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BUSINESS IN BRIEF 5/10   2010-10-05 - VietNamNet/VNA

Italian investors keen on Vietnam’s infrastructure


Italian enterprises are interested in infrastructure investment in form of public-private partnership (PPP) model in Vietnam , especially in developing highways.


At a workshop on developing infrastructure in Vietnam held on Oct. 4 in Hanoi , Italian Ambassador to Vietnam Andrea Perguni said the PPP model has been successfully applied in his country and the embassy has introduced several projects in Vietnam to Italian enterprises.


According to Counsellor Marco Saladini of the Italian Trade Commission, Italy is experienced in building infrastructure facilities as the country has 5,000 km of highways mostly built in the form of PPP.


Italian investors are interested in building underground car parks, highway and power projects in Vietnam, he said at the workshop, which was jointly organised by the Ministries of Planning and Investment and Transport, and the Italian Trade Commission.


However, he expressed concerns about shortcomings in the current tender process in Vietnam , saying most major Vietnamese enterprises still enjoy State support in infrastructure development.


Statistics released by the Asian Development Bank (ADB) showed that the capital flow into infrastructure development in Vietnam between 2006-2010 was estimated at 140 billion USD, a modest amount compared to the real needs of transport, energy and environment projects. Therefore, there are many investment chances for investors in the PPP form.


The country will need to build 3,000-5,000 km of highways, 300-400 km of metro lines in the next 10 years, requiring hundreds of billions of USD.


However, the State budget, government bonds and ODA will be able to meet only half of the demand, therefore, it is necessary to attract private-sector and FDI capital, according to ADB.


Deputy Minister of Planning and Investment Dang Huy Dong said Vietnam gives top priority to infrastructure investment and is implementing pilot PPP investment to attract capital from the private sector.


A representative from the Transport Ministry said that several transport projects, including the upgrading of National Highway No. 1, Ha Noi-Lao Cai railway and Phnom Penh-Ho Chi Minh City highway are being implemented by using FDI and PPP capital.


Vietnam is calling for PPP and FDI capital in such highway projects as Da Nang-Quang Ngai, My Thuan-Can Tho, Noi Bai-Ha Long, Dau Giay-Da Lat and Ben Luc-Long Thanh, and other transport projects, including Hai Phong international port and HCM City-Can Tho express railway.


Foreign firms look to raise city investment


Small- and medium-sized foreign firms in HCM City are looking to increase their capital because they see potential for expansion and growth.


The Dau Tu (Vietnam Investment Review) newspaper quotes the HCM City Department of Planning and Investment as saying 65 FDI projects operating in the City have raised their investment capital to 168.9 million USD in the first nine months of this year.


These projects are mainly in the manufacturing, industrial, service and retail sectors.


Fastfood chain Lotteria Vietnam Ltd Co has decided to invest an additional 7 million USD to expand its chain, while sporting goods manufacturer Adidas Vietnam has decided to raise its investment by a million dollars to 3.9 million USD.


Retailer Giant South Asia has poured an additional 15 million USD into its distribution network and warehouses, raising its total investment capital to 20 million USD.


Lu Thanh Phong, DPI deputy director, said FDI businesses in the city had, compared to previous years, increased investments in manufacturing, processing and industrial production over the last two years.


Nguyen Tan Phuoc, deputy head of HCM City Export Processing and Industrial Park Authority, said the capital increase showed trust in the market’s development potential and stability.


Yuki Vietnam Ltd, a company that produces industrial sewing machinery, has invested an additional 5 million USD this year, bringing its total investment capital to 20 million USD. This is the third time it has increased its capital investment in the city.


Tsunoda Shinji, general director of the company, said the increase in capital aimed to expand its domestic market share, instead of focusing on exports. Currently, the company earns 16 million USD per year from the domestic market, and it aims to increase this to 24-26 million USD a year in the near future.


A representative of Australia ’s RMIT University said it had invested more than 15.1 million USD to build a dormitory for its students in Vietnam .


Merilyn Liddell, director of RMIT Vietnam, said the investment aimed to expand the school area by 2013 to meet rising demand for international standard education in Vietnam .


However, many FDI businesses had also complained that they were hampered by the lack of skilled workers, and were having to provide the needed training by themselves, the newspaper reported.


Cement makers hit by coal shortages


Vietnam Cement Industry Corporation (Vicem)’s member companies need more coal to produce cement, officials from the group have said.


Le Van Chung, chairman of the corporation’s management board, said cement factories at the corporation’s member companies needed 5,000 tonnes of coal a day for production, but the Vietnam Coal and Mineral Industry Group (Vinacomin) provided half of their demand at 2,500-3,000 tonnes per day.


"We had to halt operations temporarily, and if we don’t receive an adequate supply of coal in the coming days, many Vicem factories will stop production," Chung said.


Factories in Hoang Thach, But Son, Bim Son, Tam Diep, Hoang Mai, Hai Phong and Ha Tien are experiencing coal shortages.


Hoang Thach Cement Company director Dao Ngoc Binh said his company had three kilns that consume 1,200 tonnes of coal, but the company had to stop using one kiln on September 27 due to a lack of coal.


The company has about 600 tonnes of coal in stock, which is not enough to keep the remaining two kilns operational, Binh said.


Cement producers But Son, Bim Son, Tam Diep and Hoang Mai have between 5,000-10,000 tonnes of coal for production for the next 5-15 days.


The factories acted on their initiative to get more coal for their production, but at the moment, the member companies within Vinacomin did not have enough coal to sell to cement factories, Chung said.


Vicem estimated that the cement industry needed 4 million tonnes of coal to supply the factories for the remainder of the year, he said.


High gold price fails to deter shoppers


Demand for gold jewellery on the domestic market has not significantly changed despite the fact that the cost of gold has climbed to its highest ever level, according to industry experts.


"In recent days, we have had a large number of customers across the country, " said General Director of Bao Tin Minh Chau Joint Stock Company Vu Minh Chau.


Chau added that as the wedding season approached, his company had seen no change in customer volume.


Sai Gon Jewellery Holdings Company (SJC) reported business had remained unchanged.


"The number of people buying wedding jewellery still remains high. However, the number of customers shopping for everyday jewellery is down 20 percent," said Tran Thi Ngoc Suong, head of SJC’s Jewellery Department.


To maintain customer volume, gold companies have designed a variety of new products comprising less gold.


"Our company has introduced many new products. We cut down the gold weight so that more customers can afford them," said Chau.


He added that with only about 1 million VND (52 USD), customers could buy a wedding ring.


"We use modern technology, which helps us produce light weight gold jewellery," he added.


The company has also organised a number of discount promotional programmes.


These new methods seem to be working for the gold companies, attracting large numbers of mid-income earners.


"It is a clever choice to buy cheaper wedding jewellery with good design when the gold price is so high," said Van Anh, a customer.


The price of gold on the domestic market has significantly increased. Yesterday afternoon, it climbed to 31.64 million VND (1.600 USD) per tael (1.2 troy ounces).


Free trade advantages for Vietnam, RoK firms


RoK Ambassador in Vietnam Park Suk-hwan has urged businesses of both countries to take advantage of preferences from the ASEAN-Korea Free Trade Agreement (AKFTA).


He stressed the important role of AKFTA in expanding trade and economic cooperation between Vietnam and the Republic of Korea (RoK) at a workshop on improvement of the effective use of the agreement for goods from ASEAN countries and Vietnam in Hanoi on October 4.


Bilateral trade and economic cooperation have grown rapidly and become a fine example for the world, the diplomat said.


Trade between Vietnam and the RoK reached 10 billion USD in 2009, an increase of 20 times against 1992 – when the two countries established diplomatic ties – and is expected to reach 20 billion USD by 2015.


Deputy Minister of Industry and Trade Nguyen Thanh Bien said that implementation of AKFTA had contributed to increased Vietnam exports.


In 2009, Vietnam earned 1.66 billion USD from export of goods given preferences from the regional agreement, accounting for 80 percent of the country’s total exports to the RoK.


In the first six months of this years, thanks to certificates of preferential origin, businesses shipped goods worth 842 million USD, accounting for almost 65 percent of Vietnam ’s exports to the RoK.


Deputy Minister Bien said the workshop offered an opportunity for experts and policy makers to present information about preferences and the agreement’s implementation to Vietnamese firms.


However, the Ministry warned that businesses needed to actively study and inquire into markets and preferences in order to tap the preferences in the agreement and strengthen ASEAN links.


RoK tops investor list in Vietnam


The Republic of Korea (RoK) is the largest source of foreign investment in Vietnam , with an accumulated capital infusion of 23 billion USD, said the RoK Consul General in HCM City Kim Sang Yoon.


At the Oct. 4 meeting held by the HCM Union of Friendship Organisations to celebrate the founding anniversary of the RoK (Oct. 3), Consul General Kim Sang Yoon said the cooperative relations between Vietnam and the RoK have strongly developed since the two countries established their diplomatic ties 18 years ago, with two-way trade turnover increasing from 500 million USD in 1992 to 9.5 billion USD.


At the meeting, Chairman of the HCM City Vietnam-RoK Friendship Association Vu Van Hoa thanked the RoK for its support to Vietnam - and HCM City in particular - during the national construction and development.


In 2009, Vietnam received 985 million USD in aid from the RoK Economic Development Cooperation Fund or 20 percent of the fund’s budget, Hoa said.


The RoK has also provided non-refundable aid to help Vietnam develop infrastructure systems, health care and environmental programs, he said.


In recent years, cooperation in tourism, education, sports and culture has borne fruit.


About 59,000 Vietnamese people are working and studying in the RoK and tens of thousands of Vietnamese brides have married RoK men, while many thousands of RoK families are living in Vietnam , according to the Vietnam-RoK Friendship Association.


Up to July of this year, the RoK provided the second largest number of tourists to Vietnam , with 368,000 arrivals.

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