Sharp rises in Q2 corporate earnings come from asset sales
A number of listed companies have reported sharp increases in their quarterly profits as they have performed well in selling stakes in sub-units and projects.
Hot-rolled coils stored inside a Nam Kim steel plant. The company plans to earn VND850 billion from selling its stakes in sub companies and business projects in 2019 - Photo news.zing.vn
The first half of the year was a tough time for local firms as the Vietnamese economy growth slowed to 6.71 per cent.
The figure was 0.02 percentage point lower than that recorded in the first half of 2018 amid the rising trade tension between the US and China as well as the slowdown of the global economy.
Therefore, the second-quarter earnings season was predicted to be not as good as it was in previous years for listed companies, according to securities firms.
However, some companies managed to swim against the current. Their quarterly earnings recorded extraordinary improvements thanks to the sale of their assets and stakes in member companies and projects.
The sale of its 60 per cent stake in Vinh Hao 6 Solar Power project is expected to bring construction and realty firm Fecon’s revenue in the second quarter up 30 per cent year on year to VND715.5 billion (US$30.7 million).
The value of the deal was estimated at VND45 billion. Fecon’s post-tax profit was forecast to rise 2.4 times yearly to VND150.3 billion in the past quarter.
Property developer Dat Xanh has recently released its second-quarter financial report, which shows the firm’s revenue rose 10 per cent to VND842.4 billion and post-tax profit shot up 100 per cent to VND249 billion.
The company’s quarterly financial report also stated that it sold stakes in its investment projects for nearly VND220 billion in the second quarter.
Steelmaker Nam Kim has estimated a VND120 billion profit for the second quarter of 2019, which is an improvement from the previous two quarters.
The company recorded a loss of VND173 billion in the fourth quarter of 2018 and of VND102 billion in the January-March period of 2019.
After the first two quarters of 2019, Nam Kim estimated its net profit was VND20-25 billion, down 80 per cent year on year.
As the average price of hot-rolled coil on global markets in the second quarter increased modestly to $557 per tonne from $548 per tonne in the first quarter, the company managed to sell its entire ownership in two sub companies and one land use licence.
Before the deals were pulled off, Nam Kim held 100 per cent stake in Nam Kim Corea, which had charter capital of VND91.45 billion.
Nam Kim also sold its Nam Kim 1 Plant for VND180 billion and transferred its land use licence in the southern province of Ba Ria-Vung Tau for VND250 billion.
In 2019, Nam Kim plans to earn VND850 billion from selling its shares in member companies, associate firms and projects.
VietBank to trade on UPCoM
The Hanoi Stock Exchange (HNX) has just announced approving VietBank (Vietnam Thuong Tin Commercial Joint Stock Bank), which is valued at VND6.28 trillion ($273.26 million), to trade on the UPCoM with the code VBB from July 30.
VietBank registered to trade over 419 million shares, equivalent to the charter capital of VND4.19 trillion ($182.17 million). The price at the first session will be VND15,000 ($0.65) per share. The trading band on the first day on UPCoM is ± 40 per cent, so the stock will fluctuate in the range of VND9,000-21,000 ($0.39-0.91) per share.
VietBank is a rural bank established in December 2006 with the initial charter capital of VND200 billion ($8.7 million). The founding shareholders include groups related to Hoa Lam Corporation, Nguyen Duc Kien's family who are major shareholders of VietBank), and Dieu Hien Trading Construction Co., Ltd.
The shareholder structure of VietBank has also changed. Nguyen Duc Kien’s family (including Kien, his younger sisters Nguyen Thuy Lan and Nguyen Thuy Huong, brother-in-law Dao Van Kien, father-in-law Dang Cong Minh, and mother-in-law Nguyen Thi Kim Thanh) have withdrawn their shares worth more than 10 per cent of VietBank's capital. Only Dang Ngoc Lan (Kien’s wife) retained her 4.6 per cent of the capital. However, even Lan withdrew from the Board of Directors from January 18.
According to the 2018 annual report, VietBank does not have major shareholders. The bank has nine organisations holding 32.48 per cent of its capital, with the rest belonging to 258 individual shareholders.
In 2018, the bank's pre-tax profit reached VND401 billion ($17.43 million), 1.5 times higher than in the previous year. In the first six months of this year, the bank had a pre-tax profit of nearly VND250 billion ($10.87 million), an increase of 24 per cent vis-a-vis to 2018.
Total assets at the end of this second quarter were over VND56.6 trillion ($2.46 billion). In 2019, VietBank set a target of 25 per cent increase in pre-tax profit to reach over VND500 billion ($21.74 million), keeping non-performing loan (NPL) ratio below 2 per cent, and achieving a credit growth of 5.9 per cent (about VND37.59 trillion – $1.63 billion).
HCM City to host smart factory conference
Vietnamese market and incentive policies for high-tech investment, trends in smart factory solutions and smart solutions using AI and IoT are among the topics that will be discussed at a conference in HCM City next month.
At Smart Factory Conference, experts will also discuss how to build a smart industrial zone and factory environment that would help to attract more investment, according to the organisers.
According to experts, demand for smart factories is growing in the Vietnamese market, but there are issues related to awareness, infrastructure, machinery, and human resources.
How to apply smart equipment and systems in production, what are the advantages and disadvantages of using smart factory solutions and how to synchronise all development issues are among the questions that all stakeholders are concerned about.
Organised by Houselink JSC in collaboration with Messe Frankfurt New Era Business Media Ltd and Vi?t Nam Advertisement and Fair Exhibition JSC, the conference will take place on August 15 at Secutech Vietnam at the Saigon Exhibition and Convention Centre.
It is expected to attract more than 300 government officials, investors, contractors, suppliers of smart equipment, consultants, and end-users.
Secutech, an international exhibition on fire safety, rescue technology and equipment, will be held from August 14 to 16 with over 350 brands from over 20 countries and territories taking part.
Experts expect breakthroughs from FDI investors
Vietnam should pursue a clear plan on wooing foreign investors that are able to create breakthroughs for overall economic development and nurture alliances with domestic firms, experts have urged.
The General Statistics Office of Vietnam under the Ministry of Planning and Investment (MPI) reported that the inflow of newly registered investment capital and equity purchase by investors from China and Hong Kong (China) reached US$7.5 billion during the first half of the year.
The six-month figure indicates a sudden growth in the Chinese investment inflows into Vietnam as it is much higher than the total of US$3.7 billion seen in 2017 and US$5.8 billion in 2018.
Experts from Vietnam Institute for Economic and Policy Research (VEPR) asserted their belief that China remains a moderate FDI investor in comparison with “major players” like Japan and the Republic of Korea as it occupies only a small proportion of the country’s total FDI inflows.
Meanwhile, controversies remain over the negative impacts that Chinese-invested projects could have on the country, especially those related to obsolete technologies and excessive pollution.
Dr. Nguyen Duc Thanh, director of the VEPR, said that the country has already experienced a phase of attracting FDI at any cost, for the purpose of boosting mutual development. The country now opts to be more selective with foreign investments.
The country has sketched out a draft blueprint to lure FDI for a new phase of development, with a clear focus on quality and effectiveness. Despite this, experts have expressed their concern that creating filters for FDI inflows is not a simple matter as the definition of high technologies, core technologies, and the priorities given to FDI projects, have yet to be clarified.
Given this, many localities have attached more importance to the total registered capital of FDI projects as opposed to the quality.
Dr. Tran Toan Thang, head of the division for international economics under the MPI National Center for Socio - Economic Information and Forecast, said that although the influx of FDI from mainland China remains modest, the combined Chinese FDI, including those from Hong Kong and Macau has reached a considerable value.
Thang underlined the need to make in-depth research and analysis regarding the impacts that Chinese FDI inflows could have on the Vietnamese economy, with a precise approach needed to update the profile of each Chinese investor.
Assoc. Prof. Dr. Hoang Van Cuong, vice rector of the Hanoi-based National Economics University, suggested that the country should embrace the process of selecting FDI inflows. “If we okay all foreign investors that are capable of disbursing their committed investment capital, this could lead a fierce competition between Vietnamese firms and foreign rivals, even hampering the market foothold of domestic ones.”
The country should therefore focus on luring foreign investors that are capable of creating breakthroughs for the purpose of fostering mutual development as well as linkages with domestic enterprises.
Nguyen Chi Dung, Minister of Planning and Investment, said during a recent meeting to review the ministry’s performance during the first half of 2019 that special attention must be paid to the future attraction and management of foreign investments, particularly those related to input materials and infrastructure investment.
The minister asserted that drastic measures would be taken to halt illegal foreign investment and prevent poor-quality FDI, high-energy absorbing projects, and those likely to pose threats to the environment.
Wood exports beat multi-billion dollar categories
The total export value of wood and wooden products posted over US$4.8 billion during the first half of 2019, putting them on the 6th place among the export staples that brought home billions of dollars.
The six-month figure amounted to US$4.82 billion, an annual rise of 16.6 per cent, of which US$3.39 billion came solely from wood exports, a hike of 17.9 per cent on year.
June alone saw the overseas shipment of wood and wooden products reach US$805.7 million, up 6.9 per cent on year yet down 10.7 per cent against the previous month.
Wood and wooden items shipped to the US racked up US$410.4 million during June, a slight fall of 3.14 per cent, while those sent to Japan and China reached US$107.4 million and US$76.27 million, respectively.
Nguyen Ton Quyen, deputy chairman of the Vietnam Timber and Forest Product Association, said that wood exporters have played a more active role in developing their material sources as domestic sources meet 75 per cent of the total demand with the rest being imported.
Wooden exports maintained two-digit growth over the six-month period, therefore putting the full-year export target of US$10.5 billion within reach.
500 Startups Vietnam to invest in 100 businesses by 2020
500 Startups Vietnam, a member of the US venture capital firm 500 Startups, targets investing in up to 100 Viet Nam-connected startups by 2020 under its Saola Accelerator programme.
The programme will invest US$100,000 in each company and help them build companies at scale.
The criteria for "Viet Nam-connected" startups includes serving the Viet Nam market, having a Vietnamese co-founder, and/or having a meaningful portion of the team in Viet Nam.
500 Startups Vietnam will also offer training sessions, workshops and hands-on mentoring sessions for startup staff.
The firm has partnered with member-only space Kafnu Ho Chi Minh City, which is a venue sponsor for the Saola Accelerator Programme, to support entrepreneurship in Viet Nam.
Eddie Thai, general partner of 500 Startups Vietnam, said: “Beyond sharing growth know-how, Saola Accelerator aims to create a safe space for founders to ask questions and get support from experts who understand the struggle they are going through.”
The two partners hosted their first co-event “Secrets to a Great Growth Funnel” on July 24, attracting more than 100 technology entrepreneurs and business founders.
Saalim Chowdhury, partner at 500 Startups and director of the Saola Accelerator Programme, spoke about the core drivers that deliver growth to a startup and debunked the notion of growth hacking.
Chowdhury, who has worked with over 250 startups from 25 countries over the past four years, emphasised that growth is not a collection of tactics or shortcuts but a mindset and a process based on constant experimentation.
Chris Edwards, general manager of Kafnu Ho Chi Minh City and Kafnu Hong Kong said: “We feel privileged to be part of the success story of Viet Nam’s budding entrepreneurs, especially at this crucial and exciting stage of their development, and look forward to growing with them.”
Under the partnership, 500 Startups Vietnam and Kafnu Ho Chi Minh City will deliver more activities for the creator community to further extend outreach to entrepreneurs.
Phat Dat to issue VND225 billion worth of bonds
Phat Dat Real Estate Development Joint Stock Company plans to issue VND225 billion (US$9.65 million) of non-convertible, secured and non-warrant bonds.
The bonds will have one-year terms with an expected interest rate of 9.5 per cent annually. Interest will be post paid every three months.
Phat Dat expects to issue the bonds in the third quarter for less than 100 investors, excluding professional securities investors.
This is the company's sixth bond issuance so far this year, with the lowest interest rate in the issuance periods.
Earlier, it put about VND1.22 trillion worth of bonds up for sale with the lowest interest of 10.5 per cent a year and the highest of 14.45 per cent annually.
Currently, the firm is promoting projects outside HCM City such as Phat Dat Bau Ca (Quang Ngai Province), the subdivisions in Nhon Hoi ecological urban area (Binh Dinh Province).
This year, the company targets pre-tax profit VND1.1 trillion.
Vietnam Electricity to divest from finance company
The Vietnam Electricity (EVN) will divest all its capital from the EVN Finance Company (EVF) next month.
The move aims to meet a Government regulation that requires State-owned corporations and groups to divest from non-core business.
According to an announcement from the Ha Noi Stock Exchange, it will hold an auction to sell 18.75 million EVF shares, equal to 7.5 per cent of EVF’s charter capital, at initial price of VND13,480 apiece on August 23. If successful, the EVN will earn more than VND252 billion (US$10.82 million) from the deal.
EVF has many shareholders, of which the two largest are the An Binh Commercial Joint Stock Bank with a holding of 8.4 per cent of the company’s charter capital and EVN with 7.5 per cent.
EVN Finance was established in 2008 with charter capital of VND2.5 trillion. Initially, the company took a leading role in arranging capital and managing capital for EVN's power projects. It also provides other financial products and services such as capital mobilisation and receiving deposits of organisations.
EVF last year posted net profit of VND204 billion, up 13 per cent against the previous year. In the first half of this year, the company also recorded a profit of more than VND88 billion, up 6.5 per cent year-on-year.
The company’s total assets by the end of June were at VND19.75 trillion.
EVF listed its shares on the Unlisted Public Companies Market in August last year at reference price of VND12,200 apiece. However, the stock dropped sharply after that to some VND6,000 apiece and has recently started recovering. The share closed at VND7,800 on Thursday, up 8.3 per cent from the previous session.
Steel producer posts 7% lower Q2 profit on increased material prices
Steel producer Hoa Phat has reported that its post-tax profit dropped 7 per cent year on year to VND2.05 trillion (US$88.15 million) in the second quarter of the year.
Second quarter revenue was 6 per cent higher year on year at VND15.3 trillion ($659.5 million), the company said at a meeting with investors on Thursday.
In the first six months of the year, Hoa Phat recorded VND30.4 trillion ($1.3 billion) in combined revenue and VND3.86 trillion ($166.4 million) in post-tax profit. Compared to the first half of 2018, the six-month figures were up 10 per cent in revenue but down 12.7 per cent in post-tax profit.
According to the company’s chairman Tran Dinh Long, the performance in the first six months of the year was “acceptable” because the firm and the whole steel sector faced a sharp increase in the price of iron ore, the major input for steel production.
In January-June period, the price of iron ore gained 82 per cent to almost $120 per tonne. With the key material accounting for a third of Hoa Phat’s total production cost, the soaring prices seriously affected the firm’s profits.
The firm’s sales did not increase as quickly as material costs, so the per-product profit margin declined, leading to the slight decline in post-tax profit.
The slowdown of the real estate and construction markets also pulled the company’s profits down in the first six months of the year, Long said.
In the company’s six-month earnings report, there was no contribution from the Dung Quat steel production complex.
Construction on the first stage of the complex had been completed as of June 30. The company will start testing the production chain this month and it will deliver the first batch of hot-rolled steel products next March.
In the second half of 2019, if the price of iron ore remains high and the construction market shows little improvement or gets worse, Hoa Phat will perform worse, according to the chairman.
The company will meet its sales volume target for the year of three to four million tonnes. It may even beat its sales volume target, but not by much.
In addition, the company will continue paying dividends in cash for 2020. The company issued a total of 1.66 billion bonus shares for 2018, 2017 and 2016 dividend payouts.
Hoa Phat has more than 2.76 billion shares listed on the Ho Chi Minh Stock Exchange (HoSE) with the trading code HPG.
The company's shares gained 0.7 per cent on Friday to end the week at VND22,550 per share. Its shares have lost more than 33 per cent from their all-time peak of VND34,000 per share on January 3, 2018.
Foreign investment through M&A surges while FDI drops
Foreign investment in Vietnam in the January-July period through capital contributions and stake acquisitions rocketed 78% year-on-year, while foreign direct investment (FDI) declined 12%.
According to the Foreign Investment Agency, under the Ministry of Planning and Investment, fresh foreign investment approvals nationwide in the seven-month period reached US$20.2 billion. Of the total, there were 2,064 new FDI projects, with total registered capital of US$8.3 billion, and 791 projects with additional capital of over US$3.42 billion.
Meanwhile, foreign investors conducted nearly 4,400 transactions to contribute funds to and acquire shares in local firms, with a combined value of over US$8.52 billion.
New foreign capital was mainly poured into the processing and manufacturing sector, followed by the real estate, wholesale and retail, and automobile and motorcycle repair sectors.
The signing of the European Union-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement will help Vietnam receive more foreign investment from the bloc, especially in the service, finance, telecom, transport and distribution sectors, according to the Ministry of Planning and Investment.
Vietnam Electricity to add 1,480 MW into national grid
In the first six months of 2019, EVN added 4,753 MW into the national grid, of which solar power projects amounted to 4,397 MW, resulting in total power generation capacity in Vietnam of 53,326 MW as of June.
Vietnam Electricity (EVN), the country’s sole power distributor, is scheduled to complete three power plant projects with total capacity of 1,480 MW in the remaining months of 2019, the governmental portal reported.
These projects include upgraded Vinh Tan 4 and upgraded Duyen Hai 3 thermal plants, and Thuong Kon Tum Hydropower plant.
EVN is expected to commence the construction of solar power projects such as Phuoc Thai 1 and Se San 4.
In the first six months of 2019, EVN added 4,753 MW into the national grid, of which solar power projects amounted to 4,397 MW, resulting in total power generation capacity in Vietnam of 53,326 MW as of June.
The figure remains far off from the country’s total capacity target of 95,700 MW set for the 2016-2030 period under the revised Power Plan VII.
Regarding power generation projects, the EVN has granted the Provisional Acceptance Certificate (PAC) for Nghi Son 1 and Thai Binh thermal power plants, and connected upgraded Vinh Tan 4 thermal plant with capacity of 600 MW to the national grid.
Additionally, solar power plants of Vinh Tan 2 (42.65 MWp) and Da Mi (47.5MWp) have also been put into operation.
EVN also completed 57 power grids projects from 110kV to 500kV, including one project of 500kV power grid, 10 projects of 220kV and 46 others of 110kV, while 72 other projects have started construction, including 3 projects of 220kV and 69 projects of 110kV.
Prime Minister Nguyen Xuan Phuc on July 15 requested the Ministry of Industry and Trade (MoIT) and related parties to ensure sufficient power for economic development and domestic consumption.
The ministry and the whole industry must fulfill the target at all cost as the power shortage prospect may shadow Vietnam in 2022-2023 or in 2021 at the earliest, Phuc added.
The MOIT last month warned of power shortage, saying that the situation may cast its shadow over Vietnam in 2020, mostly in the southern region due to the sluggishness of many energy projects.
More seriously, the power shortage might happen in the southern region in 2021-2025 due to rising consumption. The shortage might hit 3.7 billion kWh in 2021, nearly 10 billion kWh in 2022, 12 billion kWh in 2023, 7 billion kWh in 2024, and 3.5 billion kWh in 2025.
Adayroi to distribute Ducati vehicles in Viet Nam
Vingroup e-commerce site Adayroi has signed an agreement with Ducati Viet Nam to distribute Ducati vehicles and accessories.
Adayroi will directly distribute six Ducati models including the Monster, Scrambler, Panigale, SuperSport, Diavel and Multistrada as well as other genuine products such as accessories, toys, clothes, protective gear, helmets and gloves.
This collaboration will help widen the choice for customers who are passionate about Ducati and provide ways to purchase this product line.
In the first phase, Adayroi will have a series of promotions for online customers.
From now until August 4, 2019, all Ducati car buyers through the platform will be offered a voucher worth up to VND40 million (US$1,716) to buy clothes, accessories and car toys at a Ducati Viet Nam showroom along with a periodic maintenance voucher worth VND2.5 million and a free driver training course.
The first customers who buy a vehicle through the Adayroi website will also have the opportunity to win five pairs of domestic round-trip Vietnam Airline tickets and 10 tickets for the MotoGP 2019 - ThailanGP race in Buriram, Thailand worth VND3.5 million each.
Customers will have zero per cent installment for a maximum of 12 months without requiring a partial prepayment.
In order to purchase a Ducati vehicle in installments on Adayroi, customers need to have a credit card from one of 16 Adayroi-linked banks and choose the installment payment method, then come to the showroom to receive the vehicle in person or register to receive it at home.
VayMuon.vn partners with VietinBank Insurance
P2P lender VayMuon.vn signed a strategic cooperation agreement on July 25 in Hanoi with VietinBank Insurance (VBI) to ensure security for borrowers and investors.
VBI will help repay loans for borrowers who encounter unforeseen risks. The insurance policy is not only a solution for customers in such a position but also helps investors preserve their capital, making it easier to make disbursement decisions.
Ms. Dao Thi Trang, Director of VayMuon.vn, said the signing of the agreement with VBI affirms the vision of VayMuon.vn to build a safe financial ecosystem. “When concerns about risks are relieved and financial burdens shared, customers and families have complete peace of mind to borrow money to achieve their dreams,” she said.
Mr. Le Tuan Dung, VBI’s General Director, said its mission in the non-life insurance sector is “preserving the value of life”, so customers always need to be protected. “Receiving credibility from VayMuon.vn is a source of pride for us as we become its exclusive loan insurance provider, bringing safety to the people and the peace of mind to investors,” he noted.
VayMuon.vn connects more than 2 million customers with nearly 400,000 investors and grows over 20 per cent each month, of which loyal customers account for up to 50 per cent. Starting from five members, VayMuon.vn now has more than 200 employees working in four offices in Vietnam, Myanmar, Cambodia, and Thailand.
It achieved initial results thanks to continuous investment in the development of IT systems and the application of AI technologies and automation to automatically assess and approve loan requests from individual customers nationwide without depending on traditional paperwork and people.
Its seed investor, the NextTech Group, currently holds 20 per cent of shares. After its initial success in Vietnam, VayMuon.vn continues to call for $5 million to $10 million in Series A funding to continue investing in developing new technology platforms and products, making the most of a multi-service ecosystem with 12 million customers and the more than 60,000 sales points of NextTech. This capital will also be used to expand on its success in Myanmar, Cambodia, and Thailand.
Digiworld posts robust Q2 growth in every business unit
Vietnamese electronics and FMCG distributor the Digiworld Corporation (DGW) has announced its business results for the second quarter, revealing a new record in quarterly net revenue since its establishment, of $86.4 million, up 46 per cent year-on-year, and after-tax profit of around $1.5 million, up 56 per cent year-on-year, despite the second quarter being the “low season” for sales.
In the first half of the year, Digiworld therefore saw total net revenue of $145.4 million and after-tax profit of $2.6 million, increases of 28 per cent and 43 per cent, respectively, year-on-year. The company completed 47 per cent of its annual revenue plan and 44 per cent of its profit plan.
It made major efforts to boost growth in every business unit in the first half, especially consumer goods, where it achieved 170 per cent growth year-on-year.
Consumer goods saw revenue reach approximately $5 million, with a contract signed for master distribution of Nestlé Medical Nutrition products in early 2019.
Office equipment, meanwhile, is expected to grow in the long term given the digital transformation at enterprises in Vietnam. Revenue reached $25.4 million, an increase of 22 per cent year-on-year and representing 42 per cent of the annual plan.
Mobile phone sales were nearly $66.8 million, up 29 per cent year-on-year and completing 52 per cent of the annual plan. Digiworld now holds a market share of 8 per cent in smartphones, compared to 6 per cent in the same period last year.
In laptops and tablets, revenue stood at $48.2 million, an increase of 23 per cent year-on-year, representing 47 per cent of the annual plan and accounting for a market share of 30 per cent compared to 28 per cent in the same period of 2018.
Acuris: Vietnam sees spike in power deal activity
According to the latest Asia league table released by Inframation, an Acuris company, Asia wrapped up $32.85 billion in greenfield power deals in the first half of this year, second only to Europe. India’s governmental push suggests more opportunities lie ahead, while investors await Japan’s new wind promotion zones.
The value of power deals reaching financial close in Asia chalked up its best six-monthly performance in five years. Greenfield deals were in the lead in the six months to June, surging 44 per cent to $32.85 billion. Energy made up 21 per cent of the total, compared with 1 per cent a year ago. Power accounted for 29 per cent, while transport followed with 24 per cent.
Vietnam saw a spike in deal activity as developers raced to reach financial close and commission their projects before a favorable tariff regime expired on June 30. While balance sheet financing is still the way to go for many, experienced players such as InfraCo Asia and Sunseap managed to secure initial limited recourse loans for their 168MW Ninh Thuan facility from international lenders.
JBIC in April led a team of banks including SMBC, MUFG and Mizuho to provide up to $1.99 billion for the Van Phong 1 coal-fired power plant in Vietnam, with part of the loan covered by Nippon Export and Investment Insurance. In March, Tohoku Electric Power agreed to buy 10 per cent of the Nghi Son 2 1,200MW coal-fired project - one of the largest in ASEAN.
While leading international companies made inroads into emerging markets, many Western institutional investors are still opting for OECD countries for more steady returns, according to a banking source.
Following its first investment last year, BlackRock Real Assets in May enhanced its Taiwan solar portfolio through an acquisition of a 115MW portfolio mainly made up of under-construction or shovel-ready power stations.
Trung Luong-My Thuan expressway project may be suspended
If the Government fails to disburse the funds it had pledged earlier for the Trung Luong-My Thuan expressway project, investors may suspend the project in August due to lack of capital.
Speaking at a meeting in Tien Giang Province today, July 24, to discuss ways to resolve bottlenecks in the Trung Luong-My Thuan expressway project, Luu Xuan Thuy, vice chairman of the Deo Ca Group as a member of the consortium investing in the project, said that the biggest difficulty facing the project is that the Government is yet to provide over VND2.1 trillion from the State budget for the project.
“The project is running into shortage of capital as around VND3 trillion in funding provided by the investors and contractors has been used up,” Thuy said. Therefore, the project may be halted in August, he added.
“The suspension is aimed at minimizing the damage caused by the project due to existing bottlenecks, and giving more time to resume it when conditions are more favorable,” Thuy said.
Tran Chung, former head of the State Appraisal Council for Construction Works under the Ministry of Construction, said he expects the Government will provide the funds in August, or issue a document pledging the time for disbursement, so that the project can continue smoothly.
On July 23, the Bridge Joint Stock Company No.12 stopped work on the contract package of XL13, as part of the expressway project, demanding payment of arrears, causing the project to slow down.
The firm’s action came after the BOT Trung Luong-My Thuan JSC, the owner of the project, failed to make payments to the contractor, who faced difficulty paying salaries to workers.
The four-lane expressway will be about 51 kilometers long, with 4.5 kilometers of access roads, and it will run through five outlying districts of the Mekong Delta province of Tien Giang.
It will start at the intersection of Than Cuu Nghia T-Junction and HCMC-Trung Luong Expressway and end at the intersection with National Highway 30. The total approved investment capital for the project is around VND9.6 trillion.
Circular economy boosts efficient use of natural resources: experts
Local producers should apply the circular economy model to reduce waste, make full use of natural resources, and help improve the competitiveness of the nation’s economy, according to experts at a workshop in HCMC today, July 24.
Held by the Vietnam Chamber of Commerce and Industry (VCCI), the Vietnam Business Council for Sustainable Development and the Ministry of Agriculture and Rural Development (MARD), the workshop provided insights into the essential role of the circular economy to ensure sustainable development.
Though the concept of a circular economy has become increasingly popular in Vietnam, practical applications are still modest, especially in small- and medium-sized enterprises, according to Nguyen Quang Vinh, General Secretary of VCCI.
In the traditional linear economy, producers primarily exploit natural resources to create their products and services. Then, waste from production and consumption are buried or discharged into the environment, said Vinh.
Meanwhile, the circular economy is a sustainable alternative to the linear economy, in which producers use resources for as long as possible, extract the maximum value from them while in use, then recover and regenerate products and materials at the end of each service life.
The shift from a linear economy into a circular economy is also becoming a global trend, thanks to its economic benefits, said Nguyen Hoang Nam of the Institute of Strategy and Policy on Natural Resources and Environment under the MARD.
For example, according to Nam, eco-industrial parks in the northern province of Ninh Binh, the central coastal city of Danang and the Mekong Delta city of Can Tho, could save some US$6.5 million annually by enacting a circular business model.
Nam said the Government has adopted some relevant policies, such as laws on minerals, natural resources and the environment, along with the Vietnam Sustainable Development Strategy for the 2011-2020 period. However, a regulatory framework for the circular economy is still needed.
He added that his institute plans to formulate policies to implement the circular economy in all activities, in an effort to boost green public spending and the use of environmentally friendly products.
Le Thi Ngoc My, head of sustainability at Heineken Vietnam, said many local firms are embarking on technical programs, such as reuse, recycling and biodegradability.
Heineken Vietnam, a corporate leader in sustainability, has created initiatives to reduce the amount of waste and create value from waste. As a result, as high as 99% of waste and byproducts have been reused and recycled.
For instance, after the processing of wastewater, brewer’s grains, yeast and sediment are reused as feed and fertilizer. Other materials, such as glass bottles, paperboard, aluminum, plastics and paper, are also reused and recycled.
Currently, four out of the brewer’s six plants are using thermal energy from renewable energy and biomass fuels, leading to some 2,500 tons of carbon dioxide emission reductions in logistics just last year, by optimizing transport operations.
According to experts, sustainable development is a key focus for Vietnam to ensure long-term socio-economic growth and improve the nation’s competitiveness.
The Government has shown a strong commitment to sustainable development through specific actions, whose aims are to meet the United Nations Sustainable Development Goals.
Imports from China shoot up in H1
Vietnam imported 24 groups of commodities during the first half of the year and the import bill of three of the groups that came from China was US$10 billion each.
During the period, Vietnam spent over US$23 billion importing computers, electronic products, and their parts, an increase of about 18% year-on-year. In this group, the total imports from China reached US$5.8 billion, up nearly 70% against last year period, Thanh Nien newspaper reported.
The imports of machinery, equipment, tools, and machine parts were the next highest, at US$17 billion, a 13% increase over the year-ago period. These items were mainly imported from China, with imported turnover reaching US$6.75 billion, up 26% versus the 2018 figure.
Meanwhile, garment and footwear materials imports from China edged up nearly 11%, accounting for over US$5 billion of the country’s total imports of US$12 billion in this group. Vietnam also spent US$1.2 billion to US$1.6 billion goods from South Korea, the U.S., and Taiwan over the first six months of the year.
Data released by the General Department of Vietnam Customs shows that Vietnam imported goods worth almost US$121 billion in the first half, an increase of 9% year-on-year.
Imports from China, South Korea, and Japan accounted for over 55% of the total figure. In particular, imports from China made up 30% of the total imports, reaching as high as US$35 billion, followed by South Korea with US$22 billion, and Japan with US$8 billion.
M&As in Vietnam slow down
Mergers and acquisitions (M&As) slowed in Vietnam in 2018 and the first half of this year due to a number of reasons, such as delayed equitization and divestment of State-owned enterprises (SOEs), according to the organizers of the Vietnam M&A Forum 2019.
Vietnam Investment Review (VIR) newspaper and AVM Vietnam JSC held a press briefing on Tuesday to announce the 11th edition of the forum, entitled ‘Going for Breakthrough,’ which is slated to take place on August 6 at the GEM Center in HCMC.
The forum will assess the M&A trends for the next few years, analyze new capital flows, opportunities, and driving forces for M&A in the country.
After a decade of strong growth, with thousands of transactions worth roughly US$50 billion, the local M&A market has entered a new era with ample opportunities, said Le Trong Minh, editor-in-chief of VIR.
Citing statistics, Minh said the value of M&A deals totaled US$7.64 billion last year, equivalent to 74.9% that of 2017. In the first half of 2019, M&A transactions were valued at about US$1.9 billion, equal to 53% of the year-earlier period’s value.
He also cited data from the Ministry of Planning and Investment's Foreign Investment Agency as saying foreign investors spent US$2.64 billion acquiring stakes in local firms in the first six months of this year.
The equitization and divestment of SOEs showed signs of slowing down between early 2018 and June 2019, he said. Therefore, authorities should remove barriers to make the targets and expectations of the Government and investors achievable, he noted.
At the briefing, Deputy Minister of Planning and Investment Vo Thanh Thong said that Vietnam is promoting M&A activities in tandem with the equitization of SOEs in various sectors, such as transport, infrastructure, food, agriculture, telecommunications, trade, services, tourism and construction.
Thong said recent policies, such as the revision of the laws on investment, enterprise and securities, a draft Politburo resolution on attraction of new-generation foreign investment, and the signing of some free trade agreements, are expected to spur more foreign investment, including capital flows through M&A deals.
According to Minh, the Government and relevant agencies must remain determined to make drastic changes in order to further improve the investment and business climate, and attract more domestic and international capital into the M&A market.
There remain hindrances at home and abroad to M&A activity, including U.S.-China trade tensions, slow equitization and divestment of SOEs, challenges faced by enterprises to maintain quality, the relatively small scale of the economy, and unresolved policy barriers, he added.
This year, M&A activity may reach US$6.7 billion, Minh said. In the medium term, the scale of the Vietnamese M&A market has surpassed that seen in 2014-2016 by US$5 billion and remains stable at US$6-6.5 billion, with more efforts needed to reach US$10 billion, he said.
The most exciting deals in 2018-2019 focused on the Vietnamese market of more than 96 million people, especially sectors such as manufacturing of consumer goods and real estate, he said. Notable deals were in consumer finance, retail, fisheries, logistics and education, he added.
Unlike 2017, when Vietnam attracted a huge amount of capital from Thailand through M&A, 2018 saw the dominant presence of investors from Singapore, Hong Kong, South Korea, and Japan.
For instance, the Korean-based SK Group’s M&A deal with Vietnam’s largest property developer Vingroup, worth billions of U.S. dollars, made up 25.6% of the total M&A value achieved between July 2018 and July 2019.