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BUSINESS IN BRIEF 21/1   2010-01-21 - VietNamNet/VNA

Hanoi’s CPI up 1.30 percent in January

Hanoi’s consumer price index (CPI) in January rose 1.30 percent over the previous month, the city’s Statistics Office reported.

The index was up 7.96 percent over the same period last year.

Ten of the 11 goods groups, including foods and restaurants services, beverages and tobacco, garment and footwear, housing-electricity-fuel and construction material, home appliances and equipment, medicine and health care services, transport, cultural, recreational and tourism products, education and other goods and services experienced slight increases, ranging from 0.01-1.66 percent. In particularly, price of food in the foods and restaurants services group surge 4.68 percent over last month.

Meanwhile, the price of post and telecom service remained unchanged.

As the Lunar New Year (Tet) festival is coming near, experts predict that prices of food serving for Tet will continue to increase from 5-7 percent.

During January, gold price fell by 3.62 percent compared to the previous month but increased 52.6 percent over the same period last year.

The USD/VND exchange rate decreased 0.28 percent compared to last December, however, rose by 10.7 percent over the same period last year.

Guidelines on consumption tax for alcohol products

The General Department of Taxation has just dispatched new guidelines to tax departments in cities and provinces on the new special consumption tax for alcohol and beer products.

From January 1, 2010, a special consumption tax rate of 45 percent has been imposed on spirits, wines and beer. This rate will be increased to 50 percent on January 1, 2013.

The special consumption tax applies to all alcohol products, and will be calculated based on the strength of alcohol. All beer products will be subject to one tax rate.

Alcohol products with a proof content of 20 degrees will be subjected to a 45 percent special consumption tax rate, rising to 50 percent from 2013.

For alcohol products with a proof content of under 20 degrees, the new consumption tax rate will be 25 percent. This new rate has been applied from the beginning of 2010.

The new consumption tax rate will be similarly applied to beer products.
“With these new guidelines, the common special consumption tax rate applied to every beer product from 2010 will be 45 percent and it will be increased to 50 percent in 2013,” said a representative from the Vietnam Alcohol Bear and Beverage Association.

In the past, she added, each kind of beer had different special consumption tax rate. For example, the rate for draught beer was 35 percent while bottled beer was taxed at 40 percent.

The representative said that the new tax rate would affect the beer market, especially bottled beer.

“Consumers will drink bottled beer instead of draught beer, because the price of draught beer will be much more expensive,” she said.

Under the new guidance, the new special consumption tax will be calculated based on the price of alcohol and beer products which have not included value added tax.

Over the last decade, alcohol and beer industry of Vietnam have strongly developed despite the world recession. It has played an important part in the national industrial development.

The industry plans to produce 4.7 billion litres of beer and 540 million litres of spirits in 2015. The numbers are estimated to increase to 6.5 million litres of beer and 680 million litres of spirits by 2020.

Officials eye Senegal as promising export market

Senegal is a promising market for Vietnamese goods, according to the Vietnam Trade Office in Morocco , which works as a bridge to help the country’s goods enter both markets.

With its population of 11.9 million, Senegal has huge demand for agricultural and consumer products.

Though it is mainly an agricultural country, it is unable to grow enough to meet its needs due to persistent drought, while its industry has yet to develop.
France , the UK , China , and Belgium are the main exporters of agricultural produce to the country. Vietnam established diplomatic ties with Senegal in 1969 but trade between the two countries only began in 1994.

Vietnam exports black pepper, footwear, and garments but rice accounts for 90 percent.
It imports scrap steel and cotton from Senegal .

Due to its location, Senegal is also a possible gateway to other African countries for Vietnamese products. In the wake of falling demand in traditional markets due to the recession, Senegal – and Africa in general – is emerging as a highly promising market for Vietnamese products.

Vietnamese firms should continue to strengthen marketing to boost exports to the country.

Other products that can be exported are cereal, seafood, foods, electronics, and household appliances. But there are some hurdles like collecting export payments because of the lack of a proper banking system.

Bank and insurer agree cooperation

Maritime Bank and Prudential Vietnam on Jan. 20 signed a long-term cooperation agreement on bank insurance (bancassurance)- a new service in Vietnam.

Under the agreement, Prudential will provide its services through Maritime Bank while the bank’s clients will be insured by Prudential.

“We hope our bancassurance will provide the best financial solutions for clients in Vietnam ,” said Prudential general director Jack Howell.

Vietnam businesses urged to make use of e-commerce

Vietnamese firms should make greater use of information technology to become more efficient and competitive in the context of the country’s global integration, an industry official told a conference on e-payment held in HCM City on Jan. 20.

E-commerce and e-payment services were becoming an increasingly important part of IT use and also an indispensable business tool, said Tran Vinh Nhung, deputy director of the city’s Department of Industry and Trade.

“More and more Vietnamese companies are becoming aware of the importance of e-commerce but have not exploited the advantages it brings about to maximise their business efficiency,” he said.

A survey of 8,754 firms conducted in HCM City by the city’s Department of Statistics found that while 31.7 percent had their own websites, less than half updated them regularly, and many faced a severe shortage of qualified IT technicians.

Firms blamed the low use of e-commerce and e-payment systems on the inadequate legal framework, poor infrastructure, the entrenched cash habit among people, and low awareness of e-commerce, said Ha Ngoc Son of the municipal Department of Industry and Trade.

A similar survey of households found that 91.6 percent were connected to the internet but only 11 percent buy goods and services online. Son said it was because of distrust in the quality of goods and services offered online and making payments online.

Nhung said though the Law on Electronic Payments had been passed confirming the legal validity of electronic documents, its provisions remained vague and inadequate, adding the Government needed to amend them to give e-payments a boost and ensure healthy competition among enterprises.

Nguyen Hoa Binh, director of Peacesoft Solutions Corporation, said e-payment service providers must ensure complete security, protect users, and create user-friendly systems to promote the use of e-commerce and e-payment.

E-commerce had developed quickly in Vietnam, said Nguyen Thi Ngoc Phuong of Dong A Commercial Bank, pointing out that the value of transactions done through her bank’s website increased from 15 billion VND (812,171 USD) in 2008 to 140 billion VND (7.58 million USD) last year. The number of transactions had risen from 14,100 to 190,000 in that period. This year the bank targeted 350 billion VND (18.9 million USD) and 800,000 transactions, she added.

Egyptian investors eye Vietnam market

The Egyptian Minister of Investment Mahmoud Mohieldee is expected to visit Vietnam for market survey from January 23-26, said the Vietnam Chamber of Commerce and Industry (VCCI).

The VCCI added he will be accompanied by a number of senior officials and executives of 30 leading businesses in finance-banking, construction, delivery and transport, pharmacy, electronics, information technology, food industry, tourism, fisheries, fertilisers and chemistry.

His itinerary in Hanoi includes a business forum scheduled for January 25 to provide opportunities for businesses from the two countries to expand partnerships.

The Egyptian minister is likely to present his Government’s incentives on investments, trade and tourism.

Commercial Counsellor to Egypt Dang Ngoc Quang said bilateral trade relations have grown steadily over the past years with trade surplus bent on the Vietnam side.

The Southeast Asian nation last year earned 165 million USD from exports to the African market while its import value was estimated at 20 million USD.

Vietnam expects to increase its export turnovers by 25 percent to 200 million USD this year.

Aquatic products often make up 30 percent of Vietnam ’s hard currency earners, including pepper, coconut, coffee and rice, regarding the Egyptian market.

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