VIETNAM BUSINESS NEWS JULY 1211:01 Remittances to HCM City rise by 22.34% in first half of 2021
Remittances to HCM City topped US$3.2 billion in the first half of the year, a 22.34 per cent increase year-on-year. Nguyễn Hoàng Minh, deputy director of the State Bank of Việt Nam’s HCM City office, said the growth was impressive considering the difficulties posed by the COVID-19 pandemic. The remittances went mainly into manufacturing and other businesses, and ensure there was no foreign currency supply volatility, he said. This year the city is expected to get around $6.5 billion worth of remittances. For many years they have been rising, and the city accounts for half of the country’s remittances. Around two million people hailing from HCM City live abroad, and last year they sent home US$6.1 billion, up 15 per cent from 2019, before the pandemic struck. Banks have been making investments to improve remittance services and launching promotional programmes to attract more of them. Việt Nam received US$17.2 billion worth of remittances last year, the third highest in the East Asia and Pacific. They have grown at an average of 6 per cent annually. Reference exchange rate down 3 VND at week’s beginning The State Bank of Vietnam set the daily reference exchange rate at 23,198 VND per USD on July 12, down 3 VND from the last working day of previous week (July 9). With the current trading band of +/- 3 percent, the ceiling rate applied to commercial bank during the day is 23,893 VND/USD and the floor rate 22,502 VND/USD. The rates listed at commercial banks stayed stable. At 8:20 am, Vietcombank listed the buying rate at 22,870 VND/USD and the selling rate at 23,100 VND/USD, unchanged from the rates on July 9. BIDV also kept both rates unchanged, listing the buying rate at 22,905 VND/USD and the selling rate at 23,105 VND/USD. Similarly, Vietinbank maintained the buying rate at 22,885 VND/USD and the selling rate at 23,105 VND/USD, the same as on July 9. During the week from July 5-9, the daily reference exchange rate fluctuated variably and ended the week up 11 VND./. Tea exports to China, India rise sharply The opening five months of 2021 saw Vietnam’s tea exports to China and India rise considerably, recording increases of 87.7% and 457.5% year on year respectively, according to the Ministry of Industry and Trade (MoIT). Data from the MoIT show China imported 4,550 tonnes of Vietnamese tea valued at US$6.76 million during the reviewed period, up 104.8% in volume and 87.7% in value year on year. Meanwhile, India purchased 1,400 tonnes of tea from Vietnam for US$1.74 million, up 560.5% in volume and 457.5% in value. Experts said the recent resurgence of the SARS-CoV-2 virus and prolonged drought seriously affected the tea industry of India, a global tea exporter, forcing it to import large volumes from other countries, including Vietnam,for re-export. The MoIT data also indicate that Vietnam shipped 58,000 tonnes of tea abroad worth US$95 million in the first half of 2021, up 0.1% in volume and 5% in value compared to the same period in 2020. The average export price of tea rose 4.8% to US$1,643 per tonne in the first half of 2021. Vietnam’s tea exports are anticipated to enjoy good prospects in the second half as the global economy is recovering from the COVID-19 pandemic, stimulating the demand for tea. In addition, local businesses are greatly benefitting from preferential tariffs following the implementation of free trade agreements such as one between Vietnam and the European Union (EVFTA), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Project launched to sort out outstanding tourism firms and service providers The Vietnam National Administration of Tourism (VNAT) recently launched the ‘Vietnam Tourism Yellow Pages’ project on the occasion of the 61st founding anniversary of the country’s hospitality sector (1960-2021). The project is among VNAT’s efforts to promote digital transformation in the tourism sector in Vietnam and increase added value from the digital environment. As a tourism management agency, VNAT targets to build a digital platform to create favourable conditions for consumers to connect with and access updated information on tourist service providers. Accordingly, the ‘Vietnam Tourism Yellow Pages’ project is designed as a channel for tourism brands to approach customers and advertise their safe and high-quality products and services. The listed brands need to meet certain criteria such making their products and service prices public, accepting payment online, and handling complaints of tourists regarding their service quality. The project is also connected to other tourism digital platforms in the VNAT’s smart tourism ecosystem, including the COVID-19 safety self-assessment system such as the Covid-19 safety registration and self-assessment system and an app on safe tourism, which have seen the registration of all 64 provinces and cities in the country. Market expected to continue to
correct this week: expert On the Ho Chi Minh Stock Exchange (HoSE), the benchmark VN-Index closed last Friday at 1,347.14 points. For the week, the index lost more than 4.5 per cent. The HNX-Index on the Ha Noi Stock Exchange (HNX) edged down in the last trading session to 306.73 points. The index dropped 6.4 per cent last week. Market liquidity on the two exchanges increased compared to two weeks ago, with an average of VND28.9 trillion (US$1.3 billion) trading per session. Trading value on HOSE jumped 8.5 per cent to VND127.2 trillion, while that on HNX gained 8.4 per cent to nearly VND17.4 trillion. BOS Securities Corporation (BOS) said the fall in the last session caused most technical indicators to give signals of a formation of a correction trend in the short term. The scenario of a deeper plunge to the range of 1,310 - 1,320 points may occur before the market finds a new balance point, which should be noticed by investors in the coming sessions. BOS recommends investors continue to prioritise risk management and keep the stock proportion in portfolios at a balance or low level. Meanwhile, after investigating supply and demand, Viet Dragon Securities Corporation (VDS) said the benchmark was still negatively affected by the recent fall. The index tested 1,335 point-level again and the liquidity increased back to the 50-day average, showing a strong struggle at this support zone. However, in general, the selling pressure slightly overweighted the cash inflow into the market, so there are still risks of a downward trend after breaking above 1,335 points. VDSC recommends investors be cautious until there are enough support signals. At the same time, investors should continue to restructure their portfolios to minimise the risks. Based on Elliott's theory, analysts from Saigon - Hanoi Securities SJC (SHS) expect that the fifth wave has ended and entered the correction period with the target of around 1,210 points. Therefore, the market is likely to continue to correct to lower ranges to seek demands at low prices. According to SHS, the next support level of the market is around 1,330 points and the psychological level of 1,300 points can be tested this week. SHS recommends that investors who have taken profits in the previous weeks can try to take long positions if the market corrects to around 1,300 points. Investors who have reduced their stock proportions in portfolios during the last rallies can hold their stock portfolio at a low level and wait for deeper corrections to buy-in. Last week, most sectors inched down, excepted for the retail sector which was up 2.6 per cent in market capitalisation. Of which, Mobile World Investment Corporation (MWG) rose 12.6 per cent, Digiworld Corporation (DGW) up 9.9 per cent and FPT Digital Retail JSC (FRT) up 5.8 per cent. Oil and gas stocks posted the biggest loss, down 10.5 per cent in market capitalisation. It was followed by material stocks and bank stocks, down 10 per cent and 7.1 per cent, respectively. On the flip side, foreign investors continued to net buy last week, which was a positive signal in the market, buying a total value of more than VND2.5 trillion. Ha Noi house owners live in rentals
to lease out properties for profit As renting a house is increasingly common among millennials, more and more rental opportunities have popped up. Kien and his wife lived in a villa they own in Linh Dam area, Hoang Mai District, southern Ha Noi, three years ago but then rented it out and decided to live in a rented apartment in Cau Giay at a cost cheaper than they charge their tenants. "My wife and I really like to live in a rented place as it is close to the school for our children, and close to where my wife works while I can spend my assets and money to invest," Kien said. Nguyen Viet Dung, who works for a bank in Ha Noi also leases out his villa in Van Quan area, Ha Dong District and a house on Lang Ha Street and lives in rental in Dong Da District. Dung told Viet Nam News: "I feel comfortable when renting a mid-range apartment in the centre of the city, though people keep asking me why when I have houses of my own I still live in a rented apartment, and why would not I buy the apartment.” David Jackson, general director of Colliers Vietnam, said the previous generation considered housing as a stable value-added asset, now as millennials have become the main workers in society and gotten married, they have their own different housing needs. Apartments are chosen by most young people today as the prices are considered better in locations more suited to their work and active lifestyle than where townhouses are found. Condominiums are also often closer to important social amenities such as schools, hospitals or shopping malls. Dung said renting was convenient, but from an investment point of view, he would never buy an apartment as an accumulative asset but instead spend his money on a separate house or villa. “The value of an apartment building will go down over time but the prices of separate places will always go up.” Along the same line of thinking, Nguyen Bich Lien sold her ninth-floor apartment in Bac Tu Liem District for more than VND1.3 billion and put her money into two plots of land in Nam Dinh and Thua Thien-Hue provinces. She rents an apartment in the centre of My Dinh District for VND7 million per month. "I saw a loss when spending on an apartment building so I put money into residential land in the provinces, hoping the price would increase in the next three to five years. If I had kept the apartment, its price would go down after five years and I would have had to pay more for the travel cost for me and my children, working and studying in My Dinh where my children could access higher-quality schools.” Born in Ha Noi in 1988, Doan Manh has lived in a rented house in the capital for the last 10 years, during which he married and had two children. In the past, men like Manh would have seen living in the house they owned as essential. He said: "My principle is that money must be circular instead of being put into a house you live in. "If you buy an apartment for VND1.5 billion, while the rent of such a house is only VND5 million per month, if you put that VND1.5 billion into a bank savings account, you can get more than VND8 million interest per month or if you invest it in real estate, the profit rate will be more than the rent of VND5 million many times." Phan Cong Chanh, a real estate expert, said leasing out an owned house and living in rented accommodation is not accessible to everyone, especially those who consider houses as fixed assets for them and the next generations. Tax watchdog aims to better manage real estate tax transactions Tax authorities are aiming to improve tax management of property transactions to prevent tax avoidance and increase State budget collection. The General Department of Taxation under the Ministry of Finance asked local tax departments to focus on inspecting tax declaration documents from enterprises and individuals involved in real estate to identify those who at high risk of tax avoidance so inspections can be carried out. Local notary offices would be asked to provide tax departments with a monthly list of organisations and individuals who implemented contracts related to property transactions and business to supervise tax declarations and payments. Local tax departments must also ask local departments of natural resources and the environment to provide information about the transfer of property projects, projects opened for sale, land ownership transfers and land-use purpose conversions. Cooperation between local tax departments and police was also important to enhance tax management of individuals and organisations who leased out their properties. Experts have said tax losses in property transactions come from the difference between the market price and the regulated price frame. To avoid paying high taxes, real estate purchase contracts are often declared at a very low value, many times lower than the agreed value between the sellers and the buyers to avoid taxes. Do Linh, a real estate broker, said nearly all real estate contracts did not mention the actual transaction value, the notarised contract was only for carrying out the procedures for ownership transfer. The taxes and fees would be calculated based on regulated land price frames. Doan Hong Nhung from Viet Nam National University, Ha Noi, said the land price frame did not reflect the market price that has existed for many years and this problem must be tackled in the coming amendment of the Law on Land. This difference has created conditions for people to avoid paying taxes that should be paid to the State when buying and selling real estate, Nhung said. Former Deputy Minister of Natural Resources and Environment Dang Hung Vo said international experience showed that tax was the most efficient tool to regulate the real estate market and increase revenue for the State budget. It was necessary for Viet Nam to improve the tax policies for the real estate market, he said. Cooperation between the tax watchdog, the police and notary offices was important to prevent tax avoidance in real estate and transactions, as well as increase transparency, which would also help reflect a more accurate view of the market so State management agencies could use appropriate policies. Still, the fundamental solution was to bring the land price frame closer to the market price through the organisation of an independent land valuation council in each locality. IFC lends $100 million to OCB to
boost climate finance in Viet Nam IFC’s investment will help OCB improve its outreach to SMEs in Viet Nam, which are facing a financing gap of $21 billion, equivalent to 11.2 per cent of the country’s GDP. With IFC’s support, OCB expects to double its SME lending portfolio by 2024 by leveraging its digital banking platform and developing products that cater to the sector’s needs. Some areas that SMEs are seeking financing for include renewable energy, energy efficiency, and climate-smart solutions, which can help them grow sustainably while contributing to reducing greenhouse gas (GHG) emissions. The current share of climate financing – as a percentage of total bank financing – in Viet Nam is just about 5 per cent or $10.3 billion and is expected to increase significantly in the coming years. As the country aims to reduce GHG emissions by 9 per cent by 2030 to mitigate climate change impact, this presents a $753 billion climate-smart investment opportunity for Viet Nam between 2016 and 2030, according to an IFC study. To help OCB tap into this huge lending potential, $50 million of the funding will be earmarked for climate-friendly projects, creating new options for businesses to obtain green financing. While the State Bank of Viet Nam has been promoting green banking over the past few years, the climate-finance market is still young and banks are now considering a systematic approach toward climate finance. “IFC sees banks as a major force in fighting climate change in emerging markets such as Vietnam since they can strategically expand financing for climate-smart initiatives,” said Kyle Kelhofer, IFC Country Manager for Viet Nam, Cambodia, and Laos. “By supporting commercial banks in Viet Nam to establish a viable climate-finance portfolio, IFC is facilitating the development of a climate-finance market, attracting international lenders and further supporting Viet Nam’s shift to a low-carbon and resilient growth model.” Vietnam’s frozen pork imports increase Vietnam imported around 70,000 tonnes of frozen pork and poultry by-products worth USD727 million in the first six months of this year, up 51.5% on-year. According to the Ministry of Agriculture and Rural Development, Russia, the US, India, the Netherlands and Poland were the biggest suppliers of pork and poultry products to Vietnam. Among those, Russia topped with 45,700 tonnes valued at USD97.4 million, up 437.5% on-year. Meanwhile, between January and June this year, Vietnamese poultry product export value reached an estimated USD196 million, up 9.2%. Nguyen Van Trong, deputy director of the Livestock Breeding General Department, said that since 2019, due to the impact of the African Swine Fever, Vietnam had imported more meat products. In 2020, Vietnam imported over 141,000 tonnes of pork worth USD334.4 million, up 502.9% in value against 2019. Frozen pork prices range between VND60,000-130,000 per kilo, some 50% lower than locally-produced pork. Trong added that imported pork now accounts for 4% of the country’s total pork, so it is not big enough to dominate the local pork product market. The higher frozen pork imports have helped to reduce domestic pork prices, but in reality, many people still had to buy pork at high prices at 120,000-130,000 per kilo, Trong said, blaming this on intermediate distribution channels. However, due to the ongoing Covid-19 spread, Vietnam’s meat consumption has decreased, so the country’s meat imports would be lower this year. Pham Cong Thieu, head of the animal sciences institute, also suggested lower meat imports amid reduced demand due to the pandemic. Vietnam’s economy to surpass Singapore's by 2030: DBS Bank Vietnam’s economy is expected to grow by between 6-6.5 percent over the next decade, and at this pace, it will surpass Singapore by 2030, DBS Bank experts have said. Last year, Vietnam’s economy was worth 343 billion USD while Singapore’s was 337.5 billion USD, and Malaysia’s hit 336.3 billion USD. This ranks Vietnam the 40th largest economy globally and fourth in the Association of Southeast Asian Nations (ASEAN). In their latest forecast, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) said Vietnam is on track to outpace both Malaysia and Singapore this year. Despite two waves of COVID-19 in the first half of this year heavily impacting industrial hubs, Vietnam still posted gross domestic product (GDP) growth of 5.64 percent. Its export revenue rose 28.4 percent compared to the same period last year. Although GDP expanded slower than expected, it was still much higher than the 1.82 percent recorded in the same period last year. This suggests that policies, strategies and directives aimed at both controlling the pandemic and ensuring socio-economic development have been effective./. Bac Giang earns over 296 million USD from lychee sales in 2021 crop The 2021 Thieu lychee crop has generated over 6.8 trillion VND (over 296 million USD) in revenues from fruit sales and related services for the northern province of Bac Giang, according to the provincial People’s Committee. Farmers in the province sold more than 215,000 tonnes of Thieu lychee this year, up over 50,000 tonnes from the 2020 crop, for an average price of 19,800 VND (0.86 USD) per kg. Of the amount, 126,000 tonnes (58.6 percent) were sold on the domestic market and more than 89,000 tonnes (41.4 percent) were export. Besides the traditional market of China, Bac Giang’s Thieu lychees have also found their way into many other countries such as Japan, the US, Australia, and those in Southeast Asia, the EU and the Middle East. Bac Giang plans to keep the area under Thieu lychee stable at 28,100 ha in the 2022 crop while expanding the acreage of lychee cultivated under VietGAP and GlobalGAP standards as well as the areas with cultivation area codes for export to the US, Japan and China. The province will continue to encourage the application of advanced cultivation techniques for better fruit quality and higher value, towards increasing export of the local specialty fruit./. SBV demands interest rate reduction this month Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu has asked the Vietnam Banks Association (VNBA) to campaign lenders to slash interest rates immediately this month. The COVID-19 pandemic has taken a heavy toll on the economy and banks’ operation over the last 18 months and it is likely to evolve complicatedly, making it important for the country to fight COVID-19 and boost economic recovery at the same time, Tu said. As the pandemic lingers on, more and more enterprises are in trouble with declining resilience, he said, noting that it necessitates stronger and more active aid from all banks for the affected through debt restructuring and interest rate reduction. The official emphasised that the banking system should continue providing active and substantive support to businesses and at the same time, maintain its financial capacity and security of the national finance. The SBV will maintain flexible monetary policies and incorporate them with other fiscal and macro-economic policies to keep inflation under control, and stabilise the economy and support economic recovery, he added./. Honda Vietnam sees higher auto sales but less motorbike deliveries in June Honda Vietnam posted an 8.9-percent increase in retail sales of automobiles but a 16.9-percent drop in that of motorbikes in June, the firm announced on July 10. It sold 1,550 automobile units last month, up 8.9 percent month on month but down 51.4 percent year on year Honda City remained the most sought-after model, with 802 vehicles delivered to customers, accounting for 51.7 percent of the total sales. Meanwhile, 149,853 motorbikes were sold during the month, down 16.9 percent month on month and 14.2 percent year on year Wave Alpha was the bestseller, with 32,578 units, or 21.7 percent of the total, while Vision was the most popular scooter, with 38,542 units delivered, or 25.7 percent. Honda Vietnam also exported 17,151 motorbikes to foreign markets./. HCM City needs nearly 29.8 billion USD for mid-term public investment plan Ho Chi Minh City needs nearly 686 trillion VND (29.8 billion USD) for its mid-term investment plan for the 2021-2025 period, according to the municipal People’s Council. Of the sum, the city’s budget is estimated at 672.86 trillion VND, which will be earmarked for over 5,000 projects in line with the southern hub’s socio-economic development plan. More than 13 trillion VND is projected to come from the State budget. Priority will be given to programmes fostering collective economy and cooperatives in the 2021-25 of the city. The municipal People’s Council assigned the People’s Committee to keep a close eye and suggest the Prime Minister and centrally-run agencies consider and supplement the mid-term public investment plan in the period and the State budget, so as to help the city carry out the projects. The Committee has requested reviewing the projects, especially new ones, in a bid to ensure effectiveness./. Bac Lieu prioritises renewable energy The Mekong Delta province of Bac Lieu has chosen renewable energy as one of its top priorities, aiming to restructure the economy towards green growth and sustainable development. To capitalise on its potential and strengths, the province has taken the initiative in proposing that the Government leave the Cai Cung coal-fired power plant complex out of the national power development plan. The move is viewed an important premise which is hoped to draw investment from new domestic and foreign businesses to clean and renewable energy. According to Director of the Bac Lieu Department of Planning and Investment Huynh Chi Nguyen, the province is home to the 99.2-MW Bac Lieu wind power plant that was built with an investment of over 5.5 trillion VND (239 million USD). It is the sole offshore wind power project in Vietnam at the moment. He added that the province has attracted 19 other wind power projects with a combined capacity of more than 4,000 MW. Bac Lieu is striving to raise its total capacity of power sources to about 9,780 MW by 2030, of which wind power constitutes 5,000 MW, solar power 1,550 MW, and gas power 3,200 MW. Annual power output is projected to hit 31 billion kWh by that year. At the same time, the province is building a power network able to connect with neighbouring localities and the Mekong Delta region as a whole, thereby ensuring safe supply. That Bac Lieu is striving to become a clean and renewable energy hub of the Mekong Delta and the country at large demonstrates that it is determined to ensure national energy security as well as offers stable and high quality energy at reasonable costs for socio-economic development. Vice Chairman of the provincial People’s Committee Pham Van Thieu said that in the coming time, Bac Lieu will continue to develop energy sources in a self-reliant manner, ensuring efficiency and sustainability. The province will also work to guarantee appropriate power distribution in line with requirements on environmental protection, and review power consumption, along with creating optimal conditions for the private sector to engage in the sphere. Bac Lieu boasts huge potential and advantages in renewable energy development as it has a coastline of 56 km, alongside wind of an average speed of nearly 7 metres per second all year round. It has an average annual amount of sunshine hours of over 2,900, coupled with a relatively even terrain and is barely affected by natural disasters./. Electricity corporation, Singaporean group sign strategic cooperation agreement The Electricity of Vietnam Generation Corporation No. 2 (EVNGenco2) inked a strategic cooperation agreement with Sembcorp Industries of Singapore to explore a strategic partnership on July 11 in Can Tho city. The signing ceremony was held both online and in person with the participation of the Vietnamese Ambassador to Singapore, the Consulate General of Singapore in Ho Chi Minh City, and representatives of relevant authorities. The document focuses on several key areas of cooperation such as corporate governance, digital transformation and renewable energy projects in Vietnam. Those are Sembcorp Industries’ strong fields and the development strategy orientation of EVNGenco2 in the coming time. Therefore, EVNGenco2 views the strategic cooperation with Sembcorp a top priority in its efforts to realise its development goals./. All Viettel products win awards at 2020 IT World Awards All 12 of Viettel Group's products and services competing at the IT World Awards 2021 have won awards, making it become the Vietnamese firm with the most prizes. This was the second year all of its products and services participating in the award won prizes. The awarded products and services are in sectors that have been prioritised for digital transformation by the Government such as healthcare, finance and network security. The awarded products and servcies include Viettel's telehealth remote medical examination and treatment system, the Viettel Cloud computing platform, the All in One Customer and Revenue Management System, and the ViettelPay Digital Banking Platform. Viettel has been the pioneer in bringing Vietnamese information, communication and technology (ICT) products and services to compete with big names in the world such as IBM, Google and Verizon. The company has had 35 products win awards from the event since first entering in 2016. The IT World Awards are an annual event organised by Network Product Guide to honour outstanding achievements of the world ICT industry since 2006. The award has always drawn attention from global big IT groups such as Samsung, Ultimate Software Dell, Cisco. In Viet Nam, Viettel was the first firm to participate and receive awards at the IT World Awards. VNPT has new CEO and now aims for higher revenue in 2021 The Commission for the Management of State Capital at Enterprises on July 8 appointed Huynh Quang Liem as the new CEO of VNPT. Lien was born in 1970 and joined VNPT in 1992. He took a number of positions at VNPT, including director of VNPT's Ho Chi Minh City branch from 2015 to 2017. Before his new position as the CEO of VNPT, he was deputy general director of VNPT Group since March 2017. On March 15, Lien was elected as acting CEO of VNPT. Liem graduated from Ho Chi Minh City University of Technology and has a Master of Electronics and Telecommunications of New South Wales University (Australia). In 2020, VNPT saw its net revenue and after-tax profit fall 3 per cent and 0.24 per cent, respectively, compared to 2019. In 2021, VNPT set its revenue target at VND45.16 trillion ($1.96 billion), which would mean an up of 5 per cent on-year. Khanh Hoa wants to build $561 million expressway The People's Committee of Khanh Hoa province in Vietnam’s south-central coast has just submitted Official Letter No. 5919/UBND-XDND to the prime minister proposing the implementation of the Van Phong-Nha Trang project belonging to the Eastern Part of the North-South Highway network. The leaders of Khanh Hoa People's Committee proposed that the PM assigns the province to take on the implementation of this major highway project in the next five years, with the participation of state budget capital as regulated. "Khanh Hoa province also would like to borrow bond
sources for land clearance work from the government because the locality
still faces many difficulties and issuing local bonds remains not
feasible," said an official letter signed by Nguyen Tan Tuan, Chairman
of Khanh Hoa Province People's Committee. According to Decision No.326/QD-TTg from 2016 on approving the development planning of Vietnam's highway network up to 2020, the scale of the Van Phong - Nha Trang section within the North-South Highway network in the Eastern Spur – which spans from northern mountainous province of Lang Son (Huu Nghi border gate) to Ca Mau province in the southernmost features four lanes – will have a 24.75m wide roadbed with designed maximum speed for vehicles of 100-120km per hour. To match the burgeoning transportation needs, balance resources, and ensure investment efficiency, the project management board proposed the project to consist of different investment phases, in which phase 1 involves building four lanes with limited traffic. The roadbed in this phase would be 17m wide, with an emergency stop for every 4-5km, operating according to the newest highway standards. The project is proposed to be invested in the form of a public private partnership, with the estimated total investment value excluding loan interest reaching VND12.9 trillion ($561 million). If approved by the competent authority, the project will begin to select investors in early 2022 and start its construction after about six months, with completion and opening to traffic set for the end of 2024. Coal conundrum ahead forces Vietnam to rethink priorities While the pressure on the environment and issues like climate change are increasing, it remains difficult for Vietnamese companies and the government to turn away from fossil fuels completely. However, experts warn that while a strong reliance on them will only increase related problems, using state-of-the art technology would count most. State-owned Electricity of Vietnam (EVN) and Vietcombank on June 30 signed a credit contract to finance the Quang Trach 1 thermal power plant with a total investment of $1.78 billion. Nghiem Xuan Thanh, chairman of the board of directors of Vietcombank, said that it will grant credit worth $1.17 billion to EVN, which will be disbursed over four years, with the loan term set for 15 years. Existing technology allows to minimise the impact of coal-fired power on the environment, said Nguyen Tai Anh, deputy general director of EVN. According to Tai Anh, the Quang Trach 1 plant will be equipped with modern technology to ensure environmental protection. Additionally, the plant will use synchronous systems of wastewater treatment, gas exhaustion, and dust filtration. Among these, the gas emissions will comply with Vietnam’s environmental standards that are equivalent to those of the World Bank. EVN has chosen advanced technology for Quang Trach 1 to minimise emissions to the environment, but this also renders the entire project more expensive. For example, Japan’s coal-fired power technology has a roughly 10-20 per cent higher investment cost than the plants that Vietnam is investing in. That means a 1,200MW plant that would normally require an investment of about $2.2-2.4 billion, would then cost an additional $220-480 million, which of course, would be reflected in the cost of electricity. The low cost and advantages allow coal-fired power to maintain its position in the development strategy of Vietnam. Truong Duy Nghia, chairman of the Vietnam Association of Thermal Science and Technology, said that coal-fired thermal power has the lowest cost (about 7 US cents per kilowatt-hour). Moreover, the investment capital is not too high, equivalent to around $1,500 per kWh, lower than hydroelectricity, solar, wind, and nuclear power. The electricity output is large, meeting the demand amid the current high economic development in Vietnam. Another advantage, according to Nghia, is that the construction of a coal-fired power plant is not as complicated as hydroelectricity. Coal-fired power plants only need to be located near a river with a large flow, or along the coast. The construction of such a plant would also only take about three years. With these advantages, it comes as no surprise that in recent years, the south-central region of Vietnam has established several coal-fired power plants, such as the Vinh Tan plant in Binh Thuan province, with a total capacity of over 6,200MW. As such, EVN continues to put its faith in coal power, while many countries and institutions around the world decided to turn away from this type of energy to switch to solar and wind power – not only are these renewables more eco-friendly but the prices of these sources are becoming more competitive. The Renewable Energy Policy Network for the 21st Century report showed that renewables are increasingly cost-competitive compared to fossil fuels. By the end of 2018, electricity generated from newly invested solar and wind power plants had become more economical than electricity from fossil fuel-powered plants in many parts of the world. In addition, in some locations, it is more cost-effective to build solar and wind power plants than to continue operating existing fossil fuel power plants. Data from the International Renewable Energy Agency also showed that the price of electricity from solar and wind power declined dramatically from 2010 to 2019. On average worldwide, the price of solar power has decreased by 82 per cent, with the price of onshore and offshore wind falling by 39 and 29 per cent, respectively. According to the Institute of Energy under the Ministry of Industry and Trade, Vietnam’s electricity system ensured supply for socioeconomic development and national security in the last decade. The average commercial output per capita increased from 982 kWh in 2010 to 2,320 kWh in 2020. The transmission has also been meeting the requirements of power source projects within the entire power system. With the backup rate of power sources in 2020 reaching 22.2 per cent, the system also ensures power supply for the current demand. In Vietnam, coal-fired power is currently the main source of electricity, and the installed capacity increased significantly from about three gigawatts in 2010 to 20.2GW in 2019, accounting for about 36 per cent of total installed capacity. The total output of coal power plants in 2019 stood at about 120 billion kWh, accounting for about 50 per cent of the total distributed output. Currently, there are 32 coal-fired power plants in operation in Vietnam, most of which are located in the northeast, near the coal mines in Quang Ninh province. Besides these, there are eight factories under construction and 27 factories planned. However, this impressive growth in coal power also means that Vietnam has been and will pay significant environmental costs. The establishment of coal-fired power centres in Vinh Tan, Duyen Hai, and Mong Duong also led to the emergence of environmental pollution like ash and fine dust, which could cause serious health problems for the people in the surroundings. Dr. Tran Ba Quoc from the High-tech Research and Development Institute at Duy Tan University said that burning fossil fuels emits much hazardous waste into the atmosphere. “Coal combustion in thermal power plants emits 84 of 187 hazardous wastes in the air as determined by the US Environmental Protection Agency. Many other studies from India, China, and Europe also warn that burning coal releases many harmful pollutants into the atmosphere,” Quoc explained. Studies have shown that the full operation of all coal-fired power plants in Vietnam can render the concentration of dust in the air 30-300 times higher than Vietnamese standards. Surveys with people living in provinces with coal-fired power plants such as Thai Binh, Quang Ninh, Haiphong, Ha Tinh, Tra Vinh, Binh Thuan, and many others show that the air quality has been getting worse since the plants came into operation. However, coal-fired power is still meant to contribute a significant proportion to Vietnam’s energy production. According to the Power Development Plan VIII (PDP8), by 2030, the total installed capacity of coal-fired power plants will be nearly 17,000MW, 19 per cent higher than in 2020 (14,300MW). Quoc said that if Vietnam continues to build coal-fired power plants, it is inevitable that air quality will continue to be affected more strongly. According to scientific simulation results, if coal-fired power plants are developed according to the PDP8, by 2030, the concentration of harmful substances released into the environment will be up to 8.6 times higher than in 2011. “Vietnam needs a sustainable power scheme that ensures both energy and environmental security. Long-term exposure to air pollution will increase the likelihood of diseases. Thus, these negative effects should be considered in the decision-making process related to coal-fired power development in Vietnam,” Quoc argued. Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes |
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