Tuesday, October 30, 2007

Indochain Capital MD says Vietnam’s economy will flourish in next five years

Managing Director of the Indochina Capital Group Peter Ryder has predicted that the Vietnamese economy will pick up as more foreign investors will come to the country in the next five years.

Peter Ryder has lived and worked in Vietnam since 1992 and is one of the leading experts in financial services and real estate. He regards Vietnam as the second most attractive and dynamic market in the world just behind China with an average economic growth rate of 7.6 percent over the past 15 years.

With a population growth of 1.5 percent, the Vietnamese population is considered relatively young, creating an attractive labour force and great potential for the development of the consumer market. On the other hand, Vietnam is an important part of ASEAN, which is a dynamic economic area in Asia. Vietnam’s cultural and language and religious characteristics are quite similar to those of developed nations in the region like Japan and the Republic of Korea. This shows that Vietnam has potential for economic development, said Mr Peter Ryder.

After US major chip maker Intel’s decision to build a factory in Vietnam, many foreign investors have showed their keen interests in the lucrative market.

Unlike other regional countries such as Thailand, Singapore and the Philippines, the country’s economic development doest not rely on exports despite being big exporters of agricultural products, garments and textiles.

In addition, the Vietnamese capital market has been flourished over the past two years and is predicted to develop further in the future. All of these factors are creating a huge attraction for Vietnam.

Vietnam's ancient city Hue attracts swarms of Thai tourists

More than 15,000 Thai visitors visited the historic city of Hue this week, setting a record for tours, the Thua Thien-Hue tourism authority has announced.

On October 23, Hue welcomed nearly 6,000 Thai visitors, most of whom arrived by land caravan tours on the Trans-Asia Highway through the Lao Bao Border Gate in Quang Tri province.

This was the largest number of Thai tourist arrivals to Hue in one single day, said Vo Phi Hung, director of Thua Thien-Hue Tourism Department.

Hung said Thai tourists were expected to continue to visit the city next week as it is now a long holiday in the northeastern region of Thailand.

One of the major reasons behind the harp increase in Thai tourism tourists was the Trans-Asia Highway (linking central Viet Nam with Laos and the northeastern provinces of Thailand), also called the East-West, Economic Corridor, as well as the opening of the second Friendship Bridge (between Savanakhet of Laos and Mukdahan of Thailand) last year.

However, the hotel network in the city, with nearly 6,000 rooms, cannot accommodate such a big group of guests at one time.

Hung said after a one-day tour of Hue, many Thai visitors to Hue on October 23 had to stay overnight in neighbouring localities such as Da Nang and Quang Tri.

The director of Hue-based Huong Giang Travel Co. Ltd, Nguyen Hang Quy, said Thai tourists were interested in World Heritage sites in the central region, including the Phong Nha Cave in Quang Binh province, Hue, the historic town of Hoi An and the My Son Cham Complex in Quang Nam province.

Quy said Thai visitors would like to spend more money on souvenirs and traditional Vietnamese food rather than pay for luxury hotels and resorts.

He added his company had organized tours of central Viet Nam for groups of Thai tourists thai include up to 600 guests.

According to figures from the Tourism Authority of Thailand (TAT), Viet Nam has become the second most popular destinations in the Greater Mekong Sub-region for Thai visitors, just behind Laos . TAT’s figures show that Thai tourist arrivals to Viet Nam in the first nine months of 2007 amounted to nearly 121,000, a year-on-year increase of 137 percent.

Meanwhile, the number of Vietnamese traveled to Thailand dropped by 60 percent in the first seven months of the year, due to unrest in the country.

Monday, October 29, 2007

Vietnam trade gap seen soaring to $8.9 billion

* Industrial output to rise 17 percent

HANOI: Vietnam’s trade deficit will more than double to $8.9 billion in the first 10 months of 2007 from $4 billion in the same period last year due to a 30.5 percent surge in imports, the government said on Friday.

January to October imports raised to an estimated $48 billion while exports brought in $39.1 billion, up 18.6 percent from a year earlier, the government statistics office said in a report.

Vietnam’s main export during the period was 12.4 million tonnes of crude oil, which earned $6.65 billion, followed by textiles, which earned $6.4 billion. However, the country spent $5.85 billion on importing 10.4 million tonnes of refined oil products, the report said.

A National Assembly report on Monday said consumer goods would account for only $1 billion of this year’s forecast $9 billion trade deficit. The rest would come from spending on machinery and technology.

The government expects a wider trade deficit this year as foreign investment has been pouring in since Vietnam joined the World Trade Organisation in January. The deficit in 2006 was $4.81 billion.

However Vietnam’s January-to-October industrial output is expected to rise 17 percent from a year earlier to 467.93 trillion dongs ($29 billion), but crude oil production has slowed.

Crude oil production during the first 10 months is expected o fall 11.4 percent from the same period last year to 12.82 bllion tonnes, the government’s General Statistics Office said n a monthly report.

Crude exports, one of Vietnam’s top foreign exchange earners, in January-to-October fell 7.5 percent from a year earlier to $6.56 billion, the statistics office said.

However, production of cars, machinery and air-conditioners in the nine-month period extended the strong growth since the start of the year, rising by between 60.5 percent and 83.9 from a year earlier.

The state sector was estimated to grow 10.3 percent during the first 10 months.

Production by enterprises outside state control was also expected to expand in the January-to-October period, growing 20.8 percent from a year earlier. reuters

Tourists to enjoy Vietnam-Cambodia-Thailand sea route

16:29' 28/10/2007 (GMT+7)

Phu Quoc Island
VietNamNet Bridge - A travelling route on the southwestern sea linking Vietnam, Cambodia and Thailand will be launched.

An agreement to this effect was reached by the tourism authorities and relevant agencies of localities from the three countries at a meeting in the Phu Quoc island district, Kien Giang province, from October 24-25.

There will be two trips a week along this line by a high-speed ship, capable of carrying 300 people. Visitors will depart from Vietnam ’s Ha Tien township, travel to Cambodia ’s Shihanouk Ville port city and finally arrive in an eco-tourism site in Thailand ’s Chanthaburi province.

Kien Giang province, the Vietnamese partner in the project, is mobilising capital to upgrade its infrastructure and entertainment facilities in Ha Tien and Phu Quoc

Sunday, October 28, 2007

Vietnam Growing at Exceptional Rate… American Investors Looking for Good Entry Point

Vietnam stocks have soared 25% since early August alone, underscoring the promise of that Asian nation. A special report jointly developed by U.K. affiliate MoneyWeek Magazine and our experts here at Money Morning explores the factors fueling Vietnam’s long-term potential.

Vietnamese stocks have rocketed over the past few weeks, gaining 25% since early August. The recent rush into emerging markets has boosted near-term investor sentiment, while the long-term story remains compelling. Vietnam has posted gross domestic product (GDP) growth of more 7% a year for four straight years, and should grow by about 8.5% this year.

This is no surprise to those who follow Vietnam’s growth. Many analysts predict Vietnam will be the country that emerges after the current wave of emerging economies mature and their growth rates slow down. A big factor in Vietnam’s favor is that its economy is growing soundly, instead of at rates that border on out of control.

Deregulation and privatization, along with booming commodities markets and steadily increasing foreign direct investment (FDI) have buttressed the nation’s economic growth. Higher real incomes are fueling consumption. Car ownership, for example, is now up to 5% of the population.

The boom is evident from the growth rates at Sacombank, Vietnam’s biggest private-sector bank, notes Christopher Wood of CLSA, a provider of brokerage and investment-banking services in the Asia-Pacific market. The brokerage firm expects loans and pre-tax profits to grow by 90% and 130% respectively this year. And Vietnam’s population of 85 million still only has six million bank accounts.

Property ownership is on a roll. And the privatization of major state-owned firms is becoming an important factor in the market’s recent upswing, Wood says. Between 20 and 30 banks - including the four major state-owned banks, telecom firms and some infrastructure companies - are expected to hit the market over the next three years.

All this activity should give Vietnam’s tiny stock market a big boost in value and raise the profile of this "truly exciting market," Wood and other experts say. The leading stocks, as a group, are trading at about 25 times earnings, but this multiple is matched by projected profit growth, making Vietnam appear reasonably valued on a "PEG ratio" (price/earnings to growth rate) basis, Wood says.

Unfortunately, in spite of this financial allure, U.S. investors will for now have to take a rain check on Vietnam, as the country doesn’t have many companies that have registered their shares with the U.S. Securities and Exchange Commission. Nor is a Vietnam exchange-traded fund (ETF) currently available in the U.S. market.

Indeed, until a direct profit pathway is paved, investors may have to take the road less traveled, tapping into the many big-name foreign players plunking down major money on Vietnam projects. Key among them:

* U.S. chip giant Intel Corp. (INTC) committed $605 million for a test-and-assembly factory in February 2006, and has boosted its total Vietnam commitment to $1 billion.
* Korean steelmaker POSCO Ltd. (PKX) plans to invest $1.13 billion in new steel plants.
* Athletic-shoe innovator Nike Inc. (NKE) is responsible for more than 130,000 Vietnamese jobs.

In total, foreign investment in Vietnam jumped by 49% in 2006. And much more is expected, due to Vietnam’s brimming potential. Consider these alluring statistics:

* More than half its population is under 25 years old.
* At 2%, its unemployment rate is among the world’s lowest, trailing only Azerbaijan, Cuba, Iceland, Andorra and Liechtenstein.
* Its labor and production costs are roughly one-third that of China’s, making Vietnam a worthy rival in the contest for new production sites.
* It shrugged off the 1997 "Asian Contagion" financial crisis and averaged 5.5% growth for each of the next two years - while other nations in the region saw their own economies shrink.
* And it became a member of the World Trade Organization late last year.

The next step is for Vietnam to open its stock market to U.S. investors. And that may happen sooner than many experts expect. (Money Morning)

Acer Complains of Labor Shortage in China; works shifts to Vietnam

Dan Nystedt, IDG News Service

Acer Inc., the world's third largest PC vendor, said Friday that it is keeping an eye on a labor shortage in China that could affect PC production.

"There is a labor shortage in China, which is new to me," said J.T. Wang, chairman of Acer, during the company's third quarter investors' conference in Taipei. "China has 1.4 billion people, how can they have a labor shortage?" he asked rhetorically.

Acer's China-based component suppliers and PC assemblers have said that in some cases they have lost 1,000 workers overnight, and have had to seek new employees. The Taiwanese company will work with suppliers on new strategies to make sure the issue does not affect production, Wang said.

He characterized the concern as small, and unlikely to become a major issue in the near term.

There has been a growing shortage of skilled labor in the East coast cities of China, in part due to government efforts to develop the nation's inland areas, said one analyst. Many factory jobs used to be filled by migrant workers, but now that many companies are building factories in China's interior, people feel they can stay at home and work instead of traveling to the coast.

Acer president Gianfranco Lanci said factories tend to move to new places when production in a certain region becomes difficult, and he expects that will happen if companies continue to see labor shortages in China.

A number of electronics firms have started investing in Vietnam. Taiwan's Hon Hai Precision Industry, the world's largest contract electronics manufacturer and maker of gadgets including iPods, PlayStation 3 consoles and Nokia mobile phones, in August announced a plan to spend US$5 billion over the next five years to build a base of electronic components factories near Vietnam's capital, Hanoi. Until now, the company's major investments have all been in China.

Taiwan's Compal Electronics, the world's second-largest laptop PC maker and another major investor in China, has also announced plans to build a notebook computer factory in Vietnam.

Companies have started to look outside of China for new factory investments, the analyst said, and while Vietnam, India and other countries boast low-cost labor, they will only win investments if their workers are educated and investment incentives and regulations attractive.

Vietnam ranks top in “sex” searching on Google

06:18' 26/10/2007 (GMT+7)

Statistics by Google Trends
VietNamNet Bridge – In the early months of 2007 and especially in September and October, the searches containing the word “sex” coming from IP in Vietnam were at the highest level on Google, pushing Egypt and India into lower positions.

In 2005-2006, Vietnam was not among the top ten countries searching for this word on Google but in January 2007, Vietnam climbed to fourth and then third position (March, April, May and June), and has been first since July 2007.

October has seen a further jump of Vietnam in this category, in which Vietnam is top among countries and territories while Hanoi tops the cities in the world for searches with “sex” included in the keywords.

Meanwhile, “money” and “rich” are the words that British, Australian, American, and Canadian people search for the most. It is interesting that the countries ranking first in searching for “money” are not among the top searching for “sex”.

India and Portugal are at the middle for “money” and “sex” searching.

Google Trends is the site that makes statistics of Internet users who use Google Search around the world. It debuted in 2004.

(Source: VNE)

Tokyo, Vietnam stock exchanges link up

The Tokyo Stock Exchange signed a deal Wednesday to cooperate with Vietnam's hot-performing bourse, including through possible cross listings of stocks on the two exchanges.

World stock exchange operators are increasingly linking arms to facilitate easier cross-border trading, while boosting their own competitiveness.

Under the accord signed Wednesday, the Tokyo Stock Exchange, Asia's largest bourse, will share information with the Ho Chi Minh City Stock Exchange and consider offering technical assistance, a TSE statement said.

The two bourses will also start discussion on listing of the two countries' stocks on each other's bourses, it said.

"This is an official and long-term commitment for further cooperation between the two exchanges," Tran Dac Sinh, president of the Vietnamese bourse, said in the statement.

TSE president Atushi Saito said: "By continuing to enhance cooperation with Asian exchanges in the future, we will keep striving to improve convenience for market participants."

Vietnam's main stock exchange was opened only in 2000 and has quickly shot up, with the benchmark index rising 145 percent last year, despite warnings by some market watchers that the market risks overheating.

Both the Tokyo and Ho Chi Minh City bourses signed cooperation agreements earlier this year with the London Stock Exchange.

The Tokyo bourse has also signed a similar deal with the New York Stock Exchange and acquired a stake of almost five percent in the Singapore stock exchange.

The TSE has indicated that it is open to the possibility of overseas exchanges taking a stake in the Tokyo bourse once it achieves its own initial public offering, which has been delayed due to a series of technical glitches. (AFP)

France, ADB to help Vietnam rebuild farm infrastructure

A French agency and the Asian Development Bank (ADB) will provide US$143.3 million in loans and grants to help Vietnam rebuild rural roads, irrigation systems, and farm infrastructure, the bank said yesterday.

Hanoi will get a $90-million soft loan from the Philippines-based ADB, and a $52-million loan and $1.3-million grant from France's Agence Francaise de Developpement.

Vietnam's critical rural infra-structure has deteriorated over decades due to war, natural disasters, and budget constraints. The project will cover 13 provinces in Vietnam's impoverished central region.

Scheduled to be upgraded are rural roads; irrigation drainage and flood control systems; rural markets; domestic water supply schemes; and special coastal

works such as sand dune stabilization, salinity prevention, and mangrove rehabilitation.

"Poverty in Vietnam is a rural phenomenon, focused to a large extent on the more isolated central and northern regions of the country. It especially affects ethnic minorities," said ADB natural resources economist Ahsan Tayyab.

Improvements in rural infra-structure have already helped Vietnam's agricultural sector achieve significant growth in the past decade, the bank said.

Detailed loan terms were not disclosed.

Winvest to increase investment in Vietnam resort to US$4billion

VietNamNet Bridge –Winvest Investment Vietnam Co., Ltd. will submit an application to spur its investment in a resort in Ba Ria-Vung Tau Province by a dozen times to US$4bil from the current US$300mil, a provincial official said.

The U.S. investor will prepare dossiers for the capital boost in the Saigon Atlantis Resort project in the coastal province, said Mai Ngoc Thuan, deputy head of the provincial Department of Planning and Investment.

"The investor is preparing its document for approval," Thuan told the Daily on Monday, adding the investment would be used to develop more luxury tourist facilities for the 300-hectare resort.

In April last year, the company received the license for the US$300-mil tourism and entertainment complex from the Ministry of Planning and Investment.

It aimed to develop an area of 300 hectares at Cua Lap, six kilometers east of Vung Tau City, into a complex of a five-star hotel of 800 to 1,200 rooms, villas, a golf course, shopping centers, restaurants, and other facilities.

"The company said the new investment will be spent on developing more luxury facilities such as building more five-star hotels rather than just one hotel in the old plan," Thuan said.

The investor presented the detailed scheme for the Saigon Atlantis Resort to leaders of the provincial government on Tuesday, and expected the resort to open in the next five years. At the presentation, the investor also gave a brief preview on the expanded plan if the capital boost is approved.

The investor has also paid VND50bil as part of the land rent to the provincial government to help the province cover the cost of site clearance for the project, Thuan said.

If the new plan of the project is approved, this second biggest tourism project in the province will take the top post as the most capital-intensive project in the province's hospitality industry.

Currently, the single biggest investor in the tourism sector there is the U.S.-based Good Choice Import-Export Investment Inc., which has committed over US$500mil in two projects there.

Last week, the provincial government approved the detailed plan of 1/500 scale for these two projects, comprising the Wonderful Park and an aquarium.

Sunday, October 21, 2007

Driver’s licenses, easy to obtain for foreigners in Vietnam

Obtaining a driver’s license is now easier for foreigners
Is it legal to ride a motorbike in Vietnam with a four-wheel vehicle driver’s license from another country? How can foreigners acquire driving licenses here?

Thanh Nien Daily finds it’s relatively easy for tourists and expats to drive legally in Vietnam.

Vietnam is attracting more and more foreigners who come not only for tourism but also to live, study and work.

Traffic congestion in the country’s cities is common, but that doesn’t stop many expatriates from driving themselves around. And as it turns out, obtaining a legal license to drive in Vietnam is not very difficult at all.

“Most foreigners who have a driver’s license issued in their home countries simply have to register for a license here,” says Lam Thanh Trung, vice-chief of the Agency for Granting Driving Licenses (a sub-department of Ho Chi Minh City’s Service of Transportation).

“The agency processes over 100 licenses for foreigners every month,” says Trung.

“With the required documents, one can have their license registered within seven days.”

Who can get a driver’s license in Vietnam?

According to a 2006 mandate by the Ministry of Transportation, all foreigners can register for a license in Vietnam if they had a valid one issued to them in their home countries.

Each city or province’s Department of Transportation is in charge of granting driver’s licenses for foreigners with licenses issued in their home countries, tourists from neighboring countries driving their own cars in Vietnam, and Vietnamese who acquired a driving license abroad.

However, licenses are only granted to those who have valid travel visas for a period of at least three months in Vietnam (though the actual length of the visit does not have to be that long).

“Many tourists make the mistake that it’s legal to drive here with an international driver’s licence. But they also have to register,” Trung says.

Expiry dates and written exams

“The period for which a [registered] license remains valid is based on the expiry date of one’s original license from home,” says Trung.

“Standard driver’s licenses in Vietnam are good for five years. Motorbike licenses, on the other hand, have no expiry date.”

An important point to note, how-ever, is that the type of license issued in Vietnam will only be equivalent to the type granted in one’s home country.

For instance, “A four-wheel driver’s license can-not be registered to ride a motorcycle,” Trung stresses.

Those who have a four-wheel license but want to ride a motorcycle will have to pass an exam on riding techniques, but won’t have to take a written exam on traffic laws.

To begin, a form requesting a license must be obtained (see below) and filled out by any one of the following: the Vietnamese Embassy, the Consulate General, the Representative Office of International Organization in Vietnam, the Ministry of Foreign Affairs, Department of Planning and Investment or the General Director of Joint-Venture and Foreign-Capital Companies. A valid pass-port will also be required.

Overseas Vietnamese will need to have their documents completed by the Committee for Overseas Vietnamese.


The following submissions are required for a foreigner to get a driver’s license in Vietnam:

1 petition (issued form) requesting driver’s license
1 copy (notarized duplicate) of original driver’s license
1 Vietnamese-translated copy (notarized duplicate) of driver’s license
1 copy (duplicate) of passport 3 passport-sized photos
Original copies of passport and driver’s license must be shown when submitting all documents

Forms to request a driver’s license can be obtained at the Agency for Granting Driver’s Licenses or sgtcc.hochiminhcity.gov.vn

In Ho Chi Minh City, all documents must be submitted to the authorities for driver’s license registration, located at:
252 Ly Chinh Thang Street, District 3, 8 Nguyen Anh Thu Street, District 12.
Open weekdays only.

The fee is VND30,000 (US$2) for one license.

Vietnam's 1st oil refinery to enjoy preferential tax treatment

Dung Quat oil refinery enjoys preferential CIT
08:42' 11/06/2006 (GMT+7)
Soạn: AM 803071 gửi đến 996 để nhận ảnh này
The ground-breaking ceremony of Dung Quat Oil Refinery.

VietNamNet – The Ministry of Finance (MoF) has released circular 50, stipulating the preferential corporate income tax (CIT) and import tax to be applied to the Dung Quat oil refinery.

Dung Quat oil refinery will enjoy a preferential CIT rate of 10% for 15 years from the day it officially begins operation. The oil refinery will also be exempt from CIT for the four years from its first taxable income. It will also be able to enjoy a 50% reduction in CIT over the next nine years. The oil refinery’s income will be entered into separate accounts from the Vietnam National Petroleum Corporation (PetroVietnam).

The import tax exemption will be applied to the goods used to construct and maintain the oil refinery. This includes imported equipment and machinery, means of transport and associated accessories. In addition, the materials used to manufacturing the construction tools that cannot be made domestically will also enjoy a tax exemption. Importers will have to undertake to use the imported goods for the declared purposes.

The construction of Dung Quat Oil Refinery began in November 2005, and it is expected to begin operating at the end of 2008, or in early 2009.

The project has a total investment capital of $2.5bil, which includes the Dung Quat Oil Refinery covering an area of 110 ha, an 85.83 ha crude oil and products container, an oil pipeline, a 94.46 ha sea water supply and drainage system, ports, and a series of supporting works.

The Dung Quat refinery has been in planning since January 1998. It has been plagued by a series of delays, three times involving the withdrawal of foreign oil companies involved in the project. But ground was finally broken on the $2.5 billion project on November 28, 2005.

Saturday, October 20, 2007

Vetnam to invest heavily in Laos

Leading national enterprises make pitch in Lao market

VNECONOMY updated: 15/10/2007

Executives from Viet Nam’s eight business and industrial giants have received strong commitments from a Lao Deputy Prime Minister after handing out 13 projects of investment and bevy of aid.

In a meeting with over 40 Vietnamese business executives in Vientiane on Oct. 13, Deputy Prime Minister Somsavat Lengsavad welcomed their visit to study opportunities in Laos as the follow-up of agreements between the two Parties and Governments.

Somsavat expressed hopes that their efforts would “make a turning point in promoting Vietnamese investment in Laos.”

The Lao Deputy PM also pushed for the establishment of a Vietnamese investors association in Laos as a foundation for Vietnamese enterprises to smooth out their business operations in Laos.

Earlier on October 11-12, the Vietnamese business delegation held working sessions with a number of host ministries and agencies, including the Ministry of Transport, the Ministry of Post and Construction, the Ministry of Energy and Minerals, the Ministry of Natural Resources and Environment, the Customs Office and the Committee of Planning and Investment.

On this visit, Vietnamese businesses have brought together 13 projects of investment, focusing on minerial, energy and garment and textile industries.

Also on this occasion, Director General of the Bank of Investment and Development of Viet Nam (BIDV) on behalf of Vietnamese business circles presented the Lao Education Promotion Fund with 800 million VND. The Viet Nam Oil and Gas Group (PetroVietnam) and the Hoa Phat Company handed over 500,000 USD and 20 tonnes of rice, respectively, in relief aid to flood victims in Laos.

Vietnam Airlines told to finalize Boeing and Airbus deals

HANOI (AFP) — Vietnam on Friday ordered the state-run airline to finalise contracts before the end of the year with Airbus and Boeing to buy planes with a total catalogue price of nearly six billion dollars.

Prime Minister Nguyen Tan Dung also gave the go-ahead for Vietnam Airlines to partially privatise, boost its fleet to 107 planes by 2020 and re-develop its subsidiary airline, the government said in a statement on its website.

Dung has told the flag carrier to enter, through a bidder, into "direct negotiations with Boeing on the contract to buy 12 B787-8s, finalising the signing of contracts before November 16," the statement said.

He also said the Airbus contract to buy 10 A350-900XWBs and 20 A321s should be finalised before December 21, according to the statement.

Vietnam Airlines early this month announced preliminary agreements for the large-scale passenger aircraft orders, struck by Dung during recent visits to the United States and France.

The exact costs were not announced, but the 30 Airbus jets have a total catalogue price of nearly 3.8 billion dollars, while the Boeing deal would be worth about two billion dollars at full cost for each jet.

Air travel is taking off in the communist-ruled country of 84 million people, where the economy is growing at over eight percent a year.

Vietnam Airlines now operates 45 aircraft but wants new planes to compete against a slew of foreign carriers and budget airlines. It plans to launch five weekly direct flights to Los Angeles by the end of next year.

The carrier now operates 10 Boeing 777s, 10 Airbus A320s, 10 A321s, three A330s, 10 French-made ATR-72s and two Fokker-70s. It will receive five more A321s next year and four Boeing 787-8 Dreamliners from 2009.

The airline will also buy five more ATR-72s, the report said.

Under a modernisation plan agreed by Dung on Thursday, Vietnam Airlines will be allowed to expand its fleet to 60 planes by 2010, 85 by 2015 and 107 planes by 2020, subject to market conditions, the statement said.

The prime minister agreed to disburse 904 billion dong (56.5 million dollars) from the state budget to pay for the four Boeing Dreamliners ordered in 2005.

Dung also assigned the finance ministry to implement the previously announced partial privatisation of Vietnam Airlines.

The ministry would guarantee all loans to buy planes and engines by the airline and the newly-established Vietnam Aircraft Leasing Joint Stock Company.

The prime minister also allowed Vietnam Airlines to establish a partly private company by reorganising subsidiary Vietnam Air Service Co. (VASCO).

The new company would be formed with the participation of the Vietnam Plane Leasing Joint Stock Company, the Vietnam Bank for Investment and Development and other shareholders, the official statement said.

Industry sources have said Vietnam is planning to turn VASCO into a low-cost carrier to take on Pacific Airlines, part-owned by Qantas, and AirAsia, now in partnership with ship-builder Vinashin.

Vietnam's coal plants are a growing concern

Coal Plants Foul Up Vietnam's Miracle Economy

Hanoi, Vietnam (AHN) - Coal and thermal power plants that fire up the Vietnamese economic miracle also poison its air.

"The daily operation of thermal power plants, especially those based on coal, has been contributing to environmental problems and deteriorating air quality and public health due to air emissions, waste generation and inefficiency of plant operation," says Yue-Lang Feng, the Asian Development Bank's principal environment specialist for Southeast Asia.

The environmental problems caused by thermal power plants were partly due to poor equipment maintenance and out-of-date design and technology, according to ADB's environment analysis for Vietnam.

Viet Nam Electricity this year introduced cleaner technology for its new coal-fired power plants. Viet Nam Electricity accounts for 78 percent, or 8,822 megawatts, of total installed capacity, 61 of which comes from thermal power plants that run on coal, oil and gas.

The Agence Franaise de Development (AFD) and ADB on Wednesday announced they will also help Quang Ninh province in northern VietNam address air pollution problems.

Quang Ninh has Vietnam's largest coal reserves, with more than 100,000 people employed by the industry.

The environmental management project, estimated to cost $720,000, will be financed through a $600,000 grant from the AFD to be administered by ADB. The balance will be covered by the government.

The assistance will focus on strengthening the capacity of Viet Nam Electricity in environmental management of thermal power plants.

All these are essential to meet the growing electricity demand.

October 19, 2007 7:37 p.m. EST

Vietnam's PetroVietnam allocates $6 billion for second refinery

HA NOI — The Viet Nam Oil and Gas Group (PetroVietnam) has allocated US$6 billion to the construction of a second refinery and petrochemical complex in Tinh Gia District of Thanh Hoa Province.

"PetroVietnam will contribute between US$1.8 - 2 billion or 30 per cent of the combined capital needed to build the complex," Dinh La Thang, Chairman of PetroVietnam’s Board unveiled.

Major domestic investors include the Viet Nam Post and Telecommunications Group, the Bank for Foreign Trade of Viet Nam, the Viet Nam Bank for Agriculture and Rural Development, the Viet Nam National Petroleum Corporation and other shareholders, with a contribution ratio of eight, ten, ten, ten and 32 percent respectively.

According to Thang, "PetroVietnam is currently negotiating with Idenmitsu of Japan to form a joint venture. The co-operation agreement will ensure the group has a hand in both the finance and technology industries,"

"To further satisfy the domestic markets’ needs for crude oil for the next 30 -years and into the long-term, a deal was signed with Netherlands’ Trafigura, as well as Swiss-based oil trader Glencore," Thang added.

Construction of Vietnams’ second refinery after Dung Quat is due to begin next year. "The project is eligible for the Governments’ special incentive policies and expected to be completed by 2013," said Cao Hoai Duong, Manager of Nghi Son preparing refinery and petrochemical complex department in Ha Noi. PetroVietnam continues to seek investors for a third refinery in Long Son District of Ba Ria-Vung Tau. — VNS

Vietnam's PVN oil and gas group does deal with morgan Stanley

Oil and gas group inks deal with US investment bank

VNECONOMY updated: 17/10/2007

The Viet Nam Oil and Gas group (PVN) and the US investment bank Morgan Stanley signed a cooperation deal in Ha Noi on October 16.

The US bank is expected to hold a 10 percent stake in the PVN’s Finance Company (PVFC), which will make its initial public offering soon.

The bank will also help PVN draw capital from the regional and global financial markets and improve its financial and banking management skills.

The same day, the oil and gas group inked an agreement with the Ha Noi Securities Trading Centre (HaSTC).

As agreed, HaSTC will provide its partner with procedures and regulations relating to share auctions, share and corporation bond listings, as well as help PVN seek partners and list its shares on international bourses.

Vietnam's real estate market is heating up

Hanoi: real estate market sees new fever
16:40' 17/10/2007 (GMT+7)

VietNamNet Bridge – Hanoi’s real estate market is heating up day by day with the prices of apartments in luxury areas like Ciputra, The Manor, and Trung Hoa-Nhan Chinh up by nearly 100%.

On ACB's Real Esate Trading Floor
Mrs Hoa, who owns a villa and an apartment at Ciputra, said that she had decided not to sell the apartment at this moment as she thought the price would rise further.

The price for villas has surged to VND60mil/sq m ($3,750), while the price for apartments is VND20mil/sq m ($1,250), which represent two-fold increases over the previous levels.

Last week, Mrs Hoa sold a villa at C4 bloc for over VND60mil/sq m. Meanwhile, there are no more villas or apartments to purchase at this moment. The staffs from the marketing division for the new Ciputra’s project say “no information” in response to clients who ask about new apartments.

Apartments in new urban areas like The Manor and Garden are also being hunted by high income earners. Meanwhile, according to Nguyen Duc, Deputy Director of Bitexco, the investor of The Manor, all the apartments here have found owners.

Mr Duc said that only several special villas were left. These are villas with big surface area and super luxurious facilities, and they are being offered at special price levels of VND5-7bil/unit ($437,500).

Quynh Nhu, a resident at The Manor, said that the apartments with the area of 106-216 sq m had been selling very well. The price of these apartments has increased by 50-60% from $1,000/sq m to $1,600 /sq m. Several days ago, Mrs Nhu sold a 106 sq m (second floor, B bloc) apartment for $165,000. Meanwhile, an apartment on the sixth floor was sold last week at $180,000.

Staffs from Truong Thanh Real Estate Company say that they receive tens of calls every day from clients asking about the sale of high-grade apartments; however, the company does not have apartments to sell.

The ACB Real Estate Trading Floor in Hanoi has also reported the sharp increase of transactions. The commodities for sale are mostly private houses worth VND1-2bil ($125,000).

According to the Thang Long Real Estate Centre, the apartments in My Dinh area are being successfully traded at VND14-18mil ($1,125), while high-grade apartments are selling at $1,200-1,800/sq m.

“The prices of apartments have soared by 20%, but we do not have more apartments to sell,” said a staff from the centre, adding that a new fever was attacking the real estate market. The ‘hottest’ areas now are Thanh Xuan, Cau Giay and Tu Liem districts.

Mr Duc from Bitexco said that the state’s policy on allowing Viet Kieu to own houses in Vietnam from November 15, 2007 had stimulated the real estate market. He said that unlike previous years, when prices increased when speculators pushed the prices up, the market is now really hot due to the high demand.

Mr Duc said that the supply shortage would make the ‘price fever’ last for a long time. Meanwhile, the land price frame announced by the Hanoi People’s Committee for enterprises and individuals for reference shows the increases of between 30% and 50% in land and house prices compared to the previous year’s price frame.

According to the real estate business circle, there are three reasons behind the bustling real estate market.

First, Vietnam’s admission to the WTO has had positive impacts on the real estate market. People believe that the demand for property will increase from foreign investors.

Second, there is always a close link between the real estate market and stock market. A lot of securities investors have shifted to inject money in land and houses which they believe a better way to save their money.

Third, the legal framework for the real estate market operation has been completed, paving the way for more transparent and easier transactions. The Real Estate Law, the Property Registration Law, the Land Use Tax Law, the Housing Law, and the regulations applied for Viet Kieu have been enacted and become valid.

Analysts say that it is very likely the real estate market will boom till the end of 2007 and develop well in 2008.

(Source: Tien phong)

Vietnam ranks 6th highest in world for foreign direct investment

ietnam is ranked sixth among the most attractive locations for FDI in the 2007-2009 period, according to the World Investment Report released on October 18 by the UN Conference on Trade and Development.

China and India were the top two most favoured trans-national corporations (TNCs) FDI destinations.

The results were based on UNCTAD’s survey of TNCs all over the world.
The UNCTAD World Investment Prospects Survey 2007-2009 looks at upcoming trends in FDI among the world’s largest TNCs.

The survey forecasts FDI flows increasing across all sectors over the next three years on the back of continued global economic growth, high profitability and continuing availability of finance.

Total FDI in 2007 is estimated at a new record of US $1.4-1.5 trillion.
The UNCTAD report also cautions of challenges that the world economy has to overcome to reach the FDI attraction targets in the coming years.

These include the sharp increase of current account deficits in developed countries which may lead to changes in foreign exchange rates, causing a negative impact to FDI flows; an oil price hike may also lead to increasing inflation and the dangers that affect the financial market, including instability of the sub-prime mortgage market in the US.

Vietnam's infrastructure news bits

* Dong Hoi airport unprepared for planes
Much work remains to be done at Dong Hoi Airport in the central province of Quang Binh though the transport ministry and the provincial government have set early next month as the starting time for the first plane to land. The reason is that up to 22 households in Quang Phu and Loc Ninh communes have not moved out of the airport area.

* Thua Thien-Hue wants more cement plants
Thua Thien-Hue is seeking approval for the construction and investment firm Viet Song Long to develop a fifth cement plant in the central province. The US$205-million facility in Nam Dong District is designed to produce 1.8 million tons of cement a year.

* City approves major road expansion
The HCMC government has approved the expansion of Luy Ban Bich and Tan Hoa streets to 23 meters in width from the current 10 meters, and to 4.84 kilometers in length. This road link from Phu Lam Roundabout in District 6 toward the Tan Son Nhat Airport area in Go Vap District requires more than VND860 billion (US$53.4 million) and is scheduled for completion early next year, Tuoi Tre reports.

* SeABank, VIGEA shake hands
South East Asian Bank (SeABank) has reached an agreement to provide loans for members of the Vietnam-Germany Small and Medium Enterprises Association (VIGEA). In return, the association will introduce borrowers to the bank, Thanh Nien reports.

* Binh Dinh adopts ‘one-door’ policy for investors
The central province of Binh Dinh now applies a “one-door” policy in which investment registration procedures are simplified. Investors need to go to the province’s Department of Planning and Investment, 35 Le Loi Street, Quy Nhon City, to register business and investment, Phap Luat reports.

* Projects in Chu Lai await US$3 billion
Foreign investors are being sought for six projects worth US$3 billion in Chu Lai Open Economic Zone in the central province of Quang Nam. The projects include a US$1-billion Chu Lai international airport, a US$800-million complex consisting of a port and a trade center, and a US$300-million urban town, Lao Dong reports.

Vietnam's lack of developed ports to hurt exports

Lack of ports could choke exports, experts warn

The severe shortage of ports and related infrastructure could soon hold up Vietnamese exports with cargo volume forecast to rise 25 percent annually, according to experts at a recent conference.

“Poor infrastructure is now Vietnam’s biggest weakness,” Deputy Industry and Trade Minister Nguyen Thanh Bien told a recent workshop on seaport services and trade logistics in Da Nang.

With domestic and foreign investments on the rise, “we are facing power shortage, poor road systems, and, especially, a serious shortage of seaports, which is threatening to gridlock exports.”

The country has 266 seaports in 24 cities and provinces that handle over 80 percent of all imports and exports.

However, only nine ports could be upgraded to handle 50,000 DWT (dead weight ton) cargo ships or 3,000 TEU (twenty-foot equivalent unit) container ships, Bien said.

Ho Chi Minh City ports handled 72 percent of Vietnam’s container volume last year and 22 percent went through the northern city of Hai Phong.

Last year, 3.71 million twenty foot equivalent units passed through ports, 21.6 percent more than in 2005.

US Counselor for Economic Affairs Alan Tousignant told the workshop that port infrastructure would soon be overloaded and logjammed as Vietnam’s trade keeps growing.

He said the lack of ports and related infrastructure was holding back Vietnam’s potential to become an important sea transport hub in Asia.

The country plans to invest US$4.5 billion in ports in the next five years. Tousignant added it should pour a corresponding amount in land-based infrastructure.

He pointed out that only 19 percent of roads in Vietnam was asphalted while the railroad system too needed upgrading to meet increasing demand.

Logistics accounted for 15 to 20 percent of Vietnam’s gross domestic product, which was almost twice the ratio in more developed countries, he added.

Better planning needed

Under the government’s port development strategy, a seaport system with three main hubs – to be called “international gateway ports” – will be capable of handling 100 million tons of goods by 2010.

However, Bien said the strategy had been drawn up 10 years ago and should be revised for the present situation, especially now that the country has joined the World Trade Organization.

“The new port system must be armed with modern equipment, technologies, and management to help Vietnam become more competitive regionally and globally,” Bien said.

The Chairman of the Binh Dinh Province People’s Committee, Vu Hoang Ha, said the national strategy had to spell out the development focus instead of allowing coastal authorities to invest indiscriminately and ineffectively in ports.

The Ministry of Transport should play the central role in implementing the strategy, he said.

Tan Hua Joo, managing director of APL Vietnam, a subsidiary of the Singapore-based Neptune Orient Lines, the world’s eighth biggest container shipping firm, told another conference last month that new port developments should be focused on HCMC and Hai Phong.

He said a government plan to invest $3.5 billion to turn Van Phong Bay in the central province of Khanh Hoa into a transshipment hub might lead to inefficiency since the central region would not be a major area for cargo movements.

Da Nang and Quy Nhon ports handled less than 3 percent of the total cargo, he pointed out.

“Port infrastructure must be built to serve the need up to 20 years ahead,” he said.

Source: Vietnamnet

Singapore-Kunming Rail Link project making good progress

SINGAPORE : Agreements on linking up the transnational Singapore-Kunming Rail Project have been reached.

This update was given at the latest meeting in Singapore among ASEAN countries involved in the project.

Officials say the project is coming along.

In Cambodia, the missing link between the towns Sisophon and Poipet is expected to cost US$73 million and will be completed in three years.

Four rail links in Vietnam are being built or upgraded with rails replaced, and bridges and signal systems modernised.

In fact, several investors are keen to build one of them - the estimated US$250 million connection between Ho Chi Minh City and Loc Ninh in Vietnam, stretching almost 130 kilometres.

The four links in Vietnam are estimated to cost US$965 million.

Over in Thailand, one out of the three projects to build missing links is finished.

Construction has not started on the other two links; one is subject to a technical study, whereas a feasibility study has been submitted to the authorities for the other.

The Singapore-Kunming rail project is estimated to cost more than US$2 billion.

Thus, part of the trip to New York later this month for the ASEAN Finance Ministers meeting is to capture more international investor interest.

Malaysia's Transport Minister Chan Kong Choy said, "It will be presented there with the purpose also to showcase the investment opportunities in ASEAN."

So far, the Asian Development Bank, Chinese and French governments are funding part of the project.

Also raised at the meeting was the issue of the high speed rail link between Singapore and Malaysia.

An official from the Ministry of Transport said the Government's position of looking into a proposal by the Malaysian government has not changed.

The Malaysian Minister of Transport said the idea is still being discussed between the proposing corporation and departments in the Malaysian government.

Officials say the proposer of the project, Malaysia's YTL Corporation, is carrying out studies into the engineering aspects and land acquisition for the project.

The next meeting of the project's working group will be held in Malaysia next year. - CNA/ms

Saigon building five 28 story condos with view of Sai Gon River

City gets set for suburban condo plan


HCM CITY — The CapitaLand-Vista Joint-Venture Company yesterday announced that it would begin construction this year on a US$40 million condominium project on 2.4ha of land in HCM City’s District 2.

When completed in late 2010 or early 2011, The Vista in An Phu Ward will comprise five buildings of 28 storeys each, with 750 flats of 101sq.m to 472sq.m in size, including 14 penthouses.

Serviced apartments will be available for rent, according to general director Yoong Voon Sin.

With a view of the Sai Gon River, the building will offer residents a swimming pool, tennis court, fitness facilities, shopping area and green space.

The building will be near a Metro hypermarket and international schools.

The Vista is a joint-venture of Singapore-headquartered CapitaLand Holdings, which represents an 80 per cent stake, and two local firms, Phu Gia Investment Joint Stock Co and Thien Duc Construction Co, each with a 10 per cent stake.

An official of the foreign partner, Chen Lian Pang, said this was the first investment of his company in Viet Nam’s residential market.

The CapitaLand Group has now committed to four housing projects in HCM City in co-operation with several Vietnamese companies, with a total of 2,800 apartments and villas. — VNS

Monday, October 15, 2007

Vietnam to see broadband boom

23:56' 14/10/2007 (GMT+7)

VietNamNet Bridge - As many as 72 percent of internet users at cafe and 75 percent of internet users at offices in Vietnam are intending to hook up with broadband internet at home, according to a recent survey by Alcatel-Lucent Vietnam.

The survey, made through 305 interviews in Ha Noi and Ho Chi Minh City , also indicated that about 88 percent of professional internet users said internet is indispensable in their daily business.

“We strongly believe that the broadband internet service in Vietnam will see a boom in development,” said Valerie Faudon, vice president in charge of maketing programme at Paris-based Alcatel-Lucent Group.

She said the annual growth rate of broadband internet in Vietnam had already exceeded the government’s forecast as well as service providers’ expectations.

“The survey will help us to make a concrete business plan to provide the service in Vietnam ,” she said.

According to the survey, about 56 percent of professional internet users could afford a 10-20 USD internet bill at their home. Their main applications would involve multimedia content such as online music, video, games and downloads.

Meanwhile, about 95 percent of them have desktop computers at home, and 16 percent of them are planing to buy laptop computers, the survey reported.

The survey, also made in nine other countries worldwide, showed that Vietnam had a very high rate of voice over internet usage, just behind Brazil .

According to the Ministry of Information and Communications, there are currently 16.7 million internet users and 4.8 million internet subscribers out of population of 85 million.

The government recently announced plans to inject 100 trillion VND (6.3 billion USD) to increase the country’s Internet penetration to 35 percent by 2010. It expected the telecoms sector to generate revenues of up to 55 trillion VND (3.5 billion USD) per annum in the same period.

Australia's coal to fuel Vietnam's rapid expansion

By Andrew Trounson

October 15, 2007 02:00am

VIETNAM is shaping as a major export market for Australian thermal coal, with a delegation from the country's electricity industry flying in this week to talk to coal suppliers, the second such visit in two months.

Vietnam imports almost no coal, but billions of dollars are set to be invested in building coal-fired power stations in the south, and the country is expected to import 20 million to 30 million tonnes a year by early next decade.

At current spot prices of more than $US70 a tonne, that would be worth in excess of $2 billion a year. The Vietnamese Government has developed a long-term plan based on using a massive 80 million tonnes a year by 2025. That is equivalent to almost all the coal that will be shipped out of Newcastle this year.

Last month Deputy Prime Minister Hoang Trung Hai called on Electricity Vietnam (EVN) to speed up long-term coal supply talks with Australian and Indonesian coal producers, and to look into investing directly in mine projects.

EVN vice-president Dinh Quang Tri was in Australia last month for the APEC summit and met coal mining executives from Rio Tinto, Xstrata and Queensland's Felix. He will be here again this week to underscore Vietnam's seriousness.

"The sort of tonnages they could be importing are quite large, so Vietnam will be very interesting to the Australian and Indonesian exporters," Wood Mackenzie senior coal analyst Clyde Henderson said.

Wood McKenzie unit Barlow Jonkers has just completed a report assessing Vietnam's potential as a coal market.

Vietnam has always been off the agenda for the coal industry. The communist country initially lagged the extraordinary growth of the Asian tiger economies around it, and that, combined with the country's own coal deposits and offshore gas potential, meant it was never seriously considered as a coal market.

But the country, which has a population of more than 85 million, has been motoring along at an annual growth rate in recent years of more than 8 per cent.

With that has come persistent blackouts as the country's electricity capacity struggles to keep pace.

Power demand in the country is forecast to grow at about 15 per cent annually to 2010, but with offshore gas reserves yet to prove as plentiful as first hoped, the country is turning to coal imports.

"It has been under the radar for a while," said Allan Dawson, marketing general manager at Queensland coal miner Ensham Resources. "Vietnam is the next development ground for Asia. They have the people and a great location, but they just don't have the power," Mr Dawson said.

With major coal-fired power station projects set to be commissioned from around 2011-12, Mr Dawson said Vietnam could soon be importing 20-30 million tonnes a year, with Indonesia and Australia best placed to be the major suppliers. "I would say Australia has a good chance of getting up to half that," he said.

Vietnam is currently a net thermal coal exporter, mainly supplying coal to neighbouring China for power, and to Japan for use in steel making. Exports last year almost doubled to 29.8 million tonnes and are now flatlining, but the country is expected to start husbanding its coal for its own use, although it is likely to want to preserve the high-margin export trade with Japan in favour of importing thermal coal.

According to Platts Commodity News, Vietnam could be importing more than 1 million tonnes a year as early as 2010. EVN expects coal demand to almost double from 5 million tonnes to 9.6 million tonnes by 2010.

The big kicker will come when the new power plant projects start commissioning. Vietnam has been opening its economy to foreign investors, and global power companies have been quick to spot the opportunity. Ensham Resource's major shareholder J-Power is planning to build a $2.4 billion coal-fired power plant in Ba Ria-Vung Tau province, while Sumitomo Group is proposing to build a $3.8 billion coal-fired plant in Khanh Hoa province, with first generation as early at 2012.

Others proposing to build coal-fired plants in Vietnam are France's EDF, Malaysia's Toyo Ink, Japan's Kyushu Electric Power and Sojitz, and Czech power utility CEZ.

Representatives from these utilities can be expected to be come knocking on the doors of our coal miners soon.

Mobile phone frenzy bubbles in booming Vietnam

HANOI: Office worker Nguyen Dieu Huong keeps up with every new change to the mobile phone market in Vietnam. She says she upgrades her phone every six months, but still can't get all the features she wants.

"There are not enough products in Vietnam," she said with a frown, as she perused the offerings at a recent telecoms fair in Hanoi. "The customers do not have much choice yet."

Maybe not yet -- but as the players of the industry prowl for opportunities in one of the fastest growing mobile telephony markets in Asia, those days don't look so far off.

Just five years ago there were fewer than two million mobile phone subscribers in Vietnam. Now, according to government figures, that number is more than 18 million.

That growth has come even though a typical office salary is still less than 300 dollars per month, and one hour of mobile phone time can cost nearly nine dollars.

"Vietnam has an economy with strong growth potential, the population is the youngest in region and has a strong appetite for new technologies," said France Telecom chairman Didier Lombard. "All that goes in a positive direction."

The French firm has its eye on MobiFone, a subsidiary of national telecoms giant Vietnam Post and Telecommunications Group (VNPT). MobiFone is expected to be the first mobile operator here to open up to foreign capital.

The communist government is planning to retain control of fixed lines and the Internet for now, but it pledged to open the mobile sector when Vietnam joined the World Trade Organisation in January.

That spells opportunity for foreign firms, who see nothing but upside potential in a country where nearly two-thirds of the population of 84 million is under 30 years old.

In January Hong Kong firm Hutchison Telecom announced the launch of a nationwide mobile communications service in Vietnam, saying the country had one of the world's most vibrant, high-growth economies.

"Vietnam has a young and technology-savvy population. The demand for value-added voice and high-speed multimedia data services is growing exponentially," the firm's chief executive officer Dennis Lui said at the time.

Between now and 2012, Vietnamese authorities expect the penetration rate for fixed lines and mobile phones to rise from 35 percent to 60 percent, said France Telecom's Lombard.

The state intends to retain majority ownership of MobiFone and it is not clear if as much as 49 percent would even be sold to France Telecom or any other foreign partner.

Still, the numbers have attracted more and more foreign firms to start sniffing around for a piece of the action.

Norway's Telenor is also said to be looking at MobiFone. British giant Vodafone said in July it was opening an office in Hanoi to study opportunities in Vietnam, and Japan's NTT DoCoMo followed suit last month.

It looks certain that there will be other opportunities coming up. VinaPhone, another VNPT subsidiary, and the army telecoms operator Viettel are also expected to be opened up to foreign companies.

"Vietnam has very strong potential," Lombard said. "In my view it's still underestimated."

The country's once war-shattered command economy has grown more than eight percent so far in 2007, which counts as its best performance for nearly 10 years, according to official figures.

It is now often described as an emerging tiger, with poverty down sharply from nearly 60 percent of the population in the early 1990s.

PetroVietnam establishes finance company via stock IPO

PetroVietnam flexes some financial muscle

Investor interest in PetroVietnam Finance Corporation (PVFC) is climaxing with its initial public offering just a week away.

PVFC plans to auction 59.6 million shares on October 19. SeaBank Securities, PVFC’s financial advisor for the public offering, has set the initial bidding price at VND51,000 a share.

Besides being a subsidiary of Viet Nam’s leading oil producer, PetroVietnam, there are several reasons why investors want a piece of PVFC, including solid earnings.

The company has reported VND2 trillion (US$125 million) in revenue for the three quarters ending September 30, and a pre-tax profit of VND703 billion ($43.9 million).

"Looking at the company’s financial results, investors have high expectations for the IPO," says Hoang Mai Hoa, an analyst at Royal Securities.

Investors also feel comfortable in knowing PVFC is an arm of PetroVietnam, which in itself is expected to prosper as crude oil production increases, says Hoa.

Another important factor is the auction price is "surprisingly affordable for investors", especially for a blue chip, says James William, an executive with a HCM City fund management company.

Given demand and all the hype surrounding the IPO, William predicts PVFC shares could hit VND200,000 a piece when they officially list on the HCM City Stock Exchange.

PVFC has already announced Morgan Stanley as a posible strategic partner - a deal is expected to be complete before PVFC shares list on the exchange.

"Morgan Stanley is a leading financial firm in the global market. If it becomes a PVFC strategic partner, the Vietnamese financial corporation will be at an advantage in the local market," says William.

Deputy Prime Minister Nguyen Sinh Hung has ordered PVFC to limit total foreign ownership to 30 per cent, with any single overseas partner allowed to hold as much as 15 per cent.

Analysts, though, are warning investors not to be over zealous during the IPO.

"The market is not as hot as it used to be," says Dao Van Khanh, an Agribank Securities executive. "If share prices surge, they will not stay that way for long. If investors intend to trade in PVFC, then the initial public offering may not be a good time to buy."

Another concern, says Khanh, is more fundamental - the company is expanding aggressively into other industries, including property and media. By spreading its limited capital resources, PVFC might inadvertently put its core business at financial risk.

Nguyen Tien Dung, PVFC chairman, says money raised during the public offering will go toward the company’s core operations, which should improve earnings. He said there is little cause for concern regarding capital resources being spread too thin.

"The real value of the corporation is ensured," said Dung.

Vietnam's 3,200km coast with 100 ports is rapidly developing

Experts warn of deflated sails in port system


Trucks wait to be loaded with imported fertilizer at Khanh Hoi Port in HCM City. — VNA/VNS Photo Thanh Nhan

DA NANG — Attendees at a conference on port services and logistics yesterday urged the government to create zoning strategies and new investment policies that will attract investors and develop the local port industry in Viet Nam.

The National Committee for International Economic Co-operation and Da Nang City’s People’s Committee met to discuss strategies to develop the country’s seaports and logistical services.

Policymakers, company representatives and investors shared their thoughts on how to develop Viet Nam’s port system and logistic services.

The country has a total of 100 ports stretching along a lengthy 3,200 km of coastline, according to the Viet Nam Maritime Administration (VNMA).

The national port system, however, has not kept up with the rapid development of the shipping industry with major ports unable to receive super loading capacity vessels.

Most of ports in the southern regions are overloaded. Meanwhile, ports in the central region stand empty most of the time, according to VNMA.

The lack of sufficient international port-entrepots makes it difficult to integrate the country’s shipping activities into the global water transport system.

Moreover, the local logistical sector cannot handle the large number of cargo moving in or out of the country.

Approximately 900 enterprises offer logistical services in Viet Nam, most of them unprofessional, small and medium sized.

Findings from the Viet Nam Freight Forwarder Association show that these companies are seriously falling behind in their investments in their facilities and services.

Of 101 companies surveyed, the average investment capital was only US$93,750. That is far less than government requirements for the guarantee value of their businesses, which has to be at least $120,000.

The small amount of capital and insufficient manpower are creating difficulties in carrying out logistical services. Many enterprises have only three to five employees.

Due to their small size, local logistical companies often cannot open representative offices overseas, and instead opt to serve as agents for foreign shipping companies.

New port started

Viet Nam PSA, Viet Nam National Shipping Lines and Sai Gon Port began construction on an international port in Tan Thanh District, Ba Ria-Vung Tau Province yesterday.

In the first stage of the project, the joint venture will invest $240 million. The port is scheduled for completion in 2009. The port will be able to handle 2 million TEUs per year when fully developed. — VNS