VIETNAM'S
BUSINESS NEWS HEADLINES JULY 20
02:28
Lao Cai to build
border market and trade promotion centre
The northern
mountainous province of Lao Cai plans to build Kim Thanh border market and a
trade centre to attract investment.
The
provincial People's Committee has just proposed the project, considering it
as an important source to develop a centre for goods exchange on the border
with China and motivation for local economic development.
Aiming to be
built with modern facilities, the market and the centre are expected to
renovate and improve the efficiency of trading in the local area and attract
more businesses.
It will also
promote the development of e-commerce, creating conditions for trading and
exchanging goods between border residents, while preventing smuggling and
trade fraud.
According to
the project, they will build three different zones including a zone for fairs
and a showroom for regular product, a zone for border residents' markets and
a zone for wholesale markets for agricultural and aquatic products.
The first
zone will be built in the current Kim Thanh Exhibition and Convention Center
covering 2.69ha while the second one will be built over 2.4ha where an
e-commerce trading floor and e-commerce checking and delivery area also
exist.
To the west
of zone 1 on an area of 6.2ha, zone 3 will host a wholesale market for
agricultural and aquatic products for domestic consumption, import and
export.
Lao Cai
expected to call for investment of 200 billion VND (8.6 million USD) and
finish the building in the 2020-2022 period through land lease auctions.
Local
provinces bordering China, such as Quang Ninh and Lang Son, have formed pairs
of border markets for trade promotion which have proved effective in
promoting the activities of goods exchange, trade and import and export.
Vietnamese enterprises
overcome difficulties in Cambodia
Many
Vietnamese businesses or Vietnamese-owned enterprises are still thriving in
Cambodia despite the impact of the COVID-19 pandemic, creating thousands of
jobs with stable incomes.
In this
difficult period, the Horizon Care supplements company has been conducting
normal business activities thanks to its early application of communications
technology platforms. Technological application has become a competitive
advantage for many Vietnamese small and medium enterprises in the
neighbouring country.
With borders
forced to close to prevent the spread of the pandemic, many Vietnamese
companies have diversified their sources of imported materials and goods,
applied standards to control the quality of their output, and at the same
time identified human resources as a core value to compete and overcome
crisis.
Experts said
that, in the current circumstances, the Vietnamese business community
needs to link more closely to develop together in the
post-COVID-19 period and contribute to the recovery of Cambodia’s
economy.
Vietnam’s
large scale, high-tech agricultural investment in Cambodia is also proving
its worth and sustainability. After nearly three years of investing
in Cambodia, the THADI Company has expanded to fruit trees, cereal, and
forestry, employing some 3,500 local workers. Despite the difficulties the
pandemic has caused, the Vietnamese business community in Cambodia still
stands strong, demonstrating its competitiveness and technological
advantages./.
Malaysia potential
post-COVID-19 export market of Vietnam
Malaysia
could become one of the biggest export markets in ASEAN for Vietnam,
especially in the post-pandemic period, a city official said at a meeting in
HCM City on July 16.
Nguyen Tuan,
deputy director of the HCM City Investment and Trade Promotion Centre (ITPC),
told a seminar on exports to Malaysia organised by the centre that economic
and trade cooperation between the countries has been growing in recent years.
Vietnam and
Malaysia are members of the ASEAN Economic Community (AEC) and the
Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPTPP), he said.
In 2016,
Malaysia surpassed Singapore to become Vietnam’s second largest trading
partner in ASEAN after Thailand, he said.
It is the
third largest export market for Vietnam in the region after Thailand and
Cambodia, he added.
Bilateral
trade last year was worth 11.1 billion USD, with Vietnam’s exports being 3.8
billion USD, or 15 percent of the country’s total export to ASEAN member
countries.
The pandemic
has severely affected almost all socio-economic aspects like health,
transportation, tourism, education and trade, he said.
Due to the
pandemic, in the first half of the year Vietnam’s exports to Malaysia
declined by 17.4 percent year-on-year to 1.6 billion USD, he said.
“The centre
has taken drastic measures to support businesses to increase exports by
developing new supply chains and expanding and diversifying export markets.”
Raphy Md
Radzi, Malaysia’s trade commissioner in HCM City, said Vietnam and Malaysia
are important trade partners and should enhance promotions to achieve their
trade targets after the pandemic.
Vietnamese
exporters could also coordinate with Malaysian service companies for
distribution of their goods globally, he added.
Theng Bee
Han, chairman of the Malaysia Business Chamber, too said, “Vietnamese
businesses should not only consider Malaysia a potential export market but
also cooperate with Malaysian companies to tap the world market.”
Malaysia has
a large Muslim population, and therefore exports to it must meet Halal
standards for products like food, medicine and cosmetics, and should also
comply with food safety, labelling and traceability regulations, he said.
It is
expected that by 2030 the global Halal industry will be worth 30.6 trillion
USD, including 1.1 trillion USD in the Asia Pacific region, with Malaysia
accounting for 228.5 billion USD, he said.
Vietnamese
farm produce and seafood products meet Malaysia’s food standards, and when
they receive Halal certification, they could be exported to the country, he
said.
Vietnam
exports computers, electronic products and parts, mobile phones, iron and
steel, glass products, vehicles, garments and textiles, and wood and timber
products to Malaysia, and imports petroleum, electronic components, plastics,
chemicals, and textiles from it.
Malaysia
also has great demand for farm produce such as rice, fruits, vegetables, and
pepper, office clothes, seafood, footwear, office furniture, in which Vietnam
has strengths.
It is among
the largest rice importers in ASEAN, with annual demand at 900,000-1 million
tonnes.
Last year,
Vietnam surpassed Thailand to become Malaysia’s largest rice supplier with
shipments worth nearly 219 million USD.
In recent
times, Malaysia’s demand for medical masks, gloves and other protective
equipment has surged due to the pandemic.
Malaysia’s
GDP last year topped 364.7 billion USD, making it the 33rd largest economy in
the world and third largest in Southeast Asia.
Its income
per capita was 11,200 USD./.
Lavifood buys 100 tonnes of
Long An dragon fruits
The Long An
Dragon Fruit Association sold over 100 tonnes of dragon fruits to Lavi Agri
Company Limited, a member of Lavifood JSC, on Wednesday.
This is the
first batch following the signing of the co-operation programme between the
association with Lavi Agri to purchase and consume 100 hectares of red-flesh
dragon fruits in the provincial Chau Thanh and Tan Tru districts.
Farmer
Nguyen Van Ly in Thanh Phu Long commune said that the company purchased
dragon fruits grade 1 at VND30,000 (US$1.3); dragon fruits grade 2 costs
VND20,000 per kilo; grade 3 costs VND15,000 per kilo.
The price
was equal or higher than that in outside markets, he said.
In
particular, farmers had a clear contract with the company and will receive a
30 per cent deposit, he added.
Nguyen Quoc
Trinh, the association’s chairman, said this was the first value chain for
dragon fruit.
The
association, together with Lavifood, had created a value chain for dragon
fruit which both helps farmers to have a clear contract and provides
technical support to farmers to make dragon fruit grow better, he said.
The
agreement was signed at the end of last month to purchase and consume red
dragon fruit in the province’s Chau Thanh and Tan Tru districts.
Under the
agreement, the company will buy 100 hectares of dragon fruits, equivalent to
3,000-3,500 tonnes, provided that dragon fruits are grown in Chau Thanh and
Tan Tru districts and are cultivated using a clean process.
The province
currently has more than 12,000 hectares of dragon fruit with output of more
than 400,000 tonnes per year./.
Indonesia to participate in
ASEAN Online Sale Day 2020
Indonesia
will participate in the ASEAN Online Sale Day (AOSD) 2020, which is scheduled
to take place on e-commerce platforms on August 8.
Indonesia’s
Minister of Trade Agus Suparmanto expressed his belief that the participation
would bring in huge benefits, especially for small-and medium-sized
enterprises (SMEs).
Themed “A
Click to prosperity”, the programme will enable local businesspeople to join
e-commerce and cooperate to expand market shares of online trade products and
services in the ASEAN and global markets, he added.
According to
investment data of the ASEAN Secretariat, the bloc’s digital economy was
estimated at 100 billion USD in 2019. The figure is expected to reach 300
billion USD in 2025.
Founded in
1967, the Association of Southeast Asian Nations (ASEAN) groups 10 member
countries, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam./.
Thailand offers
45.7-million-USD loan for Myanmar’s electricity development
Thai
Government has approved a concessional loan worth 1.45 billion baht (45.7
million USD) to help Myanmar improve its electricity system.
Rachada
Dhnadirek, Thailand’s deputy government spokeswoman, said on July 14 that the
loan is part of the country’s initiative to strengthen ties with neighbouring
countries.
According to
her, Thailand’s Neighbouring Countries Economic Development Cooperation
Agency (NCEDC) will be responsible for arranging and extending the loan to
Myanmar. The sum is earmarked for the construction and improvement of
electrical substations and transmission systems in Yangon.
Myanmar will
be charged an interest rate of 1.5 percent per year with a 30-year contract
which includes a 10-year grace period. Under the terms of the loan agreement,
50 percent of goods and services in the power grid projects must come from
Thailand. Myanmar must also enlist a Thai construction contractor and
consultant engineer, while the rules governing the loan agreement must be
issued by Thailand.
Thailand is
currently the third-largest investor in Myanmar after Singapore and China.
Viettel should work towards
higher standing in Asia: NA leader
Viettel is a
strong brand and should maintain its No. 1 position in Vietnam’s telecom
sector while improving its standing in Asia, National Assembly (NA)
Chairwoman Nguyen Thi Kim Ngan said at a working session with the group in
Hanoi on July 16.
Reporting on
the development of the military-run industry and telecoms group, Acting
Chairman and General Director Maj. Gen. Le Dang Dung said between 2015 and
2020 it earned 1.23 quadrillion VND (52.8 billion USD) in revenue and recorded
200 trillion VND in profit, while contributing 195 trillion VND to the State
budget.
It has some
65 million mobile subscribers in Vietnam, for a 54 percent market share, he
said, adding that the group has also become the leading telecoms service
provider in Cambodia, Laos, Timor-Leste, Burundi, and Mozambique, and ranks
second in Haiti.
Viettel has
also engaged in the research in and production of telecoms infrastructure
equipment, helping to guarantee safety and security for its network as well
as the country.
The
corporation has focused on researching and developing 5G transceiver stations
since 2019 and has piloted them at the Ministry of Information and
Communications since June, he went on.
He noted
that Viettel has mastered cyberspace monitoring and management tools to
protect internet users and national digital sovereignty, while keeping
network infrastructure ready for military tasks.
It has also
stepped up IT application in the operation of the Government and businesses,
developed infrastructure for digital payments and mobile e-commerce, and
assisted recent efforts to fight COVID-19.
Applauding
its performance over the last 30 years and more, Ngan said Viettel should
continue working to maintain its leading position in Vietnam and raise its
profile in Asia.
In
particular, it needs to continue with R&D to lay a foundation for Vietnam
to master hi-tech equipment and weapons and their production. It should also
push ahead with improving its product to help enhance the country’s military
strength.
Viettel has
managed to form a platform of digital infrastructure and develop important
digital solutions in key socio-economic areas, she said, and requested the
group continue upholding its leading role in promoting a digital life and
society in Vietnam.
Vietnam’s trade surplus hits
5.46 billion USD in first half
Vietnam
enjoyed a trade surplus of 5.46 billion USD in the first six months of this
year, nearly 1.5 billion USD higher than the estimated 4 billion USD,
according to the General Department of Customs.
In June
alone, the export-import turnover reached 43.26 billion USD, up 15.8 percent
against the previous month.
The export
revenue in the month was valued at 22.564 billion USD, up 17.6 percent
month-on-month, while the import value decreased by 14 percent to over 20.7
billion USD.
Vietnam’s
export turnover in the first half hit nearly 122.8 billion USD, up 0.2 percent,
while the country spent about 117.3 billion USD on imports in the period,
down 2.9 percent year-on-year.
Vietnam's
major exports in the reviewed period include computers, electronics and
components (3.94 billion USD); telephones and components (3.65 billion USD);
textiles (2.6 billion USD); machinery, equipment and spareparts (1.9 billion
USD) and footwear (1.43 billion USD)./.
Vietnam a highly potential
market for German SMEs: workshop
Vietnam is a
highly potential market for small- and medium-sized enterprises (SMEs) of
Germany, President of the German Association for Small- and Medium-sized
Businesses (BVMW) Mario Ohoven said at a workshop in Berlin on July 16.
At this
event, Vietnamese Ambassador Nguyen Minh Vu provided participants, including
online audience, an overview of Vietnam’s socio-economic development and
measures to combat COVID-19, recover the economy, and assist
pandemic-affected people.
He
highlighted the country’s potential and advantages, along with its
Government’s policies on attracting foreign investors, including SMEs of
Germany.
The diplomat
also pointed out investment opportunities for German SMEs in potential
sectors like mechanical engineering, automobile manufacturing, support
industries, innovation, IT, biotechnology, health care and pharmaceutical
production, and finance-banking.
Thanks to
the EU-Vietnam Free Trade Agreement (EVFTA), set to take effect on August 1,
and the EU-Vietnam Investment Protection Agreement (EVIPA) that is waiting
for EU parliaments’ ratification, there will be more and more promising
cooperation chances in Vietnam for SMEs of Germany and other EU members, Vu
noted.
For his
part, BVMW President Mario Ohoven spoke highly of Vietnam’s dynamic
development and its Government’s resolve to support SMEs, improve the
investment and business climate, and promote the economy’s adaptability to
the digitalisation trend.
Describing
Vietnam as a highly potential market for German SMEs, he also suggested the
country further improve its logistics sector, human resources, and
administrative procedures so as to create more optimal conditions for German
SMEs’ activities.
Meanwhile,
Director of the Germany Trade & Invest’s Vietnam office Frauke
Schmitz-Bauderdick and BVMW Representative in Vietnam Ludwig Graf Westarp
spoke highly of the Southeast Asian nation’s economic development and success
in COVID-19 control, adding that it still sustains fair growth amid the
pandemic and holds much potential for German firms in the fields of public
investment, supply chains and consumer goods.
They held
that with its increasingly transparent and favourable business climate, the
EVFTA, and the EVIPA, Vietnam is emerging as an attractive investment
destination for German businesses.
At the
workshop, the Vietnamese Embassy and the BVMW agreed to enhance cooperation
in organising thematic workshops, sharing information, connecting the
countries’ enterprises, and arranging visits for German SMEs to explore the
Vietnamese market.
Founded in
1975, the BVMW represents about 900,000 SMEs in Germany and currently has 55
overseas representative offices. Its office in Vietnam was set up in June
this year./.
Bleak outlook predicted for
Thailand’s rice export in H2
Thailand's
rice export is facing an unpromising outlook in the second half of 2020 amid
sluggish global demand caused by the coronavirus crisis.
Local media
cited Charoen Laothammatas, President of the Thai Rice Exporters Association
(TREA), as saying that overall Thai rice export activity is relatively quiet
in July after the pandemic resulted in the collapse of Phoenix Commodities,
one of the world's biggest commodity traders.
Phoenix
Commodities' collapse affects almost all rice exporters in Thailand, Charoen
said, noting that it was a trading partner of many Thai rice exporters,
particularly those who ship rice to Africa.
This
UAE-based company, trading in grains, coal, metals and other commodities, is
estimated to owe 1 billion THB (31.7 million USD) to Thai exporters who sell
rice on credit to it.
According to
Charoen, the appreciation of the Thai baht earlier this month and drastic
foreign exchange swings have also led almost all exporters to baulk at rice
shipments.
In the first
five months, Thailand exported 2.57 million tonnes of rice worth 54.16
billion THB, down 31.9 percent and 13.2 percent from the same period last
year, respectively.
Its biggest
rice importers during the period were the US, South Africa, Angola, China,
and Japan.
The TREA set
a full-year rice export target of 7.5 million tonnes but is scheduled to
adjust the target on July 22.
Thailand
shipped 7.58 million tonnes of rice worth 131 billion THB in 2019, down 32
percent in volume and 25 percent in value year on year./.
Pigs smuggled in from Cambodia
The illegal
import of pigs from Cambodia has been rampant in the border area of the
southern province of An Giang.
An Phu
District in An Giang Province is home to the borderline of 42.5 kilometres
with three border gates, including two major ones. With flat terrain and many
rivers and paths, the area is ideal for the illegal transportation of pigs
from Cambodia.
According to
local authorities, sophisticated tricks are used in transportation. Some were
even fined VND35 million (USD1,421), but they have continued the business
again due to the big profits.
Around
200-300 pigs are transported through An Phu District per day from Cambodia.
The traders
arrange people to watch for local authorities and timely inform them.
Captain Ly
Ke Tung from An Giang Border Guard Command said that 800 staff from the
command have been assigned to work at 138 stations in the province’s border
areas for both Covid-19 prevention and anti-smuggling work.
Tung noted
that in many cases, pigs are carried out illegally from Cambodia into Vietnam
by small boats.
In the first
six months of this year, the border guards in An Giang interrupted 13 cases
of illegal pig transportation with 176 pigs weighing a total of 12.3 tonnes.
The force also co-operated with local customs agencies to bust four other
cases involving 75 pigs.
The
smugglers confessed that the pig prices in Cambodia are a few thousand
Vietnam dong cheaper in Cambodia.
Illegal pig
transportation often takes place between 11 pm to 3 am. Pigs are often sent
to Chau Doc City.
An Phu
District People’s Committee has recommended several measures to deal with the
illegal pig import through the border areas, including setting up patrol
stations on National Highway 91C which will help to supervise the pig
transportation from An Phu to Chau Doc City.
Vietnam
represents potential market for German SMEs
Vietnam is a
potential market for German small and medium enterprises (SMEs), said Mario
Ohoven, president of the German Mittelstand Association of Small and
Medium-Sized Enterprises (BVMW) at a recent webinar.
During the
event, Vietnamese Ambassador to Germany Nguyen Minh Vu briefed participants
on an overview of the country’s socio-economic development, whilst also
providing an update on the country’s novel coronavirus (COVID-19) prevention and
control measures.
Furthermore,
the diplomat detailed some of the efforts going on in an attempt at reviving
the national economy and supporting local firms in the post-pandemic period.
He
highlighted the country’s advantages and government policies aimed at
attracting German businesses, along with investment opportunities for German
SMEs operating in a number of promising fields such as manufacturing
mechanics, automobile, supporting industries, information technology,
biotechnology, healthcare and pharmaceuticals, along with finance and
banking.
With the
EU-Vietnam Free Trade Agreement (EVFTA) coming into force on August 1 and the
Investment Protection Agreement (EVIPA) set to be ratified in the near
future, there are bright prospects ahead in terms of business opportunities
for German and EU enterprises, Vu noted.
In response,
BVMW President Ohoven spoke highly of the country’s dynamic development and
the Vietnamese Government’s determination to implement radical reforms in an
effort to support SMEs, improve the local business climate, and increase the
domestic economy’s adaptability to ongoing digital trends.
Mario went
on to describe Vietnam as a potential market for German SMEs, noting that the
country should strive to improve logistics services, enhance workforce's
qualifications and simplify administrative procedures in a bid to facilitate
the operations of German SMEs in Vietnam.
Elsewhere,
Frauke Schmitz-Bauderdick, Vietnam director of Germany Trade & Invest,
and Ludwig Graf Westarp, a BVMW representative in Vietnam, praised the
nation’s success in containing the COVID-19 pandemic, adding that the
Southeast Asian country has maintained robust growth despite the threat of
the pandemic.
The pair
added that with a transparent investment climate and benefits brought about
by the two trade deals, Vietnam will become an attractive investment
destination for German businesses in the near future.
The webinar
also saw the Vietnamese Embassy in Germany and the German Association of
Small and Medium Enterprises agree to continue intensifying co-operation
activities moving forward by organising additional seminars, networking
activities, and exchange visits to help German SMEs gain further insights
into Vietnamese market./.
US businesses keen on
investment opportunities in Vietnam
Over 100 businesses based in the United States operating in the fields of finance, energy, technology, e-commerce, healthcare, and insurance participated in a teleconference to seek greater investment opportunities in ASEAN and Vietnam moving forward.
The occasion
was co-hosted by the US-ASEAN Business Council (USABC) in collaboration with
the auditing firm Ernst & Young.
The
teleconference saw the Vietnamese Ambassador to the US Ha Kim Ngoc share some
of the huge opportunities that exist for US businesses when investing in the
ASEAN bloc and in Vietnam in particular in the post-novel coronavirus
(COVID-19) period.
The
Vietnamese diplomat highlighted some of the favourable factors that US
investors can enjoy in the country, including positive developments in the
Vietnam-US comprehensive partnership and the enforcement of a series of free
trade agreements.
In addition,
other aspects such as the country’s success in containing the COVID-19
pandemic, the Government's determination to attract foreign investment, as
well as the nation’s key role in restructuring the global supply chain, can
all be viewed as positive factors.
Prime
Minister Nguyen Xuan Phuc has recently proposed setting up a task force aimed
at promoting foreign investment, adding that the nation will resume some
commercial routes and facilitate entry for foreign experts, investors, and
skilled workers in the near future, Ambassador Ngoc said.
The
Southeast Asian nation is also discussing other issues with the US and other
regional countries, including launching economic co-operation initiatives,
such as the Economic Prosperity Network, with a view to encouraging the
implementation of co-operative projects to launch high-tech products and
develop the local digital economy.
The diplomat
also offered an update on ASEAN's efforts in response to the pandemic and
economic recovery in post-pandemic period.
Alex Feldman,
USABC President, along with other US business representatives highlighted the
investment opportunities that exist within ASEAN and Vietnam, the crucial
position of ASEAN in the Indo-Pacific region, as well as the bloc becoming
the fourth largest trading partner and the leading investment destination for
US investors in the region.
Moreover, US
businesses expressed their belief that financiers will consider the
Governments’ capability in responding to external shocks, adding that the
country’s COVID-19 prevention and control measures, along with economic
recovery efforts, have been received positively by foreign investors.
Most
notably, several US firms such as UPS and SC Johnson unveiled plans to expand
business investment in Vietnam in the near future.
Furthermore,
other US enterprises expressed a desire for the country and other ASEAN
member states to continue improving the business investment climate,
simplifying administrative procedures, increasing transparency, and devising
policies aimed at support companies that focus on the development of human
resources and infrastructure.
USABC added
that it is ready to co-ordinate with Vietnam to successfully organise the
Indo-Pacific Business Forum in the country by the end of the year.
++
BG Container Glass (BGC), Thailand's largest glass container packaging manufacturer by capacity, is negotiating with investors in Vietnam to buy solar farms to widen its foothold in the promising renewable sector.
The company
expects to complete a deal in the fourth quarter for at least two farms, with
a combined capacity of 50-100MW.
According
to newswire Bangkok Post, it set a budget of THB1-2 billion ($31.9-63.88
million) for the purchases.
BGC chief
executive Silparat Watthanakasetr said the company aims to diversify its
business and is eager to invest in renewable energy, specifically solar,
wind, and water.
"We
target renewable businesses in Vietnam, Japan, and Taiwan because these
markets have a high potential for renewable energy development and growth in
electricity demand," he said.
BGC plans to
increase its capacity for electricity generation to 300-400MW by 2022. It
already acquired a 67MW solar farm in Vietnam.
The company
allocated THB3-4 billion ($95.82-127.7 million) this year for renewable
energy and packaging businesses.
Most
recently, Gulf Energy Development Plc of Thailand announced the purchase of
two wind power farms worth $200 million in Vietnam.
The move
aims to take advantage of low building costs and a quick return on
investment.
The company
reported to the Stock Exchange of Thailand that it entered into a share
purchase agreement with Dien Xanh Gia Lai Investment Energy JSC (DGI), the
developer and operator of the two onshore wind farm projects, each with a
capacity of 50MW.
The
projects, located in Ia Grai district of Gia Lai province, will be
wholly-owned by Gulf International Holding Pte., Ltd., a subsidiary of Gulf
Energy Development Plc./.
Harsh M&A lesson for
local producers
Local
enterprises need to be careful with co-operation proposals through merger and
acquisition deals from foreign investors in order to prevent speculation,
according to one group that suffered from just that fate.
Domestic appliance manufacturer and distributor Sunhouse Group JSC was a victim of such speculation, after it was revealed that the overseas partner did either not have the money or the expertise but still conducted the merger and acquisition (M&A).
The
information was shared by Nguyen Xuan Phu, chairman of the Management Board
of Sunhouse Group at a recent workshop themed on Vietnam welcoming foreign
investment inflows and the prospects and difficulties therein.
Phu said
that Sunhouse decided to team up with a partner from South Korea to establish
joint venture Narae Sunhouse System JSC last year. The two aimed to build a
microchip manufacturing factory located at Ngoc Liep Industrial Zone in
Hanoi’s Quoc Oai district.
At the time,
Sunhouse expected that this tie-up would be a stepping stone for the company
to meet Samsung’s criteria for first-tier vendors to produce high-tech
products such as microchips for smartphones, televisions, and air
conditioners.
“Sunhouse,
with a lack of experience in this particular field, decided to hold 49 per
cent stake in the venture and put entire trust in the South Korean partner,”
Phu said.
However,
during the process, Sunhouse found out that its partner was not experienced
in the sector either, and boasted only limited financial capability. The
South Korean partner even planned to abuse Sunhouse’s strength, Phu said, and
mobilise loans from domestic banks to develop the project. The refusal from
the banks caused the project to fall to a standstill. “At the time, the
expenditure for machinery lines and land access cost around VND200 billion
($8.69 million). In order to salvage the situation, Sunhouse was forced to
acquire stakes from the South Korean partner,” Phu said.
After that
purchase, challenges continued to pile up when Sunhouse expressed intention
to co-operate with a domestic partner to manufacture microchips for LG’s
mobile phones. “When this partner visited the factory, he found that the
capacity of all machine lines imported from the South Korean partner was so
low, they couldn’t possibly meet the demand on manufacturing the microchips,”
Phu explained. “This was a really harsh lesson for Sunhouse, even though the
company has had extensive experiences in M&A in the past.”
Sunhouse
acquired Saigon Maritime JSC, a subsidiary of Vietnam National Shipping Lines
(Vinalines) at the end of 2011. Two years later, Phu bought over 2.6 million
shares of Son Ha International JSC for VND7.7 billion ($334,782) to become a
large sharehoulder in this Asia leading manufacturer of inox household and
industrial products.
News of the
failed M&A deal is an alarm bell for domestic enterprises when choosing
foreign partners via this investment channel.
“The
shifting wave of foreign investors opens massive opportunities for local
enterprises. However, the risk is much larger if these enterprises fail to
evaluate the expertise and financial potential of the investors.
Approximately 70 per cent of proposals are either fake or to abuse domestic businesses,”
Phu insisted.
According to
Samuel Son Tung Vu, lawyer at consultancy firm Bae, Kim & Lee Vietnam,
Vietnamese laws regulate foreign direct and indirect investment under both
laws on investment and ordinance on foreign exchange, and its implementing
decrees and circulars. Vu explained that, in general, it is not uncommon to
see investors raise funds elsewhere to make a short-term investment.
However, in
order to raise funds within the territory of Vietnam itself, they are subject
to requirements and regulations under the Law on Securities. Thus, it is
uncommon for foreign investors to raise funds here, instead they establish a
special purpose vehicle or a fund in another country where they are licensed,
and use such special purpose vehicle or fund as the immediate investor in
Vietnam.
Besides the
legal barriers, Vu added, the costs of borrowing in Vietnam are usually
higher than other countries.
“In the
speculation scheme, the creditor may face a high risk on their investment.
And they should be wise when reviewing the feasibility of the investment
scheme on several aspects such as what are the collaterals, what would be the
expected earnings, and what would be the capacity to pay out dividend,” Vu
said.
He further
noted that under the current regulations, strategic investors into certain
types of company such as credit institution and insurance companies are
required to show proof of healthy financial status, including presenting the
audited financial statement to the licensing authority. Unfortunately, in the
case of simple manufacturing companies, there is no such requirement.
“In the
global market, it is not uncommon to have speculators or hedgers instead of
investors, but it is very difficult to make a clear legal distinction. In a
typical speculation/hedge scheme, the risks are shifted to those who actual
finance the scheme so they should be aware of the risks,” Vu noted.
Lawyer
Truong Thanh Duc, chairman of BASICO law firm said that the regulatory bodies
do not regulate the tie-up between sellers and buyers. In this case, Sunhouse
is just unfortunate to have such a foreign partner. It is crucial that the
Vietnamese firm needs to have specific terms in the contract to support
themselves in case of failed M&As with foreign ones. Otherwise, they just
lose the M&A game.
In the
period before the COVID-19 pandemic broke out, the capital volume in terms of
contribution and share purchase made up a massive part in the foreign direct
investment capital.
Specifically,
in 2019, overseas investors poured $15.47 billion in M&A deals in
Vietnam, up 56.4 per cent on-year and accounting for 40.7 per cent of the
total registered capital. However, in the first six months of this year,
foreign-invested capital via capital contribution or share purchases was $3.51
billion, only 43.2 per cent of last year’s figure due to pandemic impacts.
Despite the
decline, there is a number of M&A deals in the pipeline as many
cash-starved Vietnamese companies seek funding from foreign buyers to
overcome their difficulties in the midst of the pandemic.
Thus, there
are some proposals to halt M&A deals involving such buyers during this
tough time.
Commenting
on the matter, Masataka Sam Yoshida, CEO and head of the Cross-border
Division of Vietnam RECOF Corporation, told VIR, “Once such a crisis
affecting heavily the corporate performances occurs, it is a natural tendency
that the government feels obliged to protect local companies against foreign
ones. In every extent, this is the duty of each country’s government.”
On the other
hand, he added, it is also true that people should examine the importance and
the previous contribution of foreign investments to the country’s economy.
“This will
depend on each country, and the government should have the capability of
analysing and filtering the nature of such investments which will be divided
simply into two categories – those with good intentions, and those based on
bad faith,” he added.
The former
category is an investment with a purpose to realise a real and solid
partnership which will bring mutual and strategic benefits so that every
stakeholder can win.
The latter
is a solely return-oriented investment which aimed to buy cheap and sell
high. Such investors, Yoshida explained, would want to enjoy today’s profit
for themselves and leave tomorrow’s loss to the counterparty.
“Needless to
say, in a recession period, I personally see many companies going into
bankruptcy. Thus, although a highly cautious inspection from the government
would be essential, it would be very dangerous if government officials come
to the conclusion that they have to shut the doors to all possible options,”
Yoshida concluded./.
MPS proposes penalizing
former Sabeco executives
Following a
probe into irregularities over the handover of a prime plot of land
at No. 2-4-6 Hai Ba Trung Street in HCMC’s District 1, the Ministry
of Public Security (MPS) has proposed penalizing several ex-executives of the
Saigon Beer-Alcohol-Beverage Company (Sabeco) and senior government
officials.
MPS proposed
taking Party disciplinary action against Cao Quoc Hung, Deputy Minister of
Industry and Trade and Phan Dang Tuan and Vo Thanh Ha, who both served as
chairperson of Sabeco which was then a State-run business, Nguoi Lao
Dong news site reported.
Apart from
this, the police asked that certain individuals be sanctioned, comprising
Nguyen Minh An, former deputy general director of Sabeco; Pham Thi Hong Hanh,
Sabeco's former general director; Le Hong Xanh, Sabeco's former deputy
general director and Bui Ngoc Hanh, former member of the Sabeco board.
In 2008, the
HCMC government handed over over 6,000 square meters of land at No. 2-4-6 Hai
Ba Trung Street to Sabeco to develop a trade, service and office center
called the Saigon Me Linh Tower, with a total investment of over VND2.4
trillion. After that, Sabeco teamed up with three corporate shareholders in
the private sector to form Sabeco Pearl Investment JSC, in which Sabeco held
a 26% stake, to carry out the project.
However, the
brewer sold out its entire stake in Sabeco Pearl in 2016, effectively transferring
the land use rights from the State sector to the private sector, which is a
violation of prevailing laws and regulations.
The ministry
stated that the prevailing regulations have a number of loopholes, allowing
individuals to dodge laws to set up joint ventures and gradually transfer
public assets to the private sector./.
S.Korea tops list of foreign
investors in Vietnam
South Korean
investors pumped in over US$544 million into projects in Vietnam during the
first half of 2020, raising its total capital registered to invest in this
Southeast Asian nation to some US$70 billion, becoming Vietnam’s biggest
foreign investor.
This capital
was invested in over 8,000 projects, creating jobs for over 700,000 workers
nationwide and contributing 30% to Vietnam’s total export value.
These
figures were revealed at a dialogue in Hanoi on July 17 between the prime
minister’s Advisory Council for Administrative Reform and the Korean business
community in Vietnam, aimed at helping remove obstacles facing South Korean
enterprises active in Vietnam during the post-Covid-19 period.
Addressing
the event, Minister, Chairman of the Government Office Mai Tien Dung
announced that Vietnam pledges to work closely with countries, including
South Korea and international organizations, to ease difficulties amid the
Covid-19 pandemic.
Korean
Ambassador to Vietnam Park Nok Wan urged the Vietnamese Government to
continue to cooperate with South Korea to normalize bilateral exchange
following the pubic health crisis.
Besides
this, the ambassador proposed the Government continue its support for South
Korean businesses to prevent obstacles and red tape while investing in
Vietnam.
Since the
beginning of the year, the Vietnamese Government slashed 239 business
conditions, raising the total to some 3,900 of the roughly 6,200. In the
coming period, the country will also execute e-customs procedures in line
with international standards./.
Illegal construction on Ma Pi
Leng Pass under demolition
Illegally-built
parts of Ma Pi Leng Panorama, a seven-story restautant and hotel
building located on the slope of Ma Pi Leng Pass in Ha Giang Province’s Meo
Vac District, are being torn down, while the rest will be retained and
renovated into a rest stop for visitors without accommodation and other services.
A
representative of the provincial government confirmed this demolition plan on
July 18, saying that a design for demolition and renovation was approved by
UNESCO, the Ministry of Culture, Sports and Tourism, and the relevant
agencies.
The
authority of Meo Vac District will take charge of the demolition and
renovation of the building.
However, Vu
Thi Anh, owner of the Ma Pi Leng Panorama building, told the local media that
she employed workers to dismantle and renovate the building beginning July 17
in line with the approved design.
Earlier, in
March this year, the provincial government convened a meeting to gather
feedback to handle the building. The demolition and renovation plan, which
was expected to be completed in several months, was delayed till now due to
the impact of Covid-19.
VNN
|
Thứ Hai, 20 tháng 7, 2020
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