Business Beat
It’s not surprising that insurance companies in Viet Nam are relying on pyramid selling schemes. As in other emerging markets, insurance companies try to recruit as many brokers as possible, give them a short training course and send them out to sell their products. Thousands of agents have become "insurance consulting experts" this way. To meet their set sales targets, these agents have had to turn their charm on close relatives, old friends, former acquaintances and in the worst case, themselves, to sell policies. This kind of business approach is dangerous because, apart from damage to personal relationships, agents tend to convince people to sign up without explaining all the policy details. There have been cases when claims were rejected because policy-holders did not declare their illnesses – but nobody had asked them to. Worse still is the fact that people in power, or their relations, are using their influence to sell policies. A woman whose husband is the director of a company was easily able to meet her targets by selling insurance contracts to her husband’s staff. Another, whose husband is chief of a ward, was able to sell billions of dong worth of policies. People being asked to buy in these instances are in no position to refuse.***
The traffic in HCM City is getting worse, all the more so after the start of the new school year. and people are blaming the bottlenecks on the increasing number of motorbikes. There are about two million motorbikes and another two million bicycles in HCM City. If all of them were on the streets at the same time, there would be no space for them all to stand, let alone move. HCM City authorities last week sat down to discuss ways to solve the traffic problem. Some advocated a total ban of new motorbike registrations, starting in 2004. Others said motorbikes older than 20 years should not be allowed on the streets or the number of motorbikes in circulation should be limited by doubling motorbike sales tax, imposing high parking fees, and banning motorbikes from entering certain inner-city areas. It’s nearly impossible for HCM City to devise and enact any restrictive measures alone. If HCM City decides to go it alone in banning the registration of new motorbikes, for example, people would go to neighbouring provinces, buy motorbikes and register them there. When they used the motorbike in the city, nobody could do anything to stop them. The best alternative is to make it a real hassle for people to own a motorbike, thus discouraging them from buying motorbikes and choosing public transport services instead. This could be achieved through a total ban on parking motorbikes on footpaths, getting rid of illegal parking lots and improving the city’s bus system.
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The new Government met last week for the first time. one of its first jobs is to define the functions and responsibilities of its ministries, especially the new ones. The names alone cannot tell you what a ministry is responsible for. The Ministry of Post and Telecommunications is responsible for the development of the information industry, and not the Ministry of Science and Technology; and the Ministry of Resources and Environment takes care of land issues while the management of other resources like water and minerals is left to other ministries. A draft decree stipulates that the number of deputy ministers will be limited to four at each ministry. The high number of deputies, sometimes up to six at some ministries, is making the co-ordination job of ministers more difficult. It is hoped that after the decree is enacted, people will know where to go when they have to work with government agencies.
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People have blamed the Enterprise Law for recent cases of tax frauds and bogus companies, proposing an overhaul of the law to close problem loopholes. But it’s only fair to point out that if the Enterprise Law is applied to the letter then nobody can take advantage of its loopholes. Five per cent of registered companies have been found to be non-existent. This is because the law does not require registration officials to check whether the registered addresses exist. But the law does require newly established companies to make public announcements in national newspapers. This requirement has not been strictly observed and 70 per cent of registered companies did not make such an announcement and were not fined. The law requires businesses to file annual financial reports, but again, more than 70 per cent of registered businesses did not, and not one was fined. An aim under the law was a national network where basic information on businesses could be checked, but such a resource has not been established. Let’s look at the law again and enact it properly. There will be fewer frauds if people think of the law as a weapon to uncover frauds rather than a vehicle to facilitate them.
VNS
