Vietnam - News and Regulations

POWER - Power plants create opportunities
Vietnam will have a large market for domestic equipment manufacturing with the planned development of 70 coal-fired power plants within the next 15 years, according to mechanical engineering experts. Under the national electricity development plan for 2006-15, more than 40 coal-fired power plants with capacity of 600MW or more will be constructed in the country. Between 2015-25, another 30 coal-fired power plants will begin producing power. With this considerable development, demand for coal-fired power plant devices from now to 2025 will increase. On December 26, 2002, the prime minister approved a development strategy for Vietnam's mechanical engineering industry with the priority goal of developing key mechanical products. Deputy minister of Industry and Trade Do Huu Hao said the domestic mechanical engineering industry has seen significant growth in equipment manufacturing for thermal power, reaching capacity of 600MW. Vietnamese and foreign experts have done all the basic designs for the industry. Domestic businesses, such as the Corporation for Industrial Machinery and Equipment and Vietnam Engine Agricultural Machinery Corporation, have made a number of important devices such as engines, gear boxes and fan pumps. The domestic mechanical engineering industry has built around 50 to 70 percent of the country's standard equipment needs, such as lifting buckets, conveyor belts, storage devices and dust filtration equipment. Although Vietnamese enterprises have the capacity to produce a significant portion of the equipment needed for coal-fired power plants, generally only 40 percent of the equipment used by the coal-fired power projects that are under construction are from domestic enterprises, accounting for only 25 percent of the total value. If domestic enterprises do not develop, they will fail to take advantage of a great opportunity. Ngo Van Tru, deputy director of the Department of Heavy Industry under the Ministry of Industry and Trade said domestic firms without an understanding of design would not be able to contribute anything. Domestic firms need time to study in order to participate in power plant design. Director of the Centre for Design and Machinery Manufacturing Technology under the Ministry of Industry and Trade Hoang Van Got outlined some local production schemes and added that rather than becoming sub-contractors for foreign contractors, domestic firms should plan to work with foreign partners to design and manufacture boilers. Domestic firms could also manufacture the auxiliary devices for turbine generators with support from foreign consultants. This plan could lead to domestic production of 40 percent of project value, he said. He also proposed measures to assign domestic joint venture companies as Engineering, Procurement and Construction (EPC) contractors to ensure active implementation of Build and Transfer Technology plans. Engineering enterprises have also proposed an increase in domestic production of supplies for thermal power plants in Vietnam. Incentives should be offered by including required conditions in international bidding and encouraging the establishment of centres for mechanical equipment manufacturing. VNNEWS

OIL/GAS - TNK-BP looking at BP's Vietnam assets

Russia's No. 3 oil company TNK-BP may try to buy Vietnamese assets from its co-owner BP as it sells down its portfolio to pay damages in the Gulf of Mexico, company executives said on Wednesday.

"It's not a secret that TNK-BP is looking at some of BP assets," Chief Financial Officer Jonathan Muir told the Reuters Russia Investment Summit.

TNK-BP, has already said it would be interested in buying assets in Venezuela, where it has rights to develop part of Junin-6 with a consortium of other Russian oil companies.

But company executives rejected the idea of buying BP's share of Alaska's Prudhoe Bay field. Newspapers have reported it may be up for sale.

"We are looking for companies where the politics and our expertise are a good fit," chief operating officer Bill Schrader told the summit.

Russian companies regularly exploit Communist-era ties with Vietnam in business.

Russia's Zarubezhneft, a state oil company is developing fields there and in the telecoms sector, a cell phone operator which shares a shareholder with TNK-BP, Vimpelcom, recently expanded there.

Schrader said it was firming up its production growth targets for next year, aiming for a 1-2 percent range. Production growth was running ahead of target in 2010 at about 2.8 percent, he said.

But production will start to shift more rapidly from the old fields of west Siberia, which are declining at a rate of 2-3 percent a year, toward the new oil provinces of east Siberia and the Yamal peninsula in the far north. "The low-hanging fruit has been achieved," Muir said.

West Siberia's share of output will decline to 75-80 percent of TNK-BP's output over the next 3-5 years as east Siberia, whose barrels are shipped to Asian customers through a new pipeline to the Pacific region, grows.

West Siberia could come under further pressure from proposed tax changes which increase the extraction tax on oil from developed fields. Pinched by transport tariff inflation and taxes, Muir said, the company may need to cut investment in old fields.

TNK-BP, which produces 12 bcm of gas, plans to more than double gas output over the next 6-8 years, making it Russia's third largest gas producer after Gazprom <GAZP.MM> and Novatek <NOTK.MM>, Schrader said.

Its gas is sold exclusively to domestic customers by virtue of state controlled Gazprom's monopoly on the export pipeline.

"Our aim is to be number three and we have got the reserves to do it," Muir said. REUTERS

WTO - Seafood exporters oppose US tariffs

Seafood exporters say they will take action if the US imposes new anti-dumping tariffs on products of some Vietnamese seafood exporters.

Exporters made their views known on Tuesday at the office of the Vietnam Association of Seafood Exporters and Producers (VASEP) in HCM City after the US Department of Commerce (DOC) unofficially said the anti-dumping tariffs on Vietnamese tra fish could reach $4.22 per kilo, equalling 130 percent of the selling price of the Vietnamese tra fish in the US market.

Although VASEP had been informed of the news, the association's general secretary, Truong Dinh Hoe, said: "We absolutely oppose the (preliminary) decision made by the DOC in its last review of its tariffs."

Hoe said in the last review, the DOC used the Philippines, instead of Bangladesh, as the third-country market to determine the dumping tariff margins for Vietnamese tra fish, thus causing the tariffs to rise.

Hoe said that the comparison of tra fish product prices in the Philippines and Vietnam was inappropriate as fish feed in the latter was priced $0.5 per kilogramme compared with $2 per kilogramme for the former.

He added that production and management costs in the Philippines were also much higher than in Vietnam.

"It's not reasonable to impose the figures collected from 36 breeding ponds with a total of 12 tonnes per year in the Philippines with the breeding farms totalling 1 million tonnes of tra fish in Vietnam," said Hoe.

Duong Ngoc Minh, deputy chair of VASEP, said the association should prove that imposing such sky-high anti-dumping tariffs on Vietnamese tra fish would not only damage Vietnam's tra fish production but also cause losses for American customers.

If the new high tariffs are imposed in March next year, many tra fish exporters will certainly leave the American market, according to an official from the Ministry of Agriculture and Rural Development (MARD), who declined to be named.

He said the growing popularity of tra fish in the American market had resulted in the Catfish Farmers of America (CFA) lobbying against Vietnamese tra fish.

Andrew Schroth, attorney with Grunfeld, Desiderio, Lebowitz, Silverman&Klestadt LLP (the US), who has advised Vietnamese tra fish exporters on the anti-dumping case, said VASEP should consider all available options in the Phillippines to prove that using the Philippines as a third country as the benchmark was not appropriate.

Though the final rates will not be released until six months later, related sides must work very hard to divert the decision, according to Schroth.

MARD's deputy minister Luong Le Phuong said the Vietnamese government would take action to prevent the imposition of the new anti-dumping tariffs, which would affect tra fish exports to other markets around the world.

Phuong said the new tariffs could set a negative precedent by encouraging other markets such as the EU and the Middle East to follow suit.

In the previous DOC anti-dumping review, a majority of Vietnamese exporters enjoyed the lowest tariff of 0.52 percent.

The anti-dumping tariffs imposed on Vietnamese tra fish exports to the US have affected the local industry since 2003.

Vietnamese tra fish products sell well in many markets in the world.

According to figures from the Ministry of Industry and Trade, in the first nine months of this year, Vietnam attained export turnover of more than $1 billion for tra fish products, and the figure is expected to exceed $1.5 billion for the entire year.

In the first quarter of this year, the American market imported 12,000 tonnes of tra fish products from Vietnam, a 2.5-fold increase over the same period last year.VNNEWS

M&A – BANKING - Aussie bank seeks 20pct stake in VIB

Commonwealth Bank of Australia (CBA) will seek approval to increase its stake in Vietnam International Bank (VIB) to 20 percent, according to a CBA statement quoted by Dow Jones on Tuesday.

"Consistent with the strategic partnership agreement signed earlier this year, Commonwealth Bank intends to request an increase in the VIB investment to 20 percent at the earliest opportunity – the maximum investment allowed by the State Bank of Vietnam," said the statement.

No financial details of the transaction were disclosed.

VIB yesterday refused to give any comment on the statement but confirmed that all procedures had been finalised to sell a 15-per-cent of stake to CBA under a strategic partnership agreement announced last April.

CBA's acquisition of a 15-per-cent interest added 600 billion dong (US$30.8 million) to VIB's charter capital, bringing the total to 4 trillion dong ($205.2 million). VIB's assets have also increased by an annual average of 40 percent over the past five years.

CBA is the exclusive foreign strategic shareholder of the Hanoi-based bank and was expected to help VIB improve its performance in such critical business areas as retail banking, risk management, human resources, IT, and finance.

Commonwealth Bank has quietly been enlarging its footprint in Asia over the past decade. It is now one of the leading international banks operating in Indonesia, and it also has investments and partnerships in two Chinese banks – Qilu Bank in Jinan and the Bank of Hangzhou.vnnews

INSURANCE - Liberty launches online insurance service

The US firm Liberty Insurance Limited on Tuesday started launching an online automobile insurance service after three years of providing insurance products in the Vietnam market.

Carlos Vanegas, general director of Liberty Insurance, told a news briefing in HCM City on Tuesday that the increasing trend of online transaction services and payments using credit and debit cards had prompted the insurer to upgrade its website www.libertyinsurance.com.vn for the online service.

"We have looked for and put into operation the latest technical advancements in order to improve the quality of our products and services to ensure strong growth and to meet the increasing demands of customers," Vanegas said.

He described the interactive website as an online automobile insurance distribution channel, supplying new functions and links to its customers, staff, agents and partners with convenient tools and information.

The online service allows customers, particularly busy ones, to buy insurance and pay premiums anytime and anywhere by clicking on suitable insurance services for their automobiles. Besides the options to pay by cash or bank transfer, customers can also use their credit or debit cards to pay online.

"It takes only a few minutes for a customer to get an automobile insurance quotation with various options of insurance benefits and premiums," he said, adding this offers an easier and faster way to do business with the company.

The insurer's first 24/7 call centre in Vietnam can address all clients' specific needs and inquiries in both Vietnamese and English.

Liberty Insurance, which entered Vietnam in 2007, is among the top ten of 28 life insurers in Vietnam in the automobile insurance field, according to the company.VNNEWS

AIRPORTS/INFRASTRUCTURE - Airports make expansion plans

Tan Son Nhat Airport in HCM City is to be expanded to create space to service 10 additional passenger jets, while Hanoi's Noi Bai Airport also has plans to add more space for aircraft to meet an explosive demand for air travel.

The Southern Airports Corporation has submitted their plans to increase the capacity of Tan Son Nhat Airport to the Civil Aviation Administration of Vietnam (CAAV).

Nguyen Nguyen Hung, general director of the Southern Airports Corporation, said that capacity at Tan Son Nhat Airport is just enough to serve 20 million passengers a year, or 54,800 passengers a day. However during the traditional Tet holidays, Tan Son Nhat Airport received in excess of 58,000 passengers a day.

Under the new plan, Tan Son Nhat's present 42 bays will be increased to 52.

Noi Bai Airport currently has 24 parking bays, receiving nearly 90 flights a day. Nevertheless, the airport can become overloaded, meaning aircraft must queue up to take off or land, which leads to delayed flight or cancellations.

However, those plans were only a temporary solution while waiting for the construction of Long Thanh Airport in the southern province of Dong Nai. The project is expected to begin in 2011 and its first phase is expected to be completed by 2015.

Over the next few years, the national flag carrier, Vietnam Airlines and Jetstar Pacific Airlines plan to increase their fleets to over 100 aircraft. These companies and hundreds of other overseas airlines face major problems due to the country's limited aviation capacity. Two private airlines, Air Mekong and Blue Sky, are also set to join the domestic air market.

In 2009, Vietnam's airports handled over 26 million passengers and 445,800 tonnes of cargo, a four-fold increase on 2000.

In the first seven months of this year, air passenger numbers rose 33 percent over last year to 12 million, and this figure is forecast to increase by 35-40 percent this year alone.

Lai Xuan Thanh, deputy head of CAAV, said that his agency was working with carriers to formulate five and ten-year development strategies to install extra aircraft bays.

Forty-five domestic and foreign airlines are currently operating on 55 international air routes to and from Vietnam. Vietnam Airlines and Jetstar Pacific also service 40 routes nationwide.VNNEWS

Oliver Massmann

Rechtsanwalt

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