Dong Nai attracts $1.3 billion FDI in 2017

The southern province of Dong Nai attracted over US$1.3 billion in foreign direct investment (FDI) in 2017, $300 million higher than the set target.

According to the provincial industrial zones’ management board, it has attracted 1,733 FDI projects, so far, with total investment of $31.3 billion. Investors from 45 countries and territories have invested in the locality.

South Korea is the largest foreign investor in the province, following by Taiwan (China) and Japan.The board said despite laying down stricter conditions for investment projects, FDI capital that poured into the province still increased this year. In particular, disbursement reached $1.1 billion, equivalent to 88 per cent of the total registered capital.

In recent years, Dong Nai has given priority to FDI projects using hi-tech, skilled labourers and are environment-friendly.

Mai Van Nhon, deputy head of the board, said investors believed in the province’s support for businesses.

The provincial Department of Industry and Trade also said the province’s export turnover this year reached $17 billion, posting 11.8 per cent year-on-year increase. It achieved trade surplus of $2 billion, while the country’s total trade surplus was expected to reach $3 billion.

Some export products reported high export turnover in 2017, such as garment and textile at $2 billion, or 15 per cent increase from 2016; rubber at 49,000 tonnes; cashew at 350,000 tonnes; and computers and spare parts at $590 million.

Duong Minh Dung, the department’s director, said the high export turnover was because exporters found new markets while effectively exploiting traditional ones.

In addition, firms have effectively taken advantages of FTAs to expand production and increase productivity.

The province’s industrial production this year also saw stable growth.

Dinh Quoc Thai, chairman of the provincial People’s Committee, said its index of industrial production this year was expected to rise by 8.6 per cent from 2016. The industrial production value was VND731 trillion, or an increase of 9.1 per cent from the previous year.

In 2018, Dong Nai has targeted enhancing its economic restructuring, promoting economic growth with higher productivity and increasing businesses’ competitiveness. It will also further improve the business environment and focus on high quality human resources training.

The People’s Committee forecast that its economic growth in 2018 would continue to be positive thanks to increase in manufacturing, trade, construction, retail and tourism. 

Thai said investment in key projects such as the Ben Luc-Long Thanh-Dau Giay Highway and the upgraded Long Thanh International Airport would facilitate the province’s development.

Dong Nai has targeted GRDP of 8-9 per cent, average income per capita of VND94-96 million and export turnover increase of 9-11 per cent in 2018.

Toyota introduces new Land Cruiser Prado 2017

Toyota Motor Vietnam (TMV) has introduced the new Land Cruiser Prado 2017, a symbol of prosperity and officially available at all TMV dealers from December 25.

The Land Cruiser is a series of traditional sports utility vehicle (SUV) produced by Toyota Motor Corporation since 1951. 

It has built a formidable reputation around the world for its reliability and durability as well as its excellent off-road capability.

As a member of the Land Cruiser family, the Prado has inherited the core values of the SUV line and been especially designed to provide the maximum comfort when running on-road as well as to ensure the highest utility and ultimate convenience for the driver and passengers when commuting.

In the 2017 improved version, the Land Cruiser Prado has a redesigned front face that gives it a more sporty and modern look with refined chrome thinner grill bars. 

The Land Cruiser Prado 2017 is also equipped with a new, high-definition Optitron meter integrated with a modern, color TFT multifunction display. In order to bring comfort and convenience to passengers, the Land Cruiser Prado 2017 is equipped with front seat heater and ventilation and power fold for the second seat row. 

At the same time, in order to bring more convenience to drivers, especially on the highway, the Land Prado 2017 features Cruise Control, which automatically maintains the speed set by the driver and allows him or her to take their foot off the pedal. 

The Land Cruiser Prado 2017 is still equipped with a four-cylinder in-line, 16-valve, DOHC with Dual VVT-i, 2.7-liter gasoline engine, which provides maximum output of 164 Hp and maximum torque of 246 Nm, matched with a six-speed automatic transmission and an electric transfer case, same as the previous versions, which provide seamless and strong acceleration, fuel efficiency, and smooth driving on all terrain.

To ensure maximum safety when on the road, a full package of both active and passive safety systems, such as the anti-lock brake system ABS, the electronic brake force distribution EBD, the brake assist system BA, the vehicle stability control system VSC, and the traction control system TRC, are provided, as well as seven airbags.

The Land Cruiser Prado 2017 is available in eight colors: White Pearl (070), Silver (1F7), Gray (1G3), Black (221), Pure Black (202), Red (3R3), Bronze (4V8), and Brown (2X4).

Boosting industry via M&As

There are many industrial investment opportunities in Vietnam via merger and acquisitions (M&As), Mr. Vu Ba Phu, Director General of the Vietnam Trade Promotion Agency (Vietrade), told the Industrial Investment Promotion Through M&A conference on December 19.

The provided information on investment opportunities as well as measures to improve the efficiency of industrial investment promotion via M&As and to implement Vietnam’s industrial development strategy to 2025 and vision to 2035.

Mr. Phu emphasized that Vietnam’s industry sector has seen strong performance, with the manufacturing index growing at an annual average of over 7 per cent since 2012. Industries recording significant growth in 2016 included metal production, up 17.9 per cent, motor vehicle manufacturing 16.4 per cent, and computers, electronics and related items 12.8 per cent.

Recent figures from the General Statistics Office (GSO) show that Vietnam’s industrial production continued to grow well during 2017, with the manufacturing index for the first eleven months rising 9.3 per cent year-on-year, higher than the 7.4 per cent increase in the same period of 2016.

The M&A market has witnessed many business deals with foreign parties, such as SCG Group and the Vietnam Construction Materials Company, the CJ Group and the Cau Tre Company, and the Daesang Company and the Duc Viet Food Company.

Many foreign investors now choose to invest in listed companies and have a long-term vision when investing in Vietnam. Asian investors, such as those from Japan, South Korea, and Thailand, are investing in many different fields, including consumer goods, financial services, distribution, retail, and construction materials production.

Relatively few investors are from North America and Europe, and those that are in Vietnam are primarily in consumer goods and oil and gas. Mr. Phu therefore pointed out that it is necessary to adopt measures to further promote international investment, especially from the US and Europe.

Domestic capital, meanwhile, is gradually asserting its position in the M&A market, with many local firms developing long-term strategies in which M&As are an important tool. Domestic investment funds are also growing in both number and capital, to the benefit of domestic businesses.

VIMO to provide e-payments at SASCO outlets

The VIMO Technology Joint Stock Company (Vimo.vn) has officially cooperated with the Southern Airports Services Joint Stock Company (SASCO) to launch electronic payment services for Asian tourists traveling in Vietnam.

The service allows travelers to use WeChat Pay e-wallets paid for in Vietnam dong at SASCO’s booths at Tan Son Nhat International Airport in Ho Chi Minh City via QR code scanning on mobile phones.

From January 1, Asian travelers will be able to use electronic payments in Vietnamese currency at some SASCO Duty Free stores and SASCO Shops at the international terminal. The service supports foreign customers paying with WeChat Pay electronic accounts installed on mobile phones to scan QR code codes and make payments quickly.

The advantage of QR codes is that the customer does not need to carry a wallet nor multiple cards and need not worry about their card information while making payments.

SASCO is the leader in airport services in Vietnam, with a network of duty-free shops, retail outlets, business class lounges, and food chains. “SASCO is always ahead of the trends, leveraging technology to optimize business models and bring convenience, good quality products, and competitive prices to customers,” said Mr. Nguyen Van Hung Cuong, Deputy General Director of SASCO.

VIMO e-wallet is the first payment intermediary in Vietnam to allow travelers to use WeChat Pay e-wallets paid for in VND at VIMO-accepting shops when traveling in Vietnam. It has nearly 500 stores accepting payments by WeChat Pay, including more than 50 stores of seven corporations at five international airports with direct flights to and from China.

General Director of VIMO, Mr. Do Cong Dien, believes that, in the time to come, it will expand its cooperation with even more units and shops, providing convenient payments for foreign visitors as well as boosting revenue.

Vietnam is one of the most attractive destinations in the region for Chinese tourists, with an estimated 3.5 million arrivals and turnover of nearly $3 billion in 2017. It is hoped that VIMO’s development cooperation with business units around the country will build a secure, convenient non-cash payment environment for international travelers in general and Chinese travelers in particular.

IFC & Supreme People's Court introduce arbitration and mediation guide

The International Finance Corporation (IFC), a member of the World Bank Group, and Vietnam’s Supreme People’s Court recently launched the “Judicial Manual for Commercial Mediation and Arbitration”, to assist judges in adopting a consistent and predictable approach in applying national legal regulations on arbitration and mediation-related matters, building investor trust and improving the country’s business environment as a result.

Vietnam is a signatory to many international treaties governing international trade and investment, including the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, since 1995. An international framework aimed at harmonizing international arbitration law and increasing predictability in recognition and enforcement, its application by national courts is an important reference point for foreign businesses when considering business engagements with Vietnam.

At a time when the country is accelerating its integration into the global economy, Vietnam wants to ensure consistency between its legislative and regulatory framework and international regulations on commercial dispute resolution.

The result of significant effort, the comprehensive manual interprets key legal concepts and terms, elaborating on notions that are particular to arbitration and mediation. It also explains concepts that are crucial for issues related to alternative dispute resolution. Additionally, the manual offers a how-to on applying arbitration laws in a uniform manner and offers examples to help judges draw from judicial practice in other countries that have dealt with similar issues.

“We hope this manual will serve as a practical desk guide for judges to better understand the legal regulations and apply them properly to efficiently resolve arbitration and mediation-related matters under the jurisdiction of People’s Courts,” said Ms. Nguyen Thuy Hien, Deputy Chief Justice of the Supreme People’s Court.

Introduced at a roadshow covering the three major business cities of Hanoi, Da Nang, and Ho Chi Minh City, the manual intends to serve as a reference point, helping judges apply the law consistently across courts to resolve arbitral issues with regard to new regulations in the Civil Procedural Code 2015. The code was amended to ensure consistency between Vietnam’s legislative and regulatory framework and the regime under the New York Convention.

“The rule of law and its enforcement is crucial for an improved business environment,” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos. “Businesses and investors need clarity on rights and procedures to enforce contracts in Vietnam. When something goes wrong, both parties should know what to expect from the legal and arbitration system.”

Developed in partnership with the Swiss State Secretariat for Economic Affairs (SECO), the manual will be a significant step towards making Vietnam a reliable destination for business and investment, where the rights of investors are respected and exercised fairly.

Real estate firm to recoup losses by restarting previous projects

Ninh Van Bay Travel Real Estate JSC, planned to reinvest in the Ana Mandara project in the south central city of Hoi An despite the accumulated loss of VND279.5 billion ($12.3 million) in the first nine months.

During the second quarter of 2017, the firm recorded VND296 billion ($12.9 million) in loss. As a result, the insignificant earnings in the first quarter could not recoup the whopping second quarter results, leading to an accumulated loss of VND282 billion ($12.4 million) for the first half of the year.

Additionally, Ninh Van Bay mildly recovered from the negative business performance of the first six months by scoring VND62.2 billion ($2.7 million) in total revenue and VND2.4 billion ($105,360) in after-tax profit. Nonetheless, the modest earnings could not even outperform the firm’s accumulated loss from the first three quarters, which was roughly VND279.5 billion ($12.3 million).

Planning to bounce back, Vu Ngoc Tu, CEO of Ninh Van Bay Travel Real Estate JSC, asserted, “We have drafted strategies to treat the current financial debt. Particularly, Ninh Van Bay has found the capital sources to resolve the firm’s bond loans of VND230 billion ($10.09 million).”

Tu also added that the real estate resort developer had decided to resurrect the Ana Mandara Hoi An project as part of the firm’s strategy to reduce the accumulated loss. Besides, the firm also started preparations to transfer ownership over two other resort projects, Six Senses Saigon River and Emerald Ninh Binh, with the aim of minimising the financial burden.

Specifically, Ana Mandara Hoi An, constructed in Con Bap Eco-Resort, Hoi An ancient town, has a total capital of $53.6 million, 43 per cent of which came from Ninh Van Bay. Due to the firm’s financial instability, the project’s implementation was postponed.

Likewise, the firm has finished the civil works of Six Senses Saigon River, which was previously invested with VND723 billion ($31.7 million) for the first stage of construction.

In addition, Emerald Ninh Binh has been in operation since 2011, securing a fairly stable source of clients.

Ninh Van Bay Travel Real Estate JSC specialises in developing and managing high-ranking travel real estate resorts in Vietnam with a corporate history of over 20 years in the hospitality industry.

Keppel Land to spend $300 million on prime sites in Ho Chi Minh City

Keppel Land Limited (Keppel Land) has signed sales and purchase agreements to acquire 100 per cent interest in two prime sites in Ho Chi Minh City. The total development cost of the two sites is estimated at $297 million.

According to information published on the company website, on the first site located in Saigon South, Keppel Land plans to develop about 220 landed homes and a 1,029-unit high-rise condominium. The two developments will span a gross floor area (GFA) of about 36,110 and 141,540 square metres, respectively. The total development cost, inclusive of the expenditure for land purchase, is about $235 million.

The second site is located in District 9 and borders the affluent residential enclave of District 2. Keppel Land will develop another 300 landed homes spanning a GFA of about 55,000sq.m. The total development cost for the six-hectare site, inclusive of land cost, is about $62 million.

Ang Wee Gee, CEO of Keppel Land, said, "Vietnam's housing demand is expected to continue on its upward momentum, supported by the country's young population, growing middle-class, as well as rising urbanisation.”

"The two projects will add to Keppel Land's pipeline of more than 20,000 homes in Vietnam. We will continue to leverage our experience and expertise as one of Asia's premier property companies with a strong track record of delivering well-planned, quality, and thoughtfully designed homes to meet the lifestyle aspirations of discerning homebuyers in Vietnam," Gee added.

Keppel Land sold a total of 1,010 homes in Vietnam in the first nine months of 2017, four times its performance in the same period last year. The company has received positive responses for Tilia Residences and Phase 2 of Empire City, which was launched in July 2017 and has sold more than 90 per cent of the 472 launched units by the end of September 2017.

One of Asia's premier property companies, Keppel Land, a subsidiary of Keppel Corporation, is recognised for its sterling portfolio of award-winning residential developments and investment-grade commercial properties, as well as high standards of corporate governance and transparency.

The company is geographically diversified in Asia, with Singapore and China as its core markets, as well as Indonesia and Vietnam as its growth markets.

In Vietnam, Keppel Land is one of the largest and pioneering foreign real estate developers with a diverse portfolio of properties in Hanoi, Ho Chi Minh City, Dong Nai, and Vung Tau, including Grade A offices, residential properties, retail centres, integrated townships, and award-winning serviced apartments.

HDBank raises charter capital to enter top ten banks in Vietnam

Recently, State Bank of Vietnam (SBV) has approved of Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) raising its charter capital for the second time by around $43 million, from VND8.8 trillion ($388.7 million) to VND9.8 trillion ($431.9 million), joining the top 10 Vietnam-based banks having the largest charter capital.

In early 2017, the bank was reported to have its charter capital raised for the first time by 9 per cent via dividend-paying stocks.

On the basis of the plan to separately issue shares to strategic shareholders that was approved at the annual general meeting (AGM) on October 17, the board of directors (BOD) adopted the plan to separately issue 98.1 million shares in order to increase the bank’s charter capital on November 6.

Additionally, HDBank planned to offer 20 million shares for its staff at the price of VND10,000 ($0.44) per share. The deadline for the offering is no later than the first quarter of 2018.

Throughout October and November, the bank’s AGM green-lighted a series of resolutions authorising the BOD to step up the preparation process for the listing of HDBank.

On December 4, HDBank submitted the documents to list nearly 882.9 million shares on the Ho Chi Minh City Stock Exchange (HoSE) for approval. From December 14, the bank’s shares stopped trading on the over-the-counter market (OTC) to prepare for the listing.

Likewise, HDBank expects to register its depository on the Vietnam Securities Depository (VSD) and list its shares on HoSE by the end of 2017 or in early 2018.

As of the end of the third quarter, HDBank was estimated to have total assets of VND174.6 trillion ($7.7 billion), total mobilised capital of VND156.4 trillion ($6.8 billion), and total outstanding credit balance of VND104.2 trillion ($4.5 billion).

In addition, the bank kept the proportion of bad debts under control, with the ratio of merely 1.2 per cent, which was relatively low compared to other banks. As shown in the bank’s financial statement, its after-tax profit in the third quarter mounted up to VND825 billion ($36.2 million) and the accumulated profit of the first three quarters reached VND1.5 trillion ($66 million).

Improving infrastructure and economic connectivity in northern and central provinces

The Asian Development Bank (ADB) has approved two loans with a total value of $299 million for Vietnam, according to the bank's announcement on December 18.

The first loan worth $150 million aims to improve economic connectivity and raise living standards in four of Vietnam’s northeastern provinces by enhancing basic infrastructure and services. The assistance is expected to help over 212,000 people and be completed by the first quarter of 2023. The total cost of the project is $190.3 million, including Vietnam’s counterpart fund of $40.3 million.

According to the assessment of ADB, the four provinces of Bac Kan, Cao Bang, Ha Giang, and Lang Son have significant potential to become trade hubs due to their strategic location at the nexus of the People’s Republic of China, Hanoi, Haiphong Port, and the ADB-supported Greater Mekong Subregion North-South Economic Corridor. However, these potentials are yet to be fully realised.

The project to construct basic infrastructure for inclusive growth in the northeastern provinces will help unlock the binding constraints through the development of basic infrastructure across key sectors, including trade, transport, health, and agriculture.

The project will improve road connectivity among the provinces by upgrading about 121 kilometres of provincial and 144km of district roads, provide rural water supply, benefiting 42,300 people and improving the agricultural value chain infrastructure in Lang Son province through farm-to-market connectivity and support to local businesses.

The second loan worth $149 million aims to help improve basic infrastructure services and promote inclusive and sustainable economic growth that will benefit over one million people in four provinces in the north central coastal region of Vietnam.

ADB’s assistance for the project on constructing basic infrastructure for inclusive growth in the north central provinces includes a regular loan of $52 million and a concessional loan worth $97 million. Both loans will be financed from ordinary capital resources where most of ADB’s lending come from. The total cost of the project is $203.52 million, with Vietnam contributing $54.52 million.

Economic development in the provinces of Ha Tinh, Nghe An, Quang Binh, and Quang Tri has been constrained by the fragmented coverage of basic infrastructure, with the 2015 poverty rate reaching 13 per cent compared to the 7 per cent national average. Moreover, the provinces are extremely vulnerabile to weather-related disasters and are predicted to have the country’s highest increase in annual mean temperature at 1.7 per cent and annual rainfall shooting up by 20 per cent.

To address these issues, the project will improve connectivity among the provinces by upgrading and constructing about 214km of climate-resilient provincial and district roads which will benefit more than 900,000 beneficiaries. It will boost business development through the construction and upgrading of rural water supply, flood protection, irrigation, and port services.

AEON MALL Haiphong project to be kicked off in second quarter of 2018

Japanese shopping mall developer AEON MALL, the investor of AEON MALL Haiphong in collaboration with the Haiphong People’s Committee, has accelerated completing the procedures in early 2018 so that the construction can be started in the second quarter.

At the working session with leaders of the Haiphong People’s Committee, Iwamura Yasutsugu, general director of AEON MALL Vietnam, affirmed that the company signed a contract in principle with Viet Phat Import-Export Trading JSC to develop the project which is expected to create about 2,000 new jobs for locals.

Yasutsugu urged the Haiphong People’s Committee to accelerate the site clearance so that the construction can be implemented on schedule. 

The city will complete the site clearance this month, simultaneously completing the approval of procedures in January 2018. In addition, the city is accelerating the construction of transport infrastructure, including the Ho Sen-Cau Rao 2 Route in 2019, before Aeon Mall Haiphong comes into operation.

Earlier in September, AEON MALL Vietnam signed a memorandum of understanding (MoU) with Haiphong Investment-Trade-Tourism Promotion Centre to develop the project.

Under the agreement, AEON MALL Vietnam will invest, build, manage, and develop an integrated shopping mall and provide related services, including catering, amusement parks for children, as well as rental space, counters, and shelves, all constructed, installed, and decorated.

The $180-million (approximately VND4 trillion) facility covers an area of 9.3 hectares at the Ho Sen-Cau Rao 2 Route and will be the company’s third shopping mall in the north and the sixth one in Vietnam.

Scheduled to come into operation in 2020, the Haiphong mall is expected to attract over 13 million visitors every year from Haiphong and the surrounding provinces, such as Quang Ninh, Hai Duong, Thai Binh, and others. The mall will not only be a place to improve shopping convenience for customers, but also a multi-purpose complex and a place for cultural and social activities for all ages, with many integrated entertainment and educational facilities.

Reviving Vietnam-Laos investment

Vietnamese and Laotian authorities are making efforts to remove obstacles facing inbound Vietnamese investment into Laos.

Nguyen Dinh Ba, Minister-Counsellor from the Vietnamese Embassy to Laos, told VIR that the Vietnamese and Laotian governments are working to analyse obstructions for Vietnam’s investment flows into Laos.

“Vietnam’s investment into Laos is slowing down, after a strong increase in the 2005-2010 period,” Ba said. “One of the key reasons is that many big projects in Laos have already been implemented by Vietnamese firms. Currently there are not many big projects that Vietnamese firms can do in Laos.”

Recently the Vietnam-Laos 2017 co-operation plan agreement was signed by the two governments, which stipulates that the countries will assign ministries to work to remove obstacles facing Vietnamese projects in Laos.

According to the Laotian Ministry of Planning and Investment, Vietnam currently has 409 valid investment projects in Laos, registered at about $3.6 billion, of which $1.5 billion has been disbursed.

The projects include nine hydropower projects, 47 mining projects, and 26 projects on planting industrial trees, which will yield 70,000 hectares of rubber.

According to the Association of Vietnamese Investors in Laos, over the past five years, Vietnam’s registered investment capital in Laos has climbed by 55 per cent, and the number of Vietnamese projects in its western neighbour has also increased by 40 per cent.

In 2015 and 2016, Vietnamese registered investment into Laos slowed to about $100 million. In 2016, three projects with a registered capital of $6.3 million were licensed, occupying 4.7 per cent of the total 63 foreign projects invested in Laos, and only 1.69 per cent of total foreign direct investment (FDI) that Laos attracted.

In this year’s first 10 months, only two new projects were licensed, registered at $12.86 million.

In 2010, Vietnam was Laos’ largest FDI investor. But its rank fell to third in 2016 and may drop to fourth in the time to come, according to the association.

“Many projects have produced profits, and positively contribute to the two countries’ development, generate employment, and do a very good job in contributing to ensuring the social security of Laos,” said Vietnam’s Party Central Committee’s Commission for External Relations in a document on Vietnam-Laos co-operation.

The key Vietnamese investors include Vietnam National Chemical Group (Vinachem), Hoang Anh Gia Lai Group, Viettel, Petrolimex, BIDV, and Long Thanh Golf Investment and Trading JSC.

Unitel, a joint venture established in October 2009 between Viettel and Lao Asia Telecom, occupies over 53 per cent of Laos’ telecommunication market share.

Vietnam’s biggest investment project in Laos, a $522.46 million project exploiting and processing potassium salt, began construction last year. Invested by Vinachem, the project will use potassium salt as material to produce potassium fertiliser.

One year ago, Vietnam’s Hoang Anh Gia Lai Group inaugurated the $36 million Attapeu International Airport in Laos’ southernmost province of Attapeu.

According to the Commission for External Relations, the two governments have also inked a deal on developing hydropower projects in Laos, and Laos will sell electricity to Vietnam.

Investment and trade between Vietnam and Laos are also expected to see new currents. A large catalyst will be the official friendship visit to Vietnam of Laotian Party General Secretary and State President Bounnhang Vorachith and his spouse from December 19-21.            

The visit follows an invitation of Vietnamese Party General Secretary Nguyen Phu Trong and his spouse, and Vietnamese State President Tran Dai Quang and his spouse.

The commission said that the visit, Vorachith’s second to Vietnam, is aimed at “reaffirming Laos’ consistent foreign policy in its relationship with Vietnam, with special importance attached to further maintaining and strengthening the great relationship and special solidarity, and the comprehensive co-operation between Vietnam and Laos.”

Leaders will discuss solutions to further deepen the two countries’ political, trade, and investment co-operation. A joint statement will be released.

Two-way trade turnover hit $720.4 million in this year’s first 10 months, up 8.7 per cent year-on-year. Vietnam exported $462.2 million worth of goods to Laos, and spent $294.2 million buying goods from Laos.

JCCI opposes rules on used machinery

A draft amendment of the Ministry of Science and Technology’s Circular 23 on the required quality of used machine imports has come under fire for not amending the ‘rigid regulations’ which place difficulties on enterprises.

At last week’s Vietnam Business Forum (VBF) and at a meeting between Government Office Chairman Mai Tien Dung and the Japanese Chamber of Commerce and Industry (JCCI), the chamber called the draft amendment of Circular No.23/2015/TT-BKHCN on the required quality of used machine imports “a step backwards”. It is because used machinery in investment projects no longer receive exemptions from the age requirements, as set forth in the original draft of Circular 23, which aims to encourage businesses to renovate technologies.

The chamber explained that given the overall policy of attracting foreign investment, along with the purpose of environmental protection, these new regulations are impractical in Vietnam, where there are already established standards to manage and supervise the impact of imported machinery.

There are three proposed options in the draft for requirements for used equipment in investment projects. Firstly, the age of the main part of technological lines does not exceed 20 years. Secondly, the age of the main parts of a production line does not exceed 10 years. Lastly, the quality of the main units is from up to 75 per cent.

The equipment is manufactured in accordance with either a national technical regulation, such as Vietnam Standards, or the standards of the G7 countries (a grouping consisting of the seven largest advanced economies in the world) with regard to safety, energy saving, and environmental protection.

However, JCCI complained that there may be a lack of consistency in determining which units are the ‘main parts’ of a given production chain. This designation may not be applicable to the import of a single piece of machinery, and the ability to determine the remaining age would be difficult if the criteria and standard to define such age are not clearly set out.

Regarding the third proposed option, the ability to determine the remaining value would also prove to be a burdensome process as it is dependent on the evaluation of each testing agency, and such assessment may not be consistent if the criteria and standard to define the remaining value are not transparent.

Deputy Minister of Science and Technology Pham Quy Duong responded to JCCI’s objections by saying, “We welcome ideas from business associations – in developing countries the criteria for technology are applied commonly, not for the age limit of the equipment. The purpose of this rule is to put a restraint on the importation of poor-quality secondhand machineries and equipment.”

In addition, JCCI also said that the draft’s two-stage application process is both burdensome and risky for enterprises, creating uncertainty amongst applicants.

During the initial stage of applying for an investment decision or investment registration certificate (IRCs), investors must provide a list of used equipment in order to receive age and quality exemptions. Nonetheless, the Ministry of Science and Technology (MoST) does not make final decisions at this stage, instead simply providing preliminary comments to the application.

While the draft is not entirely clear on this point, it is understood that the licensing authority only grants IRCs if the MoST’s preliminary comments are positive, which is to say that the importation of used machinery as listed in an application dossier is accepted.

The final decision is only made during the second stage, 30 days before the importation, when the investors submit a subsequent dossier to the MoST. At this stage, the ministry is still able to refuse importation.

“We propose combining the two stages into a single-stage application process, the MoST will make its final decision before or during the investment decision/IRC application process. This is critical for the investment licensing authority to approve an investment project, also for the investor to decide if it will go through with the investment or not,” JCCI stated in a document.

Echoing this view, the Vietnam Chamber of Commerce and Industry also suggested reducing the importation procedures for machinery, as well as applying quality criteria for the remaining equipment instead of simply an age limit for used machines.

Formosa to pour additional $250 million into Vietnam factory

Formosa Plastic Group, through its five subsidiaries, intends to pour an additional $247.88 million into the existing $10.6 billion Formosa Ha Tinh Steel complex, to increase its capacity to seven million tonnes of steel.

The investment aims to replenish Formosa Ha Tinh Steel’s operating capital, which plans to raise $500 million in the second instalment of its on-going capital injection project, according to Taipei Times.

Four of the group’s members are Formosa Plastics Corp, Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp., and Formosa Petrochemical Corp.—each holding an 11.43 per cent stake in the Vietnamese unit.

Each company is to pay about $57.17 million in the second instalment, in accordance with their shareholdings. Meanwhile, Formosa Taffeta Co., the group’s textile affiliate which holds a 3.85 per cent stake, also plans to invest $19.23 million in Formosa Ha Tinh Steel.

At the moment, the investments are awaiting approval from the board of directors of each company.

In May this year, the first blast furnace of Formosa Ha Tinh Steel came into operation with an annual capacity of 3.5 million tonnes. The second one is expected to become operational in March 2018, increasing the total capacity of the plant to seven million tonnes.

In related news, the company is expected to implement a dry coking system by 2019 that will replace the current wet coking system, which is cheaper but creates more debris.

Formosa is notorious for its environmental incident last year. Notably, in April last year, the nearly $10.6-billion Formosa Ha Tinh Steel plant leaked toxic waste that polluted more than 200 kilometres of Vietnam’s coastline, devastating sea life and local economies dependent on fishing and tourism.

Four months later, the Taiwanese company owned up to its mistake, offering a public apology and pledging $500 million as compensation for affected fishermen, households, and organisations.

Local authorities announced that the firm had corrected 52 out of the 53 operational faults that led to the environmental disaster.

Besides, one day after the firm piloted its first blast furnace, a lime kiln dust filter explosion occurred due to a broken fabric filter. It was lucky that the incident had very little impact on the pilot operation of the factory and the giant steel complex has been under strict governmental supervision since the environmental disaster last year.

HR lessons of ‘Miracle on Han River’

Vietnam and South Korea will continue to reinforce co-operation in human resources training in the Industry 4.0 era to bring the ‘Miracle on the Han River’ to the Red River.

At last week’s South Korea-initiated Global HR Forum 2017, held in Vietnam for the first time, more than 300 Vietnamese and South Korean government officials, business leaders, startup entrepreneurs, and university representatives talked human resources (HR) exchanges and training co-operation between Vietnam and South Korea in the age of Industry 4.0.

During the two-day event, titled “Miracle on the Han River to Miracle on the Red River,” experience and lessons about the so-called ‘Miracle on the Han River’ – which helped develop South Korea from a poor nation in the late 1950s into a leading Asian economy from the 1990s – were also shared.

As part of the forum, Vietnam and South Korea shared visions in co-operatively cultivating talents to serve the requirements of the Industry 4.0 era.

At the event, Vietnamese Minister of Education and Training Phung Xuan Nha said that HR plays a key role in a country’s socio-economic development. In the Industry 4.0 era, Vietnam is facing new challenges in its HR development.

“Vietnam is hoping to gain from the experiences of developed countries, including South Korea, to improve our HR quality,” Nha said. “HR development is considered a breakthrough measure to leverage economic development and growth quality.”

Korean Minister of Education, Kim Sang-kon, hoped that the forum would provide an opportunity for the two countries to discover measures to make education and training co-operation more practical, while strengthening ties in economy, culture, and society. 

During last week’s Global HR Forum in Vietnam 2017, the nations jointly debuted a new educational platform, which enabled in-depth discussion of policy development in cultivating HR and exchanges.

According to Dr. Yoon Dae-Hee, former Minister of Policy Co-ordination of South Korea, Vietnam is facing challenges related to rising labour costs and an ageing population, as well as an insufficiently-skilled workforce. Workforce quality is becoming more important, and higher education is needed for the transition to a high-end economy.

“Policy suggestions for the economic development of Vietnam are to increase overall labour productivity by matching skills and labour market needs, raising higher education completion rates, and introducing creativity-centred education programmes,” he said.

For the ‘Miracle on the Han River’, South Korea gained ground thanks to various strategies that the country implemented in HR development. During this time, GDP per capita rose from $67 in 1953 to $20,795 in 2006, while export value ascended from $120 million in 1964 to $495.4 billion in 2016. 

According to experts, to realise ‘The Miracle on the Red River’, training and improving the quality of HR must come with breakthrough changes and accelerated speed, with universities playing an important role. 

The event’s presenters spoke on the impressive effects of a quality workforce – taking the stage were luminaries such as Nguyen Xuan Cuong, vice chairman of the Vietnam Digital Communications Association, Trinh Minh Giang, chairman of Venture Management Consulting Group, and Nguyen Thanh Nam, vice chairman of FPT University.

Jointly organised by Vietnam’s Ministry of Education and Training (MoET), the Ministry of Education of South Korea, and the Korea Economic Daily, the event marked the 25th anniversary of formal diplomatic relations between the two countries.

After establishing diplomatic ties in 1992, the connection between Vietnam and South Korea has strongly deepened, with a number of agreements signed since 2007, including several in education and training.

In the latest agreement signed between MoET and the Ministry of Education of South Korea in March 2017, Vietnam sent 26 teachers to South Korea from April to June, and South Korea sent 34 teachers to Vietnam from September to December.

By the end of February 2016, Vietnam had 8,293 students enrolled in schools in South Korea, making up 7.8 per cent of the country’s 96,357 overseas students, just behind China.

In addition, South Korea is now Vietnam’s biggest foreign investor, with $57.5 billion worth of registered capital as of November 2017.

PENM Partners backs Masan’s consumer growth strategy

Privately-held Masan Group today announced that PENM Partners, a private equity fund with one of the most successful track records of investing in growth companies in Vietnam, will acquire up to 2 per cent of the secondary shares in its member unit Masan Nutri-Science Corporation in the open market.

Separately, PENM will invest $16 million to acquire secondary shares representing a 0.8-per-cent equity stake in Masan Nutri-Science Corporation (MNS) from Masan Group, valuing MNS at $2 billion.

“We strongly believe in Masan’s long-term consumer growth fundamentals and strategy. In particular, we are excited about its prospects to consolidate a fragmented and unbranded meat sector by providing Vietnamese consumers safe, traceable, and affordable meat products,” said Hans Christian Jacobsen, managing partner of PENM.

“Ten years ago, we invested in Masan due to our belief that they were on the verge of transforming and consolidating the fish sauce market. We see a similar story starting to play out, but in a $9-billion meat category which is 30 times larger than the fish sauce market. In addition, I am confident that the operational investments across its platform in 2017 will be validated by Masan’s 2018 financial performance,” Jacobsen added.

Masan Nutri-Science is on track to launch its branded fresh meat product by the fourth quarter of 2018 with the commissioning of its farm and meat complex.

Danny Le, head of Strategy and Development at Masan Group and vice chairman of Masan Nutri-Science, stated, “PENM has been a partner to Masan at each growth stage. I look forward to working alongside PENM to deliver on and execute our 2020 growth action plan as we focus on building out a champion portfolio of packaged F&B, meat, and financial services products.” 

PENM will also sell its non-voting preference shares in Masan Resources to Masan Horizon, a wholly-owned subsidiary of Masan Group, for a total cash consideration of $22.9 million, approximately equivalent to PENM’s investment.

Masan Group’s ownership in Masan Resources (including the non-voting preference shares) will increase from 93.8 to 96 per cent post acquisition.

The acquisition is consistent with Masan Group’s strategy to gain full flexibility and raise strategic growth capital for Masan Resources to become an industrial tungsten processer.

Masan Resources is expected to generate strong cash flows over the next few years due to an uptrend in tungsten prices, pay-down of long-term debt, and development into a global player in the tungsten value-added processing industry.

In December, Masan Group has also repaid its $30 million convertible loan originally lent by Goldman Sachs, effectively reducing its fully-diluted share count by an additional 13.6 million shares on an as-if-converted basis. This follows the company’s recent buyback of 100.7 million treasury shares.

The transactions detailed above are subject to customary corporate and regulatory approvals.

Masan Group’s member companies and associates are industry leaders in meat, packaged food and beverage, and financial services products, altogether representing segments of the Vietnamese economy that are experiencing the most transformational growth.

Vietnamese orchid farmer thrives on arid land

A young local farmer has created a thriving orchid business in one of the driest provinces in Vietnam.

The brave 33-year-old, Phan Thanh Sang, has created new career paths for people in Ninh Thuan Province, on the south-central coast of Vietnam.

The mountainous area of land he calls his own is half-covered by forest, which makes cultivation challenging.

In addition, the province is considered one of the most arid areas in Vietnam, experiencing several droughts per year, making it far from the best place to start an orchid farm.

However, despite the conditions, Sang has not been discouraged from investing in the area and making a change.

Sang’s business – YSA Orchid Farm – currently consists of three high-tech farms with a total land area of more than 10 hectares, and is valued at VND70 billion (US$3 million).

Two of the farms are located in Lam Dong Province, however, the most notable one is in Ninh Thuan.

“I developed the orchid plantation in Ninh Thuan to create new jobs for people in the area. Each area has its own advantages. I just wanted to provide people there [Ninh Thuan] with a new approach, new opportunities,” the pioneer explained.

In Ninh Thuan, Sang chose to plant moth orchids.

Every nine to 12 months, his orchids are taken to Da Lat City in Lam Dong, in the Central Highlands region of Vietnam, where it is cold enough for orchids to flourish.

In 2006, when Sang was still a university student, he bought a small orchid garden and began gaining experience.

Upon his graduation from the agriculture faculty of Da Lat University, Sang borrowed VND200 million (US$8,780) from banks to fund his ambitious startup.

He began by investing in a laboratory to breed new orchids.

“I took it [the business] step by step, all by myself so as to develop sustainably. The places where I grew the flowers, I allowed people to come and learn,” the YSA Orchid Farm owner said.

“If one takes the right path, has the right approach, and is determined and hardworking, they will succeed. It is not about sitting around and waiting for projects to come to you.”

Annually, YSA Orchid Farm provides the market with thousands of orchids and has annual revenue of over VND20 billion (US$878,000), with more than 60 employees.

As a delegate of the Da Lat Flower Association, Sang was honored to participate in the Eleventh National Ho Chi Minh Communist Youth Union Congress that began on December 10 in Hanoi.

But Sang was not there just as a delegate.

Sang had arrived in Hanoi a few days in advance along with 600 moth orchid flower pots, 1,000 branches of monkara orchids and other decorations representative of Ninh Thuan to decorate the event.

The 33-year-old has become well-known for his innovative and pioneering approach.

Heeding Prime Minister Nguyen Xuan Phuc’s suggestion that “every young person is a startup warrior,” Sang is one of those living up to the idea, and even though his success is already undeniable, the young founder has more goals.

“I have a successful startup, but I still have to reach out to foreign countries, or at least spread the startup spirit to the local community so that other people can accomplish what I have,” he said.

Work begins on VND200 billion fruit and veg processing plant in Son La

Nafoods Tay Bac JSC broke ground on a fruit and vegetable processing plant in Moc Chau district, northern Son La province on December 19.

The plant will be built on a 2ha plot in the Bo Mun Industrial Zone, Moc Chau District with an investment of VND200 billion over two phases of construction. It is expected to come into operation in September 2018.

Equipped with modern facilities, the plant will have a daily processing capacity of 120 tons of passion fruit and vegetables. This production increase will lay the foundation for Son La passion fruit and other farm produce to gain a firm foothold in the domestic market and spread to demanding markets like the EU and America.

After two years of cultivation, Nafoods Northwest Company has established nearly 700ha of passion fruit crops and is expected to raise the size to 5,000ha by 2021.

According to Nguyen Van Anh, CEO of Nafoods Northwest Company, the achievements of being certified by Global G.A.P and completing the export of their first 3 tons of passion fruit to France and Switzerland are considered a passport for the fruit to conquer the world’s most demanding markets.

This is a big event not only for Son La province but also for Vietnam’s agriculture on a grand scale, said Mr Van Anh.