Home » Business » BUSINESS IN BRIEF 23/11

No optimistic signal for market: securities firms

Given the slight movement during last week and no optimistic news on macro economy, securities companies don’t expect any strong rallies on the equity market this week. The VN-Index closed last week at 385.71 points, falling 1.2 points on Friday alone but decreasing only one point for the whole week.

The dreary trade on the stock market has persisted for the last three months with similar daily scenario of low liquidity and indexes moving in a narrow range. Last week saw trade averaging out at 29 million shares a day, compared to an average volume of 31.2 million in the week before. On Friday, the southern market saw 102 stocks increasing and 98 falling with 25 hitting the ceiling prices and 41 tumbling to the floor prices.

Technical analysis of Ho Chi Minh City Securities Co. (HSC) shows that the investors are still cautious so the pressure of short-term profit taking will rise when shares that were bought at low prices will arrive investors’ accounts in the next days. The company gives neutral view on the market’s middle term movement.

Viet Capital Securities says that low liquidity is an indicator for a new recovery of the market. However, the market would face strong selling at the level of 390 points on the VN-Index, and if the market can’t break this level, it will start a short-term downtrend again, the broker said.

Meanwhile, technical analysis of Saigon Securities Co. (SSI) indicates that the VN-Index can continue rising if it can break the 388-389 level.

Saigon-Hanoi Securities Co. expects that the HCMC market would see slight increase today but given low liquidity, the company does not expect a strong momentum in the market for an uptrend.

Nguyen Son, head of the Department of Market Development under the State Securities Commission, told the Daily that the commission had taken many measures to help increase the market liquidity like applying market order, lengthening trading time, and reducing payment time to T+3. However, he said the technical measures hardly supported the market this time as it had suffered bad news from the macro economy like bad debts at banks and bad business results of companies.

The HNX-Index of Hanoi Stock Exchange last Friday rose 0.12 point to 51.81. However, compared to the previous day, the traded volume on the exchange declined by 28% to 19.9 million shares worth VND113.6 billion.

Listed firms lower business targets due to hardship

Over 30 listed companies have revised down their business targets for 2012 due to the economic situation that is described as more difficult than expected.

Many of those that have brought down their profit targets are construction firms, such as Tan Ky Construction and Real Estate Trading Corp. (TKC), Construction Joint Stock Company No. 2, No. 9 and No. 5 (VC2, VC9 and VC5) and Song Da Urban Investment Construction and Development Construction JSC (SDU). Most of them are facing troubles when the property market is frozen and many projects are put on hold.

Specifically, TKC is experiencing hardship as a number of its partners delay payments for completed projects. Therefore, the company will consult its shareholders on adjusting the after-tax profit target from VND12 billion to a mere VND1 billion.

In the first nine months of the year, TKC incurred a loss of VND790 million, so it has to make greater efforts in the final quarter to obtain a profit of VND1 billion as planned.

Several large companies listed on the Hochiminh Stock Exchange like FPT and Vinacafe Bien Hoa (VCF) have also revised down their business plans.

In particular, FTP has changed its pre-tax profit target to VND2.5 trillion, instead of VND3 trillion given in a resolution passed at the shareholders meeting earlier. Still, fulfilling the business plan for this year “is a real challenge for FPT”, said the analysis department of Viet Capital Securities Co. (VCSC).

According to VCSC, FPT recorded unsatisfactory business results in the first nine months of the year with a pre-tax profit of only VND1.7 trillion. VCSC forecast FPT could only earn a pre-tax profit of nearly VND2.4 trillion by the year’s end, not VND2.5 trillion as revised, explaining that the company’s profit from trading and system integration fell sharply in September.

Meanwhile, VCF has revealed an adjusted shareholders meeting resolution, with revenue goal brought down 17% against the plan passed in the year’s beginning. Specifically, the new revenue target is about VND2.3 trillion and that of after-tax profit is VND300 billion.

In the first nine months, VCF gained VND150 billion in after-tax profits, down more than 8% over the same period last year. To obtain the new target, the company must earn VND150 billion in profit in the fourth quarter, equivalent to the amount it earned in the first three quarters.

However, Pham Quang Vu, general director of VCF, told the Daily that his company would fulfill the new business plan by boosting production and stimulating consumption in this quarter.

While many companies map out specific new plans, some others are simply “trying not to make losses”. For example, TMT Motor Joint Stock Company (TMT) has pulled down its sales target from VND1 trillion to VND300 billion and profit target from VND15 billion to “trying not to make losses”.

The fact that companies have revised down their business plans reflects that the macro-economy has not improved as desired, said Dinh Quang Hoan, director of the corporate finance department of VCSC.

Meanwhile, many firms have constantly run into losses, facing the risk of being de-listed, but they do not announce to adjust down their business plans, he added.

Giving forecast for the rest of the year, Hoan said enterprises in food, consumer goods and rubber sectors would continue to make profits, while seafood firms would remain in troubles with price drops. Construction, real estate and finance companies would not achieve positive results as long as the macroeconomic situation has not prospered.

Answers yet to be provided for high inventory puzzle

Struggling enterprises are concerning the National Assembly, but a desired guiding light has yet to come.

Minister of Industry and Trade Vu Huy Hoang and State Bank Governor Nguyen Van Binh were grilled by many National Assembly delegates last week about helping Vietnamese enterprises to reduce high inventory levels and access low bank lending rates.

Hoang said: “I think that with solutions applied by the government and proposed by ministries and sectors to help enterprises find new output markets and enlarge credit access, we will be able to basically improve the situation.”

Meanwhile, Binh said: “We really sympathise with enterprises’ difficulties. I have met with many enterprises in 36 cities and provinces nationwide. Any well-performing enterprise will be given loans. Many commercial banks told me that they really wanted to give enterprises loans, but many enterprises were weak. So if they lent enterprises and if such enterprises became insolvent, banks would have more bad debts.”

He said the State Bank would combine with the ministries of Agriculture and Rural Development, and Industry and Trade, and localities to examine all types of products in inventory so that banks “can help enterprises.” “We are finding ways to reduce lending rates for enterprises.”

Meanwhile, National Assembly Chairman Nguyen Sinh Hung told the top legislative body that high inventories and high lending rates at 15 per cent, per year were “quite a burning and urgent issue now.”

“Enterprises’ difficulties in the industrial, construction and agricultural sectors, and other economic sectors have caused a phenomenon of stagnancy in the economy that is too weak to recover,” he said. “The problem now is how to boost credit growth, whose rate was 2.5 per cent by late October, while banks’ deposits grew 12 per cent.”

Truong Minh Hoang, representing southern Ca Mau province, said the existing inventory in Vietnam included 40 million square metres of paving stones, one million rest-room porcelain products, 300,000 tonnes of steel, 100,000 tonnes of glass and dozens of millions of tonnes of cement.
Minister of Construction Trinh Dinh Dung reported that by August 31, 2012, the property sector’s bad debt totaled VND203 trillion ($9.76 billion) and the property-related bad debt in Vietnam totaled VND1,000 trillion ($48 billion).

According to the General Statistics Office, the manufacturing and processing industry’s inventory by October 1, 2012 increased 20.3 per cent.

FPT Software enters German market

Vietnam’s leading information technology company FPT Software recently opened software outsourcing operations in Germany, aiming to develop it into one of its three key markets, besides the U.S. and Japan.

The company now has a presence in 12 countries.

Company general director Nguyen Thanh Lam said that the launch of the German branch was in line with the company’s strategy to develop services and new markets to achieve growth.

Germany, with around 3 million small and medium enterprises, was considered one of the largest markets with great potential, and the opening was a strategic move for FPT’s business in Europe, he said.

FPT in Germany will operate in the fields of consulting, managing and developing information systems, producing and distributing packaged software, developing application software, and training software engineers.

Truong Gia Binh, chairman and CEO of FPT Corporation, said that 50 per cent of FPT’s software outsourcing business currently came from Japan and they hoped to replicate the same model in Germany.

As of this year’s third quarter, the European market contributed 12 per cent of the corporation’s turnover. Last year’s figure was more than 10 per cent.

East Asia financiers to meet in Hanoi

The first East Asian Conference for Financial Stability will take place in Hanoi on November 27-28.

Vu Viet Ngoan, Chairman of the National Financial Supervisory Committee (NFSC), announced the plan at a press briefing in Hanoi on November 20.

He said financial stability and safety is an essential condition for enabling regional economies to grow steadily and stably. The conference will send the international community an unequivocal signal of Vietnam’s determination to restructure its economy and financial system.

Ngoan noted Vietnam hopes to demonstrate its responsibility for regional and international issues of mutual concern through the event.

The conference, entitled “Financial stability frameworks and supervision in changing environments”, will include a seminar and a plenary session.

The seminar will discuss three main themes: strengthening cautionary policies, improving financial safety standards, reinforcing financial foundations – crucial to East Asia’s stabilisation targets and financial stability in East Asia for sustainable economic growth in the region and the world.

The plenary session will talk about issues related to financial stability in East Asian financial stability in more detail, and encourage participants to share their experiences in financial supervisory roles and crisis response.

The conference will also focus on the timely exchange of economic information about the international financial market, the global situation’s impact on East Asian financial stability, the role of the regional East Asian economy in the global economic recovery, legal frameworks, appropriate models, and ideal supervisory and response capacity standards.

It will evaluate the condition of the East Asian financial market and encourage regional economies and international financial organisations to work in unison.

Attracting investors from EU

Vietnam National Oil and Gas Group (PetroVietnam) is keen to cooperate with foreign partners in key projects.

The aim is to go ahead with its restructuring plan that has been submitted to the Prime Minister for approval.

PetroVietnam’s leaders have estimated the total amount of investment capital they need, including state funding for several important projects, will reach US$40 billion by 2015.

Judging from challenges to the national economy in 2012, Director General Do Van Hau said PetroVietnam has proposed some solutions to attract foreign investors, particularly those from the EU. The group’s total assets are worth US$25 billion with its revenue growth hovering somewhere between US$4.5-5 billion a year.

With its total staff of 60,000, PetroVietnam annually produces 15 million tonnes of crude oil and 9 billion cubic metres of gas. It expects to exploit one million tonnes of crude oil from overseas sources in 2012 and will raise the level of oil reserves to 35-40 million tonnes in the following years by maintaining its annual exploitation of 15 million tonnes of crude oil and 15 billion cubic metres of gas.

There is a plan afoot to build two new pipelines connecting the region’s gas network and import gas for domestic production.

On November 14, 2012, PetroVietnam and the European Chamber of Commerce in Vietnam (EuroCham) co-hosted a seminar on investment promotion to introduce nearly 40 projects in five key areas: oil and gas exploitation, oil refinery and petrochemistry, gas industry, electricity industry, and high quality oil and gas technical services.

Le Thi Thu Huong, Deputy Head of PetroVietnam’s Investment and Development Department, mentioned a number of important projects such as LNG Thi Vai Warehouse (IMTPA), Nam Con Son 2 Gas Pipeline, Thai Binh No 2 thermal power plant, Hua Na hydro-electric power plant, Nhon Trach No 1 thermal power plant, Dinh Vu petrochemistry and fabric joint stock company, Phuoc An Port, and Dung Quat Shipyard.

Pham Quang Huy, General Director of Oil and Gas Securities Joint Stock Company, also briefed European investors on the financial opportunities of the PVN Index and PVN 10’s leading companies.

Eurocham President Preben Hjortlund said the chamber has increased its membership from 60 in 1998 to more than 750 so far. It is always keen to help strengthen trade and investment ties between Europe and Vietnam.

The participation of nearly 100 European businesses in the seminar, he said, has testified to PetroVietnam’s successful integration into the global market.

The effective cooperation between PetroVietnam and Premier Oil is considered a model for joint venture in the oil and gas sector.

In the long-term development strategy, PetroVietnam attaches great importance to both attracting foreign investment in the country and promoting investment cooperation overseas.
Most of PetroVietnam’s projects are focused on exploiting oil and gas and other white minerals, as well as trading petroleum overseas.

As of September 2012, PetroVietnam and its members’ total assets had reached US$5.283 billion with overseas investment estimated at US$1.814 billion.

The current level of oil reserves is equivalent to around 190.25 million tonnes and that of oil output to 2.250 million tonnes. Returns on oil and gas exploitation and trading hit US$1.032 billion and US$1.577 billion, respectively.

EEP Mekong promotes renewable energy development

A forum in Hanoi on November 20 discussed policies aimed at encouraging the development of renewable energy in the Mekong sub-region.

The forum, co-organised by the Ministry of Industry and Trade (MoIT) and the Embassy of Finland, intends to engender cooperation on the environment and energy among the Mekong sub-region nations.

Finnish Ambassador, Kimmo Lodevirta, said that the Energy and Environment Program (EEP), the Finnish Government’s policy designed to support the development of safe energy, is available in 25 nations around the world and contributes to the desired reduction of green house gas emissions.

Mekong sub-region nations such as Laos, Cambodia, Thailand, and Vietnam have implemented the EEP Mekong to promote renewable energy and the effective investment in renewable energy projects as a pathway to advanced technologies, improved capacity, and productive pilot projects.

The Finnish Ministry for Foreign Affairs and the Northern European Development Fund are committed to providing EUR7.9 million over the 2012-2016 period to safe energy projects and minimising water, soil, and other environmental pollution.

MoIT Deputy Minister Le Duong Quang emphasised the challenges Vietnam is facing, including the worsening fossil fuel shortage and climate change. It is crucial to devise policies promoting the development of this kind of safe energy, he said.

The forum facilitated the sharing of information related to potential solutions prioritising renewable energy in the Mekong sub-region and in Vietnam in particular. It is also an ideal location for partners to seek financial and technical support.

Pham Trong Thuc, Head of the Department of New and Renewable Energy Department under the MoIT, concurred with the need to perfect the policy mechanisms bolstering the development of renewable energy. Vietnam should establish a renewable energy fund to maximise the chances of success, he suggested.

He affirmed that the development of renewable energy is one solution to Vietnam’s increasing energy demands and the strain it places on maintaining energy security—especially concerning remote areas and islands.

Expo highlights ‘green’ building materials

The latest housing designs and property developments will be on display at the VIETBUILD 2012 international exhibition in Hanoi’s Vietnam Exhibition and Fair Centre.

The five-day event, to be opened on November 24, will introduce environmentally-friendly materials and energy-saving devices related to the housing industry.

The General Director of AFC International Exhibition Company, Nguyen Dinh Hung, told the media on November 19 that the exhibition will feature 1,026 booths from 241 domestic businesses, 42 joint venture companies and 23 foreign groups and enterprises.

Most foreign companies come from China, the Republic of Korea, Japan, Malaysia, Thailand, Italy, Indonesia, Hong Kong, Switzerland, Singapore, France, the US and India.

The event is expected to offer opportunities to enhance investment in the Vietnamese property market while providing customers with the latest technologies.

The exhibition will include the presentation of the VTOPBUILD and VIETOPRE awards to encourage quality improvements and creation of construction and real estate products.

Vietnam, RoK strengthen trade cooperation

Trade cooperation is seen as one of the highlights in bilateral relations between Vietnam and the Republic of Korea (RoK) after 20 years of the establishment of diplomatic ties.

Two-way trade turnover increased 26 times over the past 18 years, from just US$500 million in 1992 to US$13 billion in 2010, and jumped to US$18 billion in 2011, making the RoK the fourth biggest trade partner of Vietnam after China, the United States and Japan.

During the past ten months of this year, two-way trade maintained the growing pace with a total value of US$17.2 billion and is expected to hit US$20 billion before 2015.

Vietnam exports minerals, footwear, wood products, seafood and garment and textiles to the RoK of which, wood and wood products see a high turnover growth of 20 percent per year.

The RoK also ranks fourth among big importers of Vietnam’s seafood sector, followed by the US, European Union and Japan, making up 8 percent of the total value of seafood exports.

Thanks to the ASEAN-RoK Free Trade Agreement effective from 2010, Vietnam’s garment exports to the RoK in 2011 saw a tremendous increase of 50 percent, with the value of more than US$1 billion. The figure for the past 10 months of this year already reached US$906 million.

Vietnam imports computers, electronic parts, iron, steel, cloths and footwear raw materials from the RoK, of which computer and electronic spare parts account for the largest proportion with 17 percent.

USTDA muscles up power development

The US Trade and Development Agency is continuing to provide financial fuel for Vietnam’s power and communications development.

USTDA director Leocadia I. Zak last week told VIR that the agency had just approved a $600,000 technical assistance programme for the National Power Transmission Corporation of Vietnam (NPT) to assist NPT in developing a new information technology (IT) and smart grid roadmap.

“Hopefully implementation of this programme will be begun next year,” she said.

The programme, the second of this type between USTDA for NPT, would link a team of US’ experts from Tangible International of Virginia with NPT to expand and modernise Vietnam’s electrical grid.

“I am excited to see the outcomes of this new system, once implemented, that will enable NPT to effectively manage time-sensitive situations like line congestion or power fluctuations in order to better respond to its customers’ needs,” Zak said.

In addition to helping NPT develop the IT architecture for its smart grid implementation, the Tangible International team would also assist NPT in designing a telecommunications system that would enable the power company to identify and react to time-sensitive transmission situations on its large electric grid.

During US Secretary of State Hillary Rodham Clinton’s official visit to Vietnam in July 2012, US’ General Electric Company, in collaboration with USTDA, inked a $16.5 million deal with NPT.

Under the deal, GE would supply electricity transmission capacitors to NPT’s Power Transmission Company No.4 to double Vietnam’s existing power capacity through the upgrade of the country’s national backbone transmission system’s Pleiku-Phu Lam transmission line from 1,000 amps to 2,000 amps.

“The 500kV 500 kilometre Pleiku-Phu Lam transmission line is the backbone of Vietnam’s north-to-south power transmission,” said Dang Phan Tuong, chairman of NPT’s board of management. “When coming in operation in 2013, the project is expected to supply approximately 800 megawatts for the country’s southern region and better regulate its national energy grid.”

Under the terms of this deal, GE would supply six series capacitor banks to NPT and provide on-site supervision for installation testing and commissioning. The project utilises GE’s latest fuseless technology to enable a 100 per cent increase in the current capacity of the existing transmission line and installed infrastructure.

The US Export-Import Bank is financing the project. Shipping and installation of the capacitors at the three locations will begin in the second quarter of 2013, with commercial operation set to begin in the third quarter of the year.

$2.5bn Starlake ready to twinkle

THT Development last week officially broke ground on the biggest urban development project so far in Hanoi – the $2.5 billion Starlake.

Invested by Daewoo E&C and the Korea Development Bank (KDB), plans call for Starlake to become a modern and environmental friendly urban area for 25,000 residents located in the west of Hanoi.

The start of this large scale project was among a wide range of activities to celebrate 20 years diplomatic relations between Vietnam and South Korea.

According to Seo Jong Uk, chairman of Daewoo E&C, the brand name of the project was very meaningful. The Star represents for a symbol of a modern urban area and Lake represent for the mark of Hanoi’s West Lake and friendly living environment close to nature.

“A brilliant star sparkling in the sky of Hanoi and shinning on the waterfront ofthe West Lake represents the state-of-the-art first class urban area by the West Lake,” said Uk.

“We aim to develop Starlake into new model urban area of Vietnam which will represent for the future of Asian cities,” said Uk.

Starlake is envisioned as a new cultural hub with international commercial and financial centres that promote trade and the building of cultural networks. The project is in step with Hanoi’s master planning to 2030 with a vision towards 2050, as ratified by the prime minister in 2011.

Especially cultural international standard constructions which will be built in Starlake will be an exclusive example for the close cultural exchange between Vietnam and Korea, as well as international standard buildings will be offices for both two countries’ companies, he added.

Lee Kwon Sang, general director of THT Development company, representing for the investors said that with the brand name of Starlake the project will become a modern and Korean style urban area with ideal and environmental friendly living standard.

“Starlake’s brand mark colour is orange – the combination of yellow colour of Vietnam flag’s star and red colour of luxury and sophistication symbolising the sunset on the West Lake, which all together conveys a warm and thriving feeling,” said Sang.

According to Nguyen Huy Tuong, Deputy Chairman of Hanoi Municipal People’s Committee, investors had seriously studied the project and the implementation had been in a professional manner.

“We at local authority have highly appreciated the efforts of the investors to start construction of the project even right at the real estate market in its sluggish time, Tuong said, adding that the local government and its relevant authorities would reserve highest efforts to support the investors to push the project forward.

Starlake is built in a total area of 207 hectares belonging to Xuan La ward of Tay Ho district, Nghia Do ward of Cau Giay district and Xuan Dinh and Co Nhue wards of Tu Liem district.

The location is the nicest venue of Hanoi boundary by busy wards and next to the West Lake. Via two railways connected to the internal Hanoi centre, it takes only 10 minutes to get to Starlake from downtown or Noi Bai International Airport. The future connections can help Starlake become the major transaction centre of Asia.

In the total of 207ha, the investors reserves 90ha for road, promenade, parks, trees and lakes, more than 25ha of open space projects for the public service activities of the city and the new headquarters building departments will move on.

SHTP finally gets tough on delayed projects

Saigon Hi-Tech Park has withdrawn five investment certificates for delayed projects, including two projects with funding from Taiwan and Singapore, and reclaimed 10 hectares to give to new feasible projects.

Taiwan-funded Internet New City targets a multi-building complex with underground parking, conference rooms, leasing offices, exhibition halls and other amenities. The project got a licence from Saigon Hi-Tech Park (SHTP) Management Authority late 2007, started its construction in June 2009 due to financial distress but could not continue after all.

Singapore-funded fibre cable manufacturing plant invested by Vien Lien has also been cut off.
Three local projects that lost investment certificates include built-in factory invested by SHTP Development, TMA research and development centre of Tuong Minh Research & Development and the bonded warehouse project invested by Transforwarding Warehousing (Transimex Saigon).

“The projects in SHTP often have licences withdrawn after two years without implementation,” said Le Bich Loan, vice director of SHTP Management Authority. According to regulations, the licenced projects in SHTP have to start its construction within 12 months. The investors can enjoy a six-month grace period with suitable reasons approved by SHTP Management Authority.

Loan said the park authority would continue reviewing and withdrawing investment certificates of delayed projects to give chance for new feasible ones.

Some projects in list of withdrawal in the coming time includes Elcom’s research and development center and Vina Corporation’s Vinagame Software Service.

Many investors have explored SHTP for project locations but the 300ha phase one was nearly fulfilled, while the 600ha phase two is still waiting for funds approved by Ho Chi Minh City People’s Committee.

According to Le Hoai Quoc, director of SHTP Management Authority, about 10 investors are on the waiting list for locations in SHTP, including some big FDI projects.

$200m for nitrate plant

A consortium has scored a $200 million contract to build a low-density ammonium nitrate plant in northern Thai Binh province.

The group comprises of ThyssenKrupp Uhde, Toyo-Thai Corporation Public Company Limited, Toyo Vietnam Corporation Limited and Lilama 69-1 JSC.

The contract includes basic engineering, detail engineering, supply of all equipment and materials, construction and commissioning.

The project also comprises a nitric acid plant with a capacity of 500 tonnes per day and a tail gas treatment plant meeting high environmental standards.
The low-density ammonium nitrate plant, invested by Mining Chemical Industry Holding Corporation Limited (Micco) will cover 22.6 hectares in Thai Tho Industrial Park and cost $277 million.

Work on the plant started last November and is set to open at the beginning of 2015, when it will have a capacity of 200,000 tonnes per year.

Paper plan looks wrapped up

Hong Kong-based Lee & Man Paper Manufacturing has broken its promise to boost its $600 million project to come online in June 2013 due to tough   financial situation.

A representative of Lee & Man last week reported that its paper plant could officially run in December 2013.

He said in meeting with local Hau Giang People’s Committee that the project’s delays were the result of the global economic recession and lack of staffs. It plans to call for tender in February 2013 then starting its construction soon.

Lee & Man got investment certificates in 2007 to build two factories in Song Hau Industrial Park in southern Hau Giang province, which could produce 150,000 tonnes of pulp and 420,000 tonnes of packaging paper.

Currently, Lee&Man smoothed a 82.8 hectare site, imported machines and built three warehouses, internal roads and a small workshop, according to Hau Giang Provincial Industrial Zones Management Authority.

Nguyen Thanh Nhon, deputy chairman of Hau Giang Provincial People’s Committee, said the province would have strongly supported the company’s proposal.

“The company should also increase recruitment. Currently, the company’s recruitment is too slow at only 16 people with 150 people to be trained,” he said

Previously, Hau Giang Provincial People’s Committee announced to revoke investment certificate of Lee & Man Paper if it failed to detail construction timeline of long-delayed manufacturing project.

Lee & Man Paper Manufacturing is one of the leading paper manufacturers in China, specialising in the production of a range of linerboard and corrugating medium used to produce cardboard boxes for packaging purposes.

Currently, the paper manufacturer has four paper production plants in China, located at Hongmei and Huangyong in Dongguan, Changshu in Jiangsu and Yongchuan in Chongqing. The project in Hau Giang is the first manufacturing facilities Lee & Man has outside China.

Power investors set to enter last chance saloon

The Vietnamese government has announced a deadline for investors of the 1,320 megawatt thermal power plant Van Phong I in central Khanh Hoa province.

It will urge the investors to compile the build-operate-transfer (BOT) contract of the project before June 2013, or risk the project falling to other interested and potential investors.

This decision came after a recent meeting that reviewed the development of power plants under the umbrella of the Seventh Power Master Plan approved last July.

Van Phong 1 is within the 2,640MW Van Phong coal-fired power center costing $3.8 billion which will be built under a BOT contract for a lifespan of 25 years. The joint venture investors are Japanese Sumitomo and Vietnamese Hanoinco Company.

The investors were required to accelerate implementation of the 1,320-MW plant to prevent possible negative impacts on social security and development of the Van Phong Economic Zone as the site has been cleared for construction, the local authorities said on its official website last week.

Sumitomo’s chief project developer, Nguyen The Vinh, told VIR that Sumitomo was still eager to move forward on the 1,320 megawatt thermal power plan Van Phong I.

“We are trying our best to get back to negotiating plans soon. Only one or two months later, we expect to start negotiating BOT contract so we would not miss this set deadline,” said Vinh.

Going forward, Sumitomo, together with the Vietnamese governmental agencies concerned, will conclude formal project contracts, including BOT contract. Vinh added that Sumitomo would also consider arranging project financing from Japan Bank for International Cooperation and other banks, while selecting contractors for the plant construction

Negotiations over prices of selling electricity and the conversion of foreign currency are considered the hardest jobs for foreign investors in Vietnam’s power sector and such negotiations could takes years to complete.

Under the Document 1604/TTg-KTN issued last year providing incentives for developing BOT power projects in Vietnam, the Vietnamese government agreed to provide guarantees for conversion into US dollar for 30 per cent of a project developer’s revenue in VND. But the investors of Van Phong I project have requested to 100 per cent foreign currency exchange guarantee.

Though the Vietnamese government has been calling for foreign investments into the country’s power sector, only three foreign investors have been so far involved in BOT power plants in Vietnam.

Garment, textiles still a hot sector

A series of recent new foreign investments show that  Vietnam’s garment and textile industry remains one of the nation’s hot business sectors thanks to an abundant labour force and anticipated trade agreements.

According to Binh Thuan Provincial Industrial Parks Management Authority, Korea’s Hansoll Textile has worked with the local authorities to find a location for its textile manufacturing plant valued at around $200 million including weaving and dyeing processes.

Japan-funded NSK Vietnam’s garment supporting industry plant in Long Hau Industrial Park in southern Long An province also plans to expand its investment on raw materials supply, Tao Takeda, director of NSK Vietnam told VIR.

Vietnam National Textile and Garment Group (Vinatex) has implemented its three key projects for production of raw materials for garment and textile makers including yarn and woolen.

Vietnam’s garment and textile exports have had 25-28 per cent growth rates annually in the recent years. Vietnam should lure foreign investment focusing on yarn manufacture, weaving, dyeing and premium products, said Vu Duc Giang, president of Vietnam Textile and Apparel Association (Vitas).

Trade agreements between Vietnam and other countries, especially the Trans-Pacific Partnership (TPP), will bring benefits to Vietnam-located garment exporters, especially if Vietnam invests more in weaving and dyeing stages. This investment requires large funds and it is an advantage of foreign companies, said Nguyen Van Tuan, Vitas’ deputy general secretary.

This year, Vietnam has seen other big foreign investment projects in garment and textile industry.
In September, China’s Sunrise Shengzhou inked a deal with Vietnam’s Thien Nam Investment and Development to establish a joint venture to call for Thien Nam Sunrise Textiles to build a $24 million factory in northern Nam Dinh province’s Bao Minh Industrial Park, with the production capacity of 300 tonnes of knitted fabrics and one million metres of woven fabrics per month.

Previously, Korea-funded Kyung Bang Vietnam has spent $40 million to implement the first phase of a spinning factory with the capacity of 6,000 tonnes annually in southern Binh Duong province’s Bau Bang Industrial Zone.

Hong Kong’s Texhong Company is building a spinning factory valued $300 million in the Hai Yen Industrial Zone in northern Quang Ninh province.

Vinatex has also joined forces with Japanese Itochu to set up a joint venture to run a 50,000 spindle factory, capitalised at $120 million in northern Nam Dinh province’s Bao Minh Industrial Zone.

According to Nguyen Phuong Lan, vice director of Dong Nai Provincial Industrial Parks Management Authority (Diza), Dong Nai is home of some big garment and textile investors such as Formosa, Hansoll and, Texhong Affordable.

“Garment and textiles will continue to be the important sector in Vietnam in the next 20 years because Vietnam will take time to improve the quality of its labour force for sectors with a higher skilled labour demand,” Lan said.

According to the Ho Chi Minh City Export Processing and Industrial Zones Management Authority (Hepza), licenced projects of garment and textile in Hepza recently were to churn out premium product.

While Vietnam is a good location for labour-intensive businesses, Thai entrepreneurs should be sure to build their factories in locations that have an adequate labour supply, said Santi Jawtrakul, general manager of Alliance One Apparel Co, the Vietnamese subsidiary of Thailand’s Liberty Garment.

The Alliance One unit started operating a $15 million apparel plant in 2007 in southern Ben Tre province’s Giao Long Industrial Park, having 4,700 employees. It recently built a $5 million second factory in the same area, which employs 1,800 workers.

According to Giang in the first nine months of 2012, Vietnam’s garment and textile exports were valued at $12.6 billion. Vietnam targets the whole year export of $17 billion with expectation to reach $20-21 billion and $25-27 billion in 2013 and 2015 respectively. Vietnam aims to be among top three biggest garment and textile exporters globally in 2020.

Vinachem scales back four major projects

State-owned Vinachem is scaling back investments in four key projects in 2012 due to a dearth of capital.

It will reduce the total investment by VND1.454 trillion ($70 million) for its 2012 investment plan with four out of seven big projects having their wings clipped.

The projects are the expansion of Ha Bac urea plant, Southern Rubber Industry’s radial tyre project, the second DAP fertiliser production project and a project to expand the group’s DAP fertiliser production capacity to about one million tonnes per year.

The northern Bac Giang province-based Ha Bac urea production expansion project’s investment capital will be cut from $199 million to $73 million. The project started construction in 2010 and is expected to produce 500,000 tonnes of urea per year by 2014.

The fund for the second DAP project in northern mountainous Lao Cai province will fall from $44.8 million to $38.46 million.

A Vinachem source said that the investment capital for the group’s fertiliser projects was mostly mobilised from Vietnam Development Bank and Vinachem’s funds, but the bank had not disbursed enough required funds for the projects.

He said most of the group’s key projects in 2012 faced delays of more than six months due to difficulties in selecting contractors and site clearance issues.

Notably, Vinachem’s Ha Bac Urea project, with the total investment of $568.6 million, is six months behind schedule due to delayed site clearance.

In addition to supervising and speeding up the progress of key projects, Vinachem is focusing on restructuring the group, including equitisation, in line with its detailed plan submitted to the Vietnamese government for approval next year.

From January through September this year, Vinachem’s accumulated revenue was VND32.96 trillion ($1.58 billion) up 9.4 per cent year-on-year and it earned the profit of VND2.27 trillion ($109 million) or 84 per cent of the year’s set plan.

In the final quarter of this year, Vinachem expected to gain VND10.332 trillion ($496 million) in revenue and the profit of VND950 billion ($45.6 million), unchanged from last year’s corresponding period.

GE to open engineering center in city

The U.S.-based General Electric (GE) will establish an engineering center in HCMC which will train around 200 oil and gas engineers in the first phase, according to GE vice chairman John G. Rice.

At a meeting with HCMC vice chairman Le Minh Tri on Monday, John G. Rice said that if receiving approval from the city’s government, the center would train high-quality human resources not only for projects of GE in Vietnam but also for other countries in Asia.

Vice chairman Tri suggested GE to develop the center in Saigon Hi-Tech Park in District 9, and in such a case, the investment license will be given within 30 days.

Currently, only 300 among 900 hectares in the park have been used by 63 projects worth a combined US$2.4 billion.

Rice said that the center would be soon constructed and come into operation late next years.

GE has established several projects in Vietnam.

The plant producing electrical and energy equipment in Nomura Industrial Zone, the northern port city of Haiphong, is a successful project of GE since its presence in Vietnam in 1993.

Since 2009, GE has invested a total of over US$110 million in its plant in Haiphong City which employs 600 engineers and skilled workers. Wind turbine generators and other energy products produced in Haiphong are exported to manufacturing and service centers of GE worldwide, and the plant’s export value has so far reached some US$271 million.

Early last year, GE signed an agreement with Cong Thanh Group to supply equipment and solutions for energy, fertilizer and infrastructure projects of Cong Thanh like the 600-MW thermal power project worth over VND13 trillion.

Key business fields of GE in Vietnam include oil and gas, power and water, energy management, healthcare and aviation.

(Vietnam Net)

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