Vietnam Airlines leases aircraft

Vietnam Airlines JSC is planning to lease 20 A321 NEO Aircraft in the period from 2018 to 2020. If there would be of your interest, please do not hesitate to contact us at the following address:

Ms. Nguyen Hai Thanh - General Manager of Aircraft Acquisition Office, Investment – Procurement Department.

E-mail: thanhnh@vietnamairlines.com and Ms. Nguyen Hai Anh - Executive Aircraft Acquisition Office, Investment – Procurement Department.

Email: haianhnguyen@vietnamairlines.com

Automobile sales, manufacture enjoy surges

Manufacture, assembly and sales of automobile products of Toyota Vietnam and Honda Vietnam in the northern province of Vinh Phuc have had a sharp gain in recent years thanks to new strategies from the manufacturers.

More than 51,500 vehicles were manufactured in the two plants in 2015, up 23.3 percent against the previous year.

Vios was the best-selling model ​of Toyota Vietnam last year, hitting 13,761 units, nearly doubling the sales recorded in 2014. The Corolla model came second with 5,926 cars sold, a year-on-year increase of 10 percent.

Toyota looks forward to a 10 percent expansion in its yearly sales in 2016.

While automobile production and sales are running smoothly, those for motorbikes have gotten stuck.

The factories of Honda Vietnam and Piaggio Vietnam in Vinh Phuc manufactured 1,910,000 units in 2015, a decline of 15 percent year-on-year.

This is the third consecutive year the manufacture of motorcycles has experienced such a sharp fall. This is forecast to greatly impact Vinh Phuc province’s budget collection as the industry is a significant contributor to the locality’s budget.

Hope as we look away from 2015

Last year ended with disappointing news as record OPEC supply created a global glut driving oil prices downward, which when combined with shortfalls in agricultural and seafood exports, stunted economic growth.

Demand in global markets fell for the year says the Ministry of Industry and Trade (MoIT), and the glut in oil may take another year to clear, creating a rather bleak short term outlook for oil prices.

However, there was a mild revival in the later part of last year for agricultural and seafood exports, which though not strong enough to lift overall exports is considered a positive sign, offering hope of an improved outlook this year.

To kick start exports for the year, MoIT Minister Vu Huy Hoang said the ministry is stepping up communications with local companies and trade associations about the benefits of signed trade agreements.

In addition, he strongly recommends relevant ministries, agencies and local authorities implement major solutions to simplify export procedures to reduce clearance times and cost for enterprises.

Sharing this view, MOIT Deputy Minister Tran Tuan Anh said despite the many difficulties that lie ahead in 2016, Vietnam still has a lot of potential to boost its economic and export growth.

The participation in new free trade pacts will bring a golden opportunity for domestic companies to increase their production and participate in global supply chains, he underscored.

Tuan Anh also noted with the phase-out of tariffs and other non-tariff barriers, Vietnam can secure better market access and diversify exports with its trade partners in the coming year.

Additionally, the Vietnam government is undertaking a monumental effort to revamp laws and institute policies more conducive to the creation of a more favourable business environment, he said.

Rice exports have been thriving from early this year as the number of signed contracts indicate export demand is high, says Huynh The Nang, president of the Vietnam Food Association (VFA).

He forecasts that rice exports in the first half of the year will prosper as major importers like the Philippines, China, Indonesia and Malaysia will soon sign contracts to stabilize food supplies and cope with a possible drought caused by El Nino.

Earlier, the Philippines National Food Authority had announced its plan to buy at least 50,000 metric tons of rice from Vietnam and Thailand while the Indonesian Government planned to purchase around 350,000 metric tons of rice in the first quarter of this year.

China will undoubtedly remain the largest important importer of Vietnam rice not only in 2016 but also in the coming years, said Nang.

In terms of garments and textiles, Vinatex General Director Le Tien Truong estimated the sector’s export volume for the year at US$29.5-US$30 billion, up 11%-12% compared to last year thanks to the establishment of ASEAN Economic Community (AEC).

Vietnam's wood industry is also expected to gain total export value of wood and wooden products of US$7.7 billion for this year, higher than US$7.1 billion in 2015, according to Nguyen Ton Quyen, vice chairman cum general secretary of the Timber and Forest Product Association of Vietnam (VIFORES).

Exports of wood and forestry products from the country will have the advantage of starting operations through the AEC and other trade deals, he says.

The new year brings fresh hope, says the MoIT. The Vietnam government finances are strong enough to push critical infrastructure projects and prospects for continued foreign investment never appeared stronger.

Hopefully, local companies will see productivity gains that can improve the competitiveness of our exporters. On that note, we can all hope and look forward to a happy and prosperous new year.

Vietnam’s beer output rises 4.7% to 3.4bn liters in 2015

Beer production in Vietnam reached 3.4 billion liters last year, a 4.7% year on year increase, according to a report released by the Vietnam Beer Alcohol Beverage Association (VBA) earlier this month.

Including the 2015 figures, the Vietnamese brewery industry achieved an average of seven percent in annual growth between 2011 and 2015, the VBA said.

Currently, there are approximately 129 brewery production facilities across the country, many of which are large-scale plants with an annual capacity of 200 to 400 million liters, such as the Cu Chi Brewery Plant under Saigon Beer-Alcohol-Beverage JSC (Sabeco), the Vietnam Brewery Plant in Ho Chi Minh City, and the Me Linh Brewery Plant under Hanoi Beer-Alcohol-Beverage JSC (Habeco) in Hanoi.

According to the VBA, the total annual capacity of the local beer industry has to this point reached about 4.8 billion liters.

Vietnam currently imports about three million liters of beer and exports 70 million liters per year.

With regard to wine, about 162 industrial wine production plants nationwide produce roughly 70 million liters on a yearly basis, and the production of homemade wine for local consumption is estimated at over 200 million liters per year, according to the VBA.

Regarding beverages, the country’s output reached 4.8 billion liters in 2015, growing 8.38% on average in the 2011-15 period, the VBA said.

By the end of last year, Vietnam had had nearly 1,833 beverage production facilities with a combined annual capacity of over five billion liters.

Soft drinks and fruit juices experienced a high growth rate, making up 85% of the market share of beverages, while mineral water accounted for about 15%.

Using the 2015 results, the VBA has set ambitious targets for 2020, including producing 4-4.25 billion liters of beer per year, 8.3-9.2 billion liters of beverages per year, and 320-360 million liters of wine per year.

Vietnam is considered a highly potential market for both local and foreign brewers with an annual capacity of 3.1 billion liters, and a goal of 4-4.25 billion liters by 2020 following a plan set by the VBA.

It is also a market where competition is fierce between local and foreign rivals.

Masan Consumer Holdings, one of the biggest Vietnamese producers of fast-moving consumer goods under Masan Group, last month officially began operating its VND1.6 trillion (US$70.4 million) beer plant in the Mekong Delta province of Hau Giang, one day after entering into a massive deal with a Thai conglomerate.

The Masan Brewery HG plant, which covers 14.6 hectares in Nam Song Hau Industrial Park in Chau Thanh District, will help increase Masan Consumer Holdings Brewery’s capacity from 50 million liters to 150 million liters a year to keep up with rising demand.

Masan entered the beer market in September 2014 with Su Tu Trang (White Lion) beer products.

Last month, Masan also reached a $1.1 billion deal enabling a Thai brewery conglomerate to own a 25% stake in Masan Consumer Holdings and 33.3% of Masan Brewery.

The strategic cooperation between Masan and Singha Asia Holdings Pte Ltd of Thailand, which will reduce the ownership of Masan Consumer Holdings in Masan Brewery to 66.7%, is expected to be completed this month.

The two parties said the agreement will allow Masan and Singha to immediately expand their market from national to regional scales, with a focus on inland ASEAN countries, including Vietnam, Thailand, Myanmar, Cambodia and Laos, which have 250 million consumers in total.

Singha is a member company of the Group Boon Rawd Brewery, a Thai brewery established in 1933. Today Group Boon Rawd Brewery is the owner of a wide range of products with brands like Singha, Leo, B-ing, Purra, and Sanvo produced by its 50 affiliates.

Masan said the deal would help bring the total value of the company to US$4.2 billion, up from its current VND56 trillion ($2.46 billion) capitalization on the Ho Chi Minh City Stock Exchange.

A report from the Ministry of Industry and Trade, seen by Reuters last month, revealed that Vietnam's biggest state-run brewer Sabeco does not wish to sell a major stake to a foreign shareholder.

The report was prepared for a meeting, to which no foreign media were invited, between ministry officials and heads of some state-owned enterprises, including Sabeco, on December 21, Reuters reported.

Vietnam, which consumes three billion liters annually, is currently the third-biggest beer market in Asia, after China and Japan.

In 2015, reports that the government will divest from many local beer firms captured the attention of a large number of foreign firms that do not want to miss the opportunities present in the 90-million-strong Southeast Asian country.

Many foreign brewers, like SABMiller, Kirin Brewery, Asahi Breweries, Asia Pacific Breweries, spoke publicly about their intention to become strategic partners of Sabeco after the trade ministry announced the government’s divestment plan.

Among them, Thai Beverage wanted to buy a 53% stake in Sabeco with several billion U.S. dollars, and Singha Corp also showed their intention to jump on the Sabeco bandwagon.

Currently, Sabeco’s market share is about 46%, while 17.3% is held by another state-run brewer, Habeco, and 18.2% is grabbed by Vietnam Brewery Limited, which produces and imports many products, including Heineken and Tiger.

Credit guarantee backs hydropower plant

The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank Group, announced its support for the Hoi Xuan Hydro Power Project in Quan Hoa district, northern Thanh Hoa province.

“Vietnam is diversifying its energy mix to increase energy supply and security, just as it is diversifying its financing sources to create a more secure base for infrastructure development in the future,” said MIGA’s Executive Vice President and CEO Keiko Honda. “MIGA is glad to play a role.”

MIGA issued a $239.7 million guarantee to a consortium of lenders led by Goldman Sachs and Bank of Tokyo Mitsubishi (BTMU). The guarantee supports the financing of the design, construction, operation, and maintenance of the 102 MW hydropower plant, located approximately 15 kilometers northwest of Hoi Xuan commune.

“We are delighted to continue our cooperation with MIGA and the Government of Vietnam in helping to meet the country’s growing energy needs,” said Mr. Tim Leissner, Vice Chairman of Investment Banking in Asia Ex-Japan at Goldman Sachs. “Clean, renewable and sustainable projects of this nature are vital as the country continues its rapid GDP growth trajectory.”

The power plant will use an indigenous, renewable, low-cost resource and mitigate Vietnam’s reliance on imported thermal alternatives.

The plant will produce and sell electricity to Electricity of Vietnam under a power purchase agreement. MIGA’s guarantee covers the risk of sovereign financial obligations not being honored in respect of the government’s repayment guarantee to lenders and carries a 15-year tenor.

Demand for electricity in Vietnam is expected to double very quickly to 2020 due in large part to the country’s sustained economic growth, which has transformed it from one of the poorest in the world to lower middle-income status within a quarter of a century.

Support for local independent power producers like Hoi Xuan is critical in meeting Vietnam’s electrification goals. More than 70 per cent of investment in the country’s new generation capacity is expected to come from the private sector.

MIGA’s support to the power plant is expected to have broad demonstrative effects in Vietnam’s hydropower sector, both with respect to future private sector investments and international environmental and social best practice for such projects.

PM approves Ca Mau wind power plant

Prime Minister Nguyen Tan Dung has given the go-ahead to plans to build a wind power plant in the Khai Long tourist area in the Mekong Delta’s Ca Mau province.

Wind power generated will be connected to the national electricity grid and sold through a power purchase agreement with Electricity of Vietnam (EVN), contributing to ensuring national energy security.

The plant has a total generation capacity of 100MW and covers an area of 2,165 ha. Construction will be conducted from 2016 to 2018.

The PM has assigned the Ministry of Industry and Trade (MoIT) in cooperation with the Ca Mau Provincial People’s Committee to guide investors on appraisal and construction. The Ministry of Finance and the Vietnam Development Bank have been assigned to evaluate the loan plans of investors.

According to MoIT, Vietnam has registered more than 50 wind power plants but only around 10 per cent are currently under construction, of which three are commercial wind power plants - Tuy Phong in Tuy Phong district, south-central Binh Thuan province, with capacity of 30MW, a wind power plant on Phu Quy Island in Binh Thuan with a capacity of 6MW, and the Bac Lieu wind power plant in the Mekong Delta’s Bac Lieu province, generating 16.5MW.

Most recently, construction began last July on the Phu Lac wind power plant in Binh Thuan province, with a capacity of 20MW and investment of nearly VND1.1 trillion ($49.5 million).

Property prices to increase 5-10%

In its report on the real estate market in 2015 released on January 18 the Vietnam National Real Estate Association (VNREA) predicted that property prices would increase 5 to 10 per cent this year.

VNREA believes the impact of the economy along with the return of investors to the market will see the market maintain its stable development and be more vibrant than in 2015. The recovery will result in prices being continually adjusted, with a rise in the vicinity of 5 to 10 per cent expected in the near future.

Mr. Tran Ngoc Quang, General Secretary of VNREA, said Vietnam’s economy is entering a new growth cycle with good indicators, such as GDP growth forecast at about 6.5 to 7 per cent, inflation remaining below 5 per cent, and credit activities to be solid throughout the year.

Together with the effects of the Law on Real Estate Business and the amended Law on Housing, the State Bank of Vietnam (SBV) raising interest rates will also add heat to the property market. A positive for the property market in 2015-2016 will be the development of infrastructure, and at the same time the effectiveness of the SBV’s monetary policy will create sustainable macro-economic development over the long term, VNREA believes.

Long-term risks, however, include the budget deficit and exchange rate issues. The latter remains a factor of some concern and there is likely to be two or three devaluations this year.

VNREA also sees the mid-range segment dominating the market this year. The lower-price segment will continue to grow but it will not see significant transaction numbers for much longer due to its dependence on government assistance.

Villas and townhouses will continue to see positive changes to meet the significant demand in the market this year as most Vietnamese people prefer to have a landed house rather than an apartment. The segment will also benefit from the considerable improvements in infrastructure and more favorable connections to city centers.

Food safety crucial for Vietnamese produce’s reputation abroad

Foreign markets, especially Trans-Pacific Partnership (TPP) agreement members, will take in Vietnamese fruit and vegetables this year, but the question now is how to supply enough volume while following strict safety standards, an official said.

Fruit and vegetables are among the commodities Vietnam has an advantage in when it comes to the TPP. They made inroads into many demanding markets in 2015, including major TPP members like the US, Japan and Australia .

One of the most critical factors in Vietnam’s export of fruit and vegetables is to control chemical residues.

Director of the Ministry of Agriculture and Rural Development’s Plant Protection Department Nguyen Xuan Hong said his agency will tighten control over the use of plant protection chemicals this year while encouraging the use of advanced technology to reduce the need for those substances.

Eliminating the use of protective chemicals will help minimise not just production expenses, but also food risks due to pesticide residue, he said, noting that Vietnam aims to cut the spending on plant protection chemical use by half by 2020.

Though the country has sent many kinds of fruit abroad, including dragon fruit, mango, lychee and longan, to many strategic markets like the US , Japan and Australia , the point is to produce large quantities to improve revenue – while meeting importers’ food safety and plant quarantine standards, Hong stressed.

He assured Vietnamese exporters that his department will be able to help them treat products in line with importers’ health quarantine criteria. All businesses need to do is ensure food safety through good agricultural practices.

He suggested multiplying good cultivation role models and increasing coordination between enterprises and farmers as well as among enterprises themselves, noting that if a product from one company does not pass quarantine checks, importing countries will stop buying the same goods from all Vietnamese firms.

The poor performance of one company will affect the entire exporter community, the official emphasised.

According to the General Statistics Office, Vietnam grossed 2.2 billion USD selling fruit and vegetables abroad in 2015, a record annual increase of 47 percent.

The country is home to more than 100 fruit and vegetable processing factories, which can produce 300,000 tonnes of products each year. Vietnam exports fruits and vegetables to 40 countries and territories.

Mekong Delta set to earn over 14 bln USD from exports

The Mekong Delta region targets to earn 14.34 billion USD from export in 2016, a year-on-year increase of 1.14 billion USD.

According to the Northwest Steering Committee, during January of this year, the Mekong Delta provinces shipped abroad 1.09 billion USD worth of commodities; mostly seafood, rice, processed foods, garments and textiles, footwear and handicrafts.

A set of measures have been developed by the provinces since the beginning of this year to increase the output and quality of export products. They have drawn up monthly and quarterly export plans for each group of products, while studies on market demand and trade promotion activities have been ramped up.

Talks have been held between the chairmen of the provincial People’s Committees and enterprises once or twice per month, that allow local authorities to learn firsthand about businesses’ difficulties. Policies have been designed accordingly, particularly in terms of public administration and provision of bank loans, in order to help them overcome obstacles and expand business.

Rice and seafood exports from the region have faced fierce competition from regional countries, alongside strict anti-dumping rules and technical barriers posed by major importers.

The provincial authorities recommended farmers and processing firms strictly follow instructions on the use of fertilizer and pesticide in rice farming and aquaculture for export purpose.

The Mekong Delta provinces exported 13.2 billion USD worth of commodities last year, up 4.4 percent from 2014.-

TPP generates opportunities and challenges

The Trans-Pacific Partnership Agreement (TPP) was signed in Auckland, New Zealand, on February 4th after 20 rounds of negotiations. The deal will generate momentum for national development but will bring grave challenges as well.

The TPP will take effect when ratified by at least six of the 12 signatory countries. It will be the world’s biggest free trade area, with 800 million people and a combined GDP of US$28 trillion, accounting for 30% of global trade revenue and 40% of global productivity.

This pact has taken into consideration the varying interests and development levels of its members and aims to boost their collective economic growth.

A driving force for Vietnam’s export, particularly garments and textiles products

Economists estimate that the TPP will increase Vietnam’s GDP US$23.5 billion in 2020 and US$33.5 billion in 2025. Zero percent tariffs in big markets like the US, Japan, and Canada will enable Vietnam to increase its export of garments, textiles, footwear, and seafood.

The pact will also help Vietnam draw foreign investment to its high tech sectors.

Dang Phuong Dung, Secretary General of the Vietnam Textile and Apparel Association, said, “The TPP will generate a lot of benefits for Vietnamese enterprises, particularly the textile and apparel sector. Signed FTAs and the TPP will reduce tariffs for imported products.”

Opportunities and challenges

The export-import revenue of TPP members is forecast to reach US$230 billion. Vietnam’s trade is expected to increase 20% to 30%.

In order to take full advantage of the pact and promote its potential in international integration, Vietnam should adjust its policies to improve its comparative advantages.

tpp generates opportunities and challenges hinh 0

The TPP sets high-standard criteria, commitments, and strict implementation requirements for trade, investment, intellectual property, competitive policies, state enterprises, government purchasing policies, employment, and the environment.

Vo Tri Thanh, former Director of the Central Institute for Economic Management, noted, “A majority of the TPP deals with national policies. Non-tariff barriers and policies are major obstacles. Vietnam’s reform will determine our benefits in the TPP."

"We need to reform the institutions of public investment, state-owned enterprises, credit organizations, the business environment, and resource distribution to fine tune the market mechanism,” he added,

Preparing for TPP implementation

Minister of Industry and Trade Vu Huy Hoang said the TPP will help Vietnam elevate its status internationally. During the 5 years of negotiations, the TPP has insisted on the interests of involved parties and people. Mr Hoang said Vietnam has to prepare for the TPP’s ratification:

“First, we have to communicate the facts about the pact to enterprises that will be affected. Second, we need to improve our legal system. Third, the Ministry of Industry and Trade has to lead the implementation of the agreement by coordinating ministries and sectors and supporting business participation,” he stressed.

The TPP is expected to take effect after 2018.

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