Vietnam - News and Regulations

RETAIL/DISTRIBUTION-Vietnam's retail market growing rapidly
Being evaluated as a major potential market, Vietnamese retail market has been growing rapidly with sales force growth averaging approximately 23 percent per annum. Holding the fourth position among 30 countries that are attractive to foreign retailers, Vietnam's domestic market expects to attract various giants in retail sector. According to the market research of CB Richard Ellis Vietnam Company (CBRE), retail sales and services revenues at Vietnam's current prices have gone up by 16 percent in the first six months of 2010, and doubled compared to the same period of 2009. Having been in Vietnam since 1998, from struggling with the initial point of sale, Big C has expanded to 10 supermarkets directly distributing consumer goods and necessaries in major cities like Hochiminh city, Hanoi, etc. According to PR manager of Big C Vietnam Duong Thi Quynh Trang, Big C will soon open a supermarket in Vinh city, Nghe An province. Big C's recent business is very good and they determinedly believe in the future development of the company. There currently are 30 foreign retailers investing in Vietnam, focusing on mixed commercial centres, supermarkets, convenience stores, health and beauty studios, and food stores. According to preliminary survey, most businesses are operating effectively and have been expanding their business. CBRE Vietnam's managing director Marc Townsend said they forecast that there would be more and more high-class retailers entering Vietnam's market. The main attentions are the young population and the fast urbanisation of Vietnam. Besides the industrialisation process, which resulted in developments in technology, increasing number of medium and high-income earners has led to changes in lifestyle, including a preference trend for foreign brands. Fever in market for retail space Despite being offered at a very high rental rate since being put into use in April 2010, Vincom centre in Hochiminh city has basically filled up more than 90 percent of the total space. Similarly, finding a suitable point of sale in the downtown areas such as Diamond, Sai gon Square, Parkson, etc., is too difficult for many businesses, when most lessees have signed long-term rental contracts. Currently, the average rental for ground floor and first floor is ranging from $97 to $124 per square metre monthly, two to three times higher than renting a space far from the centre. According to real estate specialists, the current supply for retail space in Hochiminh city is nearly 318,000 square metres, located in 24 commercial centres and commercial complex. Of that, the filling rate is nearly 95 percent. By 2013, the supply is expected to increase by three times. Facing the limit of vacant retail space in the centre, retail space supply outside the city centre is estimated to increase by more than 10 times with the participation of a number of new large-scale commercial centres. There have been many new retail spaces locating in the outside city centre area, such as in District 7 (Crescent Mall, Sunrise Shopping Mall), and District 2 (Metropolis), etc. These new sources of supply are expected to help the city solve the problem of retail space shortage in the city centre for foreign investors.vnnews

FOOD PROCESSING - Northern Kinh Do JSC earns profit of 12.4b dong in Jan-June

The STC-listed Northern Kinh Do Food Processing Joint Stock Co (coded NKD) has earned accumulative pre-tax profit of 12.49 billion dong in the first six months of this year, fulfilling 10 percent of the year plan of 120 billion dong.

According to the combined financial reports, in Jan-June the company reported gaining net revenue of 305 billion dong, up 12.5 percent against the same period of last year. Meanwhile, NKD's combined profit in H1 reached 74.48 billion dong, surging by 21 percent year-on-year.

The revenue from financial activities reduced by half at 9.34 billion dong and operation costs rose to 18.8 billion dong, resulting in net profit of 11.49 billion dong, equalling to 37.6 percent over the last year.

The company reported gaining other profits of over 1 billion dong, and pre-tax profit of 12.49 billion dong, a sharp reduction in comparison with that of H1 of 2009 of 33.6 billion dong and fulfilling 10.4 percent of the year plan.

In Q2, the company estimated to reach 149 billion dong of net revenue, a slight increase of 5.6 percent against the same period of last year. Meanwhile, the after tax profit in April-June was posted at 729 million dong.

STATE OWNED ENTERPRISES- Vietnam's inefficient state firms in spotlight

The near-bankruptcy of one of Vietnam's largest state-owned enterprises highlights a lack of oversight and easy access to capital by the inefficient business groups, observers say.

In early July the ruling Communist Party announced that the chair of shipbuilder Vinashin, Vietnam Shipbuilding Industry Group, would be reprimanded for pushing the firm to the brink of bankruptcy.

The government said Pham Thanh Binh had been suspended and was accountable for the group's debts, which local media said amounted to at least 80 trillion dong (4.3 billion dollars).

Police are reportedly investigating.

Vietnam began opening its economy to the world 24 years ago. While small-scale private enterprise flourishes, 60 or 70 percent of the nation's capital and assets are held by state-owned groups, outspoken economist Pham Chi Lan, a former economic adviser to the government, was quoted by local media as saying.

Along with Vinashin, these groups include Electricity of Vietnam (EVN), the power monopoly, and PetroVietnam, the Vietnam National Oil and Gas Group, as well as others.

Prime minister Nguyen Tan Dung, who assumed his post four years ago, "has been a major supporter of building up Vietnamese business conglomerates along the model of South Korea's chaebols," said Carl Thayer, a Vietnam specialist at the University of New South Wales.

Vinashin, established in 1972 to consolidate the country's shipbuilding industry, built and repaired vessels but also engaged in shipping, heavy industry and other services, the company website said.

Local media have reported that the firm -- whose interests included ports and real estate -- would now be restructured to focus on its core business.

The Vinashin case emerged just months before next year's Communist Party Congress, at which key leadership posts will be determined.

Thayer said the scandal could have been a threat to prime minister Dung but he "struck pre-emptively" by ordering the restructuring.

"Dung has put himself in a win-win situation," Thayer said.

Before the scandal, Vinashin said it had more than 160 subsidiaries including 39 shipyards, and benefited "from strong government support".

In an interview with local media, Lan accused state-owned business groups such as Vinashin of being over-indulged.

"Vinashin was given huge resources, and allowed to spend money freely and incur big debts," she was quoted as saying. "I think if the state didn't give money to Vinashin so freely, the losses would have not been so huge."

Lan declined to speak to AFP.

Jonathan Pincus, dean of the Fulbright Economics Teaching Programme in HCM City, said some large state companies had easy access to state land and capital without being forced to compete, which led to over-investment.

He said the solution was to force them to borrow at commercial terms and to buy land at normal market prices.

"The tenure and compensation of managers of state companies should be linked to company performance. Greater transparency is also essential," Pincus said, suggesting that large state firms list on international equity markets, which would force them to disclose information.

Hanoi's Young Business Association, in a paper for a World Bank-backed forum last December, said the efficiency of capital investment in state-owned businesses was lower than in private enterprises from the same industry.

"Forty-five percent of the state-owned corporations are encountering losses," it said. "Yet resources, both human and material, still flow overwhelmingly into state firms".

Pincus said other state sectors could adopt Vietnam's telecommunications model. All the mobile phone providers are majority-owned by the state but none dominates the market, meaning they all have to compete on service and price, he said.

Lan was quoted as saying that because top executives of state groups are appointed by the prime minister, they scorn guidance from anyone else, and regulations do not clearly specify the supervisory responsibilities of government ministries.

She said state business groups should be even more transparent than listed firms "because they hold the assets of the people." AFP

SOE debt load hits nearly two times equity, losses mount

By the end of 2008, total capital of 20 audited state-run corporations was estimated at 137.464 trillion dong, while total combined debts were recorded at around 87 trillion dong and the average ratio of payable debts on total equity was 1.8 times, according to the auditing results of state-owned enterprises, state financial institutions and state banks announced yesterday by the State Audit of Vietnam.

SAV said that the business capital of those corporations posted the strong growth against previous years as their production scale was continuously expanding.

However, some corporations operated primarily based on appropriated capital and loans leading to their financial instability. Specifically, the coefficient of payable debt on equity in 2008 by Civil Engineering Construction Corporation No. 6 (Cienco 6), under the Ministry of Transport was 30.53 times; Vietnam Industry and Construction Corporation at 16.47., Vietnam National Coffee Corporation (Vinacafe) 3.36 times. SAV said that most state-owned companies did not correctly reflect their revenues and expenses.

The 2008 financial report of 183 out of 242 independently- accounted enterprises of 20 state-run corporations showed a total pre-tax profit of 20 corporations reached 16.626 trillion dong as there was 12 out of 20 corporations that obtained 2008 revenue higher than 2007's. However, total payable debts of 20 corporations by the end of 2008 was 26.586 trillion dong as the ratio of payable debts to total assets was 19.34 percent, on total equity was 55.48 percent. In particular, many bad debts outstanding for years had yet to be settled.

In particular, due to the lack of contracting inspection and internal financial control, some enterprises were facing up to several receivables not yet settled and a record of accounting books was incomplete, leading to the problem: "fake profit, real loss. " The typical example is Vinacafe, which reported a profit of 199 billion dong, but actually it posted the accumulated losses of 525 billion dong by December 31, 2008.

Total bad debts of Vietnam Engineering Construction Corporation amounted to 118.6 billion dong (already set aside 11 billion dong for stand-by reserves), which did not include several advances exceeding the regulated internal rate and advances to employees left and no possibility of debt receivables.

Bad debts of Cienco 6 were posted at 46.4 billion dong, while overdue receivables from customers in Vietnam Environment, Water Supply and Construction Investment Corporation were 33 billion dong.

According to SAV's comments, they are actually the figures of potential losses.nglaod

POWER - EVN seeks $300m bank loans for 5 years

Electricity of Vietnam started talks with a group of banks for five-year term loan of about $300 million, according to two people familiar with the matter.

The Hanoi-based utility's loan may pay an all-in fee of about 400 basis points more than the London interbank offered rate, and proceeds would be used for working capital, the people said, asking not to be identified as the plan is private.

Credit Agricole CIB, Credit Suisse Group AG, HSBC Holdings Plc and Natixis have bid to participate as a group, while Australia & New Zealand Banking Group Ltd, Bank of Tokyo- Mitsubishi UFJ Ltd, BNP Paribas SA, Deutsche Bank AG, Standard Chartered Plc and Sumitomo Mitsui Banking Corp. are considering involvement, the people said.bloomberg

RESOURCES/UPSTREAM GAS - Indian quartet eyes BP's Vietnam patch

Four Indian state-run oil companies Gail India, Oil India, Oil & Natural Gas Corporation and Indian Oil Corporation will jointly bid for BP's oil and gas assets in Vietnam, Oil India chair Nayan Mani Borah said.

The four Indian companies will approach PetroVietnam for a joint bid for BP's assets, he said, adding that state-run PetroVietnam has the first right of refusal on the assets.

"The approach and goal is to combine our strengths with PetroVietnam," Dow Jones cited Borah as saying.

He said the bid would likely be for BP's share in a gas block, pipeline and a power plant.

BP holds a 35 percent stake in Block 6.1 in Vietnam. ONGC holds 45 percent and PetroVietnam the other 20 percent interests.VNN

PSG gained nearly 30b dong of pre-tax profit in H1

PetroVietnam Southern Gas JSC (PSG) announced the parent company's business result in the second quarter with sales and service supplying revenue of 847.2 billion dong, up 140 percent, pre-tax profit of 17.3 billion dong, increasing 96.03 percent, after tax profit of 15.965 billion dong, up 124.54 percent year-on-year.

According to H1 accumulative business result, PGS's revenue gained 1.4895 trillion dong, rising 139 percent, pre-tax profit of 29.55 billion dong, up 82.41 percent year-on-year, after tax profit of 26.88 billion dong, about two times of the same period of last year.DTCHK

Oliver Massmann

$400,000 detected in shipping container

Tuesday ,Feb 09,2010, Posted at: 12:21(GMT+7)

Customs at Viet Huong Industrial Zone, southern Province of Binh Duong detected USD400,000 hidden in a shipping container that was about to be shipped to Taiwan, said Binh Duong custom on February 8. Customs displays the US$400,000 in a packing tape carton where it was found on the docks at Binh Duong before being shipped to Taiwan. (Photo: Vnexpress) Binh Duong Custom Office said the money was detected in a container packed with rolls of packing tape from Jorn Technology Co, Ltd. Two representative of the company Mr. Huang Shao Chi and Mrs. Hsu Lien Hsiang said the money was being sent to Taiwan to pay for materials. They said the company had borrowed some of the US currency and purchased the rest in Cambodia, as the banks in Vietnam couldn’t supply it. The money is being kept at Binh Duong State Treasury while Binh Duong Custom Office investigates the case. Jorn Technology Colt has operated as a packing tape manufacturer in Viet Huong Industrial Zone for ten years.

Source:SGGP,Vnexpress_Translated by Son Hai http://www.saigon-gpdaily.com.vn/Law/2010/2/79269/

Foreign Direct Investments: What Happened to Malaysia?

Monday, July 26, 2010

The recent release of World Investment Report (WIR) 2010 by United Nations Conference of Trade and Development (UNCTAD) provided a picture that is nothing short of grim and ugly for the Malaysian economy especially in its attractiveness as a local and foreign investment destination. While the headline 81% drop in foreign direct investment (FDI) from US$7.32 billion to US$1.38 billion can be brushed of as a 'blip' due to a global financial and economic crisis in 2008-2009, a more in-depth study reveals that it was certainly not a one-off.

Our country's leadership should instead heed the loud alarm bells the data presented to prevent our economy from drifting aimless to a point of no return. The UNCTAD WIR 2010 data revealed five firsts for Malaysia:

1. For the first time ever in history, Malaysia attracted less investment than the Philippines.

Malaysia has lost out to Thailand in FDI for the very first time in 1998 while Indonesia exceeded us recently for the first time in 2005. Vietnam on the other hand, beat us in FDI for the very first time the year before, in 2008. While we have come to accept Thailand, Vietnam and even Indonesia as having gained competitiveness against Malaysia in recent years, we are suffering ignominy of attracting lower FDI compared to the Philippines for the first time ever in history. The Philippines attracted US$1.95 billion in FDI compared to Malaysia's US$1.38 billion.

Among Southeast Asian nations, we are now only attracting more FDI than Cambodia, Myanmar, Brunei, Laos and Timor-Leste. And for the first time ever, what was previously unimaginable that we may one day be compared to countries such as Cambodia and Myanmar is now a real possibility.


2. Compared to the previous year 2008, Malaysia suffered by far the biggest decline of FDI in Southeast Asia

The global financial crisis has resulted in sharp declines in FDI for many countries in this region, especially given the region's reliance on investments from the United States and Europe. However, the Government cannot use the excuse of the crisis as the reason for the precipitous drop in FDI as we have performed the worst compared to all other countries big and small in the region.

While many of our regional competitiors suffered declines in FDI last year, none of them came close to what we experience. Thailand, Vietnam and Indonesia's FDI declined by 30.4%, 44.1% and 44.7% respectively, those figures are by far healthier when compared to Malaysia's 81.1% drop. This was despite the fact that Thailand was facing a year-long political upheaval while Vietnam was mired in a currency crisis.

On the other hand, Singapore, Brunei, Philippines and Myanmar still managed to register positive growth although for Singapore, the bulk of its decline in FDI was registered in 2008 which accentuated its improvement in FDI in 2009.


3. Malaysia was the only country in Southeast Asia to have register a net negative Foreign Direct Investment Flow

The WIR 2010 presented data for both the amount of FDI a country receives as well as the amount of FDI which originates from a country that was invested overseas. Out of all the countries in the region in 2009, Malaysia was the only country where our outflow of FDI amounting to US$8.04 billion is substantially greater than the FDI of US$1.38 billion received. All the other countries in the region had a net positive FDI flow in 2009.


4.For the first time ever, cumulative Outward FDI Stock exceeded cumulative FDI Inward Stock

For the first time ever the amount of foreign direct investment flowing out of Malaysia accumulated over time amounting to US$75.62 billion, or the “Outward FDI Stock” has exceeded our cumulative foreign direct investment coming into the country, which amounted to US$74.64 billion.

The trend of both local and foreign investors voting with their feet to seek greener pastures overseas is unmistakable when we look at the fact that Malaysia has been suffering from increased trend of FDI outflow over the past decade, as show in the chart above.

The above chart shows clearly that not only are foreign investors unwilling to invest in Malaysia, our own local investors as well as foreign investors who are already in the country have a total lack of confidence in the ability of our economy to generate an attractive return to their investments. Our net FDI flows have declined from US$2.56 billion in 2004 and US$1.09 billion (2005), to a net negative US$0.02 billion (2006), negative US$2.7 billion (2007) and negative US$7.67 billion in 2008.

The figures show clearly that there is money to be invested, they are just not investing in Malayisa. The investors now see improved and better opportunities in the region and abroad even during the times of crisis.


5. Barring a “blip” in 2001 when we attracted only US$0.55 billion in FDI, this is the first time we've attracted less than US$2 billion in FDI over the past 20 years

Looking at the FDI data over the past 20 years, Malaysia has shown an inability to grow its FDI while our neighbours are generally trending upwards in their ability to attract FDI. This is a reflection of our stagnating competitiveness while our neighbours continue to consistently increase theirs.

Finally, when we compare ourselves against our regional peers, it is a picture of increasing bleakness. Despite outperforming Thailand consistent in the 1990s and before, the last time we exceeded them in FDI was back in the year 2000, which means they have already beaten us for 9 consecutive years.

While Indonesia beat us once in 2005, they've now repeated the feat 2 years in a row in 2008 and 2009. ASEAN rising star, Vietnam has also done the same by attracting more FDI compared to Malaysia over 2008-2009. This is shown in the comparative chart below.

What New Economic Model?

While the proposed “New Economic Model” (NEM) by the Prime Minister Datuk Seri Najib Abdul Razak has correctly identified some of the fundamental problems with our economy which has led to our fall from grace, as well as proposing some key measures to restructure our economy, he has repeatedly backtracked from the NEM and shown little political appetite to implement the critical policies which will lead to improvements and greater competitiveness in our economy.

Datuk Seri Najib has since described and relegated the NEM to merely a “trial balloon” and backtracked from his commitment that affirmative action will be implemented by needs and not by race by reinstating the 30% bumiputera quota target in the 10th Malaysia Plan. The recent spate of privatisation projects have also not seen any political will on the part of the Government to implement open, transparent and competitive tenders, including the RM628 million construction of Malaysia's largest exhibition and convention centre, the development of the 3,000 acres of prime land in Sungai Buloh as well as the proposed major redevelopment of the old Sungai Besi airport into the KL Financial Centre.

Even the highly anticipated RM46 billion Mass Rapid Transit (MRT) project for the Klang Valley looks all but awarded to a Gamuda-MMC consortium without any open competitive tenders.

What is worse, despite Datuk Seri Najib's repeatedly insisted that the era where “the government knows best” is over, his administration continues to crowd out private investments by direct awarding mega-projects to government-linked entities such as the Sg Buloh land to an Employee Provident Fund joint venture with the Government or the Sg Besi airport redevelopment to the 1Malaysia Development Fund.

Without these necessary and critical changes to the Government's economic policies, the Malaysian economy will only continue to drift away from the radar of both local and foreign investors as our Ministers continue to indulge in their daydream of glory and success, while our neighbours will steadily and consistently improve their economies beyond our reach.


http://tonypua.blogspot.com/2010/07/foreign-direct-investments-what.html

Vietnam - News and Regulations

WELCOME TO VIETPOWER 2010

Power cuts in Vietnam continue to impact on businesses in the country. However, all that is about to change. With one of the youngest workforces in the world and one of the fastest-growing economies in Asia, Vietnam is set to attract a lot of attention over the next few years.

A lot of money, local and foreign, is going into improving capacity in Vietnam. BOTs (Build Operate Transfer contracts) are in the process of negotiation across the country, including the 1200MW Nghi Son 2 plant and the 750MW O Mon 2.

Electricity of Vietnam (EVN) have two big priorities right now. Firstly, Vietnam has eight nuclear power plants (read as 8000MW!) planned for operation by 2030, given the go-ahead by Prime Minister Nguyen Tan Dung. Helping them with construction is a Russian firm.

Secondly, Deputy Prime Minister Hoang Trung Hai extolled the virtues of a competitive electricity market for cost-saving – a pilot market is planned for 2011. EVN’s agenda should be improving their transmission network, he said, to support power companies.

Whether aiding EVN with construction or engineering talent or knowledge share, or being one of the international power companies to be selling power to the soon-improved transmission system, prospects for foreign investment in Vietnamese power are rich. Already 2010 has seen AES and Jaks Resources sign off a 1200MW coal thermal power plant each.

With this month seeing a first draft of the Ministry of Industry and Trade’s Power Development Master Plan VII, the dynamics of Vietnam’s power industry will change forever. IBC’s 2^nd Annual VietPower conference in Hanoi this September will assemble executives from the independent power producers who have successfully landed projects in Vietnam this year, along with high-ranking government officials and financial experts. Chaired by a Vietnamese-speaking lawyer who has dealt with the government for years, the conference will create a unique forum for discussion of Vietnam’s growth, its challenges, and its potential.

For more information on this conference or to register, go to www.vietpowerconference.com or contact ruohyi.tham@ibcasia.com.sg

INTERNATIONAL RELATIONS - US, Vietnam to deepen relationship despite human rights differences

The US and Vietnam pledged on Thursday to deepen their relationship despite their differences over human rights.

US Secretary of State Hillary Rodham Clinton arrived in Hanoi early Thursday to attend the Regional Forum of the Association of South-East Asian Nations (Asean) on Thursday and Friday.

After a meeting with Pham Gia Khiem, the Vietnamese deputy prime minister and minister of foreign affairs, she said the US was prepared to take the US-Vietnam relationship to the next level.

Clinton said the United States was seeking to promote economic growth in Vietnam through integration into the regional and global economy. Expanding trade links between the two countries would also create jobs in both, she said. The meeting with Khiem covered issues including trade, investment, health, education, good governance, human rights, and humanitarian and security issues, Clinton added. She said that the US was still concerned about Vietnam's human rights record. Vietnam was "on the path to being a great nation with an unlimited potential," Clinton said,"and that is among the reasons we express concern about arrests and convictions of people for peaceful dissent, attacks on religious groups and curbs on internet freedom." "We look to work in a spirit of cooperation and friendship to support efforts to pursue reforms and protect basic rights and freedoms in Vietnam." Khiem acknowledged their different views on human rights issues, but also vowed to deepen the relationship between the two former enemies. "I reaffirmed the commitment of Vietnam to strengthen our relationship with the US in the spirit of leaving the past behind," he said. Clinton's visit also marked the 15th anniversary of diplomatic relations between Vietnam and the United States.DPA

POWER - EVN pushed to expand competitive power generation market

Electricity of Viet Nam (EVN) has been told to prepare information technology infrastructure suitable for the introduction of a competitive power generation market in Viet Nam.

A recent seminar in Ha Noi discussed the design, piloting and assessment of new IT infrastructure, due to be completed early next year. The total cost for the IT infrastructure necessary for a competitive power market was estimated at $32 million, including a market interface system for generators.

The seminar was organised by EVN to look at the existing IT landscape and the overall information architecture in Viet Nam's power generation market.

EVN deputy director Nguyen Manh Hung said the corporation had already developed a basic IT infrastructure and, from 2004, in anticipation of the creation of an official power market, had begun a process of upgrades and improvements.

This included the implementation of the VietPool Interim Market System, which managed market transactions; the development of hardware and software infrastructure for metering data acquisition, processing and storage and the upgrading of metering systems at EVN.

However, the National Electricity Dispatching Centre still lacked technological tools and methods to meet the regulations of a competitive power market, and the ability to plan the optimum operation of the electricity system in the short, medium and long term.

Such tools and methods were more necessary with the increasing number of new electricity plants coming into operation, Hung said.

Currently, the electricity system operated mostly on experience or embedded knowledge, which prevented the dispatching centre from operating an optimum business strategy or accurately forecasting supply and demand, thus affecting electricity security.

The absence of a comprehensive IT infrastructure also prevented the dispatching centre from providing electricity delivery centres with the information required to prepare corresponding operational plans, he said.
While domestic electricity plants had a monthly trading volume with EVN as high as 4 trillion dong ($222.2 million), there was no monitoring system in place to determine whether they were actually operating efficiently.

The seminar discussed the key design criteria for the new infrastructure, database and information security considerations, the constraints, and recommendations from the consultant. Under the power market principles, all electricity plants with a capacity of more than 30MW have to join the competitive power generation market.

Hung expects the regulations on the competitive market to be completed by the end of this year.

According to the Electricity Law and the government regulations, the comparative generation power market will be piloted, assessed and completed in the 2006–14 period, the wholesale electricity buying market will be competitive in the 2015–22 period, and the electricity distribution market will have become competitive by 2022. The Vietnamese government in the past year has encouraged non-EVN investors to get involved in the electricity generation sector, providing financial incentives such as favourable loans, but very few investors have met the huge financial requirements. The power distribution sector is currently monopolised by EVN.

RESOURCES - BP to sell Viet Nam assets to fund cleanup

HCM CITY — British oil giant BP has said it plans to sell its upstream assets in Viet Nam to raise cash to pay for its oil spill off the US coast.

The assets include Lan Tay and Lan Do gas fields and facilities, Nam Con Son Gas Pipeline and Dinh Co Terminal and Phu My Power Plant No 3.

BP Viet Nam declined to comment about the total value of these assets but Reuters reported they were worth an estimated US$1 billion.

The company said it had informed the Government about its intention to divest its assets in Viet Nam and was now awaiting the Government's approval.

"The plan does not affect BP's other businesses in the country such as the crude oil supply to Dung Quat Refinery and the lubricants business."

A spokeswoman for BP Viet Nam also declined to comment about suitors for these assets, saying: "It's too early to speak about the buyers."

Dow Jones Newswire reported there had been no talks between BP and the Viet Nam Oil and Gas Group on the sale of BP's assets. PetroVietnam, as the latter is known, has an equal share in BP's assets in Viet Nam.

It quoted a senior PetroVietnam official as saying there should be discussions and an agreement between BP and PetroVietnam before the sale takes place.

BP entered Viet Nam in 1989 and in the 1990s discovered four major gas fields 320km off the HCM City coast.

The $1.3 billion Nam Con Son Gas Project is a complex operation involving the development of the Lan Tay and Lan Do fields, laying of a 400km pipeline and construction of the 720MW Phu My Thermal Power Plant No 3 in the southern Ba Ria-Vung Tau Province.

Production started in November 2002 and BP now supplies 4 billion cubic metres of gas annually to generate around 24 per cent of Viet Nam's electricity. — VNS/wire services

ENERGY - ASEAN urged to focus on energy, climate change

DA LAT— ASEAN should prioritise finding effective ways to realise energy security and deal with climate change challenges, Prime Minister Nguyen Tan Dung said yesterday.

Opening the 28th ASEAN Ministers on Energy Meeting (AMEM) in Da Lat City, Dung emphasized that this was a pivotal year for the regional bloc as it was being considered a growth engine in the aftermath of the global crisis.

As signs of initial recovery had been seen in the regional and global economies, the situation presented both opportunities and challenges for ASEAN, he said.

"We should strive harder so that ASEAN energy development co-operation initiatives and programmes can be realised," the PM said.

He said the meeting should focus on increasing co-operation to ensure energy security for ASEAN in the context of rising consumption to meet the demands of recovery and development, and to cope with climate change impacts.

Dung also called for wide-ranging co-operation in researching and developing energy sources and reducing greenhouse gas emissions.

The PM suggested that ASEAN step up research efforts and expedites projects like the regional power grid and the trans-ASEAN gas pipeline. Member nations should also implement petroleum security agreements to ensure mutual support for electricity, oil and gas among members, especially in emergencies, he said.

"The region should promote co-operation in trade and investment in the fields of clean coal technology transfer and application among member nations and with partners to meet the growing demand for coal," he added.

Dung also called for greater co-operation in the use of renewable energy sources so that they account for at least 15 per cent of total energy consumption by 2015.

"We need stronger commitment to providing financial support, promoting technology transfer and coming up with new, more effective mechanisms for building projects under the Clean Development Mechanism (CDM)," he said.

Kyoto Protocol

The CDM allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol to implement emission-reduction projects in developing countries in order to earn saleable certified emission reduction (CER) credits, each equivalent to 1 tonne of CO2, which can be counted towards meeting Kyoto targets.

Dung also urged co-operation in energy planning and policy-making, transportation and distribution of oil and gas, as well as environmental protection.

"The possibility of co-operation in using nuclear energy for peaceful purposes as a source of alternative low-carbon and sustainable energy should be considered," he stressed.

Dung said the plans being developed within and among ASEAN nations as well as between ASEAN and its partner countries and the international community aimed to develop low-carbon economies.

"Dialogue and co-operation between businesses and governments to ensure realisation of the ASEAN Action Plan of Energy Co-operation (AAPEC)'s objectives are crucially important," he said.

Viet Nam took over as chair of the 28th AMEM for a year, replacing Myanmar.

"This is a very important period for implementing AAPEC, which was approved last year in Myanmar," said Vu Huy Hoang, Minister of Industryand Trade, as he opened a working session at the meeting.

The lack of necessary sources was clearly creating difficulties in implementing the AAPEC, and ASEAN should raise its relationship with the international community to a new level.

Earlier, ASEAN energy officials held talks about energy co-operation for the first time with Russia and the US.

New proposals

The regional energy ministers looked at key achievements and studied new proposals for implementing the 2010-15 AAPEC, focusing on coal and clean technology, energy efficiency and conservation; renewable energy, nuclear energy and regional energy policy and planning.

They also reviewed the activities of the 2010-11 programmes initiated by SOME + 3 (Meeting of Senior Energy Officials from ASEAN and China, Japan, South Korea); as well as the implementation of the EAS (East ASEAN Summit) energy cooperation programme.

Later yesterday, Dung met the Indian Oil and Gas Minister, Murli Deora, who said Indian businesses wanted to boost their investment in Viet Nam's energy and steel sectors.

Cambodia, Laos and Viet Nam reached an agreement on future energy co-operation during a forum on the sidelines of the 28th AMEM

The document, signed yesterday evening by Vietnamese minister Hoang; Cambodian Minister of Industry, Mines and Energy Suy Sem; and Lao Minister of Energy and Mines Soulivong Dalavong, demonstrated the countries' commitment to projects involving the three nations, the ministers said.

The agreement covered inter-connection 230kV and 500kV electricity projects, development support for environmentally friendly hydroelectric power projects on the Mekong River and promotion of future energy projects that would benefit the three countries individually or collectively.

A Memorandum of Understanding on co-operation in developing nuclear power sources was signed yesterday evening by the Ministry of Industry and Trade and its Japanese counterpart. — VNS

NUCLEAR - Vietnam's nuclear ambitions powered up with China deal

Vietnam's Atomic Energy Institute and China's Guangdong Nuclear Power Group on July 21 signed a memorandum of understanding (MoU) to cooperate in nuclear power.

Under the MoU, the Guangdong Nuclear Power Group will assist Vietnam to transfer the latest scientific and technological advances and also train technicians for the nuclear power industry.

At present, China has one of the fastest-growing nuclear power industries in the world. Over the past few years, dozens of nuclear power stations have been built and put into operation in China, meeting the country's demand for power for socio-economic development.

Vietnam is considering nuclear power as a way to address an increasing demand for electricity. In 2009, the Vietnam National Assembly passed a plan to build a 4,000 MW nuclear power plant in Ninh Thuan Province. The proposed plant will have two nuclear reactors called Ninh Thuan 1 and the Ninh Thuan 2 with two 1,000 MW turbines in each.

In May the government said it would set up a steering committee to get the project up and running by 2014 with a view to having the first turbine operational by 2020.

BIO – TECH - Dong Nai plans a biotech centre

Dong Nai Province has unveiled a project to build a centre for biotechnology applications with an aim to bolster high-tech development and attract $500 million investment in the next ten years.

The province will spend around one trillion dong in developing infrastructure for the centre covering 208 hectares in Cam My District in the first stage, from 2010 to 2015, said Pham Van Sang, director of the provincial Department of Science and Technology, Sang said.

The centre will be a multi-function complex for research and development, training, technology transfer, and production of bio-products for use in the areas of agriculture, medicine, pharmaceutics and environment.

The mission of the centre is to mobilise the research and educational resources in biotechnology to facilitate discovery and commercialisation of new technologies; Sang told reporters on Monday, a day before the province started work on a road linking different sections of the biotech centre.

He also noted that the province was going to complete the procedures for the second stage, targeting to develop the centre into a high-tech park specialising in biotechnology of the region, and later as a science city.

INSURANCE - Life insurance market revenue gains of 25pct in H1

The life insurance market in the first half of the year saw revenue gains of about 25 percent over the same period last year, according to preliminary statistics from the Vietnam Insurance Association. Among the biggest gainers was Dai-ichi Life Vietnam, which reported earnings of more than 120 billion dong ($6.3 million) from new premium policies in the first six months of the year, up 48 percent against the same period in 2009. Other insurance companies also reported strong growth in the first half of the year. ACE Life said new premium policies were up 40 percent, while Korea Life Vietnam said it saw premiums rise nearly 80 percent in the second quarter. AIA Vietnam also saw solid growth in premiums, as did Prudential Vietnam, which said its market share by premiums rose 27 percent in the first six months. It now has a market share (by premium revenue) of 40 percent. Jack Howell, Prudential Vietnam's CEO, said strong growth in the local insurance market was an indictment of Vietnam's development potential. Meanwhile, Phung Dac Loc, general secretary of the Vietnam Insurance Association, said there was still room for growth in the local insurance market. At the moment, just five percent of the Vietnamese population have life insurance. It is estimated that 30 percent of the country's population can afford to take out insurance policies. There are currently 11 life insurance companies in the country. Only Bao Viet is home-grown. Nguyen Quang Tung, general director of the Vietnam Investment and Development Bank's insurance company, said his firm planned to expand its life insurance business by forming joint ventures with foreign partners.VNNEWS

RESOURCES - Olympus says Bong Mieu mine Q2 output up 12pct

Canadian gold producer Olympus Pacific Minerals Inc (OYM.TO: Quote) said second-quarter production at its Bong Mieu plant in central Vietnam is up about 12 percent sequentially, sending its shares up as much as 20 percent. Gold production at the mine rose to 8,200 ounces from 7,335 ounces in the first quarter, the company said. Olympus Pacific, which expects to further expand its reserve and resource estimates in East Malaysia and Vietnam, said it has a production pipeline capable of expansion to 300,000 ounces by 2014. Shares of the company were up 17 percent at 35 Canadian cents Thursday late morning on the Toronto Stock Exchange.reuters africa

Oliver Massmann

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