Russian petroleum giant sets up $1bn joint venture in Vietnam

Russian petroleum giant Gazprom and state-run petroleum conglomerate PetroVietnam have founded a joint venture, PVGazprom Natural Gas for Vehicles, according to the discussion points of a meeting between a Gazprom official and Ho Chi Minh City authorities on Tuesday.

The US$1billion joint venture, specializing in producing engines fueled by compressed natural gas (CNG) in Vietnam, was granted the establishment license by the local Department of Planning and Investment on September 24.

As the joint venture is now developing a production plan, it is keen on active support from the relevant state agencies of Ho Chi Minh City, Kovtun Andrey, chief representative of Gazprom International, a subsidiary of Gazprom, told city chairman Le Hoang Quan during the meeting.

The company is completing the construction of its main production plant and other functional facilities, including fuel distribution stations in the southern region, Andrey said.

Talking with Tuoi Tre (Youth) newspaper, the representative of Gazprom International said the joint venture will base its Vietnam office in the southern economic hub to promote cooperation between Gazprom and PetroVietnam, and between Russia and third parties in the region.

It is expected that the office will be officially put into operation next month, he said.

Currently, cooperation in oil and gas projects between Russia and Vietnam is advancing, and Russian corporations are looking to expand into related fields like fuel and liquefied gas distribution in Vietnam.

Also at the meeting, chairman Quan said the city welcomed foreign-invested energy projects, particularly in clean energy production, as according to the strategic development of the municipal transport sector, by 2020 all city buses will use CNG-powered engines.

The establishment of the 50:50 joint venture dates back to November 2013, when Alexey Miller, chairman of the Gazprom Management Committee and Do Van Hau, president and CEO of PetroVietnam, signed an agreement in the presence of Russian President Vladimir Putin and Vietnamese President Truong Tan Sang in Hanoi, according to Gazprom’s press release.

The creation of PVGazprom Natural Gas for Vehicles became a practical step in implementing the agreements previously achieved with the Vietnamese authorities on using natural gas as a vehicle fuel, according to the press release.

The southern region of Vietnam will be a starting point for the project, of which natural gas from the Nam Con Son basin fields and associated petroleum gas from the Cuu Long basin fields will be conveyed to Nam Con Son Terminal and Dinh Co gas processing plants near Vung Tau for treatment and subsequent liquefaction, Gazprom said in the press release.

Afterward liquefied natural gas will be transported to Ho Chi Minh City by methane carriers.

After the regasification process, which converts liquefied natural gas back to natural gas, CNG will be delivered to filling stations across Vietnam.

German press spotlights Vietnam economic liberalisation efforts

The German online newspaper Deutsche Welle-DW highlighted Vietnam’s efforts to promote economic liberalisation and attract more investors in an article on October 10. 

The article began with the opinion that relations between Vietnam and Germany have recorded fruitful development recently. 

It said that 2015 witnessed high-ranking visits from both nations’ leaders. German Parliament President Norbert Lammert visited Vietnam earlier this year and Vietnamese State President Truong Tan Sang is scheduled to visit Germany later in the year. 

While assessing Vietnam’s development, the article stressed that Vietnam has been growing between 7 and 8 percent per year since its 30-year reform process began. The country also fulfilled its target of an average income per capita of 1,000 USD in 2009.  

Over the last two years, Vietnam’s economic growth has remained high, 6 percent per year, in spite of the impacts of the global economic crisis, the article said. 

To promote national economic development, the Vietnamese Party and Government are carrying out an appropriate economic strategy, the article argued. It focused on Vietnam’s foreign trade policy, especially because Vietnam completed negotiations of the EU-Vietnam Free Trade Agreement (EVFTA) and the Trans-Pacific Partnership (TPP) agreement in 2015, and an ASEAN Economic Community (AEC) will be formed by the year’s end. 

Vietnam was becoming a crucial part of the largest regional trade agreements, it said.

Regarding economic links between Vietnam and Germany, the article cited Bjoern Koslowski, Vice President of the German Chamber of Industry and Commerce (AHK), affirming that free trade agreements Vietnam signed with its partners brought various benefits to the country.

Vietnam’s investment climate was one of the best ones in ASEAN, which was very attractive to German businesses seeking to invest, Koslowski said, adding that Vietnam’s economy would reap more gains if it develops a workforce and managers with high professional skills, and fights corruption more effectively. 

In its conclusion, the article gave comments on Germany Foreign Minister Frank-Walter Steinmeier’s upcoming visit, stressing that this would create an impulse to improve Vietnam and Germany’s economic ties, as well as deepen political trust.

Total Viet Nam to invest $13.4m to HCMC

Oil and gas company Total Viet Nam has planned to increase its investment capital by VND300 billion (US$13.4 million) in Ho Chi Minh City.

The information was released at a meeting between the Deputy Chairman of the municipal People's Committee Tat Thanh Cang and the General Director of Total Viet Nam Arnaud Guichard on October 20.

The raising capital is a part of a transformation licence to become a 100 per cent foreign capital company of Total Viet Nam, a plan submitted in July 2015.

Arnaud Guichard hoped that his company would receive more support from the city's leaders to complete investment permission in Viet Nam.

Cang said the city would create best conditions for Total Viet Nam to finish the legal documents for its transformation licence.

Currently, Total Viet Nam's oil manufacturer in District 7, Ho Chi Minh City, has a filling productivity of 2 million gas barrels per day. The company is carrying out procedures for extension of the right to use the land for long term investment and production purposes.

Total Group is the one of the largest French oil firms with operations in 130 countries. The group's first half revenue in 2015 was US$87 billion and profit after tax was US$5.5 billion.

SSI reports higher profit despite lower revenue in Q3

Saigon Securities Inc has reported lower revenues but higher profits in the third quarter.

Sales was down 16.88 per cent to VND354.35 billion (US$15.8 million), and profit before tax was 10 per cent up at VND267.55 billion ($11.9 million).

Turnover from institutional trading reached VND114.3 billion ($5.1 million) in the period, declining 42 per cent was due to the lower trading liquidity in the quarter.

The firm estimated consolidated profit for the first nine months was VND768 billion ($34.28 million).

SSI said concerns over foreign exchange rates, declining oil prices, and the Trans-Pacific Partnership (TPP) negotiations brought trading down in the third quarter, which hit revenues.

However, there were many M&A deals and private placement of securities, leading to an increase in revenue from investment banking and advisory services. The company expects private placement activities to continue to rise in the fourth quarter.

During the quarter SSI sold its shares in Long An Food Processing Export Joint Stock Company and reduced its stakes in Binh Thanh Import – Export Production and Trade Joint Stock Company and Transimex – Saigon Corporation.

A spokesperson said SSI has become the first company in the country to complete procedures to abolish the foreign ownership cap, which would bring more development opportunities.

SSI maintained its position as the top brokerage on both the HCM Exchange (HOSE) and Ha Noi Stock Exchange (HNX), with market shares of 13.45 per cent and 10.04 per cent.

The spokesperson said the company is on course to achieve its business targets this year.

Ho Chi Minh City to host first agricultural festival

An agricultural festival to be held from October 23-29 in HCM City will offer farmers and farm businesses to interact with scientists, exporters and importers.

The festival, to take place at Gia Dinh Park, is the first of its kind in the city.

Many farmers from the Cuu Long (Mekong) River Delta provinces and cities and from HCM City's districts will attend, as well as businesses working in agricultural processing and export and import. Artisans and handicraft associations will also participate. 

The festival will feature 500 booths on agricultural achievement, including information on seedling trees, urban agricultural products, and machinery and equipment used in processing agricultural and handicraft products. At least 100 booths will sell essential products for farmers.

Jointly organised by the Supporting Centre for Farmers and Rural Areas, the Viet Nam Farmers Union and the HCM City Farmers Association, it will also include bonsai and orchid competitions and a shopping festival featuring special handicraft wood and stones, porcelain and pottery products.

A seminar about the Trans-Pacific Partnership on modern production and marketable of farm produce will also be held for farmers, Le Thi Thanh Huong, director of the Supporting Centre for Farmers and Rural Areas, said at a press conference in HCM City on Monday.

The event will offer opportunities for participants to exchange information on agricultural production, technology transfer and enhance trade promotion, she said.

VND3.5 trillion to be provided for cement plant in Ha Nam

The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) on October 21 signed a credit contract with Thanh Thang Cement Corporation for the construction of the second line of its cement plant in the northern province of Ha Nam.

As outlined in the contract, BIDV will provide VND3.5 trillion (over US$156.9 million) to the project which requires a total investment of over VND4.8 trillion (over US$215.2 million).

The production line will have a capacity of 6,000 tonnes of clinker residue per day, equivalent to 2.3 million tonnes of cement per year.

Covering an area of 56.8 hectares in Thanh Nghi commue, Thanh Liem district, the project is expected to be put into operation in 2017.

The project for construction of the Thanh Thang cement plant was added to the government’s plan for the cement industry in Vietnam during the 2011-2020 period with orientations towards 2030.

With a modern and environmentally friendly manufacturing line, Thanh Thang cement plant has committed to providing high-quality products, meeting the high demand of the construction sector.

Once it is put into operation, the plant is expected to create jobs for more than 1,000 local people and contribute over VND100 billion (nearly US$4.5 million) to the State budget.

Vietnam contracts to export 5.7 mil. tons

Member companies of the Vietnam Food Association (VFA) had contracted to export nearly 5.7 million tons of rice by the end of September.

A VFA report shows commercial contracts account for more than 81% of the total volume while government-to-government (G2G) deals make up the remainder.

Vietnam had shipped abroad 4.34 million tons of rice worth over US$1.8 billion as of October 8. Therefore, the remaining 1.3 million tons already secured by VFA members will be delivered in the coming time. 

As of September 30, VFA member firms had had 1.6 million tons of rice in stock, including 125,500 tons at Vietnam Northern Food Corporation (Vinafood 1), 544,800 tons at Vietnam Southern Food Corporation (Vinafood 2) and 916,500 tons at other enterprises. 

The signing of more rice export contracts, particularly G2G contracts, in recent months, has helped lift domestic prices.

Ngo Ngoc Yen, director of Yen Ngoc Company in HCMC, said the buying price of unprocessed IR 50404 rice in Ba Dac wholesale market in Tien Giang Province stands at VND6,600-6,800 per kilo, up VND200-300 compared to earlier this week. It is VND500-600 per kilo higher than the levels before Vietnam won a G2G contract to supply 450,000 tons of rice for the Philippines on September 17.

The price of fresh IR 50404 paddy in the Mekong Delta region has risen by VND200 per kilo to VND4,600-4,700.

Yen said exporters have reduced rice purchases and that only businesses in need of rice for deliveries have to acquire the staple food as prices stay high on the domestic market now. 

Enterprises in the Mekong Delta now quote the price at US$355-365 per ton for 5% broken rice and US$335-345 per ton for 25% broken rice, nearly unchanged from early this week.

SCIC: ROE high at many listed firms with State holdings

The State Capital Investment Corporation (SCIC) said 40 listed enterprises with State capital managed by the corporation have reported an average return on equity (ROE) of 17.2%.

SCIC reported at its tenth anniversary celebration in Hanoi on Monday that many of the enterprises have paid high dividends and beaten revenue and profit targets for years.

Of the listed firms, the ROE of Vietnam Dairy Products Joint Stock Company (Vinamilk) had reached 39% as of the end of September.

The ROE of other listed companies with State ownership represented by SCIC was 30% at Binh Duong Mineral and Construction Joint Stock Company, 32% at Lam Dong Pharmaceutical Joint Stock Company, 31% at DHG Pharmaceutical Joint Stock Company, 37% at Tien Phong Plastics Joint Stock Company, 31% at FPT Corporation, 30% at Binh Minh Plastics Joint Stock Company, and 46% at Ha Giang Mineral and Mechanics Joint Stock Company.

Vinamilk, Tien Phong Plastics Joint Stock Company, FPT Corporation, Binh Minh Plastics Joint Stock Company and Ha Giang Mineral and Mechanics Joint Stock Company are among the 10 enterprises where the State will sell its shares. SCIC is allowed to divest State holdings at these enterprises and send divestment plans to the Prime Minister for approval.

SCIC said at the ceremony that by September 30 the corporation had had 283 representatives to oversee State holdings totaling VND17 trillion at 230 businesses. The figure excludes the investments assigned by the Prime Minister.

SCIC has assigned 11 staff as representatives at the enterprises and take up some senior positions there.

All of the 19 enterprises ranked in Group A1 of SCIC had been profitable by September 30. They accounted for 6.53% of SCIC’s entities but made up 54% of the total investment portfolio managed by the corporation.

Voters care about FTA impact on agriculture

Voters have paid much attention to the possible impacts of free trade agreements (FTAs) on agricultural development, especially livestock, according to a report on voters’ opinions presented to the National Assembly (NA) on October 20.

Voters have attended to such impacts as Vietnam has signed many bilateral and multilateral FTAs in recent years. Earlier this month, trade ministers of Vietnam and 11 other Pacific Rim countries clinched a deal to conclude negotiations over the Trans-Pacific Partnership (TPP).

Presenting the report before the legislative body, Nguyen Thien Nhan, president of the Central Committee of the Vietnam Fatherland Front, said voters want the Government to issue more policies to increase the quality and competitiveness of agricultural products and lower production cost in the sector.

The Government should draw up viable plans to support livestock cooperatives, enterprises and farms to get access to capital sources to expand and modernize production and promote their products. Producers of animal feed need assistance to reduce dependence on imported materials, according to the report, which reflects 4,500 opinions and petitions of voters nationwide.

Voters also complain about the low price and oversupply of rice and are not satisfied with annual programs to buy rice for storage as this is just a situational solution and cannot help push up the price of the staple food.

Vietnam exported over 4.3 million tons of rice worth some US$1.95 billion in the first nine months of this year, down 9.12% in volume and 14.3% in value against the same period a year earlier. The export price of 5% broken rice has slid to US$355-365 per ton, US$15, US$25 and US$40 per ton lower than those of India, Pakistan and Thailand respectively. 

According to NA Economic Committee chairman Nguyen Van Giau, the agricultural sector is expected to grow by 2.9-3.1% this year compared to a 3.49% rise of last year.

Talking about the TPP, Prime Minister Nguyen Tan Dung said member states were of the opinion that the comprehensive trade pact consists of high requirements but has balanced benefits for all.

During negotiations, the Government had always observed policies on international integration in accordance with relevant resolutions and specific instructions of the Politburo. Other TPP countries respect Vietnam’s political system and provide Vietnam with a suitable road map to implement the TPP.

Vietnam achieved desired results for the TPP, according to the Prime Minister.

TPP member states will continue conducting necessary procedures for the agreement to be signed late this year or early next year. The pact is expected to come into force in mid-2017 or early 2018.

Dung said the TPP would create many opportunities for Vietnam, especially exports and foreign investment attraction but would pose challenges as well.

According to PM Dung, whether Vietnam can implement the TPP successfully or not depends very much on efforts of enterprises and the competitiveness of the local economy.

Siemens eyes Vietnam transport projects

German technology firm Siemens AG is seeking to supply solutions and equipment for transport projects in Vietnam, including Metro Line No. 2 in HCMC.

Joe Kaeser, president and CEO of Siemens AG, talked about the company’s plan at his meetings with Vietnamese officials during his business trip to Vietnam last week.

Kaeser’s first visit to Vietnam aimed to strengthen and promote cooperation with Vietnam, which is described by the group as one of the most dynamic economies in the world, according to Siemens Vietnam.

At the meeting with Deputy Minister of Transport Le Dinh Tho, Kaeser expressed the company’s interest in supplying technical solutions and equipment to the second metro line in HCMC.

The HCMC government is now seeking approval to revise up the cost of its second metro line from around US$1.37 billion to US$2 billion after foreign lenders have agreed to provide an extra US$725 million. The metro line’s investor, the HCMC Management Authority for Urban Railways, started building the control building and auxiliary works at Tham Luong station for this 20-kilometer line early this year.

Apart from the metro line project, Siemens is looking for the ministry’s backing to bring its environmentally friendly hybrid bus technology and integrated transport solutions for major cities in Vietnam. 

In mid-2013, Siemens Vietnam and Vietnam Motors Industry Corporation (Vinamotor) completed their first energy-saving bus prototype using the Siemens hybrid technology for test run in Vietnam. The first prototype of the hybrid-drive bus was the fruit of months of close collaboration between the two sides.

At his meeting with Prime Minister Nguyen Tan Dung, Kaeser stressed Siemens’ commitment to expanding its operations in this market.

The Prime Minister hailed Siemens’ contribution to Vietnam’s economy and expected the company to further assist Vietnam in improving energy infrastructure, mobility, healthcare, vocational education and training.

Both sides agree that there are a lot of opportunities for further cooperation in the future, especially in fields where Siemens has advanced technology and expertise.

Kaeser discussed with Deputy Minister of Planning and Investment Dang Huy Dong about foreign direct investment (FDI) and the public-private partnership (PPP) practices in this country.

Topics of Kaeser’s meetings with leaders of Vietnam Electricity Group (EVN) and Vietnam National Oil and Gas Group (PVN) focused on cooperation in capacity building and grid optimization, among others.

Agri exports in freefall

The Ministry of Agriculture and Rural development (MARD) has announced that export turnover in agriculture, forestry and fisheries in September reached some $2.1 billion, bringing the nine-month total $21.65 billion, a decline of 5 per cent against the same period of 2014.

Nine-month exports of main products have been estimated at $10.29 billion, a 7.2 per cent decrease year-on-year, with coffee falling 32.2 per cent, rubber 13.7 per cent, rice 15.7 per cent, and fishery 17.8 per cent.

The Viet Food Association (VFA) said that, as at October 8, Vietnam had exported 4.39 million tons of rice worth $1.82 billion this year; almost 400,000 tons less than in the same period of last year. VFA Chairman Huynh The Nang put this down to an absence of high-value contracts.

Some markets have imported significantly less quantities of Vietnamese rice, such as the Philippines, at 40 per cent, Singapore 37.24 per cent, and Hong Kong 29.37 per cent.

Competitive pressure has also seen Vietnamese rice sell for lower prices than exports from elsewhere in Asia since the beginning of this year. According to VFA, however, Vietnamese rice will rebound as export contracts of 1.5 million tons to Indonesia and Philippines have been signed at a time of year when exports generally decline. Markets should therefore be secure for rice from the winter-spring crop.

Prices of other exports, such as rubber, tea, coffee, and fishery products, are expected to remain low price for the remainder of the year. According to MARD, coffee exports in the first nine months stood at 961,000 tons worth $1.96 billion, or 31.2 per cent and 32.2 per cent lower, respectively, against the same period of last year.

Tea exports, meanwhile, were 88,000 tons worth $151 million in the first nine months, a decline of 8.8 per cent and 8.1 per cent, respectively, year-on-year. Even though prices have increased slightly since last year, hygiene issues in major markets have affected Vietnam’s exports.

Total rubber exports for this year are estimated at 1.1 million tons, an increase of 3.2 per cent, worth $1.6 billion, a fall of 10 per cent against 2014; the highest decline since 2011.

In the first nine months rubber exports reached 740,000 tons with a value of $1.06 billion. Despite quantities rising 6.6 per cent, the value fell 13.7 per cent year-on-year.

According to Mr. Vo Hoang An, Secretary of the Vietnam Rubber Association (VRA), the global economic outlook still presents problems, especially in tire producing countries such as China and Japan, where rubber demand is lower.

Land for rubber plantations has also increased significantly in Thailand, Indonesia and Vietnam, pushing up volumes and worsening the oversupply.

Fisheries also recorded fewer exports in the first nine months, falling 17.8 per cent in value against 2014, to $4.69 billion, after losing significant shares in major markets such as the US, Japan, the EU, and South Korea.

$25 million electronics plant opens in Vinh Phuc

The Sekonix Vina Co. has opened an electronics component factory at the Ba Thien 2 Industrial Zone in northern Vinh Phuc province.

Located on an area of 3.5ha, construction of the $25 million factory began in December 2014. It is expected to produce 36 million lenses and 12 million voice coil monitors (VCMs) per year for the production and assembly of mobile phones. The company has already engaged some 700 employers and revenue is targeted at $22.1 million this year.

Speaking at the opening ceremony, Deputy Chairman of the Vinh Phuc Provincial People’s Committee Nguyen Van Chuc spoke highly of the efforts of the company to quickly complete construction and put the factory into operation. He asked that related departments and authorities create the conditions necessary for the company to conduct business effectively.

Sekonix Vina Co. is a 100 per cent South Korean-owned enterprise specializing in lenses and VCMs for mobile phone production and assembly. The Vinh Phuc Industrial Zone Management Board granted the project an investment license in October 2014.

As at September 2015, after stepping up investment promotion activities and reforming its administrative procedures, Vinh Phuc province had attracted 199 foreign direct investment (FDI) projects, of which South Korea led the way in project numbers with 86 and total registered capital of $834.5 million.

Vinhomes most valuable real estate brand

Vinhomes, a subsidiary of Vingroup, was assessed as being the most valuable brand in Vietnam’s real estate sector in 2015 by Brand Finance, a London-based brand valuation and strategy consultancy.

Its brand value was put at $343 million, putting it in third place nationally after Vinamilk and Viettel.

According to Brand Finance the brand evaluation criteria includes the ability to increase the value of a brand, the influence on the purchasing decisions of customers, the cost to build successful brands, the traded value in the stock market, and the ability to generate profits.

Two other brands of Vingroup also ranked in the Top 50 most valuable brands in Vietnam - Vincom, at 28th, which leases modern retail space, and Vinpearl, at 32nd, which is involved in hotels and resorts. Vinhomes is committed to construction progress and the quality of its construction and infrastructure, providing a safe living environment, security systems, and superior service quality to customers.

Brand Finance is the world’s leading independent brand valuation and strategy consultancy. Headquartered in the City of London, it has a presence in more than 20 locations worldwide. It was set up in 1996 with the aim of “bridging the gap between marketing and finance”.

Every year Brand Finance values over 3,500 brands across all sectors and geographies. The results are tabulated and published to raise awareness of brands as valuable business assets that must be managed and invested in.

Apartment maintenance funds up for debate

Apartment maintenance fees were among the hot issues discussed at a seminar on draft regulations on apartment block management, which were released for comment on July 17 by the Ministry of Construction (MoC), organized by the Vietnam Building Management and Maintenance Association (VBMA) and the Housing and Real Estate Market Management Agency (HREMMA) under the MoC on October 16.

According to Mr. Nguyen Nhu Vinh, General Director of the real estate company Hoang Thanh, many apartment management boards are still unclear on how to effectively use funds raised from maintenance fees, which are equal to 2 per cent of value of the apartment’s sale price.

“If management boards knew how to use the fees effectively they could last 40 or even 50 years,” Mr. Vinh said. At many apartment blocks, however, the funds run out in ten years. “It is necessary to advise management boards on how to effectively use the funds,” he added.

To ensure effective use, holders of the fund account in banks should include one member who is a representative of the building developer and two others who are representatives of the apartment management board, according to Mr. Nguyen Quoc Hiep, Chairman and CEO of the Global Petrol Investment Joint Stock Company (GP Invest). “This can reduce risks and conflicts in case representatives of management boards sell their apartments and no longer live there,” he added.

Developers and representatives from apartment management boards at the seminar also raised concerns over some management boards using the maintenance funds for the wrong purposes. At some apartment blocks the funds total significant amounts, in the hundreds of thousands of dollars.

According to Mr. Nguyen Manh Khoi, Deputy Head of HREMMA, to guarantee funds are used for the right purpose the draft regulation strictly regulates how they are spent. It also states that management boards must complete certain documents before withdrawing funds from banks and has limits on how much can be withdrawn for maintenance tasks and how much can be paid by bank transfer.

The holders of the bank accounts are representatives of apartment management boards, the number of whom is discussed and decided upon at management meetings. “Holders of the fund account are allowed to withdraw money when 100 per cent of members approve,” Mr. Khoi said.

According to VBMA, a similar seminar for further discussion on the draft regulation is expected to be held at the end of November.

BMI Research: Vietnam's economy to grow at 6.4% in 2015

The BMI Research, a Fitch Group company, has forecast positive prospects for Vietnam's economy in the remaining months of 2015 with the GDP growth to rise to 6.4% in 2015 from 6.0% in 2014.

In its latest report, BMI Research said it maintained a positive view about Vietnam's economy thanks to positive prospects of the foreign direct investment (FDI) inflow and the efforts of the Vietnamese government to improve the business environment with more involvement of the private sector and the enhanced capacity of the banking sector.

The report also stated that Vietnam's manufacturing sector will continue to be the driving force for the economic growth in the coming quarters. Foreign producers and manufacturers will continue to be attracted to investing in Vietnam thanks to relatively low labour costs, a number of tax reductions to investors as well as a young and dynamic labour force.

In addition, Vietnam also has a strong potential in the construction and real estate sectors. The relaxation of the rules of property ownership for foreigners, effective from July 2015 will allow foreign investors to participate further in the real estate market of Vietnam.

The BMI Research said if Vietnam continues to carry out a loose monetary policy and reduce the rate of inflation it will motivate the construction and real estate sectors.

The report said that Vietnam will continue to attract more FDI in the coming quarters and years thanks to continuous efforts to consolidate the macroeconomic stability.

It also noted that the ongoing privatisation of State-owned enterprises will help increase the health of the banking system while freeing more resources to reallocate to the private sector. It added that the promotion of the potential of the private sector will create a motivation for Vietnam's economic growth in the long term.

Buyers interested in imported cars

Exhibitors signed a total of more than 170 contracts to sell imported cars during the Vietnam International Motor Show (VIMS 2015) in Hanoi, which wrapped up last week.

VIMS 2015 featured more than 50 autos of Audi, BMW, Porsche, Renault, MINI, Jaguar, Land Rover, Luxgen and BAIC brands, as well as famous motorbike brands like BMW Motorrad, Ducati and Samsung.

Organizers said six big motorbikes were sold at the show, which attracted more than 70,000 visitors.

The Vietnam Automobile Manufacturers’ Association (VAMA) will organize Vietnam Motor Show in HCMC from October 28 to November 1. Eighteen member companies of the association and hundreds of parts suppliers will participate in the upcoming event.

Auto manufacturers and assemblers are expected to launch new car models toward the year-end when local demand usually picks up.

State ownership at firms to fall further

The Government has withdrawn State capital from many enterprises in recent years and this divestment process will accelerate in the coming time, said Deputy Minister of Finance Truong Chi Trung.  

Trung said at the October 14-16 VinaCapital Investor Conference in HCMC that State-held shares at the already equitized enterprises would be sold to raise funds for the projects that need State money.

The Government has allowed State Capital Investment Corporation (SCIC) to sell its 45.1% stake at Vietnam Dairy Products Joint Stock Company (Vinamilk) and shares at other major firms.

Commenting on the Government’s new approval for the withdrawal of State capital from 10 companies, chief executive officer of VinaCapital Vietnam Opportunity Fund Ltd. (VOF) Andy Ho said SCIC would decide when to sell State holdings.

He said foreign investors may spend US$3-4 billion buying corporate shares held by the State.

However, they will have to carefully look into the requirements for foreigners to acquire State stakes and when SCIC sells shares. SCIC may hold auctions to sell State stakes to local and foreign investors, Ho told reporters on the sidelines of the conference.

Meanwhile, specialists at Hochiminh City Securities Company (HSC) said the State budget deficit this year may be among the reasons for the Government’s decision to strongly divest State holdings at the ten enterprises.     

The Government will likely use the proceeds from the sales of State shares to fund infrastructure projects. 

Stock traders are expected to react positively to the divestment move as the availability of blue-chips on the stock market is limited, which has hindered big capital inflows.

A bank said Vinamilk shares worth a combined US$2.5 billion may be offloaded in the coming time. This will be a big opportunity for foreign investors who are interested in shares of the country’s leading dairy firm.

Speaking to the Daily, a banking expert said the Government has decided to divest State holdings as the business landscape in Vietnam has changed. Given the country’s deeper international integration, the Government should create a favorable environment for firms to do business rather than acting as an investor.

HSC commented in a report that this is a major breakthrough as foreign investors can gain easier access to blue chips such as VNM and FPT. However, investors will have to await a clear timetable; whether the proposed work-around of the definition of foreign owned company/investors for stock market trading as proposed in draft Circular 74 is accepted and clarification of the updated non-restricted list in due course. 

State capital divestments from the 10 enterprises may encourage foreign investors to invest in the firms if foreign ownership limit (FOL) increases are permitted. The list of conditional business sectors is expected to come out within this month.

HSC said the divestment will not be carried out in the short term as requirements for foreign ownership are not yet available. In addition, a schedule for the divestment is unclear now.

On the other hand, SCIC wants to keep a strategic stake at Vinamilk. If SCIC is not urged to proceed with the divestment, the process might move slowly, the brokerage commented.

Vietnam's investment environment is improving: official

Vietnam has been integrating robustly into the global economy, with eight free trade agreements it has signed and the Trans Pacific Partnership (TPP) negotiation it concluded recently opening up new economic opportunities for it as well as for foreign investors.

Deputy Minister of Finance Truong Chi Trung told participants at an annual investor conference held by investment management and real estate firm VinaCapital in HCM City on October 15 that the country's investment environment is improving.

"We are perfecting our market economic system, with a focus on the legal framework, administrative procedures, human resources, and infrastructure, and expect to reach the ASEAN-4 average level in terms of business environment, which includes taxation, customs, and social insurance.

"Vietnam is carrying out investment reforms to enable domestic and international investors to participate in infrastructure projects, and a list of projects in transport infrastructure, energy, water supply, and wastewater treatment seeking investment in the form of private-public partnership (PPP) will be released.

"Restructure of State-owned groups and corporations is speeding up, more SoEs will go public and list on the stock market, offering foreign investors the opportunity to participate in IPOs and mergers and acquisitions as well as invest in listed companies."

The banking sector had been made over, with 17 banks being whittled down to six to improve their financial capacity and governance, he said.

But he expressed concern about the small size of the stock market – with market cap being just 30 percent of GDP – compared to others in the region.

He said the solutions lie in mandating that equitising SoEs should list on the stock market and increase the foreign ownership cap in companies.

The legal foundation required for creating voluntary pension funds would be developed, he said. Pension funds are major investors in securities globally.

Andy Ho, Managing Director of VinaCapital, said Vietnam would benefit from the TPP with taxes cut on 18,000 items.

TPP member countries account for 39 percent of Vietnam's exports and 22 percent of its imports.

Ho said low inflation (1.5-2 percent expected for this year), stable GDP growth – 6.8 percent in the third quarter and 6 – 6.5 percent for 2015 – burgeoning FDI, quickly recovering property market and the devaluation of the dong were all positives for the investment environment.

Investors are showing less interest in "safe" assets and are shifting to securities and real estate, he said.

VinaCapital, founded in 2003, manages 1.3 billion USD in assets. Its closed-end funds VinaCapital Vietnam Opportunity Fund, VinaLand, and Vietnam Infrastructure trade on the AIM Market at the London Stock Exchange.

Vietnam International Bank bags MasterCard’s innovation award

MasterCard gave its Best Segment Solution Award to Vietnam International Bank (VIB) for its Classic debit card, making VIB the first Southeast Asian bank to win a prize from the world’s leading financial services corporation.

The award, among 20 categories in the annual Banking Innovation awards, aims to honour MasterCard’s important partners in the Asian-Pacific region, who have created innovative solutions to better their card services and meet the demands of different customers. The award is based on four criteria: strategy, innovation, influence and achievements.

VIB became dominant in the category thanks to its policy to refund up to 5 percent of each transaction, which is billed as an efficient strategy to change Vietnamese people’s cash-spending habits.

Speaking at the Banking Innovation Forum held in Kuala Lumpur, Malaysia from September 30 to October 1, Arnab Ghosh, head of VIB’s Cards and Consumer Lending highlighted that the award recognises VIB’s efforts to develop card services in a fiercely competitive market.

Launched in the Vietnamese market in October 2013, VIB’s Classic debit card has allowed its holders to use their VIB account at any automated teller machine worldwide, while facilitating safe online shopping.

With its prestige and MasterCard’s global network, the VIB Classic debit card is one of the best choices for travellers, businessmen, overseas students, and people who love technology and online shopping.

New customers will enjoy several of the bank’s preferential policies for a year.

Vietnam, Hungary to bolster bilateral trade ties

The Vietnam-Hungary Business Forum in Hungary’s capital city of Budapest on October 12 evaluated the status of economy and trade relations between Vietnam and Hungary, as well as cooperation opportunities when the EU-Vietnam free trade agreement is signed in the coming time.

The forum was hosted by the Vietnamese Embassy in Hungary, the Vietnam Trade Promotion Agency (Vietrade), the Mutrap Project and the Hungarian National Trading House.

Speaking at the forum, Vietnamese Ambassador in Hungary Nguyen Thanh Tuan said Vietnam’s economy was developing constantly, with a high growth rate. The country’s gross domestic product was expected to reach over 6 percent this year, and Vietnam’s Government always created favourable conditions for domestic and foreign enterprises.

The diplomat said the EU was Vietnam’s second biggest trading partner, with two-way trade hitting nearly 37 billion USD in 2014. It was also the country’s large investor, with total investment capital reaching over 36 billion USD.

Director of Vietrade Bui Huy Son spoke about business and investment opportunities in Vietnam, as the country integrates more deeply into the world economy.

He added that Vietnam is an open market with an attractive business and investment climate. The country is willing to welcome Hungarian enterprises into Vietnam.

On the occasion, representatives from the Hungary Trade Development Agency and Exim-Bank introduced their services and pledged to support the two countries’ businesses.

Enterprises from Vietnam and Hungary at the forum exchanged ideas for co-operation opportunities in fields of apparel, agriculture, beverage, pharmaceutical products.

A contract to ship 200 tonnes of rice to a Hungarian partner was reached at the event.

In the first eight months of 2015, Vietnam’s export turnover to Hungary reached 122 million USD, an increase of 8.3 percent compared with the same period in 2014.

Finnish fund investing in Vietnam's property market

PYN Elite Fund (Non-UCITS), managed by Finnish PYN Fund Management Ltd, has been actively buying shares in many real estate companies in Viet Nam with an eye to the future.

Hoang Quan Consulting-Trading-Service Real Estate Corp (HQC) on October 15 told HCM Stock Exchange that the fund had bought six million shares in the company on October 8-9, raising its stakes in Vietnam to almost 22 million shares, equivalent to 8.34% of its capital.

HQC is among the top 20 biggest real-estate companies on the Vietnamese stock exchange. It has a market value of more than VND1.6 trillion (US$71.4 million).

In the past month, the fund has bought 4.2 million shares in Hoa Binh Construction & Real Estate Corp (HBC), liftingits holding to 7.7 million shares, or 10.3% of the company's capital.

It has also become big shareholders in many property firms, including Thang Long Investment Group (TIG), Duc Long Gia Lai Group (DLG), Construction Investment Corporation 3-2 (C32), Development Investment Construction Co (DIG) and Kinh Bac City Development Share Holding Corp (KBC) with stakes ranging between 5% to 13%.

"PYN Elite fund has defined Vietnam as its core market for the period 2013-2020," said fund manager Petri Heiskanen in his September report.

The fund's assets under management reached 265 million euro ($303.2 million) by the end of September, of which 80% was in Vietnam and 11% in China.

The US Federal Reserve's decision to keep interest rates unchanged calmed anxiety in global markets, after which the focus shifted more from speculation back towards fundamentals, Heiskanen wrote in his report.

He said the weakening economic cycle of banking and property sectors had weighted the market sentiment in the Vietnamese stock market, and "as a result, the stock prices are looking very attractive compared to the historical price to book ratios".

Vietnam's real estate market is picking up, driven by the Government's support policy as well as bright prospects once the Trans Pacific Partnership becomes operational.

According to reports of some securities companies, if TPP takes effect, not only will exports grow but also foreign investment inflows are likely to benefit apartment and office leasing services.

State ownership at firms to fall further

The Government has withdrawn State capital from many enterprises in recent years and this divestment process will accelerate in the coming time, said Deputy Minister of Finance Truong Chi Trung.  

Trung said at the October 14-16 VinaCapital Investor Conference in HCMC that State-held shares at the already equitized enterprises would be sold to raise funds for the projects that need State money.

The Government has allowed State Capital Investment Corporation (SCIC) to sell its 45.1% stake at Vietnam Dairy Products Joint Stock Company (Vinamilk) and shares at other major firms.

Commenting on the Government’s new approval for the withdrawal of State capital from 10 companies, chief executive officer of VinaCapital Vietnam Opportunity Fund Ltd. (VOF) Andy Ho said SCIC would decide when to sell State holdings.

He said foreign investors may spend US$3-4 billion buying corporate shares held by the State.

However, they will have to carefully look into the requirements for foreigners to acquire State stakes and when SCIC sells shares. SCIC may hold auctions to sell State stakes to local and foreign investors, Ho told reporters on the sidelines of the conference.

Meanwhile, specialists at Hochiminh City Securities Company (HSC) said the State budget deficit this year may be among the reasons for the Government’s decision to strongly divest State holdings at the ten enterprises.     

The Government will likely use the proceeds from the sales of State shares to fund infrastructure projects. 

Stock traders are expected to react positively to the divestment move as the availability of blue-chips on the stock market is limited, which has hindered big capital inflows.

A bank said Vinamilk shares worth a combined US$2.5 billion may be offloaded in the coming time. This will be a big opportunity for foreign investors who are interested in shares of the country’s leading dairy firm.

Speaking to the Daily, a banking expert said the Government has decided to divest State holdings as the business landscape in Vietnam has changed. Given the country’s deeper international integration, the Government should create a favorable environment for firms to do business rather than acting as an investor.

HSC commented in a report that this is a major breakthrough as foreign investors can gain easier access to blue chips such as VNM and FPT. However, investors will have to await a clear timetable; whether the proposed work-around of the definition of foreign owned company/investors for stock market trading as proposed in draft Circular 74 is accepted and clarification of the updated non-restricted list in due course. 

State capital divestments from the 10 enterprises may encourage foreign investors to invest in the firms if foreign ownership limit (FOL) increases are permitted. The list of conditional business sectors is expected to come out within this month.

HSC said the divestment will not be carried out in the short term as requirements for foreign ownership are not yet available. In addition, a schedule for the divestment is unclear now.

On the other hand, SCIC wants to keep a strategic stake at Vinamilk. If SCIC is not urged to proceed with the divestment, the process might move slowly, the brokerage commented.

German Career Fair set for Oct 24 in HCM City

The German Business Association (GBA) has announced it will sponsor a career fair on October 24 at the Hoa Lu Stadium on 2 Dinh Tien Hoang Street in District 1 of Ho Chi Minh City.

This is part of a string of events to pair employers looking for workers with employees looking for job opportunities the GBA said, noting 35 German businesses have registered to participate.

The participating businesses are actively recruiting for multiple openings, from entry-level to management at locations both in Vietnam and Germany.

More details can be accessed at the following web address: www.talentbiz.com.vn, or through the organizing board: (+84) 934 798 922, e-mail: info@talentbiz.com.vn. 

Australian media: TPP to boost Vietnam-Australia business ties

The Australian Associated Press (APP) news agency on October 17 reported that business ties between Australia and Vietnam are expected to grow further after the Trans-Pacific Partnership (TPP) agreement comes into effect, quoting remarks of many analysts and diplomats.

Hanoi-based World Bank economist Sandeep Mahajan said the TPP marks a major plus for Vietnam’s economy and is set to add a cumulative 8 percent to gross domestic product (GDP) by 2030.

The question is how much benefit that Vietnam could achieve from the trade pact, not whether they can derive benefit, he told AAP.

Meanwhile, charge d’Affaires at the Australian Embassy in Hanoi Layton Pike, said the TPP will boost two-way trade, which is already valued at more than 8 billion AUD (5.8 billion USD) annually.

Particularly, the pact will enable Australian investors to make inroad into Vietnam ’s education market, currently Australia ’s third largest.

He noted that Australian agricultural producers are also looking to increase market share in Vietnam, triggering concerns that Vietnamese farmers could lose out to more efficient Australian producers.

Brian O’Reilly, President of Australian Chamber of Commerce in Vietnam, said Vietnam offers potential for Australian investors seeking access to markets in other ASEAN countries.

“ASEAN is the place where you can establish in one country (Vietnam) with the TPP in place, and grow into the rest of the ASEAN community,” the news agency quoted O’Reilly as saying.-

Consumers admire responsible brands

Vietnamese consumers are the most socially conscious in Southeast Asia, according to the 2015 Nielsen Global Corporate Sustainability Report released last week.

Consumers in Southeast Asia are the most willing globally to pay more for sustainable products and services, surpassing other regions around the world, including Middle East/Africa, Latin America, Europe and North America, the survey found.

The 2015 Nielsen Global Corporate Sustainability Report released on October13 shows eight in 10 consumers in Southeast Asia (80 per cent) prefer to buy socially responsible brands, compared to Middle East/Africa (75 per cent) and Latin America (71 per cent), Europe (51 per cent) and North America (44 per cent).

Among Southeast Asians, Vietnamese and Filipino consumers are the most socially-conscious, with 86 per cent of respondents from Viet Nam and 83 per cent from the Philippines stating their willingness to pay extra for products and services from companies committed to positive social and environmental impact (up 12 points and 4 points, respectively).

To gain better insight into the factors that influence consumer sentiment and purchase behavior, Nielsen polled 30,000 consumers in 60 countries across the globe. Consumers were asked how much influence factors such as the environment, packaging, price, marketing and organic or health and wellness claims had on their consumer-goods purchase decisions.

"Nowadays, you will be hard-pressed to find consumers who do not show concern for environmental and societal issues," Connie Cheng, head of Shopper Insights for Nielsen in Southeast Asia, North Asia and Pacific said. "In small and big ways, consumers are trying to be responsible citizens of the world, and they expect the same from corporations. Committing to sustainability might just pay off for consumer brands."

One of the top sustainability factors that influence purchasing for 77 per cent of Vietnamese consumers is health and wellness. Moreover, products made with fresh, natural, and/or organic ingredients carry similar weight with consumers in Viet Nam (77 per cent).

Equally important among consumers in Viet Nam is brand trust (75 per cent).

When it comes to purchase intent, commitment to the environment has the power to sway product purchase for 62 per cent of consumers in Viet Nam, according to the survey.

Commitment to either social value or the consumer's community are also important (each influencing 61 per cent and 62 per cent of respondents, respectively).

In 2014, 65 per cent of total sales of consumer goods measured globally were generated by brands whose marketing conveyed commitment to social and/or environmental value.

TV ads highlighting a company's commitment to positive social and/or environmental impact are influential in the path to purchase for 45 per cent of respondents in Viet Nam. 

Work kicks off on power plant

The Power Holding Corporation under the Vietnam National Coal and Mineral Industries Group (Vinacomin) held a ceremony to begin construction of the Na Duong II power plant in the northern province of Lang Son yesterday.

Covering an area of 11 hectares in Toong Gia Village, San Vien Commune, Loc Binh District, the coal-fired plant has garnered a total investment of nearly VND4.2 trillion (US$192 million).

Once completed in 2018, the plant will have a capacity of 110MW, generating 650 million kWh of electricity each year and helping ensure a stable power supply for Lang Son and other northern border provinces, as well as providing national energy security.

The plant will use about 500,000 tonnes of low-quality coal with high sulfur content from Na Duong Coal Mine to generate electricity.

The plant will also create jobs for hundreds of local workers.

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