BUSINESS NEWS IN BRIEF 5/8

VNR to keep divesting its subsidiaries

Vietnam Railway Corporation (VNR) wants to continue the divestment of its subsidiaries, aiming to improve competitiveness and attract investors to enhance efficiency after three years on a downward spiral.

A report on the results of the first six months of 2018 from VNR shows that all of its business indicators are on the rise, with revenue amounting to some VND4,000 billion, up 17.8% year-on-year, and with profit reaching VND106 billion.

According to the report, the growth in revenue results from a series of renovation solutions for railway services, including replacing new cars, flexibly increasing and decreasing ticket prices depending on the market demand and linking to the tourism sector to attract passengers in groups.

As railway transport models are still facing challenges, VNR has been forced to continue rearranging and restructuring its mechanisms and activities to sustain its operations and develop further.

Besides this, the corporation will constantly divest its subsidiaries. In particular, VNR has contributed capital to three transport firms, of which Hanoi Railway Transport JSC (Haraco) holds a 94% stake, Saigon Railway Transport JSC 74% and Railway Transport and Trade JSC (Ratraco) 34%.

In spite of being joint stock companies, Hanoi Railway and Saigon Railway are still VNR’s subsidiaries. However, both companies have affected VNR’s general efficiency since the two have suffered the pressure of revenue and competitiveness, resulting in internal conflicts.

VNR therefore proposed separating cargo transport firms from passenger transport enterprises. As scheduled, VNR will divest passenger transport enterprises and keep a controlling stake of 51% or more, while the corporation will sell all stakes in cargo transport firms without keeping any controlling stake, to attract outside investment.

Currently, some enterprises are showing interest in investments in trains to offer transport services on major routes such as Hanoi-Lao Cai and Hanoi-Danang. Other firms would prefer to set up a transport company under a model similar to that of the current railway transport company but are facing difficulties with procedures.

According to enterprises, to obtain a business license, they are required to meet various conditions including providing safe vehicles, hiring an operator, hiring trained staff, and maintaining a system that ensures safety. Due to complicated procedures regulated by the State, few enterprises fund the railway sector.

Investors accuse Sky Mining director of fraud

A group of 300 people who had invested in cryptocurrency mining machines at Sky Mining wrote a letter to Phu Nhuan District’s police in HCMC on July 30, accusing Le Minh Tam, director of the business, of defrauding them of large sums of money, reported the local media.

Nguoi Lao Dong newspaper quoted Dung, one of the investors, as saying that the group had gathered some 300 petitions against Tam’s fraudulent activities, adding that other groups are also collecting many letters of accusation.

According to one of the letters, the investors were promised a refund of their initial investment and a rate of return of up to 300% after a year. The letter stated that the investors had signed a contract for capital contribution.

Another investor identified as Thanh said that the interest was paid on time in the initial stages, but the payments were delayed from June onward. He noted that the investors had not received any money since July 21, and that as many as 11,000 investors had poured their capital into the cryptocurrency mining business.

Thanh had invested US$75,000 in the cryptocurrency mining system in the hope of making quick bucks. He had insisted Tam appropriate investors’ assets.

A representative of Phu Nhuan District’s police agency confirmed that the police had received a letter from a group of investors against the boss of Sky Mining on July 30. The police agency had earlier received nine petitions and worked with four investors. It is further probing the alleged fraud.

The Sky Mining director had reportedly streamed live on July 29 to announce that he is currently in the United States for medical treatment, promising to return to Vietnam to manage the situation.

Meanwhile, the company’s main office at 202B Hoang Van Thu Street in Phu Nhuan District has been shuttered and its nameplate has been removed.

CPTPP to open new opportunities for Canadian companies in Vietnam

More business delegations from Canada are visiting Vietnam, and this is just the first step in the potential cooperation between the two countries, according to Canadian Ambassador to Vietnam Ping Kitnikone.

During an interview with the Saigon Times, Kitnikone said bilateral trade between Vietnam and Canada is in a favorable position, with Vietnam being Canada’s largest trading partner in Southeast Asia. Two-way trade has been increasing 16% year-on-year for the last two years.

“We are happy with this figure,” she said.

Vietnamese exports to Canada make up around 75% of the bilateral trade.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to which both Vietnam and Canada are parties, provides a good platform for businesses in both countries to engage with each other with more confidence.

Agriculture, along with the agrofood industry, is the most active sector for Canadian imports into Vietnam.

“We have a lot of expertise and management skills that we can share with Vietnam. Food security is very important to the Vietnamese, and this is a critical sector where we have done quite well,” Kitnikone said.

After the United States left the Trans-Pacific Partnership (TPP), Canada has been targeting the Vietnamese market. But the flow of foreign direct investment from Canada to Vietnam is quite low compared with that of other countries, such as the Republic of Korea and Japan.

Explaining the reason for this, the ambassador said Canada has numerous small and medium enterprises, similar to Vietnam. Canada also has an advantage in services.

“This is not traditionally a manufacturing area. That is often the question I have. Why don’t Canadian companies open factories in Vietnam?” she said.

It is important to understand how to match the two economies. We need to look at how to use Canadian services to improve the performance of Vietnamese companies, the official added.

CPTPP, which will be signed soon, is expected to open new opportunities for the two countries.

“I have often encouraged the Vietnamese associations and departments to reach out to their Canadian counterparts. We have a transparent system that makes it easy to collect information,” she noted.

Wood exports hit nearly US$5 billion in 7 months

Exports of wood and timber products are estimated at US$642 million in July, bringing the total export value for the first seven months of the year to US$4.8 billion, a year-on-year rise of 11.6%, according to the Agro Processing and Market Development Authority (AgroTrade).

The US imposition of high import tariffs on Chinese timber products will bring about opportunities for Vietnam to boost exports to the market, experts said. However, they warned of a wave of Chinese investments in timber processing industry in Vietnam to evade US import duties, which will threaten domestic businesses.

Since early this year, the US has remained the biggest consumer of Vietnamese timber products with nearly US$2 billion, up 12.4% against the same period last year. It is followed by China (up 2.7% to US$660 million), Japan (up 4.7% to US$620 million), and the Republic of Korea (up 50.5% to nearly US$530 million).  Currently, exports of wood and timber products to traditional markets show positive signs and Vietnamese exporters have received and signed orders till the end of the year.

Experts said in the short-run, US-China trade tensions will facilitate the export of domestic timber products to the US. Vietnam’s exports to the US currently continue their vigorous growth, making up 30% of the country’s total forestry export value, said Nguyen Ton Quyen, Secretary General of the Vietnam Timber and Forest Product Association (VIFORES).

Last year, timber product exports to four key markets of the US, China, Japan and the RoK exceeded US$5.8 billion, accounting for nearly 76% of the country’s total wood exports.

Experts suggested that the wood sector maintain and diversify its import sources and access materials from less risky markets. Domestic businesses are fully prepared to confront world market changes and take advantage of opportunities to promote exports to high value markets like the US and Japan. They should make efforts to improve productivity, quality and competitiveness and reduce cost prices to increase their share in the US market.

Isuzu Vietnam and Hiệp Hòa Group sign deal on special-use vehicles     

Automobile manufacturer Isuzu Vietnam Co Ltd and the environmental equipment provider Hiep Hoa Group on Tuesday signed a strategic partnership agreement on the development of special-use vehicles in Viet Nam.

Nguyen Van Lien, chairman of the Vietnam Urban Environment and Industrial Zone Association (VUREIA), said the products of Hiep Hoa Group meet the requirements and demand of the market.

Special-use vehicles had to be imported in the past at very high prices, he said.

Isuzu Vietnam general director Hidekazu Noto said the company has launched its new generation of Euro 4-standard trucks and will expand its product portfolio.

The co-operation between Isuzu Vietnam and Hiep Hoa Group will create efficient special-use vehicles, Hidekazu said, adding that the two firms will strive to complete the quality of after-sale services and supply of components to meet diversified demand of customers.

The strategic partnership agreement is expected to help the two companies produce high quality trucks branded Isuzu Vietnam-Hiep Hoa, Hiep Hoa Group general director Dao Manh Hung said.

Hiep Hoa Group specialises in producing special equipment in the fields of urban environment, national defence and firefighting. The input components for Hiep Hoa Group’s products are mainly imported from Germany, Japan, Italy and the US.

The Japanese automobile firm Isuzu is familiar to Vietnamese customers for its diversified product portfolio, ranging from light trucks, semi-trucks, sports utility vehicles and trailers. The company is expanding to producing special-use vehicles and co-operating with special-use component suppliers. 

HCM City wishes to lead in startup activities

As Vietnam’s economic hub, Ho Chi Minh City boasts advantages to develop startups, with its science-technology resources accounting for 25 percent and the number of operating businesses taking up 50 percent of the country’s, while its labour productivity is 2.5 times higher than the national average.

More than 760 startups are operating in the city, accounting for more than 42 percent of the country’s total. Among those, 49 percent have found sponsors and investors.

According to experts, Vietnam ranks third in the number of startups in Southeast Asia. However, the social impact startup ecosystem lags behind compared to regional countries like Thailand and Malaysia.

To solve this challenge, the Ministry of Science and Technology, the UN Development Programme (UNDP) and Citi Foundation are implementing the “Youth Co: Lab Vietnam 2018” initiative. It aims to seek the next generation of leading social entrepreneurs in Vietnam, following the success of the SDG Challenge in 2017, where four Vietnamese startups received more than 85,000 USD in equity-free seed funding and a year-long business incubation programme.

Vietnamese businesses have paid attention to innovation but only for short-term goals, with few new products developed. This explains why domestic enterprises are yet to set up value chains for sustainable development.

Nguyen Ky Phung, Deputy Director of the HCM City Department of Science and Technology, said startup support organisations still face many difficulties because there is lack of expert networks and professional services for incubation activities.

The city is completing institutions and developing a favourable business and investment environment to build itself into a smart city and a city of innovative startups, he said.

At the same time, it will boost the development of businesses in combination with applying science and technology, developing a startup ecosystem and enhancing cooperation and experience sharing with developed countries in this field, he added.

At the recent event “Connecting Vietnamese Startups At Home and Abroad”, Secretary of the municipal Party Committee Nguyen Thien Nhan emphasised the need to form a startup ecosystem to boost links between scientists and firms in developing startups.

According to Vice Chairman of the city People’s Committee Le Thanh Liem, HCM City will encourage, step up and form startup spirit and promote the role of startups in development, thus making itself a leading city in the country in startup activities.

Vietnamese brands look plain as foreigners wear the beauty industry crown

While the beauty and personal care industry is doing better than expected in Vietnam, foreign brands are the ones sitting pretty.

Nguyen Van Minh, chairman of the Vietnam Essential Oils Aromas and Cosmetics Association (VOCA), said companies in the beauty and personal care industry have seen stronger growth than they’d forecast.

“Vietnam is an emerging market for the beauty care industry, with annual growth rate averaging 30% in recent years,” he said.

In 2016 alone, the industry generated US$1.2 billion in revenue, a figure that the association had previously predicted for 2020.

The import value of beauty care products surged almost twofold from around US$3 billion in 2016 to US$5.5 billion last year, but exports stayed insignificant at just VND500 million (US$21,520) last year, it said.

These figures match findings by British research firm Euromonitor International, which said last year that up to 90% of beauty products in Vietnam are imported.

It also said the market value of this industry had crossed US$1 billion since 2015 and repeatedly recorded double digit growth in recent years.

A representative of Medicare, a drug and beauty care retailer based in Ho Chi Minh City, said that imported products or those produced in Vietnam by foreign companies make up most of its sales, and that imported brands will have more opportunities to expand their market shares than domestic rivals in the future.

At the Mekong Beauty Show 2018, an international beauty and cosmetics expo that was held in the city in June, 110 of more than 300 international exhibitors were Korean companies who came to find potential importers and business opportunities in Vietnam.

Dominic Oh, general director of Korea International Exhibition and Convention Center (Kintex), the event’s organizer, told the Saigon Times that Vietnam was considered one of the key markets for the Republic of Korea (RoK)’s beauty care sector.

In 2016, Singapore was the biggest exporter to Vietnam’s beauty care sector, accounting for 34 percent of its total imports.

The EU followed with 19%, Thailand, 9%, and RoK, 8%, according to Euromonitor International.

In its report on beauty and personal care in Vietnam, the research firm said the market was dominated by global brands, thanks to innovative products, strong distribution network and dynamic marketing.

Three foreign companies, Unilever Vietnam International Co Ltd, Procter & Gamble Vietnam Ltd and Colgate-Palmolive Co Ltd were in the top three positions in 2017, it added.

According to VOCA, as their incomes improve, Vietnamese people are paying more attention to beauty and personal care, creating a lot of opportunities for businesses.

In a report released early April, the World Bank said 70% of Vietnam’s population are now classified as economically secure, including the 13% who are now part of the global middle-class.

These income classes are growing rapidly, rising by over 20 percentage points between 2010 and 2017.

An average of 1.5 million Vietnamese have joined the global middle class each year since 2014, confirming that households continue to climb the economic ladder after escaping poverty.

The WB also predicted that as many as 33 million Vietnamese will be in the middle class by 2022.

Despite this fertile ground for beauty care products, Vietnamese brands have struggled to do well.

Even top companies with decades in the market, like Saigon Cosmetics Corporation and Lan Hao Cosmetics Co Ltd, have stopped at making low and mid-range products.

Minh, chairman of VOCA, said local firms were held back by a lack of serious investment in packaging, design and advertisement.

Medicare, an HCMC-based drug and beauty care retailer, said it looked for Vietnamese partners to produce Medicare-branded beauty and personal care products, but local firms did not have the capacity to make products that could compete with foreign rivals.

As organic beauty products is the new trend, VOCA chairman Minh said local firms should make good use of natural ingredients that are plentiful in Vietnam to create high quality products so that they can start competing with foreign firms.

However, doing this will require bigger investments in more advanced technologies; and given the current state and scale of domestic firms, the upgrade is easier said than done, Minh said.

Value and volume of rice exports on the rise

Vietnam shipped an estimated 382,000 tons of rice valued at US$195 million in July, bringing the total rice exports for the first 7 months of the year to 3.9 million tons worth nearly US$2 billion, up 12.2% in volume and 29.2% in value, according to the Processing and Market Development Authority (AgroTrade).

China remained the biggest consumer of Vietnamese rice with 26.8% of the market share during the first half of this year, followed by Indonesia with 18.2% and the Philippines with 10.4%.

The strongest growth came in exports of rice to Iraq (up 2.5 times to US$85.5 million), Malaysia (up 2.1 times to US$138.2 million), the Philippines (up 76.8% to US$183.4 million) and Ivory Coast (up 16.8% to US$66.4 million).

AgroTrade forecasts that rice exports are likely to continue their vigorous growth in the second half of this year as several nations will require supplies of the staple crop. The Philippines will need to import an additional 500,000 tons of rice in December.

The export price of Indian rice is likely be higher than that of rivals like Vietnam and Thailand because the Indian Government has announced a 13% increase in the purchasing prices from farmers compared to the same period of last year.  Iraq’s import demand will surge in the next months due to the country’s reduction of cultivation areas to cope with their water shortages. Furthermore, African countries have a widespread increase in demand for rice imports. These factors are all good opportunities for Vietnamese rice exports.

However, the rice sector will encounter many difficulties if it wants to boost exports, especially as the biggest consumer – China – raises import duties and strengthens quality controls. Besides, the rice price is unlikely to increase because the US dollar hike places pressure on export prices while supplies from the summer-autumn crops in Vietnam and Thailand are saturating the market. Therefore, it is necessary for businesses to focus on controlling the quality of export rice and seeking new export markets to promote exports, AgroTrade advises.

FMCG sales slightly up in urban Vietnam

The national sales of fast-moving consumer goods on traditional and modern trade channels in urban areas reached some US$14 billion in Q2, growing 0.7%, according to Nielsen Vietnam.

The year-on-year growth was driven by sales increases seen across six out of seven super categories: beverages (including beer), milk and dairy products, household care products, personal care products, baby care products, and cigarettes.

Baby care witnessed the biggest jump to 12% while food showed a decline of 1.9%, according to the market research firm’s newly-released Market Pulse Quarter 2 report.

“FMCG has yet to reflect an upturn in economic conditions while Vietnam’s GDP growth hit 7.1% in the first half of 2018,” Nguyen Anh Dung, executive director of Nielsen’s retail measurement services division, said.

But there were many growth pockets, with modern trade channels seeing double-digit growth, he noted.

Semi-retail channels comprising stores with both wholesale and retail sales also saw strong growth.

Overall, the modern distribution channel enjoyed growth of 11.9% while the traditional channel was sluggish. Sales through traditional channels in urban areas rose 1.2% while in rural areas there was a drop of 2.4%.

Dung said seasonality could provide an opportunity for certain categories such as snacks, dairy, beverages, and confectionary to innovate and connect with consumers in novel ways.

“FMCG products have become basic while other products provide more excitement with innovation and new customer experiences.

Consumers are willing to loosen their purse strings as reflected in strong growth in entertainment, tourism, cellphone, and automotive sales.”

It is time for manufacturers to bring excitement back to the FMCG industry, and the most important thing is to listen to consumers and put them at the center of all decisions they make, he said.

They provide the key growth cues if manufacturers can satisfy their needs, he added.

Hanoi to boost fruit and veggie exports at Asia Fruit Logistica 2018

Hanoi will showcase its fresh fruit and vegetables at the Asia Fruit Logistica which is set to take place in Hong Kong (China) on September 3-9 in order to boost exports of its agricultural products to the world market, according to the Hanoi Centre for Investment, Trade and Tourism Promotion (HPA).

The 55sq.m pavilion will display products and catalogues of businesses and documents relating to Hanoi ’s tourism, investment and trade promotion activities.

Hanoi will share with the Consulate General in Hong Kong market information and new import and export policies and mechanisms and discuss with the Hong Kong Trade Development Council (HKTDC) cooperation in trade and investment promotion between the two sides. About 12-15 businesses from Hanoi are expected to join the event.

A HPA representative says this is part of the city’s tourism, trade and investment promotion program this year, aiming to increase farm produce exports and study new processing and planting technologies and the value chain from developed countries.

Sideline activities such as an Asia Fruit Congress, Coollogistis Asia and Asia Fruit Business Forum will be held during the fair.

Asia Fruit Logistica 2017 drew 813 exhibitors from 43 countries and territories around the world and more than 13,000 visitors.

Demand for rental office continues to rise

Vietnam’s rental offices exceeded other countries in 2017. The end of 2017 marked a transformation of the condominium market from robust growth to more sustainable growth with high profit.

The positive trend still maintained in the first six months of 2018 and economists said leasing office market would grow more. One of the reasons is that limited supply.

According to CBRE Vietnam, the current trend suggests inadequate supply of grade A buildings. Specifically, in the first quarter of 2018, grade A buildings was just 382,763 square meter and 813,362 square meter for grade B buildings in Ho Chi Minh City yet in the next quarter, no new building for leasing will be inaugurated.

It is forecast that from now to end of 2018, just two grade B buildings will be operative in HCMC but not much space for leasing because investors will use it as their office.

There was no new supply in Ho Chi Minh City’s office market in the second quarter of the year, according to CBRE’s Q2 Quarterly Report; accordingly, rent price skyrocketed in past time. For instance, in the first quarter, it were $39.71 per square meter per month for grade A building and $22.35 per square meter per month for grade B building.

With such price, there has been an increase of 3.5 percent q-o-q and an increase of 7.4 percent y-o-y. for grade A building.

While in the second quarter, grade A rent price increased by 7 percent against the previous quarter and 17 percent compared to the same last year because new buildings are soon filled out and new supply is quite rare.

According to CBRE, in first six months of 2018, no supply of grade A and B buildings. It is expected that in last months of the year, buildings with 125,000 square meters will be supplied bringing up the rental office area to 1.4 million square meter.

Though total new supply showed a decrease, good product configuration helps the market to maintain good absorption. According to James Lang LaSalle (JLL) Vietnam report, average occupancy rate of office buildings in the HCMC achieved greater than 95 percent occupancy. This showed an extremely high demand in the market for both Grade A and Grade B office submarkets.

Especially, net absorption in grade B building is thanks to giant rent area in newly buildings with 9,000 square meter filled out by local firms, foreign companies and Non-government organizations.

Economists valued that demand for rent building will maintain high, more companies are seeking big and high quality leasing area; consequently, rent will go up by 2 percent annually and all buildings will be filled out.

Marketing research companies’ statistic, more buildings were built in 2014-2016 and 2017 is considered as the year to absorb all supply. 2018 will be the year for transformation of boom in 2019 and 2020. Research companies predicted building supply will boom resulting in new circle in two next years. Investors will carry out new projects when all buildings were absorbed.

Dang Phuong Hang, Managing Director of CBRE, expects that Grade A rental will maintain its increasing trend because of limited available supply from now until late 2019 or early 2020. Vacancy rates will also decrease slower because of Grade A’s higher rentals.

Grade B is expected to see more stable and healthy performance because of its small but more constant supply from now until 2019.

The market from 2018 – 2020 will still be a landlord’s market.

Sticky rice exports from Mekong Delta decline

The sticky rice market in the Mekong Delta is witnessing a slump in exports as China, the largest importer of Vietnamese rice, imposed new import tariffs of up to 50% on glutinous rice, starting July 1, raising the rate by an additional 45 percentage points compared with previous tariffs.

According to Tran Quoc Tuan, a rice trader for exporters in the Mekong Delta region, business in the sticky rice market has come to a halt as the exporters cannot send their rice to the neighboring country.

The prices of fresh unhusked sticky rice, which is harvested by combine harvesters, have dipped sharply to VND4,400-VND4,500 per kilogram from VND6,100-VND6,200 per kilogram this year, while the prices of sticky rice have also nosedived from VND11,800-VND12,000 per kilogram to VND8,200-VND8,300 per kilogram, Tuan said.

He stressed that some traders had continued to stockpile this type of grain, waiting for prices to bounce back, as they might incur significant losses if they sell the rice to exporters at this time.

Luu Thi Lan, deputy director of Gentraco JSC, attributed the decline in exports to China’s recently adjusted import tariffs on sticky rice and a stronger U.S. dollar.

Over the years, China has been the primary rice market for Vietnam, with more than 90% of the total sticky rice volume being shipped to the northern neighbor every year.

Rice exports to China in June hit the lowest level in the first half of the year, reaching no more than 50,000 tons, down by some 220,000 tons compared with the export volume in April, the highest this year, according to rice exporters.

XtayPro to participate in startup training program in South Korea

The XtayPro company has reportedly secured tickets for 80 participants for a program in South Korea, called K-Startup Grand Challenge 2018, to support startups.

According to Nguyen Trung Hieu, founder and general director of XtayPro, the company has been chosen as a representative of the Vietnamese startup community by the organizer. As scheduled, the selected employees will visit South Korea to participate in the training course, starting in mid-August.

“This is a great opportunity and a stepping stone for the company to enter the South Korean and global markets,” Hieu said.

Other local participants in the startup accelerator program include Student Life Care, Design Bold and BMG Ami.

K-Startup Grand Challenge, organized by the government of South Korea, is aimed at building an open ecosystem, helping startups expand their presence via the South Korean market in their initial stages. The program was initiated in 2016, with 40 startups being invited to the country. Since then, dozens of startups have been established in South Korea. They have sought total investment capital of up to US$26 million from 24 investors so far.

The third edition of the program has received some 1,800 applications from more than 100 countries. The organizer will select only 80 potential startups to attend the program and will bear the entire expense of their four-month stay.

The selected startups will be able to join working programs and professional training courses, meet consulting experts and the global startup community, and access capital sources. Moreover, the participants will get the chance to connect and work with South Korea’s leading enterprises, such as Samsung, Hyundai, LG and Naver.

XtayPro, established in late 2016, has set up a platform to connect international travelers with local people at various destinations, who are in need of products that are either not available or are expensive in their country or who want to send items to another country. The sharing platform not only enables the travelers to reduce their travel costs but also helps people gain access to new products.

Hoa Phat Dung Quat prepares first steel production

The Hoa Phat Dung Quat Iron and Steel Production Complex is planning to begin production by the fourth quarter of 2019, providing an estimated four million tons of steel per year, for use as mainly construction and hot-rolled coil steel serving local markets.

At a press briefing at Dung Quat Economic Zone in the central province of Quang Ngai on July 26, a representative of the iron and steel complex said that in mid-August, the first steel products will be manufactured.

In the first quarter next year, when the first phase is put in place, the steel mill will have a production of two million tons of steel per year, mainly building steel, the representative noted, adding that two million tons of hot-rolled coil steel will be turned out in the second phase at the end of 2019. Production materials include ore and coal imported from Australia and South Africa.

The Hoa Phat Dung Quat Iron and Steel Production Complex, invested in by Hoa Phat Dung Quat Steel JSC, a member of Hoa Phat Group, cost VND52 trillion. The steel complex includes the mill, using a steel furnace and a blast furnace with European-standard technologies, and a deep-water seaport system.

In September 2016, the government of Quang Ngai Province terminated the Guang Lian Dung Quat steel mill project following 10 years of delays. It is known that the project was assigned to Hoa Phat Group to continue the investment.

Clean energy project receives US$1m investment from reality show

US$80b in ODA loans poured into Vietnam over 25 years

Vietnam has received US$80 billion worth of official development assistance (ODA) and concessional loans since 1993, making it the greatest beneficiary of this type of funding, said Deputy Prime Minister and Foreign Affairs Minister Pham Binh Minh. 

Of the amount, nonrefundable capital accounted for US$7 billion, loans with rates below 2% made up over US$70 billion, and US$1.62 billion came from loans with rates lower than those of commercial loans, according to data provided at a meeting on the management and use of foreign loans in the 2011-2016 period, held by the National Assembly Standing Committee and the Government on Wednesday, July 25.

Minh was quoted by Chinhphu.vn as saying that these results highlighted Vietnam’s efforts to seek external sources to promote its development.

The deputy prime minister mentioned donors’ common view that Vietnam’s use of loans was efficient, which is why they have continued pledging ODA and concessional loans for Vietnam over the years. Some believe it is also necessary to incorporate thorough evaluations of the efficiency of projects and loans, he added.

Localities with ineffective projects have been told to fix the inadequacies in those projects, Minh said.

ODA and concessional loans are crucial to the country’s development amid the current high demand for capital, and country leaders have continuously requested that other countries maintain such loans for Vietnam.

According to Minh, the time for low-interest capital sources is over, and Vietnam is shifting to an era of fewer preferential loans. Therefore, changes concerning the attraction and use of foreign loans to ensure borrowing efficiency and debt repayment are needed.

Minh said that the Ministry of Planning and Investment and the Ministry of Finance will evaluate and compare foreign loans and bonds to take the appropriate steps.

Besides this, under the Government’s Decree 97/2018/ND-CP, from July 1, the on-lending ratios of ODA and concessional loans will range from 30% to 100%, depending on the locality, to increase their responsibility when using foreign loans.

Regarding the adoption of policies and regulations on the management and use of foreign loans in the 2011-2016 period, Minister of Planning and Investment Nguyen Chi Dung pointed out that the issuance of legal documents occurred in a timely manner and suited actual conditions, helping increase the efficiency of ODA and concessional loans attraction, management and use.

According to project assessments by the Japan International Cooperation Agency, the Asian Development Bank and World Bank, the efficiency of projects by these donors in Vietnam is higher than that in other countries such as India, Indonesia, the Philippines and Sri Lanka.

ODA and concessional loans have played an important part in promoting socioeconomic development and increasing the quality of infrastructure and social welfare, particularly in remote areas.

However, some problems that need to be resolved in the coming period include project progress, capital disbursement and honoring commitments in agreements signed with donors.

After hearing opinions shared at the meeting, Minh said the Government would take those opinions into account to put forward proposals and solutions in the coming days.

Masan to join local pork market

Masan Group on July 25 announced that its subsidiary, Masan Nutri-Science (MNS), a cattle feed firm, will put fresh pork on sale by the end of the year. The animal feed maker is currently completing the necessary procedures to make this possible.

MNS owns a pig farming facility in Nghe An Province and a pork processing complex in Ha Nam Province. The farm in Nghe An can provide up to 250,000 hogs per year, while the processing complex, which started operations five months ago, is expected to distribute 900,000 hogs annually.

To penetrate the local pork market, MNS recruited foreign high-ranking personnel. For instance, Matthys van der Lely, who has 30 years of experience in the retail sector with diverse business models, will serve as MNS CEO, and Stefan Henn will function as research and development director of MNS Meat.

Live-pig prices will bounce back in the second half of 2018, according to the MNS steering board. The live-pig prices recently picked up, reaching VND48,000 per kilogram, after being fixed at VND30,000 per kilogram for a long period.

MNS, which sells animal feed products containing Bio-zeem in green and red versions, was founded as a joint venture among animal feed processors.

The company in the first half of the year witnessed a drop in revenue and profit margin due to live-pig price falls. However, the steering board is pinning its hopes on the pork market as live-pig prices are forecast to rebound.

Scavi Vietnam set to earn US$200 million in annual revenue

Scavi Vietnam JSC, a subsidiary of the France-based Corèle International Group, is set to meet its targets of earning US$200 million per year and maintaining the annual growth rate at 30-40% between 2018 and 2022.

A representative of Scavi, a company specializing in lingerie, swimwear and sportswear, announced the business plan today, August 1. Last year, the firm had earned US$150 million in revenue, up by 40% year-on-year.

To meet the targets, Scavi will continue to promote comprehensive cooperation with its partners, enhance its services and encourage business expansion to ASEAN countries, particularly Indonesia, as well as foster international material chains in Vietnam, said Tran Van Phu, chairman of Corèle International Group.

In addition, the firm will focus on enhancing its technology and deploying digital applications and automation in operations, Phu added.

Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, said textile and garment companies that can earn US$200 million in annual revenue account for a mere 0.33% of the 6,000 firms in the country. The sales target of Scavi Vietnam proves that the firm is expecting to make hefty profits in Vietnam.

Giang remarked that the target is completely feasible as Scavi already operates four sewing plants, with total investment capital of US$5 million, in the industrial zone of Phong Dien in Thua Thien-Hue, with 150 sewing lines and 7,000 staff in total.

Scavi Vietnam was launched in the country in 1988.

2.3 trillion VND raised from Government bonds

The Hanoi Stock Exchange (HNX) raised 2.3 trillion VND (over 98.7 million USD) at the latest auction of Government bonds (G-bonds) issued by the State Treasury on August 1.

The auction aimed to sell 7 trillion VND (300.4 million USD) worth of G-bonds with 5-year, 7-year, 10-year, 15-year, 20-year and 30-year maturity.

Five bidders bought 7-year bonds at 100 billion VND (4.29 million USD) with average yield rate of 3.9 percent/year, the same interest rate with the previous auction (July 25).

Bonds with 10-year term fetched 2.2 trillion VND (over 94.3 million USD) with annual interest rate of 4.5 percent, up by 0.02 percent against the previous auction.

There were no successful bids for 5-year, 15-year, 20-year and 30-year bonds.

From the beginning of 2018, the State Treasury mobilised over 92.3 trillion VND (over 3.96 billion USD) through G-bond auctions at the HNX.

The National Financial Supervisory Commission has predicted that the G-bond market in 2018 will see modest changes from last year thanks to economic growth of more than 6.7 percent and inflation below 4 percent. It expects the value of G-bonds issued this year to reach 180 trillion VND (7.92 billion USD).

 Last year, Vietnam sold some 159.9 trillion VND, or 7.03 billion USD, worth of G-bonds with average maturity of 13.52 years and annual interest averaging 6.07 percent, down 0.2 percentage points against 2016.

 The interest rates of Government bonds have risen lately, after a long period of decline throughout 2017 and the first four months of 2018.