FDI sees fall

As of August 15, HCM City had received FDI worth US$1.05 billion in newly registered projects and scale-adjusted projects, compared to $2.76 billion in the first eight months of 2015, according to a report from the city government.

Since January the city has issued investment licences to 508 projects with total registered capital of $708.9 million.

Of the projects, 403 are wholly foreign-invested enterprises, which received $346.4 million. Ninety-nine are joint-ventures.

The real estate sector attracted the most investment — $318.9 million in 15 projects — and accounted for 45 per cent of investments in new FDI projects.

Trading ranked second with $198.4 million in 192 projects. The industrial sector attracted $71 million in 27 projects, and the information and communication sector, $38.5 million in 70 projects.

The investing companies are from 42 countries and territories.

Argentina begins anti-dumping investigation on Vietnamese ceramic tiles

Argentina announced a two-year anti-dumping investigation on ceramic tiles from Viet Nam with a raised dumping margin of nearly 30 per cent, the Vietnam Competition Authority said.

The anti-dumping investigation, which began on August 18, will be carried out on products exported to Argentina in 2015 and 2016.

Viet Nam is one of several countries under investigation. China gets the highest dumping margin of nearly 185 per cent, followed by Malaysia, India and Brazil, with margins of 126 per cent, 107 per cent and 23 per cent, respectively.

Ceramic tile is the fourth Vietnamese product investigated by Argentina, after spokes, motorbikes and air-conditioners.

The ceramic tile industry is one of the few production sectors that have rapidly increased in Viet Nam. With an annual capacity of 500million sq.m., the country takes the lead in Southeast Asia and ranks the sixth in the world.

Many businesses, such as Viet Nam Glass and Ceramics for Construction Corporation, Dong Tam Group, Thach Ban Joint Stock Company and CMC Joint Stock Company, as well as Taicera and Bach Ma Company have joined in the production.

Experts said the European Union-Viet Nam Free Trade Agreements and Trans-Pacific Partnership would not threaten the country's ceramic tile industry, but instead open new markets for the products.

A statistic on trade between Viet Nam and Argentina, issued by the General Department of Customs, showed that Viet Nam earned US$383.2 million from exports in 2015, a year-on-year increase of 120.3 per cent. It imported goods worth of $2.15 billion, a rise of 25.3 per cent. Argentina is the 14th largest importers of Viet Nam and the 49th largest exporter. 

Cuba, VN eye more investment

Cuba and Viet Nam are seeking to boost investments, which are still at a modest level despite the two countries' long-standing friendship.

Speaking at the investment forum held yesterday in Ha Noi, Dang Xuang Quang, deputy director of the Foreign Investment Agency under the Ministry of Planning and Investment, said Viet Nam had only one project worth VND9.5 billion (US$424,000) in Cuba, while the Caribbean island nation had two investment projects in Viet Nam, till date.

"There is large untapped potential," Quang said.

The modest investments are due to the limited access to market information and investment policies of enterprises from both sides.

Quang said he hoped the investment cooperation between Viet Nam and Cuba would be leveraged to a new high.

At the conference, Cuban Ambassador to Vietnam Herminio Lopez Diaz called for investments from Viet Nam. Although firms would encounter initial difficulties when investing in Cuba, as the country was embarking on the implementation of a privatisation model, the long-standing relationship between Viet Nam and Cuba would help overcomes difficulties, he said.

A representative from the Special Economic Development Zone of Mariel said the zone was seeking investments in high and clean technologies from major industries, such as logistics, biotechnology, pharmaceutical and food industry.

He said tax incentives were provided for wholly foreign-invested firms in the zone.

Vu Quoc Huy from the ministry's Economic Zone Management Department shared the opportunities to invest in Viet Nam with Cuban firms.

Huy said Viet Nam was striving to improve the investment climate by simplifying administrative measures and introducing tax incentives and land fee reductions to promote investments.

Viet Nam's economic zones have attracted 329 foreign direct investment projects, so far, worth $40 billion and another VND784 trillion from local investors has been put into nearly 1,000 projects.

Cuba and Viet Nam celebrated the 55th anniversary of their diplomatic relationship last year.

Agro-forestry-fishery exports up, rice down

The nation's agro-forestry-fishery exports experienced a year-on-year rise of 5.6 per cent to nearly US$21 billion in the first eight months of this year, statistics from the Ministry of Agriculture and Rural Development have revealed.

Exports of farm produce fetched $9.9 billion in the period, up 6 per cent against the same period last year.

Among these products, coffee recorded the strongest growth in both export volume and value. Coffee exports earned $2.25 billion from 1.27 million tonnes, surging 40 per cent in quantity and 21 per cent in value, with Germany and the US being the two biggest importers.

Significant increases of 31 per cent in volume and 13 per cent in value were also seen in pepper exports. From January to August, 135,000 tonnes of pepper were shipped abroad, bringing home $1.1 billion.

Seafood exports topped $4.3 billion, representing a yearly rise of 4 per cent. China, the US and Thailand witnessed a remarkable surge of 54, 12 and 10 per cent, respectively, in their imports of Vietnamese seafood.

Meanwhile, exports of some other products plunged in the period.

Rubber exports fell 5 per cent in value year-on-year, despite a 10 per cent increase in volume. A modest drop of 1 per cent was also recorded in the export value of tea.

The export value of wood and wood products in the first eight months reached $4.54 billion, a year-on-year fall of 1 per cent. The US, Japan and China were the three largest consumers, together holding approximately 53 per cent of the total export turnover.

The country exported 432,000 tonnes of rice worth $191 million in August, bringing total volume and value in the first eight months of this year to 3.37 million tonnes and $1.51 billion.

The figures represented decreases of 16.6 per cent in volume and 13.1 per cent in value compared with the same period last year.

China remained the biggest importer of Viet Nam's rice with 36 per cent of the market share. A total of 1.04 million tonnes worth $476 million were shipped to China between January-July, down 21.6 per cent in volume and 11.9 per cent in value year-on-year.

Indonesia followed with 353,000 tonnes and $140.4 million, up 25.5 per cent in volume and 26.8 per cent in value year-on-year.

Rice exports to traditional markets suffered drastic drops, including the Philippines (66.4 per cent), Malaysia (54.5 per cent) and Singapore (36.3 per cent).

However, the Philippines will open the bidding for 250,000 tonnes of rice on August 31 as part of its plan to import one million more tonnes of rice.

Viet Nam will participate in the auction, according to the Viet Nam Food Association. 

FTAS pressuring farming sector 

Agricultural enterprises in the Cửu Long (Mekong) Delta are facing severe challenges as Viet Nam integrates more deeply into the global economy, the director of the Viet Nam Chamber of Commerce and Industry's (VCCI) Can Tho branch said at a meeting this week in Can Tho City.

Many enterprises still lack knowledge about the Trans-Pacific Partnership (TPP), the ASEAN Economic Community (AEC) and free trade agreements (FTAs) that Viet Nam has signed, according to VCCI director Vo Hung Dung.

The biggest challenge is the pressure of competition, especially in the livestock industry. Agriculture is expected to be the most affected sector when the TPP and other FTA commitments take effect.

Rice, aquaculture and vegetable production face stiff competition because of a lack of highly skilled human resources, cutting-edge infrastructure and special incentives for start-up investments.

Many enterprises are not fully aware of the opportunities and challenges brought by international integration, and have failed to develop strategies to develop markets in and outside the country, according to Dung.

Other challenges include slow economic growth and the impact of climate change such as rising sea levels, saline intrusion and a lack of water resources.  

Viet Nam joined ASEAN in 1996 and signed bilateral trade agreements with the US in 2001 and with Japan in 2003. It joined the WTO in 2007, and this year, became a member of the TPP. To date, the country has signed 11 FTAs.

Dũng said that Viet Nam should reform its economic growth model and restructure the economy, especially agriculture. Production should be reorganised and technology promoted, he added.

The business model of large farms would also help to reduce costs and improve quality and food hygiene and safety, according to Dung. Bio-technology should also be used in farming and animal husbandry.

Under its commitments in the TPP and FTAs, Viet Nam will need to improve its competitiveness, modify its legal system and administrative procedures, and offer more training to improve human resources.

Dr. Pham Binh An, director of the WTO Centre in the country's southern region, said to take full advantage of international integration, businesses needed to keep up to date about FTA procedures and research markets and trade barriers, as well as learn about changes in policies under the TPP and FTAs.

Vo Tri Thanh, deputy director of the Ha Noi-based Central Institute of Economic Management, said agricultural enterprises should establish relationships with large firms in the region and the world to receive lessons in developing business.

Under new trade agreements, reduction of tariffs will create opportunities for Vietnamese industries to reduce production costs and have capital to promote investment and exports.

Local enterprises should take advantage of the lower production and business costs and improve competitiveness of their goods and services, Thanh said.

Viet Nam should approach large markets that have high purchasing power, he said.

He said that domestic small- and medium-sized enterprises, however, still faced many challenges in grabbing opportunities because of shortcomings in production and business. 

Ninh Thuan gets $431m of investment

A number of agreements on investment projects in wind power, breeding and high-end resort construction, with a total capital of nearly VND9.5 trillion (US$431.8 million) were signed in the south central Ninh Thuan Province on August 27.

The signing took place in the province's Investment Promotion Conference in the presence of Prime Minister Nguyen Xuan Phuc.

Speaking at the conference, Phuc urged the province to give more specific policy commitments to win investors' confidence.

The PM held that Ninh Thuan had a high potential for growth thanks to its favourable location as well as its natural and cultural benefits.

However, he noted that the province ranked 42nd among 63 localities nationwide on the provincial competitiveness index, which was behind many adjacent provinces. "Ninh Thuan is also home to only about 2,000 businesses, far fewer than the country's average figure," he said.

PM Phuc suggested the province increase the number of enterprises, while revising its strategic planning towards a green economy and sustainable growth.

"Ninh Thuan should also foster connections with other regional localities to create a larger space for development."

The local government must change their mindset in management, creating a favourable development space for enterprises and locals, while becoming more active and determined in improving its investment environment, the PM said.

Highlighting the need to protect the environment during industrial expansion, he urged the local administration to require investors to pledge to close their factories if they are found to violate environmental protection rules.

Introducing the province's potential, the provincial Party Committee Secretary Nguyen Duc Thanh said Ninh Thuan was located at the junction of the south central, central highlands and southeastern regions.

The province has the largest wind and solar energy resources in the country, which are favourable conditions for the locality to become a major hub of economic development, especially in green energy.

With a 105km coastline, the province is also strong in salt production, fishing and the maritime economy. In addition, Ninh Thuan has great potential for tourism thanks to its beautiful bays such as Vinh Hy, Binh Tien and Ninh Chu.

Currently, the province was encouraging investment in energy, tourism, agriculture, fisheries, industrial production, education, construction and real estate, Thanh said.

Chairman of the provincial People's Committee Luu Xuan Vinh, said that investors coming to the province would only have to proceed to its Economic Development Office (EDO) to fulfill investment procedures.

The EDO was expected to help reduce the time investors spent on administrative procedures by 30 per cent.

Vinh said that this new model was designed in response to the Government's Resolution No 19 and Resolution No 35 to assist businesses and create a smooth and transparent investment environment.

Earlier the same day, the PM attended a ground-breaking ceremony for the Trung Nam wind power plant, the first of its kind in Ninh Thuan, invested in by Trung Nam Wind Power Company, a subsidiary of the Trung Nam Group.

Located in Loi Hai and Bac Phong communes in Thuan Bac District, the 90MW plant will be built at a cost of VND3.96 trillion ($177.48 million). The first phase is expected to be complete in the fourth quarter of 2017, providing green power to the province and the country.

Also on Saturday, the Government leader witnessed the launch of construction work at the Binh Son-Ninh Chu coastal urban area in Phan Rang City, with an investment of nearly VND1 trillion.

The project is invested in by Hacom Holdings Investment Joint Stock Company covering an area of 52ha, including hotels, trading centres and high-end apartments. It is expected to create thousands of jobs for local people. 

Fitch: Growth attracts foreign capital for VN banks

Viet Nam's strong economic performance is helping the country attract much-needed foreign capital into its banking system, Fitch Ratings said on August 31.

Banks are likely to need additional capital as they respond to the phasing-in of Basel II capital adequacy standards by end-2018, while trying to meet demand for rapid credit growth.

GIC, a Singapore sovereign wealth fund, signed a memorandum of understanding on Monday to buy a 7.7 per cent stake in Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank; B+/Stable), Viet Nam's largest bank by market capitalisation.

The deal follows the recent purchase of a 5 per cent stake in a much smaller bank, TienPhong Bank (not rated), by the International Finance Corporation.

This injection of foreign capital is a positive trend and comes at a time of strong economic growth, which has helped to stabilise asset quality.

"We forecast real GDP growth of 6.2 per cent in both 2016 and 2017. Healthy economic growth plus a recovery in the real estate market are likely to lead to a slower NPL formation, at least in the short term," Fitch said, adding that liquidity and funding conditions should continue to be supported by local-currency stability and benign inflation.

Fitch's outlook for the banking sector was revised to stable from negative in December 2015 to reflect these conditions.

Nevertheless, Viet Nam's banks are still facing a range of structural problems, not least of which is weak capitalisation. Published capital-adequacy ratios (CAR) are low and under-reporting of NPLs suggests that true capitalisation is even weaker. Capital buffers are likely to come under pressure over the next couple of years.

Ten banks have been designated by the central bank to move to Basel II, with full adoption expected by end-2018, and Fitch believes that the banks' CARs would be pushed lower by the shift to a more conservative regime.

Those banks with CARs close to the 9 per cent regulatory minimum will need more capital. Vietcombank, for example, had a CAR of just 9.7 per cent under the Basel I regime at end-June 2016 and Basel II is likely to have been one of the key motivations for its deal with GIC.

Rapid credit growth is also creating a need for more capital. Private-sector credit grew by an average of 16.4 per cent per year during 2010-14 and rose by 17.3 per cent in 2015. Another pick-up is likely in 2016, with the official target for the year set at 18-20 per cent.

Fitch warned that rapid credit growth poses a risk to Viet Nam's medium-term financial stability, particularly since the credit/GDP ratio -- at 110.5 per cent in 2015.

A sustained rise in foreign appetite for Viet Nam's bank equity would be a positive development because the banking sector has significant recapitalisation needs. However, there is a limit to how much capital can be raised from overseas.

Foreign ownership of any Vietnamese bank is capped at 30 per cent, and within that, foreign strategic investors are collectively allowed to own only 20 per cent. Viet Nam's banks may still need to raise significant capital in the still-developing domestic market unless foreign-ownership restrictions are relaxed.

Rising prices expected for HCMC aparments: report

The price of apartments in HCM City is expected to increase annually by 5-10 per cent for the next three years, according to a report by Jones Lang LaSalle Việt Nam (JLL Viet Nam), a foreign commercial real estate and property services provider.

JLL Viet Nam predicted overall apartment prices to rise annually by 5-7 per cent in the next three years, supported by strong absorption and affordability levels. Mid-tier and affordable apartment prices could rise by up to 10 per cent each year.

JLL Viet Nam believed that HCM City apartments were still affordable compared to income levels. Based on the top quintile household monthly income of $1,337, private apartments in the affordable and mid-end range would cost about 3.9 to 6.6 years of income, assuming an apartment size of 75 sq.m. The entry-level apartment price to income ratio of 3.9 years was 30 per cent lower than the average of 5.7 years in other Southeast Asian cities.

Even if prices rose 30 per cent over the next three years, it was likely that the home price to income ratio would be stable given that incomes have been rising at 10 per cent annually in the last few years. In the last five years, home prices in HCM City declined amid income growth, bringing the home price to income ratio down from 7.6 years in 2010 to 3.9 years in 2015.

According to the Viet Nam Real Estate Association's latest report on the local property market, prices of premium and mid-end apartments increased in July on the HCM City market.

Meanwhile, apartment prices also rose in Ha Noi, especially projects near the centre of city or important infrastructure constructions that are being built.

In July, land and houses continued be attractive segments on the domestic market. Demand on those property products increased, making selling prices for them rise by 4-12 per cent depending on the location and area, the association said.

The market has seen many products offered by developers of projects like Cat Tuong Duc Hoa and Phu Dong Him Lam in HCM City; Phu Luong urban area and Nam An Khanh in Ha Noi; and My Phuoc 4 urban area in Binh Duong Province.

The prices of those products rose by 20-40 per cent against the same period of last year, especially projects near the metro system in HCM City, and the Cat Linh–Ha Dong elevated railway in Ha Noi. The selling price of some projects having nearly-completed infrastructure and full conveniences could increase by 45-50 per cent.

'Book building' method may improve SOE equitisation

The Ministry of Finance may use a "book building method" in selling the State's holdings in State-owned enterprises (SOEs), Vu Bang, chairman of the State Securities Commission, told local media.

"Book building" is the process which defines the selling price at an initial public offering (IPO) upon demand from institutional investors as they indicate the expected number of shares they want to buy and the prices they are willing to pay.

The new method may become an effective and attractive way for investors besides the three existing methods, which are public auctioning, private placement and underwriting process, according to Bang.

The new method would allow underwriters to co-operate with sellers to introduce products to potential investors and help SOEs attract strategic investors because the selling prices were made upon the study of market demand and negotiations with big buyers from the beginning.

The State could earn more from the divestment of SOEs and avoid making losses as the selling price is now public and broadly known, Bang said.

The State sold its stake in 478 SOEs during 2011-15 period, but it still owns half of the capital in 60 per cent of those companies.

Some companies offered 30-40 per cent of the State's ownership but only a small part of that was sold. For instance, Viglacera offered 26 per cent but transferred only 8.5 per cent, Bach Dang Construction Corporation offered 27 per cent but sold only 5.4 per cent.

Since the beginning of this year, the State has withdrawn from 58 SOEs with a successful rate of 66 per cent, stock exchanges have also collected nearly VND1.9 trillion (US$85.2 million) for the State budget from 21 auctions with a successful rate of 73 per cent.

This year's results are better that previous years, however, problems still exist as initial public offering (IPO) auctions and sales of remaining State's ownership in SOEs have remained unattractive, Bang said.

Brokerage firms need to perform transparently and accountably

The success of SOE equitisation depends not only on the way to define selling prices but also on the quality and transparency of the company on sale and the consultancy firm (securities firm).

An important factor for successful equitisation of SOEs is the preparation of the company's financial report, Dang Quyet Tien, deputy head of the Corporate Finance Department under the Ministry of Finance, said.

Some consultancy firms even use the original corporate financial reports to complete the profiles without assessing them, he said.

This action often makes the auctions avoid public attention and benefit buyers and sellers as the auctions are only for the sake of public appearance to assist related sides achieve their goals, according to Tien.

Consultancy firms must be aware of their responsibilities and benefits in order to improve the transparency of SOE equitisation, he said.

Those companies must take responsibility if the State only manages to claim a few from its stakes in the SOEs, he added. Divestment from SOEs could bring back $25 billion to the State budget in the future.

Meanwhile, the State should pay high prices for good and professional consultants, which would encourage and motivate securities firms to perform their duties well and stop serving a specific group of investors with private interests.

Brokerage firms should do their best to draw attention from the public and potential investors on the sales, and work with other brokerage companies to improve the network between investors and SOEs, Le Hai Tra, deputy director general of the HCM Stock Exchange, said.

Brokerage firms should help companies develop good post-equitisation business strategies and connect them to potential investors, Viet Capital Securities Company (VCSC) commented.

When many investors pay attention to a company at the same time, the auction for that company would be competitive and ensure the State's capital does not lose out, VCSC said.

Orix wades into Viet Nam's hydropower market

Leasing giant Orix will invest in Viet Nam's Bitexco Power in September, taking its first step into the hydropower sector to tap growing electricity demand in the Southeast Asian country.

The Japanese company will take an over 10 per cent joint stake in Bitexco with Singapore's United Overseas Bank in mid-September, receiving newly issued shares in a deal expected to be worth tens of millions of dollars. In addition to gaining representation on the Vietnamese company's board, the partners will offer advice on business operations as well.

Orix is involved with solar, wind and geothermal projects both in Japan and abroad. This marks its first investment in hydropower.

Electricity demand in Vietnam is increasing by 10-12 per cent a year from population growth and economic development. Some say the country's demand for power could more than triple between 2015 and 2030. The Vietnamese government plans to liberalize the electricity market in stages, and encourage more private-sector participation in power generation.

Hydropower is cheaper to produce than power from fossil-fuel plants, which account for about half of all power generated in Viet Nam, and does not emit carbon dioxide. Orix believes that selling hydropower on Viet Nam's electricity market could yield millions of dollars in profit a year.

Bitexco was founded in 2007. It runs 18 hydropower plants in Viet Nam having a combined generation capacity of around 1,000 megawatts -- about as much as one nuclear reactor. 

Tighter supervision of SOE equitisation

Deputy Prime Minister Vuong Dinh Hue on behalf of the Government asked for tighter supervision of equitising State utility companies and firms wholly owned by State economic groups, under a dispatch issued on Tuesday.

Such State-owned enterprises (SOEs), whose equitisation plans have not been approved by the authorities, must have their corporate evaluation results audited by the State Audit Office of Viet Nam.

For companies with more than VND5 trillion (US$222.2 million) in equity, the audit must be implemented in accordance with Decree No 59/2011/NĐ-CP dated July 18, 2011 on changing SOEs into joint stock firms, and Decree No 189/2013/NĐ-CP dated November 20, 2013 supplementing the former.

For other firms that are not differentiated in sizes of equity, the audit is to conform to the Law on State Audit.

Huệ also asked the Ministry of Finance to suggest pilot cases where foreign auditing companies were hired to evaluate domestic enterprises, with evaluation results used for share offers in the international market, by September 15.

The audit is needed to boost transparency and prevent corruption and misspending in the equitisation of SOEs, he said.

News website ndh.vn reported citing Government schemes that 514 SOEs were to be ready for equitisation during 2011-15. As many as 478 firms, or 93 per cent of the SOEs, already had equitisation plans as of the end of last year.

According to the website, embarrassment still occurred in the evaluation of some major firms, and telecommunications operator MobiFone was one of them.

MobiFone was listed among the companies to be equitised over 10 years ago, but only last April did the Ministry of Information and Communications submit a plan to evaluate the company to the Government.

The Government has not yet decided on an official plan to equitise MobiFone, while Prime Minister Nguyen Xuan Phuc reportedly asked for an inspection of MobiFone buying 95 per cent of MobiTV, formerly known as Audio Visual Global JSC.

Earlier this month, the State audit office reportedly suggested that financial investments should be reviewed at Ben Thanh Group, a HCM City-based firm dealing in tourism, trading, real estate and industrial production, before this company was equitised.

The office also recommended the finance ministry to direct the State Capital Investment Corporation (SCIC) to revalue lands and assets of the Southern Waterborne Transport Corporation. This was needed to avoid losses of State capital while the SCIC was divesting from the transport company.

During a Government meeting on Monday, Prime Minister Nguyen Xuan Phuc also asked ministries, the SCIC and relevant agencies to act against corruption in the SOE equitisation process.

Phúc was chairing a discussion on State divestments from Sai Gon Beer Alcohol Beverage JSC and Ha Noi Beer Alcohol Beverage JSC, as well as capital withdrawal of SCIC from 10 other giants.

Among the 10 were Bao Minh Insurance Corporation, FPT Telecom, Viet Nam Infrastructure Investment & Development JSC, Ha Giang Mineral Mechanics JSC, and Viet Nam Dairy Products JSC (Vinamilk).

The remaining five were Viet Nam National Reinsurance Corporation, Tien Phong Plastic JSC, Binh Minh Plastic JSC, Sa Giang Import Export Corporation and technology group FPT.

The divestments must be performed in a transparent manner following market rules, Phuc said.

"The sale of State stakes in these SOEs is good news to the market. The SCIC and the Ministry of Industry and Trade need to soon inform people with detailed information and roadmaps," Nguyen Hoang Hai, vice chairman of the Viet Nam Association of Financial Investors told Tuoi tre (Youth) newspaper.

Industry insiders said the Government could gain up to VND150 trillion, or $7 billion, if State stakes were withdrawn from all these firms. The estimation was based on share prices of the firms in the market, and the prices that some partners have offered to buy into some of them.

Tran Hoang Ngan, a member of the National Assembly's Economic Committee, told Tuoi tre "One thing needed for speeding up State divestments from businesses is to handle ‘privileged groups'. The divestments must be public and monitored by the market."

A source from SCIC reportedly said that the company was scrutinising capital withdrawal schemes, because too rapid a withdrawal might cause share prices to slump. The company planned to divest from Sa Giang and FPT Group this year, the source said.

Phuc said measures to preserve national trade names such as Sai Gon Beer, Ha Noi Beer and Vinamilk were needed, as State stakes would be offered to both domestic and foreign investors in a competitive manner. 

Tourist arrivals up sharply in 2016

In August, normally a low tourist period, there were over 899,000 foreign arrivals, a 34.4 per cent increase from a year ago, according to the Việt Nam National Administration of Tourism (VNAT).

This took the number of visitors to Việt Nam in January-August to more than 6.45 million, a whopping 25.4 per cent rise year-on-year.

Lâm Thị Ánh Nguyên, media manager of Rex Hotel Saigon, said her hotel, situated in downtown HCM City, saw occupancy rates of 80-90 per cent last month.

After waiving visas for citizens of the UK, France, Germany, Spain, and Italy earlier this year, the Government has assigned the ministries of public security and foreign affairs to consider issuing electronic visas from July next year. 

TPP opens door for China and VN closer economic ties

If the Trans Pacific Partnership (TPP) is ratified, it could open the door for China to forge closer economic ties with Vietnam, according to Texhong Textile Group, one of the world’s and China’ largest yarn suppliers.

According to Nikkei Asian Review, Hong Tianzhu, founder and chairman of Texhong, the company has been aggressively building up production capabilities in TPP signatory Vietnam to take advantage should the agreement be ratified.

The TPP in a nutshell involves 12 countries: the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.

The pact aims to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth, creating a new single market something along the lines of the EU.

The 12-nation would-be bloc is already responsible for 40% of world trade.

To take effect, the deal has to be ratified by February 2018 by at least six countries that account for 85% of the group's economic output. And this means that Japan and the US would need to be on board.

Execution of the TPP "will pose new challenges to China's textile and apparel enterprises," so the company is building up its Vietnam operation "with respect to the cost advantages" and prospects of the pact, said Mr Tianzhu, in Texhong’s latest annual report last March.

Mr Tianzhu has said one of the main intentions of investing in Vietnam is to deal with the TPP trade agreement, the Nikkei Asian Review has reported.

However, even as uncertainty looms over the free trade pact amid open opposition by both major-party US presidential candidates, the Chinese company remains firmly committed to further expansion in its southern neighbour.

Vietnamese production has at least three advantages besides the TPP, Zhu has pointed out.

One is relatively favourable trade relations with the world vis-a-vis China. Even before the TPP, tariffs on yarns exported from Vietnam to Japan, the Republic of Korea and the EU have been lower compared with exporting them from Chinese factories.

Production costs are another advantage. "Compared to China, its labour, electricity and other costs are lower in Vietnam," said Zhu.

Despite strained political relations between Vietnam and China, the two countries are big trading partners.

In addition, Vietnam’s proximity to China is ‘very good’ for the group's overall operation. Its Vietnamese production complex sits in Quang Ninh Province, which is adjacent to China's Guangxi Zhuang Autonomous Region.

This enables the company to include its Vietnamese factory in a production chain already established in southern China. And being close to the port makes exporting convenient.

Vietnam utility cuts power purchases from China

Vietnam Electricity refrained from buying electricity from China last month following a surge in domestic output.

Vietnam’s electricity output during the first eight months of this year has increased by 11.2 percent to 117.1 billion kilowatt hours (kWh), including 1.2 billion kWh imported from China, said the country’s utility group EVN said on September 3.

Hydropower plants which in the first eight months of 2016 generated 32.7% of Vietnam's electricity, often face shutdowns during the dry season, causing nationwide outages. Meanwhile, coal has taken over hydro power as the leading source of electricity in the country as it has generated 38.03% of the total output so so far this year. 

In response to fast growing demand for power, Vietnam is building more coal-fired thermal plants and buying electricity from neighboring China.

However, EVN said last month it stopped buying power from China for the second month in a row.

The state-run group which started buying electricity from Chinese power plants in the border province of Yunnan in 2004, expects it will not have to import more power from the neighboring country in four consecutive months.

EVN plans to import about 950 million kWh from China to meet the domestic power needs in 2016, down 44% from 2015.

EVN said Vietnam's power output is expected to reach 183 billion kWh this year.

The average energy consumption in Vietnam grew 13% from 2006-2010, and by about 11 percent from 2011-2015, said Le Tuan Phong, deputy head of the General Directorate of Energy, adding that the country is on the path towards powering itself by 2030.

The country’s power production is expected to grow at an annual rate of 14 percent between 2015 and 2030.

Vietnam is also restructuring its power sector by breaking up its retail power monopoly EVN to develop a competitive retail power market by 2030.

And it is aiming to generate enough energy to power almost every home by 2020 and increase residential solar power usage to 50% of households nationwide by 2050.

Vietnam licenses unit of Malaysian bank CIMB

The State Bank of Vietnam has granted a license for Malaysia’s second largest lender CIMB to open a unit here, which will be the seventh fully foreign-owned bank in the country.

CIMB Group Holdings Bhd, Southeast Asia’s fifth largest bank by assets, has been allowed to open CIMB Bank Berhad with a registered capital of more than VND3.2 trillion (nearly US$144 million).

The license is valid for 99 years starting this September.

CIMB also has plans to enter Myanmar and the Philippines as well, as part of its drive to expand the fast-growing Southeast Asian markets.

The new bank will join other fully foreign-owned banks. HSBC, ANZ, Standard Chartered Bank, Shinhan Bank and Hong Leong Bank had a combined registered capital of more than US$814 million at  he end of 2015.

Vietnam's central bank in March licensed the first Malaysian-owned lender, Public Bank Berhad, and in August also approved a proposal by Woori, South Korea’s biggest lender in terms of consolidated assets, to establish a unit.

First UFC gym unveiled in HCMC

The first UFC Gym in Asia has been put into operation at Thao Dien Pearl in HCMC’s District 2.

According to UFC Gym Vietnam, CMG.ASIA that owns popular fitness brands like California Fitness & Yoga and California Centuryon inked deals in the US last September to establish UFC gym centers in some Southeast Asian countries.

The deal’s total value is US$15 million. Having set up five centers in Vietnam, CMG.ASIA will continue its expansion to other countries in the region. 

It costs around US$3.5 million to US$5 million to build a gym depending on location and space.

Since its establishment in 2009, UFC Gym has had 120 centers in the US, Australia and Canada. Its training programs are suitable for people at all ages and physical conditions.

Trade fair sparks interest of Japanese consumers

Vietnamese retail products sparked a lot of interest from Japanese consumers at a trade fair held September 2-4 at AEON LakeTown in Saitama Prefecture by the Ministry of Industry and Trade (MOIT).

More than 22 local businesses exhibited a diverse variety of clothing, footwear, leather goods, fruit and vegetables, food items, furniture (both indoor and outdoor) along with household goods and handicrafts at the event.

The event, said the MOIT, provided local business leaders the opportunity to meet directly with Japanese consumers, retailers, wholesalers and other business professionals, providing them fresh insight into the markets.

The MOIT noted that September is one of the most important times of the year for the retail industry in Japan, as it is when retailers start placing their orders for the upcoming Christmas and year-end holiday season.

We’re hoping the interest generated translates into some large orders boosting local companies’ footprint in the Japanese market, noted the MOIT.

The fair, cosponsored by the Vietnamese Embassy in Japan and AEON Group, is part of a continuing series of promotional events being staged by the MOIT to elevate the image of Vietnamese made products in foreign markets.

Vietnam says has enough coal for several centuries

The country also plans to import more coal to meet domestic demand for electricity.

Surveys of two coal fields in northern Vietnam will be completed in the next few years and the stock could be enough to generate power for several centuries, Vietnam Ministry of Industry and Trade said at a recent press briefing.

The most recent power development blueprint until 2030 has revised down Vietnam's previous targets for coal output by as much as 15 to 20 million tons due to lower demand. 

Vietnam aims to complete surveys at North East coal basin in the north by 2020 to ensure sufficient reserves for 2021-2030 and beyond. 

The basin currently has deposits totaling 6.2 billion tons, said Le Van Duan, director of Vinacomin, the state owned coal producer. 

If 50 million tons is excavated each year, North East can supply enough coal for the next 40 to 50 years. 

Additional coal may be excavated at the Red River basin, which reserves stand at 42 billion tons, enough for use over several hundreds of years. 

Total investment capital required for the coal sector by 2030 is about VND269 trillion (US$12 billion), which is equivalent to US$800 million each year.

“This capital is mainly for new investments, renovation and expansions raised from self-financing, commercial loans, preferential loans, securities and other legal sources," said Nguyen Khac Tho, deputy director of the General Department of Energy under the trade ministry.

Tho added that the adjusted blueprint also aims at reducing coal export and increasing coal import to meet household demand and to ensure energy security.

It is estimated that Vietnam needs to import 70 million tons of coal by 2030. Prime Minister Nguyen Xuan Phuc has already approved this, with Vietnam National Coal – Mineral Industries Holding Corporation Limited, Petro Vietnam, and Vietnam Electricity as importers.

The prime minister has also instructed the trade ministry to set up a coal import steering committee to ensure domestic demand is met, said Tho.

By 2030, coal fired plants will take over hydropower as the main source of electricity in Vietnam, accounting for 53.2%, as set out in the seventh Power Development Master Plan (PDMP).

Last month, Malaysian company Teknik Janakuasa has started work on a 1,200-megawatt coal-fired power plant Duyen Hai 2 in the Mekong Delta province of Tra Vinh, Vietnam's first such facility to use imported coal. Construction on the US$2.2-billion build-operate-transfer plant is expected to wrap up in 2021.

Aside from Duyen Hai 2, there are three more coal-fired power projects in Tra Vinh. Vietnam plans to build several other coal-fired power plants elsewhere in the Mekong Delta such as Hau Giang, Long An and Soc Trang, according to the blueprint.

Vietnam imposes 38.34% duty on some Chinese steel imports

The Ministry of Industry and Trade (MOIT) announced on September 1 that it has imposed preliminary duties on imports of plated steel sheets from China, whose steelmakers were slapped with a massive tariff.

The duties, set at 38.34%, will be imposed starting September 16 but must still be confirmed in a final determination scheduled for later this fall. They are meant to punish dumping, or selling below cost to improperly gain market share.

Chinese officials have denied the practice.

The tariffs, which are also applicable to steelmakers from the Republic of Korea, will run through January 13, 2017.

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