BUSINESS IN BRIEF 30/4
Japanese firms invest in Vietnam’s industrial zones
Japan’s Sojitz Group has begun construction work on a 27-ha project in an industrial zone (IZ) near Ho Chi Minh City.
The Group’s Asia-Pacific Director General, Hideaki Kato, revealed the company plans to develop an additional three or four IZs in Vietnam.
Many Japanese small-and-medium-sized businesses are keen on Vietnam’s high technology industry, Kato said, adding that Sojitz has so far invested in more than twenty plants in all three regions of Vietnam, with a focus on food processing and infrastructure for IZs.
Sojitz got involved in a project to build Long Duc IZ in southern Dong Nai province which has attracted a large number of Japanese investors since it entered operations last September.
Among its big investors were Lixil (US$441 million) and Temura (US$98 million).
As well as ongoing projects, Sojitz is taking into consideration other fields, such as energy and paper production.
Deputy Minister of Planning and Investment Nguyen Chi Dung commended Sojitz’s investment in Vietnam and encouraged the group to pour investment into the establishment of special IZs for Japanese firms in northern and central regions.
SBV Governor: Monetary market to become stable by year-end
Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh announces that the macro-economic situation and monetary market will become stable later this year and into next year, with basic interest rates down between 1.5% and 2%.
Accordingly, the exchange rate will also be stable, or down just 1% from now until the end of the year, he added.
Banks have shown good liquidity while foreign exchange reserves reached a record figure of over US$35 billion.
The Governor said that loan outstanding balance of small and medium-sized enterprises (SMEs) account for 60% of the whole banking system’s outstanding balance. If the SMEs encounter difficulties, the banking sector will also have troubles.
At present, banks are very cautious about providing loans to SMEs. Binh attributed this to the high risks of bad debts.
SBV have cut back lending interest rates over the past two years, making them far better than they were two and three years ago.
Further interest rate cuts will depend on the macro-economic situation. Monetary policies should be stable to gain the confidence of businesses and people, Binh said.
Shopping centre takes top prize in green building contest
The Green Square shopping centre - Big C Di An, the first commercial building in Viet Nam to use green technology, has won first prize at the seventh Energy-Efficient Buildings contest organised by the Ministry of Industry and Trade and HCM City Energy Conservation Centre.
Located in the southern province of Binh Duong, the Green Square shopping centre - Big C Di An uses technology that helps save 20 per cent of energy consumption compared to a conventional shopping centre.
It was the first project in Viet Nam to be granted the LEED Gold 2013 awarded by the US Green Building Council for implementing green building technologies. It also achieved the LOTUS Silver certificate from the Viet Nam Green Building Council.
Launched in 2006, the contest has so far attracted more than 400 participating buildings in 25 provinces and cities.
Economic experts discuss problems
Viet Nam's economy would face many difficulties in the future, economic experts said yesterday at the spring Economic Forum.
And they added that the official growth rate did not reflect the real situation.
They also agreed that aggressive and drastic institutional reform must be carried out to keep the country economic healthy.
The two-day forum was held by the National Assembly's Economic Committee to propose resolutions for the national economy in the coming year. The best suggestions will be selected for submission to the NA.
Speaking at the forum, the director of the Viet Nam Institute of Economics, Tran Dinh Thien, said the economic growth rate was not steady.
"The quality of growth and competitiveness is low, consumption and investment are going down, especially in the private sector, people's incomes are declining - and bad debts and public debts mostly remain at the same level. The number of enterprises closing down has also risen to 11.9 per cent," he said.
"Meanwhile, we haven't seen any breakthrough institutional reform. This means the economy has stayed in a similar position after three years of restructuring," he added.
Cao Sy Kiem, from the National Financial and Monetary Policy Advisory Council, agreed, adding that in his opinion, the economy was far too fragile.
"While some enterprises have started to recover, it must be admitted that many evaluations of the economy are still vague and the health of many enterprises are questionable. One small congestion caused by State management could lead to dramatic consequences for enterprises," Kiem said.
Nguyen Van Giau, head of the National Assembly's Economic Committee, said the most important issue facing the macro-economy was non performing loans and public debt, as they closely affected the circulation of capital. He said the economy would remain weak until these issues were resolved.
According to a report by the Ministry of Finance in March, Viet Nam's public debt is as much as 48 per cent of the country's Gross Domestic Product.
State budget costs in 2013 increased nine times compared to the year 2000. Of this amount, payment of public debts increases by 4.1 times.
"Public debts should not be under-estimated. If we don't take a serious look at this matter, it will be too late when the due date comes," said NA deputy Tran Du Lich.
Thien of the Institute of Economics said it was time to adopt a different perpective on public debts.
"The definition of public debts and bad debts is not clear. Statistics on such debts are so different among agencies. The current belief is that we are under-estimating public debts," he said.
Nguyen Dinh Cung, director of the Central Institute for Economic Management, said the Government had to increase budget collection by adjusting goods prices and imposing fees, but this would result in great difficulties for the production sector.
"If State budget spending is still high, we need to foster privatisation with State-owned enterprises instead of borrowing money from our people."
Given the shortcomings of the economy, experts agreed institutional reform was now of significant importance.
Cung said the current role of the State in the market economy was no longer appropriate.
He said the main matter in carrying out institutional reform was to deal with the relationship between the Government and the market, giving the market the key role.
"It's the rule of the market economy; we need to respect this rule. The Government can't interfere too much in its operation," Cung said.
He also recommended that a stricter policy be imposed by the State budget on State-owned enterprises.
"They need to face the lack of investment capital and choose the most effective investment projects," he added.
Jan-Apr inflation lowest in 13 years
Weak domestic demand and stable food and energy prices have resulted in January-April inflation posting the lowest rise in 13 years, according to HSBC’s report on Vietnam’s economy.
In the past 13 years, the monthly inflation has averaged out at 1% in the first four months of year. However, the average monthly inflation in the same period this year is a mere 0.2%.
HSBC expects prices to rise modestly in the next two months as domestic economic conditions are gradually improving. However, there is little price pressure in sight as consumer confidence remains low and global goods prices are in decline.
Even with an assumption of higher education and healthcare costs in August and September, and potential electricity price hikes in summer, headline inflation this year is forecast to end at 5.6%, says the report. This would be Vietnam’s lowest inflation reading in a decade.
The report of HSBC was released on April 24 when the General Statistics Office also released statistics on the price consumer index (CPI).
According to GSO, Vietnam’s CPI has inched up slightly this month compared to last month with a rise of only 0.08% though nine of 11 groups of items have marked up.
The reason for such a low rise is goods prices have remained almost flat.
The group of catering services, the most weighted in the basket of items used to calculate the CPI, has edged up only 0.15% as foodstuffs and dining-out services have risen 0.27% and 0.18% respectively and food has dropped 0.26%.
The respective increases of the beverages-tobacco, apparel-hat-footwear, household appliances and transport groups are 0.23%, 0.26%, 0.24% and 0.33%.
The country’s CPI in the first four months is up only 0.88%, well below the 4.45% recorded in the same period last year.
BIDV raises chartered capital to VND33.5 trillion
BIDV shareholders have approved a proposal for raising the bank’s chartered capital to VND33.5 trillion from VND28.1 trillion.
In the capital increase plan, the Bank for Investment and Development of Vietnam will sell shares to its current investors and strategic shareholders, and pay a dividend by shares. The forthcoming share sale will lead the State ownership of the bank to fall to 86.66% from the current 95.76%.
The bank said its listing on the HCMC stock exchange early this year had set a foundation for an upcoming sale of shares to a strategic foreign investor.
At the bank’s general meeting last Friday, shareholders asked whether or not the bank was planning to merge with another credit institution, Tran Bac Ha, chairman of the bank, said since the State remains a majority stakeholder, the bank will not do that unless otherwise approved by the State.
The 2014 targets the bank set at the meeting are 13% growth in outstanding loans, profit before tax at VND6 trillion, a bad debt ratio of less than 3% and a dividend of 9% or higher.
Last year the bank sold more than VND1 trillion worth of bad debt to the Vietnam Asset Management Company and will sell another VND2 trillion to this debt trading firm this year.
The bank last year mobilized nearly VND416.73 trillion, up 16.4% versus the previous year, and reported total outstanding loans of VND392 trillion, up 16.7% from a year earlier, and pre-tax profit of VND5.3 trillion, 12% higher than the 2013 target approved by shareholders.
Its return on asset was 0.78%, its return on equity was 13.8% and its dividend was 8.5%.
Vinacafe reports profit after big losses
Vietnam National Coffee Corporation (Vinacafe) has earned hundreds of billion dong in profit after a long period of losses, said general director Nguyen Nam Hai.
In April last year, Vinacafe had total accumulated debt of around VND1 trillion and faced the possibility of being merged into Vietnam Rubber Group (VRG) or having to sell its headquarters to settle the debt.
However, the scenarios were not translated into reality as suggested by the Ministry of Agriculture and Rural Development to help Vinacafe get out of troubles.
Hai told the Daily that the huge debt had been solved but declined to elaborate on the solutions. He added the corporation was now focusing on planting and exporting coffee.
The overlapping export of coffee between Vinacafe, its member companies and subsidiaries was one of the reasons behind the debt. As all of these companies exported coffee, they undercut prices to lure customers.
Hai said activities of the companies had been re-arranged and now just one subsidiary of Vinacafe was responsible for signing contracts with buyers and exporting coffee to them and the others provided warehousing and logistics services.
“We are running at a profit thanks to this structural change,” Hai said.
Viettel in tourism deal with Ba Ria-Vung Tau
The Tourism Information and Promotion Center of Ba Ria-Vung Tau Province has clinched a deal with mobile carrier Viettel to implement a project to provide tourism information for visitors who use Viettel mobile services.
The center said the province plans to promote tourism through its website at http://bariavungtautourism.com.vn and on Viettel network. Tourism information will be posted on this site and sent to Viettel users via text messages.
What is special about this partnership is that Viettel users will receive a welcome message that reads: “Chao mung - Welcome” upon their arrival in Ba Ria-Vung Tau for a visit. They can seek information about restaurants, hotels and entertainment areas, among others in the province, by texting to Viettel but they should pay a fee for this.
Tourism companies in the province can also send information about their promotions to Viettel’s database. Following the approval by the province’s Department of Culture, Sports and Tourism, the information can be sent automatically to Viettel users.
This is one of various programs to promote local tourism this year. Others include airing a special show on the provincial television channel (BRT) and promoting local tourism in Vietnam Tourism publications.
VietinBank chairman likely to go
Pham Huy Hung, chairman of the Vietnam Bank for Industry and Trade (VietinBank), no longer serves as a representative of State ownership in the bank, meaning the possibility of him losing the post of chairman is high.
The State Bank of Vietnam has issued Decision 807/QD-NHNN relieving Hung of his duties as a representative of 40% State ownership in VietinBank, one of the country’s leading commercial banks.
VietinBank is expected to hold a general meeting of shareholders tomorrow where a new board of directors would be picked for the 2014-2019 term.
Analysts said the central bank’s move meant Pham Huy Hung could not retain the post of board chairman at VietinBank in the next term. Hung is now 60 years old, the normal retirement age.
Hung has been serving as VietinBank chairman since 2007. From 2002 and 2009, he was general director of the bank.
Hung came in the spotlight when Huynh Thi Huyen Nhu, former acting head of Dien Bien Phu transaction office of VietinBank in HCMC, stood trial on charges of swindling over VND4.9 trillion from organizations including Asia Commercial Bank (ACB) and individuals.
Many plaintiffs and victims at the court trial early this year said they had lost money due to the contracts they signed with VietinBank, not Nhu as an individual and argued that VietinBank rather than Nhu should be the defendant.
At the time, Hung stirred up a controversy when he told the media that the money which individuals and organizations had transferred to Nhu did not go to any accounts at VietinBank. Therefore, he argued, VietinBank was not responsible for compensation.
Attorneys of plaintiffs sharply criticized Hung’s comment. Tuoi Tre newspaper cited lawyer Luu Van Tam as saying that Hung’s comment showed a sense of irresponsibility.
At the court Tam showed 32 contracts and 32 transaction statements which 17 employees of ACB had signed with VietinBank, which he said proved ACB’s money had gone to the accounts at VietinBank.
In another decision issued last week, the central bank picked Nguyen Van Thang, a member of the board and general director at VietinBank, as a representative of 40% State ownership in the bank; Le Duc Tho, office manager of the central bank, as a representative of 30% State ownership in the bank; and Cat Quang Duong, deputy head of the Credit Department at the central bank, as a representative of 30% State ownership in the bank.
Shrimp exports face stricter controls on antibiotic residues
The Europe Union (EU) and Japan have warned of more shrimp shipments from Vietnam with higher-than-allowed antibiotic residues this year than in previous years and will consider stricter inspections on imports if more cases are found.
The National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad) said it had received the warnings from the EU and Japan about the Oxytetracyline antibiotic found in Vietnam’s shrimp shipments. In January-April alone, these two markets detected 11 shrimp shipments with high Oxytetracyline antibiotic residues.
Japan has found four more shrimp batches from Vietnam having Oxytetracyline antibiotic residue problems since March 14 when that country launched checks on all the raised shrimp shipments from Vietnam after detecting the antibiotic residue excess in two batches of shrimp.
Since early this year, the EU authorities have sent warnings against five shrimp shipments imported from Vietnam for having higher-than-permitted antibiotic content while there were only two last year.
Although Oxytetracyline antibiotic is allowed in seafood farming, the fact that Vietnamese raised shrimp had been warned of the excessive antibiotic content by the two major shrimp importers indicated that this substance was being overused in local shrimp farming, Nafiqad said.
Therefore, Nafiqad has called for domestic firms to tighten controls on the quality of unprocessed shrimp. Also, the department has increased the number of samples for antibiotic testing and kept an eye on the enterprises in the warning lists of the EU and Japan.
Earlier, the Vietnam Association of Seafood Exporters and Producers (VASEP) reported that a number of shrimp shipments sent to the EU had been found to contain higher Oxytetracyline antibiotic residues than permitted. The association said the EU would consider imposing stricter controls on or even suspending shrimp imports from Vietnam if it found more contaminated shrimp.
Currently, the allowable level of Oxytetracyline antibiotic in the EU is 0.1ppm. This is also the permissible rate for seafood products that the Ministry of Agriculture and Rural Development specifies in Circular 15/2009/TT-BNN.
Last year, seafood exports to the EU exceeded US$1.18 billion while seafood shipments to Japan were lower, at US$1.15 billion.
In the first quarter of 2014, Vietnam shipped US$1.61 billion worth of seafood, a year-on-year rise of 35%, according to the agriculture ministry.
Lotte to develop US$2-billion smart complex in Thu Thiem
A joint venture between South Korea’s Lotte Group and some big Japanese investors, with Lotte Group taking the lead, will develop a smart complex worth US$2 billion in Thu Thiem New Urban Area in HCMC’s District 2.
According to Lotte, the joint venture has received approval in principle from the HCMC government to implement the project spanning ten hectares in Area 2A in the new urban center.
With an investment of US$2 billion, Area 2A will be developed into a sprawling complex consisting of commercial center, hotel, serviced apartments, office space and condos. The joint venture expects to finish the project’s master plan within this year and will proceed with the project’s phased development in line with the progress of infrastructure development in Thu Thiem New Urban Area.
The HCMC government has envisioned Thu Thiem Peninsula as a new, modern urban area. The city looks to make the 657-hectare Thu Thiem a modern financial, commercial and services center.
The South Korean-Japanese joint venture plans to make the ten-hectare complex a landmark of not only HCMC but also the Southeast Asian region.
The project while boasting special architecture will feature modern facilities in a smart complex. The smart systems utilized for buildings of the project include the ubiquitous control system like the smart city, smart home and smart office systems; the smart energy management system to deliver energy efficiency; the information system with wifi, media pole and wireless LAN services; the e-safety system with CCTV and integrated disaster prevention system.
Lotte and its partners conceived the project a long time ago. At a meeting with the HCMC government in March 2013, Lotte Chairman Shin Dong-bin said that the group had pursued the project for years and it was now the time to kick it off.
According to the investor, the complex in Thu Thiem is a follow-up of Lotte Center Hanoi which is currently under construction and expected to be put into service this September. Lotte Center Hanoi is a luxury complex comprising five basements and 65 floors with total floor space of 253,000 square meters. It features a high-end commercial center, a five-star hotel, smart office space meeting international standards, luxury serviced apartments and an observatory tower to become a destination for Hanoi residents as well as ones from neighboring provinces. Given the group’s expertise in hotel management, Lotte Center Hanoi will promisingly offer excellent services to customers.
Mr. Kim Min Geun, Vice President - Head of Overseas Mixed Used Development Division of Lotte Asset Development under Lotte Group, said that Lotte Center Hanoi and the smart complex in Thu Thiem are important projects of Lotte when making investments in Vietnam. The two projects, after being put into use, will become landmarks in Hanoi and HCMC.
Lotte enjoys many years of experience of developing modern complexes as the group has invested in many complex projects overseas like Lotte World in Shenyang and Lotte Mall in Chengdu, China. In South Korea, beginning with Lotte Mall Kimpo Airport, Lotte is developing many similar properties such as Lotte World Mall, Lotte Mall Suwon and Lotte Mall Songdo. Finished resort projects of Lotte are Buyeo Resort and Jeju Resort while The Eunpyeong New Town and Magok projects are being implemented.
In addition to the complex project in Thu Thiem, Lotte is pouring billions of U.S. dollars in many sectors in Vietnam, including hotel, fast-food store chain Lotteria, Lotte Mart supermarket, cinema, food, construction, and home shopping on TV.
Standard Chartered Vietnam wins the Asset Triple A Awards 2014
Standard Chartered Bank (Vietnam) has been presented with The Asset Triple A Treasury, Trade and Risk Management Awards 2014 by the global financial magazine The Asset.
The bank was named in the categories of “Best Banks” for Best Service Provider for Structured Trade Finance in Vietnam and Best Service Provider for eSolutions Partner Bank, and “Best Solutions” for Best Trade Finance Solution.
The Asset Triple A Awards are industry excellence awards given out every year to institutions that have outshone the competition in providing best-in-class treasury, risk management and working capital solutions to their customers. This is the second consecutive year Standard Chartered Vietnam has been chosen for the awards.
“We are honoured to receive, for the second time, The Asset Triple A Awards. This is a significant achievement reflecting our innovation, excellence and capabilities to deliver effective solutions in Vietnam,” Maxime De Guillebon, head of Transaction Banking, Standard Chartered Bank (Vietnam) said. “Standard Chartered is firmly committed to building long-term win-win relationships with clients. We will continue to leverage our innovative and tailor-made solutions and further enhance our service quality to serve them even better in the time to come, reinforcing our brand promise of being “Here for good.”
In 2013, Standard Chartered Vietnam continued its aggressive mode in enhancing its cash management solutions to help clients achieve working capital efficiencies. The bank launched a new billing statement for clients to have full transparency on cash charges, enabling clients to have wider access to banks and payment channels as a means to obtain reconcilable payments while getting collection information in an almost immediate manner. The innovation pipeline is set to cater to all cash solutions lines: liquidity, receivables and payments as the bank continuously engages clients and regulators in developing solution.
Besides, Standard Chartered also provided clients from various industries with innovative ways to have access to funding to power their working capital requirements. Most of the clients were generally provided with multiple facilities allowing them multiple trade financing options to cater to their respective needs. The Bank responded positively to unique client challenges and provided cost-effective financial solutions.
Thanks to its innovative and differentiated solutions to enable business in Vietnam, Standard Chartered have won a large number of trade finance and cash management mandates, and managed to increase its liabilities and client base by double-digits.
US businesses show interest in Vietnam market
US business entrepreneurs are quite keen on doing business with their counterparts in Vietnam as they believe there is huge potential for further enhancing beneficial cooperation.
At an April 27 dialogue sponsored by the American Chamber of Commerce (AmCham) in Singapore, the businesspeople also expressed their eagerness to learn more about recent legislative changes in Vietnam affecting foreign investment and solicited opinions from those in attendance on the best opportunities in the country.
At the event, Vietnamese Minister of Planning and Investment Bui Quang Vinh told the gathering that the government is seeking to attract projects which use environmentally friendly technology and churn out higher added value products, especially in infrastructure development, as well as in information technology and biotechnology to buttress agricultural production.
Vinh also suggested AmCham in Singapore coordinate with relevant authorities in Vietnam to schedule a series of regular exchanges with the US business community to provide them with complete information on investments in health care, education, high-tech, information technology and infrastructure development in Vietnam.
For her part, Executive Director of AmCham Judith Fergin stated that US businesses eye Vietnam as a highly lucrative alternative trade partner to China, primarily attributable to lower costs of production in Vietnam.
Potential partners are closely monitoring the Vietnamese market because its Government is undertaking important reforms in administration procedures, business restructuring and legislation, to create a healthier competitive environment, she added.
She strongly recommended that the Vietnamese Government speed up negotiations on the Trans-Pacific Partnership (TPP) agreement as the trade pact will help promote foreign investment necessary to build the economic infrastructure for improved supply chains, generating better jobs for citizens.
State firms’ divestment of non-core operations hits offshore projects
A lot of offshore investment projects have got stranded in Laos and Cambodia as their owners that are state-owned enterprises are divesting their non-core business operations as ordered by the Government.
Widespread yet ineffective non-core business activities have put many SOEs in peril, leading the Government to order them to pull out and focus on their main operations. However, the divestment process has delivered a blow to half-done projects in the two neighboring countries.
The Foreign Investment Agency of the Ministry of Planning and Investment said Song Da Corporation has been grappling with difficulties to carry on a couple of hydropower projects in Laos because its partners have declined to continue their capital contributions.
Song Da owns 49% of Vietnam-Laos Electricity Joint Stock Company, the Bank for Investment and Development of Vietnam 11%, PetroVietnam Finance Corporation 11%, BIDV Securities 10%, Vietnam Oil and Gas Group 10%, Vietnam Electricity Group 2%, Song Da Urban Investment Construction and Development Joint Stock Company 6%, and PetroVietnam Insurance Joint Stock Company 1%.
This joint venture has taken a hit from the Government restrictions on non-core business operations of state firms, plus the prolonged impact of the global economic slump, with Song Da Corporation’s all other partners having suspended new capital injections into the projects under way.
A number of projects have been put on hold though thousands of billions of dong has been disbursed into them and a lot of other undertakings are under review because of a lack of fresh funding.
Relevant government ministries and agencies, after a series of meetings, have asked the Prime Minister to allow the partners of the Vietnam-Laos joint venture to continue capitalizing a number of projects which they have committed to implementing. Nonetheless, all the stakeholders but Song Da have lost appetite for those projects.
Also in the same situation is the HCMC Medical Investment Company (MECO), the owner of Cho Ray-Phnom Penh Hospital in Cambodia capital Phnom Penh, according to FIA.
The first phase of the hospital has been in service with 200 inpatient beds since the middle of January this year. But the next development of the project has been unable to start as the involvement of five of eight partners in MECO is considered a non-core investment activity that must be done away with under new regulations.
The HCMC government has recently wrote to the Prime Minister seeking approval to permit these five firms to continue contributing finances so that MECO could finish the project as promised with Cambodia. The five companies are HCMC Finance and Investment Co., Saigon Trading Group, Saigontourist, Saigon Agriculture, Inc., and Saigon Construction Corporation.
The Prime Minister’s Decision 929/QD-TTg issued in July 2012 compels state-owned groups and corporations to relinquish their non-core investment operations by the end of next year.
The HCMC government reasoned that the Cho Ray-Phnom Penh Hospital project was drawn up before the decision came out and said it was the city that had assigned all these firms to carry out the project to bolster friendly and cooperative ties between HCMC and Phnom Penh.
Therefore, if the five enterprises are forced to pull out of this project by end-2015, the operations and second-phase development of the hospital will be adversely affected, according to the city.
The city said the governments of Vietnam and Cambodia had reached a consensus to move on with the next phase of the project to increase the number of beds from 200 to 500 but problems have emerged as the city has not been able to find other companies willing to replace the five who are compelled to withdraw as per Decision 929. Work on the second phase has not got off the ground due to this dilemma.
The Ministry of Planning and Investment has recently requested the Prime Minister to temporarily allow the five firms in question to keep injecting money into the project as capital contributions to phase one are not yet complete. At the same time, the ministry asked the city’s authorities to mull transferring the stakes of the five enterprises to state-owned groups or corporations whose core operations involve the healthcare sector.
FIA underscored the need for state enterprises to divest their non-core operations as part of the Government’s SOE restructuring scheme but said appropriate and moderate measures should be worked out to ensure important and strategic projects could move on.
Vietnam allures Japanese investors
Many Japanese investors are keeping a keen eye on investment opportunities as the pace of equitisation for many state-run enterprises in Vietnam heats up.
The Ministry of Finance’s conference on investment promotion into Vietnam held in Tokyo last week saw the participation of nearly 100 Japanese investors including SBI Holdings, Sumitomo Mitsui Asset Management, Sumitomo Life Insurance, Daiwa Securities, Misubishi, Knowledge, Mizuho, Recof, Normura Securities, Resona Bank, JP Morgan Securities and Aizawa Securities.
Japanese investors are eagerly anticipating Vietnam’s plans to boost the equitisation of its state-owned enterprises (SOEs), with Vietnam Airlines and Vinatex being the most coveted, said Tesuya Inoue, a Japanese participant at the conference.
Vietnam Airlines’ general director Nguyen Ngoc Minh said the national flag carrier had been valued by Morgan Stanley and Citi Group, and the valuation had been submitted to the government for approval.
“We have proposed that 25-30 per cent of Vietnam Airlines be sold to foreign investors, of which 20 per cent could be bought by a strategic investor. However, the final decision will be made by the government,” Minh said. “However, in the long term, the maximum 65 per cent government-held stake will gradually reduce to 51 per cent; a pattern likely to be seen in other major SOEs.”
Minh underscored that Vietnam Airlines would conduct its initial public offering (IPO) this October, and be listed on Vietnam’s stock market by late next year.
“We’re ready to work with foreign financial investors and airlines,” Minh added.
Garment giant Vinatex’s vice general director Pham Nguyen Hanh also said that Vinatex wanted to find three foreign strategic partners, including a financial investor and two investors who were operating in the garment and textile field, as part of its equitisation process.
Vinatex’s valuation had been completed and its IPO was slated for this July, Hanh said.
Vietnam Securities Depository chairwoman Phuong Hoang Lan Huong said about 6,700 Japanese individual investors and 140 Japanese organisations had investment accounts in Vietnam’s securities market, accounting for a huge 43 per cent of individual foreign investors and 6 per cent of total institutional foreign investors on Vietnam’s stock market.
Minister of Finance Dinh Tien Dung said to lure foreign investment, in addition to the revision of its Enterprise Law, Vietnam would increase foreign investor ownership caps in joint stock banks, while reducing the state’s ownership stake in state-run groups and corporations to a maximum 65 per cent.
The Vietnamese government was now focused on accelerating SOE equitisation to attract more private investment. Some 432 SOEs would be equitised during 2014-2015, he said.
Competition mounts in paid TV market
There is fierce competition at current in the paid television market as providers are running generous promotions to attract market share.
In April and May, Saigontourist cable television (SCTV) launched a huge campaign for customers in Hanoi. Accordingly, customers get two receivers and installment for the low price of VND80,000 ($4) a month. They pay only VND49,000 more for a second set-up.
In the case customers choose both cable and internet services, their monthly fee for a 2.5Mbs connection is only VND160,000 a month and for 4Mbs, only VND190,000.
SCTV has thrown the market a curveball as major providers such as VTVcab, K+, MyTV and HCTV are fast losing market share to the its highly preferential services.
Responding to the trend, VTVcab similarly launched a new promotion, its biggest ever in Hanoi. From March 28 to May 10 service fees for three TV cable lines pay only VND110,000 per month. Also, if a customer pays three months in advance, they will receive a month free.
Experts are saying the paid television market will continue this uptrend of promotions, particularly as new entrants such as Viettel TV, FPT and VNPT make their debuts.
In the past, with only a few suppliers, consumers were cornered into paying exorbitant fees for low-quality services. But now with so many competitors, providers are forced to reconsider their strategies.
In terms of services however, insiders have pointed out that there is little difference, as 70-80 per cent of the channels provided by cable companies are the same.
But Cao Van Liet, general director of K+, said customers want access to new, different channels, and this was also a major part of their decision making process.
Nguyen Hoang Linh, deputy general director of FPT Telecom, said that as paid television is an entertainment product, good quality programming will attract the most customers. “If television stations only focus on promotions to attract market share, they may find their strategy to be unsustainable,” he added.
HOSE to open new modern floor this week
The Hochiminh Stock Exchange (HOSE) will inaugurate a new 12-storey building on May 1, the most modern such facility in the country.
Designed with a modern architectural style, the Exchange Tower building is located within HOSE’s premises and is bordered by Nguyen Cong Tru and Nam Ky Khoi Nghia streets in downtown HCMC.
The building is integrated with the stock trading, depository and payment systems for various markets, including securities and bond markets. More facilities are also in the offing at this building to serve the derivatives market and carry out a plan for emerging the northern and southern bourses in the near future.
With the three major projects - the Exchange Tower, a data backup center and an information technology package, HOSE will provide good technical infrastructure that could make the local exchange one of the most modern in Southeast Asia.
Last week, leaders of HOSE and contractor Coteccons witnessed the final touches putting on the Data Backup Center in Quang Trung Software City in HCMC’s District 12. The center, covering more than 16,000 square meters and costing VND300 billion, will be handed over to HOSE in the fourth quarter this year.
HCM City to have new office building next month
MB Sunny Tower, an office building with three basements and 22 floors, will be put into service at 259 Tran Hung Dao Street in HCMC’s District 1 next month after three years of construction.
The investor, MB Land, has selected Savills Vietnam to manage the building with around 13,000 square meters of office space. This is the 60th property managed by Savills Vietnam in the nation.
The US$29-million tower is equipped with two escalators, five elevators, an energy-saving air-conditioning system and two backup generators.
Savills Vietnam said 30 office building projects would be up and running in HCMC in the next three years, with over 385,000 square meters of space for lease.
Another property service provider, CBRE Vietnam, said many office buildings would be completed and put into operation in HCMC this year, including Union Square with 20,000 square meters, Vietcombank with 55,000 square meters, Viettel Tower with 65,000 square meters and V-Tower with 12,500 square meters.
According to Savills, 217 office buildings had provided over 1.4 million square meters in this city as of the first quarter of this year, up 1% compared to the previous quarter.
Savills said the average occupancy and rent had inched up since the second quarter of last year.
In the first three months of this year, office buildings posted average occupancy of 90%, a five-year high, and up one percentage point quarter-on-quarter and three percentage points year-on-year.
The average office rent in HCMC was VND531,000 per square meter in the first quarter, up 2% over the previous quarter and 3% compared to the same period last year.
A recent survey of Savills shows that the Grade-A, Grade-B and Grade-C office buildings have been faring well in recent quarters, with the Grade-A segment having the highest occupancy rate of 92%.
Foreign companies accounted for around 60% of the total leased office space in HCMC.
Mong Duong II receives Golden Hardhat Award
AES-VCM Mong Duong Power Company Limited today held a ceremony to receive the Golden Hardhat Award presented by US’ AES Corporation.
Vice president of The AES Corporation hands over the Golden Hardhat Award to the Leadership Team of Mong Duong 2
BOT Power Project
The Golden Hardhat Award is a prestigious annual award established in 2009 by AES Corporation to recognise a single AES operating business or construction project that exemplifies what it means to put safety first, made significant improvements in comparison with previous performance, developed new safety techniques and best practices and improved safety performance significantly through execution of proactive or new safety practices.
Joining the ceremony was Pham Minh Chinh, Quang Ninh Provincial Party Committee Secretary, Do Thong, Vice Chairman of the Quang Ninh Provincial People’s Committee, Andrew Vesey, chief operating officer and executive vice president of AES Corporation, together with other high level representatives from POSCO Energy and China Investment Corporation.
The $2 billion Mong Duong 2 BOT Power Project, with two units and the total gross capacity of 1,240MW is currently under construction in Mong Duong Ward, Cam Pha City, Quang Ninh province. The project owner is AES-VCM Mong Duong Power Company Limited with three shareholders from the subsidiaries of AES Corporation (51 per cent), POSCO Energy from Korea (30 per cent) and China Investment Corporation from China (19 per cent).
After completion of construction in the second half of 2015, the Mong Duong 2 BOT Power Project will be the first and largest BOT coal-fired power plant in Vietnam. It is forecasted to produce over 7.6 billion kWh of electricity annually.
Prudential Vietnam and Standard Chartered Vietnam sign partnership agreement
Prudential Assurance Vietnam Private Limited and Standard Chartered Bank (Vietnam) Limited have entered into a new agreement to establish a 15-year strategic partnership to grow their bancassurance business together.
This came after parent companies of both entities signed a new 15-year agreement covering in several Asian markets subject to applicable regulations in each country. Vietnam is one of the markets where Standard Chartered Bank branches in the country will exclusively distribute a wide range of Prudential Vietnam’s life insurance products.
The agreement extends the already successful cooperation between Prudential Vietnam, the leading life insurer in Vietnam, and Standard Chartered Bank, one of the leading international banks in the country. Both organisations entered into a bancassurance agreement in 2009 and have developed their partnership into one of the most productive bancassurance businesses in the country. Building on their respective strengths and their common goal to broaden their bancassurance franchise in Vietnam, Prudential Vietnam and Standard Chartered Bank have reinforced their commitment and investments under the new 15-year strategic partnership, which will commence on July 1, 2014.
“Prudential Vietnam is the leading bancassurer in the country and enjoys highly successful bancassurance relationships with both international and local banks. Celebrating 15 years of operations in Vietnam, we are very happy to enter into a new 15-year exclusive partnership agreement with our strategic partner Standard Chartered Bank,” said Jack Howell, CEO of Prudential Vietnam. “An exclusive bancassurance partnership provides us with a seamless platform to offer high-quality insurance products and superior banking solutions to customers, allowing us to better serve their long-term insurance and financial needs. Both teams have worked well together and we are excited to take our partnership to a new level."
“We are excited to enter into a new stage of the highly successful partnership with Prudential in Vietnam. The alliance enables us to continue enhancing the value we offer to our customers across the country. It is also a great opportunity to provide our customers with a superior experience, focusing on meeting their diverse financial needs. Standard Chartered has been present in Vietnam for 110 years and is fully committed to this market. We look forward to working closely with Prudential to extend the protection to more people in the country, reinforcing our brand promise of being here for good,” Nirukt Sapru, CEO of Standard Chartered Vietnam said.