Foreign investment

Participants at the seminar (Photo: VNA)

Hanoi (VNA) – Many businesses from the Republic of Korea (RoK) are looking to connect and get more information about the Vietnamese market as well as investment policies of the country, especially in auto parts, mechanics, and electronics, said Vu Ba Phu, Director of the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade (MoIT).

Speaking at seminar jointly held by Vietrade, the Korea Trade Investment Promotion Agency (KOTRA) and the Vietnam National Trade Fair and Advertising Company (Vinexad) in Hanoi on April 15 in the framework of the 30th International Trade Fair (Vietnam Expo 2021), Phu said this was a good opportunity for Vietnamese industrial parks and businesses to connect with Korean firms to attract investment and expand cooperation in developing value chains in manufacturing.

Auto parts manufacturing is one of the top areas attracting interest from businesses in Vietnam at present, Phu said.

Participant focused their discussions on policies for developing the automobile manufacturing and assembling industry in Vietnam, as well as how to form a sustainable manufacturing link chain in the auto parts sector.

Pham Tuan Anh, Deputy Director of the MoIT’s Industry Agency, said that a number of domestic firms have actively participated in the global automobile manufacturing chain.

Accordingly, the country’s total designed assembling capacity is about 755,000 vehicles per year, of which foreign-invested firms account for about 35 percent. Domestic manufacturing and assembling of many large firms have meet about 70 percent of the domestic automobile demand with the total output of passenger cars hitting 200,000 units per year.

However, Anh noted that the automobile manufacturing industry has not yet formed a system of large-scale suppliers of materials and components, which makes car prices in Vietnam still remain high compared to other countries in the region.

In order to further promote the domestic automobile manufacturing and assembling industry and help the auto parts manufacturing industry participate deeply in the global value chain, experts said attention should be paid to developing healthily the automobile market by creating a market large enough for domestic automobile manufacturers, and encouraging the use of locally-manufactured cars.

Vietnamese automobile manufactures should be supported more to improve their manufacturing ability and competitiveness, they added./.

SOEs must complete the sale of shares within four months, photo Le Toan

State-owned lender Agribank has been stuck for years with divestment efforts because its real estate assets could not be approved by the Ministry of Finance due to their large size and complex procedures.

“At the end of last year, the Ministry of Finance also made a comprehensive assessment on the equitisation goal of state-owned enterprises. Specifically, only about 28 per cent of enterprises were equitised, which means that nearly three-quarters did not meet the plan. The main issue is that many large corporations’ land use rights remain unclear, as can be seen in the cases of VNPT and Agribank,” explained Chu Manh Hung, deputy head of the Equitisation Department at Agribank.

“Since the equitisation plan during 2016-2020 has not been completed yet, Agribank will continue carrying out this task for the 2021-2025 period,” he added. “However, there are still major roadblocks hampering the process, associated with determining the value of land and affiliated enterprises.”

While Agribank has been constantly pushing the equitisation process, the complex valuation procedures have been a major obstacle slowing down progress. The bank also has to cope with the myriad challenges arising from its large number of affiliated enterprises, multi-level authorisations required, as well as delayed approval of land use schemes.

Agribank has a total of around 294 real estate properties with a total area of 2.6 million square metres, with diverse origins and incomplete legal documents. While these assets can help the bank’s equitisation value reach record levels and enhance its efficiency, they have also delayed divestment for years.

“Agribank currently has more than 100 land plots with unclear legal status. We hope to receive support from relevant units and agencies to quickly equitise this large volume of assets,” Hung told VIR.

Despite its ongoing equitisation, Agribank jumped 17 spots to rank 173rd in the recently-announced Brand Finance Banking 500 list for 2021, which featured the most valuable and strongest banking brands in the world.

As of December 31, Agribank’s total assets reached nearly VND1.57 quadrillion ($68.26 billion), with its capital exceeding VND1.45 quadrillion ($63 billion). According to Brand Finance, as governments scramble to stimulate economic growth in the face of the ongoing global health crisis, and profits and interest rates taking a hit, nearly two-thirds of the world’s 500 most valuable banking brands have recorded brand value losses.

As per Decree No.01/2014/ND-CP released in 2014 on foreign investors’ purchase of shares of Vietnamese credit institutions, a foreign strategic investor shall not hold more than 20 per cent of the charter capital of a Vietnamese credit institution. Foreign investors shall not hold more than 30 per cent of the charter capital of a Vietnamese commercial bank.

Besides Agribank, other local lenders have been enjoying the attentions of foreign partners looking to increase their footprint in Vietnam.

In 2019, a strategic co-operation between Vietnamese bank BIDV and South Korean KEB Hana Bank turned the former into the lender with the largest market capitalisation in Vietnam with around $1.73 billion. KEB Hana invested capital in exchange for a 15 per cent stake in BIDV, while BIDV received long-term technical assistance from the South Korean lender and its parent company, Hana Financial Group. The tie-up also quenched the bank’s thirst for capital as BIDV announced it has now satisfied Basel II requirements.

Elsewhere, Singapore’s sovereign wealth fund GIC in 2019 purchased over 94 million new shares and now owns a 2.55 per cent stake in Vietcombank. Mizuho, one of the largest Japanese financial services providers purchased an additional 16.6 million new shares to maintain its existing 15 per cent stake in the bank.

“The equity investment by GIC and Mizuho increases Vietcombank’s charter capital and creates a solid capital buffer for the bank to meet capital requirements under Basel II Accord as well as maintain its leading position in the Vietnamese banking sector,” a GIC representative stated.

Last year, the International Finance Corporation (IFC), a member of the World Bank Group reduced its stake in VietinBank by 1.5 per cent, following an earlier divestment.

The IFC and equity subsidiary IFC Capitalization Fund also reduced their combined ownership in VietinBank from almost 6.49 to 4.99 per cent last year, leaving more room for other foreigners.

Besides the IFC, Japanese financial institution Bank of Tokyo-Mitsubishi UFJ holds 19.73 per cent in the state-run bank. However, VietinBank has not signalled any new potential partnerships since IFC pulled out.

On the other hand, under Vietnamese regulations, state-owned enterprises (SOEs) must complete the sale of shares within four months of having their equitisation plans approved. This time limit may not be enough for overseas investors to conduct due diligence and negotiate representations and warranties, special rights, and other conditions for share acquisitions with the authority representing state capital in the SOE, according to ASCV Legal.

Customers buying Vinamilk products in a supermarket. The company shares posted the biggest loss in market capitalisation on Friday, down over 2 per cent. — Photo vinamilk.com.vn

Shares edged lower on Friday as selling pressure persisted but falls were capped by strong performance of real estate stocks.

The market benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) closed the last session of the week at 1,238.71 points, down 0.68 per cent or 8.54 points.

The market breadth was still negative as 355 stocks declined while 81 stocks increased during the session. But the market’s liquidity stayed high with nearly 986.9 million shares traded on the southern bourse, worth nearly VND21.8 trillion.

Friday’s losses are expected to extend to next week, according to Saigon – Hanoi Securities JSC (SHS).

The securities firm expected that the index might struggle and fluctuate around 1,250 points in the last trading session of the week. “The close of above or under 1,250 point-level of the index can suggest the trend for next week,” SHS stated in a daily report to customers.

Bao Viet Securities Company said that the VN-Index is expected to test the support territory of 1,225 – 1,232 points again in the next sessions.

Selling pressure weighed on almost every sector, especially materials, banking, utilities and transportation sectors.

The VN30-Index lost 0.57 per cent, or 7.33 points, to finish Friday’s trade at 1,276.87 points. Twenty-one of the 30 biggest stocks in the VN30 basket fell while only seven rose.

Vietnam Dairy Products JSC (Vinamilk, VNM) posted the biggest loss in market capitalisation, down 2.22 per cent. Followed by Vietnam Rubber Group JSC (GVR) and Vietcombank (VCB), down 4.32 per cent and 1.23 per cent, respectively.

Big stocks like JSC Bank For Investment and Development of Vietnam (BID), VPBank (VPB), Techcombank (TCB), Saigon Beer – Alcohol – Beverage Corporation (SAB), Vietjet Aviation Joint Stock Company (VJC) all lost more than 1 per cent.

However, gains in real estate and construction stocks limited the losses. Of which Vingroup JSC (VIC) still led the rally, up 1.49 per cent on Friday. Other stocks like No Va Land Investment Group Corporation (NVL) and Investment And Industrial Development Corporation (BCM) also rose more than 5 per cent.

On the Ha Noi Stock Exchange, the HNX-Index slid by 1.02 per cent to 293.11 points due to falls in large-cap stocks. The HNX30-Index, tracking the 30 biggest stocks in HNX, declined 0.76 per cent to 440.43 points.

During the last session, domestic investors poured over VND3.8 trillion into the market, equivalent to a trading volume of over 225 million shares.

On the contrary, foreign investors were still net sellers in the market with a total value of VND535.27 billion. Accordingly, they net sold a value of VND560.83 billion on HoSE and a value of VND3.48 billion on UPCOM, while net buying a value of VND29.04 billion on HNX. — VNS

Illustrative image (Source: VNA)

Hai Phong (VNA) – The northern port city of Hai Phong targets 1.5 billion USD in foreign direct investment (FDI) in the second quarter of 2021, according to head of the Management Board of Hai Phong Economic Zones Le Trung Kien.

Kien said that the city will increase dialogues to explore obstacles facing businesses, while enhancing efficiency of investment promotion activities, while prioritising investors with high capacity and advanced, environmentally-friendly technologies .

Along with speeding up administrative reforms, the board will coordinate closely with the local police force to ensure order and security in economic zones and industrial parks, creating a safe environment for enterprises, Kien said.

He said Hai Phong currently has 12 industrial parks. As of March 31, 2021, the local industrial parks and economic zones had lured 406 FDI projects worth 17.15 billion USD.

The average occupancy rate in the local industrial park has reached 62.5 percent. There are 154,100 labourers working in Hai Phong’s industrial parks and economic zones.

In the 2021-2025 period, Hai Phong plans to construct 15 new industrial parks with a total area of over 6,200 hectares.

Last year, the city ranked seventh out of 63 provinces and cities nationwide in the Provincial Competitiveness Index (PCI), and second out of 11 provinces and cities in the Red River Delta region./.

Anh affirmed that Hanoi welcomes Nordic companies to come and learn about its investment environment and business opportunities, and hopes for their greater engagement in investment, trade, tourism, smart city and e-government building, green technology, energy, sustainable development, technology transfer, and human resources training.

The Vietnamese capital is willing to establish and expand cooperation with the capitals of Nordic countries so as to contribute to deepening the traditional relations between the two sides, he said.

The municipal People’s Committee will direct relevant departments to work with Nordic enterprises that want to seek cooperation opportunities in Vietnam, and discuss with Nordic cities about cooperation possibilities towards the signing of related agreements.

Thomasen said that Nordic companies are willing to share their experience to help Hanoi with green city development and to achieve effective energy use.

He proposed Hanoi put in place specific mechanisms to facilitate connections between enterprises and cooperation between the city and Nordic companies.

He also expressed a hope that NordCham Vietnam will have a chance to work with relevant offices in Hanoi to address problems relating to work permits for businesses’ staff.

Source: VNA