Several major traffic projects are set for completion by the end of 2023, bringing significant improvements to transportation infrastructure in Vietnam.

These projects include the My Thuan 2 Bridge and the My Thuan-Can Tho Expressway in the Mekong Delta, the Metro Line No. 1 in HCMC, and a section of the Nhon-Hanoi Station urban railway in Hanoi.

The My Thuan 2 Bridge has a total length of over 6.6 kilometers, including approach roads, and connects Tien Giang and Vinh Long provinces. It links to the My Thuan-Can Tho Expressway, which stretches over 23 kilometers between Vinh Long and Dong Thap provinces.

Once completed, the two projects will halve the travel time between HCMC and Can Tho City and stimulate regional development.

In HCMC, the Metro Line No. 1 project is nearing completion. This 19.7-kilometer urban railway will link Ben Thanh Market in District 1 to Suoi Tien Theme Park in Thu Duc City, providing a modern and efficient public transportation option.

Hanoi is also making progress with the long-stalled Nhon-Hanoi Station urban railway. Part of the project, including the elevated section from Nhon to Cau Giay station, will begin commercial service this year, improving public transit within the capital city.

Several component projects of the North-South Expressway are expected to be opened to traffic by year-end, including the sections of National Highway 45-Nghi Son and Nghi Son-Dien Chau.

These infrastructure developments are expected to widen the transportation networks and fuel economic growth. The completion of these projects will improve travel efficiency and contribute to the development of the country.

Cambodian visitor arrivals increase

Vietnam has seen a significant rise in high-spending tourists from Cambodia.

The neighboring country has emerged as one of Vietnam’s top ten tourism source markets, with 198,000 visitors in the first half of this year. Notably, Cambodian arrivals have soared by 338% against the same period in 2019, placing it among the top five fastest-growing source markets, according to the General Statistics Office (GSO).

A source from a leading tourism company in HCMC said that while medical examination and treatment used to be the primary reason for their visits, post-pandemic trends now include longer stays and weekend trips through border gates.

There are three categories of Cambodian guests coming to Vietnam. Traditional visitors primarily come from three provinces adjacent to Tay Ninh Province and usually make day tours. Luxury tourists from major cities like Phnom Penh and Siem Reap travel to Vietnam to seek medical care. The third category includes tourists who opt for long-stay holidays, often choosing Tay Ninh-Phu Quoc-Da Lat-Vung Tau tours.

The close proximity, stunning beaches, and delectable cuisine make Vietnam an attractive destination for Cambodian travelers. The number of Cambodians visiting Vietnam through travel agencies also increased by 10% in the first five months against the pre-pandemic same period in 2019.

Due to reasonable costs, convenient transportation, and smooth border checks, Cambodian visitors often enter Vietnam by road. The Moc Bai border gate serves as one of the key entry points for Cambodian visitors to Vietnam.

Tay Ninh, a province in the southeast region of Vietnam that shares a border with Cambodia, saw a 14% year-on-year increase in Cambodian visitor arrivals during January-June, reaching a total of 3.5 million. Tourism has contributed VND1,450 billion to the province, up a staggering 71% over last year.

FPT opens office in Indonesia

FPT Software, a subsidiary of FPT Corporation, has recently inaugurated an office in Jakarta, Indonesia, furthering the Hanoi-based company’s global expansion.

The new office is located in the Treasury Tower, a 279.5-meter-tall skyscraper in Jakarta. FPT Software has planned to have 10,000 employees in the city by 2035.

With this addition, FPT Software now has a total of 67 offices worldwide.

Nguyen Khai Hoan, executive vice president of FPT Software, expressed enthusiasm about the potential opportunities in Indonesia’s growing economy and digital transformation.

With over 20 years of experience in the industry, FPT Software is well-equipped to offer expertise and innovative solutions to support the growth of local businesses, he added.

FPT Software has been providing technology services and products to leading businesses in Indonesia, with a focus on industries such as finance and banking, consumer goods, and healthcare.

FPT Software has established a global presence in nearly 30 countries and territories. The company specializes in cutting-edge technologies, including Artificial Intelligence, Internet of Things, Cloud, Blockchain, Big Data, and Robotic Process Automation.

PM urges swift selection of contractor for Long Thanh International Airport

Prime Minister Pham Minh Chinh has stated the importance of deciding on a contractor for Package 5.10 of the Long Thanh International Airport project as quickly as possible, highlighting concerns over delays and the failure to meet the project's timeline as set by the National Assembly.
 
In official document No.5208/VPCP-CN issued by the Government Office, PM Chinh expressed his dissatisfaction with the sluggish progress of Package 5.10, an integral part of the first phase of the ambitious Long Thanh International Airport project.

The Commission for the Management of State Capital at Enterprises was called upon to take decisive action, with Airports Corporation of Vietnam (ACV) instructed to promptly identify a suitable contractor in full compliance with the PM's directives and those of deputy prime ministers.

The Long Thanh International Airport project, the first phase, holds strategic importance for Vietnam, aiming to alleviate the strain on Tan Son Nhat International Airport and enhance connectivity, trade, tourism, and investment with both regional and global partners.

Upon completion, the project is designed to cater to a capacity of 100 million passengers and handle five million tonnes of cargo annually. Among the project's numerous elements, Package 5.10, focusing on the construction of and installations in the passenger terminal building, carries the largest budget of VND35 trillion ($1.46 billion).

This package encompasses the design, construction, and installation of crucial equipment for the passenger terminal building, a complex endeavour requiring precision, total quality, technical expertise, and a focus on international standards.

Thus, the selection of a contractor for this package assumes paramount significance and necessitates strict adherence to the legal provisions governing the bidding process.

The Ministry of Planning and Investment (MPI) has issued its assessment of the tender documents for Package 5.10 within Phase 3 of the Long Thanh International Airport project, overseen by ACV as the project's investor.

According to the ministry's conclusions, the ACV must ensure meticulous compliance with the prescribed procedures and regulations pertaining to the contractor selection process for Package 5.10. Moreover, the ACV bears full responsibility for the approved tender documents.

The MPI has recommended that the ACV undertake a thorough review and make appropriate adjustments to certain aspects of the tender documents to foster competitiveness, fairness, and transparency, as well as to prioritise domestic contractors where they have the requisite capabilities and experience.

The bidding process for Package 5.10 has attracted interest from three consortia. These include the Hoa Lu consortium, the Vietur consortium, and the CHEC-BCEG-Vietnam contractors consortium.

Among the contenders, the Hoa Lu consortium stands out as the only one led by a Vietnamese firm. Its members consist of Coteccons JSC, UNICONS Investment LLC, Thanh An General Company, DELTA Construction Group LLC, Central Construction JSC, An Phong Construction JSC, Hoa Binh Construction Group JSC, and PLE – a prominent Thai construction firm.

Vinhomes gets nod for US$1-billion residential project in Hai Phong

Vinhomes JSC, which trades its VHM shares on the Hochiminh Stock Exchange, has been approved to be the investor of a large-scale residential area project in the northern port city of Haiphong.

The residential area project requires an estimated cost of over VND23,200 billion, equivalent to around US$1 billion.

According to the local authority’s decision, Vinhomes JSC would pour nearly VND3,500 billion, or 15% of the total investment, into the project, while the remaining VND19,700 billion would be mobilized from other sources.

This project is set to cover around 107 hectares in Hoa Nghia Ward, Duong Kinh District, and around 122 hectares in Kien Thuy District, adjacent to Highway 5B which connects Haiphong City with Hanoi and Quang Ninh Province.

The project consists of high-rise apartment units, 5,000 townhouses, and 1,300 villas. The project’s operational term is 50 years from the day Vinhomes receives land from the city.

Over 1,000 sacks of rice imported from India seized

More than 1,000 sacks of rice imported from India without Vietnamese labeling have been seized by authorities in Ben Tre Province in the Mekong Delta.

The confiscated shipment, weighing 52 tons and valued at VND624 million, was imported by a rice trading establishment located in Ba Tri District.

Upon inspection, market surveillance officials found violations in the business operations of the establishment.

The inspection team has recorded the violation and temporarily seized the rice for further investigation. This is the largest quantity of rice seized by authorities since 2022, with a similar seizure of 30 tons of suspected smuggled rice from India taking place last year.

The situation regarding imported rice has become increasingly complex, significantly impacting the domestic rice market, according to the Vietnam Directorate of Market Surveillance.

To address this issue, the authority is directing market management departments in provinces to strengthen inspections and controls, aiming to detect and strictly penalize smuggling and commercial fraud in the rice sector.

PV Drilling to open four offices in ASEAN to support rig operations

PetroVietnam Drilling and Drilling Services Joint Stock Corporation (PV Drilling) has decided to establish four operating offices in ASEAN countries as part of its efforts to expand its presence in the region.

In its filing to the State Securities Commission (SSC) and Hồ Chí Minh Stock Exchange (HOSE) this week, the company said it would establish offices in Malaysia, Thailand, Brunei and Indonesia to support its rig operations in these nations. 

The firm is currently engaged in drilling programmes for oil and gas contractors in these countries. Notably, it has secured a significant contract with Brunei Shell Petroleum Company Sdn Bhd (BSP) for a period of six years, with the possibility of two two-year extensions thereafter.

The stable job opportunities for PV Drilling's rigs in foreign markets also present prospects for the growth and development of its technical service units. In the future, PV Drilling and its affiliated units aim to strengthen their involvement in providing various technical services in the markets where PV Drilling operates rigs. These services may include personnel training, drilling manpower provision, drilling equipment leasing, and more.

According to PV Drilling's General Director Nguyễn Xuân Cường, after six months, the company has achieved its production and business plan set for the whole year. With the positive indicators of increasing demand, PV Drilling anticipates doubling its profit, reaching VNĐ200 billion (US$8.4 million), surpassing the initial set target. 

Preferential policy improvements needed to attract quality FDI

In order to attract quality foreign direct investment (FDI) in the coming time, the improvement of institutions to attract foreign investment was done at the drop of a hat in the context of the global minimum tax application.

As of June 20, the total newly registered capital, adjusted capital and contributed money to buy shares by foreign investors reached over US$13.43 billion, equaling 95.7 percent over the same period in 2022.

The improvement of institutions, especially the review and modification of preferential policies and mechanisms, to attract foreign investment should be carried out to attract quality foreign direct investment in the coming time.

According to the General Statistics Office, the economy declined by 4.3 percent showing clearly the general difficulties of the world economy as well as of Vietnam in the face of many risks and fluctuations in 2022. Worse, this trend was forecast to continue extending in 2023.

Developed countries’ outward direct investment showed signs of slowdown even though the Covid-19 pandemic has been brought under control. This is the subsequent result of adverse factors such as the complicated and unpredictable world context and existing political conflicts in some nations. Moreover, although price pressure and inflation showed signs of cooling down, they still remained at a high level and global commodity demand tends to decrease without recovery signs.

In addition, global financial conditions tend to tighten, strongly affecting international business, trade, and investment, which are negatively affecting the investment partners of Vietnam.

However, though the total registered FDI capital in the first 6 months of 2023 dipped by 4.3 percent over the same period, this decrease has improved compared to the same period in 2022, which saw a decrease of 8.1 percent. Newly granted investment capital accounting for 48.3 percent of total registered capital increased by 31.3 percent in cash and 71.9 percent in the number of projects. Meanwhile, foreign investors’ capital for buying shares accounted for 29.9 percent of total registered capital, which increased by 79 percent, and registered capital, accounting for 21.8 percent of total registered capital, dropped by 57.1 percent.

Remarkably, in the past 6 months, small and medium-sized investors have continued to eye Vietnam for opportunities and trust in Vietnam's investment environment to make new investment decisions while large corporations still seem to carefully consider the impact of the global minimum tax policy effective from 2024.

Foreign investors' capital contribution and share purchase in Ho Chi Minh City in the first six months of 2023 increased by 3.6 times over the same period, bringing the total foreign investment capital from the beginning of the year to June 20 to reach $2.8 billion, up 30.7 percent against the same period last year.

In addition to traditional solutions such as administrative reform, effectively implementing one-stop procedures and quality improvement of human resources, more solutions should be adopted to attract big investors and multinational corporations. In particular, relevant agencies should pay attention to meeting their requirements on time for negotiation, signing of agreements and implementation.

In addition to preferential policies for strategic investors, a global production chain and high-tech enterprises with technology transfer to domestic enterprises also need to be clearer and more substantial, especially in Ho Chi Minh City, which has no more clean land. These policies should not be fixed and rigid but need a certain margin to promptly adapt to the current volatile situation.

Work to begin on Dong Hoi airport’s Terminal T2 next year

Construction of Terminal T2 at Dong Hoi Airport in the north-central province of Quang Binh is scheduled to commence in the third quarter of next year, according to the Ministry of Transport.

The Airports Corporation of Vietnam will make the necessary preparations to ensure funding for the project and keep it on schedule, the ministry said in a statement.

The VND1,900-billion project also includes upgrading aircraft aprons at the airport.

The 16,800-square-meter passenger terminal is designed to handle three million people annually and expected to be operational by March 2026.

In the first phase, four aprons would be built to accommodate planes such as Airbus A321 and A320, with an additional four aprons to be developed in the second phase.

According to the national aviation development plan, Dong Hoi Airport is projected to have an annual handling capacity of up to five million passengers by 2050.

VND120 trillion housing package sees progress

Banks have started disbursing loans in the VND120 trillion credit support package for social housing projects, said Nguyen Thi Hong, governor of the State Bank of Vietnam (SBV).

At a meeting on July 4 between the central Government and local authorities, Hong said that projects that have obtained construction permits are eligible to borrow from this package. Banks such as BIDV and Agribank have already started utilizing this preferential loan package since the start of the year.

There were 24 eligible social housing projects in the provinces of Bac Giang, Tra Vinh, Tay Ninh, Binh Dinh, Ba Ria-Vung Tau, and Phu Tho, with five of them already granted construction permits.

The VND120 trillion credit package, introduced in early April, aims to encourage investors to develop social housing projects and support workers in purchasing a home. Loans under the package are offered at interest rates that are 1.5-2 percentage points lower than the prevailing market rates for medium and long-term loans.

However, despite the availability of this credit package, the Ministry of Construction reported that no projects qualified for loans in the first half of this year. This was because the localities were still in the process of finalizing and announcing eligible projects. Moreover, most of the projects were still undergoing the necessary investment procedures.

During the conference, the central bank governor said credit to the real estate sector in May grew 14% against early this year.

However, real estate loans for individuals in the first five months dropped by 1.3%, compared to a 15% increase during the same period last year. This suggests that individual real estate investors and homebuyers remain hesitant to invest.

Governor Hong emphasized the need for legal reforms, price reductions and other measures to stimulate consumer demand and investment in the real estate sector.

Interest rates have now returned to pre-Covid-19 levels after continuous efforts to reduce them, making the SBV stand out as one of the few central banks in the world that have lowered key interest rates, she said, adding many other countries have maintained high rates.

Moreover, commercial banks have been directed to review procedures and documentation to facilitate credit access for businesses. Banks have already restructured the repayment terms for 2,800 customers.

Fruit and veggie exports expected to reach US$5 billion this year

Vietnam’s fruit and vegetable export target by 2025 is US$5 billion. However, this goal may be achieved as early as this year if the current export pace is maintained, said Dang Phuc Nguyen, general secretary of the Vietnam Fruit and Vegetable Association (Vinafruit).

In June, fruit and vegetable exports generated US$1 billion, up a staggering 2.7 times over the same period last year, said Vinafruit. The total value of January-June exports amounted to US$3 billion, equivalent to 94.9% of the total in 2022.

China continues to be the leading market for Vietnam’s fruit and vegetable exporters, with a market share of nearly 63.5% and a growth rate of over 12.4% year-on-year. From January to May, fruit and veggie exports to China skirted US$1.3 billion.

China is followed by South Korea, Japan, and the Netherlands, which all show promising growth. However, exports of fruits and vegetables to the U.S. have inched down by 12% versus the same period last year.

Exporters attributed the significant growth in fruit and vegetable exports to the stronger demand of China, facilitated by an agreement signed with the neighboring country last year. Despite China’s strict technical and food safety regulations, Vietnamese products are gaining popularity due to their improving quality and competitive prices.

Many types of Vietnamese fruits are entering the harvest season. With a staggered harvesting pattern, there is still significant potential for fruit and vegetable exports this year, said Nguyen Dinh Tung, vice chairman of Vinafruit.

Dragon fruit, mango, rambutan, durian, and longan account for over 62% of the total harvested area, with the production of these fruits contributing to over 54% of the total output.

Among the exported fruit varieties, durian has demonstrated the highest growth rate. In the first five months of 2023, durian exports generated over US$503 million, up 18-fold over the same period last year. The Chinese market is the primary destination for durian from Vietnam, accounting for 84.3% of the total export value of durian.

This robust rise is attributable to the memorandum of understanding signed in July last year between Vietnam and China regarding phytosanitary requirements for durian exports from Vietnam to the Chinese market.

To further boost fruit and vegetable exports to the Chinese market, Vietnam has proposed that China facilitate shipments of other fruits and vegetables, such as pomelo, fresh coconut, avocado, lime, pineapple, and starapple.

The estimated export value of processed fruit and vegetable products totaled US$550 million in the first six months of 2023, a 24% year-on-year rise. This segment has consistently maintained a positive growth trajectory and holds huge potential for growth due to the increasing global demand for processed fruits and vegetables in people’s diets.

Fruit and vegetable exports are forecasted to sustain high growth in the coming months, driven by increasing domestic production and demand from global markets.

Cloud use intensifies within business arena

Cloud adoption in Vietnam’s business landscape is expected to revolutionise financial reporting by streamlining workflows, enhancing efficiency, and ensuring accuracy through automation, data consolidation, and seamless integration.

Tran Thi Nham, chief accountant from Kim Tin Corporation, a firm specialising in welding equipment, has experienced substantial time savings and increased accuracy by leveraging cloud-based consolidated financial statement solutions. She told VIR, “With the adoption of cloud services, we can now swiftly generate reports, including cash flow statements, without the need for manual data extraction and consolidation.”

The automation streamlines the process and facilitates seamless collaboration, even with renowned firms, minimising the need for extensive adjustments during the reporting phase.

Pham Duy Hoang Nam, CFO of FPT Retail, said that the company’s financial reporting process previously required a team of at least three individuals working continuously.

The implementation of a cloud-based system automated various tasks, saving valuable time and reducing the risk of errors. With financial data securely stored within the cloud, businesses could benefit from improved accuracy and data integrity. The automated processes streamlined their reporting workflows, leading to significant time savings and increased productivity.

Le Hong Viet, CEO of FPT Smart Cloud, underscored the importance of cloud-based service providers in offering seamless integration capabilities with various accounting software and leveraging multiple cloud platforms, including Oracle, Fast Accounting, or Misa.

This integrated approach plays a crucial role in enabling businesses to effectively automate their financial processes, ensuring a smooth and continuous flow of data and facilitating consolidated reporting. By consolidating data from diverse sources onto a unified cloud platform, businesses can access comprehensive financial insights efficiently, leading to more informed decision-making.

In line with the growing importance of sustainability in today’s business landscape, some cloud services providers could also integrate additional features that will assist companies in launching their sustainability reports and adopting environmental, social, and governance criteria.

However, he stated, as more organisations recognise the advantages of cloud services in terms of automation, data consolidation, and improved reporting accuracy, it is expected that the number of listed companies leveraging cloud services for financial statement integration will gradually increase in the future.

Nam of FPT Retail acknowledged the complexity of handling data from various sources, particularly in the retail industry, such as point-of-sale systems and accounting systems.

He also underscored the importance of reflecting transaction fluctuations in the balance sheet, in addition to ensuring accurate account balances. Traditional accounting practices often focus on the latter while overlooking cash flow dynamics. Accurate representation of cash flow dynamics in financial reporting is crucial to align with accounting standards and facilitate effective cash flow management.

In addition, industry insiders also believed cloud services offer immense value to real estate companies with numerous projects and subsidiaries. These businesses, including those exposed to high tax risks, can benefit from cloud solutions that enhance financial management and streamline tax-related processes. By leveraging cloud services, companies can effectively navigate complex tax regulations and ensure efficient financial operations.

In Vietnam, the cloud market has been experiencing fast-paced growth, but it still lacks the robustness needed to match global standards. While Vietnam has been recognised for its innovative initiatives in the cloud sector and is on a trajectory of strong development, it ranks 53 out of 76 countries in the 2022 Cloud Ecosystem Index, according to German online platform Statista.

Lenders determined to meet financing needs of customers

In line with the government’s economic stimulus initiatives and to ensure market liquidity, a number of major financial institutions are implementing strategies to address the financing needs of businesses and individuals.

LPBank has witnessed remarkable results just 20 days after launching a short-term loan programme with attractive interest rates for business and individual customers. The programme offers business loans starting at 7.5 per cent per annum and personal loans starting at 8.5 per cent per annum.

The bank has reported a total of 514 out of 561 nationwide branches generating over $250 million in disbursed loans from an incentive package worth $333 million. These figures highlight the strong demand for credit in Vietnam’s economy. Similarly, MSB recently announced interest rate reductions to support personal loans. The bank has lowered interest rates by an additional 1 per cent per annum for existing individual customers until December 31. This marks the second interest rate adjustment made by MSB this year.

“Moreover, MSB has intensified efforts to attract new customers by offering competitive credit packages for various purposes, including business loans, flexible collateral loans, and real estate financing,” said Nguyen Thi My Hanh, deputy CEO of the bank. “MSB strives to optimise cost, provide timely capital infusion for business operations, fulfill expenditure requirements, and reinforce customer trust and loyalty through credit support programmes.”

The strategic moves by LPBank and MSB reflect their determination to stimulate economic growth and meet the financing needs of businesses and individuals. These initiatives come as part of broader efforts by the Vietnamese banking sector to support economic recovery and ensure adequate liquidity in the market.

Meanwhile, other major banks, including VPBank and MB Bank, have faced a depletion of their available credit limits due to heightened demand. The banks have requested an additional 10 per cent increase in their credit limits, aiming to allocate a total credit limit of 22 per cent for all of 2023.

The urgency to expand credit limits stems from the banks’ commitment to meeting the borrowing requirements of primarily short-term loans and export-import activities. The banks claim that the timely extension of credit limits will prevent any disruptions in lending operations, ensuring a continuous and uninterrupted flow of funds to the economy.

The government has played a crucial role in promoting a supportive economic environment. Last month, it announced its commitment to stability and growth, urging the State Bank of Vietnam (SBV) to determine the necessary and reasonable credit growth targets for 2023.

The SBV had been tasked with allocating credit limits and making public announcements by the end of June. The approach empowers credit institutions to expand lending operations throughout the remainder of the year, with a focus on real estate and production loans to invigorate the market and stimulate investment and business activities.

Nguyen Dinh Tung, CEO of OCB, acknowledged the unpredictable nature of the current market but adopted a positive outlook. He highlighted the recognition of challenges and the government’s call to increase credit limits, which reflects a supportive policy and a programme for overall economic development.

Yun Liu, an economist at HSBC, has acknowledged the challenging economic landscape but maintains a positive perspective. She points to encouraging signs, such as the gradual recovery of international tourism, with Vietnam welcoming nearly one million visitors in the past two months, about 70 per cent of the 2019 level in the same period.

With the resumption of direct flights between Vietnam and China and potential relaxation of visa restrictions, Vietnam is poised for a stronger recovery in the fourth quarter of 2023, bolstered by increasing tourism demand. Furthermore, the first half of June 2023 has witnessed an 8.2 per cent increase in the import value of goods by foreign-invested enterprises, signalling a recovery in export-import activities.

Korean lenders aspiring to become major market players

South Korean financial conglomerates are deepening their involvement in Vietnam through a series of strategic agreements in energy, banking system restructuring, and digital payments.

VinaCapital and South Korean firm GS Energy entered into an MoU with the Export-Import Bank of Korea (KEXIM) last week.

The agreement will expedite the financial progression of the Long An I and II liquefied natural gas power plant projects, representing a significant breakthrough for South Korean banking conglomerates in Vietnam.

The bilateral agreement is aimed at enabling thorough investigation of potential opportunities for KEXIM to extend financial aid and credit facilities to Long An Energy Group.

This joint venture is a brainchild of VinaCapital and GS Energy. Yoon Hee-seong, CEO of KEXIM, acknowledged the strategic significance of the power plants, vowing KEXIM’s unwavering support to South Korean businesses and engineering, procurement, and construction contractors engaged in the project.

Meanwhile, Vietnam’s Deputy Prime Minister Le Minh Khai welcomed representatives from major South Korean financial institutions, Industrial Bank of Korea (IBK) and Korea Development Bank (KDB), for talks regarding potential collaborations amid Vietnam’s banking system ovserhaul.

DPM Khai’s interaction with Kim Sung-tae and Kang Seoghoon, chairmen and CEOs of IBK and KDB respectively, underscored the pivotal role of foreign financial entities in reinforcing Vietnam’s banking sector restructuring.

Seoghoon extended his admiration for Vietnam and conveyed KDB’s aspirations to align with Vietnamese companies in high-tech innovations, digital transformation, and green energy initiatives.

“Furthermore, we plan to establish a KDB branch in Vietnam to aid Vietnamese enterprises in their global market expansion, catalysing job creation and economic growth,” he said.

Khai said that he appreciated the KDB’s successful operations as a government-owned development bank. He referred to the MoU inked between KDB and the Vietnamese Ministry of Finance.

The purpose behind these agreements is to share valuable knowledge and experience to aid the ministry in determining appropriate operational models for restructuring the Development Bank of Vietnam.

Current players in the Vietnamese financial market, such as IBK, are boosting their activities in the country. With branches operating in Hanoi and Ho Chi Minh City, and assets in Vietnam tallying up to $1.5 billion, IBK is offering loans to South Korean businesses in Vietnam, along with local partners. The bank also plans to establish a legal entity in Vietnam to cater to Vietnamese businesses, particularly small- and medium-sized enterprises.

As Vietnam’s financial landscape continues to evolve, foreign financial entities have been encouraged to participate in the restructuring process, particularly in reforming credit organisations and handling weaker banks.

This reformative initiative is not only advantageous for financial organisations seeking to establish a new commercial presence in Vietnam, but also brings opportunities for active participation from South Korean banking and financial institutions, DPM Khai said.

Other South Korean banking entities extending their footprint in Vietnam include Shinhan Bank and Woori Bank.

A collaboration of Samsung Vietnam and Shinhan Bank Vietnam, cemented in an MoU last month, is set to further accelerate the digital payment landscape. The alliance merges Samsung Wallet’s digital wallet technology with Shinhan’s financial services.

Lee Chung Lyong, general director of Samsung Vina Electronics, believes this synergy will shape a digital payment platform for the Vietnamese market.

In addition, the bank has also teamed up with Nguyen Hoang Group (NHG), a local educational group, to offer an interest-free tuition fee financing programme for parents whose children attend NHG-affiliated educational institutions.

The initiative also supports financial assistance and future credit facilities for infrastructure development as well as teaching equipment procurement within NHG’s educational network.

Woori Bank Vietnam, under its new CEO Park Jong Il, aspires to become a prominent player in the Vietnamese market.

Jong Il also stressed the need for a second leap forward, positioning Woori Bank Vietnam as a top retail business operator in Vietnam’s market while expanding localisation strategies targeting local customers through Vietnamese personnel.

Positive developments in the real estate market

The SBV has received 24 social housing initiative applications for a $5 billion loan package in six provinces, including 15 social housing projects in the provinces of Bac Giang, Tra Vinh, and Tay Ninh, and nine projects in the provinces of Binh Dinh, Phu Tho, and Ba Ria-Vung Tau.
 
The positive news was revealed on July 4 by Nguyen Thi Hong, Governor of the SBV, during the government's online national conference.

Credit made available to real estate businesses rose by 14 per cent in the first five months of the year, according to the SBV, indicating that market-improving solutions have begun to take effect. However, credit for real estate purchasers dropped by 1.32 per cent during the same period.

Hong emphasised that easing access to credit is of vital importance. She stated that the SBV is directing credit institutions to evaluate their procedures to increase credit availability. In addition, the operator is contemplating an announcement of credit expansion soon, at the behest of the Prime Minister.

The governor stated that interest rates have returned to pre-pandemic levels following a succession of recent rate reductions, while noting that the SBV is also one of the few central banks in the world that is actually lowering interest rates at the moment.

According to Governor Hong, the SBV is tracking macroeconomic developments and government directives vigilantly.

As of June 27, the credit of the entire economy had increased by 4.03 per cent since the start of the year and by 9.08 per cent on-year.

Quang Tri greenlights Thanh An Wind Power to spearhead $74 million wind power project

In a stride towards expanding its renewable energy portfolio, Quang Tri People's Committee has green lit a second adjustment to the investment initiative for the Tan Hop wind power plant project, with the total investment approaching VND1.7 trillion (approximately $74 million).

According to Quang Tri Department of Industry and Trade, the local people's committee's decision facilitates a second investment adjustment for the Tan Hop wind power project, led by Thanh An Wind Power JSC.

With the plant's capacity maintained at 38MW, the revisions encompass a broad spectrum of tasks, including the installation of a medium-voltage electrical system to connect the turbines to a 110kV transformer station, the construction of a 35/110kV cable station, a 5km long 110kV line, the expansion of a 110kV output compartment at the 220kV Lao Bao transformer station, and approximately 2.2km of access roads to the project site.

The schedule has also been revised, with design adjustments and technical design approval set for June to September this year. Construction and turbine installation, along with the internal transmission line, is slated for October 2023 through to July 2025.

Commercial operations are projected to commence in August 2025, a significant deviation from the original plan of November 2021.

In approving these changes, Quang Tri People's Committee mandates regular investment activity reports from Thanh An Wind Power JSC, and insists on adherence to the revised schedule.

In the case of violations of Article 48 of the 2014 Investment Law, Quang Tri Department of Planning and Investment will report to the local people's committee to terminate the project.

Quang Tri People's Committee previously issued Decision No.2168/QD-UBND to change the use restrictions of 20.4 hectares of forest land (3.9ha of protected forest and 16.5ha of production forest) to land lease to allow Thanh An Wind Power JSC to implement the Tan Hop wind power project.

Endorsed by Quang Tri People's Committee in Decision No.3588/QD-UBND on December 15, 2020, the Tan Hop wind power project has an estimated annual output of 150 million kWh and a projected capacity of 38MW. It consists of 10 wind turbines, each with a capacity of 3.8MW.

Vietnam’s LNG power projects face regulatory hurdles despite high hopes

Vietnam's liquified natural gas (LNG) power projects, hailed as potential baseline power sources with quick startup capacity, continue to confront significant challenges amidst efforts to expedite their progress.
 
As of the end of June, Nhon Trach 3 and 4 LNG Power Project has shown no progress in its power purchase agreement (PPA) negotiations, as compared to its status that was shared in mid-May at the Vietnam Clean Energy Forum.

Stakeholders involved in the PPA negotiations cite the absence of a government-issued power pricing framework for the LNG power plant as the main obstacle to finalising negotiations.

An energy price negotiation expert explained, "Finding agreement on gas power plant PPAs has been a protracted process in the past. The Ministry of Industry and Trade issued Circular No.57/2014/TT-BCT in 2014 to govern the methodology and procedures for constructing and issuing power pricing frameworks, but since then, no new gas power projects have been implemented, hence no pricing framework for this type of power generation has been introduced by the relevant state regulatory bodies."

In contrast to the stagnant PPA negotiations, Nhon Trach 3 and 4 LNG Power Project has progressed substantially on the ground. This advancement was facilitated by Circular No.02/2023/TT-BCT, which eliminated the requirement for a signed PPA before the start of construction. Therefore, even amidst PPA negotiation difficulties, the project has been able to commence work on several fronts.

However, not all LNG power projects have the fortitude to proceed under such circumstances. For instance, the Bac Lieu project, granted an investment certificate in January 2020, and the Quang Ninh project, which initiated investment work in October 2021, have yet to fully materialise on the ground. Other projects like the Hai Lang and Long An I and II LNG power projects also face similar challenges.

Nguyen Binh, an energy project consultant, pointed out that a significant hurdle to actual project implementation is securing annual electricity production commitments from Electricity of Vietnam (EVN) and ensuring annual gas volume guarantees.

Some LNG power projects have been held up by these issues. The Vietnamese government considers these as business production agreements, the Ministry of Industry and Trade recommends reporting to higher authorities, and EVN claims insufficient authority to make decisions.

However, the commitment to annual power output and gas consumption is crucial, serving as the basis for financial institutions to consider credit sponsorship for projects, and for the project teams to secure cheap LNG through long-term contracts – resulting in lower electricity prices.

The price of electricity remains an unresolved hurdle.

The high cost of LNG power generation, primarily due to dependence on imported raw materials, remains a major barrier. Without a clear power pricing framework for LNG projects, it is hard to determine a reasonable negotiation benchmark.

A PPA negotiation expert stated, "The biggest obstacle for LNG power plants is the high cost, as input materials for electricity production depend on imports. Therefore, the plants need to operate at base load to get a better price that is more acceptable. However, without a power pricing framework for these power projects, it is unclear how much it is reasonable to negotiate."

"If only considering the global LNG prices, which at times reach up to $30 per million BTU, the price of electricity from LNG power sources would be much higher than the retail price at which EVN sells it to the public. EVN's financial regulatory bodies are unlikely to accept this, so it cannot make this purchase decision," they continued.

A representative of PV Power Corporation, the investor in Nhon Trach 3 and 4 Power Project, shared that under the current regulations and operating mechanisms of the electricity market, there is no specific mechanism to encourage investment in the stable operation of the power grid for LNG power projects. Additionally, the annual electricity purchase volume for LNG power plants has not been regulated, creating a lack of consensus with the electricity buyer, EVN.

A clearer glimpse into these issues can be gained from the experience of the Bac Lieu project. Despite projected electricity prices of around 7 US cents per kilowatt hour, the project's investors have raised a series of concerns that require government guarantees to be addressed before the project can proceed.

These include foreign currency conversion commitments, assurances for payment obligations to EVN, compensation for damages when terminating PPAs, the LNG gas price conversion to electricity sale prices, and volume guarantees.

Binh commented, "These commitments are also aimed at ensuring project efficiency when there are no officially determined electricity prices. With projects like wind and solar power that once had attractive feed-in tariff prices, investors rushed in without needing the government to make any other commitments."

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes