Vietnamese firms join world’s largest food, beverage fair in UAE

Vietnam pavilion at Gulfood 2018 (Source: laodong.vn)

Twenty Vietnamese enterprises will showcase their products at the 24th edition of Gulfood – the world’s largest annual food & beverage trade exhibition – in Dubai, the United Arab Emirates, from February 17-21.

The firms include the Vietnam Dairy Products Joint Stock Company (Vinamilk), the Hanoi Trade Joint Stock Corporation (Hapro), the Nafoods Group and the Vietnam Hanfimex Corporation.

The Agricultural Trade Promotion Centre under the Ministry of Agriculture and Rural Development will organise the Vietnam pavilion at Gulfood.

The event is expected to help Vietnamese enterprises find consumers, sign export contracts and expand their market share in the Middle East, Africa and Southwest Asia.

They can also introduce Vietnamese agricultural products, food and beverages and promote Vietnamese brands to foreign visitors, according to the Ministry of Agriculture and Rural Development.

This exhibition will comprise 120 national pavilions, with more than 5,000 exhibitors. The five-day event is expected to attract more than 90,000 visitors from more 170 countries and territories across the world.

Petro firms drive VN Index up for a third day

Technicians at Ca Mau Gas Factory - a sub-unit of PetroVietnam Gas Corporation - operate a pipeline in the southern province of Ca Mau. Petroleum stocks, such as PetroVietnam Gas (GAS), were driven up by increasing oil prices on Wednesday. — Photo petrovietnam.petrotimes.vn

 Vietnamese shares extended their growth for a third straight day as focus switched to the petroleum sector following sharp increases in oil prices.

The benchmark VN Index on the Ho Chi Minh Stock Exchange added 0.82 per cent to close at 945.25 points, extending a three-day rally of 4.02 per cent since returning from Tet (Lunar New Year).

More than 215.2 million shares were traded on the southern bourse, worth nearly VND5 trillion (US$214.2 million).

Wednesday trading figures were up 14.2 per cent in volume and 19 per cent in value compared to the previous session.

Petroleum stocks took over from banks and consumer staple firms to lead the market on Wednesday after oil prices surged during the day.

Brent crude gained 1.4 per cent and US crude West Texas Intermediate (WTI) was up 1 per cent to trade at $63.28 and $53.64 a barrel.

Crude prices have increased by nearly 3 per cent in the last two days after the Organisation of Petroleum Exporting Countries (OPEC) announced a sharp production cut for January and US sanctions hit Venezuela – another big oil producer.

Among local petroleum stocks, PetroVietnam Gas (GAS) rose 2.2 per cent and PetroVietnam Drilling and Well Services (PVD) jumped 4.6 per cent.

Following the petroleum sector were consumer staples led by Masan (MSN), HAGL Agrico (HNG), brewer Habeco (BHN) and dairy producer Vinamilk (VNM).

According to the Ministry of Industry and Trade, purchasing power during Tet was up 10-12 per cent on-year and 15-20 per cent from previous months, boosting expectations for consumer staple firms to record good earnings for the first quarter of the year.

According to Thanh Cong Securities Co (TCSC), the third-straight-day rally with improved liquidity showed the market was showing positive signs and buyers were overpowering sellers, supporting the market’s short-term uptrend.

“However, the benchmark VN Index has gained at slower pace in the last three days as it is approaching the resistance of 950-960 points, proving selling pressure will increase in the next two trading days of the week,” TCSC said in its daily report.

“Buying will become quite risky in the next few sessions” and investors may “stand aside and wait for a market correction to continue buying stocks,” the company added.

Given these factors, the stock market was forecast to struggle in the 940-950 point range for the next two days and fluctuations will occur more often, according to Sai Gon-Ha Noi Securities.

On the Ha Noi Stock Exchange, the HNX Index edged up 0.42 per cent to close at 106.49 points with nearly 31 million shares traded worth VND405.7 billion.

The northern market index has rallied 4.08 per cent since the end of last year. 

Gold shops prepare for sales surge

Customers flock to gold shops on the God of Wealth Day last year. 

Gold demand is expected to surge today, the God of Wealth Day which falls on the 10th day of the lunar year.

Legend has it that the god returns to heaven on this day every year, and people think buying some gold brings good luck and prosperity throughout the year.

Gold and jewellery companies have stocked up on gold pieces with the words Phuc (Happiness), Loc (Prosperity) or Tai (Wealth) and the images of the 12 animals of the zodiac inscribed on them.

They have also launched many products with the image of the pig since this is the Year of the Pig.

According to gold companies, since the God of Wealth Day coincides with Valentine’s Day this year, they have also launched a wide range of jewellery items to meet the demand for gifting.

Phu Nhuan Jewelry Joint Stock Company (PNJ) has launched vividly carved figurines of pigs made from 24k gold and weighing 0.5 tael (a tael equals 37.5g).

It has also launched gold pieces with Tai – Loc etched on them and Phuc-Loc-Tai, God of Wealth and Bodhisattva figurines made from 24k gold, 24k gold-plated pig figurines, jewellery collections made from 18k or 24k gold, and feng shui-inspired pixiu bracelets and bracelets with gold pigs.

It also has collections of diamond, gold and silver jewellery items with youthful designs for Valentine’s Day.

PNJ is also selling gold online with the price fixed at the time a customer places the orders and delivery done on the Gold of Wealth Day.

Other major players like DOJI, Sacombank-SBJ and SJC have also launched new collections.

DOJI offers 24k items in blister packs, gold coins inscribed with the image of the pig, golden pig figurines, gold-plated handicrafts, and others.

SJC has launched a lucky gold series with pieces inscribed with images of the God of Wealth, Maitreya and the words Phuc, Loc, Tho besides “lucky” coins.

Vo Hoang Huy, regional retail sales manager at PNJ , said demand for gold on God of Wealth Day is expected to be higher than in the past.

So his company’s stores would open earlier and close later than usual on the day and keep gold prices steady, he added. 

Provinces to boost shark catfish trade

A shark catfish processing facility in Tien Giang Province. Farmers reaped huge profits from the fish last year.

 For the shark catfish industry in the Mekong Delta region to develop sustainably, authorities need to regulate output and quality and the use of chemicals more stringently and prevent unauthorised farming, Le Hoang Vu, head of Dong Thap Province’s Sub-department of Fisheries, has said.

The province would push for more co-operation between brood stock producers, fish farmers and processing firms, he said.

This year it plans to increase the area of fish farms by 150 ha to 2,600ha and output by 60,000 tonnes.

Tran Phung Hoang Tuan, his An Giang Province counterpart, said his province is helping farmers through a three-tier project to produce high quality brood stock to supply farms in the delta, fully meeting demand by 2025.

The first tier involves research institutes and universities researching into techniques in selecting high quality fish breeders, the second involves brood stock producing centres and nurseries and the third, establishments that raise the fish until they reach the fingerling stage.

They produced nearly 1 billion shark catfish fry in 2017 –18, meeting around 30 per cent of the farmers’ demand in the province, Vu told Tuoi Tre (Youth) newspaper.

But many farmers are struggling to follow the instructions due to their unfamiliarity, he added.

Other provinces in the region too are planning to monitor shark catfish farming more closely, especially at the breeding and farming processes to ensure quality for exports.

According to Nguyen Van Khanh and Cao Luong Tri, two shark catfish farmers in the delta, the price of the fish has been extremely profitable for farmers at around VND29,500 per kilogramme, sometimes even rising to a record VND35,000. This has made farmers happy since in the last few years prices have been volatile, they said.

But Tri also said that as a result people could switch to farming shark catfish en masse, resulting in a shortage of quality fish breeds, which could affect the market.

Vo Hung Dung, deputy chairman of the Viet Nam Shark Catfish Association, said the fish output last year was 1.4 million tonnes, up 20 per cent from 2017. Exports were worth a record US$2.2 billion, 26.4 per cent higher than in 2017, he said.

The industry targets exports of around $2.4 billion this year.

More industrial parks to be built in Hai Phong city

Ships dock at Nam Hai-Dinh Vu port in Dinh Vu-Cat Hai economic zone.

Five or six more industrial parks are expected to be built in the northern port city of Hai Phong in the time ahead, according to head of the Hai Phong Economic Zone Authority (HEZA) Pham Van Moi.

Investors have kept keen eyes on the construction of the Vinh Quang industrial park in Tien Lang district and the DEEP C4 Industrial Zone in Dinh Vu-Cat Hai Economic Zone thanks to the favourable transport infrastructure. In particular, DEEP C4 is located adjacent to Lach Huyen Deep Sea Port which is able to receive ships with a capacity of up to 8,000 TEU.

Moi said that the city’s 13 industrial parks, including the nine in Dinh Vu-Cat Hai Economic Zone, have attracted 449 domestic and foreign projects so far. Nearly 13.6 billion USD was poured into 311 FDI projects, and more than 136.3 trillion VND (5.9 billion USD) was secured in 138 Vietnamese projects.

In 2018 alone, local industrial parks had 65 new projects with a total registered capital of 520.2 million USD, and 38 projects adjusted their investment capital with a combined additional sum of 1.76 billion USD. Foreign investment tripled the amount recorded in 2017 to reach 2.28 billion USD.

Meanwhile, domestic investors landed 42.7 trillion VND in investment in the year.

Good transport infrastructure alongside improvements in administrative procedure reform and land clearance have made Hai Phong city more attractive to investors, Moi said. 

The HEZA will continue working to remove bottlenecks for investors, as well as shorten the time needed for granting investment licences to between two to seven days.

Vietjet Air offers 3 million promotional tickets

Vietjet Air is offering 3 million promotional tickets priced from just zero Vietnamese dong during a three-day promotional programme from February 13-15.

The promotional tickets is applied for all domestic flights and international routes connecting Vietnam with Tokyo and Osaka (Japan); Seoul, Busan, Daegu (the Republic of Korea)/ Hong Kong/ Kaohsiung, Taipei, Taichung, Tainan (Taiwan - China)/ Singapore/ Bangkok, Phuket, Chiang Mai (Thailand)/ Kuala Lumpur (Malaysia)/ Yangon (Myanmar)/ Phnom Penh, Siem Reap (Cambodia).

The tickets are valid for passengers travelling between Phu Quoc and Hong Kong from April 19 to October 25, and on other routes from April 14 and December 31, 2019.

The promotional tickets are available on all sales channels during the golden hours from 12:00 to 14:00 on www.vietjetair.com (also compatible with smartphones at https://m.vietjetair.com) or www.facebook.com/vietjetvietnam (just click the “Booking” tab).

Vietjet Air is currently operating 40 domestic routes and 66 international ones, with highest safety ratings in Asia-Pacific and the world over.

Firms investing abroad urged to pay attention to corporate social responsibility

A rubber project run by Hoang Anh Gia Lai in Laos. (Source: nld.com.vn)

Vietnamese firms should focus on environmental protection and corporate social responsibility when investing abroad to develop sustainably and promote the socio-economic development of their host countries, experts have urged.

The existing legal system does not clearly state the corporate responsibility of overseas projects operated by Vietnamese firms. However, firms cannot ignore corporate responsibility if they want their projects to develop and bring long-term economic benefits.

According to Pham Quang Tu from Oxfam Vietnam, when investing abroad, Vietnamese firms must clearly understand the legal system about social and environmental protection, respect the cultural heritages of the host country and consult those who could be affected by their projects before implementation.

In addition, social and environmental impact reports must be conducted together, ensuring compliance with the host countries’ regulations, he said.

Deputy Chairman of the Vietnam Chamber of Commerce and Industry Hoang Quang Phong said that due to a lack of awareness of international laws, host countries’ laws, the cultures and customs of local people and agreements signed between governments, a number of overseas projects had not achieved their goals.

Vietnamese firms must change their investment methods towards sustainable development and promote corporate social responsibility to avoid problems which might negatively affect their own benefits, the socio-economic development of the host country and the image of Vietnam in overseas markets, Phong said.

He stressed that the Vietnam’s policies for investing abroad should be raised towards approaching the international practice to create favourable conditions for firms to improve themselves and contribute to promoting international cooperation.

Global Witness, a non-Government organisation, urged the Vietnamese Government to strengthen the provision of instructions to Vietnamese firms on environmental and social risk management in overseas markets.

The biggest difficulty for firms investing abroad was insufficient awareness of the legal system of the host country and regulations under international conventions, said Nguyen Thi Hai, deputy director of the Dak Lak Rubber Joint Stock Company. In addition, firms had not yet fully assessed the risks related to the culture and customs of the local people, which existed a significant barrier, she said.

According to Dinh Trong Thang from the Central Institute for Economic Management, it was necessary to have an agency to provide instructions in investing abroad, stressing the role of business associations.

Statistics from the Foreign Investment Agency under the Ministry of Planning and Investment showed that Vietnamese firms invested 432.2 million USD in 38 countries and territories in 2018. Laos was the largest destination for Vietnamese investment with 81.5 million USD, followed by Australia with 55.5 million USD and the US with 53 million USD.

Hoa Phat construction steel sales post 27 per cent hike

Sales of Hoa Phat construction steel in the first month of this year hit 250,000 tonnes, a 27 per cent year-on-year rise and equal to record sales in October 2018.

Hoa Phat Group said steel sales in the central and southern regions accounted for 48,800 tonnes, with the rest in the northern region.

Its agents were stocking steel for construction after the Tet (Lunar New Year) holiday, it added.

The group’s steel exports also saw high volume of 34,6000tones last month. Of which, the US and Cambodia were the biggest importers with volumes of 12,000 tonnes and 11,772 tonnes respectively.

Exports of high-quality coil steel wire accounted for 66.4 per cent of the total exported volume, mainly shipped to the US and Japan. The firm’s steel exports to Japan last year were 20 times higher than that of 2017.

Hoa Phat is aiming for consumption of 3.3 million tonnes of construction steel in 2019 as its second steel rolling line of its Hoa Phat Dung Quat iron and steel production complex is expected to become operational by the end of this year.

Last year, the group posted records in its business results as its consolidated revenue reached VND56.5 trillion (US$2.43 billion), increasing 21 per cent from the previous year. Notably, its after-tax profit hit a record high of VND8.6 trillion, surpassing 7 per cent of its target.

The steel sector contributed to the high growth with up to 85 per cent of revenue and after-tax profit. Its steel sales last year reached a record high of 3.16 million tonnes.

The company exported steel to 14 countries and territories, of which construction steel accounted for 240,000 tonnes. 

Government hastens capital injection scheme for southern metro projects

Ben Thanh - Suoi Tien metro line includes a 2.6 km long tunnel designed with three depots and a 17km above-ground section with 11 depots.

Deputy Prime Minister Trinh Dinh Dung has required combined efforts between the Ho Chi Minh City People’s Committee and relevant ministries in fulfilling the Politburo’s guidance on capital adjustments for two metro projects in the southern city.

According to Vietnam Economics Times, the Ministry of Planning and Investment was asked to team up with other ministries to assist HCM City in mulling over plans to ratify capital adjustments for the two metro projects. They includes the partially completed Ben Thanh – Suoi Tien section and the upcoming Ben Thanh – Tham Luong line.

The outcomes from considering the capital injection will be reported back to the Prime Minister while good quality and further developments on the metro lines must be secured. 

The Ben Thanh – Suoi Tien metro line is the first section of a mega metro project connecting HCM City with neighbouring provinces. The construction on the first metro line resumed in August 2012.

It stretches nearly 20 km in total, connecting district 1 of HCM City to Di An townlet in Binh Duong province. The work includes a 2.6 km long tunnel designed with three depots and a 17km above-ground section with 11 depots.

Last month, HCM City reportedly made rushed attempts to put the long-delayed Ben Thanh - Suoi Tien metro line into operation by 2020.

The project has suffered from chronic delays with only half of the project’s work volumes being completed, due to a lack of capital and divided opinions over the total capitalisation.

The first line, initially valued at VND17.4 trillion (US$741.5 million), was approved by HCM City in 2007. At the time, approval from the National Assembly was not needed. 

However, the capital required to complete the first metro line has skyrocketed to VND47.3 trillion (US$2.01 billion) after an array of capital adjustments in 2011. This level of capital means the first metro line has been named among a list of projects which must be submitted to the National Assembly for approval.

Meanwhile, the second Ben Thanh – Tham Luong metro line was approved in 2010, with the volume of capital exceeding US$1.3 billion.

The funding includes US$540 million financed by the Asian Development Bank (ADB), US$313 million from the German Development Bank, and US$195 million from the European Investment Bank (EIB).

However, the capitalisation has been adjusted to over US$2.1 billion due to a slip in prices, financial costs, additional costs for building items that link the second metro line with metro line 3b, metro line 5, and metro line 6, in addition to expenses for extending the length of tunnel depots. 

The second metro line will be 20km in length, starting near Thu Thiem ward in district 2 and ending at Tay Ninh bus station in the southeast province of Tay Ninh. Construction on the project is expected to begin in 2020 and be completed by 2024. 

Vietnam poised to benefit from US-China trade fallout  

Manufacturing has been Vietnam’s key growth driver in recent years. While global trade has stagnated, Vietnam’s has soared from 70 per cent of GDP in 2007 to 200 per cent in 2017.

The manufacturing sector has been the key component of Vietnam’s FDI, which experienced a compound annual growth rate of 18 per cent from 2012 to 2017 (the majority of which was sourced from Japan and South Korea).

Meanwhile, China’s role as the global manufacturing hub is in decline as an increasing number of elements prompt companies to diversify their investment. The factors that drove its position as a manufacturing darling - government reforms and the availability of a cheap, young workforce - are beginning to soften.

Many multinationals are reviewing their global supply chains and looking to diversify by relocating production facilities to other countries.

Head of Asia Research at ANZ, Mr. Khoon Goh, said Vietnam has opened its doors to foreign investment and removed barriers to doing business in the country. “Vietnam is actually likely to benefit from the more fraught global geopolitical environment,” he noted.

Through this period of global adjustment, manufacturing will flow down the path of least resistance - and greatest opportunity.

The US has traditionally been a major trading partner of China, with around 19 per cent of the Asian giant’s total exports going to the States.

Import tariffs imposed by President Donald Trump on 50 per cent of goods imported from China and the retaliatory measures by President Xi Jinping have increased the costs of exporting products from China to the US.

The concern over a prolonged trade war could accelerate companies’ decisions to explore alternative manufacturing bases and diversify away from China to lower-cost countries such as Vietnam. The country has already become a major exporter of textiles, electronic goods, and footwear, among other items, with one in ten of the world’s smartphones produced in Vietnam.

As far back as 2017, the United States’ Fashion Industry Association noted the sourcing model in the sector was shifting from a “China Plus Many” model to a “China Plus Vietnam Plus Many” one.

Increasing trade liberalization, deregulation, lowered costs of doing business, and investments in human capital have contributed to the growing attractiveness of Vietnam as a manufacturing hub. Favorable factors include labor costs and high productivity, a young workforce, trade liberalization, a favorable investment climate and economic stability, taxation, and incentives.

There are no winners from war but Vietnam looks poised to benefit from the US-China trade fallout.

Dat Lat faces hotel room shortage during Tet

The Central Highlands city of Da Lat has seen a sharp rise in tourists during Tet, leading to a shortage of hotel room and guesthouses. 

The number of tourists to Da Lat surged during the Lunar New Year to avoid the hot weather.  

Many people from the neighbouring localities drove motorbikes to the city but failed to book accommodation, even homestay service or guesthouses. As a result, they had to set up tents by Xuan Huong Lake to sleep overnight. Some groups of young people lit fires by the lake to keep warm.

Some families slept right in their cars when they couldn’t book rooms.

Da Lat is now home to 1,400 hotels and guesthouses but hasn’t been sufficient during peak periods.

This Lunar New Year, many roads in the city’s centre areas saw traffic congestion. Local authorities even banned cars with more than 16 seats going through Prenne Pass, but the pass was still jammed at rush hours on February 7-10.

The municipal Department of Police had to arrange staff to ensure traffic flows.

Meanwhile, many local restaurants were also crowded. Guests often had to wait for quite long for being served.

Banks attract new deposits with lucky money

Many banks are trying to encourage customers to make deposits by giving out lucky money after Tet.

Viet Capital Bank launched a promotional programme that gives lucky money to those who make deposits for three days. Each lucky envelope includes a banknote of up to VND100,000 (USD4.30).

According to Sacombank, many people made deposits on February 12 to earn some lucky money. Their programme launches from February 7 to 12. Customers who deposit over VND60m have been given VND39,000 or VND68,000. Those who deposit over VND1.5bn have been given 3.75 grams of gold.

Customers who open new savings accounts with at least VND500,000 or deposit VND1m to VND10m into their old accounts have been given VND20,000.

Trang, a local in District 2, said after knowing about the programmes, she deposited VND200m into two different banks to earn VND200,000 of lucky money and a chance to join a lucky draw.

Meanwhile, ABBank gives their depositors practical items in the new promotion programmes such as a set of wine glasses or dishes besides the lucky envelopes with banknotes of at least VND50,000.

This year, most of the programmes aimed at customers who make at least 6-month deposits. According to experts, banks need money for medium and long-term capitals as the maximum ratio of short-term funds used for medium and long-term loans was drafted to be at 45% in 2018 and 40% in 2019.

Logivan raises $5.5 million in new funding round

Logivan is a technology platform that directly connects truckers with shipping firms. — Photo theleader.vn

 Logivan, a Vietnamese platform that connects truckers with shipping companies, has successfully secured US$5.5 million from venture capital firm Alpha JWC and two angel investors, including Founding Managing Partner at Matrix Partners China David Su.

Indonesia-based Alpha JWC has strengths in fintech and consumption, and has prestige in the US and China. It targets companies with strong growth and potential to expand to new markets in the future.

Logivan said the newly raised funds would be used to invest in data analysis and integration to improve the effectiveness of its supply chain and bring the best experience to customers. The company would apply artificial intelligence in clarifying documents, meeting user demands and providing more accurate forecasts on orders. In addition, it would continue to develop technology to connect trucks and calculate transport costs.

Established in September 2017, Logivan’s central platform tracks the location of freights and trucks, helping to optimise truck routes and reduce their empty load return rates.

Logivan’s CEO Linh Pham said other logistics applications on the market such as Ahamove and Grab Express usually focus on last mile delivery – the final step in the supply chain.

Meanwhile, Logivan concentrates on the first and middle steps in the delivery supply chain. It is a business to business (B2B) model.

He said the goods transport by road market in Viet Nam was worth around $9 billion in 2017, with a transport volume of one billion tonnes. There were more than one million trucks participating in the market, with an average growth rate of 9.5 per cent a year.

The high growth rate makes road shipping a tempting potential market for start-up companies, he said.

This is the third funding round for Logivan, which has raised $7.9 million in total so far.

It last raised $1.75 million from Ethos Partners, Vina Capital Ventures and Insignia Ventures Partners in August 2018.

Logivan said it had connected more than 22,000 transportation partners with every major commercial truck type. The network has 10,000 shipping companies registered on its system. 

Vietnamese airlines excited, worried about direct US flights

Vietnamese carriers are keen on operating direct flights to the US, but worried about recouping the large investments involved.

The U.S. Federal Aviation Administration (FAA) is expected to grant a Category 1 rating to Vietnam soon, allowing direct flights between the two countries, Reuters reported earlier this month, citing two U.S. officials.

Dinh Viet Thang, head of the Civil Aviation Authority of Vietnam (CAAV), said that direct routes to the U.S. would be a new market for Vietnamese airlines as they will not have to compete with international airlines that dominate one-stop routes. He did not elaborate.

"Non-stop flights from Vietnam to the U.S. will be a brand-new market full of potential for local airlines, as no international airline has operated them so far," he told local media. 

Local airlines are enthused about the possibility of operating direct routes. A Vietnam Airlines official who asked not be named said the carrier was considering the purchase of more airplanes which are capable of flying non-stop to the U.S.

"None of our airplanes can fly directly, so we are considering the purchase of wide-body aircraft such as Airbus 350-1000 or Boeing 787-8 Dreamliner," the representative told VnExpress International.

Budget airline Vietjet and new private airline Bamboo Airways have also said they are interested in opening direct flights between the two countries.

The direct route is expected to cater to the large demand for travel between both countries. The number of tourists coming to Vietnam from the U.S. grew by 11.9 percent last year from 2017 to 687,000, according to the Ministry of Culture, Sports and Tourism. 

A Vietnamese population of over 2.1 million in the U.S., is also expected to be a stable source of travel demand, said industry insiders.

Tourism companies are also having high hopes about prospects of direct flights. Nguyen Cong Hoan, vice general director of Hanoi Redtours, said that the number of customers travelling to the U.S. through his company has increased by 30 percent each year in the last few years.

"A direct flight will make travel between the two countries much easier and reduce the time passengers have to wait in airports. We believe that our customers are willing to pay 20-40 percent more for a direct flight," he told VnExpress International.

But there are also concerns about possible losses. Vietnam Airlines CEO Duong Tri Thanh had said earlier that the airline could face an average annual loss of $30 million in the first years of operation if it opens a direct route to the U.S.

It would take at least five years for the national flag carrier to break even, he added. 

CAAV head Thang said that local airlines would need to purchase larger airplanes as most of the existing fleet cannot manage such long flights.

Another option would be to reduce the number of passengers and/or cargo weight of existing aircraft to guarantee safety over a 13-hour flight, but this would reduce revenue, he added.

The Vietnamese government had early last year approved plans to expand the network of national carriers to major markets including Australia, China, Europe and the U.S.

Under these plans, Vietnam Airlines will go through with its proposal to open non-stop services to the U.S., starting with direct flights to San Francisco or Los Angeles.

As Vietnam has never held an FAA rating, passengers travelling to the U.S. now have to transit through different countries and territories like China, Hong Kong and Japan, with a total time of 18-21 hours. 

In 2004, Vietnam Airlines sought permission from the U.S. to provide direct services. However, the request was denied because it was judged that the CAAV did not meet safety supervision requirements set by the FAA.

Vietnam’s aviation industry has seen increasing demand in recent years. The country welcomed 12.5 million air passengers last year, up 14.4 percent from 2017, according to the General Statistics Office.

The country’s aviation traffic increased 16 percent on average each year from 2010 to 2017, according to data from the civil aviation regulator.

Coal and transmissions set to drive power infrastructure sector

The future growth of Vietnam’s power infrastructure will be spearheaded by coal-fired power plants in the short term as Vietnam is one of Asia’s fastest growing markets, thus driving the demand of electricity for industry, and commercial and residential usage, according to a world-class research unit.

Fitch Solutions Macro Research, a subsidiary specializing in market research services of Fitch Group, said in its newly-released outlook for Vietnam’s power sector that the country’s electricity generation is set to increase to 236 terawatt hours (TWh) by 2023 and to 318TWh by 2028.

The research unit said that the Government, along with international observers, has been pushing for a decrease in reliance on coal and an increase in renewables usage to lower greenhouse gas emissions, reduce air pollution, and achieve sustainable growth in light of challenges posed by climate change. 

However, according to the Fitch Solutions Key Projects Database (KPD), coal projects current dominate the power infrastructure construction pipeline – out of 57 projects currently in the pre-construction phase, 17 are coal-fired plants, accounting for more than 85 per cent of the total project value.

Together with facilities currently under construction, coal-fired plants are expected to provide an additional 66GW of capacity if all pipeline projects turn operational, a figure that is well ahead of other sources of energy.

This indicates a short-term reliance on coal to meet the rapid increase in demand for electricity within the country, which will result in the construction of coal-fired plants as the primary driver of the local power sector. 

Fitch Solutions believes the construction of non-hydro renewable power plants, currently the second largest component of the pipeline, with 24 projects in the pre-construction phase with a total value of US$4.7 billion, will gain traction in the next few years.

This view is underpinned by increasing efforts to promote usage of renewable energy, such as wind and solar, along with technological advancements in renewable and grid technology that would further drive down the cost of implementation. 

In particular, Fitch Solutions expects an increase in the launch of wind and solar power projects given the Government’s renewable push via the recent adjustment of feed-in tariffs. The KPD reveals 15 projects currently under construction and a further 24 projects, mostly wind and solar, in the pre-construction phase, underscoring the growing opportunity in the renewable construction sector.

The research unit also expects additional investment in grid infrastructure in tandem with rising demand for electricity in the country. Demand for electricity is mainly driven by rapid urbanization and economic growth in the country’s two most populous localities - Hanoi and Ho Chi Minh City.

The current network transmitting electricity from the north and central regions to the south is overloaded and under strain, causing instances of power outages and larger power losses.

To address the issue, the National Power Transmission Corporation (EVNNPT) has announced plans to launch three 500kV and 30 220kV power transmission projects in 2019, to increase capacity for power transmission. Hence, upgrades to existing grid infrastructure would help to minimize power distribution losses, Fitch Solutions asserted. 

Power losses have been on a steady decline since 2011 and the EVNNPT intends to make further improvements to transmission efficiency, especially on the 220kV lines, which carries the majority of the electricity produced.

These projects will continue to be led by State-owned utility Vietnam Electricity (EVN), with opportunities in financing, construction and provision of equipment by local and foreign companies, the research unit noted.

Tra Vinh looks to attract more investors

The Mekong Delta province of Tra Vinh has welcomed representatives of seven domestic and foreign firms to learn about the investment and business environment and regulations related to business registration in the locality in the first days of the Lunar New Year. 

According to the provincial Department of Planning and Investment, the firms mainly operate in production, waste treatment and environmental protection, energy and seaport development, construction and refrigeration electromechanics. 

Deputy Director of the department To Ngoc Binh said the locality’s investment attraction has shown positive signals thanks to measures implemented by local authorities to improve the competitiveness index and promote administrative reform, and support enterprises. 

Apart from activities to call for more investment, they have also enhanced trade promotion and helped local firms join trade and industrial fairs in neighbouring localities. 

Through activities to assist businesses, Tra Vinh has developed 27 new small- and medium-sized enterprises with a total registered capital of 815 billion VND (nearly 35 million USD) so far this year, 2.5 times higher than the figure in the same period of 2018. 

Grab-Uber deal comes under fresh antitrust scrutiny in Vietnam

Vietnamese authorities are set to further investigate the merger between Grab and Uber last year for possible violation of antitrust regulations.

The Competition Council said after a thorough examination of documents and arguments furnished by both parties it has discovered a number of new details related to possible violation of competition laws by ride-hailing platform Grab’s acquisition of Uber’s business operations last March. 

It has returned the case dossiers to the Ministry of Industry and Trade’s competition and consumer protection department for further investigation. The investigation is expected to go on until April this year.

Last year Singapore-based Grab acquired Uber in Southeast Asia in return for a 27.5 percent stake. 

Vietnam’s Competition Law requires any merger or acquisition that results in a company gaining a 30 percent market share to be reported to competition authorities.

If a company gains a 50 percent market share from the deal, it can only be carried out with express permission from the authorities.

The department’s preliminary investigation found Grab’s market share had exceeded 50 percent since the acquisition.

But Grab insists it had acted legally and that the competition authorities have misinterpreted the scope of relevant markets when calculating the market share. 

Last October the Philippines’s competition watchdog fined the two companies a cumulative 16 million pesos ($296,873) saying they had completed the deal too soon and that the quality of service had dipped. 

Singapore's competition authority fined them a total of S$13 million ($9.5 million) and announced other measures to address competition concerns arising from the merger.