Vietnam - News and Regulations

GOLDMANN SACHS ON VIETNAM - FDI attraction encouraged in high tech

US finance group Goldman Sachs has ranked Vietnam among 11 countries that could achieve high growth rate in 2010 and be a good investment destination for international investors.

Along with optimistic forecasts of other international organisations, the assessment of Goldman Sachs has helped investors feel more secured while investing in Vietnam.

Foreign investors now are ready to pump long-term production and business expansion plans in Vietnam to head off the post-crisis opportunities. Many projects, which were previously tardy in implementation because of global finance crisis, are also expected to start within this year. Nguyen Hoai Nam, general director of Berjaya Vietnam Group said that its finance centre in Ky Hoa tourism site, HCM City's Dist 10 will be kicked off in Q1. The project is estimated to cost $930 million. In Ba Ria Vung Tau province, work on Saigon Atlantis hotel tourism project worth $4.1 billion will begin in Q1 also after the provincial governance handed over 80 among 295 hectares to the project investor.

The retail sector in Vietnam's market has attracted special attention of foreign investors. Tham Tuck Choy, general director of Parkson Vietnam stated that the Parkson system in Vietnam last year reached the best business results (with a gross revenue of 30 percent/year) among the markets Parkson has invested in, higher than 10-15 percent/year in Malaysia and China.

"With such a satisfactory result, we are more confident in expanding investments in new projects. The fourth Parkson shopping centre was inaugurated in HCM City in late December 2009 and the sixth one will be opened in next five years. This year, Parkson will have one more shopping centre in Hanoi and another in Da Nang towards. The network expansion will not stop at this figure", Tham Tuck Choy added.

Foreign Investment Department targets to attract total $22-25 billion of FDI capital in 2010, a year-on-year growth of 10 percent and actualise $10-11 billion, also up 10 percent. FDI attraction will concentrate on support industries, infrastructure development and human resources.

Local firms are also ready to cooperate business with foreign investors. In 2009, Saigon investment group (SGI) started work on infrastructure of Saigon-Chan Mai non-tariff and industrial area with total cost of 1.279 trillion dong in Thua Thien Hue province. Also SGI plans to kick off ground on 100,000 sqm production facility (costing 400 billion dong) in Can Tho City. The facility is expected to complete within 2010 and welcome foreign investors with suitable land rentals when the world economy has overcome the difficult period, Dang Thanh Tam-chair of SGI.

In recent months, Jetro organisation in HCM City received a large number of investors for seeking business opportunities in Vietnam. Last year Japan ranked ninth among top ten countries with the highest investment capital in Vietnam with 77 newly licensed projects worth $138 million. Japan's investment capital here surged by $234 million.

Dang Thanh Tam was very optimistic as predicting that 2010 FDI attraction of Vietnam will be over $40 billion. In his opinion, Vietnam should boost FDI attraction in high technology, which requires a suitable investment preference mechanism.CAFEF

POWER/PRICE - EVN suggests raising electricity rate over 11pct

The Electricity of Vietnam Group has suggested increasing the retail electricity price by 11.65 percent to 1,059.75 dong a kWh.

According to the prime minister's decision on trading electricity in 2009 and 2010 - 2012 in accordance with the market mechanism dated 12 February 2009, the electricity selling price from 1 January 2010 will be based on the market.

At the end of December 2009, Vietnam Coal and Mineral Industry Corp ?Vinacomin? submitted an official letter to the prime minister proposing increasing coal selling prices for electricity production as of 1 January 2010. EVN said that if the input fuel coal price increases, the electricity price will naturally surge accordingly.

Pham Manh Thang, director of the trade and industry ministry's electricity regulation department, said that building the annual electricity price plan is responsibility of EVN, while the trade and industry ministry will give ideas. The plan will be appraised by the finance ministry before being submitted to the prime minister for approval.

Based on the processes and the price hike plan proposed by Vinacomin, EVN submitted an official letter to the trade and industry ministry on January 15. EVN suggesting four price scenarios applicable in 2010 with the lowest increase of 6.2 percent. By that time, the average electricity selling price will be 1,052.44 dong a kWh.

However, EVN suggested raising the retail sale electricity price by 11.65 percent against the approved average price of 2009, reaching 1,059.75 dong a kWh (in accordance with the coal price increase of 15 percent). According to EVN, if this scenario is realised, total production and business expenses of electricity in 2010 will be 84.915 trillion dong and the average cost 1,029 dong a kWh. With this price, EVN will gain profits of 6 percent to 12 percent.

Right after EVN issued the above document, related agencies also submitted their reports to the trade and industry ministry. Accordingly, most of them agreed with the price plan mooted by EVN. However, some opinions stated that the proposed electricity rates (the coal price rises by 15 percent, the electricity price 11.65 percent) should be cut to 4.98 percent, equivalent to 1,019 dong a kWh.

Additionally, the appraisal department also suggested eliminating the scenario 4 of EVN because the coal price hike of this scenario is low (10 percent), failing to meet the routine on raising the coal price in accordance with the market price.

As for the plan inspection agency of the finance ministry, Nguyen Tien Thoa, director of price management department, said that his department needs four scenarios. Their main difference is because of coal price.VNEXPRESS

INSURANCE COOPERATION - Maritime Bank cooperates with Prudential

Maritime Commercial Joint Stock Bank (Maritime Bank) and Prudential Vietnam Life Insurance Co have signed a banking insurance cooperation agreement.

Accordingly, in 2010, the customers under Maritime Bank's credit programme for consumption purposes will get loan insurance offered by Prudential Vietnam until the payment maturity date. The insurer's credit life insurance products will be applied for all the mortgage and credit loans supplied by the bank.

At the same time, the two parties will continue to carry out the cooperation model, in which Maritime Bank's financial consultants will introduce the insurance products offered by Prudential Vietnam that meet the customers' financial demands.

In addition, Prudential and Maritime Bank will keep searching other cooperation opportunities that bring in mutual benefits in the future.TBKT

TELECOMMUNICATION - Vietnam telcoms propose floor rates for mobile services

Vietnam's big telecommunications companies have asked the Ministry of Information and Communications to establish minimum mobile phone service fees in fear of unhealthy competition this year.

In the proposal, the state-owned Vietnam Posts and Telecommunications together with the military-run Viettel, have recommended that the ministry apply floor charges of some 800 dong per minute.

The companies also said the ministry should not allow sales promotions offering customers more than 50 percent off the credit they purchase.

Viettel deputy general director Nguyen Manh Hung said it was very likely that a fees "war" would break out among mobile phone service suppliers this year, implying unhealthy competition.

This could sink new companies and prevent major ones from expanding their business to disadvantaged areas and overseas, according to Hung.

Most foreign investors, meanwhile, said the "war" would take place sooner or later without the government's interference.

Minister Le Doan Hop said the ministry would consider the proposal.

TNN

RESOURCES - Hard to find out large oil and gas mines, PetroVietnam says
Around 40 percent of Vietnam’s electricity is produced from fuel fired plants of PetroVietnam so the potential to increase the gas output in next years will help Vietnam partially surmount the power shortage as well as ease the pressure of seeking coal supply sources for power production. But opportunity to find out big petroleum mines in Vietnam’s territory seems to be running out. In 2010, PetroVietnam plans to start drilling six new oil wells but the drilling will not likely increase this year’s petroleum output. According to the group’s 2010 mining plan, total output of crude oil will be only 15 million tonnes and gas with eight billion cubic metres, lower than 2009’s. The development of gas drilling sector depends on infrastructure like gas pipeline and consumption market. Currently, each year PetroVietnam only can supply few hundreds of cubic metres, almost condensate gas drilled from the crude oil mining process at some new oilfields. Along with three gas pipelines Bach Ho, Nam Con Son and Ca Mau, PetroVietnam is building the fourth pipeline from the Thai frontier to Can Tho province’s O Mon and also the second Nam Con Son pipeline to drill gas in West Ocean and Nam Con Son basin (including Hai Thach well with an estimated reserve equalling to the combined reserve of Lan Tay and Lan Do).SET Phung Dich Thuc, general director of PetroVietnam said, after two new pipelines are finished, the onshore gas supply will be raised by 30-40 percent to 10-11 billion cubic metres a year. More important, all new pipelines will help promote contractors to enhance investments and exploration at new potential oilfields. It is hard to find out some large petroleum wells, he admitted. All of the six new oilfields set for drilling in 2010 are small so total extra petroleum reserve is only 34 million tonnes (excluding the reserve of oil wells overseas). This year PetroVietnam only targets to hike the reserve to 35-40 million tonnes of convertible oil. Meanwhile, Vietnam’s need of crude oil and gas in the future is on rapid increase. Only Long Son oil refinery in Ba Ria Vung Tau province (that will be signed JV contracts in 2010) and Nghi Son refinery in Thanh Hoa (ground will start in 2010) need up to 20 million tonnes of crude oil a year. In addition, PetroVietnam plans to raise the capacity of Dung Quat Oil Refinery from 6.5 million tonnes to 10 million tonnes, thus the group will have to expand operation scope outside Vietnam to increase petroleum output. “We may import gas by pipeline and compressed gas by ships”, Thuc revealed. PetroVietnam is considering connecting Vietnam’s gas pipelines to some South-eastern Asia countries to buy gas for meeting domestic demand. As estimated, from 2012, Vietnam needs to import four billion cubic metres of gas. The plan of importing compressed gas was carried out through building the big reserve depots in provinces. From 2010, PetroVietnam will have first petroleum products in foreign countries when the oil wells namely Nhenhexky, SK 305 in Russia and Malaysia, Junin (Venezuela) are put into drilling. The crude oil output (drilled in foreign countries) in 2010 could be about 500,000 tonnes. Up to now, PetroVietnam has invested in 21 overseas projects with total cost of $600 million. According to Dinh La Thang-chair of PetroVietnam director board, the group’s overseas investment will surge sharply when its JV with Russia’s Gazprom started petroleum exploration and drilling projects. In 2010 alone, PetroVietnam will invest 110.500 trillion dong, up over 44 trillion dong year-on-year. Apart from signed projects, PetroVietnam will continue seeking other investment opportunities in Africa, America, South-eastern Asia, Russia, SNG countries also. Last year the group established partnership deals with national petroleum companies of Bolivia, Nicaragua, Mozambique, Angola, Sudan, Kazakhstan, and Argentina.

POWER - Hoang Anh Gia Lai Group invests in hydropower in Laos

Under the memorandum of understanding (MoU) signed in Vientiane on January 19 between Vietnam’s Hoang Anh Gia Lai Joint Stock Co (HAGL)’s general director, Nguyen Van Su and Laos’ deputy minister of planning and investment, Thongmy Phomvisay, HAGL will build a $120 million hydro-electric power plant in Laos.

The Nam Cong 2 hydro-electric power plant with a designed capacity of 70MW will be put into operation after three years of construction.

Earlier in August 2009, the two signatories signed a MoU for Nam Cong 3 hydro-electric power plant.

Once operational, the two projects will help boost socio-economic development in southern Laos’ region.

The HAGL has gained prestige in Laos with the Sea Games 25 village in Vientiane and a project on planting 10,000 hectares of rubber trees in Attapeu province.CAFEF