BUSINESS IN BRIEF 6/9 8M State budget deficit at $5bn   The State budget deficit in the first eight months of this year stood at VND111.5 trillion ($5 billion), the latest figures from the General Statistics Office (GSO) reveal. State budget revenue and spending during the period were VND603.7 trillion ($27 billion) and VND715.2 trillion ($32.05 billion), respectively. Tax revenue from domestic business activities reached VND486.2 trillion ($21.8 billion), equal to 61.9 per cent of the annual plan, from crude oil VND24.6 trillion ($1.1 billion), or 45.2 per cent, and from import and export activities VND90.2 trillion ($4 billion), or 52.4 per cent. Revenue remained low in the period due to the “effect of low crude oil prices and the impact of the change in direction of Vietnam’s trade activities when joining foreign trade agreements (FTAs),” according to GSO General Director Mr. Nguyen Bich Lam. Some tax revenue from domestic business activities were higher than expected, with land use fees reaching VND48.3 trillion (2.16 billion), equal to 96.7 per cent of the annual plan, while industry and trade activities (excluding State-owned enterprises, or SOEs) contributed VND97.4 trillion ($4.36 billion), equal to 67.9 of the plan.   Personal income tax payments totaled VND42.4 trillion ($1.9 billion), equal to 66.7 per cent of the annual plan, environmental taxes VND25 trillion ($1.12 billion), or 65.1 per cent, and tax payments from foreign-invested enterprises (excluding crude oil) VND97.1 trillion ($4.35 billion), equal to 61.1 per cent of the plan. Notably, tax revenue from SOEs stood at VND126.1 trillion ($5.65 billion), equal to just 49.2 per cent of the annual plan. “This is due to corporations and companies within the petroleum, coal, mineral and hydroelectric sectors facing difficulties in their operating and manufacturing activities,” Mr. Lam said. Budget spending in the period stood at VND715.2 trillion ($32.05 billion), equal to 56.2 per cent of the annual plan. Spending on investment and development was VND107.2 trillion ($4.8 billion), equal to 42.1 per cent. Spending on socioeconomic, national defense and security, and administrative management was VND506.7 trillion ($22.7 billion), or 61.5 per cent of the plan, while spending on debt repayments and donations reached VND 96.2 trillion ($4.3 billion), or 62 per cent. The State budget deficit therefore came in at VND111.5 trillion ($5 billion) in the period. The deficit for the year as a whole has been forecast to increase to 6.5 per cent of GDP. Government debt, meanwhile, was reported at VND1,830 trillion ($86 billion) in 2014, double the figure in 2010, according to the Ministry of Finance (MoF)’s latest report released in June. Domestic debt was more than VND1,000 trillion ($47 billion) and foreign debt some VND800 trillion ($39 billion). The cost of servicing government debt in 2014 alone was VND260 trillion ($11.8 billion). Government debt represented 50.3 per cent of the country’s GDP as at December 31, 2015, MoF’s figures show, exceeding the 50 per cent cap set by the National Assembly for the last five years. The state of the economy from now to the end of the year remains difficult to forecast. “MoF will cooperate with authorities to strengthen tax policy, including fighting tax evasion, smuggling, and trade fraud,” Mr. Nguyen Dai Tri, Deputy Head of the General Department of Taxation (GDT) was quoted as saying. Fuel prices gain over 700 VND per litre The prices of RON 92 petrol and bio-fuel E5 were raised 702 VND (0.31 USD) and 611 VND 0.27 USD) per litre from 3:00 pm on September 5.  Following a joint decision by the Ministry of Industry and Trade and the Ministry of Finance, the prices of diesel 0.05S and kerosene also increased 474 VND and 489 VND per litre, respectively.  It was the second fuel price hike after four consecutive falls in recent times, with a total increase of nearly 1,400 VND (0.63 USD) per litre.  Under the joint decision, RON 92 and E5 are sold at no more than 16,076 VND (0.72 USD) and 15,836 VND (0.71 USD) per litre, while the ceiling prices of diesel and kerosene are 12,388 VND (0.55 USD) and 10,985 VND (0.49 USD) per litre.  The two ministries also decided to keep retailers’ contribution to the Petroleum Price Stabilisation Fund unchanged and give them a subsidy of 300 VND per litre for RON 92 and E5 from the fund. Danone exiting Vietnam due to dismal Dumex sales Danone Vietnam, a subsidiary of French multinational food company Danone SA, announced stopping its operations on August 30. As reported by newspaper Thoi Bao Kinh Te Sai Gon, a company representative attributed the decision to the low sales of children formula Dumex. “The market share of Dumex in Vietnam is not enough for the company to continue making investments here,” the representative said, adding that the company will not withdraw from its other Southeast Asian markets. Earlier, Danone disposed Dumex China due to a significant decrease in market share following a food safety scare that later proved to be a false alarm. The sale of Dumex China to Yashili International Group Ltd. was finalised on May 31, 2016, for €150 million ($159 million). Besides Dumex, popular brands of formula for children under six in Vietnam include Pediasure and Similac by US company Abbott, Enfagrow by US company Mead Johnson Nutrition, Friso by Friesland Campina from the Netherlands, Aptamil also by Danone, and Meiji by Japanese company Meiji. The Vietnamese government frequently campaigns to encourage mothers to breastfeed. The government also forbids advertising for children under two years of age, starting at the beginning of last year. Moreover, starting on June 1, 2014, there has been a price ceiling issued on formula for children under six. A Nielsen survey carried out in Ho Chi Minh City and Hanoi revealed that sales decreased by 10 per cent in volume and 9 per cent in value by February 2015, compared to the same period in previous years. Agricultural investors make up small fraction Though more private capital has been injected in agriculture in recent years, investors in this sector account for a mere 1% of the total number of businesses nationwide and most of them are small, heard a meeting between Deputy Prime Minister Trinh Dinh Dung and the Ministry of Agriculture and Rural Development in Hanoi last week. The ministry said that after implementing a restructuring scheme for the agricultural sector in 2013-2015, the sector posted average gross domestic product (GDP) growth of 2.83% a year and its total production value increased by 3.41% a year despite the impact of natural disasters and unfavorable market developments. The sector registered total export revenue of US$88.3 billion in the three-year period, or nearly US$29.5 billion per annum. Notably, many large enterprises have invested in agriculture, including TH True Milk, Vingroup and Hoang Anh Gia Lai Group. However, the ministry acknowledged that the sector had not attained sustainable growth and that the restructuring of the sector was still in its infancy. Minister of Agriculture and Rural Development Nguyen Xuan Cuong said perennial problems remained in the sector, including low competitiveness and small-scale farming. For example, 13 million farmer households own only 0.3 hectare of farmland each and demand of importing markets for key products such as rice and seafood was unstable. In addition, negative impacts of climate change have weighed on agriculture. Cuong said the restructuring of the agricultural sector will be implemented at three levels. At the national level, 10 products with advantages and of high value will be chosen and developed for export based on domestic production. At the provincial level, farm specialties such as Hung Yen longan and Luc Ngan litchi will be developed and promoted to boost domestic sales and exports. Good products of localities using advanced processing technology will be invested for local consumption and export. Cuong said enterprises will play a pivotal role in agricultural production. There will be policy incentives to lure more investors to the sector and competent agencies should review and propose policies that help spur the development of the sector and prevent trade fraud. Dang Kim Son, former director of the Institute for Policy and Strategy of Agriculture and Rural Development (IPSARD), said to speed up agricultural restructuring, it is important to woo large enterprises to help create a strong value chain, build major brands and boost exports for local farm produce. Son said to realize the objectives authorities should create policy breakthroughs by allocating land to good businesses and encouraging farmers to diversify crops and fisheries, especially products of high added value. Many SOEs operate inefficiently A number of State-owned enterprises (SOEs) ran at a loss while budget spending was not well managed in previous years, according to a report of State Audit of Vietnam released last week. Last year, State Audit looked into the management and use of State capital and assets at 234 SOEs. Among them, five reported losses, including Vietnam National Shipping Lines (Vinalines) with nearly VND3.5 trillion, Corporation 15 with VND471 billion, Vietnam Industrial Construction Corporation (Vinaincon) with VND131 billion, Vietnam Sugarcane and Sugar Corporation II with VND15 billion and Daklak Printing Co Ltd with VND2.95 billion. The ratio of after-tax profit to equity fell sharply at many SOEs in 2014 such as Vietnam National Oil and Gas Group (PetroVietnam) with a 10.45% drop and Vietnam Construction and Import-Export Corporation (Vinaconex) with 3.3%. Meanwhile, many SOEs did not manage overdue and bad debts owed by customers and partners well. For instance, MobiFone had VND331 billion in bad debt, Hanoi Trade Corporation (Hapro) VND376 billion and Vietnam National Tobacco Corporation (Vinataba) VND86 billion. PetroVietnam and Vietnam Electricity Group (EVN) had not opened bank accounts to support their restructuring in line with the existing regulations. Some other firms do not strictly comply with wage management rules.  The report showed SOEs were required to pay taxes and contribute to the State budget an extra VND6.22 trillion, including PetroVietnam with VND4.56 trillion, HCMC Finance and Investment Company (HFIC) with VND758 billion, Hanoi Alcohol Beer and Beverage Company (Habeco) with VND210 billion, MobiFone with VND201 billion, Vinataba with VND128 billion and EVN with VND99 billion. Almost all SOEs relied on huge bank loans and did not generate profit from their investments in the real estate sector. Notably, the report showed that budget overspending surpassed VND249.3 trillion in 2014, or 6.33% of the nation’s gross domestic product (GDP). The amount was about VND25.3 trillion higher than approved by the National Assembly (NA). Though budget overspending dropped compared to 2013 (6.6% of GDP), it did not well match the Government’s orientation toward budget overspending cuts in the 2011-2015 period. Moreover, the 2014 budget overspending was higher than spending on development investment at VND910 billion, which was against the State Budget Law. The report indicated regular expenditures approved by the NA and the Government were VND704 trillion for 2014, but the actual amount jumped to VND723 trillion. State Audit found wrongdoing in spending at almost all ministries, agencies and localities. State Audit requested 21 provinces to pay back VND1.6 trillion which was used for wrong purposes. It said some provinces did not abide by regulations on management, purchase and maintenance of State assets. Vietjet announces two new Taiwan flights Vietjet Air announced the introduction of two international routes connecting Hanoi with Taipei and Ho Chi Minh City with Kaohsiung, Taiwan, on August 29. The Hanoi-Taipei flights will be operated daily from October 30 with a flight time of two hours and 45 minutes. The flights take off from Hanoi at 2.15pm and land in Taipei at 6pm (local time). The return flights depart at 7.10pm and arrive in Hanoi at 8.55pm (local time). Ho Chi Minh City-Kaohsiung flights will be launched on December 12 with five return flights a week, on Monday, Tuesday, Thursday, Friday and Sunday. The flights, which take three hours and 30 minutes, depart from Ho Chi Minh City at 2.10am and land in Kaohsiung at 6.30am (local time). The return flight takes off at 8.15am and lands in Ho Chi Minh City at 10.45am. Tickets are now available for the both flights, from VND310,000 ($14) and VND210,000 ($9), respectively. Tickets can be booked at www.vietjetair.com or https://m.vietjetair.com for smartphones, by clicking the “Booking” tab at www.facebook.com/vietjetvietnam, or via the national call center at 1900 1886. Payment can be easily made with debit and credit cards of Visa, MasterCard, JCB, and American Express and ATM cards issued by 29 Vietnam’s banks that have been registered for internet banking. The airline also will increase its flight frequency on the Ho Chi Minh City-Tainan (Taiwan) route to five a week. Flights from Ho Chi Minh City to Seoul and from Hanoi to Seoul are now served by A321 aircraft with 230 seats instead of A320 aircraft with 180 seats.    The Ho Chi Minh City-Tainan route will fly on Monday, Wednesday, Thursday, Saturday and Sunday from October 30, with a flight time of three hours 15 minutes. The flights leave Ho Chi Minh City at 10.30am and arrive in Tainan at 2.45pm (local time). The return flights take off at 3.45pm and land at 6pm (local time). Known as the first airline in Vietnam to operate as a new-age low-cost carrier, Vietjet Air is making all efforts to diversify its services to meet customer demands. Following the successful operation of the Ho Chi Minh City-Taipei and Ho Chi Minh City-Tainan routes its services to Kaohsiung and Taipei are part of its network expansion plan and are expected to boost trade exchange and integration between the destinations. HCM City: purchasing power rises sharply on National Day The purchasing power in Ho Chi Minh City increased by up to 40 percent during the National Day occasion as many families spent the three-day holiday at commercial centres instead of travelling to far destinations. A representative of LOTTE Mart said the number of customers to the shopping centre expanded by about 40 percent and its revenue grew by 25 percent compared to normal days thanks to various promotion programmes and entertainment activities. The strong purchasing power was also reported in supermarkets like Big C and Co.op Mart, as well as in traditional markets such as Ben Thanh, Tan Dinh, Nguyen Van Thoi and Ba Chieu. The best-selling items included fresh food, confectionary, beverages, cosmetics and household utensils. The trend is expected to continue in the next few days when people return to the city after the holiday. Retailers have offered abundant quality products and services at stable prices in an effort to promote their prestige and raise consumers’ confidence. Moody’s: Domestic demand supports Việt Nam’s growth outlook Việt Nam’s (B1 stable) credit profile is supported by its robust economic growth and diversified economy, Moody’s Investors Service said on Wednesday. These credit strengths are balanced against accelerating credit growth, wide fiscal deficits and an increasing government debt burden. At the same time, while the operating environment for the banking sector has stabilised, capital levels remain inadequate and asset quality is still weak. Moody’s conclusions were mentioned in its just-released annual credit analysis of Government of Việt Nam -- B1 Stable. The report elaborates on Việt Nam’s credit profile in terms of Economic Strength: High (-); Institutional Strength: Low; Fiscal Strength: Low (+); and Susceptibility to Event Risk: High, which are the four main analytic factors under Moody’s Sovereign Bond Rating Methodology. Over the last two years, GDP growth in Việt Nam has picked up to above 6.0 per cent, which stands in contrast to slower growth across much of the region as well as among rating peers. Moody’s forecasts real GDP growth to remain around 6.0 per cent in the next two years. According to Moody’s, stronger domestic demand has prompted healthier demand for imports. As a result, the current account surplus has declined and Moody’s forecasts a small surplus of 0.6 per cent in 2016. Nevertheless, with the central bank’s new exchange rate mechanism, Moody’s still expects the balance of payments to be in a healthy surplus with a net accretion of foreign exchange reserves. UOB and ORIX invest in Vietnam's leading private hydropower company UOB Venture Management Pte Ltd (UOBVM), a wholly-owned subsidiary of United Overseas Bank Limited, and financial company ORIX Corporation (ORIX), on September 1 announced that they will each invest $25 million in one of Vietnam’s largest privately-owned hydropower companies, Bitexco Power. Bitexco Power owns and operates 18 hydropower plants in Vietnam with a gross power capacity of around one gigawatt (GW). The existing capacity can generate about 3,500 gigawatt-hours (GWh) of renewable energy annually, which is enough to provide electricity for about 2.7 million people in the country. Bitexco Power plans to use the new capital for business expansion and further consolidate its market-leading position in the renewable energy sector. “The acquisition of shares by globally-renowned institutions - UOB and ORIX - will enable Bitexco Power to continue its rapid growth in the increasingly dynamic Vietnamese renewable energy space. It is also a reflection of their confidence in our ability to meet international corporate governance standards and our business plan execution, necessary to deliver long-term value to stakeholders and to contribute to the growth of the country,” said Ian Fox, CEO of Bitexco Power. With the rapid growth of the Vietnamese economy over the past decade, power consumption has been rising dramatically. General Statistics Office of Vietnam estimated that electricity demand will continue to expand at an annual growth rate between 10 and 12 per cent, rising from 169.8 terrawatt-hours (TWh) in 2015 to 615.2 TWh by 2030. “We believe Vietnam’s growth will continue to drive the demand for renewable energy. By investing in Bitexco Power, we hope to participate in the growth of the power sector and play a role in the country’s economic transformation,” said Seah Kian Wee, managing director of UOBVM. Established in 1992, UOBVM has provided financing to more than 100 privately-held companies through direct equity investment, mainly in Southeast Asia and Greater China. UOBVM manages about $733.2 million in assets. The new investment will be allocated through from its ASEAN China Investment Fund III. This fund invests in growth-oriented companies in Southeast and East Asia, with an emphasis on the 10 countries of the ASEAN and China. “Bitexco Power is our first investment in the Vietnamese power sector, which shows strong growth potential. We believe Bitexco Power is in the best position to benefit from the country’s on-going reform of the electricity market, underpinned by the rising demand for electricity. Following this investment, we are pleased to announce our further business expansion in the renewable energy sector across Asia,” said Yuichi Nishigori, corporate executive vice president of ORIX. ORIX Corporation (TSE: 8591; NYSE: IX) provides products and services in lending, investment, life insurance, banking, asset management, automobile-related operations, real estate, and environment and energy-related businesses. It has offices in a total of 37 countries and regions across the world. Local authorities put on market Vung Tau Paradise Resort The Ba Ria-Vung Tau People’s Committee has released the criteria to choose new investors for Vung Tau Paradaise Resort developed by Vung Tau Paradise Company, a joint venture between Vietnameses Vung Tau Intourco Resort JSC and Taiwanese Paradise Development and Investment. Accordingly, the investors will have to invest at least $2 billion in the project, at least 25 per cent of which need to be equity capital. Furthermore, the investors have to commit to completing the construction within three years. In addition, the project’s construction must create a link with Bau Trung, another potential area for tourism development in the province. According to Nguyen Dinh Trung, deputy director of the Ba Ria-Vung Tau Department of Planning and Investment (DPI), the province plans to make Vung Tau Paradise a luxury resort with all facilities meeting international standards, including the residential units, an amusement park, spa, and the golf course. “The province will hire the design companies to advise the specific plans for the project and will carefully select feasible investors so that they can meet the province’s expectations and ensure that the project will help to promote the province’s tourism potential,” Trung stated. The project was licensed in 1991 with the total estimated investment capital of $97.2 million, however, only about $40 million has been disbursed so far. Both the provincial authorities and local residents expect significant benefits once the project comes into operation. The Vietnamese investor also expects to acquire $50 million in profit within 25 years. However, since coming into operation in 1995 with poor infrastructure featuring a 27-hole golf course and a housing area with only 54 units, the resort has not only not any profit but went straight into the red. The firm also failed to make good on its commitments to construct several of the designed components, including a 500-room hotel, a theatre, and an entertainment playground. According to the DPI, Vung Tau Paradise Resort’s investment certificate expired at the end of April this year. As such, in accordance with the Law on Investment, Vung Tau Paradise Company must complete its liquidation process within the next 12 months. The joint venture requested the local authorities’ approval for extending its investment certificate but was refused as the province resolutely seeks other potential investors to develop the resort. Glutton for work: Thien Tan to develop second solar power plant After kicking off the construction of the first solar power plant in the central province of Quang Ngai, Thien Tan Group continues to co-operate with US partner Black & Veatch to study investment opportunities for another solar power plant in Ninh Thuan province. Notably, representatives of Thien Tan and Black & Veatch attended a working session to discuss the feasibility of a solar power plant in the province. Accordingly, Thien Tan plans to develop a 1,000MW solar power plant with a total investment capital of $2 billion, using batteries imported from First Solar Group from the US.  Regarding Black & Veatch, the company said that it specialises in consulting and constructing infrastructure for energy projects. The company has plenty of experience in implementing solar power projects and wind farms up to a capacity of 3,500 and 2,200 MW, respectively, in over 100 countries. Black & Veatch currently has over 100 offices across the world. In August 2015, Thien Tan has also started developing a 19.2MW solar power project in Quang Ngai, with the total investment of nearly $41 million. It is one of the two solar power plants implemented in Vietnam to date. The plant will be kitted out with modern technology and equipment. Once it comes into operation, it will have an output capacity of 28 million kWh per year. Along with solar power projects, Thien Tan is negotiating with US-based Global Universal Inc. to form a joint venture to upgrade and expand the Chu Lai airport expansion projec in the central province of Quang Nam under a build-operate-transfer (BOT) format. Besides, in July, Thien Tan signed a consultancy agreement with Nikken Sekkei Civil Engineering Ltd. from Japan to aid the infrastructure development of Ly Son Island District in Quang Ngai province. Vietjet offering 300,000 cheap fares Vietjet Air has made 300,000 cheap tickets available at a starting price of VND0 on domestic routes from Hanoi to Ho Chi Minh City, Da Nang, Nha Trang, Phu Quoc Island, Da Lat, Pleiku, Tuy Hoa, Can Tho, Buon Ma Thuot, Quy Nhon, Chu Lai and Hue and return.  The promotion, under its “12pm, It’s Time to Vietjet” campaign, is running from August 24 to August 26 for flights from September 1 to December 31 (except national holidays). The tickets are on sale from 12pm to 2pm at www.vietjetair.com, or at m.vietjetair.com for smartphones. Customers can also buy tickets via Facebook at www.facebook.com/vietjetvietnam by clicking the “Booking” tab. Payment can be made easily with debit and credit cards of Visa, MasterCard, JCB, and American Express and ATM cards issued by 24 Vietnamese banks that have been registered for internet banking. Vietjet also recently announced that Hanoi - Hue flights will be launched on November 1, with a flying time of one hour and 10 minutes. The daily flight will depart Hanoi at 12.35pm and arrive in Hue at 1.45pm. The return flight will take off from Hue at 2.20pm and land in Hanoi at 3.30pm. Vietjet is the first airline in Vietnam to operate as a new-age airline, with low-cost and diversified services to meet customer demands. It provides not only transport services but also uses e-commerce technology to offer various products and services to customers. The airline recently secured IOSA Certification from the International Air Transport Association (IATA) after just three years of operations. It was also in the Top 500 Brands in Asia 2016 and “Best Asian Low Cost Carrier” at the TTG Travel Awards 2015, which compiles votes from travelers, travel agencies and tour operators in Asia. The airline was also rated as one of the Top 3 fastest growing airline brands on Facebook in the world by Socialbakers. Vietjet now boasts a fleet of 40 aircraft, including A320s and A321s, and operates 300 flights each day. It has opened 53 routes in Vietnam and across the region to international destinations such as Thailand, Singapore, South Korea, Taiwan, China, and Myanmar and has carried nearly 25 million passengers to date. Power equipment companies embrace SEA’s growing electricity demand A number of foreign cable and wire companies are planning expansion in Vietnam in order to take advantage of the growing local and Southeast Asian demand. Late last week, South Korean cable manufacturer LS Cable & System announced the initial public offering (IPO) of its subsidiary LS C&S Asia on the country’s main bourse, Korean Composite Stock Price Index (Kospi) next month. This subsidiary is a holding company of LS Cable & System’s two Vietnam-based locally incorporated operations LS-VINA and LS CV. The reason for the listing, according to CEO Myung Roh-hyun, is the Vietnamese operation’s gleaming prospect of growth. According to a release posted on the company’s website, as the Vietnamese government is now carrying out many power projects due to its high economic growth, the sales of extra high voltage cables are expected to increase sharply. ASEAN countries are also expected to expand their investments in their power and communication infrastructure as their economies are growing by more than 5 per cent a year on average. “We will transform LS C&S Asia from No. 1 in Vietnam to the best total cable-maker in Southeast Asia,” Myung said. He added that the company is aiming for 1 trillion won ($890 million) in sales in 2021, compared with the 490 billion won ($436.5 million) last year. LS C&S Asia reported a market share of 30 per cent in Vietnam in 2015, ranking as the leading company in the industry. Talking to local media, Myung said he is confident in the company’s ability to stay at the top in the following years because “Vietnamese competitors have yet to catch up with LS Cable & System in terms of technology.” LS C&S Asia is also planning an additional investment of $15 million in Vietnam to be disbursed from now to 2020, and to export products to other fast growing economies in the region, including Myanmar, Laos, and Cambodia. Late last year, the company secured a $13-million contract with Myanmar’s Ministry of Electricity and Energy. LS C&S is not the only company planning expansion in Vietnam. Late last month, Taihan Electric Wire acquired complete ownership of Taihan Sacom Cable (TSC), its joint venture established in 2005, and renamed it to Taihan Cable Vina (TCV). CEO Choi Jin-yong said the company decided to pick Vietnam as a strategic location to expand its global market share due to its geographical advantages as well as the growth potential of its economy and electricity market. “We will make aggressive investments in new facilities and technologies to make Vietnam our second production base, following our plant in Dangjin in South Korea,” he told newswire businesskorea.co.kr. Taihan Electric Wire is planning to build a plant in Vietnam for high-margin products, such as ultra-high voltage cables and aluminium conductor composite core cables, to strengthen the competitiveness of TCV. The company expects its annual sales revenue to rise from $36 million in 2015 to $190 million by 2020. Germany-based cable producer Helukabel GmbH, meanwhile, is ramping up sales activity in the region. The company recently opened its 26th global subsidiary in Ho Chi Minh City. The office will initially be operated by a seven-member sales and logistics team, but the company projects it to grow to about 20 people over a five-year span. The office is currently just 765 square feet and only carries small quantities of single conductor wire, but a larger warehouse is expected to be completed in 2017. The firm said Southeast Asia is one of the world's fastest growing regions, with Vietnam's industrial sector accounting for more than 40 per cent of the country's economic output. “We expect solid, double-digit growth in Asia overall,” a Helukabel spokesman said. Electricity demand in Vietnam is expected to see a remarkable increase of more than 10 per cent per annum in the near future, due to the rapidly increasing population and economic growth. In particular, southern Vietnam faces a critical situation due to the current imbalance between existing supply and the increasing electricity demand. There is an urgent need for the development of power generation and transmission infrastructure in the region. For Southeast Asia, the demand for electricity is expected to triple from now to 2040, according to a forecast by the International Energy Agency. Canadian joint owner takes over whole PVI Sun Life PVI Holdings Company (PVI) has agreed to sell its remaining 25 per cent stake in PVI Sun Life Insurance Company Limited (PVI Sun Life) to Sun Life Assurance Company of Canada (Sun Life), increasing the latter’s equity ownership to 100 per cent, according to newswire Tinnhanhchungkhoan.vn. The transaction will be completed after receiving the authorities’ approval. Accordingly, Sun Life will become the sole owner of PVI Sun Life. Earlier in January, PVI signed over a 26 per cent stake from PVI Sun Life to Sun Life, increasing Sun Life’s equity ownership from 49 to 75 per cent. PVI Sun Life, a joint venture between the northern exchange-listed PVI and Sun Life, was launched on the local market on March 15, 2013, with the chartered capital of VND1 trillion ($44.9 million). PVI owned a 51 per cent stake in this joint venture, while the remaining 49 per cent belonged to Sun Life. Vietnam has been one of the fastest growing economies in Asia in recent years and the life insurance and pensions industry is expected to continue experiencing strong growth. Since its launch in 2013, PVI Sun Life has established itself as the sixth largest life insurance provider in Vietnam, as well as a market leader and industry pioneer in the pensions market. Sun Life has nearly 150 years of experience in insurance and risk management over Asia and the world. PVI is one of Vietnam’s major insurance groups focusing on various business lines, including general insurance, reinsurance, life insurance, and other financial services. Home prices up in July Home prices in Vietnam continued rising in July, according to a monthly report of the Vietnam Real Estate Association (VNREA) released last week. Price hikes were seen in almost all segments including apartment, townhouse, villa and land lot. Prices of mid- and hi-end apartments in finished projects picked up 4-6%. In HCMC, home prices in the mid- and hi-end segments edged up last month and houses targeting middle-income earners turned more attractive to homebuyers. A number of projects in the mid-end segment were offered for sale in July such as Richmond City, Moonlight Garden, Diamond Lotus Riverside and Citisoho. This segment accounted for some 37% of the housing products sold in July. According to the VNREA, developments on Hanoi’s housing market were opposite to HCMC’s last month as luxury apartments outpaced mid- and low-end ones. Real estate developers put up for sale houses in Vinhomes Thang Long, Thanh Xuan Tower and Aqua Central projects. Two new projects provided 700 apartments to Hanoi’s property market in July. In the two major cities, mid-end apartments made up 82% of new houses offered for sale. Overall, apartments located in good locations near the city center and key infrastructure facilities saw their prices going up. Demand for land lots and townhouses surged in July, sending their prices up 4-12% depending on locations. Investors of residential areas like Cat Tuong Duc Hoa and Phu Dong Him Lam in HCMC, Phu Luong and An Nam Khanh in Hanoi and My Phuoc 4 in Binh Duong Province have looked for homebuyers. Notably, land lots and townhouses shot up 20-40% in prices while those near metro lines in HCMC, elevated urban railways in Hanoi, infrastructure facilities and public utility works soared 45-50%. VEAM in negotiations with potential strategic investors The Vietnam Engine and Agricultural Machinery Corporation (VEAM) is now negotiating with potential strategic investors to identify who is most suitable, following an IPO that retrieved millions of US dollars for the company. A representative from the company declined to confirm with VET the substance of rumors that the Vietnam N.A Motor Company (Vinamco) has offered to buy 36 per cent of VEAM. Vinamco’s PR Manager Ms. Tran Thi Hieu Thao also preferred not to comment when contacted by VET on August 14. VEAM’s charter capital rose VND2.13 trillion ($95.5 million) after its IPO on August 29 saw 149.5 million shares sold. It was reported earlier that VEAM - the major local partner in joint ventures with foreign automakers such as Honda, Toyota and Ford - would publicly auction 167 million shares, equal to a stake of 12.57 per cent. It will also sell 36 per cent to strategic investors, or 478 million shares. VEAM’s charter capital will be VND13.3 trillion ($597 million) post-equitization, with the State holding 678 million shares, or 51 per cent. Employees hold 0.43 per cent, or 5.7 million shares. Its IPO saw most buying orders around the initial price of VND14,290 ($0.64) per share. A total of 240 investors registered to buy, with shares sold to 15 organizations and 225 individuals. One investor obtained 79.7 million shares, or 47.7 per cent of those offered, the Hanoi Stock Exchange (HNX) revealed. The amount of shares auctioned totaled 89.5 per cent of the 12.57 per cent holding on offer, or 149.5 million shares. With an average successful bid price of VND14,291 ($0.64) per share, VEAM reaped VND2.13 trillion ($95.5 million). The IPO was considered the “hottest” of the year, not only because of VEAM’s revenue but also its holdings in joint ventures. Its market capitalization is forecast to rise to VND19 trillion ($851.9 million).    VEAM currently holds 30 per cent of Honda Vietnam and 20 per cent of Toyota Vietnam. It also holds a total of 50 per cent in Ford Vietnam when taking into account the holding of a subsidiary, the Song Cong Diesel Company (Disoco), in the automaker. Its 2015 financial statement noted that the majority of its profit came from dividends in the three joint ventures. Last year it reported after-tax profit of VND3.3 trillion ($148.1 million), with dividend revenue at VND3.4 trillion ($152.6 million).  Early this year Vinamco acquired 97.7 per cent of shares in the State-owned automaker the Vietnam Motors Industry Corporation (Vinamotor) for VND1.25 trillion ($55.6 million). Vinamco is said to have a close relationship with the BRG Group, the private property developer that has been actively seeking a slice of several other State-owned entities. VEAM has led the domestic engine and agricultural machinery market with a market share of 15 to 25 per cent since its establishment in 1990. It also distributes engines and accessories for motor cars and to motor vehicle manufacturers via its subsidiaries. Quang Ngai threatens Tan Tao project with license revokation Central Quang Ngai province has warned a subsidiary of the Tan Tao Group that its project may appear on the list of projects whose license may be revoked due to long delays in implementation. In a document sent to the subsidiary, the Vina Film Studio and Tourism Zone Investment JSC, the provincial People’s Committee said that the company must push ahead with its Vina Universal Paradise Trade and Service Complex project or face revocation. Accelerating construction progress is an urgent matter, it wrote, in ensuring the needs of the province’s urban development planning and in stabilizing lives for residents where the project is located. Ms. Ho Minh Hoa, Head of the Foreign Economic Relations Division at the provincial Department of Planning and Investment (DPI), told VET that “the project has been delayed for many years due to site clearance issues and the crisis in the real estate sector a few years ago resulting in the investor facing financial difficulties.” Due to the large scale of the project, on a site of 56.5 ha in Son Tinh district, much time was needed to establish site compensation options for local residents and to conduct site clearance work, she added. The company was licensed in 2008 to develop the Vina Universal Paradise Trade and Service Complex and had total registered investment capital of around $55 million. Under the original planning the project was to be completed within four years and would include a residential area of 237 houses, 183 villas, and 56 bungalows, a public area, and five trade and service blocks. The investor is still to complete compensation payments and build resettlement areas for residents affected by the project. The long delay in construction has turned the project area into a wasteland while residents have no land for cultivation or construction. The investor previously proposed provincial authorities provide an extension to the deadline to 2018 so it may complete the final stages, including service facilities, commercial areas, and landscaping, which was rejected.   The People’s Committee suggested instead that the investor reduce the size of the project and seek cooperation with provincial authorities to deal with any difficulties. The Tan Tao Group also received an investment license in 2008 to build the Vina Universal Studio Resort project in the province, with total investment of $50 million, according to the provincial DPI. The project was to have a combined land and sea area of 2,500 ha. Because commencement was continually delayed, in 2011 the license was revoked by local authorities. The company then abandoned the project due to financial difficulties. Another project planned by the Tan Tao Group in the province, the Pho Phong Industrial Park, had its investment license revoked in 2012 due to slow progress. With total registered capital of more than $13 million, the project was located on an area of 157 ha and was licensed in 2009. The Tan Tao Group is one of the largest private groups in Vietnam and operates in a number of fields, ranging from property to power generation, water supply and education. Exxon Mobil investing in central provinces The government has approved planning for the Central Gas and Power Center in Vietnam’s central region, which will receive investment from the US's Exxon Mobil and PetroVietnam. The government also agreed to the construction plan for four gas-fired power generators at the Center, with a total capacity of 3,000 MW using gas from the Blue Whale Oil Field, in which each generator has a capacity of 750 MW. The Center has four plants, with two to be built at the Chu Lai Open Economic Zone in Nui Thanh district, Quang Nam province, and two at the Dung Quat Economic Zone in Binh Son district, Quang Ngai province. According to Mr. Tran Dinh Quang, Deputy Manager of the Chu Lai Open Economic Zone, Quang Nam is ready to welcome the investment. “We have conducted site clearance on nearly 400 ha, as required for the project,” he told VET. “Site clearance and compensation and the building of resettlement apartments for local residents took around two years to complete,” he added. The Center is a joint venture between the 1870-founded Exxon Mobil and PetroVietnam. Two hundred hectares is needed for the first phase, with a 1,500 MW electricity plant. Once in operation the plant will consume 6 to 8 trillion cu m of natural gas from the Blue Whale field. “The total investment is yet to be finalized,” Mr. Quang said. The initial scale of the project could reach $22 billion but the number mentioned by PVN was $10 billion and, according to the latest news, has been reduced to $4.6 billion. Exxon Mobil will invest a well-head shelf for dehydration processing offshore and two underground mining clusters, each with four exploitation wells and a pipeline of about 88 km connecting to the coastline near Chu Lai. It is expected that of the 8 to 9 billion cu m of gas exploited each year, 1 to 3 billion cu m will go to the Dung Quat Oil Refinery for processing. Due to the large scale and significance of the project, Exxon Mobil has visited the central provinces many times recently to survey construction sites, which triggered competition between Quang Ngai and Quang Nam. A working group on investment promotion for the gas and power plant at the Chu Lai Economic Zone was established three years ago, while Quang Ngai province has also proposed favorable locations on a number of occasions. Nearly two months ago Quang Ngai sent a document to central authorities introducing three locations for the Center, in which the favored location was 385 ha in Binh Son district. This land is adjacent to the Dung Quat Oil Refinery and on the coastline, making it suitable for the laying of an oil pipeline from Dung Quat to supply diesel for the Center. Both Quang Nam and Quang Ngai will benefit from the project, especially the Chu Lai Open Economic Zone and the Dung Quat Economic Zone, which have received development incentives from the government. ExxonMobil was also part of a business delegation of the US-ASEAN Business Council to seek investment opportunities in Vietnam at the end of August. Genco 3 IPO plan awaits PM's approval The initial public offering (IPO) plan of the Power Generation Corporation 3 (Genco 3) under Electricity of Vietnam (EVN) has been submitted to the government for the Prime Minister’s approval. With the State holding some VND25 trillion ($1.12 billion) and the plan to sell up to 49 per cent there will be a large amount of shares on offer. The most important factor in determining the IPOs success, according to Genco 3’s Chairman Mr. Nguyen Van Le, will be the electricity price. The blueprint for EVN’s equitization is that, following Genco 3, Genco 1 and 2 are to be equitized and operate independently. The government previously directed EVN to equitize Genco 1, 2 and 3. Genco 1’s valuation is currently being assessed by its consultant unit and will be forwarded to its IPO Steering Committee for review. Genco 2’s equitization process has only just begun, with an IPO Steering Committee formed recently. The three equitizations are also part of EVN’s reform target during the 2016-2020 period. According to EVN Chairman Mr. Duong Quang Thanh the criteria set for the reform process during the period is to organize the reform of EVN’s corporations to improve generation and productivity so that Vietnam moves into the top 4 ASEAN countries in electricity. As at the end of 2015 EVN had completed all of its reform plans for the 2012-2015 period. The overall target was to completely divest from all holdings in non-primary sectors and reduce its holdings in seven joint stock companies, as directed by the government. This went much better than expected, with EVN recouping its initial investment in non-primary sectors and even reporting capital gains. EVN completely divested from the seven joint stock companies, in real estate, securities, finance, banking, and insurance, brining in VND1.96 trillion ($87.8 million). It also completely divested from two joint stock companies within its primary business: the Central Area Electrical Mechanical Company (CEMC) and the Power Engineering Company (PEC), and reduced its holdings in the Thu Duc Electro Mechanical Company (EMC) and the Dong Anh Electrical Equipment Corporation (EEMC). Power plants are investments in infrastructure and investors must be prepared for a long haul of ten to 15 years. They can be quite profitable, though not to the same extent as in other fields, but in the long term they are less risky. Even though EVN is focusing its resources on executing its reform process as directed by the government and the Ministry of Industry and Trade (MoIT), a company official said its equitization must ensure that power plants continue to operate normally, as this relates to secure electricity supplies throughout the country. In August 2014 MoIT approved the initial plans to equitize Genco 3, with a valuation to be conducted by January 1, 2015. The plan aimed to conduct an IPO in March 2016 and then hold its first shareholders’ meeting a month later. Startups rise in first eight months The number of newly established firms in January-August has jumped 19.7% year-on-year to more than 73,400, according to the Business Registration Agency under the Ministry of Planning and Investment. These startups have total registered capital of VND567.9 trillion (US$25.47) billion, surging 50.9%. The number of startups has increased across all sectors. There are 1,900 firms in the real estate sector, leaping 101.3% year-on-year; 1,724 firms in training and education, up 41.9%; and 724 firms in finance, banking and insurance, up 24.6%. Entertainment is the only sector that saw a decrease in startups with 906 firms, down 34% compared to the same period last year. As for capital, new real estate enterprises have registered VND133.37 trillion, up a staggering 268.4%; the mining sector VND19.7 trillion, soaring 247%; information and communications VND17.4 trillion, surging 183%; science, technology, consulting service, design and advertising VND34.9 trillion, rising by 125.3%. The average registered capital of a company in the first eight months is VND7.7 billion, a year-on-year increase of 26%. New enterprises in January-August have planned to employ 857,200 laborers, down 1.8% against the same period last year. Operational businesses have registered to add a total of VND1,024 trillion in the eight-month period. More than 18,700 suspended businesses have resumed operation in the year to August, up 65.1%. Over 14,920 enterprises have suspended operation in the period, increasing 32.7% year-on-year. The number of firms that have stopped operation without prior notice or have waited for dissolution has fallen by down 8.3% to around 25,500, with 93% of them having registered capital of less than VND10 billion. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR