Vietnam - News and Regulations

ENERGY - VIETNAM'S ENERGY DEMAND OUTSTRIPS ECONOMIC GROWTH

With energy demand growing faster than the gross domestic product growth, the nation is facing widespread power shortages by 2015 unless investment in new energy sources is increased dramatically, according to Deputy Minister of Industry and Trade Bui Xuan Khu.

Speaking at a recent European Green Business exhibition and conference in Ha Noi, Khu estimated that Viet Nams power consumption would increase at a rate of 8.6-9.7 per cent per year during 2001-25.

"While conservation measures could lower demand in the cement, steel, food processing and other industries by 20 per cent or more, it would require heavy investment in energy-saving technology", Khu said.

"This, along with renewable energy, was an enormous untapped opportunity for foreign investors," he added.

Vietnam had abundant renewable resources that could replace imported fossil fuels and minimise environment impact, said Le Tuan Phong, deputy head of the ministrys energy department, pointing to geothermal reserves that could produce an estimated 200MW by 2020, as well as solar power and wind farms that could produce 800-1,400kWh per square metre per year.

Renewables were already expected to supply 3 per cent of national power output by next year, to rise to 11 per cent by 2050, Phong said, but an overall plan for renewable energy development was now waiting for the Prime Ministers approval.

To encourage foreign investment into the sector, incentive policies for renewable energy needed to be clearer, especially how prices would be established when the power would hit the national grid, said Attorney Oliver Massmann from the law firm of Duane Morris Vietnam.

A new retail power market was in the making, and Vietnam needed to work out reasonable price levels in the power sector, Massmann said, adding that a number of investors worried that they would meet with difficulties in negotiating power prices with the State-run utility giant, Electricity of Vietnam. A truly competitive market should be formed that eliminates the monopoly in deciding power prices and ensures equality, Massmann said.

(VNA) cr: asia pulse



PLEASE EMAIL ME (omassmann@duanemorris.com) IF YOU WOULD LIKE TO RECEIVE THE PRESENTATION “INVESTMENT IN THE ENERGY SETCOR IN VIETNAM” I GAVE AT THIS GREEN BIZ EVENT !









REGIONAL TRADE MOVES ON! Japan removes 7,220 tariffs for Vietnamese enterprises



Vietnam-Japan Economic Partnership Agreement (VJEPA) has officially come into effects from October 1.

Under the commitments mentioned in JPEPA, Japan has removed 7,220 tariffs on imported goods from Vietnam right after the agreement took effect and Vietnam has done the same with 2,586 ones

Under the VJEPA framework, 94 percent of exports and 86 percent of agricultural exports from Vietnam to Japan will enjoy tax exemption within the next 10 years, after the agreement took effect.

Most of the products getting benefits from tax exemption under the agreement include apparel, machinery, electrical cables, computers, components, wood products, shrimp and shrimp-processed products, durians and flowers.

At present, there are three major types of Vietnam-made products exported to Japanese markets including seafood, leather shoes, and apparel. The two-way trade value in 2008 was posted at $16 billion and is expected to reach $18 billion in 2010.VNS







Finance - Vietnam leads in foreign trade growth prospect in HSBC's latest survey on Business Confidence Index



HSBC's latest survey on Business Confidence Index reported that Vietnamese small to medium sized enterprises (SMEs) led among surveyed markets in terms of foreign trade potential.

The bank implemented massive surveys on SMEs in fields of export import in 12 countries and territories-major economies in Asia Pacific, UAE, Brazil, UK and US.

Over 3,500 SMEs joining the survey offered their forecast on commercial transaction volume, risks from buyers and suppliers, commercial support demand, capacity of accessing commercial funding, impacts of foreign currency on enterprises' business operation in next three months. The survey result will be used to figure out Business Confidence Index.

Over a half of surveyed SMEs said that the payment from buyers and suppliers (for the fear of not implementing commercial agreements) will not be unchanged. Majority of Vietnamese and Singaporean enterprises (81 percent) said that the payment risk from buyers will not change and 88 percent of Vietnam and 84 percent of Singapore said that the risks from suppliers not complying with commercial deals will be sustainable.

Compared with the survey in Q2 of 2009, this time Vietnam rose by two points in term of commercial transaction prospect from 108 to 110 points. 65 percent of Vietnam's surveyed companies predicted the commercial transaction will surge three times from now to late December, which is also the highest ratio among the surveyed nations.

When being questioned on the measures that enterprises usually use to protect themselves from payment risks, 41 percent of Vietnamese firms said that they would apply flexible payment measures while 29 percent will require buyers to pay in advance.

In comparison with May 2009, many Vietnamese companies plan to use bank loans to meet their demand of business and commerce support.

Vietnamese importers and exporters assessed China to be the most important market. Over one third (36 percent) said China is still the most potential market for Vietnam's commercial development prospect, 23 percent set their belief in other Asian countries and 14 percent on south-eastern Asia, US and Canada.

The survey result showed positive vision on commercial development prospect of enterprises in newly emerging economies as well as developed markets. The businesses in China (121 pts), Indonesia (120 pts) and UAE (118 pts) have the highest Business Confidence Index on commercial operational and growth. Others in Hong Kong, Singapore and Australia are more optimistic when their Business Confidence Index increased by 10 percent from Q2 of 2009.

However, a lot of import and export companies still consider forex rate changes and low demand of foreign currency to be the two major challenges for the business growth in next three months. In which, the companies of Brazil, UK, South-eastern Asia and China are afraid of forex rate movements while US and UK are worried on the shortage of consumption market. Meanwhile, Indian and UAE businesses fear about a sharp reduction in marginal profit and capacity of credit accession.vn. TBKT





FRANCHISE - Vietnam sees bustling franchise sector



In the first half of this year, the Ministry of Industry and Trade granted licences for the franchise deals of 15 overseas companies, mostly from the US, Belgium and Canada, in the food and beverage, fashion and information technology industries in Vietnam.

The figure reflected a noticeable growing interest from foreign groups in franchise operations in Vietnam, where the consumer market is getting more powerful and the population has now reached 85 million people.

Currently, the US's Grainger Group is looking for Vietnamese manufacturers of industrial equipment and other devices to supply to the group, which already sells 850,000 different products. Grainger has established a network of 18 distribution centres and 600 branches scattered around the world.

The Vietnam Business and Franchise Association and the Business Centre from the Republic of Korea have forecast that the Vietnamese franchise sector will earn $36 million in revenue in 2010 if it keeps growing at the current rate.

They also forecast that by 2010 the number of franchised shops in the country will rise by 50 percent. In 2008 there were only 890.

The Japan External Trade Organisation (JETRO) has predicted that franchise activities in Vietnam will heat up in the near future, particularly in the catering and tourism industries, as a large number of Japanese businesses have shown their eagerness to start up businesses in the country.

More Vietnamese businesses are accepting franchises as an appropriate way of securing their investments when trying to establish a niche in local markets and indirectly penetrating foreign markets in a quicker and easier fashion, if they are not strong enough financially to launch overseas promotions themselves.

For example, the Phu Thai Group, one of Vietnam's leading distributors of consumer goods, has teamed up with Japan's Family Mart to develop a network to distribute Japanese goods in Vietnam and Vietnamese commodities in Family Mart's stores in Japan.

Pho 24 is a successful example in the franchise business, as six years after starting up, it has established a total of 70 franchised restaurants in and out the country.

The company is mulling over a plan to increase its franchises to 80 by the end of this year with the opening of its first restaurant in Hong Kong and its second in the Republic of Korea in October.

The company expects to set up more franchised shops in Japan, China and the US in 2010.

At present, there are around 70 franchising networks operating in Vietnam, mainly Malaysia's Parkson, Germany's Metro, the US 's CBRE, Dilmah and KFC. Several Vietnamese businesses are joining these networks, such as Trung Nguyen Coffee, Pho 24, Kinh Do Bakery, AQ Silk and 24-Seven.VNA





Distribution - Vietnamese goods distribution network expanded



Vietnam made goods appear much in supermarkets now but in the traditional distribution models like small retail points, Vietnamese goods have failed to access the market. Thus, domestic enterprises need to focus on developing the distribution system widely, noted Pham Chi Lan, senior economist on building the professional sales group.

Total 95 percent of domestically made goods in supermarkets and a series of Vietnamese goods support programmes showed that Vietnamese goods are dominating the retail system thanks to remarkable progresses in upgrading goods quality.

Imported goods items only account for 5 percent of total number of business items. Not only Big C but also other supermarkets namely Metro, Nguyen Kim, Fivimart confirmed that 90-95 percent of goods items here are produced by domestic firms.

In September, many local supermarkets launched the programme "Vietnam high quality goods sales-off month" with preferential prices.

In Hanoi, the Department of Industry and Trade organised the programme "bringing Vietnamese goods to outskirt districts" to promote the domestic market.

According to Pham Chi Lan, the South Africa countries, Vietnam and others with the economic conditions like Vietnam, the market share of modern commerce system (modern retailing, supermarket, online shopping) made up about 10-20 percent till 2000.

To date, in Vietnam, the modern retail system accounts for 18 percent with the more readily increasing growth especially after Vietnam joined WTO while the traditional retail channel (traditional markets) 82 percent.

Apart from big supermarkets, Vietnam has new business methods like online shopping, franchising and others.

In the last decade, Vietnamese economy reached high growth rate, averaging 7 percent a year and the income per capita in the past four years has doubled from $560 per person a month in 2004 to over $1,000 this time, which helped increase the development potential of market and boost the growth of distribution system in line with the market demand.vns





INSURANCE- Insurers accelerate business strategies



Life insurance companies have developed business and marketing strategies as the economy begins to show signs of recovery.

French life insurance company Prevoir Vietnam, through an agreement with the Vietnam Post and Telecommunication Group, is exclusively providing life insurance products over a 10-year period through the nation wide network of post offices and banks.

The service is designed to create greater access to life insurance product.

"Although the new insurance system has not bee easy to introduce, Prevoir Vietnam remains optimistic that the personal insurance market will develop in the near future," said Le Thuy Binh, general director of Prevoir Vietnam.

The company had strongly invested in training sale officials for future growth, she added.

Korea Life jointed the Vietnamese insurance market in March this year, and is now accelerating its growth and branding countrywide.

The company will focus on developing a strong network of specialists, said Pham Truong Khanh, marketing director of Korea Life Vietnam.

To help promote its work, the company has paid attention to supporting community projects, including supporting poor patients at Paediatric Hospital 2 in HCM City and the Hanoi Paediatric Hospital. In addition it has organised programes to support Agent Orange victim in Hoa Binh (Peace) Village in Hanoi.

According to Korea Life Vietnam, a large amount will be spent on developing their corporate social responsibility programmes.

AIA Vietnam and ACE Life are focused on developing the quality of their services.

Along with opening the first customer service centre, AIA Vietnam has made high-quality service the centre of their business strategy.

With a population of more than 85 million people,encouraging economic growth figures and a decreasing property rate, Vietnam remains an attractive market for life insurers. Less than 10 percent of the population currently have insurance.VNA







GAS/ INFRASTRUCTURE - 400km gas pipeline for Mekong Delta



The Vietnam National Oil and Gas Group (PetroVietnam) will join Military Zone 9 to build a 400-km gas pipeline project in the Cuu Long (Mekong) Delta.

The project, which is worth nearly $800 million and is invested by PetroVietnam, will supply gas from the Lot B oilfield offshore Phu Quoc Island to gas-fuelled electric power plants in the Cuu Long Delta.

The gas will feed the Ca Mau Province based gas-electricity fertiliser complex and the 6 Mon Electricity Centre in Can Tho City.

Construction on the pipeline, which extends 246km under sea and 160km on land, will begin in the four quarter of this year and is expected to be completed in July

2011. The pipeline will have a capacity to transport 2-2.5 million tonnes of cubic metres of gas a year.

Under the Memorandum of Understanding signed on Wednesday, the Military Zone 9 Command will provide services to protect the pipeline in areas under its management during the time of construction and after completion.

The command will also be responsible for digging canals and building small bridges crossing Ca Mau, Kien Giang, Bac Lieu and Hau Giang provinces and Can Tho City.

The management board of the southwestern Vietnam gas project has also signed a contract with PetroVietnam Finance Corporation to arrange capital for the construction of the pipeline project.

VNNEWS



LUBRICANTS - Total buys back lubricant operation of ExxonMobil



Total yesterday signed an agreement on buying back full lubricant operations and specialised products of ExxonMobil in Vietnam, including the lubricant mill in Dong Nai province and the nationwide distribution network.

The agreement only includes lubricant business transference and does not affect to other business fields of ExxonMobil in Vietnam.

ExxonMobil confirmed it would continue investing in Vietnam's upstream, serving customers in maritime and international airlines in Vietnam.TBKT



LOGISTICS - Logistic centre built in Binh Duong



Binh Duong Production Import Export Co (Protrade) and Singapore's YCH Group yesterday signed a deal to set up YCH Protrade Logistic Centre in Binh Duong province.

The centre covers 6.9 hectares in Binh Hoa commune, Thuan An Dist, 20 kilometres from HCM City with a total investment capital of $14 million.

The centre is expected to start operation from Q1 of 2010.TT





POWER - First turbine of Se San 4 hydropower plant joins the national grid



The first turbine of Se San 4 hydropower plant with total capacity of 120 MW officially contributed electricity to the national grid on Sep 30.

Se San 4 hydropower plant complex was located in Ia O Commune, Ia Grai Dist, Gia Lai province with three turbines, total designed capacity of 360 MW, providing the total electricity output of 1.5 billion KWh per year. The total investment value for this project was about 5.8 trillion dong.

The construction was officially started in November 2004.

After the first turbine of Sesan 4 hydropower plant contributed electricity to the national grid successfully, it's expected that the second turbine would be in operation in November and the third one in January 2010.VIETSTOCK



POWER - Duyen Hai 2 thermo power plant offers investment of $1,200 per KWh



Janakuasa Group, Malaysia has recently submitted to Vietnamese ministry of industry and trade the investment report of Duyen Hai 2 thermo power plant project with designed capacity of 600 MW x2 to be built in Tra Vinh province, under Building-Operating-Transferring (BOT) method.

The group's leaders said the investment rate for Duyen Hai 2 Thermo power plant project might reach $1,200 per KWh.

The construction was supposed to be kicked off in Q3 of 2010, after the group finishes all the concerning negotiations for electricity price, BOT contracts with Vietnamese partners.

France-based Alstom Group seems to be selected as the main EPC contractor for this project.

In the opening ceremony of its representative office in Hanoi last week, Janakuasa Group presented Tra Vinh province with $100,000. The group pledged to fund $1 million every year for building schools in Tra Vinh province, starting from the year the plant is officially put into operation until the ending period mentioned in the BOT contract.DAUTU



TELECOM UNICATION 3G-VinaPhone to be the first mobile provider to offer 3G services



VinaPhone will become the first mobile network provider to offer mobile services on the basic of 3G technologies on October 12. VinaPhone commits to offer reasonable service charges that will be suitable for most of Vietnamese mobile subscribers.

So, after exactly one month since the issue date of 3G certificate granted by Ministry of Information and Communications, VinaPhone is the first 3G service provider in Vietnam. The mobile network provider has already tested successfully the 3G services such as video calls, Mobile TV and other high-speed Internet services.

Ho Duc Thang, VinaPhone's vice director said his company has already finished installing thousands of 3G BTS stations nation-wide. The service charges would be suitable for all Vietnamese mobile subscribers, he added.

The current, available 2G basic services will stay unchanged when using on 3G such as phone calls, SMS, MMS and Data.

Thang said the charges for typical 3G services such as Mobile TV, Mobile Camera, Video calls will be at acceptable level for all Vietnamese customers.

VinaPhone's announcement to launch 3G services in October has removed all the doubts that this mobile network provider will be fined when it fails to carry out the 3G plan in time.

The three other competitors of Viettel, MobiFone and the associate of EVN Telecom & Hanoi Telecom at present are in the middle of testing the services. All the mobile network providers planned to officially offer the services in the earliest time. The total paid deposit was posted at over 8.1 trillion dong, in which Viettel's paid amount was 4.5 trillion dong, and the rest of VinaPhone, MobiFone, and EVN Telecom-Hanoi Telecom.VNEXPRESS