Gide Loyrette Nouel advises IFC on its $307 million investment in VietinBank

International law firmGide Loyrette Nouel (GLN) has assisted IFC(International Finance Corporation), a member of the World Bank Group, and IFC Capitalization Fundin investing in Vietnam Joint Stock Commercial Bank for Industry and Trade or VietinBank.

The investment capital include up to $182 million in equity and $125 million in subordinated debt.

The equity investment represents approximately 10 per cent of Vietinbank's increased charter capital. It is a milestone in Vietnam as VietinBank is the first state-owned Vietnamese bank to allow a strategic foreign investor to take an equity stake.

The subordinated loan has been structured to qualify as "Tier II" capital under new regulations in Vietnam.

In October last year IFC and Vietinbank signed strategic cooperation agreement in a bid to pave the way for stake sale of Vietinbank.

The signing ceremony was conducted with a Cooperation Agreement on Advisory Services covering Vietinbank’s SME banking, risk management, and energy efficiency financing.

A separate memorandum of understanding outlines IFC’s tentative plan to invest in Vietinbank. The investment is still subject to approval by both parties and IFC’s Board of Executive Directors.

IFC, as a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries.

The IFC Capitalization Fund is a global equity and subordinated debt fund founded by IFC and the Japan Bank for International Cooperation and managed by IFC Asset Management Company, LLC, to support banks considered vital to the financial systems of an emerging market countries in which they operate.

Enterprises told to ‘manage costs like you manage quality’

Enterprises should recognize the importance of cost management especially in the current price turbulence, and manage costs like they manage the quality of an enterprise's products or services, speakers at a cost efficiency seminar in HCMC said on Thursday.

The seminar, held by 2030 Businessmen Club, one of seven clubs under the umbrella of the Saigon Times Club of Saigon Times Group, attracted representatives from over 50 enterprises.

Speaker Vu The Du, director of Beautiful Mind Consulting, opened his presentation saying that ‘like quality management, cost management must be an operation strictly executed by all employees in the company’.

Du said the company leader must always require his staff to increase productivity and reduce each product’s cost. This must be repeated in every meeting and applied to all departments in the company, he said.

“Always ask the question on costs for staff to create a habit of thinking about costs in their mind,” Du said. The consultant also insisted that cutting operating costs should not come from the management board like commands, it should come from the staff.

Leaders should suggest that employees think how to reduce costs in their jobs. That is the way to raise awareness of saving money among enterprises, he added.

Du said saving costs did not mean cutting big costs at a given period of time; it should be a routine. In addition, there should be an individual who is in charge of the costs and directors should ask staff to report on their savings results periodically.

“Savings must be carried out patiently. Never be satisfied with cutting programs and reducing levels. Cutting 1% a year is better than cutting 5% in one year and doing nothing for the next four years,” Du added.

Quach My Tien, Chief Financial Officer of GiBC Vietnam, shared the theory that many enterprises were in a hurry to cut operating costs, given current increasing prices of electricity and fuel, to ensure profit target.

However, it is just a short-term method; in the long-term leaders should care about their staff’s saving awareness as staff will look at their leaders’ behavior, Tien added. She concluded: “Saving costs does not mean cost cutting but using costs effectively.”

Vietnam has potential to grow rapidly: British official

British Minister of State Jeremy Browne said Vietnam has huge potential to achieve rapid growth and that Britain is moving to build stronger relations and partnership with Vietnam to contribute to the latter’s success.

Browne was speaking to reporters during a cocktail reception organized in HCMC on Tuesday evening for him to meet and talk with more than 70 representatives of British and Vietnamese companies and organizations. The event was part of his official visit to HCMC and Hanoi from April 5 to 7 to boost the Vietnam-UK bilateral relations in the fields of foreign policy, education, trade and investment.

“My main message is that Britain wants to work more closely with Vietnam and we want to be partners together in helping Vietnam to become even more successful,” Browne said.

Therefore, Browne said British businesses regarded Vietnam as a good destination to invest in, particularly in accountancy, construction, banking and financial services, and other areas that they had advantages.

Browne explained to the Daily that Vietnam was economically at a lower level than several other countries in Southeast Asia so it had huge potential and opportunities to grow rapidly and become much more successful.

Browne said he had received positive signals about Vietnam through his meetings with British companies operating here. “They feel that the Government is making the right decision to make sure that Vietnam has a strong future, and there is good potential here for much more economic growth.”

The British Minister of State also called for Vietnamese companies to look at London and elsewhere in Britain as this was a market of open and free trade if they were planning investments in Europe.

Asked about the possibility of a direct air service between Vietnam and London, Browne said the decision was in the hand of Vietnam Airlines but stressed that the Olympic and Paralympic Games in the UK next year would be a good opportunity for the airline to consider the direct flight.

The two countries saw their bilateral trade in 2010 grow 15% to around 1.4 billion British pounds, with the UK’s top exports to Vietnam including power generating machinery and equipment, general industrial machinery, medical and pharmaceutical products, professional and scientific instruments, miscellaneous manufacturing articles.

The UK’s top imports from Vietnam were footwear; clothing accessories; furniture, bedding and mattresses; coffee, tea and cocoa.

The Ministry of Planning and Investment put total investment by British companies in Vietnam at US$2 billion and looked to US$3 billion in the next several years.

Thai firms show keen interest in Vietnam

More Thai companies are turning their attention to Vietnam in the quest for investment opportunities, according to Tharabodee Serng-Adichaiwit, general manager of Bangkok Bank in Vietnam.

Tharabodee said, at a gathering of Thai firms in the southern province of Binh Duong on Thursday with Becamex IDC Corp., that due to higher production costs in Thailand, Thai businesses think more aggressively about investing overseas, especially in neighboring countries like Vietnam.

Bangkok Bank brought 37 Thailand companies to Vietnam to look for investment. They are small and medium enterprises operating in various sectors, and want to develop projects for packaging, food processing, animal feed, medicine, supporting industries, and electronic sectors.

Compared to Laos and Cambodia, Vietnam has more advantages like a large market, skilled workers as well as a good investment environment, Tharabodee said, adding that this is the reason why Thai investors are interested in the country. They want to cooperate with Vietnamese companies to set up joint ventures and establish factories here.

“The interest of Thai investors in Vietnam is very strong, even in the current market difficulties,” Tharabodee said after a meeting with Becamex IDC, a developer of industrial parks in Binh Duong.

He said that there are 1,000 clients of the bank in Thailand expected to visit Vietnam in the future to look for investment, but on this occasion the bank chose to bring only 37.

Besides higher production costs in Thailand due to higher domestic wages, Thai businesses think more aggressively about investing overseas also due to the strengthening baht.

Director of marketing for Becamex IDC Vo Son Dien, a regular visitor to Thailand, said there were five Thai companies who signed contracts to lease land at his company’s industrial parks this year. They are operating in the printing, packaging and animal feed sectors, Dien said.

Tharabodee hoped that at least 10% of companies from this delegation would carry out projects in Vietnam and said his bank would bring more companies this year, especially to Binh Duong province.

“Our Bangkok Bank branch in HCMC has been in operation in Vietnam for 18 years and we’ve already assisted our clients in setting up more than 100 plants,” said Tharabodee.

Thailand has 244 projects in Vietnam with investment capital of more than US$5.8 billion.

Hiep Phuoc wants to hand over power grid to EVN

Hiep Phuoc Power Company expects to arrive at an agreement with Electricity of Vietnam (EVN) in a meeting this Saturday to hand over its power grid to the State utility company in early July to avoid more losses, an executive said.

“We will hold first negotiations with leaders of EVN this Saturday in Hanoi on conditions and the time of the grid handover. We expect to transfer our power grid and the right to distribute power to EVN by early July,” said Nguyen Hong Tien, manager of the technical division of Hiep Phuoc.

Tien told the Daily on Thursday that if the two parties reach an acceptable deal, EVN will take over the grid and distribution network linking the power plant in Nha Be District to its three major clients namely Tan Thuan Export Processing Zone, Hiep Phuoc Industrial Park and Saigon South urban area.

Tien said that by that time, Hiep Phuoc would still be the operator of the power plant and EVN would be the power distributor for the whole region. Hiep Phuoc also expects to sell all electricity to EVN at prices changeable with the fuel price on the market.

“However, the grid handover must be appraised by the Ministry of Industry and Trade and finally approved by the Government,” said Tien of Hiep Phuoc.   

Since 2001, Hiep Phuoc power plant, which has total supplying capacity of over one billion kilowatt hours each year, has been a key power supplier for some 200 enterprises in the export processing zone and industrial park as well as thousands of families living in the southern residential area. The selling prices are of 5-7 U.S. cents per kilowatt hour.

Besides, the power plant also sells 50% of its generated power to EVN at a price of 17 cents per kWh.

Dang Hoang An, deputy general director of EVN, told the Daily on Thursday that the negotiations could prove very difficult because this issue is unprecedented.

An of EVN also said that the agreement, if reached, will need the participation of other related ministries such as the Ministry of Finance and the State Audit of Vietnam to reassess the value of Hiep Phuoc’s power grid. The Ministry of Investment and Planning will also be involved for the probable change of Hiep Phuoc’s investment certificate.

Late last month, Hiep Phuoc suggested collecting a surcharge of 12 cents per kWh on 60 enterprises in Hiep Phuoc Industrial Park to compensate its huge losses of some US$200,000 per day due to the high fuel cost. However, the power producer had to make concessions after strong objections from the enterprises.

Good leadership will sway top talent to employers

Navigos Search on Thursday named good leadership, working environment, training and development, and salary, benefits and bonuses system as the four most important criteria for an attractive employer brand.

The leading executive recruitment firm in Vietnam found the criteria through an “Employer Branding” survey it conducted from January 24 to March 15 with more than 4,800 senior-level employees at both domestic corporations and multinational companies (MNCs) in the country.

The survey showed 76% of respondents chose a good leadership team as the top criteria for the most attractive employer brand. This proved the importance of leaders’ role in attracting and retaining talents, said Nguyen Thi Van Anh, managing director of Navigos Search.

“A good leadership team on Friday is not only a driving element of a successful business, but also a principal attribute that helps an organization become an employer of choice,” Anh said.

A good working environment, physically and spiritually, was ranked second by 75.2% of the survey participants, followed by employee training and development with 71.8% and a good salary, bonuses and benefits system with 66.4%.

“Many companies are attracting talent by offering higher salaries and bonuses. However, based on this survey’s result, salary, bonuses or incentives is not the only means of attracting and retaining talent,” Anh commented. She believed companies were able to map out appropriate strategies for their talent pool when they had known what a talented person wanted.

The survey also revealed a change to Vietnamese employees’ choice of companies. MNCs in Vietnam have enjoyed a big advantage in attracting local employees because of better environment, pay and career prospects than domestic companies. However, the survey indicated only 14.3% of the participants selected MNCs as one of the most important criteria for the most attractive employer brand.

“We think that there is a shift in candidates’ attitude. It might be due to the consistent growth that domestic companies have even during the economic downturn,” Anh said.

“Domestic companies nowadays also pay a lot of attention to building their reputation and employment branding to attract talent. They are significantly improving and also offering lots of good career prospects to candidates,” Anh continued.

Nearly 62% of respondents said they counted on newspapers, the internet and websites to check information and the reputation of the companies which they considered working for. This media channel was much more popular than others such as family (11%), friends (33%) and employees at that company (42.8%).

“On Friday’s employees choose to work with employers they trust. Hence, it is essential to develop a good employment branding image,” Anh said.

Bayer cuts PPP deal for sustainable rice farming

Bayer Vietnam Ltd. on Tuesday signed a MOU with the Mekong Delta Rice Research Institute to support research and develop sustainable crop management solutions and help the agricultural sector cope with climate change.

As part of the collaboration, the institute will conduct extensive research of Bayer’s crop protection compounds and hybrid rice varieties to help the company adapt their products effectively in Vietnam.

The institute will conduct research in Much More Rice (MMR), a program by Bayer to timely apply seed treatments, fungicides and insecticides to reduce costs, improve rice yield and quality.

Le Van Banh, director of the institute, told local media that the cooperation between the private sector and the scientific community is expected to bring about sustainable agricultural development.

“Previously, local scientists conducted research themselves to transfer the development to farmers. Now, businesses have the ability to sell their products to farmers. Despite the effectiveness of these products, farmers have been unaware of their existence,” Banh said.

“That’s why companies want to cooperate with scientists. Due to our independent research on the products the companies want, we can even give farmers advice on how to apply their products effectively.”

According to Rob Hulme, country director of Bayer Vietnam, the cooperation will also support a project on “Adaptation of rice-based crop systems” funded by the Australian Government via the Australian Center for International Agricultural Research and administered by the International Rice Research Institute.

In the implementation of its own MMR program in Vietnam, the company has launched a successful public-private partnership with the Mekong Delta Rice Research Institute, and plant protection sub-departments of all Mekong Delta provinces.

From 2007 to now, over 320 separate trials in the region show the program helped increase productivity of rice crops by 10% and with lower costs.

According to a representative of Bayer, Vietnam is the first and only country in the region that Bayer is conducting the MMR program, which combines integrated crop protection solutions tailored to local conditions.

“We believe the model we have created in Vietnam is an example of a good partnership between government, farmers and the private sector. We would like to expand that model to other countries for a better yield of crops and sustainability,” said Sandra Peterson, chairman of the board of management of Bayer CropScience on a visit to Vietnam this week.

LED company gets green light for hi-tech project

Fawoo Kidi Technology Co., Ltd on Tuesday received an investment certificate from Saigon Hi-Tech Park (SHTP) to build a factory for producing LED lights in the park.

The US$12.3-million joint venture between Fawoo Technology Co., Ltd of South Korea (35% stake) and Vietnamese partner Kim Dinh Green Energy Joint Stock Co. (65%) leased ten hectares of land in the park in District 9.

It will research and develop as well as produce high efficiency, energy-saving and low-cost LED lights for civil and public lighting, according to the park authority.

The park authority said the project is the type it is trying to attract to the high-tech park following the Government’s development program for renewable energy.

Construction will begin this month for completion in two years. The park said the investor would also pour money into long-term plans of research and development to introduce LED light technology into the country’s key fields of agriculture, fishery and oil and gas.

At Tuesday’s ceremony, Fawoo Kidi Technology Co., Ltd, and SHTP also signed a contract commiting the company to pledge VND1.3 billion for research, development and training in the biotechnology sector in the park.

SHTP, home to leading international hi-tech companies, is focusing on attracting hi-tech projects in the microelectronics, IT, telecommunications, R&D and service sectors. The park is trying to attract between six and eight new projects this year and have an export value of US$1 billion in 2011.

Local and international hi-tech companies have pledged a total investment of some US$1.9 billion since the park opened more than seven years ago, according to the park’s authority.

Around 300 of the park’s 913 hectares is occupied by around 50 projects in IT, science and technology. The prominent investors include the Intel of the U.S., Japan’s Nidec, Denmark’s Sonion, Allied Technologies of Singapore, Jabil, Datalogic, FPT and EVN Tel.

Vietnam buys more German textile machinery

Vietnamese companies are buying more textile machinery from Germany, as seen in a sharp increase of imports of the products last year, said a German industry source.

Jennifer Hohn, head of exhibitions and marketing in VDMA Textile Machinery Association, quoted data of the Federal Statistical Office of Germany and the German Engineering Federation (VDMA), to say on Wednesday that German exports of textile machinery to Vietnam increased by 114% to 34 million euros in 2010.

Hohn is having a visit to Vietnam together with representatives of 16 German companies to introduce their latest developments in the area of spinning, weaving, knitting, finishing and textile testing in a two-day exhibition in HCMC.

The “German Technology for the Vietnamese Textile Industry – Conference & Exhibition” takes place in the New World Saigon Hotel in HCMC on April 6-7.

Hohn told the Daily on the sidelines of the event that this was the third time such an exhibition was held for German textile and apparel machinery companies to promote their products in Vietnam. The previous event took place in 2007.

“It’s a good time for the companies to come back to Vietnam as the country is buying more textile machinery from Germany,” she said.

While big Vietnamese apparel companies such as Phong Phu and Viet Thang are already buyers of machinery from Germany, small and medium companies found it unaffordable to buy the expensive products.

Vu Tri Hung, director of Tan Hiep Hung Ltd., told the Daily that he was impressed with the technology of German textile machinery can help produce high-quality products. However, the company, which produces ribbon and accessories for the apparel industry, has to think twice for such investment because the German machinery is two times more expensive than Taiwanese ones being used at the company. 

According to Vietnam’s General Statistic Office, the country last year exported US$11.2 billion worth of textile and garments, up 23% year-on-year. However, the country imported more than US$5.3 billion worth of clothing and more than US$2.6 billion worth of material and accessories for garments and footwear.

City fines 13 enterprises for pollution

The HCMC government has just handed down penalties totaling VND632 million on 13 enterprises in the suburban district of Binh Chanh due to discharging untreated wastewater and harmful smoke into the environment.

According to the decisions issued by the city last week, many of the violators are operating in garment, dyeing, plastics, paper and construction materials production. These include AFC Paper, Le Phan concrete factory, and Dang Hoa Paper.     

Remarkably, AFC Paper Company in Vinh Loc B Ward was forced to pay a fine of VND103 million because it discharged untreated wastewater exceeding the permitted level by nearly 30 times. Furthermore, AFC also discharged harmful smoke into the environment in its production.

Binh Chanh is one of the suburban districts having the most polluted waterways.