Vietnam - News and Regulations

GOVERNMENT RELATIONS - US, Vietnam have enduring partnership, Bill Clinton says

The US and Vietnam have built a lasting relationship since re-opening diplomatic ties 15 years ago that has created wealth, boosted trade and investment and enhanced security, former President Bill Clinton said in Hanoi.

As US leader, Clinton oversaw the normalisation of links in 1995 and in 2000 became the first US head of state to visit the Vietnamese capital. During a return trip today, Clinton met with Vietnam's prime minister Nguyen Tan Dung and spoke to students at Hanoi's Foreign Trade University.

US interests in its relationship with Vietnam include shared concern over the rising strength of China, the Congressional Research Service said in a report last year. Clinton cited "security cooperation" when listing areas in which the US and Vietnam have worked together.

There is now an "enduring partnership between the United States and Vietnam," Clinton said in his speech to the students today. "We have put those years to very good use."

Vietnam's per-capita income has increased fivefold since the Asian nation and the US normalised relations, Clinton said. Two-way trade has surged since a 2001 trade pact took effect, and American companies that have built plants in Vietnam include Intel Corp., which this year opened a $1 billion factory in HCM City.

The trade agreement "was the right thing to do, for both of us," Clinton said. "We have become your largest export partner and one of your largest investors."

Exports Increase

Vietnam's exports to the US grew to $12.4 billion in 2009 from $1 billion in 2001, according to the US International Trade Commission. In the first nine months of this year, Vietnamese shipments to the world's largest economy climbed 18 percent to $10.75 billion, while US exports to Vietnam rose 19 percent to $2.51 billion.

"In Vietnam, we are cultivating a level of cooperation that would have been unimaginable just 10 years ago," said US Secretary of State Hillary Clinton, speaking last month in Hawaii en route to a visit to Asia that included a stop in Hanoi.

"Our diplomatic and economic ties are more productive than ever, and we've recently expanded our discussion on maritime security and other defense-related issues," said Hillary Clinton, who is Bill Clinton's wife.

In March, the two countries signed a nuclear energy accord, calling for cooperation in developing the regulatory and physical infrastructure needed for a safe and secure Vietnamese civilian nuclear power sector. In 2004, the US made Vietnam the first Asian nation eligible for funding under a $15 billion plan to fight the spread of HIV and Aids.

"The normalisation of relations between the United States and Vietnam was one of the proudest moments of my presidency," Bill Clinton said. "The importance of our ties with Vietnam is one of the few things that both political parties in Washington, D.C. agree on.BLOOMBERG

POWER - Power supply projects to start operations

National Power Transmission Corp (NPT), directly under Electricity of Vietnam (EVN), on November 14 successfully put into operation the 500 kV Dak Nong substation and 220 kV transmission line of Dong Nai 3 hydropower plant.

EVN assigned NPT to invest in three projects including 500 kV Dak Nong substation with a capacity of 900 MVA and nearly 79 kilometres of 220 kV transmission line of Dong Nai 3 hydropower plant and Dong Nai 4 hydropower plant with a total investment of nearly 720 billion dong.

After being completed, two above projects will be handed over to Dak Nong power transmission (Power Transmission Co No 3) for running. Especially, the 220 kV transmission line of Dong Nai 4 hydropower plant is being urgently finished and is expected to join the national grid as soon as possible.

The completion of these power projects will increase the electricity supply for the economic development demands, especially the bauxite industry sector in Dak Nong and central highland region of Vietnam. At the same time, it will support electricity supply for provinces of Dak Lak, Lam Dong and Binh Thuan.

Previously on November 12, in Tam Ky town, in the central province of Quang Nam, NPT also started operation the 220 kV Tam Ky substation and 220 kV transmission line of Song Tranh 2 hydropower plant that has a total investment of over 282 billion dong.VNPLUS

INSURANCE - Demand for life insurance increases

The domestic life insurance market has been sparked into life by a story that received wide media coverage about a businesswoman who paid an annual premium of VND1.2 billion (US$61,000).

The policy was reported to cover her for VND39 billion ($2 million).

The story is clear evidence that the Vietnamese attitude towards life insurance is changing.

Instead of purchasing life insurance to support friends and family in the industry, Vietnamese people are now looking at the actual benefits of taking out a policy and many of them are willing to part with large sums of money for the privilege.

"In recent years, my company has sold more and more policies," said Lam Hai Tuan, general director of ACE Life Vietnam, one of the country's leading life insurance provider.

Tuan said that up to the end of August, his company had sold nearly 8,400 policies with premiums from VND1 billion ($51,000) each.

"We currently have 15 policies that provide cover of over VND10 billion [$510,000], the largest of which is worth VND50 billion [$2.5 million]," Tuan added.

Other companies such as AIA Vietnam, Korea Life and Dai-ichi Vietnam have also witnessed an increase in customers.

The Association of Vietnamese Insurers reported that the market had grown in the first half of the year.

"Up to the end of H1, more than 4 million policies had been taken out, worth VND323.6 billion, an increase of 33 percent over the same period last year," said head of the life insurance division under the association Nguyen Viet Hai.

Better economic conditions were cited as the main reason.

"Living conditions have improved and demand has increased for services such as healthcare and life insurance," said Hai.

Hai added that many people were planning for the future.

"This happens in many countries, not just in Vietnam," he said.

Agreeing with Hai, Tuan said, "Vietnamese people now realise that life insurance is a means of planning for the future and providing financial protection for their families."

According to an association report, Vietnamese life insurance has witnessed high growth this year, but still lags behind other countries in terms of value and the number of insurance companies.

GOVERNANCE - Anti-money laundering centre opens

The United Nations Office on Drugs and Crime (UNODC) in collaboration with the Ministry of Public Security opened Vietnam's second computer-based, anti-money training centre yesterday in HCM City.

The centre is responsible for receiving, assessing and handing over information related to money laundering crimes to higher authorities.

A two-day computer-based training course on anti-money laundering and combating the financing of terrorism was also held yesterday at the centre for 20 instructors who teach at the People's Police University.

Varat Phongthirasuwan from Thailand, an expert in the subject, described how police could equip themselves with the latest information and knowledge, including interrogation and investigation methods.

The first computer-based, anti-money training centre in Vietnam opened on November 8 in Hanoi. There are currently 300 training centres in 50 countries.

RETAIL - SM eye smalls in Vietnam, Indonesia

While it remains bullish on China, the SM Group of retail tycoon Henry Sy is training its sights on Vietnam and Indonesia as possible sites for the future expansion of its shopping mall operations, a top group executive said.

Jose T. Sio, chief financial officer and executive vice-president of SM Investments Corp., told The STAR that Vietnam and Indonesia offer attractive investment opportunities that may help open opportunities for the Sy family's businesses.

"We have received invitations for us to go into Vietnam and Indonesia. But these are all under study. We are concentrating our expansion on China," Sio said.

According to a forecast by global auditing firm PricewaterhouseCoopers in 2008, Vietnam may be the fastest growing among emerging economies by 2025, with a potential growth rate of almost 10 percent per annum in real dollar terms that could push it up to around 70 percent of the size of the UK economy by 2050.

Businessman Chairul Tanjung, who chairs the National Economic Committee, an ad hoc forum for the President of Indonesia, predicted that Indonesia with a 285 million population, would become the fifth largest economy in the world after China, the US, EU and India. He said Indonesia's economy would grow at an average of about 10 percent annually until 2030.

Sio pointed out that the group's overseas mall expansion programme remains focused on China, where they currently have four malls. He said the group, through SM prime Holdings Inc., has yet to maximise the potential of the world's second-biggest economy and most populous country.

"We haven't really explored the whole of China. It's such a big country. We're in fact accelerating our expansion in China in the hope of replicating our success here," Sio said.

The move is part of efforts to cut its dependence on the Philippines, where it currently has 40 malls nationwide. Including its China malls, the group's total estimated gross floor area will reach 5.4 million square meters.

SM prime has budgeted 3.58 billion reuminbi (roughly P24 billion) to build four new malls in China – SM Suzhou, which will open this December SM Chongqing (slated for opening in the fourth quarter of 2011), SM Tianjin and SM Zibo in central Shangdong province.

When completed, these malls would bring SM prime's total store network in China to eight. SM prime entered China in 2007 after buying out the Sy family-owned malls in Xiamen, Jinjiang and Chengdu for $252 million.

SM Tianjin will be SM prime's biggest shopping mall, about 30 percent larger than its anchor Mall of Asia along Roxas Boulevard in Manila. To rise on a 34-hectare property, the project will require an investment of around two billion reuminbi approximately P13.4 billion.VNNEWS

RESOURCES - Vietnam faces risk of gas shortage

Although Vietnam has up to 700 billion cubic metres of natural gas reserves, only about 90 billion cubic metres have been exploited so far.

At the meeting held on November 11, in which the World Bank's report "Vietnam Gas Sector Development Framework" was released, the World Bank has warned that Vietnam is facing the risk of gas shortage.

According to the World Bank, Vietnam's gas sector is facing three great challenges, which may cause the potential gas shortage to happen in 2025, when the demand would be three times higher than at present. The gas price is unstable, since the pricing methodology is unclear, thus investors are less interested.

In addition, the capability to convert resources into reserves is weak, the exploration, exploitation, processing, delivery and distribution to bring gas from mines to the market remain backward. The structure and management of the sector are unreasonable, while cooperation of gas and electricity sectors still face many difficulties.

Therefore, Vietnamese government should soon issue focusing policies and specific roadmaps, based on considering proposals of the World Bank and experts mentioned in the report to avoid the risk of gas shortage when the demand is tripled. In the immediate future, experts must evaluate the recommendations of the World Bank in the report, construct formal recommendations and submit to the government for consideration and approval.

In the meeting, deputy minister Industry and Trade Hoang Quoc Vuong said although Vietnam has large gas reserves but so far, the country has epoloited some 90 billion cubic metres to fuel power generation, fertiliser production and some other industrial sectors.

In addition, Vietnam has not discovered any major oil and gas fields. As forecasted, after 2025, Vietnam will have to import up to 17 billion cubic metres of gas for domestic use. Therefore, to have stable gas resource and ensure energy security, Vietnam should build up a stable pricing framework, clear roadmap to develop the natural gas market and good management structure to attract investors.

In the meeting, along with the recommendations on the gas sector on the aspect of actual scale, the World Bank also made recommendations on institutional arrangements for the gas industry of Vietnam to develop effectively. Accordingly, the Ministry of Industry and Trade should soon establish the Department to regulate and manage oil and gas both upstream and downstream areas.

In particular, Vietnamese government and Ministry of Industry and Trade should restructure the Vietnam Oil and Gas Corporation – PetroVietnam, in the direction of not giving monopoly position in the long term for this unit.VNPLUS

RESOURCES - Nation to import natural gas after 2025

Vietnam will have to import up to 17 billion tonnes of gas for domestic use annually after 2025 despite its sizeable reserves of natural gas, a senior official has said.

Addressing a meeting held on Thursday to release a World Bank report titled Vietnam Gas Sector Development Framework, deputy minister Industry and Trade Hoang Quoc Vuong said Vietnam has natural gas reserves of 700 billion tonnes.

Potentially, it has an additional 700 billion tonnes yet to be recognised as reserves, he added.Vuong said so far the country has exploited some 90 billion tonnes to fuel power generation, fertiliser production and other industrial sectors.

The World Bank report says that the natural gas sector is set to triple in size over the next 15 years and presents a vision of the infrastructure and institutions needed to overcome the challenges and realise these objectives.

The gas sector is facing multiple challenges, including greater demand for gas and a potential gas shortage, which may become worse if a few key decisions for change are not made soon, the report says.

"Development of the natural gas sector is a key component of Vietnam's overall economic policy and is prominent within the National Strategy for Energy Development," said Alain Barbu, Acting World Bank Country director for Vietnam.

"Vietnam wants to move towards more competitive markets with more liberalised pricing, and this should be done gradually, so that a stable pricing framework, with linkages to competitive fuel markets, can support the build-out of gas production and infrastructure."

The report recommends that from now until 2025, Vietnam should apply various measures to address the uncertainty in the pricing methodology, the weaknesses in converting resources into reserves and to attract more investment in the sector.

It stresses that Vietnam needs to create a competitive gas pricing methodology, and eventually, a wholesale competitive gas market.

It also suggests that the Ministry of Industry and Trade sets up an advisory unit on gas policy development, adjusting PetroVietnam's role and establishing a modern regulatory structure.

According to the report, Vietnam's gas sector has tremendous potential that can be realised by 2025 with concerted and coordinated efforts by public agencies and their private partners.

Gas now meets over 15 percent of the country's primary energy demand and 88 percent of the gas is currently consumed by the power sector. Gas-fired generation accounts for 40 percent of total electricity supply.VNNEWS

RESOURCES - Challenges facing gas industry

Vietnam should place high priority on developing the gas supply for economic development, environmental protection, energy security, and electric generation.

According to a recent report of the World Bank on building Vietnam gas sector development framework, the Vietnam's natural gas industry will triple in size by 2025 if the government objectives are achieved.

The industry should be able to provide as much as 24 billion cubic metres per year by 2025, says the report.

The socio-economic development in Vietnam over the past 10 years has created an increasing demand and there is now a shortage of natural gas. The gas sector is now facing three challenges: the instability of prices due to vague valuation and the lack of encouragement to the private sector to participate in the industry, the poor capacity to transfer from natural resources to reserves, and the ineffective cooperation between the gas and electricity industries.

According to the nation's energy development strategy, the country's total supply of gas in the coming years is estimated at 25 billion cubic metres, three of which are for generating electricity.

88 percent of the gas supply is now used by the electricity industry, producing 40 percent of the total electricity output.

Dao Thanh Hoai from the Vietnam Electricity (EVN) said EVN can buy all of the gas produced.

Ben Timer from the US-based Chevron Group, said the electricity sector plays an important part in the value chain of the oil and gas as it consumes most of the gas output. It is, therefore, very necessary to develop the two sectors at the same time.

The use of gas in generating electricity is more effective compared to other resources as it is much cheaper, said World Bank expert Roland Priddle.

However, there is not an effective cooperation between the two sectors. The northern part of Vietnam can not access any supplies of gas while in the southern region, the infrastructure for the sector still needs upgrading and a competitive market has not yet been formed.

The development of the gas sector in the economy requires significant changes in pricing and distributing work. The prices of gas is usually negotiated by government agencies and gas exploration companies.

Roland Priddle said Vietnam should value the price of electricity produced by gas similar to that made by coal-fired power plant to assist investors. Developing the infrastructure for the gas industry will help Vietnam produce electricity at a cheaper prices and minimise the adverse impact on the environment.

The valuation of gas will help create a competitive environment between domestic and foreign businesses.

It is not possible for Vietnam to export gas as the prices are still high, said Priddle, adding that he is confident in the development of the gas industry in Vietnam.VNNEWS

LIFE INSURANCE - ABBank inks deal with Prevoir

An Binh Commercial Joint Stock Bank (ABBank) on November 12 in HCM City signed a business cooperation contract with Prevoir Vietnam Life Insurance Co Ltd (Prevoir Vietnam) to include Prevoir Vietnam's insurance products to ABBank's mortgage lending products.

Under the signed contract, ABBank's mortgage lending products for customers will be enclosed Prevoior Vietnam's life insurance products.

Mortgage borrowers at ABBank in any way, in case of unfortunate risks under the insurance coverage, their whole remaining outstanding loan will be repaid for ABBank with the amount of insurance of up to 24 billion dong/loan contract.

The way to participate is very simple and does not require insurance evaluation procedures with quick and convenient insurance settlement processes, further increasing the value of ABBank's mortgage lending products.

According to ABBank, the signing is a new step in the closed cooperation tie between Prevoir Vietnam and ABBank in bancassurance sector.VNNEWS

SHIPPING LOGISTICS - French shipping line adds direct cargo service

French shipping line CMA CGM's container ship CMA CGM Otello departed the SP-PSA Port in Ba Ria-Vung Tau Province on Wednesday on its first direct route from Vietnam to Northern Europe.

It will operate on the company's French-Asia Line 3 (FAL 3) route.

The 8,488 TEU (20-foot equivalent unit), 334m vessel and nine sister ships are the largest vessels that will ply the route.

It will sail weekly from SP-PSA to Port Kelang, Malta, Le Havre, Dunkirk, Zeebrugge, Hamburg, Rotterdam, Zeebrugge and Southampton before returning to Asia.

The new direct service will enable shorter transit times and enhanced service for importers and exporters from and to key European and Mediterranean markets.VNNEWS

HOTEL – TOURISM - Starwood to manage Sheraton Resort project in Da Lat

Starwood Hotels & Resorts Worldwide, Inc. on November 8 signed an agreement with Robin-Hill Resort Limited Company, a member of Saigon Invest Group, to manage a Sheraton resort underway in the Central Highland's Da Lat City.

Scheduled to open in 2014, the project will feature 150 guest rooms and other facilities including indoor swimming pool, kids club, fitness centre, spa and three signature restaurants and bars. The hotel will also feature more than 5,380 square feet of meetings and banquet space.

Sheraton Resort Da Lat with total investment capital of $25 million, the project is an integral part of the Saigon – Lam Dong eco-tourist development project to be implemented under a cooperation programme between HCM City and Lam Dong Province.

The commitment by Starwood to manage the Sheraton Da Lat Resort marks a crucial milestone in the progress of Ro-bin Hill Resort Limited Company in particular and Saigon Invest Group in general in the field of tourism.

The project will reinforce SGI's strategy and effort to diversify its operations into various domains, especially in tourism, according to the local company.

"We are delighted to strengthen our presence in Vietnam with the signing of Sheraton Da Lat Resort! Given Sheraton's strong presence in Hanoi and HCM City, a Sheraton in the Central Highlands of Vietnam will be a great addition and will complement the recently opened Sheraton Nha Trang Hotel & Spa located on the south central coast of Vietnam," said Miguel Ko, chair and president, Asia Pacific, Starwood Hotels and Resorts Worldwide in a statement.

The new Sheraton project also further strengthens the position of Starwood as one of the largest international upscale hotel chains in the region.

Starwood currently operates 19 hotels in the region, with 11 more under development in Bangkok, Koh Samui, Phuket, Angkor, HCM City, Cam Ranh and now Da Lat under the different brands of Sheraton, Westin, Le Meridien, St. Regis, Four Points by Sheraton, and The Luxury Collection among others.

SGI is a big public enterprise in hi-tech park development in the country, and is active in various fields such as real estate, infrastructure, ICT sector, finance and banking, manufacturing, construction, and energy among others. Currently, the group owns and manages 20 industrial parks, hi-tech parks and scores of large-scale projects across Vietnam.SGTD

HCM City to pilot green hotel programme

Around nine hotels of three to five stars in HCM City will start joining a pilot programme on November 23 in which they will get a provisional sustainable development and environment tag from the hotel authority.

Nguyen Phuong Anh, head of the Hotel Department of the Vietnam National Administration of Tourism, told the Daily on Wednesday the participating hotels would have to meet more than 80 criteria on sustainable development and environment.

"The pilot programme will help us improve the criteria," Anh said. "We hope the official Green Lotus tag will be awarded in 2012."

Some hotels of similar types in the capital city of Hanoi are also taking part in the trial programme, which has been approved by the Ministry of Culture, Sports and Tourism. The hotel authority will extend the programme to the central region upon completion in HCM City.

Anh said the department had included the Global Partnership for Sustainable Tourism Criteria into the criteria in an attempt to develop the country's hotel system in line with the popular "go green" trend and improve its competitiveness.

"More and more tourists, especially Europeans, want to stay in green hotels. We need to adapt to the suitable development trend of the tourism sector," she said.

She noted the programme would be applying to three- to five-star hotels across the country first before it was expanded to other hotels, using suitable criteria.

Hotels that have already gained ISO14000 accreditation on environment management can still join the programme. Anh said hotels should not expect specific support from the programme but when participating, they would have the opportunity to promote their image worldwide through national tourism promotion activities.

The country has around 10,800 tourist accommodations, of which nearly 300 meet three-to Five-star standards.VNPLUS

Oliver Massmann

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