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“Voluntary Commitments” To The Six-Nation Nuclear Deal: Iran

Despite the havoc on the Iranian economy, U.N. officials have certified Tehran's compliance with the nuclear deal.

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Iran
In this photo released by the official website of the office of the Iranian Presidency, President Hassan Rouhani speaks during a ceremony commemorating "National Day of Nuclear Technology," in Tehran, Iran, April 9, 2019. VOA

Iran is giving up some “voluntary commitments” to the six-nation nuclear deal, but is not pulling out of the deal, Foreign Minister Mohammad Zarif says.

Iranian state media quote Zarif as saying Iran is making the move because “the European Union and others … did not have the power to resist U.S. pressure.”

Zarif did not specify what he means.

But a newspaper tied to the hardline Revolutionary Guard says Wednesday’s announcement would “ignite the matchstick for burning the deal.”

U.S.
The U.S. announced last week it would no longer waive sanctions against countries that buy Iranian oil — another blow to Iran. VOA

President Hassan Rouhani will send letters to Britain, China, France, Germany, and Russia outlining exactly which parts of the deal he is abandoning.

Breaches Nuclear Deal, French Official Says

He also plans to make a speech Wednesday.

His remarks will come exactly one year after President Donald Trump pulled the U.S. out of the agreement, calling it one of the worst deals ever put together.

A French official cautions Iran against making any moves that would compel Europe and others to reimpose sanctions.

“Depending on what is in the statement from Tehran, at this stage what we’re expecting is a collective European reaction. But as we do not yet know exactly what will be in it, we are preparing for different eventualities,” the official said Tuesday.

The U.S. reimposed sanctions on Iran when Trump tore up the deal. The sanctions have had a devastating effect on what was already a weak Iranian economy. The sanctions relief from the five other signatories has brought little help.

U.S.
Iranian state media quote Zarif as saying Iran is making the move because “the European Union and others … did not have the power to resist U.S. pressure.” VOA

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Despite the havoc on the Iranian economy, U.N. officials have certified Tehran’s compliance with the nuclear deal.

But Iranian newspapers have reported the country could revive some of the nuclear activities it halted under the agreement. (VOA)

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Businesses in Vietnam Face Cash Shortage: Study

Cash Shortage Hurts Investment in Vietnam

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Vietnam Booming Economy
A woman sells vegetables at an outdoor market in Hanoi, Vietnam. VOA

Businesses in Vietnam face a cash shortage that is preventing as much as $24 billion that could be invested in the nation’s $250 billion economy, according to a study by PwC Vietnam.

The financial services company analyzed the 500 businesses in Vietnam with the highest revenue that have been listed on both the Ho Chi Minh City Stock Exchange and the Hanoi Stock Exchange for the last four years or more. PwC Vietnam analysts said that those companies’ “cash conversion cycle” has increased, meaning that they have to wait longer from the start of the business cycle, when they first make their investments, until those investments start to pay off in the form of revenue.

“We continue to see cash flows being sacrificed to attain top line targets in Vietnam, which is not sustainable for businesses in the long run,” said Mohammad Mudasser, who leads the working capital management practice at PwC Vietnam. “Managing operating working capital is a cross-functional responsibility,” he added.

Top line refers to revenue, while bottom line refers to profit.

Vietnam economy
Due to lesser investments in businesses, startups are not growing in Vietnam. VOA

To sacrifice cash for the sake of revenue targets usually means that companies are willing to make an initial cash investment, often to buy inventory that can be sold for revenue. However the long cash conversion cycle suggests that there are some inefficiencies along the way, such as longer wait times between billing a customer and actually collecting the payment.

While there is no perfect business cycle, the PwC Vietnam study suggests companies in Vietnam could tackle some inefficiencies to unlock further potential in the already fast growing economy.

In 2018 Vietnam had one of the highest cash conversion cycles in Asia, at 67 days, which is an increase of two days compared with 2017, according to PwC Vietnam. That compares with an average in Asia of 58 days, and in particular 64 days in neighboring Thailand and 54 in Malaysia. That means those other Southeast Asian countries are able to turn their investments into cash sooner than Vietnam does.

“The fast-growing companies had significantly higher short term debt growth, indicating risks to the sustainable growth of these companies,” PwC Vietnam, a consulting company that sells tax and accounting services, said in a press release.

If the U.S. Federal Reserve Bank increases interest rates in the coming year, as some economists are expecting, emerging markets, such as Vietnam, could follow. That would increase borrowing costs for companies, increasing their vulnerability to debt.

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However it estimated that only a fraction of that capital could be released, $11 billion, because some of the capital has to stay in the business cycle. Analysts said inventory and outstanding invoices, known as accounts receivable, where the best bet for improving efficiency. That could mean that too much inventory is being held, or that companies are waiting too long to be paid by customers. (VOA)