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SEIKO IDEAS CORPORATION Vol 08 VIETNAM
BUSINESS
REVIEW
Vol 08 *Special Edition*
March 04 th
2015
ASEAN ECONOMIC COMMUNITY IN THIS ISSUE AEC to be formed in 2015
by [R&C Dept] In 2015, ASEAN will form Asian Economic rubber-‐based products, textiles and apparel, Community (AEC) and markets in the tourism, wood-‐based products, and logistic Southeast Asia will become a single market. services. There will be free flow or movement of goods, services, capitals and skill labor across the ASEAN region. The most important objectives of forming AEC are to promote equitable economic development across the region, to form a single market and production base in the In this business review, we hope not only to introduce to you the foundation of AEC but Should you have interest in our weekly business review, please subscribe here. competitive economic region that will be the Special Edition here as well as your fully integrated into the global economy. requirements market and production, including agro-‐based products, air transport, automotive, e-‐
ASEAN, electronics, fisheries, health care, Page 2 prospects for nation members. Also, we do appreciate your comments on sectors which will be benefit from single Let's have a look at how the upcoming AEC impacts on Asean economies. also bring up updated on its process and region which will become a highly After forming AEC, there are several industry Focus: ASEAN Economic Community
of information here. other kinds of Other News As a collection of news of remarkable events in Vietnam’s economy, investment, banking, finance Page 7
VIETNAM BUSINESS REVIEW VOL 08 *SPECIAL EDITION* 2 FOCUS: ASEAN ECONOMIC COMMUNITY AEC 2015: Will it happen?
by Jakarta Post The 2015 ASEAN Business Outlook Survey market and production issued by the US Chamber of Commerce base by 2020 with a free reveals prevalent anxiety that a good chunk movement of services, of the ASEAN Economic Community (AEC) goods, isn’t going to be ready by the 2015 deadline. investments and skilled Most respondents were a bit cynical about labor. the AEC’s inauguration even happening by leaders met in 2003, they 2020. That’s because this isn’t the first time signed the Declaration of the AEC has faced a potential delay. The ASEAN Concord II and agreed to establish The 2012 AEC Scorecard reveals four key original AEC commencement had been the AEC by 2020. objectives, one market and production base; pushed back in 2012 from Jan. 1, 2015 to Dec. However, in 2007, the Cebu Declaration sped a viable fiscal region; reasonable economic 31, 2015. Although Surin Pitsuwan, then up this establishment to the year 2015. This ASEAN secretary-‐general, had firmly said is when ASEAN revealed its AEC Blueprint, there would be no further delays and that all which, two years later, became the Roadmap already put into place by the end of 2011). 10 countries were going to participate, for an ASEAN Community to help with the Thus the AEC formation is right on track, strong and not so strong AEC proponents AEC’s enactment. which begs the question why so many people worried about the possibility that the AEC The AEC Scorecard was developed to track don’t expect it to occur by 2020. would not be ready by the close of 2015. the progress being made, based upon the EU The skepticism isn’t too hard to understand. The AEC was born out of the ASEAN Vision Internal its It took nearly 50 years for Europeans to put 2020 adopted on the 30th anniversary of inception, there were two published together the European Community during ASEAN in 1997. The goal is to produce one scorecards — 2010 and 2012. the European integration process. capital, When ASEAN Market Scorecard. Since growth and incorporation into worldwide economy (187 of 277 measures have been Vietnam is now ready for AEC, due to be formed at the end of 2015, experts said at a seminar held by the Central Institute of Economic Management (CIEM). Nguyen Anh Duong, deputy head of the CIEM's macro-‐economic section, said the country has made essential preparations in terms of governance and institutional and administrative procedure reforms. Participants said AEC would bring opportunities to Vietnam to expand markets and at the same time fiercer competition on its own ground, particularly in industrial and agricultural sectors. CIEM Deputy Director Vo Tri Thanh noted that however, Vietnam still faces problems in human resource quality and poor infrastructure. He suggested that the country Vietnam ready for AEC
by VNS develop effective macro-‐economic policies to AEC aims to establish a single common boost the integration process through market and production base for the ASEAN attracting investment while preventing member countries that that enables the free negative impacts. movement of goods, services, capital and continue skilled labour within ASEAN. The AEC was improving its investment and business one of the three pillars of the ASEAN climate, completing legal framework and Community, together with the ASEAN assisting Political Security Community (APSC) and the In particular, Gov't enterprises should in updating technologies and expanding markets. Vietnam brought the tariff rates to 0-‐80% of tax lines and remove tariff for another 13-‐
15% by Jan 1, 2015. The rest will be removed until 2018. ASEAN Socio-‐Cultural Community (ASCC). VIETNAM BUSINESS REVIEW VOL 08 *SPECIAL EDITION* 3 Vietnam - Myanmar: Major competitors in AEC
by [Hoang Huong] "Myanmar is an agricultural country, so it "We will train our farmers with high will enter to the region's market with technology and modern knowledge on farming products," said Dr. Maung the product's quality as well. I think all Maung Lay, Vice -‐ President of those things will help," Pyaf added. Myanmar's Federation of Chambers of Rice production in Vietnam in the Commerce and Industry (UMFCCI), at a Mekong and Red River deltas is press briefing about his country's important to the food supply in the capacity to be a full member of the country and national economy. ASEAN Economic Community (AEC) by the end of 2015. The Mekong River and its tributaries Vietnam, one of early movers in Myanmar, is staged with its Lioa brand, a producer of sound technology, on the body of a truck. Myanmar, the country had been making headlines worldwide since 2010, when it embarked on a political and economic reform-‐process ending decades of However, he also mentioned about the are crucial to rice production in Vietnam. The completion joining the AEC, and indicated delta produced about 20 million tons in 2008, that farming industry is the key business about a half of the country's total production. sector of his country. The rice field has assured food security to its Thus, Vietnam, the second biggest rice exporter in ASEAN, and market leader Thailand will be Myanmar's direct competitor population whose 75% of daily meals are met by rice, and support diets to international consumers. in AEC. Pyaf Sonf Do underlined. The 29-‐
Meanwhile, according to Myanmar's media, year-‐old man who earned an economic rice exports by Myanmar in 2012-‐13 were the Myanmar was like a sleeping beauty, waiting degree in Canada and worked there before highest in 46 years, and are expected to grow for princes to come", Maung Maung Lay returning to his native country where he to around 3 million tons in 2013-‐14, up describes his country's current state, exports rice to Africa. around 43% from the previous year. Myanmar exports only small amounts of rice Myanmar has expanded its export market to ASEAN countries like Indonesia and from mostly African countries during the Foreign businesses are visible almost Philippines, but wants to target the EU and military rule (that ended in 2008) to China, everywhere in the streets of Yangon, the the US market in the future. Japan, and European countries, including international isolation. attracting the outside world in many different ways. country's business capital. Foreign products and companies are waving their banners everywhere on billboards, in the newspaper advertisement sections and even on vehicles. "I know it is not easy to enter the fight; we will face a lot of difficulties, but I believe we Recently, Myanmar signed an agreement will have our own way to overcome", said with Indonesia to export up to 500,000 tons Pyaf. "By now, Vietnam is the mayor of rice per year to Indonesia. Vietnamese also appears on communication competitor for us. Its established export equipment, such as telephones or meeting-‐
industry and the low price are advantages for room speakers at conference rooms and Vietnamese rice. To compete, we have to hotels. focus on producing high quality rice," the Mr. Maung Maung Lay noted that Myanmar young business man added. has imported many products from Vietnam, Pyaf is betting on scientific research to adding that "the two countries are both parts improve the quality of his rice, as well as of the Mekong community, ASEAN region, training and capacity-‐building. and familiar culture. We are one", the official said. Russia, Spain, Portugal and Belgium. Myanmar’s rice production stands at around 13 to 14 million tons of milled rice. The country is aiming to increase rice production by introducing a third crop to help boost rice exports. VIETNAM BUSINESS REVIEW VOL 08 *SPECIAL EDITION* 4 AEC promises retail rivalry
by [Nguyen Chung] Thailand’s leading retailers are pushing ahead Thai Chearavanont, Mongkol Group in a $32.4m joint venture to with aggressive expansion plans into Vietnam chairman of Charoen Pokphand Group (CP set up Thai Corporation Int'l Vietnam (TCI) to as the deadline for the launch of AEC nears. Group) was recently rebuffed by German open a supermarket chain in Vietnam. Vu Vinh Phu, chairman of Hanoi Supermarket retailer Metro Group AG in negotiations to TCI director Mongkol Banthrarungroj said the Association told VIR that scores of foreign buy Metro Cash and Carry in Vietnam, in a joint venture’s target was to promote its retailers, including those from Thailand had deal that was valued at more than $500m. CP brand name in Indochina and export Thai recently entered the market on anticipation may well return to the table with an improved products to Myanmar, Laos, Cambodia & of establishment of AEC by 2015. offer. Vietnam. TCI expected to increase its sales in AEC is likely to attract further foreign Korsak Chairasmisak, managing director of Vietnam to VND3 trillion ($150m) once AEC investors to Vietnam eager to make the most CP, said that Thailand wanted to take becomes operational. of tariff advantages, he added. advantage of AEC. CP anticipated promoting Marketing communications and management small and medium-‐sized Thai enterprises to consultancy company AT Kearney in a Central Group, Thailand’s leading retailer recently announced its expansion in Vietnam billionaire Dhanin the wider ASEAN market. recently survey of corporate leaders on their with next month’s launch of a Robins Thailand’s Berli Jucker (BJC), owned by AEC expansion, merger and acquisition and department store. billionaire Aswin Techajaroenvikul, also brand plans found that the majority of previously bought the Vietnamese Family companies in ASEAN member countries such Mart’s 42 retail outlets to establish a joint as Thailand, Singapore, Malaysia, the venture with Vietnam’s Phu Thai Group. Phu Philippines and Vietnam planned to enter Thai and BJC recently launched B’mart, with new markets, and create new products and Phu Thai saying that details of the deal would brands to reach more consumers across the officially be released in September this year. economic community after 2015. The first Robins store, the group’s first international branch, will occupy 10,000 square metres of retail space at Royal City in Hanoi. A second Robins store in HCMC opened by the end of 2014. The two stores will together hire 1,000 local workers. In December 2012, BJC hooked up with AEC to expand Vietnam footwear sector
by VNS Vietnamese footwear exports will enjoy zero AEC member states will have a better chance to tariff once AEC is established in late 2015, develop new materials, reducing their reliance allowing producers to expand their markets and on imports and increasing the added value of access new materials. the end products, she said. ASEAN represents a substantial footwear Xuan added that the countries are also market for Viet Nam, as the region spent more expected to provide a steady supply of footwear than $1.8b on footwear imports last year. The and gain a solid foothold in major markets such establishment of the AEC in 2015 would offer as US, EU and Japan. VN a host of advantages. However, Xuan pointed out that competition VN has an abundant qualified and low-‐cost will intensify once zeo tariffs are applied & this workforce, giving it an edge over Thailand, trend was inevitable. Indonesia and Malaysia, General Secretary of At the moment, almost all AEC countries have VN set up technical barriers to protect their Leather, Footwear and Handbag Association (LEFASO) Phan Thi Thanh Xuan said. domestic products. To strengthen the sector, Minister of Industry and Trade Vu Huy Hoang called upon the Viet Nam Textile and Garment Association and LEFASO to devise plans to develop support industries. According to industry insiders, domestic firms should reinvent themselves by improving the quality of their products and popularising their trademarks. VIETNAM BUSINESS REVIEW VOL 08 *SPECIAL EDITION* 5 market to export raw products, because the AEC offers new export oppotunities
country had mainly exported raw products and components, including farming, seafood and mineral products, as well as electric and by [WTO Center] electronic components, said Pham Thi Hong Thanh, deputy head of Asia Pacific Department AEC would bring challenges, as well as countries – Brunei, Indonesia, Malaysia, the improved export opportunities for Viet Nam Philippines, Singapore and Thailand – will be when the AEC is formed in 2015. slashed to zero in 2015 under the ATIGA signed AEC marks the commitment of ASEAN leaders in Thailand in 2009. to building and promoting a single market and This would provide plenty of opportunity for VN production base, a highly competitive economic to balance its trade, Thanh added. region tempered with equitable development, Hai said VN would have a significant & a region fully integrated into the global opportunity for major export products, such as economy. textile, garments, rice, seafood and electronic ASEAN includes the Association of South East components. Asian Nations consisting of Brunei, Cambodia, When the AEC is formed, VN could sell goods to Indonesia, Laos, Malaysia, Myanmar, the machinery, equipment, and steel and rice. They ASEAN market in ways that are similar to should selling in home markets, because of simplified strategies to take full advantage of incentives Experts said AEC would also create greater trade procedures and new procedures for post-‐2015. opportunities for exporting goods and services certifying the origins of products. to the ASEAN market, though local enterprises However, Chu Duc Khai, general secretary of have faced many difficulties in production and Import-‐Export Department, said local firms VN Steel Association, said most local steel business. needed to raise the competitiveness of their enterprises have had a lack of information exports Deputy Minister of Industry and Trade (MoIT) about conducting business in the ASEAN especially by following regulations related to Do Thang Hai said the trade turnover between market, AEC and the benefits, as well as originating certification (OC) of products, if Vietnam and ASEAN has quadrupled over the challenges, of doing business in the regional market. they want to fully utilise the opportunities AEC past decade, climbing to nearly $40b in 2013 from $9b in 2003. Last year, Vietnam took in They have not had the chance to study the businesses should set up their development $18.47b from its exports to the bloc, the ASEAN market, and steel companies have only strategies to enlarge the production scale to country's third largest importer only after the exported small amounts to ASEAN countries, meet larger orders in the near future. US and the EU, which was an increase of 4.4% including the Philippines, Cambodia and Meanwhile, Gov't had corrected policies to Indonesia, with a total volume of 1.7m tons and become more suitable with the process of Meanwhile, export turnover was estimated at a value of $1.4b, Khai said. integrating into AEC. $4.7b in Q1 of this year, a year-‐on-‐year increase Meanwhile, Tran Thanh Hai, Deputy head of the Bui Huy Son, head of the Trade Promotion of 6.4%. However, the figure has tended to Import-‐Export Department under the Ministry Agency, said to support local enterprises in remain steady, and even slowed on occasion, as of Industry and Trade (MoIT), was concerned entering further into the ASEAN market, the domestic enterprises have not yet taken full because 80% of local enterprises that were agency had conducted market studies and advantage of the close geographical distance surveyed about AEC have little information compiled market information, as well as and incentives offered by the ASEAN Trade in about interests and challenges available for sponsored seminars and training courses to them in the ASEAN market, reported Thoi bao improve exports and the competitive abilities of Hai said ASEAN is one of Viet Nam's leading Kinh doanh newspaper. businesses, and organised exhibitions and trade trade partners, accounting for 15% of VN's total This lack of knowledge would also be a great fairs to create business bridges for local firms trade. The regional grouping made up 22.4% of challenge for local production and business with ASEAN partners. total FDI capital in 2013 with Singapore, enterprises when the AEC is formed in 2015. So far this year, the agency had submitted to Additionally, local products would face the MoIT to receive approval for 183 projects Philippines, Singapore, Thailand & Vietnam. from the previous year, added Hai. Goods Agreement (ATIGA). Malaysia and Thailand being key investors. AEC and FTAs have helped promote Viet Nam's under the MoIT. Thanh pointed out challenges for Vietnamese products in the context of fierce competition, especially when barriers to protect domestic products no longer exist. She suggested domestic businesses should accelerate exports of key products to ASEAN in the short term, such as mobile phone handsets and components, computers, electronics and components, the means of transport, tools, also devise long-‐term business Tran Thanh Hai, Deputy Director of the MoIT through quality improvement, will provide. He also proposed that domestic competition with products made in other under exports to ASEAN, Hai stressed. ASEAN countries and China. programme, including projects on supporting Thanh also forecast that exports to these Moreover, Vietnamese export products would markets wouldcontinue to grow steadily as compete with other countries in the ASEAN more than 99% of tax rates of six ASEAN the national trade promotion local firms in trade promotion activities in ASEAN countries, Son said. VIETNAM BUSINESS REVIEW VOL 08 *SPECIAL EDITION* 6 FAST FACTS Dec 31, 2015 AEC has been planned to become operational in December 31, 2015. FiVietnam FDI statistics 2005 -‐ 2014 76% More FDI will flow into each Southeast Asian Up to now, 76% of Vietnamese enterprises have not been fully aware of AEC. AEC will be a boon to FDI
by [ANN] 14million country, especially into infrastructure and Trade Negotiations, said Asean had already innovative products, after the Asean Economic signed five free-‐trade agreements, with China, Community becomes fully effective at the end Japan, India, South Korea, and Australia and of this year, economic experts said on Friday. New Zealand. This opened opportunities for At a seminar on "Opportunities in a New Era of trade and investment in Asean. Enhanced Asean-‐Japan Partnership", they Masayasu Hosumi, president of Jetro Bangkok agreed that the AEC would be the largest single and chief representative for Asean and South market in the region and open opportunities to Asia for the Japan External Trade Organisation, 15% link its members to the rest of the world. That said the AEC would boost investment and trade would challenge foreign interests to invest between Asean and others countries. Asean is more in Asean. already a base for Japanese manufacturing. ASEAN countries are important partners of The event yesterday was organised by Toshiba Fukunari Kimura, chief economist of the Vietnam, accounting for 15% of this country's International Foundation (TIFO), the Federation Economic Research Institute for Asean and East of Thai Industries (FTI), and Thai Chamber of Asia, said Asean would enter a new era when Commerce (TCC) with support from Chula the AEC becomes effective late this year. FDI Global Network, Chulalongkorn University and will expand in this region, including in Graduate School of Public Policy, University of infrastructure, manufacturing, and innovative Tokyo, Nation Multimedia Group and Asia products. News Network (ANN). "The AEC has played and will play an important Anton H Gunawan, independent commissioner role in pursuing the development model. The of Indonesia's Bank Mandiri, said his country key words in the AEC beyond 2015 should be would see more FDI, esp from Japan, which 'connectivity and innovation'," he said. would expand its investment in infrastructure Tin Maung Maung Than, a senior research and manufacturing. China will also invest more fellow at the Institute of Southeast Asian in Indonesia and Asean as a whole. Studies and a Myanmar national, said it would Steven CM Wong, deputy chief executive of the be important for Japan to invest in Asean so as Institute of Strategic and International Studies to transfer technology and develop local labour in Malaysia, said the AEC would be a big boost skills. to trade and investment between Asean and other countries as tariffs and non-‐tariff barriers are lowered. AEC is believed to create 14 million jobs more for skilled labors in Vietnam. total trade. 60-‐70,ooo Thailand plans to open for 60-‐70,000 labors from Vietnam after AEC foundation. 80% Vietnam has prepared approximately 80% of AEC's requirements for participation. Sunanta Kangvalkulkij, deputy director-‐general of the Thai Commerce Ministry's Department of VIETNAM BUSINESS REVIEW VOL 08 *SPECIAL EDITION* 7 OTHER NEWS Oil prices send CPI down, Tet ups
purchasing power
VNS -‐ According to GSO, total retail sales of goods & services in Feb touched $12.97b, up 3.7% from Jan & 11.6% against Feb-‐2014. The private sector contributed more than 86%, while the State and the foreign-‐invested sector contributed 10% and 4%, respectively. As Tet holiday fell in Feb, consumption demand rose with purchasing power for food and foodstuffs, up 8.9% and for garments, up 3.6%. Banking credit seen growing 13-15%
in 2015
VGP – Banking credit is expected to grow by 13-‐
15% this year, 1% higher than last year. The target is based on this year's GDP target of 6.2%. Normally, credit growth is 2.0-‐2.5 times that of GDP growth, which means that to ensure the economy grows at 6.2%, credit growth must reach 14-‐15%. The inflation rate this year is expected to be around 3% and 3.3% as maximum. This means the banking sector will have chance to further lower both deposit and lending interest rates to accelerate credit activities. Foreign investment fall 22.5% in
Jan-Feb
TNN – Vietnam has attracted aroung $1.2b in FDI so far this year, down 22.5% against the same period last year. Ministry plans to sell operational rights to international airports by [Dtinews] The pilot scheme to sell the operation rights of It was designed to serve 2.65 million passengers Phu Quoc International Airport should be per year by 2020 and up to seven million speeded up this year, the Minister of Transport passengers by 2030. Dinh La Thang has said. It provides services to domestic flights Thang said revenue from the selling of connecting the island district with Ha Noi, HCM operation rights of the international airport on City and other cities across the country Phu Quoc Island in Kien Giang will help operated by local carriers such as Vietnam modernise other airports in Viet Nam. Airlines, VietJet Air and Jestar Pacific. Thang spoke at a meeting on mobilising If the pilot plan to sell the operation rights to investments aviation Phu Quoc Airport is successful, ACV would infrastructure, held by the Transport Ministry in continue to sell or transfer the operation rights Ha Noi on Wednesday. of other airports. He asked the Airports Corporation of Viet Nam Minister Thang also asked ACV to map out (ACV) to build a plan to sell 100 per cent of the plans to invest in projects to upgrade and Flappy Birst among the world's 50
most popular brands
stakes at Phu Quoc International Airport. renovate other airports in the country, including According to the Civil Aviation Authority of Viet Cam Ranh Airport in the central province of VIR -‐ Vietnam's Flappy Bird mobile game has been ranked 39th in a report on the world's 50 most popular brands of 2014. Nam (CAAV), Phu Quoc Island airport was Khanh Hoa. developed with total capital of VND3 trillion Thang also asked ACV to speed up the pilot (about US$141 million), mainly funded by ACV. plan to sell the operation rights of Hall E of The report was released by Infegy, an American provider of intelligent social media monitoring, which is also an analytics platform. The sale of Phu Quoc Airport will help ACV, Terminal 1 (T1) at Noi Bai International Airport which provided 100 per cent of funding for in Ha Noi. building the airport's terminal and runway, will CAAV in coordination with ACV has conducted The game became a phenomenon at the beginning of 2014 and was the most downloaded application on the Google Play Store and App Store for Android and iOS devices. result in money to be used for other aviation a feasibility study for a project to enlarge the infrastructure projects. parking lots for aircraft and to build parking Phu Quoc Airport, which was brought into areas for automobiles at Tan Son Nhat Airports operation in HCM City. The feasibility study is scheduled The country licensed 148 new projects to foreign investors with a combined capital of $712m, a drop of 4.3%. It also allowed 58 existing projects to boost registered funding by a total $480.5m, down 32.2%. for over the two country's years ago, can accommodate long-‐range aircrafts such as Boeing 777-‐300s, Boeing 747-‐400s and Airbus A380-‐800s. to be completed in March 2015. VIETNAM BUSINESS REVIEW VOL 08 *SPECIAL EDITION* 8 It was in negotiations to join a foreign bank as SBV plans to take over more troubled lenders of March last year, but the deal fell through, by [TNN] Thanh said OceanBank posted a pre-‐tax profit The State Bank of Vietnam (SBV) is planning to The capital level was not divulged at the time, take over at least two more banks which have but was believed to have fallen far below VND3 not been able to sort out their financial and trillion ($140.6m), the minimum requirement managerial troubles, an official said. for commercial banks in Vietnam. Deputy Governor Nguyen Phuoc Thanh told According to SBV, it did not have to pay local media on Saturday that SBV is likely to anything for the takeover. acquire Global Petro Bank (GPBank), which has Vietnam’s Gov't introduced a new regulation in been in the red for some time, and Ocean Bank, Sept 2013, allowing SBV to restructure a weak whose leaders were arrested in recent months bank by purchasing its shares. over lending violations. VNBC is the first bank which the regulation has one with Vietnam Bank for Construction fully owned by Gov't. The other, Agribank, is (VNBC) earlier this year. SBV decided to acquire one of Vietnam's largest lender. voted against such a plan. have always of its chairman and several executives. They have been accused of approving a VND500 bln ($23.5m) loan to a real estate firm in HCMC in 2012 without proper collateral. The SBV officials have said several weak banks are having their own plans to merge with stronger Among potential mergers are Nam A Bank joining Eximbank, PGBank into Vietinbank, Saigon Bank to Vietcombank, and Mekong Housing Bank merging with the Bank for Thanh said GPBank is one of the troubled banks which faced managerial problems with recent arrests banks this year. been applied to, making it the second lender raise the bank’s registered capital but then of VND232 billion ($10.9m) in 2013 but has company is now likely to default on the loan. Thanh said the takeovers will be similar to the VNBC in January after its shareholders met to opening the bank to state ownership. been pushed Investment and Development of Vietnam.
for restructuring through mergers or acquisitions. public private partnership (PPP) investment New decree cleans up PPP mode confusion modes, replacing previous decrees intending to by [VIR] Gov't has just issued a long-‐awaited decree on promote private investment in infrastructure to boost economic growth. The new decree (Decree 15/2015/ND-‐CP) does not include a limitation on state funding in a PPP, which will seek to cool investor anxiety over the limited financial support provided by the government to such projects – an issue that emerged as a major barrier for private investment in the country’s infrastructure. According to the decree, the PPP is an investment model implemented through a contract between a state authority and private investors to invest in infrastructure or public projects. Apart from build, operate and transfer (BOT), build, transfer and operate (BTO) and build-‐
transfer (BT), PPP will include forms of build, own and operate; design, build, finance, maintain, operate and transfer; build, finance, operate and maintain, and operate and maintain forms. Tang, who helped draft the decree, expected Meanwhile, Decision 71 failed to attract private private companies to invest more into investors in infrastructure projects under PPP infrastructure projects this year after the models because it did not clearly regulate how decree takes effect from April 10. much exposure the state would accept when The new decree is a combination of two putting up funding for a PPP project. previous legal documents which guided the “Given the shortcomings in these two previous implementation of PPP investment. Those legal documents, a merger was needed not documents prime only to remove any shortcomings, but to also ministerial Decision 71/2010/QD-‐TTg guiding include ensure we have a comprehensive and effective the implementation of pilot PPP projects, and PPP policy,” Tang said. Decree 108/2006/ND-‐CP the the The MPI estimated that from now until 2020, implementation of infrastructure projects guiding Vietnam would need around $170 billion to under BOT, BTO and BT contracts. develop its infrastructure, including transport, Decision 71 and Decree 108 previously confused bridges, power plants, water supply network, investors when considering opportunities. waste The MPI, which drafted and proposed the Meanwhile, traditional, public sources of decree to the government, noted that while capital, Decree 108 set an important milestone to government bonds and official development promote private investment into infrastructure assistance, would struggle meet more than sector, especially in road and power projects, it half of this sum, therefore, this decree could still contained unclear regulations on investor prove to be a timely opportunity for both selection and ways finance would be raised. treatment including plants the and state Gov't & the Vietnamese economy. ports. budget, SEIKO IDEAS CORPORATION Vol 08 Our services Training (Languages & Soft skills) Investment Consulting Market Research – Business Matching Translation -‐ Interpretation Address Floor 5th -‐ A Chau Building No.24 Linh Lang str., Ba Dinh dist., Hanoi, VN Telephone +84-‐4-‐6275-‐5246 ; +84-‐4-‐6273-‐6989 Fax +84-‐4-‐6273-‐6988 Website www.seiko-‐ideas.com Person in charge Nguyen Thi Quynh Tram (Ms.) Mobile +84-‐91-‐4994-‐830 Email tram.nguyen@seiko-‐ideas.com *You are receiving this because you subscribed to our weekly business newsletter or you gave us your address via namecard.