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VIETNAM


  
   

REPUBLICAN REFERENCE

Area (sq.km)
329,560

Population
79,939,000

Capital
Hanoi

Currency
dong

President
Tran Duc Luong

 

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Background:
France occupied all of Vietnam by 1884. Independence was declared after World War II, but the French continued to rule until 1954 when they were defeated by communist forces under Ho Chi MINH, who took control of the north. US economic and military aid to South Vietnam grew through the 1960s in an attempt to bolster the government, but US armed forces were withdrawn following a cease-fire agreement in 1973. Two years later North Vietnamese forces overran the south. Economic reconstruction of the reunited country has proven difficult as aging Communist Party leaders have only grudgingly initiated reforms necessary for a free market.
One of the most important political events to happen in Vietnam in 2002 was the election held in May of the country's new National Assembly (NA), the highest legislative body, for the 2002-2007 term. 498 individuals were elected as parliament members, including 118 permanent members, who will work on NA committees during their term, unlike the majority of members, who usually operate in local areas and only attend regular meetings of the NA when they are arranged.
The NA has decided on the new government cabinet, whose working term will also extend from 2002 to 2007. Prime Minister Phan Van Khai was re-elected and the number of deputy prime ministers cut to three for the next five years from four in the previous term. 
Minister of Trade Vu Khoan, was elected deputy PM in charge of trade and foreign affairs, replacing Nguyen Manh Cam. Khoan is respected for his contribution in signing a landmark trade deal between Vietnam and its former enemy the United States.
Two deputy PMs, including Nguyen Manh Cam and Nguyen Cong Tan who was responsible for agriculture, retired. Deputy PMs Nguyen Tan Dzung and Pham Gia Khiem continue in their posts for the next five-year term.
The NA approved the setting up of 26 ministries and ministerial committees, up from 23 in the previous term. The new formation aims to help ministries to focus more on their responsibilities and to work more effectively. Stagnation, overlapping functions and the bulky structure of the government's administrative bodies was one of the major causes of the ineffectiveness of government in its previous terms.
Fourteen new ministers and committee heads or 50% of the government's cabinet have been appointed for this new term, including ministers of police, justice, trade, transport, construction, industry, planning and investment, home affairs, science and technology, natural resources and environment, post and telecommunication, state inspectorate, ethnic minority people, and population, family and children. Two newly-created ministries included the Ministry for Natural Resources and Environment and Ministry of Post and Telecommunication.
The NA held its second meeting, which lasted from November 12th to the middle of December, to seek measures to improve the country's socio-economic situation in the remaining months of 2002 and discuss plans for the next year. 
Major issues focused on during this meeting were corruption, squandering, education, criminals, justice and traffic jam and accidents. The government firmly pledged to implement changes to provide a more favourable and equal environment to support private enterprises during the term of the 11th National Assembly, in addition to imposing tougher conditions for state owned enterprises (SOEs). In practice, the new-found commitment to the private sector remains to be tested. The government has, however, moved ahead with economic reforms related to its pursuit of World Trade Organization (WTO) membership, and its commitments under the bilateral trade agreement with the US.
In an effort to ease the public's increasing discontent with corruption and other social ills, the Communist Party general secretary, Nong Duc Manh, promised to pursue a tough campaign to crack down on corruption and wrong-doings of party members. Manh has also attempted to breathe new life into the economic renovation (doi moi) process, but the pace and progress of economic reform is unlikely to quicken significantly in 2002-03. 
The Communist Party, easily the most powerful organization in Vietnam with around two million members, has set targets to consolidate control and leadership in grassroots groups. The Party says it will clarify the responsibilities of commune authorities and other social organizations, make them work under local Party organizations' management, and to consult citizens regarding their decisions. It will also improve discipline in those offices, train staff for commune offices and organizations and increase payments and preferential treatment for grassroots officials, according to the meeting's final announcement. 
For many years, Party organizations have had little effect on people since the tasks and responsibilities of Party organizations and local governments have not been clearly defined. 
In urban areas, local Party organizations just assemble some retired Party members for impractical gossip sessions and rarely admit new Party members, because most Party members are drawn from their offices' organizations. 
In rural areas, Party members are also commune authorities, so they have unchallenged power to decide on local issues, which is the root of increasing corruption and abuse of power, illustrated by the mounting number of complaints and criticisms. 
The Party only has groups in State-owned enterprises and administrative offices. While private and foreign invested enterprises keep expanding and increasing their contribution to the economy, the Party has not yet set up organizations in those sectors because it still prevents Party members from operating businesses. The NA's final announcement, however, did not make it clear if the Party would admit business people into its organization in a bid to increase its influence in the private sector. 
However, not wanting to evade the increasingly important role of private businesses, the party this year made an historical decision allowing businessmen to be members and will permit current members to operate private enterprises. Party members can run private enterprises if they do not violate laws and have the support of their staff and neighbours. They can maintain their Party membership if they wish. The Politburo, the country's political elite, hopes that Party members working in the production sectors will be excellent businessmen who can make legal fortunes and encourage other people to make fortunes but do not explain how these objectives may be realised. 
In the Party's previous regulations, Party members could not practice labour exploitation, because it is contradictory to old Russian socialist theory, which the Party adopted as a bible. But the Party never clarified what "labour exploitation" was, resulting in an implicit understanding that Party members could not run private businesses that employ workers. 
In fact, no Party members are directors of private companies and few are working in private companies. The permission to do so came along with the Party's resolutions on boosting the private sector's role in the economy and on improving the Party's leadership in grassroots organizations. 
The Party now has to admit the existence and increasing role of the private sector. Despite much discrimination and repression, the private sector now contributes around 60% of GDP. The Party also realizes that it has lost control, along with its image and prestige at the grassroots level, in rejecting the private sector, the largest and fastest emerging part of society. 
One of the pressing issues that the party has had difficulty in coping with in 2002 is its failure to find answers to the people's complaints and criticisms. The number of petitions from people regarding losses caused by, and their discontent over, the increasing number of cases of wrong doing, corruption, trade fraud and undue extravagance are on the rise. Many also expressed fury at not receiving any answers to their petitions from local authorities. The State Inspection Department received over 35,000 petitions last year, which were described as becoming more complex. 

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Update No: 016 - (01/04/03)

Vietnamese government's policy on its relations with the US. 
While the government of Vietnam decides to remain diplomatically silent over the US-led war on Iraq, it is paying more attention to minimising the negative impact of the event on the economy by storing more oil and seeking new markets for its rice as an alternative to Iraq. 
This attitude is partly the result of the fact that the government does not want to cause possible further tension in US-Vietnam relations, putting at risk the implementation of the ambitious bilateral trade agreement which is believed by the Vietnamese, will bring about a surge in the economy in the coming years.
"The submission of a recent draft bill - H.R.1019 - by two American members of the US Congress, E.Royce and Z.Lofgren, to its International Relations Committee seeking greater press and information freedom in Vietnam has made the relations between the two countries bad enough for this period" said a communist party leader.
This event has been met with a backlash from Vietnam's communist authorities. They called on the US Congress's International Relations Committee to reject the bill, which will have a negative impact on relations between the two countries.
This is the second time since the beginning of the year that Vietnam has spoken out against freedom and rights-related drafts originating from the US Congress. (The US State of Virginia House of Delegates passed a bill on January 31 to use the former South Vietnamese flag as the national flag of Vietnam for display in schools and public buildings).

Vietnam intensifies action on human rights related activities 
The government is now putting more effort into tracking down human right activists to get them under control. A 61-year-old dissident physician in Vietnam was arrested recently after he sent documents to a US-based organization from an Internet café, which are said to call for human rights and political reform in the country. The arrest was made on March 17th but only on March 22nd was it announced in a small column in local newspapers. Television and radio, the two most popular means of propaganda in Vietnam, have not mentioned the case. 
Police said Nguyen Dan Que, a resident of Ho Chi Minh City, was caught sending documents with content that "runs against the State" to the "High Tide Humanist Movement" organization. Police are said to have found many bulletins compiled by Que for sending to the organization so it can allegedly conduct activities against the State.
Authorities have charged Que pursuant to Article 80 of the Criminal Code, which imposes punishment ranging from 12 years imprisonment to the death penalty for persons found guilty of spying or performing intelligence activities for foreign countries. The arrest of Que is seen as the next step by the conservative Hanoi authorities in its crackdown on local dissidents launched last year. 
In late November, Hanoi's court sentenced cyber-dissident Le Chi Quang to four years imprisonment on charges of disseminating anti-State documents on the Internet. In December, Hanoi's court handed down a sentence of 12 years imprisonment and a subsequent three years probation to Nguyen Khac Toan, a former military officer, after he was found guilty of espionage. The court was told that Toan had sent 24 emails and two floppy disks and used his cell phone to transfer information to the group so it could be used to slander the country. And earlier this year, three nephews and nieces of religious dissident Nguyen Van Ly were prosecuted on charges of espionage. 
Hanoi's government, however, still insists there is freedom of speech and information! 
It is unavoidable that the communist party is struggling hard with the recent crisis of confidence of its population as well as suspicion over the country's socio-economic policies. 
Vietnam's Central Communist Party issued a very candid resolution after its 7th plenum on January 13th this year, outlining actions to promote national unity and improve the people's eroding confidence in the Party. This is a rare document from the Vietnam Communist Party (VCP), which for the first time publicized problems causing it a headache, including the danger of a split in national unity and erosion of faith
"A section of the public is yet to have complete confidence in the Party, the State and the socialist system, partly because of their difficult living conditions and partly because of rampant social injustices and corruption and red-tape," it says.
The resolution admitted that the VCP is facing difficulties in enticing the people, especially ethnic minorities, religious followers and private businesses, to join the Vietnam Fatherland Front (VFF), the nationwide umbrella organization of political, social and religious groups.
This is because the Party had not fully analyzed or forecast structural changes in social classes or new conflicts among the people, nor worked out timely solutions to deal with these conflicts, the document says. 
In particular, many Party members and organizations continue to be prejudiced against non-Party members, religious dignitaries and private businesses. State unity policies have also not been implemented effectively, and many of the VFF's and campaigning organizations activities at grassroots level are only conducted theoretically. 
The last cause mentioned in the resolution is "hostile forces' plots to sabotage national unity", including issues relating to democracy, human rights, ethnic minorities and religion. 
The resolution states the CPV's objective, viewpoints and main policies and actions to enhance national unity and regain the public's faith in the regime, and stresses firm unity between the worker-farmer-intellectual classes [the intellectual class remains in the last position]. 
The Party says it will make efforts to reduce high unemployment among workers and set up an unemployment assistance fund. It will actively assist farmers in finding outlets for their products as well as encourage them to change to non-farming occupations. More favorable policies for training, employing and dealing with talented scientists will be revised. Scientists, even retired ones and overseas Vietnamese, will be encouraged to join in the country's socio-economic program and legal and policymaking. 
In its resolution, CPV also asserts freedom of faith, but says this "must be in keeping with the law."
Enhancing democracy is also emphasized in the resolution. The Party will have policies to boost multi-sectoral economic development. The people will have more opportunities to discuss important issues as well as to supervise the implementation of Party and State policies. The CPV has pledged to improve their method of leadership but its specific plan was not included in the resolution.
Vietnam now has 54 different ethnic minorities, including 50 who live in mountainous areas. There are many groups who are living below the poverty line and without the assistance of the central government. Being aware of the situation where many tribal groups ask for political separation, the central government is now pushing a campaign to calm down these tribes. However, the majority of the local people believe that the country's ruling bodies must treat the population in a truly democratic fashion and only by doing so can they regain people's trust. 
The ruling Communist Party in Vietnam on the other hand, with considerable candour has frequently admitted the erosion of people's belief in the government, the Party and the regime, mostly as a result difficult living standards and indignation about serious social inequality, bureaucracy, wide-spread corruption and waste.

Investment updates
Vietnam is expected to license 79 foreign direct investments (FDI) worth $178.65 million in the first three months of this year, representing an on-year fall of 48% in project numbers and 32.3% in total capital, according to the Ministry of Planning and Investment.
The ministry did not provide any explanation for the sharp decrease in new investment. 
It also estimates that 64 FDI projects will increase their capital by an additional $182.6 million in the period, down 3% in project numbers but up 11% in capital, respectively, on-year.
Since the introduction of the Foreign Investment Law in 1987, Vietnam has received a total of 4,650 FDI projects with a combined capital of $42.88 billion. Of these, 1,160 have raised their capital by an additional $7.77 billion, bringing the total pledged FDI to $50.65 billion. 
The number of valid FDI projects stands at 3,818 with a total registered capital of $38.47 billion, with $21.02 billion having already been disbursed. Of these, 1,107 are joint ventures worth $18.49 billion, 2,548 are wholly foreign-owned worth $14.75 billion, 157 are business contracts worth $3.9 billion, and six are BOT (Build-Operate-Transfer) worth $1.33 billion. These forms of investment have realized capital of $9.56 billion, $7.04 billion, $2.12 billion, and $300.5 million, respectively.
Investment officials said that capital of more than $1 billion has been realized among nine industries including heavy industry ($4.34 billion), gas and oil production ($3.34 billion), light industry ($2.24 billion), hotels and tourism ($2.02 billion), construction ($1.92 billion), office and apartment construction ($1.6 billion), food processing ($1.47 billion), forestry and agriculture ($1.22 billion), and transport and posts ($1 billion).
Of the 62 countries and territories that have poured investment into Vietnam, Singapore is the biggest with $7.24 billion, followed by Taiwan and Japan with $5.15 billion and $4.28 billion, respectively. Other foreign investors with capital of more than $1 billion are South Korea, Hong Kong, Malaysia, the UK and the Netherlands. 

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AGRICULTURE

Vietnam's rice shipment to double in Jan-Mar

Vietnam will export around 650,000 tons of rice in the first three months of the year, nearly double the same period last year, according to initial figures released by the Ministry of Trade. Shipments abroad in March alone are expected to reach 350,000-400,000 tons, it said. 
Vietnamese exporters offered $176 per ton of 5%-broken rice and $164 per ton of 25% broken, slightly higher than in the previous week. 
Farmers in the Delta reported to have harvested 60% of the total of 3.6 million hectares of the winter-spring rice, the most important crop in the year. The winter-spring paddy yield is predicted to be around 16.7 million tons, or 8.44 million tons of rice, this year. Harvesting activities usually accelerate in March and April annually.
Domestic rice traders are also seeking to expand their footholds in African and Middle East countries after it loses the Iraqi market because of the break out of war.
Vietnam sent a delegation to investigate new markets in Africa and will invite 20 countries from Africa to Vietnam in April so they can undertake research on Vietnamese rice and become familiar with the product.
The agri ministry will also send an investigation delegation to the Middle East next month and promote bilateral trade with Dubai, and use it as a gateway to transport more Vietnamese rice to Syria, Saudi Arabia, and other regional countries. 

Vietnam seeks more tea customers to avoid impact of Iraqi war

Vietnamese tea exporters are eagerly seeking new foreign markets to boost exports this year and reduce their reliance on Iraq, their leading customer, as shipments to the Middle East country have been stagnant since the Iraqi war began, said Nguyen Kim Phong, Chairman of Vietnam Tea Association (Vinatas).
"We have been preparing a market expansion strategy for a long time before the Iraqi war and are now pushing up the plan's implementation," Phong said.
Vietnamese tea products were shipped to 59 countries in 2002, up from 48 previously, he said. The exporters have been successful in building a reputation in new markets such as Taiwan, Russia, the EU and the US. 
Vietnam is the eighth largest tea producer in the world. As at the end of 2002, it had planted more than 100,000 hectares of tea, turning out 93,000 tons. The country exported 75,000 tons of tea last year, representing 81% of total output. 
Tea shipments in the first two months of this year also saw growth of 24.5% in volume and 45.2% in value to 8,000 tons and $8.4 million. February's shipments doubled from a year ago to around 4,000 tons worth $4.2 million, up from $2.6 million in last February. 

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BANKING

DAF posts increasing overdue debts


The State-run Development Assistance Fund (DAF), which is tasked to provide concessional loans to businesses and key infrastructure projects, reported having total overdue debts of VND760.8 billion ($49.4 million), equal to 3.39% of its total outstanding balance, a slight increase of 0.39% over two months earlier.
Lending in some provinces have higher overdue debt ratios, such as Son La with 13.5%, Nghe An with 12.9%, Ca Mau 12.35%, and Hoa Binh 8.3%.
Many experts criticized the fund's staff for their low capability in examining and appraising investment projects, which has resulted in mounting non-performing debts.
Fund officials, however, blamed changing policies in development investment, and inconsistent regulations in development credits and credit guarantees.
DAF is now the biggest financial institution in Vietnam in terms of chartered capital, with a total of VND5 trillion ($326.8 million). This year it plans to provide soft loans worth a total of VND23 trillion ($1.49 billion), up 30% compared with the previous year. 

Banks report total lending growth of nearly 20% per annum 

Total outstanding lending of the banking system recorded significant growth of around 20% per annum during the 2000-2002 period, according to source from the State Bank of Vietnam (SBV), the country's central bank.
Lending to the private sector has increased from 55% of the economy's total outstanding loans in 2000 to 58% in 2001 and 62% at the end of 2002.
The Agriculture sector also reported soaring credits. At the end of 2002, the sector received 29% of the total loans, up from 24% in 1998.
The central bank, however, was wary of the quality of lending to the private sector, as the sector has a higher overdue debt ratio compared with the average. The exact figure was not revealed.
According to SBV, weak financial capability, a shortage of assets for collateral and inadequate accounting systems were the main obstacles for private companies in obtaining bank loans.
In related news, according to a recent report from the SBV, commercial banks nationwide have reduced bad debts from 12.7% at the end of 2000 to 5% at the end of last year.
Most of the bad debts came from the four biggest State-run commercial banks, which account for more than 70% of the country's total lending and deposits. 

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ENERGY

Vietnam well-prepared for any oil price surge

The Vietnam Oil and Gas Corporation (PetroVietnam) has pledged to keep the local oil market well supplied despite uncertainties on the world market prompted by the US-led war on Iraq.
The corporation plans to have its crude oil refined in Singapore to partly meet the domestic demand for oil products, said a PetroVietnam official. "The measure is expected to avoid the heavy spending on imported petroleum in case of climbing prices," the official said.
Oil suppliers in the country have not suffered from any impacts of the war until very recently. The only likely impact due to the war is that PetroVietnam may have to cancel an oil exploitation project agreed earlier with Iraq, but fortunately no losses would be incurred as the project is just in the procedural process.
The local market has so far remained stable as most of oil imports have come from East and Southern Asia, according to Bui Bao Ngoc, deputy general director of Petrolimex, which is the key oil importer. The company is now supplying more than 60% of the domestic demand for oil products.
The government has previously assigned PetroVietnam, Petrolimex and some other oil importers to stock up on petroleum products, sufficient for use in some months.
Vietnam is estimated to consume around one million tons of petroleum products a month. 

PetroVietnam to sell 25% stake in Algerian wells

The State-run Vietnam Oil and Gas Corporation (PetroVietnam) has agreed to sell a 25% interest in its two oil wells in Algeria to Thailand's oil and gas firm PTT, an official from the State-owned corporation confirmed.
The official, however, declined to give further details on the value of the deal. After the sale, PetroVietnam will still hold a 75% stake in wells 436 and 411 in the African country.
PetroVietnam and PTT plan to dispatch their employees this year to Algeria to complete legal procedures so that test-drills will begin next year. PTT will probably hold talks with PetroVietnam over joint operations in a number of projects in foreign countries. 
The corporation will also ask for Government approval to transfer foreign currency abroad for oil exploration operations at the two wells.
PetroVietnam won an exploration and exploitation tender for the two wells in northwestern Algeria two years ago, with each having estimated reserves of one billion barrels.
In addition to Algeria, PetroVietnam has also signed deals to explore and exploit oil and gas in Iraq and has bought stakes from international oil and gas exploiters in Mongolia and Malaysia. 
PetroVietnam officials say the corporation plans to gradually carry out its projects abroad in the coming time and join hands in the establishment of an inter-ASEAN gas network to preserve the national energy security. 
The corporation exploited 2.82 million tons of crude oil in the first two months of the year, up 6.7%, and 300 million cu m of gas. It exported 2.8 million tons of crude oil worth $689 million in the period, up 0.5% in terms of volume and 71.9% in value over the same period last year. It plans to drill 16.8 million metric tons of crude oil and 3.7 billion cubic meters of gas this year, compared to 17.1 million tons of crude oil and 2.26 billion cu m of gas last year. 

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FINANCIAL NEWS

Vietnam reduces trade deficit by 63.5% in first quarter

Vietnam's total export revenue is estimated to increase by 43.1% on-year to $4.66 billion, and import spending will be up 26.2% to $4.86 billion in the two first months of this year, resulting in a trade deficit of only $200 million, significantly lower than the $521 million recorded in the same period last year, according to the Ministry of Planning and Investment. 
The ministry attributes the fall in the trade deficit to the better than expected growth of exports, which were targeted at $4 billion for the period.
In March, the total export value is expected to rise by 23.7% on-month to $1.6 billion, of which foreign invested firms earned $480 million from exports, excluding earnings from crude oil, up 45.9%.
Apart from rice, rubber and coal that will see respective declines of 14.5%, 16.3% and 1.2% in the month, other key commodities will post high growth such as garments and textiles up 63%, seafood 53.8%, pepper 100%, plastic products 50% and crude oil 3.9%.
Of the total export earnings in the first quarter of the year, the foreign invested sector contributed $1.25 billion, up 35.1% on year.
The export of most key commodities posted high growth in the three-month period, including garments and textiles up 90.6%, footwear 32.3%, seafood 29.3%, crude oil over 70%, rice 77.7%, cashew nuts 55.2%, wood products 100%, and electric wires and cables 81.5%. The six products seeing a decline are coal, bicycles, coffee, vegetables and fruit, pepper and tea. However, no exact estimates about the export value of the products are available. 
The Asian market remains Vietnam's biggest export market with a 52% share, followed by Europe 23.4%, America 16.3% and Australia 8.1%. 
The Ministry of Trade, however, is concerned that Vietnam's exports may decline amid the Iraqi war. It has urged local firms to expand potential markets such as Africa and raise their competitiveness in the coming time so as to help the country maintain a high growth in exports for the whole year. 
In the first quarter of the year, Vietnam's spending on imports is forecasted to expand by only 26.2% to $4.86 billion, including $1.62 billion paid by foreign invested firms, up 23.7% on year.
The country has experienced a sudden increase of 166.7% in the import of motorbikes. Imports of PCs and components have gone up 41.8%, motorbike parts 33.3%, fabric 30.8%, and machinery and equipment 23.7%. Spending on imported petroleum products, automobiles, fertilizers, steel and cotton, meanwhile, fell by 6.7%, 40.3%, 3%, 4.6% and 42.3% on year, respectively. 

March CPI up 3.9% on-year

Vietnam's consumer price index (CPI) in March is predicted to increase by 3.9% against last March as a result of a surge in the price of foodstuff, housing and constructing materials and pharmaceuticals during the month, the government's initial data reveals.
Housing and constructing material prices saw the highest growth of 10.2% on-year and 3% against last December, as people nationwide are speeding up house building in the dry season, which lasts from March to July, according to the General Statistics Office (GSO).
Healthcare services and pharmaceutical costs also rose 9.7% against a year ago and 8.1% against February - a result of hikes in imported drug prices during the month. 
The price of foodstuffs, meanwhile, grew 5.8% on-year but declined by 2.4% on-month. Food prices, however, decreased by 1.1% on-year and 0.9% on-month. Food prices normally reach their highest level in February each year when people welcome in the traditional Lunar New Year festival, and then often fall in the following months.
The GSO also released a sub-index in the country's rural area, which increased by 3.3% against last March. Of which, food and foodstuff prices rose 2.9% on-year, housing and constructing materials 9% and pharmaceuticals 10%. 
CPI figures in most cities, provinces and regions in the country saw a slight decrease against February. The index in Hanoi fell 1.8%, Ho Chi Minh City 1.7%, Hai Phong 1%, the central coastal region 0.6%, central highlands 1.5%, and the Red River Delta 1.1%. 
The office also predicts the gold price in March will be 24.4% more than a year ago but 1.2% lower than February. The office said the US dollar gained 1.9% against the Vietnamese dong since last March and has remained stable since last month. 

Many businesses still displeased with cumbersome admin procedures

Up to 32% of over 90,000 firms in Vietnam expressed dissatisfaction with the sluggishness of administrative reform, according to a survey conducted earlier this year by the Vietnam Chamber for Commerce and Industry (VCCI), the representative of the country's enterprises. Twenty eight percent said there was almost no change in administrative procedures and 4% said it had became worse, VCCI said.
The survey results were presented on the second day of a meeting between Prime Minister Phan Van Khai and domestic and foreign enterprises in Ho Chi Minh City. 
There are still 192 different types of licenses and sublicenses from central and local authorities relating to the operations of companies, VCCI said.
Fifty five percent of interviewed firms said that the procedures to obtain a licence were very complicated and wasted much time and money. Around 10.26% of the licences were granted 90 days after application, and 25.6% between one and three months later.
Half of the enterprises said many of the existing licences and sublicences were not necessary and were a major burden. The validity of each licence is also too short, making firms concerned about reapplying for new one, and hindering them from concentrating on their business. More than 36% of licenses are valid for only three months, 30.6% for one year, 14.1% for three years and 13.3% are unlimited.
Almost no ministries or branches that are responsible for issuing and granting licences could remember how many kinds of licences they have. 
The survey, on the other hand, reported that 89% of the firms expressed greater satisfaction with the positive change in the business and investment environment, particularly the reform of policies and the legal system in recent years.
Eighty five percent of the enterprises gave significant consideration to the government's efforts to hold dialogue and to create more favourable conditions for businesses. 
The Ministry of Planning and Investment gained the highest rate of approval from enterprises for its reform, at 89%. The Ministry of Trade and the Central Bank followed with 87%, the General Customs Department 83%, the Ministry of Science, Technology and Environment 82%, the Ministry of Finance 81% and the Ministry of Police 77%. 

Government promotes improvement of domestic markets

Prime Minister Phan Van Khai approved a program on March 20th that focuses on boosting domestic trading markets and improving rural commercial activities from now to 2010. 
The program encourages enterprises to pay more attention to the 80 million-strong local market, which has been ignored for a long time, said Hoang Tho Xuan, Head of the Trade Ministry's Domestic Market Policy Department.
The government will push up building markets in localities, particularly in remote and mountainous areas and assist traders to sign contracts with farmers in purchasing raw materials, he said. 
The program aims to maintain retail sales and service growth at 11-15% annually by 2005 and 14-15% in the 2006-2010 period. The consumer price index is expected to be kept at 5% per annum. 
The government also commits to conducting a stronger fight against the smuggling and trading of counterfeit goods in the coming years. 

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FOREIGN ECONOMIC RELATIONS

Moldovan, Vietnamese leaders vow to boost ties

Moldovan President, Vladimir Voronin's, meeting with his Vietnamese counterpart Tran Duc Luong will boost the development of Moldovan-Vietnamese relations in the 21st century. Vladimir Voronin, who was on an official visit to Vietnam, and Tran Duc Luong made this statement in Hanoi.
The presidential press-service told Infotag News Agency that the two heads of state exchanged information on the socio-economic and political situation in their countries and discussed the state of and prospects for the development of Moldovan-Vietnamese relations.
The two presidents said in the statement that Moldova and Vietnam are ready to strengthen and develop their friendship and comprehensive cooperation based on the principles of state sovereignty, independence, territorial integrity, non-intervention in each other's internal affairs, equality and mutual benefit. The sides will develop mutually beneficial cooperation both in bilateral aspects and on the international arena, in particular within the UN, the International Francophone Organization and others.
Vietnam supports Moldova's efforts in the settlement of the problem of the breakaway Dniester region based on respect for Moldova's sovereignty and territorial integrity," the statement says.
"Moldova highly appreciates Vietnam's achievements in the renovation of the country and welcomes its open foreign political course," Voronin said.

Trade Ministry to promote six major export markets this year

Vietnam will this year focus on export promotion in the six major markets of the US, Japan, the EU, ASEAN, and the Middle East and Africa, aiming to help increase the country's total export turnover to $18.5 billion, according to the Ministry of Trade (MoT).
The ministry will speed up preparations for the establishment of a showroom in the US, assist local firms to open representative offices and register and protect their trademarks in the foreign market. It will also conduct further investigations into the demand for specific products so it can work out appropriate measures to export more Vietnamese products to the US.
The MoT expects the export value to the US market will increase by 35% on-year to $3.2 billion this year. Garments and textiles will contribute $500-600 million, seafood $130 million and footwear $90 million. 
With the goal to promote Japan as a key market in the 2003-05 period, the MoT will also open Vietnamese trade centres in the foreign country and provide financial assistance to local firms to attend trade fairs. It expects more shipments of Vietnamese garments and textiles, seafood, footwear, fine arts, wooden products, plastic, fruit and vegetables, and coal, helping Vietnam to achieve an on-year 7% growth in total export revenues this year. 
Targeting a 10-15% growth in export earnings from China this year, the MoT will boost border trade, especially with South and Southwestern China. It has pledged to provide financial assistance to projects to build roads, trade centres and storehouses in the Vietnamese areas bordering China. 
While continuing negotiations to raise EU import quotas for Vietnamese garments and textiles and to remove barriers facing Vietnamese exports of seafood to EU, Vietnam will also increase the shipment of wooden products, plastic and electricity and engineering equipment. A 12% increase in total export earnings from the EU appears to be attainable, MoT said.
ASEAN countries are planning massive tariff cuts for imports from each member country, which will create both advantages and disadvantages for Vietnam's exports. The MoT has thus urged local firms to join hands in cutting production costs. Vietnam will have to boost exports of rice and crude oil and consumer goods in order to make up for the less competitive industries. This market is expected to increase by 5-7% this year
The Middle East and Africa have for a long time been a potential market that Vietnam wishes to expand. MoT said it would focus on promoting bilateral trade with Dubai, and use it as a gateway to transport more Vietnamese commodities to Syria, Saudi Arabia, and other regional countries. 
Vietnam's total export revenue is estimated to have increased by 44.2% on-year to $2.87 billion, and import spending up 25.9% to $3.02 billion, in the two first months of this year, resulting in a trade deficit of $158 million, according to the General Statistics Office (GSO).

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FOREIGN INVESTMENT

Vietnam increases limit for foreign investors to 30% from 20%

The Vietnamese Government has raised the proportion that foreign investors can hold in a Vietnamese company from 20% to 30% in a move to attract more foreign investment into the country.
According to Prime Ministerial Decision 36 issued on March 11, foreign investors can purchase a stake in Vietnamese companies or contribute capital by supplying machinery, equipment or technology.
The range of Vietnamese companies was also expanded to include all equitized State-owned enterprises, joint stock companies, limited liability companies, partnerships and cooperatives.
If they wish to purchase or contribute more than 30% in a Vietnamese company, they will then operate pursuant to the Law on Foreign Investment.
Foreign shareholders will enjoy privileges in accordance with the Law on Domestic Investment Encouragement or the Law on Foreign Investment if they use retained profits to re-invest in Vietnam, the decision said.
They are entitled to mortgage their shares for bank loans, transfer it to other investors and trade on the stock market when the company is listed.
Do Huu Phuc, spokesman for the Ho Chi Minh City's Securities Trading Centre, said that there are 30 individual and 14 institutional foreign investors operating on the local bourse who account for 10% of the total market capitalization. 

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TOURISM

Foreign investors sought for major tourism projects

Vietnam is targeting foreign investors for large-scale tourism projects capitalized at $10 million or more from now until 2010, not only in big cities but also in many provinces with great tourism potential, Pham Trung Luong, deputy head of the Vietnam Tourism Research and Development Institute said.
"The central and central highlands regions have significant potential and we encourage the establishment of tourism complexes there. Along with the Foreign Investment Law, we'll support investors in developing infrastructure," he said.
"The country previously encouraged the building of hotels because there was a need, but now major tourism complexes with diversified products and services are required," said Vu The Quan, a representative from the Planning and Investment Department of the Vietnam National Administration for Tourism (VNAT).
"Investment in the hospitality industry has not been seen in recent months and the number of major tourism projects to date is very modest," said Quan. 
The administration has received only applications to build three hotels, he said. 
Vietnam's tourism industry needs more than $2.5 billion for infrastructure development until 2010 according to its development strategy. Hotel construction will attract more than $1 billion.
These figures are just estimates and the real amount could be higher. The tourism complex at Van Phong Bay in Khanh Hoa Province alone needs some $1 billion and the same money is needed for Phu Quoc Island, off Kien Giang province.
VNAT officials say they have spent VND646 billion ($40 million) on infrastructure development in the last two years, and assigned VND450 billion ($29.2 million) from the State budget to develop the tourism industry. 
According to the VNAT, Vietnam has 194 foreign-invested tourism projects with a combined capital of nearly $5.8 billion. However, up to 170 of these are hotel projects, and the others are transport and services.
Vietnam welcomed 2.6 million foreign tourists in 2002, up 11.5 % year-on-year, generating total revenue of VND23.5 trillion ($1.5 billion), a 14.6% rise. It expects to receive 5.5-6 million foreign visitors and earn revenue of $4-4.5 billion per annum by 2010. 

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