Vietnam - News and Regulations

POWER/NUCLEAR - First nuclear plant project for Vietnam

The members of State Steering Board in Ninh Thuan nuclear plant project held a meeting yesterday to discuss about the solutions to carry out necessary procedures for constructing the first nuclear plant in Vietnam.

Electricity of Vietnam (EVN) has already finished approving the location and make feasibility studies for the Ninh Thuan 1 nuclear power plant.

Deputy prime minister Hoang Trung Hai required the concerning parties to work closely and carefully when carrying out the nuclear power plant project. The Ministry of Industry and Trade was required to work out each implementation phase to submit the project to the Parliament, and collect opinions from the concerning ministries and departments to work out the relating agreements in construction works on nuclear power plant with Russian partners.

The Parliament has already approved the investment project on Ninh Thuan nuclear power plant with total designed capacity of 4,000 MW, including two nuclear power plants of Ninh Thuan 1 and Ninh Thuan 2. According to the roadmap, the construction on the first power plant will be officially kicked off in 2014 and finished in 2020 with investment capital of about 200 trillion dong.chinphu

RENEWABLE ENERGIES - Big wind power project gets nod

Authorities of the central province of Ninh Thuan have approved in principle a project by Trung Nam Investment and Construction Joint Stock Co to develop a wind power project with designed capacity of 200MW.

The project will be carried out on the total area of 900 hectares encompassing two villages of Loi Hai and Bac Phong in Thuan Bac District. It will require total investment of $500 million.

In a letter of commitment sent to the provincial government, the company also pledges to carry out another project manufacturing technical equipments to supply local wind power plants once its 200- MW wind power project is completed.

Vietnam has attached importance to renewable energy. In its strategic plan for renewable energy development, the country targets renewable energy to account for 5 percent of the total power output by 2020 and up to 11 percent by 2050. The rate of renewable energy currently accounts for some 3 percent. SGTW

OIL REFINERY - $4b invested in Long Son Oil Refinery Complex
Japan-based Itochu Group and Qatar Petroleum State-owned Group were currently completing the negotiation process to build the large oil refinery in Vietnam. The new oil refinery complex would be sited in Long Son, Ba Ria-Vung Tau province with total investment capital of about $4 billion. It was expected that when in operation in 2015, Long Son Oil Refinery would supply the market with 1.4 million tonnes of petroleum products per year. After completion, the complex would provide 1.45 million tonnes of plastic particles of polyetylen (PE) and polypropylene (PP); 730,000 tonnes of raw chemicals for producing PVC and other 840,000 tonnes of basic chemicals to be used in oil refinery industry and chemistry, meeting the nation's demands for PE and PP plastic particles in 2017. The construction works would be divided into two phases. The first phase was supposed to be completed in late 2013 and the second phase of 2016.DDDN

FINANCE - Vietnam banks likely to achieve credit growth target of 25pct

Up to September 27, Vietnam's credit growth reached 19.27 percent and is expected to increase approximately 19.5 percent by end of September, State Bank of Vietnam Governor Nguyen Van Giau reported on SBV's website yesterday Sep 30.

Giau said that in 2010, State treasury deposits at commercial banks were estimated at about 57 trillion dong. The SBV allows banks to calculate Treasury deposits as mobilised funds, which will increase the credit. According to the new roadmap, Treasury deposits at local banks will be gradually reduced and this will not cause big changes to the market.

Currently, economic organisations have fairly large deposits and any small fluctuation can cause the banking system and capital problems. According to a survey of the Vietnam Banking Association, fluctuation of call deposits is likely to rise up to 80 percent. Thus, the amount of money in stock about 20 percent -30 percent is relatively stable.

Circular 19 allows credit institutions to use 25 percent of deposits of economic organisations to provide credit. However, the Governor noted that this is a sensitive rate, central bank will closely monitor the implementation to avoid the occurrence of mutations.

In addition, Circular 19 allows banks to use funds from "other banks' loan that has a term of three months." The SBV will require banks to calculate the loans very closely based on reality and ensure the ability of risk management.

Currently, the funds from "other banks' loans that has a term of three months or more" on the interbank market are only about 11 trillion dong (4.4 percent). Thus, the impact of high credit growth from this provision is not likely to happen.

Answering questions about the orientation of the central bank in operating the monetary policy in the last months of 2010, SBV Governor Giau said the central bank would continue operating under the direction of monetary policy to balance two objectives: of economic stability contributed to macroeconomic and economic growth as set out earlier this year.

By September 27, the credit growth of the banking system had reached 19.27 percent year-on-year. Thus, credit growth target of 25 percent for the full 2010 will be possibly performed. In the last months of 2010, the SBV will closely monitor macroeconomic developments and market conditions to devise flexible measures to ensure the compliance of the government's objectives..

For total outstanding loans in the banking industry up to the present, outstanding loans of the banking system to the non-manufacturing sector are estimated at 385 trillion dong, up 18.2 percent - lower than the outstanding balance of the whole system. Total loans to the real estate sector are estimated to have reached 218 trillion dong, up 18 percent of total outstanding loans and securities lending is 15 trillion dong, up 19.8 percent, and outstanding consumer credit is about 151 trillion dong, up 19.7 percent.

According to SBV Governor, outstanding loans to some prioritised areas of the agriculture - rural sector have increased 19 percent and loans to small and medium businesses soared by 20 percent.SBV

ECONOMY - Small firms show optimism

Vietnamese small- and medium-sized enterprises are the fourth most optimistic in the region that the Asia-Pacific economy will continue to grow, according to an annual report conducted by the market research firm TNS.

The sixth Asia Business Monitor done by US logistics firm UPS, which surveys SME decision makers across the region on the business sentiments and factors that drive success, said 59 percent in Vietnam expected growth, while another 32 percent expected the economy to remain the same.

The survey, which polled 1,350 SME decision makers in 13 key markets in March-April, included Vietnam for the first time.

Besides Vietnam, Australia, mainland China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand also took part.

Vietnam is the second most optimistic market in the region about business success in 2010, with 72 percent of the respondents believing their companies will perform better this year.

Though nine out of 10 Vietnamese SMEs are focused on conducting business within Asia and the Pacific, they expect trade with other regions to increase.

Global trading has helped Vietnam become a rapidly emerging market and this was confirmed by 58 percent of SMEs who said it had a more positive impact on their business growth and had opened up business opportunities for them.

Despite the prevailing positive growth sentiment, Vietnam was the least optimistic in the region when it came to the workforce: an overwhelming 61 percent intend to pare their workforce, while none plans to increase it.

As Vietnam's economic growth accelerates and it continues to invest in infrastructure, the building and construction industry is expected to boom. More than half of Vietnamese SMEs (53 percent) believe this sector will continue to be the country's key growth industry this year. It is followed by IT (36 percent) and leisure and tourism (28 percent).

When asked which industries will be the key economic pillars over the next three to five years, building and construction remained the top choice among Vietnamese SMEs with 53 percent, followed by agriculture, forestry and fishing (29 percent), leisure and tourism (29 percent), and IT (26 percent).

Though the Vietnamese economy is expected to grow this year, local entrepreneurs continue to face challenges and seven out of 10 SMEs said their top business concern was costs. The second biggest concern is interest rate hikes (46 percent) while competition (40 percent) is the third biggest concern.

Vietnamese SMEs want the government to continue its low-interest lending programmes since many banks still charge them above 14 percent.

Around 23 percent said they needed support funds to upgrade their technologies and equipment and 19 percent wanted the government to promote Vietnamese brands.

Of those who encountered problems in financing their business, 45 percent blamed this on bureaucracy and red tape in processing applications and 25 percent on the lack of institutions willing to lend to small businesses. Some 30 percent said they had no difficulties in finding funds.

To sustain their competitiveness, they said more needed to be done in terms of government support, transport infrastructure, and legal framework.

Asked about their perception of their own competitiveness, 31 percent said better service or quality was the key competitive advantage they had when competing with big corporations, followed by forming partnerships/associations (29 percent) and offering better prices (17 percent).

"[The survey] has clearly revealed that Vietnam SME leaders needed government support for them to grow and develop, and truly put Vietnamese brands on the regional as well as global map for years to come," Jeff Mclean, general manager of UPS Vietnam, said.

An important fact the survey uncovered is the importance of supply-chain management for SMEs.

Cost savings is the number one reason for Vietnamese SMEs to pursue a supply-chain management strategy (31 percent). In addition to cost savings, 28 percent view it as a method for quality assurance.

When asked what changes were needed in supply chain practices to support future growth, 31 percent said they would focus simply on reducing transport and distribution costs while 21 percent said they would shift their supply-chain operations closer to their final destination.SGTD

SHIPBUILDING - - Vietnam's Vinashin finishes Natixis debt repayment

Vietnam's state shipbuilder Vinashin has completed repaying its debt to French bank Natixis <CNAT.PA>, using funds from the Vietnamese government's overseas bonds for part of the settlements, a government official said on Thursday.

Vinashin, which has been near bankruptcy, used the bond proceeds to repay the remaining $3 million in the $25 million loan the French bank extended, deputy Transport minister Nguyen Hong Truong told a news conference.

"The group has now completed the debt settling duty with Natixis Bank," he said.

The overextended state conglomerate has racked up some $4.5 billion in debt, leading the government in July to reorganise the firm and later arrest several executives for mismanagement.

Truong rejected state-run media reports this month which said the government may allow Vinashin to use as much as $300 million from the $1 billion 10-year bond issued in January to settle the debt with Natixis.

Vinashin has raised $75 million by selling five ships and planned to sell another 35 ships to raise an estimated $160 million by the year's end, minister Nguyen Xuan Phuc, head of the government's office, told the conference.

The government has also injected funds worth nearly $130 million to help Vinashin complete its shipbuilding orders and ensure their delivery this year.

Vinashin has projected turnimg a profit in 2013-2014 after losses expected in 2011-2012. REUTERS

WTO – TRADE - Vietnam's shipments to US to face more barriers

Numerous trade barriers will likely go up stateside, choking off the flow off goods into the Northern American market, especially from 'non-market economies' like Vietnam, a practitioner said in Hanoi on Wednesday.

William Barriger, a legal counsellor working alongside the Vietnam Chamber of Commerce and Industry (VCCI) since 2003 over the antidumping tax imposed on Vietnam's shrimp, said an estimated 14 new trade barriers would go up in the US

The lawyer of the law firm Winston & Strawn said at a meeting at the VCCI Office that the Secretary of the US Department of Commerce in late August had announced new proposals to aid American exports related to the antidumping tax. These proposals, with the primary goal to bolster US exports in the next five years, will in effect create new trade barriers and will defend punitive duties on certain imported products, Barriger said.

He informed the audience that the US considered Vietnam a venue of concern when initiating antidumping lawsuits as Vietnam is also emerging as a production base besides China.

Many commodities originating from China are imposed anti-dumping tariffs stateside, so many manufacturers want to move their production facilities to Vietnam, he said. Any surge in imports into the US from Vietnam may trigger questions on goods dumping, the legal adviser said.

The US Department of Trade in its new proposals also changed the method of calculating antidumping tariffs with an aim to slap higher punitive taxes on imported products seen as being dumped in the US soil, according to Barriger. For example, he said, Vietnam's tra fish has recently been imposed higher punitive rate as the US chooses Bangladesh for calculating the production cost to apply to Vietnam's products.SGTD

ASEAN FREE TRADE - Garment makers look for Asean materials

Vietnamese textile and garment producers are looking for more apparel materials from Asean countries to make the most of free trade agreements, said an industry insider.

Pham Xuan Hong, vice chair of Vietnam Textile and Apparel Association (VITAS), said on Wednesday that to enjoy low import tariffs when shipping products to Japan, garment companies will have to source materials from Asean countries.

"Vietnam's garment exports to Japan have increased strongly recently due to the bilateral trade agreement. Japan is providing duty-free treatment to Vietnam's apparel articles," said Hong, who is also director of Saigon3 Garment Joint Stock Company.

Hong was speaking to the Daily while attending the Indian Textile Exhibition in HCM City on Wednesday.

"To be entitled to the treatment in Japan, Vietnamese garment producers are looking for material sources from Japan and Asean countries. My company Saigon3 Garment Joint Stock Company, for example, has just sent a team to Indonesia to look for textile and garment materials. We see Indonesia as well as Thailand as good materials suppliers," he added.

Asked where the rising prices of apparel materials make inroad into garment makers' profit, Hong said the impacts were not substantial as buyers were also willing to share the burden.

"We talked to foreign importers, and they agreed to share with us our hardships caused by the material price hike," he said.

However, local apparel producers are struggling with other challenges, including the labour shortage, and higher prices of electric power, oil, and transportation charges.

According to VITAS, in the first eight months of this year, Vietnam's textile and garment exports fetch $6.89 billion, up 17.4 percent year-on-year. The export value is expected to reach the target of $10.5 billion for the year 2010.

However, the country also suffers from a steep rise in the apparel import bill. Fabrics imports rose 26.6 percent year-on-year to $3.4 billion, while cotton and yarn imports rose 32 percent and 42 percent to $418 million and $700 million, respectively.SGTD

AVIATION - Air France unveils non-stop services to HCM City

Air France on Wednesday announced it would operate non-stop services between Paris and HCM City and will increase frequencies from Vietnam from November this year, a time when demand for travel to and from Vietnam surges.

Thierry Beragnes, Air France's country manager in Vietnam, told the Daily after a press conference held in HCM City on Wednesday to introduce the new services that the carrier would leave Tan Son Nhat Airport for Charles de Gaulle Airport in Paris at 10:45 p.m. on Wednesdays, Fridays and Sundays from November 2.

The services from Charles de Gaulle Airport will be at 11:25 p.m. on Tuesdays, Thursdays and Saturdays, and land on Tan Son Nhat at 4:55 p.m. the next days.

Air France will use its Boeing 747-400 equipped with 40 business and 396 economy seats for the three weekly non-stop services, which Beragnes said would mark a new step in its development in the Vietnamese market.

Air France showed confidence in the Vietnamese market, which he said had changed for the better compared to six years ago when it suspended a code-share pact with Vietnam Airlines for non-stop flights from Paris, leaving the Vietnamese airline the sole operator of direct flights on this route.

"The economic context has changed and Vietnam on Thursday is quite different from six years ago in terms of development. An airline like Air France is really confident in the development of Vietnam," Beragnes told reporters.

Air France will start to operate the new generation Boeing 777-300ER on the Paris-HCM City route in January to offer a full range of Air France in-flight products, including the new Premium Voyageur seat, which is positioned between the business and economy cabins.

Beragnes said passengers aboard the non-stop services would be served a choice of Vietnamese meals in all cabins in addition to the traditional French cuisine and wines.

From November, Air France will also join two weekly code-share services from HCM City and five frequencies from Hanoi, and these non-stop flights will be operated by Vietnam Airlines under an agreement between the two carriers.

Vietnam Airlines' non-stop services will depart from HCM City at 11:10 p.m. on Tuesdays and Saturdays, and arrive in Paris at 6:30 a.m. the next days. The flights from Noi Bai Airport in Hanoi will take off at 11:55 p.m. on Tuesdays, Wednesdays, Fridays, Saturdays and Sundays for Charles de Gaulle Airport.

Beragnes said the flight and route changes underlined stronger cooperation between the two members of SkyTeam. The flagship carrier of Vietnam became a full member of the world's second largest airline alliance on June 10.

The changes mean Air France will stop flying between Paris and Vietnam via Bangkok as it does currently. However, passengers can board Air France's flights to Paris and then to other destinations in Europe and the world.

Air France now sells return fares from $777 excluding taxes and fees until October 24 for the non-stop services from either HCM City or Hanoi to Europe between November 1 and March 31, 2011. Beragnes said customers would be able to purchase these promotional fares on www.airfrance.com.vn, booking offices and agents.SGTD

Oil - Russia to send first crude oil shipment to PetroVietnam

Russia's TNK-BP Oil Group will provide the first shipment of 100 tonnes of crude oil for the PetroVietnam Oil Corporation (PV Oil) via the Eastern Siberia-Pacific Ocean (ESPO) in November this year.

PV Oil general director Nguyen Xuan Son and deputy Chair of TNK-BP's Management Board Maksim Barskiy signed the contract for the oil in Moscow on Wednesday.

Deputy prime minister Hoang Trung Hai attended the ceremony where he expressed the hope that the partnership would further develop.

Hai emphasized that the signing of the ESPO crude oil contract would be the foundation for more cooperation, including the exchange of experiences in crude-oil trading and processing.

The government supported the cooperation between PetroVietnam and TNK-BP in exploring for and exploiting oil and gas in both their own and in third countries.

Son said he hoped TNK-BP would continue to participate in oil processing, refinery and distribution in Vietnam. The contract was an initial step for the two companies to sign other agreements in order to boost cooperation and mutual investment, he said.

PetroVietnam general director Phung Dinh Thuc said his group considered Russia a strategic area and with the contract, TNK-BP had become the third biggest partner of PetroVietnam and PV Oil, after Zarubezhneft and Gazprom.

PetroVietnam had signed 20 oil and gas contracts with foreign companies, he said.vnnews

Total: Second oil discovery off shore Vietnam on block 15-1/05

French oil major Total SA (TOT) Thursday said its Total E&P Vietnam unit and partners on block 15-1/05 have discovered oil in the Lac Da Vang prospect, located in the southern part of the block in the Vietnamese offshore.

The Lac Da Vang exploration well is located approximately 125 kilometers east of the city of Vung Tau, about 65 kilometers off the coast, and was drilled in a water depth of 48 meters. The well produced up to 3,500 barrels a day of oil during tests.

The discovery was made on the second exploration well drilled and the second discovery made in less than a year later. Lac Da Vang is located 15 kilometers east-north east of Lac Da Nau, the first discovery announced in November 2009.

Phu Quy Petroleum Co, a subsidiary of PetroVietnam Exploration and Production Corp., is the operator with a 40 percent stake. The other partners on Block 15-1/05 are Total E&P Vietnam with a 35 percent stake and SK Energy Co (096770.SE) with a 25 percent stake.vnnews

GAS - PV Gas inaugurates three LPG tanks in Quang Ngai

PetroVietnam Gas Corporation (PV Gas) and its subsidiary PetroVietnam Southern Gas Joint Stock Company on Tuesday inaugurated three tanks of liquefied petroleum gas with a total containing capacity of 3,500 tonnes in Binh Son District of the central province of Quang Ngai.

According to a press release issued by PV Gas, the three LPG tanks, built at a total cost of some $3 million, will help distributing LPG gas produced at Dung Quat Oil Refinery in Quang Ngai Province to coastal areas nearby in the central and southern region as well as the Central Highlands.VNS

POWER - Tan Tao Group plans to begin construction project of Kien Luong power plant in Dec

Thai Van Men, general director of Tan Tao Industrial and Investment Joint Stock Co (coded ITA) confirmed at the meeting with the steering board of Kien Luong Power Centre project that the company would overcome the difficulty and try to kick off the Kien Luong 1 thermo power plant next December.

At present, the company was facing with three main obstacles that needed to be resolved in order to start up construction works on Kien Luong 1 thermo power plant as scheduled.

The first obstacle was that the investors lacked the materials for ground levelling purposes. The company had sent the document to the local functional authorities for permission to explore the mines in those mountains of Hon Tre, Ong Cop, Huynh and Son Tera. However, the Kien Giang province Department of natutal resources and environment had sent response in document to ITA, pointing out that there was no resourses left for exploitation purposes in the province at present.

Le Khac Ghi, director of the provincial department of planning and investment suggested the ITA's leaders to deal with two main obstacles of negotiating the power purchase agreement (PPA) with Electricity of Vietnam (EVN) Group and seeking for government-guaranteed loans.

The total investment capital for Kien Luong 1 thermo power plant was estimated at 40 trillion dong, 90 percent of which was loans. At present, ITA was working with 15 consulting agents to discus with large banks under international credit organisations and China's Sinosure Insurance Corp for lending capital. Especially, Sinosure had already approved in principle for offering insurance loans for the project, after getting the commitment from the government and power purchase agteement with EVn. After getting the loans, the company can appoint the EPC contractor for Kien Luong 1 thermo power plant.

At present, the project's main investor of Tan Tao Energy Joint Stock Co was negotiating the power price with EVN Group as well as convincing the relating functional authorities so as to get the government's approval for offering guaranteed loans in order to conduct the large project in time.VNS

Oliver Massmann

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Vietnam - News and Regulations

RENEWABLE ENERGY - Wind power investors have wind taken out of their sails.

Investors have described a long-waited draft on wind power project incentives as a load of hot air.

Electricity of Vietnam (EVN), the country’s sole power distributor, will have the responsibility for buying electricity from wind power farms at VND1,317 (about US6.9 cents) per kilowatt-hour, according to the draft, released by the Ministry of Industry and Trade earlier this month.

Wind power is a clean, green way to address Vietnam’s chronic power shortages

In addition, the government will subsidise VN185 (US1 cent) for each kilowatt-hour. That means wind power investors can get back 7.9 cents for each kilowatt-hour.

“This is low and not encouraging,” said Nguyen Tien Long, vice general director at Vietnam Renewable Energy Joint Stock Company (REVN), owner of the only operating wind farm in Vietnam.

Located in a subtropical zone with a long coastline, Vietnam is said to have great advantages for developing wind power. According to a World Bank survey, under the Asia Sustainable and Alternative Energy programme, 8.6 per cent of Vietnam’s soil is considered having potential for wind power development, totaling 513,360 megawatts.

The divergence in electricity selling prices between EVN and wind power investors is the biggest challenge for wind power development in Vietnam. While many wind power investors claim selling prices must be higher than 8.5 cents per kilowatt-hour, EVN said it could not afford to buy at this price, as the group resells to consumer at an average of 6 cents per kilowatt-hour.

“The draft has not yet tackled the biggest challenge for investors. We need more subsidy from the government,” said Long.

Long’s company is in purchase price negotiations with EVN, despite its $76.6 million wind power farm connected to national electricity transmission line nine months ago.

The price offered by REVN is 13 cents, in which EVN pay 9 cents and the government subsidises the remaining 4 cents. However, EVN has not accepted.

“The price and subsidy offered in the draft is just sufficient for maintain the operation of wind farms, but not for making profit,” said Bui Van Son, a representative of Swiss Aerogie.Plus Company in Vietnam, which is preparing to build a wind farm in central Ninh Thuan province.

Though the prices offered in the draft does not satisfy the expectation of investors, it is still considered as a milestone for wind power development. “They are better than nothing,” said Son.

Duong Manh Thao, former chairman of Vietnam Wind-Power Joint Stock Company, said said investors could survive at a price of 8 cents. The company is investing in four wind power farms in Vietnam.

“I think the draft offers better conditions for wind power development. This is time for investors to start the construction of projects. If they hesitate, they will miss investment opportunities because potential for wind power in Vietnam is not too high,” said Thao.

As the demand for power is sharply rising in Vietnam, many domestic and foreign investors are eyeing developing wind power, especially in central Binh Thuan and Ninh Thuan provinces where are said to be the most favourable places for wind mills.

According to Binh Thuan’s Department of Planning and Investment, about 12 private investors gained wind power investment certificates in the province. Some other investors like Belgium’s Enfinity and German Donier Aircraft Leasing Limited are also preparing to develop new projects in neighbouring Ninh Thuan province.

Norway’s SN Power recently set up a representative office in Vietnam to study the investment opportunities in renewable sector. NINH KIEU

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OIL - PetroVietnam delays to appoint EPC contractors for Nghi Son Oil Refinery project

The National Oil and Gas Group (PetroVietnam - PVN) has announced to delay the deadline to submit the bidding profile for EPC Nghi Son Oil Refinery project by 2.5 months, instead of four months as requested by the contractors.

Up to now, there are three large contractors that have registered for carrying out Nghi Son Oil Refinery. These contractors are from Japan, France, Italy, South Korea, Spain and Taiwan.

Therefore, PetroVietnam will officially announce the main EPC contractor for Nghi Son Oil Refinery project in December 2010.

At present, the management board of Nghi Son Oil Refinery was working closely with Thanh Hoa province people's committee and the contractor of PetroVietnam Construction Joint Stock Corp in handing over 39-hectare ground for Nghi Son Oil Refinery Co Ltd in time for conducting EPC contract.

Nghi Son Oil Refinery is situated in Nghi Son Economic Zone, Thanh Hoa province with total investment capital of $7 billion. The main investors for this project include PetroVietnam, Kuwait International Petroleum Group, Japan's Idemitsu Koran Group and Mitsui Chemical Inc.

In the first phase, the oil refinery has designed capacity of 10 million tonnes of products per year. Once in commercial operation in 2014, Nghi Son Oil Refinery will supply the markets with 2.3 million tonnes of petroleum, and 3.7 million tonnes of heavy oil and LPG. VIETNAM PLUS

Additional $1b to be poured in Dung Quat Oil Refinery

According to the Circular that has been issued by Ministry of Finance, the ministry granted authoriry to Vietnam Development Bank to re-lend the credit worth $1 billion for Dung Quat Oil Refinery project.

The ministry announced that the lending terms for loans in Dung Quat Oil Refinery was within 16 years with annual interest rates of 3.6 percent. The investors are required to pay the principal and interest in US dollars at due date.

The loan of $700 million was taken from the capital source of the government-guaranteed international bonds that had been issued early this year. These bonds have maturity date in January 2020 and face interest rates of 6.75 percent per year. The coupon rates will be paid every six months.

Meanwhile, the rest of $300 million was offered by BNP Paribas with total lending term of 13 years (from 2007). The interest rate in the first two years was Libor +2 percent, and then applying fixed interest rates of 3.3 percent per year. VNNEWS

Expert calls for strong shift to thermo-power supply
Vietnam needs to make a drastic shift to thermo-power generation and lessen its reliance on hydro-power sources if the country is to avoid widespread outage in the dry season, said an industry expert. Tran Viet Ngai, chair of the Vietnam Energy Association (VEA), told the Daily on the phone on Monday that the nation's structure of power supply still posed a danger for the economy as hydroelectric stations were still responsible for over 60 percent of total power output. To ensure energy security for the country in the coming years, power generation restructuring is imperative, he told the Daily after the commencement of thermo-power plant Duyen Hai 1 in Tra Vinh Province on Sunday. "Hydroelectric plants around the country are much dependent on weather. Vietnam has been warned of climate change impacts, so I think rainfalls will decline in the coming years, and drought will last longer," said Ngai. Ngai commented that the government had become aware of the situation and has therefore supplemented 13 thermoelectric projects with total output of 13,800MW into the Sixth National Master Power Development Plan. This added output is nearly equivalent to the current total power supply of the country. Under the assignment of the government, Electricity of Vietnam (EVN) will build four thermoelectric plants, PetroVietnam another four plants, and Vietnam National Coal and Mineral Industries Group (Vinacomin) three plants between now and 2015. Until now, only EVN has started work on two projects, while the other investors have not made a move, Ngai said. EVN on Sunday started work on Duyen Hai 1 thermoelectric project in the Mekong Delta province of Tra Vinh with a designed output of 1,245MW at a cost of VND19.2 trillion, or some $1.5 billion. The group last month also started construction of Vinh Tan 2 thermoelectric plant in Binh Thuan Province with the same capacity. These two thermoelectric plants are expected to supply power to the national grid from the middle of 2014. It is not known when EVN will commence work on the two remaining projects, Mong Duong 1 and Duyen Hai 3. "If the government does not urge investors to quickly start construction of these 13 thermoelectric plants for completion by 2015, the country will struggle with more severe power shortages," he said. According to the Ministry of Industry and Trade, power shortage occurs regularly from April to August when the rainy season is about to begin. The situation earlier this year was particularly critical as the long drought badly affected operations of hydropower plants in northern provinces.

FINANCE - Vietnam's forex reserves may lose another 2.5 weeks of imports: MPI

The Ministry of Planning and Investment had forecast in its report at the government meeting in August that the overall balance of payments (BoP) deficit in 2010 could reach $4 billion, which has brought suspicion on the possibility of US dollar/dong exchange rates fluctuations in the rest of this year.

Earlier this year a representative of the International Monetary Fund (IMF) gave shocking information that the overall balance of payments deficit of $8.8 billion in 2009 has pulled in Vietnam's foreign exchange reserves to only seven weeks of imports.

Shortly thereafter, the credit risk insurance CDS (a kind of derivative stocks to insure a loan) of Vietnam's bond was up about 35 points after only one night and finalised a landmark moment passing 260 points, ranking Vietnam just above Greece, the country is still submerged in the public debt crisis.

In fact, the inflows of foreign direct investment (FDI), foreign indirect investment (FII) and external loans are declining in Vietnam.

FII capital through international balance of payments in Vietnam has dropped from $1.29 billion in the first quarter this year down to $510 million in the second quarter, according to the report of Nguyen Huu Nghia, Head of Monetary Statistics and Forecasting Department under State Bank of Vietnam.

Chair of the State Securities Commission Vu Bang also admitted that FII inflows in Vietnam have fallen in recent years.

He said that in 2007, Vietnam's stock market achieved about $11-12 billion of FII capital, but by the end of July 2010, the figure had fallen to only about $7 billion.

According to the Ministry of Planning and Investment, the real foreign direct investment (FDI) capital this year will only reach about $8 billion, compared to the estimated $9 billion.

In a related action, the second issuance of $1 billion international bonds by Vietnam with a coupon of 6.95 percent per year, higher than the Philippines and Indonesia by more than 1 percent per year, is believed to be the cause of the domestic macroeconomic risks, while Vietnam's credit rating is higher than the two above Asean countries.

As per the forecast figure of the Ministry of Planning and Investment, with $4 billion BoP deficit, the country's foreign exchange reserves may lose another 2.5 weeks of imports if compared with the turnover that has been officially published has always reached at about $ 7 billion a month in four recent months.

With a deficit from last year transferred to this year, the US dollar/dong exchange rate needed a new equilibrium. From the beginning of this year, the State Bank has adjusted the average exchange rate for interbank twice with the dong devaluation of about 5.5 percent.

According to Dr Le Xuan Nghia, vice chair of Vietnam's National Financial Supervision, the trade deficit plus the maturity of loans in US dollar credit will increase pressure on the exchange rate in late 2010.SG THIEP TI

CORPORATE BOND FRAMEWORK - VBMA asks for loosened rule over corporate bond issues

The Vietnam Bond Market Association (VBMA) representing 60 members active on the bond market has written to the Ministry of Finance asking for a loosening of rules in a forthcoming decree on corporate bond sales.

The Ministry of Finance is composing a draft decree replacing Decree 52 issued in 2006 on corporate bond issuances. The association suggests that the ministry consider allowing enterprises to issue corporate bonds for whatever legal purposes, rather than to comply with a set of rigid conditions that confine areas of permission.

"At other bonds markets, enterprises can even issue bonds to raise funds for hostile takeovers of other companies, in order to increase its manufacturing capacity," the association says, giving a comparison.

In addition, the association says big enterprises can issue bonds including short-term valuable papers to mobilise funds for working capital.

In the draft decree, the finance ministry regulates that bond sellers can only issue the debt paper if they have been established for at least one year, a provision harshly criticised by the association which calls for the ministry to scrap it.

If this provision stays, many enterprises that have been operational on the market for years will be stripped of the right to issue bonds if they have merged with others to create a new entity, according to the association.

The association also asks the ministry to take off the condition of profitability for issuers because it is not suitable with enterprises operating in the infrastructure and manufacturing sectors which can only earn profits after a long time of operation.

"As the bond market is a market for professional investors, we think investors can absolutely appraise the risks and payment ability of issuers," the association said.

In addition, the draft decree should not ask issuers, auditors, and credit rating agencies to be held responsible for the accuracy of information published as "this goes against international practices… and neither auditor nor credit rating agency will be willing to give comment due to this regulation," the association said.

VBMA and International Finance Corporation (IFC) will jointly issue a guidebook for their members on Vietnam's bond market in the fourth quarter this year. The guidebook will help members refer and apply international standard bond trading models with detailed instructions and methods for bond trading.VNNEWS

POWER - Power cuts loom as water levels at reservoirs decrease sharply

Water levels in many reservoirs have declined sharply compared to previous years, leading to possible electricity shortages.

Hoa Binh Reservoir, the biggest in the north, was at its lowest level for two decades.

The current water level stands at 99m, much lower than the reservoir's 117m capacity.

About 24.5 billion cubic metres of water flowed into the reservoir this year, 18.3 cubic metres less than the same period in previous years.

The National Hydro-meteorological Forecast Centre warned that the total amount of water flowing into the reservoir during the remaining quarter of this year would reach 9.4 billion cubic metres.

The reservoir's water level is estimated to decrease by 22.5 billion cubic metres by the year's end.

This year's severe drought was to blame for the problem, said Hoa Binh hydroelectric plant director Nguyen Van Thanh.

There has been one small downpour this year. In the past, there were between five and eight, he said.

"Over the past 23 years of operation, this is the first time the plant hasn't had to open the sluice gate," Thanh said.

Other reservoirs also face the same problem, with many of their water levels reaching 'death level' where turbines cease to safely function.

Son La Reservoir water level stands at 162m, 13m lower than the death level.

The water levels of Dai Ninh Reservoir in central Quang Nam Province, Ham Thuan Reservoir in central Binh Thuan Province and Tri An Reservoir in southern Dong Nai Province stand at just 0.2 m, 0.1m and 0.13m higher than death level, respectively.

Meanwhile, the monsoon season was set to end, worsening the water shortage situation, said deputy director of the centre Nguyen Lan Chau.

"Rains are forecast in the next few months, however the expected 20-30mm of rainfall will not be enough to make up for the water shortages," she said.

Low water levels may lead to electricity shortages.

CEO of the Electricity of Vietnam (EVN) Dao Van Hung said the company's electricity supply would be 5-10 percent lower than demand as a result of the droughts.

The Hoa Binh hydropower plant annually generated more than 10 billion kWh and this year intended to generate 8.5 billion kWh but the target might be decreased due to water shortages, he said.

The plant generated 42 million kWh per day in 2009, but the figure had dropped to 32 million kWh a day this year.

The plant's director Thanh said electricity generation was limited due to water shortages while the Hoa Binh Reservoir had to start to reserve water for electricity generation during the approaching dry season.

The low water level at the Hoa Binh Reservoir would affect the construction of Turbine No 2 at the Son La hydropower plant, meaning that the power's electricity generation would slow, according to EVN deputy director general Vu Duc Thin.

The water level needed to measure 113m to be able to transport the equipment, but the present level was 99m, he said.

All 17 key EVN reservoirs faced water shortages while hydroelectricity accounted for 6,500MW of the company's total electricity generation capacity of 16,000-17,000MW, causing difficulties for electricity generation which would continue well into next year, CEO Hung said.

The company planned to propose the Ministry of Industry and Trade to map out plans to avoid rolling power cuts, he said.

"Cement and steel production plants, which consume large amounts of electricity, will be required to change their production plans to save electricity," he said.

Other power sources such as thermo-electricity would be maximised to help make up for the electricity shortages, he added.

Petrochemical - Itochu in talks with Qatar on Vietnam petchem plant

Japanese trading house Itochu Corp said on Wednesday it is in talks with state-run Qatar Petroleum and Thailand's Siam Cement on building and operating a petrochemical complex in southern Vietnam.

The Nikkei business daily reported earlier that the roughly $4 billion project, which also involves Vietnamese state-run oil firm PetroVietnam, would aim to create a cracking furnace, with a capacity of about 1.4 million tonnes per year, on the island of Long Son with operations set to start in 2015.

The report, based on an interview with Qatar Oil minister Abdullah Al Attiyah, said the negotiations were in the final stages, but an Itochu spokesman declined to comment on specifics.ARABIAN BUS

WATER - Thu Duc water plant inaugurated in HCM City

Thu Duc Water BOO Corp on Monday began commissioning a long-awaited water treatment plant, thus easing the chronic shortage of running water in some parts of districts 7, 8 and Nha Be.

The plant will be able to supply 300,000 cubic meters of water a day for residents in the three districts.

This is the first water project in the city developed under BOO (build-operate-own) form with the total cost of over 1.7 trillion dong. The project includes a water pumping station in Dong Nai Province and a treatment plant in HCM City's Thu Duc District.

Saigon Water Corp, or Sawaco, has completed 25.7 kilometres of water pipe for the project, starting from Thu Duc and running through districts 9, 2, 4, 7 and 8 to Ba Chiem Bridge in Nha Be District.

The enterprise will extend the pipeline system in the future to supply more running water for Thu Duc, Binh Thanh and Go Vap districts.

Ly Chung Dan, Sawaco deputy general director, said Sawaco would distribute water from Tan Hiep water plant to districts 4 and 8 to supply water for districts 12, Binh Tan and Cu Chi.

Construction of the project began by the end of 2005 with the capital initially estimated at over 1.5 trillion dong.

HOTEL - Accor targets 30 operational hotels in Vietnam by 2013

Accor is striving to realise its new ambitious goal to operate 30 projects in three years' time, or almost three times higher than the current number of hotels the group is managing in Vietnam.

"Our first realistic objective is to have 30 hotels and we think we shall be able to have this network of hotels already open by the end of 2013," said Patrick Basset, Accor vice president of operations for Vietnam, the Philippines, Japan and South Korea.

Basset told the Daily after a press conference in HCM City on Tuesday to introduce the Pullman brand that Accor now operated 14 hotels under the Sofitel, MGallery, Novotel, and Mercure hotel brands in Vietnam. The rest of the projects under construction will be up and running in the next three years.

"The 30 hotels will have a quite balance of Accor brands," Basset said, adding that Accor would have about four Sofitel and five Pullman hotels, and six to seven properties under each of Mercure, Novotel and ibis.

The biggest international operator of hotels in Vietnam told reporters that it had just signed contracts to manage two new Pullman hotels, bringing the total number under this upscale brand in this fast-growing tourism market to five.

All the five Pullman hotels will be put into service by 2013, and the Pullman Hai Phong Flamboyant Island Resort and Pullman Danang Beach are the two new developments committed to Accor.

"We are very excited to announce Pullman Hai Phong Flamboyant Island Resort," he said.

The hotel in Hai Phong is the latest commitment for the brand in Vietnam. Situated on Flamboyant Island in Do Son District, this 300-room hotel will cater to the increasing number of travellers to the northern industrial and seaport hub of Vietnam, as this upscale hotel has a ballroom, meeting rooms, three restaurants, two bars, swimming pools, an entertainment centre, spa and an amphitheater.

Due to open in mid-2011, the Pullman Danang Beach will feature 207 guest rooms, four restaurants and leisure facilities including three swimming pools. The other Pullman projects scheduled to go online next year are in the southern city of Vung Tau and in Hanoi.

The 360-room Pullman Vung Tau, the first Pullman hotel planned for opening in Vietnam, will have a ballroom for 500 guests at a time, smaller functional rooms and other business and leisure facilities.

The 250-room Pullman Hanoi Horison under renovation will have event facilities able to accommodate up to 1,000 guests among others. Accor will operate more Pullman hotels to take advantage of the demand for upscale business and leisure facilities, he said.

"With sustained economic growth and significant investment in infrastructure leading to increased volumes for business travel and continued international and domestic leisure strength, opportunities continue for quality upscale hotel developments in Vietnam," Basset said.

Evan Lewis, Accor vice president of communications for Asia Pacific, told reporters that increasing foreign investment flows into Vietnam and continued economic growth would fuel strong demand for international quality upscale hotels in this country. This is why Accor introduces the Pullman brand to this emerging market.

But Basset predicted ibis would grow slightly bigger than the other Accor brands in the years to come because of the larger need for the hotel under this economy, new-concept brand in Vietnam.

Earlier this month, Viethan Hotel Joint Stock Co. started work on the first ibis hotel project in Vietnam. The company, founded by B.B. Dai Minh Corp., will inaugurate this three-star hotel in HCM City's Saigon South in about 20 months' time.

The $11 million property in District 7 will have 160 rooms as well as café, restaurant, gym and conference facilities.

Oliver Massmann

Rechtsanwalt

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Vietnam - News and Regulations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

WTO - Seafood exporters oppose US tariffs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

No financial details of the transaction were disclosed.

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

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

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

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

INSURANCE - Liberty launches online insurance service

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

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

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

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

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

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

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

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

AIRPORTS/INFRASTRUCTURE - Airports make expansion plans

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

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

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

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

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

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

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

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

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

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

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

Oliver Massmann

Rechtsanwalt

This e-mail is from Duane Morris Vietnam LLC (a law firm). We can provide a list of our partners upon request. If this e-mail has been sent to you by mistake, please let us know, and then delete this message.

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Please note that the above articles, comments etc have been extracted or reproduced and forwarded electronically from the sources credited above and have not been authored by the sender and do not necessarily represent the views of the sender. The sender takes no responsibility for the accuracy or legitimacy of the above or changes that may be made to the above by subsequent forwarders or recipients.

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Vietnam - News and Regulations

WORLDBANK on Vietnam - Vietnam uses over 739tr dong for public investment in 2006-2010 period

The World Bank (WB), Ministry of Planning and Investment (MPI), and Asian Development Institute on September 8 and 9 have jointly held an international seminar on strengthening public investment management, and enhancing the effectiveness of public investment. Participants also shared their experiences in mapping out strategies that could help countries improve public investment management.

According to MPI, around 286 trillion dong was used for public investment during the 2001-2005 period, accounting for over 23 percent of the total social investment. For 2006-2010 period, the figure is estimated at over 739 trillion dong, accounting for 24 percent of the total social investment. The proportion figure is expected to remain the same in the period of 2010-2015.

The state capital for public projects and programmes holds a large proportion. Hence, it is very important and necessary to manage and use this source effectively. Therefore, Vietnamese government should have suitable measures and policies to use the national capital source more efficiently.

Martine Rama, Acting director of the WB's East Asia Development Department said Vietnam is one of the countries having high public investment proportion, nearly 40 percent of the total GDP.

However, Martin also pointed out Vietnam's shortcomings in public investment management, such as insufficient attention to regional development in the overall investment plan; no strategic environment assessment to make key selections (e.g. mining sector); decentralisation leading to overlapping and ineffectiveness; disconnected relation between state capital and current budgetary expenditure; and overlapping among related laws such as State Budget Law, Construction Law and Bidding Law, etc.

Sharing Korean's reform experiences, Jay-Hyung Kim, Managing director of Public and Private Infrastructure Investment Management Centre, Korea Development Institute completely agreed with Vietnamese government's direction to follow the general trend. He added that the project appraisal would be better if it is decentralised to localities.

Director of MPI's Foreign Economic Relation Department Ho Quang Minh said, in order to promote the effectiveness of public investment in the future, Vietnamese government would focus on perfecting the guides on public investment management, especially investment from the state budget. Moreover, the government would also focus on improving the policies and mechanisms for the project consultation, supervision and management to be more transparent; specifically defining responsibilities of each area and each level; strengthening the inspection and supervision activities, correcting the ineffective projects and the investments not included in the overall planning, and overcoming losses and corruptions.

In addition, Vietnam would comprehensively carry out the measures such as assigning investment decision makers and investors to bear more responsibility, and accelerating the implementation of project constructions, etc. vietplus

FINANCING - PetroVietnam, foreign banks sign derivatives deals

State oil and gas group PetroVietnam has signed agreements with three foreign banks to help limit risks when it conducts derivatives transactions, the Vietnamese government said on Thursday.

PetroVietnam signed the International Swap and Derivatives Association Master Agreement with BNP Paribas (BNPP.PA), Sumitomo Mitsui Banking Corporation (8316.T) and Standard Chartered Plc (STAN.L) on Thursday, the government said in a statement.

The deal would help PetroVietnam "balance and limit changes, prevent risks of interest rates, exchange rates and prices of goods, and diversify the group's financial activities", the statement said.

It quoted PetroVietnam deputy Chief Executive Nguyen Tien Dung as saying the group would have high funding requirements in due course, and using derivatives transactions would help mitigate associated risks.

Dung did not detail upcoming investments, but PetroVietnam has been seeking funding for the construction of several major projects, including two oil refineries, after Vietnam's first such facility started running at full capacity earlier this year.

CAPITALISATION - SBV to review capital rules

The State Bank of Vietnam will review new strict capital adequacy requirements imposed on commercial banks by Circular No 13, following an outcry from the banking sector and a directive from the government.

The announcement late Wednesday helped boost shares on the nation's stock market yesterday.

The review and analysis of Circular No 13 would aim to address shortcomings in various risk management provisons, including the imposition of stricter capital adequacy ratios, the State Bank said.

A deadline for conclusion of the review was not disclosed. However, last month, prime minister Nguyen Tan Dung ordered the State Bank to review the circular and report its findings and possible solutions before the new regulations were scheduled to take effect on October 1.

Circular No 13 would require commercial banks to increase their capital adequacy ratios from 8 to 9 percent, as well as impose other risk management measures.

For instance, the circular would restrict banks from lending out funds from non-term deposits made by the State or State entities, the social insurance fund or commercial lending organisations.

According to media reports, many commercial banks and the Vietnam Banking Association complained that this last provision would require commercial banks to leave idle as much as 35 percent of deposited funds. They urged the central bank to extend the deadline for complying with the circular in order to give banks more time to restructure investment portfolios.

Fiachra Mac Cana, managing director of the research department of HCM Securities Co, predicted that the review would not result in any significant changes to the requirements but would allow banks more time to comply and adjust loan and capital ratios.

A central bank official who asked to remain unnamed told Vietnam News yesterday that Circular No 13 was indeed the opening salvo of what would be an ongoing programme of stricter risk management measures to be imposed on the nation's banking system.

Many economists, the official noted, have complained that the capital adequacy ratios in Circular No 13 were still too low to adequately guard against risk. The newly passed Law on Credit Institutions to take effect in January includes provisions stricter than those in Circular No 13, he noted, but still short of the Basel standards for finance and banking.VNNEWS

RENEWABLE ENERGIES - Finland wants to develop clean technologies in Vietnam

A delegation representing 15 Finnish enterprises said here on Tuesday they wanted to look for local partners to develop renewable energy, wastewater treatment, industrial waste management and other environmental technologies.

Some of the Finnish companies introduced their clean technologies at a seminar held here on Tuesday were Neste Oil Corporation, Cargotec, GD Power, Kemira, Fincumet, YIT and Outotec.

"We identify Vietnam as a key market in Southeast Asia and want to have direct partners in developing our innovative clean technologies to address Vietnam's energy and environmental challenges," said Santtu Hulkkonen, executive director of Cleantech Finland who represented the Finnish delegation.

He told the seminar that the clean-tech sector in Finland included some 2,000 enterprises operating in energy efficiency, clean industrial processes, renewable energy, and waste management and treatment.

Janne Mielck, vice president of the New Ventures of the Neste Oil Corporation, told the Daily on the sidelines of the seminar that his corporation was seeking suppliers from Vietnam for producing environmentally friendly diesel.

Neste Oil is a refining and marketing corporation specialising in low-emission technologies, especially high-quality oil products for vehicles.

"By the end of this year, we will open a plant producing renewable diesels in Singapore with an annual capacity of 800,000 tonnes, so we are here to seek partners for supplying raw materials such as vegetable oil and non-edible oil for our plant in Singapore," said Janne Mielck. He added his company expected to buy some 100,000 tonnes per year from Vietnam.

Huynh Kim Tuoc, director of the HCM City Energy Conservation Centre, told the seminar that "Vietnam targets renewable energy to account for 7 percent of the total energy supply by 2020 and up to 11 percent by 2050 compared to less than 3 percent now."

"While the hydropower source as an important renewable energy of the country has been fully tapped, Vietnam should urgently exploit other renewable sources such as wind power, solar power, and other bio-fuels," he said.

Tuoc added that Finnish enterprises with good technologies could definitely find a lot of opportunities to develop projects of solar energy around the country.

Besides, Tuoc also encouraged Finnish enterprises to invest in wind power projects, including the manufacturing of equipment for wind power plants.

According to the city's energy conservation centre, it has become very urgent for Vietnam to develop renewable energy as power shortage is a big worry for all economic sectors.SGTD

POWER - Construction on Bac Lieu wind power plant starts

Cong Ly Construction, Trading and Tourism Co Ltd has officially started construction works on a wind power plant in Bac Lieu province yesterday Sep 9, 2010.

The plant is situated in an area of about 500 hectares in NHa Mat Ward, Vinh Trach Dong Dist, Bac Lieu province, near Vinh Chau Dist, Soc Trang province. With designed capacity of 99 MW, Bac Lieu wind power plant project has been included in the general power development plan for 2006-2015 period.

The total investment capital to build this power plant is estimated at about 5 trillion dong.TBKT

Korean group wishes to invest in thermo power plant in Vietnam

Early this week, Lee Daebong, chair of the South Korea-based Charmvit Group revealed that his group was planning to invest in a thermo power plant in Vietnam. "We were waiting for adjustment in power selling mechanism from Vietnam's ministry of industry and trade that allows the power generators to adjust the sales price for distributors in case there are changes in retail prices", he added.

Charmvit Group plans to cooperate with the largest power generator in South Korea to carry out thermo power plant in Vietnam, if the project's feasibility is ensured. Lee Dae-bong refused to release any information relating to the planned thermo power station, but affirmed that the mechanism about adjusting the wholesales price would play a key role for realising the project.

Oliver Massmann

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