The Kim Thanh Exhibition and Convention Centre in Lao Cai province will be rebuilt into a modern border market and trading centre. (Photo laogai.gov.vn)

The northern mountainous province of Lao Cai plans to build Kim Thanh border market and a trade centre to attract investment.

The provincial People's Committee has just proposed the project, considering it as an important source to develop a centre for goods exchange on the border with China and motivation for local economic development.

Aiming to be built with modern facilities, the market and the centre are expected to renovate and improve the efficiency of trading in the local area and attract more businesses.

It will also promote the development of e-commerce, creating conditions for trading and exchanging goods between border residents, while preventing smuggling and trade fraud.

According to the project, they will build three different zones including a zone for fairs and a showroom for regular product, a zone for border residents' markets and a zone for wholesale markets for agricultural and aquatic products.

The first zone will be built in the current Kim Thanh Exhibition and Convention Center covering 2.69ha while the second one will be built over 2.4ha where an e-commerce trading floor and e-commerce checking and delivery area also exist.

To the west of zone 1 on an area of 6.2ha, zone 3 will host a wholesale market for agricultural and aquatic products for domestic consumption, import and export.

Lao Cai expected to call for investment of 200 billion VND (8.6 million USD) and finish the building in the 2020-2022 period through land lease auctions.

Local provinces bordering China, such as Quang Ninh and Lang Son, have formed pairs of border markets for trade promotion which have proved effective in promoting the activities of goods exchange, trade and import and export.

Vietnamese enterprises overcome difficulties in Cambodia

Many Vietnamese businesses or Vietnamese-owned enterprises are still thriving in Cambodia despite the impact of the COVID-19 pandemic, creating thousands of jobs with stable incomes.

In this difficult period, the Horizon Care supplements company has been conducting normal business activities thanks to its early application of communications technology platforms. Technological application has become a competitive advantage for many Vietnamese small and medium enterprises in the neighbouring country.

With borders forced to close to prevent the spread of the pandemic, many Vietnamese companies have diversified their sources of imported materials and goods, applied standards to control the quality of their output, and at the same time identified human resources as a core value to compete and overcome crisis. 

Experts said that, in the current circumstances, the Vietnamese business community needs to link more closely to develop together in the post-COVID-19 period and contribute to the recovery of Cambodia’s economy. 

Vietnam’s large scale, high-tech agricultural investment in Cambodia is also proving its worth and sustainability. After nearly three years of investing in Cambodia, the THADI Company has expanded to fruit trees, cereal, and forestry, employing some 3,500 local workers. Despite the difficulties the pandemic has caused, the Vietnamese business community in Cambodia still stands strong, demonstrating its competitiveness and technological advantages.

Malaysia potential post-COVID-19 export market of Vietnam

Malaysia could become one of the biggest export markets in ASEAN for Vietnam, especially in the post-pandemic period, a city official said at a meeting in HCM City on July 16.

Nguyen Tuan, deputy director of the HCM City Investment and Trade Promotion Centre (ITPC), told a seminar on exports to Malaysia organised by the centre that economic and trade cooperation between the countries has been growing in recent years.

Vietnam and Malaysia are members of the ASEAN Economic Community (AEC) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), he said.

In 2016, Malaysia surpassed Singapore to become Vietnam’s second largest trading partner in ASEAN after Thailand, he said.

It is the third largest export market for Vietnam in the region after Thailand and Cambodia, he added.

Bilateral trade last year was worth 11.1 billion USD, with Vietnam’s exports being 3.8 billion USD, or 15 percent of the country’s total export to ASEAN member countries.

The pandemic has severely affected almost all socio-economic aspects like health, transportation, tourism, education and trade, he said.

Due to the pandemic, in the first half of the year Vietnam’s exports to Malaysia declined by 17.4 percent year-on-year to 1.6 billion USD, he said.

“The centre has taken drastic measures to support businesses to increase exports by developing new supply chains and expanding and diversifying export markets.”

Raphy Md Radzi, Malaysia’s trade commissioner in HCM City, said Vietnam and Malaysia are important trade partners and should enhance promotions to achieve their trade targets after the pandemic.

Vietnamese exporters could also coordinate with Malaysian service companies for distribution of their goods globally, he added.

Theng Bee Han, chairman of the Malaysia Business Chamber, too said, “Vietnamese businesses should not only consider Malaysia a potential export market but also cooperate with Malaysian companies to tap the world market.”

Malaysia has a large Muslim population, and therefore exports to it must meet Halal standards for products like food, medicine and cosmetics, and should also comply with food safety, labelling and traceability regulations, he said.

It is expected that by 2030 the global Halal industry will be worth 30.6 trillion USD, including 1.1 trillion USD in the Asia Pacific region, with Malaysia accounting for 228.5 billion USD, he said.

Vietnamese farm produce and seafood products meet Malaysia’s food standards, and when they receive Halal certification, they could be exported to the country, he said.

Vietnam exports computers, electronic products and parts, mobile phones, iron and steel, glass products, vehicles, garments and textiles, and wood and timber products to Malaysia, and imports petroleum, electronic components, plastics, chemicals, and textiles from it.

Malaysia also has great demand for farm produce such as rice, fruits, vegetables, and pepper, office clothes, seafood, footwear, office furniture, in which Vietnam has strengths.

It is among the largest rice importers in ASEAN, with annual demand at 900,000-1 million tonnes.

Last year, Vietnam surpassed Thailand to become Malaysia’s largest rice supplier with shipments worth nearly 219 million USD.

In recent times, Malaysia’s demand for medical masks, gloves and other protective equipment has surged due to the pandemic.

Malaysia’s GDP last year topped 364.7 billion USD, making it the 33rd largest economy in the world and third largest in Southeast Asia.

Its income per capita was 11,200 USD.

Lavifood buys 100 tonnes of Long An dragon fruits

The Long An Dragon Fruit Association sold over 100 tonnes of dragon fruits to Lavi Agri Company Limited, a member of Lavifood JSC, on Wednesday.

This is the first batch following the signing of the co-operation programme between the association with Lavi Agri to purchase and consume 100 hectares of red-flesh dragon fruits in the provincial Chau Thanh and Tan Tru districts.

Farmer Nguyen Van Ly in Thanh Phu Long commune said that the company purchased dragon fruits grade 1 at VND30,000 (US$1.3); dragon fruits grade 2 costs VND20,000 per kilo; grade 3 costs VND15,000 per kilo.

The price was equal or higher than that in outside markets, he said.

In particular, farmers had a clear contract with the company and will receive a 30 per cent deposit, he added.

Nguyen Quoc Trinh, the association’s chairman, said this was the first value chain for dragon fruit.

The association, together with Lavifood, had created a value chain for dragon fruit which both helps farmers to have a clear contract and provides technical support to farmers to make dragon fruit grow better, he said.

The agreement was signed at the end of last month to purchase and consume red dragon fruit in the province’s Chau Thanh and Tan Tru districts.

Under the agreement, the company will buy 100 hectares of dragon fruits, equivalent to 3,000-3,500 tonnes, provided that dragon fruits are grown in Chau Thanh and Tan Tru districts and are cultivated using a clean process.

The province currently has more than 12,000 hectares of dragon fruit with output of more than 400,000 tonnes per year.

Indonesia to participate in ASEAN Online Sale Day 2020

Indonesia will participate in the ASEAN Online Sale Day (AOSD) 2020, which is scheduled to take place on e-commerce platforms on August 8.

Indonesia’s Minister of Trade Agus Suparmanto expressed his belief that the participation would bring in huge benefits, especially for small-and medium-sized enterprises (SMEs).

Themed “A Click to prosperity”, the programme will enable local businesspeople to join e-commerce and cooperate to expand market shares of online trade products and services in the ASEAN and global markets, he added.

According to investment data of the ASEAN Secretariat, the bloc’s digital economy was estimated at 100 billion USD in 2019. The figure is expected to reach 300 billion USD in 2025.

Founded in 1967, the Association of Southeast Asian Nations (ASEAN) groups 10 member countries, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Thailand offers 45.7-million-USD loan for Myanmar’s electricity development

Thai Government has approved a concessional loan worth 1.45 billion baht (45.7 million USD) to help Myanmar improve its electricity system.

Rachada Dhnadirek, Thailand’s deputy government spokeswoman, said on July 14 that the loan is part of the country’s initiative to strengthen ties with neighbouring countries.

According to her, Thailand’s Neighbouring Countries Economic Development Cooperation Agency (NCEDC) will be responsible for arranging and extending the loan to Myanmar. The sum is earmarked for the construction and improvement of electrical substations and transmission systems in Yangon.

Myanmar will be charged an interest rate of 1.5 percent per year with a 30-year contract which includes a 10-year grace period. Under the terms of the loan agreement, 50 percent of goods and services in the power grid projects must come from Thailand. Myanmar must also enlist a Thai construction contractor and consultant engineer, while the rules governing the loan agreement must be issued by Thailand.

Thailand is currently the third-largest investor in Myanmar after Singapore and China.

Viettel should work towards higher standing in Asia: NA leader

Viettel is a strong brand and should maintain its No. 1 position in Vietnam’s telecom sector while improving its standing in Asia, National Assembly (NA) Chairwoman Nguyen Thi Kim Ngan said at a working session with the group in Hanoi on July 16.

Reporting on the development of the military-run industry and telecoms group, Acting Chairman and General Director Maj. Gen. Le Dang Dung said between 2015 and 2020 it earned 1.23 quadrillion VND (52.8 billion USD) in revenue and recorded 200 trillion VND in profit, while contributing 195 trillion VND to the State budget.

It has some 65 million mobile subscribers in Vietnam, for a 54 percent market share, he said, adding that the group has also become the leading telecoms service provider in Cambodia, Laos, Timor-Leste, Burundi, and Mozambique, and ranks second in Haiti.

Viettel has also engaged in the research in and production of telecoms infrastructure equipment, helping to guarantee safety and security for its network as well as the country.

The corporation has focused on researching and developing 5G transceiver stations since 2019 and has piloted them at the Ministry of Information and Communications since June, he went on.

He noted that Viettel has mastered cyberspace monitoring and management tools to protect internet users and national digital sovereignty, while keeping network infrastructure ready for military tasks.

It has also stepped up IT application in the operation of the Government and businesses, developed infrastructure for digital payments and mobile e-commerce, and assisted recent efforts to fight COVID-19.

Applauding its performance over the last 30 years and more, Ngan said Viettel should continue working to maintain its leading position in Vietnam and raise its profile in Asia.

In particular, it needs to continue with R&D to lay a foundation for Vietnam to master hi-tech equipment and weapons and their production. It should also push ahead with improving its product to help enhance the country’s military strength.

Viettel has managed to form a platform of digital infrastructure and develop important digital solutions in key socio-economic areas, she said, and requested the group continue upholding its leading role in promoting a digital life and society in Vietnam.

Vietnam’s trade surplus hits 5.46 billion USD in first half

Vietnam enjoyed a trade surplus of 5.46 billion USD in the first six months of this year, nearly 1.5 billion USD higher than the estimated 4 billion USD, according to the General Department of Customs.

In June alone, the export-import turnover reached 43.26 billion USD, up 15.8 percent against the previous month.

The export revenue in the month was valued at 22.564 billion USD, up 17.6 percent month-on-month, while the import value decreased by 14 percent to over 20.7 billion USD.

Vietnam’s export turnover in the first half hit nearly 122.8 billion USD, up 0.2 percent, while the country spent about 117.3 billion USD on imports in the period, down 2.9 percent year-on-year.

Vietnam's major exports in the reviewed period include computers, electronics and components (3.94 billion USD); telephones and components (3.65 billion USD); textiles (2.6 billion USD); machinery, equipment and spareparts (1.9 billion USD) and footwear (1.43 billion USD).

Vietnam a highly potential market for German SMEs: workshop

Vietnam is a highly potential market for small- and medium-sized enterprises (SMEs) of Germany, President of the German Association for Small- and Medium-sized Businesses (BVMW) Mario Ohoven said at a workshop in Berlin on July 16.

At this event, Vietnamese Ambassador Nguyen Minh Vu provided participants, including online audience, an overview of Vietnam’s socio-economic development and measures to combat COVID-19, recover the economy, and assist pandemic-affected people.

He highlighted the country’s potential and advantages, along with its Government’s policies on attracting foreign investors, including SMEs of Germany.

The diplomat also pointed out investment opportunities for German SMEs in potential sectors like mechanical engineering, automobile manufacturing, support industries, innovation, IT, biotechnology, health care and pharmaceutical production, and finance-banking.

Thanks to the EU-Vietnam Free Trade Agreement (EVFTA), set to take effect on August 1, and the EU-Vietnam Investment Protection Agreement (EVIPA) that is waiting for EU parliaments’ ratification, there will be more and more promising cooperation chances in Vietnam for SMEs of Germany and other EU members, Vu noted.

For his part, BVMW President Mario Ohoven spoke highly of Vietnam’s dynamic development and its Government’s resolve to support SMEs, improve the investment and business climate, and promote the economy’s adaptability to the digitalisation trend.

Describing Vietnam as a highly potential market for German SMEs, he also suggested the country further improve its logistics sector, human resources, and administrative procedures so as to create more optimal conditions for German SMEs’ activities.

Meanwhile, Director of the Germany Trade & Invest’s Vietnam office Frauke Schmitz-Bauderdick and BVMW Representative in Vietnam Ludwig Graf Westarp spoke highly of the Southeast Asian nation’s economic development and success in COVID-19 control, adding that it still sustains fair growth amid the pandemic and holds much potential for German firms in the fields of public investment, supply chains and consumer goods.

They held that with its increasingly transparent and favourable business climate, the EVFTA, and the EVIPA, Vietnam is emerging as an attractive investment destination for German businesses.

At the workshop, the Vietnamese Embassy and the BVMW agreed to enhance cooperation in organising thematic workshops, sharing information, connecting the countries’ enterprises, and arranging visits for German SMEs to explore the Vietnamese market.

Founded in 1975, the BVMW represents about 900,000 SMEs in Germany and currently has 55 overseas representative offices. Its office in Vietnam was set up in June this year.

Bleak outlook predicted for Thailand’s rice export in H2

Thailand's rice export is facing an unpromising outlook in the second half of 2020 amid sluggish global demand caused by the coronavirus crisis.

Local media cited Charoen Laothammatas, President of the Thai Rice Exporters Association (TREA), as saying that overall Thai rice export activity is relatively quiet in July after the pandemic resulted in the collapse of Phoenix Commodities, one of the world's biggest commodity traders.

Phoenix Commodities' collapse affects almost all rice exporters in Thailand, Charoen said, noting that it was a trading partner of many Thai rice exporters, particularly those who ship rice to Africa.

This UAE-based company, trading in grains, coal, metals and other commodities, is estimated to owe 1 billion THB (31.7 million USD) to Thai exporters who sell rice on credit to it.

According to Charoen, the appreciation of the Thai baht earlier this month and drastic foreign exchange swings have also led almost all exporters to baulk at rice shipments.

In the first five months, Thailand exported 2.57 million tonnes of rice worth 54.16 billion THB, down 31.9 percent and 13.2 percent from the same period last year, respectively.

Its biggest rice importers during the period were the US, South Africa, Angola, China, and Japan.

The TREA set a full-year rice export target of 7.5 million tonnes but is scheduled to adjust the target on July 22.

Thailand shipped 7.58 million tonnes of rice worth 131 billion THB in 2019, down 32 percent in volume and 25 percent in value year on year.

Pigs smuggled in from Cambodia

The illegal import of pigs from Cambodia has been rampant in the border area of the southern province of An Giang.

An Phu District in An Giang Province is home to the borderline of 42.5 kilometres with three border gates, including two major ones. With flat terrain and many rivers and paths, the area is ideal for the illegal transportation of pigs from Cambodia.  

According to local authorities, sophisticated tricks are used in transportation. Some were even fined VND35 million (USD1,421), but they have continued the business again due to the big profits.

Around 200-300 pigs are transported through An Phu District per day from Cambodia.

The traders arrange people to watch for local authorities and timely inform them.

Captain Ly Ke Tung from An Giang Border Guard Command said that 800 staff from the command have been assigned to work at 138 stations in the province’s border areas for both Covid-19 prevention and anti-smuggling work.

Tung noted that in many cases, pigs are carried out illegally from Cambodia into Vietnam by small boats.

In the first six months of this year, the border guards in An Giang interrupted 13 cases of illegal pig transportation with 176 pigs weighing a total of 12.3 tonnes. The force also co-operated with local customs agencies to bust four other cases involving 75 pigs.

The smugglers confessed that the pig prices in Cambodia are a few thousand Vietnam dong cheaper in Cambodia.

Illegal pig transportation often takes place between 11 pm to 3 am. Pigs are often sent to Chau Doc City.

An Phu District People’s Committee has recommended several measures to deal with the illegal pig import through the border areas, including setting up patrol stations on National Highway 91C which will help to supervise the pig transportation from An Phu to Chau Doc City. 

Vietnam represents potential market for German SMEs

Vietnam is a potential market for German small and medium enterprises (SMEs), said Mario Ohoven, president of the German Mittelstand Association of Small and Medium-Sized Enterprises (BVMW) at a recent webinar.

During the event, Vietnamese Ambassador to Germany Nguyen Minh Vu briefed participants on an overview of the country’s socio-economic development, whilst also providing an update on the country’s novel coronavirus (COVID-19) prevention and control measures. 

Furthermore, the diplomat detailed some of the efforts going on in an attempt at reviving the national economy and supporting local firms in the post-pandemic period.

He highlighted the country’s advantages and government policies aimed at attracting German businesses, along with investment opportunities for German SMEs operating in a number of promising fields such as manufacturing mechanics, automobile, supporting industries, information technology, biotechnology, healthcare and pharmaceuticals, along with finance and banking.

With the EU-Vietnam Free Trade Agreement (EVFTA) coming into force on August 1 and the Investment Protection Agreement (EVIPA) set to be ratified in the near future, there are bright prospects ahead in terms of business opportunities for German and EU enterprises, Vu noted.

In response, BVMW President Ohoven spoke highly of the country’s dynamic development and the Vietnamese Government’s determination to implement radical reforms in an effort to support SMEs, improve the local business climate, and increase the domestic economy’s adaptability to ongoing digital trends.

Mario went on to describe Vietnam as a potential market for German SMEs, noting that the country should strive to improve logistics services, enhance workforce's qualifications and simplify administrative procedures in a bid to facilitate the operations of German SMEs in Vietnam.

Elsewhere, Frauke Schmitz-Bauderdick, Vietnam director of Germany Trade & Invest, and Ludwig Graf Westarp, a BVMW representative in Vietnam, praised the nation’s success in containing the COVID-19 pandemic, adding that the Southeast Asian country has maintained robust growth despite the threat of the pandemic.

The pair added that with a transparent investment climate and benefits brought about by the two trade deals, Vietnam will become an attractive investment destination for German businesses in the near future.

The webinar also saw the Vietnamese Embassy in Germany and the German Association of Small and Medium Enterprises agree to continue intensifying co-operation activities moving forward by organising additional seminars, networking activities, and exchange visits to help German SMEs gain further insights into Vietnamese market. 

US businesses keen on investment opportunities in Vietnam

Over 100 businesses based in the United States operating in the fields of finance, energy, technology, e-commerce, healthcare, and insurance participated in a teleconference to seek greater investment opportunities in ASEAN and Vietnam moving forward.

The occasion was co-hosted by the US-ASEAN Business Council (USABC) in collaboration with the auditing firm Ernst & Young. 

The teleconference saw the Vietnamese Ambassador to the US Ha Kim Ngoc share some of the huge opportunities that exist for US businesses when investing in the ASEAN bloc and in Vietnam in particular in the post-novel coronavirus (COVID-19) period.

The Vietnamese diplomat highlighted some of the favourable factors that US investors can enjoy in the country, including positive developments in the Vietnam-US comprehensive partnership and the enforcement of a series of free trade agreements.

In addition, other aspects such as the country’s success in containing the COVID-19 pandemic, the Government's determination to attract foreign investment, as well as the nation’s key role in restructuring the global supply chain, can all be viewed as positive factors.

Prime Minister Nguyen Xuan Phuc has recently proposed setting up a task force aimed at promoting foreign investment, adding that the nation will resume some commercial routes and facilitate entry for foreign experts, investors, and skilled workers in the near future, Ambassador Ngoc said.

The Southeast Asian nation is also discussing other issues with the US and other regional countries, including launching economic co-operation initiatives, such as the Economic Prosperity Network, with a view to encouraging the implementation of co-operative projects to launch high-tech products and develop the local digital economy. 

The diplomat also offered an update on ASEAN's efforts in response to the pandemic and economic recovery in post-pandemic period. 

Alex Feldman, USABC President, along with other US business representatives highlighted the investment opportunities that exist within ASEAN and Vietnam, the crucial position of ASEAN in the Indo-Pacific region, as well as the bloc becoming the fourth largest trading partner and the leading investment destination for US investors in the region.

Moreover, US businesses expressed their belief that financiers will consider the Governments’ capability in responding to external shocks, adding that the country’s COVID-19 prevention and control measures, along with economic recovery efforts, have been received positively by foreign investors.

Most notably, several US firms such as UPS and SC Johnson unveiled plans to expand business investment in Vietnam in the near future.

Furthermore, other US enterprises expressed a desire for the country and other ASEAN member states to continue improving the business investment climate, simplifying administrative procedures, increasing transparency, and devising policies aimed at support companies that focus on the development of human resources and infrastructure.

USABC added that it is ready to co-ordinate with Vietnam to successfully organise the Indo-Pacific Business Forum in the country by the end of the year.

Thai investors set sights on Vietnam's renewable sector

BG Container Glass (BGC), Thailand's largest glass container packaging manufacturer by capacity, is negotiating with investors in Vietnam to buy solar farms to widen its foothold in the promising renewable sector.

The company expects to complete a deal in the fourth quarter for at least two farms, with a combined capacity of 50-100MW.

According to newswire Bangkok Post, it set a budget of THB1-2 billion ($31.9-63.88 million) for the purchases.

BGC chief executive Silparat Watthanakasetr said the company aims to diversify its business and is eager to invest in renewable energy, specifically solar, wind, and water.

"We target renewable businesses in Vietnam, Japan, and Taiwan because these markets have a high potential for renewable energy development and growth in electricity demand," he said.

BGC plans to increase its capacity for electricity generation to 300-400MW by 2022. It already acquired a 67MW solar farm in Vietnam.

The company allocated THB3-4 billion ($95.82-127.7 million) this year for renewable energy and packaging businesses.

Most recently, Gulf Energy Development Plc of Thailand announced the purchase of two wind power farms worth $200 million in Vietnam.

The move aims to take advantage of low building costs and a quick return on investment.

The company reported to the Stock Exchange of Thailand that it entered into a share purchase agreement with Dien Xanh Gia Lai Investment Energy JSC (DGI), the developer and operator of the two onshore wind farm projects, each with a capacity of 50MW.

The projects, located in Ia Grai district of Gia Lai province, will be wholly-owned by Gulf International Holding Pte., Ltd., a subsidiary of Gulf Energy Development Plc.

Harsh M&A lesson for local producers

Local enterprises need to be careful with co-operation proposals through merger and acquisition deals from foreign investors in order to prevent speculation, according to one group that suffered from just that fate. 

Domestic appliance manufacturer and distributor Sunhouse Group JSC was a victim of such speculation, after it was revealed that the overseas partner did either not have the money or the expertise but still conducted the merger and acquisition (M&A).

The information was shared by Nguyen Xuan Phu, chairman of the Management Board of Sunhouse Group at a recent workshop themed on Vietnam welcoming foreign investment inflows and the prospects and difficulties therein.

Phu said that Sunhouse decided to team up with a partner from South Korea to establish joint venture Narae Sunhouse System JSC last year. The two aimed to build a microchip manufacturing factory located at Ngoc Liep Industrial Zone in Hanoi’s Quoc Oai district.

At the time, Sunhouse expected that this tie-up would be a stepping stone for the company to meet Samsung’s criteria for first-tier vendors to produce high-tech products such as microchips for smartphones, televisions, and air conditioners.

“Sunhouse, with a lack of experience in this particular field, decided to hold 49 per cent stake in the venture and put entire trust in the South Korean partner,” Phu said.

However, during the process, Sunhouse found out that its partner was not experienced in the sector either, and boasted only limited financial capability. The South Korean partner even planned to abuse Sunhouse’s strength, Phu said, and mobilise loans from domestic banks to develop the project. The refusal from the banks caused the project to fall to a standstill. “At the time, the expenditure for machinery lines and land access cost around VND200 billion ($8.69 million). In order to salvage the situation, Sunhouse was forced to acquire stakes from the South Korean partner,” Phu said.

After that purchase, challenges continued to pile up when Sunhouse expressed intention to co-operate with a domestic partner to manufacture microchips for LG’s mobile phones. “When this partner visited the factory, he found that the capacity of all machine lines imported from the South Korean partner was so low, they couldn’t possibly meet the demand on manufacturing the microchips,” Phu explained. “This was a really harsh lesson for Sunhouse, even though the company has had extensive experiences in M&A in the past.”

Sunhouse acquired Saigon Maritime JSC, a subsidiary of Vietnam National Shipping Lines (Vinalines) at the end of 2011. Two years later, Phu bought over 2.6 million shares of Son Ha International JSC for VND7.7 billion ($334,782) to become a large sharehoulder in this Asia leading manufacturer of inox household and industrial products.

News of the failed M&A deal is an alarm bell for domestic enterprises when choosing foreign partners via this investment channel.

“The shifting wave of foreign investors opens massive opportunities for local enterprises. However, the risk is much larger if these enterprises fail to evaluate the expertise and financial potential of the investors. Approximately 70 per cent of proposals are either fake or to abuse domestic businesses,” Phu insisted.

According to Samuel Son Tung Vu, lawyer at consultancy firm Bae, Kim & Lee Vietnam, Vietnamese laws regulate foreign direct and indirect investment under both laws on investment and ordinance on foreign exchange, and its implementing decrees and circulars. Vu explained that, in general, it is not uncommon to see investors raise funds elsewhere to make a short-term investment.

However, in order to raise funds within the territory of Vietnam itself, they are subject to requirements and regulations under the Law on Securities. Thus, it is uncommon for foreign investors to raise funds here, instead they establish a special purpose vehicle or a fund in another country where they are licensed, and use such special purpose vehicle or fund as the immediate investor in Vietnam.

Besides the legal barriers, Vu added, the costs of borrowing in Vietnam are usually higher than other countries.

“In the speculation scheme, the creditor may face a high risk on their investment. And they should be wise when reviewing the feasibility of the investment scheme on several aspects such as what are the collaterals, what would be the expected earnings, and what would be the capacity to pay out dividend,” Vu said.

He further noted that under the current regulations, strategic investors into certain types of company such as credit institution and insurance companies are required to show proof of healthy financial status, including presenting the audited financial statement to the licensing authority. Unfortunately, in the case of simple manufacturing companies, there is no such requirement.

“In the global market, it is not uncommon to have speculators or hedgers instead of investors, but it is very difficult to make a clear legal distinction. In a typical speculation/hedge scheme, the risks are shifted to those who actual finance the scheme so they should be aware of the risks,” Vu noted.

Lawyer Truong Thanh Duc, chairman of BASICO law firm said that the regulatory bodies do not regulate the tie-up between sellers and buyers. In this case, Sunhouse is just unfortunate to have such a foreign partner. It is crucial that the Vietnamese firm needs to have specific terms in the contract to support themselves in case of failed M&As with foreign ones. Otherwise, they just lose the M&A game.

In the period before the COVID-19 pandemic broke out, the capital volume in terms of contribution and share purchase made up a massive part in the foreign direct investment capital.

Specifically, in 2019, overseas investors poured $15.47 billion in M&A deals in Vietnam, up 56.4 per cent on-year and accounting for 40.7 per cent of the total registered capital. However, in the first six months of this year, foreign-invested capital via capital contribution or share purchases was $3.51 billion, only 43.2 per cent of last year’s figure due to pandemic impacts.

Despite the decline, there is a number of M&A deals in the pipeline as many cash-starved Vietnamese companies seek funding from foreign buyers to overcome their difficulties in the midst of the pandemic.

Thus, there are some proposals to halt M&A deals involving such buyers during this tough time.

Commenting on the matter, Masataka Sam Yoshida, CEO and head of the Cross-border Division of Vietnam RECOF Corporation, told VIR, “Once such a crisis affecting heavily the corporate performances occurs, it is a natural tendency that the government feels obliged to protect local companies against foreign ones. In every extent, this is the duty of each country’s government.”

On the other hand, he added, it is also true that people should examine the importance and the previous contribution of foreign investments to the country’s economy.

“This will depend on each country, and the government should have the capability of analysing and filtering the nature of such investments which will be divided simply into two categories – those with good intentions, and those based on bad faith,” he added.

The former category is an investment with a purpose to realise a real and solid partnership which will bring mutual and strategic benefits so that every stakeholder can win.

The latter is a solely return-oriented investment which aimed to buy cheap and sell high. Such investors, Yoshida explained, would want to enjoy today’s profit for themselves and leave tomorrow’s loss to the counterparty.

“Needless to say, in a recession period, I personally see many companies going into bankruptcy. Thus, although a highly cautious inspection from the government would be essential, it would be very dangerous if government officials come to the conclusion that they have to shut the doors to all possible options,” Yoshida concluded.

MPS proposes penalizing former Sabeco executives

Following a probe into irregularities over the handover of a prime plot of land at No. 2-4-6 Hai Ba Trung Street in HCMC’s District 1, the Ministry of Public Security (MPS) has proposed penalizing several ex-executives of the Saigon Beer-Alcohol-Beverage Company (Sabeco) and senior government officials.

MPS proposed taking Party disciplinary action against Cao Quoc Hung, Deputy Minister of Industry and Trade and Phan Dang Tuan and Vo Thanh Ha, who both served as chairperson of Sabeco which was then a State-run business, Nguoi Lao Dong news site reported.

Apart from this, the police asked that certain individuals be sanctioned, comprising Nguyen Minh An, former deputy general director of Sabeco; Pham Thi Hong Hanh, Sabeco's former general director; Le Hong Xanh, Sabeco's former deputy general director and Bui Ngoc Hanh, former member of the Sabeco board.

In 2008, the HCMC government handed over over 6,000 square meters of land at No. 2-4-6 Hai Ba Trung Street to Sabeco to develop a trade, service and office center called the Saigon Me Linh Tower, with a total investment of over VND2.4 trillion. After that, Sabeco teamed up with three corporate shareholders in the private sector to form Sabeco Pearl Investment JSC, in which Sabeco held a 26% stake, to carry out the project.

However, the brewer sold out its entire stake in Sabeco Pearl in 2016, effectively transferring the land use rights from the State sector to the private sector, which is a violation of prevailing laws and regulations. 

The ministry stated that the prevailing regulations have a number of loopholes, allowing individuals to dodge laws to set up joint ventures and gradually transfer public assets to the private sector.

S.Korea tops list of foreign investors in Vietnam

South Korean investors pumped in over US$544 million into projects in Vietnam during the first half of 2020, raising its total capital registered to invest in this Southeast Asian nation to some US$70 billion, becoming Vietnam’s biggest foreign investor.

This capital was invested in over 8,000 projects, creating jobs for over 700,000 workers nationwide and contributing 30% to Vietnam’s total export value.

These figures were revealed at a dialogue in Hanoi on July 17 between the prime minister’s Advisory Council for Administrative Reform and the Korean business community in Vietnam, aimed at helping remove obstacles facing South Korean enterprises active in Vietnam during the post-Covid-19 period.

Addressing the event, Minister, Chairman of the Government Office Mai Tien Dung announced that Vietnam pledges to work closely with countries, including South Korea and international organizations, to ease difficulties amid the Covid-19 pandemic.

Korean Ambassador to Vietnam Park Nok Wan urged the Vietnamese Government to continue to cooperate with South Korea to normalize bilateral exchange following the pubic health crisis.

Besides this, the ambassador proposed the Government continue its support for South Korean businesses to prevent obstacles and red tape while investing in Vietnam.

Since the beginning of the year, the Vietnamese Government slashed 239 business conditions, raising the total to some 3,900 of the roughly 6,200. In the coming period, the country will also execute e-customs procedures in line with international standards.

Illegal construction on Ma Pi Leng Pass under demolition

Illegally-built parts of Ma Pi Leng Panorama, a seven-story restautant and hotel building located on the slope of Ma Pi Leng Pass in Ha Giang Province’s Meo Vac District, are being torn down, while the rest will be retained and renovated into a rest stop for visitors without accommodation and other services.

A representative of the provincial government confirmed this demolition plan on July 18, saying that a design for demolition and renovation was approved by UNESCO, the Ministry of Culture, Sports and Tourism, and the relevant agencies.

The authority of Meo Vac District will take charge of the demolition and renovation of the building.

However, Vu Thi Anh, owner of the Ma Pi Leng Panorama building, told the local media that she employed workers to dismantle and renovate the building beginning July 17 in line with the approved design.

Earlier, in March this year, the provincial government convened a meeting to gather feedback to handle the building. The demolition and renovation plan, which was expected to be completed in several months, was delayed till now due to the impact of Covid-19.