Đa Nang - Quang Ngai Highway project ratified

PM Nguyen Tan Dung recently ratified the portfolio of Đa Nang - Quang Ngai Highway project.

The Government chief urged the Ministry of Transport to work with the Ministry of Finance on capital resources for the project, then report to the PM for approval.

The highway, with the length of over 135 km, will stretch from Tuy Loan town, Hoa Vang District in the central city of Đa Nang to Quang Ngai Province.

To be ground-broken in Q4/2011, the project will be completed by 2016.

The highway is expected to boost economic growth in the central province of Quang Nam, Quang Ngai, and Đa Nang City as well.

Indian ambassador hopes to boost trade

Indian ambassador H.E.Ranjit Rae emphasised the need to boost trade by having more frequent visits between Vietnamese and Indian business people at a press conference here on April 4.

"The most important thing for business people is to know each other, to know where there are possibilities for cooperation, for mutually beneficial trade and investment," he said.

The ambassador announced that an Indian delegation of 62 business people led by the Associated Chambers of Commerce and Industry and the Federation of Indian Export Organisation will visit Vietnam to explore business opportunities from April 5-9.

The delegates come from different sectors, including agriculture, food processing, chemicals, construction materials and machinery, handicrafts, electrical equipment, gems and jewellery, oil, leather, garment and textile, and science equipment.

Moreover, Indian companies will participate in the Vietnam Expo at Giang Vo Exhibition Centre from April 6-9.

They will also participate in a seminar on trade and investment between the two countries on April 5, and some other events during their stay.

"There is huge potential in Vietnam, and Indian companies will look at the country much more closely to identify opportunities," said Ambassador Rae.

He said two-way trade had increased rapidly, standing at $2.75 billion last year.

"But the figure is still far below the potential," he added.

But the ambassador said investment remained quite low given the fact that Indian companies have been making major investments abroad in order to establish a global presence.

Statistics released by the Ministry of Planning and Investment show that Indian companies have pumped about $210 million into 50 projects in Vietnam.

In an effort to raise bilateral trade, Ambassador Rae said the Indian government has endorsed a new scheme to extend preferential credit to overseas companies for the import of goods and services from India.

The Exim Bank of India will extend credit to Vietnamese companies that are executing projects in a range of areas, such as infrastructure, power, oil and gas. The lending period will last between 10 and 15 years

Ambassador Rae said this plan will be further introduced to Vietnamese companies during the delegation's visit.

Rotterdam seeks new port of call in Vietnam

“While we are developing a strong marine economy, cooperating with the world’s leading port developers will be very important for us”.

The European Union’s largest port is looking to berth in Vietnam. Roger Clasquin, director of Port of Rotterdam International, in a visit to Vietnam last week said the firm was looking for port development joint ventures.

Port of Rotterdam is the globe’s fourth largest port and also an important waterway to the European Union. The port received 33,352 seagoing vessels and 110,000 barges last year – handling 430 million tonnes of throughput cargo.

Clasquin said Port of Rotterdam would also cooperate with Vietnam’s port authorities in sharing market intelligence.

Kees Weststrate, senior project manager from Port of Rotterdam International, said the cooperation between the port developer and Vietnam’s port authorities could improve ports’ service quality and set direct routes from Vietnam to Rotterdam, which would help reduce logistics costs for European nations.

“There are very few vessels transporting cargo directly from Vietnam to Port of Rotterdam. We don’t know exactly how many tonnes of Vietnamese cargo are handled by our port each year because most of them transit in Singapore or Hong Kong,” he said.

Vietnam’s rapid economic growth is pressuring its port infrastructure. Deputy Prime Minister Hoang Trung Hai said the average volume of cargo at ports had risen 25 per cent in recent years, while most of the important ports faced severe congestion.

“While we are developing a strong maritime economy, cooperating with the world’s leading port developers like Port of Rotterdam will be very important for us. We need to learn experiences, opportunities and market intelligence,” said Hai.

Vietnam is now developing a series of new ports nationwide to ease the current congestion, especially in north and south. Some international port developers like APM Terminals, SSA Marine, PSA Marine and Hutchison Port Holdings are investing into port projects in Vietnam.

“There are many investment opportunities for Port of Rotterdam in Vietnam. The developer could join hands with local partners to build terminals in Haiphong, Danang, the Van Phong international transshipment port and Cai Mep-Thi Vai port complex in Ba Ria-Vung Tau,” said Le Tuan Anh, director of International Cooperation Department under Vietnam Maritime Administration.

Rising labour costs bring benefits

Vietnam is to become a more competitive manufacturing destination for foreign textile and garment businesses as competitors’ production costs climb.

According to the Thai Garment Manufacturers Association (TGMA), rising local production costs have pushed five major Thai garment manufacturers to relocate to Vietnam, transferring combined investment of $50 million.

Vallop Vitanakorn, honorary adviser to the TGMA, said the five were Hong Seng Knitting Company, Hi-Tech Apparel Company, Nice Apparel Company, Liberty Garment Company, and Golden Thai Industry Company. Their factories in Vietnam were expected to start operations within 2011, employing 24,000 workers.

He added that “more Thai garment businesses may move to more competitive-labour countries such as Vietnam, Bangladesh, Indonesia, Cambodia and possibly Myanmar due to the declining Thai labour trends.”

Sukij Kongpiyacharn, president of TGMA, said that Thai government’s consideration to increase minimum wages by 25 per cent over the next two years was certain to reduce the Thai garment industry’s competitiveness.

“The problem is also employee retention, as 10-20 per cent of workers drop out of the industry after returning home to harvest crops.”

Also, existing foreign manufacturing businesses in Vietnam plan to expand their production to take over work transferred from their other factories currently based in neighbouring countries due to increasing production costs.

Kenny Wong, financial controller of Hong Kong’s garment firm Smart Elegant International in Vietnam, said: “Compared with the other countries, labour cost in Vietnam is still cheaper and labour skills are not too much different compared with China. Besides, many of our overseas buyers also consider Vietnam an important and reliable base for manufacturing. And this is an important factor pushing us to continue to invest in Vietnam.”

He said his company was going to set up another factory in Ho Chi Minh City to move all production work from China in case the company could not afford fast-rising production costs.

“Right now we already have two factories in Ho Chi Minh City. The total planned manpower should be 1,800 workers,” he said.

However, Wong said that as more foreign textile and garment manufacturers were coming to set up their factories in Vietnam, the pressure of labour supply would increase.

“In this context, we need to offer more benefits and allowances to workers to keep them working for us,” said Wong.

“We are now contacting some vocational training centres in the central Vietnam and hope they can recommend their graduated students to work in our new factory next year. On the other hand, we are planning to build a dormitory for our workers to solve their living problem and the design of our new factory will be a modern one with facilities of canteen and air-con working environment so as to attract more workers.”

Province told to pull its socks up

“But this matter is beyond the management responsibilities of Ba Ria Vung Tau’s administration”

Southern seaport hub of Ba Ria Vung Tau is urged to ramp up efforts to become a regional deepwater transit port.

Speaking at “Logistics and Maritime Services Development in Vietnam” forum in Ba Ria Vung Tau province last week, Jan Tomczyk, senior expert at Multilateral Trade Assistance Project III said “a whole of government approach was needed” to put the province on the map.

And this was not just true for seaport centres like Ba Ria Vung Tau province, but for the whole country, said Tomczyk.

“[Vietnam] should systematically identify and solve physical and non-physical obstacles and “behind the border” issues which stem from lack of harmonisation, complex and non transparent requirements and market access failure. These barriers which will hinder national logistics companies being part of the global supply chain,” said the expert.

He added that enhancing transparency of government rules, efficiency documentation and customs clearing as well as the predictable application of methods and rules would be crucial in future

Ho Van Nien, deputy chairperson of Ba Ria Vung Tau People’s Council said there were both “visible and invisible” challenges.

Nien said: “I think the most worrisome is the invisible challenges. The infrastructure for transporting containers and goods – at least in terms of heavy weight and long distance – and also for the flow of goods, has become weak and outdated. But this matter is beyond the management responsibilities of Ba Ria Vung Tau’s administration.”

The official added that logistics operations needed an assembly line but he recognised there had been poor interconnection between the government, businesses and customers. This had lead to impediments in the implementation and management of the entire production-consumer chain, he said.

According to the province’s figures, Ba Ria Vung Tau is now home to 21 terminals, mostly in the Thi Vai-Cai Mep area.

These terminals have a total handling capacity of around 45 million tonnes per year.

There are three international container terminals accessible to over 50,000 dead weight tonnage ships directly heading to foreign markets.

Over 60 million tonnes of goods are expected to pass through the province’s ports by 2015 and this figure is expected to double by 2020.

The province now houses over 5,000 businesses active across in the whole spectrum of the economy including petroleum, electrical, mechanical, iron and steel processing, seaport, seafood and tourism services.

It has so far given shelter to 280 foreign direct investment projects worth over $27 billion in total registered capital, including 19 port projects valued at $2.3 billion. In addition, there are 341 domestic investment projects capitalised at VND135.9 trillion ($6.56 billion), including 32 port projects worth around VND55 billion ($2.65 million).

Ba Ria Vung Tau province is aiming to become a modern seaport and industrial hub in the south by 2015.

The value of province’s total industrial production in 2010 was double that of 2005 level while the value stemming from trade, services and export almost tripled over the same period. There are now 14 industrial zones and 30 industrial clusters covering over 11,000 hectares in the province.

During a visit to the province last year Prime Minister Nguyen Tan Dung emphasised the need to turn Ba Ria Vung Tau into a regional deepwater transit port in the next five years.

He said: “Ba Ria Vung Tau should cooperate with ministries and relevant agencies to upgrade its port facilities and ensure it is easily accessible and connected to other infrastructure projects.

“The coastal southern province should create major industrial products and improve its hi-tech industries to become competitive in both domestic and international markets.”

RCR trumpets waste plan

“We want to cooperate with some German and Canadian investors in this project”

ReCycled Refused International Group, one of Britain’s waste treatment leaders, is taking greater steps to plant a giant urban solid waste treatment project in Vietnam.

Local firm Tecin, the group’s (RCR) representative in Vietnam, told VIR that the $3.8 billion project would include 15 urban solid waste facilities in 15 provinces and cities, to be implemented under a public private partnership (PPP) model.

Tecin’s deputy general director Le Trung Truc said that 12 provinces and cities’ authorities had agreed to give locations to 12 facilities under the project. Tecin is also working with authorities of Haiphong, Nam Dinh and Ha Tinh provinces. “We expect that locations for the facilities in these three localities would be defined by June, this year,” Truc said.

“After that, we will make a detailed report about these facilities for submission to the Ministry of Planning and Investment (MPI). I think it will take one year to process all investment procedures for the whole project. But we expect to commence construction of the first facility this year,” he said.

Last November, RCR trumpeted its plan to implement this behemoth project. Accordingly, it would see 15-20 waste treatment facilities with total treatment capacity of 15 million tonnes of solid waste per year. Discharged gas and waste water standards would be far higher than Vietnam’s required standards.

The facilities, covering up to five hectares each, would also produce 3.5 million megawatt hours of power annually. It would need five years for all of these facilities to operate smoothly. They are expected to employ 25,000 workers and help localities not bury 95 per cent of their solid waste.

Besides, RCR would provide 2,700 modern trash collecting lorries for Vietnam, Truc said.

Under this project, local provincial and municipal authorities and related ministries of natural resources and environment, and construction would have seats in the board of directors of RCR’s Vietnam-based corporation.

“Vietnam’s contributions are investment priorities, financial policies and implementation of solid waste provision contracts, and payment for treating and collecting waste, while RCR is in charge of pouring investment, technology and know-how,” Truc said.

RCR also wanted to plant three other PPP projects in Vietnam including a $1.69 billion ethanol manufacturing project, a $2.82 billion project to desalinate sea water with solar energy and a $88.83 million project to destroy and recycle automobile tyres.

Thus, the total investment capital RCR wanted to pour into Vietnam for the four projects would be $9.2 billion.

In a statement sent to VIR, Tecin said that the ethanol manufacturing project, with capacity of 10 million litres of ethanol per year, would include many plants to be constructed in Hung Yen, Thanh Hoa, Quang Ngai, Binh Dinh, Phu Yen, Tay Ninh and Long An provinces. “We want to cooperate with some German and Canadian investors in this project. Jatropha, a plant used to manufacture ethanol, is its materials,” Truc said.

Tecin is working with Quang Binh, Quang Tri, Thua Thien-Hue and Ninh Thuan provinces, where natural conditions are ideal for RCR’s project to desalinate sea water with solar energy. This project was designed to annually churn out 4.2 million megawatt hours of power and 72 million cubic metres of fresh water.

Tecin’s statement said that Vietnam’s potential in destroying and recycling automobile tyres was 90,000 tonnes per year. RCR’s project of the type would include five factories in Hanoi, Danang, Quang Ninh, Dong Nai and Long An. The project was expected to be implemented by 2015.

Opportunity to boost seafood exports to Japan

The sharply increasing demand for clean food, including seafood, in Japan is considered a good chance for Vietnamese businesses to increase exports to this market.

General secretary of the Ca Mau Association of Seafood Processors and Exporters Ly Van Thuan said contrary to a forecast that seafood exports to the Japanese market will face difficulties due to earthquake and tsunami impacts, the number of orders to export seafood to Japan have skyrocketed in recent days, especially frozen shrimp and fillet tra fish products.

To ensure timely supply for the Japanese market, businesses in Ca Mau are speeding up the processing of export seafood products, he added.

According to the Ministry of Agriculture and Rural Development, together with the EU and the US, Japan is a key consumer of Vietnamese seafood with an import value of $898 million in 2010, up nearly 19 per cent over the previous year.

Vietnam is also Japan’s leading frozen shrimp supplier, accounting for 21 per cent of its market share.

In the first two months of this year, Vietnam’s seafood export turnover to Japan reached $106 million, representing a year-on-year increase of 21 per cent.

Dung Quat refinery back to production

Vietnam ’s first oil refinery, Dung Quat, returned to production on April 3 after temporarily stopping to examine its equipment for upcoming overall maintenance.

The plant started checking all of its equipment and facilities on March 23 and was due to kick off its overall maintenance in mid July, this year, after two years of operation.

The refinery’s overall maintenance will be undertaken by the Ubec firm of the Republic of Korea at the cost of $25 million.

The contract for the work was signed by the refinery’s owner, the Binh Son Petrochemical Company, and the RoK firm on March 31.

The refinery is capable of processing 6.5 million tonnes of crude oil a year into products like liquefied gas (LPG), unleaded petrol, kerosene, air fuel, auto diesel, fuel oil (FO), sulphur and polypropylene.

By March 30, it had produced 8.52 million tonnes of petroleum products and sold more than 8.43 million tonnes of products.

Vietnam’s largest ethanol plant inaugurated

The nation inaugurated its largest ethanol plant in Dai Tan Commune in Dai Loc district of the central province of Quang Nam on April 2.  

The bio fuel plant, owned and operated by domestic producer Dong Xanh, has the capacity to produce 100,000 tonnes of bio fuel per year, equivalent to 125 million litres of gasoline. This plant will greatly enrich the industry in Dai Loc district.

The plant is one of three largest ethanol plants in Southeast Asia. It currently creates jobs for 300 local workers and consumes around one thousand tons of cassava feedstock from 20,000 farmers.

In 2010, the plant produced around 12,000 tonnes of ethanol.

As of now, 5 per cent ethanol-blended gasoline is available everywhere in the country and it will be exported to other countries.

In related news, Dung Quat Oil Refinery resumed normal operations on April 2 after a one-week shutdown for checking and maintenance of machinery.

The plant will operate full blast today, April 3 and produce from 17,000-18,000 tonnes of petroleum products.

Earlier, the refinery had shut down its operation for inspection, since March 23. It had planned to remain closed for two or three weeks. The plant plans to carry out inspection works before the scheduled maintenance in July.

Dung Quat, Vietnam’s first refinery will produce about 4.9 million metric tonnes of petroleum products in 2011, according to PetroVietnam. The plant plans to import 640,000 tonnes of crude in the first six months of 2011 compared with a total of 400,000 tons in 2010.

More investors coming to VSIP

Vietnam-SingaporeIndustrial Parksor VSIP in southern Binh Duong province are attracting more  investors despite of the country’s foreign direct investmen inflow slowdown.

Foreign investors have registered to invest into seven new projects and expand investment at eight existing projects in two VSIP in southern Binh Duong province, with the total committed capital up to $160 million.

Among those projects, Japan-based instant noodle maker Nissin Foods Holdings gained an investment certificate to build $41 million factory and Hong Kong’s TBC-Ball Beverage Can Vietnam will build a $50 million aluminum can manufacturing factory in VSIP II. The two factories will be operational next year.

The parks announced that about 30 companies would start production this year, which were estimated to reach $3 billion of turnover. In 2011, VSIP in Binh Duong expects to lure $300 million of committed capital from 75 newly registered and expanding projects.

Sacombank to pay cash dividend

Shareholders of Sacombank (STB) have approved a plan for the bank to pay a 15-per-cent cash dividend in 2010 and offer additional shares to existing shareholders, as well as to increase the bank's charter capital this year to over VND10.7 trillion (US$511.7 million).

Sacombank's plan to pay a cash dividend but then offer additional shares drew market attention last week, with many investors seeing the scheme as a way to "force" shareholders to buy more shares.

STB chairman Dang Van Thanh said that the bank had intended to simply pay dividends in the form of shares during 2001-10 in order to ensure the reinvestment of profits in the bank. However, he said, under Ministry of Finance regulations, shares issued as dividends to institutional shareholders could not be recorded as income and the bank was "responsible to harmonise the interests of all shareholders".

Currently, 47 per cent of STB shareholders were institutional, Thanh said, and the new plan would give individual shareholders the option of receiving the cash dividend or reinvesting it in the bank by taking advantage of the share offer.

Under the plan, the bank would sell shares representing 2 per cent of total capital, or 18.3 million shares, to bank employees, while shares would be offered to both existing shareholders and to employees at a price of just VND10,000 (US$0.48) per share. STB shares closed on the market yesterday at VND13,800 ($0.66).

Sacombank has targeted growth in charter capital and total assets at an annual rate of 15-20 per cent during 2011-20. Deposits were projected to increase 15-18 per cent and outstanding loans, 18-20 per cent, per year during the period.

This year, it targets to raise its total assets to VND160 trillion ($7.65 billion) and total outstanding loans to VND90.5 trillion ($4.32 billion). It also expects to earn a pre-tax profit of VND2.7 trillion ($129.1 million).

Thanh admitted that the profit estimate was conservative, saying that profit was likely to be closer to VND2.9 trillion ($138.7 million) "if the economic situation were not too difficult." Sacombank posted a pre-tax profit of VND652 billion ($31.2 million) in the first quarter.