Vietnamese businesses get a little Seoul

by Le Hung Vong

Major foreign companies have been visiting Viet Nam for years, but now major Vietnamese companies have begun to seek opportunities abroad.

A delegation led by deputy PM Nguyen Sinh Hung with representatives of 100 companies will visit South Korea from May 21 to 24 during the Viet Nam Days in South Korea to be held by the Viet Nam Chamber of Commerce and Industry (VCCI).

The delegation includes representatives of major companies in the oil and gas, telecommunications, coal and mineral, and shipbuilding sectors. They aim to attract direct and indirect investment from South Korea to Viet Nam.

VCCI general secretary, Pham Gia Tuc, said Korean and Vietnamese security companies were expected to sign significant new agreements during the trip.

So far Viet Nam has suffered a deficit in two-way trade with South Korea. According to figures from the Ministry of Trade, in 2005 Viet Nam’s exports to South Korea totalled US$0.7 billion while its imports from RoK amounted to $3.43 billion. Tuc said these imports from South Korea included equipment and materials for production lines in Viet Nam that specialise in exports.

By the end of 2006, Viet Nam had licensed 1,263 FDI projects with a total investment of $7.8 billion by Korean companies. In 2006 alone, Korean companies were licensed for 203 projects capitalised at $2.4 billion.

Eye on Cambodia

Facing competition in the do-mestic market, some companies in HCM City have begun to look into the neighbouring market of Cambodia.

The Dong Thien Joint Stock Co, for example, has ceased its operation in Viet Nam to focus on a sand-exploitation project in Cambodia. It has set up a branch in Cambodia that will open in June.

The assistant to Dong Thien’s general director, Nguyen Phuc Son, said that the VND20 billion ($1.25 million) sand-exploitation project in Cambodia was the company’s biggest project to date.
Twenty-seven Vietnamese companies have opened branches and representative offices and invested in projects in Cambodia. The main fields of investment are health, agriculture, transport, telecoms, and hydropower production.

The Ministry of Planning and Inestment recently licenced the Si Gon Trade Corp (Satra) to form a joint-venture with the Sokimex Group to build major plants to process cashews and seafood, and to breed cows as well as construct a supermarket in Cambodia.

Four travel companies, the Sai Gon Mekong Joint-Stock Co, Saigontourist, Cho Lon Tourist and Fiditour, have cooperated with Cambodian partners to bring tourists from HCM City to Phnom Penh and Siem Reap by land, air and water.

The $10.5 million Cho Ray-Phnom Penh hospital project is also underway, in which the Sai Gon Health Investment Joint-Stock Co. is contributing two-thirds of the capital and Cambodian partners the remaining amount.

However, investment in Cambodia still faces difficulties. For example, a Build-Operate-Transfer (BOT) project to build a road from Phnom Penh to Cambodia’s international airport was cancelled at the last minute because of several problems, including site clearance. It was invested in by a joint-venture between the Viet Nga Infrastructure Investment Joint-Stock Co. and the Cambodian Mong Rethy Group.

Nguyen Van Hung, representative of a Dong Nai-based company that has a rubber plantation in Cambodia, said the company had to abandon the project because of site clearance problems.

Deputy director of the Tay Ninh Department of Planning and Investment, Tran Luu Quang, said companies investing in Cambodia also faced problems caused by Vietnamese authorities. He added that many companies in Tay Ninh wanted to grow cashews and cassavas in Cambodia but when they imported these products to Viet Nam they encountered problems at customs.

"Because of the high import tax rates and no preferential policies, many companies become discouraged and leave their projects unfinished," said Quang.

Japanese group plans resort

The Central Highlands prov- ince of Lam Dong has given the nod to a Japanese consortium to invest 100 billion yen ($831.4 million) in a luxury resort complex.

The Para Plan Joint-Stock Co, which includes four Japanese companies, Mitsui, Mitsubishi, Sumitomo and Limtec, plans to build the Dankia-Suoi Vang (Gold Stream) resort complex on a 5,100-ha area in Lac Duong District, some 22 km from the city of Da Lat.

The Japanese investors plan to turn the area outside Da Lat into an attractive urban town and a larg-scale complex of high-class resorts dubbed "Romantic Town"

However, the provincial authority has warned that if the consortium failed to submit its investment application after six months, the project would be taken off the table.

Lam Dong People’s Committee revealed that a French group proposed a 2 billion euro project for Dan Kia-Suoi Vang. But Chairman Huynh Duc Hoa said the province would wait to hear from the four Japanese groups who have pursued the project over the past three years.

Sun Wah looks skyward

The Hong Kong-based Sun Wah group is seeking a prime location for a second high-rise building in HCM City as part of its plan to expand business in Viet Nam, the group president said last week.

After his meeting with Le Hoang Quan, chairman of HCM City People’s Committee, Sun Wah President Jonathan Choi Koon-shum said Sun Wah planned to build another high-rise because the current one is fully occupied.

Sun Wah is currently the owner of the Sun Wah Tower in HCM City, and is also the developer of the $400 million Sai Gon Pearl residential-commercial complex. It is a key shareholder in the VinaCapital Investment Fund.

Choi said the company was seeking to hire consultants to list on the Vietnamese stock market this year. The group was also keen on investing in the new urban area of Thu Thiem in District 2 as well as a software park.

He said the group was also planning to build an industrial park and an eco-tourism complex in Ha Noi and Vinh Phuc Province.

Sun Wah Group, established in 1957, is a diversified conglomerate with businesses in areas related to seafood and foodstuffs, real estate, financial services, infrastructure, technology and media. The group began activities in Viet Nam in 1970.

Steel production slows

Imports of China-made steel have resulted in a sharp decline of steel production and consumption in the local market this year. According to figures from the Vietnamese Steel Manufacturers Association, the country’s steel production in April amounted to 248,979 tonnes, a decrease of 3 per cent compared with March and a year-on-year decrease of 14 per cent.

In the first four months of 2007, the association’s members produced 916,692 tonnes, an increase of 5.53 per cent compared with the same period last year. Consumption, however, decreased by 9.26 per cent over 2007.

Members such as Hoa Phat and Pomina had to halt their roll-steel production lines while others, such as Viet-Han and Vinakyoei, reduced their production by half because their products were less competitive than those imported from China.

Meanwhile, steel consumption in the local market was on the rise in April, amounting to 300,000 tonnes a month. According to the association, due to the pressure from ASEAN members and other countries, the Chinese Government abolished the refunding of the 8 per cent Value-Added Tax (VAT) on exported steel products from April 15, resulting in higher prices of exported steel from China, estimated at $35 or VND500,000 per tonne.

The association also said they would propose appropriate measures to defend their members’ production. — VNS