Philippines' AC Energy keen on renewables in Vietnam

AC Energy Holdings Inc., the power generation unit of conglomerate Ayala Corp., has unveiled a plan to build renewable energy plants with a combined capacity of several hundred megawatts in Vietnam over the next two to three years.

AC Energy’s President Mr. John Eric Francia said the company was in talks with several potential partners in Vietnam to implement the strategy. The move to look for potential renewable projects in Vietnam is part of its thrust to reach 2,000 MW of attributable capacity by 2020, with half coming from renewable energy projects.

Mr. Francia said that while the company was open to all types of technologies, it was keenly interested in renewable energy. “The market in Vietnam is growing in the double digits and my view is that there is a need for greater supply,” he said. “They have no reserve margin with double digit growth, so are in need of additional investment.”

Affirming that Vietnam was offering positive investment opportunities, he said he was hoping that a deal would be finalized soon. “We are trying our best,” he said.

Currently with 1,300 MW of capacity, including 300 MW of renewable energy, AC Energy recently acquired Bronzeoak Clean Energy, one of the leading renewable energy developers, having built over 250 MW of solar and biomass projects, as well as San Carlos Clean Energy.

Ayala Corp., the Philippines’ oldest conglomerate, entered Vietnam in 2008 through its subsidiary Manila Water’s $44-million water loss reduction project in Ho Chi Minh City.

It became a strategic investor in the Ho Chi Minh City Infrastructure Investment Joint Stock Co. (CII), the leading infrastructure developer in the southern city, in 2012, and now holds an 8.8 per cent stake in CII via its unit VIP Infrastructure Holdings Pte. Ltd. Through Manila Water, Ayala now owns a 38 per cent stake in Saigon Water Infrastructure JSC (SII).

Vietnam is trying to generate enough energy to sustain the country’s growth and to connect the millions of people who still do not have access to power, while gradually shifting towards clean and low-carbon energy. Last year, the government revised down its output target for coal-fired power plants to 53.2 per cent of the country’s total power generation by 2030 from the previous 56.4 per cent.

The country is aiming to produce 10.7 per cent of its total electricity through renewable energy by 2030, mainly through solar and wind energy, up from 6 per cent previously. In May this year, the government issued long-anticipated regulations on solar energy projects.

A raft of incentives to support renewable energy will be in place to June 2019 and have been dubbed a “landmark” in the country’s solar energy outlook. Other than exemptions on import duties and incentives including breaks in taxes and land use fees for solar power projects, raising the bid price to purchase solar energy to 9.35 US cents per kWh is a key measure.

Most recently, the Ministry of Industry and Trade has asked the government to raise the buying price for wind power in an effort to help investors cover high input costs, suggesting that the price should be lifted to 8.7 US cents per kWh for wind energy projects on land and 9.95 US cents per kWh for offshore plants.

Since 2011, the buying price for wind energy has stood at 7.8 US cents for all land-based projects in Vietnam, with 6.8 US cents paid by State-run power monopoly Electricity of Vietnam (EVN), and the remainder coming from the country’s Environment Protection Fund. For the country’s only offshore plant, in the Mekong Delta province of Bac Lieu, the current price is 9.8 US cents per kWh.

Appropriate growth plan considered for 2018

The Ministry of Planning and Investment (MPI) has outlined three scenarios for economic growth in 2018, in preparation for the next year's socio-economic development plan with GDP growth expected to be at 6.4-6.8%.

According to the Head of MPI’s Department for National Economic Issues Tran Quoc Phuong, the three scenarios for the 2018 development plan were developed by the MPI on the basis of the estimates made in 2017, forecasts for the global and domestic economy in 2018, and taking into account the objectives of the five-year, socio-economic, development plan during 2016-2020, as well as the direction given by the Prime Minister on the development of the socio-economic development plan for 2018, with expected GDP growth at 6.4-6.8%.

The MPI also set a forecast economic growth target of 6.7% for 2017, which is considered to be "achievable", and formally reported to the Government on three economic growth scenarios for 2018. In particular, in a low growth scenario, GDP is expected to grow by 6.4%; in an average scenario, the growth rate will stand at 6.5%; and in the high scenario, the growth rate is expected to be 6.81%.

The three scenarios have been developed but amidst the projection for 2018 and the following years, in which the mining sector may continue to decline which will affect the country's growth and while the current economic model cannot move right away, the MPI believes that in the above scenarios, the medium scenario is the most suitable option.

This proposal has also received the support of many cabinet members. It is likely that the 2018 socio-economic development plan will be developed with a GDP growth target of 6.5%, a reasonable growth rate.

In addition to setting growth targets for the coming year, the focus of socio-economic development in 2018 is consistently identified as "ensuring macroeconomic stability, controlling inflation and creating a stable foundation for economic development," Tran Quoc Phuong added.

Meanwhile, the 2018 plan also targets moving gradually towards the implementation of economic restructuring and deploying three strategic breakthroughs in order to create new growth engines, thereby re-impacting and creating macroeconomic stability on a higher scale and level.

In addition, it aims to continue to promote the growth of relevant sectors and branches, creating favourable conditions for economic development in the following years, and striving to achieve the five-year, socio-economic, development plan's objectives set for 2016-2020.

Although there are positive and optimistic signals for the economy in 2018, it cannot be denied that a number of difficulties and challenges are waiting ahead. One of the most visible challenges is the possibility of achieving a 6.7% growth target this year. If this target is not met, it will affect the set achievement for implementing the economic growth target for the coming year.

Therefore, during the regular government monthly meeting for August 2017, the Prime Minister repeatedly emphasised that: "All ministries, sectors, localities and corporations must continue to scrutinise again the set target and drastically strive to fulfill it. Industry, agriculture and services, including tourism, should remain focused; if lagging behind for even one month, the 6.7% target may not be met.”

According to the MPI, the difficulties and challenges for 2018, besides the objective factors, are also issues related to the internal weaknesses of the economy, including the economic model being based mainly on cheap labour and at a low-tech level; land and natural resources are gradually depleting, while the efficiency of land use has not increased significantly; whilst domestic enterprises are still limited in terms of scale and operating capacity, leading to restrictions in competitiveness.

In addition, new difficulties may also arise, as the synergy for economic growth provided by oil, gas and coal, and Samsung's contribution and remittances are leveraged and unlikely to increase. This issue, in combination with a limited fiscal and monetary policy and difficulty in raising capital for development, will have a significant impact on the 2018 economic growth.

In this regard, Director of Central Institute for Economic Management Nguyen Dinh Cung said that the growth of the economy relies heavily on the development of the business sector, but the private sector still faces many difficulties. According to statistics, only one third of private enterprises are profitable. If in next year the salary rate and a series of costs increase, they would affect the business efficiency of this sector; therefore, the number of profitable enterprises would reduce and thus affect economic growth.

It is necessary to reconsider the economic efficiency of the "steel fists" of the economy – State-owned corporations, at least to review the business performance of 30 SOEs. In the assigning of next year’s tasks for these units, it should not be in the direction of exploiting how many tonnes of oil or coal, but how much profit and how much the profit rate is, which means focusing more on quality.

In addition, the proposal to increase the value added tax (VAT) at this time is also stirring social concerns. This issue should be thoroughly considered and calculated to choose the most appropriate option.

Regarding the VAT increase, Tran Quoc Phuong said that the MPI, when reporting the issue to the Government, mentioned that the VAT increase in the time ahead should be thoroughly researched and include an impact assessment for State budget collection, as well as impact on the consumption of the entire population, especially those with low income, on production costs of enterprises, and on labour and employment.

Vietnam Railways proposes over VND4.6 trillion investment in modernisation

Vietnam Railways (VNR) has proposed an investment of over VND4.6 trillion (US$202.4 million) in order to buy new locomotives and carriages by 2020, with 70% of the total amount to be borrowed from the State-owned Vietnam Development Bank.

According to the document sent to the Ministry of Transport, VNR intends to gradually replace technologically backward locomotives, coaches, and waggons with modern ones by 2020 in a bid to reduce costs, improve efficiency and increase the competitiveness of rail transportation.

Specifically, VNR will buy 100 new locomotives worth over VND2.1 trillion, 150 passenger coaches worth over VND1.6 trillion, 300 container waggons worth VND270 billion, and 500 waggons, with speeds below 60km per hour, worth VND550 billion.

Approximately 70% of the total investment (VND3.2 trillion) is proposed to be borrowed from Vietnam Development Bank, while 30% of the investment will be counterpart funded from the VNR, Hanoi Railway and Saigon Railway.

VNR said that it wants to receive the loan from the State-owned Vietnam Development Bank, as the interest rate for investment projects is stable and the borrowing period is lengthy, while enterprises can use assets formed from loans as collateral assets. Meanwhile, loans from commercial banks will bear higher rates in addition to a shorter borrowing period, resulting in low business efficiency, VNR noted.

However, it is difficult for VNR to gain access to loans from the Vietnam Development Bank as VNR's projects are not subject to loans from the bank.

Based on the provisions of Articles 5 and 6 of the amended Railways Law 2017, the VNR will be provided with preferential credit from the State's investment credit or provided with loans guaranteed by the Government. But, the Railways Law 2017 will not begin to come into force until July 1, 2018.

Therefore, VNR has asked the Ministry of Transport to report to the Government for approval of the loans from the Vietnam Development Bank in order to timely meet the investment requirements in infrastructure development.

VNR pledged to fully comply with the loan procedures and to perform the obligation to pay principal and interest in accordance with the terms of the loan agreement.

Railway industry needs $205 million to renew locomotives, coaches

Vietnam Railways has proposed the Ministry of Transport to permit it to get loans from Vietnam Development Bank (VDB) to buy new locomotives and coaches with the total investment capital of VND4,658 billion (US$205 million).

The corporation is expected to buy 100 new locomotives, 150 passenger coaches, 300 container coaches and 500 coaches having the speed of less than 60 kilometers an hour to gradually replace old and downgraded coaches from now until 2020.

Of the total funds, nearly VND1,398 billion accounting for 30 percent will be reciprocal capital from Vietnam Railways, Saigon and Hanoi Railway Transport Companies. The remaining amount accounting for 70 percent will be bank loans.

The investment aims at raising the competitive ability of railway compared to other types of transport.

Vietnam Railways says that the project is not subject to borrowers of VDB.

According to Articles 5 and 6 of the revised Railway Law 2017, the corporation can get preferential credit source of the state or receive Government’s loan guarantee for the project. However, the law will take effect on July 1, 2018.

Therefore, Vietnam Railways has proposed the Ministry of Transport to report to the Government, permitting the railway industry’s investment projects to get loans from VDB so that they will be invested in a timely manner.

Massimo Dutti opens first store in Vietnam

Massimo Dutti last Friday opened its first store on the first floor of Vincom Center on Dong Khoi Street in District 1, HCMC.

Massimo Dutti was present for the first time in the fashion industry in 1985. In 1991, it was acquired by the Inditex Group. In 2003, Massimo Dutti launched a children’s fashion line under the name Boys and Girls.

Currently, the brand boasts more than 775 stores in 73 countries around the world.

HCMC wants to lure more Chinese tourists

Travel companies in HCMC want to woo more Chinese tourists in the coming time to help boost international arrivals to the city and revenue from tourism.

At a seminar on solutions to attract Chinese tourists to HCMC held by the municipal Department of Tourism last week, Phan Xuan Anh, chairman of Viet Excursions, said the city holds high potential to attract Chinese tourists, but it should focus on high-spending visitors.

HCMC is not as popular as Nha Trang, Hanoi, Halong Bay and Danang among Chinese tourists. Last year, Vietnam welcomed more than 2.69 million Chinese visitors, surging 51.4% versus 2015, but only 400,000 of them came to HCMC, increasing 37.4% year-on-year. 

Tourists from the neighboring country are keen on sea travel. Services in Can Gio or Vung Tau can satisfy these requirements.

At the seminar, some Chinese experts also provide information about tourist sources, and their hobbies and ways to get tourism information.

The city should seek guests from Beijing, Shanghai, Fujian and Guangdong, and other eastern coastal provinces of China who have high demand for overseas travel.

According to the Vietnam National Administration of Tourism, Chinese tourists to Vietnam can increase by 1.3 million to four million this year. At present, a huge number of Chinese travel to Nha Trang, Danang and Phu Quoc on chartered flights.

Air service between Cam Ranh and Seoul to be launched

Representatives of Nha Trang-Khanh Hoa Tourism Association and South Korea’s Jeju Air struck a deal last week to launch a tourism air service connecting Cam Ranh Peninsula in the south-central coast province of Khanh Hoa and the Korean capital Seoul.

The service will be launched late this year, with a flight frequency of one trip a day. Each trip will take around five hours.

The association will work with local tour operators and hotels to develop services and manpower to serve Korean tourists, as well as to create favorable conditions for Vietnamese to visit the Northeast Asian nation.

Earlier, the association has carried out a survey of the South Korean market, and found out that it has great potential for growth. This is why it teams up with the Korean partner to prop up tourism. The move is to diversify source markets for Khanh Hoa’s tourism sector, in addition to China and Russia.

On Thursday, the province launched a direct air service to Malaysia. Therefore, some companies are preparing travel programs, including tours to Dalat City of Lam Dong Province, to serve Malaysian tourists.

“We are in preparation for the first group of Malaysia tourists to Khanh Hoa, thanks to the direct air service. The tourists will enjoy four days in Dalat and Nha Trang,” said Giang Loi Khon from Hong Thai Travel Co Ltd on the sidelines of the signing ceremony.

Cement makers warn city of costs if production is halted

HCMC can suffer extra costs of VND1.4 trillion (US$62.15 million) if it invests in cement distribution facilities to replace cement grinding plants which will be shut down to prevent pollution, said a representative of Ha Tien 1 Cement JSC.

At a discussion on the development of building materials in HCMC to 2020 with a vision towards 2030, the municipal Department of Construction said the city would not invest in new cement plants, including clinker factories and grinding stations.

The city plans to relocate those cement grinding stations meeting environmental standards to industrial parks in the city or other localities. Ba Ta Co JSC, for example, will shut down from next year, while Saigon Development Corporation and Ha Tien 1 Cement JSC will be relocated later.

The scheme is not only meant to limit environmental pollution but also to ensure enterprises’ operations.

HCMC is now home to ten cement grinding and distribution stations with a total annual capacity of more than 10 million tons, which still falls short of the city’s demand. By 2020, the city may lack 3.3 million tons a year to satisfy its demand.

HCMC plans to initially build three distribution stations with a capacity of 1.2 million tons each to replace its grinding stations and cement factories. Thus, total cement supplies in the city will amount to 13.7 million tons in 2020.

However, cement makers said such a plan will cost the city dearly in terms of economic value.

A representative of Ha Tien 1 Cement JSC said transshipment and loading fees will be huge as the city will require ships to transport cement from northern ports. Total estimated investment may reach US$600 million, equivalent to the investment in 11 cement grinding stations with an annual capacity of 1.2 million.

In addition, the city will have to build special-use ports to receive bulk cement shipments from the north as all ports have no facilities for bulk cement handling, except for Cat Lai Port in District 2.

Higher prices spur retail revenue

Retail revenue from consumer goods in the first seven months of the year increased substantially over the same period last year, but this rise was attributed to higher prices, according to a report of market research firm Kantar Worldpanel.

The report on sales of fast-moving consumer goods (FMCG) was issued last Thursday after Kantar Worldpanel had conducted a 12-week market research in four large cities -- HCMC, Hanoi, Danang and Can Tho -- and in rural areas.

Retail sales of consumer products grew 10% in January-July, 9.7% higher than in the year-earlier period. Revenues from FMCG sales in both rural and urban areas picked up 5.3% year-on-year.

However, the revenue growth did not come from the higher consumer spending. Instead, in some rural areas in the central and northern regions, consumption tended to decrease, especially of dairy products.

Higher prices of products were also reflected in the average consumer price index (CPI) in the first seven months which edged up 3.91% over the year-ago period. The rate was only 1.82% in January-July last year compared to the same period in 2015.

According to Kantar Worldpanel, the CPI of below 4% may not be kept in the remaining months of the year as food prices inched up in July after going down for six consecutive months and fuel prices have also been revised up.

Mavin pledges to inject US$80 million into Nghe An

Mavin Group has pledged to pour around US$80 million into the north-central province of Nghe An, mainly in the husbandry sector, said the group’s chairman David John Whitehead at an investment conference in HCMC last Friday.

Whitehead told the conference “Nghe An: opportunities for your business growth” that Mavin has been doing business in Vietnam for more than 12 years, and has set up shop in 19 provinces nationwide.

The group inaugurated a feed mill in February at a total cost of US$15 million. The facility covers 3.6 hectares and has a designed capacity of 300,000 tons a year.

Mavin has recently been awarded a business certificate to develop a swine nucleus farm worth US$18 million, which is part of the firm’s US$80 million investment commitment to Nghe An.

Mavin also intends to establish an animal health research center, and carry out a feasibility study for a five-hectare food processing plant which may get off the ground next year.  The facility which has an annual capacity of 200,000 tons costs around US$25 million. It will turn out products from meat, such as sausages and ham, for customers at home and abroad.

Whitehead said Mavin has taken into consideration many factors like manpower, market, geography, investment incentives, and transparency before making its investment decisions. The company is committed to Nghe An as the local government has extended a lot of support to it, said Whitehead.

Many domestic and international investors have come to sound out business opportunities in Nghe An, according to Nguyen Chi Toan, marketing director of the Vietnam-Singapore Industrial Park (VSIP) for central and southern Vietnam.

Since VSIP Nghe An, an industrial park infrastructure development company, started construction in September 2015, more than 90 companies from various countries and territories have come to the province, of which 10 enterprises have pledged over VND400 billion, Toan said.

Advance payment for metro project in HCMC yet to be disbursed

Although the Government has allowed HCMC authorities to use capital from the medium-term public investment plan for the 2016-2020 period to make advance payments for the Metro Line No.1 project to speed up construction work but the money has not been disbursed, threatening the progress of the project.

Le Nguyen Minh Quang, head of the HCMC Management Authority for Urban Railways (MAUR), told a meeting on Saturday that the construction of Metro Line No.1, which connects Ben Thanh Market in District 1 and Suoi Tien Park in District 9, is at risk of falling behind schedule due to slower-than-expected disbursement of official development assistance (ODA) loans from the central Government.

Some contractors said they would have to suspend construction work if the city delays payments, so the city has to use its own budget to advance money for the contractors.

On August 25, HCMC chairman Nguyen Thanh Phong signed a decision advancing VND500 billion (about US$22 million) from the city’s budget to pay for the contractors of the project.

As of early September, the contractors had received nearly VND300 billion. However, this is just a temporary solution.

“The city has to pay the metro project’s contractors VND500-600 billion a month. If slow disbursement of ODA loans continues, the construction pace of the project would be badly affected,” Quang said.

The city’s government earlier made an advance payment of nearly VND1 trillion for the contractors.

According to MAUR’s report, Package 1a for the underground section from Ben Thanh station to Opera House station is 13.5% complete while Package 1b for the underground section from Ba Son station to Opera House station is 51% done.

Package 2 for the elevated section from Ba Son to Long Binh is 69.5% finished while locomotives, cars and rails for Package 3 are now being manufactured in Japan. The contractor has plans to import the first train to Vietnam next August.

Duong Huu Hoa, director of Metro Line No.1 project, said the contractors will begin to install the rails for the metro line’s elevated section in October 15. Up to 8,000 rails for the track are now manufactured in Long An Province and will be transported to HCMC soon.

However, import of machines and equipment that facilitate rail installation is now facing difficulties. Quang said the Ministry of Finance earlier announced that such machines and equipment will enjoy 0% import tax. However, the ministry has issued a new circular saying that those goods might be taxed.

According to Quang, another reason for the slower-than-expected construction of the city’s first metro line project is complicated procedures and paperwork on the part of ministries.

Metro Line No.1 is nearly 20 kilometers long, passing through districts 1, 2, 9, Binh Thanh, Thu Duc in HCMC and part of Di An District in neighboring Binh Duong Province. It has 2.6 kilometers of underground track and over 17 kilometers of elevated track along Hanoi Highway.

The US$2.49 billion project is scheduled for operation in late 2020.

Tuna exports to emerging markets on the rise

Tuna exports rose by 22% to US$328 million in the first seven months against the same period last year, according to latest statistics from the General Department of Vietnam Customs.

Exports of most tuna products enjoy growth, particularly canned tuna saw the highest growth rate of 32.3%, trailed by fresh, frozen and dried tuna products (up 14%).

Tuna products have been exported to more than 70 countries in the world. The US, EU, Israel, ASEAN, Japan, Mexico, Canada and China were major importers of Vietnam tuna products in seven months, accounting for 88% of its total export value.

Most export markets obtained growth in July. For instance, tuna exports to the US inched up 8% to US$20 million while exports to the EU increased by 23% to US$69 million against the same period last year. It’s noteworthy that exports to Italy rose sharply in July after seeing constant decline since early this year. Exports to the market in the period skyrocketed 166% to US$1.2 million.

Israel surpassed ASEAN and Japan to become the third largest consumer of Vietnam tuna in the first 7 months with US$28 million, up 155%.

In recent times, as tuna consumption demands in traditional markets like the US, EU and Japan seem to come to a grinding halt, Vietnam tuna exporters shift to emerging markets in the Middle East, especially Israel.

The Vietnam Association of Seafood Exporters and Producers forecast that tuna exports to the US and EU will increase slowly late this year while exports to new markets will witness strong rise.

French firms learn about investment chances in Da Nang’s hi-tech park

Representatives from about 30 French enterprises participated in a seminar introducing investment opportunities in the hi-tech park in the central city of Da Nang held by the French Business Federation (MEDEF) in Paris on September 11.

The event was part of the Da Nang Hi-Tech Park (DHTP) Management Board’s investment promotion activities in Europe.

At the seminar, Director General of the board Phung Tan Viet informed the participants of the park’s construction process and development plans.

Participating businesses were also briefed on Da Nang’s preferential policies and projects which need investment in the DHTP.

With a total area of more than 1,100ha, the DHTP is one of Vietnam’s three hi-tech parks, connecting industrial and economic zones in the key economic region in central Vietnam.

The park welcomes enterprises to visit and invest in its projects, Viet added.

Michel Jonqueres, President of the MEDEF’s International Commission, said that Da Nang and the DHTP’s clear administrative procedures are an advantage that encourages investment.

He also expressed optimism about the two sides’ cooperation opportunities, especially with Da Nang hosting the APEC Leaders’ Week 2017 in November and drawing leaders of 21 APEC economies and thousands of official delegates and heads of the world’s leading enterprises.

At present, the DHTP has more than 300ha of land available for investment projects. In the first half of 2017, it attracted seven projects worth 158 million USD.

Vietnam accelerates fruit, veggie imports from Thailand

Vietnam’s fruit and vegetable imports from Thailand in the first seven months of 2017 picked up 3.2 times compared to the same period last year, shows Ministry of Agriculture and Rural Development data.

In explaining the sudden upsurge, Hoang Trung, head of the Plant Protection Department under the ministry, said Vietnamese firms bought fruits and vegetables from Thailand to ship them on to China.

Thailand remains Vietnam’s largest exporter of fruits and vegetables and accounts for 61.8% of the country’s total fruit and vegetable purchases from abroad, followed by China with 16%.

Besides Thailand, India and New Zealand were also major fruit and vegetable exporters to Vietnam, with respective growth of 2.2 times and 53.5% in January-July.

According to a report by the Ministry of Agriculture and Rural Development, Vietnam spent US$169 million buying fruits and vegetables in August, taking the total in the first eight months to US$1.02 billion, a year-on-year surge of 94%.

Vegetable imports doubled to US$190 million and fruit imports grew 34.6% to US$809 million year-on-year.

In the other way around, Vietnam has secured Thailand’s approval to annually export 9,000-10,000 tons of fruits and vegetables to the neighboring country, especially dragon fruit, Trung noted.

The ministry report also said Vietnam exported US$296 million worth of fruits and vegetables last month, taking the total in January-August to US$2.32 billion, up 46.5% versus the year-ago period.

China, Japan, the U.S., and South Korea were the four leading importers of Vietnamese fruits and vegetables in January-July, representing 85.1% of the country’s total exports.

In the first seven months of the year, the country’s major export markets include Japan with 61.7% growth, the United Arab Emirates with 61.4%, China with 61.3%, Russia with 49.4%, the U.S. with 26.7%, Taiwan with 19.2% and the Netherlands with 12.9%.

Industry ministry still struggling with 12 loss-making projects

The Ministry of Industry and Trade is still grappling difficulties in dealing with the 12 loss-making investment projects though there are bright prospects for some of them.

The ministry told Deputy Prime Minister Vuong Dinh Hue, head of the steering committee for handling the 12 projects, at a meeting in Hanoi on September 6 that Viet Trung steel mill and DAP 1 fertilizer plant in Haiphong City had begun to be profitable, reports the Government news website. For the ethanol projects in Quang Ngai and Phu Tho provinces, some investors have shown interest in them.

A report delivered at the meeting by the ministry said four fertilizer projects of the Vietnam Chemicals Group have resumed production but one of them, DAP 2 in Lao Cai Province, has stopped operation for maintenance since August 12.

However, all of them but DAP 1 in Haiphong City have yet to be financially efficient as input costs have remained higher than expected.

For five projects under the Vietnam Oil and Gas Group (PVN), the Dung Quat ethanol plant in Quang Ngai Province has not been able to return to production due to the lack of funding for solving problems with its wastewater treatment facility.

Moreover, shareholders have been discouraged by the lower-than-expected fuel prices which might lead to losses for them. Ethanol is mixed with A92 gasoline to make E5 bio-gasoline, a fuel which is cheaper than A92 and A95 petrol but has yet to win consumer confidence due to concerns over quality.

The ministry said at the meeting that several investors have expressed interest in getting involved in this ethanol project and that shareholders have been told to work with investors over the possibility of clinching a business cooperation contract to bring the facility back to life.

Meanwhile, PVN has told its subsidiary PVOil to draw up plans to divest from an ethanol plant in Phu Tho Province and another in Binh Phuoc Province. The ministry’s report said there has appeared an investor interested in the Phu Tho facility.

PVTex, a polyester fiber factory in the northern city of Haiphong, has remained in distress as it has been financially unable to carry out a court decision to pay out more than VND73 billion in water and power bills for the authority of the Dinh Vu Industrial Park where PVTex is located. Meanwhile, the Government is determined to not inject new capital into PVTex.

For Dung Quat Shipyard, PVN has asked its affiliates to use services at the shipyard to help keep it afloat and secure jobs for workers there. But there is a high possibility that the shipyard could be disbanded.

In two steel projects under the Vietnam Steel Corporation, the ministry said, after the Government took back a VND1 trillion budget for the second phase of Thai Nguyen steel plant, Chinese contractor MCC has returned to the negotiating table to solve the lingering problems with this project.

The other steel project, Viet Trung steel mill, has reported profit since March this year, with first-half profit estimated at VND67 billion and full-year tax payments projected at VND290 billion.

Deputy PM Vuong Dinh Hue told the State Bank of Vietnam to work with commercial banks over plans to restructure debts owed by the 12 projects. These plans would be used as a basis for the Ministry of Finance to weigh rescheduling the depreciation and amortization process of the 12 projects.

Meanwhile, the owners of these projects must find ways to cut costs and implement restructuring plans so that they could get out of the woods, Hue noted.

Property market seen undergoing drastic change

The HCMC Real Estate Association (HoREA) has forecast there will be a drastic shift in the property market in the 2016-2020 period with demand for small and medium houses for low-income people to surge and supply of high-end apartments to outstrip demand. 

The real estate market in HCMC and Vietnam as a whole was opened up in 1987 and officially took shape in 1993 when the National Assembly passed the first law on land use and an ordinance on homeownership.

The market development depends on five factors, namely the law of value, competition, supply and demand, government policies and mechanisms, and investment and business activities of enterprises.

The property market expanded significantly in 1993, 2001, 2002 and the second half of 2010. But it became frozen from 1995 to 1999, from early 2008 to mid-2009 and in the 2011-2013 period but then recovered robustly in the 2003-2006 period, and from 2009 to mid-2010. Since 2013, the market has remained buoyant.

The real estate market in HCMC registered positive growth in the 2006-2015 period despite woes.

Since 2016 the market has shown signs of slowing down, especially in the high-end housing and tourism property segments. However, the market fundamentals have stayed solid given strong demand.

Vietnam holds strong e-commerce growth potential - report

E-commerce in Vietnam has much room for growth but local companies have yet to tap its potential, according to a market research report.

The next source of growth is Connected Spenders, who have the ability to access the Internet and are willing to spend their discretionary income, according to the report by Nielsen Vietnam and the Demand Institute.

The report predicts these consumers will account for nearly 40% of the global population, thereby contributing more than 50% to annual spending.

Thanks to growing access to the digital economy and all that comes with it, the East Asia and Pacific region will witness the greatest increase in the number of Connected Spenders, especially in emerging markets like Indonesia, the Philippines, Thailand and Vietnam.

The report says there were 23 million Connected Spenders in Vietnam in 2015 and the figure is expected to nearly double to 40 million by 2025. Their spending will rise from US$50 billion annually to US$99 billion over the same time period and by 2025, they are expected to account for half of the total consumer spending.

Around one-third of Vietnamese Connected Spenders are between 21 and 34 years old (34%). By definition, the report says, over three-quarters of the consumers within the higher income bracket are Connected Spenders (76%) and nearly two-thirds of those have middle income, and 43% falls into the lower income group.

“Vietnamese Connected Spenders will spend US$0.8 trillion over the next decade. Therefore, for consumer-facing businesses seeking to grow in Vietnam, these are the consumers whose needs will need to be addressed,” said Rakesh Dayal, executive director of Consumer Insights at Nielsen Vietnam.

The report stresses Connected Spenders are much more adept at omnichannel shopping. Around 80% of them think shopping online is more fun and convenient. Before buying, regardless of searching online or offline, they gather information from both sources.

Around four in five read online reviews (83%) and refer to social media comments (74%) prior to purchasing a product whereas two out of three (66%) check out products in the physical store before purchasing them online.

Especially, Connected Spenders are price-conscious, constantly on the lookout for special deals and promotions: more than half of them use price saving apps to search for the best deals even when they plan a shopping trip online or in store.

Therefore, Nielsen Vietnam urges local firms to pay attention to Connected Spenders as a new emerging type of consumer.

Vietnam has great potential for e-commerce as more than half of the population has access to the Internet, and 44.3% of households own smartphones or mobile devices. Notably, online consumers rocketed 129% in 2011-2015, according to a survey of Vietnamese consumers conducted by Singapore-based market technology company Criteo.

However, data of market research firm Kantar Worldpanel Vietnam shows e-commerce, despite exponential growth, accounted for a mere 0.4% of the domestic retail market last year. Of this tiny market share, 43% of goods were sold by traders on Facebook while the remainder were consumed through e-commerce websites.

Kantar Worldpanel forecasts e-commerce will amount to 2.2% and online buyers will make up 25% of the total by 2025.

Domestic gold prices fall sharply

Gold prices slumped in the Vietnamese market on Tuesday morning. On the Hà Nội market, selling price of one tael, or 1.205 ounces, of State-owned SJC’s gold declined by VNĐ190,000 (US$8.3) to VNĐ36.75 million. 

On the buying side, the price of each tael also fell VNĐ160,000, trading at VNĐ36.53 million.

In the southern cities of HCM and Cần Thơ and central Đà Nẵng City, one tael of SJC’s gold declined VNĐ250,000 during selling, trading at VNĐ36.73 million. Meanwhile, one tael was being bought at VNĐ36.53 million.

Bảo Tín Minh Châu Gold Jewellery Company and Doji Gold and Jewellery Corporation (DOJI) listed their selling prices at VNĐ36.68 million and VNĐ36.70 million, respectively. Buying rates of their gold were listed at VNĐ36.62 million and VNĐ36.60 million, respectively.

On the Asian market, gold is trading at some $1,325 per ounce, equivalent to VNĐ36.36 million per tael.

On global gold trading website Kitco.com, the price of gold slipped 1.2 per cent per ounce to end at $1,330.24 per ounce, the largest drop since July 3. Last Friday, global gold price hit a yearly peak of $1,357.54 per ounce.

Thus, the price of one tael of gold in Việt Nam is some VNĐ410,000 higher than that on the world market.

Global gold prices declined due to an upward trend in the dollar rate following an uptick in risk appetite fuelled by relief that North Korea did not test-fire missiles or conduct nuclear tests over the weekend as some had feared, Reuters reported.

Assets traded primarily in dollars, such as gold, are very sensitive to currency fluctuations. An increase in the dollar rate will lead to gold becoming more expensive compared with other currencies and the demand for gold also decreases, the website said.

Meanwhile, the worst-case scenario due to Hurricane Irma’s impact, the most powerful hurricane ever recorded in the Atlantic, looked to have been avoided, easing concerns of investors about the negative impact of the storm on the US economy. 

Stocks correct down after 10-year peak

The local stock market underwent a downward correction yesterday as investors increased selling pressure to seek short-term cash profits following a 10-year peak.

The benchmark VN-Index lost value in the last trading minute, falling off the 10-year peak recorded Friday, closed down 0.47 per cent at 797.47 points.

The market breadth on the HCM Stock Exchange was negative with 189 stocks declining, 29 rising and 75 closing flat.

Large-cap shares were also on the defensive with 21 of the top 30 largest shares by market value and liquidity (VN30) losing value and only seven advancing. Top shares, such as Vietnam Prosperity Bank (VPB), Military Bank (MBB), real estate giant VinGroup (VIC), PV Gas (GAS), confectionery Kido Group (KDC), steelmakers Hòa Phát Group (HPG) and Hoa Sen Group (HSG) dropped between 1.9 per cent and 3.1 per cent, each.

Brewer Sabeco (SAB), insurer Bảo Việt Holdings (BCH), private equity Masan Group (MSN), FLC Faros Construction (ROS) and budget airline Vietjet (VJC) slowed last week’s growth and failed to lift the market.

“Profit-taking pressure will remain high in the next sessions after a streak of gains of the VN-Index over the past three weeks,” said Trần Đức Anh, a stock analyst at Bảo Việt Securities Co.

The key market index has expanded about 4.2 per cent in the last three weeks.

Anh predicted some large-cap stocks would continue to rise but the rally will not be strong enough to support the overall market.

According to Nguyễn Hồng Điệp, director of the Sài Gòn-Hà Nội Securities Co’s HCM City branch, the market could see a short-term correction but it would not be long and serious.

Điệp said the market rally was driven by growth of some major large-cap stocks while a majority of the market has not been on the same rising wave. This phenomenon was part of investors’ anxiety about the market outlook, which is often volatile in the exchange-traded funds’ portflio restructuring period.

However, the 800 point landmark did not indicate a market downturn and the achievement would motivate the market to go further, Điệp was quoted as saying on vietstock.vn.

On the Hà Nội Stock Exchange, the HNX-Index also dropped 0.99 per cent to end yesterday at 102.89 points.

Liquidity rose slightly, totaling 195 million shares worth VNĐ4.2 trillion (US$185 million) on the two exchanges.

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