VietNam Business: Vietnam

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Thursday, February 24, 2011

Xin Chao upgrades city’s circus theater for new show

Vietnamese performers practice the “Xin Chao” production at the HCMC Circus Theater in downtown area on Tuesday - Photo: Mong Binh

HCMC – Xin Chao Art Performance Co. Ltd. is investing heavily in the upgrade of the HCMC Circus Theater at September 23 Park in District 1 in preparation for the premiere of a major show about Vietnam for international tourists and locals.

Augustus Greaves, operation director and producer of the Vietnamese company Xin Chao, told the Daily on Tuesday that the cultural show entitled “Xin Chao” (hello) had three parts featuring the tale of Lac Long Quan and his wife Au Co, heroines Trung Sisters and the present life of Vietnam. The aim is to show the country’s rich culture to the world.

To make the circus theater an attractive venue for recreation, Greaves said the site would be given a facelift after the upgrade to incorporate areas for audiences to enjoy drinks and buy souvenirs before and after the production.

Greaves did not disclose the exact investment in the facelift but said the company was spending a substantial amount of money on renewing the theater on Pham Ngu Lao Street and adjacent to an area of international backpackers in HCMC.

Again, he did not say how much the company had invested in producing the “Xin Chao” show but noted this kind of show would normally cost US$250,000 based on a research that he had made from art performing shows around the world.

The production is scheduled for a premiere in early December, a time when international visitor arrivals in HCMC pick up. Greaves said foreign visitors to Vietnam had been rebounding strongly and growing nearly 35% year-on-year.

According to the Vietnam National Administration of Tourism (VNAT), the country attracted more than 3.7 million international visitors in the January-September period, an impressive increase of 34.2% over the same period last year.

The majority of international visitors to Vietnam go through HCMC, giving the company confidence in the success of the show of 80 minutes including intermissions.

Greaves said Xin Chao had met with travel agents in Vietnam and other markets including Thailand, the Philippines and Korea to promote the show. “We have received a good response from these travel agents.”

The company plans to stage “Xin Chao” every day in the early evening so that audiences will have time to go out for dinner at restaurants, drinks at bars and shopping in this economic hub of Vietnam.

Greaves said Vietnam was a beautiful country of internationally renowned attractions, and HCMC was the destination of most of inbound tourists to Vietnam. However, most attractions here are daytime activities focused on visitation and photography.

“Xin Chao is a theatrical attraction and experience to fill the gap in HCMC nighttime entertainment markets,” Greaves said.

The all-Vietnamese cast includes more than 50 performers and employs some of the country’s top acrobats, martial artists and traditional/contemporary dancers. Experienced producer and director Laura Burke has applied her film making talents in scripting the stories of Vietnam into an internationally appealing story line.

Burke has also written a music score featuring the traditional sounds of Vietnam. “The Xin Chao experience will be wonderful for Vietnamese guests and will make memories for tourists to take back home,” Greaves said.

Xin Chao described the production as the same genre as Cirque du Soleil, which was originally Canadian and is now a global phenomenon including popular shows in Japan and Macau; Voyage de la Vie in Singapore and Siam Niramit Cultural Show in Thailand’s Bangkok.

Intel to open factory in Vietnam next week

HCMC - Intel Corporation, the world’s largest chipmaker, will open its US$1-billion chip assembly and testing facility at Saigon Hi-Tech Park in HCMC next Friday.

A ceremony to open the facility by Intel Products Vietnam is slated to take place on October 29 at the hi-tech park in District 9.

The facility, in which Intel originally planned to invest US$300 million but later announced to treble its investment to US$1 billion, covers more than 46,000 square meters.

Intel Corp. started construction of the Vietnam facility in 2007 after obtaining a license on February 28, 2006, and about 4,000 people are expected to work for the plant, according to the company’s initial plan.

This will be Intel’s seventh assembly and testing site. Other sites include Penang and Kulim in Malaysia, Cavite in the Philippines, Chengdu and Shanghai in China, and San Jose in Costa Rica.

The Vietnam facility is part of Intel’s worldwide expansion of production capacity, according to the corporation at the groundbreaking ceremony in 2007.

SHTP is now home to 44 local and foreign hi-tech companies, with a total investment commitment of more than US$1.84 billion, creating more than 10,000 skilled jobs, and contributing nearly US$640 million in export revenue to the city.

SHTP expects foreign and domestic investment capital-flow this year to hit US$150 million. The park is focusing on attracting high-technology projects in microelectronics, IT, telecoms, research and development, and the service sector.

Wednesday, February 23, 2011

Vietnam has no devaluation plans: newspaper

Vietnam has no devaluation plans: newspaper The State Bank of Vietnam has no plans to adjust the dong exchange rate against the US dollar, even though the dong's value has been dropping on the unofficial market, a local newspaper reported on Tuesday.

"At present the State Bank does not have any plans for exchange rate adjustment," Governor Nguyen Van Giau was quoted by the Saigon Giai Phong daily as saying, rejecting market rumors of a dong devaluation.

The central bank has devalued the dong three times since November and speculation of another devaluation has been putting pressure on the currency, making businesses reluctant to sell dollars.

Dollar demand has also been rising as businesses need the currency for loan repayments and importers need dollars for settlements.

However, the dong edged up to 19,870/19,920 per dollar on the unofficial market on Tuesday morning from 19,920/19,970 on Monday, while it was steady at VND19,490/19,500 on the interbank market, with the selling rate at the permitted ceiling.

Victoria Kwakwa, the World Bank's representative in Vietnam, told reporters on Tuesday that "we think that broadly the government has been moving in the right direction" on monetary and fiscal policy.

However, she said more could be done by the authorities to communicate their policy stance and give more information on indicators, so as to build up confidence in overall macroeconomic management.

This would help "address some of the left-over expectations of inflation and continued instability that are underpinning some of the challenges".

The Bank's lead economist for Vietnam, Deepak Mishra, said he expected pressure on the dong to ease over time, but how the market reacted would depend on the government putting forward a "credible road map" for dealing with the problem.

The International Monetary Fund warned in September that Vietnam needed to concentrate on maintaining the level of the dong, and said that repeated comments from the government about the need to lower lending rates was counter-productive.

"A lack of coordination between monetary and fiscal policies, or the appearance thereof, would amplify market skepticism," it said.

World Bank finds cause for worry amidst rapid recovery

World Bank finds cause for worry amidst rapid recovery Vietnam’s recovery from the economic crisis has been fast but uneven, and improved governance of state-owned enterprises is needed to ensure strong and sustainable growth, the World Bank says.

The nation’s key economic indicators are expected to recover to “near their pre-crisis trend growth rates” but there are still concerns about a “soft landing” for the country, the bank said in its latest East Asia and Pacific Economic Update released Tuesday.

The current account deficit remains high and there is “persistent pressure” on the local currency as households and firms appear to continue to stockpile foreign currency and gold, it said.

Bankers said this week that speculation of another devaluation is putting pressure on the dong, making businesses more reluctant to sell dollars to banks.

Le Xuan Nghia, deputy director of the National Financial Supervisory Commission, told Reuters the pressure on the dong was increasing as businesses needed to accumulate dollars to settle greenback loans they had taken in earlier months of the year. “But I don't think there should be a devaluation at this point of time, as the pressures are not large enough,” he said.

The World Bank also said Vietnam’s current account deficit remains high and there are concerns about the balance sheet of some of the banks.

“The stock market, after staging a smart recovery in 2009, has slumped again and continues to underperform the broader economy,” the bank said in the report. Vietnam’s benchmark VN-Index has fallen by more than 11 percent so far this year.

The government is trying to “phase out the stimulus package without disrupting the economy”, the bank noted, adding that the economy is on track to achieve the 2010 target of 6.5 percent

State sector

According to the World Bank, state-owned enterprises have played an important role in Vietnam’s progress, but have also become “a source of long term vulnerabilities.”

“While some of the Economic Groups have served the cause of their existence (e.g., Vietnam Posts and Telecommunications Group, Electricity of Vietnam, PetroVietnam, etc.), many have also contributed to magnify the economic instability,” it said.

The bank said in its report that in late 2007 and early 2008, the groups invested heavily in the financial sector and real estate, exacerbating the asset price bubbles. It cited the case of shipbuilder Vinashin, which was on the verge of default, as an example of a state-owned enterprise that failed.

Vinashin piled up to $4.5 billion in debt, leading to a restructuring and a financial investigation in to the firm. Several top managers of the shipbuilder have been arrested for mismanagement.

The World Bank said improved governance of the Economic Groups, along with a new law on public investment and a new framework for public private partnership, will “boost structural reforms in Vietnam and set the foundation for a strong and sustainable growth.”

At the regional level, the bank said the economic recovery in East Asia and the Pacific is robust, but attention must now turn to managing emerging risks.

“Should inflows remain strong, especially against a background of weak global growth, the authorities will be faced with the challenge of balancing the need for large capital inflows – especially foreign direct investment – with ensuring competitiveness, financial sector stability, and low inflation,” said Vikram Nehru, World Bank Chief Economist for the region.

The bank also said in its report that the ongoing relocation by manufacturing firms from higher wage countries in East Asia is beginning to benefit Vietnam, “which with its relatively low wages and easy access to coast is well positioned to absorb such investments.”

World Bank finds cause for worry amidst rapid recovery

The current account deficit remains high and there is “persistent pressure” on the local currency as households and firms appear to continue to stockpile foreign currency and gold, it said.

Bankers said this week that speculation of another devaluation is putting pressure on the dong, making businesses more reluctant to sell dollars to banks.

The World Bank also said Vietnam’s current account deficit remains high and there are concerns about the balance sheet of some of the banks.

The government is trying to “phase out the stimulus package without disrupting the economy”, the bank noted, adding that the economy is on track to achieve the 2010 target of 6.5 percent

State sector

According to the World Bank, state-owned enterprises have played an important role in Vietnam’s progress, but have also become “a source of long term vulnerabilities.”

Vinashin piled up to $4.5 billion in debt, leading to a restructuring and a financial investigation in to the firm. Several top managers of the shipbuilder have been arrested for mismanagement.

At the regional level, the bank said the economic recovery in East Asia and the Pacific is robust, but attention must now turn to managing emerging risks.

Dai-ichi Life Vietnam sees premiums up 51%

HCMC - Dai-ichi Life Insurance Company of Vietnam reported on Tuesday strong year-on-year growth of 51% in new business premiums to nearly VND230 billion (US$11.8 million) in the January-September period, almost the same as the total of last year.

The Japanese life insurer said its third-quarter premiums hit a high of nearly VND110 billion, giving it confidence in achieving the business target of 2010 and strengthening its position in the life insurance market in Vietnam.

“Our target for 2010 is to grow by at least 50% for new business sales premiums, and to earn higher profits than in 2009,” Takashi Fujii, chairman and general director of Dai-ichi Life Vietnam, said in a statement.

Fujii said the higher-than-expected business performance supported the company’s plans to continue sales office network expansion across the country and enhance the relationships with strategic partners.

Fujii credited the business success in the three quarters to the company’s big investment in infrastructure, new products to meet the diverse needs of customers, and the quality of customer service to match the demand.

Dai-ichi Life Vietnam is pressing ahead with a plan to expand its office network with emphasis on general agency offices. With 14,500 staff and agencies at 56 offices nationwide, the company is now serving more than 510,000 customers and ready for a bigger share of the market.

Dai-ichi Life Vietnam said it would focus on strengthening cooperation with partners in the banking industry and new investments as one of the ways the company was pursuing to improve its business efficiency.

Vietnam is the first foreign market for the Japan-based Dai-ichi Life Insurance Co. Ltd. to expand life insurance business by establishing a wholly-owned subsidiary. In January 2008, Vietnam’s Ministry of Finance allowed Dai-ichi Life Vietnam to increase its charter capital from US$25 million to US$72 million, after one year of its official operations in this market.

Tuesday, February 22, 2011

PetroVietnam mulls purchase of BP assets

HCMC - Vietnam Oil and Gas Group, or PetroVietnam, is considering buying BP’s stakes in their joint projects in the country.

Phung Dinh Thuc, director general of PetroVietnam, told the Daily via the phone on Tuesday about his company’s plan a day after BP’s announcement that it had reached agreement to sell its upstream businesses and associated interests in Venezuela and Vietnam to its Russian joint venture for a total of US$1.8 billion.

TNK-BP, Russia’s third largest oil company, is owned equally by BP and AAR Consortium grouping Alfa Group, Access Industries and Renova.

“On Wednesday they informed us directly of the agreement. They said TNK-BP has been up to now their only partner chosen to make direct negotiations, and suggest the Russian company as purchaser,” Thuc said.

“BP has not let us know about the price of its stakes, but it’s certainly equivalent to the price offered by TNK-BP. If the price is reasonable for us, we will make a decision to buy the assets,” the director general added.

BP wanted to sell its assets in its Vietnam-based projects in a bid to make divestments of US$30 billion by the end of 2011 to pay for damages in the Gulf of Mexico oil spill.

However, PetroVietnam as a partner in such projects has some preferential rights, Thuc said, adding that within 60 days upon being informed of the agreement, the Vietnam group has the right to buy the stakes as well as to veto the deal.

Thuc explained the group could disapprove the deal if BP’s partner doesn’t have good technology and competence.

A representative of BP in Vietnam on Tuesday also confirmed the agreement, adding that BP needs regulatory approval from Vietnam’s Government to sell its assets in the country.

BP said the deal with its equal joint venture will help retain an economic interest in these assets and ensure the interests of BP’s shareholders.

BP’s stakes put up for sale include a 35% interest in offshore block 06.1, currently operated by BP, 370 kilometers offshore south-east Vietnam and containing the Lan Tay and Lan Do gas fields.

In addition, BP has a 32.67% interest in the 370 kilometer PetroVietnam-operated Nam Con Son pipeline that transports gas onshore from the Lan Tay and Rong Doi fields, and a 33.3% stake in the joint venture that owns and operates the 739MW Phu My 3 power plant in Ba Ria-Vung Tau Province.

TNK-BP has agreed to pay US$1.8 billion in cash for the assets. Under the agreement, TNK-BP will pay BP a total deposit of US$1 billion on October 29, with the balance due upon completion of the sale expected in the first half of next year.

The agreement is said not to affect BP’s other business activities in Vietnam, including a significant lubricants blending and marketing business.

Unusual cash stocks pressuring Vietnam's dong: WB

An unusually large amount of money held outside Vietnam's official foreign exchange reserves is continuing to pressure the dong while most other regional currencies strengthen, the World Bank said Tuesday.

"While many currencies are experiencing appreciation of their exchange rate, in the case of Vietnam the reverse is true," the World Bank's lead economist in Vietnam, Deepak Mishra, told reporters.

Vietnam in August devalued the dong for the third time since late last year, saying it was trying to control the trade deficit.

The official exchange rate is at VND18,932 per US dollar, down from VND17,034 or more than 11 percent since late November when the series of devaluations began.

In contrast, regional exchange rates are 10-15 percent stronger than before the 2008 global financial crisis, the Bank said Tuesday in its latest East Asia and Pacific Economic Update.

It said East Asia's success in leading the global recovery has attracted a surge of capital that has inflated the currencies, spelling a risk to exports and future growth.

Vietnam's recovery has also been rapid, but uneven, the Bank said. It noted "the current account deficit remains high and households and firms appear to continue to stockpile foreign currency and gold, putting persistent pressure on the local currency."

Mishra, in a briefing for reporters, said Vietnam has enough foreign exchange to pay for its current account deficit but "the real issue" is the amount of foreign exchange held in such forms as savings that are not with the State Bank of Vietnam.

This figure amounts to about 12 percent of gross domestic product (GDP), he said, adding: "That's the reason why there's pressure on the exchange rate."

But he said it is not easy to say the dong is necessarily overvalued.

In its latest report, the Bank estimated Vietnam's full-year real GDP growth at 6.5 percent, inflation at 8.0 percent, and a current account deficit of US$9.3 billion.

Unusual cash stocks pressuring Vietnam's dong: WB