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BUSINESS IN BRIEF 29/5   2009-05-29 - VNA

Building industry set for clean-up

Workers accomplish HCM City’s Thu Thiem Bridge project. Transparency in construction work will help boost the building process and save costs.

Experts from the Ministry of Construction and the British Department for International Development worked on May 28 in Ha Noi, on an initiative to provide more financial transparency in the construction industry.

Le Van Lan, director of the Steering Committee on Anti-Corruption’s General Affairs and International Co-operation Department, said the construction industry played a vital role in the Vietnamese economy.

However, investment in the industry was considered at a high risk of corruption. This was why, in 2008, Viet Nam took part in the Construction Sector Transparency Initiative (CoST), which runs until next year.

Lan said transparency in construction work was of major importance in the fight against construction corruption in a scheme being piloted from 2008-10.

A recent survey of some 1,000 people in 18 communes and wards of nine provinces found that they thought construction was second (84.8 per cent) after land management (85.8 per cent) as the most open to corruption.

Pham Sy Liem, deputy chairman of the Viet Nam Construction Association, said contracts for public construction accounted for 10 per cent of GDP, one third of the State budget.

Liem said unless the State introduced transparent bidding processes with information on labour and materials costs, the cost of corruption in public works would exceed price increases.

According to William Paterson, a technical advisor on CoST, losses in the international building industry due to corruption amount to 15 to 30 per cent.

He said that in Viet Nam, annual construction growth of 12 per cent was the main driver behind the growth of Gross Domestic Product (GDP) and it was important to minimise unnecessary costs, delays and waste.

He said construction contracts were particularly prone to corruption because of their size, technical complexity, extensive approval processes and easy concealment of sub-standard worksmanship and materials.

Last year, Viet Nam and half a dozen other countries carried out the pilot phase of CoST.

Ministry tightens grip on steel

The Ministry of Industry and Trade on Tuesday ordered provinces and cities nation-wide to examine local steel and iron production projects to boost the sector’s overall efficiency.

The ministry has required provinces and cities to meticulously examine all local steel and iron projects and report on them, outlining their capacities, types of steel and iron products, total investment capital, construction process and dates when these projects will be operational.

The ministry asked provinces to also assess the ability of projects which had already received investment clearance. Provinces are required to clearly note which projects should have their investment certificates revoked and which ones can be carried out in the long term.

In case of ineffective or weak projects, provinces are required to clearly identify these projects and make plans to shut these operations down. Efficient projects should receive support from provincial people’s committees to boost their construction process.

Committees are required to ensure projects start operations as soon as construction is complete. This includes ensuring the projects have sound financial structures and access to enough energy for production.

The ministry also required provinces to provide a list of feasible projects which are not under the national plan for developing the steel industry. The list must be submitted before the end of June.

The move comes after the ministry raised concerns over the breakdown of the plan to develop the steel industry. The ministry found that 32 recent projects were not in line with the Government’s development plan, 24 of the projects did not conform to the Law of Construction and have not received approval from the Prime Minister or the Ministry of Industry and Trade.

In another development, the Viet Nam Steel Association announced that the amount of steel consumed in the domestic market in the first five months of the year was at about 1.5 million tonnes, up 1.2 per cent over the same period last year.

During this time, domestic steel companies also increased their exports to Laos and Cambodia. Each month, about 10,000 tonnes of steel was exported to these markets. The association predicts the domestic market would require about 3.8 million tonnes of steel this year.

Bao Viet Holdings prepares to list shares

Bao Viet Holdings, the gaint local insurance service provider, will list more than 570 million shares on the HCM City Stock Exchange, a listing that would represent the entire VND5.7 trillion (US$320.2 million) charter capital of the company.

Bao Viet Securities Co, a subsidiary of Bao Viet Holdings, is set to be the listing consultant.

Bao Viet Holdings made its initial public offering of 60 million shares in mid last year.

The average winning bid was VND71,918 per share, and the shares have since been traded on the over-the-counter (OTC) market.

"We have not set the offer price," said Nguyen Thi Tu from the company’s public relations department. "The offer price will depend on market development at the time the shares are listed."

"We are certain to come on the bourse this year, but the time relies on many factor," she said.

"A reasonable offer price would be 30 per cent higher than the trading price on the OTC market, so long as the VN-Index has reached 500 points by the time the company lists," said Dao Van Khanh, an analyst with a Ha Noi-based securities company.

Khanh said that the submission of application materials for a listing by Bao Viet Holdings promised the market a good financial stock in the near future.

"The market lacks a major financial share like Bao Viet or Vietcombank," Khanh said, although, he added, Sacombank or Asia Commercial Bank were quite familiar to traders and gave investors stable returns.


Vietnam promotes transparency in construction sector

Vietnam is among seven countries are benefiting from the assistance of the UK and the WB in implementing an initiative on construction sector transparency (CoST).

CoST is an international multilateral initiative that aims to enhance transparency and accountability of procuring bodies and construction companies for the cost and quality of publicly financed construction projects.

The Vietnamese Ministry of Construction, the UK Department for International Development (DFID) and the World Bank jointly held a seminar on the initiative in Hanoi on May 28.

The participants assessed the CoST process in the country, defined main causes of corruption in construction and reviewed regulations on construction investment.

Acting DFID deputy representative Bridget Crumpton spoke highly of the Vietnamese Government’s cooperation in CoST process. Fighting corruption is also a solution to improve construction projects’ quality and contribute to poverty reduction, she said.

WB’s expert Jim Anderson said that WB has contributed to infrastructure projects in Vietnam as well as in Asia and wants to realize CoST to ensure the quality of construction works.

He emphasised the need to pay attention to public finance management and prevent corruption in public purchase.

Six other countries joining in the two-year pilot CoST programme are Tanzania, Zambia, the Philippines, the UK, Ethiopia and Malawi.

Gov’t tightens up regulations on rice exporters

Rice businesses need to work much harder to meet the Government’s new requirements on rice exports as clarified by Deputy Prime Minister Hoang Trung Hai on May 28.

The Deputy Prime Minister has set out several new conditions including mandatory licenses for domestic operations, a standardised storage system, transparent finances and sufficient reserves of rice in line with current regulations, after a meeting on May 20 with agencies involved with rice exports.

He also asked the Ministry of Industry and Trade to work with the relevant agencies to revise the current regulations on rice exports and to tighten up the supervision of export prices to prevent trade fraud and ensure that the fulfilling of contracts is centrally-controlled.

The revision of the current regulations on rice exports must be submitted to the Prime Minister for approval by the third quarter of the year at the latest, Hai emphasised.

He also asked the Ministry of Agriculture and Rural Development to focus on post-harvest operations, especially rice drying, to meet the market’s requirements for quality and to mitigate post-harvest losses.

Rice exports in the first four months of the year reached 2.3 million tonnes in volume and 935 million USD in revenue, representing respective increases of 66 percent and 56.4 percent, year on year.

Exporters have managed to ensure a 40 percent profit for farmers.

Expo spotlights manufacturing, electronics industries

As many as 450 businesses from 20 countries and territories around the world are showcasing their products at a manufacturing and electronics expo that opened in Hanoi on May 28.

Speaking at the opening of the Vietnam Manufacturing Expo 2009 and the NEPCON Vietnam 2009, Nichapa Yoswee, Executive Director of Reed Tradex - a leading organiser of trade fairs in Thailand and Indonesia – highlighted the potential and rapid growth of the Vietnamese manufacturing industry.

The Executive Director of Thailand ’s Cripton Co. Ltd., Somsak Saensongsak, said that Vietnam is always a potential market for Thai investors and hoped that the expo would be a chance for them to seek out partners.

This view was underlined by the large number of foreign companies taking part, despite the adverse impacts of the current global financial crisis and economic recession, which has affected production for many companies worldwide.

The Vietnamese Deputy Minister of Science and Technology, Nguyen Quan, said the show offers domestic enterprises a valuable opportunity to get access to the world’s most advanced manufacturing technologies, which are being introduced to Asia for the first time.

This move will help to improve the competitive edge of Vietnamese companies as well as expand cooperative relations between domestic and overseas firms, he added.

Running until May 30, the exhibition will spotlight around 1,000 manufactured products including plastics, rubber, automobile spare parts, assembling technologies, automation and electronics. Twenty discussion groups will also meet as part of the event.

Fines for listing prices in foreign currencies

Retailers and dealers advertising prices in foreign currencies without ministerial approval will soon be liable to fines of up to 30 million VND (1,687 USD) and risk having their business licences withdrawn for 12 months.

Repeat offenders will risk losing their licences for longer.

The ruling was announced in the latest circular issued by the Ministry of Industry and Trade and will come into effect on July 4.

Many jewellery shops, motor vehicle dealers, real estate agents and tourism retailers have ignored State Bank of Vietnam warnings to stop the practice.

All organisations and retailers are required to list their goods and service prices clearly.

Circular 11/2009TT-BCT also covers other violations like speculating, illegal storing or exporting petrol, oil, rice and forest products across borders, trading forbidden or illegally imported fake goods, measuring, packing, verifying goods and services and enumerating and registering prices.

Deal inked on evaluation of JICA-funded projects

Representatives from the Japan International Cooperation Agency (JICA), the Ministry of Planning and Investment (MoPI), the Ministry of Transport and the Hanoi People’s Committee have signed a joint programme on project appraisal for 2009.

The signing took place at a seminar in Hanoi on May 27 which aimed at improving local staff’s capacity of assessing development projects.

The seminar rated three projects at A in JICA’s assessment system which included a project to develop a radio system of Vietnam’s southern coastal region to help search and rescue work as well as marine transport and offshore fishing.

The other projects involved the construction of the Phu My-Nha Be 500kv transmission line and the Ham Thuan-Da Mi hydroelectric which are said to not only increase the power supply source but also provide local people with stable water supply and basic infrastructure.

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