New Solar Power Plant Project in Binh Dinh

  Solar energy is encouraged to invest by Vietnam Government. Therefore, there were many foreign business delegations come to Vietnam to find out opportunities in this area.

On January 11^th 2017, Chairman of Binh Dinh Province has met and worked with the President of Truong Thanh Investment and Development Co., Ltd (Vietnam) and Truong Thanh's partners from Japan and Spain to find out opportunities to invest in solar energy plant project in Binh Dinh, Vietnam.

According to representatives of Truong Thanh, in recent time, the Company has made the solar power plant investment project proposal in Cat Hiep commune, Phu Cat district, Binh Dinh province. The project capacity is 95mW, using land area of about 150 hectares.

The expected investment capital for plant construction is 4,000 billion VND. Tuong Thanh Company wants to be supported by leaders in Binh Dinh Province and relevant local Government agencies with the investment procedures.

According to Chairman of Binh Dinh Province, they are always welcome and encourage enterprises to invest in power plant using renewable energy, which is very environmentally friendly.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Potential of Vietnam’s Renewable Energy

  Vietnam territory is located in the tropical climate zone with over 3,200 km long coastline. Therefore, there is great potential for renewable energy development. The available renewable energy sources in Vietnam are: solar energy, wind energy, biological energy, hydropower and energy from the sea.

Vietnam has great potential for hydroelectric power, with total theoretical capacity of about 35 GW, the technical potential is about 26 GW, annually it can produce more than 100 GWh; in which the small hydropower (the installed machine capacity <30 MW) has the potential to produce about 15-20 GWh of electricity.

Until 2013, the total number of projects have been put into operation is 268 projects, with a total installed machine capacity of 14,240.5 MW. As planned, until 2017, there will be 473 projects will be put into operation with a total installed machine capacity of 21,229.3 MW. In addition, according to the Electricity Corporation of Vietnam, the potential of small hydropower has installed machine capacity of about 4,000 MW.

In a report of the World Bank in 2001, the wind energy potential of Vietnam is estimated at 512 GW, much higher compared to other countries such as Thailand, Laos and Cambodia.

Vietnam has great potential for solar energy, particularly in the Central and South of the country, with the average intensity of solar radiation of about 5 kWh/m2. The total theoretical potential of solar energy in Vietnam is estimated at 43.9 billion TOE (TOE – tons of oil equivalent).

With the advantage of being an agricultural country, Vietnam has a large and diverse biomass sources, including wood, firewood, rice husk, rice straw, sugarcane bagasse and other kind of agricultural residues. Annually, Vietnam is estimated to have over 60 million tons of biomass from agricultural waste. The biomass energy sources mentioned above can be used to produce bio-fuel (ethanol), fuel pellet, biogas and various other products.

Vietnam livestock industry is now quite developed, released to the environment annually a large amount of livestock waste in the form of solid and liquid.

According to the statistic data from national environmental status by 2014, the amount of solid waste from livestock in 2013 in Vietnam includes: 18.5 million tons from raising cows, 13.8 million tons from raising buffalo, 18.9 million tons from raising pig, 22.6 million tons from raising poultry. Part of livestock waste in rural area of Vietnam provides raw material for more than half a million active biogas in three regions of the country.

With a population of nearly 90 million people, the annually amount of domestic waste generated due to activities of the population is very huge. Domestic waste after being collected and classified can be recycled, reused and recovered energy from waste incineration or landfills.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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FDI Status in 11 Months of 2016

  Vietnam has become an ideal destination for foreign investors from many countries to come and invest in Vietnam. Generally in the first 11 months of 2016, total newly registered and additional capital reach 18.103 billion USD, equivalent to 89.5% compared with the same period in 2015.

Operational status:

Implemented capital:

As of November 20^th 2016, it is estimated that the foreign direct investment (FDI) projects have disbursed 14.3 billion USD, increased by 8.3% over the same period in 2015.

Exports and imports:

Exports of the foreign investment sector (including crude oil) in the first 11 months of 2016 reached 114.076 billion USD, increased by 8.6% over the same period in 2015 and accounted for 71.5% of export turnover in 2015. Exports excluding crude oil in the first 11 months of 2016 reached 111.979 billion USD, increasing by 10.3% over the same period in 2015 and accounted for 70.2% of export turnover.

Imports of the foreign investment sector in the first 11 months of 2016 reached 92.831 billion USD, increased by 3.6% over the same period in 2015 and accounted for 59.2% of import turnover. Generally in the first 11 months of 2016, foreign investment sector has export surplus 21.245 billion USD including crude oil and 19.148 billion USD excluding crude oil.

The investment certificate granting status:

According to the data from the information system on foreign investments, as of November 20^th 2016, there were 2,240 new projects were granted the investment certificates with total registered capital of 13.028 billion USD, equal 96.1% over the same period in 2015. Till November 20^th 2016, there were 1,075 projects register to adjust the capital with the total registered additional capital of 5.075 billion USD, increased by 76.1% over the same period in 2015.

Generally in the first 11 months of 2016, the total newly registered and additional capital reached 18.103 billion USD, equal 89.5% over the same period in 2015.

According to the investment areas:

In the first 11 months of 2016, foreign investors have invested in 19 areas, in which the processing and manufacturing industries are areas attracting more attention of foreign investors with 907 newly registered investment projects and 766 adjusting capital projects, the total newly registered and additional capital reached 13.41 billion US dollars, accounting for 74.1% of total registered capital in 11 months.

The real estate sector ranks 2^nd with 49 newly licensed projects, with the total newly registered and additional capital reached 740.93 million USD, accounting for 4.1% of total registered capital. The professional activities, scientific and technological sectors ranks 3^rd with 684.84 million USD, accounting for 3.8% of total investment capital.

According to the investment partners:

In the first 11 months of 2016, there are 68 countries and territories having investment projects in Vietnam. Korea leds with total newly registered and additional capital of 5.29 billion USD, accounting for 29.2% of total investment capital in Vietnam; Singapore ranked 2^nd with total newly registered and additional capital of 2.05 billion USD, accounting for 11.3% of total registered capital; Japan ranked 3^rd with total newly registered and additional capital of 1.95 billion USD, accounting for 10.8% of total investment capital.

According to the investment location:

In the first 11 months of 2016, foreign investors have invested in 54 provinces and cities. In which Hai Phong attracted the largest foreign investment with 45 newly licensed projects and 35 projects register to adjust capital. The total newly registered and additional capital reached 2.74 billion USD, accounting for 15.2% of total investment capital.

Binh Duong ranked 2^nd with total newly registered and additional capital reached 1.93 billion USD, accounting for 10.7%. Followed by Dong Nai, Hanoi, Ho Chi Minh City with total newly registered and additional capital reached 1.87 billion USD, 1.84 billion USD and 1.32 billion USD respectively.

Some large projects that are licensed in the first 11 months of 2016:

- LG Display Hai Phong project, licensed on April 15^th 2016, the total registered capital is 1.5 billion USD, which is invested by LG Display Co., Ltd (Korea) to manufacture and produce plastic OLED display products for mobile devices such as cell phones, smart watches, tablets...

- LG Innotek plant project in Hai Phong, the total registered investment capital is 550 million USD, invested by LG Innotek Co., Ltd. (Korea) to produce camera module.

- The project to develop the port and industrial parks complexes in Dam Nha Mac area, Quang Yen Town, Quang Ninh province, invested by CDC International Corporation (Cayman Islands) with total registered investment capital of 315.46 million USD.

- Amata Long Thanh City project, with total investment capital of 309.3 million USD, invested by Thailand investors to build urban area in Dong Nai.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Many Foreign Brands Are Coming to Vietnam

  Realizing that Vietnam is a promising market, foreign enterprises want to do business in Vietnam through the form of franchising. Recently, many consumer goods, fashion and cosmetics brands from Japan and Thailand are promoting the franchise with Vietnamese partners and enterprises.

In the framework of the program "Vietnam - Thailand Enterprises Interaction in The Field of Franchising" which was held in Ho Chi Minh City (HCMC) recently, there were 40 Thailand enterprises operating in the food, beverage, restaurant, supermarket, health care, cosmetic sectors joined to find partners in Vietnam.

According Mr Nupartpat Sutthitham, Director of the MP Mart convenience store chain (Thailand), currently in Thailand there are 3 MP Mart stores, in which the model is not the same as Family Mart or Circle K. While Family Mart sells mainly food (80%), MP Mart sells mainly fast moving consumer goods, which are produced in Thailand (70%).

According to representatives of MP Mart, the cost to open a store in Thailand with an average area of 150 m2 is approximately 50,000 USD. Realizing the Vietnam market has many opportunities, MP Mart wants to explore and this is the first time this brand comes to Vietnam. The criteria for selection of investors, partners of MP Mart are having financial resources to be able to scaling this model in large numbers in Vietnam.

Meanwhile, according to representatives of Kokekokko - a well-known chicken fast food brand in Thailand with 5 stores, using Japanese spices to marinate chicken. Representatives of this brand also did not hide their intention to find partners with business understanding and financial resources to open stores in Vietnam.

Also in late November of 2016, there were 9 Japan enterprises with 14 fashion brands came to Vietnam to find partners to open franchise stores or distribute products in the domestic market.

According to Mr Akira Kaise, representatives of I Am Company Limited, this fashion brand has been presented in many markets around the world such as Hong Kong, Shanghai, Korea, Taiwan, Spain, UK, Netherlands... and this is the first time he comes to Vietnam to study the market.

Representative of I Am Co., Ltd commented that young population, good economic development, increasing people's incomes... are factors to make Vietnam becoming a potential market for fashion items. In addition to the market penetration, the Company is also interested in outsourcing or investing in Vietnam to take advantage of low labor costs and highly skilled labors.

At the Vietnam market, Japanese businesses are often mentioned in the culinary field, meanwhile, the fashion, cosmetics or beauty brands are not widely known by consumers. Thus, recently, many Japanese cosmetic brands have decided to enter the market of Vietnam and looking for official distributors.

In an activity operated by the Esuhai Company of Vietnam recently in HCMC, there were nearly 10 cosmetic brands of Japan participated. Among them, the brand Kose is well known by many consumers.

According to the representative of Kose, this enterprise has been established since 1946, global sales reached 2.1 billion USD a year and has been presented in 18 countries. However, so far, this brand does not have official distribution channel in Vietnam market. Therefore, along with the promotion of market presence and product introduction, on this occasion, Kose desires to find agents and official partner in Vietnam.

Meanwhile, according to representatives of Nippon Menard Cosmetic Company, owner of the brand Menard, the Company is fully confident to introduce their products to consumers in Vietnam and wanted to find good partners to be able to access to more consumers.

According to the representatives of the Japan External Trade Organization (JETRO) in HCMC, Vietnam currently has more than 93 million populations, of which half are women who want to become more beautiful as earnings are improving and willing to spend the budget for beauty and body care. Therefore, this is a favorable time and good opportunity for the Japanese cosmetics brand to penetrate the market of Vietnam.

However, there is the fact that the Japanese cosmetic and fashion products are priced relatively high compared to the average income of local consumers. In addition, the Japanese fashion is not common in Vietnam market. Therefore, this is seen as the first step for the fashion and cosmetic brands of Japan to explore the market and find partners.

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Forms of Public Private Partnership Investment in Vietnam

  Public investment in Vietnam is not just limited to the transportation infrastructure, electricity, renewable energy, water, health and environment, but also in areas such as education, training, vocational training, culture, sports, commercial infrastructure complex, science and technology, economic zones, industrial zones...

Vietnam is in the development stage that needs significant investment in infrastructure.  However, the state budget is limited, and donor funds have been reduced and limited. Therefore, the investment pattern in the form of public-private partnership (also known as PPP) is an effective solution to this problem. PPP has been expected to mobilize resources for investment in infrastructure from the private sector, from both domestic and foreign investment.

Investments in the form of public-private partnership investment is made on the basis of contracts between competent state agencies and investors or project company for the implementation, management and operation of the project in infrastructure, or providing public services. Accordingly, investors, project company shall be authorized to implement investment projects on construction or renovation, upgrading, expansion, management and operation of infrastructure projects or providing public services.

The investment contracts in the form of public-private partnership are defined in Vietnam as following.

BOT Contract

“Build – Operate – Transfer contract” (referred to as BOT contract) means a type of contract to build an infrastructure project between a competent state agency and an investor; after completing the construction, the investor shall be entitled to operate it for a specified period of time; eventually, the investor shall transfer it to the Vietnam competent state agency.

BTO Contract

“Build – Transfer – Operate contract” (referred to as BTO contract) means a type of contract to build an infrastructure project between a competent state agency and an investor; after completing the construction, the investor shall transfer it to the competent agency, and shall be entitled to operate it for an agreed period of time.

BT Contract

“Build – Transfer contract” (referred to as BT contract) means a type of contract to build an infrastructure project between a regulatory agency and an investor; after completing the construction, the investor shall transfer it to the competent agency, and then the investor will be allotted a land parcel used for carrying out another project.

BOO Contract

“Build – Own – Operate contract” (referred to as BOO contract) is a type of contract to build an infrastructure project between a competent agency and an investor; after completing the construction, the investor shall take ownership of this project and have the right to operate it for a specified period of time.

BTL Contract

The Build – Transfer – Lease contract (referred to as BTL contract) means a type of contract to build an infrastructure project between a competent agency and an investor; after completing the construction, the investor shall transfer it to the regulatory agency and shall be entitled to provide services on the basis of operation of such project for a specified period of time; the competent agency shall lease and make payment for the investor’s services.

BLT Contract

“Build – Lease – Transfer contract” (referred to as BLT contract) means a type of contract to build an infrastructure project between a competent agency and an investor; after completing the construction, the investor shall have the right to provide services on the basis of operation of such projector a specified period of time; the competent agency shall lease and make payment for the investor’s services according to the regulation; when the lease term expires, such project shall be transferred to the competent agency.

O&M Contract

“Operation & Management contract” (hereinafter referred to as O&M contract) means a type of contract to operate the project between a competent agency and an investor for a specified period of time.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Vietjet Air Had 26 Foreign Investors

  The total number of shares that foreign shareholders are holding at Vietjet Air accounting for more than 24% of charter capital.

Recently, Vietnam’s Deputy Minister of Transport has signed a written approval for Vietjet’s 5 shareholders to transfer 66,506,870 shares, equivalent to 22.169% of the charter capital of 3,000 billion VND to 23 foreign investors.

Earlier, in December 2016, the Ministry of Transport has also agreed for 1 Vietjet’s shareholder to transfer 6.566 million shares, equivalent to 2.626% of charter capital for 3 foreign investors, who are: Wareham Group Limited (British Virgin Island), Dragon Capital Markets Limited (Cayman Island) and DC Developing Markets Strategies Public Company (Ireland). The amount of transferred money was not revealed, but ranged from 65 billion VND to 788 billion VND. The transfer has been completed and aproved by the Department of Planning and Investment of Hanoi on December 22^nd 2016.

In total, the transfer of shares to foreign investors has reached 24.358% of charter capital.

According to Vietnam Civil Aviation Administration, the transfer of shares to foreign investors of Vietjet is valid. The transfer does not increase the charter capital of Vietjet, foreign investors do not participate in the executive apparatus, management operations and administration works of Vietjet and therefore it does not alter the business plan and development strategy of Vietjet.

Relating to the transfer of shares to foreign investors, according to Decree 92, the foreign parties cannot occupy more than 30% of charter capital and foreign members shall not exceed 1/3 of the total number of members participating in the executive apparatus.

Vietjet Air is the first airline in Vietnam operating under the model of the new generation airline, with low cost and provides a variety of services for customers to select. Vietjet is an official member of the International Air Transport Association (IATA) with IOSA safety operation certificate. Besides the position of "Top 500 Leading Brands in Asia in 2016", Vietjet is voted as "Best Asian Low Cost Carrier” in 2015 by the TTG Travel Awards and Top 3 airlines that have fastest growth facebook fanpage in the world, evaluated by SocialBakers.

Currently, Vietjet is operating 42 A320 and A321 aircrafts, performed about 350 flights a day and has transported nearly 35 million passengers, with 60 routes covering destinations in Vietnam and international routes to Hong Kong, Singapore, Korea, Taiwan, China, Thailand, Myanmar, Malaysia, Cambodia...

Vietjet has planned to develop extensive flight network throughout Asia - Pacific region. Moreover, they are studying for further expansion of routes in the region and has signed procurement contracts to purchase new generation aircrafts.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Why Japan Investors Invest in Vietnam

  The depreciation of yen against dollar, more available funds for loans from Japanese banks, and the fast aging population make Japanese corporations increasing investment in foreign markets including Vietnam through setting up business venture.

In a morning of Jan 22^nd 2015, the office of Ministry of Planning and Investment and Foreign Investment Agency have met and worked with small and medium business delegation of Japan to explore investment opportunities in Vietnam.  The Japanese business delegation led by Mr. Shuichi Kageyama, vice president of Sumitomo Mitsui Banking, are representative of 21 companies operating in the area of construction, real estate, electronics, manufacturing, chemicals, pharmaceuticals products, medical devices.  The visit has shown interests of Japanese investors in various sectors in the socio-economic development, environmental and investment policies of the government of Vietnam in attracting foreign investment. The Vietnam government also shows effort to support Japanese investor through improving on administrative procedures, and transparency.

The visit of Japanese delegation to Vietnam should be noted amid the strongest wave of Japanese corporations’ investment into foreign markets since 2006 after building up record cash on hands.  The yen has been at weak level making M&A into foreign market expensive.  However it is expected that yen will depreciate further against dollar over the year to come due to the policy of Mr. Shinzo Abe. In the meantime, Japanese banks are also ready to make more funds available for loans.  Another fact is that Japanese population is aging faster. Those combined reasons together with Vietnam's attractiveness for investors make Japanese corporations increase investment through making direct investment or acquiring other corporations in foreign markets including Vietnam.

According to the Foreign Investment Agency, as of Oct 2014, Vietnam has attracted more than USD 36.5 billion from Japan with more than 2,434 FDI projects. Japan ranks first in the number of countries and territories that have investment projects in Vietnam, in which, the first 10 months of the year 2014, total investment of newly registered and increased capital from Japan reached USD 1.66 billion.  Thanh Hoa has 9 projects with a total investment of USD 9.68 billion; Hanoi has 607 projects at nearly USD 4 billion; Binh Duong province has 241 projects at USD 3.8 billion.

Japanese corporations invest in various area including retail, food processing, IT, manufacturing, constructions.  Several prominent Japanese investors have been successful in Vietnam are Cannon, Isuzu Motors, Ajinomoto, Toyota Corporations, Logitem Logistics, Mitsubishi Corp, Kotobuki Holdings, Taisei Corp, Sumitomo Corp, Itochu Corp. The list will continue to grow as the time to come as Japan diversifies from China and Vietnam continues to emerge as an attractive destination.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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