Vietnam - News and Regulations

VIETNAM/EUROPEAN UNION - Vietnam sees EU as important partner: deputy FM

Vietnamese deputy Foreign minister Bui Thanh Son said here Tuesday that Vietnam always considers the European Union (EU) as an important partner of Vietnam. Son made the comments at the conference of "Vietnam-EU Economic Prospects in the 2011-2015 period and its vision towards 2020". Son said prospects for Vietnam-EU cooperation in the next 10 years appear to be good and hopeful as Vietnam-EU cooperation have brought benefits to both sides. Moreover, the signing of Partnership and Cooperation Agreement between Vietnam and the EU earlier last month laid a foundation for the two sides to approach a free trade agreement (FTA), said Son. Negotiating and signing an FTA will provide a variety of economic and trade cooperation opportunities for Vietnam and the EU, said Son. Sean Doyle, head of the EU delegation to Vietnam said at the conference that Vietnam's economy is enjoying a robust growth. The EU maintains Vietnam as one of the most important parters of EU in all fields of cooperation, said Doyle. Vietnam-EU relations have seen fast but sustainable development in all fiels, especially in bilateral trade and investment. Vietnamese official statistics showed that in 2009, the two-way trade turnover between Vietnam and the EU reached 15.2 billion U.S dollars. In the first nine months this year, Vietnam's export value to the EU market hit 7.8 billion U.S dollars, up 13 percent year-on-year.VNNET

WORLD BANK ON VIETNAM - WB finances Vietnam $2.13b in fiscal year 2010

State Bank of Vietnam (SBV)'s deputy governor, Nguyen Van Binh, on November 17 in Hanoi met with Joachim Von Amsberg, World Bank (WB)'s vice president.

At the working session, the two partners exchanged views on issues relating to Vietnam's socio-economic development plans during 2011-2015, impacts of the global financial recession to Vietnam's economy, the use of loans provided by International Bank for Reconstruction and Development (IBRD) and loans from pubic investment policy programme (PIR) III and the efficiency of IDA 16 capital source for Vietnam.

Generally, WB's projects have huge investment capital mainly in fields such as public policy reform, energy, urban and environmental sanitation, agriculture, rural development, finance and banking and some other sectors like health development and education.

In coming times, with the government's orientation of giving priorities in investments for infrastructure, and urban development, WB's prioritised supports will switch to fields of transport development, highways, urban and budget support.

Reportedly, Vietnam has officially resumed relations with WB since October 1993. Till the end of August 2010, WB has provided Vietnam over $9.83 billion for 92 programmes and projects. Currently, 50 programmes and projects are being implemented (including projects financed by GEF Fund, CFC and the Trust Fund) with a total value of approximately $6.4 billion.

Particularly, in the fiscal year 2010 (from July 2009 till the end of June 2010), WB has financed Vietnam $1.429 billion of preferential loans from international development assistance (IDA) capital and $700 million of commercial loans (IBRD). SBV

RETAIL BANKING - Foreign banks boost retail services

Foreign banks are racing to expand retail services by launching more services and subsidiaries as Vietnam approaches the time for opening the door to all banking services.

In line with the country's WTO commitments, foreign banks operating in Vietnam will be allowed to provide banking services and products on par with local banks from January 1, 2011.

Hong Kong Shanghai Banking Corp (HSBC) inaugurated its fifth subsidiary in Vietnam in late September, while Citibank and Standard Chartered Bank launched their retail banking services in Hanoi in mid-October.

Foreign banks also launched new products and services, with the aim of narrowing market share gaps with local banks that currently account for 90 percent of retail market share.

US giant, Citibank introduced smart banking services aiming at young, high- tech customers and is aiming to provide internet and mobile phone retail banking services. Standard Chartered Bank, along with seven-day services, plans to link to the local Smartlink's ATM card alliance system from next January, becoming the first foreign bank in Vietnam to make this connection.

The Standard Chartered Bank Vietnam’s general director expressed his pleasure with establishing a "fair" market for both local and foreign banks. All products and services his bank wants to provide have received permission, he said.

Although possessing only a moderate retail market share, foreign banks treasure the most wealthy client group, including individuals with monthly income of 10 million VND (about 500 USD) or above.

According to Standard Chartered Bank, Vietnam 's per capita income is estimated to be 2,000 USD a year by 2015, resulting in an increase in the use of banking services.

But there is a concern among financial experts that in the near future, local bank services such as international payments, trade assistance and project investment could be taken over by foreign banks because of their superior capacity in technology and management as well as financial strength.

Therefore, apart from strengthening and improving management and business capacity, local banks have invested in improved technology, expanding services to the private business and foreign-invested business groups along with state-owned firms.VNNET

INFORMATION TECHNOLOGY - Government has big plans for ICT

Vietnam government has pledged strong investment into the information, communication and technologies (ICT) industry with an outlay of $8.5 billion over the next 10 years, Le Nam Thang, deputy minister of Information and Telecommunications said on Wednesday.

"This is a great motivation for the industry to take off," Thang said at the opening ceremony of the 13th Vietnam Telecom/Electronics – Internet & IT 2010 exhibition at the Sai Gon Exhibition and Convention Centre.

At least 200 local and international enterprises from 13 nations and territories – Australia, Britain, China, France, Germany, Hong Kong, India, Japan, Malaysia, Singapore, Taiwan, the US and the host nation are participating in the expo. The 4-day event covers an area of 9,000sq.m, double that of last year, and focuses mainly on digital convergence. In 2010, Vietnam has improved its world IT connectivity index by 16 positions in comparison with 2009, it was said at the World Economic Forum (WEF). The ICT industry turnover is expected to reach $10 billion this year and rise further to $15 billion by 2015. "This [the exhibition] is a good chance for local enterprises and government offices to learn of new technologies and ideas for the future brought in by the top ICT companies in the world," said Pham Long Tran, Chair of the Vietnam Post and Telecommunication Corporation, which organised the event.

Participating firms will introduce new technologies and ideas for the sector, focusing on mobile solutions, corporate management services, online content, 3G services, Wimax, broadband, electronic entertainment, multimedia, next generation networks (NGN) and communication satellites. A seminar on ICT development trends in Vietnam for the next decade, ICT applications in governance, ways to bring 3G applications into daily life, cloud computing, long term evolution (LTE) will be held during the fair. Top Vietnamese ICT companies like MobiFone, VinaPhone, Vien Thong A have joined the event with a series of displays and big promotions for visitors. Prominent among the participating enterprises are Taiwanese electronic manufacturers looking for a stronghold in the Vietnamese market. They are implementing a Taiwanese Excellence campaign, introducing top products like Acer, Asus, D-Link and Zyxel. UK-based Metaswitch Networks, carrier system and software solutions provider to AT&T, British Telecom, Cable & Wireless, O2 and Vodafone, is also eyeing the potential that Vietnam presents by introducing their latest telephony solutions like voicemail and unified messaging.VNNET

ECONOMIC GROWTH - Vietnam economy likely to grow 7.24pct in Q4, Govt says

Vietnam's economy is expected to grow 7.24 percent in the fourth quarter of this year, resulting in a full-year expansion of 6.7 percent versus a 5.32 percent growth last year, the government said on its website Tuesday. The government also revised the economic growth for Q3 to 7.18 percent from previous 7.16 percent and for Q2 to 6.64 percent from 6.4 percent and confirmed Q1 growth at 5.83 percent. The recovery came from a 13.7 percent growth in the industrial sector, a 7.1 percent increase in the disbursement of foreign direct investment at $11 billion, a 15 percent rise at $78 billion in the total retail sales and services revenue, and a 23 percent surge at $70 billion in export values. In 2010, the country's tourism sector is expected to bring about $4.6 billion revenue, rising 50 percent from 2009 as it received five million international visitors. The government is also aware of difficulties and challenges ahead such as high inflation, trade deficit. However, it believes that the local economy is on growth track with a strong momentum for a GDP growth target of between 7 percent and 7.5 percent next year. VNNET

Hanoi estimates average GDP growth at 10.72pct in 2006-10

The GDP growth of the capital city of Hanoi is estimated to have reached an average of 10.72 percent per annum in the 2006-2010 period. This news was released by standing vice chair of Hanoi People's Committee Phi Thai Binh at a meeting with the departments and branches of the city to review plans for socio-economic development in 2011-2015. However, this growth has not reached the planned goals that Hanoi People's Committee set for this period at 12-13 percent previously. Average growth of the fields are as follows: Services up 10.35 percent, industry -building up 12.77 percent and agriculture up 2.43 percent. In the 2011-2015 period, Hanoi set a specific target to reach an average GDP growth of 12-13 percent, in which the growth of services is 12.2 -13.5 percent, industry— construction 13 to 13.7 percent, and agriculture 1.5-2 percent Speaking at the meeting, Binh said that setting the target of Hanoi's GDP growth in 2011-2015 at 12-13 percent in the context of world and domestic markets which still is in passing through upheavals is an extremely difficult challenge, and if no determination is made then the capital city will find it difficult to accomplish the target.intellasia

RESOURCES - OIL/GAS - NK-BP Gets PVN backing to buy BP's Vietnam assets

TNK-BP has announced a cooperation agreement in which the Vietnam Oil and Gas Group (PVN) will support Russia's third biggest oil firm to buy BP's Vietnam assets. The company said in a statement issued early this week that the agreement outlines "the further steps and activities to be undertaken as part of the (two) companies' long-term cooperation." PVN will assist TNK-BP to enter to the Vietnamese oil and gas market through the acquisition of BP's stake in upstream gas producer Block 06.1 and to further expand its downstream and upstream business operations in Vietnam. In return, TNK-BP will throw support behind PVN's plans to develop its upstream business in Russia, and to materialise this, the two firms will hold talks over the establishment of a joint venture in Russia. The Daily's attempt to reach Phung Dinh Thuc, general director of PVN, for confirmation of the news failed on Wednesday. Thuc is in charge of the issue. Earlier, on October 18 this year, BP announced it had reached agreement to sell its upstream businesses and associated interests in Venezuela and Vietnam to TNK-BP for a total of $1.8 billion. TNK-BP, which is equally owned by BP and the AAR Consortium comprising Alfa Group, Access Industries and Renova, would buy BP's 35 percent operating interest in the Lan Tay and Lan Do gas fields and associated pipeline and power generation interests in Vietnam. Phung Dinh Thuc then said PVN was also considering buying BP's interests in Vietnam. TNK-BP said in the statement that it would supply ESPO crude for Vietnam on a long-term basis. PetroVietnam Oil Corp. (PV Oil), a member of PVN, signed a contract in September to buy ESPO crude from TNK-BP over one year, PV Oil said on its website. TNK-BP will provide PV Oil with the first 100,000 tonnes of crude this month.VNS

OIL REFINERY - Thai PTT in talks with PetroVietnam on new refinery

Thailand's largest energy company, PTT Pcl, said on Thursday it was in talks with state-owned PetroVietnam to build an oil refinery in Vietnam as part of PTT's overseas expansion.

PTT, Asia-Pacific's third largest oil and gas firm by market value, is also studying upstream, downstream and power businesses in Vietnam, Chief Financial Officer Tevin Vongvanich told reporters.

"We are interested in all of them. If we have a chance, we will go for it," Tevin said. "We are negotiating with PetroVietnam to build an oil refinery there because Vietnam has a policy to construct a few of them." "If it does not succeed, PTT may negotiate with them to import oil products from Thailand because we have some excess in output," he said. PTT subsidiary PTT Exploration and Production Pcl has joined with US oil major Chevron to negotiate with Vietnam government on developping gas fields in Vietnam, Tevin said. PTT was also keen on building a gas pipeline, he said without giving details about the fields. Chevron operates Block 52/97 and B, 48/95, in which PTTEP has an 8.5 percent stake in the first and 7 percent in the latter. PTTEP also has interest in two other blocks, 9-2 and 16-1, in Vietnam.VNNS

Petrovietnam Gas - Initial public offering - PV Gas sells 61m shares

Hochiminh Stock Exchange (STC) announced to hold the auction successfully for PetroVietnam Gas Corp on November 17, 2010. In the initial public offering, the company has sold about 61 million shares to public, equalling to 64 percent of the total shares, bringing in 1.89 trillion dong.

There were 1,057 registered investors participating in the auction session, including 12 domestic and international institutions. The highest price was 55,000 dong per share and the lowest one of 31,000 dong per share. The foreign investors have successfully purchased over 4.24 million shares.

PVGas planned to hold the first shareholders meeting in December 2010 and planned to apply for listing shares on southern bourse in Q1 of 2011.vns

AVIATION - Vietnam Airlines expands cooperation with Moscow's airport

Vietnam Airlines (VA) and the Domodedovo international airport in Moscow on November 17 held a press briefing in Moscow to announce an increase in VA's flights to the airport and the results of their cooperation.

Vietnam Airlines now conducts three flights a week from Moscow to HCM City route on Monday, Thursday and Sunday and two flights a week from Moscow to Hanoi on Wednesday and Saturday.

The airline plans to increase the number of weekly flights from Moscow to Vietnam to seven in 2011.

Speaking at the press briefing, Vietnamese Ambassador to Russia Bui Dinh Dinh stressed that the fine traditional friendship between Vietnam and Russia will be a foundation for Vietnam Airlines and Domodedovo airport to boost cooperation and contribute to the development of economic cooperation between the two countries. Domodedovo consortium director Viacheslav Nekrasov pledged to create best conditions for passengers to promote the image of Domodedovo airport. In 2009, Vietnamese Airlines carried 9,387,000 passengers, including 151,646 people from Vietnam to Russia. In 2010, the airline expects to carry 12,372,000 passengers, including over 200,000 ones from Vietnam to Russia.VNNET

SHIPBUILDING - Gov't approves Vinashin's restructuring scheme

HA NOI - The Government has approved Vinashin Business Group's restructuring plan to stabilise the corporation's operations while helping them pay off debts.

Under decision 2108/QD-TTg issued on Thursday, the Government will allow Vinashin to focus on three main areas of building and repairing ships, developing a shipbuilding support industry, and training workers.

The group has been asked to take a leading role in Vietnam's shipbuilding industry which is key to developing Vietnam's maritime industry and sea strategy towards 2020.

After restructuring, Vinashin will operate under the shareholding company model, with a parent company, subsidiaries, and stakes in other enterprises.

The parent company will work as a one member limited company with 100 per cent of its charter capital held by the State.

Vinashin's subsidiaries include Nam Trieu Shipbuilding, the Bach Dang and Pha Rung corporations and two joint-ventures. It is also a shareholder in Hyundai Vinashin Shipyard Co.. - VNS

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Vietnam - News and Regulations

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

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

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

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

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

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

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

Exports Increase

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

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

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

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

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

POWER - Power supply projects to start operations

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

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

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

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

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

INSURANCE - Demand for life insurance increases

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

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

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

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

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

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

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

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

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

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

Better economic conditions were cited as the main reason.

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

Hai added that many people were planning for the future.

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

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

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

GOVERNANCE - Anti-money laundering centre opens

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

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

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

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

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

RETAIL - SM eye smalls in Vietnam, Indonesia

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

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

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

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

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

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

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

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

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

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

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

RESOURCES - Vietnam faces risk of gas shortage

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

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

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

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

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

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

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

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

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

RESOURCES - Nation to import natural gas after 2025

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

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

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

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

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

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

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

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

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

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

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

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

RESOURCES - Challenges facing gas industry

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LIFE INSURANCE - ABBank inks deal with Prevoir

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

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

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

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

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

SHIPPING LOGISTICS - French shipping line adds direct cargo service

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HCM City to pilot green hotel programme

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

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

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

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

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

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

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

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

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

Oliver Massmann

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Vietnam - News and Regulations

POWER - Electricity sector: Smoothing the way

Vietnam needs investors in its electricity but a range of difficulties make many reluctant to come on board.

Electricity generation in Vietnam is forecast to be at the top of the range in the Asia Pacific region. The country has rich potential for development with demand from its 87 million population and capacity of 17,000MW in 2009.

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 great deal of money, both local and foreign, will go to improving electricity capacity. Build-operate-transfer (BOT) contracts are in the process of negotiation around the country, including the 1200MW Nghi Son 2 plant and the 750MW O Mon 2 plant. “With this month seeing the 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,” said Mr. Oliver Massmann, Partner at Duane Morris LLC, who has been in Vietnam for 20 years and has lengthy experience in the power sector.

Power Generation Capacity Ownership Structure, 2009

Source: Ministry of Industry and Trade, 2009(MOIT)

Although Vietnam is now ranked sixth, just below Malaysia, in BMI’s updated Power Business Environment Ratings, foreign investors face a range of challenges in doing business in its power sector.

Decision makers

When VFR asked Mr. Joel Laykin, Secretary General of the Independent Power Producers Forum (IPPF), about the challenges a power project may face in Vietnam, his reply was “Government decision makers”. “Negotiation time” was the answer from one Vietnamese expert long involved in power projects such as Phu My 2-2, which has a capacity of 715MW.

Investors believe that the legal framework in the power sector still contains many shortcomings, such as unclear documentation and uncertain regulations regarding BOT projects. The biggest challenge, analysts say, is that strict requirements over independent power producers (IPPs) prevent investors from conducting their investment.

Electricity of Vietnam (EVN) being the single electricity purchaser also discourages investors and adversely affects Vietnam’s development. IPPs cannot sell their electricity at a fair price, which affects their ability to recover costs and earn profits. A lawyer from Malakoff, a power generation company planning to invest in Vietnam, said that high Government subsidies in the power sector meant investors find it difficult to compete. “Despite government encouragement and a competitive roadmap, few investors can meet the financial requirements and the sector will continue to be monopolized by EVN for the next ten years,” said Mr. Massmann.

There are also some unreasonable requirements in pre-licensing procedures. Perhaps because direct investment is quite new for Vietnam’s power industry, decision makers appear confused. Under Decision No. 30/2006/QD-BCN, investors must obtain agreement from EVN on electricity purchasing and a commitment from banks or credit institutions regarding lending. The problem is that this takes a long time for companies and banks are unlikely to provide such a guarantee before projects have been approved. Investors must also ensure their equity/debt ratio is 30/70 or less in special circumstances. But there is no definition of “special circumstances” and equity expectations are too high for such major projects.

Article 31 of the Law on Electricity, meanwhile, defines a fixed electricity price that creates difficulties for investors in negotiating prices with EVN. Bidding procedures are also time-consuming. For example, negotiations regarding the Phu My 2-2 project continued to two years after the tender closed. One analyst estimates it takes four to six years to establish a project and a further two or three years to negotiate a power purchase agreement (PPA) in Vietnam.

Beyond the decisions

In the current context, joint ventures with Vietnamese partner(s) may be a better option and more time-efficient for investors than stand-alone development. But “if you want to have a private Vietnamese partner taking part in your project, it will be very, very costly,” said one experienced investor. “And ‘private’ is not ‘private’ in Vietnam.” If a private partner is more than 30 percent owned by a state-owned enterprise (SOE), it is considered an SOE and must follow rules on SOEs, not those for private companies. Another problem for private enterprises is the lack of information regarding tenders compared with SOEs, which have good relations with government officials.

According to Ms. Dao Nguyen, Managing Partner at Mayer Brown JSM, Vietnam has put in place fairly clear legal fundamentals for investment in the power sector compared with ten years ago. The legal framework, she believes, is not a challenge for investors. “Vietnam is a developing country and needs projects like Phu My 2-2 and Phu My 3, but lenders to these projects required the State to offer a wide variety of guarantees. Currently, the State is deciding whether it is appropriate to use Phu My 2-2 documentation as the benchmarks for future BOT projects, since it was licensed over 10 years ago and the law and economic environment in Vietnam have changed since then,” she explained. “Thus, investors may find it difficult, because they may have to wait for the State to make a decision on the type, scope and extent of the guarantees that would be available and what types of projects would receive such support from the Government.”

For example, under the Law on Investment, the Government will decide what projects are considered “important” and will decide which ones will be provided guarantees in respect of loans, raw material supply, sale of products, payment and other guarantees, but they are yet to define what an “important” project is. Further, foreign exchange guarantees are not enough for investors/lenders of major projects. Government guarantees were limited by the International Monetary Fund (IMF) under the Enhanced Structural Adjustment Program (ESAP), and although these restrictions expired at the end of 1998 Vietnam continues to follow them. On loans with a maturity of 1 to 12 years, the Ministry of Finance can only provide guarantees of up to US$400 million per year. Investors complain that the State lacks a sub-national debt financing system, for example a municipal bond market.

Wait and see

In February 2006, the Prime Minister approved the Electricity Market Master Plan for the development of the electricity market.

					After 2022 Competitive retail power market
	2005 – 2014 Competitive power generation market		2015 – 2022 Competitive wholesale power market

Source: MOIT

According to the master plan, the Government is planning to slowly remove subsidies on electricity. To 2014, IPPs will not be allowed by EVN to sell directly to the market, to 2022 EVN will be transformed into independent distributing companies, and after 2022 customers nationwide will have the right to select an electricity supplier. The reality is, though, that customers will have to accept a competitive price, which will be higher than today’s price.

When asked about investor attraction, Mr. Dau Duc Khoi, Deputy General Director of EVN, said “I think we must wait until the opening up of a competitive power retail market. If supply exceeds demand by 20 percent, power producers will have to compete more strongly. The result will be higher quality electricity and competitive prices, and investors will come.”

Mr. Oliver Massmann, Partner at Duane Morris LLC, practicing in corporate international taxation, power/water projects, matters relating to oil and gas companies and telecoms, privatization and equitization, mergers and acquisitions, and general commercial matters for multinational clients in relation to investment and doing business in Vietnam.

VFR: What can the Vietnamese Government do in the short term to facilitate investment in the energy sector?

Mr. Massmann: First, the Government should increase the retail electricity price. This is mandatory in funding the expansion that EVN must undergo to meet rising demand and also gives EVN the ability to pay more in PPA’s, which will allow more investment to be made in the energy value chain.

Second, de-bottleneck the process of negotiating PPAs and Gas Supply Agreements (GSAs), accelerate the development of the energy markets to move beyond Petro Vietnam (PVN) as the single buyer of natural gas and EVN as the single buyer of power, and accelerate the timetable allowing for direct sales of gas and power to the industrial sector.

Third, Vietnam needs to develop a regulatory framework in gas and power that ensures transparency and predictability for investors.

VFR: What would you recommend in forming a sustainable energy policy that will benefit Vietnam in the long term?

Mr. Massmann: One of the most important things is defining “sustainable energy”, so that energy provision meets the needs of the present without compromising the ability of future generations to meet their needs. This usually refers to renewable sources as well as to energy efficiency.

Also, balance supply and demand with realistic growth targets, allowing for adequate planning; evaluate commercial alternatives to meet strategic objectives; and strike a balance between meeting supply needs and long-term energy security, cost-benefits, etc.

Vietnam needs to encourage the development and use of cogeneration technologies that greatly improve the efficiency of energy use by the coproduction of power and steam and develop a long-term plan for energy supply that includes a diversity of resources. Do not rush to meet all near-term supply needs with coal, when there might be better alternatives available. Hydrocarbons will continue to play a huge role in Vietnam’s energy future, so policies need to be developed that most efficiently utilize those resources.

Finally, I recommend Vietnam apply the right technology at the right time. Do not rush to apply technology too early before it is ready. Do not lose sight of the entire cost to incorporate renewable resources (for example, the interconnection cost of wind with thermal or hydro resources in order to have stable sources of supply). finrevvn

PLEASE LET US KNOW WHETHER YOU WOULD LIKE TO OPBTAIN A COPY OF MY POWER POINT PRESENTATION COVERING THE ABOVE TOPIC “VIETNAM - LIFE IN A BALANCED ENERGY MIX”.

PLEASE CONTACT ME UNDER:

omassmann@duanemorris.com

Coal import for thermo power plants

The local coal using demand for thermo power plants has surpassed domestic supply that may led to lack of coal for thermo – electricity in the near future. Thus, the local firms should start looking for foreign coal sources. Formerly, finding a foreign coal supplier was difficult. However, now Vietnam could source coal from Russia, a feasible market for the import by buying stakes in mines or purchasing the right to mine or buy coal from the country, said Nguyen Manh Quan, a member of the committee and the head of the Heavy Industry Department. The price of imported coal increased to $120 per tonne from $70. In addition, no investors, including the Electricity of Vietnam were interested in the plan because the imported coal costs were higher than that of domestic Although the Vietnam National Coal and Mineral Industries Group (Vinacomin) was tasked as import coal firm but no investors had discussed the issue yet, Tran Chien Thang, deputy general director of Vinacomin, said. Up to this time, Vinacomin inked 15 memorandums in principle with coal suppliers because there are no detailed figures from its customers to send to its suppliers. Investors, especially State - owned ones preferred local sources because costs were partly subsidised by the government, Quan added. The Electricity of Vietnam (EVN) also did not want to use imported coal instead of domestic ones because of much higher cost. Meanwhile big coal firms kept hesitating, a private one signed an agreement for buying coal for 20 years with a foreign supplier and were willing to import more to supply other companies, said Ta Van Huong, director of Energy Department. An Vien Group and Vincom Group suggested to the Ministry that they could help local firm source coal from Russia. However, the field's experts wondered that whether many firms should participate in the coal import because that might lead the competition. However, Huong affirmed that more firms could enter the import business as long as they followed the government rules. The government would set up a legal framework to regulate local coal importers as well as avoiding conflicts among them.tbkt

Power - EVN invests in over 5,200 projects in 5 years

Electricity of Vietnam (EVN) has recently reported its investment projects since 2006 so far. During past five years, EVN has invested in 5,238 projects with the investment for each project at from one billion dong and higher. Of which, 75 projects have been invested by the EVN holding company, 22 others invested by EVN's joint stock companies and the remaining financed by EVN's subsidiaries. Of 5,238 projects, 3,647 projects have been finished, 1,403 others are under construction and 188 projects have not started yet. EVN also put into operation 21 power source projects, 445,000 power grid projects from 110-500 kV. At the same time, EVN is carrying out 15 power source projects including six being started construction in 2010 and hundreds of power grid projects. The group is also preparing to start 11 power source projects and finalising procedures for four power source projects to start in 2011 and put into operation after 2015. According to EVN, because the demand of number of power projects is big while the electricity price is not allowed to increase along with the price of materials and fuel increases thus power projects are not attractive. Foreign investors after pouring capital into Phu My 3 factory has not invested in any BOT power factory so far. Many projects do not have enough capital for reinvestment. However, EVN said that although many projects are under slow progress, from 2006 so far, the group has paid both principal and interest rate of loans in accordance with the credit contracts signed with creditors. Regarding long term investments in 2010, EVN's total investment reached 6.155 trillion dong in September, bringing the total figure in Jan-Sep to 36.8 trillion dong including over 17.7 trillion dong for power source projects, 9.913 trillion dong for power grid projects, 1.721 trillion dong for telecommunications, engineering and 7.409 trillion dong paying for loans.tbkt

CURRENCY - Vietnam may devalue Dong twice in 2011, Credit Agricole says

Vietnam's dong is about 2 percent cheaper to buy in the black market than the rate banks pay and devaluations are likely in 2011 to bring the official exchange rate into line, according to Credit Agricole CIB. The dong was trading at between 19,820 and 19,880 per dollar at money changers in HCM City this morning, according to a telephone information service run by state-owned Vietnam Posts & Telecommunications. The rate in the interbank market was 19,485 as of 9:35 a.m. in Hanoi. The Vietnamese central bank permits the currency to trade up to 3 percent on either side of its reference rate, currently set at 18,932. Dollar liquidity has dried up because of the disparity between the official rate and market rate, forcing importers that need foreign exchange to buy euros instead, according to an October 11 research note written by Dariusz Kowalczyk, a Hong Kong- based senior economist and strategist at Credit Agricole. "The foreign-exchange market in Vietnam is distorted by all the regulations and by all the methods that companies are forced to use to circumvent them," Kowalczyk said in a phone interview yesterday. "But the big picture point to make is that relatively soon after the last devaluation, the implied exchange rate is already 2 percent weaker than the official rate." The last devaluation of 2 percent on August 18 was "not large enough to balance the market," Kowalczyk wrote in the note. The dong will probably be devalued by another 2 percent in February and by a further 3 percent in the northern hemisphere's summer or autumn of 2011, bringing the official exchange rate to 20,500 per dollar, he wrote. Vietnam's inflation accelerated in September to 8.9 percent, the fastest in four months. The trade deficit widened to $1.05 billion in September from $395 million the previous month, according to preliminary general Statistical Office figures. The currency's weakness is being driven by Vietnam's "large and persistent" trade deficit and by inflation, wrote Kowalczyk. The trade shortfall is putting "pressure on Vietnam's balance of payments, requiring further devaluation in order to at least partially restore exports' competitiveness," he wrote.BUS WEEK

ECONOMY - Hanoi: Average income in 2010 rises by 10 to 13 pct compared to 2009

The increase of average income in 2010 is one of several comparative figures given at the conference on "Sustainable development of heroic and cultural Hanoi capital, the city for peace" recently held in Hanoi.

The author of the discussion on 10-year socio-economic development of Hanoi (2000-2010), achievements and some problems in management, Dr Mai Thi Thanh Xuan (University of Economics and Business, under the Vietnam National University) also brought out other notable figures of the outstanding achievements of Hanoi.

People's income increases significantly

Accordingly, if GDP of Hanoi only reached 39.944 trillion dong in 2000 (accounting for 9.04 percent of total GDP of the country), to 2009, it was 205.890 trillion dong (accounting for 12.41 percent).

With the economic growth rate always in the top ranking of the country, GDP growth in 2010 is predicted to reach about eight to 8.5 percent, bringing the average growth of 2006-2010 period to be about 9.85 percent (6.96 percent nationwide).

According to Dr Xuan, throughout the last 10 years, the economic structure of Hanoi has shifted towards absolute increase (from 4.154 trillion dong in 2000 to 13.033 trillion dong in 2009), and relative decrease (from 10.4 percent to 6.3 percent) in the value of agricultural, forestry and fishery products.

The value of industrial sector sees both absolute increase (from 14.570 trillion dong to 82.297 trillion dong) and relative increase (from 36.5 percent to 41.3 percent). Although the proportion of service sector fell slightly from 53.1 percent in 2000 to 52.4 percent in 2009, the absolute value still went up by five times, from 21.220 trillion dong to 107.590 trillion dong.

Proving for the estimate that the income and life of Hanoi's residents have been considerably improved, Dr Xuan has showed that GDP per capital in Hanoi has increased on average of 33.2 percent per year(national average increase is 29 percent) in the last 10 years.

According to prediction of the city, the average income of Hanoi in 2010 could be from 35 to 36 million dong, up by 10 to 13 percent compared to 2009. Currently, the average income of Hanoi has already been 64.8 percent higher than the national average. In 2009, average income of Hanoi was 31.8 million dong, and of the country was 19.3 million dong.

The rise of income has lowered the number of poor households of the whole city from three percent in 2006 to 2.4 percent in 2008. From 2009, Hanoi applied a new standard in assessing poverty (which is two times higher than the national standard), so the poverty rate under the new standard is 6.09 percent, and estimated to decline to 5.4 percent in 2010.

Remarkably, the average housing area of the urban residents might reach seven to 7.5 square metres per person this year (30 percent of local people had to live at average housing area of three square metres per person).VN-ECONOMY

RESOURCES- Coal import for thermo power plants

The local coal using demand for thermo power plants has surpassed domestic supply that may led to lack of coal for thermo – electricity in the near future. Thus, the local firms should start looking for foreign coal sources.

Formerly, finding a foreign coal supplier was difficult. However, now Vietnam could source coal from Russia, a feasible market for the import by buying stakes in mines or purchasing the right to mine or buy coal from the country, said Nguyen Manh Quan, a member of the committee and the head of the Heavy Industry Department.

The price of imported coal increased to $120 per tonne from $70. In addition, no investors, including the Electricity of Vietnam were interested in the plan because the imported coal costs were higher than that of domestic

Although the Vietnam National Coal and Mineral Industries Group (Vinacomin) was tasked as import coal firm but no investors had discussed the issue yet, Tran Chien Thang, deputy general director of Vinacomin, said.

Up to this time, Vinacomin inked 15 memorandums in principle with coal suppliers because there are no detailed figures from its customers to send to its suppliers.

Investors, especially State - owned ones preferred local sources because costs were partly subsidised by the government, Quan added.

The Electricity of Vietnam (EVN) also did not want to use imported coal instead of domestic ones because of much higher cost.

Meanwhile big coal firms kept hesitating, a private one signed an agreement for buying coal for 20 years with a foreign supplier and were willing to import more to supply other companies, said Ta Van Huong, director of Energy Department.

An Vien Group and Vincom Group suggested to the Ministry that they could help local firm source coal from Russia. However, the field's experts wondered that whether many firms should participated in the coal import because that might lead the competition.

However, Huong affirmed that more firms could enter the import business as long as they followed the government rules.

The government would set up a legal framework to regulate local coal importers as well as avoiding conflicts among them.VNNEWS

Bilateral relations - US and Vietnam build ties with an eye on China

A visit to Vietnam this week by Robert M. Gates, the United States defense secretary, is just the latest step in a bilateral relationship that is at its warmest since diplomatic ties were established 15 years ago.

A steady progression of careful gestures has eroded the enmities of the Vietnam War, built a basis of increasing trust and turned the two nations' attention, in large part, from issues of the past to the present.

It is the second American cabinet-level visit to Vietnam in four months; Secretary of State Hillary Rodham Clinton came in July. Exchanges at this level have become almost common, if not routine.

Gates was here for a gathering of defense chiefs from the 10-member Association of Southeast Asian Nations and partner countries.

"I would say that relations are at their highest point in 15 years," said Hung M. Nguyen, director of the Indochina Institute at George Mason University in Fairfax, Va. "We have basically removed the major hurdles of suspicion in military-to-military relations, and I would expect things to proceed quite fast," he said.

The main concern shared by the two nations underscores the shifts in alliances in the 35 years since the war came to an end: Chinese claims in the South China Sea.

It is an issue with some historical paradox. While the United States sought during the war to contain an expansion of Chinese Communism into Vietnam, it is aligned with Vietnam today in concern over an escalation of China's maritime claims.

China was an ally of North Vietnam in its war against South Vietnam and the United States in the 1960s and '70s and is now a partner of a unified Vietnam in an uneasy relationship between Communist nations of vastly different size.

"Vietnam worries about Chinese in the South China Sea, and America worries about interference in freedom of navigation," Dr Hung said. "Because of this, the strategic interests of Vietnam and the United States converge."

On Tuesday, Vietnam announced that China had released a Vietnamese fishing boat and crew it had seized near the disputed Paracel Islands a month ago, ending the latest flare-up between the nations. China earlier said that the crew must pay a fine, and Vietnam said that the crew members had been mistreated.

By Vietnam's count, 63 fishing boats with 725 crew members have been seized since 2005 in areas claimed by China.

In March, China raised the level of its territorial claim, asserting that the South China Sea was a "core concern," a phrase that placed it on a par with Taiwan and Tibet, its most politically contentious territorial interests.

In response, during a visit to Hanoi in July, Clinton hardened Washington's stance by saying the United States had a "national interest" in freedom of navigation in the area.

In balancing its relations between the two major powers, Vietnam has been at pains to reassure China, the giant on its doorstep, that it would have no alliances, military bases or military coalitions that threatened China.

While Vietnam marked the 15th anniversary of diplomatic ties with the United States this year, it also celebrated a much longer diplomatic relationship of 60 years with China.

Hanoi's warming toward Washington has also been slowed by suspicions of American motives and commitment to a Vietnam policy, analysts said.

They said Washington's relations with Vietnam had always been part of larger international interests and could shift as those interests changed.

Once again, as it was during the war, America's stance toward Vietnam is one piece in a broader China policy.

Toeing a careful line, Vietnam insists that its policies toward the two nations are independent of each other.

"You should not look at Vietnam's relationship with the United States through the prism of China," said Nguyen Nam Duong, a research fellow at the Diplomatic Academy of Vietnam, a branch of the Foreign Ministry.

"Vietnam will have independent relations with both the United States and China, and we want to separate those relations from each other," he said in an interview on Tuesday.

Quite apart from their relations with China, the two former wartime enemies have grown steadily closer. Trade relations were normalised in 2006. Port calls by United States naval vessels have become more frequent since the first one in 2003.

"It's a very deliberate pace that's being kept here," said Carlyle Thayer, an expert on Vietnam at the Australian Defense Force Academy at the University of New South Wales in Sydney.

"Neither side wants to be used by the other, but both want to advance the relationship," he said.

Clinton took an exuberant tone last month when she said, "The progress between Vietnam and the United States has been breathtaking."

Vietnamese officials have been less effusive, but they seem to agree.

"Vietnam and the United States are enjoying an excellent period of bilateral relations," the Vietnamese ambassador to the United States, Le Cong Phung, said in remarks quoted by the official Vietnam News Agency last month.

However, warming relations have been slowed by American concerns over human rights abuses in Vietnam and by Hanoi's suspicion that Washington is using the issue to undermine the Communist government.

The Vietnamese often use the phrases "peaceful evolution" and the "color revolutions," expressions that refer to their view that the collapse of the Soviet Union and other European Communist governments was brought about at least partly by outside support for democracy and human rights.

The competing concerns involving human rights renew themselves in something of a vicious circle. Vietnam's fear of American motives leads to the arrests of dissidents it sees as connected with the West. And those arrests in turn intensify concerns of the United States over human rights abuses.

The two nations' alignment on the issue of the South China Sea illustrates the emergence of a more forward-looking relationship, said Kim Ninh, the country representative in Vietnam for The Asia Foundation, which is based in San Francisco.

For the United States, the chief issue from the past continues to be a full accounting for military service members still missing from the war, though that concern no longer carries the power that it once did.

For Vietnam, the chief remaining postwar issue is a demand for greater American assistance in addressing the effects of Agent Orange, a chemical defoliant that was sprayed in parts of the country, causing widespread birth defects.

Duong of the Foreign Ministry said these postwar issues remained "very relevant."

"In terms of defense relations, we still need to settle the issues of the past so as to build trust to move toward the future," he said.

But he said that bilateral relations "have never been better" and that "they can only go upward. They cannot go downward."vnnews

FOREIGN DIRECT INVESTMENT - IFC plans to invest in ABBank

International Finance Corp (IFC), a member of the World Bank (WB), intends to invest in An Binh Commercial Joint Stock Bank (ABBank), according to IFC's website.

In its investment portfolio, IFC plans to invest some $50 million in ABBank. At the same time, IFC will provide a $25 million loan for ABBank including $20 million from IFC and $5 million from Clean Technology Fund.

According to IFC, the $50 million investment may be poured under convertible bond form. This capital source would help ABBank ensure better the bank's capital adequacy ratio (CAR).

Meanwhile, the $25 million credit loan is to support activities on environmental protection and energy saving. This project is consistent with IFC's strategy in Vietnam and in accordance with the WB's goal of using the market mechanism to mitigate impacts of climate changes in Vietnam.

According to ABBank, IFC is under studying and negotiating period with the local bank about the $50 million investment.

Currently, ABBank cooperates with IFC in two programmes namely development consultancy for small and medium sized enterprises (SMEs) and support for firms that committed to protect the environment and save energy.

IFC also pledged to provide supports on technique, customer consultancy and improve corporate management for the local bank.

ABBank now has a chartered capital of 3.482 trillion dong and it would be 3.83 trillion dong after offering bonus shares at the ratio of 10 percent from the bank's capital surplus to the shareholders by the end of this year.

Till the end of September, the bank posted 36.257 trillion dong in total assets, total outstanding loans at 17.956 trillion dong including 13.42 trillion dong for enterprises.

During the first nine months this year, the lender gained 546.2 billion dong of pre tax profit, a year-on-year rise of 94.1 percent.

Last weekend, IFC also signed a memorandum of understanding (MoU) to invest in Vietnam Commercial Joint Stock Bank for Industry and Trade (VietinBank). VietinBank's leader said IFC plans to buy 10 percent stake worth $190 million in VietinBank.TBKT

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~