The Vietnam-Russia oil and gas joint venture Vietsovpetro has recently sent a proposal to the Vietnam Oil and Gas Group (Petrovietnam) regarding the expansion of its operating area.

Specifically, Vietsovpetro proposed Petrovietnam accelerate development plans for Blocks 09-2/09, 16-1/15, and 09-2/10, and ask the relevant authorities to approve Vietsovpetro's involvement in potential projects such as Blocks 17 and 05-2/10, while adopting Vietsovpetro's investment plans for new blocks.

Vietsovpetro General Director Vu Mai Khanh said Vietsovpetro is encountering challenges in mobilising floating systems and drilling rigs due to the scarcity and high rental costs, which are hindering its expansion plans and activities.

To overcome these challenges, Vietsovpetro has proposed geological and technical solutions, including increasing reserves, optimising drilling and production operations, ensuring timely completion of key construction projects, enhancing internal capabilities, maintaining a competitive edge in service supply, particularly in the renewable energy sector. It also aims to expand cooperation and leverage external factors to develop and expand other services, he said.

Petrovietnam General Director Le Manh Hung asked member units to work closely with Vietsovpetro to review the management system and propose more decentralisation to uphold the responsibility of the joint venture's leader.

He also urged Vietsovpetro to partner with Petrovietnam Technical Services Corporation (PTSC) to develop a plan for flexible and efficient resource sharing. This includes prioritising the use of services from units within Petrovietnam's ecosystem to increase the proportion of internal industry revenue and allocate resources to upcoming key projects such as Block B and offshore wind power.

In the first half of this year, oil production across all Vietsovpetro fields reached over 1.5 million tonnes, surpassing the plan by 48,600 tonnes. It is forecast that oil production in the second half will hit more than 1.44 million tonnes, and the expected figure for this year will be over 2.96 million tonnes, exceeding the plan by 70,700 tonnes.

Natural gas production in the first half reached 38.3 million cu.m, exceeding the plan by 8.4 million cu.m. The estimated total for 2023 will be 70.7 million cu.m, 16.5 million cu.m higher than the target.

On July 15, the RC-8 drilling rig in the Rong field, Block 09-1, officially welcomed the first oil flow, one month ahead of schedule, contributing to increasing Vietsovpetro's oil production this year.

Vietnam Post, France’s La Poste step up cooperation

Vietnam Post Corporation (Vietnam Post) and La Poste Group (La Poste) of France signed a memorandum of understanding (MoU) on cooperation for the 2023-2025 period in Hanoi on July 18.

French Ambassador to Vietnam Nicolas Warnery and Vietnamese Deputy Minister of Information and Communications Pham Duc Long witnessed the signing, which took place as part of activities celebrating the 50th anniversary of Vietnam-France diplomatic ties (1973-2023).

In his remarks, Long said over the past years, Vietnam Post has received consultations from the French side in developing products and services to meet the increasing demand in the digital era.

First signed in 2019, the MoU serves as a foundation for the two sides to promote their cooperation and elevate it to a new height, the official stressed.

Under the new deal, Vietnam Post and La Poste will seek solutions to enhance the exchange of traditional postal services, and share experience in database management, digital service development, finance and insurance, among others.

They agreed to continue their mutual support through appropriate resources, platforms and solutions, intensify personnel training, and exchange experience in IT application.

Experts share experiences in sustainable urban planning and development in Mekong Delta

A workshop on sustainable urban planning and development in the Mekong Delta was held on July 18 in the southern province of Hau Giang.

The event was part of a series of workshops on urban planning and sustainable development organised by the Party Central Committee's Economic Commission, the Ministry of Construction (MoC), the French Development Agency (AFD), and the provinces of Hau Giang, Son La, and Quang Tri.

It was reported that the Mekong Delta currently has 211 urban areas with an urbanisation rate of 32%, lower than the national average rate of 40.5%. 

It is forecasted that from 2021 to 2025, the region will have over 250 urban areas with an urbanisation rate of about 35-36% by 2025 and about 42-48% by 2030.

According to studies, Vietnam is among the countries that are heavily affected by climate change, and the Mekong Delta is among the three deltas that will suffer the biggest inundation and lose the most land to encroachment in the world. 

It is forecast that the sea level will rise by 0.5-1 metre by the end of the 21st century, about 0.47 metre yearly. Therefore, if there is no solution to respond to climate change, 35% of the population in the Mekong Delta and more than 10% of its area will be affected.

All 13 provinces in the Mekong Delta are at high risk of flooding due to climate change such as Kien Giang province (80%), Hau Giang province (80%), Bac Lieu province (40-50%), Soc Trang province (25-30%), and Ca Mau province (40-50%). 

Climate change put about 300 urban areas in the coastal provinces of Vietnam, including dozens of urban areas in the Mekong Delta, at risk of inundation, flooding, and water source depletion due to saline intrusion.

Speaking at the workshop, Deputy Director of the MoC’s Urban Development Department Tran Thi Lan Anh said that following the direction of the Party Central Committee and the Government on proactively responding to climate change, the ministry coordinated with relevant ministries and agencies to propose the Prime Minister to promulgate urban development projects on climate change response in the period of 2013-2020 and the period of 2020-2030.

She said that a model for sustainable urban development, climate change adaptation in the Mekong Delta is a combined urban-rural system. Accordingly, the combination gives priority to “making room for water", ensuring the balance of the ecosystem and the existing structure of rivers, and canals.

According to a representative from the AFD, the management of urban public space should pay attention to infrastructure location, roads, and access roads so that they do not prevent the flow of floodwater.

At the workshop, Chairman of the Hau Giang provincial People’s Committee Dong Van Thanh introduced a project on green urban area development in the province’s Nga Bay city.

He said that the province is also gradually implementing disaster risk management policies and integrating these policies into the provincial planning and development.

Especially, Hau Giang uses tools and methods to integrate climate-related risks into urban development planning and urban infrastructure development, helping to strengthen the locality’s resilience.

The province also adjusted key orientations on the approach to climate change resilience and increased public awareness of risks relating to climate change.

Netherlands, UNDP team up to accelerate circular economy in Vietnam

The Embassy of the Netherlands and the United Nations Development Programme (UNDP) have signed to launch their Accelerate Circular Economy for Business (ACE-Biz) project serving a shared commitment to pushing the acceleration of the circular economy in Vietnam’s private sector.

According to a press release, the project aims to contribute to Vietnam’s low-carbon and circular development by transforming business through formulating circular guidelines, delivering capacity-building programme and fostering technology transfer, and demonstrating the certification scheme to promote exchanges of secondary materials and reusable goods through an online marketplace.

ACE-Biz will be jointly implemented by government bodies, including the Ministry of Industry and Trade, the Ministry of Natural Resources and Environment, and the private sector partners and academia, from both Vietnam and the Netherlands, Nam Cau Kien Industrial Park, NX Filtration Company and Saxion University of Applied Sciences.

The new project will facilitate the development of comprehensive technical guidelines, enabling enterprises to integrate circular design principles and adopt circular industrial wastewater model.

Furthermore, it will offer tailored capacity-building programmes, equipping Vietnamese businesses with the knowledge and skills to demonstrate green production methods and reduce environmental pollution through circular economy practices. The collaboration aims to drive tangible change and establish a solid foundation for sustainable economic growth by nurturing a network of circular economy champions in the private sector.

A significant demonstration component of the project involves establishing a close – loop model for circular industrial wastewater. This model will showcase the economic viability of circular industrial wastewater treatment, inspiring and encouraging the adoption of similar models in other regions and industries.

"The strengthened collaboration between the Embassy of the Kingdom of the Netherlands and UNDP underscores our shared commitment to driving the acceleration of circular economy practices in Vietnam's private sector," stated Kees van Baar, the Netherlands Ambassador to Vietnam. "Together, we will leverage our expertise, resources, and networks to support Vietnamese businesses in transitioning towards a more sustainable and circular economy, thereby contributing to a greener future."

"By combining our knowledge and experience, we can drive transformative change and empower businesses to adopt sustainable practices, leading to a more resilient and prosperous future for Vietnam," said Ramla Khalidi, UNDP Resident Representative in Vietnam.

Vietnam and Canada further boost economic, trade, and investment ties

Vietnam and Canada should further step up economic, trade, and investment links, suggested Minister of Industry and Trade Nguyen Hong Dien and Canadian Minister in charge of International Trade, Export Promotion, Small Enterprises and Economic Development Mary Ng at their recent meeting. 
      
The meeting took place on the sidelines of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Commission meeting in Auckland, New Zealand, on July 16.

Dien noted that the cooperative relations between Vietnam and Canada have developed more comprehensively and effectively, especially since the CPTPP deal took effect in early 2019.

Vietnam has been the leading trade partner for Canada among ASEAN since 2015, while Canada is among Vietnam’s top 10 import partners.

Two-way trade turnover between the two countries reached US$7 billion in 2022, marking a rise of 16.5% compared to 2021. 

Currently, Canada now makes up the third largest Vietnamese trading partner in the Americas, behind only the United States and Brazil.

However, the negative developments of the global economy have significantly affected economies around the world, including Vietnam and Canada. According to the latest statistics compiled by Vietnam Customs, their two-way trade turnover decreased by 14.7% in the first half of this year  compared to the same period last year.

Dien suggested that the two sides seek to iron out snags, making it easier for their business communities to cooperate and expand their markets.

The success of the first meeting of the Vietnam – Canada Joint Economic Committee in Vancouver in June 2022 can be considered an important step forward for economic, trade, and investment relations between the two countries, he stressed.

The Minister outlined that the two sides need to effectively exploit the important co-operation mechanism and make full use of the CPTPP.

Sharing Dien’s view, Ng affirmed that Canada always attaches importance to cooperative ties with Vietnam and it is keen to further promote cooperation with Vietnam in the field of economy, trade, and investment.

The Canadian Minister also expressed hope that Vietnam would be the leading trade partner for Canada in Southeast Asia, thereby serving as a bridge to connect Canada to other countries throughout the region.

At the meeting, the two ministers also agreed that both sides would further strengthen links with specific projects and action programmes in the near future, especially in the field of energy transition.

Vietnam Medipharm Expo 2023 set for Ho Chi Minh City return

More than 400 domestic and foreign enterprises are expected to join the 21st international medical, hospital and pharmaceutical exhibition (Vietnam Medipharm Expo 2023) to be held in Ho Chi Minh City from August 3 to 5.

The exhibitors hailing from 22 countries and territories from across the world will showcase advanced equipment and technologies in the healthcare and pharmaceutical sectors across 450 booths.

Vietnam Medipharm Expo, the largest of its kind, has been jointly held by Vietnam National Trade Fair & Advertising Company (VINEXAD) under the Ministry of Industry and Trade and Ho Chi Minh City Medical Equipment Association over the past 20 years.

Seven national pavilions from India, Taiwan (China), Russia, the Republic of Korea, Indonesia, Turkey, and China led by various medical associations and ministries of health worldwide will serve as the highlight of the three-day expo.

At the Indian pavilion, companies will introduce medicines, lab, and medical equipment, and herbal products, all of which are Indian strengths in the international market. This is the second time the Indian Trade Promotion Organizations (ITPO) have sent businesses to the exhibition,

After their first appearance at Vietnam Medi-Pharm Expo 2019, Busan pavilion of the Republic of Korea organised by Busan Metropolitan City and Busan Economic Promotion Agency will have over 40 booths of 30 most famous hospitals, aiming to promote Busan as one of the best medical tourism destination for Vietnamese people.

Conferences on “Vietnam Medical & Pharmacy Market and Polices” to be hosted by the Ministry of Health will also get underway on the sidelines of the event. They will provide foreign exhibitors and visitors with general information of the Vietnamese healthcare market and regulations on importing and dealing medical and pharmaceutical products in the country.

Within the framework of the expo will be a fact-finding tour of local hospitals to help foreign businesses have a realistic view of medical equipment and services in use there.

Deputy PM: banks consider solving financial difficulties of seafood businesses

Deputy Prime Minister Lê Minh Khái has requested the State Bank of Việt Nam and relevant ministries and organisations to consider solutions to solve financial difficulties of enterprises in the fishery sector.

Specifically, according to Document No. 639/TTg-KTTH signed by Deputy Prime Minister Lê Minh Khái on July 12, SBV has been requested to coordinate with the Ministry of Agriculture and Rural Development (MARD), and relevant ministries and organisations to consider adjusting lending rates, granting credit, restructuring debts, as well as preparing a credit package of VNĐ10 trillion to support enterprises in the forestry and aquatic industries.

The document was issued in reply to the Việt Nam Association of Seafood Exporters and Producers (Vasep)'s official dispatch which reports their challenges and propose solutions to remove the difficulties of the fishery industry.

Accordingly, seafood enterprises have been facing many difficulties, such as high production and transportation costs, depleted capital, high borrowing interest rates, and reduced orders, so they have struggled to maintain production and business activities, and needed solutions to solve problems in a timely manner.

VASEP said loan interest rates are the biggest challenge for the industry so the association hoped the Government, the Ministry of Finance and the central bank will solve this challenge.

VASEP recommended that banks cut the interest rate to below 4 per cent for US dollar loans and below 7 per cent for Vietnamese đồng loans to support export enterprises.

It also suggested that seafood enterprises be allowed to delay payment of 4-6 months for the loans having maturity date in the third quarter of 2023. They also continue to take loans to stably purchase raw materials for processing goods exported until this year's end.

In addition, VASEP believed that it is necessary to have a credit package of VNĐ10 trillion to support the seafood businesses in purchasing fishery materials from farmers.

Also in Document No. 639/TTg-KTTH, Khái requested the Ministry of Finance to coordinate with relevant ministries and agencies to urgently implement value-added tax refund for businesses according to current regulations.

At the same time, they must consider and respond to VASEP's recommendations on prolonging policies on exemption and reduction of tax, land rent, fees and charges as well as extension of payment for those.

The central bank and the Việt Nam Bank for Social Policies are asked to consider and respond to recommendations on continuing lending to the seafood enterprises from the social policy bank to pay wages for workers having to quit jobs.

The Ministry of Planning and Investment coordinates with MARD and relevant ministries, agencies and localities to simplify investment procedures in setting up new seafood processing factories and innovating technology to increase capacity.

According to VASEP, in the first six months of 2023, total seafood export turnover reached US$4.13 billion, down 27.4 per cent over the same period in 2022, reaching 41.5 per cent of the plan.

Of which, the total export turnover in June was estimated at nearly $800 million, down 21 per cent over the same period in 2022. Key seafood products saw a strong reduction in June as well as in the first half of this year.

Shrimp exports in June were estimated at $341 million, the highest level since the beginning of the year. But it was still down 18 per cent year on year. In the first half of the year, shrimp exports reached nearly $1.6 billion, 31 per cent lower than in the first half of 2022.

Pangasius export in June was estimated at $156 million, an reduction of 26 per cent on year. This figure in the first six months was estimated at $885 million, 38 per cent lower than the same period of last year.

Tuna export turnover reached $64 million in June, down 29 per cent on year. This turnover was $380 million in the first half of the year, down 31 per cent compared to the corresponding period in 2022.

Investment cooperation a highlight in Vietnam-Singapore ties: FM

Addressing a conference on Vietnam investment in Singapore on July 17, as part of his ongoing official visit to the country, Foreign Minister Bui Thanh Son stressed investment cooperation has become a highlight in bilateral relations, actively contributing to the socio-economic development of both Vietnam and Singapore in recent times.

Themed “Seizing investment opportunities in Vietnam in response to new changes”, the event was jointly hosted by the Vietnamese Embassy to Singapore and the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank). It saw the participation of over 250 representatives from the Ministry of Planning and Investment, the Ministry of Industry and trade, and the Ministry of Foreign Affairs, business associations and enterprises of the two countries.

There are new opportunities for Vietnam and Singapore to promote investment cooperation in various sectors in the context of rapid transformations with such trends as digital transformation, green economy, sustainable development, and the Fourth Industrial Revolution in the region and the world, he said.

The establishment of the Vietnam–Singapore Digital Economy and Green Economy Partnership during Prime Minister Pham Minh Chinh’s visit to Singapore in early 2023 serves as an essential foundation for the two sides to strengthen cooperation in important areas, promote circular economic development, clean energy, and address climate change challenges.

Representatives from Vietnamese ministries, sectors, and businesses updated on the countrys development goals for 2030 and its vision for 2045, development trends and investment opportunities in Vietnam, particularly in the fields of digital economy, industry - manufacturing, and renewable energy.

Participants expressed confidence in Vietnam's strong economic development potential and spoke highly of its efforts in promoting the development of green economy, digital economy, and circular economy. They discussed and proposed various specific measures to effectively implement the Vietnam–Singapore Digital Economy and Green Economy Partnership, strengthen cooperation, and mobilise resources for infrastructure development and high-quality investment projects, and promote green financial cooperation and energy transformation.

Singaporean delegates showed their interest in Vietnam's policies related to developing eco-industrial parks, plans to implement National Power Development Plan VIII, and incentives for green investment projects.

The conference started a series of activities within the framework of FM Son’s first official visit to Singapore. It is expected to pave the way for new and practical opportunities in investment cooperation between the two countries, contributing to further deepening the Vietnam-Singapore strategic partnership.

Singapore is now the second-largest foreign investor in Vietnam with nearly 3,300 projects worth over 73 billion USD. Building on the initiative of both governments, the first Vietnam-Singapore Industrial Park (VSIP) was established in the southern province of Binh Duong in 1996. So far, there have been 14 VSIPs operating efficiently, generating over 300,000 jobs for locals.

Export shows sign of gradual recovery: Statistics office

Vietnam’s export turnover is estimated to reach 29.3 billion USD in June, a month-on-month rise of 4.5%, which shows that the market is gradually recovering thanks to trade promotion activities, according to the General Statistics Office.

President of the Vietnam Association of Seafood Exporters and Producers (VASEP) Nguyen Thi Thu Sac told a recent conference that many seafood enterprises have determined that after a period of market fluctuations, a decrease in orders is an opportunity for them to review production costs, not to expand investment but keep the number of employees and their income stable. This is also a period when some businesses spend time researching and analysing new products to suit the market context.

Expecting a positive sign for shrimp exports, Le Van Quang, General Director of Minh Phu Group Joint Stock Company, analysed that the export market from August 2023 onwards will be better when the shrimp supply sources in major exporting countries such as India, Ecuador and Vietnam all decrease sharply, and world demand gradually recovers.

A representative of Viet Thang Jean Co., Ltd. said that for the third quarter of 2023, many businesses are confident that they can compete better in the market as their products meet green standards from raw materials to technology.

Tran Duy Dong, Director of the Ministry of Industry and Trade (MoIT)’s Import-Export Department, said that in the remaining months of this year, his ministry will speed up the implementation of activities to promote export.

The ministry will focus on completing legal documents on import and export, recommending additional financial and monetary policies to support businesses to increase supply, reduce costs, and create more competitive products.

The MoIT and its Import-Export Department will concertedly carry out programmes in Vietnam's import and export strategy to 2030 and a strategy on development of several key commodities of Vietnam.

Attention will be paid to soon completing procedures towards the signing of a free trade agreement (FTA) with Israel, and speeding up negotiations on other deals with potential markets such as the United Arab Emirates and the Southern Common Market (Mercosur) which includes Argentina, Brazil, Paraguay, and Uruguay.

Companies suggest opening more tourism representative offices abroad

Travel companies have suggested opening more tourism representative offices abroad, with priority to China, Thailand, India, Europe and the US, in an attempt to boost the attraction of foreign tourists now that the bottleneck in the field of visa has been removed.

At present, Vietnam has only three such offices in Japan, the Republic of Korea (RoK), and the UK.

Head of the Vietnam Tourism Association (VITA)’s Communications Department and CEO of Flamingo Redtours Nguyen Cong Hoan said Vietnam spends around 2 million USD on tourism promotion each year, or about 2.9% of Thailand’s, 2.5% of Singapore’s, and 1.9% of Malaysia’s. Therefore, it is impossible to arrange large-scale stalls or design effective business-to-business and business-to-consumer meetings.

He suggested that funding for the offices should be drawn from diplomatic agencies, the Ministry of Industry and Trade, the Tourism Development Assistance Fund, and the private sector.

Highlighting the need to open such offices abroad, CEO of AZA Travel Nguyen Tien Dat said although Vietnam is not a big market, many countries such as the RoK, Japan, Thailand, Indonesia, and Singapore have opened their tourism representative offices here which are operating effectively.

VITA Chairman Vu The Binh proposed that the State should well manage destinations and popularise Vietnam’s tourism trademark while businesses should develop tour products.

In the first half of this year, indexes regarding international and domestic tourist arrivals or total revenue met over 60% of the yearly plan, partly thanks to the impact of the Law on amendments and supplements to several articles of the Law on Entry, Exit, Transit and Residence of Foreigners in Vietnam.

Hoan expected that between now and the year’s end, Vietnam’s tourism industry will grow strongly and shape tourism products for foreign visitors in Vietnam in 2024, 2025 and subsequent years.

A report by Google Destination Insights ranked Vietnam at the seventh place among the most searched destinations from March-June, and the only country in Southeast Asia in the top 20.

The Vietnamese Government also issued a new visa policy for international visitors arriving in the country, tripling visa waivers from 15 to 45 days for selected countries. The changes will come into force on August 15.

Manulife Vietnam appoints new CEO Tina Nguyen
 
Tina Nguyen has been appointed as Chief Executive Officer of Manulife Vietnam, subject to regulatory approval.

Tina will report to Phil Witherington, President and CEO of Manulife Asia, Manulife Vietnam announced on Monday. 

Tina joins Manulife Vietnam from Generali Vietnam Life where she was CEO for the past seven years. Before that, she was with Prudential Vietnam for more than 11 years, holding multiple roles including General Manager for Marketing and Partnership Distribution, Chief Customer Officer, Chief Strategy Officer and Finance Director.

Before joining Prudential Vietnam, Tina was Financial Controller at Texas Electric Cooperatives in Austin, Texas, the US. Tina began her career as an auditor with Ernst & Young and worked in various offices in the firm’s network in Asia including Hong Kong and Việt Nam as well as in Canada and the US.

Steel imports subject to stricter quality standards

Enterprises advocated for a quality and type control procedure for imported steel into Vietnam in order to safeguard domestic steel.
 
In early July, the Vietnam Steel Association (VSA) recommended to the government and relevant ministries and branches that they devise processes and procedures for inspecting the grade of steel imported into Vietnam. This will enhance the investigation and application of proper trade remedies to limit unjust rivalry for imported steel products and safeguard the domestic steel industry.

This recommendation was made because in the first five months of the year, Vietnam imported approximately 4.6 million tonnes of steel worth approximately $3.93 billion, resulting in a trade deficit of 220,000 tonnes worth $480 million.

Significantly, Chinese steel imports tend to spike dramatically once more. From more than 200,000 tonnes in July–August 2022, it has risen to more than 600,000 tonnes in April of this year. The most direct reason is that a devalued yuan is advantageous for exports, according to Pei Hao, a senior FIS analyst based in Shanghai. Moreover, China's export prices are appealing.

"The yuan depreciated by approximately 5 per cent, China's real estate market remained lethargic, and demand in certain countries such as the Philippines, Indonesia, the Middle East, and Africa increased, resulting in a surge in China's steel exports," said VSA chairman Nghiem Xuan Da.

On the Vietnamese market, even though the demand for steel has not recovered to pre-pandemic levels, the low price of steel from China due to the weak yuan has prompted a number of trading companies to retain their inventory.

Currently, in Vietnam, import regulations are extremely lax. According to the VSA, steel is not required to declare conformance or inspect imported products and commodities because it is not included in the group of products that pose a threat in Circular No. 06/2020/TT-BKHCN.

Currently, most imported steel is exempt from import duties. Other steel products, such as galvanised steel sheet, coloured corrugated iron, steel conduit, and prestressed steel, are no longer subject to trade remedies such as the steel billet safeguard.

In 2022, Vietnam imported more than $11.9 billion worth of finished steel products, totalling 11.7 million tonnes. The deficit in steel trade was $3.9 billion.

Currently, China accounts for approximately 41.6 per cent of Vietnam's steel supply markets, Japan for 15 per cent, Korea for 12.2 per cent, Taiwan for 8.8 per cent, and India for approximately 6.5 per cent.

Runergy pumps $293 million into silicon and semiconductor plant

Solar power titan Runergy has announced a $293 million investment into a silicon and semiconductor manufacturing facility in Vietnam's Southeast Nghe An Economic Zone, a move set to bolster Vietnam's burgeoning tech sector.
 
The Southeast Nghe An Economic Zone (SENA) on July 13 confirmed a $293 million investment from Runergy, a leading solar panel manufacturer. The news came through the economic zone's online portal, announcing that the investment is earmarked for the construction of a silicon and semiconductor manufacturing plant.

The significance of this investment was underscored by the prime minister's presence at the project's investment certificate presentation, held concurrently with a meeting with several key Chinese economic conglomerates.

The new facility's capacity, projected to yield an annual output of 14,635 tonnes of silicon and 995 million 182mm semiconductors, marks a significant step forward in Vietnam's tech landscape. Beyond manufacturing, the project will cater to factory leasing services. Execution of the project is slated for Hoang Mai I Industrial Park, nestled in Quynh Thien ward of Hoang Mai town, within the SENA remit.

This development succeeds a spate of job listings by Runergy in Thailand for a multitude of roles spanning administrative, legal, human resources, and accounting domains. These positions, offering salaries between VND15 million ($640) to VND60 million, specified a requirement for Chinese language proficiency and a minimum of diploma-level education.

A key player in the solar power arena, Runergy PV Technology from Thailand, is an affiliate of China's Jiangsu Runergy New Energy Technology. Capitalising on global renewable energy opportunities, the enterprise has remained steadfast in its commitment to researching, developing, and manufacturing high-efficiency solar panels and modules.

The establishment of Runergy PV Technology Vietnam on July 7, signified the firm's expansion within the country. Song Wen Xiang, incumbent CEO of Runergy PV Technology (Thailand), was appointed as the legal representative of the newly formed entity.

Runergy's robust foray into the region followed an extensive survey in February 2023 of prospective investment sites, including Hoang Mai I and II industrial parks within SENA.

In a high-level meeting with Nghe An People's Committee in March 2023, Runergy expressed satisfaction with Vietnam's investment climate and articulated its aspirations to expand its footprint in the country. This sentiment was echoed by Dao Long Trung, chairman of Runergy, highlighting Nghe An as a potential investment locale.

The latest data from the Foreign Investment Agency under the Ministry of Planning and Investment positions Nghe An province eighth nationally in terms of foreign direct investment (FDI) for H1/2023, pulling in a substantial $720.94 million.

Up to June 20, 2023, the province drew eight FDI projects with registered capital of $613.15 million and augmented five existing projects with an additional $107.79 million, making a total new and adjusted registered capital of $720.94 million.

Nghe An is currently home to 124 active foreign-invested projects with the total registered capital of nearly $3.3 billion. This includes 76 projects within the Southeast Economic Zone and other IPs of the central province with the total registered investment capital of $2.95 billion and 48 projects outside the Southeast Economic Zone totalling $334.45 million in registered capital.

Conditions aligning for renewables boost

Renewable energy investors are being assured that national policy and electricity purchase prices are both secure and lucrative.

Numerous investors are contemplating the possibility that the Vietnamese government will soon issue a mechanism for the development of rooftop solar power. The Ministry of Industry and Trade (MoIT) sent out a document over a week ago to solicit feedback from other ministries and Electricity of Vietnam (EVN) on the related draft decision.

Bui Van Thinh, president of the Binh Thuan Wind and Solar Energy Association, stated that the finalisation of the policy will “encourage investment” in renewable energy, particularly rooftop solar power. “The government should come up with a new pricing strategy as soon as possible, guiding the bidding process and avoiding a policy void as with solar power in the past and wind power now,” he urged.

According to Thinh, there are two issues with Vietnam’s renewable energy development policy. Firstly, the average selling price of electricity in EVN is between 7.7 and 7.8 US cents per kWh, which is a quarter of that in developed nations. Currently, EVN’s purchase price for power from renewable energy sources is significantly higher than its selling price, transmission and distribution stages excluded.

Secondly, Vietnam’s transmission network is overstretched and deficient, with no regional connection. Vietnam has constructed 110kV transmission lines to Cambodia, 220kV transmission lines to China, and 500kV transmission lines to Laos, but the transmission capacity is minimal.

In Vietnam, the majority of investment in renewable energy comes from the private sector, with investors constantly prioritising profitability. According to Thinh, however, fresh funding and revamping of the power grid, regional linkage policy to export renewable electricity, when there is excess power, who will sell electricity, and at what price, are all policy-dependent.

Institutions continue to be viewed as the limiting factor in the development of renewable energy sources. At the National Assembly on June 1, lawmaker Nguyen Van Hien noted a “sudden alteration” in energy policy, concentrating on three key documents, including Decision No.21/QD-BCT dated January 7 on enacting the framework for electricity prices from transitional solar power and wind power plants.

In 2022, renewable energy sources produced 35.7 billion kWh, which accounted for 13.2 per cent of the total electricity produced. According to a report dated November 2022 on EVN’s 2023 electricity system operation plan, the actual output of solar energy produced in 2022 was 26.3 trillion kWh, a rise of 723 million kWh compared to the plan.

A different decision establishes a minimum average retail price of 0.9 US cents per kWh and an increase of 2.3 US cents per kWh for the maximum average retail price. In the meantime, the greatest ceiling price for transitional wind power plants and solar power plants is 21-29 per cent less than the fixed price mechanism outlined.

Upgrading power transmission lines or connecting regions to export excess power requires substantial funds. Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Committee, stated that Vietnam requires an average of $3.45 billion per year to invest in energy, but EVN and its National Power Transmission Corporation were only able to secure roughly $1 billion per year over the previous decade.

According to the Power Development Plan VIII, out of the total electricity development investment of $165.7 billion, $131.2 billion will be earmarked for power source development and about $34.5 billion will be spent on transmission.

The lack of electricity in the north during the months of May and June poses issues for the energy sector, highlighting the capacity of renewable energy sources to respond. On May 19, the National Load Dispatch Centre determined that the quantity of electricity mobilised from solar and wind sources reached a record high of 115 million kWh. This means that wind and solar energy have contributed 12.5 per cent, which is greater than the median contribution of renewable energy in the first four months of this year, which was 11.5 per cent.

Significant real estate deals remain on shelf

While the demand for real estate deals is rising, legal tussles and low liquidity mean genuine transactions remain limited for now.
VietinBank a fortnight ago shocked the market with a list of nearly 400 secured assets for sale at a total value of more than $330 million.

The list of assets to be sold includes over 350 real estate properties and almost 40 vehicles or pieces of equipment. They will be auctioned or sold off after negotiations.

In addition to residential houses and land plots, the lender is also selling a series of 4-star and 5-star hotels, homestays, and villas in Hoi An, Danang, Nha Trang, and Cam Lam.

Several other banks are also promoting debt sales worth millions of dollars, such as Agribank, BIDV, and Sacombank.

In February, Sacombank saw 18 assets secured by property rights at Phong Phu Industrial Park in Binh Chanh district of Ho Chi Minh City for auction. The project spans 134 hectares, including land for developing industrial, houses, supermarkets, and hospitals.

Some businesses have spent heavily to seek opportunities to expand and improve profit margins. However, the number of successful transactions are still few, industry insiders noted.

The difficult economic situation has forced companies to focus on their core business and only move forward with small- and medium-value deals. Meanwhile, there are very few domestic real estate developers who can still arrange capital flows to buy in the context of reduced liquidity and high financial costs.

According to Nguyen Quoc Anh, deputy general director of batdongsan.com.vn, despite huge supply with hundreds of projects being on sale, eligible projects with the right conditions for transfer are limited.

Vietnam Association of Realtors (VARS) data shows that the number of foreign groups interested in learning about M&A in real estate projects here is still increasing, mainly from Singapore, South Korea, Taiwan, Japan, and Malaysia. However, most of the potential new deals are still in the process of appraisal or negotiation.

In addition, legal bottlenecks mean many projects cannot see transactions even if their owners are eager to make a deal.

To ensure successful M&A deals, VARS recommends competent bodies create better conditions for investors who do not have enough resources to transfer the entire or a part of their projects, if they have already cleared land and completed compensation activities.

It also said that the demand for real estate M&A is currently high. In the market, there are about 1,000 projects delayed due to different reasons and waiting for legal issues to be resolved. Many of those owners have exhausted their internal resources, and transferring projects to restructure their financial status would be a crucial way for them to survive in the coming months, it added.

Credit bubble risk reality as banks hit lending capacities

The availability of cheap capital has the potential to fuel subprime projects and activities, leading to a credit bubble risk for the economy.

According to one bank’s general director, despite offering a loan programme with a low annual interest rate of 5 per cent and a significant limit of almost $170 million, customers are hesitant to borrow. The bank has been closely monitoring the credit situation, which has been the primary focus in recent months. This is an unprecedented occurrence.

“The credit situation is almost all we cared about lately. At the end of the loan term, enterprises only come to pay off the debt without further borrowing. On the other hand, there are businesses looking for ways to get loans, but we do not dare to lend because we clearly see the risks. The board is vigilant about ensuring financial safety,” said the general director.

This situation is not unique, as even major banks like Vietcombank have experienced minimal credit growth, barely reaching 0.5 per cent by the end of June.

A senior official from the State Bank of Vietnam (SBV) acknowledged the challenging economic conditions. Credit growth has decreased or even turned negative in some banks, as businesses, including reputable ones, have become cautious. However, certain banks have almost fully utilised their credit capacity by using technical measures to promote corporate lending within their ecosystem.

“These banks have not adhered to the rules and have adjusted their provisions for these loans, which is against regulations,” the official said.

The SBV’s data revealed that credit institutions have implemented repayment term structures for 2,800 customers, and this process is still ongoing.

As of June 27, credit has increased by 4.03 per cent compared to the same period last year, showing a growth rate of 9.08 per cent. Credit to the real estate business increased by 14 per cent in the first five months of the year, indicating that previous measures to address market challenges have started to yield results. However, credit for real estate consumption has decreased by 1.32 per cent during the same period, contrasting with a 15 per cent increase last year.

SBV Governor Nguyen Thi Hong highlighted that individual real estate investors and consumers are still hesitant to invest, resulting in low credit demand.

“Addressing legal obstacles and adjusting house and real estate prices are among the solutions to stimulate consumption and investment in the real estate sector,” Hong said.

She added that after reducing the operating interest rate consistently in the past, interest rates have now returned to pre-pandemic levels. The SBV is one of the few central banks in the world that has lowered interest rates while other countries have raised rates. By June 15, there were over 100 interest rate hikes globally.

“The SBV is currently instructing credit institutions to review procedures and documents to facilitate credit access. Additionally, it is considering and will soon announce the credit growth direction in the near future, following the prime minister’s guidance,” the governor noted.

Dinh Duc Quang, country head of Global Markets at UOB Vietnam, assessed that the SBV has taken more aggressive actions than expected, cutting refinancing rates by 150 basis points to 4.5 per cent in June. This indicates a looser policy stance by the SBV, with the possibility of further interest rate reductions in the third quarter of 2023.

Factors such as weak export activity, the Fed’s decision to halt rate hikes, the potential for rate cuts in 2024, and confidence in the stability of the VND exchange rate contribute to the prospect of additional rate cuts in Vietnam.

“We projected that interest rates could decrease by another 100 basis points in the third quarter, after which the SBV will pause to assess the impacts,” Quang said.

Nguyen Thi Phuong Thanh, an expert at VNDirect’s analysis division, highlighted that commercial banks have also implemented significant policy changes, reducing lending interest rates by 0.5-1 percentage points for existing and new loans, and even more for loans related to consumption, working capital, and business activities.

“However, there are potential risks associated with a sharp decline in lending interest rates, as it could lead to the use of cheap capital for subprime projects and create a credit bubble risk for the economy,” she emphasised.

A director from a joint-stock commercial bank’s small- and medium-sized enterprise division commented, “While the SBV requires credit institutions to maintain lending standards, some banks have faced pressure and lowered their standards against their better judgment. This has resulted in increased credit growth, but may be short-lived due to the potential emergence of bad debt.”

Vietnam prepares for launch of corporate bond trading platform

The Hanoi Stock Exchange (HNX) and Vietnam Securities Depository (VSD) are gearing up for the official launch of a dedicated platform for corporate bonds on July 19, having completed rigorous system tests and operational guidelines.
 
The HNX, in conjunction with the VSD, are fine-tuning their systems and operational processes as they ready for the inauguration of a singular, dedicated marketplace for corporate bonds, aiming to augment liquidity and boost investor engagement in Vietnam's burgeoning capital market.

In an effort to meet the stipulations of Decree 65/2022/ND-CP, the Ministry of Finance has tasked the HNX with the development of an exclusive trading platform for corporate bonds. The HNX has successfully concluded the first phase of the system's construction. From June 2023, the system was subjected to rigorous testing together with the VSD and is on course for an official launch on July 19.

Pham Hong Son, vice chairman of the State Securities Commission, has verified that all requisite preparations for the rollout of the dedicated bond market have been duly completed. This encompasses the promulgation of legal documents, the creation of operational guidelines, and the optimisation of the system's IT infrastructure.

Nguyen Son, chairman of VSD's Board of Directors, said that the VSD has prioritised its resources and coordinated closely with the HNX and other market stakeholders.

"VSD's preparations have reached fruition, positioning us to commence bond registration and provide custodial services for individual bonds," he said.

"We are ready to accept registrations from members wishing to participate in VSD's individual bond settlement system, ensuring smooth operationalisation of the system in compliance with regulatory mandates."

Chairman Nguyen Duy Thinh highlighted that the collaboration between HNX and VSD in organising securities trading and settlement activities had progressed seamlessly, bolstering the growth of Vietnam's securities market.

He is committed to maintaining a strong alliance with VSD, emphasising the diligent and effective implementation of their collaborative agreement to ensure the successful inauguration of the individual bond market.

This development signals a pivotal progression for Vietnam's capital market. The provision of a dedicated platform for trading corporate bonds is expected to enhance transparency and liquidity in the market, thereby attracting more individual investors and propelling growth in the nation's financial landscape.

Hoa Binh province rolls out red carpet for Thai investors

The northern province of Hoa Binh will roll out the red carpet for Thai investors in the locality, said Secretary of the provincial Party Committee Nguyen Phi Long at an investment, trade and tourism promotion conference held in Bangkok on July 17.

Ambassador Phan Chi Thanh said that with many favourable conditions in terms of geography, climate, soil and cultural traditions, the Vietnamese province is gradually becoming an ideal destination for foreign investors and tourists.

The diplomat affirmed that the conference not only helps attract investment to the province, but also contributes to promote investment and trade cooperation between the locality and Bangkok in particular, contributing to the development of economic cooperation, trade and investment between Vietnam and Thailand.

Long introduced the strengths of Hoa Binh province with a convenient transport system, connecting to many airports, seaports and international border gates. In the coming time, the province will focus on attracting investment to various fields, including modern and high-quality industrial production; production and processing of agricultural, forestry and aquatic products; resort tourism development; and urban development associated with ecology systems.

He said the province has a plan to prioritise investment in necessary infrastructure such as roads, power supply, and construction planning, among others, at potential and advantageous locations to create favourable conditions for investors in the province.

Long expressed his hope that Thai enterprises will become important investors in the Vietnamese province.

Representatives of Thai and Vietnamese businesses at the conference shared information and introduced orientations and investment needs, tourism products and services, contributing to promote trade, economic cooperation, tourism and culture between the two localities as well as between the two countries.

President of the Thai Chamber of Commerce Sanan Angubolkul said that 2023 marks a milestone in the relations between Vietnam and Thailand as the two countries are celebrating the 10th anniversary of the establishment of a strategic partnership, opening up a new era in strategic cooperation between the two nations for peace, stability and common prosperity.

He affirmed that Thailand and Vietnam will cooperate to strengthen the relationship between the two countries according to the model of Vietnam-Thailand Economic Connection at all levels, including the public sector, the private sector and people.

He affirmed that Thailand and Vietnam will cooperate to strengthen the relationship between the two countries according to the model of Vietnam-Thailand Economic Connection at all levels.

Sanan added that the Young Entrepreneurs Group of the Thai Chamber of Commerce and the Vietnam Young Entrepreneurs Association will continue to strengthen cooperation and mutual understanding. In August this year, the Thai Chamber of Commerce will organise a special forum for start-ups in Thailand to promote and strengthen connection of young entrepreneurs of the two countries.

Seminar on electricity pricing policies, market held

National Assembly Vice Chairman Nguyen Duc Hai, head of the NA Standing Committee’s Supervisory Delegation on the enforcement of energy development policies and laws during the  2016-2021 period, attended a seminar on Vietnamese electricity pricing policies and market held in Hanoi on July 18.

The event was co-hosted by the NA Standing Committee and the Vietnam Union of Science and Technology Associations (VUSTA).

In his opening speech, head of the NA’s Committee on Science, Technology and Environment and permanent deputy head of the supervisory delegation Le Quang Huy said during 2016-2021, the energy sector achieved commendable results. However, there remained weaknesses and shortcomings in pricing and market capture that need to be fixed. As a result, the committee decided to conduct specialised supervision on this issue.

NA Vice Chairman Hai said there remains shortcomings and limitations in the electricity pricing policy and electricity market. Some believed that the power generation structure and electricity pricing adjustments have not fully offset the input costs and ensured reasonable profitability. The formula for calculating and determining the fluctuations of basic input parameters in electricity pricing is not yet complete.

The restructuring of the energy sector has been slow. The focus is on gradually developing a healthy competitive energy market, including the electricity market. Some suggested the need to review the subsidy of coal prices for electricity production, gas prices for fertiliser production, and electricity prices for certain consumer households.

According to him, the current retail electricity pricing mechanism is not aligned with the actual development of the electricity market. Additionally, there is insufficient forecasting and comprehensive calculation of influences from the regional and global energy markets.

He suggested the standing members of the NA’s Committee on Science, Technology, and Environment, together with the VUSTA, experts and scientists, urgently collect feedback at the event to complete the draft report of the supervisory delegation, with special attention to right and effective ideas to  address obstacles in electricity pricing policy and the Vietnamese electricity market over both short and long terms.

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