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FINANCE – WB supports Vietnam’s public investment

VietnamPlus

The World Bank (WB) on May 24 approved a 350 million USD loan to support Vietnam's public investment reform program.

The purpose of the loan is to help Vietnam improve its public investment program, which began in mid global economic crisis in 2009 and avoid adverse impacts of the crisis.

The reform program will be implemented through boosting a 4-step investment cycle including project selection, project implementation, financial management and supervision.

The first loan, worth of 500 million USD for the program was approved WB to Vietnam in December, 2009.



INFRASTRUCTURE - Japan helps Vietnam manage the expressway
VOVNews

Deputy minister of Transport Ngo Thinh Duc and Chief Representative of the Japan International Cooperation Agency (Jica) in Vietnam, Tsuno Motonori signed a memorandum of understanding in Hanoi on May 25 about a project to provide technical assistance for Vietnam to operate and maintain the expressway.

Under the framework of the project, the Jica will assign Japanese experts to help Vietnam issue regulations and instructions concerning the operation and maintenance of the expressway, while supplying technical equipment and organising training courses in both Japan and Vietnam.

Funding for the project worth $2.2 million will come from non-refundable aid of the Japanese government.

Management of three sections including belt No. 3, Phap Van-Cau Gie and Cau Gie-Ninh Binh, will take the form of On-The-Job Training (OJT).

As part of its master plan, Vietnam will build 2,500 kilometres of expressway by 2020 and 5,800 kilometres by 2030.



RESOURCES - Illegal petrol speculation leads to shortage

VNS



Stiffer penalties should be imposed on filling stations to prevent speculation at petrol retailers around the country, according to industry experts.

Vuong Thai Dung, deputy general director of the Viet Nam National Petroleum Corporation (Petrolimex), said Government regulations required that petrol retailers be supervised by their wholesalers to create a more transparent petrol manufacturing chain.

Many petrol stations suspended sales waiting for anticipated higher prices, a practice that is against the law, Dung told Dau Tu newspaper.

Petrolimex has more than 6,000 gas stations. When there was a shortage of petrol in March, the company's retail stations did not have enough fuel for customers.

The trading volume at the stations was even higher than normal because the stations of other petrol wholesalers had stopped selling their products, a Petrolimex representative explained.

"We could not determine which stations (that had stopped selling) were linked to particular wholesalers. That responsibility belongs to authorities," Dung said, adding that it was not very difficult to discover the fuel shortage at a petrol station and then trace the responsibility of the wholesaler.

The country has around 14,000 petrol stations, enough to satisfy consumption demand for the country.

Early this month, many petrol stations in the Mekong Delta and southeastern region either closed or sold petrol only periodically.

The situation has become more serious as it has expanded to other regions, according to Industry and Trade newspaper.

The speculation has created a serious shortfall of fuel for daily use and production in some rural areas.

Farmers in An Giang Province's Phu Tan District had to leave their combine harvesters and pumps idle or buy fuel at higher prices at 25,000 dong to 30,000 dong a litre from stations.

This also occurred in Tien Giang, Tra Vinh, Binh Phuoc and other provinces, even though market watch officers imposed penalties on the speculators. The situation has improved in northern provinces.

The Ministry of Industry and Trade's Market Control Department has announced that it will impose a heavy penalty on gas stations speculating in fuel.

The department has set up a hotline to receive complaints from customers.

PVE wins engineering bidding package for $300m oil pipeline

PetroVietnam Investment Consultancy and Engineering Joint Stock Co (PVE) has recently won a Feed engineering bidding package for Hai Su Den rig and the linking pipeline between Hai Su Den and Hai Su Trang rigs with a total investment of $300 million.

The contract signing ceremony between PVC and Thang Long Joint Operating Co was taken place on late May 19 in HCM City.

At the signing ceremony, representative of PVE said this is the first time a Vietnamese contractor has undertaken Feed design (overall design). The project is expected to complete in September 2011.

Reportedly, Hai Su Den field is about 60 kilometers from the coast of Vung Tau and about 9 kilometers from Hai Su Trang field, with an area of 2.832 square kilometers. Reservoir testing result showed that the field will provide about 21,660 barrels of oil per day and night.

Ending the first quarter of this year, PVE gained 102.85 billion dong net revenue, up nearly 44 percent from the same period last year and after tax profit at 9.85 billion dong, 2.5 fold increase year on year.



More than $1m to design drilling rig

Vietbiz24

PetroVietnam Investment Consultancy and Engineering Joint Stock Corp (PVE) under the Vietnam National Oil and Gas Group (PetroVietnam-PVN) has recently signed a contract with Thang Long Joint Operating Co (TL JOC) to design the drilling rig for Hai Su Den (Black Sealion) oil field and the pipeline connecting between Black Sealion and White Sealion oil fields.

This is the first time an engineering project of drilling rig system has been undertaken by Vietnamese engineers. The project has total costs of $1 million.

The exploited oil from this project is planned to serve Dung Quat and Nghi Son oil refineries and for export.



ENERGY - Vietnam debuts with prepaid electricity service

Thanh Nien

The Ho Chi Minh City Power Corp. has announced the launch of the first prepaid electricity service in the country this month, describing it as a purchase option that can help save power consumption.

News website VnExpress reported Friday that customers with a prepaid account can buy top-up cards to continue buying electricity if the account has run out of money.

The power company, a subsidiary of state utility Electricity of Vietnam, will first offer the service on a trial basis to residential customers, said Nguyen Anh Vu, its public relations manager.

As customers know their electricity consumption and how much they are paying for it, they could reduce their power use by up to 20 percent, Vu said.

He said the prepaid purchase option would also allow the company to cut operations costs. Right now its staff members have to go to each and every household to check electricity meters and collect monthly data on power use. Then they return, usually a week later, to collect the bill.

The Ministry of Industry and Trade announced the plan to start using prepaid electricity meters in the country in February. It said prices of prepaid electricity will be set at 30 percent higher than the current average power tariff, which is 1,639 dong per kilowatt-hour.



POWER - Ministry asks no power cut in June

Vietbiz24

Vietnam Authority of Electricity has noticed the electricity supply in the first 5 months and June, in which the sector confirmed that the June power supply will be ensured thanks to favorable conditions.

Ministry of Industry and Trade ordered the Electricity of Vietnam (EVN), the country’s power group, not to cut power in the whole country in June. The sources of coal and gas thermo power, FO, DO electricity will be raised to conduct the instruction, the Vietnam Authority of Electricity added.

In Jan-May, total electricity output and import of Vietnam will have been estimated to reach 43.088 billion kWh, up 10 percent against the same period of 2010.

INFRASTRUCTURE - Thai firm plans 1,200MW thermo power plant

Vietbiz24



Thailand-based EGAT International Ltd Co on May 19 worked with People's Committee of Binh Dinh province on its plan of building a thermo power plant covering an area of 100-120 hectares and using imported coal.

Particularly, the Thai firm plans to build a thermo power plant with an estimated capacity of 1,200 MW.

Previously, another Thai company namely STFE Ltd Co and Khang Thong Service Construction Investment Joint Stock Co also planned to build a thermo power plant with an estimated capacity of 700 MW in the non-tariff area in Nhon Hoi Economic Zone. The 100 hectare project will have a total investment of $972 million.



INDUSTRY - Steel market may stand still in Jun

The retail of construction steel in the market now fluctuates around 20 million dong per ton, while the steel price sold at the factories (VAT exclusive) ranges between 16 and 17 million dong per ton depending on each type, according to Vietnam Steel Association (VSA).

Pham Chi Cuong, the association chairman said that the steel sector is facing a surplus risk because the domestic demand is estimated at around six million tons a year while the country’s total construction steel capacity is 9 million tons. In addition, extra 5 high-capacity steel mills will be operational in the coming time with total capacity of 1.5 million tons a year.

Vietnam now has around 30 big-sized steel projects belonging to VSA. Also, there are hundreds of small sized ones in the country so the steel sector will see a fiercer competition.

Department of Price Management under Ministry of Finance predicted that the domestic steel price would be stable in last half of May. Steel billet in first 15 days of this month was offered at lower around $5 per ton than the same period of the previous month, particularly at $670-685 per ton in Asia.

Within May, the consumption of steel is estimated at 400,000 tons, down 40,000 tons against April. Steel in the domestic market is hard to go down in June because factories will extend production pace to release the stored volume instead of producing in mass. Furthermore, the world’s steel billet price will gradually be stable, so Vietnam’s steel industry will not have to suffer pressure of price reduction, Cuong remarked.



PROPERTY - $500m fund coming to Vietnam’s real estate market

Vietbiz24

Singapore-based Mapletree Investments real estate firm said it planned to set up three real estate investment funds amounting to $2 billion in next months to invest in commercial and complex properties in China, Vietnam and Japan, ChannelNewsAsia reported.

Mapletree hopes it could attract more institutional investors to three new real estate funds in Asia, expecting a profit of 12-22 percent a year from the funds.

As for the fund to be launched in Japan this year, the firm plans to use $300-500 million to buy office buildings outskirt Tokyo as well as Osaka and Nagoya, with a targeted interest of 18.5 percent.

The similar volume of investment capital will also be used for a fund in Vietnam, focusing on retail real estate, offices and apartments in some big cities. This fund, namely Vietnam Fund is expected to be established by 2013 with the profit plan of 22 percent.

Mapletree Investments will invest in service apartment projects in Hanoi and retail space in HCM City.

Also,Mapletree will invest $500 million to $1 billion in China’s Level 1 and Level 2 real estate.

After the financial year ending on March 31, 2011, profit of Mapletree surged 90 percent to 747 million Singaporean dollars.



Golden property spots are shining

Vietnam Investment Review

A number of property projects in Ho Chi Minh City ‘golden’ land areas are in the development pipeline.

The 700 billion dong ($33.8 million) New Pearl building in District 3’s 192 Nam Ky Khoi Nghia street is developed by an investor consortium of Duc Khai, Phuong Trang and Saigon 5 Construction and Trading firms. Construction of the project’s foundation and basement is completed.

Vincom has completed site clearance at its 8 trillion dong ($386.4 million) Eden project, a shopping, hotel and apartment complex in District 1’s Ben Nghe ward.

Currently, Van Thanh Market, developed by an investor consortium including SSG Group, Cofico, Fico and Sun Wah Properties Vietnam Company Limited, is in intensive preparations to be able to soon kick-start construction.

As designed, the nearly 6,000 square metre area will be turned into SSG Tower mixed-use complex with commercial quarters, office tower, hotel and luxury apartments.

SSG Van Thanh Joint Stock Company’s director Dang Chinh Nghia said the project’s site clearance basically finalised and construction of the mixed-use complex would possibly be kicked off in June.

SSG Van Thanh’s deputy director Nguyen Minh Tuan said construction would take place over three years at a total investment of 903 billion dong ($43.6 million).

Besides Van Thanh mixed-use complex, SSG is the developer of several other hi-end property projects in propitious locations such as the Thao Dien Pearl luxury apartment complex project in District 2’s Thao Dien ward which completed construction of its first basement floor and Thanh Da Pearl project in Binh Thanh district’s ward 28.

Phu Long Real Estate Joint Stock Corporation – the developer of well-placed Dragon City project that spreads along North-South axis and Nguyen Huu Huan road – showcases its particular attention to ‘golden’ land areas in Ho Chi Minh City.

Deputy head of Phu Long Corporation’s business and marketing department Nguyen Du Truong Nguyen said ‘golden’ land areas would bring great added value to investors and these investment ventures would help the developers magnify their image.

Ho Chi Minh City Land Development Centre reportedly submitted to the city people’s committee a list of 18 land plots slated for auctions within 2011. The people’s committee also gave the green light to Ho Chi Minh City Planning and Investment Department’s proposal to offer six other well-placed land plots for auctions in the coming period.



BUSINESS – Hoa Phat Group signs contract with German Group to build gas separation plant

HPG

Germany-based Messer Group and Hoa Phat Group Joint Stock Co (HPG) on May 25 signed a contract to provide industrial gas for the second phase of Hoa Phat iron and steel complex.

Accordingly, Messer Hai Phong, a branch in Vietnam of Messer Group, the world's biggest private supplier for industrial gas, will ensure the gas supply for the complex with a duration of 25 years.

According to the contractual agreement, Messer will build its second gas separation plant in Hoa Phat iron and steel complex in Kinh Mon, northern province of Hai Duong. The plant with an investment of about $26 million is expected to produce about 1,300 tonnes of gases such as argon, oxy and nitrogen per day.

The plant is scheduled to start operation in July 2012 to timely serve the operation of the complex-phase 2.

With the technology of steel production in blast furnaces, industrial gas plays a crucial role as the lungs of the complex.

The Hoa Phat iron and steel complex is considered to have the largest and synchronous investment in Vietnam's steel industry currently with closed manufacturing line from input to output stages. The complex has total investment capital of 5.5 trillion dong for both phases.

Following the success of phase 1, the phase 2 of the complex project is ongoing and once in operational by late 2012, the complex will increase the group's annual profit by 500-700 billion dong per year.



Jetstar Pacific faces fuel cut threat for non-payment of dues

Thanh Nien

Vietnam Air Petrol has threatened to suspend fuel supply to Jetstar Pacific, saying the low-cost carrier has failed to repay its debts.

In its ultimatum dated May 17, the fuel supplier, also known as Vinapco, said it had demanded payments from Jetstar Pacific many times but the carrier had not responded.

As of Friday, the debts had mounted to VND173 billion (US$8.35 million), which Vinapco said could compromise its balance sheet. As a result, the company has requested the authorities to allow it to suspend sales to Jetstar Pacific until the carrier fulfills its debt obligations.

News website VnExpress cited a Jetstar Pacific official as saying on Friday that his company was going through a restructuring process. The airline had requested a payment extension until June and it had been approved by Vinapco already, he said.

However, a source from Vinapco said the fuel company has not agreed to any extension. Vinapco itself has had to borrow money from banks to import fuel and Jetstar's late payment was hurting its business, the source said.

This is not the first time Vinapco, an affiliate of state carrier Vietnam Airlines, and Jetstar Pacific have been caught up in a dispute.

In April 2008, Vinapco cut off supplies to Jetstar as the two sides were arguing over a price increase. It caused a delay that grounded 30 flights with some 5,000 passengers. The authorities then ordered Vinapco to resume supply, and later fined it VND3.4 billion ($164,250) for abusing its monopoly position.

The fuel company protested the ruling, saying it was not fair. The dispute lasted through the end of last year, until a court in Hanoi rejected an appeal by the fuel company against the fine.

Vinapco is Vietnam's largest jet fuel supplier. It held a monopoly in the local market until February 2010, when the country's top oil products importer Petrolimex began selling jet fuel.



FOOD PROCESSING - Refineries attempt to set up trade company to stabilise sugar prices

VietNamNet/Thoi bao Kinh te Vietnam

The Vietnam Sugar and Sugar Cane Association is consulting with its members on the establishment of a trade company which is hoped to help stabilise the sugar prices.

Sugar refineries lack capital to maintain their production. The business performance goes up and down all the time. When the supply gets profuse, the sugar price goes down and merchants do not want to store sugar. Therefore, sugar refineries and sugar cane growers do not feel happy with big crops. Meanwhile, there always exists a big gap between the price set up by refineries and the price defined by distributors.

All those problems of the Vietnam Sugar and Sugar Cane Association are hoped to be settled with a sugar trade and service joint stock company; if established, would be charge of stabilizing the domestic prices. The association has opened the draft charter of the company for opinion collection from member companies.

The most important functions of the company will be stabilizing the domestic prices, effectively mobilizing and using capital for the business in order to create profits, create stable jobs, help improve the working conditions and improve the living standards of workers and ensure the interests of shareholders.

The operational scope of the company will be trading sugar and sugar made products, storing sugar products in order to stabilize the domestic market, importing and exporting sugar products and other kinds of materials and equipments serving the sugar production and sugar cane growing.

The company has the chartered capital of 100 billion dong which will be divided into 10 million shares, each of which will have the face value of 10,000 dong. All the shares to be issued for the first time will be ordinary shares, which have the right to vote. After five years of operating stably, the company may issue additional shares to outsiders.

The founding shareholders are the representatives from the Vietnam Sugar and Sugar Cane Association, companies and sugar refineries with the capacity of over 30,000 tons a year. The founding shareholders will have hold at least 20 percent of the total shares which can be offered for sale. Statistics released after the 2010/2011 crop show that there are 14 sugar refineries, including five foreign invested ones, which can meet the requirements

Pham Thi Sum, Chair of Bien Hoa Sugar Company, said that in fact, the sugar association has been cherishing a plan on setting up such a company for the last many years. However, to date, such a company has not come out yet.

The information has been confirmed by former Secretary general of the association Ha Huu Phai.

However, Sum does not think that it is necessary to set up a trade company which bears the function of stabilizing the domestic market. She believes that sugar refineries just need to take care for the production, while the distribution should be undertaken by other enterprises.

"If all the producers in the national economy set up their own distribution networks, this will lead to a chaos, while the model proves to be ineffective, because producers will have to cover too many kinds of expenses," Sum said.

She went on to say that the sugar prices on the domestic market should be defined by the supply and demand basis. The pricing should be reasonable to ensure the profits for all involved parties, from sugar cane growers, sugar refineries and consumers.

Meanwhile, Bui Thi Quy, Chair of Van Phat Group, thinks that setting up a trade company is a good idea. In this case, refineries will only have to take care for production, and they will be able to send their products to the trade company which will be in charge of distributing the products.

In case the supply is too profuse, the trade company will store sugar products instead of putting into circulation. As such, the company will not only help sugar refineries distribute their products, but also help stabilize the domestic prices.

Also, Quy said, the company will also help mobilize capital to help the member companies in difficulties. This will help stabilize the supply and demand. Especially, this will allow to prevent contraband sugar to flood into Vietnam. It is estimated that every year, Vietnam fails to collect 500 billion dong in tax from smuggled sugar.



AVIATION - Two more foreign cargo airlines enter Vietnam

Tuoitrenews

Saudi Arabian Cargo Airlines and Jade Cargo International from China have been granted a license to operate in Vietnam, the Civil Aviation Administration of Vietnam has said.

Arabian Cargo Airlines is now licensed to offer flights between King Khaled in Saudi Arabia, Shanghai in China and HCM City every Wednesday, Friday and Sunday.

Jade Cargo International will provide services on several routes connecting Hanoi with Shanghai, India, and Dubai.

ECONOMY – Vietnam inflation nears 20pct: official data

AFP

Vietnamese inflation will reach almost 20 percent year-on-year in May, official estimates said Tuesday, adding to the pressure on consumers facing some of the steepest price rises in the world.

The consumer price index is expected to rise 19.78 percent this month compared with May last year, the general Statistical Office said.

Inflation has increased every month since August of last year, but is still below a recent peak of 28.3 percent recorded in August 2008 as well as the triple-digit figures seen in the 1980s.

The communist country has one of the top five inflation rates in the world, and poverty will increase as a result, the United Nations in Vietnam said earlier this month.

Food prices are a key driver of the price increases.

The government, long focused on economic growth, now says fighting inflation is its top priority.

It has tightened monetary policy and set a series of targets to help stabilise an economy facing challenges including a struggling currency and a trade deficit.

Among its goals, the government wants commercial banks to keep growth in credit, or loans, to below 20 percent this year. It also said public investment should be reduced.

"The suite of policies they're undertaking is very encouraging," said Vishnu Varathan, Asia economist at Capital Economics consultancy in Singapore.

But he said inflation will not peak until the third quarter, and further hikes of key interest rates would not be surprising.

"I think Vietnam has not established beyond doubt that it is well on course to establish macro stability," Varathan said.

Le Dang Doanh, a lecturer at the Economic College of Hanoi, said inflation has reached a worrying level that is causing many difficulties for small and medium-sized businesses.

Doanh said the government should re-examine the way it is implementing its inflation-fighting measures.

"They need to be really more serious and effective. The efforts have not been sufficient," he said.

The authorities, who have set a full-year inflation target of seven percent, began taking firm action in February to tackle the trade deficit with a 9.3 percent devaluation of the dong.

But that led to higher imported fuel costs, which in turn pushed up the price at neighbourhood petrol stations by 18 percent.

The government blamed rising global oil prices for another 10 percent increase in the price of fuel in late March, which added to the misery of consumers who had just been hit by a 15 percent rise in electricity prices.

Varathan said he believes the State Bank of Vietnam wants to avoid another currency devaluation, which would risk further pushing up import prices.

Nguyen Trung Minh, manager of a farm equipment company, said what particularly worries him "is that we don't know when the prices will stop rising or be brought under control."



Governor of US-based Maryland State to visit Vietnam in Jun
Vietbiz24

The Governor of the US-based Maryland State, O'Malley will pay a working visit in late May to meet with leaders of enterprises of the State's three leading and emerging export markets namely China, Korea and Vietnam.

The delegation will include officials, business leaders and educators.

In Vietnam, Maryland has opened its trade and investment office in HCM City since 2009, marking the US's first state opening trade and investment office in Vietnam.

Last year, Maryland business delegation also had a working trip to Vietnam to seek cooperation and business opportunities.

Most recently, the Business Association of Overseas Vietnamese US Branch (BAOOV-US) has set up Vietnam Business Centre (VBC) covering on a site of 15,000 square meters in the central of Baltimore city, Maryland state, bridging for the cooperation between Vietnamese enterprises and the US market.





Vietnam trade deficit widened to $1.7b in May from April
Bloomberg

Vietnam's trade deficit widened in May from the previous month, adding pressure to curb the gap as the nation tries to rebuild its foreign-exchange reserves.

The shortfall was $1.7 billion, compared with a revised $1.49 billion in April, based on preliminary figures released by the general Statistical Office in Hanoi Wednesday. The deficit was $6.59 billion for the five months through May.

Vietnam devalued the dong for the fourth time in 15 months on February 11 to help curb the gap amid concern funding it is eroding the government's foreign-currency holdings. The deficit and size of reserves were about the same at end-2010, raising the spectre of a hard-currency shortage causing a financial crisis, the Heritage Foundation in Washington said May 23.

"Watch out for the trade deficit," Tai Hui, the Singapore-based head of Southeast Asian research at Standard Chartered Plc, wrote in a note before the release. It "deserves close monitoring in case it gains further momentum in the months ahead," Hui said.

The dong on Wednesday was little changed at 20,630 per dollar as of 2 p.m. local time, according to data compiled by Bloomberg. The VN Index on the HCM City Stock Exchange tumbled 4 percent today and is down about 20 percent in 2011, the biggest fall in Asia.

Vietnam's consumer prices climbed 19.78 percent in May from a year earlier, the fastest pace among 14 Asian economies tracked by Bloomberg, adding pressure for further increases in interest rates that may also slow economic growth.

'Low' reserves

Foreign reserves declined 46 percent to $12.4 billion by the end of 2010 from 2008, the World Bank said in March. They are "at low levels, unlike in neighbouring countries," the United Nations Economic and Social Commission for Asia and the Pacific said this month.

Strong domestic demand has underpinned Vietnam's trade deficit, with the government now willing to sacrifice economic growth in order to cut into the gap, Credit Suisse Group AG said on May 5.

The economy may expand 6.5 percent in 2011, down from an earlier target of 7 percent to 7.5 percent, minister of Planning & Investment Vo Hong Phuc said May 3. The government is "no longer prioritising the growth rate," he said.

Imports rose to $9.2 billion in May from a revised $8.93 billion in April, today's report showed. For the five months through May, they rose 29.7 percent to $41.34 billion.

Exports rose to $7.5 billion in May from a revised $7.44 billion in April. For the five months through May, they rose 32.8 percent to $34.75 billion.