Oil gas vietnam

Sharp increases in capital contributions and share purchase

According to the Ministry of Planning and Investment (MPI), there were 1,321 valid projects invested in by Vietnamese enterprises abroad with a total registered capital of US$20.6 billion by the end of 2019. The disbursement of the investment capital was US$9.49 billion by the end of the same year.

Vietnamese enterprises have invested in 78 countries and territories across the world with the largest investments poured into Laos, Russia, Cambodia, Venezuela, and Myanmar. Enterprises invested in 18 key industries and sectors with the biggest capital running in the oil and gas industry, accounting for 38.4% of the total offshore investment capital.

About 15.3% of the investment capital was poured into agricultural, forestry and fishery sector while 12.8% of the capital was invested in telecommunications and information technology and 7.2% of the capital went into the hydroelectricity sector.

The number of small and medium-sized projects run by the private sector has increased over the years while the number of large-scale projects run by State-owned enterprises in the areas of oil and gas exploration and extraction, telecommunications, industrial crops and hydroelectricity has fallen sharply.

The volume of investment capital transferred abroad has tended to decrease since the 2015-2017 period due to a plummet in the number of large projects.

According to the MPI, accumulated profits transferred to Vietnam from abroad was approximately US$3 billion while the profit retained for reinvestment was about US$363.4 million. Nearly 10,000 Vietnamese workers have been sent abroad to work.

In addition, Vietnamese enterprises have established a significant amount of assets abroad including factories and production facilities worth billions of US dollars. These are favourable conditions for Vietnamese enterprises to expand their overseas investment and business activities in a context of deeper international economic integration.

Notably, investment abroad in 2019 was entirely implemented by the private sector with no projects conducted by State-owned enterprises. More and more large private corporations and domestic joint stock companies have invested in developed countries in order to expand their market and affirm their brands such as Vingroup, Vietjet, Thaco, T&T, Vinamilk, FPT, and others.

Investment forms are also diverse with an increasing number of investment projects in the form of capital contributions and share purchase in foreign enterprises.

Minister of Planning and Investment Nguyen Chi Dung said that there are Vietnamese enterprises that have spent US$3-5 million to buy shares of foreign enterprises that are now valued in the hundreds of millions of US dollars.

Major global changes due to the COVID-19 pandemic have led to a wave of mergers and acquisitions through capital contributions and share purchase at potential companies for very cheap prices. Vietnamese enterprises need to have big aspirations to participate in this market segment to accelerate the process of reaching out to the world and bringing greater value into the country.

To date, five Vietnamese enterprises have invested abroad with registered capital of over US$1 billion each including the Vietnam Oil and Gas Group (Petrovietnam), Military Industry and Telecoms Group (Viettel), Vietnam Rubber Group, Hoang Anh Gia Lai Group, and Long Thanh Golf Investment and Trading JSC.

Besides these impressive achievements, there remain inadequacies including legal risks, international lawsuits and disputes, slow progress of projects, and ineffective implementation of projects, among others.

According to experts, the change in the investment tendency of Vietnamese enterprises in recent years has been market-oriented and consistent with the process of trade and investment liberalisation and international economic integration.

There is large room and great potential in international markets, thus, the most important thing for offshore investment is to perfect mechanisms and policies and create more favourable conditions for private enterprises to easily invest their resources abroad in order to transfer the profits to Vietnam. Meanwhile, enterprises need to improve their governance capacity, their ability to grasp the market and sufficiently strong cash flows.

The amended Law on Investment which will take effect on January 1, 2021 has completed policies on investment abroad regarding clear updates of cases prohibited from investment abroad, conditions accompanied with investment abroad, lending abroad, reporting the process of State management agencies related to investment abroad, the use of profits from overseas projects to contribute to other projects abroad, and others.

To prevent risks in offshore investment activities, the MPI has proposed the Government assign relevant agencies to review and evaluate investment trends abroad in the areas of real estate and the investments of foreign investors in Vietnam abroad in order to devise timely solutions to problems arising.

In addition, Vietnam should boost negotiations and early signing of investment promotion and protection agreements with countries receiving large investment from Vietnam or with Vietnam’s potential partners to create a legal framework for safe and effective investment abroad.

Disbursement during the period also declined by 5.1% to US$11.35 billion, as shown by data as of August 20.

There were nearly 1,800 new foreign-invested projects in the January-August period, with total capital pledges of US$9.73 billion, with the largest project being a natural gas in Bac Lieu Province worth US$4 billion.

The past eight months also saw foreign investors pledge an additional US$4.87 billion to existing projects and another US$4.93 billion in capital contributions.

Due to the coronavirus pandemic, exports by the foreign sector, including crude oil exports, fell by 4.5% to US$113.3 billion, accounting for 65.1% of Vietnam’s export revenue.

Their imports also dropped by 5.3% to US$90.8 billion, meaning the sector recorded a trade surplus of over US$22 billion.

Manufacturing remained the most attractive to foreign investors, receiving US$9.3 billion, followed by power generation and distribution with US$4 billion and property trading with US$2.87 billion.

Singapore, the Republic of Korea and China were the three largest investors with respective capital pledges of US$6.54 billion, US$2.97 billion and US$1.75 billion.

With the natural gas project, Bac Lieu Province was the largest FDI recipient during the first eight months of 2020, followed by Hanoi and Ho Chi Minh City, which received US$2.86 billion and US$2.62 billion, respectively.

Thùy Vân Beach in Vũng Tàu City. The number of visitors to Bà Rịa-Vũng Tàu Province in the first quarter doubled from a year earlier to 1.8 million. VNA/VNS Photo Duy Khương

HCM CITY — Bà Rịa-Vũng Tàu managed to achieve positive economic growth in the first quarter of 2021 driven by a surge in industrial production, port services and domestic travel.

Speaking at a meeting held on Friday to review the socio-economic development for the quarter, deputy secretary of the provincial Party Committee, Nguyễn Thị Yến, said key economic sectors achieved growth during the quarter.

The province achieved the dual goal of containing COVID-19 while ensuring economic growth, she said.

So its revenues rose by 6.7 per cent to more than VNĐ22 trillion (US$953.46 million), she said.

Industrial production value excluding oil and gas rose by 7.3 per cent year-on-year.

The value of port services jumped by 9.6 per cent.

The province speeded up work on some crucial transport projects to facilitate connectivity to the Cái Mép-Thị Vải port complex in Phú Mỹ Town.

The tourism sector saw a robust recovery, with the number of visitors in the first quarter doubling from a year ago to 1.8 million.

In the second quarter, the province plans to focus on improving its business climate and competitiveness to attract foreign investment. —VNS