Vietnam Industry and Trade News Bulletin for JANUARY 15, 2016

A. OUTSTANDING GENERAL ECONOMIC NEWS

1. Budget Transparency and Administrative Reforms

• Low Budget Transparency: Vietnam scored only 18 out of 100 on the Open Budget Index, significantly lower than the global average of 45,. The country is ranked in the lowest group, characterized by providing “little” or “no” public budget information.

• Tax and Customs Reform: The Ministry of Finance aims to reduce at least 10% of tax administrative procedures and simplify 20% of existing ones in 2016. As of late 2015, over 98% of businesses used online tax filing, and 93.1% registered for electronic tax payments,.

• Business Registration Challenges: Despite legal reforms, the business registration process in Hanoi remains overloaded, with hundreds of representatives waiting daily and staff working overtime to handle the surge,.

2. Investment and Corporate Performance

• Weak Private Sector: Domestic private enterprises are predominantly micro or small (96%), struggling to connect with FDI “islands” or participate in global value chains,,.

• FDI Shifts: Capital is shifting from China and Thailand to Vietnam due to opportunities from the TPP and the ASEAN Economic Community,.

• Aviation Deal: Japan’s ANA Group signed a memorandum to become a strategic shareholder in Vietnam Airlines, investing approximately $108 million to expand its Southeast Asian network,.

• Major Tax Collection: The Ministry of Finance collected over 1,911 billion VND in taxes from Metro Cash & Carry following its transfer to a Thai partner,.

• Banking and Debt: VAMC issued nearly 110,000 billion VND in special bonds in 2015, helping reduce the system’s bad debt ratio to 2.72%,. Meanwhile, many banks have raised deposit interest rates by 0.1-0.2% to attract capital.

• Real Estate Risks: Experts warn of a potential “real estate bubble” in 2016 due to an explosion in high-end projects and “virtual fever” caused by price manipulation,.

B. NATIONAL ASSEMBLY NEWS

1. Law on Access to Information

• The National Assembly Standing Committee discussed the draft Law on Access to Information, emphasizing the need for clarity on which information must be public, which can be requested, and which is restricted,.

• Delegates suggested simplifying procedures and shortening timeframes for providing information to better serve citizens.

C. INDUSTRY AND TRADE NEWS

I. ELECTRICITY

• Price Adjustment Mechanism: New regulations stipulate that the minimum interval between retail electricity price adjustments is three months,.

• Competitive Market: A circular for a competitive wholesale electricity market is expected by mid-2017, with full operation aimed for 2019.

• Infrastructure Progress: Two critical power project clusters (Cau Bong and Duyen Hai) were completed ahead of schedule to ensure electricity supply for Southern Vietnam,.

II. MINERALS

• TKV Divestment: Vietnam National Coal-Mineral Industries Holding Corporation (TKV) completed divestment from six non-core units, earning 1,771 billion VND with a surplus of 270 billion VND.

III. IMPORT AND EXPORT

• Manufacturing Optimism: Over 90% of enterprises in the processing and manufacturing sector expect an increase in export orders for 2016,.

• Logistics Struggles: Foreign shipping lines, controlling 90% of Vietnam’s shipping capacity, are reportedly “colluding” to raise fees, while local associations remain too weak to protect members,,.

• Rice Export Challenges: Vietnamese rice faces pressure as Thailand plans to release 13 million tons of stockpiled rice. Additionally, Vietnamese exporters must pay high costs ($500/sample) to test rice quality in Thailand.

• Coal Imports: For the first time, Vietnam has transitioned to importing coal, bringing in nearly 500,000 tons in 2015.

IV. DOMESTIC MARKET AND MANAGEMENT

• Petrol Price Proposal: The Ministry of Finance and Ministry of Industry and Trade are considering daily adjustments for petrol prices to align closely with the global market and potentially eliminate the Price Stabilization Fund,,.

• Car Prices: Imported car prices, such as the 2016 Ford Everest, have surged by up to 25% (over 300 million VND) due to new Special Consumption Tax calculation methods based on retail rather than import prices,.

• Confectionery Market: Foreign corporations like Mondelēz International are aggressively entering the Vietnamese market, especially during the Lunar New Year season.

V. INTERNATIONAL INTEGRATION

• Trade Defense: Vietnamese businesses are urged to proactively use trade defense tools (anti-dumping, safeguards) as they are currently “passive” and often lose in international lawsuits,,.

• TPP Impact: The TPP is viewed as a major driver for institutional reform, helping Vietnam diversify markets and join global manufacturing networks,.