New trends in Vietnam’s rice exports
2018 is witnessing new trends in Vietnam’s rice export sector, notably the priority of exporting high-quality rice through international bidding as well as stricter and more diverse trade barriers from importing countries.
Preliminary data by the General Department of Customs shows that Vietnam exported 264,500 tonnes of rice in October, generating a revenue of US$135.56 million, up 22.96% in volume and 31.8% in value, compared with the same month last year.
The total volume of rice exports in the first ten months of 2018 was 5.15 million tonnes, worth US$2.6 billion, representing year-on-year increases of 6.62% and 21.49% in volume and revenue respectively.
What is notable during the period is that the price of Vietnamese rice has now surpassed that of Thailand, averaging at more than US$500 a tonne, up about 15%.
In 2016, Vietnam exported 4.8 million tonnes of rice, bringing in US$2.1 billion. The respective volume and revenue figures rose to 5.8 million and US$2.6 billion the following year. And in 2018 Vietnam has set a target to ship 6.5 million tonnes.
Such positive results come due to not only growing global demand and higher prices but also Vietnam’s marked shift towards producing and exporting high-quality and specialty rice varieties.
The global rice market has recently seen a trend towards prioritising international bidding processes and attaching greater importance to quality. At the same time, more and more non-tariff barriers are emerging. For example, China, a major importer of Vietnamese rice, has also imposed strict requirements through quotas and food safety checks.
The greatest challenge to Vietnamese rice exporters is now the laws of importing countries, with numerous stringent requirements on quality, food safety and origin.
In the meantime, most of Vietnamese rice exporters are small- and medium-sized businesses with little experience in dealing with trade lawsuits and international technical barriers.
Therefore, Vietnamese enterprises should actively learn and update themselves about new information in order to promptly adjust their business plans and remedy their shortcomings.
Furthermore, enterprises also need to work together to build supply chains for exports to add more value to Vietnamese commodities as well as cooperating with local businesses so as to meet the technical barriers.
VNG reports massive loss from affiliated companies
VNG saw soaring losses from affiliated companies, with the estimated loss of VND151 billion ($6.57 million) in the three first quarters of this year, nearly doubling the figure on-year.
VNG has announced the third quarter fiscal report for 2018. Accordingly, losses in VNG’s affiliated companies increased sharply, while VNG’s revenue in the third quarter increased only slightly.
VNG’s net revenue from sales and services reached VND1.095 trillion ($47.6 million), slightly up compared to the corresponding period of 2017 (VND1.076 trillion – $46.78 million). However, throughout the first three quarters of 2018, revenue was VND3.161 trillion ($137.43 million), slightly down compared to the VND3.177 trillion ($138.13 million) in 2017.
Financial income increased from VND90 billion ($3.9 million) to VND115 billion ($5 million) mainly from collecting interest, but financial expenses also increased sharply from VND700 million ($30,434) to VND2.4 billion ($104,347). Meanwhile, affiliated company’s losses surged to an estimated VND151 billion ($6.56 million) in the first three quarters of 2018, which is double the figure of VND74.8 billion ($3.25 million) in 2017.
Sales and management costs increased simultaneously, causing after-tax profit plunging to less than half since 2017 to VND391 billion ($17 million).
VNG’s revenue from online games also dropped sharply. According to the parent company’s financial statement, online gaming revenue in the first nine months was only VND1.736 trillion ($75.48 million), down sharply from VND2.123 trillion ($92.3 million) in the corresponding period last year.
It is noteworthy that the investment in the affiliated company continued to shrink in value, although was not included in the company’s losses, but the financial report showed that the investment in Tiki at the end of 2017 as worth VND384.4 billion ($16.7 million). As of the last day of September, the total investment in Tiki increased to VND506.2 billion ($22 million), equalling 28.8 per cent of Tiki shares.
In 2017, VNG recorded a loss of VND219 billion ($9.5 million) from Tiki. In the first half of this year, this loss rose by VND102 billion ($4.43 million). Thereby, the total losses in Tiki reached VND321.2 billion ($13.96 million) as of June 30 and the value of VNG’s investment in Tiki fell to VND185 billion ($8.04 million).
In 2017, VNG had a splendid year with fast business growth and revenue of VND 4,267 billion ($185.52 million) and after-tax profit increasing by 73 per cent to VND938 billion ($40.78 million).
In 2018, VNG set an ambitious revenue target at VND5.006 trillion ($217.65 million). However, it reduced the target by 41.5 per cent to VND549 billion ($23.87 million) – equivalent its 2016 profit. With the results announced, VNG seems on track to achieve its higher revenue target with lower profit performance due to various new investments and expenses.
Vingroup dives into pharmaceuticals with 11 VinFa stores
With a series of locations in trade centers and large-scale urban areas, VinFa promises to become a heavy-weight competitor of Mobible World and FPT Retail in the pharmaceutical industry.
Last weekend, Vingroup has launched the chain of 11 VinFa pharmaceutical stores in Hanoi, located next to Vinmart supermarkets or convenience stores in urban areas and apartment buildings.
The local pharmaceutical retail market is large but has yet to saw the emergence of a dominant player. Perhaps this inspired Vingroup to launch VinFa right after the appearance of An Khang Pharma of Mobile World and Long Chau Pharma of FPT Retail at the end of 2017 and early this year.
Following the success of the Vinmec Medical System and realising its expansion plan in the healthcare sector, in April 2018 Vingroup announced entering the pharmaceutical industry with the establishment of VinFa JSC.
The conglomerate also invested into VinFa Drug Research and Production Centre in Gia Binh district, Bac Ninh province. With a total investment of VND2.2 trillion ($95.7 million), this project’s first phase will be built in an area of nearly 10ha following international standards, including research, production, logistics, and support works
Along with pharmaceutical research, manufacturing, trading, and export-import tasks, VinFa will focus on the preservation, research, and development of traditional Oriental medicines from Vietnamese herbs. VinFa will also focus on the production of healthy food, vaccines, and medical equipment of international standards to better meet the high demand for healthcare and treatment.
With investment from Vingroup, the entire production process at VinFa will be equipped with the latest and most advanced technologies to optimise the efficiency and quality of pharmaceutical products.
In addition to exploiting the country’s precious herbal resources, VinFa plans to promote co-operation with prestigious pharmaceutical production industries from the US, Europe, and Australia. The aim is to receive consultancy, technology, and technical expertise as well as facilitate the import of raw materials and products.
Taxi firms attempt to compete against Grab
Three major taxi firms in Hanoi have jointly launched a new service with roughly 3,000 vehicles in a bid to take on ride-hailing giant Grab.
Thanh Cong, Ba Sao and Sao Ha Noi will begin operating under the single G7 Taxi brand on Monday.
Nguyen Anh Quan, general director of G7 Taxi, said Hanoi was now home to around 70 taxi firms.
However, almost no taxi firm has more than 1,000 vehicles so it is difficult for them to compete with Grab.
Taxi companies are facing fierce competition from the rocketing rise in app-based car usage.
G7 Taxi will not impose peak-hour price rises like Grab and will operate across 12 inner-city districts.
Chairman of Vietnam Automobile Association Nguyen Van Quyen said that the government needed to revise draft Decree 86 which proposes ride-hailing taxi cars with less than nine seats should be treated the same as conventional taxis to ensure equal competition among taxi firms.
Vietnam sees vegetable and fruit imports
Vietnam spent more than USD1.43 billion on vegetable and fruit imports in the first ten months of this year, up 13.1% on-year.
According to the Ministry of Agriculture and Rural Development (MARD), of the total figure, USD980 million was spent on imported fruit, up 0.5% on-year. The remaining USD380 million was spent on vegetable imports, up 36.5% compared to the same period of last year.
Vietnam imported fruit and vegetables mainly from China and Thailand during the period, accounting for 43.3% and 23.1% respectively.
Meanwhile, Vietnam also witnessed a sharp increase in vegetable and fruit imports from the US, South Korea and China between January and October this year, up 86%, 82% and 73% consecutively.
Hoang Trung, head of the MARD’s Plant Protection Department, said that a large amount of fruits were imported from Thailand into Vietnam and then re-exported to China.
2018 Vietnam HR Awards to be given away this month
The Vietnam HR Awards ceremony and seminar this year will champion effective human resources strategies by businesses and reveal innovative and practical perspectives.
The event will reveal untold success stories of industry pioneers in Viet Nam and the region, bringing together over 500 business leaders and HR professionals.
This is the third season of the awards, and the ceremony will be held on November 27 at the Gem Centre in HCM City.
Businesses and HR professionals can register to join at www.vietnamhrawards.com.
Vinaconex set to lock foreign holdings at zero
The State Securities Commission has approved Vinaconex’s request to lock its ceiling foreign ownership ratio at zero per cent, saying the move complies with regulations.
Earlier, Viet Nam Construction and Import-Export JSC (Vinaconex) asked for permission to adjust its foreign ownership limit to zero per cent from the current 49 per cent to prepare for a share offload by the State Capital Investment Corporation (SCIC) and Viettel.
Both SCIC and Viettel will sell their entire stakes, collectively 79 per cent, in Vinaconex worth VND7.43 trillion (US$317.6 million), in a public auction on November 22 on the Ha Noi Stock Exchange.
With the lock, foreign investors will be ineligible to participate in the auction.
Foreign shareholders owned a combined 10.86 per cent of Vinaconex’s capital as of November 9, including PYN Elite Fund (7.1 per cent) and Market Vector Vietnam ETF (1.79 per cent). These investors will have to sell their holdings to meet the company’s new policy.
According to Do Trong Quynh, a member of Vinaconex’s management board, this decision is to ensure compliance with State regulations on foreign ownership prior to the auction.
In its business registration, Vinaconex had some sectors subject to foreign investment restriction including labour export and construction and operation of large power plants which allow no foreign investment as per 2014 Law on Investment, Quynh was quoted as saying on ndh.vn.
Regarding whether foreign shareholders are required to sell their shares immediately or gradually, Quynh said guidance was needed from the State Securities Commission.
Vinaconex underperformed this year with nine-month revenue decreasing 4 per cent on-year to VND6.4 trillion while its profit after tax dropped 41 per cent to VND368 billion.
Its shares, with the sticker VCG, are trading at around VND18,000 ($0.77) per share on the Ha Noi Stock Exchange.
VPBank named best bank for SMEs
VPBank was named by IFC as one of three banks with the best services for small-and-medium sized enterprises (SMEs) in Asia at the Global SME Finance Forum 2018 held in Madrid on Monday.
VPBank surpassed more than 100 international candidates to achieve the silver award.
The prestigious prize was evaluated by a jury board including 60 persons in the first round and another 6-8 in the second round.
VPBank received the award thanks to its breakthrough growth in the SME sector including both financial and non-financial factors. In addition, the jury board also commended VPBank for its efforts in applying digital technologies to bring more convenience to customers.
In Viet Nam, VPBank is one of the leading banks in the SME segment, with more than 75,000 customers. The bank is a pioneer in providing financial solutions for micro-businesses and women-led firms that find it hard to access bank loans.
The Global SME Finance 2018 award aims to honour excellent financial institutions and fintech firms with impressive results in providing products and services to SMEs in the market, said Matthew Gamser, CEO of SME Finance Forum.
Fung Kai Jin, VPBank’s deputy general director and director of its SME Sector, said this is the fourth consecutive year VPBank has won the award. The prize not only recognised VPBank’s efforts in providing support to the SME community in Viet Nam but also provides momentum for the bank to continue offering suitable and creative financial solutions to help Vietnamese firms prosper.
Regional firms discuss financial security
Policy-makers, international experts and representatives of Asset Management Companies (AMCs) in five Asian countries will gather in Ha Noi on Thursday at the International Public Asset Management Company Forum (IPAF) to discuss regional financial security and non-performing loans (NPLs) settlement plans.
Representatives from China, Kazakhstan, the Republic of Korea, Thailand and Viet Nam will attend the forum, organised by Viet Nam’s Debt and Asset Trading Corporation (DATC), Viet Nam’s Ministry of Finance and the Asian Development Bank (ADB).
According to DATC Deputy Director Pham Manh Thuong, at the upcoming forum, global economic leaders will share best practices and search for more innovative and systematic NPL resolutions that will lead to a stable foundation for economic growth, thereby benefiting all people in the region.
“The primary mission of IPAF is to contribute to the stability of local and regional economies by promoting co-operation and partnership and sharing knowledge and expertise among public member AMCs,” he said. “Through co-operation among members, IPAF shall strengthen crisis response mechanisms in order to promote a more resilient regional economy.”
At the event, experts and decision makers will analyse the influential factors of a country’s financial security and forecast the trend of NPL settlement in the Asian market. This will serve as a basis for member states to develop their debt trading market and efficiently manage public assets while making policy recommendations to Governments on issues related to the handling of NPLs and bad assets, strengthening financial security and ensuring the stability of the national and regional economy.
IPAF aims to reinforce regional asset management companies through capacity building through annual summits and conferences, training courses and research papers.
At the Hanoi Conference in April 2012, co-hosted by ADB, Viet Nam’s finance ministry and the Republic of Korea’s Asset Management Cooperation (KAMCO), participants formally discussed the establishment of a regional co-operative organisation among public asset management companies.
The International Public Asset Management Company Forum (IPAF) was launched in May 2013 through the initiative of six AMCs from China, Kazakhstan, the Republic of Korea, Thailand and Viet Nam. IPAF was established to provide opportunities for collective actions to address regional economic issues through knowledge sharing and partnership development among its member AMCs.
The founding IPAF members were China Cinda Asset Management Co Ltd., China Great Wall Asset Management Corporation, China Huarong Asset Management Co Ltd, Korea Asset Management Corporation, Sukhumvit Asset Management Co Ltd and Viet Nam’s Debt and Asset Trading Corporation.
SHB wants to be a among top three private bank
Sai Gon – Ha Noi Commercial Joint Stock Bank (SHB) has targeted becoming one of the three largest private joint stock banks in Viet Nam.
The information was released at a Tuesday ceremony held in Ha Noi to celebrate SHB’s 25 years.
SHB, formerly known as Nhon Ai Rural Commercial Joint Stock Bank, was established on November 13, 1993 in Can Tho with the initial charter capital of VND400 million.
SHB has achieved outstanding business growth and built a sustainable financial foundation with charter capital of more than VND12 trillion in 2018, over 30 times higher than in 1993. Its total assets grew from VND1 billion in 1993 to VND300 trillion today. From only eight staff members, SHB now has 8,000 people working at more than 500 transaction points both inside and outside the country. The bank has nearly four million customers.
SHB has been in the top five largest private joint stock commercial banks in Việt Nam, top 10 credit institutions with important effects on the finance and banking sector and the top 10 most prestigious commercial banks in Viet Nam.
With these achievements, the bank was awarded a second-class Labour Order, presented by Deputy Prime Minister Vuong Dinh Hue at the ceremony.
Speaking at the ceremony, Deputy Governor of State Bank of Viet Nam Dao Minh Tu said SHB had been a pioneer in restructuring credit institutions system by acquiring Habubank. After the acquisition, SHB had restructured and achieved positive results.
“SHB has always paid attention to retail banking products and maintained lending rates to agriculture and rural areas of 40 per cent out of its total outstanding loans, contributing to developing the agricultural sector,” Tú said.
He expected SHB to continue enhancing its role as a commercial bank with firm financial foundations to provide loans into prioritised sectors such as agriculture and rural areas while developing new products and services.
The bank was also required to focus on the restructuring plan for 2016 to 2020.
“SHB has made great efforts for the prosperity of the economy, businesses, entrepreneurs and customers in Viet Nam, Laos and Cambodia,” said SHB chairman Do Quang Hien. “SHB is determined to achieve higher targets in all banking activities, maintaining safe, sustainable and modern growth towards international standards.”
Ministry measures economic reform
The Ministry of Planning and Investment has proposed criteria for monitoring and evaluating the efficiency of economic restructuring and growth model renewal in the 2016 to 2020 period.
Seventy-six criteria were proposed to evaluate macro- and socio-economic stability and the results of five key tasks in Viet Nam’s 2016-20 economic restructuring plan.
Nine of the criteria measure the economic situation. Twelve are to be used to evaluate the restructuring of public investment, State-owned enterprises and credit institutions. Six are for the restructuring of the State budget and the public sector. Nine are for the development of the private economic sector and foreign direct investment. 25 are for modernising structures of industries to enhance productivity, quality and efficiency in line with promoting international integration, and 15 are for the development of financial, land, labour and science and technology markets.
The ministry said it was pressing to raise the criteria for evaluating the efficiency of economic restructuring to figure out measures to enhance the competitiveness of the economy in the new period.
The ministry pointed out that the current growth model, which was based on investment and the mining industry, presented some limitations. Several industries contributed to economic growth but generated low added value, while competitiveness remained weak and labour productivity low.
Dinh Trong Thang from the Central Institute for Economic Management said experiences from other countries like Canada, Portugal and Singapore showed that the use of criteria to evaluate economic restructuring helped tackle difficulties and create favourable conditions for businesses.
At an August meeting of the National Steering Committee on Restructuring the Economy and Renewing the Growth Model, Prime Minister Nguyen Xuan Phuc asked the Ministry of Planning and Investment to raise detailed measures to improve efficiency and find new drivers for growth in the next period.
The evaluation would make the economic restructuring and the renewal of the growth model more efficient to create breakthroughs in enhancing productivity and competitiveness. Phuc said at the meeting that this was decisive in developing the economy towards sustainable development, adding that the country needed high growth to boost the scale of the economy, generate jobs and accumulate resources for future growth.
Authorities and companies seek ways to improve domestic mould-making industry sector
Authorities in HCM City and leaders of mould-making companies needed to use more advanced technologies and training, experts said.
Le Hoai Quoc, the head of the management board of the Sai Gon Hi-Tech Park (SHTP), said since the Samsung factory opened in SHTP, the demand for mould-making had risen.
However, domestic mould-making production capacity was limited and could only supply a small portion of the moulds needed for the production of computers and other technologies.
Currently, the largest domestic mould-making companies include Duy Khanh, Lap Phuc, Duy Tan, Cat Thai and Minh Nguyen, and they were not able to meet market demand.
Chau Ba Long, the operations director of Minh Nguyen, said the company’s total revenue from supplying moulds to Samsung was about US$15 million, and accounted for only one per cent of the tech giant’s demand.
Small domestic firms in HCM City also lacked skilled workers due to more attractive foreign direct investment firms and workers moving overseas.
Long said the lack of skilled workers was due to the fact the country did not have any professional training in mould-making.
A lack of co-operation between mould producers was another cause of concern, expert said.
Fairs and exhibitions were needed to advertise domestic moulds and promote co-operation, which would help raise capacity and quality, he added.
Bui Huyen Ngoc, a representative of a mould-making company operating in HCM City, said the industry lacked highly skilled techniques and human resources, while equipment for mould production was costly.
Human resources played an important role in the development of mould production, which depended mainly on experience, knowledge and creativity.
To solve this problem, Lap Phuc Company has been working with universities and colleges to launch training courses for students to attract skilled graduates.
A final year mechanics student at HCM City’s Technical College Dương Quang Thien has been taking a training course at Lap Phuc Company.
“Thanks to the course, I have chances to practise my technical skills and gain more experience,” he said.
The enterprise and the school launched the project to equip students with practical skills that match business requirements.
Thien and 17 other students on the course hope that after graduation they will be offered a position at the company.
Lap Phuc is also working with Nguyen Tat Thanh University to train hundreds of mechanics students and is also holding factory visits for students.
According to a survey, more than 70 per cent of labourers working in industrial zones around the city were from other provinces and mostly unskilled. It was difficult to form a solid training plan because the number of labourers fluctuated, a representative of Lap Phuc said.
Imported cars boost auto sales in October
Almost 28,900 cars were sold in Vietnam in October, up 21 percent from the previous month, according to the Vietnam Automobile Manufacturers Association (VAMA).
VAMA reported on November 13 that the sales included 21,288 passenger cars (up 25 percent), 7,096 commercial vehicles (down 7 percent) and 515 special-purpose vehicles (up 31 percent).
While 17,599 domestically assembled cars were sold in October (up 2 percent), the number of imported completely built vehicles sold was 11,300, up 46 percent month on month.
Among car brands in Vietnam, Toyota led the market with 8,426 cars sold, followed by Honda (3,475), Mazda (2,920), Kia (2,657) and Ford (2,574).
Insiders attributed the surge in sales to businesses’ launch of promotion programmes throughout the Vietnam Motor Show 2018 last month and others to meet their yearly targets.
Notably, the sharp rise in imported car sales was also thanks to the fact that most importers have succeeded in handling import procedures under new regulations on car production, assembly and import conditions.
Between January and October, a total of 223,326 cars were sold in Vietnam, up 1 percent from the same period last year. The sales of domestically assembled cars increased by 11 percent to 174,664, while the figure for imported vehicles fell 22 percent to 48,756.
The best sellers in the 10 months were Mazda, Kia, Honda and Ford, respectively, according to VAMA.
Korean-invested Hyundai Thanh Cong sold 6,510 cars in October and 51,046 vehicles in the last 10 months. However, as it is not a VAMA member, its sales were not included in the association’s report.
Among all car brands, Hyundai ranked second, after Toyota, in October and first so far this year in terms of market share.
Insiders forecast as the year-end shopping season has begun, total car sales this year could surpass the 273,000 cars sold in 2017.
IREX pursues Munich Re’s PV Insurance
As the solar power insurance market is experiencing hot development, IREX Energy JSC, which has been exporting “Made in Vietnam” solar PV to the world, is teaming up with Munich RE to get PV insurance and protect itself against manufacturer’s risk.
IREX and Germany-based Munich RE have agreed to insure the performance of every solar panel order manufactured by IREX. The move follows the recent co-operate with BIDV Insurance Corporation and is in line with IREX’s target by 2020 to obtain the Tier 1 standard of the Bloomberg New Energy Finance ranking system.
A Tier 1 solar panel is expected to produce power for the entirety of its roughly 25-year lifespan. Thus, getting the deal with Munich RE is expected to help IREX to persuade banks to co-operate.
Under the agreement, after several rounds of testing, Munich RE will supply a Sales and Buyers Insurance Policy for IREX dedicated exclusively to each PV project or energy buyer and including client’s limited warranty, covering product defect and performance output.
Besides, Munich RE’s policy will last for 25 years. Client’s customers, whose panels have been registered with Munich Re, will enjoy an irrevocable and insurance-backed warranty which provides third-party beneficiary status to the insurance in case of insolvency or bankruptcy. Moreover, deductibles do not erode the insurance limit, PV projects are qualified for additional Munich RE insurance, immediate coverage, and A.M Best A+ rated reinsurance. This is a Backstop for Client’s Limited Warranty and protects both the manufacturer and its overseas sales (Buyers) of photovoltaic modules.
According to Munich RE’s estimates, Vietnam has a great potential in solar power development, with ideal natural conditions and blooming electricity demand. Through the collaboration with IREX – a Vietnam company that has a strong background and capacity through SolarBK – Munich RE also has a chance to penetrate the Vietnamese solar power reinsurance market deeper.
In recent years, investors in renewable energy projects have been facing a range of operational risks, one of which is whether the installation will perform to the projected expectations. Investors are increasingly looking to protect not only their physical assets and cover business interruption risks during PV operations, but also the revenue derived from a shortfall caused by faulty designs, miscalculation of systems or a lack of sun. The insurance in effect picks up where the manufacturer’s warranty leaves off after bankruptcy voids it.
Therefore, the solar power insurance market is becoming more and more popular, especially in Europe and the US. In Vietnam, such services still need more time to establish a solid foothold, as solar power is only in the first stages of development.
2018 is also the year for IREX to boost its “Internationalisation” strategy with the goal of becoming the first company in Vietnam to achieve the Tier 1 ranking. The performance insurance policy from Munich RE, one of the world’s leading reinsurers, will give IREX the credibility to approach clients. IREX established many overseas branches and offices in markets like the Dominican Republic, the UK, the US, Myanmar, and China, among others, and participated in many renewable energy exhibitions around the world.
IREX is also striving to reach the goal of exporting 160MW in 2018, In second quarter of 2018, IREX’s high-tech renewable energy manufacturing complex that runs a 100 per cent automatic chain will be launched. The project includes a renewable energy factory and a renewable energy R&D center.
TEPCO joins Coc San hydropower plant
Tokyo Electric Power Company Holdings, Inc. (TEPCO) recently completed the purchase of 36.38 per cent stake in Viet Hydro Pte., Ltd. (Viet Hydro), the majority shareholder of Lao Cai Renewable Energy JSC (Lao Cai Renewable Energy), from InfraCo Asia Development Pte., Ltd. (InfraCo Asia), marking its first hydropower project outside of Japan.
InfraCo Asia, a company of Private Infrastructure Development Group (PIDG), confirmed that it has sold its interest in Viet Hydro to TEPCO, noting that through this stake the company indirectly held 33.4 per cent of Coc San hydropower plant in Lao Cai province.
The purchase is part of TEPCO’s strategy to turn renewable energy into one of its primary energy sources to increase the company’s corporate value as the Japanese electricity market is nearing saturation.
The project represents the first foreign direct investment (FDI) in hydropower in the mountainous northern region as well as the largest FDI project in the province at the time it started to go commercial.
Notably, TEPCO has recently begun pursuing the development of hydropower overseas and offshore wind power both in Japan and overseas. The company aims to eventually develop a total capacity of two to three million kilowatts of hydropower.
TEPCO representative executive vice president Seiichi Fubasami said, “Working with InfraCo Asia in the Coc San project is TEPCO’s first investment in an overseas hydropower project. We look forward to furthering our relationship with InfraCo Asia for future collaboration in both South and Southeast Asia.”
TEPCO will continue exploring opportunities to participate in other hydropower projects, mainly in Southeast Asia, and develop its overseas business by partnering with companies in Japan and overseas.
TEPCO is Japan’s largest power company group, holding three independent business entities: TEPCO Fuel & Power, Inc., TEPCO Power Grid, Inc., and TEPCO Energy Partner, Inc. As a group, it generates, distributes, and sells electricity and other types of energy principally to the Kanto metropolitan area, which includes Japan’s two most populous cities, Tokyo and Yokohama.
Coc San hydropower plant has been operating stably since launching commercial operations in April 2016, supported by a 20-year power purchase agreement with Northern Power Corporation, a power distributing subsidiary of Vietnam Electricity.
The project represents the first foreign direct investment (FDI) in hydropower in the mountainous northern region as well as the largest FDI project in the province at the time it started to go commercial.
Numerous firms still ignore with sustainable development goals
Conversion of VAS financial statements to IFRS among Vietnamese firms
Auditing firm PwC Vietnam recently organised two workshops in Ho Chi Minh City and Hanoi to help more Vietnamese companies reach international financial reporting standards and comply with the roadmap of the Ministry of Finance.
The workshops, themed “Conversion of VAS financial statements to IFRS and new key points of IFRS in 2018/2019,” attracted more than 250 finance directors, heads of finance and accounting departments, chief accountants, and finance and accounting experts currently operating in Vietnam.
At the workshop, PwC’s experts and a speaker from the Ministry of Finance shared their knowledge and practical experiences on coping with the challenges of converting VAS to IFRS, as well as gave updates on new key points of IFRS in 2018/2019.
In fact, while IFRS is not yet mandatory in Vietnam, many companies have converted their financial statements from VAS into IFRS already.
The adoption of IFRS is expected to become more common in the Vietnamese business community, not only to align with the IFRS roadmap in Vietnam but also for Vietnamese companies to attract foreign investors who may expect international accounting standards.
In fact, while IFRS is not yet mandatory in Vietnam, many companies have converted their financial statements from VAS into IFRS already.
By actively preparing in advance for the Vietnam IFRS roadmap, Vietnamese companies could have sufficient time to analyse and prepare for relevant processes. Early preparation would enable companies to assess challenges properly, while at the same time better control costs, thus ensuring a smooth transition.
Conversion experience from Europe, Asia, and Australia shows that conversion projects often take more time and resources than anticipated. If not prepared, companies will be rushed when the conversion deadlines are close, leading to increased costs for compliance actions and inability to manage negative impacts.
At the same time, conversion brings a one-time opportunity to comprehensively reassess financial reporting and take “a clean sheet” approach to financial policies and processes.
Such an approach recognises that major accounting and reporting changes may have a ripple effect impacting many aspects of a company’s organisation.
Adopting IFRS will likely impact key performance metrics, requiring thoughtful communications roadmaps for the board of directors, shareholders, and other key stakeholders, especially impacts that could cause negative financial effects.
Internally, IFRS could have a broad impact on a company’s infrastructure, including underlying processes, systems, controls, even customer contracts and interactions.
The companies will face many challenges they cannot avoid when adopting IFRS so early adoption will help companies have more understanding about the changes and choose the most appropriate solution for the company.
Besides the benefits of conversion to IFRS financial statements, companies have encountered a number of difficulties and challenges in converting, largely due to the significant differences between VAS and IFRS and the requirement to have timely decisions from the board of management to control the impacts.
“In the era of globalisation, by adopting IFRS, the Vietnamese economy and Vietnamese companies would gain from deeper integration into the region in terms of capital and investment co-operation opportunities,” said Tran Hong Kien, deputy general director of PwC Vietnam.
“More importantly, when Vietnamese companies are allowed to adopt IFRS, it would have the wider impact by improving corporate governance, financial data transparency, and the healthy development of the Vietnamese capital market.”
“With strong resources and experience in Vietnam and in the region, PwC Vietnam is actively co-operating with the Ministry of Finance and professional organisations on the Vietnam IFRS roadmap proposal, and at the same time, we are supporting companies in designing their own IFRS roadmap,” Kien added.
Luong Thi Anh Tuyet, director of Assurance and Accounting Services at PwC Vietnam, stressed the need to have a dedicated roadmap for IFRS from the beginning.
In her words, the first step is to train employees about IFRS. The second step is to practice and apply IFRS in operations, including analysing differences between VAS and IFRS and determining the adjustments needed for preparation of IFRS financial statements. The final step is to embed the IFRS financial information into the systems.
First self-storage company opens for business
KingKho, Vietnam’s first self-storage company, has officially opened in Hanoi to meet the increasing need for “mini storage”.
Mini storage, or “self-storage”, is used by both individuals and businesses to temporarily store possessions in an individually-lockable unit housed in a clean, well-lit, access-controlled, and secure facility
Unlike in a warehouse, employees at self-storage facilities do not have access to the customers’ units.
KingKho offers individual and business customers individually-lockable storage units housed in their 24/7 accessible and secure self-storage facility. Unit sizes start at 1 sq m and can go up to several hundred sq m.
“There are now many e-commerce companies selling products online in Vietnam,” said Mr. Vinh Do, KingKho’s Co-founder and Director. “With mini storage they can just rent a small unit of 1 sq m then easily add more space as required. As there are neither deposits nor any long-term commitments necessary, mini storage offers an easy and risk-free solution to customers.”
“In the self-storage industry, we call the main drivers for self-storage the 4Ds: dislocation, density, divorce. and death,” added Mr. Lorenz Wagener, Mr. Do’s Co-founder and Partner from Germany. “But besides those, mini storage can also be useful for businesses where the bulk of the work takes place outside of the office. Many mini storage customers are online shops, painters, electricians, landscapers, sales reps, plumbers and so on.”
Self-storage in the US, Canada and the UK have been big business since the 1970s. Bloomberg reports that in 2016 alone, the self-storage industry in the US generated more than $32.7 billion in revenues, almost three times Hollywood’s 2016 gross box office.