Price Waterhouse Cooper’s (PwC) 2018 Global Economic Crime and Fraud Survey in Vietnam finds that 52% of Vietnamese enterprises had experienced economic crime in the past two years.
This is the first PwC survey in Vietnam. According to the survey, this crime rate is higher than the average in Asia-Pacific’s 46% and the global rate of 49%. Even though 40% of the asked people said they hadn’t encountered any criminals, it’s highly likely that the crimes just haven’t been exposed yet.
The most common crime in Vietnam is embezzlement with 40% votes and bribes and corruption with 36%. 11% of the asked people don’t know or don’t want to say. About 53% of the criminals in major cases are insiders with 61% of them are low-level or middle-level managers.
32% of the surveyed said they suffered more than USD100,000 in damage not to mention damage to reputation and business relations. Marcus Paciocco from PwC Vietnam said some measurable financial losses included legal costs or actual loss of money. However, other damage, such as to reputation or image could lead to much larger losses.
However, most of the crimes were only discovered by accident or internal alerts. If internal audit is a powerful tool that helps discover 14% of the crimes in the world then this rate in Vietnam is only 3%. The hotlines in Vietnam also help to discover 3% of the crimes while the rate in the Asia-Pacific region was 7%.
Paciocco said that a negative side of a rapidly-developing economy was that firms only focused on sales growth instead of internal controls.
The survey pointed out that since the Vietnamese economy heavily depends on cash, it was an ideal environment for money laundering. It is a good sign that firms have a strong awareness about the issue with 86% firms said they had followed all procedures about money laundering prevention.
State-run ship giant Vinalines has announced that it will cut the state holding in Vietnam Sea Transport and Chartering JSC (Vitranschart) from 58.03 to 36 per cent to reduce losses.
Vinalines said that it will auction over 13.4 million shares of Vitranschart, or 22.03 per cent of the latter’s charter capital, at the starting price of VND1,200 ($0.052) per share.
The auction is planned to be held on December 5, 2018 at the Hanoi Stock Exchange. Vinalines is expected to get over VND16 billion ($695,700) from the sale.
Established in 1975, Vitranschart’s core businesses are sea freight, waterway transportation, port operation, warehouses, and logistics services.
According to its consolidated financial statement, in the first nine months of 2018, Vitranschart incurred losses in all business lines, producing a loss of VND182 billion ($7.9 million) in the period and amassing VND1.485 trillion ($64.56 million) in total losses.
As of the end of the third quarter of 2018, Vitranschat’s total assets reached VND1.367 trillion ($59.4 million), while total debts hit VND2.228 trillion ($96.87 million), surpassing total assets by 63 per cent.
Vitranschart is one of the 18 member companies that Vinalines will divest. They include Tin Nghia Industrial Park Development JSC, Petec, Sesco, Inlaco Haiphong, Haiphong Maritime Investment and Trading JSC, Dong Do Marine, OSTC (previously NOSCO), and Vinalines Nha Trang.
The ship giant will cut its holdings in nine others, namely VOSCO (from 51 to 49 per cent), Vinaship (from 51 to 36 per cent), Haiphong Port (from 92.56 to 65 per cent), Danang Port (from 75 to 65 per cent), Can Tho Port (from 99.05 to 51 per cent), Cam Ranh JSC (from 80.9 to 51 per cent), Cai Lan Port (from 56.58 to 51 per cent), Transvina (from 56 to 51 per cent), and Khuyen Luong Port (from 49 to 36 per cent).
Building HCM City into an innovative business hub in the Southeast Asian region will top the agenda of the HCM City Economic Forum to be held in the city on November 23.
The forum, with the theme “Fostering Interactive and Innovative Districts: the Prominent Role of Businesses”, will focus on the transformation of the city’s eastern area, including districts 2, 9 and Thu Duc, into an innovative hub.
More than 600 local and international experts, scientists, academics and representatives from local and foreign businesses are expected to participate in the two-day event, the first of its kind organised by the city government. Key leaders from the Government and State agencies will also attend the event.
The event will discuss the role of businesses, especially start-ups, in building an innovative and competitive city.
Speaking at a press conference in the city on Wednesday, Chu Tien Dung, chairman of the HCM City Union of Business Association (HUBA), said: “The city will continue to foster its sustainable development by improving growth quality and competitiveness through healthy economic restructuring.”
Dung said the city would ensure a favourable business environment for enterprises, encouraging start-ups, innovation and smart-city measures.
The forum will feature speakers from respected companies, organisations and educational institutions around the world.
“The city will also introduce a project to develop the eastern part of the city into an innovative urban area, which will be discussed at the forum,” Dung told the Viet Nam News.
The event is expected to connect Vietnamese businesses with investors in many fields from other countries.
Pham Tran Thanh Thao, an assistant to the director of the city’s Department of External Relations, said: “International cooperation plays a key role in developing HCM City into an innovative and sustainable hub.”
“With a focus on a knowledge-based economy, HCM City wants to receive opinions from the forum and seek cooperation from foreign investors,” she added.
The forum, organised by HUBA and the HCM City Department of External Relations, will discuss how HCM City can learn from innovative urban areas that are contributing to sustainable development.
The forum will also include input from experts, businesses and investors on measures for enhanced connections between enterprises, research institutes and the Government.
The event is expected to be held annually to discuss HCM City’s progress in applying innovative and sustainable development.
First real estate promotion event Red Friday slated for December
The real estate week Red Friday with special promotion programmes will be held in Vietnam for the first time, from December 7-14, the Vietnam Association of Realtors (VARS) announced on November 14.
The event, held by the VARS with the engagement of many firms such as Eurowindow Holdings, Hai Phat Invest, Sunshine Holdings, Hateco, MIK, Tan Hoang Minh, Ciputra, Gamuda, Hacinco, Vinaconex 2 and Taseco, aims to create a breakthrough for the real property market in the end of the year before the Lunar New Year comes.
During the week, customers will have chances to own real estate products with interesting discounts up to 30 percent, which is higher than any promotion programme offered by developers so far this year.
VARS Vice Chairman and General Secretary Nguyen Van Dinh said that Red Friday has great social significance as this is a chance for investors to show gratitude to customers, while giving opportunities for many people with real demand to own houses within their budget capacity.
At the same time, the event will coordinate with leading banks to help customers arrange their finance with preferential interest rates, he added.
All promotion products are available at website www.redfriday.com.vn.
Start-up Hoa Nắng receives VNĐ10b from angel investor
Louis Nguyễn, an investor of TV reality show Shark Tank, on Monday said he plans to invest VNĐ10 billion (US$438,000) in Hoa Nắng Agriculture Company Ltd, a start-up producing organic agricultural produce.
Louis Nguyễn announced at the signing ceremony that Hoa Nắng would diversify from rice into other kinds of organic produce, and focus on both the domestic and export markets.
Besides selling in the domestic market, the company would also export, including to the US, with the strong development in the former driving exports, he said.
Without disclosing the stake he was buying in the company, he said merely its structure would be changed.
Nguyễn also announced he was investing in VIETSWAY Enterprise, in this instance saying he would pick up a 49 per cent stake without revealing the investment amount.
VIETSWAY is an e-commerce company that now sells more than 200,000 Vietnamese products on international e-commerce platforms like Amazon, Walmart, Ebay, Sears, Google Shopping, Etsy and Rakuten.
The investment in VIETSWAY would help Hoa Nắng export, he explained.
Hoa Nắng is famous in Shark Tank for having founders Lâm Anh Tú and Đặng Thị Trường An with a lot of ambition and enthusiasm but little money.
When they came to Shark Tank, Hoa Nắng had had another investor. When Nguyễn agreed to invest in it, the company shut down since the investor pulled out his stake.
The two founders then set up a new company with the same name.
Nguyễn owns SaiGon Asset Management.
Online Friday expected to see US$64 million in sales
Online Friday 2018, which will be held on December 7, is expected to see sales of VNĐ1.5 trillion (US$64 million) from two million orders, event organiser Việt Nam E-commerce and Digital Economy Agency (IDEA) under the Ministry of Industry and Trade said.
Speaking at a press conference held in Hà Nội on Wednesday, the agency said there would be 5,000 products with promotional prices in the fifth year of the event.
Around 3,000 businesses registered to join the programme. The event will continue to accept payments through QR code and POS systems. The technical system was prepared to handle five million visitors and 150,000 interactions at the same time.
Đặng Hoàng Hải, IDEA’s director, said they would organise an event to provide digital technologies and e-commerce experiences to customers on walking street around Hoàn Kiếm Lake from November 30 to December 9.
To ensure product and service quality, the organiser told firms to provide certificates of origin, Hải said.
The organiser will co-operate with price comparison apps to ensure the products offered during Online Friday are promotional prices before uploading to www.onlinefriday.vn.
Many big brands plan to participate such as Samsung, Jetstar, Vinamilk, Lazada, Shopee, Tiki, Lotte, Adayroi, Thế giới di động, Yes24, FPTshop and ViettelStore.
He said delivery businesses such as VnPost, Nijavan, Lalamove and Snailship would support firms by reducing delivery costs for the event.
Moreover, 20 banks will join in cash-back programmes to help customers use card payments.
Online Friday 2018 was organised and implemented following the Government’s Decree 81/2018/NĐ-CP detailing the commercial law regarding trade promotion activities.
The maximum value of goods and services used for sale promotion and the maximum discount rate for promoted goods and services are extended to 100 per cent in concentration promotion. For this reason, Online Friday will have products sold at zero đồng or with prices reduced by 90 per cent.
Online Friday was organised for the first time in 2014 with 400,000 visitors, 160,000 orders and VNĐ154 billion in revenue.
Last year, the programme received 2.4 million visitors, 1.3 million orders and VNĐ1.22 trillion in revenue.
Local specialties to be on display next week
The Vietnam Local Specialties Fair 2018 and the “One Village One Product” exhibition are scheduled to take place from November 21-25 in the capital city, the Hanoi Promotion Agency announced on November 13.
According to the agency, the fair will accommodate nearly 300 booths of more than 200 domestic and foreign businesses. A prominent feature of the fair is the presence of typical products and the demonstrations of the culture of the 13 Mekong Delta localities.
Meanwhile, nearly 100 pavilions will be set up at the exhibition, showcasing products by over 20 craft villages in Hanoi.
Within the framework of the events, there will be a conference that aims to promote the goods supply-demand connection between Hanoi and other localities throughout the country.
Hanoi is home to more than 1,300 craft villages, over 300 of which have been recognised as traditional.
In 2017, craft villages brought home a combined revenue of 200 million USD from exports.
Quang Ninh to bring “One Commune, One Product” fair to Hanoi
The “One Commune, One Product” (OCOP) agricultural trade fair will be held by the northern province of Quang Ninh in Hanoi from January 11–15, 2019, just before Tet, the traditional New Year of Vietnam.
This will be the sixth year Quang Ninh has organised the OCOP fair, which was previously held in the province only.
Bringing the fair to Hanoi this year, Quang Ninh hopes to create greater competition among its agribusinesses and cooperatives that would motivate them to improve their products’ design and packaging to meet broader market demand. The event would also be an opportunity for them to raise production capacity, expand market access and boost sales.
The fair will house about 80 booths with various OCOP products put on display, ranging from food, beverage and herbal medicines to handicrafts and services.
The Quang Ninh OCOP programme has been so far participated by 44 enterprises, 64 cooperatives and 56 business households. It has provided employment for more than 3,500 locals with a monthly income between 5 million and 9 million VND (213 – 385 USD).
Since the final quarter of 2018, the province has held a host of three-day-per-week OCOP events across Dong Trieu, Quang Yen, Hai Ha, Mong Cai, and Cam Pha to support local participants of the programme in expanding their markets to traditional wet markets, industrial zones, and residential areas.
In 2013, Quang Ninh was the first province in Vietnam to pilot the programme, which was initiated by the Ministry of Agriculture and Rural Development in 2008, following the model of Japan’s “One Village, One Product” (OVOP) drive and Thailand’s “One Town, One Product” (OTOP). Any OCOP brand will be registered as intellectual property and printed on all products.
Concluding the first stage of the programme from 2013-2016, Quang Ninh developed 210 OCOP products. More than 180 economic establishments and households joined the programme.
A chain of OCOP points of sale have been open in all the 14 districts, towns and cities with product values up 20-30 percent.
During the second stage, the province will strive to have 250 high-quality OCOP products by 2020, including at least 12 provincial-level products, six others qualified to join the national value chain, and one to two competitive enough in the global market.
OCOP products brought approximately 239 billion VND (10.23 million USD) to Quang Ninh in the first six months of 2018, up 7.4 percent year-on-year. The revenue resulted in a profit of 27.7 billion VND (1.18 million USD), an annual increase of 10 percent against the same period last year.
Mekong Delta to become No.1 riverside destination in Asia
DNES rolls out new incubation program with new advancement
Danang Entrepreneurship Support (DNES), also known as Danang Incubator, launched Incubation Program 1.1 today, November 13, with many advanced features at SURF SPACE, the second coworking space of DNES in Danang City.
In particular, the Incubation Program 1.1 will be applied to three startup projects: Dawa Farm, which makes clean peanut cooking oil; ecommerce website Toidayhoc.com, which connects instructors and learners; and Fserving Home, which links real estate traders by deploying an artificial intelligence (AI) application.
During the first six months of supporting startup projects under the new program, DNES will prioritize enhancing the project founders’ capacity and streamlining the startups’ development process to obtain specific outcomes. In addition, the incubator will help startups connect with angel investors to increase their confidence during the early stages of doing business.
According to Le Van Sinh, one of Dawa Farm’s co-founders, in joining the incubation program, he expressed his desire to connect with experienced investors and seek partners to jointly produce cooking oil containing good cholesterol, or HDL cholesterol. Thus, the healthy peanut cooking oil will help consumers burn more calories and avoid obesity, stated Sinh.
Dawa Farm has been operational for around one year, using materials supplied by local farmers, and mainly serves customers in the central and northern regions, Sinh added.
Besides this, Nguyen Huu Nhan, the project founder of Toidayhoc.com, remarked that the ecommerce site will offer a number of courses associated with jobs and skills and will recommend them to people in need. Later, Nhan will expand the business by browsing social network platforms to find more instructors and learners.
For the Fserving Home project, its founder noted that the project will apply more specialized smart apps to other fields including food and beverages and entertainment in the coming period, alongside the AI application for the property sector.
DNES has provided an incubation setup for over 40 startup projects. However, only some 50% of these projects still exist and grow to date, and some 60% stay connected to the incubator, said Vo Duy Khuong, chairman of the Member Council at DNES. Accordingly, Khuong hoped that the newly launched incubation program would help more startups achieve success and retain their connection with DNES to form an effective startup ecosystem.
Commercial property supply likely to shrink in HCMC
According to the Ho Chi Minh City Real Estate Association (HoREA), the city is unlikely to see any major increase in supply of commercial real estate in ten first months of the year compared to the same period last year.
For instance, the number of housing project decreased by 11.1 percent and the number of houses sold in market dropped by 39.2 percent. High-end, mid-range and cheap apartments have seen a decline of 9.6 percent, 37.5 percent and 68 percent respectively.
Specifically, just 23,759 houses of 65 projects were built in ten months with 7,444 high-end houses; 11,731 mid-range houses and 4,584 cheap houses
From the figure, HoREA said the supply of high-end houses is abundant in the next time. Imbalanced supply doesn’t guarantee the sustainable development for the market with low proportion of cheap houses.
Investors should re-consider their products and there will be fierce competition in the high-end house.
HoREA added that deluxe apartment projects in downtown enjoy exclusive right because city authorities decided not to approve high-rising building projects from now to 2020.
Vietnamese farm produce exported to 200 nations
Vietnam has risen to the second largest farm produce exporter in Southeast Asia and the 15th in the world with agricultural, forestry and seafood products being exported to 200 nations and territories.
That has been reported by the Ministry of Agriculture and Rural Development after five year implementation of agricultural restructuring project towards value added increase and sustainable development.
According to the ministry, agricultural, forestry and seafood export turnover reached US$157.49 billion in the phase of 2013-2017, up 51.2 percent over the average level in the previous five year phase.
The country had 1,955 newly established businesses in agricultural field in 2017, up 20 percent compared to the average number in three year 2014-2016.
As of September this year, the country has over 49,600 businesses operating in farm produce production, processing and trading; accounting for 8 percent of the country’s enterprises.
28,000 enterprises resume operation
A total of 28,000 businesses resumed operation in the first ten months this year, a year on year increase of 22 percent, according to the Government’s socioeconomic estimation.
In addition, the country had nealy 110,000 newly established companies with the total registered capital of VND1,116 trillion (US$47.94 billion), up 4.3 percent in the number of businesses and 9.2 percent in capital.
Export turnover was estimated to reach $200 billion, up 14 percent. Of these, domestic sector was up 16.8 percent and foreign direct investment (FDI) sector increased 13.2 percent.
FDI capital hit US$21.4 billion including $15.1 billion investment and $6.3 billion capital contribution and share purchase.
HCM City gets more three safe farm produce fairs
More three safe farm produce fairs will be organized in districts 3,5 and 11 in HCM City, starting in November.
The fairs at the district 5’s Cultural Center and district 11’s Cultural Center are held on Saturday every week, beginning on November 10. Meanwhile the market at Children’s House in district 3 will open to the public on November 11.
Participants , including units and individuals, have products with food safety certification such as VietGap and GlobalGap.
The first safe farm produce fair was organized at Dong Ho restaurant’s courtyard at No. 195-197 Cao Thang Street in District 10 in Ho Chi Minh City in 2016. The fair’s organizers regularly check the quality of produce and randomly test fruit and vegetable samples for plant protection residues. The event is held every two weeks by the Ho Chi Minh City Department of Agriculture and Rural Development.
The safe farm produce fairs have been held in 10 locations throughout the city over the last 2 years with the participation of more than 20 farms earning turnover of VND 195 million a fair, attracting 500-1,000 visitors.
Shop, retail premises rent leap in HCMC
According to the report of Cushman & Wakefield, the supply of retail space in the HCMC realty market reflected a significant increase of 6.6 percent year-on-year, standing at roughly 1.26 million square meters in the third quarter of this year.
More people hired the retail space with the increase of 1 percent compared to the month before and 4 percent compared to the same period last year standing at 93 percent. Up to 90 percent of retail premises were hired by startup companies.
The Cushman & Wakefield said that fresh supplied resulted in new rent. Specifically, average rent in the third quarter leaped by 5.6 percent compared to the previous month and 7.4 percent compared to the same period last year standing at approximately VND 1.27 million ($54.5) per square meter monthly.
Most retail premises were hired to open food and beverage outlets. For instance, over 40 percent of food and beverage operators hired The Estella Place.
Additionally, international fashion brand names flooded in Vietnam with focus on average consumer. It is scheduled in 2019-2020, Decathlon and Uniqlo will open their first stores in Hanoi and HCMC.
As per Cushman & Wakefiel, stable economic growth is one of factors which helps retail sale maintain stable.
Transport giant to withdraw capital from leading HCM City taxi firm
In an apparent u-turn, transport giant Tracodi has approved divestment of its 30% stake in Vinataxi.
Just months after saying it intends to increase its stake in Vinataxi, renew its fleet and install driver software, the Transport and Industry Development Investment Corporation (Tracodi) has decided to pull out.
Tracodi has authorized Nguyen Thanh Hung, its general director and vice chairman, to seek investors and negotiate a transfer price not lower than the net present value of Vinataxi shares calculated according to book value.
Vinataxi is a joint venture between Tracodi and electronic component distributor Tecobest Hong Kong, established in 1992.
In 2003, Tecobest transferred capital management rights to ComfortDelGro, the leading public passenger transport operator in Singapore.
According to the consolidated financial statement of the third quarter, Vinataxi occupied the third largest market share in Ho Chi Minh City with a chartered capital of VND113 billion (US$4.84 million).
Tracodi’s initial investment value was approximately VND34 billion (US$1.46 million) in the joint venture.
Tracodi’s capital withdrawal is in stark contrast to the plan announced by its board at its annual general meeting mid-June. Then, the corporation announced it wanted to negotiate raising its ownership ratio in Vinataxi to 49%, and coordinate with ComfortDelgro Savico Taxi, a joint venture between ComfortDelgro and Saigon General Service Corporation, to renew their fleets and install driver software.
Tracodi’s management board estimates the firm will reap net profit of VND8 billion (US$342,916) from its taxi business line this year with its combined fleet of over 300 cars.
In 2017, revenues and after tax profit of Vinataxi reached over VND47 billion (US$2.01 million) and VND1.2 billion (US$51,431), respectively.
How to port your Vietnamese phone number to another network operator
Big-name brands get involved in Online Friday 2018
Renowned brands like Samsung, Oppo, LG, Jetstar, Vinamilk, Mattana, Canifa, and Uma, among others, will offer their products at a substantial discount during the fifth Online Friday scheduled for December 7.
General Director of the Vietnam E-commerce and Digital Economy Agency, under the Ministry of Industry and Trade, Dang Hoang Hai told the press on November 14 that famous e-commerce websites including Lazada, Shopee, Tiki, Lotte, and Adayroi will partake in the programme.
The organising board has set the target of some 2 million successful orders, hoping to bring about VND1.5 trillion (US$64.5 million) in revenue on the day. There are 3,000 enterprises having registered to offer discounts on 5,000 products and services, he said.
As authentic products with transparent sources continue to be the highlight of this year’s event, products on offer must have certificates of origin, Hai stressed, adding that the quality of the goods will be strictly controlled through e-commerce platforms as intermediaries.
The big promotional event encourages payment by QR codes or card swipes at point-of-sale (POS) machines, instead of cash, he noted.
As many as 20 banks have agreed to implement a cashback policy during the event, which means customers will receive discount into their bank accounts after buying products or services online.
In particular, consumers will have the chance to experience digital technologies and e-commerce at a one-week event taking place at the pedestrian zones around Hoan Kiem (Returned Sword) Lake from November 30, jointly held by the Ministry of Industry and Trade and the Hanoi city People’s Committee.
In a bid to improve customer experience, the agency’s Centre for Information and Digital Technology will work to ensure the technical system is stable and accessible to 5 million users and 15,000 interactions at the same time.
Online Friday 2018 will be the first online promotion programme held by the Government this year, carried out under Decree No.81/2018/ND-CP on trade promotion law.
The annual e-commerce event has been held since 2014. In 2016, the event generated more than VND1 trillion (US$43 million) in revenue, while the figure for 2017 was VND1.22 trillion (US$52.46 million).
Vietnam must be an early 5G bird: minister
To move up in global telecom rankings, Vietnam should be among the first to launch 5G services, says the nation’s information minister.
Nguyen Manh Hung said at a recent meeting that Vietnam should test the 5G network next year and ensure nationwide coverage by 2020.
Vietnam used to be ranked among the top 20 in the world by the International Telecommunication Union for mobile-broadband subscriptions, thanks to the application of 2G mobile networks in 1993, just three years after its global entry.
But it lagged far behind the world in launching its 3G and 4G services, and Vietnam’s rank plummeted to 115/193.
3G networks showed up in the world in 2000, but it was not launched in Vietnam until a decade later. The 4G service has been in vogue for 10 years, but so far, the network in Vietnam is still far away from the qualified speed.
“5G is coming, and this is the chance for Vietnam to climb up in the ranking. And for this change to happen, Vietnam should be one of the first to launch the network, at least in Hanoi and Ho Chi Minh City,” Hung said.
The Ministry of Information and Communications aims to test 5G networks next year and launch it in 2020, local media reports have said.
“5G is not only an opportunity for connection services and going up the telecommunications ladder, but also an opportunity for developing the country’s information and communications technology (ICT) industry,” Hung said.
Like the 4G networks currently widely available, 5G is based on radio frequencies, the same used for television broadcasts, walkie-talkies, wifi signals or garage door remote controls, according to AFP.
It will use a higher radio frequency that is not in use yet and can move data at a much faster speed.
But since higher radio frequencies don’t travel as far as lower frequencies, it will rely on denser arrays of small antennas and artificial intelligence to offer data speeds up to 50 or 100 times faster than current 4G networks, the report said.
5G will allow people to send texts, make calls, and browse the web as always – but will dramatically increase the speed at which data is transferred across the network.
This will make it easier to download and upload Ultra HD and 3D videos and allow smartphones to run more complex mobile internet apps.
5G will also make room for thousands of internet-connected devices to enter the everyday world.
Most European operators have targeted 2020 for rolling out their 5G services.
Fly-by-night foreign companies remain a problem for Vietnam
Vietnam continues to be plagued by foreign company chiefs fleeing the country without paying off debts or workers’ salaries.
Last month Kim Dae Gun, a Korean national and director of the Cho Won Textile Company in southern Dong Nai Province, disappeared after a business trip abroad leaving the company owing VND23 billion (US$990,138) to banks and VND120 million (US$5,150) in employees’ social insurance premiums.
The police are investigating the incident, the latest in a slew of such incidents in the country.
Canadian steel-manufacturer Metacor Vietnam based in southern Ba Ria – Vung Tau Province was deeply in the red by mid-2018.
It had racked up nearly VND150 billion (US$6.4 million) worth of debts in the form of social insurance obligations, income tax and loans from banks.
Denis Piche, its general director and a Canadian national, was summoned thrice in June this year by the Ba Ria – Vung Tau Industrial Zone Authorities but he failed to respond.
Piche had already left Vietnam, in early June, through the Moc Bai border in Tay Ninh Province, according to local authorities.
In Ba Ria – Vung Tau alone, nearly 20 foreign-owned companies owing taxes worth VND30 billion (US$1.28 million) no longer operate at their registered addresses, while another three owing VND60 billion (US$2.56 million) have ceased operations completely.
Speaking to Tuoi Tre newspaper, Nguyen Minh Cuong, deputy head of the Ba Ria – Vung Tau Tax Department, said some companies take advantage of lax policies and work online to avoid financial obligations, making it difficult for authorities to properly monitor them.
Nguyen Mai, chairman of the Association of Foreign Investment Enterprises, blamed the problems on poor management of foreign firms by authorities.
Most of the firms are based in industrial zones, each with their own management, and the average size of a zone is only 100-150 hectares, yet foreign enterprises vanish, he said.
“The reason why foreign businesses are able to disappear is because of lax monitoring of their business activities by authorities.”
Pham Minh Huan, a former deputy labor minister, said foreign enterprises have been shutting down surreptitiously for years but the issue has not been resolved.
Since there are no specific regulations, local authorities have had to deal with disappearing businesses on an ad-hoc basis, using taxpayers’ money to pay employees’ salaries, encouraging local businesses to recruit the abandoned employees or freezing and liquidating companies’ assets under the Bankruptcy Law.
“But if a business had rented its fixed assets, there is nothing we can do,” Huan pointed out.
Phan Huu Thang, former head of the Foreign Investment Agency under the Ministry of Planning and Investment, explained that foreign business executives are able to flee because industrial zone managements, tax authorities and insurance agencies do not supervise their activities closely enough.
In the long term the solution lies in tightening the FDI licensing process by factoring in the history of the investor, he suggested.
Foreign companies’ activities should be assessed every three months to prevent them from disappearing. Though it seems fairly simple to do, the difficulty lies in selecting the government agency to implement it, he said.
Disbursed FDI in Vietnam reached US$15.1 billion in January-October this year, up 6.3% year-on-year, according to the Foreign Investment Agency.
FDI pledges for new projects, increased capital and stake acquisitions downed 1.2% from a year earlier to US$27.9 billion in the 10 months.