BUSINESS NEWS IN BRIEF 8/1

Businesses advised to take better advantage of FTA benefits

Vietnam’s joining of free trade agreements (FTAs) is quite suitable in the context of trade globalization. However, to promote the efficiency of boosting exports, a concerted policy system is needed to help businesses successfully take advantage of benefits brought by the FTAs, according to insiders.

A survey by the Vietnam Chamber of Commerce and Industry (VCCI) shows that the rate of taking advantage of FTA benefits by Vietnamese enterprises is falling. 

Businesses attributed the fall to shortcomings in State offices’ enforcement of policies, strict rules of origin, and their lack of information about commitments and how to take full advantage of the FTAs. Many also acknowledged that their firms’ competitiveness is weaker than that of partners whose countries are also members of the FTAs.

The garment and textile sector is considered one of those taking the most advantage of FTA benefits in Vietnam. However, President of the Ho Chi Minh City Textile and Garment - Embroidery Association Pham Xuan Hong said that the sector only succeeds in doing so with the Republic of Korea, while the rates with other partners remain low.

The reason is that different FTAs have different requirements on rules of origin, Hong elaborated, adding that many FTAs request clarification of origin of yarn, while Vietnam mainly imports materials from China.

According to experts, the rate of enterprises bringing into full play the FTAs has been improved remarkably, from 10% at first to 38% at present. However, it is not enough to equilibrate the trade balance with partners.

They said that together with tariff reduction, new-generation FTAs include strict regulations on technical standards, source of origin, and intellectual property, which have made Vietnamese enterprises fail to be adaptive to these agreements.

To meet expectations when joining FTAs, Vietnam should carry out measures in a concerted way to increase competitiveness of exporters, experts said.

Pham Quynh Mai, deputy head of the Multilateral Trade Policy Department under  the Ministry of Industry and Trade, suggested businesses take the initiative in accessing information about the FTAs and their contents to make use of rules on origin in a systematic and effective manner.

Enterprises should also improve technology and increase product quality, as all kinds of products which hope to enjoy tariff incentives and be welcomed by consumers must meet all quality and technical requirements committed, Mai added.

Nguyen Thi Tue Anh, deputy director of the Central Institute for Economic Management (CIEM), said that the small scale is a week point of Vietnamese enterprises, so they are incapable of meeting big orders.

She suggested they connect with others in the same sector to share orders, or cooperate with multi-national groups and businesses to bring opportunities into full play to participate in the regional and global supply chains.

Besides efforts of enterprises, the Vietnamese Government should focus on supporting enterprises to export their strong products by guiding them to implement rules of origin and simplifying procedures of certification and specific inspections, experts advised.

Hanoi’s exports grow 21.6% in 2018

Waste-to-energy offers quick returns, Nokia 8.1 comes to Viet Nam, Thaco pours US$200m into production plant, Hoa Phat Group’s steel export shoots up over 50 percent, Wooden furniture exporters expect bright prospects in 2019

Hanoi shipped goods overseas for US$14.23 billion in 2018, an annual increase of 21.6%, reported the municipal Department of Industry and Trade.

In December alone, the capital city’s export value reached about US$1.38 billion, up 7.6% from November and 28.2% year on year. 

Garment-textile products, farm produce, and petroleum contributed the most to such growth. The garment-textile export turnover increased 24% while the respective figures for farm produce and petroleum were 39.8 and 83.8%.

The US, Japan, and China remained Hanoi’s biggest markets, with values accounting for 16, 13, and 12% of the total obtained by the city, respectively.

Meanwhile, the capital city imported US$3.1 billion worth of goods in December, rising 8.4% from November and 9.6% against one year earlier.

Hanoi’s total import value exceeded US$31.18 billion in 2018, increasing 8.2% annually.

Various measures to be taken to promote trade in 2019

The Ministry of Industry and Trade (MoIT) will continue its efforts to achieve the National Assembly’s target of total export turnover growing from 7-8% and trade deficit being kept at below 3%, Minister Tran Tuan Anh has said.

To that end, it will keep a close watch of market developments in order to roll out the best business and production plans, expand its presence to foreign markets, optimise free trade agreements (FTAs), and effectively cope with protectionism and technical barriers imposed by other countries, the minister told the Vietnam News Agency in an interview.

Of note, he said, the MoIT will work to build, amend and supplement the legal system to realise the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and promote the signing and ratification of major FTAs, especially the EU-Vietnam FTA (EVFTA), as the two deals will make Vietnam more attractive to foreign investors. 

The ministry will improve its capacity for settling disputes and coping with trade protectionism, and intensify IT applications and administrative reform, Anh added. 

Given uncertainties of the global economy, the Vietnamese Government, the MoIT and other ministries and agencies have employed various measures to ease the risks, according to the official. 

Due attention has been paid to export market expansion, he elaborated, adding that apart from the US and China, the EU, the Republic of Korea (RoK), Japan and the Association of Southeast Asian Nations (ASEAN) have also become Vietnam’s major trade partners. 

The MoIT has also stepped up trade promotion to boost production and product consumption, he said.

Reviewing the ministry’s performance in 2018, Anh said it fulfilled and overfulfilled targets set by the Government. 

In the year, the ministry took the lead in cutting 675 investment and business conditions, which has created an open environment for investors while improving the efficiency of State management, he added.

CPTPP to cause dramatic changes in domestic market in 2019

The domestic market is expected to see considerable changes in 2019 as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) becomes effective from January 14, according to market watchers.

In 2019, the import tax of agricultural products, milk and wine from CPTPP member countries will be reduced in line with the set roadmap.

From November 14, import taxes applied for grape wine and champagne from Canada will be reduced from the current 56% to 41% and 36% in early 2020.

Except for Canadian lobster and salmon, Vietnam will erase all import tax for fisheries products such as frozen crab and fish from Canada and Australia, while cutting down tax for Canadian salmon from 18% to zero percent, and that for Canadian lobster from 35% to 15%.

Last year, many foreign food businesses, including those from Japan, Australia and Chile, introduced fresh and processed aquatic products as well as fruit, children’s food and vegetable to Vietnam to seek distribution channels.

Le Van May, CEO of Lotus Group, a Japanese nappy, formula milk and food distributor, said that Japanese firms will continue introducing more food products to Vietnam to optimize the opportunities in the market.

Nakajima Hayato from Japan’s Middis Inc. said that since 2017, the firm has cooperated with three Vietnamese businesses to introduce the milk trademark Bean Stalk to Vietnam. The company will increase the sale of the product in Vietnam when the CPTPP takes effects, he said.

Meanwhile, a representative from Oitaken, a Japanese provider of Kosui pears, said that the company will also supply more products to Vietnamese consumers.

Seeking measures to improve the quality of domestic products, Nguyen Viet Dung, a National Assembly deputy from Ho Chi Minh City, held that investment to agriculture should be carefully calculated as similar products from CPTPP markets are very competitive.

He stressed the need to develop large-scale production facilities to help the application of technology, thus enhancing the competitiveness of domestic products.

Trinh Quoc Dung, Executive Director of Vinamilk group said that if Vietnamese firms do not make care full preparations, they will lose right in the domestic market.

In the context of strong competition from foreign firms, restructuring themselves to reduce costs and improve the quality of their products is the only way for Vietnamese breeding companies, meat processing and milk businesses, he stated.

Dung held that products that are internationally competitive in the domestic market will have easier way to foreign markets.

Quang Tri gets PM approval for $614 million port project     

The central province of Quang Tri is going to build a seaport at a cost of VND14 trillion (US$614 million) at local My Thuy Beach in an attempt to boost development of the province’s key economic zone.

According to the local People’s Committee, a decision issued by the Prime Minister late last week gave the province permission to go ahead with construction of the proposed My Thuy Sea Port in Hai Lang District.

The total investment draws on different funding sources. A newly formed joint venture entity, the My Thuy International Port Joint Venture Company, will be in charge of managing construction.

The PM’s decision stated the port’s main function will be to service the South East Quang Tri Economic Zone, local industrial parks and the cargo flow on the East West Economic Corridor, which links Viet Nam, Laos, Cambodia, Thailand and Myanmar.

The port will be 685ha wide and able to accommodate 10,000-tonne vessels. It will have 10 wharves, which will be built one by one from this year until 2036. The first four wharves will be operational by 2025.

The South East Quang Tri Economic Zone is the only economic zone in the province. It was formed in 2015, taking 23,792ha land from 17 communes in the districts of Hai Lang, Trieu Phong and Gio Linh. So far, almost 90 per cent of its area has been left unused.

Quang Tri is the last of the 12 provinces of the country’s central region – spreading from Thanh Hoa to Khanh Hoa – to get a deep sea port. The region is home to Chan May Port, Dung Quat Port, Da Nang Port and Quy Nhon Port.

This central province was hit hardest by American bombs during the war. The locality is listed as one of the least-developed provinces in the country more than 40 years after the war ended. 

Shares of Coteccons soar as foreign funds lift holdings     

Shares of the construction conglomerate Cotec Construction Joint Stock Company (Coteccons), coded CTD, have recovered strongly since early November, climbing by 14 per cent after two foreign management funds announced they would increase their holdings in the company.

CTD, traded on the Ho Chi Minh Stock Exchange, hit VND160,000 (US$7) per share on Monday. It has soared 35.5 per cent since 2018’s one-year low of VND118,120 per share.

Since late December 2018, Korea Investment Management Fund (KIM) has become a major shareholder of CTD after buying an additional 830,000 CTD shares to raise the ownership ratio of the fund in CTD from 4.95 per cent to 6 per cent, equivalent to 4.7 million shares.

Over the same period, investment and asset management company VinaCapital Group has also acquired an additional 108,000 CTD shares, lifting its stake holdings in Coteccons to 7 per cent.

Turumbayev Talgat, a member of Coteccons’s board of directors, has also registered to buy nearly 1.27 million shares of CTD via both put-through and order-matching methods.

From December 12, 2018 to January 10, 2019, Coteccons decided to buy back 3.8 million shares with a price of VND140,000 to VND180,000 per share. The plan received high consensus from all members of the company’s board of directors as it will benefit all parties and the company in the future.

Recently, the company has won contracts for many projects. It won contracts to work as the main contractor for two new projects of real estate giant Vingroup (VIC) with a total value of nearly VND7 trillion, including VinCity Sportia and Vincity Ocean Park projects in Ha Noi.

In December 2018, Coteccons also received five bidding packages worth up to VND11 trillion.

In October last year, CTD signed a contract to build factory project Timberland Manwah in the southern province of Binh Duong worth VND1.5 trillion and the headquarters project of Military-run telecommunications company Viettel Group.

Nguyen Sy Cong, general director of Coteccons, said that in the context that the construction industry faces difficulties and fierce competition, the company still achieved planned profit and revenue.

The company has set this year’s revenue and profit targets at the same level as 2018. In the first nine months of 2018, Coteccons earned net revenue of VND20.7 trillion, up by 14 per cent year-on-year and fulfilling 74 per cent of the whole year’s plan.

Post-tax profit reached VND1.2 trillion, approximately equal to the same period of 2017. 

Banks must warn customers about ATM theft     

The State Bank of Viet Nam (SBV) issued a new circular requiring commercial banks to regularly update customers on the theft of money from ATMs, ensuring smooth ATM operations and preventing card crimes.

The circular stipulates that banks and payment service suppliers must provide information and co-ordinate with local police agencies and branches of the SBV to ensure ATM systems operate safely and smoothly and prevent crimes.

Banks must inform police agencies if money is stolen from ATMs and instruct customers on the safe use of ATMs.

To ensure the ATM system works smoothly, banks need to promptly detect and troubleshoot problems. In case the machines stop working for more than 24 hours, payment service suppliers must inform customers.

Commercial banks must continue to inform customers about measures to prevent risks and fraud when trading online.

Banks recommend customers keep their ATM account information confidential and secure e-banking accounts including their personal identification number (PIN), one-time password and personal email to avoid having account information stolen. 

SBV sets 2019 credit growth target at 14 per cent     

The State Bank of Viet Nam (SBV) had set a credit growth target for 2019 equivalent at 14 per cent, said SBV Deputy Governor Nguyen Thi Hong.

“Credit would focus on priority fields ensuring risk control and supporting economic growth,” she said at a press conference in Ha Noi on Monday.

In 2018, the SBV implemented monetary policies to stabilise the currency and foreign exchange markets and contributing to controlling inflation at 3.54 per cent (the fifth consecutive year when inflation was curbed below 4 per cent) and supporting economic growth at 7.08 per cent – the highest level in the past 11 years.

Director of the SBV Department of Monetary Policy Pham Thanh Ha said that the restructuring of credit institutions and settlement of bad debt had made positive changes. As of December 2018, the credit institution had handled VND149.22 trillion (US$6.4 billion) in bad debt, he noted.

SBV’s Department of Payments Director Pham Tien Dung said 76 credit organisations had already provided online payment services, while 41 were offering mobile services.

SBV Deputy Governor Hong said the central bank would continue adopting flexible monetary, fiscal, and macroeconomic policies to keep inflation under 4 per cent again this year.

“The bank will keep a close watch on the developments of the macroeconomy, as well as domestic and international financial and monetary markets; while monitoring monetary policy instruments in a proactive and prudent way to stabilise the currency and foreign exchange markets,” she said.

In addition, the SBV would continue to set credit growth limits for each bank depending on its health to regulate overall credit growth and to support government targets.

We would focus on quality of credit growth this year. The central bank would regularly require banks to submit their reports on credit quality. We would directly work with credit institutions to control risks if it is needed. SBV required banks to enhance check-ups on internal process and implementation in lending activities,” she said. It will actively implement measures to limit dollarisation in the country and increase public confidence in Vietnamese dong, thus contributing to stabilising the foreign currency and macroeconomic markets.The SBV will direct credit institutions to increase the quality of credit packages, focusing on the Government’s priority business fields, and enabling businesses and locals to access credit capital. It will improve a legal framework to support bad debt settlement and the reshuffle of credit organisations, Hong added.

Answering questions about rising interest rates, the deputy governor acknowledged that interest rates had increased in some banks due to increasing capital needs of organisations and individuals.

She said credit institutions could still meet the needs of the economy while controlling interest rates.

“Interest rates decreased at the beginning of the year and increased at the end of the year to ensure liquidity. Interest only increased slightly over the course of the year.”

“The State Bank will closely monitor fluctuations in the market and external impacts, especially the FED’s rate hike schedule to take appropriate policies for exchange and interest rates,” she said.

In 2018, the central exchange rate increased by 1.6 per cent while the market exchange rate increased by about 2.5 per cent.

The system’s bad debt ratio fell sharply in 2018 to VND149.22 trillion. The internal bad debt ratio of the credit institution system was 1.89 per cent, down from the level 2.46 per cent at the end of 2016 and 1.99 per cent at the end of 2017.

The rate was also the lowest level recorded since 2012. 

Cement Corporation sets revenue target     

Viet Nam Cement Industry Corporation (VICEM) targets a net revenue of VND40 trillion (US$1.72 billion) this year, a level that would mark a year-on-year increase of 10 per cent.

The pre-tax profit is expected to be more than VND3.2 trillion, said General Director of VICEM Bui Hong Minh at a conference held in Ha Noi on Monday to review the firm’s 2018 results and set plans for 2019.

To achieve the goal, Minh said the corporation would produce and consume 31 million tonnes of coal. It would further invest in technology to raise its production capacity and set up programmes to save natural resources.

In terms of consumption, VICEM will apply Industry 4.0 technology in sale management, distribution and e-invoices.

Minh said the corporation had completed its 2018 tasks assigned by the State and the Ministry of Construction as it had maintained high-yield production to reduce production prices.

Last year, VICEM earned VND37 trillion in revenue, 10 per cent higher than that in 2017. It made more than VND2.8 trillion in pre-tax profit, up 11 per cent. 

MoIT proposes to resolve Thai Binh 2 power plant’s difficulties     

The Ministry of Industry and Trade (MoIT) has sent a document to Prime Minister Nguyen Xuan Phuc following PetroVietnam’s proposal to use VND2.5 trillion (US$107.7 million) from its provision cost to complete the much-delayed Thai Binh 2 plant.

Earlier, the Viet Nam National Oil and Gas Group (PetroVietnam) – the investor of the VND41 trillion ($1.827 billion) Thai Binh 2 project – submitted a proposal to the ministry to use the project’s provision cost and some of PetroVietnam’s profits to resolve the difficulties. The costs would be independently audited.

The MoIT said PetroVietnam must report on the capital and specific targets and provide an overall evaluation of the project. In addition, the duties and responsibilities of the engineering, procurement and construction (EPC) contractor should be reviewed by the Commission for the Management of State Capital at Enterprises (CMSC).

Under the adjusted timeline, the project’s first turbine was expected to be complete in June 2020 and the second one four months later.

The ministry said the adjustment should not exempt the firm from its responsibilities as the investor under existing contracts and according to legal provisions.

State-run PetroVietnam (PVN) is building the 1,200MW Thai Binh 2 thermal power project, part of the Thai Binh Power Centre in the northern province of Thai Binh. PetroVietnam Construction JSC (PVC) is the EPC contractor with a $1.2 billion contract.

PetroVietnam also proposed exempting fines for PVC with the condition that PVC would make maximum effort to complete the project according to the adjusted schedule.

In response, the ministry asked PetroVietnam to report the proposal to the CMSC for consideration, as the exemption would affect the group’s rights and responsibilities.

Earlier, the MoIT handed over ownership of PetroVietnam to the CMSC.

The investor has disbursed more than VND31.2 trillion, accounting for 82 per cent of the project’s total investment. PetroVietnam said the project would be completed by 2020, meaning that Thai Binh 2 Thermal Power Plant was delayed by 55 months.

PetroVietnam said project difficulties include the fact that PVC has not had experience acting as an EPC contractor for thermal power plants. Inability to pay for completed works and sub-contractors is also a challenge.

More than VND1.1 trillion that PetroVietnam paid to PVC as an advance payment to implement the EPC contract for the plant was used to pay for PVC’s bank loans, causing a capital shortage for the project.

As reported by PetroVietnam, it is expected that when the project is completed, the PVC contractor would be short about $55.18 million compared to the value of the signed EPC contract after the total investment was adjusted 2nd time due to delay.

PetroVietnam still has difficulties due to the lack of capital. Many machines have not been put into use but have exceeded their warranty period, causing risks related to equipment quality.

“This is a large-scale project,” the ministry said. “If it is not completed soon it will lead to ballooning costs and big economic losses, affecting the supply of electricity and creating bad public opinion. The PVC contractor lacks the experience and financial capacity to ensure cash flow for project implementation.” 

VN firms get opportunities in Bulgaria     

The Viet Nam-Bulgaria Trade Promotion and Investment Centre opened in Ha Noi on Saturday, improving conditions for Vietnamese businesses to boost investment and exports to Bulgaria as well as accessing other EU markets.

According to the centre’s Deputy Chairman, Nguyen The Hung, the centre would help leading businesses of Viet Nam and Bulgaria implement joint economic projects in the two countries.

Bulgaria is expected to be an attractive destination for investment and doing business thanks to its favourable business environment and low tax level. The Bulgarian government’s policy is to build and maintain stable macro economy and finance, boosting economic growth, in addition to improving administrative environment and keeping the lowest tax level in the EU.

Bulgaria also encourages investment in solutions to increase access to finance for small- and medium-sized enterprises, reforming vocational training and education and enhancing interaction between university education and businesses.

Charge d’Affaires Marinela Petkova of the Bulgarian Embassy to Viet Nam said Bulgaria was striving to develop production innovations with high added value, improving the business environment and the potential for technology development.

These efforts are capable of attracting Vietnamese investment and creating opportunities for co-operation in a number of areas such as information and communication technology, electronics and electrical engineering, machine manufacturing and food, she said.

The trade turnover between the two sides in 2017 was US$109.16 million, of which Bulgaria’s exports to Viet Nam were valued at $71 million, mainly medicine, plant protection medicine and feed. Meanwhile, Viet Nam exports products such as rice, cashew, coffee, pepper, frozen seafood and products made of rubber and leather, clothes, computer and devices. 

Wooden furniture exporters expect bright prospects in 2019

2019 is expected to be a good year for Vietnamese wood and wooden furniture exporters thanks to the expansion of markets, according to the Ministry of Agriculture and Rural Development (MARD).

Along with the growth in the US market, the EU-Vietnam Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are also forecast to help increase orders for the sector.

However, the domestic wood sector is also likely to encounter difficulties in the year, especially from the shifting of production from foreign countries into Vietnam.

Unofficial statistics showed that in 2018, about 65 foreign wood firms invested in Vietnam, 23 of them came from China, posing fierce competition to domestic wood and handicraft enterprises.

Last year, Vietnam earned over 9.3 billion USD from forestry exports, up 15.9 percent year on year. The figure helped the forestry sector to see a trade surplus of 7 billion USD.

The wood processing industry officially surpassed the fishery sector to become the top foreign currency earner in the agricultural sector.

In 2019, the export revenue of forestry products is hoped to hit 10.5 billion USD.

Hoa Phat Group’s steel export shoots up over 50 percent

Hoa Phat Group, the largest steel maker in the country, shipped abroad 240,000 tonnes of steel in 2018, up 50.97 percent against the previous year, the group said on January 7.

Hoa Phat also reported an 8 percent increase in the year to nearly 2.4 million tonnes.

Particularly, the group set new records in both domestic sales and export in October, with reckoned volume of more than 250,000 tonnes, and 40,000 tonnes, respectively.

Never before had the group received such large orders from its traditional markets (including Japan, the US, Cambodia, and Malaysia) like it did in 2018. Strongest growth was seen in Japan, with the amount of steel orders increasing 20 times to over 58,500 tonnes, followed by Cambodia (246 percent) and Malaysia (202 percent).

Cambodia was the biggest customer of Hoa Phat in 2018 with nearly 70,000 tonnes, and will continue to be a potential market for Hoa Phat steel as the neighbouring country’s steel industry has not developed yet while demand is high for construction of high-rise buildings.

The group also won the anti-dumping case filed by Australian firm One Steel Manufacturing Pty Ltd, resulting in no anti-dumping subsidies imposed on Hoa Phat steel in the Australian market.

Regarding the US market, despite a 25 percent tariff on most steel imports under the Trump administration’s Section 232, Hoa Phat managed to sell 35,600 tonnes to the market, accounting for 15 percent of the group’s total exports.

Last year, Hoa Phat steel was shipped to 14 countries across the five continents. The group said that diversity in markets helped it not depend on a single market. In 2019, the corporation will continue prioritising domestic market, and set aside 10 percent of its output for exports, targeting more markets in the Southeast Asian region.

Also, construction of the Hoa Phat Dung Quat iron and steel production complex will be accelerated so that it can be completed by the end of the year. The complex sits on a site of nearly 372.7ha, nearly 340ha of which will be earmarked for factories and around 27ha is for specialised ports with a total investment of 60 trillion VND (2.6 billion USD). 

With a capacity of 4 million tonnes per year, it mostly manufactures construction and rolled steels. In the first stage, the complex will churn out 1 million tonnes of construction steel and 1 million tonnes of rolled steel. Later, two million tonnes of rolled steel will be produced during the second stage. 

After being put into operation, it is expected to make an annual revenue of nearly 2 billion USD, generate jobs for 8,000 workers and contribute 4 trillion VND (173.9 million USD) to the State budget a year.

Nokia 8.1 comes to Viet Nam     

HMD Global on Thursday launched Nokia 8.1, the newest addition to its flagship range, in Viet Nam.

The phone is available in three colour combinations -- blue-silver, steel-copper and iron-steel -- and costs VND7.99 million (US$285).

The company said the phone has Android 9 Pie, the latest Android software, to deliver the latest innovations right out of the box.

Kyler Tan, Viet Nam country general director of HMD Global, said: “We’ve seen great success in the value flagship category with each of our smartphones in this class consistently introducing new premium experiences to our fans.

“With the Nokia 8.1, we are further pushing the boundaries in this segment. We offer accelerated performance with a first-class processor architecture, dual cameras with an industry-leading sensor, OIS and ZEISS optics for great low light imaging, and our new PureDisplay HDR screen technology."

The Nokia 8.1 also combines Google Assistant with Dual-Sight.

It will receive three years of monthly security patches and two major OS updates as guaranteed in the Android One programme.

Google Play protect scans over 50 billion apps per day to keep phones safe from malware. 

Waste-to-energy offers quick returns     

Power generation from waste has a short break-even period and benefits the environment and so is attractive to investors.

Dong Minh Toan, chairman and CEO of Binh Phuoc Import Export Company, which operates waste-to-energy plant, said: “With the high electricity price, along with the fee for waste treatment, a waste-to-energy project only needs around five years to break even whereas it takes 10 years for solar and wind power plants.”

Waste-to-energy projects are an excellent investment in places where at least 500 tonnes of waste is generated per day and the treatment price is over $21 per tonne.

There are five or six cities in Viet Nam meeting these requirements.

HCM City is Viet Nam’s biggest city and generates the largest volume of waste -- 9,300 tonnes a day.

The city stipulates that waste-treatment facilities need to generate electricity from the waste besides certain other conditions and pays US$21 per tonne for treatment.

To further support this, it has fixed a rate of 10.05 cent/KWh for the electricity generated from waste, higher than for solar and wind energy.

“We are ready to buy and connect our grid to waste-to-energy projects because all these projects are located in cities and large towns, where we have already had our grid,” a spokesman for the Vietnam Electricity Corporation told Nguoi Lao Dong (The Labourers) newspaper.

“Besides, waste-to-energy projects are reliable since they are not dependent on the weather.”

However, these projects usually involve strict technical requirements from authorities.

Besides, most technologies for generating energy from waste from the US, Europe and Japan require waste classification, something that is not yet done in Viet Nam.

“This means enterprises need to invest also in waste classification systems,” an investor said.

EVN said it has signed contracts to buy electricity from three waste-to-energy projects, including Go Cat, Can Tho and Nam Son – though their total capacity is only 9 MW. 

Thaco pours US$200m into production plant     

The local Truong Hai Auto Corporation (Thaco) has invested VND4.5 trillion (nearly US$200 million) in a manufacturing plant to produce cars for luxury European brands in the central province of Quang Nam.

The company said the plant, which is built on 7.5ha, was designed with a total capacity of 20,000 Peugeot cars per year for domestic use and export.

The plant has been equipped with modern production lines and updated automation technology to meet the luxury brand’s standards.

Thaco has been an exclusive agent for imported Peugeots since the French car giant returned to the local market in 2014. The French brand posted 60-per cent sales growth in 2016.

The local manufacturer has already opened 13 Peugeot showrooms with 3S (sales-services-spare parts) facilities across the country.

In 2016, Thaco introduced the locally manufactured Peugeot model 408 from the Thaco-Chu Lai Industrial Mechanic and Automobile Zone to boost competition in the European luxury car segment in Viet Nam.

According to a report by the Vietnam Automobile Manufacturers’ Association (VAMA), the Peugeot’s all-new 3008 and 5008 models were the top sellers among European car brands in Viet Nam in 2018. 

An Giang Province exports grow     

An Giang Province’s exports grew by 2.43 per cent last year to US$840 million to comfortably achieve the target set at the beginning of the year.

With its favourable geographic location, the province has demonstrated its strength as a trading gateway and its exports have been growing steadily, said Vo Nguyen Nam, director of the province’s Department of Industry and Trade.

The province lies on the Cambodian border and has border checkpoints at Tinh Bien District and Tan Chau Town, two in An Phu District and numerous smaller ones, which help facilitate trade.

Its main exports are seafood, rice, clothing, and frozen vegetables, and its main markets include the Philippines, Malaysia, Cambodia, and Singapore.

The province plans to gather information about more markets to aid exports and organise more trade facilitation activities.

It will help firms export to Cambodia by studying provinces in that country where demand for Vietnamese goods is high and apprising local companies about Cambodia’s trade policies.

It aims to achieve exports of $890 million this year.

An Giang is one of the Mekong Delta’s key economic hubs along with Kien Giang and Ca Mau provinces and Can Tho City. 

Vietnam, Bulgaria boost trade, investment

The Vietnam-Bulgaria Trade Promotion and Investment Centre has opened in Hanoi recently, improving conditions for Vietnamese businesses to boost investment and exports to Bulgaria as well as accessing other EU markets.

According to the centre’s Vice Chairman, Nguyen The Hung, the centre will help leading businesses of Vietnam and Bulgaria implement joint economic projects in the two countries.

Bulgaria is expected to be an attractive destination for investment and doing business thanks to its favourable business environment and low tax level. The Bulgarian government’s policy is to build and maintain stable macro economy and finance, and boost economic growth, in addition to improving administrative environment and keeping the lowest tax level in the EU.

Bulgaria also encourages investment in solutions to increase access to finance for small- and medium-sized enterprises, reforming vocational training and education and enhancing interaction between universities and businesses.

Charge d’Affaires Marinela Petkova of the Bulgarian Embassy in Vietnam said Bulgaria is striving to develop production innovations with high added value, and improve the business environment and the potential for technology development.

These efforts are capable of attracting Vietnamese investment and creating opportunities for co-operation in a number of areas such as information and communication technology, electronics and electrical engineering, machine manufacturing and food, she said.

Two-way trade between Vietnam and Bulgaria in 2017 was US$109.16 million, of which Bulgaria’s exports to Vietnam were valued at US$71 million, mainly medicine, plant protection medicine and feed. 

Meanwhile, Vietnam exports products such as rice, cashew, coffee, pepper, frozen seafood and products made of rubber and leather, clothes, computer and devices.

CPTPP deal will prompt interest in real estate

Savills believes the real estate market will continue to remain robust, despite the demise of the Trans-Pacific Partnership (TPP). In its place, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will become an important driver for continued investment in all sectors of the economy, especially in real estate.

According to the Ministry of Industry and Trade, the CPTPP will have a comprehensive and positive impact on Vietnam’s investment and trade as a whole, with garments, footwear, food and beverage sectors to be the biggest beneficiaries, as the majority of import tax rates for these sectors’ products will be reduced to 0 per cent when the deal takes effect.
Despite the failure of the TPP negotiations, investor confidence has been bolstered by the finalisation of the EU-Vietnam Free Trade Agreement (EVFTA).

The upcoming Regional Comprehensive Economic Partnership (RCEP) will expand trade routes between the 10 member states of the ASEAN and the six Asia-Pacific states with which the ASEAN has existing FTAs. Investors also await the ASEAN-Hong Kong and China FTA to come into effect, which promises to further deepen trade relations with the largest economy in the region.
 
We have seen that trade with countries such as Japan and the Republic of Korea typically comes together with foreign direct investment (FDI), importantly fuelling finances into infrastructure and real estate.

There is considerable interest from overseas backers in Vietnamese real estate at this time, supported by strong GDP growth, a relatively stable currency, the young demographics, rapid urbanization, as well as the rapid growth in the domestic consumer market that is driven by one of the fastest-growing middle classes anywhere in the world.

This is fuelling investment across all real estate sectors from industrial to office and residential to retail.

In addition, the rapid growth in tourism arrivals, both foreign and domestic, is creating a boom in the hospitality sector.
 
On the other hand, some wondered why Vietnam was invited to join the TPP even though its per capita income is under $3,000, much lower than that of other member states. One of the most important reasons is that the member states see a large market of 95 million people, and significant opportunities to invest in and export goods to the country.

Previously, the TPP was often viewed as a potential magic wand for the economy but there are still many aspects that require review to ascertain their real impact and the best means of preparation. In the past, many people wondered if the appearance of the TPP could revive Vietnam’s real estate market after the last crisis, which did not end until as recently as 2015.

Since the time when the negotiation round of the agreement was complete, Vietnam’s economy in general and the real estate market in particular have been exceptionally strong despite the fact the benefits of the deal had never actually come into effect yet.
 
As these benefits materialize under the CPTPP, the economy should be set for renewed momentum at a time when the global economy is otherwise showing signs of a slowdown. In particular industrial real estate, logistics warehousing, retail and ultimately the office and residential markets should all reap the benefits of renewed investment and interest in Vietnamese real estate.

We expect to see a considerable amount of inbound investment into real estate in 2019, following a very active 2018 for our investment advisory teams. Interest remains strong from Japan, South Korea, Singapore, and China.

However, it remains challenging for foreign investors to identify quality real estate investments with clear ownership, and transactions involving operating assets will remain scarce.

The majority of transactions will involve development projects, with many foreign developers seeking to secure long-term partnerships with local developers.
 
A renewed focus from the local authorities on land reform in order to ensure that foreign funders are able to participate will be most welcome and ensure a sustainable real estate market over the long term.


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