BUSINESS IN BRIEF 3/5
Trung Son Hydropower Plant synchronized national power grid
The turbine group No.3 of Trung Son Hydropower Plant was officially generated power and successfully synchronized with national power grid system.
The powerhouse is located at Trung Son commune, Quan Hoa district in Thanh Hoa province which includes four generating units with a total capacity of 260 MW and an annual output of 1,018 billion kilowatts.
It is also the first hydropower plant of Vietnam funded by the World Bank (WB).
After putting into the operation, the hydropower plant will provide electrical energy for the whole national power grgrid, contributing to control Ma River’s flood downstream.
Especially, the project is considered as new motivation for economic development, hunger eradication and poverty alleviation in the locality.
Ministries discuss measures to deal with oversupply of pork
The Ministry of Agriculture and Rural Development (MARD) met with several ministries on April 28 to discuss measures to deal with an oversupply of pork, which has caused prices to plunge in recent months.
MARD Minister, Nguyen Xuan Cuong, said Vietnam’s meat output, especially pork, has now far exceeded domestic demand, causing prices to fall drastically to VND28,000 (US$1.23) a kilogramme, meaning farmers are suffering losses of VND1.5 million (US$66) a pig.
He warned that if this situation continued, pig raisers, including large farms, would go bankrupt, and sectors such as animal feed, veterinary care, slaughtering and pork trading will suffer damaging consequences.
The minister informed that a number of feed manufacturers have cut prices of their products, while some farms stopped supplying more pork to give up the market to smallholders, while several food retailers increased purchases of pork for freezing.
At the meeting, Deputy PM Trinh Dinh Dung asked the MARD, the Ministry of Industry and Trade and the Ministry of Foreign Affairs to step up negotiations so that Vietnam’s pork can be exported.
He also urged relevant ministries and local authorities to work with large consumers of meat such as industrial parks and armed forces to increase pork consumption.
Meanwhile, the State Bank of Vietnam was asked to instruct commercial banks to consider extending debt payment deadline and reduce interest rates on secured loans to help pig raisers tide over this crisis.
In addition to immediate measures, in the long term, the MARD should reorganise the animal husbandry sector, reduce the size of pig supplies and restrict the establishment of new feed production facilities, stated Deputy PM Dung.
Vietnam’s exports hit US$61.34 billion in first four months
Vietnam exported goods worth an estimated US$61.34 billion in the first four months of 2017, up 15.4% year on year while imports surged 24.9% to US$64.07 billion, according to General Department of Customs.
In April alone, exports fell 3.2% from the previous month to 16.7 billion and imports dropped 4.6% to US$17.5 billion.
Main exports in the last four months were still phones, garments and electronic devices, which brought in US$11.37 billion, US$7.47 billion and US$7.27 billion respectively.
Other top-performing exports were footwear products at US$4.17 billion and equipment at US$4 billion, a surge of 38.8%.
Seafood exports also posted solid growth at 8.2% to US$2.1 billion for the January-April period, according to data from the Ministry of Agriculture and Rural Development.
On the import side, Vietnam’s major purchases were equipment and electronic devices which rose by 38.9% and 24.7% to US$11.32 billion and US$10.45 billion respectively.
The trade deficit in the first four months was nearly US$2.74 billion, equivalent to 2.2% the total export value.
HCMC townhouse/villa segment sees high Q1 growth
The Ho Chi Minh City market received a primary supply of around 3,500 units from 50 new projects in the first three months of this year, including 1,200 villas and 2,300 townhouses. The new supply was up 62 per cent quarter-on-quarter, with more than 500 units from five villas and townhouses entering the market, according to the latest Vietnam Quarterly Knowledge Report in Q1/2017 released by Collier International.
The transaction rate in the segment reached 1,000 units, up 6 per cent quarter-on-quarter. Projects with completed built-in infrastructure and utilities developed by reputable developers have a sales rate of up to 90 per cent.
In the secondary market, sale prices increased by between 1.5 and 3 per cent quarter-on-quarter, depending on the project’s location. Prices are expected to continue increasing due to improved buyer demand and psychology.
The second quarter will see the arrival of 16 new projects, with most supply coming from the eastern and southern areas of the city, in which District 9 will lead, accounting for 35 per cent with about 900 units.
Collier International commented that in the past two years, districts in the eastern area of the city led the supply of real estate attached to land. Infrastructure development and rapid urbanization have created investor confidence in the area. Many people have been looking to buy townhouses with an average land area of 90-150 sq m. These customers prefer real estate products with an average land area of less than VND6 billion ($263,000) with internal facilities, good security, and convenient access to the city center.
Mr. Vo Van Anh Tuan, Deputy General Director of the Thang Long Real Estate JSC, said that the eastern area has been attractive not only to investors but also to buyers.
The area’s real estate benefited from synchronous infrastructure development, convenient transport links with the Long Thanh - Dau Giay Expressway, the upcoming urban railway line, and new bridges being built. The expansion of National Highway No.13 from Thu Duc to southern provinces and the central highlands will create uninterrupted conditions for the city’s northeastern gateway.
Rapid infrastructure development has also significantly cut travel times from suburbs to the city center and encouraged customers to purchase houses in coastal projects.
Contrary to the optimistic situation in townhouses and villas, apartment trade fell 50 per cent in the first quarter against the previous quarter, with 6,000 successful transactions. The number of apartments for sale fell 40 per cent, to around 4,000.
Most new supply comes from subsequent sale openings of existing projects. Eastern and southern areas of the city continue to lead in supply thanks to strong growing potential from major infrastructure development projects and large land reserves.
PNJ targets opening 40 new stores this year
The Phu Nhuan Jewelry Joint Stock Company (HSX stock code PNJ) has set a target of opening 40 new stores this year and recording profit growth of 33 per cent.
It held its 2017 annual general meeting (AGM) on April 27, to approve results in 2016 and targets set for 2017.
It Board of Management reported total revenue of VND8.56 trillion ($376.8 million) in 2016, up 11.3 per cent and fulfilling 97.5 per cent of the annual plan. Wholesale sales of jewelry reached 78.9 per cent of the plan and were down 15 per cent compared to 2015,
Revenue from sales of gift and promotional products grew 59 per cent and exceeded the plan by 11 per cent. PNJ sees this as a potential niche market.
Exports grew 10 per cent, fulfilling 95 per cent of the annual plan. Silver jewelry increased 22.3 per cent in revenue and nearly met the annual target. Its online business contributed only a small part to total revenue, with VND15.2 billion ($670,000), reaching 96 per cent of the plan and up 30 per cent against 2015.
PNJ increased its network over the last year, with 30 new stores (five more than targeted), bringing the total number to 219 and increasing its coverage to 47 out of Vietnam’s 63 cities and provinces. This resulted in higher sales, general and administration (SG&A) expenses of 9.5 per cent and 1.4 per cent, respectively.
Pre-tax profit in 2016 reached VND608 billion ($26.7 million), up 223 per cent compared to 2015 and 32.2 per cent higher than planned. After-tax profit was VND470 billion ($20.7 million), up nearly five-fold and exceeding the plan by 30 per cent. Consolidated net profit came in at VND449 billion ($19.8 million), nearly double against 2015.
According to Chairman Cao Thi Ngoc Dung, 2017 is a pivotal year for the company’s ten-year development strategy for 2012-2022. The company focuses on three main areas of business: improvements in the quality of its human resources, its processing system, and the computerization of its management system.
It also targets promoting efficiency in its supply chain, with the goal of opening 40 more stores this year and reaching the 300-mark in 2018.
In terms of financial performance, the company plans to increase sales of gold jewelry (wholesale and retail) by 23 per cent, silver jewelry sales by 30 per cent, and export sales by 20 per cent. Consolidated net sales are targeted at VND10.2 trillion ($449 million), up 19 per cent year-on-year, with net profit of VND600.8 billion ($26.4 million), up 33 per cent. The dividend will be maintained at 18 per cent.
SCG's profit up 29% in Q1
Thai industrial conglomerate the Siam Cement Group (SCG) has announced its business performance in the first quarter of 2017, with profit up 29 per cent year-on-year thanks to its chemicals business. ASEAN investments also prospered, as it worked with partners in Vietnam in the first petrochemical complex in the country.
The company’s unaudited business results for the first quarter show revenue from sales up 6 per cent year-on-year to around $3.4 billion. Profit reached $495 million, an increase of 29 per cent, attributed mainly to the solid performance of its chemicals business and non-recurring gains from the sale of investment assets and non-used assets. Export revenue, which accounted for 27 per cent of SCG’s total revenue from sales, reached $884 million.
In SCG’s operations in ASEAN (excluding Thailand), revenue from sales rose 15 per cent year-on-year, to $413 million, representing 13 per cent of the group’s total revenue from sales. Total assets as at the end of March amounted to some $16 million, while assets in ASEAN (excluding Thailand) totaled $3.9 million, or 24 per cent of total consolidated assets.
In Vietnam, it owns nearly $1.4 million in assets, an increase of 72 per cent year-on-year. Revenue from sales was $186 million, up 30 per cent year-on-year and primarily from packaging and its cement - building materials business.
“SCG’s investment in ASEAN is in line with its vision,” said Mr. Roongrote Rangsiyopash, President and CEO of SCG. “It recently increased its investment in the Long Son Petrochemicals project, the first integrated petrochemical complex in Vietnam, to 71 per cent.”
“The project is located in Ba Ria Vung Tau province near Ho Chi Minh City, a location with promising economic growth. It has incorporated state-of-the-art technology of international standard for health, safety, and the environment. Its output will meet rising domestic demand and in ASEAN. SCG is now in the final stage of the financial investment decision with its Vietnamese partner. Construction is expected to take five years, with plans for commercial operations in 2022.”
In the cement - building materials business, SCG recently acquired the Vietnam Construction Materials JSC (VCM), an integrated cement operator with a production capacity of 3.1 million tons per year. Located in central Quang Binh province, the plant will serve nearby markets in the first phase and later serve the entire country.
In the packaging business, SCG’s Vina Kraft Paper Co. Ltd. recently completed the installation of new manufacturing lines to expand capacity at its packaging paper business in Vietnam. This will enable SCG to achieve a total production capacity of 500,000 tons per year and retain its position as the largest packaging paper manufacturer in Vietnam.
Woomentum to support Vietnamese startups
Woomentum, a Singapore-based startup community and crowdfunding platform, recently launched its first “CrowdFundHer Live!” event in Vietnam, supporting female entrepreneurs and their startups by connecting them with investors and consultants. The event took place at Dreamplex 2 in Ho Chi Minh City.
“We look forward to becoming a bridge to help startups gain access to whatever is needed for their journey,” Ms. Mouna Aouri, founder of Woomentum, said at the event.
Six women-founded startups were selected at the event, operating in sectors including education, the Internet of Things (IoT), lifestyle, high-tech agriculture, and FinTech, and given the chance to showcase their work and vision to investors, seek funding, and see how experts responded to their products.
Each had four minutes to present their projects and convince investors to back them, and eight minutes to interact with four panelists. Woomentum also facilitated discussions between the startups and interested investors.
Guests famous in Vietnam’s startup community included Mr. Adrian Tan, Director of Vietnam Innovative Startup Accelerator (VIISA), Ms. Ngo Thuy Ngoc Tu, co-founder of YOLA Language Center, Mr. Nguyen Ngoc Dung, Vice Chairman of the Vietnam E-commerce Association (Vecom), Ms. Violet Lim, CEO of Lunch Actually, and Mr. Michael Blakey, Managing Partner of Cocoon Capital, a renowned investor from the UK.
The first presentation came from CricketOne, a startup in high-tech agriculture that provides the means to feed protein-rich crickets. The five other projects were DropDeck, Giki, Fastsell, Phleek and Rudicaf.
While DropDeck provides data to evaluate a startup, Giki brings a new vocabulary recording tool inspired by Cambridge University. FastSell, meanwhile, introduced a new option in the e-commerce industry with an emphasis on purchases from people living nearby.
The Phleek team said they needed more money to develop their app because it now primarily runs on Facebook, offering personalized stylist services and online purchases. Rudicaf brings a new selective dating app to the market. Those joining the app are required to have a Bachelor’s degree or a college degree and earn good incomes. The membership fee is quite high, ranging from $500-$1,000 a year, to ensure community quality.
Woomentum has already organized four “CrowdFundHer Live” events in Singapore with support from Bloomberg, Google, the Hub Singapore, and other organizations. The events, which drew 600 people, saw 23 tech startups receive more than $143,000.
In organizing the event, Woomentum worked with the Vecom Startup Vietnam Foundation, the Mat Bao Corporation, Baker McKenzie, Citylinks, and others.
Founder Mouna Aouri said Woomentum will make its official debut in Vietnam in the summer, offering opportunities for startups with female founders to approach new knowledge and capital and receive valuable feedback to create better products.
She said Woomentum wants to work as a bridge to link Vietnamese startups with investors, entrepreneurs, and consultants in Southeast Asia and, more importantly, connect male and female entrepreneurs.
Woomentum last year announced it would launch its crowdfunding platform, the Woomentum Fund, the first women-centric crowdfunding platform in Asia.
Private enterprises up against it
It is difficult for private enterprises to compete with State-owned enterprises (SOEs), Mr. Truong Dinh Tuyen, former Minister of Trade, said at the first Private Business Forum held in Hanoi on April 26.
Although there is no difference between SOEs and private enterprises under Vietnamese law, private enterprises must cope with a host of difficulties when competing.
He suggested that development strategies promote market share and improve competitive capacity.
He still believes, however, that there are advantages held by private enterprises. The government has acknowledged the important position they play in Vietnam’s economic development and has been improving administrative processes and the business environment. It has also pushed forward with SOE equitization.
In discussing the private sector in Vietnam after 30 years of “doi moi” (renovation), Mr. Tran Dinh Thien, Director of the Vietnam Institute of Economics stated that private business is foundation of economy.
Vietnam’s private sector has proved its position in the economy, especially over the last decade. It contributes about 40 per cent of GDP, about 30 per cent of total industrial output, and about 64 per cent of total goods production.
Mr. Tuyen said that private enterprises should have reasonable strategies for development in new free trade agreements (FTA). They must also reduce their weaknesses and promote their strengths to improve the competitive capacity. The growth strategy is, indeed, competitive improvements.
They should also restructure with reasonable strategies and green growth. Restructuring should be deployed when there are changes in the market. Enterprises should express their responsibility to Vietnamese society.
The Private Business Forum, entitled “The Private Economy in Socio-Economic Development”, was organized by the Vietnam Private Business Association (VPBA).
Deputy PM urges EVN & MoIT to conduct Gencos' equitization during Q3
Deputy Prime Minister Vuong Dinh Hue, who is also Head of the Central Steering Committee for the Innovation and Development of Enterprises, urged the Ministry of Industry and Trade and Electricity of Vietnam (EVN) to conduct the equitization of the latter’s power generation corporations during the third quarter of this year.
In a working session on April 26, the Deputy PM asked EVN to actively review and list the group’s loss-making projects in accordance with market principles, balance cash flows in production and trade, apply modern technology in management, reduce labor costs, reduce energy consumption, and ensure transparency in calculating electricity prices, reducing the price by at least 10 per cent.
In regard to input costs, Deputy PM Hue requested that EVN prepare different scenarios for retail electricity prices during 2016-2020 and the management mechanism for electricity prices during the period and for 2017.
He urged EVN to determine the electricity price for 2017 with prudence, ensuring appropriate returns and creating the grounds to attract investment and ensure energy security, in particular attracting investment in renewable energy sources like wind and solar.
EVN owns all capital in three major power generation corporations and plants that play an extremely important role in the country’s socioeconomic development and national security.
It also owns 100 per cent of the National Power Transmission Corporation and five other corporations that manage power distribution, trading, and market operations.
In an interview last month, Mr. Dinh Quang Tri, Deputy CEO of EVN, said the Power Generation Corporation 3 (Genco 3) will undergo its equitization process this year and Genco 1 and 2 in 2018. As per the Prime Minister’s approval, it will equitize the three Gencos in two phases.
In the 2016-2018 period, the Gencos will remain under EVN’s management, with the group holding at least 51 per cent. In 2019-2020, the group will consider reducing its controlling stake, and two years after equitization the Gencos will cease to be EVN subsidiaries.
The Gencos are currently having difficulties investing in power projects, Mr. Tri said. The group has submitted a restructuring plan to the PM, under which they can sell part of their equity in power generation companies to improve financial capacity and ensure a debt-to-equity ratio of less than three, as per the law. This would help EVN and the Gencos ensure reciprocal capital for attracting investment into new power projects.
EVN has also suggested that the PM allow the Gencos to put up shares worth more than half of their charter capital in their IPOs. If those shares are not sold, EVN would continue to hold a controlling stake in the corporations and divest at a later date.
In August 2014, the Ministry of Industry and Trade approved initial plans to equitize Genco 3, with a valuation to be conducted by January 1, 2015. The plan aimed at conducting an initial public offering (IPO) in March 2016 and then hold its first shareholders’ meeting a month later.
Knock-on effects of Can Gio growth
An influx of transport and real estate projects planned for Can Gio has created a land fever in this island district. Alongside with expectations of what the turnaround could do for one of poorest areas in Ho Chi Minh City, many experts have raised concerns about the environmental threats that come with such a development. Gia Huy reports.
Can Gio is an island district southeast of Ho Chi Minh City, about 50 kilometres away from the city centre. This is the only district of Ho Chi Minh City that touches the East Sea, and the surrounding river and stream system is populated by a vast mangrove forest – one of the most distinct hallmarks of a diversified ecosystem consisting of a wide variety of flora and fauna endemic to coastal Vietnam.
In 2011, the city’s management authorities inaugurated the 31km-long Sac Forest road at a total investment capital sum of VND1.56 trillion ($71 million), stretching from the Binh Khanh ferry-landing to the district centre.
The Can Gio real estate market began to warm up in late 2016, after the completion of the 5.8km-long Binh Khanh Bridge which connects Nha Be and Can Gio districts. This is the first bridge linking Can Gio to Ho Chi Minh City’s centre, which should help bolster tourism and entertainment activities in Can Gio’s seaside areas.
Early last month, the Ho Chi Minh City People’s Committee approved a plan to build Can Gio Bridge, which will replace the Binh Khanh ferry-landing. The 40m-wide, six-lane bridge will have a 5.8km-long approach road, with a speed limit of 60km/hour. The total investment capital for this project sits at around VND5.3 trillion ($241 million).
After the plan was made public, a string of real estate development plans were announced. On April 10, Chairman of the Ho Chi Minh City People’s Committee Nguyen Thanh Phong gave a nod to the Can Tho Urban Tourism JSC, the project’s developer, to increase the land area of Can Gio tourism and urban complex from 1,080 to 2,870 hectares. The project received approval for its investment proposal 17 years ago, at an initial area of 600ha. It then incurred delays due to a variety of factors, and now the project is accelerating its pace alongside the expansion of its scope.
Nguyen Thanh Nha, director of the Ho Chi Minh City Department of Planning and Architecture (DPA), said that Can Gio has received many proposals for building resorts and modern trade centres in the district.
In the future, investors might also build a casino in the district to serve visitors. DPA is reviewing the district planning and the projects which are in progress or set to commence construction to report to the prime minister early next year.
Ho Chi Minh City-based real estate developers have recently begun to seek investment opportunities in Can Gio.
“When Can Gio Bridge’s construction is finalised, the district will turn into a resort property hot spot. Many other investors will also flock there for project development,” said Nguyen Van Hau, general director of realty firm Asian Holding Real Estate JSC.
Real estate projects in the district saw their prices ascend sharply in the past weeks, as many secondary investors flocked there to hoard land for speculative purposes. The transaction price has reportedly increased week after week since early April, after the news on the construction of Can Gio Bridge was released.
One square metre of residential land in an area next to Sac Forest Square fetched VND2.5 million ($113) in early April. By mid-April, that same plot went for VND3.5 million ($159) per sq.m.
“The land price rose the most in coastal areas, which currently average VND13 million ($590) per sq.m. Meanwhile it stood at only about VND10 million ($454) per sq.m last year,” said Nguyen Van Cuong, a local real estate investor.
“These inflated prices are driven by speculative investors. The actual price is much softer, at about VND8 million ($363) per sq.m,” he added.
To experts, the market’s recent movements act as a warning sign. The commitment of Ho Chi Minh City leaders to turn Can Gio into a tourism hub has long been known, but the recent ascendant land prices are an aberration. Going on little more than rumour, the land prices are rising day by day.
“Without prudence, the real estate market might backslide as it did in 2008, and these inflated land areas might turn into deserted land areas,” said Tran Khanh Quang, a real estate consultant.
According to Deputy Chairman of the Can Gio District People’s Committee Truong Tien Trien, the district is home to an important biosphere reserve zone which covers 33,000 square kilometres, nearly half of the district’s overall area. If too many investors head there, the land price will increase and the general planning will be disrupted, negatively affecting forested areas as well as the local ecosystem.
A source from the Ho Chi Minh City Real Estate Association said that the Can Gio Bridge construction has yet to be officially approved, and most property developers have just studied investment plans in the district. The source cautioned that claims of Can Gio quickly becoming a tourism hub are unrealistic, and only facilitate speculation in the area.
Architect Nguyen Van Hung, director of Green Architecture Company, said that besides being a biosphere reserve site, Can Gio is a strategic location for national defense, which adds one additional wrinkle to the planning forecast. Any megaprojects developed in the district must carefully consider their effect on Ho Chi Minh City’s buffer zone planning.
Samsung Vietnam’s largest recruitment test in two big cities
Samsung Vietnam yesterday held its Global Samsung Aptitude Test (GSAT) for applicants from both the north and the south at the National Convention Center (NCC) and at Samsung HCMC Complex (SEHC).
About 8,800 applicants who are engineers, bachelor degree holders were selected from 20,000 applications to join the GSAT this time.
GSAT is a Samsung global capacity test for new candidates graduating from the universities, including three main topics, "mathematical ability", "deductive reasoning", and “visual thinking”. This is one of the first rounds of recruitment procedures for graduated staff of all Samsung subsidiaries worldwide.
After the GSAT, high scorers will go through interviews in May 2017. After passing two rounds, the most outstanding and suitable candidates will become official employees of Samsung Vietnam in June 2017. The new recruits will work at eight facilities/centres of Samsung Vietnam.
Samsung Vietnam has organised GSAT since 2011, and there have been nearly 9,500 employees enrolled from this recruitment. The recruitment of a large number of university graduates is a part of Samsung’s expansion plan in Vietnam. This is an important step in the transformation of Samsung's strategy to strengthen its leading position of the world’s largest mobile phone manufacturer.
Annually, Samsung recruits thousands of bachelor degree holders into entry-level positions, with exciting salary and personnel policy. Samsung Electronics Vietnam has always adhered to the laws, as one of the factors to attract hi-quality human resources.
Samsung has been conducting the fair and transparent recruitment test, GSAT, since 1995 in Korea to recruit outstanding university graduates. Vietnam is the only country that Samsung organise GSAT except for Korea and China.
Long Thanh Golf Course maintains leading position in Vietnam
The various awards that Long Thanh Golf Course has received over the years are testaments to the course’s quality.
Long Thanh Golf Course is located in the southern economic triangle, about 40 minutes’ drive from Ho Chi Minh City centre.
It was designed by Ron Fream – the founder of Golfplan-Fream & Dale Golf Course Architecture, with more than 35- year experience in designing, building, and maintaining golf courses throughout the world.
Of the over 350 hectares in land-scape area, the golf course has around 100ha for high lawn hills. Two thirds of its circumference is surrounded by branches of the Dong Nai River.
Hence, it has very cool, fresh climate, with poetic natural scenery consisting of rows of palms, artificial pools and lakes, and tumbling falls.
The grass for the course is Paspalum grass, which not only helps golfers make exact shots but also contributes to making them feel more relaxed.
At present, Long Thanh Golf Course is being operated with 18 rounds on Hilly Course, and 18 rounds on Lake Course, both delicately designed to bring attractive challenges to professional golfers and beginner players as well. The lighting system meets international standards and can serve golfers at night.
The experienced staff are very courteous and well trained in golf rules, foreign languages and services, by an expert from the British Professional Golf Association.
Long Thanh Golf Course is serving more than 1,000 members, more than 60% of whom are from Europe, Japan, Republic of Korea, Singapore, China and Thailand.
Most recently Long Thanh Golf Investment and Trading JSC, operator of the golf course, has received the Biggest Charity Fundraising Golf Award in May 2016 from the Asia Book of Records.
In 2015, World Records University conferred on Le Van Kiem – chairman of Long Thanh Golf Investment and Trading JSC the honorary degree of Doctorate in record Breaking Hanoris causa for: “The Creator and Initiator of the largest Charitable Golf Tournament".
In 2014 Long Thanh Golf Investment and Trading JSC received the Global Ethics Awards from the Vietnam Federation of UNESCO Associations.
Vietnam’s exports see positive signs
The Ministry of Industry and Trade forecasts that Vietnam’s exports will grow stronger in the second quarter, thanks to business reforms and the implementation of free trade agreements.
Vietnam earned US$45 billion from exports in the first quarter, up 15% from last year.
This encouraging result is attributed to a surge in the price of key export items including raw materials, crude oil, farm produce, seafood, and processed products.
Exports revenues from major markets like China, Japan, Russia and ASEAN also increased significantly.
“Businesses should apply advanced technologies and update their management methods. We have signed 17 free trade agreements and are negotiating several others,” said Tran Thanh Hai, Deputy Director of the Export-Import Department of the Ministry of Industry and Trade.
The Vietnam-Eurasia Economic Union Free Trade Agreement which took effect last October offers an opportunity for Vietnam’s exports to reach a market of 183 million people.
“We are trying to consolidate existing export markets while seeking new ones. Other important missions include reducing tariffs and remove non-tariff barriers to boost exports,” said Nguyen Khanh Ngoc, Deputy Director of the Europe Market Department.
Under the Vietnam-Eurasia Economic Union Free Trade Agreement, both sides will reduce or exempt tariffs on nearly 90% of items and open their markets for investment and services.
The Eurasia Economic Union, which consists of Russia, Armenia, Kyrgyzstan, Belarus, and Kazakhstan, is expected to be a lucrative market for Vietnamese apparel, seafood, agricultural products, and footwear.
Mekong Delta expands farm land toward large-scale production
Land concentration toward large-scale commodity production is one of the main objectives of Vietnam’s agriculture restructuring.
Farm land expansion in the Mekong Delta region has benefitted those involved in large-scale production models.
With 120 ha of farmland, Nguyen Van Khanh of Phu Cuong village is one of the largest individual landowners in Dong Thap province. Until recently his family farmed several small disconnected fields. Khanh has found ways to consolidate his farmland by renting the land from others to create large-scale production areas.
But Khanh says this is a band-aid solution. In the long run, he says, he hopes the government will promulgate a clearer policy on farmland expansion.
Khanh told VOV “With this model, we can mechanize agricultural production to increase efficiency. But we need clearer policies on the expansion of farm land so farmers can feel secure about their production.”
In Dong Thap, one of the Mekong Delta’s largest farm areas, the average farm household has about 1,440 square meters of farmland, which is usually divided into separated rice fields, making mechanization unfeasible. But lately some farmers and collectives, in expanding their farmland, have begun to develop larger-scale production models.
Le Minh Hoan, Secretary of the Dong Thap provincial Party Committee, said land expansion is an important lever for boosting production of farm commodities and changing farmers’ ways of thinking.
“We should find a way to get farmers to reach a consensus on farmland expansion and indemnify their risks. Dong Thap is trying to persuade farmers to expand their farmland or lease land to create larger-scale paddy fields,” said Hoan.
Farmland expansion began earlier in the Mekong Delta than elsewhere in Vietnam, but there have been lots of difficulties in affirming ownership of the land.
Huynh Van Thon, Director General of the Loc Troi Group, a leading distributor and manufacturer of crop protection chemicals in Vietnam, said farmland expansion has made it easier to mechanize production and apply modern technology and farming techniques.
Thon said that in recent years a growing number of farm households have joined his group’s large-scale rice field model. For the first winter-spring crop of the 2010-2011 period, the model was applied to about 1,000 ha. That figure had grown to more than 90,000 ha by 2015.
He said “I hope the government can convince the National Assembly to increase farmers’ land ownership and allow them to expand their fields. That will foster large-scale production and mechanization and modernize Vietnam’s agriculture.”
According to the Steering Committee for the Southwest Region, the large-field model has cut production costs 10% to 15% and increased production values 20% to 25%, boosting farmers’ profits to US$330 per hectare.
Kido to acquire Vocarimex’s controlling stakes
Foodstuff producer Kido Group (KDC) has decided to acquire a controlling stake in Vietnam Vegetable Oil Industry Corporation (Vocarimex) in a deal worth nearly VND1 trillion (US$44 million).
In a filing to the State Securities Commission on Wednesday, Kido registered to purchase nearly 32.9 million shares in Vocarimex to increase its holding there from 24 per cent to 51 per cent.
The purchase will be conducted through negotiations from May 4 to June 2.
Vocarimex’s shares (VOC) are traded on the Unlisted Public Market Company (UPCoM) for about VND30,000 (US$1.32) each. At this price, Kido is estimated to spend almost VND987 billion ($43.5 million) for the deal.
After the announcement, VOC shares increased 8.5 per cent in the last two sessions. The shares have increased 5.2 per cent this year.
In January this year, the vegetable oil producer approved Kido raising its stake, bypassing the obligation of making a public bid to purchase shares.
On Monday, VP Bank Securities Co (VPBS) announced it sold its entire holding of 9.74 million VOC shares, equivalent to 8 per cent of Vocarimex’s capital.
Apart from Kido, the State Capital Investment Corporation (SCIC) is the second biggest shareholder with a 36.3 per cent.
Vocarimex is one of the largest local vegetable oil firms, with Kido aiming to seize a controlling stake to penetrate deeper in vegetable oil market after its withdrawal from the confectionery sector.
Besides Vocarimex, in November 2016, Kido spent more than VND1 trillion to buy a 65 per cent stake in Tuong An Vegetable Oil Joint Stock Company (TAC). This acquisition is reportedly boosting Kido’s performance.
The company announced its first-quarter consolidated revenues soared 217.4 per cent year-on-year, totaling VND1.25 trillion, after acquisition of Tuong An Vegetable Oil. Its after-tax profit rose 9.4 per cent to VND30.1 billion.
However, revenues of the parent company Kido Group declined 74 per cent from VND162.7 billion in 2016’s first quarter to just VND42.3 billion in the first three months of this year.
Kido attributed the decline to the group’s business model transformation in which it gives more autonomy for subsidiary and affiliate firms in doing business while the parent company plays key role in planning strategic development, risk management and brand marketing.\\
Start-up businesses to get funding from VCIC
Start-up businesses that focus on green growth will have the opportunity to receive funding and access to comprehensive business development support services from the Viet Nam Climate Innovation Centre (VCIC).
The announcement was made by Pham Duc Nghiem, VCIC’s deputy director at the launch of a contest named “Proof of Concept”, sponsored by the World Bank and Ministry of Science and Technology, held in Ha Noi on Friday.
Specifically, start-ups would receive funds amounting to US$75,000 for the development, deployment or extension of a product or service, he said.
In addition, sponsored businesses will also receive VCIC’s counseling from the initial stage to the market development phase.
Innovative products, services, or business models can be included in VCIC’s second contest in the following categories: effective energy, sustainable agriculture, water management and purification, renewable energy technologies, technology information and other technologies related to climate change.
"This is an opportunity for start-up projects to reduce the impact of climate change on the environment, as well as an opportunity to showcase the potential of Vietnamese companies in the field of technology to cope with climate change," Nghiem said.
"These companies are in the best position to provide innovative solutions to fight climate change, because they know better than anyone else about the difficulties, challenges and potential of the locality. It will help them come up with good ideas to improve the local economy and create more jobs," he added.
Climate change is increasingly attracting the interest of the international community.
As one of the five countries most vulnerable to climate change, the Vietnamese Government has been implementing a number of policy and action programmes to strengthen national capacities to adapt and respond effectively to climate change and reduce greenhouse gas emission.
The Ministry of Science and Technology expects that VCIC will create the foundation to help businesses identify business models and commercialise their products to cope with climate change.
VCIC will also organise seminars to call for ideas in Ha Noi, Da Nang and HCM City to provide more information for businesses who want to join the contest, Nghiem said.
At least 18 enterprises received funding from VCIC in the first contest in 2016.
Their projects included a car sharing solution to save costs and help passengers access transportation services, an automatic unbaked brick molding chain and bio-produce for agriculture.
Tra Vinh attracts additional projects
The southern province of Tra Vinh granted licenses to eight projects in April, including seven domestic ones worth more than 327 billion VND (14.2 million USD) and one foreign-invested worth 3 million USD, according to the provincial authorities.
Since early this year, the province has lured 15 domestic projects with a total registered capital of nearly 581 billion VND (25.26 million USD) and three foreign-invested ones worth 5.64 million USD, up 518 billion VND (22.5 million USD) and 4.64 million USD year-on-year.
Tran Anh Dung, Vice Chairman of the provincial People’s Committee, described key national projects in the province as one of the favourable conditions for local investment attraction, including Luong work for the travel of large capacity vessels on the Hau River and Co Chien bridge that facilitate the marine-based economy and goods transportation by road.
The Duyen Hai power centre with four power plants is capable of generating nearly 4,500 MW of electricity to major industrial projects, meeting power demand in the region.
With a lengthy coastline and extensive fishing grounds, Tra Vinh is well-positioned to develop wind and solar power; cruise, ecological, spiritual and resort tourism, he said.
Tra Vinh currently records 181 projects, including 35 foreign-invested ones worth about 3 billion USD and 146 domestic ones with a total registered capital of more than 98 trillion VND (4.26 billion USD).
It is home to 1,900 businesses and 1,001 affiliates with a total registered capital of some 25 trillion VND (1.08 billion USD) and creates jobs to in excess of 85,000 workers in and outside the province.
Quang Ninh’s exports increase by 5 percent in first months of 2017
Total export turnover of the northern province of Quang Ninh hit 461.3 million USD in the first four months of 2017, making up 28 percent of the yearly plan and up 5.3 percent from a year ago, according to the provincial Department of Planning and Investment.
In April also, the province earned 130 million USD from exports.
Coal export brought home 59.7 million USD from shipments of 455,000 tonnes.
Other export goods seeing increase included cement, up 32 percent; wolfram, 19.1 percent; textiles, 14.4 percent; and vegetable oil, 9.2 percent.
Imports of local businesses were valued at 128.31 million USD in April, adding up to 496.4 million USD in total imports in the January-April period, down by 24 percent compared to the same period last year.
OV scholar suggests shifting to overseas venture investment
A Vietnamese scholar in the Netherlands suggested Vietnam shift to venture investment abroad rather than relying on developing the intellectual-based economy at home during a seminar recently held in Geneva, Switzerland.
According to Dr Hoang Ngoc Giang, lecturer at Utrecht University of the Netherlands and former independent advisor to several venture investment funds in Switzerland, the Vietnamese economy is focusing on attracting foreign capital to facilitate technology transfer and send experts abroad for studies, and has recently embarked on a plan to develop itself into a start-up nation.
However, he described this approach as unfeasible, reasoning that four major pillars of Vietnam’s intellectual-based economy, including education-training, innovation eco-system, information infrastructure, economic climate and social institutions, remain insufficient and weak.
In his suggestion, the top priority should be given to technology because it is the greatest source of added value in the future. In spite of requiring long-term capital (5-10 years) and exposing weak liquidity and high risks, it will bridge development gap and bring strategic interests to Vietnam regarding governance skills and competiveness learnt from the most developed economies.
He proposed that direct outbound investment could be made by sending the most excellent intellectuals abroad to nurture and commercialise inventions, providing aid for successful start-ups to join relevant overseas competitions, and pouring capital into start-up ideas by Vietnamese students and workers in host countries.
Indirect investment could be made by contributing capital to overseas venture investment funds and start-ups, he said.
In order to utilise linkage between overseas venture investment and domestic manufacturing, he called attention to drafting a detailed plan on venture investment abroad, arranging human resources and capital to build a start-up ecosystem, establishing a Vietnam venture investment fund abroad, prioritising agricultural and processing technology projects, and screening relevant start-ups.
Saigon Co.op retailer expands market share
The Saigon Union of Trading Co-operatives (Saigon Co.op) is affirming its status as Vietnam’s leading retailer by opening additional 8-10 Co.opMart supermarkets this year.
In addition, it will build one Sense City commercial centre and launch 65 Co.op food stores and 500 convenience store called Co.op smile.
The company will also flesh out its brand-new business model- Co.opMart Finest that connects multimedia and other forms of shopping.
It also runs the programme “Accumulating Stamps to Exchange for Gifts” until July 30 for customers holding Co.opmart cards. The programme has been launched in collaboration with Brand Loyalty that enables customers to collect a set of high-quality crystal imported from Germany.
According to Nguyen Anh Duc, permanent deputy general director of the Saigon Co.op, constant updates of international trends and renewal of promotional programmes will help the company bring practical benefits to its customers while connecting consumers and the supermarket.
The move also fosters the consumption power of the Co.op market chain’s products, 90 percent of which are made in Vietnam, he added.
Lavifood begins construction of $66m fruit, vegetable processing plant in Tay Ninh
Lavifood Joint Stock Company on May 2 broke ground for a fruit and vegetable processing plant in Tay Ninh Province’s Go Dau District.
The 15ha Tanifood plant on National Highway 22B in Thanh Duc Commune is expected to cost VND1.5 trillion (US$66.07 million).
To be equipped with technologies from Germany, Sweden, Italy, and Japan, it will include a production line for fresh fruits and vegetables and heat treatment with a total capacity of 10,000 tonnes a year, a frozen fruit and vegetable production line with a capacity of 20,000 tonnes, a production line for drying, soft-drying and sublimation drying of fruits and vegetables, and a line for producing condensed fruit juice.
It will also have a production line with a capacity of making fruit juices in 600 million cans, bottles and Tetrapak cartons a year.
Pham Ngo Quoc Thang, general director of Lavifood JSC, said the new plant would make “international standard” products for export to the US, EU, South Korea, Japan, and Australia.
The plant targets daily consumption of 500 tonnes of fruits like mangoes, passion fruits, pineapples and dragon fruits when it begins operation in November 2018.
Pham Van Tan, chair man of the Tay Ninh Province People’s Committee, said "The Tanifood plant is an important link in developing an agricultural value chain in the province and enhancing farmers’ incomes".
Thang’s company plans to build four more such plants in the province to enable Tay Ninh to become a high-value farm produce export hub and raise farmers incomes by three to four times from the current $1,500 per year.
Many farmers in the province yesterday signed agreements with Tanifood to supply fruits for the plant.
Established in 2014, Long An Province-based Lavifood processes and exports fruits and vegetables to the US, France, Japan, Australia, Korea, Algeria and other countries.
The plant is its first project in Tay Ninh Province.
Samsung’s weighty contribution to Vietnamese economy
By expanding its businesses in Vietnam, Samsung’s contribution to the Vietnamese economy is getting larger.
Samsung has several huge manufacturing complexes in Vietnam. Its subsidiary Samsung Electronics already has three complexes in Bac Ninh Province (SEV), Thai Nguyen Province (SEVT), and Ho Chi Minh City (SEHC), with a total investment value of $9.5 billion.
While SEV and SEVT have become familiar with the Vietnamese people, as these two complexes have been operating for many years and have contributed significantly to the Vietnamese economy and society, SEHC is brand new. Being launched in the middle of last year with a total investment of $2 billion, SEHC manufactures complete television units and consumer electronic products, such as vacuum cleaners, washing machines, and fridges.
Compared to Samsung’s previous television manufacturing plant in Thu Duc district (Ho Chi Minh City), SEHC in on a whole different scale and technological modernity. The large factory buildings were constructed on a 94-hectare area, and according to Samsung, all the production lines are the most modern available freshly imported for the production of high-end product lines, such as TV SUHD, Smart TV, and LED TV.
At the time VIR’s reporters visited SEHC in the middle of April 2017, it was focusing on the production of QLED televisions, the most high-end product line of Samsung available domestically and internationally. SEHC specifically reserved a special manufacturing area, called LCM, to manufacture screens, the part accounting for 70 per cent of televisions’ value. This place must be kept absolutely clean, so the production process is very strict: all components, devices, and employees must be “clean” before entering this area.
With the capacity of 40,000 LCM products each day, this production line not only supplies enough components for SEHC but 30 per cent of its capacity goes to export.
“There are not many Samsung plants in the world that can manufacture LCM screens. This technology is considered an original production process, which means that Samsung highly appreciates its Vietnamese operations,” a Samsung’s representative told VIR.
Despite only being launched for a short time, SEHC now has an average capacity of about 1.1 million products each month. Beside semi-finished products, 80-90 per cent of SEHC’s finished products are exported. In particular, the consumer electronic products are exported to 75 markets and the audio visual products are exported to 60 markets.
Samsung’s mobile device manufacturing complexes in Thai Nguyen Province and Bac Ninh Province, both larger in scale than SEHC, are faring similarly. At present, the mobile devices of SEV and SEVT are exported to 78 markets. 40 per of Samsung mobile devices in the world are manufactured in Vietnam. With over 110,000 employees, Samsung Vietnam now employs one third of the total Samsung Electronics staff all over the world.
The statistics of Vietnam’s socioeconomic situation in the first quarter of 2017 indicate that the GDP growth rate was 5.1 per cent only. According to some regulatory authorities, this fairly low percentage resulted from the decreasing production of Samsung during the observed period.
Samsung’s decreasing production may derive from the Note 7 incident last year. It is not clear yet whether Samsung is the reason behind the decline in Vietnam’s GDP in the first quarter of 2017, but it seems that Samsung is playing an increasingly important role in the growth of the Vietnamese economy.
Thus, when discussing the movements of the Vietnamese economy in the rest of the year, experts again mentioned Samsung. Accordingly, when Samsung increases its production in the second quarter, the Vietnamese manufacturing industry will recover, thereby pushing economic growth.
Bang Hyun Woo, deputy general director of Samsung Vietnam, said that last year, despite the incident of Note 7, SEV and SEVT still had an export turnover of $36.2 billion. In total, all Samsung manufacturing activities in Vietnam generated a revenue of $46.3 billion. Of the total, the revenue from exports was $39.9 billion, an increase of 9.9 per cent compared to 2015.
In the middle of April 2017, when visiting SEVT, VIR’s reporters saw that the $5-billion production line was focusing on the production of new smartphones Galaxy S8/S8+. According to its schedule, on May 5, these smartphones will be officially sold in Vietnam as well as in global markets.
After the Note 7 incident, Samsung is now very careful in producing and testing the S8/S8+ devices. All products are tested for 72 hours, instead of the two hours of the previous practice, to ensure that there will be no defect or incident. In the reliability test lab, the product safety testing department now added an explosion testing stage, and additional tests to verify the products’ ability to withstand force, temperature, and chemicals.
This is the reason why Samsung believes that the S8/S8+ will generate a significant revenue, as the rising demand will bring about increasing production, thereby increasing SEV and SEVT’s production and export value.
Samsung expected that SEV and SEVT’s export turnover will increase by 10 % compared to last year, reaching $40 billion this year.
In addition, when SEHC stabilises operation during this year, its export turnover will increase by about $4 billion, while last year’s export turnover was $1.7 billion only. Thus, these three Samsung complexes will contribute $44 billion to Vietnamese exports. Almost no other domestic enterprise can contribute such a large amount to Vietnamese exports.
None of these calculations include the manufacturing and export activities of Samsung Electro Mechanics Vietnam in Thai Nguyen Province or Samsung Display in Bac Ninh, which has increased its investment to US$6 billion. If it is counted, it is estimated that Samsung’s export turnover will be US$50 billion this year, a remarkable increase in comparison with the US$39.9 billion of last year.