M&A makes up majority of foreign capital inflows
Some US$6 billion out of US$7.63 billion in foreign investment capital pledged to HCMC last year came from capital contributions, share acquisitions and purchases of stakes from domestic businesses.
HCMC vice chairman Le Thanh Liem said at a conference in Binh Duong Province on February 14 that the pledged investment capital from foreign investors for HCMC last year picked up by 15.59% against the previous year. Of these, there were 1,060 new projects, with total registered capital of US$811.68 million, and 244 projects with additional capital of over US$835 million.
Last year also saw 3,283 cases in which foreign investors received approval to contribute capital, buy shares and contribute capital to domestic firms, with registered capital totalling US$5.99 billion.
With these results, HCMC received around 60% of foreign capital.
According to Liem, the 2014 investment law has provided a favorable legal corridor for foreign investors to proceed with mergers and acquisitions (M&As).
There have been continuous increases in the number and value of these investments, with only US$1.5 billion received in 2016, US$3.68 billion in 2017 and almost US$6 billion last year.
Liem noted that registered capital through M&As in HCMC had so far reached US$10 billion, 22% of the total foreign capital the city has attracted since 1988.
Also, in HCMC private investments are overwhelming foreign investments. Liem pointed out that the amounts of private capital and foreign direct investment (FDI) capital were almost the same, 29% and 29.5% in 2000, but 68.1% and 15.6% in 2015.
Regarding absolute values, private investments in the city have risen 33-fold, from VND7.4 trillion to VND250 trillion, whereas FDI capital has soared by 7.45 times, from VND7.6 trillion to VND56 trillion.
As shared by Liem, in the past, FDI businesses tended to dominate major property projects, which required heavy investment and advanced construction technology, but local businesses are now able to compete and even buy some projects owned by FDI firms.
On a national scale, Liem said that many economic groups have grown rapidly, dominated the markets and competed with FDI firms in areas where Vietnam is often weaker such as telecoms, automobile manufacturing and electronics manufacturing.
This, according to Liem, has confirmed the position and role of domestic firms in the new age.
However, Liem raised the issue of whether FDI attraction policies are no longer able to maintain their effectiveness as they once did.
He also highlighted the need to build a separate policy to attract special partners. “We have attracted many large investors to Vietnam, but what we have not been able to do is get multinational companies to base their headquarters or research and development wings in Vietnam.”
This is partly due to the fact that Vietnam’s investment environment is not ripe enough to be appealing and the country has yet to impose drastic measures to attract special partners, Liem added.
Last month, the Ministry of Planning and Investment coordinated with the Government Office; relevant ministries and agencies; and the governments of Haiphong, Bac Ninh and Hanoi to organize meetings on foreign investment attraction. These meetings, chaired by Deputy Prime Minister Vuong Dinh Hue, were intended to gather the opinions and proposals of local governments on foreign investment policies.
The meeting in Binh Duong on February 14 was attended by more than 650 representatives of the Central Economic Commission, ministries and agencies, governments of southern localities and authorities of economic zones, industrial parks, associations and investment organizations.
Pepper prices at record lows during harvest season
A local farmer harvests pepper in this file photo. The pepper prices in Ba Ria-Vung Tau Province saw a sharp decline, at VND45,000-VND46,000 per kilogram
The price of pepper has declined to a record low of VND45,000-VND46,000 per kilogram as the harvest season has begun in the southern province of Ba Ria-Vung Tau. The sharp price fall has provoked concern among local pepper farmers, VietnamPlus reported.
The pepper harvest in the province started at the end of the Tet holiday. Nguyen Tan Linh, residing in the province’s Kim Long Commune, Chau Duc District, said that his family had an abundant harvest of pepper this year when the one-hectare garden yielded over four tons of the crop, but their happiness was short-lived as the pepper prices tumbled.
The sharp pepper price slump, which was attributed to the world pepper price drop and the large pepper inventory in the province, saw many farmers incurring heavy losses. Also, the pepper prices traded in the province are forecast to remain low in the coming time, according to Le Quy Thinh, deputy head of the district’s Agriculture and Rural Development Division.
The concerns heightened when local farmers had to pay high costs to hire workers to harvest the pepper, due to the severe shortage of manpower, Thinh said. Some 6,000 hectares of pepper-farming land among 7,000 in the district are ready for harvesting, with the total yield reaching an estimated 10,000 tons.
Many people in rural areas had flocked to major cities to find work, resulting in a serious shortage of manpower for harvesting the pepper. Meanwhile, a surging number of households are growing pepper plants, Thinh explained.
To cope with the manpower shortage, the district’s local authorities on February 13 asked the competent agencies to mobilize human resources to support local pepper farmers with the harvest.
Aside from Chau Duc, the district of Xuyen Moc, one of the largest pepper-farming localities in the province, has faced the same manpower shortage. The current costs for hiring workers to harvest pepper in Xuyen Moc fluctuates between VND180,000 and VND200,000 per person per day.
Regarding Ba Ria-Vung Tau Province, it has total pepper farming land of 13,000 hectares, with more than 10,000 hectares currently entering the harvest season.
More funding needed for Southern Key Economic Region
The Southern Key Economic Zone needs special policies to attract foreign direct investment (FDI) and improve linkages between localities to ensure sustainable development, experts have said.
The Southern Key Economic Region includes Ho Chi Minh City and the provinces of Binh Phuoc, Tay Ninh, Binh Duong, Dong Nai, Ba Ria-Vung Tau, Long An and Tien Giang.
The region accounts for only 8 percent of the country’s area but plays a leading role in its economic development as it makes up 60 percent of the Government’s revenues.
The region ranks highly in FDI attraction, accounting for 50 percent of the capital and 60 percent of projects of the entire country.
However, the region’s technical and social infrastructure has not met socio-economic development needs, experts said.
Dr Du Phuoc Tan, head of the urban management and research division at the HCM City Institute for Development Studies, said the region needed a huge amount of funds each year to develop road infrastructure, but the funds allocated by the government were insufficient.
“The Government’s finances are limited, so we need to look for other sources of capital,” he said.
According to statistics from the Ministry of Transport, around 300 trillion VND (12.9 billion USD) is needed to build road infrastructure in the region.
Tan said that policies for financing traffic infrastructure linking the city and provinces in the region and elsewhere in the country are limited, and the Government should issue more “breakthrough policies”.
A transport development plan in the region by 2020 envisages building more new expressways such as between Bien Hoa city in Dong Nai province and Vung Tau city in Ba Ria-Vung Tau province, between HCM City and Binh Phuoc province’s Chon Thanh district passing through Binh Duong province’s Thu Dau Mot city, between Long An province’s Ben Luc district and Dong Nai’s Long Thanh district, and between HCM City and the Moc Bai international border gate in Tay Ninh province.
Many other waterway transport projects are expected to be added to the plan.
With a leading role in the region, HCM City has proposed many solutions to mobilise capital for socio-economic development not only for the city but also for the whole region.
In 2010, the city government issued a decision on the establishment of the HCM City Financial Investment Company (HFIC).
To date, HFIC has attracted investment in major infrastructure projects in the city to ensure efficient use of State capital.
HFIC has provided credit for 131 infrastructure projects in the city with a total investment of more than 14 trillion VND with a credit limit of 6.076 trillion VND in key fields such as technical infrastructure (33 percent), health (22 percent), education (41 percent) and others (4 percent).
HFIC has also managed a number of funds from the city budget such as a power grid renovation project; science and technology development fund; information technology human resources development fund; and pollution reduction fund.
It has also given loans to social and political organisations with total disbursement value of 2.064 trillion VND, while ensuring debt collection in a timely manner.
Le Thi Huynh Mai, deputy director of HCM City Department of Planning and Investment, said the city government should issue government bonds to mobilise investment capital.
The department will seek funds from the private sector for infrastructure projects, she said.
She said the department would continue to seek potential investors for all sectors through public-private partnerships (PPP).
The department will also connect investors with banks and credit institutions, and help businesses access loans and simplify administrative procedures.
Binh Duong province has proposed solutions to attract local and foreign investment by creating a favourable investment environment.
The province has improved road infrastructure significantly to enhance connections with HCM City and surrounding provinces, developed concentrated industrial zones (IPs), and attracted labour resources from provinces and cities in the country.
As of the end of 2018, the industry-service sector had accounted for 88.2 percent of Binh Duong province’s economic structure, while budget revenue collection had reached 50 trillion VND and per capita income 130.8 million VND per year.
The province has no poor households, according to national criteria.
Meanwhile, Dong Nai province has shifted to attracting FDI from big corporations, investment projects in high-tech fields, and supporting industries instead of projects using outdated technology.
Improved infrastructure and consistent land planning have helped Dong Nai attract investors.
In the past five years, Dong Nai has attracted more than 1.7 billion USD of FDI each year.
In 2018, Dong Nai had 27 trillion VND of domestic investment and 1.85 billion USD worth of FDI.
Mai Van Nhon , deputy head of the Dong Nai Industrial Zone Authority, said the province has provided many solutions to support businesses.
Every year the province organises many dialogues to solve obstacles for businesses. Dong Nai also works with other localities with large labour resources to support enterprises to recruit workers.
Dong Nai has also furthered administrative reform to attract more investment in the province.
In Binh Duong, in the 2011-15 period, total investment for road infrastructure reached more than 98 trillion VND, accounting for 37.3 percent of the total capital, of which the budget capital accounted for only 24.8 percent with the rest coming from other economic sectors.
The capital source is primarily for investment in transport infrastructure and construction of industrial parks.
Currently, Binh Duong province has 29 IPs with a total area of 12,7ha, of which 27 IPs are operating with leasing area of 80.8 percent.
Phu Huu Minh, deputy director of the province’s Department of Planning and Investment, said mobilising investment from the private sector in transport infrastructure and industrial parks had helped attract more investment.
To date, the province has 36,379 domestic enterprises with a total registered capital of 296.989 trillion VND and 3,509 FDI projects with a total investment of 32.2 billion USD, contributing greatly to the province’s socio-economic development.
Recently, Binh Duong hosted the Horasis Asia Meeting 2018 to promote its potential with international partners, improve its management capacity, and apply advanced technologies to implement its smart city.
The event offered local enterprises an opportunity to network with international partners who are senior founders, general directors and CEOs of leading companies from around the world.
Binh Duong was also chosen to host the 2018 World Technopolis Association Summit in 2018.
Long An province has attracted about 11,748 enterprises investing in the province, including 951 FDI projects.
In 2018, the province’s economic growth reached 10.36 percent; per capita GRDP reached 61 million VND per year; and the poverty rate fell to less than 2.92 percent.
The province’s total State budget revenue in 2018 reached 13.83 trillion VND, topping the Mekong Delta region.
According to a Government master plan, the Southern Key Economic Region needs total capital of 6.54 quadrillion VND for its economic development in the 2015-20 period.
Total budget revenue of the region accounted for 41.3 percent of the country’s total budget revenue.
In 2016, localities in the region had an economic growth rate of 1.5 times the average level of the country, contributing 60 percent of the national budget revenue.
Con Dao Islands resorts, hotels struggle to recruit staff
Con Dao Islands businesses are unable to hire staff despite flourishing tourism, with people preferring to work on the mainland.
Almost a week after Tet, Vietnam’s longest holiday of the year, resorts and hotels in Con Dao, a 16-island archipelago off the country’s southern coast, are looking to hire hundreds of employees for various positions including managers, waitresses and tour guides.
The Poulo Condor Resort on the island is looking for 33 new employees for 14 positions, while the Saigon Con Dao Resort and the Six Senses Con Dao Resort are looking for seven new staff each.
Phuong Ly, head of recruitment at Saigon Con Dao Resort, said that more resorts and hotels are being built on the island but there are few experienced staff available to work in them.
“The local authority does provide training courses, but not many participate. Most staff are young people, so they jump between jobs very often.”
Smaller businesses are also looking for people. A café on Pham Van Dong Street is looking for 32 staff, offering bonuses, meals, accommodation, social insurance and annual travel to the mainland.
Thuy, owner of a local seafood restaurant, said businesses start looking for staff in March when tourists start arriving in large number.
“But this year, many businesses are already short-staffed so we are already searching for people as the number of tourists has been rising. Last year, a tour guide could earn up to VND30 million ($1,296) a month during peak season.”
Con Dao is 180 kilometers away from the shores of southern Ba Ria- Vung Tau Province, and accessible by air and boat.
Industry insiders said that attracting people from mainland to Con Dao to work is a challenging task given the long distance from the shores while most people don’t want lower income jobs like serving in restaurants, driving taxis or guiding tours.
The high cost of living on the island is another reason that people prefer to work on the mainland, they said.
Con Dao served as prison islands for political prisoners during the French colonial era, and in later years the Saigon regime imprisoned opponents of the regime in the infamous cells known as the “tiger cages”.
The old prison buildings are still standing and are open to the public as is a small museum tracing Con Dao’s history.
Con Dao also boasts pristine natural beauty with forested hills, deserted sandy beaches and extensive coral reefs.
Last year, Con Dao welcomed over 286,000 tourists, up 17.31 percent from 2017.
Vietnam’s pepper output estimated at 200,000 tons in 2019
Vietnam is predicted to produce roughly 175,000 tons of black pepper and 25,000 tons of white pepper over the course of 2019, maintaining its spot as the largest producer and exporter of pepper, according to the International Pepper Association (IPC).
Experts suggest top priority should be given to improving the quality of pepper exports.
The IPC also predicted the nation’s pepper output would decrease along with other leading global exporters such as Brazil, Indonesia, and India during 2019 against 2018’s figures.
In January, Vietnam raked in US$46 million from overseas shipments of 15,000 tons of pepper, up 13.5% in value and a 19.5% rise in volume compared to the previous month.
The price of pepper exports in January stood at US$3,067 per ton on average, a 5% drop against last December and 23.5 per cent on year.
Vietnam now exports 95% of its annual pepper produced. Therefore, experts warn that the quality of pepper exports must remain a top priority with regard to the production chain.
Greater efforts must be made to foster alliances between domestic firms, importers, and the World Spice Organisation for the purpose of increasing sales and improving product quality.
Toll-fee transparency will ensure all stakeholders’ interests
Toll fee collection, either at road projects developed by private investors or expressways built by a State-owned enterprise such as Vietnam Expressway Corporation (VEC), has long been an issue of controversy. There have been hundreds of protests by drivers against collectors over what are claimed to be unreasonable locations of tollgates or the time length of collection, and there have also been dozens of inspections launched by State agencies into toll-gate operators over suspected irregularities regarding costs and revenues.
They key reason is the lack of transparency.
In the latest incident in which robbers broke into a tollgate of the HCMC-Long Thanh-Dau Giay Expressway and snatched VND2.2 billion two weeks ago, the issue of transparency – or its absence – has resurfaced when local media cast doubt on the real daily revenue of VEC as the expressway operator. VEC later announced that its revenue from the expressway amounts to some VND3.2-3.4 billion a day, but its revelation still fails to convince a doubtful public. The dispute has been so noisy that the Directorate for Roads of Vietnam has decided to launch an inspection into the fee collection at the expressway, starting today, February 18.
Enhancing transparency does not look like an insurmountable obstacle, especially in the digital era when technical solutions are readily available to address all demands of supervision. The only problem is the reluctance from all relevant sides – from the State to investors and even road users – to apply technological advancement.
At numerous tollgates across the country, drivers still pay the toll fee in cash and get a paper ticket. On expressways operated by VEC, the technological application is a bit better when drivers are given a smart card upon entering the road and are charged for the distance traveled when exiting the road. However, given such practices, cheats and frauds cannot be ruled out, which is the reason why State agencies have to closely supervise operators, and in turn, operators take measures to oversee their employees.
The Directorate for Roads of Vietnam currently supervises tollgate operators on a periodic or ad-hoc basis, and compare revenues upon inspections with revenues reported by operators to spot differences, if any, according to Tuoi Tre. Meanwhile, VEC as an operator regularly cross-checks its employees and collectors, and each quarter, VEC would make a report to higher transport authorities on the number of vehicles and revenues.
Such manual ways of toll-fee collection and reporting do not ensure transparency, and can hardly pinpoint all cases of deliberate fraud or cheating by collectors or employees.
For years now, authorities have pledged to apply the Electric Toll Collection System (ETC) to facilitate a smoother movement of vehicles on toll roads, help operators cut labor cost, and enhance transparency, as all data of revenues and vehicular movement will be stored and can be retrieved for supervision any time. However, while State agencies lack determination to enforce the technical application, and tollgate operators are lukewarm to the new mode, even road users are still reluctant in using the ETC solution. To date, only 18% of nearly four million autos nationwide have been attached with an ETC tag, and on most toll roads, the single ETC channel has always been vacant while drivers queue up along other channels to pay cash.
As transparency has been a source of frustration, it is high time the State gets tough on applying new technology – which is not merely limited to the ETC – to ensure that benefits and interests are safeguarded for all stakeholders, from the State to the investor and the people.
Investigators prosecute six cases in DongA corruption scandal
Tran Phuong Binh, former general director and vice chairman of HCMC-based DongA Commercial Bank
The Investigative Police Agency, under the Ministry of Public Security, has filed six new cases involving 10 former members at the HCMC-based DongA Commercial Bank (DAB) under various charges, as part of a broader probe into a high-profile economic corruption case at the bank, a source told Thanh Nien Online newspaper.
PM approves in-principle planning adjustment in HCMC
Prime Minister Nguyen Xuan Phuc has given his in-principle approval for the adjustment of a general master plan for HCMC to help the city develop in a fast but sustainable manner, reported the Government news website.
The prime minister called on the HCMC People’s Committee to cooperate with the relevant agencies to complete the tasks and adjustments related to the general planning process for the city.
Bidding will be set up to select a competent consulting unit to handle the review, assessment and formulation of zoning adjustments. Later, the Ministry of Construction will evaluate these adjustments in line with prevailing regulations.
As the economic hub of the country, the city will seek to maintain its development tempo, according to the municipal government.
Therefore, the master plan must be attractive to businesses and acceptable to the people. The plan should also be open and not based on set administrative boundaries for urban and suburban districts.
The local government will also introduce strict management regulations – combining planning with accountability for its leaders – to put the revised master plan into practice.
A leader of the HCMC Department of Planning and Architecture said at a conference in December that the revised master plan is expected to transform HCMC into a smart city, develop a creative urban area in the eastern part of the city, and build a sea tourism area in the outlying coastal district of Can Gio.
The highlights of the plan include combining zoning with human capital development and devising an appropriate urban structure to ensure technical infrastructure development, adapt to climate change and prevent flooding.
By 2045, the local government should be able to create a highly competitive environment; improve its infrastructure system; develop urban spaces that can minimize the effects of climate change; boost the efficiency of land use; and renovate and develop existing urban centers and satellite towns to minimize population pressure.
In a related development, the country’s capital Hanoi and HCMC remain among the global Top 10 most dynamic growing cities in the Short-Term City Momentum Index 2019 of the global real estate advisor Jones Lang LaSalle (JLL), which tracks socioeconomic and commercial real estate growth in 131 cities over a three-year period.
Hanoi was ranked third, while the southern metropolis was ranked eighth, making Vietnam the strongest performer, with two cities ranking the highest in ASEAN, stated JLL.
In its report, JLL noted that the two cities have performed very well to achieve socioeconomic momentum, with fast-growing populations and economies.
HCMC is generally viewed as the more business-friendly destination, attracting more overseas investment along with a higher corporate presence, whereas Hanoi has lagged commercially but is a city that is swiftly evolving, according to the report.
On the real estate front, Vietnam has “a small real estate investment market struggling with issues such as low transparency and a limited volume of investment grade stock,” JLL added.
However, steps are being taken to improve transparency, such as providing enhanced access to the land registry, better valuation practices and increasing the application of the green building certification system, the consulting firm remarked.
More advance capital sought for metro line No. 1 project
The Management Authority for Urban Railways of HCMC (MAUR) has proposed the city government advance an additional VND2.158 trillion (US$92.6 million) from the city’s budget to pay the contractors of the metro line No.1 project this month, Sai Gon Giai Phong newspaper reported.
At a meeting on February 14 with HCMC vice chairman Tran Vinh Tuyen on the progress of the metro line No.1 and No. 2 projects, MAUR director Bui Xuan Cuong said that the metro line No. 1 project was 62% complete. The contractors of the project had demanded a payment of almost VND2.5 trillion. However, only VND323.5 billion had been paid by January 31.
Cuong also proposed appointing staff for a company that would take charge of operating and maintaining the two metro lines when they are in service. The municipal government established the company on December 1, 2015, but it has yet to begin operations, Cuong added.
Speaking at the meeting, Tran Vinh Tuyen asked the municipal Department of Finance to consider MAUR’s proposal and told the Department of Home Affairs to send the city government a plan for appointing staff for the company.
He reiterated that the two projects must be executed on schedule.
The city’s first metro line will stretch 19.7 kilometers from Ben Thanh Market in District 1 to Suoi Tien Park in District 9, consisting of a 2.6-kilometer underground section and a 17.1-kilometer overhead section, with three underground and 11 elevated stations.
In 2009, HCMC approved the total investment of the project at VND17.388 trillion. The fund was later revised upward to VND47.33 trillion.
The city government has used its own budget to advance payments totaling a combined VND3.27 trillion for the project since September 2016.
Prior to the Tet holiday, MAUR asked the city government for an additional advance of VND2.25 trillion.
As for the second metro line project, the city is conducting site clearance work and holding tenders to choose the investors for the electronic and mechanical system package and the package of tunnels and underground stations.
The route will stretch nearly 20 kilometers and connect Thu Thiem New Urban Area in District 2 with Tay Ninh Coach Station in neighboring Tay Ninh Province.
In the first phase, the city will develop an 11.3-kilometer section running from Ben Thanh Market in the downtown area to Tham Luong Depot in District 12, including 9.3 kilometers of underground track.
Its investment is expected to soar to VND47.89 trillion from the VND26.12 trillion approved in 2010.
Mango put on Vietnam Airlines in-flight menu
Cat Tuong Agricultural Processing and Production Company said Hoa Loc mango, a fruit specialty of the Mekong Delta province of Tien Giang, is now put on the menu of Vietnam Airlines, starting today, February 14.
This allows the province to promote its fruit specialty to local and foreign customers, said Le Van Nghia, permanent vice chairman of Tien Giang Province at the product launch on February 14.
Nghia said that Tien Giang has 1,500 hectares under mango farming, with annual output of 35,000 tons. “This fruit got a certificate of geographical indication in 2009 from the National Office of Intellectual Property of Vietnam,” Nghia noted.
Le Hong Ha, deputy director of Vietnam Airlines, said the national flag carrier had worked with Tien Giang and chosen pomelos and mangos to serve passengers on domestic and international flights.
To preserve the original flavor of the fruit, Vietnam Airlines has applied a strict monitoring process, from the farm to the storage facility, before taking it onboard, Ha said.
Doan Van Phuong, director of the Tien Giang Department of Industry and Trade, said that the province exported 7,600 tons of fruits in 2018, earning some US$15 million.
Main markets include the Netherlands with 20.5% and the United States with some 17%, besides Japan, South Korea and China.
Meanwhile, on the local market, Tien Giang’s fruits are supplied to major cities such as Hanoi, HCMC and Danang. At present, the province has seven firms processing fruits for export, with total output of 12,000 tons per year.
Thaco kicks off agricultural support zone in Thai Binh
Truong Hai Auto Corporation (Thaco) today began work on an industrial zone project that supports agricultural production in Quynh Phu District of Thai Binh Province.
According to Tran Ba Duong, chairman of Thaco, the project, which was approved by the prime minister in August 2018, aims to manufacture products that serve agricultural production in northern delta provinces such as Thai Binh, Hung Yen, Hai Duong and Nam Dinh.
The industrial zone will have several components with different functions, including an insecticide plant, a research and development center, farm produce warehouses, food processing plants and river ports.
The project will also provide farmers with agricultural solutions such as harvesting and preserving farm produce.
According to Duong, the project requires a total investment of VND7.8 trillion and is scheduled for completion in 2021.
He said that in 2019, Thaco will kick off some components including a 4.8-kilometer-long road that connects the industrial zone with National Highway 10 and a river port capable of receiving 2,000-ton ships.
The corporation will also start building the industrial zone’s infrastructure, a farm produce warehouse capable of storing 160,000 tons per year, a rice milling facility with a capacity of 75,000 tons per year and food processing plants.
Duong said that the project is expected to contribute significantly to the agricultural development of Thai Binh Province and the Northern Delta as a whole.
Vietnam encourages private investment in energy sector: PM
The Vietnamese government is helping out non-state investors to invest in the power sector amid rising consumption for economic growth, Prime Minister Nguyen Xuan Phuc said on February 14.
Vietnamese PM Nguyen Xuan Phuc attends the inauguration ceremony of Thai Binh 1 Thermal Power Plant. Photo: Chinhphu
The Ministry of Industry and Trade, the Commission for the Management of State Capital at Enterprises (CMSC), and Electricity of Vietnam (EVN) need to continue mobilizing capital for power projects, mostly prompting private investment, the PM said at the inauguration ceremony of the 600-MW Thai Binh 1 Thermal Power project.
Phuc’s statement indicates that Vietnam is in need of capital for the power sector which requires roughly US$10 billion annually through 2030.
Private capital has become an indispensable option for Vietnam in the context of public debts reaching the ceiling and double-digit growth in energy demand. As a result, the country needs to call for flows of domestic and cross-border private capital into the energy sector, the World Bank said in a report released last month.
Thai Binh 1 Coal-fired Power Plant, located in the northern province of Thai Binh, is put into operations in the context that Vietnam is intensifying the generation of thermal energy to feed its fast growth.
With an investment of US$1.27 billion from the Japanese official development assistance (ODA), the plant is designed to generate between 3.6 and 3.9 billion kWh/year.
With this plant, the number of coal-fired power plants hits 29 with total capacity of 18,600 MW, making up 38% of the country’s total capacity.
At present, Vietnam’s total power capacity reaches 48,000 MW, ranking second in Southeast Asia and 31st in the world. The country’s consumption increases on average 10%-11% annually.
To ensure enough electricity for the economic growth, Vietnam has focused on hydropower and thermal power while trying to tap potential of renewables like solar and wind. However, the ratio of coal-fired power has risen over the past years. The ratio might hit 53% by 2030.
Foreign experts, including the World Bank Country Director for Vietnam Ousmane Dione and Ambassador – Head of Delegation of the European Union to Vietnam Bruno Angelet, have warned the country of long-term impacts on the environment from coal fuelled power plants, noting that Vietnam should not barter sustainable environment for temporary economic benefits.
Deputy PM urges Agribank, VNPT to launch IPO by end-2019
Deputy Prime Minister Vuong Dinh Hue has urged Agribank and telecom group Vietnam Posts and Telecommunications Group (VNPT) to launch their respective initial public offering (IPO) by the end of this year, the governmental portal reported.
At the meeting with Agribank’s executives on February 11, Hue considered 2018 a positive year for the Hanoi-based bank, for which key indicators such as outstanding loans, pre-tax profit and bad debt ratio improved compared to 2017.
Agribank is currently the largest lender for the agribusiness sector, with 70% of its over VND1,000 trillion (US$43 billion) in outstanding creidt by the end of 2017 loaned back to the agriculture – fishery – forestry sector, a government’s priority for development, Hue stressed.
In the coming time, Hue requested Agribank to ensure providing sufficient capital for the economy, while continuing the restructuring process. Following the rapid development of technology, especially fintech, Agribank is under huge pressure to improve its corporate governance and technologies application, Hue continued.
With regard to VNPT, one of Vietnam’s three leading telecom groups, Hue stressed the company has undergone a successful restructuring process, posting revenue of nearly VND155 trillion (US$6.66 billion) in 2018, an increase of 25% year-on-year in profit.
VNPT has played a key role in the government’s initiative of establishing an e-government and national Industry 4.0 strategy through the facilitation of digital transformation in health and education sectors, among others, according to Hue.
Hue expected VNPT to become a leading digital service provider by 2025 in Vietnam and a digital trading center of Asia by 2030.
Another leading state-owned telecom group, namely Vietnam Mobile Telecom Service Company (Mobifone), which was separated from VNPT in 2014, is also expected to complete the equitization process in 2019 after several hurdles, including the scandal involving its controversial acquisition of TV pay service provider Audio Visual Global (AVG).
Hoa Lac Hi-tech Park capable of attracting major investors worldwide
Following Vietnam’s first aircraft engine parts factory with investment from South Korea’s Hanwha Aerospace in Hanoi-based Hoa Lac Hi-tech park last December, Nguyen Trung Quynh, deputy head of the Management Board, expected the park to be capable of attracting major investors worldwide.
Investors from South Korean, Japan, among others, have been selective in searching for possible investment destination, according to Quynh, adding that Hoa Lac Hi-tech park could now meet the demand of both local and foreign investors.
Recently, domestic enterprises, especially leading corporations such as VNPT, FPT, Viettel or Vingroup have chosen the park as location for investment.
Last November, Vingroup signed an agreement to build a plant worth VND1.2 trillion (US$51.3 million) specialized in producing smart electronic devices.
The Hoa Lac Hi-tech park also has a variety of social infrastructure development projects, which is in line with the city’s plan to become a worth-living city, Quynh continued.
In the coming time, Quynh expected the park to attract quality projects creating high spill-over effects to the city and surrounding provinces and cities.
Hoa Lac Hi-tech Part currently has 87 projects with registered capital of VND78 trillion (US$3.34 billion). In 2018, the park has 10 new projects worth a combined of VND15.85 trillion (US$678.62 million).
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