Vietnam - News and Regulations

TRADE/Export value likely to jump 16pct in 2010

The Industry and trade ministry estimates the value of exports will jump 15.6 percent to $66 billion this year against 2009. But it warns that the promotion of exports during the next six months will be difficult because of the fragile world economy. The ministry forecasts exports value of $33.5 billion during the second half of the year at a monthly average of $5.59 billion. Exports from the agriculture, the fisheries and processing industries will continue to grow to higher export value than the first half, it says. The likely rate is 10 percent for agriculture and fisheries and 22 percent for processing. The export value of fuel and minerals will fall an estimated 3.8 percent due to lower coal and crude oil exports. Measures The ministry lists numerous measures to meet the target of 6 percent growth in export value by December 31. Deputy Industry and Trade minister Nguyen Thanh Bien said the first should be the removal of obstacles and for the State to support increased exports of agriculture, forestry and fisheries produce. The ministry would boost its support of trade promotion and inform cities and provinces about the possibility of exporting in accordance with free-trade agreements. The ministry's import-export department director, Phan Van Chinh, said the target of 12 percent growth in export value for 2010 could be met if enterprises took advantage of the free-trade agreements. The trade promotion department and the competitive management authority would increase trade promotion and find ways to abolish trade barriers to Vietnam's goods, he said. This would help exports penetrate into new markets and increase share in existing markets. The ministry would work with other ministries and economic sectors to help enterprises raise capital for production, especially exports. Trade deficit Imports would also be curbed to reduce the trade deficit. The ministry estimated that the value of imports for the year would total $76-77 billion and the trade deficit $10-11 billion. Economists argue that if enterprises do not switch to made-in Vietnam materials to reduce imports, the State will find it difficult to limit the deficit. The general Statistical Office's National Account Department director Bui Ba Cuong said the import consumption was the cause of the deficit and the State must be careful about the measures it introduced. The majority of imports were machines, equipment and materials for production. If the State were to control the import of these goods, production would be harmed, he said. Policy makers should find measures to control the trade deficit without affecting production. VNS

INSURANCE- Life insurance market reports high growth

The life insurance market, according to preliminary statistics, continued to have significant growth in the first six months of 2010 with 25 percent increase in revenue from new insurance policies (not including Bao Viet).

The optimistic signs of the market have encouraged life insurance businesses to have faster move. Till the end of 2010, they plan to simultaneously launch series of new products, strongly focusing on the segments for retirement insurance, group insurance and health insurance, etc.

According to Dai-ichi Life Vietnam, in the first six months of 2010, they have achieved over 120 billion dong in new policies' premium, obtaining growth rate of 48 percent compared to the same period of 2009, nearly double the average growth rate of the market. In June, Dai-ichi Life Vietnam has issued an insurance policy of 15 billion dong premium to a client in Hochiminh city. This is a record for the highest premium ever in life insurance sector. Till May 2010, Dai-ichi Life Vietnam had put into operation six general agents and it will continue to expand the network till the end of 2010. Dai-ichi Life Vietnam expects to launch a new health product in July 2010.

Other insurance companies also have reported strong growths such as ACE Life (achieving 40 percent growth in new policies' premium), new member Korea Life Vietnam (in the second quarter obtaining nearly 80 percent growth in new policies' premium compared to the same period of last year). After officially went into strategic partnership with ILA in order to provide more value added products to the clients, Korea Life Vietnam has launched a specialised product for the clients who are preparing for their retirement; this is in endowment insurance product group. In the near future, Korea Life Vietnam will continue to open its branch in Binh Duong and offer more products to the market.

Being more or less affected by the parent corporation's unsuccessful merger with Prudential, in the first six months of the year, AIA still maintained good growth in premium for new policies. It also has expansion and new product launching plans in the last months of the year.

According to unofficial statistics, total revenue from new policies' premium of Prudential Vietnam in the first six months has gone up by 27 percent. Market shares (by premium revenue) of Prudential remained stable at 40 percent. In the future, Prudential will expand its insurance channel through banking system with major banking partners; continuing to develop general agent network, especially in major cities. Prudential Vietnam also plans to bring to the market a number of specialised insurance products in the shortest time possible. The company achieved impressive growth of 33 percent in new policy revenue.

The competition between life insurance companies is expected to become exciting due to new moves in the market; especially the future participations of some new foreign insurers (may be in late 2010). Leaders of the existing insurance companies not only have to encourage employee retention but also consider offering more value added products into the market to the clients. The new comers have certain advantages in utilising and enhancing the advantages of the existing insurance products and adding value to attract clients. Therefore, the competition will become fiercer and clients will certainly be the ones who benefit the most.DTCHK

Energy takes centre stage in Vietnam-Russia ties

Energy cooperation will be the highlight in the bilateral relations between Vietnam and Russia, said Vietnamese Party general Secretary Nong Duc Manh during meetings with top leaders of Russia during an official visit.

Manh, currently in Russia, and the host country's deputy prime minister Alexander Zhukov on Saturday discussed ways for strengthening comprehensive bilateral ties between the two nations.

They two sides highly appreciated agreements signed between the two governments in late 2009, particularly those on oil and gas, energy and military technology sectors. They agreed to enhance the coordination role of the Vietnam-Russia Inter-governmental Committee on Economic, Commercial, Scientific and Technological Cooperation as well as accelerate the implementation of the signed pacts.

The two leaders also decided to speed up negotiations to sign inter-governmental agreements on the construction of Vietnam's first nuclear power plant and the provision of credits for the project and on energy development, the Vietnam News Agency reports.

It is not made clear which nuclear power projects in Vietnam Russia will join in, as Vietnam's government has lately approved a master plan on developing 13 nuclear power plants with combined output of 16,000MW between now and 2030. Vietnam targets to start commissioning the first nuclear power plant in 2020.

During the meeting, Zhukov appraised Vietnam's renewal process as well as its positive role in dealing with regional and international issues. He also affirmed Russia's consistent policy to treasure and to promote the traditional relations and comprehensive partnership with Vietnam.

Vietnam and Russia also promised to strengthen cooperation at regional and international forums such as the East Asia Summit (EAS), the Asean Regional Forum (ARF), the Asia-Pacific Economic Cooperation (Apec) and the United Nations, especially within the Asean-Russia framework when Vietnam holds the Asean chairmanship in 2010.

Earlier, Manh and Russian President Dmitry Medvedev in an official talk also agreed to maintain frequent meetings of high-ranking leaders, strengthen political dialogues, and boost cooperative ties in different fields.

The two leaders pledged to expand cooperation in traditional fields, including oil and gas exploration, exploitation and processing, energy, machine manufacturing, mining, banking and telecommunications. Russia said it would be willing to help Vietnam in training, especially for high-tech sectors in the future.

They also stressed the importance of bilateral trade relations of the two countries and said to instruct business sectors and administrative bodies to strengthen trade and investment promotion to raise two-way trade value to $9-10 billion in the years to come.

The two sides also agreed to boost science and technology cooperation, especially for nanotechnology, information technology, biotechnology, new materials, non-traditional energies, and automation.

The Party chief on Sunday also witnessed the signing of three contracts between PetroVietnam and its long-established Russian partner Zarubezhneft.

Under the deals, the two sides would bolster operation of their joint venture Vietsovpetro, start operation of the new oilfield Nhenhetsky so as to have the first oil product in this quarter, and continue oil exploration and exploitation in Vietnam and a third country. vns

RENEWABLE ENERGIES - Huge Potential For Wind Power

Vietnam's potential for wind power development far surpasses that of some other Southeast Asian countries, particularly Thailand, Laos and Cambodia

A study by the World Bank shows that Vietnam is capable of generating 513,360MW of wind power annually. Figures from the Ministry of Industry and Trade on Vietnam's renewable energy indicate that this source of power will rise by some 5 percent. Vietnam is planning to develop energy sources that can replace fossil fuels in 2015-2025. Wind power and solar power are expected to account for half that amount.

According to a survey by the government, land plots covering some 17,400 hectares in Vietnam are suitable for wind power projects. The authorities in Binh Dinh, Ninh Thuan and Binh Thuan provinces promise to provide investors with incentives to embark on these projects, with a capacity of over 8,000MW.

One of Vietnam's first wind power plants in Binh Thanh Commune, Tuy Phong District, Binh Thuan Province, has a total design capacity of 120MW and five wind propeller sets, with a capacity of 1.5MW. The plant was completed and connected to the national power grid in August 2009. All the components of the next 15 wind propeller sets have been transported from Sauerland (Germany) to the work site and are about to be set up and operated.

So far, Binh Thuan has nine investors, local and foreign alike, who have been applying to embark on wind power projects. In Ninh Thuan, nearly 10 investors have established stations to obtain data on wind power in a region endowed with sunshine and wind. Phuong Mai project in Binh Dinh Province has identified the locations of wind turbine foundations and 12 wind engines (with a capacity of 2.5MW), which will be designed, produced and installed by experts from AVANTIS Energy Group in 2011.

In Lam Dong Province, two wind power projects, with a capacity of 150MW and 80MW respectively, are under way. Mau Son eco-tourism park in Lang Son is expected to have 20 wind turbine foundations, which will be installed immediately after the road linking Mau Son to the low-lying areas is completed. This construction is 600-800m above sea level.

Aerogie Plus Solution AG from Switzerland has also entered Vietnam's energy sector by engaging in a 7.5MW wind power project, in combination with diesel engines on Con Dao Island off Ba Ria-Vung Tau Province. The project costs $28 million in total and is slated to go into operation in 2011-2012.

The 20 wind power projects under implementation in Vietnam are expected to generate 20,000MW, most of which will be transmitted to the national grid. The purchase, sale, supply, transmission and distribution of such electricity is determined solely by the Electricity of Vietnam Group (EVN). The price of electricity rose from 4.7 cents (of US Dollar) per kWh to 5.0 cents and 5.5 cents. Some sources claim that EVN agrees to purchase power at 6.5 cents per kWh, far lower than that which investors demand (9.5 cents or at least 8.5 cents). This is indeed a hard nut to crack for those concerned.

The Canadian government provides a subsidy to push up the purchase price for electricity to 17 cents per kWh while its Australian counterpart is fleshing out a policy to increase the price to 12 cents per kWh. Through GTZ, the German government approved a subsidy equivalent to $1.47 million in August 2009 to help Vietnam develop a legal framework for connecting wind power plants to the national grid. This agreement also suggests that Vietnam should promptly map out a policy regarding wind power projects. This is proof that if it is easy to transfer profits to their own countries, foreign investors will have an incentive to offer advice on how a developing country can turn wind power into an important energy source.

Gunter Riethmacher, chief representative of GTZ in Vietnam, notes that Vietnam needs to improve its policies and provide a solid legal foundation capable of luring foreign investment into renewable energy. Klaus Bodenstein from AVANTIS Energy Group also says that Germany is tapping into wind power to protect the environment, create beautiful landscapes and avoid the deleterious impacts of nuclear power plants, which may impose an enormous burden on future generations. In general, the growth of windpower is hindered by (1) the lack of policies and regulations governing the purchase of wind power, which entails higher costs, (2) limited financing for wind power projects, (3) the dearth of coordination and transparency between central and local governments in the formulation of wind power development plans and (4) the paucity of knowledge and technical capabilities required to carry out a wind power project from start to finish. These problems can be tackled by virtue of the experience gained from the development of the first few projects. Wind measuring stations, aimed at collecting and analysing data on wind, are being set up to pave the way for a master plan in the future.

The potential for wind power development in Vietnam (at a height of 65m) is immense, 210 times as much as the capacity of Son La hydropower project and over 10 times as much as the total forecast capacity in 2020, offered by EVN. Reality may not be so rosy, but it could be argued that wind power will be a significant energy source to replace dwindling fossil fuel reserves, whether or not offshore wind is included.SGTD

ECONOMIC GROWTH - Hanoi targets GDP growth of 11 to 11.5 pct in the last six months of 2010

The Hanoi People's Council, on the afternoon of July 13, has conducted discussions on the implementation of socioeconomic and defense security tasks in the first six months and set targets for the last six months of 2010.

According to the report of Hanoi People's Committee, the city has maintained good economic recovery and achieved good growth. In the first six months, the city's GDP is estimated to go up by 10.1 percent, equivalent to 2.5 times, compared to the same period of 2009. Of that, industrial and construction sector rose by 11.5 percent, while service sector, agriculture forestry and fishery products went up by 9.1 percent, 7.3 percent, respectively.

The city has successfully eradicated poverty for 10,200 households (accounting for 45 percent of yearly plan), completing 1,079 out of 3,257 houses, 1,566 houses are in the course of construction, and been preparing to build 612 houses for households that have housing difficulties.

The city has created jobs for approximately 68,000 labours, reaching 50.4 percent of yearly plan. It has also built 2,400 classrooms in replacement for the temporary and degraded ones, completing 60 percent of the yearly plan.

Additionally, central tasks and solutions for the last six months of 2010 have also been agreed in the meeting. Of that, the most notable tasks are effectively implementing measures to control inflation, accelerating economic growth and ensuring social security. The city targets to achieve GDP growth of 11 to 11.5 percent in the last six months in order to achieve 10.5 percent yearly growth.

Oliver Massmann