Author Archives: Thu ha NGUYEN

VENTURE CAPITAL

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Venture Capital refers to the activities that investors provide financial capital to individuals and start-up/small businesses that are believed to have long-term growth potential. Venture capital could be from banks, well-off investors or any financial institutions. They have to acknowledge the risks if the project they invest fails to make up for. In case successful, the investment will become the share of the venture capital firm. Venture capital are mainly focused in information technology, biology, chemistry, environmental protection projects or health projects.

A stark example in Vietnam is FPT Ventures, a venture arm of FPT Corporation. With the target to turn Vietnam into a startup country, FPT strategically cooperated with international funds & incubators to support startups by let them take full advantage of technical infrastructure as well as use the resources available from FPT. These startups will have the opportunity to work with experienced mentors internal & external of FPT, with the sole goal is to create the product that the market really needs, and be able to scale not only In Vietnam but also in the world. The highest priority of the fund was to invest Seed and Serie A funds in the companies that had undergone the concept development phase and had already entered the business or groups graduated from local and international incubators in a relationship with FPT.

List of some projects supported by FPT Ventures

Source: http://fptventures.com/portfolio.html

Writers

Le Thi Quynh Anh – ID.04

Nguyen Thu Ha – ID.06

Tran Thi Thu Trang – ID.19

Rules-based and Principle-based Accounting

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Writer: Nguyen Hong Hanh – Number: 07

Source: https://www.fundamentalsofaccounting.org/wp-content/uploads/2017/11/ifrs_course.jpg

In Vietnam, Finance Statement regulations are follow Rules-based Accounting. Some countries followed this regulations such as Indonesia, Thailand, Phillipines… But the International Financial Reporting Standards (“IRFS”) follow Principles-based Accounting. Do these regulations have any conflicts in business results? This article will bring you an aspect about this question.

“IRFS” is applied from 1/1/2005 and over 100 countries have follow this regulations. Principles-based Accounting is used as a conceptual basis for accountants. A simple key of objectives are set out to ensure good reporting. The most basic benefit of this is bringing a clear guide to the accountants to specific case because of its broad guidelines and practical in a variety of circumstances. The problem with principles-based accounting is that lack of guidelines sometimes can produce unreliable and inconsistent information that makes it is difficult to compare one organization to others.

Rules-based Accounting is basically a list of detailed rules that must be followed when preparing financial statements. When there are strict rules that need to be followed, the possibility of lawsuits is diminished. Having a set of rules can increase accuracy and reduce the ambiguity that brings to management. The complexity of rules, however, can cause unnecessary complexity in the preparation of financial statements. Countries that follow this regulations will focus on how to write finance statements, rules… When the rules change, the students are worried about they have to learn all over again. Therefore, there is a worry about good students will not be attracted about the curriculum.

The finance standards are now changing rapidly and many countries are applied increasingly, which requires teachers to change the teaching method into principles, suitable with the present business results. The teaching of Principles-based Accounting will increase students’ judging about jobs, how to deal with problems in many cases, understand that there are some answers for one finance question, not only one. This will support students to find solutions by theirself, not by learning by heart.

In Vietnam, from 2001 to 2005, The Ministry of Finance has released 26 Accounting Standards, which are built on the world standards. In this trend, some companies with the foreign investment or big companies has applied IFRS such as VpBank, PVI Joint Stock Company have shown very clear and precise information. Many meetings about applying IFRS has been hold, such as “IFRS – Trend and Roadmap for adoption in Vietnam” in December 2016. From 2018-2020, 10-20 companies will be chosen to follow these regulations, and in the future, more and more companies will follow this. In Hanoi, one of the biggest training courses about IFRS for learners are hold by VCCI and Deloitte Vietnam. They often has courses for companies, bring a fresh view about IFRS and how to apply it in the jobs.

To change completely regulations in Vietnam is still under considering. Companies should encourage and make opportunities for staffs to learn and to change, It will bring a different way in manage business.

 

Source:

https://www.investopedia.com/ask/answers/06/rulesandpriciplesbasedaccounting.asp

http://vaa.net.vn/Tin-tuc/Tin-chi-tiet/newsid/3951/GIANG-IFRS-TRONG-DAO-TAO-KE-TOAN

Doing Business in Vietnam

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Writer: Nguyen Hong Hanh – Number: 07

 

Vietnam is now a developing country and fastly intergrated with other countries. The opportunities for international companies to join the market is very potential. But to make sure Doing Business in Vietnam is on the right way, there are many regulations that companies should know to be competitive. Some important aspects I will mention in this summary is Accounting and Auditing, Human Resources and Employment Law, Banking and Capital Markets, which cover many business activities of every company.

The accounting framework is now fully complete and suitable for Vietnam companies and international companies. There are currently 26 Vietnamese Accounting Standards (“VAS”) and the accounting framework is mainly rules-based accounting rather than a principles-based one. Rules-based accounting is a list of detailed rules that must be followed in financial statement. With a set of rules, the accuracy will increase and the ambiguity will diminished. The accounting period is generally 12 months in durations and audited annual financial statements must be completed within 90 days of the end of the financial year. One thing that the foreign-invested entities must remember that they will be audited by an independent auditing company operating in Vietnam. “VAS” and International Financial Reporting Standards (“IFRS”) have some key differences, such as a number of key accounting standards (regarding financial instruments and impairment of assets) have not been issued yet in Vietnam, so foreign companies may need to examine the rules carefully.

In Employment Law, foreigners working in Vietnam must have a work permit issued by the labour management authority, the maximum duration of a work permit is 24 months. With the population of over 92 million, around 40% of the population is under 25 years of age, Vietnam is expected as a potential market with young generation. Approximately 22% of the population is consider to be trained or skilled, so they have the ability to apply knowledge to work and they are as good as the foreign labour force.

According to Vietnam authorities, a minimum legal capital levels for foreign banks’ branches, finance companies are US $15 million and VND 500 billion respectively. Foreign investors can own more than 30% of the total shares in a local bank. The activities is controlled by the Prime Minister on a case by case basis. Every year, credit instituons and foreign banks’ branches must review and assess the adequacy, validity, effectiveness and efficiency of internal controls. These report shall be submitted to the key stakeholders, the State Bank of Vietnam within 30 days from the end of the fiscal year. With these strict controlling, Vietnam expects companies are followed equally in a fast developing environment.

Vietnam has brought many opportunities not only for local companies but also to companies from all over the world. If business entrepreneurs understand rules carefully, they can make a difference with high quality products.

Innovative start-up ecosystem

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The foreign businesses are still optimistic about the prospects for business development in Vietnam. However, they also expressed concern over recent changes in policies and regulations that are inconsistent with international practices. They often face to complex policy implementation, ineffective and unfair treatment policies across regions. Th To create a favorable environment to promote and development of fast-growing enterprises based on the exploitation of intellectual property, technology, new business models. Vietnamese startup ecosystem is growing rapidly in Hanoi, to become a modern industrialized country by 2020. That is why the government plans to develop a national innovation system that works to support the development of innovation through Startups and SMEs.

The Vietnamese Government issued a project called “Assistance policies on national innovative start up ecosystem to 2025”. The goal of the project is to improve the legal system to support innovative start-up by 2020; set up the National Innovation Innovation Portal; supported by 800 projects, 200 start-up businesses, 50 of which were successful venture capitalists, valued at about VND 1,000 billion. By 2025, support the development of 2,000 innovative projects; assisted in the development of 600 innovative enterprises; 100 enterprises participated in the project to call for investment capital from venture investors, with a total value of about VND 2,000 billion. Some specific support:

  • Building a service center for innovative start up support
  • Partial support funding for training activities
  • To develop facilities and technical support for innovative start up
  • Encourage the use of funds by agencies to contribute capital to start-ups enterprise
  • Preferential tax regime

Writer: Nguyen Thu Ha (number 06)

The past and the Hopeful Future of Vietnam’s Economy

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Vietnam has high growth potential. Moreover 65 percent  of population is working age, there is an attractive dosmetic market. Vietnam’s economy has to shift to a market economy to reform the economy – a structural reform needed to modernize the economy. Provetly levels have dropped dramatically. The government allows state-owned companies to diversify their investments. That is one of the easiest ways to increase GDP. The combination between Vietnam and the world is very impressive. It has joined many economic associations and signed trade agreements. Vietnam could expect to increase GDP from TPP and AEC. Vietnam’s eagerness to sign the TPP and restructure the economy to prepare for future competition.
Vietnam ranked 68 out of 144 economies in the Global Competitiveness Index for the period 2014-2015. There is a lot of room to improve, and Vietnam needs to reform otherwise it will face the risk of falling into the middle income trap. Vietnam has advantages in terms of market size, health, primary education and labor market efficiency – but it suffers from infrastructure. Vietnam must move from a low-wage economy to a highly skilled and trained country. Vietnamese enterprises must stick to the global value chain. The Vietnamese government has streamlined the bureaucracy and improved the role of civil society. Integration will require new standards of fair competition and transparency from the government. I believe that if Vietnam can burn the creativity and dynamism of its people, Vietnam should have the opportunity to thrive and take advantage of its integration into the world economy.

Writer: Nguyen Thu Ha (No.06)

Source of the Article: “The past and the Hopeful Future of Vietnam’s Economy” – by Le Dang Doanh