BUSINESS IN BRIEF 7/7

GEM invests US$20 million in local real estate company

The US Global Emerging Market (GEM) will invest US$20 million in Vietnamese real estate company - Hoang Quan Company (HQC).

The signing ceremony between the two firms took place in New Work on July 1 under the witness of representatives from the Ministry of Finance, the Stock Securities Commission (SSC) and the HCM City Stock Exchange.

Accordingly, GEM will purchase HQC shares within 30 months since the date of signing.

GEM CEO Christopher F Brown said GEM is keen on HQC social housing development strategy in Vietnam and believes that social housing will thrive in the near future thanks to Vietnam’s better social welfare policy.

HQC President Truong Anh Tuan said the company will use the capital to develop social housing projects in the coming times.

GEM will be the third international partner of HQC, after LC and Huyndai.

The US group, with asset worth of US$3.4 billion, has successfully conducted 305 transactions in 65 countries.

Total Viet Nam becomes sole owner of Totalgaz Viet Nam

Oil and gas company Total Viet Nam recently signed a capital transfer agreement to buy Sai Gon Construction Corporation's (SGCC)18.5 per cent stake in Totalgaz Viet Nam.

With this transaction, Total will own 100 per cent of Totalgaz Viet Nam, a part of its commitment in investing in the country for the long term. Photo dddn

The agreement marked an important step in the development of Total Viet Nam.

With this transaction, Total will own 100 per cent of Totalgaz Viet Nam, a part of its commitment in investing in the country for the long term.

Total is one of the world's largest integrated oil and gas companies with operations in 130 countries.

SGCC is a wholly State-owned corporation belonging to the People's Committee of HCM City.

$90m fibre plant to be constructed in Tay Ninh

The Century Synthetic Fibre Corporation has been licensed to build a US$90-million fibre plant in the southern Tay Ninh Province's Trang Bang District, Nhip Cau Dau Tu online newspaper reported.

Fibre production at Century Synthetic Fibre Corporation. The Corp got license to build a $90m fiber plant in Tay Ninh province. Photo vinacorp.vn

Covering an area of 100,183sq.m in Thanh Cong Industrial Zone, the plant will produce 15 million kilograms of fibre and yarn and 12 million kilograms of fabric and twine each year.

It will be jointly built by the Century Synthetic Fibre Corporation and the Uni Industrial and Investment Corporation.

The construction of the three-phase project is scheduled to be completed in the 2015-2016 period. Part of its production line will become operational in 2017, and the whole plant will be officially operational by 2021.

The Century Synthetic Fibre Corporation aims to earn nearly VND1.7 trillion ($78 million) in revenue this year.

62 projects introduced in Mekong Delta Green Tourism Week 2015

The Mekong Delta Green Tourism Week 2015 has wrapped up on July 4, the organization board said the event attracted over 350,000 visitors.

Accordingly, 13 provinces in the Mekong region introduced 62 investment projects in tourism sector with total capital of VND 11,862billion and US$ 714.9. Can Tho, Ca Mai and Vinh Long granted certificates for three investment projects with total capital of VND 745,359billion and US$ 62million.

The exhibition and fair draw over 50,000 visitors. The organiers said over 150,000 visitors poured to The Mekong Delta’s Miss Mekong final round.

This is the first time that the Mekong green tourism has been launched in the region, creating more chances for tourism organizations in the region and country to exchange and seek for international partners.

Tay Ninh attracts $490m in H1 FDI

Industrial parks and export processing zones in southern province Tay Ninh attracted over US$490 million of foreign investments in the first six months of this year, up 13.4 per cent annually.

As a result, the province had 231 valid foreign direct investment projects, with total registered capital reaching nearly $3.4 billion as of the end of June.

The province is also home to 361 domestic projects worth VND38 trillion (approximately $1.76 billion).

Trang Bang industrial park attracted 160 projects, with a total investment of $700 million, while the Moc Bai industrial zone got 46 investment projects, with total registered capital at $444 million.

Chairman of the provincial People's Committee Nguyen Thi Thu Thuy said the province has bolstered foreign investment capital in industrial production and economy.

She reported that local foreign invested businesses posted a combined industrial output value of $631 million in the first six months of 2015, around 48 per cent increase compared with the same period last year.

FDI projects in the province's industrial parks and processing centres have created 93,000 jobs for local workers, as well as those from neighbouring areas.

Correction seen after growth

Viet Nam's stock market might extend its rally to this week's sessions, though many stock analysts warn about a possible downward correction after last week's strong growth.

Both markets started last week with moderate gains after a drop in the previous week, despite information that the Government approved the raising of foreign ownership limits in listed companies. However, the rally was mainly driven by blue chips and financial stocks that are expected to benefit from the regulation, but did not extend to many other stocks.

Rumors of the possible lift in foreign room in domestic banks helped the market easily surpass the psychological 600 point benchmark on Thursday, with bank shares leading the upturn. Large-cap lenders, such as Vietcombank (VCB) and BIDV (BID) hit the ceiling, while other banks and insurance companies also rose sharply, led by Bao Viet Holdings (BVH).

These stocks contributed to the market's momentum on Friday, lifting the VN-Index to cross the 615 point threshold, but again this drive could not result in a spillover effect across the market, when many other blue chips, such as Vinamilk (VNM), PV Gas (GAS), Masan Group (MSN), PetroVietnam Drilling and Wells Service (PVD) and Kinh Do Corp (KDC), fluctuated in a narrow range.

Ending Friday, the VN-Index on the HCM Stock Exchange gained a cumulative 5.96 per cent over the week, closing at 616.43 points, while the Ha Noi Stock Exchange's HNX-Index also added 2.55 per cent during the week to end at 87.70 points.

According to data by the financial information website , shares under the VS-Large Cap group saw the most substantial rise of over 7 per cent, but the VN-Mid Cap group rose just 0.99 per cent. Meanwhile, small-cap and penny stocks fell slightly.

Liquidity was little changed compared with the previous week. The daily trading volume in the HCM City's market increased just 4 per cent to reach 142.5 million shares, valued at VND2.39 trillion (US$109.6 million) per day.

Similar figures were reported on the Ha Noi bourse, at 50 million shares worth VND620 billion ($28.4 million) per session, down slightly from the previous week.

Also, last week's opening of the State Securities Commission investment promotion conference in the United States helped bolster domestic investors' psychology. Leaders of the Ministry of Finance and the commission presented new policies to help upgrade the Vietnamese investment environment, including newly-issued Decree 60 which allows foreigners to raise their stakes in Vietnamese listed companies.

Meanwhile, Minister of Finance Dinh Tien Dung said the ministry would soon issue a circular to provide instruction to implement Decree 60 in July. This eased investor concerns about the delay in the implementation of the raising foreign room regulation.

The foreign sector reacted positively to this movement, causing an increase. They picked up the combined net buy values of more than VND1.1 trillion ($50.5 million) worth of shares in the two markets, of which 90 per cent of their purchases focused on the HCM City market's shares.

"Although the market outlook remains in an uptrend in the medium- and long-term period, the markets remain exposed to substantial risks of a short adjustment this week," analysts at Bao Viet Securities Co wrote in a report. They added that the market rallies would heavily depend on leading stocks and foreign movements in the context that domestic money flows were still modest.

According to Viet Dragon Securities Co. analysts, if banks and large caps continue to rise, the market could reach still higher benchmarks. However, they predict cash flows would likely shift to mid-cap and penny shares this week.

Binh Duong sees foreign investment boom in garment sector

More that 50 per cent of the US$1 billion in foreign direct investment Binh Duong Province accrued over the first six months of the year was poured into the garment sector, according to Nguyen Thanh Truc, director of the provincial Department of Planning and Investment.

The province granted an investment certificate to Polytex Far Eastern Co., Ltd under the Taiwanese Far Eastern Group. With a first-phase investment of $274 million, the company will construct a 99-hectare plant to produce auxiliary products such as cotton, synthetic and knitted fibres at Bau Bang Industrial Park.

This is the province's largest investment project so far this year.

As the Trans-Pacific Partnership Trade pact enters its final rounds of negotiation, foreign investors are making huge investments in Viet Nam to take advantage of preferential export taxes, Truc said.

In the first two quarters of the year, provincial garment export revenue reached more than $904 million, rising 11.2 per cent over the same period last year and accounting for 10.6 per cent of the locality's total exports.

Viet Nam trademark week to promote producer-consumer bond

The Ministry of Industry and Trade has announced the upcoming debut of an initiative promoting Vietnamese products across the country.

According to Deputy Minister of Industry and Trade Ho Thi Kim Thoa, this year's annual campaign, titled "Viet Nam trademark week", will run from July through October - with one main week of activities in September - aiming to strengthen the bond between domestic producers and consumers.

From July 6 to September 22, the campaign will seek and subsequently unveil its ambassador.

It will also give details on activities scheduled for the main week due to take place in Ha Noi, Da Nang and HCM City from September 23-29.

VN firms must prep for EAEU deal

Experts discussed domestic businesses' preparations for the free trade agreement (FTA) between Viet Nam and the Eurasian Economic Union (EAEU) during a workshop held on Thursday in HCM City.

At the event, co-organised by the municipal Department of Industry and Trade, the Centre of the World Trade Organisation (WTO) and the HCM City Enterprises Association, participants highlighted the huge potential domestic businesses would have entering the new market, which has 175 million people and a GDP of nearly US$2.5 trillion.

Nguyen Khanh Ngoc of the Ministry of Industry and Trade emphasised the need for accuracy in the certificates of origin for Vietnamese products, saying that businesses would benefit less from the FTA if errors were made on this front.

Domestic firms should work to better understand the FTA in order to overcome difficulties, raise product competitiveness and improve product quality to meet the strict requirements of these markets, she said.

Participants pointed to the impact of the FTA on a number of domestic sectors, saying that FTA commitments will include cutting 82 per cent of taxes on the garment-textile sector and 72 per cent on the rubber sector.

The EAEU also stipulated in the agreement that it wanted direct trade with Viet Nam, which means commodities must be sent directly from Viet Nam to the importing countries. Extra transit stops are only allowed if completely necessary.

The FTA was signed on May 29 after more than two years of negotiations, opening up a new chapter in the partnership between Viet Nam and the union.

The agreement is expected to be effective from early next year, after all signatories complete the necessary domestic procedures.

Apartment sales expected to climb

The domestic real estate market will continue positive development in apartment sales during the second half of this year.

The segment had recorded an upward trend during the first quarter, said experts.

Continuing its recovery since the end of 2014, the local real estate market will see positive development and is expected to mark an increase in supply and demand in the second half of this year, Nguyen Ngoc Thanh, deputy chairman of Viet Nam Real Estate Association, was quoted as saying by the Thoi bao Tai chinh (Financial Times) online.

However, unlike the previous period, the market will not have fever or bubbles, according to Thanh.

The market will also see an increase in prices, especially of high-quality projects developed by reputed investors offering good connectivity, infrastructures, and services.

The amended laws on real estate trading and housing, which has come into effect in July, will support the local property market in sustainable development, the selection of healthy enterprises, as well as protection of consumer interests.

According to the second quarter report on Ha Noi property market prepared by CB Richard Ellis Viet Nam Ltd. Co. (CBRE Viet Nam), in the second quarter (Q2) of this year, the market continued to show positive signals amidst anticipation on the impact of new regulations effective from July 1, 2015.

A total of 5,137 new units were launched across 19 projects, marking a 93 per cent increase as compared to Q2 2014. High-end apartments continued to have a larger share in the newly launched units. Notably, for the first time, high-end apartments accounted for approximately one-third of the total newly launched stock (30 per cent), which had been higher than any quarters since 2012. With 1,518 units, the number of launches of high-end units tripled quarter-over-quarter.

Overall, the market's sales performance continued to be strong in this quarter. An estimated 4,480 units were sold during the quarter, up 80 per cent from that of Q2 2014. Transactions in high-end apartments also marked a notable increase.

In the first six months of 2015, high-end apartment transactions accounted for 22 per cent of total sales, as compared to 6 per cent in 2013 or 18 per cent in 2014. At the same time, the share of affordable segment, which used to dominate the market, dropped to 26 per cent in the first half of 2015, from 49 per cent in 2013 and 33 per cent in 2014.

Meanwhile, prices too saw an increase of approximately 4-6 per cent year-over-year across several projects, especially those in sought-after localities that were fairly close to central business districts or were near major infrastructures that were under construction.

Price increase had been marked mostly in high-end and affordable segments.

It was noted that progress in infrastructure development had a positive impact on the prices of projects. It is expected that good infrastructure will continue to be a catalyst for new projects and investors and developers entering the market.

In addition, as the market is on the recovery track, it is expected that more high-end and luxury projects will be introduced as developers want to exploit the current market sentiments, said CBRE Viet Nam.

Meanwhile, with new regulations in place, the market is expected to become a more transparent platform for stakeholders in the long run.

For HCM City market, the CBRE Viet Nam said, if there was any doubt because of the slightly slow start this year, the picture has become much clearer now, and one can see that the condominium market is firmly on the path to recovery.

This was proved by take-up levels – Q2 this year saw a record in historical quarterly absorption, with over 10,000 units in both new and previous launches sold. Interestingly, the majority of successful transactions have shifted from the affordable segment in 2012-13 to the high-end segment now.

The high-end segment reported record absorption in Q2 2015, with the sale of some 5,800 units, while the affordable segment saw the sale of around 2,800 units.

Improving the situation further, most high-end projects increased their asking prices for later phases/launches, edging the market-wide, high-end primary price up by 3.2 per cent quarter-over-quarter to US$1,781 per square metre.

Marc Townsend, managing director of CBRE Viet Nam, said: "With such impressive take-up, launches, and improved price levels in the first half of 2015, we can confirm that bad days are behind us."

PE firm KKR sells Masan shares

US private equity firm KKR & Co, formerly known as Kohlberg Kravis Roberts & Co LP, sold half of its holdings in Viet Nam's leading consumer goods company Masan Consumer.

Local media reported that MC Holdings and KKR Aggregator, two units under KKR's management, have sold almost 42.6 million shares, equivalent to a 10 per cent stake in Masan Consumer.

Steven R. Okun, KKR's director of Asia-Pacific Public Affairs, confirmed the sale with Viet Nam News but declined to provide further information.

The buyers were not disclosed, but sources have said KKR has received a 100 per cent return on its investment, even though it retains half of its stakes in the Vietnamese company. The private equity firm also received US$50 million in dividend payments from Masan Consumer last year.

The New York-based firm made its first investment in Masan Group in April 2011, spending $159 million to acquire a 10 per cent equity stake in the Vietnamese fish sauce maker. This made it the largest private equity deal in the country at that time.

Two years later, KKR invested an additional $200 million in Masan Consumer for another 10 per cent stake, lifting its total investment here to $359 million. This became its biggest investment in Southeast Asia.

The PE firm has bet on Viet Nam's young population and growing middle class, which it believes will help it generate returns, and Masan Consumer is the fastest growing fast-moving consumer goods (FMCG) company in Southeast Asia.

The typical holding period for a PE investment is three to five years. In developed markets, that is a good time to identify targets that are primed for growth and can generate the necessary value enhancement in time. In emerging markets, this time horizon may differ.

According to market insiders, this year is the proper time for KKR to consider the exit of its investment. The sale of its stake in Masan Consumer has brought KKR substantial profit.

Last month, Masan Consumer successfully sold all its bonds, worth VND9 trillion ($413 million), in the largest-ever private corporate deal in Viet Nam's capital market. Its five-year bonds were sold to eight banks to help its parent company Masan Group pay off debts, reduce costs and bolster its balance sheet.

This year, Masan Consumer hopes to earn VND15.5 to 17.5 trillion ($711 to 803 million) in total sales and VND3.6 to 4.3 trillion ($165 to 197 million) in net profit.

Banks exercise caution as provisional funds rise

Requirement for large provisional funds to support the risk of non-performing loans (NPLs) has forced commercial banks to use caution, despite their positive performance in the first half.

According to the current regulations, Viet Nam Asset Management Company (VAMC) is allowed to issue special bonds to acquire bad loans from credit institutions. However, commercial banks are required to establish yearly provisional funds amounting to 20 per cent of the value of the bonds they had bought from VAMC.

This year, commercial banks will have to sell roughly VND80 trillion (US$3.73 billion) NPLs to VAMC, raising the total NPLs sold to the company to roughly VND200 trillion ($9.34 billion).

With this sales, it is estimated that the profits of banks will be negatively affected as they need about VND40 trillion ($1.869 billion) for provisional funds in a year. The number is equal to around 85 per cent of last year's profits of nine listed commercial banks.

This year, Vietcombank will have to sell some VND1 trillion ($46.72 million) worth NPLs to the VAMC, while the figure for the bank for Development and Investment of Viet Nam (BIDV) will be VND8 trillion ($373.83 million), in addition to the VND6 trillion ($280.37 million) sold last year.

Sacombank's NPLs sold to VAMC this year is estimated to rise sharply after its merger with Southern Bank whose NPLs accounted for roughly 6 per cent of total outstanding loans.

DongA Bank general director Tran Phuong Binh said this year, his bank would sell NPLs close to VND7 trillion ($327.1 million) to VAMC, while Saigon Bank will sell an estimated VND500 billion ($23.36 million) worth NPLs.

Though it need not have to sell NPLs to VAMC thanks to the NPL ratio of less than 2.2 per cent, after selling more than VND1 trillion ($46.72 million) NPLs last year, ACB this year has still registered to sell another VND1 trillion to VAMC.

Member of the National Financial and Monetary Policy Advisory Council Tran Du Lich said selling NPLs to VAMC was a good way for banks to clean up their accounting balances, but the requirement for provisions would put significant pressure on them.

Questions raised on new property laws

Two long-awaited amended laws on housing and real estate, effective from July 1 and expected to have a significant impact on the property market, may not be as effective.

The two new laws were introduced amid the recovery of the property market starting from the end of last year, after seven years remaining frozen, with amendments to drive the market back on track. Still, market participants are awaiting further detailed instructions.

As most of the documents instructing the implementation of the two new laws had not been promulgated, the Ministry of Construction on Thursday issued a document saying that decrees and circulars under the previous laws will remain in effect, as long as they do not conflict with the new laws.

According to CBRE, the impact of the new laws might be significant and might mark an important step toward opening up the real estate market to overseas investment. The effects may not be felt immediately, CBRE said, adding that foreigners are likely to adopt a wait-and-see approach before making any decision.

In fact, many property developers have begun to take advantage of amendments in the new laws such as getting guarantees from banks for under-construction projects and selling apartments to foreign buyers.

Lawyer Nguyen Mai Phuong from Zicolaw observed that it was too early to affirm that the property market would thrive rapidly as the legal framework had not been completed.

Major amendments

Opening up the market to foreign buyers and Viet kieu (overseas Vietnamese): Foreigners are allowed to own houses in Viet Nam for 50 years. However, the number of apartments owned by foreigners in a building or houses in a ward-level zone must be less than 30 per cent. There is no limit on the number of houses that Viet kieu can own.

Bank guarantees for future property projects

Following Article 56 of the Law on Real Estate Business, property developers, before selling or leasing unfinished or future property, must obtain guarantees from commercial banks as assurances of their financial obligations to buyers. The regulation is expected to protect the rights of home buyers, as well as contribute toward cleaning up the realty market.

Minimum legal capital of property firms increased

The minimum legal capital requirement for property firms has been raised from VND6 billion (US$284,000) to VND20 billion ($945,000). Existing firms, which had not met the requirement, must raise their legal capital within one year since the law comes into force. This is aimed at enhancing the financial capacity of property developers.

Transactions through property trading floor not compulsory

The Law on Real Estate Business 2014 removed the compulsion of property transactions conducted through trading floors as the regulation proved ineffective after years of implementation.

Property to be used as capital

Property assets can now be used as capital contribution to found or raise charter capital of real estate investment trusts (REITs).

According to Decree 60/2015/ND-CP, which replaced Decree 58/2012/ND-CP, the evaluation of property assets must be carried out by two independent organisations.

The value of the property assets contributed as capital to REITs must be agreed upon by the trust's investors and founders.

In case, the property assets were evaluated higher than its market value, the concerned investors would be responsible for the price difference, the new decree said.

MIK announces VP Bank tie-up

MIK Corporation has announced that it will partner with Viet Nam Prosperity Bank (VP Bank) to carry out property projects including Park Riverside, Villa Park and the Park Residence.

The relationship was set up to respond to the amended Housing Law 2014, which is effective from July 1, in which property projects need to be guaranteed by banks.

The guarantee bank is responsible for refunding the payment to clients if real estate developers fail to hand over their products in time.

In another development, more than 1,000 clients joined MIK Corporation's marketing programme, in which 150 transactions were successful.

Savills Vietnam extends services

Following the establishment of a Japan Desk in Ha Noi last October, Savills Vietnam has extended its services to HCM City-based Japanese clients from this month.

The Japan Desk in HCM City is overseen by Sachiyo Asakawa who specialises in tenant representation in the real estate market. Asakawa graduated from Rutgers University, New Jersey, with a master's degree in city and regional planning. With more than 12 years of experience in the real estate market in both the United States and Japan, she has completed a large number of real estate transactions on behalf of global occupiers and owners.

"For many years, Japanese corporates and investors have been expanding their presence in Viet Nam. As the leading real estate agency in Viet Nam, we are delighted to further expand our international standard services and deep local insight to our Japanese client base," Neil MacGregor, managing director of Savills Vietnam, said.

Thanh Hoa sees remarkable surge in tourism revenue

In the first half of this year, the northern central province of Thanh Hoa earned more than 3.36 trillion VND (157 million USD), up 22.7 percent from the same period last year.

The total number of tourists to the province in the reviewed period exceeded 3.3 million, including 57,700 foreigners, an increase of 16.2 percent from the same period last year.

The Sam Son beach resort town alone earned 1.23 trillion VND (57.5 million USD), up 19.6 percent from the same period last year, with 2.5 million tourists.

The town plays a central role in promoting the province’s tourism potential in the National Tourism Year 2015.

The province aims to conduct a number of activities to promote local tourism development.

In the second half of the National Tourism Year 2015, Thanh Hoa will organise a wide range of festivals including an international stone sculpture festival, the 2015 Lam Kinh festival and a UNESCO-recognised intangible heritage festival.

Under the plan for tourism development from 2010- 2020, some 25 projects are being implemented to improve infrastructure facilities.

Currently, the province has 672 hotels and motels offering 15,000 rooms. The province is encouraging enterprises to upgrade facilities and develop high-end resorts to lure more foreign and domestic tourists.

Over the past five years, Thanh Hoa has invested more than 400 billion VND (18.7 million USD) in upgrading more than 200 relics, including the Ho Dynasty Citadel in Vinh Loc district, the Lam Kinh national special relic site in Tho Xuan district and the Ham Rong tourism zone in Thanh Hoa city.

Quality is key to North Europe market, businesses told

Product quality is the key to the North Europe market, including Finland, trade experts told businesses at a recent workshop in Ho Chi Minh City.

In addition, it is advisable for Vietnamese businesses to make full use of the EU’s Generalised System of Preferences (GSP), as most domestic exporters lack through understanding about the system.

The workshop was held on July 3 by the Vietnam Chamber of Commerce and Industry (VCCI), the Finnish Embassy in Vietnam, and the Finnish Ministry of Foreign Affairs’ Finnpartnership programme, with the goal to promote trade between Vietnam and Northern Europe.

Bilateral trade between Vietnam and Northern European has yet exceeded one billion USD and there remain shortcomings in the trade promotion activities among the stakeholders.

According to Nguyen Tan Hai, Deputy head of the VCCI’s Department of International Relations, Northern European countries have great potential for Vietnamese exports, as they have big demands for farm and aquatic produce.

Le Ky Anh, Economics and Trade Officer of the Delegation of the EU to Vietnam, said however, these countries, including Finland, are choosy markets with many strict demands for quality, food safety and hygiene, together with environmental protection and green growth standards, including those related to the use of female or children workers.

He stressed that businesses should be more proactive in improve their product quality and market study.

Deputy head of the Economics and Trade Section at the Delegation of the EU to Vietnam Jana Herceg said the up-and-coming Free Trade Agreement (FTA) between the EU and Vietnam is expected to exert strong impacts not only on trade but also on foreign investment attraction, technological transfer, economic reform and restructuring.

In order to optimize the benefits of the deal, Vietnam should make good preparation and specific strategies to integrate into the global economy, she recommended.

The two sides have recently concluded the 7 th round of negotiation on the bilateral FTA with commitments reached on many key issues.

Under the Vietnam-EU trade pact, 95 percent of the tax line would be reduced while a free trade zone would be established.

Businesses to purchase Lam Dong farm produce

More than 80 businesses have signed contracts and memoranda of understanding (MoUs) on cooperation in producing and consuming farm produce in the Central Highlands province of Lam Dong.

The contracts and MoUs focus on the consumption of vegetable and fruit specialties in Da Lat city, including potato, tomato and sweet pepper.

Customers included companies from Hanoi, Ho Chi Minh City, southern Dong Nai and Binh Duong provinces.

Notably, Korean-invested Lotte Mart supermarket chain inked several MoUs involving the supply of Da Lat vegetables and fruits to its supermarkets across the country.

Lam Dong now has nearly 40,000 hectares of land dedicated to hi-tech agricultural production, accounting for 15 percent of the province’s total farming land.

It is also home to more than 300 enterprises operating in farm produce production and processing. The export value of agricultural products makes up 80 percent of the province’s total export turnover.

Gov’t determined to spur SOE equitization

The Government will take bold measures to accelerate equitization of State-owned enterprises (SOEs) toward the end of this year as the equitization target was only 21% complete in the first half.

According to the Central Steering Committee for Enterprise Reform and Development, one of the measures is that leaders of State economic groups and corporations would not be re-appointed or promoted to higher positions if they fail to implement the already-approved equitization plans without good reasons.

This quarter, the Government is expected to approve equitization plans for 44 enterprises whose values have been announced and will order relevant agencies to publicize the values of 127 other enterprises now under asset evaluation. The equitization plans of these 127 SOEs could be approved in the fourth quarter.

If ministries, agencies, economic groups and corporations seriously proceed with SOE equitization, 200-230 enterprises would be equitized this year.

SOEs unable to launch their initial public offerings will be converted into joint stock companies with the State, labor unions and employees being their shareholders.

The committee reported at a recent meeting that only 46 out of 228 SOEs went public in the first six months of the year. The equitized enterprises offered 557 million shares but only 110 million shares worth around VND1.1 trillion were sold.

Therefore, equitizing the remaining enterprises in the second half of the year is a big challenge. The number does not include an additional 125 SOES approved to undergo equitization this year.

According to the committee, ministries and agencies have not focused on issuing effective mechanisms and policies to remove the hurdles to the SOE equitization process.

At a meeting in May, the Government issued a resolution speeding up SOE equitization though relevant decrees had not been revised.

Experts: Proper mechanism needed for competitive power market

Local economic experts have underscored the need for a market mechanism and proper institutions to develop a competitive power market and attract more private investors to this sector.

Nguyen Dinh Cung, president of the Central Institute for Economic Management (CIEM), said Vietnam wants private firms to invest in electricity generation and distribution projects and that a market mechanism would help achieve this.

The Government should create opportunities for the private sector to take part in electricity generation and distribution activities to increase supply and quality for consumers and prop up economic growth.  

Vietnam is now in transition towards a market economy and the Government needs to control prices of products and services in monopolistic areas and allow the market to decide prices in the areas where there is real competition.

Cung said a market mechanism for the competitive power market requires changes to State management in this sector. There have not been efficient market regulators and supervisors in the country or they have existed but not been independent.

Cung stressed independent agencies are important to protect the interests and rights of consumers and producers. To obtain this, electricity transmission and generation needs to be separated to ensure fairness for both producers and consumers.

Economic expert Le Dang Doanh said there are problems with State management in the electricity sector and reality has shown that the ministry has never refused power tariff hike proposals by Vietnam Electricity Group (EVN).

Doanh pointed out it is not appropriate to allow the Ministry of Industry and Trade to act as the owner, State administrator and supervisor of EVN and the Vietnam Competition Authority under the ministry should be separated from the ministry to better manage the power sector. The authority should be under the National Assembly or act as an independent agency in line with the existing regulations.

Doanh noted that a leader of EVN has recently been promoted to the post of deputy minister of industry and trade and that how the Vietnam Competition Authority could monitor EVN operations effectively if it is still under the ministry.   

Doanh said EVN’s new electricity tariff calculations are also cause for concern as they have spiked electricity bills dramatically. He noted electricity tariffs should be calculated based on the country’s state of economic development and incomes of users.

Doanh said it is inappropriate to say electricity prices in Vietnam are lower than in Singapore as the average income of Vietnamese people is way below that of Singaporeans.

Transport ministry evaluates Quang Ninh airport project

The Ministry of Transport yesterday worked with the government of Quang Ninh Province to evaluate the Quang Ninh airport project in Van Don District in the northern province.    

According to the ministry, the airport is designed to meet 4E standards for domestic airports of the International Civil Aviation Organization (ICAO) and have one runway, one taxiway and parking lots for airplanes.

A report by the province and the ministry said Quang Ninh airport is important to the success of Van Don Economic Zone and the province’s socio-economic and tourism development. The project is in line with master zoning plans for transportation in general and air travel in particular.

Deputy Minister of Transport Nguyen Hong Truong said the airport project, if funded by private capital, would get off the ground sooner than that funded by the State budget.

He called for Quang Ninh Province to do what it can to ensure the efficiency of investment capital, site clearance and environmental protection, and the building of approach roads for the airport.

The government of Quang Ninh Province and Sun Group originally planned to begin work on the airport on March 27 but the groundbreaking ceremony was postponed.

In the middle of April, the Ministry of Construction found the airport project had been drawn up based on the design and technical figures of Phan Thiet airport planned in the central province of Binh Thuan.

Therefore, the Government put the project on hold and told the transport ministry to work with other relevant agencies to evaluate whether the airport was needed.

Earlier, Quang Ninh airport was designed to cover 290 hectares in Doan Ket Commune in Van Don District, have one runway and a parking area for at least four Boeing B777 and Airbus A321 aircraft.

The build-operate-transfer (BOT) project would require nearly VND7.5 trillion, including more than VND5.25 trillion for construction and equipment, and VND734.2 billion for site clearance. The investor was expected to recover the investment capital over a period of 45 years.

U.S. invests US$11.1 billion in Vietnam

The U.S. is the seventh largest foreign investor in Vietnam with total registered capital topping US$11.1 billion since 1988, reported the Ministry of Planning and Investment yesterday.

American largest scale project is Ho Tram with a total capital of US$4.2 billion in the southern province of Ba Ria-Vung Tau. Besides, Intel Company has invested in a US$1 billion chipset plant in Ho Chi Minh City.

Twenty years after two sides normalized diplomatic relations, the U.S. has become one of Vietnam’s biggest trade and investment partners.

Foreign direct investment capital from the U.S. to Vietnam reached US$71 million last year and approximated US$73 million in the first half this year.

As many as 995 American investors have been present in Vietnam’s capital market. However, U.S. indirect investment in Vietnam has been limited compared to the potential of American investors and the capital absorption capacity of Vietnam.

Petrol, oil prices drop

Gasoline, diesel, kerosene and mazut prices slightly reduced yesterday, announced the Ministry of Industry and Trade and the Ministry of Finance.

Ron 92 and ethanol gasoline E5 prices slid by VND331 to VND20,380 and VND20,050  a liter.

Diesel and kerosene dropped VND284 and VND221 to VND15,793 and VND14,878 a liter. Mazut oil decreased VND424 to VND12,306 a kilogram.

The two ministries instructed businesses to keep contribution to the price subsidization fund unchanged. The fund’s use levels to subsidy traditional and E5 gasoline prices are VND527 and VND362 a liter respectively.

Jan-Jun electricity output, consumption up strongly

Vietnam Electricity Group (EVN) said electricity output and consumption in the first half of this year surged over the same period last year.

EVN reported at a meeting of the Ministry of Industry and Trade in Hanoi on Wednesday that the power sector generated 78.74 billion kWh in the first six months of this year, rising by 12.35% against the January-June period of 2014.

Nguyen Tai Anh, deputy general director of EVN, was quoted by VietnamPlus as saying at the meeting that household electricity consumption soared in May and June compared to the same period of last year due to hot weather.

The highest daily electricity consumption in May-June was more than 531 million kWh, up over 13% against the peak electricity consumption day of the same period of last year.

To meet rising demand, EVN commissioned five power generators with a combined electricity capacity of 2,654 MW last month. This helped reduce the number of power cut hours from January to June by 38% year-on-year.

“This (less power cuts) is one of the targets EVN is striving to achieve to better serve customers,” Anh said.

EVN projected the volume of electricity generated in Vietnam and imported in the second half of this year would be 80.32 billion kWh.

The group pledged sufficient electricity supply for production and commercial activities toward the year-end. It plans to put into operation Lai Chau Hydropower Plant with a designed generation capacity of 1,200 MW and Huoi Quang Hydropower Plant with 520 MW.

Minister of Industry and Trade Vu Huy Hoang said EVN should secure stable electricity supply to meet the demands for not only production but also daily use consumption of households as assigned.

Hoang told EVN to find measures to drastically solve the environmental pollution caused by coal ash from Vinh Tan 2 Thermal Power Plant in the central province of Binh Thuan and not to let this pollution happen at other thermal power plants in the country.

In April this year, a large number of people in residential areas near Vinh Tan 2 Thermal Power Plant gathered on the National Highway 1A section at the project in protest against the dust pollution triggered by the plant. The gathering caused severe traffic congestion on the 50-kilometer-long road section in the province.

Vietnam urged to choose right trade partners

Vietnam needs to choose and expand cooperation with trade partners that help the country boost exports and achieve further growth, said Le Ky Anh, trade and economic officer at the delegation of the European Union (EU) to Vietnam.

The EU and the United States are among such right partners as Anh said at a seminar “Doing business with the EU and Finland” in Can Tho City on Wednesday.

Vietnam obtained strong growth in exports to EU and U.S. markets. Last year, bilateral trade between Vietnam and the EU surpassed US$36 billion and Vietnam enjoyed a trade surplus of around US$19 billion.

Goods produced by the EU do not directly compete with Vietnamese products as the EU and Vietnam are complementary economies.

The expert said the Vietnam-EU free trade agreement (FTA) and the Trans-Pacific Partnership (TPP) would bring more opportunities for Vietnam as this ASEAN country can boost exports of competitive products to EU markets. The EU has been a major market for Vietnamese tra fish for years, which makes up a significant proportion of the country’s total tra fish export revenue.

The EU accounted for 19-20% of Vietnam’s exports of key products in 2014, 36% of its phone exports, 35% of its leather-shoe shipments and 16.8% of its outbound apparel sales.

Once the FTA between Vietnam and the EU is signed, the EU will liberalize 95-97% of tariffs on Vietnamese goods and Vietnamese should prepare to make the most of this opportunity.

Anh said studies showed Vietnam has used only 40% of the Generalized System of Preferences (GSP) given by the EU while the percentage of Thailand is 60-70%.

Anh said the FTA between Vietnam and the EU covers many fields such as trade, service, investment and government procurement in addition to goods.

Vietnam should open the door wider to EU investors as they bring advanced technologies to the country and create more jobs for local workers. Vietnamese employees can also learn good lessons from EU firms, he stressed.  

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

GEM invests US$20 million in local real estate company, Total Viet Nam becomes sole owner of Totalgaz Viet Nam, $90m fibre plant to be constructed in Tay Ninh, Apartment sales expected to climb, PE firm KKR sells Masan shares
 
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