MBC welcomes our New Corporate Members “CHIN WELL FASTENERS (VIETNAM) CO., LTD”,” GAMUDA LAND (HCMC) JOINT STOCK COMPANY”,” HAWE INDUSTRIAL CONSTRUCTION JOINT STOCK COMPANY”, ” PANPAGES VIETNAM LTD”,” TUAN LE CONSTRUCTION COMPANY LIMITED” and ” ZICOLAW (VIET NAM) LTD”---MBC welcomes our New Individual Members “ALAN NG AIK HOW from TAN VIET XUAN PRODUCTION JOINT STOCK COMPANY “, “GAN YEE CHUN from SAMTEC VIETNAM COMPANY LIMITED “, “GARY LIT from GL TRAINING & CONSULTANCY”,” GOH SHUI HSIN from HEXACHEM CO., LTD”, “GRATIA GADING GEORGE from KRETOP INTERNATIONAL CONSTRUCTION CHEMICAL”, “HOW YEN LING from GLOBAL TRAINING NETWORK ALLIANCES SDN BHD”, “LENG TZE SING from CT TNHH MOC CAPITAL VIETNAM”,” LIM HOCK SIN from FURNITECH COMPONENTS VIET NAM CO., LTD”, “MARTIN WONG SIEW BING from SOUTHEAST ASIA TELECOMMUNICATIONS HOLDINGS PTE.LTD “,”MICHEL KHAOU from AGILITY CO., LTD “, “PETER LIM WEI HENG from TEXCHEM MATERIALS (VIET NAM) CO., LTD “, “ROGER YAP WENG FOOK from CONG TY TNHH MOLUTION”, “TAN JING KUAN from NORD ANGLIA EDUCATION GROUP”,” TAN LAI SEE from ABS ENGINEERING VIET NAM LIMITED”, “TAY KENG CHONG from NIRO CERAMIC VIETNAM”, “TEO SECK CHUAN from SEAMASTER PAINT VIETNAM CO.,LTD”,” TEOH TEAN TIAR from GTC VIETNAM SERVICE AND TRADE COMPANY LIMITED”.

Malaysia Business Chamber Vietnam


Block G, Unit 0215, The Manor 2, 91 Nguyen Huu canh, Binh Thanh District, HCMC  Tel:(84-28) 6258 6316
Vietnam News

HEADLINES 

 

FINANCE

Moody’s: Outlook for VN banking system positive

Vietnam Dong, among most stable in Asia this year: experts

 

ECONOMY

Vietnam back on M&A radar

Vietnam’s PMI in October decreases to 51.6 points, lowest in 5 months

 

INVESTMENT

South Korea’s Yakin Group to develop $700-million highway in Can Tho

Investors in VN’s mining industry look for long-term returns

 

REAL ESTATE

Realty M&A picks up foreign interest

 

OIL&GAS&ENERGY&MINING

Electricity sector gets BOT boost

Vietnam calls for international investments in LNG industry development

 

LEGAL

New requirements set for declaration of imported chemicals

New Law on Planning is scheduled for adoption

 

 

Source:

Dr. Oliver Massmann

International Attorney at Law
Certified Financial Accountant and Auditor
General Director of Duane Morris LLC
Partner of Duane Morris LLP
Member to the Supervisory Board of PetroVietnam Insurance Holdings Joint Stock Company

  

 

FINANCE 

Moody’s: Outlook for VN banking system positive

VNS 

Moody’s Investors Service on Tuesday upgraded its outlook for Vietnam’s banking system to positive for the next 12-18 months from stable, reflecting the country’s strong economic prospects and the positive outlook for most rated banks.

“The change in outlookwhich expresses our expectation of how bank creditworthiness will evolve in this system over the next 12-18 monthsreflects Vietnam’s robust economic growth, supported by domestic demand, healthy exports and public sector investment,” Eugene Tarzimanov, Moody’s vice president and senior credit officer, said.

“We forecast Vietnam’s real GDP will grow 6.1 per cent in 2017 and six per cent in 2018, faster than the 5.9 per cent average for the previous five years.”

“Strong economic growth translates into positive conditions for banks’ asset quality, but rapid credit growth, aided by accommodative monetary policy, can raise asset risks again,” Tarzimanov said.

According to Moody’s the banks’ operating environment will benefit from robust economic growth, based on ongoing improvements to infrastructure, favourable demographics and the government’s continued focus on reform to support foreign direct investment.

The banks’ asset quality will remain largely stable during the outlook with problem loan ratio at 7.1 per cent at end-2016, slightly lower than 7.5 per cent in 2015. Moody’s further expects this ratio to decline to 5.8 per cent in 2018, driven by loan growth outpacing the formation of problem loans and because of modest recovery in the property sector.

However, rapid credit growth will continue to erode capital buffers and capitalisation will deteriorate as banks struggle to replenish capital against rapid loan growth. High provisioning expenses will undermine banks’ abilities to generate internal capital, while options to raise external capital are limited.

In addition, the growth in local-currency customer deposits, the main funding source for Vietnamese banks, will continue to be healthy, but it will lag behind credit growth, resulting in slightly tighter system liquidity.

Profitability will remain stable with banks’ pre-provision income growing steadily over the next 12-18 months on the back of strong loan growth. However, the improvement will be offset by high credit costs. Net interest margins will also likely decline further due to competition and government pressure to lower bank lending rates.

At the same time, government support notching could increase for some bank ratings. Any upgrade of the government of Vietnam rating — which has positive outlook — will likely result in upgrades of a number of banks’ ratings, which in some cases could receive greater uplifts from their baseline credit assessments.

Moody’s rates 15 banks in Vietnam, which together account for 58 per cent of banking system assets as of June 30, 2017. Three of the 15 banks Bank for Investment & Development of Vietnam (B1 positive, caa1), Bank for Foreign Trade of Vietnam (B1 positive, b1) and Bank for Industry and Trade (B1 positive, b2) are owned by the government, while the other 12 are privately owned joint-stock commercial banking institutions.

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Vietnam Dong, among most stable in Asia this year: experts

VNA 

The Vietnam Dong (VND) is among the most stable currencies in Asia this year, said the US-based Bloomberg News, echoed by similar views from Vietnamese economists who were confident that the stability would remain until the year end thanks to the economy’s positive signs.

The currency has been kept stable, weakening about 1 percent against the US Dollar since the start of this year. An increase in remittances was behind this, said Can Van Luc, a member of the National Financial and Monetary Advisory Council.

Remittances from Vietnamese living abroad were worth 13.4 billion USD in 2016, up 3 percent from the previous year, according to latest statistics by the World Bank. The remittances are forecast to grow 5-7 percent to exceed 14 billion USD this year, taking Vietnam to the top 15 countries with the biggest remittances, he noted.

The rising remittances have helped the country ensure enough dollar supply to meet the domestic demand and allowed the State Bank of Vietnam (SBV) to boost forex reserves. “Such a high level of foreign reserves will allow us to step in to stabilise the money market when needed”, said SBV deputy governor Nguyen Thi Hong on the sidelines of a meeting last month.

The central bank has adopted a more market-based management mechanism with reference exchange rates set on a daily basis since January 2016 in its effort to maintain the Vietnam Dong’s value.

Luc added that surge in foreign direct investment (FDI) has also helped stablise the currency. The Ministry of Planning and Investment’s Foreign Investment Agency reported that Vietnam drew in 28.24 billion USD in FDI in the first 10 months of this year, 12 percent higher than the country’s yearly target of 25 billion USD. The FDI disbursement was estimated at 14.2 billion USD during the period, up 11.8 percent year-on-year.

In addition, Vietnam has also witnessed a growth in foreign indirect investment over the past several years. Foreign investors have poured 4.2 billion USD into the local stock market in the first three quarters of the year, a 3-fold increase from 2016, according to director of the Business Development Institute Le Xuan Nghia.

HCM City led the way in both FDI attractions and remittances. The southern economic hub lured around 5.03 billion USD in the first 10 months, doubling the year-on-year figure. In 2016, overseas remittances to the city reached 5 billion USD, accounting for 57-58 percent of the national total, a year-on-year rise of 11 percent. It aims a 10 percent growth to 5.5 billion USD this year.

More pressure will be likely on the Vietnam Dong at the end of the year due to the US Federal Reserve’s forecast benchmark interest rate rise and higher demand for foreign exchange from importers ahead the Lunar New Year holiday.

 

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ECONOMY 

Vietnam back on M&A radar

VET 

 

Strong deal growth seen during first three quarters in Vietnam and Southeast Asia, according to Mergermarket.

M&A activities targeting Southeast Asia (SEA) so far this year have reached $53.5 billion in 290 deals, increasing in value by 23.1 per cent compared to the same period of 2016. This is the second-highest value in the first three quarters of a year, according to Mergermarket data. In Vietnam, there were 37 deals in the period worth $1.218 billion.

“Vietnam’s back on the radar for investors,” said Mergermarket’s SEA Office Chief Riddhima Saxena. “Consumer, healthcare, and education continue to be attractive given the population and growing consumption demand. The most active investors remain Japan and South Korea.”

“Private equity firms are also showing interest across the board,” she went on. “Education in particular has been active and shows a strong pipeline of deals. Earlier this year, the Vietnam Australia International School was acquired by the US-based TPG Capital. Similarly, English language training services company ILA Vietnam was acquired by Swedish private equity firm EQT.”

There were 97 deals worth $26.7 billion in Southeast Asia during the third quarter, an 81.8 per cent rise in value compared to the same period of 2016. Three of the region’s top five deals ever were logged in the third quarter: Global Logistic Properties’ $15.9 billion take over, Grab’s $2 billion acquisition, and the acquisition of 47.5 per cent stake in Energy Development Corporation for $1.3 billion.

The internet/e-commerce sector is spurring strong deal growth, seeing 13 deals worth $5.3 billion this year, or nearly four-times more in value than in the same period last year.

Mergermarket is an Acuris company. In M&A, information is the most valuable currency. Mergermarket reports on deals 6-24 months before they become public knowledge. With the largest network of dedicated M&A journalists and analysts, Mergermarket offers the most comprehensive M&A intelligence service available today. Mergermarket’s reporters are based in 67 locations across the Americas, Europe, Asia-Pacific, the Middle East, and Africa.

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Vietnam’s PMI in October decreases to 51.6 points, lowest in 5 months

Bizlive 

The Manufacturing Purchasing managers’ Index (PMI) for the whole manufacturing sector in Vietnama composite index measuring the performance of the manufacturing sectorfell to 51.6 points in October from 53.3 points in September.

This shows a slight improvement in business conditions and is the worst improvement in five months. However, Vietnam’s manufacturing sector has continuously improved since December 2015, the Nikkei report said.

Nikkei has not released the PMI for Asean in October. With 53.3 points, Vietnam led Asean countries in September.

According to this report, the main factor causing operating conditions to improve more slowly in October was the slower increase in output. Output increased at the lowest level in the of production increase period that lasts for 12 recent months.

The report shows that the number of new orders continued to rise sharply in October, although the growth was weaker than September. Meanwhile, the number of new export orders increased faster and was the strongest growth in six months.

As the number of new orders soared, manufacturers increased their purchasing power at a faster pace, although the increase was lower than the previous month.

Companies are still optimistic that output will improve in the next 12 months, thanks to forecasts about market demand improvement and achievement of the company’s plan. The level of optimism is higher than September.

“Vietnam’s manufacturing sector has slowed down in October as output only increased slightly in the month. The number of new orders have also slowed down, but are still strong as the number of new export orders increase faster”, said Andrew Harker, deputy director at IHS Markit, the company that collects survey results.

Harker argues that the situation of material shortage affects the manufacturing sector, leading to increased input costs and longer delivery time.

“The production sector is still a strongly developed sector of the Vietnamese economy so far this year. Therefore, from October to the end of 2017, growth should increase again to reach the whole year GDP growth target of 6.7 percent. IHS Markit is currently forecasting the growth at 6.5 percent,” Harker added.

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INVESTMENT

South Korea’s Yakin Group to develop $700-million highway in Can Tho

VIR 

Yakin Group from South Korea plans to develop a series of projects in the southern city of Can Tho, especially the 91C Highway project with a total investment capital of VND15.1 trillion ($666.2 million), according to newswire Saigontimes.

Accordingly, the highway will have a total length of 30.12 kilometres and a surface width of 31 metres, with nine intersections and 25 overpasses. The construction will be divided into two phases.

At a working session with leaders of the Can Tho People’s Committee, both the investor and the  leaders reached a compromise to develop the project under the build-offer-transfer (BOT) form.

Jang Sang Kyu, chairman of Yakin, expected that the company will be permitted to charge fees for 30 years to recover the investment capital. However, the representative of the Can Tho People’s Committee said that the duration for recovering the investment capital will be considered based on the investment capital and the fee rate, thus the duration for recovering the investment capital may be either longer or shorter than the duration offered by the investor.

Along with the BOT highway project, Yakin intends to develop a 100-hectare golf course, including a five-star hotel.

According to the leader of the Can Tho People’s Committee, the city has will have to seeking prime ministerial approval for the investor’s proposal.

Yakin Group assists real estate owners, investors, and builders with the planning, coordination, and control of construction projects including the construction of new buildings, the expansion of existing ones, and changing the use of projects.

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Investors in VN’s mining industry look for long-term returns

VNA 

 

Although fluctuations in international demand and pricing have put pressure on returns from Viet Nam’s mining industry, the sector remains a magnet for foreign direct investment (FDI), a sign of confidence in its long-term prospects.

Mining attracted FDI totalling $7.7bn in the first half of the year, representing 10.6 per cent of all FDI inflows during that period. Investment into the mining sector came second only to manufacturing at 66.7 per cent, according to a report by global lender HSBC.

This indicates strong interest by overseas investors in the industry’s long-term prospects, despite short-term cooling in some segments.

FDI levels could be lifted further if the government approves plans by India’s state-owned National Mineral Development Corporation (NMDC) to acquire a stake in tungsten mining operations in Viet Nam.

In February NMDC announced it was in talks to purchase a share in the Nui Phao polymetallic mine from Vietnam’s Masan Resources. This was followed on September 1 by a statement saying it was seeking permission to ink a memorandum of understanding to begin the due diligence process.

Decline in mining output weighs on industrial index

Viet Nam’s industrial production index grew 6.7 per cent year-on-year (y-o-y) in the first eight months of 2017, according to data issued by the General Statistics Office (GSO) in late August. This was slower than the annual rate of expansion seen both last year and in 2015.

A 6.9 per cent decline in mining output contributed to slower growth on the production index, the GSO said.

The contraction was milder than the 11.4 per cent drop in production in the first quarter of the year, suggesting improving sector conditions. However, the downturn may continue into next year, according to a forecast by the Ministry of Planning and Investment in early September, unless conditions in the industry pick up further.

The slower growth could also weigh on the broader economy, potentially making the ministry’s economic top-end growth target of 6.8 per cent for 2018 harder to achieve.

Domestic coal demand set to increase to 121.5 tonnes per annum by 2025

One segment of Viet Nam’s extraction industry that has outperformed the sector is coal, with both output and revenue up in the first eight months of this year, according to a report issued by the Ministry of Industry and Trade on September 8.

In the first eight months of 2017 the volume of coal exports rose by 142.1 per cent y-o-y to reach 1.4m tonnes. Earnings from outbound shipments of coal from January to August also increased by 228.5 per cent y-o-y to $188m.

The majority of shipments were made by the state-operated Vinacomin, which accounted for nearly 62 per cent of total exports from January to August. However, domestic consumption represented 87 per cent of the company’s coal output in the eight-month period, which stood at 24.6m tonnes.

These results for the overall coal exports through to the end of August surpass year-end results in 2016. Last year exports totalled 1.3m tonnes, down 27 per cent compared to 2015, with earnings falling by 23.8 per cent to $141m in that period, according to data from the Ministry of Industry and Trade.

Domestic coal demand is projected to rise from roughly 86.4m tonnes per annum (tpa) in 2016 to 121.5m tpa by 2025 and 156.6m tpa by 2030, according to a government report released last year.

The appetite for coal is being driven by its expanding role in the energy mix. More than half of the country’s electricity requirements will be met by coal-fired plants by 2030, under the government’s revised Power Development Master Plan VII, with 83 plants adding 55.3 GW to the grid.

Coal dependence sparks environmental concerns

Though demand for coal and minerals remains solid, environmental concerns could curb expansion or add to production costs.

The increased dependence on coal for electricity generation will contribute to higher levels of air pollution unless advanced purification technology is deployed by the power sector. This will build on running costs for existing plants and raise the budget for plants not yet constructed.

Environmental concerns could also see the closure of the largest iron ore mine in South-east Asia, with the Ministry of Planning and Investment announcing on August 30 it would push for the Thach Khe mine to be shut down due to its adverse environmental impact.

These concerns, and the government’s moves to rein in environmental damage caused by mining, could affect investments in the sector, though Viet Nam’s growing need for energy and metals should ensure mining remains a core industry.

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REAL ESTATE

Foreign property lags

VIR 

  

Despite the Law on Housing 2015 which gives greater room to foreigners to own properties in Vietnam, the number of foreigners who have purchased real estate is increasing, but remains modest.

According to the latest figures from the Ministry of Construction (MoC), as of July 2017, there were less than 800 cases reported of foreigners being granted housing ownership in Vietnam. This figure is quite low compared to the total number of foreigners living and working in the country – about 82,000.

 According to Savills Vietnam, the main barriers discouraging foreigners from pursuing real estate ownership are uncertainties in local laws and legal procedures, as well as unfamiliar administrations.

 Many foreigners have expressed interest in Ho Chi Minh City, Hanoi, and Danang real estate. The number of red books (ownership certificates) issued to foreign organisations and individuals buying houses has been relatively low considering the high levels of interest and demand.

However, Sergey Nam, deputy CEO of Kusto Home, the developer of Ho Chi Minh City District 2 development Diamond Island, said that the number of foreigners buying units in Diamond Island has been increasing, and the set targets have almost been hit. “Actually, we have to admit that the revised Law on Housing in Vietnam, which took effect on July 1, 2015, has affected the foreign buyers. It’s easier for foreigners to buy residential properties in Vietnam, as long as they can enter the country legally. There is no need for a residence visa, unlike in previous periods. The two-fold rise in foreign buyers in our Diamond Island project in District 2 has shown their interest in Vietnam’s property,” Nam told VIR.

 He further added that the big challenge now is clearing up how foreigners apply for and receive ownership certificates for 50 years, and to figure out what the terms and conditions to extend leaseholds are.

 “If it was clear by now, I am sure the number of foreign buyers would be much bigger,” he added.

 According to Circular No.19/2017/TT-BXD and Decree No.99/2015/ND-CP issued by MoC, regulating the number of houses and apartments owned by foreigners was meant to tighten resale procedures and increase transparency in legal and administrative processes.

 However, adjusting limits to make them more suitable for areas with special demands, such as condominiums or Grade A apartments, is another direction that needs consideration.

 The flexibility of limited-area coverage over fixed limits would support the market, especially with more than 82,000 foreigners living and working in Vietnam.

 Residential Sales director of Savills Ho Chi Minh City Nguyen Khanh Duy said that the law allowing foreigners to buy real estate in Vietnam has received positive feedback from sellers and buyers alike.

 “The Ho Chi Minh City real estate market has seen thousands of successful transactions with foreign clients over the last two years,” Duy said.

 Generally, requirements have become clearly defined and the evolution of the local real estate market has created a new source of demand.

 Nam from Kusto Home said that Vietnam is seen as a new destination for both living and investing, based on the positive economic signals and newly-updated land-related laws. The number of foreign buyers aiming to own property in Vietnam is increasing every year.

 “I believe the government is on the right track and a lot has been done so far. We are looking forward to additional instructions to be issued very soon,” he said.

 In 2017, many projects quickly reached the 30 per cent foreign ownership limit (in terms of units) in a very short time. The 30 per cent quota on many developments was reached almost immediately, forcing developers to turn away many interested foreigners looking to buy.

 According to property consultants, clients were mainly Asian, from places such as Korea, China, Taiwan, Hong Kong, and Singapore.

 Projects and products attracting overseas buyers are mainly in the high-end segment. A great deal of buyer appeal is in buy-to-let properties – as potential lease income is an attractive investment.

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Realty M&A picks up foreign interest

VIR 

Mergers-and-acquisitions in Vietnam in this year’s first nine months has seen continuously strong momentum, with a number of key transactions in commercial and residential sectors.

new

One of the most active investors was Novaland, which conducted major transactions such as acquiring Palm Marina from Saigon Tourist and transferring Nova Phu Sa Resort and the Galaxy 9 apartment complex to other partners.

The ledger of merger-and-acquisition (M&A) cases in the first nine months was full, with 11 big M&As involving well-known firms such as FLC, Keppel Land, and VinaLand.

According to JLL, the residential segment remains the most attractive for both buyers and sellers. Apart from this, investors are now averting their attention to commercial Grade A office properties and hotels, which offer investment returns of 7-8 per cent.

In this year’s first three quarters, over $1.2 billion exchanged hands through M&As in the property segment.

This is quite a high figure, as the figure for the corresponding period last year was only $921 million.

“In reality, it was very difficult to conduct a successful transaction, especially if it involved foreign investment. Due to the complicated procedures for both sellers and buyers, each step of the transaction process was more risky, from land clearance and compensation to legal processes and the actual construction phase,” said Stephen Wyatt, general director of JLL Vietnam.

Wyatt, however, further added that since the country’s economy keeps growing, the Vietnamese property market is still one of the most attractive segments for foreign investors.

Chairman of th Ho Chi Minh City Real Estate Association Le Hoang Chau said that M&A could be a key trend for real estate developers in the coming years. This year presents golden opportunities for M&A deals, as Ho Chi Minh City has a stockpile of more than 500 projects that are stalled and unable to continue.

“We anticipate seeing strong demand from a wide range of investors in the following quarters. They are seeking to make the cut in the Vietnamese real estate market, with a particular focus on groups from Japan, South Korea, Singapore, Hong Kong, and mainland China. With fierce competition and limited supply of good quality stock, we will be keeping an eye out for further real estate M&A transactions as investors seek ways to deploy capital quickly and efficiently,” Wyatt said.

In addition to industrial M&As, residential transactions also trended higher.

In September, VinaLand Ltd., one of the real estate arms of VinaCapital, divested its entire stake in the Vina Square Project – a three hectare development site in Ho Chi Minh City’s District 5 – to Tri Duc Real Estate Company for approximately $41.2 million cash. This sum allowed VinaLand to repay shareholder loans, resulting in an internal rate of return (IRR) of 3.3 per cent.

Kinh Bac Corporation, another IP developer, has also decided to transfer 100 per cent of its ownership in Lotus Hotel Development Company – the developer of the Diamond Rice Flower hotel complex – to Sun Investment JSC.

Also near the Lotus Hotel, VinaLand Ltd. transferred the right to develop the $50 million Times Square Hanoi – on the market since 2015 – to Elite Capital Resources Ltd.

In a statement released recently, VinaLand announced that it had divested its entire stake in the Hanoi-based Times Square project for approximately $41 million, resulting in an IRR of 5.3 per cent.

Prior to this divestment, VinaLand sold its entire stake in Dai Phuoc Lotus, a residential complex in the southern province of Dong Nai, to foreign investors, bringing in about $65.3 million.

Berjaya Land Bhd., a leading Malaysian real estate developer, announced that it transferred its entire position in the Vietnamese four-star Berjaya Long Beach Resort Phu Quoc to Sulyna Hospitality Hotel Restaurant Travel Service Co., Ltd., at a price of VND333.25 billion ($14.67 million).

In the last weeks of October, South Korea’s Hanwha Life Insurance Co. was considering backing Seoul-based Koramco Asset Management Co. to acquire TNR Tower Nguyen Cong Tru for a purchase price of $62 million.

“The acquisition, if closed, will be meaningful in that there is no precedent for a Korean investor buying a 100 per cent ownership in a building in Vietnam,” said an anonymous source from Hanwah Life Insurance.

Duong Thuy Dung, senior director of CBRE Vietnam, predicted that in 2018, the three segments which will attract the most M&A will include houses for sale in Hanoi and Ho Chi Minh City, hotels and condotels in coastal provinces, and industrial properties stretching from the north to the south.

“In the near future, we think that we should slow down our investments in Vietnam and be more careful about the fast development of the market. However, we are seeing many good projects with great potential and feasibility that would make good supply for M&A activities in Vietnam,” Dung said.

JLL also predicted that there will be more foreign investors entering Vietnam, and opening new offices here.

“Typically, these investors were on a fly-in fly-out basis on their first investment, while for subsequent investments, they set up local teams comprised of a combination of local and expat operators. Due to the strong focus on Vietnam from regional investors, we expect M&A activities to reach record levels in the end of 2017 and 2018,” Wyatt said.

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OIL&GAS&ENERGY&MINING

Electricity sector gets BOT boost

VIR 

 

Vietnam-based manufacturers are looking forward to a more stable power supply in the near future, with a series of build-operate-transfer power plants speeding up and coming online, and many foreign investors showing strong interest in the segment due to the high demand.

Last week, the operators of the Chinese-invested, 1,200-megawatt (MW) build-operate-transfer (BOT) Vinh Tan 1 thermal power project reported to Vietnam’s government that they will be finished 11 months ahead of schedule, as the $1.75 billion plant, located in the south-central province of Binh Thuan, is expected to start its first turbine in 2018 and the second in 2019.

Jointly invested by China Southern Power Grid, China Power International Holdings, and Vinacomin Power, the Vinh Tan 1 thermal power project is one in a lineup of key power projects in the government’s Power Development Master Plan VII, aimed at meeting Vietnam’s dramatically rising power demand during 2010-2020, with a vision toward 2030.

Vinh Tan 1 is the biggest power plant invested by a Chinese investor in Vietnam.

Tran Viet Ngai, chairman of the Vietnam Energy Association, said that the successful completion of the BOT power project is a positive development, and has once again raised hopes on boosting other power investments under the BOT approach.

The project also plays an important role in supplying power to some southern provinces, as there is concern over the power supply in said provinces due to delays in the Song Hau 1 and Long Phu 1 thermal power plants.

The Long Phu 1 and Song Hau 1 projects in the Mekong River Delta provinces of Soc Trang and Hau Giang, respectively, are designed to produce 1,200MW each annually, but are now years behind schedule. Both of them are invested by Vietnam’s state-run oil and gas group PetroVietnam.

The Vietnamese government has pressed ministries to boost coal-fired projects and coal supplies in order to sufficiently power the southern provinces in the near future. This is currently considered one of the main challenges the government faces.

Meanwhile, the Hai Duong BOT plant project spearheaded by Jaks Hai Duong Power Co., Ltd., a joint venture between Malaysian Jaks Resources Bhd and China Power Engineering Consulting Group Co., Ltd., expects to come into operation over the next few years since it started construction in March 2016. The first 600MW turbine of the 1,200MW plant is expected to be put into operation in 2020.

This is also the first foray of Malaysian firm Jaks Resources Bhd into Vietnam. Last week, company delegates also visited the southern province of Binh Phuoc to investigate opportunities for a 200MW solar project, with investment capital of $262.5 million.

Another Malaysian company, Janakuasa Sdn Bhd, has signed four landmark documents with Vietnam’s Ministry of Industry and Trade for the development of the 1,200MW Duyen Hai 2 coal-fired power plant in the southern province of Tra Vinh, specifically a land-lease deal, a power purchase agreement, a BOT contract, and a government guarantee.

The project is one of four power projects within the Duyen Hai Power Centre, which has a combined generation capacity of 4,348MW, and uses imported coal as the feedstock to generate power.

A few months ago, a consortium including Saudi Arabian ACWA Power and Korea’s Taekwang Power Holdings Co., Ltd. officially received an investment certificate for the $2.3 billion Nam Dinh 1 thermal power project, making it the seventh foreign-invested BOT power project licensed in Vietnam. The project is scheduled to commence construction in early 2018. The first unit will enter commercial operations within 51 months.

The list of foreign-invested BOT power projects will rise further as several foreign firms are currently in negotiations or are conducting feasibility studies for developing thermal power plants nationwide. They include Korea’s Samsung C&T Corporation, India’s Tata Power, Singapore’s Sembcorp Industries, and Thailand’s EGATI.

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Vietnam calls for international investments in LNG industry development

Vietnam Energy 

 

At the Sixth International Conference on production and consumption of liquid natural gas (LNG) in Tokyo (Japan), the Minister of Industry and Trade of Vietnam Tran Tuan Anh put forward “5 opportunities” and “5 challenges” in the development of LNG industry in Vietnam to call for foreign and domestic enterprises to cooperate for investing in LNG in Vietnam.

The 2017 International Conference on LNG production and consumption was held with participation of the Ministers of Energy of 14 countries, Representatives of international organization on LNG and over 1000 businessmen from more than 30 nationalities (accounting for 60% of export and 70% of import of LNG demand in the world).

In opening speech, Japanese Minister Seko Hiroshige pressed the rapid growth and change along with the opportunities and challenges of the LNG market in the world. To affirm the leading role of Japan in expanding LNG market in Asia, Mr. Seko Hiroshige stated the participations of the Japanese government in Asia LNG market development including “ 2 contributions” as a fund of US$ 10 billion (including LNG infrastructure development) and training 500 experts on LNG production and consumption within the five years; and “3 commitments” as to companion with the other countries in Asia LNG market development, putting forward the action program to create LNG demand by means of breakthrough measures, and promoting the role in building international consensus on common interests for LNG market development through the activities of the bilateral and multilateral dialogues.

Speaking at the conference, the Minister of Industry and Trade Tran Tuan Anh mentioned the policy of Vietnamese government on strengthening to use renewable and clean energy, especially LNG for power generation.

Based on an analysis of current situation and trend of LNG market development of Vietnam, Mr. Tran Tuan Anh presented “5 opportunities” and “5 challenges” in Vietnam’s LNG industry to call for the foreign and domestic enterprises to cooperate in LNG market development in Vietnam.

On the sidelines of the conference, Mr. Tran Tuan Anh also had meetings with business representatives from countries attending the conference, and in particular held a bilateral meeting with Minister Seko Hiroshige. At the meeting two Ministers discussed the cooperation mechanism between Vietnam and Japan on LNG development in particular and energy in general. Two Ministers agreed to accelerate the energy projects invested by Japanese fund in Vietnam, and discussed multilateral trade agreements that Vietnam and Japan have jointed as well as the activities toward to the APEC Summit in early November in Da Nang city.

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LEGAL

 New requirements set for declaration of imported chemicals

VLLF

The Prime Minister issued on October 9 Decree 113/2017/ND-CP to remove 46 conditions on chemical production, storage and trading with a view to implementing more facilitative policies for enterprises engaged in chemical trading and concurrently helping functional agencies manage more strictly chemical production and trading activities.

Under the Decree, which will take effect on November 25, chemical importers may complete the declaration of their imported chemicals via the National Single-Window Portal (NSW). To-be-declared information includes information of declarants and imported chemicals, sale and purchase invoices, and chemical safety data sheets in Vietnamese.

A declarant will have to take responsibility before law for the accuracy of information filled in the declaration form posted on the NSW. Declarants will be held responsible for intentionally declared untruthful information under the current regulations.

The new decree allows chemical traders to keep confidential names and quantities of produced, imported or traded chemicals, information about technological and trade secrets.

However, important information that can be used for the protection of community health and the environment will not be considered confidential, including product trade names, names of producers and importers, information in chemical safety data sheets, cautions for use and direct contact with chemicals and measures to be taken in response to possible incidents, etc.

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New Law on Planning is scheduled for adoption

VIR 

The National Assembly will likely adopt the long-awaited Law on Planning next month, making it more convenient for the government to control the planning of many sectors and products, which are overlapping now.

The 12th National Assembly’s fourth session last week released a draft resolution on the implementation of the Law on Planning, which was compiled by the Ministry of Planning and Investment (MPI). The resolution and the law, which will take effect on January 1, 2019, are slated for adoption by the legislature on November 24.

Under the resolution, the National Assembly assigns the government to release a list of types of planning that will become invalid by

December 31, 2020, and to remove all types of product-based planning starting from January 1, 2019.

The law will adjust a total of 190 articles from 25 existing laws, and cover 38 types of national-level sectoral planning – such as roads, railways, seaports, airports, waterway infrastructure, electricity, energy, information and communication, and gas and petrol supply.

Product-level and sector-level planning will be integrated into master planning at all levels.

Many National Assembly members said they expect the law to be adopted as soon as possible, because as compared to the first draft version released during the third session in May this year, this draft has become perfected in terms of terminology, significance, and transparency, because it has received “significant adjustments”.

“I wholly support this law and expect it to be adopted as soon as possible. It is because it will help remove the current overlap of planning activities in many sectors,” said deputy Vo Dinh Tin, representing the Central Highlands province of Dak Nong.

He said that the law will also create a close connection in planning between the central and grass-roots levels. At present, each locality and each ministry has its own planning, without taking into account resources needed to implement their plans. This has created major disputes between localities and ministries.

There are currently may types of planning in Vietnam, including plans for rice, cassava, coffee, fish, and many kinds of industrial products.

Over the past few years, a total of 71 legal documents and ordinances and 73 decrees have been promulgated by the National Assembly and the government to regulate planning in Vietnam. A total of 19,285 plans of all types have been drafted by government agencies and sectors set to take effect from 2011 until 2020. Many had shortcomings, including overlaps, wasted resources, and a lack of quality.

Like many other deputies, deputy Leo Thi Lich representing the northern province of Bac Giang commented that the law will “surely help eradicate the disconnection in planning activities nationwide, curb the wastefulness of the state budget, and help fight corruption”.

Deputy Hoang Van Cuong, representing Hanoi, suggested that preparations be made as soon as possible for the implementation of the law. He warned that if the law’s implementation is delayed, many old planning activities by localities and ministries will become invalid on January 1, 2019, making it hard to attract investment.

MPI Minister Nguyen Chi Dung told the National Assembly that the law means all products will be determined by the market’s laws of supply and demand.

“The state only acts as a regulator who conducts forecasts and analysis of the market in support of the people and enterprises,” he said.

“There has been a notorious ‘ask-and give’ mechanism in past years because of sector-level and product-level planning. But under the new law, there will be no specific sector-level and product-level planning, and everything must follow the market demand,” he stressed.

The frequently-used term ‘ask-give mechanism’ refers to the means of governing society by orders rather than the rule of law, meaning that actions by lower officials are contingent on receiving approval from superiors, with various ‘favours’ exchanged in return.

 

 

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