Eleven outstanding banks of standard international payment honoured

Citi, a leading foreign bank in Vietnam, held an award ceremony on December 11 to present the Straight Through Processing Award 2014 (STP Award) to 11 banks operating in Vietnam in recognition of their excellence in international electronic payment services.

This is the 12th consecutive year Citi has acknowledged and honoured banks in Vietnam for their efforts and success in international payment activities, with an average STP rate of over 95% in 2014.

The award was designed on the basis of the analysis on the bank's ability to perform payment transactions smoothly, professionally and thoroughly.

The 11 banks were: Vietcombank, BIDV, Agribank, Vietinbank, Techcombank, Military Bank, VPBank, ACB, Sacombank, Eximbank and Ho Chi Minh City branch of Taipei Fubon Bank.

On the occasion, Citi held a seminar themed Basel III and its impacts on the operations of the banking sector, international trends and renewals on payment products and commerce, attracting the participation of more than 20 domestic banks and senior experts from Citi Vietnam and Citi Asia-Pacific.

PVN extracts more crude despite falling prices

Vietnam National Oil and Gas Group (PVN) has extracted more crude oil than the target although oil prices have kept falling on global markets in the past months.

A source from PVN said the group has realized the target to pump 16.21 million tons of crude oil from domestic and foreign fields as assigned by the Government and 9.5 billion cubic meters of gas as of December 9. The volume from the oil fields within Vietnam was 14.37 million tons.

PVN still managed to realize the targets for crude oil and gas though oil prices have dropped on global markets since late August to around US$62.48 per barrel on December 9, the lowest in five years.

The volume of crude PVN had extracted is 900,000 tons higher than its target set earlier this year, which is expected to help increase export revenues and contribute more to the State budget.

Despite a 40% fall of crude oil prices against the average in January-September, PVN still wanted extractions to be one million tons of crude oil and 500 million cubic meters of gas higher than targeted for this year.

The Ministry of Industry and Trade estimated the volume of extracted crude oil last month rose 22.3% year-on-year to 1.7 million tons while the pumping of liquefied petroleum gas (LPG) in January-November fell 10% compared to the same period last year.

The affiliates of PVN beating their oil and gas targets include Vietsovpetro which has surpassed the target by 250,000 tons, Su Tu oil fields by 150,000 tons, PetroVietnam Exploration and Production Corporation (PVEP) by 500,000 tons, Hai Thach-Moc Tinh gas field by 200 million cubic meters, and Lan Tay-Lan Do gas fields by 200 cubic meters.

Crude oil exports inched up 3.2% in November when prices fell 5.6% against October, according to a report of the trade ministry.

Due to strong decreases in oil prices on global markets, PVN will have to adjust its previous revenue and tax payment calculations for this year thought it is expected to contribute more to the State budget.

Based on crude oil prices from the year to August, PVN previously put crude oil prices in the last three months of this year at US$105 per barrel and the average price of this year at US$110 per barrel, up US$12 per barrel compared to its earlier estimation. Therefore, the group eyed VND107 trillion from crude oil sales, or 25.6% higher than estimated.

Deputy Minister of Finance Do Hoang Anh Tuan calculated that the State budget would lose around VND30 trillion if crude oil prices averaged out at US$70 per barrel this year.

Tuan was quoted by Tuoi Tre newspaper as saying that the finance ministry did not ask relevant agencies to raise crude oil extractions to offset the price fall but the trade ministry and PVN still determined to tap one million more tons.

Standard Chartered issues bonds for Masan

Standard Chartered Bank Viet Nam Limited on December 9 announced that it has issued the first 10-year bonds worth VND2.1 trillion (US$100 million) for Masan Consumer Corporation.

Standard Chartered's bonds are guaranteed by the Credit Guarantee and Investment Facility (CGIF) of the Asian Development Bank (ADB).

Nirukt Sapru, general director of Standard Chartered Bank Viet Nam, said the bonds have a fixed interest rate of eight per cent, and this is the best interest rate for 10-year corporate bonds in the private sector in Viet Nam.

November auto sales grow strongly

Auto sales nationwide continued to soar last month, with nearly 16,000 units delivered to customers, up 7% against the previous month and 57% year-on-year, according to the Vietnam Automobile Manufacturers Association (VAMA).

The November auto sales volume was much higher than the monthly average of 12,000-13,000 units in the first months of this year.

November was the 20th consecutive month to see auto sales growing against the same period last year. The number of passenger cars and trucks accounted for 10,068 and 5,886 units respectively.

Last month saw completely built-up (CBU) autos imports reaching 4,363 units, up 37% against October, while locally-assembled cars edged down 1% year-on-year to 11,591 units.

Many automakers reported strong sales growth last month. Toyota Vietnam sold 4,187 autos, surging 51% year-on-year, and November witnessed the Japanese carmaker posting the strongest monthly sales growth since the beginning of this year.

Following Toyota Vietnam were Ford Vietnam with 1,552, Vinamazda with 1,047 and Mercedes-Benz Vietnam with 294 units, increasing 99%, 79% and 81% respectively.

Statistics of VAMA showed more than 137,600 vehicles had been sold as of November, jumping 41% compared to the same period last year with cars and trucks making up nearly 87,220 and 50,384, up 42% and 40% respectively. The number of locally-assembled units soared 33% year-on-year to 103,000 while CBU auto imports climbed 76% to 34,500.

VAMA forecast auto sales could reach 150,000 units this year, up 36% against last year.

Automakers have launched new models and promotions to attract customers in the run up to the Lunar New Year holiday, Tet, when demand often soars.

Euro Auto has introduced new BMW M3 sedan and Honda Vietnam has offered new Civic and CR-V models.

Thaco PC has unveiled new Mazda 3 models with prices ranging from VND749 million to VND882 million.

Sacomreal issues shares to raise capital

Property developer Sacomreal will issue more than 37.5 million shares to increase its charter capital to nearly VND1.88 trillion (US$88.26 million).

Equity holders will be allocated with 7.5 million shares, while 30 million shares will be sold to existing shareholders at VND10,000 per unit. Shareholders need to register to participate during the purchase period, which will be from January 15 to February 9 next year.

The company will use VND250 billion ($11.7 million) from the issuance proceeds to reduce debts and add to their working capital.

Government bond yield rises

Government bonds issued by the State Treasury with three- and five-year terms and worth a total of nearly VND2.2 trillion (US$103.3 million) were bought with increasing yields on Thursday.

The yields for the three – and five-year bonds were 5.2 and 6.05 per cent, respectively, which were both higher by 0.2 per cent than the interest rates on December 4.

The State Treasury has raised over VND195 trillion ($9.2 billion) through the selling of bonds since earlier this year.

State fertiliser firm raises $74m in IPO

PetroVietnam Ca Mau Fertilizer Company Limited has raised nearly VND1.58 trillion (US$74 million) from its initial public offering on Thursday at the HCM City Stock Exchange.

PVCFC said it successfully sold all of around 129 million shares in the IPO at an average price of VND12,251, VND251 higher than the initial price. The shares account for 24.36 per cent of the company's capital.

The auction saw 1,303 investors registering to buy 141.4 million shares, or 10 higher than the number offered.

The company said 24 domestic and two foreign organisations bid for 66.3 million and seven million shares respectively, while 1,265 Vietnamese individuals bid for 68.1 million shares and 12 foreigners registered to buy 35,100 shares.

The highest price was VND24,000, and the lowest, VND12,100.

The IPO has spurred its chartered capital to nearly VND5.3 trillion ($248.35 million).

The Viet Nam National Oil and Gas Group (PVN) remains the company's largest share holder after the IPO with a 51 per cent stake.

The company plans to sell another 129 million shares to strategic investors, who it hopes will strengthen its finances and management and help improve its performance.

Bui Minh Tien, general director of PVCFC, said the company is set to change its name to PetroVietnam Ca Mau Fertilizer Joint Stock Company.

The company will list on the HCM City Stock Exchange next March.

Debt trading company increases charter capital

The Prime Minister has approved the addition of 3.1 trillion VND (145.19 million USD) to charter capital of the Debt and Asset Trading Corporation ( DATC) in the period of 2014 – 2015.

Of the amount, 2.5 trillion VND (117.09 million USD) will come from the fund supporting the re-arrangement and development of enterprises and the rest from other regulated financial sources.

The DATC, founded in 2003, operates under the Finance Ministry in a bid to settle bad debts.

In 2013, the corporation's total revenue was 530 billion VND (24.09 million USD), including that from debt trading activities of more than 326 billion VND (14.82 million USD). It focused on negotiations with commercial banks to buy bad debts of mainly State-owned groups and corporations, and restructured five State-owned enterprises into joint-stock companies.

French firms supply aluminium technologies to local companies

A number of French firms have succeeded in their goal to provide local partners with technologies to directly produce aluminium from Vietnam’s substantial bauxite reserves.

Frederic Sanchez, president of the France-Vietnam Medef International Business Council and chairman of French industrial engineering FIVES company, told VIR that FIVES had just inked a memorandum of understanding with a domestic private firm to transfer technology that allowed the direct production of aluminium from bauxite in Vietnam.

The local partner’s name however, was not revealed.

Other sources however did say that the amount of the investment was significant and that around five French firms were providing the technology to Vietnamese partners with total contract values in the hundreds of millions of dollars.

Sanchez said France’s aluminum production technology was ranked number one in the world.

France has 12 leading firms with this kind of technology, for example Alstom and BNP Paribas, which are also looking to do business with Vietnamese partners.

“Vietnam’s bauxite reserves are reportedly the third biggest in the world. The Vietnamese government doesn’t want to export bauxite any longer. It wants to produce aluminium from bauxite here at home, and they are seeking suitable technologies,” he said.

Aluminium is used for production in many industrial sectors like automobiles, motorbikes and aircraft.

In early September 2014 construction started on Vietnam’s first aluminium plant, capitalised at $575 million.

The 114 hectare plant, invested in by locally-owned Tran Hong Quan Trading Ltd, is located in the Central Highlands province of Dak Nong’s Nhan Co Industrial Park. It will produce aluminium bars with the capacity of 450,000 tonnes per year.

SBV imposes penalties for empty ATMs

The State Bank of Vietnam (SBV) will begin imposing penalties of VND10-15 million on banks with ATM machines that run out of money or are taken out of service without a 24-hour warning.

The decree on administrative fines in the banking sector takes effect today, December 12. Banks will be fined VND15 million (700 USD) for ATM machines that run out of cash. A fine of VND10-15 million will be imposed on banks that suspend ATM operations without at least 24 hours notice.

Banks that fail to maintain customer services, as well as those that install, move ATM locations or suspend operations of ATMs, will also be fined if they have not done so in accordance with regulations. The SBV has asked banks to maintain good customer service during the time of soaring demand at the year's end.

Banks have also also required to raise awareness about criminal activities and expeditiously deal with complaints from customers and the media.

In recent years, customers have had great difficulties withdrawing their money from ATMs as the demand for cash skyrockets with the approach of Tet.

Vietnamese workers waiting to draw money before Tet holiday.

The banks were are allowed to increase service fees with the expectation that they would improve services. However, complaints have continued to file in about various problems with ATM machines, especially during holiday seasons.

Int’t conference discusses land issues

Land and certification of relevant documents took center stage at the third international notarization conference scheduled to take place in HCMC on December 12-13.

Phan Van Cheo, chairman of the HCMC Notary Association, said the Government allowed his association to partner with the International Union of Notaries to organize the conference on notarization for land documents.

Local and foreign experts and scholars at the event discussed the fundamental issues of land use rights, land management and usage for sustainable development. They will also share know-how on property management, a one-door notarization mechanism, land and house registration, and taxes.

Other topics included principles for land ownership in Asia and proposed solutions for urban and rural issues and development.

Vietnam became the 84th member of the International Union of Notaries in September 2013.

VAMC seeks approval for bad debt auction center

Vietnam Asset Management Company (VAMC) has plans to establish a bad debt auction center acting as the cornerstone for ushering in an official debt trading market in the country.

VAMC has sent its petition to the Government. It has plans to build an information technology (IT) system for the center to facilitate bad debt monitoring and management, a source told the Daily.

Initially, the center will offer debts and assets with a total book value of VND150-200 trillion. The center will be put under the management of VAMC.

According to a leader of VAMC, the Government should give special power to VAMC to handle bad debts worth at least VND150 trillion that it has purchased. Meanwhile, relevant administering agencies should join hands with VAMC to tackle bad debts at credit institutions.

The enterprise also wants to have funds to revise up its chartered capital soon, get approval for bond, treasury bill and convertible bond issues or have other plans to take out loans from international organizations to buy bad debts at market prices. If all the schemes fail, VAMC would return the debts to banks after five years.

VAMC is also seeking approval to access long-term credits from international organizations to buy bad debts at market prices. It calls for foreign and domestic investors to handle bad debts via business restructuring, mergers and acquisitions (M&A).

Relevant agencies should support VAMC in bad debt settlement, especially in legal procedures.

VAMC has suggested the Ministry of Planning and Investment and the Ministry of Construction facilitate foreigners’ participation in the debt trading process.

Fiber firm sells shares at a premium

Century Synthetic Fiber Corporation (STK) sold five million shares at an average price of VND21,124 each at its initial public offering (IPO) Tuesday, well above the starting price of VND18,000.

The enterprise offered three million shares for public auction at the Hochiminh Stock Exchange (HOSE). Red River Holding, its foreign shareholder, also offloaded two million shares.

Six organizations and 21 individuals snapped up the five million shares and foreigners bid for 0.18% of the total put up for sale.

With winning prices ranging from VND22,700 to VND25,000 each share, the auction brought in over VND120.6 billion. Of the figure, STK got around VND70 billion.

Earlier, the company expected to mobilize VND54-56 billion to fund its factory expansion in Trang Bang District, Tay Ninh Province. The project has a total investment of VND729 billion. Once completed, the factory will have an annual capacity of 52,000 tons compared to the current 37,000 tons.

The project will start running at 50% capacity in the third quarter of 2015 and at full steam in the first quarter of 2016.

The corporation, which is capitalized at VND393 billion, has plans to list on HOSE in the second quarter of 2015. It plans an annual dividend payment at 15% for shareholders in both cash and stock.

Greenback still firm against local currency

Though the central bank has sold a huge amount of foreign currencies to stabilize the market, the exchange rate between Vietnam dong and the greenback remained high on December 10.

Vietcombank sold U.S. dollar for VND21,385, up by VND5 against the previous day and VND25 from late last week. Eximbank quoted the selling price a dollar at VND21,390 and the buying price at VND21,320, or VND15 lower than at Vietcombank.

The forex has increased around 1% compared to a year ago. On December 9 last year, Vietcombank adjusted up dollar prices to VND21,300 and VND21,600 for buying and selling respectively.

Earlier, the central bank sold around US$1.5 billion to stabilize the forex market, sending the exchange rate down slightly but the level is still high. The dollar price has been hovering at VND21,380 since last week.

As usual, the exchange rate often fluctuates strongly at year-end given high pressure on bank debt and goods import payments. The central bank has allowed more borrowers to reach foreign-currency credits, thus pushing dollar prices up further.

On the unofficial market, a dollar was sold at VND21,440 while buying prices were from VND21,400 to VND21,410.

However, the greenback depreciated on the world market. At 2:00 p.m. Tuesday, the USD Index was 89.05 points, down by 0.13 point, or 0.15%.

MoIT Deputy Minister makes proposals to spur India-CLMV trade

Deputy Minister of Industry and Trade Do Thang Hai introduced a six-point proposal to stimulate trade and investment among CLMV nations at a business forum held December 11-12 in New Delhi.

Those in attendance at the event included hundreds of representatives from the CLMV countries of – Cambodia, Laos, Myanmar and Vietnam – including more than 130 representatives from the Vietnamese business community.

Hai also suggested that CLMV members create a free trade area and eliminate trade and investment barriers to each other’s businesses and proposed India provide assistance to members in developing infrastructure and cross-border transport systems.

Hai stressed the need for CV countries to simplify administrative procedures and make them highly transparent by installing modernized customs systems, and strengthen collaboration within the ASEAN-India cooperation framework.

Vietnamese Ambassador to India Ton Sinh Thanh in turn delivered reports and submitted proposals to strengthen all-round cooperation among India, CLMV nations and Vietnam, especially in economic trade and investment.

Ambassador Thanh underscored the Government of Vietnam and India have exerted great effort to accelerate bilateral and multilateral economic cooperation in recent times. However, these efforts have not matched each nation’s potential.

The diplomat also expressed his belief that Indian businesses would seize opportunities to do business with Vietnam as it has become one of the world’s most dynamic economies with high economic growth rate.

Vietnam has now taken the lead in the world in producing and exporting farm produce, garments and textiles, wood products, seafood products, electronics, mobile phones and construction materials, opening up more opportunities for Indian businesses.

Meanwhile, India has transformed into an economic powerhouse with advantages of software and nano technologies, space, cotton, fibre and chemicals. Along with the open-door policies, India has also become a huge market for exchanging goods, which should be fully tapped by Vietnamese businesses.

During the two- day session, delegates also agreed to ease the granting of visas for citizens from CLMV nations and encourage Indian tourists to travel to these nations, promote people-to-people exchange and finalize bilateral tax agreements with CLMV nations, establish an ASEAN-India Trade and Investment Centre.

Speaking at the closing session, Indian Deputy Foreign Minister Anial Wadhwa said he hoped that both sides would make great strides in accelerating the relationship between India and CLMV countries.

He said the government of India plans to launch a training centre for providing knowledge on software and teaching English at CLMV nations to better equip CLMV citizens with useful skills.

He stressed the necessity to enhance trade between India and CLMV nations, which has not been fully exploited, by strengthening geographical connectivity between India and CLMV nations.

Wadhwa also expressed hope that the Myanmar-India-Thailand tripartite highway would be linked to Vietnam in the future.

ASEAN, RoK to strengthen links

ASEAN and South Korean leaders have agreed to conclude negotiations on the Regional Comprehensive Economic Partnership (RCEP) agreement by the end of 2015.

In a joint statement issued at the end of the ASEAN-RoK Commerative Summit 2014 yesterday, they also mentioned several other issues that have been agreed upon.

The summit was held in the South Korean city of Busan to mark 25 years of relations between the two sides.

The joint statement also mentioned specific measures to further deepen the two sides' ties in all aspects.

The two sides will formulate an action plan for the 2016-2020 period, and effectively implement co-operation projects in priority areas for mutual benefit.

They will maximise benefits of the ASEAN-Korea Free Trade Agreement (AKFTA) and strive to raise two-way trade to US$150 billion by 2015 and $200 billion by 2020.

They will enhance cultural and people-to-people exchanges to boost mutual understanding alongside collaboration in human resources development .

2017 will be observed as the ASEAN-RoK cultural exchange year, they agreed.

On regional security, the two sides agreed to work together in ensuring maritime and aviation security and safety in the region, exercise self-restraint, and settle disputes by peaceful measures without the use of or threat of force in line with international law, including the 1982 UN Convention on the Law of the Sea (UNCLOS) and relevant standards and practices of the International Civil Aviation Organisation (ICAO).

They will promote joint efforts to deal with non-traditional security challenges like epidemics, environmental pollution and natural disasters.

Reviewing the last 25 years, leaders of both sides felt significant achievements had been made, contributing to peace, co-operation and development in the region.

ASEAN leaders hailed the active and important help rendered by South Korea towards building the ASEAN Community, enhancing connectivity, narrowing the development gap and responding to other common challenges.

President Park Geun-Hye reiterated that South Korea accorded high priority to relations with ASEAN and pledged continued support to the bloc for building the ASEAN Community as well as in carrying out the bloc's post 2015 vision.

Vietnamese Prime Minister Nguyen Tan Dung said both sides should strengthen their partnership and mutual support in all arenas. Mutual trust was key to achieving sustainable peace, stability and security, he said.

The PM also said that recent complicated developments in the East Sea testify to the need for maintaining peace, stability and maritime security in the region.

He called on all related sides to respect international law including the 1982 UNCLOS, fully abide by the Declaration on the Conduct of Parties on the East Sea and strive for an early conclusion of the Code of Conduct of Parties on the East Sea.

Refraining from the use of or threat of force as well as acts that might escalate tension would be an important confidence building measure, Dung said.

ASEAN and the RoK have enjoyed a strong and fruitful development of relations since they established dialogue partnership in 1989. In 2004, the RoK joined the Treaty of Amity and Co-operation (TAC), taking the ties between two sides to the level of comprehensive partnership. This was elevated further to the Strategic Partnership for Peace and Prosperity in 2010.

The RoK has backed all co-operation mechanisms and forums initiated by ASEAN in the region. The country is now one of ASEAN's leading economic partners with two-way trade hitting $135 billion in 2013.

VN courts infrastructure investment

Viet Nam has started improving its legal framework to attract more private finance into infrastructure, officials said yesterday at a conference.

Deputy Transport Minister Nguyen Hong Truong said in his opening remarks that infrastructure development plays an important role in the country's plan to become an industrial nation by 2020.

"Because the State budget is limited, the Government considers attracting domestic and international infrastructure investors critical," he said.

Many documents had been issued in recent years to improve the legal framework for public-private-partnership (PPP) projects, Truong said. The upcoming PPP decree, which is expected to be approved this month or in early January, is expected to invigorate investment in infrastructure projects.

According to Le Van Tang, director of the Public Procurement Department at the Ministry of Planning and Investment, the new PPP decree covers more PPP project forms, ranging from BOT (Build-Operate-Transfer) to BOO (Building-Owned-Operate).

It will replace previous decrees, which only provided general guidelines on PPP investment, and to regulate BOT, BT (Build-Transfer) and BTO (Build to Order) projects.

The new decree stipulates higher fiscal incentives for investor-proposed projects. It also covers competitive bidding, policy publicity and price negotiation time frames.

After the decree gets approval, the Ministry of Planning and Investment will issue instructions on its implementation.

According to Nguyen Danh Huy, head of the Transport Ministry's PPP Project Management Unit, the transport sector estimated that private investors will pour about VND235 trillion (US$11.2 billion) into infrastructure projects between 2016 and 2020.

In 2014, Huy said the transport sector has been given VND43 trillion ($2 billion) in private investments for infrastructure projects.

Aside from ground transport, the transport sector will focus on attracting investments for railways, seaports and the proposed Long Thanh International Airport.

Viet Nam lacked a legal framework adhering to international standards, which has deterred many foreign investors, Huy said. Meanwhile, domestic investors often lacked the capacity to assess risks associated with PPP projects, he added.

According to Huy, the Transport Ministry and other relevant agencies will soon release a list of projects needing private investment with diversified PPP forms.

Le Tuan Anh, deputy head of the Finance Ministry's Investment Department, said most BOT project investors must rely on commercial banks and with the rate-of-return for BOT projects lasting up to 20 years, investors and the banks carried a lot of risk.

"PPP is not a magic wand," he said. "We still need to increase the attractiveness of the projects, considering it often takes a long time for investors to get back their initial investment."

Nguyen Thi Thuy Hanh, a representative from the State Bank of Viet Nam's Credit Department of Economic Sectors, said banks still faced many difficulties for lending money to infrastructure project investors.

Her department estimates that commercial banks have lent VND135 trillion, accounting for 89 per cent of total investment, for 63 PPP projects currently under the supervision of the Transport Ministry.

Infrastructure projects typically required investment periods of 20 to 25 years, but the banks' funds were primarily intended for short-term loans, Hanh said.

In addition, banks must carry the risks involved, such as capabilities of investors, subcontractors' work and project delays, she said.

Pham Quang Dung, chairperson of Tasco Joint Stock Company, said the Government should come up with policies that reduced risk for commercial banks and investors.

Ministry seeks investment in traffic infrastructure

Minister of Transport Dinh La Thang chaired a conference discussing measures to attract investment in traffic infrastructure because the state budget is far behind demand in Hanoi on Friday.

Head of the Investment Department under the Ministry of Finance Le Tuan Anh reported big challenges in capital mobilization for traffic infrastructure development.

Public-private partnership (PPP) projects in this field have mainly been conducted under BOT (Build-Operate-Transfer) form. Some projects have been successful benefiting both the government and investors. However some have failed such as Ong Thin Bridge, an underground parking lot in HCMC, and Lien Khuong-Prenn Highway.

Mr. Tuan Anh said that there has no official study on the success and failure of PPP projects in Vietnam. However, it is possible to identify some challenges for investors in the traffic infrastructure field. For instance, they have faced with difficulties in mobilizing long term capital for the implementation of projects.

They have mainly looked forward to loans from commercial banks. However the banks have limited these long term loans with close guarantee requirements. According to regulations, the Government does not act as guarantee for businesses’ domestic commercial loans.

Stock market is an important channel for investors to mobilize capital. However most of them have not well exploited it.

Delegates at the seminar also pointed out another challenge from the legal framework which has failed to catch up with international practice.

Ms. Sindy Wong, deputy chairwoman of the Indian IL&FS Transportation Networks Ltd, said that Vietnam lacks of regulations and institutions for PPP attraction, which needs sufficiency and stability in mechanisms and policies.

Sharing the same view, head of the Transport Ministry's PPP Project Management Unit Nguyen Danh Huy said that several Government agencies have not closely worked with investors and local authorities while implementing projects.

In addition, toll fee policy has not been complete without specific toll rates for highways, local waterway, railway, shipping and airway. There has not a policy to assist investors in case of financial shortage for project implementation.

According to the Ministry of Finance’s representative, there should have an effective mechanism on risk control and sharing among related sides.

At first, it is necessary to balance benefits between PPP and other normal traffic projects. Investors of PPP projects should have higher than normal profit level to make up for risks from long-term and large scale investment.

Many experts proposed the Government to extend the capital reclaiming time of BOT projects, have a suitable road toll mechanism, and help banks control risks to loan the projects.

Businesses also proposed the Ministry of Transport to publicly announce projects calling for investment, their implementation progress and capital demand, and learn developed nations about toll collection with credit cards to better control collection sources.

The ministry will work with the State Bank, the Ministry of Planning and Investment and the Ministry of Finance on facilitating private investment in traffic infrastructure projects, he added.

The Government is set to issue a decree on PPP to create advantageous conditions for businesses, which Mr. Thang believed that it will bring large changes in attracting capital for traffic infrastructure development.

A Transport Ministry’s report shows that private sector has invested nearly VND43 trillion (US$2,014 million) in traffic projects this year. The number has met only a small part of demand.

Road construction is estimated to need an average of VND202 trillion a year by 2020. Of these, key and urgent projects such as the National Highway 1A and Ho Chi Minh Highway need VND22 trillion and VND27 trillion a year respectively.

IFC helps local banks finance energy-saving projects

International Finance Corporation (IFC) will support Vietnamese banks to fund energy-saving projects, said Vu Tuong Anh, who is in charge of financing the clean production and energy-efficiency program of IFC.

Anh told a seminar in HCMC on Wednesday that IFC, a private sector lending arm of the World Bank Group, would provide financial and technical support for the banks participating in the program in Vietnam.

As for financial assistance, IFC will offer seven-year loans with a grace period of two years for local banks to lend to individual and corporate customers wanting to buy and invest in energy-saving houses and buildings.

IFC can also set up a fund to share lending risks with local banks. The corporation will cover part of the debts for energy-saving projects that borrowers are unable to repay to the lenders if the banks and the corporation can agree on criteria for lending and risk evaluation.

Regarding technical assistant, IFC will assist local banks in working out loans for energy-efficiency projects as well as marketing plans and staff training. Anh said most Vietnamese banks have yet to lend to such projects.

In addition, IFC will build a bridge between local banks and green technology suppliers who have close relationships with investors and companies to help the banks find more customers. The corporation will also launch campaigns to raise public awareness of energy-efficiency projects.

Currently, IFC has a tool called EDGE to evaluate energy-efficiency projects and Vietnamese banks can use this tool to assess projects before deciding to lend them or not.

IFC expert Autif Sayyad said EDGE is free on www.ifc.org/EDGE but enterprises need to pay for the EDGE certificate issued by IFC.

Nam Long Investment Company is one of the first Vietnamese firms to get such a certificate next week as planned.

IFC has invested around US$2 billion in its sustainable energy program via banks. In Vietnam, the corporation together with Techcombank and VietinBank has lent to a number of energy-efficiency projects in the manufacturing sector.

Nguyen Cong Thinh of the Department of Technology-Science and Environment under the Ministry of Construction said Vietnam does not have detailed supporting policies for energy-saving structures and this is a major hurdle to investors.

Thinh added that there is no policy that encourages or forces investors to have their projects certified as energy-efficiency structures. Vietnam has not set up a fund to support and promote energy saving just as Thailand and other nations have done.

New driving force for SOE restructuring

National Assembly (NA) deputies and economists are pinning high hopes that a new regulation of the revised Law on Enterprise will serve as a new driver for the reform of State-owned enterprises (SOE).

Under the new rule in the revised law passed by the NA last month, an enterprise is a SOE when its 100% stake is held by the State, instead of 51% as before.

Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM), said such a change will create a new driving force for the restructuring of SOEs in Vietnam as it will create a new legal framework enabling enterprises to be more independent in operations.

According to Cung, after being equitized, an enterprise will no longer be a SOE but operate as a private company or a joint stock company. Therefore, there will be many changes concerning rights and obligations of such enterprises.

“After enterprises go public, outside shareholders are equal and have their rights and benefits protected. They will be no longer dominated by State shareholders,” Cung pointed out.

Cung said strategic shareholders are encouraged to invest more in equitized SOEs and more investors will help accelerate equitization.

“They will be real investors rather than shareholders who invest in equitized enterprises to enjoy the privileges of SOEs like previously,” he explained.

Nguyen Van Phuc, deputy head of the NA’s Economic Committee, shared Cung’s view, saying that old regulations on SOEs did not create an impetus for outside shareholders to contribute their capital as they are afraid of being tightly controlled.

However, the new regulation will speed up equitization, restructuring and capital divestment as well as attract investors from other economic sectors to pour their money into equitized firms.

The equitization process in Vietnam has been slowed. According to the Ministry of Planning and Investment, there have been around 100 enterprises undergoing equitization, a modest number compared to 432 candidates to go public this year and next as required by the Prime Minister.

A report the Government sent to the NA recently revealed there were 796 enterprises wholly owned by the State as of late last year. If 432 SOEs complete equitization next year, the number of SOEs will drop to 364.

Victoria Kwakwa, the World Bank’s Country Director for Vietnam, noted that the Government should focus on the quality of equitized enterprises rather than the quantity. She stressed the importance of increasing private ownership at SOEs to make it more attractive to investors and improving corporate governance.

Besides, Kwakwa urged Vietnam to improve transparency via regularly disclosing information, stopping offering financial and land incentives and strengthen budget requirements on SOEs.

According to the Ministry of Finance, 100% state-owned enterprises owed a combined debt amount of VND1,515 trillion last year.

French experts suggest urban development model

French experts have proposed the authorities of cities in Vietnam consider a vertical urban development model in order to spare more space for public areas and greenery to ensure a good living environment for citizen.

Speaking at a seminar on sustainable cities in HCMC on Wednesday, French architect Jonathan Thornhill from Loci Anima Architectures Co. said widening the area of a city without effective administration will not be sustainable and basic criteria for a good living environment will not be met.

Planning expert Antoine Mougenot from AREP Vietnam Co. Ltd. said reducing the ground area of construction will make room for more trees and help protect the ecosystem of urban areas.

On the same side, Phan Van Truong, Vietnamese-French lecturer at the Vietnam National University - HCMC, said the vertical urban development model will make it easy for cities to develop public transport systems.

Nguyen Van Tat, member of the HCMC Architects Association, said the choice of an appropriate model for urban planning in Vietnam will depend on times and stages of economic development in cities.

Other experts at the seminar noted that the vertical urban development model sounds good for HCMC as it enables the city to address chronic traffic issues, but now is not the right time to apply it as the average living standard of citizens is not high and the city’s economy is not strong.

Julien Schnell, director of Urbanica Company, said the agencies responsible for urban planning should attend to connectivity between buildings and public transport systems, and make the most of natural light and wind when it comes to designing living spaces and underground facilities.

Trade center to go up in town

The HCMC People’s Council on December 10 passed a proposal by the city government to select an investor for an office, hotel and commercial center project in a prime location in HCMC’s District 1.

The project will go up in a 5,160-square-meter land lot bordered by Le Loi, Nguyen Hue, Dong Khoi and Nguyen Thiep streets as proposed by the HCMC People’s Committee in its report submitted at the opening of the council’s meeting on Tuesday.

The city government will organize a tender to select the investor for the project in accordance with exisiting regulations.

According to the HCMC Department of Planning and Investment, a joint venture between Saigontourist Holding Company and Van Thinh Phat Corp. wants to develop the office, hotel and commercial center project.

The venture has suggested a plan to build the eight-floor building at an estimated cost of nearly US$70 million. Of the US$36 million for construction, Van Thinh Phat is expected to contribute US$27 million and the rest is covered by Saigontourist.

As many as 129 households will be removed and affected by construction of the project.

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