BUSINESS IN BRIEF 28/5
Consortium of two Japanese companies acquire stake in FPT
Two Japanese companies – Toppan Printing Co Ltd and Tokyo Shoseki – have agreed to acquire a stake in FPT Corporation, a leading multinational information technology company of Vietnam.
A stock purchase agreement between the Japanese consortium and FPT was signed on May 26 in Tokyo, paving the way for a planned significant expansion of operations in the information technology and software industry segments of Vietnam.
Although all of the details of the agreement have not yet been made public, it has been revealed that the Japanese consortium has agreed to significantly increase its outsourcing activities in Vietnam.
An unidentified FPT source said it’s anticipated the initiative will bring US$200 million of Japanese foreign direct investment into the Vietnamese technology giant over the next two years.
In addition, the agreement should bolster FPT revenue and profits and result in the creation of 8,800 jobs.
Jan-May FDI increases almost 140%
In the first five months of the year total newly-registered and additional foreign direct investment (FDI) stood at $10.159 billion, a 136.4 per cent increase year-on-year, according to the Ministry of Planning and Investment.
Foreign investors invested in 19 sectors, with processing and manufacturing attracting the most, at 398 newly-registered projects and total newly-registered and additional capital of $6.61 billion, accounting for 65.1 per cent of the total.
Information and communications ranked second, with 67 newly-registered projects and total newly-registered and additional capital of $1.3 billion, accounting 12.8 per cent of the total.
Real estate was third, with $542.8 million, or 5.3 per cent of the total.
Of the 60 countries and territories investing in Vietnam, South Korea led the way with newly-registered and additional capital of $3.42 billion, accounting for 33.7 per cent.
With major projects of up to $1.248 billion, Luxembourg ranked second, accounting for 12.3 per cent, followed by Singapore with $907.1 million, or 8.9 per cent.
Hanoi attracted the most FDI, with 139 newly-registered projects and total capital of $1.96 billion, accounting 19.3 per cent, followed by Hai Phong and Dong Nai.
Toshiba to equip Vinh Tan 4 power plant
Japan’s Toshiba Corporation will supply steam turbines and generators (STGs) for the expansion of the Vinh Tan 4 coal-fired thermal power plant in south-central Binh Thuan province being completed by Electricity of Vietnam (EVN).
Toshiba will supply STGs that generate steam at a pressure of over 240 bars with a reheat steam temperature of 593°C.
They are considerably more efficient than the STGs now in wide use in Vietnam.
Toshiba will begin delivering the STGs in January 2018, with commissioning scheduled for 2019.
It received the order to supply the STGs from Japan’s Mitsubishi Corporation and South Korea’s Doosan Heavy Industries & Construction Co., who are members of the consortium awarded the engineering, procurement and construction contract for the EVN project.
Toshiba earlier won a contract to provide STGs for Units 1 and 2 of Vinh Tan 4, which now under construction, in April 2014 and started delivery in December 2015.
Strong economic growth is straining Vietnam’s power generating capacity, with southern Vietnam particularly susceptible to shortages. The government is responding with expansion plans to boost electricity supply.
Toshiba will reinforce its thermal power plant business, a source of steady income, by globally providing high-efficiency power generation equipment. It will look to contribute both to the realization of a low-carbon society and to stable electricity supply.
It has already supplied STGs for the Vung Ang 1 Thermal Power Plant and the Thai Binh 2 Thermal Power Plant.
Agricultural exports at $12 billion in first five months
The Ministry of Agriculture and Rural Development (MARD) has announced that exports of agriculture, forestry and seafood products in May were valued at $2.32 billion, bringing total export turnover in the first five months of the year to $12.18 billion, an increase of 4.9 per cent compared to the same period last year.
Exports of main farm produce reached $6.05 billion, up 6.6 per cent, forestry products $2.69 billion, up 1.8 per cent, and seafood $2.43 billion, up 1.1 per cent year-on-year.
Strong growth was seen in the export of coffee, rubber, cashew nuts, and seafood while exports of tea, timber, cassava and cassava products were lower than in the same period last year.
Coffee recorded the strongest growth in the first five months, rising 33.9 per cent in volume and 10.7 per cent in value.
Some 134,000 tons were exported in May, worth $234 million, for volume in the first five months of 797,000 tons worth $1.36 billion.
Rubber exports also increased in the first five months, by 20.5 per cent in volume and 19.7 per cent in value. Exports reached 79,000 tons in volume and $189 million in value in May, bringing the five-month figure to 391,000 tons worth $561 million.
Seafood value in May was estimated at $471 million and in the first five months $2.43 billion, up 1.1 per cent against the same period of 2015.
Rice exports fell by 2.1 per cent in volume but increased 1.2 per cent in value year-on-year.
There were 345,000 tons of rice shipped abroad in May worth $165 million, bringing rice exports in the first five months to 2.35 million tons worth $1.06 million.Hanoi's export turnover fetches US$4.3 bln in Jan-May
Ha Noi’s export turnover was estimated at US$4.3 billion in the January-May period, representing a year-on-year growth of 0.3%, according to the municipal Statistics Office.
In May, export turnover reached US$897 million, up 2.7% against the previous month, but down 1.9% against the same period last year. Export made by domestic enterprises amounted to US$692 million, representing a month-on-month growth of 2.9% and a year-on-year surge of 0.9%.
In the fifth month, biggest hard currency earners included electronic products (up 15.4%); transport vehicles and spare parts (up 55.7%); machines and spare parts (up 14.9%). Meanwhile, agricultural export turnover was on the decline.
In the January-May period, largest hard currency earners consisted of garments and textiles (up 10.8%); transport vehicles and spare parts (up 33.9%). Meanwhile, export turnovers of some products decreased including agro-products (down 15.2%); computer spare parts; peripheral devices (down 19.6%); and petrol (down 16.4%).
In May, import turnover was US$1.913 billion, posting a month-on-month surge of 6.5% and a year-on-year decline of 12.4%. Domestic enterprises imported US$862 million, up 6.9% against the previous month and down 14% against the same period last year.
In the first five months, import turnover fetched US$9.2 billion, down 6.2% against the same period last year. Domestic sector imported US$4 billion, down 6.5% against the same period last year.
Ca Na Industrial Zone dreams lie in ruins
Ninh Thuan Provincial People’s Committee has issued a license revocation of developing Ca Na Industrial Zone from the ashes of the inactive Ca Na steel manufacturing complex, due to long delays in submitting dossiers for an investment certificate.
In September 2008, Vinashin-Lion Joint Venture Company Limited, a joint venture of state-owned Vietnam Shipbuilding Industry Group (Vinashin) and Malaysian Lion Group, was licensed to develop the $9.8 billion Ca Na steel manufacturing complex. The complex’s construction was started on November 2008.
Designed to have an annual capacity of 14 million tonnes, the complex was the biggest steel project licensed in Vietnam and the largest-ever foreign-invested project at the time. The investors promised to complete the first phase in 2008-2011. However, the construction could not be implemented on schedule due to financial troubles, leading to Lion Group’s withdrawal from the project. In early 2011, the management board of Ninh Thuan Industrial Zones revoked the investment certificate of the complex.
In May 2011, the prime minister green-lighted a proposal to turn the Ca Na steel manufacturing complex into Ca Na Industrial Zone. The project was also added to the list of zones prioritised for establishment until 2015, with a vision towards 2020.
The prime minister also licensed Ho Chi Minh City-based Ocean Energy Development Corporation and Vietnam Construction and Import-Export Joint Stock Corporation to study plans to implement the 1,000 hectare project.
The construction of the zone was divided into two phases, however, as of now, no progress has been made.
Vietnamese steel unit of Taiwan’s Formosa under scrutiny
The steel unit of Taiwan's Formosa Plastics Group in the north-central Vietnamese province of Ha Tinh has been placed under close scrutiny from anti-transfer pricing and tax evasion agencies, following a number of repeated tax violations.
The Hung Nghiep Formosa Ha Tinh Steel Co.Ltd (Formosa) has been asked to pay back more than VND1.55 trillion (US$69.2 million) in tax refunds it had wrongly claimed, plus VND5.5 billion ($245.54 million) in back taxes.
Such a systematic violation of the tax rules has prompted tax authorities to keep a close watch on the company.
The steelmaker declared wrong HS codes for several material and equipment imports between 2010 and 2015 to avoid import duties and value-added taxes.
The avoidance has been detected and Formosa eventually had to pay VND5.5 billion in tax arrears, according to the General Department of Vietnam Customs.
In late February, tax authorities also discovered that Formosa had used 19,470 inappropriate receipts to claim tax refunds. The company then had to return the VND1.55 trillion it had been refunded.
With Formosa having made many false tax refund declarations prior to the latest violation in February, tax authorities will apply a stricter rule on the company, a tax official told Tuoi Tre (Youth) newspaper.
“Tax authorities will inspect refund declarations before giving money to Formosa, reversing the procedure the steelmaker used to enjoy,” he said.
In the meantime, Formosa is also suspected of engaging in transfer pricing activities by manipulating the prices of its imported machinery and equipment.
“The company has imported certain machinery and equipment to be used as fixed assets for its steelmaking complex in Ha Tinh, but declared incorrect prices for the shipments,” Pham Tien Thanh, a top official from the Ha Tinh tax department, said.
“The steelmaker would declare the imports cost much higher than the real prices to enjoy bigger tax deduction for property depreciation,” Thanh said.
For instance, in October 2014, Formosa had a local forwarder, SAS Vung Ang Co. Ltd., import a batch of machinery from a foreign contractor. While the forwarder stated in the receipt that the shipment cost US$348.65 million, the bill from the foreign supplier says the products were worth US$1.42 million.
“This is a sign of transfer pricing, as the false import price would result in higher input cost, from which Formosa can report losses while the company actually operates with a gain,” Thanh explained.
The Ha Tinh unit of Formosa was licensed in 2008 with a registered capital of US$2.7 billion. However, in eight years, the company has asked to have its business license amended 14 times, with the capital increased gradually.
The company asked to raise its capital to US$7.8 billion in 2012, and $10.5 billion following the latest adjustment in June 2015.
According to tax inspectors, the repeated capital adjustments suggest that the firm had declared false values for its machinery and equipment imports via foreign contractors.
Vietnam values Pan-Tonkin Gulf economic cooperation: official
Vietnam attaches importance to Pan-Tonkin Gulf economic cooperation and wants to enhance partnerships between ASEAN countries and China, Deputy Minister of Transport Nguyen Hong Truong has said at a forum in China’s Nanning city.
The ninth Pan-Tonkin Gulf Economic Cooperation Forum commenced in the Chinese city, which is located in the Guangxi Zhuang Autonomous Region, on May 26.
It is being attended by about 500 delegates from China and the ASEAN nations.
At the opening session, Deputy Minister Truong noted the outstanding achievements in the ASEAN – China dialogue relationship, including the completion of negotiations on the ASEAN – China free trade area.
He highly valued opportunities brought about by the ASEAN Economic Community, established on December 31 last year, to both sides’ businesses and the regional development cooperation.
Stronger cooperation between the ASEAN countries and China will augment bilateral trade, facilitate customs clearance and technology development, and improve production capacity. It will also help develop transport networks, educational cooperation, people-to-people exchanges, and collaboration in environmental and natural resources protection, he added.
The official also highlighted the progress in Vietnam’s affiliation with China, including Guangxi province, recently.
At the forum, participants discussed the formation of a China – mainland Southeast Asia economic corridor, and a cooperation network of Chinese and ASEAN port cities.
The Pan-Tonkin Gulf Economic Cooperation Forum is part of the “One Axis and Two Wings” initiative, launched by China in 2006.Toyota & Uber working together
Toyota Motor Corporation and Uber signed a memorandum of understanding in Tokyo on May 25 to explore collaboration and begin trials in the expanding world of ridesharing.
As part of the cooperation, Toyota Financial Services Corporation and Mirai Creation Investment Limited Partnership are making a strategic investment in Uber.
The companies will create new leasing options in which car purchasers can lease vehicles from Toyota Financial Services and cover their payments through earnings generated as Uber drivers. The leasing period will be flexible and based on driver needs. This initiative builds upon Uber’s current Vehicle Solutions program.
“Ridesharing has huge potential in terms of shaping the future of mobility,” said Mr. Shigeki Tomoyama, Senior Managing Officer of Toyota Motor Corporation and President of Connected Company, one of Toyota Motor Corporation’s recently created in-house companies. “Through this collaboration with Uber we would like to explore new ways of delivering secure, convenient and attractive mobility services to customers.”
Mr. Emil Michael, Chief Business Officer at Uber, was also pleased with Toyota, the largest automobile manufacturer in the world, making a strategic investment in Uber as part of a broader global partnership.
“Toyota vehicles are among the most popular on the Uber platform worldwide and we look forward to collaborating with Toyota in multiple ways going forward, starting with the expansion of our vehicle financing efforts,” Mr. Michael said.
Toyota and Uber will also explore collaboration in a variety of other areas, such as developing in-car apps that support Uber drivers, sharing knowledge and accelerating their respective research efforts, and establishing a special fleet program to sell Toyota and Lexus vehicles to Uber.
In Vietnam, Uber has also cooperated with Maritime Bank to offer promotions for owners of Maritime Bank MasterCards from May 23 to May 29. In particular, from May 25 to May 27 Uber passengers will receive a discount of 30 per cent on their trips.
APEC workshop promotes SMEs participation in global food supply chains
The Asia-Pacific Economic Cooperation (APEC) workshop on promoting the participation of small- and medium-sized enterprises (SMEs) in global food supply chains took place in Hanoi on May 25.
The event was organised by the Ministry of Industry and Trade and the APEC Secretariat to contribute to APEC’s joint effort to ensure food security and support SMEs in taking part in global supply chains.
Addressing the event, Deputy Minister of Industry and Trade Nguyen Cam Tu said deeper regional and global integration would make enterprises working in different functional stages of a supply chain more dependent on each other.
In the future, competition will be no longer between companies, but between supply chains, the deputy minister said.
An effective supply chain enables businesses to reduce costs, improve connections and enhance customer satisfaction, Tu added.
Developing food supply chains “from seed to shelf” is vital amid today’s stiff competition in international markets. It will help ensure food security and boost profits for producers and distributors of a product to the end consumers, he noted.
The SMEs are facing a number of obstacles that prevent them from joining the supply chains, for examples, a lack of capital and skilled workers, and poor management and technological capabilities.
It is an urgent need for the government to provide help for SMEs to take part in global agricultural supply chains when Vietnam’s economy is integrating deeper into regional and international markets.
During the workshop, attendees discussed potential support policies for SMEs to effectively participate in food supply chains in Asia-Pacific, contributing to regional stability and prosperity.
Traditional markets lack VN goods
Despite positive results of the "Vietnamese give priority to use Vietnamese goods" campaign, the ratio of Vietnamese goods being sold in traditional markets remains quite modest.
Le Ngoc Son, head of Dong Xuan Market Management Division of Dong Xuan Joint-Stock Company, said Vietnamese goods were being displayed in the market, mostly made by small-sized local companies or traditional handicraft villages. Big producers prefer to stay away from this traditional market channel.
A retailer in Dong Xuan market said local retailers often purchase a small volume of new products depending on the demand from local consumers first. Due to their limited capital, they always pay owners in full at the end of the year. Meanwhile, Vietnamese businesses often require them to place big orders and pay in advance thus causing much difficulty for them. In addition, local retailers are ignorant about Vietnamese products due to their inflexible payment methods, undiversified samples and high prices.
Pham Thi Thanh Ha, deputy director of Duc Giang Fashion Centre, said her company has never distributed garments to traditional markets because her company wants to retain its image. She, however, said that if local retailers can prove their eligibility, her company is willing to deliver garments to them.
Most of Vietnamese products sold at traditional markets have low-added value.
According to the Ministry of Industry and Trade, Viet Nam has more than 9,000 traditional markets and distributes some 80 per cent of goods to local consumers. If Vietnamese goods can enter this channel it would become a very useful distribution channel.
For this, a consensus should be reached between retailers and businesses that will be a key to developing this channel. Market management divisions also play an important role in linking retailers and businesses.
Son said his company will soon conduct meetings between retailers and businesses to sell goods in this market.
According to Vu Vinh Phu, chairman of the Ha Noi Supermarkets Association, local retailers must co-operate with each other and compete by improving the quality of products, prices and customer care services. And local businesses needed to pay more attention to local income earners via distribution channels at traditional markets, he said.
A representative of a manufacturing company said traditional markets have advantages as compared to supermarkets such as diversified and cheap products, and convenient locations. However, local businesses need to provide better product design and quality with reasonable pricing.According to the ministry, to bring more Vietnamese goods into traditional markets, businesses should allocate their goods to local retailers at wholesale markets for distribution in rural areas. This would help businesses save costs while establishing their sales agents in rural areas.
No discrimination in debt trading
There must be no discrimination in regulations with regard to debt trading between domestic and foreign participants, Deputy Prime Minister Vuong Dinh Hue has said.
At a meeting in Ha Noi on Wednesday, Hue directed relevant authorities to compile a draft decree on debt trading.
Deputy governor of the State Bank of Viet Nam Nguyen Phuoc Thanh, concurring with Hue, said that the debt trading decree must ensure a level playground for all individuals and institutions.
Admitting that the compilation of the decree is difficult, as Viet Nam does not have the experience in debt trading and investment, Hue required the drafting board to scrutinise the concepts related to the business as well as the conditions and responsibilities businesses must show to be eligible to provide the services.
The decree must obey the Constitution as well as ensuring the freedom of business and be compliant with the regulations of the Investment Law and the Enterprise Law, he said.
"All businesses, including both the Viet Nam Asset Management Company and the Debt and Asset Trading Corporation, must comply with the regulations as they participate in the debt trading market," Hue said.
He also instructed the Ministry of Finance and the Ministry of Planning and Investment to amend another decree on handling administrative violation cases in doing business, including debt trading.
Debt trading and investment is among industries that require business conditions under the amended Investment Law, but the Government has not so far announced the conditions for the business yet. Therefore, a legal framework for the business is indispensable when the Government has to announce business conditions for all industries from July 1 this year.
Besides, experts said that there is no debt trading market in Viet Nam which is professional and large enough for businesses to trade in. Debts have been either lying still, thus causing big losses to involved parties, or have been transferred around.
Online newspaper Vietnamnet quoted Nguyen Van Hung, finance director of AASC, a finance service and auditing firm, as saying that debt trading would be a large market. In developed markets, the debts would be securitised in the form of a bond and transacted on the stock market.
According to the drafting board, the debt trading decree aims to develop a legal framework for the launch of debt trading services, including the foundation of debt trading floors where debt trading, consultancy and brokerage take place.
To qualify for the participation, the businesses which want to trade debts must have minimum legal capital of VND100 billion (US$4.44 million), while the businesses which run trading floors must have VND1 trillion at least.
The required minimum legal capital for businesses providing other services is VND10 billion.
The drafting board is expected to complete the draft decree soon to be able to submit to the Government at its meeting in May.
Margin trade ban won't harm market
The circular that puts a stop to foreign investors' margin trading from July 1 would not affect capital flow in the local market, said securities experts.
The Article 9, section 4 of the Circular No 203/2015 / TT-BTC that guides the listing on the stock market regulated that foreign investors were not allowed to perform margin trading.
So far, some securities companies have announced that they would stop opening new margin trading accounts for foreign investors and for the ones who already had margin trading accounts, they would lock the purchasing side and keep the selling side so that foreign investors could sell their stocks to pay the debts. They also stopped new disbursement for such accounts.
According to local data, at the end of first quarter, local margin lending in 12 securities companies with the biggest margin in the market reached VND21 trillion (US$954.5 million) , an increase of 61 per cent over last term. The two biggest margin providers distributed one third of the margin in the market. Of the two, Sai Gon Securities Inc (SSI) provided over VND3.77 trillion, an increase of VND1.5 trillion over the same period last year while HCM City Securities Corporation (HSC) provided VND2.35 trillion, an increase of over VND1.2 trillion from its last term.
While SSI still had no answer about the impact of the margin cut for foreign investors, Bao Viet Securities Company, which provided VND986 billion of margin to the market said it did not process any foreign margin trading so the regulation would not make any changes to company operation.
A representative of the securities company said the cut would not apply for all foreigners.
NIVL promises to pay, out of media sight
Indebted to local sugarcane farmers since 2013, Indian-owned NIVL JSC once again pledged to fully repay them during a recent dialogue held between the company’s leaders, local sugarcane farmers, and merchants, under the oversight of provincial officers. NIVL, however, refused media coverage of the dialogue.
At the beginning of May, over 20 sugarcane farmers and merchants gathered up at NIVL’s factory in Luong Hoa commune, Long An province, with banners hung high asking NIVL to pay for sugarcane bought in from 2013 through to 2016. NIVL, following the incident, closed down for days to prevent trespass and announced that its leaders were away on a business trip.
On May 11, NIVL held a public dialogue between general director A. Nandaa Kumar and some 40 local sugarcane farmers and merchants, who acted on behalf of those that have not received almost VND60 billion ($2.75 million) in due payments from the company.
While the dialogue took place from 3 PM through to 10 PM, the NIVL representative, on behalf of the general director, denied entrance to all reporters, despite the dialogue being open to the public. The reason given to the reporters was that the presence of media could distress the company’s general director.
At the meeting NIVL leaders continued promising to sell sugar to repay farmers and merchants in two designated phases. The first one was scheduled to May 16 and the second to June 30. Numerous farmers and merchants, however, expressed doubts over NIVL’s promises, as the company has made quite a number of pledges to pay them in full but failed to make them into reality.
According to Duong Van Ut, deputy chairman of Ben Luc District’s People’s Committee, the sugar factory is currently indebted some VND56 billion ($2.56 million) to local sugarcane farmers and merchants, of which VND16 billion ($733,944) is payments due for the 2016 season, while the remainder was accumulated over the previous seasons. However, an anonymous source disclosed that the arrears could be as high as VND95 billion ($4.35 million), with a number of households being owed some VND3-4 billion ($137,600-$183,480). According to this source, some the unpaid amount adds up to VND9 billion ($412,844).
In 2014, NIVL was besieged by local farmers to perform on unsettled bills worth VND150 billion ($6.88 million) that the company had yet to pay. NIVL subsequently managed to repay the furious farmers in instalments, yet the amount of its debts continued building up over the harvests until the current crop.
On April 27 and 28, various employees of the NIVL factory went on strike to demand that the company pay them their overdue wages in full. A NIVL representative then met up with the workers to discuss and settle the issues, promising to look into their requests on the remuneration policy, bonus, and medical insurance. To date, there have not been any specific solutions carried out by the sugar factory.
In the same month, NIVL was fined by the Southern Long An Provincial People’s Committee for discharging untreated toxic waste water into Vam Co Dong River. The fine imposed was VND350 million ($17,500), the highest ever inflicted on an environmental violator in Vietnam, according to the Ministry of Natural Resources and Environment’s Vietnam Environment Administration.
VinaCapital decreases real estate holdings
London Stock Exchange-listed VinaLand Ltd. (VNL) and Vietnam Opportunity Fund (VOF), both closed-end funds governed by VinaCapital, have made major real estate divestments in May.
On May 25, VNL announced on its website that it had divested its entire stake in HBT Court, a serviced apartment building in Ho Chi Minh City that it acquired in 2007. The disposal will result in net proceeds of $534,000 to VNL, including adjustments for additional investments and dividends from the project over this period.
In the same month, VNL has made two other divestments. On May 20, the company announced the divestment of its stake in the Danang Golf Project. The project, acquired by VNL in 2006, is situated in Danang on a 219.8 hectare land area and includes a completed 18-hole golf course with related facilities as well as residential dwellings, some of which are currently under construction. VNL will transfer its entire stake to An Phu Import Export Investment and Trading Company Limited. This transaction will result in net cash proceeds of $37.4 million to VNL, and an internal rate of return (IRR) of 8.9 per cent.
On May 11, VNL announced that it is divesting its entire stake in 21st Century International Development Joint Stock Company (Century 21 Project) located in Ho Chi Minh City. The site is a future residential-mixed use development site, with a total area of 301,060 square metres, which was acquired by VNL in 2006 for residential and mixed use development. VNL’s entire stake in Century 21 Project will be taken over by Khai Hung Real Estate Co., Ltd. This transaction will result in net cash proceeds of $75.4 million to VNL.
According to VNL managing director David Blackhall, all divestments are consistent with the Company's strategy agreed on at the EGM in November 2015, where shareholders supported a 12 month extension of the strategy focused on the realisation of assets. The strategy, in turn, was agreed at the November 2012 EGM.
“Further details on the proposed $35 million capital distribution will be announced in due course, with the expected timing to be early June 2016,” he added.
Meanwhile, VOF also announced the disposal of its entire stake in Danang Golf Project to An Phu Import Export Investment and Trading Company Limited for net cash proceeds of $12.2 million. On May 11, VOF also announced selling its entire stake in the Century 21 direct real estate project to Khai Hung, making a net gain of $28.7 million on the deal.
“Over the past few weeks, we have taken great strides in reducing our real estate direct investments and look forward to putting the proceeds to work in asset classes and sectors where we see greater opportunities for significant growth,” said VOF managing director Andy Ho.
According to Ho, VOF’s strategy is to reduce direct real estate holdings, while at the same time remaining opportunistic in market areas where it sees significant potentials, namely privately negotiated deals and OTC investments.
“We continue to see robust deal flows in these asset classes, as reflected in our recent OTC investment into Airports Corporation of Vietnam and our privately negotiated investment into Thai Hoa Hospital. We are evaluating a number of very attractive opportunities in the pipeline. Our fully realised private equity investments have delivered an IRR in excess of 20 per cent to date, and we believe these types of investments continue to offer the most attractive returns in the market,” he said.
Vietjet, Coca-Cola strike cooperation deal
Vietjet and Coca-Cola on May 25 clinched a comprehensive cooperation agreement to diversify each other’s products and services, and provide more value-added benefits for their customers.
Vietjet and Coca-Cola will work together to promote sales, do the branding and increase information exchanges.
Luu Duc Khanh, managing director of Vietjet, said in a statement that the deal with Coca-Cola would offer the airline’s passengers more choices of beverages. The carrier will soon welcome a new aircraft featuring Coca-Cola brand livery.
Vamsi Mohan, regional director of Coca-Cola Indochina and Myanmar, said Coca-Cola Vietnam is committed to continuing its sustainable development investment to build up an effective, comprehensive value chain in terms of production, business, and community activity.
He added the agreement showed both companies’ commitment to offering more innovative activities in the future.
Vietjet now uses a fleet of 36 Airbus A320 and A321 aircraft and operates 250 daily flights on 50 routes across Vietnam and to destinations in Thailand, Singapore, South Korea, Taiwan, China, Myanmar and Malaysia.
The second biggest airline in Vietnam after Vietnam Airlines looks to expand its network in the region.
Meanwhile, Coca-Cola Vietnam has about 2,500 employees at its factories in HCMC, Danang and Hanoi.
Ministry wants sugar output cuts
The Ministry of Agriculture and Rural Development targets domestic sugar output of two million tons by 2020, down by100,000 tons compared to the volume approved years ago by the Government.
The target is part of a Prime Minister decision drafted by the ministry approving a master development plan for the sugar and sugarcane sector until 2020 with a vision towards 2030.
The draft decision has put forth for comment and will replace the Prime Minister’s Decision 26/2007/QD-TTg dated July 15, 2007 approving the development plan for the industry to 2010 with a vision to 2020.
According to Decision 26, the sugar output nationwide would reach 2.1 million tons in 2020
The draft decision retains 300,000 hectares of sugarcane. Vietnam’s sugarcane productivity is expected to reach 72 tons and 80-84 tons per hectare in 2020 and 2030 respectively, and sugar output would be 2.7 million tons by 2030.
Vietnam now has 41 sugar mills. In the draft, the ministry aims to increase the capacity of the existing sugar mills, instead of increasing the number.
The Vietnam Sugar and Sugarcane Association (VSSA) said domestic sugar output had totaled 1.15 million tons by May 20, including 400,000 tons in inventories at factories and commercial companies which are members of the association.
According to the Agro-Forestry-Fisheries Processing and Salt Production Department, the country produced 1.41 million tons of sugar in the 2014-2015 crop, down nearly 178,300 tons year-on-year, and harvested 64 tons of sugarcane per hectare.
The fall was attributable to declining sugar prices on the domestic market. Many farmers have shifted to growing other crops as the sugarcane price dipped to only VND12,000 per kilogram.
The price drop on the local market was due partly to lower prices of sugar on global markets. For example, the price on the London market was sometimes quoted at only US$350 per ton for sugar delivery in July 2015, when the 2014-2015 sugarcane season ended.
PVcomBank finances PVPower projects
Vietnam Public Bank (PVcomBank) has signed a contract to lend to PetroVietnam Power Corporation (PVPower) to implement its power projects in the coming time. The contract totals VND2 trillion (US$89.6 million), the Vietnam News Agency reported.
PVPower is under Vietnam National Oil and Gas Group (PVN). This group, Vietnam Electricity Group (EVN) and Vietnam National Coal and Mineral Industries Group (TKV) have been assigned by the Prime Minister to develop the country’s power sector in line with a national strategy for energy development until 2020 with a vision towards 2050.
Over the past years, PVN has been pursuing the goal of becoming Vietnam’s second largest power producer after EVN and the largest operator of gas-fueled power plants by 2025.
Founded in May 2007 with chartered capital of VND7.6 trillion, PVPower had had its equity rising to over VND21.77 trillion as of end-2015. It now has 26 member companies compared to the original seven.
As of May 17, PVPower had generated 117.3 billion kWh, and posted revenue of VND125.35 trillion and pre-tax profit of over VND4.78 trillion. It had contributed VND7.12 trillion to the State budget.
Vinacas asked to set base prices for cashew imports
The Vietnam Cashew Association (Vinacas) has been requested to set base prices for cashew imports to prevent unhealthy price increases by cashew importers and losses for the local industry.
At a conference in HCMC on Monday on sustainable development of the cashew industry, Dang Hoang Giang, vice chairman of Vinacas, said more enterprises have jumped into cashew nut processing business as profit is higher than other crops.
Statistics of Vinacas showed Vietnam now has around 350 cashew exporting firms and more than 1,000 cashew processing firms, and many of them used to export rice and coffee. Strong competition has led to a price spike.
Vietnam is now the world’s biggest cashew nut exporter and major raw cashew importer, so the country needs to control cashew prices. However, unhealthy competition on the domestic market has weakened the country’s position on global cashew markets.
To deal with the situation, enterprises proposed Vinacas set base prices for cashew imports to make it easy for them to negotiate with raw cashew exporters. Besides, Vinacas suggested choosing one or two enterprises to import raw cashew to enable Vietnam to be more proactive in price negotiations.
Vietnam imports 500,000-700,000 tons of raw cashew, mainly from Africa, a year to meet domestic demand.Right policy sought to attract renewable energy investors
Vietnam needs to adopt appropriate policy and incentives to attract large investments to maximize the benefits of renewable energy, heard a workshop in Hanoi on Tuesday.
The workshop on renewable energy development in Vietnam was organized by the General Department of Energy under the Ministry of Industry and Trade, and the UN Development Program (UNDP).
Pham Trong Thuc, director of the renewable energy office under the General Department of Energy, told the workshop that the Renewable Energy Development Strategy aims to make renewable energy account for 32.3% of total energy consumption by 2030.
The strategy is expected to enable Vietnam to reduce greenhouse gas emissions by 25% in 2030, Thuc said. Most households will have access to modern, sustainable and reliable energy services with reasonable prices in 2030.
Thuc stressed priority will be given to proven technologies in the renewable energy fields, including hydropower, wind, solar, biomass and biogas. “The strategy aims to encourage and mobilize all resources from society and develop renewable energy with reasonable prices, to gradually increase the renewable energy share in the national energy production and consumption.
“This will help ensure less dependence on fossil resources and contribute to better energy security, climate change mitigation, environmental protection and sustainable socio-economic development.”
At the workshop, the German Agency for International Cooperation (GIZ) presented a wind energy development program in Vietnam. Meanwhile, UNDP shared its latest paper titled “Greening the Power Mix: Policies for Expanding Solar Photovoltaic (PV) Electricity in Vietnam.”
The UNDP paper highlights the advantages of solar PV power and recommended measures to boost this source of energy. It said solar PV power has little negative environmental, health and livelihood impact while its production can enable remote communities and islands, small and large businesses to improve power supply and reduce their electricity bills.
UNDP suggested regulating a “Feed-in-Tariff” (FiT) of 15 U.S. cents/kWh for mainland solar PV power plants, and 19 U.S. cents/kWh for power plants on islands, over a lifetime period of 20 years.
The organization also recommended financial support for on-grid and off-grid solar PV systems in remote areas and islands as well as incentives to reduce investment costs of solar PV power plants, ‘rooftop’ and community solar PV systems.
“Globally, the technical and financial aspects of renewable energy are changing positively and fast, and Vietnam must be poised to benefit from this,” said Bakhodir Burkhanov, UNDP’s Deputy Country Director in Vietnam.
“It needs policies and concrete guidelines to encourage adopting electric transport, bio-gas digesters and solar photovoltaic rooftop installations such as the one on the Green One UN House, which reduce our electricity bills while protecting the environment,” Burkhanov said.
Over 57,700 firms enter market in Jan-May
More than 57,700 enterprises have been established and resumed operation in the first five months of this year, up sharply from the year-earlier period, according to the Business Registration Agency under the Ministry of Planning and Investment.
Data of the agency showed that the country had over 44,740 startups with combined registered capital of VND349.46 trillion (US$15.6 billion) in the January-May period, increasing 24.1% and 59.3% year-on-year respectively.
Besides, operational firms registered an additional VND655.9 trillion for their expansion plans in the year to date, bringing the total new capital registered by businesses in the five-month period to over VND1,005 trillion.
The registered capital of new enterprises average VND7.8 billion in the first five months, a 28.4% pickup from a year earlier. These companies plan to recruit 532,000 employees, up 2.6% year-on-year.
Meanwhile, nearly 13,000 enterprises have been back to business in the year to May after a period of suspension.
According to the agency, the first five months saw an increase in the number of newly established firms in almost all sectors such as property with 1,076 companies (up 121.4%), healthcare and social services with 198 (up 81.7%), education and training with 993 (up 44.3%) and science-technology and advertising with 3,475 (up 37.1%).
However, there have been only 583 new businesses in the art-entertainment-recreation sector, down 26.5% versus last year’s same period.
Notably, an extra VND85.9 trillion has been registered for the real estate sector, up a hefty 456.3% year-on-year; VND15.26 trillion for the information and communications sector, up a staggering 383.2%, VND29.9 trillion for the science-technology and advertising sector, up 143.1%, and VND18.47 trillion for the power-water-cooking gas production and distribution sector, up 137.1%.
In January-May, the processing-manufacturing sector has recruited 254,455 new employees; sales, auto and motorbike repair 96,338 employees; construction 48,407 laborers and transport 25,144 people.
Data of the agency showed that 10,794 enterprises have suspended operation in the first five months. Over 4,600 firms have completed procedures for dissolution and 17,788 others have halted operation to wait for dissolution.
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