Vietnam - News and Regulations

WORLD ECONOMIC FORUM ON VIETNAM - Vietnam trade environment ranks 71st

Vietnam has leaped 18 places to 71st in the World Economic Forum's latest report on trade environment.

The Global Enabling Trade Report 2010, released May 19, says Vietnam has achieved among the biggest progress made by any of the 125 countries and territories in the report.

The improvements in the country's trade environment reflect Vietnam's commitments following its accession to the WTO in 2007, which is leading to a significant liberalisation of trade in goods and services.

Vietnam's market access ranks 50th among the 125 economies studied.

The country's tariff schedule remains complex but bigger concerns are border administration and infrastructure.

The country's low rank of 104th for transparency of border administration indicates room for improvement in this area, and trade could be further enabled by upgrading the country's transport infrastructure, which is in a dire state.

Low airport density, poor road quality, and insufficient port facilities indicate that the booming economy is straining the country's infrastructure.

The report ranks countries based on four criteria -- market access, border administration, transport and communications infrastructure, and business environment.

Singapore and Hong Kong continue to occupy the top two positions followed by Denmark, Sweden, and Switzerland.intella

INFRASTRUCTURE - Jica funds $200m for two infrastructure projects in HCM City

Japan International Cooperation Agency (Jica) yesterday signed detailed agreements with Vietnamese government relating to ODA loans of $200 million dong for two projects in HCM City. The first loan of about $150 million will be used to finish the East-West Corridor project in order to put into operation in the following year. The second loan valued at approximately $50 million will go on water environment improvement in HCM City. Under the project, Binh Hung waste water treatment plant was built and started operation in December 2008 with designed capacity of 141 cubic metres per day.TBKT

NUCLEAR POWER - EVN proposes corporate bond issue for developing nuclear power in Vietnam

Phan Minh Tuan, head of EVN renewable energy and nuclear power project's investment board said that bonds might be issued for carrying out construction project of the first nuclear power plant in Vietnam. He revealed the information on the occasion of participating the international exhibition on nuclear power held on May 27 and 28.

Tuan added that investment capital for setting up a nuclear power plant would be at the highest level among the industrial power generator models at present.

At present, Electricity of Vietnam Group (EVN) has started cooperation with Russia in providing technologies for the country's first nuclear power plant in Ninh Thuan province.

The project's feasibility study was underway and EVN would approve the profile to seek for partners' opinions.

The construction of Ninh Thuan Nuclear Power Plant was expected to be started in 2014 and to be finished after 18-24 months.LDONLINE

Vietnam to operate first nuclear power plant by 2020

The construction of the first nuclear power plant at Ninh Thuan will begin in 2014 and the first turbine will become operational in 2010, said a representative from the Electricity of Vietnam (EVN).

At a press briefing held in Hanoi on May 25 on the fourth international exhibition on nuclear power, the Head of EVN's renewable energy and nuclear power projects' investment board, Phan Minh Tuan, said a feasibility study is underway and the project is seeking opinions from consultants and partners.

EVN has also started negotiations with Russia on choosing the right technology as it is experienced in civil nuclear power, he added.

The country is also cooperating with Russia in human resource training nuclear power sector. According to director of the Vietnam Atomic Energy Institute Vuong Huu Tan, Vietnam has sent 40 students and MAs to Russia for further training in this field. Seven domestic universities are also training workers for the sector.

Together with its rapid economic development, the country's energy consumption is rising fast, said Tan. The Ministry of Industry and Trade has forecast that Vietnam will need around 294 billion kWh of power in 2020 and 562 billion kWh by 2030. Meanwhile, current energy sources will only be able to supply around 230 billion kWh by 2020 and 293 billion kWh by 2030.

Developing nuclear power, therefore, is extremely important, said Tan, adding that it would not only meet the national economy's increasing demand for power but also ensure energy security.

The fourth exhibition, which focuses on the Ninh Thuan nuclear power project, will take place in Hanoi from May 27-29, drawing many of the world's leading nuclear technology companies from Japan, Russia, France, the US, China, Canada and Bulgaria.

The Ninh Thuan project, which was approved by the National Assembly in its November 2009 session, includes two reactors which combined can produce over 4,000MW.

RENEWABLE ENERGIES - Wind power potential of Binh Thuan province estimated at 5,000MW

Binh Thuan province has finished the wind power development plan for 2010-2015 and vision for 2030 and submitted it to the Ministry of Industry and Trade's Energy Department for appraisal. Accordingly, the province's wind power potential is estimated at total 5,000MW.

Nguyen Anh Tuan, vice head of the department said the wind power development areas mainly locate in coastal districts of Tuy Phong and Bac Binh.

Development of wind power potential requires preferential power purchase policies to encourage investors.

To date, Binh Thuan provincial Department of Industry and Trade has licensed 12 wind power projects (covering total 13,900 hectares of land) with total capacity of 1,540MW for 10 investors.TBKT

RESOURCES- Vung Ro Oil Refinery project to be started in 2011

Representative of Russia-based TellOil Group, main investor of Vung Ro Oil Refinery project revealed yesterday that at present, the company has pushed up designing works and contractor selection in order to officially kick off the project in 2011.

It is the third time after nearly three years of receiving the investment certificate that the $1.7 billion project has been worked out the deploying plan. Previously, due to financial problems caused by the world economic recession, the foreign investors of the UK's Technostar Co and Russia's TellOil Group had to delay the implementation on the project.

Vung Ro Oil Refinery will be constructed on an area of about 400 hectares of land and water surface, with designed capacity of 4 million tonnes per year. The oil refinery is expected to raise the production capacity to 8 million tonnes per year in the second phase.TBKT

INDUSTRIAL PRODUCTION - Industrial production value soars 13.6pct y-o-y

Vietnam's industrial production value in May is estimated to reach 64.7 trillion dong, up 13.8 percent over the same period last year, reported Ministry of Planning and Investment (MoPI) on May 27. Of which, private economic areas posted a rise of 11.4 percent and foreign-invested economic areas soared 19.2 percent year-on-year.

Totally in Jan-May, the country's figure reached 301.8 trillion dong, a year-on-year increase of 13.6 percent. Of which, private economic areas increased 12.4 percent and foreign-invested economic areas saw a year-on-year rise of 16.7 percent.

Noticeably, crude oil exploitation decreased 17.9 percent y-o-y while other products posted year-on-year increases.

Items reached high growth such as liquefied petroleum gas (LPG) up 93 percent, air conditioner up 45.7 percent, and tyre up 43.2 percent.

Some provinces reported high growth including Vinh Phuc up 41.9 percent, Phu Tho 24.1 percent and Da Nang up 20.1 percent y-o-y.

Some others posted lower growth against the average level such as Ba Ria Vung Tau up 10.7 percent and Khanh Hoa up 8.3 percent y-o-y.

Also according to MOPI, the total state budget collection during the first 15 days of May was estimated to reach 15.8 trillion dong, bringing the total figure in Jan-May to 176.8 trillion dong, or 38.3 percent of this year's estimate, higher than the same period last year (31.8 percent of year's estimate).

Of which, domestic tax collection reached nearly 113.3 trillion dong or 38.4 percent of the year's estimate, tax collection from crude oil reported at 22 trillion dong, or 33.3 percent, and collection from export and import activities posted at 39.5 trillion dong or 41.4 percent of the year's estimate. Total budget spending during the first 15 days of May was 19.8 trillion dong, bringing the total figure in Jan-May to 197 trillion dong, or 33.8 percent of this year's plan (it was 28.2 percent last year). Of which, spending for development and investment was 44.4 trillion dong or 35.8 percent, spending for socio-economic and defence at 125.4 trillion dong or 33.8 percent and spending for debts and aids at 26.8 trillion dong or 38.1 percent of this year's plan.

In May, spending for development and investment was 12.2 trillion dong including 3.8 trillion dong for central development and investment and 8.4 trillion dong for local development. Totally, the figure in Jan-may was 45.6 trillion dong or 36.5 percent of the year's plan. Of which, Ministry of Agriculture and Rural Development disbursed 62.8 percent, Ministry of Education (55.8 percent) and Ministry of Transport (48.3 percent).

Some provinces reported high disbursement including Ninh Binh (75 percent), Hoa Binh (60.7 percent), Da Nang (53 percent) and Hai Phong (52 percent of the year's plan).

Till the end of May, total credit for investment and export reached 23.9 trillion dong, or 44 percent of the year' figure including 5.5 trillion dong of domestic credit, or 20.8 percent, 2.4 trillion dong from ODA or 24 percent and 16 trillion dong of average total outstanding loans to support exports.

From the early this year till now, ODA attraction reached $497 million including $454 million of loans and $43 million of non-refundable aid.

During the first five months this year, total ODA disbursement was estimated to reach $844 million or 35 percent of the year's plan including $767 million of ODA loans and $77 million of non-refundable assistance.CAFEF

FOREX - Vietnam's overseas remittance of 2010 expected at over $6b

Many financiers, economists and bankers forecast that the overseas remittance inflow to Vietnam in 2010 will be more satisfactory and at higher potentials compared to previous years thanks to the world's economic recovery.

Replying to Dau Tu Chung Khoan magazine, Nguyen Hoang Minh-deputy director of State Bank of Vietnam-HCM City arm said that the inward remittance via HCM City banks during the first five months of 2010 reached $1.079 billion, marking a growth of 32.13 percent against 2009's $4 billion.

Prof Dr Tran Hoang Ngan, vice master of HCM City Economic University cum member of the National Monetary Policy Advisory Council in a statement said that inward remittance of Vietnam this year could be over $6 billion.

The current movements of free market's forex rate was closer to the banks' listed forex rate, which will create conditions for residents to decide to keep more US dollar at banks for longer time. Factually, between 2009 end and 2010 early, when the forex rate between free market and commercial banks was around 300-500 dong per US dollar, banks felt very hard to keep inward remittance because remittance receivers used to withdraw US dollar for selling on the free market to earn profits from forex rate difference,

At Sacombank, overseas remittance transference in Jan-April attained $430 million, up 33.5 percent year-on-year. The payment turnover is expected to achieve $1 billion, higher than 2009's actualised result of $900 million.

Ending the first four months of this year, the inward remittance payment turnover via Eastern Asia (DongA) Commercial Joint Stock Bank (EAB) also increased by 20 percent compared to the same period of 2009. The turnover could increase from $991 million in 2009 to $1 billion this year. With flexible policies, EAB's remittance payment now accounts for 15 percent of the country's total figure.

In the same period, the overseas remittance transference via Vietcombank grew by 14 percent to $434 million.

Usually, the overseas remittance payment will blossom in the last months of year when many Viet Kieu want to send money to the homeland for spending in Lunar New Year.DTCHK

Insurance - M&A in insurance expected to surge in 2010

Mergers and Acquisitions between companies are blossoming strongly this year on account of difficulties in capital mobilisation and network expansion.

Although in the past time, M&A in the insurance field has not really become a strong wave like other production sectors. But the trend of M&As in insurance is expected to be brisker in the near future.

2010 M&A operation started with a record business deal that UK's Prudential insurance group took over AIA insurance firm under US AIG Finance Group. Both groups have subsidiaries in Vietnam.

Previously, Vietnam's insurance market also witnessed several remarkable M&A events.

Over 10 years ago, Allianz Vietnam, a 100 percent foreign invested insurer decided to transfer its entire network to Australia's QBE Insurance Co after nearly seven years of operation. Terms and compensations of insurance contracts signed before the merger were still valid.

Another deal, Bidv Bank had contributed capital into Viet-Uc (Australia) Co to set up Viet-Australia Insurance JV but the new firm did not operate sufficiently. On December 28, 2005, Bidv officially bought back the JV and establish Bidv Insurance Co (BIC) that came into official operation from 2006.

Or lately, Dai-ichi Life of Japan took over local insurer Bao Minh CMC to form Dai-ichi Life Vietnam. At present, Dai-ichi Life Vietnam posts good performance with seven percent market share and its annual growth rate always is higher two times than the average growth of the whole market.

The quick development in number of insurance companies, especially as for the non-life insurance field, led to the shortage of qualified manpower. Meanwhile, a source from finance ministry's Insurance Supervision Department said that till the last year end, most non-life insurers met enough authorised capital level of at least 300 billion dong but now some insurers still are implementing the capital increase to 300 billion dong, namely Bao Long, Bao Tin, Hung Vuong, UIC and Samsung Vina.

Shortage of capital, good workforce and IT system has forced insurance firms to look for foreign strategic partners. In 2007, Bao Minh Non-Life Insurance Co officially joined hands with France's AXA Group through selling its 16.6 percent stake to the foreign insurer.

According to Nguyen Cong Ai, deputy general director of KPMG law consulting firm, Vietnam's insurance market always welcomes foreign invested companies because local firms need the capital and technical supports from foreign partners.

But the process of looking for foreign partners is not easy. Duong Duc Chuyen, director in charge of investment and strategy construction of Bao Viet Group (that had a successful cooperation deal with HSBC) shared, in M&As, companies will have to define what they want to sell and what foreigners want to buy.

Bao Viet group, for example, previously expected to find out a good partner with business experience and technical support willingness for Bao Viet.

"M&A does not mean to sell a part of companies to take money. After M&A deals, how companies do to develop is the core result", he added. Before the marriage between HSBC and Bao Viet, two sides had to undergo a detailed and long run negotiation process.

Takashi Fufi, CEO of Dai-ichi Life Vietnam also said that a successful M&A deal requires a clear strategy. The post-M&A strategy are very important also.cafef

BANK/CAPITALIZATION - Central Bank proposes legal capital roadmap for commercial banks

Mission group chaired by Tom Tobin, general director of HSBC Bank (Vietnam) Ltd remarked at the Business Forum that SBV's draft on compulsory legal capital of commercial banks at 5 trillion and 10 trillion dong in end 2012 and 2015 correspondingly was already submitted to the government for consideration and approval. We {HSBC Vietnam] comprehend 10 trillion dong is a huge capital level that a lot of banks will not able to reach.

The forum was held in Hanoi on May 26.

Banks addressed, the requirement will lead to the inefficient usage of many banks in Vietnam in future. So banks expected Central Bank would consider lowering the capital level.

Concerning the foreign ownership ratio of foreign investors at Vietnamese banks, a banker proposed the government to consider raising the ratio according to a particular roadmap to create conditions for strategic partners to draw up long term strategy. Currently, the foreign ownership ratio at a local bank is disallowed to surpass 30 percent. In which, the maximum ratio of a strategic partner (international bank) is 15 percent that could be 20 percent if obtaining prime minister's approval.

The mission group represents for over 30 international groups and companies operating in Vietnam, including subsidiaries, branches and transaction offices of well known consumer finance companies and banks from over 15 countries.CAFEF

FUND INVESTMENTS - Vietnam Dream Fund to start investment in stock market from Jun 1

As of June 1, Vietnam Dream Fund capitalised at $100 million will start operation on Vietnamese stock market. The fund was formed by the cooperation of Japan Asian Group's United Investment and MB Capital.

Thang Long Securities Co will be the official brokerage for the fund.

Truong Thi Huong Tra, business development director of MB Capital said that the establishment of Vietnam Dream Fund showed the faith of Japanese investors in Vietnamese stock market. From the start, two parties will continue making big efforts to raise capital from some other international markets to connect this capital flow with Vietnam.

Vietnam Dream Fund will mainly invest in Vietnam listed firms, she added.

Till end of March 2010, total assets managed by MB Capital reached over 20 trillion dong.

VNNEWS

BANKING - Banking Vietnam 2010 conference takes place in Hanoi

Information Technology Department of Banking, under State Bank of Vietnam, cooperated with International Data Group (IDG) to organise the Banking Vietnam 2010 from May 27-28 under theme of "Banking modernisation at the threshold of economic recovery".

The participants of this event focused on discussing on strategic planning for banking technology development, banking technology in boasting non-cash payment and banking technology in improving administration, management capacity for banking business in the renewal period.DTCHK