News on 11 July 2016

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1)  Fresh cable cut hits Vietnam’s Internet, again

Subscribers of Viettel, one of Vietnam’s leading Internet service providers, started experiencing snail-paced connection speed on Saturday (Jul 9), but it is not the infamous AAG submarine cable system to blame this time. Instead, it was a rupture found on the Intra Asia, one of the four international underwater Internet cable systems Vietnam is connected to, that is slowing down connection speed in the country. Military-run Viettel suffers the most damages as it has the biggest reliance on the IA to ensure Internet traffic for subscribers, compared to FPT or CMC Telecom. The telecom firm however announced later Saturday (July 9) that it had added deployed backup solution to make up for 30 percent of the international traffic loss caused by the IA incident. Viettel admitted that users will still have to experience slow connection at times due to overloading. The IA incident came only ten days after the Asia America Gateway cable system, crucial to Vietnam’s Internet connectivity, underwent its infamous regular maintenance from June 22 to 27.

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2)   VN to pay over $12 billion debts, borrow $20 billion in 2016

Under the plan on debt payment and loans in 2016, approved recently by Prime Minister Nguyen Xuan Phuc, the Government plans to borrow $20 billion to pay debts and cover its expenses, including $15 billion from the Social Insurance Fund and the State Capital Investment Corporation (SCIC). Under this plan, VND273,300 billion ($12.2 billion) will be used to pay debt this year, including VND24,000 billion of foreign debt. Also this year, the government plans to borrow VND452,000 billion, equivalent to more than $20 billion. Of which, loans to offset the budget deficit are VND254,000 billion; Government bond issuance for investment of VND60,000 billion; ODA loans and soft loans to reloan VND43,000 billion. Regarding the sources, domestic loans through the issuance of government bonds and loans from SCIS are up to VND336.000 billion ($ 15 billion). Foreign loans from ODA, preferential loans are estimated at VND99,000 billion, of which VND43,000 billion will be reloaned and VND56,000 billion to cover the budget deficit. The government also assigned the Ministry of Finance to monitor domestic and international markets to mobilize VND17,000 billion through other channels such as issuance of foreign currency bonds in the country and international bonds. According to the Ministry of Finance, the state budget balance in January-May 2016 is estimated at VND396,200 billion, up 4.5% from the same period in 2015. Of which, domestic revenue is estimated at VND321,200 billion, up 11.9% over the same period in 2015. State budget spending in this period reached VND466,300 billion, an increase of 4.7% over the same period of 2015. Thus, in the first 5 months of the year, the budget deficit was over VNd70,000 billion.

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3)   North–South highways project must be completed quickly, on time: Deputy PM

The completion of the North-South highways is not only a prerequisite for the construction of other highways throughout the country, but is also necessary to realise the target of building at least 2,000km of highways by 2020. Deputy Prime Minister Trinh Đinh Dung made the comment at a meeting to review the project in Hanoi on Thursday (July 7). The construction of the highways was necessary and could not be delayed, Dung said, stressing that it would support national development and the economy’s competitiveness. Although expanded transport infrastructure over the past years had helped fuel economic growth and raise people’s living conditions, it still failed to meet the demands of industrialisation and modernisation, he pointed out. Dung requested the eastern route of the North–South Highway, running parallel to National Road 1, be completed in 2020 at the latest. The eastern highway, with a length of 1,814km, will run from Phap Van Road in Hanoi to the Mekong Delta city of Can Tho. Meanwhile the western section will follow the direction of the Hồ Chí Minh Highway.

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4)  Dollar edges up on better risk appetite, but seen capped long-term

The dollar edged up against the euro and yen on Monday (Jul 11)  thanks to an improvement in risk appetite amid a bounce in equities, but Friday' strong U.S. jobs data capped the greenback longer term by firming expectations that the Federal Reserve would not raise interest rates anytime soon. The dollar was up 0.1 percent at 100.69 yen after sliding to as low as 99.99 yen on Friday (Jul 8) in the wake of the U.S. jobs report. The report was much stronger than expected with jobs increasing by 287,000 in June, but it did not change the view that the Fed may not hike rates this year, particularly after May's payrolls growth was revised down to 11,000 from 38,000. The euro was steady at $1.1043, recovering slightly from Friday's low of $1.1002. Japan's Nikkei rose 3.0 percent following Friday's gains on Wall Street, where shares soared on views that the Fed would not be in a hurry to tighten monetary policy. "We still see the yen appreciating in the medium to long term, but for the moment we see the market focusing on Bank of Japan's policy and Japan's fiscal stimulus plans now that the Japanese elections are over," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo. Japanese Prime Minister Shinzo Abe's ruling coalition won a landslide victory on Sunday (Jul 10) in an election for parliament's Upper House. While the win is seen clearing the way for the government to compile fresh stimulus measures, there are concerns that revising the constitution could now be given priority with economic steps taking a back seat. Elsewhere, the pound steadied a little following the post-Brexit turbulence which has buffeted the currency through much of this month.

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5)   Foxconn to buy Microsoft’s Vietnam phone plant for $22 ml

Taiwanese electronics manufacturer Foxconn will acquire Microsoft Mobile Vietnam to produce feature phones and smartphones in the Southeast Asian country, news website Deal Street Asia reported on Friday (Jul 8). The VND492.4 billion (US$22 million) consideration will be payable within seven business days of the closing date of the transaction, the website said, quoting Foxconn. Upon closing the transaction, Foxconn, or Hon Hai Precision Industry, will own and operate a feature phone and smartphone manufacturing business out of a facility in the Vietnamese northern province of Bac Ninh.

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(All the above News Items have been sourced from: Reuters, ThanhNien News, Vietnam Net, Tuoitre News, Vietnam News, New York Times)

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