Thailand wants stronger logistics cooperation with Vietnam
The logistics business associations of Vietnam and Thailand have expressed keen interest in boosting cooperation at a time when demand for merchandise trading in the region and the world is surging.
Speaking at a press conference in HCMC on Wednesday on TILOG-LOGISTIX 2016 exhibition on logistics services and solutions slated for September in Thailand, Visarn Chansate, president of the Thai Logistics Provider Federation, said both countries could do more to strengthen connectivity.
The ASEAN Economic Community (AEC) and ASEAN+6 will bring many opportunities for goods trading, which will in turn push up demand for logistics services.
As the second largest exporter in ASEAN, Thailand plays a key role in the increasingly sophisticated regional supply chain, especially in terms of meeting the rising demand for cross-border logistics services. These services include transporting machinery, parts and components, and managing supply chain functions, from sourcing to distribution.
Foreign manufacturers are setting up production bases in regional countries with lower production costs. Vietnam is a destination for investors in ASEAN+6 while Thailand is a hub for connectivity, so both countries can partner to provide sophisticated logistics infrastructure and services, Chansate said.
Do Xuan Quang, chairman of the Vietnam Logistics Association (VLA), said Vietnam and Thailand play an important role in logistics and the supply chain in the region when the AEC and ASEAN+6 are in place.
Quang however said Vietnam will need more sophisticated logistics infrastructure and services, strong global transportation networks and especially value-added logistics solutions. Vietnam’s Government has been focusing on developing logistics services by boosting investments in ports, highways, airports, and electronic customs to facilitate cross-border trade, and establish a national single window within the ASEAN single window intended to expedite cargo clearance within the context of increased economic integration in ASEAN.
Pittinun Samanvorawong, director of the Thai Trade Center and consul (commercial) in HCMC, said logistics and transportation collaboration within ASEAN is playing a crucial role and that logistics cooperation between Thailand and Vietnam will sharpen the edge of the logistics sector.
In order to support transportation and strengthen connectivity, especially in Cambodia, Laos, Myanmar and Vietnam, the Department of International Trade Promotion (DITP) under the Ministry of Commerce has held TILOG-LOGISTIX for the past 12 years.
The exhibition will introduce integrated logistics technologies and services such as material handling, warehousing, automated system, software and logistics services.
Partnership and networking opportunities with 415 brands from 25 countries are possible to enhance the effectiveness of logistics management through business networking and best practices in supply chain management.
According to the organizers, Vietnam businesses taking part in the exhibition will receive two free hotel nights. The exhibition is set for September 21-23.
Japanese electronic manufacturing plant inaugurated in Quang Ngai
A Japanese electronic spare part manufacturing factory was inaugurated in the central province of Quang Ngai on June 5.
The plant, which has a registered capital of 10 million USD, is able to produce 132 million electronic units per year.
It is expected to generate job for nearly 3,000 workers, and help increase the local export turnover.
Sumida Electronic Vietnam Ltd received an investment license to build the factory at Tinh Phong Industrial Park in Son Tinh district in April 2015.
This is the fourth foreign direct investment (FDI) project of Japanese investors in Quang Ngai and the sixth of its kind at the Tinh Phong Industrial Park.
Sumida Electronic Vietnam Ltd is a branch of the Japanese Sumida Company. It set up its first factory in the northern city of Hai Phong in 2010. It specialises in manufacturing signal products, power inductors and other related components used in household electronics, automated components and medical equipments.
Quality key for retail goods, hears seminar
Vietnamese producers of consumer goods should invest more in improving product quality and develop close links among themselves to negotiate better with foreign-owned retailers, a seminar heard in HCM City on June 3.
Pham Ngoc Hung, deputy chairman of the HCM City Union of Business Associations (HUBA), said recently many producers have complained that they are struggling to sell to foreign-owned supermarkets mainly because the latter demand excessive discounts.
“Many businesses said they do not earn profits, even make losses from selling their products to supermarkets, but still strive to distribute their products through supermarket to sustain their brands.”
Local retailers have also suffered from the massive influx of foreign retailers, who now control more than 50 percent of the retail market, he said.
Le Thanh Lam, deputy general director of Saigon Food, said though the supermarket network has expanded rapidly in recent years, it remains inadequate compared to businesses’ need to take their products to the market.
“If one business wants to withdraw its products from a supermarket’s shelves, many others queue up to offer theirs, leading to a lopsided relationship.”
Local retailers ask producers for a discount of up to 10 percent, but it is 10-30 percent at foreign supermarkets, she said.
The lack of close links among local firms and their lack of experience in negotiating with foreign retailers always put them at a disadvantage to foreign supermarkets, she said.
Nguyen Phu Chien, general director of Bibica, said foreign supermarkets refuse to accept any changes in contracts with businesses, while the cost of transporting products are increasing relentlessly.
Chien, Lam and others at the seminar agreed that local producers should join hands to negotiate with foreign retailers.
Nguyen Ngoc Hoa, deputy chairman of the city Department of Industry and Trade, said producers should invest more in technology to make quality products with unique features that satisfy customers’ needs.
“If your products are good, customers will seek your products when they go to supermarkets, and no retailer will dare to refuse your products.”
He said businesses should be more dynamic in expanding both traditional and modern distribution networks, especially in rural areas.
Hung said that with its population of 90 million, of whom 60 percent are young consumers, and modern trade channels accounting for just for 25 percent of retail business, the country is an attractive retail market for foreign investors.
A lot of foreign retailers have entered the domestic market, he said.
Meanwhile, imports from countries like Japan, Malaysia, the Republic of Korea, and Thailand are becoming more and more popular, threatening local producers, he said.
If the country does not have a suitable strategy for the retail market, it would be dominated by foreign investors, he said.
Foreign retailers in Vietnam are obliged to go through an “economic needs test” before they are allowed to open a new store larger than 500 square meters. But in most places authorities have not implemented it well.
Hoa said the ENT would not slow down the entry of foreign retailers since they have other ways like mergers and acquisitions to penetrate the Vietnamese market.
The Government should intensify checks to crack down on unfair business practices in the retail market, quickly make a development scheme to develop the retail system, help local businesses find sites to expand their distribution networks and invest in improving their technologies, he said.-
UPCoM reaches 5 billion USD in capitalisation
The Hanoi Stock Exchange has welcomed three new companies to the Unlisted Public Companies (UPCoM) market, reaching capitalisation of more than 108.4 trillion VND (5 billion USD).
The three new stocks are Industrial Construction JSC (ICC), Ben Tre Water Supply and Sewerage JSC (NBT), and Consultant and Inspection JSC of Construction Technology and Equipment (CNN).
The three new stocks have increased UPCoM’s registered trading value to 69.5 trillion VND and raised the number of registered shares to more than 6.9 million shares. UPCoM’s trading liquidity has increased sharply in the past five months, reaching 130 billion VND each session.
Petrol prices up nearly 700 VND per litre
The retail prices of RON 92 petrol and E5 bio-fuel increased by 680 VND and 668 VND per litre, respectively, from 3:00pm on June 4.
Following a joint decision issued by the Ministries of Industry and Trade and Finance, diesel 0.05S price rose by 608 VND per litre while that of kerosene was up by 650 VND per litre.
This was the fifth hike in fuel prices so far this year with a total increase of more than 2,700 VND per litre.
Accordingly, the ceiling prices of RON 92 and E5 bio-fuel are 16,509 VND per litre and 15,983 VND per litre while the maximum prices of diesel and kerosene are kept at 11,908 VND per litre and 10,297 VND per litre.
The average global price of RON 92 during 15 days to June 4 was 58.111 USD per barrel, up 3.2 USD while that of diesel 0.05S was 57.405 USD per barrel, up 3.6 USD, the ministries said.
Lam Dong province benefits from special policies to develop
Prime Minster Nguyen Xuan Phuc on June 5 presented Decision 1528/DQ-TTg that provides some specific mechanisms and policies for developing Lam Dong province, especially Da Lat city, to the provincial administration.
Under the PM’s Decision, the Central Highlands province is permitted to apply some special mechanisms and policies for developing various aspects in Da Lat city and its vicinity such as real estate business, satellite cities, public transport, tourism sites, a biotechnology and hi-tech agriculture zone, and a concentrated IT zone.
Accordingly, the Lam Dong People’s Committee can allow property investors, (except for those in ecological and leisure tourism projects) who have completed infrastructure construction, to transfer their projects to other investors for building housing or other structures approved by authorised agencies.
The Chairman of the People’s Committee can ask the PM to decide on exempting the land rent for projects on building a national tourism site and a key tourism site in Da Lat.
Taxes on imported materials and equipment for building hi-tech greenhouses and net houses serving vegetable and flower production can also be exempted for five years if those materials and equipment cannot be sourced domestically.
Lam Dong province is also permitted to build a “green village” on a trial basis in Da Lat city. The “green village” will include a hi-tech agricultural production area along with housing and public facilities. Agritourism will be developed there. The village will be designed to preserve biodiversity, natural landscapes, and local culture while reducing greenhouse gas emission and using renewable energy.
At the decision announcement ceremony in Da Lat, PM Nguyen Xuan Phuc said Decision 1528/QD/TTg aims to create optimal conditions for Lam Dong to capitalise on its natural potential, especially in tourism and agriculture.
He told local authorities to prioritise tourism and hi-tech agriculture, adding that brands should be built for each hotel and tourism site, along with each hi-tech farm products to boost export.
While the province’s administration needs to overhaul its apparatus and business climate, businesses must comply with laws during their operations there to help Da Lat and Lam Dong grow.
Later on June 5, the Government leader visited the Da Lat Ground Force Academy and some policy beneficiaries.
On June 4, he had a working session with provincial officials to assess local socio-economic development and visited residents in N’Thol Ha commune, Duc Trong district.
Lam Dong has a population of nearly 1.3 million from 43 ethnic groups. It welcomed 5 million tourists in 2015.
The province has posted an annual per capita GDP of 45.5 million VND (over 2,000 USD) during the last five years, approximating the national average. It expects the figure at 70 million-73 million VND (3,100 – 3,200 USD) in 2020 and low-income households reduced by 1.5 – 2 percent annually.
Prime Minister asks Hanoi to facilitate start-ups
Prime Minister Nguyen Xuan Phuc urged authorities of Hanoi to promote reform and take initiatives in order to further support start-up enterprises while addressing an investment promotion conference in Hanoi on June 4.
Themed ” Hanoi 2016 – Cooperation, investment and development”, the conference manifests Hanoi authorities’ determination to reform as committed by the city and as instructed by the PM. It also aims to collect opinions from diplomatic missions, foreign organizations, business associations and investors for making the investment environment more friendly to startup businesses.
The PM asked leaders of the city to take strong action, focusing on improving the investment climate and removing barriers which cause the city deviate from development.
He stressed the need for Hanoi to fully tap its potential and strength, to seize and realise development opportunities.
Hanoi should be the vanguard in start-up promotion, and become a start-up and creative centre of the country, he said.
Regarding building the e-government, Hanoi ought to enhance IT application in administrative management to make it easier for enterprises and the people.
The Government encourages Hanoi to pilot international initiatives and practices in restructuring State enterprises and managing public assets, thus increasing transparency and reducing wastefulness, he stated.
The city’s authorities asserted that they are committed to bettering the investment environment and focusing on administrative reform, towards attracting resources for Hanoi’s development and realising its targets of international integration.
In his speech, Secretary of the Hanoi municipal Party Committee Hoang Trung Hai remarked on the city’s determination to reach rapid and sustainable economic growth, saying that the city will pay heed to ensuring social security, improving living conditions for the people, and protecting the environment.
The city will create the most favourable conditions for start-up enterprises, he stated.
Specific measures will be rolled out to improve the quality and competitiveness of the economy, Hai said, adding that the city will also concentrate on building and upgrading infrastructure facilities, especially those for transport, water drainage and supply, electricity and telecommunications.
According to Chairman of the municipal People’s Committee Nguyen Duc Chung, Hanoi is calling for investment in 43 projects in 2016, including 15 industrial and trade projects, and 11 for building social infrastructure.
At the meeting, representatives from associations and enterprises operating in the city proposed measures to improve the business climate and draw investment to Hanoi, how best to use official development assistance (ODA) capital, and ways to assist the city’s enterprises to access capital sources and loans.
They also gave recommendations to attract resources for developing high-tech health care and discussed the preservation of Hanoi’s cultural identity.
FTSE Vietnam ETF adds GTN to investment portfolio
Thống Nhất Production and Investment JSC, listed as GTN on the HCM Stock Exchange, yesterday became the latest stock to be added to the investment portfolio of German investment fund FTSE Vietnam ETF.
Its addition to the index has raised the total number of stocks to 25. The company was recently renamed GTN Foods JSC.
Steel producer Hoa Sen Group (HSG) and Đà Nẵng Rubber JSC (DRC) failed to be added to the Germany-based fund’s portfolio, beating analysts’ previous expectations.
GTN’s share edged up 0.6 per cent to close at VNĐ16,800 (US$0.75) at the end of yesterday’s session.
Sabeco to pay 13 cents per share to shareholders
Sài Gòn Beer-Alcohol-Beverage Corp (Sabeco) will pay shareholders a dividend worth VNĐ3,000 (US13 cents) per share for last year’s performance, according to the company’s annual shareholder meeting on May 27.
Sabeco will finalise the list of shareholders who receive dividend payments on June 10, and they will receive their dividends between June 29 and December 27.
The company recorded an after-tax profit of VNĐ3.6 trillion and chartered capital of VNĐ6.4 trillion ($285 million) at the end of last year, with the Ministry of Industry and Trade holding 90 per cent of the capital. The ministry will receive more than VNĐ1.7 trillion from Sabeco.
This year, Sabeco is targeting an after-tax profit of VNĐ3.4 trillion, a decrease of 5 per cent from 2015’s figure and a dividend of 25 per cent.
FDI to HCM City decreases by 38 per cent
Foreign direct investment (FDI) in HCM City, the country’s major economic hub, has fallen 38 per cent year-on-year since the beginning of this year, according to the city’s Statistics Office.
As of the middle of May, the office reported total FDI of approximately US$650 million.
Nearly 280 FDI projects were awarded investment certificates, worth a total of $482 million. Some 48 projects had value added with a capital of $166 million.
According to the office, total FDI flow significantly dropped by $408 million over the same period last year.
Of the total, 47.9 per cent was from the Cayman Islands with four projects worth over $230 million.
The following were Japan with 42 projects, Singapore with 38 projects, South Korea with 50 projects, and Malaysia with nine projects.
Tran Viet Ha, head of the investment department of the HCM City Export Processing and Industrial Zones Authority (Hepza), said the city had no new big projects in the garment and textile sector, which had caused FDI figures to fall.
In other sectors, no new projects worth $50 million or more have begun this year, Ha was quoted as saying in Dau Tu (Investment Review) Newspaper.
The city’s Statistics Office said that most of the projects were in the sectors of real estate, finance and telecommunications.
FDI poured into HCM City, however, was expected to increase at the end of this year.
According to Vietnam Investment Review, at a recent press conference, Hepza announced that there could be a number of projects this year, including one worth $500 million to develop solar energy.
Firms praise lifting of SBV foreign money loan ban
Export enterprises and commercial banks welcomed the State Bank of Viet Nam (SBV)’s decision to allow credit institutions to resume provision of foreign currency loans two months after it was banned.
Under the Circular 07/2016/TT-NHNN, which came into effect from June 1, commercial banks can provide short-term loans in foreign currency for export firms which need funds for production.
After getting the loans, exporters must immediately sell the amount of foreign currency borrowed to the lending institutions under the spot forex trading method, except in case the foreign currency will be used to make payments.
This decision will remain in effect until December 31 this year.
Truong Dinh Hoe, general secretary of the Viet Nam Association of Seafood Exporters and Producers (VASEP) that had requested the SBV to extend the foreign currency loans in early April, said the decision to issue the circular was timely and proper.
Since the operation was banned on March 31, seafood enterprises lost the chance to borrow foreign currency at low interest rates, Hoe said.
Over the past two months, firms had been worried about their source of capital and they had complained about the rise of capital costs and narrowed profits as they had to borrow loans in dong at much higher interest rates, he added.
The interest rate for a three-month foreign currency loan is currently popular at 3 per cent per year while the rates of local currency loans range between 8 and 11 per cent per year.
Nguyen Hai Nam, deputy chairman of the Viet Nam Coffee and Cocoa Association, said it was essential for the enterprises to access cheap funding through foreign currency loans because agricultural and fisheries industries needed a large amount of capital to purchase materials.
Over the past few years, foreign companies had taken advantage of cheap capital by borrowing from banks in foreign countries and then converted it to Viet Nam dong to buy materials in local markets.
Therefore, if local companies were not allowed to borrow foreign currency, they would lose in their own backyard and they would be unable to compete with foreign rivals.
Nguyen Hoang Minh, deputy director of the SBV’s HCM City branch, said, at present, foreign invested companies were enjoying low lending interest rates.
Under the situation, local exporters needed to be facilitated to improve competitiveness and boost exports, Minh said.
Nguyen Duc Huong, standing deputy chairman of the Lien Viet Post Join Stock Commercial Bank (LienVietPostBank), said the new regulation not only benefitted exporters, but also helped ease the pressure on commercial banks to cut interest rates for dong loans.
Experts also hailed the policy as flexibility in the Government’s management to support the enterprise community.
However, some experts raised concerns that the policy might lead to an increase in demand for foreign currency, especially the United States (US) dollar, and if the interest rates of the dollar deposits at different terms were still kept at 0 per cent, it would create a risk for banks.
Banking expert Nguyen Tri Hieu said the risk related to the “unbalance” between lending and deposit terms because most of US dollar deposits were non-term while banks lent short-term.
In fact, there were reports that some banks used tricks to draw US dollar-denominated deposits and the SBV had to issue a warning that a violating credit institution might face the heaviest punishment of being banned from expanding its network for a period of time.
Therefore, they suggested that the SBV allow a rise in the interest rate of the US dollar deposits above the zero per cent cap.
Hieu said the rate should be adjusted to 0.25 per cent per year.
Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM), said an important task of the Government should be turning people’s savings into investment capital in Viet Nam rather than investment outflows because the economy is facing a severe shortage of capital.
Huong from LienVietPostBank said the hike in interest rate would encourage people to deposit dollar savings in local banks, instead of foreign banks.
Regarding the Government’s effort to curb dollarisation, Truong Van Phuoc, deputy chairman of the National Financial Supervisory Commission, said the policy would not harm the effort.
Anti-dollarisation could not be done in a short time, but it needed a roadmap and flexible policies in accordance with the real condition of the economy, Phuoc said.
Expert Can Van Luc said this was a temporary policy.
“We are on track for prevention of dollarisation. So, by the end of the year, the SBV, the ministries and the relevant agencies will have to review all policies related to foreign currency management, including the new circular.”
Luc said if the market showed new movements, the Government would have to make other suitable adjustments. A policy could not be fixed for a long time if the economy did not remain stable.
Vietnam sells rusty dock for nearly US$1.7 mln after spending US$22 mln
State shipping company Vinalines has sold an abandoned floating dock that cost it VND500 billion (US$22 million) for a much smaller sum of VND38.5 billion (US$1.69 million), news website Bnews reported on June 4.
The 83M, which was sold at an auction with only three bidders, is linked to a corruption case that rocked the country in 2012 and ended with 10 Vinalines executives and customs officers being sentenced either to death or imprisonment.
An individual bidder reportedly won the auction with the offer, which was not much higher than the minimum reserve price of VND34.8 billion.
Vinalines put the made-in-Japan dock up for sale after failing to find investors to jointly operate it.
In 2008, the state-owned shipper bought the dock from Russian company Nakhodka through a Singaporean brokerage firm called AP. It paid nearly four times the expected price of US$2.3 million for the heavily damaged dock, which had been in use for several decades in Russia before being brought to Vietnam.
The company then spent US$10.5 million repairing it, but work was suspended in 2012.
Even as the dock was left idle, extra costs including insurance and port fees kept mounting. The book value was estimated at more than VND500 billion.
The purchase of 83M was approved by then chairman Duong Chi Dung, who, together with general director Mai Van Phuc, were found guilty of receiving VND10 billion ($442,000) each in kickbacks for the deal.
They were both sentenced to death after a long trial in 2013. Eight others were jailed for up to 22 years.
Mega expos propel green initiative
Two mega expos will be held in Ho Chi Minh City to showcase the latest innovations in the water and renewable energy sectors.
The expos will highlight the latest innovations in the water and energy sectors
The events, including Vietnam’s leading international water supply, sanitation, water resources, and purification event – Vietwater 2016, and Vietnam’s leading renewable energy and energy efficiency exhibition – RE & EE Vietnam 2016 will take place at the Saigon Exhibition and Convention Centre in Ho Chi Minh City from November 9 to 15, 2016. More than 400 leading enterprises from 35 countries will showcase cutting-edge technologies, solutions and products in the water and energy industries. There will be many international pavilions, including ones from Australia, the EU, China, France, Holland, Korea, Japan, and Taiwan. Notably, the Singapore pavilion will receive support from the “International Marketing Activities Programme” from the International Enterprise Singapore. Some medium and small-sized enterprises based in Singapore will have a chance to enjoy up to 50 per cent off its participation fee.
The shows are expected to create a networking platform, connecting over 10,000 professionals, trade buyers, key decision makers, government representatives, and associations. This is a great opportunity for participants to discover the latest technologies and innovations available in this sector. Within the framework of the expo, the conference and technical seminar will discuss recent hot topics and offer some valuable and practical experience for participants.
Eliane Van Doorn, business development director of UBM ASEAN at UBM Asia – the organiser of the events – stated that “Vietnam is a potential market for the water and energy sectors. According to the recent Renewable Energy Development Strategy, Vietnam will increase the rate of power generation from renewable energy by 7 per cent in 2020, while the rate of clean water access also increase by 100 per cent by 2020 as the National Rural Clean Water Supply and Sanitation Strategy. Hence, there are many foreign enterprises who are looking to invest in Vietnam. Towards that trend, we are organising Vietwater and RE & EE Vietnam this year again in Ho Chi minh City, to create a business platform for these enterprises to find out what the opportunities are and to conduct business and to connect with local partners.”
SolarBK scoops second Energy Globe Award for energy and water solutions
In addition to its “Light up the Spratly Islands” project, Vietnamese renewable energy firm SolarBK, in 2009, installed a hybrid power supply system using both wind and solar energy with a capacity of 824kWh per day.
SolarBK’s water and energy projects have changed the daily life in the Spratly Islands
The water source for military and daily use on the islands was unstable, mostly collected from rainfall and the mainland. Regional rain volume does not cover the demand for water and is not distributed equally throughout the year. The high volume of rainfall is concentrated around months with storms and tropical depressions – from May to October. Water supply transportation from the mainland is difficult and is one of the main factors limiting water resources on the islands.
For these reasons, the application of a desalination system to produce fresh water is a solution to providing enough water to meet the year-round demand on the island. The four-machine system provides around 18,000 litres per day of drinkable water. Each machine is designed to have a different capacity varying from 236-250 litres per hour. The system is powered by wind and solar power, consuming about 5kWh per cubic metres. The project will also contribute to saving on diesel costs for power generators. 90kWh generated from renewable energy will save approximately nine litres of diesel per day – an estimation based on a consumption rate of 3,385l per year. The renewable power generation will reduce CO2 emissions by 9,071.8 kilogrammes per year.
These positive results demonstrate the effectiveness and sustainability of pursuing clean energy and greater awareness in terms of environmental protection, and will give SolarBK added momentum in its research and development to scale the system to suit other remote islands or areas severely affected by salinity. “The pilot desalination project on the Southwest Cay Island” has earned SolarBK the Energy Globe in the National Awards of Vietnam 2016. Over 1,500 projects submitted from over 177 countries take part each year in these awards, with only the best project from each country chosen as an award recipient.
SolarBK is the first Vietnamese organisation to win the Energy Globe Award twice in a row, each time with projects that apply clean energy solutions to improve the living conditions and environment in the Spratly Islands. The company has shown its capability over the course of a decade implementing large-scale projects on the islands.
Kyoei Steel upholds steel making plan
Japan’s Kyoei Steel Company remains committed to its delayed high-quality steel project in northern province of Ninh Binh, despite information that the Ministry of Industry and Trade may cut the project from its new master steel plan to 2020, with vision to 2030.
General Director of Kyoei Steel Vietnam Co., Ltd (KSVC) Hoshino Yoichi, shared with VIR that, “we have decided to maintain the license as before, we have not altered that decision so far” He confirmed that the investor has spent $3 million to improve soil where the project has been located since 2012.
However, Hoshino Yoichi gave no timeline, only saying that “if the appropriate business conditions present themselves, we will implement the project without further delay,”
As VIR reported previously, the Ministry of Industry and Trade (MoIT) is considering dropping the high-quality steel project from its new master steel plan 2020 with vision to 2030, which is currently being drafted. The project has moved at a snail’s pace since 2012, according to VIR’s MoIT source that declined to be named.
The project, with a capacity of 500,000 tonnes, held its groundbreaking ceremony in March 2012 and was expected to operate commercially from 2015, becoming the second-largest steel project in Vietnam’s northern region, after the Thai Nguyen steel project. Its capacity could rise to about one million tonnes of steel bar products when in full production.
Hoshino Yoichi explained that the business conditions have changed dramatically when compared to the time of the initial investment decision, four years ago.
Steel demand in Vietnam has shown a trend of recovery, as steel consumption in 2015 in Vietnam was 8.87 million tonnes, which was up 28 per cent in comparison with 2014, and is anticipated to develop further by another 15 per cent in 2016, according to KSVC.
“Meanwhile, authorities have permitted new large scale-investments in steel projects since last year, so even if demand for steel increases, the steel production can also increase definitely, this is contrary to our expectations,” he added.
The MoIT predicted that Vietnam steel sector will see their overall manufacturing output rise over the next five years.
Commenting on this issue, former chairman of Vietnam Steel Association (VSA) Pham Chi Cuong, who has years of experience in Vietnam’s steel sector, said that there is a need to adjust the master plan based on the current context of the steel sector and the use of electricity.
“Some projects are on track, however, in this case careful consideration is needed as KSVC entered Vietnam early on and has a good reputation for quality and experience,” Cuong suggested that “the ministry should guide investors into the production of high-end steel products that Vietnam currently imports for mechanical engineering.”
Kyoei Steel officially entered Vietnam in 1994 as Vina Kyoei Steel, established as a joint venture company between Kyoei Steel, Mitsui & Co. and Itochu Corporation (Japan), and Vietnam Steel Corporation. Its factory is located in the Phu My Industrial Zone in Ba Ria-Vung Tau province.
Challenged Ninh Binh plant restarts next week
Vietnam National Chemical Group (Vinachem)’s $667 million nitrogenous fertiliser plant in Ninh Binh may restart its operation next week, after a two months temporary halt, according to newswire Tienphong.vn.
On June 1, the plant’s management board convened workers to restart machinery and go through operation regulations.
However, Chu Van Tuan, deputy general director of Vinachem, said that although the plant would restart operations, it would have difficulty maintaining itself because the already high production expenditures are increasing even further, while fertiliser prices are in a continuous plunge on the domestic market.
Besides, Ninh Binh nitrogenous fertiliser plant is fuelled by coal, while other such plants run on gas. While gas fuel prices are on a continuous decrease, coal prices are immobile, leaving the Ninh Binh plants’ unable to compete with other plants.
Tuan added that farmers in the north usually used phosphate fertilisers instead of nitrogenous fertilisers, thus Ninh Binh nitrogenous fertiliser plant would continuously have difficulty in selling its products.
Thus, Vinachem has submitted 11 separate plans to deal with the above difficulties to the government and the Ministry of Industry and Trade, one of which is closing the plant.
Previously, the plant was forced to call a temporary halt to its operations in late March by its continuous losses. The company temporarily laid off 400 of its 1,100 workers, paying the monthly unemployment allowance of VND3.1 million ($139.37) to each in order to convene them when the plant opens its gates again.
The plant’s construction was kicked off in May 2008 in Ninh Binh’s Khanh Phu industrial zone and came into operation in 2012, after 42 months of construction.
During the nearly four years since then, the plant has been operating at a continuous deficit, accumulating altogether over VND2 trillion ($89.9 million) in losses. Notably, in 2012, the company’s losses amounted to VND75 billion ($3.37 million), which increased to VND759 billion ($34.12 million) in 2013, VND500 billion ($22.48 million) in 2014, and VND370 billion ($16.63 million) in 2015.
Banyan Tree’s luxury resort takes shape
Singaporean developer Banyan Tree Holdings intends to build six more hotels in the Laguna Lang Co resort complex over the next few years.
According to Alexa Phan, marketing director of Laguna Lang Co, the 300-hectare, $875-million project will be carried out over four phases, the second of which is currently under development. The first phase, which carried a price tag of $200 million, became operational in 2013.
“Asides from six more hotels, we are developing more vital infrastructure. Laguna Lang Co hopes to be a highlight of tourism in the central part of Vietnam, turning Lang Co into a famous tourism destination just like Laguna Phuket of Thailand,” she added.
Phan said that the second phase would involve building 53 villas in the Laguna Park residential area, in addition to 73 villas in the Banyan Tree hill area, as well as more retail and entertainment facilities.
Notably, Banyan Tree is planning to operate a casino in the resort, and it seems close to securing the permission to do so. On March 14, during the joint working session between the Thua Thien-Hue People’s Committee and the Ministry of Finance (MoF), Thua Thien-Hue leaders laid out the plans for the casino to Minister of Finance Dinh Tien Dung who said he supported the proposal because he believed it would be mutually beneficial for both the province and the developer.
Michal Zitek, area general manager of Banyan Tree Lang Co and Angsana Lang Co – two operating 5-star hotels and resorts at the complex – said that if and when the company received approval, the casino would be up and running within a short period of time.
“We are confident that because we already have the infrastructure, the space, and the establishment, we will be able to get the casino going faster than a greenfield project. Everything here is just waiting for approval and we can be operational within months rather than years,” he said in a recent interview with VIR.
“Such a natural environment is like a fairytale location in which to have a casino. Macau is all big streets and bright lights. In Vietnam they’re also looking to put a casino in very developed areas. I think putting it in this location would be a unique selling point. It will be a little more exclusive and allow for a more refined casino experience,” he said.
Laguna Lang Co resort complex is Banyan Tree’s debut project in Vietnam and the province’s first (almost) billion-dollar project. The resort is situated at Lang Co, between Thua Thien-Hue and Danang, two bright spots in the booming tourist landscape of central Vietnam. At present, this development includes Banyan Tree and Angsana hotels and spas, an 18-hole championship golf course designed by Nick Faldo, private villas and residences for sale, as well as convention centres and recreational facilities.
Currently, Vietnam has 50 licensed electronic gaming service providers and has licensed eight casinos, all of which are open to international punters and foreign passport holders exclusively. Hotels and resorts in Vietnam which house a casino are all eagerly awaiting the government’s decree that will permit Vietnamese people aged 21 and over to gamble.
Business concerns over agency abuse of power continue
Incompetence or wilful interference in the activities of businesses has been heavily criticised, with public criticising management agencies for their actions.
The recent case of the Hanoi Market Monitoring Authority’s wrongful claim that Vietfoods’ sausage products were unsafe, causing the company big losses, has made the headlines in days.
In April this year, the authority seized a shipment of 2.2 tonnes of Vietfoods sausages on suspicion that Sodium Nitrate 251 was used in the sausages. They then issued administrative fine based on this.
However, Vietfoods provided a document issued on May 23 by the Ministry of Health’s Food Safety Association that showed Sodium Nitrate 251 was not on the list of banned substances for food and the content level used by Vietfoods were safe.
After that, Hanoi Market Monitoring Authority had to return the seized sausages to Vietfoods, but most of them had passed their expiry date. Vietfoods had to halt its operations due to the authority’s conclusion, forcing it to make 100 workers redundant.
The Hanoi Market Monitoring Authority’s wrong sausages safety claim caused Vietfoods losses running into tens of billions of VND, but to date, the authority has failed to provide compensation or even apologised.
Earlier, the environmental police force at Hai Duong Province seized more than two tonnes of fresh octopuses from a truck when it was running from Noi Bai Airport in Hanoi to Quang Ninh Province. The seizure was illegal and met strong opposition from the owners. Finally, the police had to pay nearly VND1 billion in compensation as the entire shipment was spoiled.
By late 2015, a driver named Luong Hoang My in Kien Giang Province sued a local police officer for stopping and then seizing his truck which was carrying three tonnes of the fresh fish, causing him great losses, despite finding no violations.
These cases have raised serious concerns among businesses and contradicted the prime minister’s claims that the government wanted to make it easier to do business in the country.
If these activities have personal motives, the government need to take urgent measures to deal with this to ensure trust for the business community.
Vietnam leads in German business blitz
German enterprises are demonstrating their confidence in Vietnam, thanks to the country’s improved investment climate and participation in free trade agreements.
Released last week, the results of the AHK World Business Outlook survey, conducted in March 2016 by the German Industry and Commerce in Vietnam (GIC/AHK Vietnam), show that German firms’ confidence, outlook, and expectations in Vietnam for the next year are growing.
Marko Walde, GIC/AHK Vietnam’s chief representative, said that “German enterprises are seeking opportunities for further investment in Vietnam, because they see Vietnam as an attractive destination in terms of the integration efforts made by the Vietnamese government – EU-Vietnam Free Trade Agreement (FTA) and Trans-Pacific Partnership and its other locational advantages”.
More than half of the German companies surveyed are upbeat about Vietnam’s economic outlook.
47% expect better economic development, and 60% forecast good business performance over the next 12 months. Seventy per cent thought their business situation at this time was “good”, while 58% perceived their business outlook as “positive.”
Some 54% of respondents were considering raising their investment in Vietnam next year, with 58% intending to hire more employees for their investment plan.
According to GIC/AHK Vietnam, Bosch will complete its US$340 million investment in Vietnam during the 2011-2016 period. The firm will continue expanding its production lines and will build a research and development centre in the southern province of Dong Nai.
In another case, after investing US$20 million in Vietnam between 2013 and 2014, Mercedes-Benz will launch its first cars assembled here in June. Meanwhile, medical equipment maker B.Braun will complete its US$225 million investment by 2017.
Ball-bearing manufacturer Schaeffler is also boosting its investment, after having disbursed US$117 million across its projects in the central city of Danang.
Other German firms are also considering a hike in investment here, including Messer, which has invested US$80 million in producing industrial gas; and Knauf, which has invested US$38 million in gypsum production. Also, Siemens wishes to participate in projects such as thermal power and smart transport in urban areas. It is also pursuing a role in the development of metro line No2 in Ho Chi Minh City.
“German companies are more confident regarding Vietnam’s economy and business development than in other ASEAN members, or in China and India. It shows a very positive sign in terms of the business confidence, outlook, and expectations among German companies in Vietnam,” Walde said, adding that “All the positive feedback from German companies as well as Vietnam’s locational advantages are the results of Vietnam’s government encouraging integration into the world economy and improving the infrastructure of the investment environment.”
According to Walde, Vietnam is a fast-growing market and only the second ASEAN country (after Singapore) to have a free trade agreement (FTA) with the EU.
“This FTA will provide significant new opportunities for companies on both sides by increasing market access for goods and services. The agreement will help promote high-quality capital flow from the EU as the business and investment environment is bound to improve now that commitments have been made,” Walde said.
Around 300 German companies have ongoing operations in Vietnam. To date, most German companies (182 projects worth US$880 million) have entered through greenfield or 100% foreign-owned companies, while others have opted for direct acquisition or joint ventures.