A total of 45 new projects were granted investment certificates in Bac Ninh during that time, with total registered capital of $488 million. Meanwhile, the adjusted capital for 44 ongoing projects stood at about $409.1 million. However, 12 foreign-invested projects terminated operations with total registered investment of $18.68 million, according to Bac Ninh Industrial Parks Management Board.

In April alone, the province issued investment certificates for 12 projects and approved capital adjustments for 13 projects, with total new and adjusted capital of over $142.7 million.

In addition, 436 businesses resumed operations in the locality, an increase of 28.99 per cent on-year. Meanwhile, 1,092 businesses registered to suspend operations, up 25.09 per cent, 167 others implemented voluntary dissolution procedures, and 111 changed their types of operation.

Bac Ninh is home to 23,165 enterprises with total registered capital of more than VND403.9 trillion ($15.8 billion). Among them, 18,423 enterprises are operating with a total charter capital of more than VND367.1 trillion ($14.4 billion). The average registered capital per enterprise stands at VND19.93 billion ($784,377).

Big corporations that have built factories in Bac Ninh include Samsung, Foxconn, Canon, PepsiCo, Amkor, GoerTek, and VSIP. As a result, Bac Ninh has become a high-tech industrial centre in the northern region.

Land clearance for $2 billion Thai Binh LNG power plant set for completion in January 2025

Thai Binh authorities are working with the investor to complete site clearance for a $2 billion LNG power plant in the northern province by January 2025.

Secretary of Thai Binh Party Committee Ngo Dong Hai set the deadline at a meeting last week with Japan’s Tokyo Gas Co., Ltd. and Vietnam’s Truong Thanh Vietnam Group, two of three partners in a joint venture named Thai Binh LNG Power JSC — the investor.

The province has also set a target to complete administrative procedures by the second quarter of 2025 for further development.

To meet these deadlines, the investor proposed the involvement of all relevant authorities to resolve issues relating to land, site clearance, materials, and investment procedures.

At present, the joint venture is working on a pre-feasibility report and paying compensation for impacted households. The investor is also preparing procedures to hand over land and complete a power purchase contract and environmental assessment report.

Hai said that the investors should make long-term plans to ensure gas supplies and expand the plant’s capacity if possible. Thai Binh will support Tokyo Gas in researching and developing offshore wind power projects, in line with the province’s target of becoming a zero-carbon green energy hub.

Thai Binh Party Committee gave an in-principle nod to the $2 billion LNG Thai Binh thermal power plant in Thai Thuy district in December 2023, tasking the local authorities with completing legal procedures for the project.

In the same month, the joint venture was handed an investment certificate for the project at the Vietnam-Japan Economic Forum held in Tokyo during Prime Minister Pham Minh Chinh's visit to Japan in December 2023.

The project is the biggest foreign-invested project in Thai Binh so far. It is estimated the project will provide approximately 10 billion kWh per year to the national grid, supplying electricity to the northern region and contributing to national energy security.

MPI to amend Decree 35 on the implementation of PPP regulations

Deputy Prime Minister Tran Hong Ha has permitted the Ministry of Planning and Investment (MPI) to draft amendments and supplements to Decree No.35/2021/ND-CP, which provide guidance for the implementation of the Law on Public-Private Partnership Investment.

According to the decision approved by DPM Ha on May 4, the MPI will be responsible for building the draft decree to submit to the government in September.

Meanwhile, the Ministry of Finance (MoF) has been assigned to build a draft to amend Decree No.28/2021/ND-CP, providing regulations for the financial management of PPP projects. The MoF is also to complete a draft amending Decree No.69/2019/ND-CP on using public assets for payment to build-transfer projects in northern cities and provinces. The deadline to submit these two draft decrees is also September.

The MPI and the MoF will solicit opinions from the ministries of Transport, Industry and Trade, Construction, Natural Resources and Environment, among others to form the new draft decrees.

The DPM assigned the MPI to coordinate with relevant ministries in assessing the implementation of the Law on Public-Private Partnership Investment enacted in 2020 and reviewing and collecting all obstacles in the deployment process of Decree 35 in March last year.

Doosan wants to develop LNG project in VN

South Korea's Doosan Group is interested in working with Vietnam Electricity (EVN) to develop the liquefied natural gas (LNG) Quang Trach 2 project and other renewable energy projects.

This was according to sentiments expressed by Kim Bong Jun, deputy general director of Doosan, during a meeting between the South Korean delegation and EVN in April.

EVN general director Nguyen Anh Tuan said, "Doosan can participate in the bidding for some of the project's main packages as soon as EVN completes regulatory approval procedures."

The project is part of Quang Trach Power Centre in the central coastal province of Quang Binh, which includes the Quang Trach 1 coal-fired power plant, also being developed by EVN.

The government approved the Quang Trach 2 project in 2021, initially as a coal-fired plant, with EVN assigned as the developer. The initial estimated cost was VND48.2 trillion ($1.9 billion), with 20 per cent coming from EVN equity and 80 per cent from loans.

Quang Trach 2 was approved under Power Development Plan VIII to transform into an LNG-to-power project, with a higher capacity of 1,500MW. EVN is now working with Quang Binh to update the project’s legal documents for the change. Last August, the Ministry of Industry and Trade asked relevant sides to speed up Quang Trach 2 to begin construction at the end of 2024.

In addition, earlier this year, Quang Binh People’s Committee also asked Quang Trach District People’s Committee to resolve pending issues relating to land clearance, compensations, and resettlement so that EVN can start construction on time.

Doosan wants to expand its eco-friendly energy portfolio in Vietnam, as one of its future strategies is to enter the potential clean energy market here. The South Korean group signed an MoU on pursuing eco-friendly fuel conversion projects with three local operators of thermal power plants in Vietnam last June.

Weak bank reform to facilitate expansion activities

A number of domestic banks are planning to restructure distressed zero-VND banks, but experts warn that the process is fraught with significant risks, such as rising non-performing loans and unresolved debts.

At a late April AGM, VPBank chairman Ngo Chi Dung addressed concerns regarding the bank’s involvement in restructuring a zero-VND bank - a financial institution under special control by the State Bank of Vietnam (SBV), acquired for zero due to their negative equity.

The financial landscape includes four such banks: OceanBank, CBBank, GPBank, and DongABank.

“From a strictly financial standpoint, most banks are reluctant to undertake such restructuring. However, VPBank’s participation is motivated by broader strategic goals,” Dung said.

Dung pointed out that the involvement of strategic shareholder SMBC has fortified VPBank with a substantial capital base, enabling its participation in the restructuring efforts.

“Although this restructuring does not offer immediate financial returns, it facilitates our expansion strategy. Notably, it allows us to pursue higher credit growth and potentially increase our foreign ownership limit beyond the current 30 per cent cap,” he explained.

Banks are generally capped at a 30 per cent foreign ownership limit, but with strategic investors, VPBank aims to elevate this threshold. Dung said that participating in the restructuring of zero-VND banks could enable it to extend foreign ownership, which is crucial for scaling operations and boosting capital.

In Vietnam’s challenging financial landscape, pivotal steps are being taken to restructure financially vulnerable institutions. Nguyen Thanh Tung, CEO of Vietcombank, announced that the bank has finalised its restructuring plan, which is now pending approval from the SBV. This move is part of a broader strategy to ensure seamless transitions and adherence to regulatory timelines.

“We have developed specific strategies to proactively ensure the transition is managed smoothly,” Tung said.

In preparation, Vietcombank is refining its network and evaluating its human resources to bridge any skill gaps, simultaneously establishing tailored training programmes to swiftly meet standards. Moreover, the bank has formed dedicated subcommittees to assist in the transfer of weak financial institutions.

“Transfers are planned for 2024. Over the long term, acquiring weaker banks opens doors for potential strategies such as share sales or mergers,” Tung explained.

Meanwhile, Nguyen Thi Phuong Thao, vice chairwoman at HDBank, stated at its AGM in late April that the bank is among four chosen by the SBV due to its strong financial health and effective operations.

“About 6-7 years ago, when we received the proposal from the SBV, we arranged and prepared to engage seriously. Accepting this role underlines the bank’s commitment and opens up transformative growth opportunities,” Thao said.

“Supporting this initiative allows HDBank to utilise additional favourable mechanisms to increase our annual credit growth limits, positioning us to become one of the top banks in the country within the next five years,” Thao added.

Luu Trung Thai, chairman of MB, views this as an opportunity to explore new developmental pathways, notably in credit growth and management capabilities.

“We are prepared for the assigned tasks, just awaiting government approval,” Thai reported at the bank’s AGM last month. “MB is engaging in various collaborative efforts aimed at supporting targeted commercial banks, with mandatory transfers expected to commence this year. Post-transfer, the weak bank will continue to operate independently under MB, with future options for merging or divesting after restructuring.”

While the final destinations for these banks remain undisclosed, Vietcombank is actively providing comprehensive support to CBBank, covering aspects of governance, technology, products, services, and branding.

Meanwhile, MB’s leadership has disclosed that the bank it is acquiring has accumulated losses of approximately $833 million, along with a non-performing loan ratio of 47 per cent. Among these institutions, OceanBank, acquired for zero, faces similar financial challenges.

The restructuring process, while beneficial, is complicated by significant risks, including the potential rise in non-performing loans, unresolved corporate bond debts, and challenges in achieving robust credit growth for production.

“Given the complexities and impending risks, the timing and execution of these transfer plans must be judiciously considered to mitigate any negative impacts on the broader banking system and the economy,” noted one financial sector expert to VIR.

At the SBV’s April report to the National Assembly, the recurrent use of phrases such as “finalising” and “submitting for approval” highlighted the sluggish progress in handling weak banks, a theme that has persisted over the years.

Vu Hong Thanh, Chairman of the National Assembly’s Economic Committee, expressed frustration with the slow progress of the restructuring project for the 2021-2025 period. “In addition to the four mandatory acquisition banks, now including SCB, we are spending a significant amount of money daily to support these struggling banks, which is proving to be very costly,” Thanh remarked.

Economic experts mull over best way to aid growth

Financial experts are weighing up the best options for Vietnam to support the country's still nascent economic growth and ensure financial market stability.

Vietnam continued its bumpy path of recovery in April, reflecting the highly uncertain global environment, according to Yun Liu, ASEAN economist at HSBC Global Research. Encouragingly, exports rose 10.6 per cent on-year, driven by electronics, which grew 20 per cent on-year.

However, peripheral risks are keeping near-term sentiment cautious despite growing confidence of a cyclical recovery in the global trade cycle.

"Some exporters have noted concerns stemming from the Red Sea disruptions of trade with Europe. Unsurprisingly, textiles and footwear exports, for which Europe is a major destination, stalled in its recovery, falling almost 3 per cent on-year," said Liu.

Despite this, the economist assumes that an expansion of Vietnam’s manufacturing capabilities through robust foreign direct investment (FDI) inflows should provide a further tailwind to a stronger cyclical rebound as the broader trade cycle picks up.

New FDI to the manufacturing sector rose 50 per cent on-year, while FDI disbursements also rallied to a multi-year-high, exceeding $6 billion in the first four months.

Liu noted that inflation appears an imminent concern as headline inflation rose 0.1 per cent on-month, pushing the on-year ratio to 4.4 per cent, in line with market forecasts. This marks the first time in more than 18 months that inflation has been so close to the State Bank of Vietnam's (SBV) 4.5 per cent inflation ceiling.

Similar to previous episodes, the main drivers are higher oil prices and food inflation. "The former reminds us of how acutely sensitive Vietnam is to the volatility in the international commodity market, whereas the latter suggests that even an exporter like Vietnam cannot be insulated from high food costs," said Liu.

Coupled with the latest downward pressure on the VND, there are concerns this could prompt the SBV to hike interest rates.

"We expect inflation to breach the 4.5 per cent ceiling in the second quarter of this year, before likely dropping below 4 per cent on-year in the third. Moreover, a rate hike in the face of still-subdued credit growth would be negative for the nascent economic growth, so we do not expect the SBV to move," Liu said.

In fact, banking sector deposit rates recorded a slight upward trend again in April, particularly in the second half of the month. Specifically, a number of commercial lenders such as VPB, VIB, OCB, and STB hiked their interest rates in the range from 0.2-0.5 per cent annually for both short- and long-term.

Several state lenders such as VietinBank and BIDV also adjusted to increase interest rates by 0.2 per cent yearly for terms under 12 months.

However, deposit interest rates are still at their lowest level for many years, and the rates of some state lenders for long terms are also listed at a lower level than the group of joint-stock banks from 0.2 to 1 per cent annually.

Can Van Luc, chief economist at BIDV, assumes that the SBV will continue to relax the monetary policy in 2024 due to a combination of factors.

"First, the world economy continues to face many challenges. Global inflation is forecast to continue its downward trend and domestic inflation remains under control, below 4 per cent. Second, major central banks worldwide are expected to ease monetary policy tightening through lowering operating interest rates, and lastly, the government and SBV will continue to prioritise economic growth goals," said Luc.

Luc expects that the VND interest rates will enter a somewhat more stable period in 2024 and the interest rates in general will remain at a low level, and increase slightly from 0.2 to 0.5 per cent in the second half of the year when credit demand recovers more strongly.

Business concerns apparent on land law

The business community is still unclear about draft decrees related to land prices and implementation of the new Land Law.

At a meeting in mid-April, Deputy Prime Minister Tran Hong Ha asked the Ministry of Natural Resources and Environment to continue clarifying issues with different opinions on the scope, subjects, and implementation policies of the law, while speeding up the online processing of administrative procedures related to land.

The ministry is completing two drafts to be submitted to the government for approval, one directly related to land prices, and the other on implementing the 2024 Land Law. The prime minister has directed ministries and sectors to build documents guiding the implementation of the law to make sure that it can take effect in July this year instead of January 2025 as previously planned.

Pham Tan Cong, chairman of the Vietnam Chamber of Commerce and Industry, said, “These drafts are two of the most important decrees impacting the investment and trade of businesses. Thus, the drafting board has organised conferences to collect opinions with the expectation to draft a complete decree, which creates feasible conditions for businesses during implementation.”

During this process, many issues in the draft decrees are still being discussed and corrections are being proposed.

“We cannot follow the entire content of these draft decrees due to too much information. Regardless, the draft decrees are still being updated,” said Nguyen Quoc Hiep, chairman of the Vietnam Association of Construction Contractors.

“In the draft decree on land pricing, our members say more than 20 pending pieces of content need to be clarified or revised. For example, in the article relating to the withdrawal of land, there are two purposes for withdrawing land: ensuring national security and developing the socioeconomy. The problem is that the draft decree has specific guides to recover land for national security purposes, but no specific explanation for taking back land to serve socioeconomic development.”

Hiep said that the current instructions on bidding and selecting investors to implement projects using land were “sketchy” and many localities were confused on how investors were chosen for projects.

“In particular, before bidding to select investors for projects, the land price had not been determined. As a result, when the bidding is finished or even when winners implement land clearance, the land prices are determined at a high level, which can be in excess of investors’ capacity. Thus, they are forced to give up the projects. We need a more detailed guide on this content,” Hiep said.

Besides this, businesses are also concerned with contradictions between the Land Law and draft decree detailing the implementation of certain provisions.

“Article 218.2 of the new Land Law stipulates that cases of land usage combined with commerce and services must prepare a land use plan and submit it to the competent authority for approval. However, Article 157 of the draft decree stipulates that some cases of multipurpose land use do not need to prepare a combined land use plan and simultaneously do not have to carry out land registration. Therefore, we are concerned whether the draft is stipulating exceptions to the cases in Article 218 in the new law,” said Trinh Minh Hang of the Legal Division at Honda Vietnam.

The company expects the draft decree will add detailed instructions when using multipurpose land so that businesses do not face any barriers during implementation, Hang added.

According to the Office of the National Assembly, the new 16-chapter Land Law boasts regulations on determining land prices according to market principles, and inspection and supervision of the central government and localities’ people’s councils in the formulation of land price lists.

Commerce chamber advocates power purchasing agreement, bypassing state utility EVN

The Vietnam Chamber of Commerce and Industry (VCCI) has recommended allowing all businesses and individuals to purchase renewable energy directly, rather than through state utility Vietnam Electricity (EVN).

The Ministry of Industry and Trade (MoIT) has drafted a Direct Power Purchase Agreement (DPPA) decree, offering two models. One involves purchasing through private lines, and the other through the national grid, facilitated by EVN. This scheme would involve suppliers from renewable energy plants, including wind and solar, with capacities exceeding 10 megawatts if grid-connected, or without any capacity limitations for transactions over private lines.

A VCCI spokesperson emphasised the benefits of the proposed DPPA mechanism, stating, "It aims to effectively bridge the gap between supply and demand in renewable energy."

This initiative could rejuvenate numerous renewable projects that are currently languishing due to outdated feed-in tariff (FIT) pricing. It would also enable manufacturers, particularly exporters to developed countries, to meet their Environmental, Social, and Governance (ESG) obligations within their supply chains.

The VCCI contends that the impact of direct transactions via private lines on the national electricity system would be negligible. Therefore, it is advocating for the expansion of this initiative to include not only large electricity consumers but all interested parties.

According to Vnexpress, Thai Nguyen Department of Industry and Trade has also called for a wider application of the policy. They pointed out that many rooftop solar installations are operational yet remain disconnected from the national grid due to the absence of clear regulatory guidance.

"Allowing these systems to sell directly to nearby consumers would reduce pressure on the electricity sector," commented a department spokesperson, noting that this would also minimise waste for owners of these systems.

Given the minimal system impact from transactions over private lines, the VCCI argues that aligning power source projects with national planning is unnecessary, so provisions are needed to prevent feedback into the grid.

The draft also requires that customers engaging in direct purchases invest in electrical infrastructure and manage their own operations. The VCCI suggests that these responsibilities could be subject to negotiation, potentially lying with the power generator or the customer, depending on the agreement.

The introduction of the DPPA model has been consistently advocated by foreign investors in Vietnam, who believe it would positively influence the energy sector's competitiveness. Large corporations such as Samsung, Heineken, and Nike, with average monthly consumptions well over 1,000,000 kilowatt-hours, are keen to participate.

According to a survey by the MoIT, about 20 large enterprises have expressed interest in direct power purchasing, demonstrating a combined demand of nearly 1,000MW. Furthermore, 24 renewable energy projects with a total capacity of 1,773MW are eager to sell electricity through the DPPA, with 17 additional projects contemplating participation, summing up to 2,836MW.

ESG poses challenges for Vietnamese businesses in global trade expansion

According to the Corporate Global Trade Survey Report 2023 published by Reuters, 88 per cent of businesses require annual environmental, social, and governance (ESG) data collection from their suppliers. This poses a new challenge for Vietnamese businesses in the process of global supply chain integration.

While it may still be relatively unfamiliar to many Vietnamese businesses, major markets around the world have started implementing policies to make ESG a mandatory compliance standard for companies.

Starting from 2022, companies with over 500 employees in the United Kingdom are obligated to report on ESG issues under the Sustainable Disclosure Requirements (SDR), as reported by Reuters.

Notably, Germany has also passed the Supply Chain Due Diligence Act, which requires large companies to adhere to criteria related to environmental, social, and governance aspects of their supply chain operations. Companies found to be non-compliant may face fines, or more significantly, suppliers may be excluded from the supply chain if violations occur.

In January 2023, the European Union (EU) officially announced the Corporate Sustainability Reporting Directive, which will be effective across the entire region and could impact approximately 50,000 large entities listed in the EU.

In the United States, while there are no specific regulations regarding ESG or sustainable development, there are regulations targeting human rights violations and human trafficking. The US Securities and Exchange Commission has also been drafting rules that require companies to provide information on environmental and climate change matters.

Vietnam cannot stand outside the current trend where major markets like the EU and the US are applying ESG standards in global production and trade.

Over two-thirds of trade experts participating in the Reuters survey stated that they always consider ESG issues before deciding to collaborate with suppliers.

Amidst the restructuring of the global supply chain, Vietnam has emerged as one of the countries with significant opportunities for breakthroughs, thanks to its strengths in resources and human capital.

Vietnamese businesses must recognise the regulations related to ESG if they wish to continue participating in major markets; otherwise they may lose the potential for integration into the global value chain. Companies that meet ESG standards also increase their opportunities to access long-term investment capital, thereby establishing long-lasting partnerships.

At COP 28, theVietnamese government reaffirmed its commitment to achieving net zero by 2050. Vietnam has also approved a national green growth strategy, seeking to engage domestic businesses in sustainable development.

According to the ESG report published by PwC in 2022, the readiness level of Vietnamese businesses is promising. The report indicates that 80 per cent of surveyed companies have plans to commit to ESG within the next two to four years.

The main reasons for this can be attributed to three key drivers: complying with local regulations, enhancing the value of businesses, and minimizing reputation-related risks. Many ESG criteria related to the supply chain, such as carbon emissions, labour rights, anti-corruption measures, and sustainable supplies, require trade experts to engage in company ESG initiatives.

The Reuters report also indicates that over half of the surveyed companies are collecting data on health and safety (54 per cent), labour practices within the company (51 per cent), supplier ethical business conduct (48 per cent), and carbon emissions (47 per cent)

Therefore, it is crucial for Vietnamese businesses to quickly integrate ESG into their sustainable development strategies, turning ESG into a driving force for growth, enhancing their competitive capabilities when participating in the global trade flow.

Wide participation can boost nation’s energy transition

Vietnam is pushing ahead with the energy transition by involving synchronous solutions and joint contributions of society.

At a consultation workshop on the public awareness campaign for the energy transition held in Hanoi two weeks ago, experts emphasised that as many individuals and businesses as possible should participate in the energy transition process.

“Every action, no matter how small it is, such as saving electricity, recycling, and using environmentally friendly means of transportation and living, makes an important contribution to the overall effort to reduce environmental pollution and ensure energy security,” said Nguyen Ngoc Thuy, country coordinator of the Energy Transition Partnership.

Thuy noted that the energy transition is a multi-faceted issue, covering complex contents such as finance and investment, renewable energy infrastructure development, green jobs, and improving access to affordable clean energy for people in remote areas.

“It will open up numerous new doors for employment, advanced technology development, and socioeconomic growth. However, this may pose some challenges for economies, for example, how to minimise the impact on vulnerable groups and subjects, especially the impact of electricity price increases on poor households, and remarkable structural changes in industries related to fossil energy,” she added.

According to the International Energy Agency, in a net-zero scenario, behavioural changes would reduce emissions and reduce energy demand for buildings, road transport, and aviation. The total amount of CO2 emissions in the period 2021-2050 is estimated to decrease by about 4 per cent if there are more effective energy-saving behaviours by authorities, organisations, businesses, and individuals.

In the 2023-2025 period, the annual growth rate of electricity demand in Vietnam is increasing by about 8.5 per cent, higher than the economic growth rate. So understanding various aspects of energy and behavioural change is important, Thuy added.

Realising the importance of the movement, numerous businesses have prepared specific strategies and plans to convert and adapt to the energy transition trend.

PetroVietnam Exploration Production Corporation (PVEP) in January updated its action programme to adapt to the energy transition. Dinh The Hung, head of Technology and Environmental Safety at PVEP, said that the newly updated action programme has set out specific goals and solutions to implement and adapt to the energy transition trend.

“They include applying new environmentally friendly technologies, shifting product structure towards increasing the proportion of gas compared to oil, and implementing carbon collection and storage projects, among other areas. These solutions will help PVEP gradually adapt to the current trend and contribute to the energy transition of the country,” Hung said.

The corporation is focused on groups of solutions like managing the implementation of energy transition, energy management, net emission reduction, and recycled energy. These include nine tasks and over 80 specific actions for each department to follow.

Meanwhile, the Ministry of Natural Resources and Environment has compiled lists of priority projects to implement the Just Energy Transition Partnership starting in 2024, including Pha Lai Thermal Power Corporation (PPC). Pha Lai 1 coal thermal power plant will use 100 per cent suitable fuel, without carbon emissions for four units. If possible, the Pha Lai 2 coal thermal power plant will switch to using 100 per cent suitable fuel without carbon emissions by gradually switching from co-firing to absorption.

PPC chairman Mai Quoc Long said, “We aim to reduce greenhouse gas emissions, hit net-zero emissions by 2050, and contribute positively to the international community in protecting the earth’s climate, shifting the growth model to improve the economy’s resilience and competitiveness.”

However, the transition from using fossil fuels to using clean fuels struggles with big issues, Long warned. “Therefore, we need the support of relevant ministries and agencies to provide policies, quickly approve procedures, and create stronger conditions for investments and technical assistance,” he added.

Vietnam remains focused on EVs for sustainable growth

According to a recent HSBC report, Vietnam is advancing its green energy transition rapidly while prioritising electric vehicles (EVs) as a key driver of sustainable economic growth.

The report from May 9 indicates the country’s electric two-wheeler (E2W) market, the largest in ASEAN and second globally behind China, is leading this transformation.

"Vietnam’s annual E2W and electric car sales could rise from under one million in 2024 to over 2.5 million by 2036," the report projects, highlighting the market’s vast potential.

Three years ago at COP26, Vietnam committed to achieving carbon net-zero by 2050, bolstered by a $15.5 billion G7 pledge to support its decarbonisation efforts. The country's Power Development Plan VIII, released the following year, outlines a clear roadmap for achieving renewable energy targets.

E2Ws are set to dominate this growth due to their affordability and high local production rate, with Vietnamese consumers favouring two-wheelers, which outnumber cars by 30 to 1. Despite this preference, the EV market holds significant promise, with only 5.7 per cent car ownership compared to over 60 per cent motorcycle ownership in 2020. The Vietnam Automobile Manufacturers Association estimates 3.5 million electric cars will be on the road by 2040.

However, Vietnamese EV makers, particularly VinFast, face challenges in the electric car segment, including high prices, range anxiety, and limited charging infrastructure. Overcoming these barriers will require substantial government support, such as BEV registration fee exemptions and reduced import duties.

"Investment in infrastructure is critical," the report states, estimating $12.3 billion is needed for renewable energy capacity and EV charging infrastructure from 2024 to 2040.

Vietnam’s extensive rare earth reserves, the second largest globally, are poised to further boost the domestic EV ecosystem. These elements are crucial for EV production, especially in motor magnets.

Foreign investment and partnerships are essential for Vietnam’s green automotive shift. Japanese and South Korean companies have significantly contributed to the automotive industry, with major car manufacturers like Honda, Toyota, and Hyundai among the top foreign corporate taxpayers.

As the EV market expands, local producers are expected to secure the entire supply chain and enhance cooperation with Chinese firms. VinFast’s parent company is partnering with China’s Gotion High-Tech to develop LFP batteries and build lithium-ion factories in Ha Tinh province. TMT Motors has also announced a strategic partnership with a SAIC-Wuling and GM joint venture.

Chery Automobile, a Chinese automaker, is establishing Vietnam's first Chinese EV plant, an $800 million joint venture with Geleximco, set to produce 200,000 vehicles annually by the start of 2026. This increased Chinese involvement is expected to boost production integration with Thailand, where BYD is building a $504 million plant to export EVs to Vietnam, leveraging ASEAN's zero per cent import tax.

Furthermore, VinFast aims to expand its production capacity from 250,000 to one million vehicles annually, with Indonesia as a key export market. VinFast recently signed an MoU to supply 600 EVs to Indonesian businesses and is establishing an EV assembly plant there.

Corporations set out capital-raising goals

Several corporations in Vietnam are poised to list their subsidiaries amid a landscape fraught with challenges as well as promising growth prospects.

At the Vingroup AGM in late April, chairman Pham Nhat Vuong captured the attention of investors by announcing plans for initial public offerings (IPOs) of hospitality arm Vinpearl and electric taxi subsidiary GSM.

“We are in the process of listing Vinpearl and aim for a successful IPO by year-end. And currently, there are no plans to divest other businesses,” he said. “The group is also vigorously expanding and enhancing GSM’s presence internationally. Moreover, there is consideration for potentially listing GSM on an international market in the near future.”

Other major companies outlined IPO plans for their subsidiaries this year. At its AGM on April 27, Bamboo Capital Group (BCG) revealed its ambition to list two of its subsidiaries – BCG Energy and non-life insurer AAA – on the Unlisted Public Company Market (UPCoM).

Last year marked a significant milestone for BCG with the successful IPO of its real estate arm, BCG Land. Pham Minh Tuan, vice chairman of BCG and CEO of BCG Energy, told VIR, “We’ve filed for the public listing of BCG Energy and are awaiting regulatory approval. We anticipate the official listing to occur in Q2, amidst promising prospects.”

“Given our growing portfolio of renewable energy projects and robust backing from investors and major partners like SK Ecoplant, coupled with the stock market’s resurgence and the vast potential within Vietnam’s renewable and waste-to-energy sectors, we are optimistic about the IPO’s success.”

Currently, BCG Energy is advancing eight wind power projects with a combined capacity reaching 925MW. The company is also slated to start building its inaugural waste-to-energy facility in Cu Chi district of Ho Chi Minh City. This facility will handle 5,000 tonnes of waste daily, with construction commencing in May.

“For AAA Insurance, we are moving forward with our plans to list on the UPCoM, although this will take a longer timeframe, with an expected listing around 2025 or 2026,” Tuan added.

Several prominent firms, including the Bach Hoa Xanh (BHX) chain of Mobile World Group (MWG), have also announced IPO plans for 2024.

MWG disclosed in April that it sold a 5 per cent stake in BHX to Chinese investment fund CDH Investments, a lower amount than the previously intended 20 per cent. Initially hinted at in 2022, the IPO caught attention when Reuters this February leaked a valuation of $1.7 billion for BHX by foreign investors.

Just before its IPO in December 2023, BHX announced it had reached break-even status after covering all operational costs, significantly based on core business activities.

“These strategic adjustments are expected to sustain and enhance our profitability into 2024,” stated a company executive.

Meanwhile, Hoa Sen Group also unveiled its IPO plans for Sen Plastic and Sen Steel Pipe in mid-March. The company is reorganising its operational segments, focusing on stabilising its core business lines.

Likewise, Taseco Land has also made its shares available on the UpCOM exchange under the ticker symbol TAL.

At its AGM on April 25, Masan Group chairman Nguyen Dang Quang revealed plans under consideration to transition the listing of Masan Consumer from the UPCoM to the Ho Chi Minh Stock Exchange. Industry analysts have projected that the listing could generate between $1 billion and $1.5 billion.

Masan Group CEO Danny Le said, “A significant portion of the capital raised will be earmarked for accelerating our push into overseas markets.”

In 2023, the IPO landscape was subdued, with only three companies successfully launching and garnering a mere $7 million, marking a 90 per cent downturn from the previous year. However, 2024 has witnessed a revitalisation starting with DNSE, which successfully raised approximately $36 million in its IPO. Other successful listings followed, including Hydropower JSC Hua Na and Quy Nhon Port JSC, among others.

VNDirect has articulated a cautious outlook for the IPO market, attributing the ongoing sluggishness to not only persistent liquidity issues but also to stricter regulatory frameworks imposed by the State Securities Commission (SSC).

“Newly instituted rules demand that companies show profitability for two consecutive years before their IPO, an extension from the prior one-year requirement, and must present a clean slate with no accumulated losses,” noted VNDirect. “These new prerequisites, while designed to filter for companies with robust financial health and stable growth trajectories for the stock market, also inadvertently dampen the entrepreneurial spirit, particularly in the technology sector. This results in venture capital funds being hesitant to channel investments into Vietnamese startups unless they are poised for international listings,” the brokerage added.

Additionally, IPO candidates are now required to document their capital utilisation meticulously from inception to the filing date, posing significant challenges for long-established companies. The extended duration for processing IPO applications further contributes to investor apprehension among foreign stakeholders. “Nevertheless, we anticipate a resurgence in IPO activities in 2024, spurred by an improvement in market liquidity,” VNDirect concluded

Bui Van Trinh, assurance leader of Deloitte Vietnam, stated, “The limited number of IPOs in Vietnam was primarily due to stringent regulatory processes and substantial net capital outflows from foreign investors, influenced by global and domestic factors that negatively affected market liquidity throughout the year.”

On the outlook through to 2024, Tay Hwee Ling, disruptive events advisory leader of Deloitte Southeast Asia and Singapore, said, “Amidst this challenging macroeconomic environment, many stock exchanges are dealing with the trend of Southeast Asian companies looking to list on large overseas markets to access more capital and investors, or where they perceive they can secure the best valuations. For quite a few companies, listing in the US is attractive due to the deeper pool of investors.”

The SSC has introduced supportive policies aimed at revitalising the market. In February, it stressed its commitment to streamline the listing process. They plan to closely integrate IPOs with immediate listings, thereby shortening the timeline between a company’s public offering and its market debut.

Chairwoman Vu Thi Chan Phuong outlined the proactive measures being adopted. “We are collaborating with the Vietnam Securities Depository and Clearing Corporation and various entities to ensure that in 2024, listed companies will streamline their information disclosures, reducing the need to communicate with multiple layers,” Phuong said.

Vietcombank Fund Management (VCBF) highlighted the VN-Index’s potential, driven by promising economic indicators, robust corporate earnings, and sustainably low interest rates. “The market’s valuation is increasingly appealing, with a price-to-earnings ratio at just 11.7, enticing substantial capital inflows,” stated a VCBF representative.

According to Nguyen Hoai Thu, managing director and head of investments at VinaCapital, given the earnings growth, the ratio for the VN-Index is expected to average between 10 and 11 times for 2024, approximately 15-20 per cent lower than the valuation levels of Singapore, Malaysia, Indonesia, Philippines, and Thailand.

“Additional factors bolstering the stock market include increasing consumer demand, a rise in foreign investment, and the anticipated elevation of Vietnam’s market status within the next 2-3 years,” Thu said.

Tra fish exports to EU market plunge

Vietnamese pangasius (Tra fish) exports to the EU between the beginning of the year and mid-April dropped by 13% to US$47 million against the same period from last year, according to data released by the General Department of Vietnam Customs.

Most notably, the Netherlands and Germany remained the two key consumers of Vietnamese pangasius to the demanding market.

Specifically, the country fetched nearly US$11 million from exports of pangasius to the Netherlands during the first quarter of the year, marking a drop of 10% against the same period from last year.

Meanwhile, pangasius exports to Germany throughout the reviewed period also witnessed negative growth of 29% to US$8 million on-year.

Experts pointed out that although the pangasius export volume to the EU increased by 26%, the average export price remained low, thereby leading to a continuous decline in terms of the total export value for several months.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), seafood exports to the EU, including pangasius, have been significantly affected by the global recession, the Russia-Ukraine conflict, and the tension escalation in the Middle East.

Vietnamese export enterprises are required to take the full advantage of the incentives set out under the EU-Vietnam Free Trade Agreement (EVFTA) in order to make further inroads into the fastidious market.

Simultaneously, local firms have been advised to meet relevant green standards set forth by the EU in terms of environmental protection and sustainable development to boost exports to the highly lucrative market.

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