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Vietnam News

HEADLINES

TOP NEWS

Vietnam Wind Power is taking off - The new Feed in Tariff - what you must know:

Wind power projects may take to sky through FiT hike

FINANCE

Will interest rates continue to be reduced?

Reference exchange rate goes up on September 7

ECONOMY

Apec motivates Vietnam to sign FTAs

Vietnam to make customs reform

INVESTMENT

Coca-Cola completes additional investment

Special incentives in pipeline for agricultural investors

REAL ESTATE

Real estate remains 2nd largest FDI lurer

Foreign house ownership rights in special administrative economic zone proposed

OIL&GAS&ENERGY&MINING

Multi-billion dollar gas-to-power complex officially kicks-off in November

Smarter energy is on the way, pending some local challenges

LEGAL

Casino business: Commercial banks allowed to provide services

Finance Ministry wants business registration fee lowered

 

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

 

TOP NEWS

 

By Oliver Massmann, Duane Morris Vietnam LLC

 Decision No. 37 of the Prime Minister on supporting regime for wind power projects provides an FIT of 7.8 UScent/ kWh. This FIT applies to two current projects in operation in Binh Thuan, namely Phu Lac and Binh Thuan No. 1. For Bac Lieu near shore wind project, the FIT follows a special financial regime, being 9.8 UScent/kWh. However, with the current FIT, the Ministry of Industry and Trade (MOIT) opines that it will be difficult for these plants to recover their investment capital.

 Thus, the MOIT has recently proposed the Government to increase wind FIT for inland wind power plants to 8.77 UScent/ kWh and to 9.97 UScent/kWh for near shore wind projects. This proposal is expected to attract more investors in the market as well as create incentive for current projects whose pre-feasibility reports have been approved by the MOIT to come into real operation.

 ***

If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under  This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

 

Thank you very much!

 

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VIR 

The Ministry of Industry and Trade’s proposal to increase the feed-in tariff (FiT) of wind power is expected to take projects currently on paper into implementation.

Investors’ expectations

The Ministry of Industry and Trade (MoIT) has proposed the government to increase the FiT of wind power from onshore wind power plants to 8.77 cent from the current 7.8 cent per kWh.

This proposal is expected to help investors develop new or expand their existing projects. Besides, it contributes to operating projects by accelerate the speed of recovering their investment capital.

At present, two wind power plants, namely Phu Lac and Binh Thuan wind farm No.1 work with the FiT of 7.8 cent per kWh, and Bac Lieu wind farm enjoys 9.8 cent per kWh due to its offshore location.

According to MoIT, with the existing FiT of wind power, these plants have difficulties in recovering the investment capital.

Notably, having come into operation in 2011, Binh Thuan wind farm No.1 received several financial incentives through Decision No.130/2007/QD-TTg on financial mechanisms and policies applied to investment projects taking part in the clean development mechanism. However, since 2014, the plant has been suffering from the regulated FiT of 7.8 cent per kWh set by Decision No.37/201/QD-TTg.

According to MoIT, Binh Thuan wind farm No.1 complied with the clean development mechanism of Decision 130, thus applying the FiT of 7.8 cent per kWh to the plant will make it difficult to maintain operations. 

Regarding the Phu Lac project, the investor Thuan Binh Wind Power JSC proposed the authorities to increase the regulated FiT of wind power due to concerns over the time to recover the investment capital.

According to the investor, the first phase of the project, which came into operation in November 2016, has a total investment capital of VND1.1 trillion ($48.4 million). With the existing FiT, it will take the company 14 years to recover this investment—which is only the first phase.

Previously in 2016, the Binh Thuan Wind Power Association proposed MoIT and the government to increase the regulated FiT to 9.5 cent per kWh, but failed.

As of now, there are 48 registered wind power projects with the total capacity of 5,000MW in Vietnam, 23 of which had their pre-feasibility reports approved by MoIT and are waiting for an increase of the FiT.

Opportunities are coming

Along with increasing the regulated selling price of wind power exploited offshore, MoIT also proposed the government to increase the selling price of inland wind power plants.

Accordingly, MoIT asked the prime minister to increase the selling price of wind power exploited offshore to 9.97 cent per kWh. The figure is still small compared to the global average of 19.6 cent per kWh reported by the World Energy Commission.

According to Bui Van Thinh, chairman of Thuan Binh Wind Power JSC, MoIT’s proposal to increase the FiT of wind power will help investors develop new or expand existing projects.

Along with Phu Lac wind farm, Thuan Binh plans to develop four other similar farms with a combined capacity of 500MW. They are two in the central provinces of Ninh Thuan and Binh Thuan and two in the Central Highlands provinces of Dak Lak and Gia Lai.

William Gaillard - Regional sales director at Gamesa—the exclusive supplier of the 40MW Dam Nai project in the central province of Ninh Thuan

I believe a FiT of about 8-9 cent is acceptable for wind projects in Vietnam. Now you can have profitable wind projects that a few years ago were simply not possible, thanks to larger rotor sizes and bigger generators, but also larger volumes and economies of scale. Also, other suppliers need to make an effort. Balancing plants like civil and electrical works also needs to drive costs down. In Vietnam there is very little experience and so risks are high and contractors expect high margins.

But the key issue is to get a bankable PPA of international standards. Indexation of tariffs over the 20 years to follow consumer price index (CPI) should be there. Lots of legal provisions are lacking. So it is not possible to bring international non-recourse project finance with long tenure and low interest rate. As a conclusion, we shall all do our fair share to make it happen. Suppliers, developers, the government, banks—we shall all work together.

I am sure that when you will have installed the first 800MW target, the price of electricity will go down as it did in other countries, because there are ample wind resources in Vietnam. More than anything, we need to build experience in Vietnam so that the industry can be confident. Instead of focusing on the FiT, we shall focus on having a bankable PPA.

Vu Chi Mai - Senior project officer at GIZ

Wind power technology development is cutting costs and time for developers. Some developers and turbine suppliers shared that a 9 cent feed-in-tariff (FiT) is bankable if the site has overly benevolent conditions regarding wind potential, grid and transportation access, and support from local authorities.

Olivier Duguet - Chief executive officer of The Blue Circle

Focusing on the FIT is the wrong approach. Instead, we should focus on the conditions to attract long-term debt financing for projects in Vietnam, as this is the only way to promote wide-scale development of wind power. Of course, only the very best projects in terms of wind resources and installation costs will be financially viable in the current environment of difficult financing.

 

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 FINANCE

 

Will interest rates continue to be reduced?

DTCK 

It is estimated that by the end of August 2017, credit increased about 11.5 percent compared to the end of 2016, just a bit higher than the target of 21 percent in 2017 following the direction of the prime minister. One again, interest rate reduction is mentioned.

The economic situation and financial market report in August 2017 by the National Financial Supervisory Commission (NFSC) shows that the liquidity of the banking system is still quite abundant in the month, reflecting in two aspects.

First, interbank interest rates in terms remained low (one percent/annum for overnight and one-week terms, 1.6 percent/annum for one-month term, up 0.2-0.3 percentage points from the end of July 2017).

Second, on the open market, from August 1 to August 22, the State Bank of Vietnam (SBV) net withdrew 4.494 trillion dong. Cumulatively, the State Bank net withdrew 32.632 trillion dong since the beginning of this year.

In market 1, interest rates were relatively stable compared to the previous month. As of August 21, 2017, the average interest rate for one-month term was 4.7 percent/annum compared to 5.68 percent for 6-month term; 7.07 percent/annum for 12-36 month term, equal to the deposit rate in July.

Lending rates for five priority sectors was 6.5 percent/annum and even six percent/annum at some banks. For normal production and business sector, interest rates mainly range around 9.3-11 percent/annum for 6-month term and above.

Talking with Dau Tu Chung Khoan, NFSC leader said there are still supporting factors to lower lending rates in the last months of 2017.

Specifically, the pressure from exchange rate was not too large as Bloomberg Dollar Index fell quite sharply from the beginning of the year (down 9.3 percent); the pressure from the issuance of government bonds was also not much (about 20 percent of the plan); support factor from the regulator on bad debt settlement will contribute more positively to the interest rate reduction.

Sharing with the local Newswire Dau Tu Chung Khoan, a bank CEO said inflation trend is one of the key points in the decision to reduce interest rates of bank leaders.

As per data released recently by the general Statistical Office, the consumer price index (CPI) in August 2017 improved 0.92 percent from the previous month, up 3.35 percent from August 2016 and 1.23 percent from the beginning of the year.

The average CPI in the first eight months of 2017 swelled 3.84 percent from the same period. As such, inflation has shown signs of rebound in August after six consecutive months of decline.

Analysing components of inflation, we can see that seasonal factor contributed zero percentage point while cyclical factor (inflation due to price factor) added 0.1 percentage point to the overall inflation in August.

“This is an early sign for a new price increase cycle which might start in the following months, especially the end of the year”, said Dr Le Xuan Nghia, economic expert.

Another important thing that banks concern now is the low Net Interest Margin (NIM). Reportedly, in 2016, the bank’s NIM reached 2.8 percent. In 2017, it is forecasted that banks are difficult to maintain this.

“Statistics show that the NIM of the entire banking system is 2-2.2 percent”, said a bank CEO.

A financial director of a bank said the low NIM is because the 5-year tenor government bonds that banks invested in 2011-2012 period with high interest rate of 10-12 percent/year are gradually maturing while investment bonds in recent time have much lower interest rates, just 5-6 percent/annum. Therefore, the fixed source of income from government bonds can be affected by the declining profitability.

Besides, capital mobilisation cost may increase as over the last period, many banks have strengthened the bond issuance to increase Tier-2 equity besides the issuance of deposit certificates at high interest rates.

At the same time, deposit rates in long terms are raised to increase medium and long-term capital, ensuring the ceiling for the usage of short-term capital for medium and long-term loans to decrease from 60 percent to 50 percent in 2017 following the State Bank’s Circular No.06/2016. These measures may cause the LDR and NIM to decrease.

“The NIM of the banking system is currently quite low, and is hard to be further narrowed because it will affect the operational safety”, said the aforementioned bank CEO.

Leader of banks said the current lending rates must be stabilised in line with the government’s direction and the State Bank to support the economy. Therefore, the input-output interest rate margin continues to narrow in reality.

Most importantly, the room to reduce lending rates has almost been fully exploited and reflected through the lowest interest rates in 10 recent years.

 

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Reference exchange rate goes up on September 7

VNA

 The State Bank ofVietnamraised the daily reference exchange rate for VND/USD by 5 VND to 22,439 VND per USD on September 7.

With the current trading band of +/- 3 percent, the ceiling rate applied for commercial banks during the day is 23,112 VND and the floor rate 21,766 VND per USD.

The opening hour rates at major commercial banks saw strong fluctuations compared to September 6.

The biggest changes were seen at Vietcombank, which raised its buying rate by 25 VND to 22,715 VND and the selling rate by 35 VND to 22,795 VND per USD.

At Vietinbank, both rates were revised up by 5 VND, with the buying rate now listed at 22,695 VND and the selling rate 22,765 VND per USD.

Meanwhile the rates at BIDV remained the same as on September 6, at 22,695 VND (buying) and 22,765 VND (selling) per USD.

 

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ECONOMY

 

Apec motivates Vietnam to sign FTAs

VET 

FTAs a benefit of Vietnam’s greater cooperation within Apec and also outside the bloc.

“We have to utilise all of the opportunities presented by Apec to develop our economy and maintain its modernity,” Pham Tat Thang, a senior expert at the Ministry of Industry and Trade, told VET.

Apec creates connections in economics and politics and, especially, in culture among Asia-Pacific countries, including leaders such as the US, Russia, Japan, and China, he went on. “Apec is consensual, while free trade agreements (FTAs) are binding, but FTAs are always based on Apec’s directions,” he said.

Crucial motivation

In the last 30 years, half of all FTAs and regional trade agreements (RTAs) have been in Apec and the number is increasing quickly, minister of Foreign Affairs and Chair of the Apec Senior Officials Meeting (SOM-3) Bui Thanh Son told the recent senior Apec officials meeting in HCM City.

Apec members have signed 165 FTAs and RTAs, Son revealed, with 62 signed among members. In the 2000-2016 period, internal trade within Asia-Pacific rose 274 per cent, from $2.3 trillion to $6.3 trillion.

Along with implementing commitments in FTAs, Vietnam is trying to fulfill the Bogor Goals on free trade and investment in Apec by 2020, Son said. “We are taking concrete steps to carry out the FTA in Asia-Pacific (FTAAP), which is one of the key tools in Apec’s regional economic integration agenda,” he added.

He stressed that FTAAP should be a comprehensive free trade agreement by developing regional FTAs such as Asean+3 and Asean+6. Fortunately, Vietnam has negotiated with Asean members on FTAs between Asean and important economies and also has important bilateral FTAs, he said.

During senior officials meetings, FTAs were a topic of much discussion, according to Marie Sherylyn Aquia, Chair of the Apec Committee on Trade and Investment. Apec members are important players in FTAs and RTAs and Vietnam has long-term plans and made great efforts in integrating and cooperating with other economies.

As at the end of 2016, Vietnam had 16 FTAs, including six new-generation FTAs, such as the EUVietnam FTA and the TPP. Ten have come into effect, including six signed between Asean and China, South Korea, Japan, India, Australia and New Zealand, and four bilateral FTAs with Chile, South Korea, Japan, and Eurasian Economic Union.

By 2020, when all 16 FTAs come into effect, Vietnam will have 59 partners, including five members of UN Security Council and 15 of the 20 countries in the G20.

Challenges ahead

Apec 2017 takes place in the context of many challenges arising from the complex evolution of the global economic situation. Vietnam is not separate from such challenges, but the greatest advantage the country holds is the significant increase in internal resources thanks to the government’s efforts to create innovative growth models, Son said.

The trend of promoting trade liberalisation and facilitation in Apec has opened up tremendous opportunities for Vietnam’s business community, especially small and medium-sized enterprises, to seek cooperation and boost exports to markets inside and outside of the region.

Among Vietnam’s leading economic partners, Apec is currently the largest direct investor, accounting for 78 per cent of total foreign direct investment (FDI), 60 per cent of export value, 80 per cent of import value, and 79 per cent international visitors.

Vietnam’s business community has been making good use of opportunities to access and tap into the Asia-Pacific market, reflected in export turnover to member economies increasing each year.

According to the general Department of Vietnam Customs, export turnover in 2014 was estimated at $98.37 billion. In 2015 it grew about 8 per cent to $106.12 billion and in 2016 was over $119.69 billion.

Apart from the benefits and opportunities provided by the Apec cooperation process, Vietnamese enterprises also face a number of difficulties. Members of the region, in addition to active cooperation, also have fierce competition in trade and investment relations.

Vietnam is, relatively speaking, some distance behind in terms of development compared to most other members, so is vulnerable to competition. Implementing commitments in trade and investment liberalisation and facilitation within the forum means that Vietnam will face many obstacles from greater competitive pressure when opening up its market.

As Vietnam is at a level of medium-low development, it bases negotiations on the following principles: special and differential treatment for open economies, exchanges, and market access, Son said.

“Vietnam’s principles in negotiating FTAs are shared by more developed economies,” he added. “Therefore, in trade agreements, Vietnam has a roadmap and timeframe for businesses to adjust and participate more effectively.”

Most Vietnamese enterprises are SMEs, marked by low technology, outdated management methods, and an absence of business strategies. Conversely, the strong competitiveness of Apec member economies, which have a high level of science and technology development and high growth, is undeniable, especially in the fields of banking and finance, insurance, telecommunications, power, manufacturing, and shipping, etc.

In the context of international economic integration in general and cooperation within Apec in particular, Vietnam will host the Apec Leaders Meeting for the second time in eleven years this November in central Da Nang city. In addition to efforts from the government regarding Apec conferences, businesses should also actively take advantage of opportunities for investment and business, to maximise the benefits and strengthen connectivity with Apec partners to expand markets and increase production, sales and services in the region. 

 

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Vietnam to make customs reform

VNA

 

The Global Alliance for Trade Facilitation (GATF) will helpVietnamto establish a customs bond system part of the country’s efforts to modernise and reform administrative procedures relating to import and export.

The GATF and the Vietnam Private Sector Forum (VPSF) launched their joint project on customs bond last week, aimed at facilitating customs clearance inVietnam. A customs bond is an agreement that ensures that any importer will pay all fees and taxes as well as operate according to all laws and regulations.

This is the start of the GATF’s Technical Assistance Project with the government of Vietnam to help the country carry out its World Trade Organisation (WTO) commitments, as well as carry out the government’s Resolution 19 on improving the national competitiveness and business environment.

Vietnamis the first country inAsiaand the first developing country in the world to be selected by donor countries in the WTO to receive technical assistance under the agreement on WTO Trade Facilitation, in effect since February 22, 2017 when 112 countries ratified it.

The scheme will be co-ordinated by the PM’s Advisory Council for Administrative Reform, whose standing agency is the government Office.

Customs bonds are designed to streamline importers’ process for bringing goods into the country. Anyone that is importing goods or transporting them locally is required by the customs agency to purchase a bond from a surety company. If an importing company fails to pay fees or follow regulations, Customs can file a claim against the bond. The surety company would then pay to make restitution, but in the end the importing company is required to pay back the surety company.

According to the advisory council, a customs bond is a trade-facilitating mechanism widely used in countries such as theUS,Australia,Sweden,New Zealand, theUK,Singapore,Malaysia, thePhilippines,Thailandand theRepublicofKorea.

Basically, the mechanism is meant to separate the releasing of goods at border gates and the preparation and submission of required customs documentations to facilitate the export or import into the country.

Once importers or exporters have customs bonds, they are guaranteed to fulfill their tax obligations before their goods arrive in the country, so the goods can undergo faster customs clearance.

GATF director Philippe Isler said that the GATF would provideVietnamfeasible solutions to carry out WTO commitments, increase national competitiveness and improve business climate.

Foreign experts from WTO member countries will assist with administrative procedure reforms, reviewing and amending the legal framework as well as monitoring Vietnam Automated Cargo and Port Consolidated System/Vietnam Customs Information System (VNACCS/VCIS).

A customs bond system would be a breakthrough in facilitating trade inVietnam, he said.

Nguyen Viet Nga, vice head of International Affairs Department under Vietnam Customs, said that inVietnam, customs clearance operations consumed up to 72 percent of required time for goods to be released from border gates because of cumbersome procedures relating to specialised inspections of goods.

Dao Huy Giam, general Secretary of the Vietnam Private Sector Forum, said that the customs bond has helped enterprises, surety companies and customs effectively monitor import and export processes and save time in customs clearance.

An official from the Insurance Supervisory Authority under the finance ministry told thoibaotaichinhvietnam.vn that over 30 non-life insurance companies inVietnamprovided insurance guarantees but none of them offered customs bond.

Surety companies face major difficulties such as a lack of information about insured companies or the risk of losing money that they paid to make restitution.

Vietnamhas climbed 9 spots to 82 from 91 on the World Bank’s Doing Business 2017 ranking, and moved 15 spots up to 93 from 108 for improved border-trade indicators related to import-export operations. Time needed to handle customs procedures was cut from 138 hours to 108 hours.

Vietnamwants to cut down the required time for customs procedures from 108 hours to 80 hours by 2020.

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INVESTMENT

 

VET

 

Da Nang plant upgrades warehouse and wastewater treatment with total investment of nearly $5 million.

Coca-Cola Vietnam has recently announced the completion of additional investment of $300 million in Vietnam during the 2013-2016 period. The company officially put into operation a new warehouse and an ameliorated wastewater treatment system featuring state-of-the-art equipment and advanced technology at its Da Nang production plant; a milestone marking the fulfillment of the project.

This is yet further demonstration of Coca-Cola’s strong commitment to sustainable investment in Vietnam, setting business development goals that are in parallel with positive impacts on the community.

“Aimed at operating as a long-term investor in Vietnam, Coca-Cola has always focused on generating more added value that benefit both the business and the community’s living standards,” said Mr. Calin Dragan, Regional Director at Coca-Cola ASEAN and Middle East. “This is demonstrated through significant progress made in the utilization of green technology in every Coca-Cola plant, diversifying its product range to best meet consumer tastes, and pursuing community programs on a long-term basis.”

The company’s investment activities in Da Nang are in line with the direction of bringing practical values to the community and making Da Nang a new economic driving force in Vietnam and the region. The warehouse and wastewater system are equipped with the latest in technology and expresses the company’s commitment to the development of Da Nang in particular and Vietnam in general. The project’s completion is fundamental to Coca-Cola’s subsequent steps towards sustainable growth in Vietnam.

The Da Nang plant now has four manufacturing lines using cutting-edge technology. During the course of development, the plant has been continuously upgraded with smart, environmentally-friendly technologies that have secured stringent quality certificates in Vietnam and globally.

Total investment for upgrading the Da Nang plant’s warehouse and wastewater treatment system was nearly $5 million. The new warehouse, with a total area of 4,800 sq m and a capacity of 4,000 pallets, can be further transformed to a smart warehouse to store up to 8,000 pallets.

“With the goal of becoming one of the largest cities in the country, Da Nang always focuses on developing both its economy and environmental protection,” said Mr. Tran Van Mien, Deputy Chairman of the Da Nang People’s Committee. “City authorities always encourage companies and organizations to protect the environment. We greatly appreciate the commitments by Coca-Cola, a companion of the city for 20 years, to build long-term goals in not only economic development but also in providing a better living environment to the community.”

A memorandum of understanding was also signed between Coca-Cola Vietnam and the University of Industry on a program that provides clean, safe drinking water to students at secondary and high schools in the city through the supply of 65 drinking water filtration systems, worth up to $520,000.

 

 

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Special incentives in pipeline for agricultural investors

VIR

 

 

In a move to attract more private investment to the agriculture sector,Vietnamis mulling over offering a series of special incentives in terms of land-use fees and favourable loans for such projects.

Yesterday afternoon, the Ministry of Agriculture and Rural Development (MARD) held a seminar to collect comments for the latest version of a draft decree on incentives for the farming sector, which will replace Decree No.210/2013/ND-CP.

“Decree 210 has proved problematic. There remain many problems in the agriculture sector due to reliance on small and retail households, thus having low productivity, market access difficulties, and low added value,” admitted Nguyen Xuan Cuong, minister of Agriculture and Rural Development.

“The two key tasks will focus on agriculture restructuring towards increasing added value chains and dealing with the weaknesses of the sector, mainly processing and market access. We will also promote sci-tech applications amid the increasing global integration,” he added.

Under this draft decree, a firm that has a project with special investment incentives will be exempt from land-use fees, while those having a project with investment incentives will enjoy a 70 per cent reduction in land-use fees.

This draft also includes financial support for agricultural businesses. Accordingly, a firm investing in an agriculture project with special investment incentives and investment incentives, and accepting land-use rights of households and individuals as capital contribution to develop a material area will get a financial support of VND50 million ($2,270) per hectare to develop infrastructure for the area.

In terms of credit policies, a business investing in an agriculture and rural development project will get local support for the interest rate for their commercial loans, once the project is completed.

Specifically, local support for interest rate payments will have a maximum term of eight years for agriculture projects with special investment incentives and six years for projects with investment incentives.

The borrowing cap with interest rate support is not higher than 70 per cent of the project’s total investment.

This draft also includes big support for startups in the sector. Accordingly, they will be exempted from water surface and land rental fees from the moment their projects are put into operation. Startups will also be exempt from import duty for machinery and equipment for their project.

There are also many other special financial supports for research, transfer, and application of high-technology in agriculture, for human resources training and market development, for investments in dairy cow and high-yielding cow projects, for investments in slaughter houses, for grown-forest processing projects, for investment in agro-forestry-fishery processing and preservation facilities, and for investments in agriculture and rural development infrastructure.

Both local and foreign firms can benefit from the special incentives, according to the draft.

MARD expects to submit the draft decree to the government for approval in September, contributing to making the sector more attractive to private investors.

According to the ministry, the number of businesses investing in agriculture remains modest. As of September 2016, the country had 4,424 businesses in the sector, making up less than 1 per cent of the country’s total.

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REAL ESTATE

 

VIR 

Despite having fallen to the fourth position in terms of foreign direct investment in the first eight months of 2017, the real estate sector remains the second-biggest recipient of this type of investment to date.

According to the Ministry of Planning and Investment’s Foreign Investment Agency, between January and August 20, the real estate sector stood in fourth with regards to foreign direct investment (FDI) inflows – with 46 newly-registered projects and 15 others increasing their capital, totalling more than $1.16 billion.

Real estate FDI is behind the sectors of manufacturing and processing ($11.69 billion), power processing and distribution ($5.36 billion), and mining ($1.28 billion).

Cumulatively, as of August 20, investment capital in the real estate sector remained firm in the second-highest position, with 618 projects in total and $51.2 billion worth of investment capital.

According to Su Ngoc Khuong, investment director of Savills Vietnam, the strong inflows of FDI in the manufacturing and infrastructure sectors have been driving more FDI into the real estate sector.

In May, Thai firm Hemaraj Land & Development and Vietnam-based Cienco 4 secured approval for their $1 billion joint-venture industrial park, covering 3,200 hectares in central province of Nghe An, Khuong said. “Beyond industrial developments, FDI is also a contributing factor to the growth of other sectors of the property market. Both the office and hospitality sectors are showing high occupancy, increasing office rents and room rates.”

While these sectors are gaining more and more traction among developers, the focus from investors is still on operating assets, with the exception of developments in prime locations in major cities like Ho Chi Minh City and Hanoi, Khuong added.

Last week, South Korea’s Shinhan Investment Corporation reportedly teamed up with Vietnam’s leading asset management firm VinaCapital to establish a $100 million private equity fund to invest in Vietnamese real estate developer Novaland.

Japanese investors, meanwhile, remained active in the market, with a range of names such as Nishi Nippon Railroad and Hankyu Realty, Maeda, AEON, and EXS pursuing real estate projects.

Many other foreign investors are coming from China and Hong Kong. Prominent names include China Fortune Land Development Group and Elite Capital Resources Ltd., which have both recently acquired major projects in Vietnam.

According to Jones Lang LaSalle (JLL), Southeast Asian countries, including Vietnam, are increasingly attractive to real estate investors. Stronger exports coupled with rising capital expenditures from companies across industries in recent months are positive growth indicators,

“Hong Kong and mainland Chinese investors active in Singapore are also looking at Indonesia, Vietnam, and the Philippines,” said Regina Lim, head of Capital Markets Research, Southeast Asia at JLL.

“We’re seeing growing interest from large-scale mainland Chinese groups looking to invest in Indonesia, as well as Vietnam and the Philippines. These investors are keen to tap Indonesia’s attractive economic and demographic profile. In Jakarta, we expect advance purchases of office assets under construction to remain the most likely point of entry,” Lim said.

“We anticipate continued interest in industrial and logistics assets in the next six to twelve months, as they’re seen as an avenue to leverage the growth in manufacturing and e-commerce in Southeast Asia.” she added.

 

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Foreign house ownership rights in special administrative economic zone proposed

DTI 

Authorities ofQuangNinhProvinceare seeking the government’s approval for 75 preferential policies and mechanisms for Van Don Special Administrative Economic Zone.

The proposals are related to incentives in taxes, land, and immigration and special administration model in the zone.

Under the province’s proposals, rights to trade and own real estate in the zone would have to be considered for foreigners. The province has also proposed the visa exemption for air travellers staying less than 60 days in the zone.

Van Done Special Administrative Economic Zone has been recommended to follow the model of one-level administration and the head of the zone will be authorised to decide land lease terms and wage contracts.

At a recent meeting with Quang Ninh authorities, deputy prime minister Vuong Dinh Hue urged the province to work with relevant ministries and sectors to draft a Law on Special Administrative Economic Zones.

The zone is part of a government-approved plan to build three such zones in the country, with the others being Van Phong in the central province of Khanh Hoa and Phu Quoc in the Mekong Delta’s Kien Giang province.

Van Don has an important position as it lies on the strategic transit route from East Asia to Southeast Asia and from Asean to China; in VietnamChina “two corridors, one belt” cooperation area; in NanningSingapore economic corridor; and in extended Tonkin Gulf inter-regional cooperation area.

At present, several big projects are being carried out at Van Don Special Administrative Economic Zone, including an international airport, a luxury tourist site along with a highway linking Van Don withHaiPhongCityand Ha Long City.

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OIL&GAS&ENERGY&MINING

VIR

 

ExxonMobil Corporation from the US will officially kick-off the construction of the Blue Whale (Ca Voi Xanh) gas-to-power complex located in the central provinces of Quang Nam and Quang Ngai in November this year, at the same time as APEC Summit 2017.

This was announced by the representative of ExxonMobil at a recent working session with Prime Minister Nguyen Xuan Phuc, according to newswire VTV.

Previously, according to a VIR source, the investor expected to start the construction of onshore infrastructure items in October this year.

The group is currently completing the geological survey and building the design of the pipeline installation. Besides, the corporation has carried out the land survey and took soil samples to conduct the environmental impact report.

The investor urged relevant authorities to complete remaining procedures, so that it can implement the project on schedule.

Aiming to affirm its determination to develop the project, on March 26, ExxonMobil and co-investor PetroVietnam as well as leaders of the Quang Nam People’s Committee signed a co-operation agreement to implement the project.

Previously, ExxonMobil and PetroVietnam signed a memorandum of understanding for the project in 2013. The project is believed to have high feasibility thanks to the good reputation of the investor and the readiness of local authorities.

According to the plan, the construction will be implemented in the two provinces of Quang Nam and Quang Ngai. Notably, the landfall location of the gas pipeline stemming from the Blue Whale gas field and the gas processing plant will be located at Chu Lai Open Economic Zone (EZ) in Quang Nam. Besides, four more gas-to-power plants to be fuelled from the same field, with a total generation capacity of 3,000 megawatts, will be divided equally between Quang Nam’s Nui Thanh district and Quang Ngai’s Dung Quat EZ.

ExxonMobil expects to exploit 8-9 billion cubic metres of gas per year, 1-3 billion cubic metres of which will go to Dung Quat Refinery for processing.

The investor expects to connect the first gas line from the Blue Whale gas field to the mainland by the end of 2023.

In the first phase, the exploited gas volume will be used to supply four power plants with a total capacity of 3,000 MW. The gas volume exploited in the second phase will be supplied to petrochemical projects or a fifth power plant with the capacity of 750MW.

Established in 1859, ExxonMobil is an American multinational oil and gas corporationIt ranks sixth among the ten largest companies in the world, with 37 refineries in 21 countries.

The corporation made its presence in Vietnam in 2015 via establishing ExxonMobil Vietnam Co., Ltd., specialising in distributing lubricant and petrochemical products.

 

 

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VIR

 

Vietnam is making consistent efforts to build a smart energy industry, where investors can easily find good investment opportunities.

Koos Neefjes, senior climate change expert at the United Nations Development Programme in Vietnam, shares his views on how Vietnam can achieve this goal, and the key challenges and opportunities along the way.

A smart energy industry is a forward-looking industry, and one that creates future opportunities for investors as well as consumers.

It is an industry that uses information technology, is at the core of the Internet of Things and is part of the Fourth Industrial Revolution. Its innovations come in, for example, artificial intelligence and material science. It is also a future where most of our energy will be green and clean: public and private transport will become electric; vehicle batteries will become part of the storage capacity in the electricity grid; efficiencies will go up through decentralised power production by citizens and private and public enterprises; the demand and supply of power will be under “smart” management; and there will be new companies and jobs.

So, is Vietnam on the way to becoming a smart energy industry? And does this offer opportunities for investors? My answer to these questions is “yes” and “yes”, but only partly, and more must be done.

First, many existing strategies and plans contain elements of a future smart energy industry, but I think it is not yet enough for an “energy transformation” akin to what is taking place in other countries. Vietnam needs to formulate an energy strategy with a radically different vision: an energy future that is green, clean, mostly electricity-based, interconnected, intelligent, and that benefits all. This means that electricity production must become much more decentralised, diverse, and renewable; future transport must become electricity-based; industry must become significantly cleaner; and housing and construction must become much more energy efficient, even self-sufficient.

Second, Vietnam is planning for growth in renewable energy, but only at a modest pace. According to current plans, most electricity will be generated by burning coal in 2030 and even in 2050. This is the direct opposite of most other countries, including developing countries that are decommissioning coal plants, slowing down or stopping their planning and construction. If countries like Vietnam keep coal as a significant factor in the energy mix, the fight against global climate change will be very difficult.

I think that Vietnam must rethink its power development plans urgently, because the alternatives are cheaper and cleaner, and they will improve national energy security. There are dozens of countries where solar photovoltaics (PV) and wind power are already cheaper than coal power. This can also be achieved in Vietnam because there is plenty of sun and wind, especially in the central and southern areas of the country.

Some coal power plants are highly efficient and produce less pollution than existing plants, but they are much more expensive per unit of electricity over their economic lifetime, need a continuous supply of (imported) coal, and produce huge amounts of solid waste. Also, the state must limit public debt, so opportunities for private investment in clean power must be created – something that I think is not only possible, but straight-out easy.

Third, there are a lot of policies and regulations in place to encourage energy efficiency and the use of renewable energy, but some of the most important administrative and technical regulations are weak or missing. An example of this is a regulation on “net-metering” – meaning that households, communities, or businesses with solar PV panels on their roofs interconnect their system with the power grid. They consume electricity that they themselves produce, send the excess to the grid, and buy when their demand is higher than their own supply (mostly at night). Regulations must be in place on the technical equipment for the interconnection and the billing system with the local power distribution company. Such regulations exist in many countries, so Vietnam could copy and adapt them to the local situation.

I estimated that even in not-so-sunny Hanoi I would recover my investment in about seven years against the current prices of equipment and power tariffs, whereas the equipment can stay for at least 20 years with minimal maintenance. It would cost the state nothing, and local power companies could be allowed to charge a small fee for the use of infrastructure. The country will increase its renewable power production capacity through private investment, the consumer will benefit, and jobs will be created. A win-win(-win) situation, but Vietnam has yet to issue such regulations.

Fourth, Vietnam is already seeing a surge in the use of electric scooters, and you can sometimes spot an electric tourist vehicle as well. However, there has been no bold, forward-pointing move in Vietnam’s transport policies, car industry, or construction sector. The major car companies in the world are developing electric cars, buses, and also vans and trucks. Many developed countries, China and India, the US state of California, and several cities around the world are issuing policies to phase out the production, sales, and use of diesel cars, and later, of petrol cars. Some are setting targets for the dominance of electric car sales as soon as 2025 or 2030. This will have a huge impact on the power sector and it offers opportunities for Vietnam, if smartly regulated.

Car batteries can be charged when there is excess power production and they can feed back into the grid at times of high demand, for which they must be connected to the power grid as well as the Internet of Things. Creating opportunities for investment as well as consumer benefits from this new concept of transport-energy management requires, for example, new designs of parking spaces and buildings. Your home, farm, factory, or office will become your “petrol” station, and your vehicle a power source.

Fifth, the electricity transmission and distribution infrastructure must be reinforced and made “smart” to enable a transformation to decentralised electricity production, dynamic demand and supply management, and electric transport. I believe that official development assistance (ODA) to the Vietnamese energy sector should focus on increasing the capacity and smart aspects of this infrastructure. It also must create energy storage in the system, for example by pumping water into lakes when too much solar or wind power is generated, which can be used to generate power in times of shortages. With this focus, ODA will enable small and large private investors in renewable power.

Finally, Vietnam is already manufacturing renewable energy equipment. Some Vietnamese private investors produce solar water heaters and solar PV components, and there are several large foreign investments already completed and on the way for the manufacturing of solar PV components and wind towers. These factories produce mainly for export. They have been invested and grew with few government incentives, and with policies to open the domestic market they can grow faster. They will generate many jobs, as global data show that renewable energy is much better for employment than the mining and petroleum sector. But they need qualified workers, so universities and colleges must provide appropriate training.

A key role for the government is to drive education and training towards a smart energy future.

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LEGAL

 

Casino business: Commercial banks allowed to provide services

VNS 

Commercial banks will be allowed to trade and provide foreign exchange services related to the casino business from next month.

This information was stated under Circular No10/2017/TT-NHNN on the management of foreign exchange for the casino business, which will come into effect from October 15 this year.

Casino business is a conditional business and under close management of competent State agencies. It is regulated under Decree 03/2017/ND-CP, which allows foreigners and Vietnamese people residing overseas with passports licensed by a foreign competent agency to gamble at the country’s casinos.

Vietnamese citizens are also allowed to enter domestic casinos on a three year trial basis. They must be 21 years old or above with full capacity for civil acts of individuals according to Vietnamese law, have proof of regular monthly income of VND10 million (US$450) or be subject to third degree taxation according to the law on individual income tax. The Ministry of Finance is responsible for providing citizens with application forms to verify the above conditions.

After the pilot period, the government will then decide whether or not to continue to allow domestic citizens to participate in gambling at casinos.

According to experts, easing regulations for the casino business will help prevent capital from leaving the country by Vietnamese who visit casinos in neighbouring countries such asCambodiaandMacao, help better manage social order in the sensitive entertainment area inVietnamand attract foreign tourists.

Furthermore,Vietnamhopes to further integrate regionally and internationally, attract billions of dollars of foreign investment to sustain growth and make tourism a key sector to further development.

 

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Finance Ministry wants business registration fee lowered

The Saigon Times 

The Ministry of Finance has proposed halving the fee for new business registrations, and business registration certificate adjustments to VND100,000.

The ministry is drafting a circular amending Circular 215/2016/TT-BTC on collection, payment, management and use of fees for provision of business-related information, and for business registrations.

In addition to the proposed fee reduction, the ministry suggests the charge for providing company information be lowered from VND5 million to VND4.5 million for 125 documents or above per month.

The ministry cites Resolution 75/NQ-CP adopted on August 9, 2017 at the government’s regular meeting as saying that the ministry was assigned to work with ministries, agencies and local governments to agree on a fee reduction for businesses.

This is why the ministry is reviewing this circular and asking for feedback from the public on its official website before it is presented at the government’s regular meeting next month.

The ministry has also proposed the Ministry of Planning and Investment calculate the fee revenue decline as a result of releasing the revised circular.

The January-August period saw around 85,350 startups registered with total capital of over VND822.1 trillion (around $36.2 billion), up 16.3 percent and 44.8 percent respectively over the same period last year, according to the Business Registration Agency.

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Thanks,

 


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