Samsung

Choi Joo Ho, CEO of Samsung Vietnam, submitted the proposal last week to the Ministry of Industry and Trade last week. He asked that the company participates in the Direct Power Purchase Agreements (DPPA) policy that is being studied for a three-year trial.

Three to four other big companies also want to join the program, a person familiar with the matter told VnExpress .

The program will allow manufacturing companies with minimum 22-kilovolts power lines to negotiate and buy directly from solar and wind power plants.

In the first three years, when the policy will be trialed, the customer needs to buy at least 80 percent of the agreed amount of power.

Solar and wind farms with a capacity of 30 megawatts or more can sign these agreements, and need to begin commercial operation within nine months of joining the pilot program.

The program with a total capacity of around 1,000 megawatts is set to start this year and run until 2023. At the end of the trial period the ministry will review it and take a decision on making the arrangement permanent.

The program is being considered amid the challenges solar power plants face in running at full capacity due to the limited capacity of the country’s transmission lines.

Vietnam is set to cut up to 1.74 billion kilowatt-hours of renewable energy in the second half this year to deal with national grid overload, Vietnam Electricity, has announced.

Samsung’s smartphone factory in Vietnam

At a meeting with Vietnamese Minister of Industry and Trade Nguyen Hong Dien last week, Choi Joo Ho, CEO of Samsung Vietnam, suggested that the ministry support the company to join the direct power purchase agreement (DPPA).

Nguyen Anh Tuan, director of the Electricity Regulatory Department, said the Ministry of Industry and Trade welcomes all companies meeting the requirements to participate in the DPPA. Besides Samsung, three or four other big companies also want to join the program.

According to the ministry’s DPPA draft, manufacturing companies with minimum 22 kV power lines will negotiate and buy electricity directly from power plants. They must be committed to using renewable energy and buying at least 80% of the agreed amount of power in accordance with the contract in the first three years.

Solar and wind farms with a capacity of at least 30 MV are eligible to join the agreement. They will have to begin commercial operation within nine months of joining the program. Besides, they must have documents proving financial support from credit institutions.

With a total capacity of some 1,000 MW, the DPPA pilot program is set to start this year and run until 2023.

Samsung is the single-biggest source of exports from Vietnam. Production in Vietnam accounts for half of the smartphones shipped globally by the South Korean electronics giant.

SGT

By Nguyen Huong

Investors are anxiously waiting for a breakthrough from this firm’s one-of-a-kind project in Vietnam.

His Vincom Retail Joint Stock Company (VRE) has announced the consolidated financial statement for the first quarter of 2021. Specifically, Vingroup’s retail space leasing firm recorded an increase of 32% of consolidated revenue in the first quarter of 2021, to VND2,226 billion, with most coming from real estate leasing. At the same time, the real estate transfer segment recorded revenue of more than VND450 billion.

Vincom Retail’s after-tax consolidated profit reached VND781 billion, up 58.7% over the same period of last year.

In the previous quarter, the last quarter of 2020, Vincom Retail also unexpectedly reported a record profit of more than VND970 billion, despite the impact of the Covid-19 pandemic, which has caused an unprecedented decline in the retail industry worldwide. Vietnam’s retail market rebounded better thanks to good domestic epidemic control.

In the first quarter of 2021, as Vietnam controlled the epidemic well, the retail industry recorded a positive recovery in both consumer purchasing power and growth of store sizes of retail brands. Many domestic and international brands opened more stores in Vincom shopping centers, including H&M, Haidilao Hot Pot, Pandora and others.

Last week, Vincom Retail officially put into operation the “24/7 entertainment city” Grand World and at the same time the super complex of Phu Quoc United Center opened.

Last week, Vincom Retail officially put into operation the “24/7 entertainment city” Grand World and at the same time the super complex of Phu Quoc United Center opened. The VRE shopping tourism model expects a large number of tourists during the peak tourist season.

The opening of the “24/7 entertainment city” Grand World in the peak tourist season is considered a boost to Vincom Retail. However, the complicated Covid situation in the world, especially in India and countries at the southwestern border of Vietnam, may affect VRE’s prospects.

Vincom Retail is known as the leading retail space provider in Vietnam. As of the end of the first quarter of 2021, Vincom Retail owned and operated 80 commercial centers in 43 provinces and cities nationwide, with a total retail floor area of about 1.7 million square meters.

The opening of Southeast Asia’s leading resort complex of billionaire Pham Nhat Vuong’s Vingroup is expected to make Vietnam’s Phu Quoc comparable to the top entertainment centers in the world, such as Jeju Island in Korea or Las Vegas in the US.

According to Bloomberg, Vingroup is considering an initial public offering (IPO) in the US for its car manufacturing company VinFast. It is expected to raise about $2-3 billion.

VinFast expects a valuation of at least $50 billion or even up to $70-75 billion. With this, the capitalization of VinFast will surpass the famous car maker Ferrari (capitalization at $52 billion), Honda ($51 billion), Ford ($49 billion), Kia ($30 billion) … and only behind some famous brands such as Tesla, Toyota, Volkswagen, Mercedes Benz, GM and BMW.

In the mobile phone segment, Vingroup has also achieved many positive results, with the number of Vsmart phones sold in the country continuously increasing over the past year, although the leading private corporation in Vietnam just entered the smartphone market in 2018. Vingroup has become the third largest smartphone manufacturer in Vietnam, behind only Samsung Electronics and Oppo.

On the website of the leading US telecom carrier AT&T, an image of the first Vingroup smartphones appeared, a testament to the group’s plan to enter the American smartphone market.

In recent years, Vuong’s Vingroup had to withdraw from many fields, selling the retail segment to billionaire Nguyen Dang Quang and recently presenting the Youth Football Training Center to Van Lang Education Group, even though it had many achievements in these fields.

V. Ha

Vietnam is open to investors

At a seminar held between Vietnam’s chief representatives abroad for the 2020-2023 term and the Committee for the Management of State Capital at Enterprises, Deputy Minister of Foreign Affairs Bui Thanh Son said that Vietnam is now a bright spot in investment attraction and more than 126 large corporations shifting their investments are now looking to invest in Vietnam.

Meanwhile, Director of the Foreign Investment Agency under the Ministry of Planning and Investment Do Nhat Hoang revealed that although investment activities were interrupted due to the impact of the pandemic, the Ministry of Planning and Investment (MPI) and senior leaders of large corporations around the world still maintained discussions about investment cooperation opportunities through many channels. In particular, a number of online seminars were held at the operation centre of the MPI to connect with destinations across the world so that large corporations can find out more investment information regarding Vietnam. Through this activity, many large corporations started negotiations to bring investment projects into Vietnam with registered capital of billions of US dollars.

According to the United Nations Conference on Trade and Development (UNCTAD) global investment in 2020 declined by 40%, but FDI inflows into Vietnam saw a much lower rate than other countries in the world and the region, especially in disbursed capital. Export and import turnover of FDI enterprises also decreased slightly compared to the same period in 2019.

“Despite the many difficulties that arose due to the COVID-19 pandemic, FDI enterprises have still maintained relatively good production and business activity levels. This is a positive signal, demonstrating the confidence of foreign investors in the investment environment in Vietnam and also proving that Vietnam is still seeking further FDI,” Hoang emphasised.

In 2020, not only manufacturers, but also supply companies shifted investment to Vietnam, as well as providers of logistics and warehouses services and others doing likewise. Big manufacturers are considered “queen bees” coming to Vietnam to build a hive, bringing along “worker bees” – suppliers and supporting manufacturers, and creating a new ecosystem and supply chain in Vietnam.

This trend is happening in the electronics industry, as the story of Samsung has shown and is now also evident in the story of animal feed, e-commerce, consumption, and auto parts industries.

Acting fast to seize opportunities

Dr Nguyen Dinh Cung, a member of the Economic Advisory Group to the Prime Minister, expressed his concerns about FDI attraction in Vietnam. According to the expert, opportunities for Vietnam in terms of the shifting of global investment capital flows is great, but the “eagle” itself will not come if we take no action.

“I have just had the opportunity to work in Quang Ninh and Hai Phong, a region with a lot of potential in terms of its land and synchronous infrastructure, thanks to its seaport system and airport linked with Hung Yen ,creating a large industrial park capable of attracting the world’s leading technology enterprises. If there is a policy of regional linkage, these localities can create further intrinsic attractiveness to lure “eagles” to turn Vietnam into an important global production location. If these localities still compete in the attraction of FDI as before, they will only scatter and reduce Vietnam’s attraction in the eyes of foreign investors,” Cung said.

To seize the opportunity, it is advisable to take quick action and change the methods of attracting investment. First of all, the concept of “high quality investment” must be clearly defined to set screening criteria and formulate suitable policies for each industry and region in order to actively attract investors. To do this, it is necessary to have a new approach tailored to specific projects and investors, not applying a general policy to all projects.

Meanwhile, investors pouring capital into Vietnam can enjoy outstanding incentives but must also meet set conditions and be a reputable and socially responsible investor.

Referring to the concept of ” preparing the nest to welcome the eagle s”, used recently to regarding the attraction of high-quality FDI in Vietnam, Prof. Nguyen Mai, President of the Vietnam Association of Foreign Invested Enterprises (VAFIE) said that there were “eagles” but so far only Asian and a few European or American eagles. This is the time for Vietnam to proactively direct the flow of FDI and prepare conditions to attract high-tech and pervasive projects to meet the needs of the country’s new development period.

In the context of a decline in global investment activities due to the impact of the COVID-19 pandemic, although Vietnam has many advantages and has emerged as a bright spot in investment attraction, FDI inflows have not yet strongly recovered. This is the time for Vietnam to improve its investment and business environment to stand ready to welcome big waves of FDI.

Industry insiders advise a shift from wooing foreign direct investment in high numbers towards higher quality

“This year, economic activity is forecast to accelerate rapidly, with growth set to outstrip regional peers on improving domestic and foreign demand dynamics,” FocusEconomics said, adding industrial output will grow 9.4 per cent in 2021. “The underlying strength of Vietnam’s industrial sector remains intact despite COVID-19: Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to the US-China trade tensions.”In its fresh analysis for April, global analysts FocusEconomics expects Vietnam to grow 7.4 per cent this year, taking the lead in Southeast Asia in economic growth – where the rate will be 5.3 per cent for the region as a whole.

According to the analysts, one of the key drivers for Vietnam’s economic growth in general is foreign direct investment (FDI) which is looking for new potential markets including Vietnam.

Deputy Minister of Planning and Investment Tran Quoc Phuong told VIR that despite causing a serious aftermath in Vietnam, the health crisis seems not to be able to prevent FDI inflows to the nation in the long term, with the manufacturing industry continuing to be a big magnet.

“Many big foreign groups and companies are eyeing the Vietnamese market, which has generally succeeded in controlling COVID-19 – this has strengthened their confidence in the market,” Phuong said. “The pandemic is only slowing down the FDI inflows into the country. Many projects are temporarily halted, and will be strongly implemented when the pandemic eases.”

For example, it is expected that representatives of Samsung Vietnam will continue travelling to some provinces to seek locations for its potential projects which will help enrich its investment portfolio in the country.

General director of Samsung Vietnam Choi Joo Ho recently worked with authorities of the northeastern province of Quang Ninh, saying that Samsung is focusing investment in the northern provinces of Bac Ninh, Thai Nguyen, and Ho Chi Minh City, with total capital of over $17.5 billion in addition to a $230-million research and development centre under construction in Hanoi.

A representative from Quang Ninh Investment Promotion Centre told VIR, “We expect that Samsung will invest in a project in Quang Ninh. Ho has visited the province’s Dong Mai Industrial Park, which is currently home to 18 projects registered at over $350 million. Everything is ready for Samsung investment and we hope to continue working with Samsung.”

In early February, LG declared to add about $750 million to its LG Display Vietnam facility in the northern port city of Haiphong, raising its total investment capital to $3.25 billion.

A key driver

Senior economic expert Nguyen Mai told VIR that during its national construction and development, FDI attraction has become a bright colour in the Vietnamese economic picture as it has been an important and stable impetus for the economy over the past three decades and more.

As of March 20, Vietnam had nearly 33,300 valid foreign-invested projects registered at $393.3 billion. Some 19 out of 21 economic sectors have been home to FDI, with processing and manufacturing achieving $230 billion registered FDI (58.5 per cent of the economy’s total), property business $60.77 billion (15.4 per cent), and electricity production and distribution $33.56 billion (8.5 per cent).

As of March 20, total registered foreign investment reached $10.13 billion, an on-year climb of 18.5 per cent. Total disbursement in the first three months of 2020 is estimated to be $4.1 billion, up 6.5 per cent on-year.

Foreign-invested enterprises (FIEs) have been providing jobs for 4.5 million direct local labourers and millions of indirect labourers. They create over 50 per cent of industrial production value, while helping the country develop a modern financial and banking system.

According to the General Statistics Office, in the first quarter of 2021, FIEs’ total export turnover, including crude oil exports, hit $59 billion, up 28.5 per cent on-year and holding 76 per cent of Vietnam’s total export revenue. This is demonstrated by a rise in exports largely created by FIEs, such as mobile phones and spare parts (over 99 per cent mainly by Samsung), equipment (over 93 per cent), and footwear (nearly 82 per cent), and textiles and garments (nearly 63 per cent).

Moreover, also in the first three months of 2021, FDI occupied 25 per cent of Vietnam’s total development investment, 55 per cent of industrial output, 18 per cent of the state budget revenue, and 20 per cent of GDP.

“FIEs have helped Vietnam engage further in international integration since doi moi and the opening door policy were launched, supporting Vietnam to get out of international embargo and recover its relations with many nations and international organisations. Moreover, FIEs have also helped Vietnam enhance its status and prestige in the region and the wider world,” Mai said.

New orientation

Under the resolution of the recent 13th National Party Congress, the Party specified a number of strategic breakthroughs for the country to become a developing country with modernity-oriented industrial development by 2025 when per capita GDP will be $4,700-5,000; a developing nation by 2030 with modern industrial development and upper-middle income; and a developed economy with high income by 2045 – meaning a GDP of $2.5 trillion with per capita income of about $18,000 a year.

To this end, one of the strategic breakthroughs will be “creating a good system of laws, mechanisms, and policies, while establishing a favourable, healthy, and fair investment and business climate for all economic sectors, with the promotion of innovation and the mobilisation, management, and effective use of all resources for development – especially land, finance, and public-private partnerships.”

This breakthrough would mean FIEs will have opportunities to perform in a more transparent and equal investment and business climate.

The Party has determined that FDI is an important part of the national economy with a big role to play in mobilising investment capital, technology, modern governance, and expanding export markets.

“A shift is to be made from attracting FDI in quantity to quality. Priorities are to be for projects with high technology and high added values, and with modern governance models, high spillover effects, connecting with domestic businesses,” stated a report passed at the 13th National Party Congress.

Marko Walde, chief representative, Delegation of German Industry and Commerce in Vietnam, explained that FIEs including German ones are contributing significantly to Vietnam.

“Over 500 German companies in the country have created around 47,000 qualified jobs. They also show optimism about Vietnam’s economy in the medium and long term,” Walde said. “Under our AHK World Business Survey, half of the survey participants expected a further development of their companies in Vietnam in 2021.”

In addition, he recommended, there is still room for improvement, as in this survey, German investors in Vietnam pointed out major risks to their development here, namely economic policy framework (68 per cent), trade barriers/preference (32 per cent), legal certainty (27 per cent), exchange rate (23 per cent), and shortage of skilled workers (18 per cent).

Andrew Barnes, deputy head of mission from the Australian Embassy in Vietnam, also commented that for Vietnam to attract more FDI and achieve its dreams over the next decade, “good public policy is also an important contributor to improving Vietnam’s business environment”.

“For example, initiatives such as the Law on Enterprises of 2020 and the Law on Supporting Small- and Medium-sized Enterprises of 2017 have enabled Vietnamese private sector to increase their contribution to national economic prosperity,” Barnes said at last week’s launch of the report on business environment improvement programme assessment by businesses.

This study is supported by Australia’s Aus4Reform Program, aimed to help Vietnam boost administrative reforms.

“Of course, the government can only do so much, and the business community has a critical role to play in informing government authorities of improvements to policy settings to reduce unnecessary regulation and support the business environment and economic growth,” Barnes added.

Ministries, agencies, and localities are required to implement in a synchronous, drastic, and effective manner all goals, tasks, and solutions set out for sectors under the resolutions enacted by the Party and the National Assembly, and the government’s Resolution No.01/ND-CP dated January 1, 2021 on major tasks and solutions guiding the realization of the socio-economic development plan in 2021. Importance must be attached to controlling inflation and ensuring macroeconomic stability and the economy’s major balances. More efforts are to be made to remove difficulties for production and business activities, with radical settlement of obstacles. It is also necessary to boost the application of scientific and technological achievements, foster innovation and digital transformation, develop a digital economy and a digital society. All efforts also to be made to accomplish at the highest level all targets and tasks set out in the whole 2021. The government and the prime minister will solve problems under their power. Decentralisation is boosted, with the clear determination of responsibilities of collectives and inividuals.

VIR