UNDP, Citi Foundation support innovation, startups in Vietnam

The UN Development Programme (UNDP), Citi Foundation and the Ministry of Science and Technology (MOST) jointly organised a diagnostic workshop on the state of the social impact startup ecosystem in Hanoi on June 15.

In his opening remarks, MOST Deputy Minister Tran Van Tung said sustainable development is one of the important orientations in the country’s socio-economic development. 

“Social impact businesses both make profit and have a positive effect on the community. And with their ability to adapt and replicate quickly around the world, these innovative businesses are the best models to tackle social challenges, create social impact, and accelerate the achievement of the UN Sustainable Development Goals,” he said.  

“A vibrant startup ecosystem and skilling are key to unleashing the creative energies of youth in meeting the most pressing SDG challenges in Vietnam,” said Caitlin Wiesen, UNDP Vietnam Country Director, at the event. 

She also informed that UNDP will open up applications for SDG Innovations Incubator and selected teams will receive an intensive business incubation and impact acceleration programme as well as the opportunities to pitch their ideas to national and international investors. 

Director and co-founder of Healthy Farm Nguyen Thi Thuy said her company will target providing clean and safe farm produce with clear origin to consumers, hotels and restaurants in order to develop social renovation and startup spirit among youths in Vietnam.

At the workshop, speakers focused on discussing young social innovators, developing startup spirit among youths in Vietnam, sustainable investment, and investment vectors, among others.

The workshop was part of the Youth Co:Lab Vietnam 2018 initiative, which is looking for the next generation of leading social entrepreneurs in Vietnam, following the success of the SDG Challenge in 2017.

Sharp drop in pork and beef imports

Vietnam purchased 477 tons of pork worth US$797,250 from foreign markets in April, down 44.8% in volume and 46.2% in value compared to March, according to the General Department of Vietnam Customs.

Approximately 19,750 tons of meat and meat products valued at US$30.64 million were imported into the country over the period, a drop of 19.7% in volume and 21.3% in value compared to March. In addition, imports of beef and buffalo meat also saw a fall from March.

The country bought meat and meat products from 34 markets in the world, with the US ranking first, making up 37.3% of the total import volume with 7,360 tons, worth more than US$10.49 million (down 11% in volume and 11.9% in value). Poland came second with 1,930 tons, worth more than US$2.16 million, down 17.8% in volume and 6.1% in value.

Last year, Vietnam spent nearly US$527 million on meat imports, including US$11.07 million on pork, US$75.7 million on poultry meat and more than US$415 million on live cows and buffaloes, and beef and buffalo meat.

Developer of Hanoi-Haiphong Expressway loses $110,000 a day

After more than two years in operation, VIDIFI JSC is facing difficulties as total revenue cannot cover its interest payments.

Vietnam Infrastructure Development and Finance Investment JSC (VIDIFI) has just submitted its report to the Ministry of Transport (MoT) on the 2017 business results of the Hanoi-Haiphong Expressway project.

Accordingly, the revenue from the seven tolls booths on Hanoi-Haiphong Expressway in 2017 hit only VND1.258 trillion ($55.42 million), equivalent to VND3.4 billion ($150,000) per day. Meanwhile, the revenue of two tolls booths on National Route 5 running nearly parallel to th Hanoi-Haiphong Expressway reached VND832.9 billion ($36.7 million) in 2017.

The total revenue of the entire project was VND2.091 trillion ($92.12 million), equivalent to VND5.7 billion ($251,100) per day, excluding the costs that VIDIFI spent to operate the nine tolls booths and maintain the two roads.

Meanwhile, in the recommendation submitted to the prime minister before his 2017 conference with enterprises, VIDIFI claimed to have to pay VND8 billion ($352,500) of interest a day.

Thereby, this project has been making negative VND2.5 billion ($110,132) in profit a day, equivalent to VND900 billion ($40 million) per year. Interest payments capture 94 per cent of the total costs, VIDIFI confirmed.

The Hanoi-Haiphong Expressway, which is considered the most modern expressway in Vietnam, has six lanes with the maximum speed of 120km per hour. Its length is 105km, passing through the four cities and provinces of Hanoi, Hung Yen, Hai Duong, and Haiphong with the total investment of approximately VND45.6 trillion ($2 billion). Most of this came from loans at the interest rate of 10.5-11.4 per cent for 30 years.

VIDIFI plans to repay around $17.7 million in 2016-2020 and $213.6 million in 2021-2044 to KEXIM Bank. From its $100 million debt to the German Development Bank (KfW), VIDIFI has returned over $46 million in 2013-2017, and intends to repay $29.2 million in 2018-2020. Therefore, VIDIFI has to repay $75 million by 2020, and $24.7 million between 2021 and 2023.

Unless the state provides a bailout or incentive policies as proposed in Decision No.746/QD-TTg dated May 29, 2015 on the structure of capital sources for the Hanoi-Haiphong Expressway project, VIDIFI's financial solutions on exploiting the land on the two sides of the expressway will be unsuccessful and this company will face bankruptcy.

VIDIFI was established in 2007 with the charter capital of VND5 trillion ($222 million) by Vietnam Development Bank (VDB), Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB), and Vietnam Construction and Import Export Corporation (Vinaconex).

Hoa Sen and Nam Kim not threatened by new Indonesian tariffs

Domestic steel giants Hoa Sen Group and Nam Kim Group do not expect negative impacts from the Indonesian government’s high anti-dumping duties imposed on colour-coated steels.

Indonesia has just announced applying anti-dumping duty of 12.01-28.49 per cent on colour-coated steel products imported from China and Vietnamfor five years. vietnamfinance.vn stated that accordingly, the two domestic steel manufacturers Hoa Sen Group and Nam Kim Group will be imposed tariffs of 12.01 and 19.16 per cent.

Previously, Indonesia has been imposing similar taxes of 13.5-36.6 per cent on cold-rolled steel products imported from Vietnam, China, Korea, Japan, and Taiwan since 2013 and has continued to maintain the safeguard measures after the country’s anti-dumping investigation in September 2015.

According to Viet Dragon Security Company (VDSC), Hoa Sen Group and Nam Kim Group will not suffer much of an impact from the Indonesian government’s tax because exporting colour-coated steel has never been a major activity of the Vietnamese steel industry.

Specifically, in 2017, the total output of domestic steel exports reached 1.6 million tonnes, including 47 per cent of galvanised steel, 38 per cent of cold sheet metal pads, and just 17.1 per cent of colour-coated steel, equalling 278,000 tonnes.

VDSC also estimated that nearly three-quarters of colour-coated steel manufactured goes to serve the domestic market. In 2017, the total consumption of colour-coated steel was 1.1 million tonnes, while 278,000 tonnes were exported, equalling 28 per cent of the total consumption.

The security firm also stated that domestic steel manufacturers tend to focus on developing products of gavalnised steel and cold sheet metal pads, and are steadily reducing colour-coated steel production because the durability and profit margins of the first two product categories are higher. Manufacturers like Hoa Sen and Nam Kim also have smaller capacity of colour-coated steel than other steel products.

Thanks to Hoa Sen Group’s great market share and revenue from its retail chains over the country, the firm does not depend on exporting activities, as 70 per cent of its products go to the domestic market, while the rest is distributed to 70 countries.

Indonesia used to be Nam Kim Group’s main market, taking up 60 per cent of its export output in 2015. However, by taking advantage of the globalboycott of Chinese steel, Nam Kim has expanded its export range to reduce indonesia's portion in its exports to 40 per cent in 2017. In addition, the firm’s colour-coated steel output last year only made up 13 per cent of its export output.

Thus, the new Indonesian tariffs may not impact the two domestic steel manufacturers significantly.

BSR considers second share sale before listing

Binh Son Refining and Petrochemical Co., Ltd. (BSR), the operator of Dung Quat Refinery, is considering putting more shares on sale before listing its shares on the Ho Chi Minh City Stock Exchange in April next year.

BSR chief exclusive Tran Ngoc Nguyen told Reuters that in order to attract more interested investors, BSR will not limit the sale to only strategic investors as previously planned. The sale is expected to take place via a public auction.

The money from the sale will be used to upgrade Dung Quat Refinery’s capacity to at least 192,000 from the 148,000 barrels per day (bpd) now and to allow it to process more types of crude oil.

Nguyen added that BSR selected one from seven contractors bidding for the contract to upgrade its facility, but refused to disclose the selected contractor’s name.

According to the approved equitisation plan, after selling 7.79 per cent of charter capital to investors at the IPO, BSR will continue to offer a maximum of 1.52 billion shares, equalling 49 per cent of the charter capital for strategic investors. However, BSR has yet to find strategic investors.

At the second sale, BSR hopes to ease requirements such as lock-up time and minimum registered capital for the planned sale, and also expects the government to approve the changes in order to speed up the process.

In the first half of this year, the firm reported a revenue of VND53.9 trillion ($2.36 billion) and after-tax profit of VND2.69 trillion ($117.9 million), equalling 69 and 77.6 per cent of the annual targets.

Previously, BSR has targeted the total sales of VND78.1 trillion ($3.5 billion) for the whole year.

Its net profit is expected to reach VND2.95 trillion ($129.3 million) by the end of June, exceeding the six-month target by 70.7 per cent and completing 84.7 per cent of the target set for the whole year.

In the next six months, BSR aims to produce and sell more than 3.18 million tonnes of products and earn VND1.75 trillion ($76.7 million) in after-tax profit.

Vinataxi and Savico Taxi to merge to compete with Grab

Backed by ComfortDelGro Corporation Limited from Singapore, the merger between Vinataxi and Savico Taxi may help them overcome the competition with Grab and other ride-hailing applications.

Most recently, the representative of Vietnam Taxi Company (Vinataxi) has announced the plan to merge with ComfortDelgro Savico Taxi—the taxi brand that had to suspend operations in March due to heavy competition.

Vinataxi currently holds the third largest market share in the taxi sector in Ho Chi Minh City. Despite the firm claiming that its taxi business has not been much affected by Grab’s presence, its 2017 profit was only 10 per cent of the annual target. Notably, last year Vinataxi reported VND48.7 billion ($2.13 million) in revenue and VND1.2 billion ($52,553) in after-tax profit, equalling 49.8 and 9.87 per cent of the yearly targets.

The representative of Vinataxi expects that the merger with Savico Taxi will help increase revenue and profit from taxi business by six times compared to 2017.

Vinataxi was established in October 1992 by Tecobest Investment Ltd. (Hong Kong ) and Tracodi. In 2003, the Hong Kong partner transferred its holding to ComfortDelGro Corporation Limited from Singapore, one of the world's largest land transport firms.

Once Vinataxi merges with Savico, ComfortDelGro Corporation Limited will be a common backer to both.

However, there are concerns that Vinataxi’s optimism is misplaced as Savico might not give it the expected boost, especially after it had to suspend operations due to competition.

Savico reported bleak business results prior to the suspension. Notably, according to Savico’s 2017 financial report, the taxi joint venture had total assets of VND92 billion ($4.038 million), however, its after-tax profit was VND235 million ($10,316) only. Previously, in 2016, its pre-tax profit was VND4.1 billion ($180,000), equaling 53 per cent of its plan for the whole year.

According to Savico, the purpose of ComfortDelgro Savico Taxi’s decision was to look for other business opportunities as well as safeguard the capital that Savico and ComfortDelgro contributed to the joint venture.

First container vessel received at the SSIT Port

The SSIT port in Cai Mep welcomed its first container vessel on June 14. The MV MSC Rosaria is owned and operated by MSC Geneva, one of the world’s largest shipping lines. MSC will make regular calls at SSIT in the future.

SSIT is a joint-venture port. SSA Marine, headquartered in the US, owns 50 per cent of the facility. Saigon Port controls 39 per cent and Vinalines Hanoi holds the remaining 11 per cent.

SSIT was built to handle the largest container vessels in the world. These so-called Ultra-Large Container Vessels can carry up to 20,000 twenty-foot equivalent units (TEU) with a deadweight capacity of almost 200,000 tonnes.

SSIT is a deep-water facility with a 16.5m draft alongside the berth. The terminal is equipped with the largest container shore cranes in Vietnam. The overall operational berth length exceeds 1km, of which 425m are dedicated to barge operations. The SSIT’s land area totals 60ha. The container handling capacity of SSIT will reach about 1.2 million TEU annually.

SSIT has been actively handling bulk vessels since October 2014. Today, the terminal is the largest and busiest bulk port in southern Vietnam. Starting in June, container operations will be added, complementing SSIT’s operations going forward.

First Vinfast cars to debut at Paris Motor Show

Recently, images of the first two models of Vinfast’s sedan and SUV designed by Pininfarina through a $5 million contract sharing intellectual property rights from BMW are now exhibited at the Paris Motor Show at the end of last week.

With the logo V in front and the word Vinfast in the back, the IDG Sedan 02 design which won the public vote in the sedan line-up with 22,400 votes (36.2 per cent).

The vote for SUVs was won by IDG SUV 02, with 13,853 votes (22.4 per cent). However, according to information leaked on social media, IDV SUV 03 will also be introduced at Paris Motor Show. The commercial versions of these cars will be sold in 2019.

At Vingroup’s annual general shareholders’ meeting (AGM) taking place on May 31, Vuong stated that the domestic market is the priority of Vinfast. Although Vietnam is a competitive market, he believes Vinfast’s chances of success are high.

Vuong confirmed that Vinfast cars will beat competition in quality due to the highly automated manufacturing. There are 1,200 robots working in the welding factory of Vinfast.

Moreover, the selling price will be very different from market standards as profit will not be a priority for Vinfast as instead the firm will focus on capturing the market.

In the long term, however, Vinfast will export its cars. Russia and the surrounding countries will be the priority market at first because of the large population and the significant knowledge the leaders of Vingroup hold about this market.

“In the long term, Vinfast will be the mainstay business line for Vingroup. Vinfast will not only manufacture automobiles, but also set foot in the heavy industry through cutting-edge technology to manufacture so many things. This is the new target of Vingroup,” Vuong said the AGM.

With the total investment of VND35 trillion ($1.54 billion), the 335-hectare mega automotive factory project in Cat Hai (Haiphong city) is expected to place Vietnam on the global map of automobile manufacturing with the annual capacity of 250,000 electric motorbike and 250,000 cars in the first phase.

Three billion-dollar thermal power plants running behind schedule

Failure to discuss between investors and contractors as well as the weakness in management and inadequate operation capacity of contractors are two of the major reasons delaying the construction of three billion-dollar thermal power plants.  

The three projects include $1.82 billion Duyen Hai 3 expanded, $2 billion Song Hau 1, and $1.2 billion Long Phu 1 thermal power plants.

The project at Duyen Hai thermal power complex located in Dan Thanh commune, Duyen Hai district includes a 688MW power facility. The facility was scheduled to start operation in 2018, supplying approximately 3.9 billion kWh to southern region.

In 2014, Sumitomo Corporation received an engineering, procurement, and construction (EPC) contract to construct a supercritical power station in the 688MW Duyen Hai 3 coal-fired thermal power station expansion project of Power Generation Corporation 1, a power subsidiary of state-run utility Electricity of Vietnam (EVN).

Duyen Hai 3 is one of four power projects developed at Duyen Hai Power Centre with a combined generation capacity of 4,348MW as outlined in the nation’s power development master plan between 2011 and 2020 with vision towards 2030. The centre occupies a total area of 879 hectares.

According to the report of the National Steering Committee for Power Development, the construction of Duyen Hai 3 expanded project is 6.5 months behind schedule.

Sumitomo Corporation and sub-contractors’ weakness in management and operation capacity, in collaboration with the delays in supplying machineries and equipment, are major reasons for falling behind schedule.

Especially, the fire at the construction site in March, caused by the carelessness of the sub-contractor Jurong Engineering Limited, will extend the delays in the construction of the project.

Song Hau 1 thermal power plant is one of the key projects in the National Power Development Master Plan VII. It is invested by Petrovietnam and managed by PetroVietnam Song Hau 1 Power Project Management Board and developed by general contractor Lilama Corporation through the EPC format.

This project is part of the 5200MW Song Hau Thermal Power Centre (including three member thermal power plants), located in Chau Thanh district, Hau Giang province with a $2 billion total investment.

The construction of the project was started in May 2015. According to plan, the plant would come into operation with full capacity in 2019 and generate 7.8 billion kWh of power per year.

However, as of April 2018, the construction progress only met 56.57 per cent of the schedule, meaning a 24 month delay.

According tothe EPC contract, 12 months after the signing (April 10, 2016), the project’s management board and the general contractor will be permitted to discuss adjustments to the prices for a number of component construction projects.

However, the documents of competent state management agencies do not provide detailed guidance on the method of adjustment, thus, parties have yet to reach a compromise ever since.

Besides, according to the EPC contract that PetroVietnam and Vinaincon E&C signed on May 15, 2017, Vinaincon E&C will conduct the construction of the 500kV distribution yard segment within 602 days, however, the segment is still being evaluated and has not even started construction.

Furthermore the delay in construction caused the investment capital of the project to increase by VND10.45 trillion ($458.04 million) due increases in the price of machinery, equipment, and labour, among others.

On January 26, Power Machines, the EPC contractor of Long Phu 1 thermal power plant, was put on the US Department of Treasury’s extended list of Russian individuals and companies subject to sanctions imposed on Moscow over the Ukraine crisis.

The move may delay the construction of Long Phu 1 project by 36 months. After the sanctions were imposed on Power Machines, General Electric announced cancelling the contract of supplying turbines and generators, which are two important segments of the project.

In September 2015, PetroVietnam and the Power Machinery-PTSC contractor partnership held a ceremony to begin he construction of Long Phu 1 in the Mekong Delta’s Soc Trang province.

The thermal power plant consists of two generators with a capacity of 1,200MW in Long Duc commune, Long Phu district, and is one of the key national projects within the National Power Development Master Plan VII.

The first generator was expected to be put into commercial operation in 2018 and the second in 2019.

Fire risks uncovered at another 108 buildings in Hanoi

Duc Dai Phat Commercial and Manufacturing Company, Sudico Service JSC, and No.1 Dien Bien Province Construction Private Enterprise are three among a hundred developers running buildings that violate the fire code in Hanoi.

The Hanoi Police Department of Fire Fighting and Prevention has just uncovered safety violations at 108 high-rise buildings across the capital. Adding to the list of 91 properties in late May.

The announcement lists a hundred buildings run by well-known real estate developers that are located in Ba Dinh, Dong Da, and Cau Giay, and some suburban districts.

14 of the listed buildings are developed by Duc Dai Phat Commercial and Manufacturing Company under the Ministry of Defence’s Urban and Housing Development Investment Corporation, including the A1, A2, A4, B1, B2, B3, B4, B5, B6, C1, C2, C3, C4, C5 buildings in My Dinh I urban area of South Tu Liem district.

Sudico Service JSC under Da River Urban and Industrial Zone Investment and Development JSC is the developer of four buildings, namely CT1, CT4, CT5, and CT6 in My Dinh-Me Tri urban area of South Tu Liem district.

Six buildings in Dai Kim and Hoang Liet wards of Hoang Mai district are managed by No.1 Dien Bien Province Construction Private Enterprise, the developer which was responsible for eight buildings from the 91 listed in May.

The list of 108 buildings also includes buildings run by Vimeco JSC (a member of Vinaconex Corporation), Vinaconex Corporation, Hanoi Real Estate Investment JSC, Thang Long Victory apartment building (in Hoai Duc District) by IPACO, and Licogi 18, among others.

The Fodacon apartment building in Ha Dong district where a fire occurred on May 25 is also included on the list.

High-end apartment buildings are also listed, along with the headquarters of 35 companies, central and local agency offices, and four educational facilities.

The 19 hotels listed include OASIS, Candle, Maydeville (Ba Dinh district), ASEAN hotel, Larosa, Emotion Hanoi (Dong Da district), and London Hotel (Cau Giay district).

Officials said they would continue to work with building managers to address the shortcomings. Investors who do not follow regulations will be subject to criminal proceedings.

Earlier on May 29, Hanoi announced a list of 91 buildings violating the fire code. As a result, there are nearly 200 buildings in Hanoi violating fire regulations.

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