To import or manufacture? - That is car companies’ question

Experts warn that if all automobile joint ventures import cars to sell rather than manufacturing them, Vietnam will not have its own automobile industry.


Mercedes Benz Vietnam has announced it received a license to import cars for domestic consumption. Experts say this might ignite a new trend for existing automobile joint ventures to import cars to sell instead of investing in manufacturing.

Under WTO commitments, as of January 1, 2009, foreign enterprises and foreign invested enterprises will have the right to import and distribute cars on the domestic market. However, in mid 2007, several members of the Vietnam Automobile Manufacturers’ Association (VAMA) sought permission to import cars to sell domestically. Mercedes Benz Vietnam has become the first automobile joint venture able to import and sell their autos.

The next automobile joint venture to get permission might be Ford Vietnam and Toyota Vietnam, though their representatives did not respond to questions to this effect.

What the public is interested in now is not will automobile joint ventures will import cars, but when they will import cars. Joint ventures are rushing for permission because of the recent tax adjustments by the Ministry of Finance.

The ministry reduced import tax rates from 90% to 60% last year, which has made importing autos more profitable than manufacturing them. Analysts estimate that 25% of total cars (28,000) now in circulation were imported.

Automobile joint ventures have said many times that if the Government continues lowering the import tax and thus hampering their operations, they will shift to importing and distributing cars rather than manufacturing them.

Analysts say that once automobile joint ventures are allowed to import cars for domestic consumption, the domestic market will be flooded.

Luckily, Mercedes Benz Vietnam only distributes its Mercedes S500L, CLS350, R350L, ML350, ML500, SLK350, GL320CDI and GL450 models, but not its Maybach, Dodge and Chrysler subsidiary models as well, said director of an auto seller that specializes in importing European cars.

At the launching ceremony of MPV Chevrolet Vivant, General Director of GM-Daewoo Vietnam (Vidamco) Jung-In Kim, said his joint venture has not made any decisions yet, but if necessary, will import Chevrolets, Cadillacs, GMCs, Hummers, Saabs and Saturns.
Ford and Toyota, like GM Daewoo, will also bring many more models to Vietnam if they are allowed to import cars, including Ford’s Jaguar, the Aston Martin, Land Rover, Lincoln, Mercury, Volvo, or Toyota’s Lexus and Scion.

Automobile joint ventures have the advantages when compared to trading companies. They can sell cars at lower prices because they can import for less. Moreover, they can provide better post-sale services.

In latest news, sources say the Ministry of Finance is considering re-increasing the tax on imported cars from 60% to 63% or 70% in an effort to solve the traffic jam problem.

source: http://english.vietnamnet.vn/biz/2008/01/766379/

Jim Andrew Elected Chairman of AmCham Vietnam in Ho Chi Minh City

The Board of Governors of the American Chamber of Commerce in Vietnam (Ho Chi Minh City) has elected a new chairman, Mr. Jim Andrew, of ConocoPhillips Vietnam.

In outlining his vision for the organization, Mr. Andrew stressed the need to continue the dynamism of AmCham. "We want to build on the momentum we have developed in recent years, particularly now that Vietnam is a member of the World Trade Organization (WTO) and enjoys Permanent Normal Trade Relations (PNTR) with the United States.

"We also want to support the government's shift from export-oriented manufacturing investment promotion to more broadly based economic development, including foreign investment in services and infrastructure," he said. "We will strengthen our support for investment promotion, networking, and work with other AmChams in the Southeast Asia region to advance regional economic integration."

Jim is currently Manager of Business Development and Government Affairs for ConocoPhillips Vietnam, where he is responsible for commercial oversight of ConocoPhillips businesses, management of ConocoPhillips government relations programs, and development of new ventures in Vietnam. Jim also serves on the Board of Directors for the Nam Con Son Pipeline System, the nation's largest natural gas transportation and processing business.. ConocoPhillips is the single largest foreign investor in any industry in Vietnam, with over US$ 1.3 billion invested in capital projects in Vietnam since 1996.

He has held a variety of operational, engineering, commercial and leadership positions at ConocoPhillips in New Orleans, Anchorage, Calgary and Houston. Jim has worked on oil and gas business initiatives in over 20 countries in Europe, Africa, Asia and Latin America, most recently as Director of Business Development for ConocoPhillips in Latin America.

A native of New Orleans, Louisiana, Jim holds an undergraduate degree in engineering from LSU and an MBA in International Business from the University of Western Ontario.

Jim has been active in the United Way in the US and Canada and served on the Board of Directors for the Petroleum Joint Venture Association of Canada.

AmCham Vietnam is a not-for-profit, non-governmental, and non-political voluntary membership association of American businesses in Vietnam. Objectives include:

1. Promote the development of trade and investment between the United States and Vietnam.

2. Provide a forum where American businesses in Vietnam can identify and discuss common interests regarding commercial activities in Vietnam.

3. Work with organizations in Vietnam on matters of mutual interest.

4. Maintain relations with chambers of commerce in the United States and other chambers of commerce or commercial organizations.

AmCham Vietnam was founded as an informal association in March 1994, just one month after President Clinton lifted the trade embargo in February 1994.

For more information on AmCham Vietnam, http://www.amchamvietnam.com/.

Source: PRWeb

US Market Turmoil Affecting Vietnam’s economy

Experts, State officials, and entrepreneurs all think that Vietnam will be heavily influenced by the US economic recession.

Vietnam, and especially textile and garment companies will not be safe from the US economic recession. It is expected that in 2008, the US market will consume 55% of Vietnam’s total garment exports.

As the US economy falls further into difficulty, Vietnamese exporters have to offer lower sale prices in order to stimulate the demand from US consumers. Once they have to lower prices, their profit will be lower and they will face the possibility of becoming the defendants in anti-dumping lawsuits raised by US textile and garment producers. Currently, the US still is still imposing the apparel imports monitoring program on imports from Vietnam.

The US economic recession has had big impacts on footwear exports in recent months. Vietnamese companies have been facing a lot of difficulties negotiating new orders. Enterprises need to think of expanding export markets instead of focusing on the US in order to avoid risks in anticipation of weaker purchasing power. However, it is not so easy to do that and it takes time.

The optimal solution for footwear companies is trying to negotiate to get the best deals on contracts. Moreover, they also need to increase the ratio of locally made products or parts of products and economize production materials.

If the US economy falls into recession, this will affect Vietnam in three ways. First, in terms of exports, the US is a huge market for Vietnamese products; it consumed 24% of total exports in 2007. As American consumers tighten their belts, it will more difficult to export products to the US. The US will cut imports of garment and footwear products, which are Vietnam’s key export products.

Second, when the US economy falls into recession, East Asia will be the region to suffer most, and they hold 60-70% of total investments in Vietnam. These countries will reduce spending while trying to boost exports. As a result, they will reduce their investments in Vietnam, while Vietnamese export products will face big challenges. The competition between Vietnam and East Asian countries, which have the same advantageous export items, will become fiercer.

Third, the foreign portfolio investment into Vietnam, especially into the stock market, will decrease.

On January 23, at the conference “Achieving sustainable growth – one year after WTO accession’ held in Hanoi, Brad Levitt, Global Head of the Capital Markets for Standard Chartered Bank said that the falls of the global stock markets have been negatively affecting Vietnam’s stock market and credit market

The Government of Vietnam should discuss the solutions to problems right now. It has to take actions to achieve macroeconomic balance, reduce inflation, reduce the trade deficit and cut ineffective investments, while helping improve the competitiveness of Vietnamese enterprises.

source: vietnamnet

Disney-theme Park to be Built in Vung Tau

California-based Good Choice USA last week got an official investment certificate to develop a $1.3 billion Disneyland-style them park in the coastal town of Vung Tau, near Ho Chi Minh City.

It is a move that Good Choice, one of the affiliates of leading US real estate and investment firm Platinum Dragon Empire Incorporated (PDE), considered “very significant” for its project development.

The Vung Tau Wonderful World Theme Park project will cover 155 hectares in Vung Tau’s Bau Trung area with entertainment facilities for children and adults.

The giant park will also house the 80-storey Landmark Tower, a “Wonders of the World” site, where spectators will find replicas of the Eiffel Tower, Golden Gate Bridge, the Egyptian Pyramids as well as an international conference centre, shopping malls, internationally-standardised hotels and restaurants, 3D cinemas and open-air stages.

The giant park will be able to accommodate 100,000 visitors around the clock.
Besides the park, Good Choice is also interested in a project to build an aquarium complex in Nghinh Phong Cape. The multi-storey Vung Tau Aquarium will be modeled on a giant aquarium in Monterey, northern California, USA.

The project will comprise large aquariums displaying various marine life as well as fastfood restaurants, bars, souvenir shops, booking counters, waiting rooms and showrooms featuring coral, marine plants and information on oceanography.

The two projects are scheduled to finish beyond 2010, but developers want them to be operational as soon as possible to cash in on arising opportunities for Vietnam’s tourism industry.

To view more pictures of the projects, click here.

source: vietnamnet

Vietnam Index Maybe Listed on Dow Jones

Dow Jones said last week the company was looking into incorporating Vietnam into its global listing of stock indexes.

“Vietnam is on our priority list for market expansion,” said Sybille Reitz, a Dow Jones spokeswoman who visited the offices of Dau Tu (Investment) and Vietnam News newspapers last Thursday and Friday.

International investors are looking to diversify their investment portfolios by investing in emerging markets such as Vietnam.

Dow Jones offers 130,000 equity indexes, as well as fixed-income, alternative and portfolio indexes, from 58 countries.

Based in the US , Dow Jones Indexes has offices in China , Hong Kong and Singapore. For more information on Dow Jones Global Indexes, click here.

Source: VNA

Pharmaceutical industry attracts foreign investors

Right after the country joined the World Trade Organisation, the pharmaceutical industry became a magnet to draw in foreign investment with 58 new foreign businesses in 2007 alone.

The Health Ministry reported that it has, by the end of October 2007, licensed 370 foreign businesses engaged in the making of medicines and drug materials with Chinese, Indian and Pakistani entrepreneurs making up the majority.

“With a population of more than 85 million people and an abundant source of tropical herbal plants, Viet Nam is a potential market for foreign pharmaceutical businesses to explore,” an official from the Ministry of Planning and Investment (MPI) said.

The Government has given incentives to those involved in the making of biotechnology-used medicines, materials for antibiotics, drugs to cure social diseases, vaccines, bio-products, and herbal medicines.

There are 46 foreign-invested projects with a total registered capital of 112 million USD engaged in producing pharmaceutical products in the country, Trung said, adding that these facilities have not yet produced a large quantity of high-quality products to meet the people’s demands.

The Vietnamese people’s spending on medicines jumped from an average 0.3 USD per person in 1999 to 8.6 USD in 2004 and 12.69 USD in 2007.

Currently, locally-made drugs meet around 50 percent of the demands, leaving the haft to imports.

In 2007, the country imported 777 million USD in drugs and medicinal materials, of which medicinal materials accounted for 25 percent.

The pharmaceutical industry has set a target of meeting 60 percent of the local market’s demands by 2010 and 70 percent by 2015.

source: vnbusinessnews

13 Firms Approved to Conduct Audits by State Securities Commission

The State Securities Commission (SSC) has approved the 13 independent auditing firms below to provide auditing services for securities issuers, listed firms and securities companies in 2008.

They are:
1. CA&A Consultant and Auditing Company Limited
2. Auditing and Accounting Services Company Limited (AASC)
3. Vietnam Auditing and Accounting Consultant Company Limited (AVA)
4. Dat Viet Auditing and Consulting Company Limited (Vietland)
5. International Financial Consultancy and Auditing Company Limited (IFC)
6. Chuan Viet Consulting and Auditing Company Limited (Vietvalues)
7. Phuong Dong ICA Auditing Company Limited (PCA)
8. Hanoi Accounting and Auditing Company Limited (CPA Hanoi)
9. UHY Consulting and Auditing Services Company Limited
10. AS Auditing Company Limited
11. Vietnam Auditing Company
12. Southern Auditing and Accounting Financial Consulting Services Company Limited (AASCS)
13. Vietnam ASNAF Auditing Company Limited

Let's hope these auditing firms can remain truely independent. As we know, the reliability of the audited financials will depend on the automony of the auditing firm, interpretation of accounting rules, conflicts of interest, and the integrity of management.