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BUSINESS IN BRIEF 5/8   2010-08-05 - VNA, SGGP

VN seeks investment from Japanese private sector


Vietnamese Deputy Minister of Planning and Investment Dang Huy Dong

A Vietnam Business Forum was held in Tokyo on August 4 to call on Japanese businesses, especially private companies, to invest more in infrastructure projects in the Southeast Asian country.


While addressing more than 200 participants, Vietnamese Deputy Minister of Planning and Investment Dang Huy Dong said Vietnam needs 15 billion USD each year to develop its infrastructure systems from now until 2020 to realise its target of becoming an industrial nation.


However, the country is only able to meet 50-60 percent of the required capital, of which 40-50 percent will come from the State budget, the deputy minister noted, adding that’s why the Government of Vietnam is working to adopt more effective solutions and policies, including those regarding the public-private partnership (PPP) to encourage all economic sectors to engage in developing infrastructure projects.


According to the official, PPP has been implemented in Vietnam in different forms such as build-operate-transfer (BOT), build-transfer-operate (BTO) and build -transfer (BT), helping to diversify sources of investment.


In the years to come, the Government of Vietnam will work out PPP policies in line with international practices and meeting criteria in terms of economic efficiency, transparency, market, benefit, equal competition among investors and risk management.


The selection of investors for projects will be conducted through tenders to maximise benefits and create an equal competition for investors both in and outside the country, Dong elaborated.


Statistics compiled by the Vietnamese Ministry of Planning and Investment show that more than 90 projects, including nine foreign-invested ones, with a combined registered capital of 7.1 billion USD have been carried out in the forms of BOT, BT and similar forms. The transport sector accounts for up to 70 percent of the total number of such projects and 95 percent of the investment.


On behalf of the Vietnamese private sector, Dang Thanh Tam, chairman of the Saigon Invest Group (SIG) and co-chairman of Vietnam-Japan Business Forum, briefed the participants on successful projects which are being carried out by private companies in Vietnam such as SGI’s project to build an expressway linking the capital city of Hanoi and the northern port city of Hai Phong and another project of build a 5,000 MW power plant in the Mekong Delta province of Kien Giang of the Tan Tao Group.


He said he hoped that more and more investors from Japan would cooperate with Vietnamese partners to develop infrastructure projects in Vietnam .


At the forum, representatives from the Ministry of Transport, Hanoi and the southern largest economic hub of Ho Chi Minh City presented the transport projects calling for investment in the country in general and the two cities in particular.


Officials from the Vietnamese Ministry of Planning and Investment, which jointly organised the forum together with the Japan Federation of Economic Organisations (Keidanren), cleared up Japanese investors’ questions about investment procedures and obstacles in Vietnam .


Following the plenary discussion, government officials of the two countries co-chaired three symposiums on the development of seaports, railway routes as well as energy, safe water supply and waste water treatment in big cities.


The Vietnamese delegation is scheduled to attend a Kansai -Vietnam Investment Forum and a roundtable conference on the attraction of foreign direct investment (FDI) from the Kansai region which will be held in Osaka city on August 6.


Leather, footwear exports on the rise


Leather and footwear exports rose 13.8 percent in the first seven months to 2.75 billion USD, according to the Vietnam Leather and Footwear Association.


Nguyen Van Khanh, its general secretary, said the country remains the world’s fourth largest footwear producer and exporter.


Vietnam turns out 800 million pairs of shoes of various kinds, 120 million bags, and 150 million square feet of tanned leather products a year and exports them mainly to the US, EU and Japan.


Exports to the US rose sharply in the first seven months to 700 million USD, accounting for 25 percent of the country’s total exports.


The growth in exports to the US was a positive sign since the EU, Vietnam’s key market, no longer offered preferential tariffs for Vietnamese shoe products under the GSP (Generalised System of Preferences), he said.


The EU is also set to extend anti-dumping duties on Vietnamese leather-capped shoes until 2011.


Tran Ngoc Quan, head of the EU Division at the Ministry of Industry and Trade’s Europe Market Department, said the obstacles to exporting leather and footwear to the EU could still remain this year.


To boost exports in remaining months this year, Vietnamese exporters should focus on high-value contracts, the association said.


If the sector continues to maintain the current export growth rate, however, the year’s target of 4.6 billion USD can be achieved, it said.


However, a shortage of labour has become the biggest problem for footwear companies and is affecting exports.


Large companies should consider building dormitories for workers to retain them, the association added.


PetroVietnam finds its first Malaysian offshore oil


PetroVietnam Exploration Production Corporation (PVEP) has reported the first oil extracted at the D30, Block SK305 field offshore Malaysia.


The field churns out an average 4,730 barrels of crude oil and 7.83 million cubic metres of gas a day. The accumulated production until July 31 reached 170,340 barrels with 282 million cubic metres of gas, PVEP said.


The SK305 project has been implemented under a common co-operation agreement on oil and gas exploitation and exploration between Vietnam , Malaysia and Indonesia . Its contract came into effect on June 16, 2003.


PCPP Operating Co is a joint venture between the three state-run companies to operate the project. PVEP, an affiliate of Vietnam ’s leading PetroVietnam group, holds 30 percent; Petronas Carigali Sdn Bhd, a member of Malaysia ’s leading Petronas group, has 40 percent; Indonesian Pertamina Co holds the remainder.


This is one of 20 contracts that PVEP has signed to explore and exploit oil and gas abroad. The firm also signed 38 other deals for oil and gas exploitation in Vietnam .


Block 305 is located in Balingian province, offshore from Sarawak , with the average water depth of 150m. The joint venture is exploring about 18 drilling wells. The fields D30 and Dana are the first two selected for early exploration and exploitation, PVEP said.


This is one of two projects bringing products for PVEP from overseas fields; the other one is in Algeria .


Dinh La Thang, chairman of PetroVietnam, affirmed to continue bolstering the strategic collaboration between PetroVietnam and Petronas in their oil and gas exploration activities.


PVEP also expects to extract the first oil from its largest project with a total investment capital of 12 billion USD: the Block Junin 2 in Venezuela in 2012, corporation chairman Tran Duc Chinh said.


"In the context of oil and gas resources in the country becoming exhausted, PVEP has mapped out strategies to boost oil and gas exploitation and exploration abroad in an effort to ensure the country’s energy security and reserves," he said.


Four million tonnes of crude oil exploited from Junin 2 will be imported to Vietnam to supply the local market.


In its strategies, PVEP plans to bolster oil and gas exploration and exploitation offshore and deep-water oil rigs rather than the currently employed shallow-water structures.


PVEP had total revenue of 18.97 trillion VND (998.4 million USD) in the first six months of this year, up 36 percent on the same period last year.


Supermarket-farmer alliance boosts consumption


Farmers’ concerns about consumption of their products have been addressed as more supermarkets want to cooperate with them in producing and selling rural products.


It can be said that farmer households in specialist fruit and vegetable areas in the Central Highlands province of Lam Dong and the Mekong Delta province of Tien Giang have never received such good care from supermarkets as currently.


According to Duong Thi Quynh Trang, Director for External Relations at the Big C supermarket chain, Mekong Delta fruits and Lam Dong vegetables now account for large spaces in Big C supermarkets with an average 1,400 tonnes consumed per month.


Since it started its pilot model of association with producers in mid-2008, Big C has successfully promoted the brands of over 30 local agricultural and food production companies by selling their products in Big C supermarkets and has also exported some lines.


Boosting cooperation for mutual development with local providers is a top priority in Big C’s business policy and the partnership has been strengthened by a strategic cooperation programme which will be implemented from now to 2011 in all 63 cities and provinces nationwide.


After Big C, Saigon Co.op signed long-term consumption and investment contracts worth a total 20 billion VND with Tien Giang and Lam Dong provinces through its system of Co.op Mart and Co.op Food shops.


At present, Saigon Co.op daily consumes around 40 tonnes of vegetables and 50 tonnes of fruit, mainly from Lam Dong. The corporation also has an ambition to expand cooperation with many other localities in order to gain priority supplies.


With the benefit of its experience as a world-leading distributor, Metro Cash & Carry has rapidly expanded its purchasing network to all localities in Vietnam and at the same time supported farmers to produce safe agricultural products under international standards. These products, besides being sold in Vietnam-based Metro supermarkets, are expected to be sold in Metro chains throughout the world.


The group recently hosted a conference of producers in the Mekong Delta province of An Giang to familiarise them with its supply chain in the domestic market. During the process of building this chain, Metro will train local producers in the supply methods of modern trade channels.


Vietnam ’s agricultural products account for up to 90 percent of the total volume of farm produce sold in the country’s supermarkets.


Long-term strategy needed to push up consumption of Vietnamese goods 


Through one year of the campaign “Buy Vietnamese goods,” Vietnamese-made items have achieved good position in the heart of clients; however, a long-term strategy is needed if domestic enterprises are to dominate the market.


Vu Thi Kim Hanh, Director of the Business Supporting Associates (BSA), said that before the campaign was launched and the worldwide economic crisis was underway, Vietnamese enterprises only focused on exportation. But since then, domestic businesses have honed in on the Vietnamese market, especially in the countryside.

The countryside market has proved its vital role, said Ms. Hanh. 857 enterprises have sold their goods in the new market, netting around VND1, 5 trillion.


According to economic experts, the countryside market is of full potential, with a population of 60 million, threefold that of cities. Mobile stores stocked with essential commodities for residents and workers in countryside localities and industrial parks have changed people’s views of homemade goods.


Through the campaign, it was decided that focus of the campaign must be on businesses more than customers. Enterprises need to become more competitive to launch good products and services that will receive support from customers. Vietnamese consumers will respond if domestic producers make a heavier investment in improving the quality of products and services.


Foreign retailer groups consider Vietnam as the market of full potential, according to Luong Van Tu, former deputy head of the Ministry of Industry and Trade (MoIT). Domestic businesses should continue to develop supermarket form to hold market share as well as create mobile stores to supply goods to each household in the countryside; traditionally, home delivery is a favorite form of Vietnamese commerce.


MoIT is working out a program to push up the national commerce for 2011, including a division specifically in charge of promoting the trade of domestic goods. MoIT and relevant agencies will work together to provide market information in order to strengthen cooperation and reduce unhealthy competition.

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