Finance Ministry Says to License More Insurance Firms
Vietnam's Ministry of Finance (MoF) is considering licensing for some foreign insurance companies and the number of new firms will depend on Vietnam's pledges during further integrating into the world economy, said head of Insurance Department under the MoF Le Quang Binh.
The ministry is considering providing licenses for the French Groupe Prevoir and the US ACE INA. Both of them were seeking to establish a wholly foreign-owned life insurance company in Vietnam, he said, adding that there would be more insurance firms licensed in the coming time.
The MoF has recently licensed the leading insurance brokerage firm in the US - Marsh Inc to operate in Vietnam as an insurance brokerage. It also granted a licence for China's Ping' An Insurance Company to open a representative office in Vietnam.
Currently, Vietnam has 18 insurance companies, one re-insurance company and five insurance brokerages. They offer around 500 insurance products. There are also around 30 representative offices of foreign insurers in the local market.
Total insurance premiums in Vietnam rose 25% in 2004 totaling VND14.232 trillion ($906.5 million), accounting for nearly 2% of GDP. (Vietnam Economic Times Mar 21 p9)
Vietnam Cuts Tariffs on Imported Electronics Parts
Vietnam has substantially cut tariffs on a large number of imported electronics parts by between 5% and 20%, the Ministry of Finance announced last week.
The products subject to the tariff cut include TV antennas, CD and VCD players, digital cameras, mobile phone beepers, and transformers etc., the ministry said. The new tax rates for these products would range from 0% to 20%.
Ministry officials also said the prices of electronics products in the domestic market would not change after the tariff reduction.
Early this week, domestic electronics makers reportedly asked the finance ministry to remove import duties on electronics parts.
Local electronics businesses say their production will be hit if the proposal is not approved, as tariffs on electronics products imported to Vietnam will be reduced to 5% this year and 0% in 2006 under the Common Effective Preferential Tariff (CEPT) scheme.
The ministry said it did not totally agree with the businesses, but it would change the tax rates to facilitate the operations of electronics makers. (Thanh Nien Daily Mar 21, Investment Mar 21 p1)
Vietnam Plans $126Mln in Subsidies for Sugar Refineries
The Vietnamese Government will provide State-run sugar refineries with at least VND1.98 trillion ($126 million) this year to help them reorganize and pay debt, including that to many foreign lenders, according to the Vietnam Sugar Association.
The Government, with this latest subsidy, has decided to reorganize 32 sugar factories and to relocate or close three more among the 39 that are operating now.
The ministries of Finance, and Agriculture and Rural Development have issued guidelines to help the factories use the State subsidy to improve their operations. The two ministries have tried twice before to aid the factories to escape from the red but failed.
Last year was the first profit-making year of the country's sugar industry since 1995, according to the Vietnam Sugar Association.
The sector reported VND5.37-trillion ($342 million) revenue last year. In 2003 it suffered from VND595 billion ($37.9 million) in losses. State auditing at 34 State-run sugar refineries showed that despite State money, the factories had racked up a combined loss of VND2.29 trillion ($145.8 million) by the end of 2003.
In 1995, the Government launched a program in which State-run sugar refineries were expected to supply one million tons of sugar per year by 2000.
To meet the target, Vietnam borrowed some VND9.5 trillion ($864 million) from international lenders to build new sugar factories, buy equipment and grow more cane. (Saigon Times Daily Mar 19 p1)
Common Enterprise Law Expected to Create New Investment Wave in Vietnam
Both domestic and foreign enterprises are eager to see the promulgation of the Common Enterprise Law, which is expected to create a fair playing field for them, according to a conference on drafting the Common Enterprise Law held in Hanoi late last week.
"The new law should ensure the unanimity between itself and Vietnam's current legal system. Its prime purpose is to facilitate the establishment and development of enterprises," said a representative of France's GLN Legal Consultancy Company.
Regarding the limits on the operations of foreign enterprises in Vietnam in the Draft Common Enterprise Law, Vietnamese policymakers should clarify the objects and the effects of the limits, said Peter Nelson from My Hoa Anh Consulting Co.
"All the limits, if necessary, must be made public to foreign investors so that they know what to do next," said Peter.
Many investors said Vietnam's legal system is still incomplete and many articles in the Draft Common Enterprise Law are not suitable with international business practice.
A representative of the European Chamber of Commerce (Eurocham) said he doubts the necessity of the article requiring that the board chairman and the general director of an enterprise be located in Vietnam.
In spite of many inappropriate articles the draft law may have, many foreign investors are happy that under the law, the proportion of shares that they can obtain in an enterprise will not be limited. The current limit is 30%.
"This move is expected to create a new investment wave in Vietnam," said Nguyen Dinh Cung, secretary of the Common Enterprise Law Drafting Committee. (Investment Mar 21 p4)