Vietnam - News and Regulations

FINANCE – PetroVietnam to issue international bonds

National oil and gas group PetroVietnam announced it would complete the preparation for international bond issue in the last half of 2010 to arrange enough capital for building the projects like Ca Mau urea fertiliser, Vung Ang 1 thermo power plant, Nhon Trach 2 power plant, and oil mining at Block 05-2 and 05-3.

PetroVietnam will change operation into the one member limited company from July 1, 2010, transform PVGas into the joint stock firm and Petec into a corporation.

In Jan-June, the group earned total revenue of 205.820 trillion dong. Its members produced 394,000 tonnes of urea, 6.5 billion kWh and 2.360 million tonnes of kinds of petroleum.VNNEWS

INFRASTRUCTURE AIRPORT - $10b to build Long Thanh airport

Deputy prime minister Hoang Trung Hai ordered Ministry of Traffic and Transportation to soon set up the council of appraising the Long Thanh airport project with total cost of $10 billion in Dong Nai province, and prepare the comparative draft to select a consultant for building feasibility study.

According to the plan sent to Dong Nai provincial People's Committee by Southern Airport Corp (SAC), Long Thanh international airport is levelled at 4F built on 5,000 hectares with the transportation capacity of 100 million passengers and five million tonnes of goods a year. As designed by the Australian consultant Hensen Partnership, the airport can receive big planes A380-800.

Long Thanh airport comprizes eight functional areas: offices, parking area, museum, transit centre and preservation warehouses, processing area, hotels, non-tariff area and golf course.NLD

FINANCE - Vietnam inflation may have peaked, slow to 6 pct, JPMorgan says

Vietnam's inflation may have peaked and could slow to 6 percent by the end of the year as global commodity prices ease, JPMorgan Chase & Co. said.

Consumer prices rose 9.05 percent in May from a year earlier, down from 9.23 percent in April and 9.46 percent in March. They increased 0.27 percent in May from April.

Evidence that inflation may slow further would give the government room to renew appeals for banks to revive lending by cutting interest rates. State Bank of Vietnam deputy Governor Nguyen Van Binh told a World Economic Forum conference in HCM City on June 6 that the central bank will try to ease rates at the government's request.

"We're probably already past the worst," David Fernandez, Singapore-based head of research for emerging Asia at JPMorgan Chase Bank, said at a conference in HCM City Tuesday. "The headline numbers will probably continue to come down."

International food and energy prices are likely to be stable for the rest of the year, Fernandez said. Overall Vietnamese food prices rose 9.23 percent in May from a year earlier, while dropping 0.12 percent from April. Prices in Vietnam's transportation category rose 0.12 percent from April.

"This didn't happen only by the magic of global commodity prices," Fernandez said. "We have seen a tightening of credit, though that is starting to loosen up."

Credit growth

Credit expanded 8 percent in the first five months of the year, Thoi Bao Kinh Te Vietnam newspaper reported May 31, citing State Bank of Vietnam Governor Nguyen Van Giau. Last year, Vietnamese lending jumped 38 percent. The State Bank of Vietnam has set a 25 percent full-year target for 2010.

With inflation "looking more benign than everyone had expected," Vietnam's central bank may not adjust its benchmark interest rate all year, Fernandez said. The State Bank of Vietnam's so-called base rate has been held at 8 percent since December.

"People came into this year worried again about the same two issues that always plague Vietnam: the balance of payments and inflation," Fernandez said. "Many people have gone too far in expecting these to be macro challenges that require very strong measures."

Nicholas Kwan, the Hong Kong-based regional head of research at Standard Chartered Plc, told journalists Monday at the World Economic Forum conference in HCM City that the bank didn't expect "any significant moves" in the benchmark rate, and that Vietnam should focus on finding more effective monetary policy tools instead of changing the base rate.BLOOMMBERG

Vietnam's public debts still at safe threshold, NA officials say

Replying to questions of National Assembly delegates on public debts yesterday, minister of Finance Vu Van Ninh confirmed that Vietnam's government debt touched 41.9 percent of GDP, including debts of state firms and government guaranteed debts for enterprises. Of government debts, the foreign debts accounted for 58.8 percent and domestic debts 41.2 percent.

In the foreign debt structure, 86.5 percent was long term loans (30-40 years along with 10 years of grace period), ODA and loans sourced from World Bank, International Monetary Fund, loans of Asian Development Bank and Japan. The loan rates range between 0.75-1 percent depending on each credit agreement. Actually, these loans are used for big projects like My Thuan Bridge, Can Tho Bridge and some seaports, important irrigation works.

Foreign short term loans carry ordinary interest rates equalling or lower a bit than the market's levels.

Domestic debts include 9.9 percent of government guaranteed debts, the local governments' debts totalling at 26 trillion dong or 1.6 percent of GDP.

The country's foreign debts makes up 38.9 percent of GDP at this time, of which 86.5 percent is medium and long term loans and remainder is short term loans. The foreign debt of the government is 64 percent and those of enterprises 36 percent.

Minister remarked "we [Vietnamese government] do not hide the government debts because afterwards, if Vietnam goes under bankruptcy, I will have to take responsibility first. So we have to report all statistics".

Last year the government's debt payout accounted for 15.8 percent of total state budgetary collection, which still is less than the allowable limit of 30 percent.NA

CAR INDUSTRY - Auto seminar ponders ways to develop Vietnam's stagnant car industry

Infrastructure development and tax policies are vital to boosting Vietnam's stagnant car manufacturing industry. The issues were much debated by automobile specialists and policymakers yesterday in Hanoi. '

Speaking at a seminar titled "Automobile Market, Supporting Industries, Transport Infrastructure and Development Platform for a Stable Automobile Industry", deputy director of the Ministry of Industry and Trade's Heavy Industry Department Ngo Van Tru said if the country wanted to develop the car manufacturing industry, it could not rely on truck and bus development only as this segment would become saturated in 2018.

Tru commented that between 2008 and 2009, as import and special consumption tax and registration fee dropped, local consumers took the opportunity to buy cars, resulting in scarce supplies.

Elaborating on why domestic manufacturers could not meet rising domestic demand, Tru said manufacturers already had their production plans for the whole year; that was why they could not meet the sudden spike in demand from consumers at that time.

He also said: "Many local manufacturers are quite small in terms of their scale of production. We have to develop strategic measures to promote the domestic automobile industry so that we can attract supporting industries."

Tru also cited the sluggish rate of localisation, saying that Vietnam was now home to 54 car manufacturers, each on average capable of manufacturing and assembling 2,800 units per year.

There were now 400 kinds of automobiles in the country; however, the volume of each model was quite small, resulting in greater difficulty in further localising production and component manufacturing.

As a result, investment in producing car spare-parts for the local car manufacturers was less attractive to foreign investors due to low cost efficiencies.

Domestic manufacturers were at a disadvantage in exporting spare parts to other countries as local manufacturers largely relied on imported materials for production.

The country's economic development had been dramatic while infrastructure development could not keep pace with growth and that had resulted in a conflict between production, consumption and infrastructure capabilities.

He also mentioned changing tax policies that had caused difficulties in car manufacturing and assembly plants, discouraging both producers and investors.

Nguyen Van Phung from the Ministry of Finance's Taxation Policy said tax always contained a conflict of interest, citing that importers always wanted the ministry to reduce import tax while local producers wanted the ministry to raise import prices to protect local production.

In an attempt to develop the car manufacturing industry in line with its international commitments, Vie t Nam needed to protect local producers in a better way, creating advantages for imports and enhancing the supply of input materials without negatively affecting the trade deficit and spurring local production in an attempt to raise product quality.

Phung said the ministry would use taxes and charges in a holistic way, based on the reality of the situation, in a fair, public and transparent manner.

Vietnam is compelled by the World Trade Organisation to cut taxes on various kinds of cars to 70 percent within the seven years since joining.

By 2019, 2.5-litre cars will enjoy export tax reductions from 90 percent to 52 percent. To avoid trade fraud, all kinds of passenger cars will enjoy a 47-per-cent tax rate by 2017.

In the process of the Asean free trade area tariffs reduction framework (CeptI Afta), from January 1, 2006, 10-seat passenger cars and trucks have enjoyed a tax reduction to 5 percent since 2006. The nine-seat cars will enjoy a zero tax rate by 2018, according to Phung.

According to the Ministry of Industry and Trade, after 2020, the coach and bus fleet will develop in line with Vietnamese economic development and the generalised spreading of mass motorised transport.

Apart from giving priority to the development of trucks and buses, the Vietnamese car industry needs to outline a clear orientation for the development of tour buses and coaches. Vietnam will also need to have a focused policy to develop a specific car segment by mobilising finance and human resources so as to avoid haphazard investment.vnnews

INFRASTRUCTURE - Six banks fund National Highway 51 expansion project

Bien Hoa-Vung Tau Expressway Development Joint Stock Co (BVEC) inked a deal with six commercial banks to fund the 3.3 trillion dong project expanding the National Highway 51 yesterday.

Under the credit agreement signed yesterday, the six banks offer close to 2.4 trillion dong, or $125 million, equivalent to 72.16 percent of the total invested capital. The six banks are Bank for Investment and Development of Vietnam (BIDV), Vietnam Export Import Commercial Bank, Asia Commercial Bank, Vietnam Bank of Agriculture and Rural Development, Vietnam Bank for Industry and Trade, and DaiA Commercial Bank.

The expansion of the 72.7-kilometer road running through Dong Nai and Ba Ria-Vung Tau provinces will take three years from August 2. It will be widened from 32.9 meters to 39.3 meters to have eight lanes and allow for a design speed of 80 kilometers an hour.

The project also includes expanding 10 existing bridges and building 12 new bridges.

The consortium of investors, comprising Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO), Song Da Corp and BIDV, accounts for around 27.8 percent of the total investment capital. The project will be developed under BOT (build, operate, transfer) form.

IDICO general director Nguyen Van Dat said the project would meet cargo transport demands of major ports in Cai Mep- Thi Vai area and industrial parks along the highway.

Along with the Long Thanh-Dau Giay Expressway to be developed, the highway will help boost economic development of the southern key economic zone including the two provinces.VNNEWS

Techcombank, BCEC cooperate in developing coffee trading floor

Vietnam Technological Commercial JS Bank (Techcombank) and Buonmathuot Coffee Exchange centre (BCEC) have signed a cooperation deal in developing deadline coffee products on the exchange.

Under it, Techcombank will play as the key consultant for BCEC in organising, building products and managing operation of the exchange floor. Also it will arrange finance and provide other financial services to the customers who join transactions at BCEC.

In return, BCEC will manage and supervise the operation of floor, members, and customers and administrate risks.VNN

INSURANCE - Bidv insurance firm reports achieving sharp increase in Bancassurance revenue

After the first five months of this year, Bidv Insurance Co (BIC) reported earning total revenue of 222.192 billion dong, increasing by 14 percent against the same period of 2009, in which the insurance premium surged by 63 percent to 156.264 billion dong and revenue from Bancassurance channel recorded the impressive growth of 19.08 billion dong, counting for 12.21 percent of the total insurance premiums. Last year, the revenue gained from Bancassurance channel only counted for 9.6 percent of the total premium.

The company also announced to reach total pre-tax profit in Jan-May of 29.475 billion dong.

BIC has launched new insurance products such as insurance for apartments and individual houses. The company has also launched online sales channel via ATM and transaction points of PayNet, VNPay, ViettelPost and CoopMart.

The company's distribution network was expanded with the establishment of new nine transaction offices in Dong Anh, Ca Mau, Bac Giang, Buon Ma Thuot, Dak Nong, northern Dak Lak, east Dong Nai and two new offices in Hanoi.DTCHK

AVIATION - Vietnam Airlines aims to have 7 new international routes in 2010

Vietnam Airlines said Thursday that it aims to serve seven new international routes this year, raising its total international routes to 40.

The new routes will include those from Hanoi to Osaka, Yangon, Shanghai and Kuala Lumpur, and those from HCM City to Shanghai, Nagoya and Yangon, the country's flag carrier said in a statement.

It said it will start flying the HCM City-Nagoya route in August and the HCM City-Yangon route in October. Services on the Hanoi-Kuala Lumpur route will start in winter.

Vietnam Airlines said services on the other routes already started in the first quarter this year.

The airline said it expects pre-tax profit of VND161 billion ($8.5 million) this year, up from VND154 billion in 2009.

Vietnam Airlines' revenue may rise 31pct this year

Vietnam Airlines Corp.'s revenue may rise 31 percent this year as the state owned carrier expands its fleet of aircraft and network of destinations.

Sales may increase to 32.24 trillion dong ($1.7 billion) in 2010 from 24.62 trillion dong last year, Hanoi-based Vietnam Airlines said in a press release Thursday.

The carrier on Thursday joined the Skyteam Alliance, whose members include OAO Aeroflot, Air France-KLM Group, China Southern Airlines Co., to enlarge its network of destinations and cut operating costs. Vietnam Airlines expects to carry 12 million passengers this year, up 28 percent from 9.35 million in 2009, according to the press release.

The airline plans to expand its fleet of aircraft to 115 by 2015 and to 165 by 2020, compared with 70 by the year end, Chief Executive Pham Ngoc Minh said at a media briefing in Hanoi Thursday.

Vietnam Airlines expects to take delivery of 10 aircraft this year, including ATR-72s and Airbus SAS A321s and A330s, Minh said on June 7.

The carrier is still in the process of preparing its initial public offering and finding foreign partners, the chief executive told reporters Thursday, without stating when the company may sell shares or the names of prospective partners.

The global financial crisis has delayed the plans of state owned companies, including Vietnam Bank for Investment and Development and Vietnam Mobile Telecommunication Services Co., to sell shares.

The government may revive plans to sell stakes in companies, including Vietnam Airlines, in 2010, minister of Planning and Investment Vo Hong Phuc said on December 3.

The government said in 2008 that it planned to sell a holding of as much as 20 percent in Vietnam Airlines.BLOOMBERG

PetroVietnam subsidiary joins setting-up of packing facility

PetroVietnam general Service Joint Stock Co (STC listed PET) announced it has contributed capital to set up PetroVietnam Packing Joint Stock Co capitalised at 25 billion dong.

Of which, PET contributes 51 percent, Phu My fertiliser and chemical JSC 19 percent and Trang Hoang My Co Ltd 30 percent.

The new firm will build the packing production factory in Bac Lieu province in the near future.

On June 14, PET will move its headquarter from 12AB Thanh Da St, Ward 27, Binh Thanh Dist to Floor 5, PetroVietnam Building, No 1-5 Le Duan St, Ben Nghe Ward, Dist 1, HCM City.VIETSTOCK

Shipbuilding - Bach Dang shipbuilder launches 17,500dwt cargo ship for export to Korea

Hai Phong City's Bach Dang Shipbuilding Industry Corp yesterday launched the 17,500dwt cargo ship named that will be exported to Korean buyer Shinsung Marine Transportation Co.

The ship, named Shinsung Accord, has the capacity of 6,060 horse-power, speed of 13.2 knots an hour.

The ship will be handed over to the Korean firm by this August end.

After launching Shinsung Accord, two parties signed a deal to build the second 17,50dwt cargo ship of four ordered by Korea.

Previously, Bach Dang shipyard had built four 4,500m3 gas vessels for an Italian investor.dtchk

TELECOM - EVN Telecom signs contract for value-added services with VTC Intecom

EVN Telecom has recently signed a deal for providing value-added services on 3G background with VTC Digital Telecommunication (VTC Intecom) on the occasion of its official launch of 3G network.

Accordingly, the two parties will cooperate with each other in developing the content services for the 3G subscribers of EVN Telecom.

Relating to developing 3G network, EVN Telecom also inked the deal for 3G special agents with ECPAY, Electricity and Telecommunication Payment Solutions Joint Stock Co.DT

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Oliver Massmann

Rechtsanwalt