Petrol prices hike again

The Ministry of Finance and the Ministry of Industry and Trade have permitted businesses to increase retail price of petrol by VND420-470 a liter, since 8pm of July 17.

The price of Ron 92 gasoline is up by VND460 to cost VND24,570 a liter now, while diesel was up VND470 to cost VND22,310. Kerosene price was hiked by VND420 to reach VND22,020 a liter.

In an announcement made by the Ministry of Finance last night, world petrol prices have been steadily rising for the last one month; making Ron 92, diesel and kerosene prices higher than domestic retail prices by VND726-988 a liter.

The remaining balance amount in the price subsidization fund was too little to bail out the present situation, while world petrol prices are likely to go even further up.

PetroVietnam divests on schedule

PetroVietnam, the state arm for oil and gas development, has been consistent in its portfolio restructuring strategy to withdraw from non-core business fields.

According to chairman of the PetroVietnam’s board of members Phung Dinh Thuc, the group will completely withdraw its investment from Ocean Bank by 2015.

Works are also actively being done to merge the current PetroVietnam Finance Corporation (PVFC) and Western Bank. Thuc said the new bank would be consolidated after the merger and that PetroVietnam would also wind down its investment down to less than 20 per cent in the new bank by 2015, according to the restructuring strategy.

Thuc stressed that according to the strategy of PetroVietnam to abandon non-core fields, withdrawal from banks and financial institutions was an important issue.

“We have been strictly following the government’s requirements to focus on our core fields an concentrate on our strengths,” Thuc said.

Speaking about the merger of PVFC, a financial institution in which PetroVietnam holds a 78 per cent stake, Thuc said that after being approved by the State Bank, the two sides had set up a merger plan. The plan has been approved by the government in principle and final work is being done with the aim to hold a shareholders’ meeting at the end of July.

A source from PetroVietnam Finance said that following the merger, the bank would be renamed PVCombank and had total assets of more than VND100 trillion ($4.7 billion).

The merged bank is expected to have charter capital of VND9 trillion ($432.7 million) or 900 million shares at par value of VND10,000 per share. This will be the first ever merger between a finance company and a bank in Vietnam.

PVFC currently has VND6 trillion ($288 million) in charter capital of which half belongs to Western Bank. US-based Morgan Stanley is now PVFC’s foreign strategic shareholder, holding 10 per cent of its charter capital.

After the merger, PetroVietnam’s stake in PVFC will be reduced to 52 per cent, from a current 78 per cent.

While emphasising that the group’s withdrawal from the financial sector was making good progress, Thuc stressed that the divestments in other areas, particularly the real estate sector, were facing difficulties.

“While the real estate sector remains in turmoil, restructuring projects in this sector remain extremely complicated,’ Thuc said.

PetroVietnam is currently restructuring its PetroVietnam Construction Joint Stock Corporation (PVC), a subsidiary which invests in construction and real estate projects. PVC alone has 15 subsidiaries and 13 associated companies.

In 2012, PetroVietnam decided to abandon the Petro Tower project – projected to be the tallest building in the country with 79 storeys.

In line with the government’s restructuring of state companies following the Vinashin scandal, the group has returned to its five core business fields, including oil and gas exploration and exploitation, petrochemistry and oil filtration, the gas industry, electricity industry, and high quality oil and gas services.

WB guarantees new Masan loan

The American bank JP Morgan and its affiliates have provided Masan Industrial, a subsidiary of Masan Consumer- one of the leading Vietnamese FMCG companies, a three-year loan facility of $175 million, according to its parent company, the Masan Group.

The proceeds will be used to refinance the existing $108 million loan and to further invest in the Masan Group’s consumer-related businesses. The firm, the largest private sector company in Vietnam by market capitalisation will take a new loan facility that bears a lower interest rate than the previous $108 million loan provided in 2011.

Of the new loan facility, $150 million is guaranteed by the Multilateral Investment Guarantee Agency (MIGA), a World Bank member. MIGA only supports investments that are developmentally sound and meet high social and environmental standards. Masan is the first private company in Vietnam and South East Asia to secure MIGA support for a corporate finance loan.

MIGA said late this June, it has issued a guarantee of $167.7 million (Gross exposure) covering a non-shareholder loan by the Hong Kong branch of American bank JPMorgan and other financial institutions yet to be identified. JPMorgan will act as the Primary Rate Interface (PRI) facility agent for a loan to support the expansion and improvement of Masan Group’s consumer products business in Vietnam covering a $150-million loan to refinance existing debt and general corporate purposes, including investments in fixed assets, in addition to an estimated $26.5 million for associated interest.

The project will help Masan underpin its current consumer product operations in Vietnam, diversify its products portfolio, and increase its production capacity in the FMCG business.

The project’s expected development impacts include increased food security and safety, job creation, significant tax revenues, and improved environmental and social standards.

The project will also benefit small and medium enterprises (SMEs), as the company currently purchases raw fish sauce from 40 traders who in turn source from over 100 producers. Masan’s products are sold by 130,000 SME retailers through 100 independent SME distributors operating in all 64 cities and provinces of Vietnam.

The project is in line with the World Bank Group’s strategy to support private sector growth through IFC lending and MIGA guarantees. This is the largest corporate finance loan MIGA has supported in respect to a private sector company globally.

The MIGA requirements for its investment guarantee focus on accountability, including environmental and social safeguards; institutional integrity; and information disclosure.

The agency has so far guaranteed just six Vietnam projects, including Masan. The other projects are outside the private sector, and all the previous assurances were for smaller loan facilities in terms of finance. The biggest of them, $133 million, went to Phu My 3 power plant while the others ranged from $1.9 million to $36 million.

As for Vietnam, MIGA said it had received guaranteed proposals for Nghi Son Oil Refinery ($1.5 billion proposed), Hanoi-Hai Phong Expressway ($650 million proposed), and National Highway 20 ($400 million proposed).

Masan Consumer has created some of the country’s most recognised food brands, such as Chin-su, Omachi, Kokomi, Nam Ngu and Tam Thai Tu. The May 2013 Kantar Worldpanel Brand Footprint Ranking for Vietnam showed that Chin-su is one of the five most chosen brands in the ountry’s food sector. Chin-su, with different food product ranges such as fish sauce, soya sauce and chilli sauce, came second after Vinamilk, Vietnam’s largest dairy company. Masan Consumer has continually transformed its safety and environmental practices to conform to international standards. The management team has developed a certified management system for ISO 22000, 14001 and OHSAS 18001 as well as Hazard analysis and Critical Control Point (HACCP) for food and safety for its operations where applicable.

The World Bank has categorised Masan Consumer as a Category B project for MIGA due to the limited number of specific environmental and social impacts. This January, US private-equity firm KKR announced a $200 million investment to increase its equity stake in Masan Consumer, putting its total stake in Masan at $359 million, its biggest investment in Southeast Asia. The transaction is subject to regulatory approvals and other customary closing conditions.

According to market analysts, Masan’s achievement of an MIGA guarantee was a good signal for Vietnamese companies, because Asia-Pacific projects guaranteed by the World Bank’s arm accounted for just 8 per cent of the total worldwide in 2012, with a total of just $306 million.

Taiwan is top destination for Vietnam labourers abroad

Taiwan received 15,106 Vietnamese guest labourers in the first six months of this year, accounting for nearly 47% of the total number of Vietnamese labourers going abroad for overseas jobs.

Taiwan was followed by Japan, where 3,341 Vietnamese are working. At least 2,492 labourers are working in Malaysia.

In the first half of the year, 33,216 Vietnamese workers were sent abroad under contracts signed by Vietnamese firms and other their foreign partners, up by 1.6% compared to the same period of 2012, according to the Department of Overseas Labour (DOLAB) under the Ministry of Labour, Invalids and Social Affairs (MOLISA).

Despite 2013 forecasts of economic downturn, traditional markets have opened their doors for Vietnamese workers, says Dao Cong Hai, deputy chief of DOLAB.

Taiwan is expected to receive over 20,000 Vietnamese labourers, while Japanese will take 9,000 this year, up from 7,000 in 2012.

In addition, other markets, including Qatar and the Middle East, are also attractive to Vietnam workers. More than 85,000 local workers will be sent to these countries this year.

To realize the set targets, DOLAB has increased the number of Vietnamese workers in traditional markets, while at the same time looking for new markets.

In the first quarter of this year, the department sent workers to Malaysia and the Middle East, including United Arab Emirates, Qatar and Kuwait. It also for the first time sent Vietnamese nurses to Japan and Germany.

Language barriers remain the biggest difficulty for Vietnamese labourers in accessing markets that require high-quality workers.

MOLISA has mapped out a project to support Vietnamese labourers working abroad under contract.

Under the project, each poor labourer from rural areas would be provided with VND3 million for vocational training, and VND3 million for foreign language courses. They would also receive financial support to help cover other expenses before they go abroad.

M&A market boasts huge development potential

Despite unpredictable ups and downs over the past five years, the Mergers and Acquisitions (M&A) market in Vietnam has been rated as the eighth busiest market in Asia-Pacific.

The value of M&A deals has strongly increased, particularly during the 2009-2011 period. The market saw 295 deals worth US$1.14 billion done in 2009, and 245 transactions valued at US$1.75 billion, conducted in 2010.

In 2011, a total of 266 M&A deals raised US$4.7 billion, in total value a year-on-year increase of 135%.

Last year, the M&A market was worth a total of US$4.95 billion from 157 deals, a rise of 5.3%t in value compared to the previous year. Despite the decrease in the number of deals, the large transactions helped keep the market value at a stable level.

In December 2012, Vietinbank, one of the leading State-owned commercial banks in Vietnam, collected US$743 million after selling a 20% strategic stake to the Bank of Tokyo Mitsubishi UFJ (BTMU).

Thailand’s Siam Cement Group acquired 85% of Prime Group’s shares worth US$240 million in the same year.

The first six months of this year also saw various M&A deals, particularly an impressive deal of the largest commercial property company in Vietnam, VinGroup, which collected US$470 million from selling one of its commercial centres to its Vietnamese partner VIPD.

Recently, foreign investors showed their greater interest in Vietnam’s M&A market, particularly Japanese investors.

Vietnam’s market in 2013-2014 still creates opportunities for both foreign investors and domestic enterprises with an increasing trend of transferring from foreign direct investment (FDI) to indirect investment through M&A, forecast specialists in the field.

Nguyen Quang Thuan, General Director of Stoxplus Financial Media Corporation, predicts that the M&A market will be much more dynamic in property, food and drink, cement, finance and banking.

“Our database shows that there are presently 10 M&A food and drink deals in the process of negotiation. Foreign investors, specifically Japanese investors, will continue publicising new deals in the coming time,” says Thuan.

Meanwhile Robert Tran, CEO of Canada’s Robeny Consultancy Group in Asia and the US, says the pharmaceutical industry, pet food and education will receive more attention in the near future, adding that his company has received various requests from American and Canadian small and medium-sized enterprises about pharmaceutical factories in Vietnam.

This August, the largest annual M&A forum in Vietnam will be held in Ho Chi Minh City and is expected to attract leaders from more than 500 domestic and international corporations, groups and companies.

It will focus on the quality of investment connection activities in order to create greater cooperation opportunities, says Dang Xuan Minh, the Deputy Head of the forum’s organising board, when talking to Dau Tu (Vietnam Investment Review) about the event.

This forum will sum up M&A activities in the country over the past five years and forecast the trend and opportunities in the coming years.

Attracting German investors to HCM City

A delegation led by Nguyen Thi Thu Ha, Vice Secretary of the HCM City Party’s Committee has paid a three-day visit to Germany.

During its meeting with Berlin authorities, the delegation briefed the host on the City’s socio-economic, potential and its incentive policies for investors.

Ha spoke highly of effective cooperation with Germany in building a metro line, Vietnam-Germany University, and German House, as well as implementing other projects in the city.

Ha called upon businesses from Germany in general and Berlin in particular to further invest in the economic hub.

During its stay in Germany, the delegation visited the Vietnamese Embassy and laid wreaths at the statues of Karl Marx and Friedrich Angels in Alexander Square.

Developing wind power in Vietnam

Vietnam possesses considerable potential for the development of wind power, an energy sector which has generated strong interest from domestic and foreign investors.

However, to fully exploit this endless source of energy, besides support policies, investors will feel more at ease if there are complete pricing and trading mechanisms.

According to the International Energy Agency (IEA) and the World Bank, Vietnam has an overwhelming advantage for the development of wind power, compared with other countries in Southeast Asia.

Wind turbines of the Bac Lieu wind power plant (photo:vietnamnet)

The two organisations’ statistics show that 8.6% of Vietnam’s territorial area is suitable for wind turbines, in comparison with 2.9% of Laos, and just 0.2% of Cambodia and Thailand.

The Ministry of Industry and Trade of Vietnam predicts that the country’s total wind power capacity on land may reach 513,000MW, which is 200times more than that of the current Son La hydroelectric power plant – the largest of its kind in Southeast Asia – and 10 times more than that of the power sector’s combined capacity.

In the coastal areas and islands, total wind power capacity may reach 200,000MW.

In a national power development masterplan to 2030, the government gives priority to developing various sources of renewable energy, including raising the ratio of wind power to total national power capacity to 4.5% by 2020 and 6% by 2030.

Despite the great potential, there are only about 20 wind power projects up and running in the coastal and Central Highlands provinces of Bac Lieu, Binh Thuan, Ninh Thuan and Lam Dong.

Binh Thuan, the national wind power leader, last year operated 20 turbine groups for its wind power plant No1 in Binh Thanh district, with a total combined capacity of 30MW.

In May 2013 the Bac Lieu wind power project completed the first phase, when 10 of its turbine groups with a design capacity of 16MW were put into operation, aiming to generate 56 million kWh/year.

Recently Ninh Thuan province licensed the Cong Hai wind power project, which has 15 turbine groups with a design capacity of 37.5 MW and an investment capitalisation of approximately VND900 billion.

Besides domestic businesses, foreign companies have come to Vietnam to seek investment opportunities in this area.

Recently, France’s Volorem worked with Electricity of Vietnam (EVN), pledging to seek capital with appropriate interest rates for any wind power projects in Vietnam.

However, the main obstacles to foreign investors include the high production cost of such a project, time taken for investors to get back their investment capital, and the lack of a competitive sale price.

Experts calculate that the production cost for every kW would be US$2,250 if US technology is used, and US$1,700 for Chinese technology. As a result, the corresponding selling prices for every kWh would be 10.68 cents and 8.6 cents. This means it would take the investor 20 years to get back the initial investment capital.

A wind power investor in Bac Lieu complains that a modern wind power plant offers electricity at 10-12cents/kWh, while EVN is authorised by the government to purchase wind power at just 7.8cents/kWh.

To run the project effectively, this investor has asked the government and relevant ministries to have a price subsidy policy and raise the average buying price.

However, Tran Viet Ngai, chairman of the Vietnam Energy Association, has advised investors to increase the use of local equipment and train local workers to operate the plant, so as to lower production costs. According to his calculations, investors will make a profit if the selling price is 7.8 cents/kWh.

The Energy institute under the Ministry of Industry and Trade says to develop this source of energy, the government should allow projects of this type to enjoy existing credit preferences, import tax exemptions, and reduced corporate income tax.

In addition, the government should introduce an appropriate energy price policy to encourage businesses investment in this field.

Local firm to manage tallest building project in Myanmar

Vietnam’s Archetype Group has won the project management contract for Diamond Inya Palace, a building set to be the tallest in Myanmar.

Located near Inya Lake, the building will be a residential complex with 34 stories situated on a 120,000sq.m plot.

It will have 406 apartments including four penthouses and several facilities like spa, a mini-theatre and a swimming pool.

Construction on the palace is due for completion in late 2015.

Archetype Group Ltd is a multi-disciplinary construction consultancy firm. It has operations in Vietnam, Cambodia, India, Thailand, Laos, Mongolia, Indonesia, Myanmar, Qatar, Kazakhstan and France.

Penetrating the Polish market

Poland has emerged as a lucrative market for Vietnamese businesses in recent times. Yet, it is not easy to enter this market without carefully studying local consumer tastes.

Poland, the sixth largest market of the European Union, is home to approximately 40,000 Vietnamese expatriates and tens of thousands of nationals from China and other Asian countries, making it a potential consumer of commodities from Asia, including Vietnam.

Since Vietnam and Poland established bilateral relations more than half a century ago, a variety of Vietnamese goods, from food and foodstuffs, seafood, vegetables and fruits to dried items and spices, have been favourites with Polish people.

Vietnamese kiosks at trade centres in Poland

Nguyen Duc Thanh, Vietnamese trade counsellor to Poland, says most high-quality products by branded Vietnamese and foreign joint venture businesses have gained a market niche in Poland, meeting EU quality regulations.

Meanwhile, small and medium-sized enterprises, including foreign invested, still find it difficult to penetrate this market, due to their inconsistent product quality, substandard designs and patterns, and poor forwarding, delivery and logistical services.

Thanh reveals that Polish importers are conscious about the price of the products and compare them with similar products from other countries.

In addition, Poland is not too demanding a market, as this EU economy is in its transformation process and its GDP per capita is lower than in other EU member countries.

The trade counsellor, however, warns that Vietnamese businesses should keep their eye on product quality if they want to gain a firm foothold on this market, because Polish consumers are now more careful about imports.

To penetrate deep into the Polish market, Thanh suggests businesses should invest more in building and developing brands alongside market research, trade promotions and post-sale services.

Top priority is given to product quality, then prices, he says.

Obviously commodities exported to Poland must meet EU quality regulations. Food and foodstuff batches undergo strict quality examinations to see if the products meet food safety and hygiene standards.

Polish people also show interest in environmentally friendly products and the control of hazardous substances contained in imports.

Thanh says businesses should take advantage of the strong development of associations of Vietnamese nationals, which now number 70.

The Vietnamese Trade Office has worked closely with Vietnamese businesses that run trade centres and showrooms in Poland, to establish long-term and stable distribution networks for Vietnamese products.

This offers reliable support for Vietnamese businesses tapping into a market of 40 million consumers, and a broader market of 300 million consumers, because Poland is the gateway to Germany, the Czech Republic, Hungary, Slovakia, Baltic countries, and the Commonwealth of Independent States (CIS).

Vietnam and the EU have undergone several rounds of free trade agreement negotiations, and once the FTA is signed, it will open the door for Vietnamese products to enter the EU and Poland in particular.

According to the Ministry of Industry and Trade, Vietnamese exports to Poland hit US$27 million in June 2013, up 32.5 percent from a year earlier.     

RoK businesses seek opportunities in central province

The Republic of Korean businesses have invested nearly US$61 million in 12 valid projects in Nghe An province, employing more than 10,000 local workers.

The figures were released at a July 12 meeting in Hanoi, summarising the provincial investment environment and encouraging even more Korean investors to Nghe An.

Nghe An enjoys advantages that range from land, minerals, and fisheries to tourism, human resources, and investment incentives, As of June 2013, the province has welcomed 36 foreign directed investment projects worth a total approaching US$1.4 billion.

RoK Ambassador to Vietnam Dae Joo noted Korean business investment has traditionally limited itself to urban centres like Hanoi and Ho Chi Minh City. Increasing expenses and high labour costs are driving their emerging interest in other opportunities.

He expressed his hope that with support from the central province, the Korean Embassy, and the Korean Trade Promotion Agency (KOTRA), more Korean businesses will invest in Nghe An in the future.

Nghe An Provincial People’s Committee Chairman Nguyen Xuan Duong said the local administration will complete its administrative reforms as soon as possible and do its utmost to facilitate foreign investor success, particularly in projects involving advanced technology.

The meeting also saw the signing of agreements between the Nghe An People’s Committee and KOTRA, the approval of Korean StrongPlus Elevator’s US$10 million project, and the authorisation of Korean Global Sourcing International’s US$2.5 million garment export investment.

Domestic shipping firms strive to weather hardships

Effectively using advantages on local and short-distance international routes instead of further hiking transport gross tonnage proves a proper direction to local ship fleets.

“It becomes harder and harder for Vietnam’s ship fleets to achieve dual important targets it is obliged to reach by 2020: transporting 200-292 million tonnes of cargos, representing 9-10 per cent of Vietnam’s total transport volume and hiking import export transport market share to 25-30 per cent,” said Portcoast Consultant Corporation (Portcoast)’s deputy general director Nguyen Manh Ung.

Portcoast, under the Vietnam Maritime Administration (VMA), was assigned to handle the project on revising Vietnam’s sea transport development planning to 2020, with the vision towards 2030. Earlier, the sector’s development planning to 2020 was approved by the prime minister via the Decision 1601/QD-TTg dated October 2009.

According to Portcoast, these dual targets could only be feasible once satisfying these two conditions: Vietnam’s ship fleets were strong enough to win back transport market share from foreign players on international and local routes and local ship fleets run effectively (at least not incurring losses).

In respect to international shipping, at the end of 2012 local fleets consisted of 1,755 ships with the gross tonnage reaching 6.9 million dead-weight-tonnage (DWT) only covered 12 per cent of the market share, mainly operating on short routes (less than 2,000km).

On local routes, particularly regarding container transport the market share of local ship fleets had dropped constantly from 80.1 per cent in 2010 to 61.7 per cent in 2011 and 58.7 per cent in 2012.

“Vietnamese ship fleet’s market share has sunk significantly amid fierce competition from foreign rivals whereas a suitable roadmap and conditions are needed to improve the situation,” said a Portcoast source.

According to Portcoast, local shipping firms, submerged in losses, are not in a position to both embrace restructuring and further invest to raise the ship fleet’s gross tonnage to 8.4-9.6 million DWT by 2015 as regulated at the prime ministerial Decision 1601/QD-TTg.

Chairman of Vietnam Shipowners’ Association Vu Xuan Quynh assumed from now until 2015 shipping firms’ prime target was to restructure their ship fleets to boost operational efficiency.

Accordingly, ships to be sold on liquidation would cover 40 per cent of ships’ total gross tonnage of which Vinalines alone would sell 1.4 million DWT. Critically, even after selling 59 ships Vinalines still incurred VND8.640 trillion ($410 million) in accumulated losses.

Based on shipping market latest forecast and treaties, Portcoast has proposed alleviating the sector’s pressure through scaling down development indexes relevant to Vietnam’s ship fleets’ import export goods’ transport market share to 16.4-17 per cent by 2020 (3.84-4.39 per cent on long-distance routes).

“In the near term, Vietnam’s ship fleets should take advantages of local routes and short-distance international routes with traditional goods, pursuing the target of restructuring the ship fleets, then gradually hiking their operational efficiency in later period,” said Ung.

Regulations throttle engine plant

Truong Hai Auto Corporation’s engine manufacturing plant, the first of its kind in Vietnam, is being threatened by closure as its engines may not satisfy emission standards set out in the Vietnamese government’s roadmap.

According to a Quang Nam Provincial People’s Committee report sent to the government last month, the Truong Hai engine factory “is facing difficulty” because it “has not yet met the roadmap’s emission standards regulated by the prime minister in 2011”.

According to the Decision 49/2011/QD-TTg dated September 1, 2011 signed by Prime Minister Nguyen Tan Dung, all cars and motorbikes manufactured in, or imported to Vietnam have to meet Euro 4 emissions standards from January 1, 2017 instead of the current Euro 2 and 3 standards.

Truong Hai broke ground on its engine factory in June 2012 with the total investment capital of $182 million. As the country’s first automobile engine factory, it is expected to increase the localisation ratio in Vietnam’s automobile industry. According to Truong Hai, it signed a technology transferring contract with South Korea’s Hyundai Motor Company to produce approximately 20,000 engines at Euro 2 and Euro 3 emissions standards each year.

In accordance with the Vietnamese government’s roadmap, Truong Hai will have to stop manufacturing engines at Euro 2 and Euro 3 standards in January 2017. Even if Truong Hai begins production in 2014 as scheduled, it will still only be able to manufacture Euro 2 and Euro 3 engines for three years.

Critically, the Quang Nam Provincial People’s Committee report stated that updating the engines from Euro 2 to Euro 4 standards would not be easy for Truong Hai.

“In addition, the changing to the manufacturing of Euro 4 engines over a short period will be very costly,” said the report.

If Truong Hai fails to upgrade the factory to one capable of manufacturing Euro 4 engines within next three years, the production at the plant will be forced to cease.

In the report, Quang Nam asked the government to allow Truong Hai to continue manufacturing Euro 2 and Euro 3 engines even when the Euro 4 standards are applied.

Previously, Truong Hai obtained preferential incentives from the Vietnamese government as it is considered a key national project. This means the investor could borrow money, equal to 85 per cent of project’s total investment capital from the Vietnam Development Bank with a preferential interest rate over 12 years. Furthermore, Truong Hai will be backed by the government when borrowing capital from foreign bankers. The company can also enjoy import and export taxes of zero or the lowest possible levels in international agreements that Vietnam has joined with other countries.

Growing opportunities from car export

The car sector strives to boost investment efficiency via export.

First Mazda cars assembled at VinaMazda factory in central Quang Nam province’s Chu Lai Open Economic Zone (OEZ) will be shipped to Laos on July 14, 2013.

This is the start of VinaMazda Company’s plan to export Mazda cars from Vietnam to left-hand drive car markets in Southeast Asia such as Laos, Cambodia and Myanmar.

VinaMazda is a member of Thaco, one of leading domestic automobile manufactures in Vietnam.

Around 300 Mazda cars were bound for export to these markets in 2013, jumping to 3,000 units by 2014 and 15,000 units by 2020.

A half-month before that date, at Mazda Motor head office in Japan, Thaco’s chairman Tran Ba Duong and Mazda Motor’s deputy chairman Seita Kanai inked a contract under which VinaMazda will export Mazda cars from Vietnam to Laos

In March 2011, VinaMazda was appointed as Mazda cars’ exclusive manufacturer, assembler and supplier in Vietnam.

VinaMazda factory in Chu Lai OEZ has received technology transfer from Mazda Motor for manufacture and assembly of three Mazda car models in Vietnam- Mazda 2, Mazda 3 and Mazda CX-5- and entrusted to develop an expansive system with 20 showrooms and dealers across Vietnam.

This is one of 15 manufacturing and assembling bases of Mazda globally.

“We selected Laos as the first export market for made-in-Vietnam Mazda cars and will consider bolstering VinaMazda’s export operation, preparing to make the most of the tax breaks given to the auto sector under Vietnam’s integration commitment with ASEAN region by 2018,” said Seita.

According to Thaco’s chairman Tran Ba Duong, amid current hostile business climate Mazda cars’ sales revenue constant growth in the recent years came on the back of Mazda’s active support through rolling out new car models.

This year, Mazda cars’ sales volume was forecast to be at least 3,000 units, occupying 5.4 per cent of the market share and placing firth among Vietnam-based auto manufacturers.

Export of completely-built car units (CBUs) from Vietnam to neighbouring countries along with spurring the development of auto supporting industry is regarded as proper steps to balance auto sector’s foreign currency flows.

The Ministry of Industry and Trade forecasts the demand for cars in Vietnam would range from 800,000-900,000 units by 2025, hiking to 1.5-1.8 million by 2030. Auto import value would amount to $12 billion by 2025, hiking to $21 billion by 2030 respectively unless below-nine seat passenger cars and 50 per cent of trucks and buses were made in Vietnam with localisation rate reaching 50 per cent.

Even in this best-case domestic production plan, the total automobile import value by 2025 would come to $5 billion, increasing to $9 billion by 2030. Thereby, investing in domestic production and striving for export as what Thaco is doing with its products and some foreign brands like Mazda and Kia are gaining special attention.

The ASEAN region has emerged as one of global auto manufacturing bases. Most global auto giants have placed production facilities there, including GM, Ford, Toyota, Mitsubishi, Mazda, Isuzu, Honda and Nissan. However, only five ASEAN member countries have engaged in auto assembly and manufacture, namely Thailand, Indonesia, Malaysia, the Philippines and Vietnam.

Fujitsu Vietnam opens new office in Haiphong

On July 11, Fujitsu Vietnam Ltd officially opened its new office in northern Haiphong port city in order to meet the increasing demands of the firm’s customers in Vietnam.

Fujitsu has its Vietnam headquarters in Hanoi and a branch office in Ho Chi Minh City. The firm’s new office opening in VSIP Haiphong has shown the commitment of Fujitsu Vietnam to constantly improve the customer service quality and “shaping tomorrow” with Vietnam’s ICT industry.

“Setting foot in Vietnam over 14 years ago, our top-of-mind goal is to make life better through our best and highest quality technology products and solutions. With this new opening office in Haphong, we are glad to be able to contribute more to the development of one of the active and potential cities in Vietnam, with our first initials to our partners in VSIP industrial park,” said Matsuura Taro, general director of Fujitsu Vietnam.

“Haiphong welcomes the presence of Fujitsu Vietnam Limited. The new office opening will definitely open a long-term cooperation between one of the leading Japanese ICT company in the Vietnamese market and the active, young, full of potential Haiphong. We commit to have the full supports for Fujitsu Vietnam and we trust that this cooperation will be lasting and fruitful,” said Jack Zhea XUI , VSIP Haiphong’s Marketing and Customer Service manager.

Fujitsu Vietnam said it would continue broadening customer base and networking not only in Haiphong but also in other areas in Vietnam’s northern region.

Fujitsu is the leading Japanese information and communication technology (ICT) company offering a full range of technology products, solutions and services. Over 170,000 Fujitsu people support customers in more than 100 countries. The firm reported consolidated revenues of 4.5 trillion yen ($55 billion) for the fiscal year ended March 31, 2011.

Power security calls for new plan

The government is about to adjust the national electricity development master plan for the 2011-2020 period, as delayed implementation of the plan over the past two years threatens the nation’s power security.

In a document just released by the Government Office, seen by VIR, Deputy Prime Minister Hoang Trung Hai ordered the Ministry of Industry and Trade (MoIT) to “urgently complete the adjusted electricity master plan VII” to be submitted for prime ministerial approval next year.

Hai also asked MoIT to hire an experienced foreign consultant to advise on amendments to the master plan VII.

The electricity master plan VII, or the national electricity development master plan for the 2011-2020 period, was released two years ago and comprised of construction timelines for 86 power generation projects and the national power transmission grid.

The plan was designed to ensure national power security in the long term. However, the implementation of this plan has been slow over the past two years, raising great concerns over potential power shortages in the near future.

“The construction of many power projects, particularly those in the south, have been delayed, requiring additional supply from the north and central regions to be sent to the south. This threatens the supply security of the national power system,” Hai said in the Government Office’s document.

According to the document, the government has taken numerous measures to push the development of power projects in the south, including Vinh Tan 2, Duyen Hai 1 and Duyen Hai 2 power plants, and setting up transmission lines between Pleiku – My Phuoc – Cau Bong, and Dak Nong – Phuong Long – Binh Long. But these are not likely to be enough to ease the threat of power shortages.

“If no more measures are implemented to increase the construction of power plants and transmission lines, a severe power shortage is forecast in the south from 2014-2015,” Hai said.

According to the electricity master plan VII, signed by Prime Minister Nguyen Tan Dung on July 21, 2011, 46 out of 86 electricity generating projects were assigned to state-owned companies, of which Electricity of Vietnam (EVN), PetroVietnam and mining group Vinacomin are the investors of 40 projects.

Fourteen projects were assigned to private domestic investors. Meanwhile, foreign independent power producers, who are said to have stronger financial capital, have few opportunities to engage in the plan, being assigned only eight projects.

Just a few months after the government released the master plan VII, state-owned groups and corporations like EVN, PetroVietnam and Vinacomin complained that they could not procure the necessary funds for all the power investment projects.

From now to 2015, EVN needs at least $25.3 billion for developing new power generators and transmission projects and PetroVietnam needs $8 billion to build five thermal power projects. Meanwhile, Vinacomin needs about $1.6 billion each year for investment in the sector.

Although Vietnam’s economy is experiencing a downturn, power demand in the first half of the year still rose 11 per cent year-on-year. The MoIT estimates power demand will keep on rising from 11 per cent to 13 per cent next year, burdening the existing power supply if new power generating plants fail to meet construction schedules.

HCM City to achieve public transportation target

Public transportation will meet 15 percent of Ho Chi Minh City’s commuting demand by 2015 as targeted, according to the municipal Department of Transport.

The current public transport system, mostly comprising buses, meets 10.53 percent of residents’ demand, it was cited as saying in local reports on July 15.

Over the last several years, the city has improved bus services to attract more passengers. It has ensured better over sight of the operations of bus companies, restructured several public transportation firms, reorganised bus routes and promoted the use of bus services, the report said.

Among the major improvements are the introduction of 53 buses running on compressed natural gas (CNG), making them more environmentally friendly, and making 153 buses easily accessible for passengers with disabilities.

The city is also drafting a plan to assemble 300 CNG buses under a 2012-15 project, the report said.

It said the department will review the pilot programme to use smart cards instead of tickets on bus routes 1 (Ben Thanh – Cho Lon Bus Station) and 27 (Ben Thanh -Au Co - An Suong Bus Station).

The department will propose that the use of smart cards is expanded to al bus routes in the city by the end of this year, and later, to all public transport services.

Vinachem celebrates healthy H1 profits

The Vietnam National chemicals Group (Vinachem) reported profits of 1.787 trillion VND (85.1 million USD) in the first sixth months of the year, an increase of 12.6 percent against the same period last year.

This outcome was discussed at a recent conference to review the implementation of tasks in H1/2013 and operations in H2.

According to a general assessment, Vinachem’s industrial production continued to face a number of difficulties and challenges during the period. However, efforts by the industry along with good management by the group helped boost production and business in the first half of this year and yielded some excellent results.

In the second quarter of 2013, the production value reached nearly 11.9 trillion VND (566.4 million), turnover hit more than 12.3 trillion VND (588.62 million USD) and profits recorded 937 billion VND (44.62 million USD).

For the whole January-June period, the value of industrial production posted 21.2 trillion VND (1.01 billion USD), up by 6.7 percent over the same period last year.

Vinachem’s accumulated revenue was over 23.9 trillion VND (1.14 billion USD), up 6.3 percent year-on-year.

In the past six months, the group’s members focused on stimulating the production and consumption of products, keeping stocks at a reasonable level to ensure the supply of essential commodities on the market.

Subsequently, the group has seen its products sell more than during the same period of 2012, which has helped reduce stockpiles.

On the basis of these results for H1/2013, Vinachem has set a target for Quarter 3 of 11.44 trillion VND (544.76 million USD) in the value of industrial output, 11.8 trillion VND (561.9 million USD) in turnover and 800 billion VND (38.1 million USD) in profits.

In order to achieve these targets, Vinachem will focus on speeding up key projects as well as restructuring itself to create the motivation for a thorough development with stable profits, said Nguyen Anh Dung, President of Vinachem’s management board.-

Wood exports to hit annual target

Vietnam's wood industry is expecting to reach this year's export target of 5.5 billion USD, thanks to a recovery in exports of its wood products, experts have said.

The Ministry of Industry and Trade said that the wood industry gained a year-on-year increase of 12.5 percent, bringing the export value of this industry to 2.46 billion USD for the first half of this year.

Traditional markets such as the US , Japan and China also had a strong surge in export values.

Dang Quoc Hung, deputy chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said that exports of Vietnamese wood products to the US increased over the first half of this year, which signals a recovery.

The industry expected that the export of wood products will continue to increase in the second half of this year, Hung said. The export value of wood products to the US is estimated to reach 1.7 billion USD for the year.

In the second half of this year, Chinese demand for wood exports will surge due to competitive pricing, he said. China will import 800 million USD of woodchips from Vietnam this year.

The ministry said that the export value for wood products is expected to increase by 10-15 percent, which will reach its export target of 5.5 billion USD for the year.

However, Hung said, almost all of the wood processing businesses have faced higher import prices for their materials, yet they could not increase their selling price, so they must have huge losses or might be even forced to stop production.

On the other hand, large businesses have managed to keep up production because they have modern equipment which reduces labour costs.

Companies have said that the Government should support them with low interest rate loans so that they can upgrade their equipment and technology and overcome production difficulties. The Government should also not increase land rent to allow businesses to focus on their capital and to make investments in equipment and technology.

Trade deficit forecast cut to 4bln USD

The Ministry of Industry and Trade has slashed its forecast for the country's 2013 trade deficit down to 3-4 billion USD from 9 billion USD previously.

According to a ministry report released last week, the country's export revenue in the second half of the year will be roughly 68-69 billion USD, pushing total export earnings for 2013 to nearly 129-130 billion USD - a 12.5-14 percent gain on last year.

Import value during the second half will reach roughly 70-71 billion USD, raising the yearly figure to 132-133 billion USD, a 14.5-16 percent increase on the previous.

Accordingly, the trade deficit is expected to be nearly 3-4 billion USD, equal to 2.5-3 percent of the total export value.

Previously, the ministry forecast the country's export revenue to reach 127 billion USD this year, 1 billion USD higher than the Government target, while import value was to be 136 billion USD.

The trade deficit therefore would stand at roughly 9 billion USD, equal to 7 percent of the total export value, but still slightly below the Government's 8 percent target.

Export value during the first half of the year rose 16.1 percent to 62.05 billion USD in spite of price falls and trade barriers. Export growth was driven by manufactured and processed goods including telephones and components, computers and electronic devices.

The country's trade deficit in the first half of the year was roughly 1.4 billion USD, equal to 2.3 percent of the total export value.

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