17Trang 63 : Doing good to feel good
Over the last 12 years, the life of Marc De Muynck, a 64-year-oldFrench veteran, has been ruled by the simple desire to help thoseless fortunate than him
When he came to Vietnam in 2001 after retiring from the military,
he was a tourist, but also on a mission of delivering gifts from aFrench veteran association to an orphanage in the Mekong Deltaprovince of Dong Thap
The Frenchman was stricken by the plight of the abandonedchildren After the three-month trip, he returned to his home,Arras in Northern France, and interned with a volunteerorganization engaged in humanitarian activities around the world
He worked with several non-governments until 2007 when hereturned to Vietnam and started projects on his own
"My volunteering experience with some NGOs did not satisfy me Idid not really find my place Very often, a volunteer is given aspecific task and has very little or no involvement in projects ordecision-making," said Muynck, whose friends call him Minh
During his first years in Vietnam, Muynck initiated severaldifferent projects, from helping upgrade a nursery in hisresidential neighborhood in Ho Chi Minh City which was oftenflooded during torrential rains, to building houses for poor people
in the southern province of Dong Nai
The projects were conducted in cooperation with humanitarianorganizations or his friends, acquaintances and even tourists whodonated medicines, school stationeries, and toys
Trang 18Two years later, he founded the association Les Enfants duDragon (The Children of the Dragon) with his friend, Bui Huy Lan,
a Vietnamese-French dentist based in Northern France, to helppoor people and orphans in the Mekong Delta and part of thecentral region
With 11 core members, a dozen volunteers, and the support oflocal governments, other NGOs, and numerous fundraisers, theassociation tries to meet every need of the needy
It has built houses, bridges, ensured clean water supply to poorlocalities, provided scholarships and bicycles, opened freeEnglish and French courses for children, supported teachertraining projects, supplied walking sticks for the elderly,entertained sick children and organized camping trips fororphans
Les Enfants du Dragon also runs farms that culture spirulina akind of nutritious algae usually recommended as food supplement
to combat malnutrition and supplies it to orphanages and centers.About one-third of the farms' output is for sale to generate fundsfor the association's activities
What motivates him is, Muynck said, the smiles of children whenthey are given gifts like bicycles, and the tears of happiness of apoor family when given a roof above their heads
"Man can only feel happy when helping people who are less luckythan himself, when bringing joy to kids without parents."
After 12 years, what does he feel about his work?
Trang 19"I have not finished my mission yet."
He said his "foremost" desire now is to carry out the association's
"heart project" an orphanage for about 100 children in thesouthern province of Long An
When the project is finished, he will see if he wants to take a shortrest, he said
"But, for now I still have enough energy to help other people ["¦]There is always more to do, to do better."
Sweet lifestyle
While most of the association's core members are French andSwiss nationals living in their own countries, Muynck, despitehaving his own family in France, is among the few members whoare based in HCMC so that they can work directly with localgovernments, volunteers, and beneficiaries
"I am retired, and I like the sweetness of the Vietnamese lifestyle,and the southern heat."
He said one of difficulties he faced at the beginning was building
a stable network of volunteers
Initially lots of people volunteered, but many would also retreatquickly, either because they found the work hard and time-consuming, or because they did not get the recognition they
Trang 20expected from the association's leaders, and perhaps even morefrom beneficiaries, he said.
"But, in the end, we managed to form a small but strong andunited team of loyal members."
Currently, there are a dozen of full time volunteers, bothVietnamese and French expats, working with Les Enfants duDragon
Occasionally, foreign donors also come to visit their beneficiariesand take part in volunteer work like building houses for the poor,and playing with children they had adopted by providing financialassistance
These days Muynck is busy checking the progress of constructionsites, visiting beneficiary families, attending meetings organized
by local authorities, and updating the association's website andhis personal blog to keep members and supporters informed
He also joins other members in finding partners and donorsonline
Dr Lan, who is in charge of the association's work in France, saidMuynck has done his job "very well," and thanks to him, LesEnfants du Dragon's activities are always "transparent."
Lan, who has always wanted to contribute to his home country,said he has found a kindred spirit
Trang 21"Muynck has a heart for Vietnam and its people."
Trang 22Trang 64 : Vietnam economists warn against addiction to
Vietnam is in active negotiations for the Trans-Pacific StrategicEconomic Partnership Agreement (TPP) and plans to allow moreforeigners to buy housing in the country
Nguyen Dinh Cung, head of the Central Institute for EconomicManagement (CIEM), said: “It is now the time to review whatnegative and positive impacts FDI has on Vietnam.”
According to international norms, FDI should account for only 5percent of gross capital formation, he said, but in Vietnam, it nowmakes up 25 percent, which may cause risks to the economy
Economist Pham Chi Lan concurred, saying: “The development of
an economy cannot rely on foreign firms, only local ones Foreigninvestors could leave Vietnam for other markets when the country
no longer has advantages or offers them the incentives it doesnow
Trang 23“What will happen to our economy if investors leave Vietnam enmasse like they did in Thailand in 1997? The reliance on FDI is abig challenge to economic development.”
Current policies only benefit foreign firms and cause difficulties tolocal private businesses, she said
Equal treatment
“No country offers incentives to foreign investors like Vietnam Weshould review our policies, cutting out too generous incentives forforeign investors and providing equal treatment to local privatefirms.”
Bui Kien Thanh, another economist, said many provinces, whichwant to compete with others in attracting FDI, offer them toomany incentives but do not know if the projects are useful
“They are exempt from corporate tax and get thousands ofsquare meters of land free in industrial parks for many years
“On the other hand, local firms find it hard to get even 100 sq.mfor their workshops
“Authorities should reconsider the issue Why do we causedifficulties for our local firms? FDI should support development ofour products instead of overwhelming Vietnamese firms Ourfirms are being crushed by foreign firms.”
Trang 24Unable to compete with foreign rivals, many local firms havedisappeared from the market Some firms with good brand nameshave been bought up by foreign rivals in the last two years whenthey faced financial difficulties.
Thanh urged the government not to let local firms with goodproducts, good markets, and good management be in a positionwhere they cannot compete with foreign firms only because theycannot get bank loans
“The government should implement a monetary policy whichensures enough money flows for the economy’s development,” hesaid
“Private firms should play the leading role in the economy owned enterprises should work to serve the development ofprivate firms, while foreign invested firms should support it.”
State-Limited contribution
Lan said the country has been too friendly in inviting in foreigninvestors, and the economy has lost much and gained little withthis approach
Many foreign companies are benefiting from cheap Vietnameseresources, including labor, but abuse transfer pricing andannounce losses to avoid paying taxes, she said
Economist Dinh The Hien said foreign businesses' contribution tothe country is not worth the damage caused to the country'sresources and environment
Trang 25The FDI sector was the best performer in the country with a tradesurplus of $14 billion last year compared to a deficit of $13.1billion made by the state and domestic private sectors.
But its importance to the country's overall growth was not highbecause its exports had little to no added value, the GeneralStatistic Office said
Economist Nguyen Minh Phong said the biggest disappointmentwith FDI projects is that they have done very little technologytransfer to benefit Vietnam
Foreign investors tend to keep their technologies secret whilelocal authorities do not demand them, he said
The lack of technology transfer might not be a good thing but thesituation can actually be worse if Vietnam becomes a dumpingground for outdated technologies
Many foreign investors focus on exploiting cheap naturalresources at low prices, and use outdated technologies, harmingthe environment
Fourteen percent of foreign businesses use outdatedtechnologies, more than twice the number that use high-techmethods and equipment
Thanh said the country needs to tweak its FDI policies, forcingforeign investors to use new technologies and be content with
Trang 26"We need to boost the development of domestic firms to build astrong economy," he said.
Foreign investors brought in $1.12 billion in the first two months
of the year, up 6.7 percent from a year ago, according to theGeneral Statistics Office
Vietnam has forecast total disbursement of $11-12 billion thisyear compared to $11.5 billion in 2013
Trang 27Trang 65 : Vietnam struggles to attract foreign investment
in airports
Vietnam has been soliciting foreign investments in airports for thepast several years, but it has not succeeded, and critics blamethis on the low profitability of airports in the country and vaguepolicies
The government plans to have 26 airports by 2020, building fiveand upgrading the 21 existing ones, the latter at a cost of someVND221 trillion ($10.5 billion)
Le Manh Hung, general director of the national airports operator,the Airports Corporation of Vietnam (ACV), said many airportsneed to be upgraded and expanded
The government used to provide funds for the construction ofairports, usually big-ticket projects, but it has become necessary
to attract investment from other sources, both domestic andforeign, he said
It is difficult to mobilize enough taxpayers' money for the task,and other sources have to be tapped, head of the Civil AviationAdministration of Vietnam (CAAV), Lai Xuan Thanh, concurred.Public funds can meet just 60 percent of the need, and the restshould be raised from foreign and domestic private investors,according to the CAAV
It is necessary to find investors with experience in theconstruction and management of airports, advancedtechnologies, and deep pockets, Thanh said
"However, it is difficult to attract foreign investment in airportconstruction because it requires huge funds and a long time tobreak even, but fetches little profits."
Nevertheless many investors have expressed interest indeveloping airports in Vietnam, he said, and have carried outfeasibility studies
Canadian Commercial Corporation is working with Quang NinhProvince authorities to do feasibility studies for Van Don Airport,
Trang 28which will come up 45 kilometers from
world heritage site Ha Long Bay
The construction of Van Don International
Airport in Quang Ninh Province is expected
to start this year at an estimated cost of
VND5.1 trillion ($242.9 million)
Japanese firms have expressed interest in
the $10-billion Long Thanh Airport near Ho
Chi Minh City, work on which is expected to
start in 2015
Another barrier to foreign investment is the
lack of specific policies, Thanh said
"We do not have clear regulations about which projects foreigninvestors can participate in or how much they can invest," hesaid In fact, the government announces regulations on a case-by-case basis
Many airports are used for both military and civilian purposes,and this too causes difficulties in seeking foreign investment, hesaid
All airports are managed by the government except in certaincases approved by the government
Most investors do not want to build airports under build-transfercontracts, but want to manage them, Thanh pointed out, sayingthis was also a deterrent to attracting investments
"So, to encourage foreign investment in the field, we need tocategorize airports and allow foreign investors to managethem."
The CAAV has recommended that the Ministry of Transport shouldcategorize airports into two groups, with the first comprising ofthose playing an important role in international transport andnational security - like the ones in Hanoi, HCMC, Da Nang, andCam Ranh
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Trang 29The rest would be in the second group and foreign investorsshould be encouraged to participate in their construction andmanagement, it said.
Barely used
Vietnam's plan to build new airports and upgrade existingfacilities is predicated on boosting tourism and vying for moreinternational routes
Increased domestic air travel, propelled by an increasinglyprosperous middle-class, is also spurring this task
The government plans to have six international airports
International flights are now mostly routed through Hanoi, HCMC,and Da Nang
Vietnam is developing a strategy to compete with airports inneighboring Thailand and Singapore, according to the ACV
Deputy Minister of Transport Pham Quy Tieu said the aviationsector holds promise, with average annual growth of 15 percent inpassenger transport and 12 percent in goods transport
Passenger numbers rose from 6 million in 2000 to 52 million lastyear
The country has five carriers that fly to 15 countries, and they areexpected to expand their fleets to 150 aircraft by 2015, he said.However, many of Vietnam's existing airports are struggling toget flights or passengers and suffer losses running into tens ofbillions of dong (VND1 billion = $47,600)
Dong Hoi Airport in Quang Binh Province is one such The airport,which cost VND210 billion ($10 million) and has an annualcapacity of 500,000 passengers, has only received 140,000 since
it opened in 2008, deputy head of the airport, Trinh Hai Duc, said
It only has a few flights a week to Hanoi and HCMC, and sufferslosses of VND55-60 billion a year, he added
Trang 30A similar situation exists in Chu Lai Airport in Quang Nam, whichwas built in 2004 at a cost of VND80 billion.
The airport now handles 60,000 passengers and suffers losses ofVND5-6 billion a year
But despite this, several provinces are planning to build their ownairports, hoping it will boost economic and social development.The central province of Thanh Hoa, for example, plans to sinkover VND2.6 trillion into a 213-hectare airport that will becomeoperational in 2030
The Mekong Delta province of An Giang has announced plans for
a $163-million airport, also scheduled for completion in 2030
Trang 31Trang 66 : A fruitful expedition
I had been to Cho Lach District a couple of times earlier, but I didnot remember much apart from bad roads and weak bridges.There was nothing to write home about
However, on a recent trip to the place with a group of friends, Isaw the district in a new light
The district is located about 144 kilometers from Ho Chi Minh City
in the Mekong Delta province of Ben Tre When we requested theCenter for Ben Tre Tourism Promotion to help us spend some timewith farmers in the district, they recommended that we visit theDai Loc eco-tourism site belonging to Nguyen Cong Thanh, betterknown as Tu Thanh, in Son Dinh Commune
It was late in the evening when we arrived at Thanh's place BenTre's reputation as "the land of coconuts" is well deserved and wewere not surprised to see coconut palms with 50-70 fruits eachright at the entrance
Thanh, a middle-aged man, took us to a restaurant on the banks
of the Cho Lach canal
We started our dinner with a sweet-sour, lightly fragrant white
smoothie Called ca cao dằm Ä‘á (cocoa chipped with ice), the
drink was made with cocoa flesh Suitable for almost every kind ofsoil, cocoa is quite popular in Ben Tre, where, apart from its mainuse as raw material for chocolate, all its parts are used the flesh ismade into a fresh fruit drink or wine, seeds are powdered, and thefruit's outer layer is used as food for cattle
Since he received 600 cocoa saplings from the HCMC University ofAgriculture and Forestry in 2001, Thanh has successfullydeveloped eight strains of cocoa and every year he provides morethan 500,000 seedlings to farms nationwide
After the refreshing drink, we were treated to bánh xèo
hến(deep-fried pancake, or sizzling cake, stuffed with mussels) cooked byThanh's wife
Trang 32Having had the pancake at many different places, I canconfidently say it was one of the best I've enjoyed The sweetness
of mussels, the fattiness of coconut milk and fresh milk, thefragrance of home-grown mushrooms and mung beans, thedipping sauce - fish sauce mixed with lime, sugar and coconutjuice, and fresh herbs picked from Thanh's garden, are tastes thatwill linger on our tongues and in our minds for a long time
Other dishes on the menu included freshwater apple snails thatwere cooked into seven different dishes, sour hot pot with swampeels, and braised small cyprinids fish with a toothless jaw that donot have stomachs These dishes were accompanied with sips ofcocoa wine
The dinner ended with durians, another fruit that Thanh is famousfor Nicknamed "the durian witch," he was the man who broughtthe famous Mon thong durian variety from Thailand into Vietnamduring the 1990s and successfully grew it here
I would highly recommend a boat ride with Thanh along the canalthat runs through his garden He will provide the best form of
"entertainment," introducing you to many facts about the manyfruits that are grown in his four-season garden that covers morethan two hectares Guests are free to collect ripe durians that fall
on the ground and eat them Or, at the coconut area, just tellThanh, and he will pick whichever fruit you like and you can enjoy
it on the spot
We decided to spend the night at Thanh's place Contrary to ourinitial belief that it would be a homestay experience, we ended upstaying in bungalows built in the garden to serve guests Therewere no mosquitoes, but the pleasant breeze was cooling andcomforting
The next morning we visited the Cho Lach Market, which can bereached either by motorboat or bicycle
The sight of vegetables like sweet potatoes and taro, seafood likeprawns, snails, and fish, as also a variety of dried foods, made mewant to buy them all In the end, however, I just bought the
Trang 33with mussels and coconut milk that Thanh's wife was going toteach us to cook.
Besides Thanh's eco-tourism site, there are many other places tovisit in Cho Lach: a sandy beach on the banks of the Co ChienRiver in Son Dinh Commune; the Ba Ngoi and Tam Loc fruitgardens in Vinh Binh Commune; the Nam Cong ornamentalgarden with nation famous plants in Vinh Thanh Commune; theCai Mon tourism area with fruit gardens and one of the oldestchurches in southern Vietnam
On this trip, I felt Cho Lach is a good match for Thailand's SuanSupatra Land, which is considered a paradise for fruit lovers Iflocal authorities could improve the infrastructure and promote itsattractions, this place can be a big draw for tourists
Trang 34Trang 67 : No takers for bad debts
Local investors lack capacity, foreign counterparts lack confidence, asset management company finds
Vietnam's new asset management company is finding it hard put
to find investors to whom it can resell the bad debts that it buysfrom the ailing banking industry
Very few local investors have the financial capacity needed to buysuch debts and prospective foreign buyers are concerned aboutvague policies that could weaken their investment
The Vietnam Asset Management Company (VAMC) has thus farbought VND6.5 trillion (US$309.5 million) worth of bad debts thathave book value of VND7.8 trillion, from eight domestic joint stockbanks
Run by the central bank, the company opened in July as thegovernment aimed to restructure bad debts that have crimpedlending and further slowed the economy, which is facing its mostsevere slump in at least a decade Lenders with bad debts ofthree percent or more are required to sell them to VAMC
Economist Nguyen Tri Hieu said: "In theory, foreign investors areinterested in Vietnam's bad debt market, as it has not yet beentapped However, they will not participate
now due to the lack of regulations on bad
debt trading procedures, and the settlement
of secured assets."
Another barrier to foreign investors is that
foreigners are not allowed to own land in
Vietnam The regulation hinders them from
getting mortgaged assets, mainly properties,
when buying bad debts, Hieu said
Economist Bui Kien Thanh agreed with Hieu,
adding that shortcomings in bad debt
assessment were also a barrier in reselling
bad debts In principle, banks, when offering
loans, evaluate mortgaged assets, mainly
properties, below the market value However,
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Trang 35it is difficult to price them now since the property market iscurrently frozen.
Vietnam does not have independent assessment agencies yet
"Foreign investors will not participate in the market unless theyknow the assets' real value, the potential to resell the assets, andcan understand clearly the bad debt trading procedures inVietnam," he added
Nguyen Quoc Hung, VAMC's vice chairman, admitted that Vietnam
is yet to have policies on selling bad debts to foreign investors
"We have to learn how other countries have dealt with the issue
If foreign investors could participate, Vietnam can receive hugefunds from them."
Pham Manh Thuong, deputy director of the Ministry of Finance'sDebt and Asset Trading Company, said a number of foreign banksand funds have come to study the country's market for bad debts
"I myself have held talks with some big investors who said theyare ready to invest even billions of dollars in buying Vietnamesebad debt," he said
But it is not an easy market for them, Thuong said "We cannotexpect the participation of foreign investors in the next 1-2 years,because there are too many barriers they cannot overcome, and
we cannot remove them in one or two days."
Apart from the complex procedures and lack of certainty aboutcooperation from Vietnamese banks, their biggest problem is thelack of transparency on bad debts, he said
Many banks have announced bad debts much lower than the realfigures due to worries about having make high risk provisions andloss of prestige Banks estimated their bad debts at 4.93 percent
of loans as of September 2012, but the central bank put the ratio
it calculated independently at 8.82 percent
Many foreign companies want to buy Vietnam's bad debts butthey need a clearer policy framework, said Karin Finkelston, vicepresident Asia Pacific for the International Finance Corporation, aprivate sector lending arm of the World Bank
Trang 36Setting up the VAMC is a good thing to rescue lenders, but thecountry should also develop a market mechanism to quicklyresolve the debts, she said.
Not thoroughly been solved
The Asian Development Bank (ADB) has recently said it isconcerned that VAMC's current capitalization may not besufficient for it to deal with large amounts of non-performing loans(NPLs)
The VAMC has an initial registered capital of VND500 billion, whilethe NPLs (non-performing loans) in the banking system could totalwell over VND200 trillion
Hung of VAMC admitted that the state, due to its thin budget,cannot pour more money to help the company by NPLs, but has towait for investors to do it
The VAMC buys bad debts using its own funds or issues five-year,zero-coupon "special" bonds to the banks in exchange The bondsmay be used to obtain refinancing loans from the central bank toboost lending and stimulate an economy that grew at just 5.03percent last year
Thus, banks will still play the decisive role in tacking their NPLs,
an economist said
The VAMC is expected to buy VND40-70 trillion worth bad debtsthis year However, the biggest issue of finding out customers toresell the bad debts has not yet been resolved
Hung said the company will sell the debts to both foreign andlocal investors, but not at any price, only for a profit
If the debts are not sold by the time the bonds mature, the bankswould have to swap those with the bad debts
Hung said the company is mainly focusing on buying andcategorizing bad debts at present, not reselling them
"After categorizing, VAMC will join hands with banks and firms todeal with the debts."
Trang 37Some 60-70 percent of NPLs that VAMC bought from banks arefrom real estate sector.
An economist said many NPLs are not eligible to be sold to VAMC,
as it only buys those backed by collateral Thus, banks can onlysell a part of their bad debts to VAMC, and have not found a way
to deal with the rest
Bad debts had accounted for 4.58 percent of the total VND138.98trillion in loans as of July, official news website Banking Timesreported last month, based on reports released by the commercialbanks themselves
Trang 38Trang 68 : Is Vietnam ready to compete on free-trade
playgrounds?
Vietnam professes, especially in the rhetoric of governmentleaders and so-called experts, seeing many chances to expand itsmarkets with the signing of major pacts like the free tradeagreement (FTA) with the EU to be finalized later this year, andthe Trans-Pacific Partnership (TPP) that is under negotiation with
11 other countries
However, in reality, such chances are just theoretical exercises ininternational economics, as Vietnam lacks strengths to play alongand hold its own on free-trade playgrounds
According to the theory of comparative advantage developed byeconomist David Ricardo (1772-1823), a nation shouldconcentrate on producing and exporting products where it hascomparative advantages, while engaging in international trade toimport products where it does not This way, every nation wouldmaximize its benefits from international trade, the theory goes
So, in entering a “flat world” that the FTAs are purportedlycreating, every country needs to focus on its key industries thatcan help it withstand the flows of goods from other countries
At the launch of the book “Swiss Made: The Untold Story BehindSwitzerland's Success,” by James Breiding in Hanoi last month, VuKhoan, former deputy prime minister, conveyed the samemessage
He said Swiss people have this simple but very effective concept:they make use of and develop what they have So, with fields,pastures, and snow, they focus on building agriculture andtourism as their key industries
Now, speaking of Switzerland, people would think about Nestlé,chocolate and cheese And its well-protected and maintainedsnow covered landscapes continue to attract lots of tourists fromaround the world
With such well-developed key industries, Switzerland is alwayseager for FTA playgrounds This is also true of countries likeAustralia, which is keen on exporting the products of its animal
Trang 39ownership of a large amount of intellectual properties; and Japanwith its car industry.
What does Vietnam have to enter FTAs and gain from them?
For many years, local experts have argued over whether or notagriculture is Vietnam’s key industry
The country has been blessed with natural resources like fertileland and suitable climatic conditions to become a major producerand exporter of farm produce like rice, coffee, cashew and pepper.However, the experts have pointed out that the internationallyrecognized produce is Thai rice, Japanese rice, Indian cashew, orItalian and American coffee Only when it comes to cheap, crudeproducts do people occasionally speak of Vietnam
How about tourism?
Vietnam has a long way to go in using its tourism resources well, given the lack of effective investment in infrastructure, humanresources, and cultural preservation, and the failure to effectivelytackle problems like robbery, rip offs, and tourist harassment
The Central Institute for Economic Management recentlyintroduced six industries chosen as spearheads for Vietnam:electronics, agricultural machinery, agriculture and sea produceprocessing, shipbuilding, environment and energy saving, andauto and auto part manufacturing
The industries were, in fact, chosen in 2007 along with thegovernment’s pronouncements about issuing policies that wouldhelp develop them
However, the industries are still underdeveloped, as officialfigures show that their imports have kept increasing over theyears
According to the General Statistics Office, last year Vietnam’simport of machines, devices and spare parts increased by 16percent year on year The import of electronics, computers andaccessories was also up 34.9 percent
The country imported US$3 billion worth cattle feed and rawmaterials, a year-on-year rise of 23.6 percent, while its riceexports earned less than $3 billion
Trang 40Generally speaking, what should be Vietnam’s comparativeadvantage (agriculture) has yet to be made best of, while thosewhich are considered as key industries in national developmentstrategy are still languishing.
Without comparative advantages, Vietnam’s trade balance will beunder great pressure soon
For instance, if TPP is finalized, Australia-imported beef with thesame prices as Vietnamese but with higher quality will obviouslydominate the domestic market
Towards the end of last year, the Hoang Anh Gia Lai Groupattracted widespread objections and criticism from local sugarproducers when proposing to the government that it imports30,000-40,000 tons of crude sugar from Laos, refines it inVietnam, and re-exports it to China
Nguyen Hai, general secretary of the Vietnam Sugar andSugarcane Association, warned that the project, if approved,would kill local sugar producers and sugarcane farmers
The association also submitted a petition asking for help from thegovernment
However, once Vietnam enters one free-trade playground afteranother, businesses will no longer be able to turn to thegovernment and seek its help to survive
The evidence so far is that FTAs are not the level playing fieldstheir votaries claim them to be Signatories bound by theirregulations have found that they favor the stronger playersbecause the stronger players are setting the rules, and theweaker players typically end up getting crumbs at the negotiatingtable
Vietnam needs to seriously think about how it is going to becomestrong enough to survive in such an environment One has tosurvive first, thrive later