Vietnam Restructures Electricity Sector with Vision into 2025

Vietnam has been increasingly needing energy for industry development and consumption and therefore investment in building plants are encouraged by governments in all forms, especially with sources from Public Private Partnership.

The nuclear energy has not been approved by Vietnam National Assembly in 2016.  Vietnam has now more depending on up-coming thermal coal power plant construction projects when the sustainable energy projects i.e. wind, solar are slowly initiated.

For most of the significant projects, the developers requires the foreign EPC contractors to provide equipment, engineering and constructions whom requires construction licenses to operation in Vietnam.  They also keep an eye on on the changes in the law in electricity and Vietnam development of energy sector to follow opportunities.

In 2016, Vietnam has issued decision on national power development into 2020.

With aim to grow the energy sector to meeting growing demands and publicly announce the plan to the interested parties, Vietnam government has now restructuring the power sector aiming to achieve the conversion of the power sector under the market mechanism in order to enhance business efficiency, enhance the publicity, transparency, equal competition in terms of international integration, ensuring the development of sustainable electricity systems, market development-oriented retail electricity in Vietnam according to the market mechanisms under the regulation of Government.

Restructure Electricity Sector 2016 – 2020

The period from 2016 to 2018

Privatize the power generation corporation of Vietnam electricity Group (EVN), Vietnam National Oil and Gas Group (PVN), Vietnam national coal – mineral industries holding corporation limited (Vinacomin). Vietnam Power Generation Corporation to be remained in the groups managed by EVN and the group hold at least 51% of the shares.

To encourage the plant using the renewable energy to engage in the wholesale electricity market.

Orienting the National Load Dispatch Center to become one member limited liability company with independent profit and loss center to manage the system, the electricity market and metering activities.

The period from 2019 to 2020

Reduce the State capital in the power generation corporation, separate the Vietnam Power Generation Corporation from Vietnam Electricity Group, and guarantee the State capital ratio in the power generation companies.

Allow the BOT power plant, the large power plant having important meaning to involve in the wholesale electricity market. Ensure a fair, equality environment for investors.

Separate the cost of distribution and retailing of electricity to operate the retail electricity market.

Before the competitive wholesale electricity market officially implemented, complete the conversion of the National Load Dispatch Center into one member limited liability company.

Restructure Electricity Sector 2021 – 2025

Creating an environment for fair competition in the electricity retailing, separate the cost of distribution and retailing.

Privatize the power generation corporation, and retail activity ensuring the state’s capital ratio but not to private each company, or distribution activity.

Ensure the independence of the legal status, personnel, financial and interests between the power seller, and power buyer.

The Expected Changes of the Law on Electricity

The competent authority will revise the Vietnam Electricity Law and the related legal documents to propose the necessary amendments, to fit with the open market direction for the electricity industry in Vietnam, in order to avoid the legal entanglements for domestic as well as foreign investors.
Allows the plant using the renewable energy to have a options for preferential price mechanism or engage in the competitive wholesale electricity market.

Provide guidance on the cost separation on distribution and retailing of electricity, renew the mechanism of the retail price of electricity suitable for the market mechanisms under the state’s management.

Build a road map to transform the national load dispatch center to become one member limited liability company to complete the tasks independently and take responsibility.

The  laws on  electricity will be changed to attract investment of the private sector, boosting the industrial development of the country, which is always hunger for power to develop.  The changes of laws will be monitored by ANT Lawyers Energy and Project Department  in Hanoi, Da Nang and Ho Chi Minh City to provide clients with updates.

ANT Lawyers has law offices in Hanoi, Ho Chi Minh, and Da Nang City.  For advice or service request, please contact us via email ant@antlawyers.vn, or call +84 8 3520 2779.  To learn more about us, visit www.antlawyers.vn.

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How to Transfer Investment Capital into Bank Account Vietnam?

Foreign investors must transfer money in and out through the Direct Investment Capital Account (DICA) for investment capital contribution.

Transfer Investment Capital into Bank Account Vietnam

FDI enterprises, foreign investors participating in business cooperation contracts, foreign investors implementing investment activities in Vietnam in the direct foreign investment forms in accordance with current provisions of law on investment should comply with the provisions of the investment law when making investment and transfer the capital into Vietnam implementing FDI activities in Vietnam, through setting up company.

The capital contribution in cash of foreign investors and Vietnamese partners in FDI enterprises must be made through transferring to the DICA, either in foreign currencies or Vietnam dong, which are opened by FDI enterprises and foreign investors participating in a business cooperation contract at an authorized credit institution in order to perform the relevant transaction to the FDI activities in Vietnam.  From DICA account, the investor could then transfer into transaction bank accounts opened in a commercial banks in Vietnam.

The transfer of investment capital before being granted investment certificate into Vietnam and the transfer of capital abroad in case of not being granted investment certificate of foreign investors shall be complying with the provisions of the relevant regulations.

After being granted the investment certificate, the accounting of pre-establishment costs of FDI enterprises into equity or foreign loans is made on the basis of agreement between the involving parties, ensured to comply with current provisions of Vietnamese law and regulations on accounting, borrowing, repayment of foreign debts of enterprises and other relevant provisions of Vietnamese law and regulations. In case the foreign investors do not use all the investment capital transferred into Vietnam to satisfy the legal costs for the preparatory phase of investment, foreign investors can buy foreign currency and transfer the remaining investment capital abroad in foreign currency on the basis of the issuing records and documents evidencing investment capital transferred into Vietnam and the expenses incurred for investment projects in Vietnam.

In case foreign investors had moved investment capital into Vietnam to satisfy the legal costs for the preparatory phase of investment in Vietnam but were not granted the investment certificate by Vietnamese competent agencies, foreign investors are allowed to transfer the investment capital transferred abroad after deducting the expenses incurred in relation to the preparation of direct investment projects in Vietnam. The investment capital transferred abroad by foreign investors shall not exceed the maximum investment capital transferred into Vietnam and the amount of interest of non-term loans incurred (if any). Foreign investors are allowed to buy foreign currency and transfer abroad the investment capital transferred into Vietnam in accordance with valid documents proving the amount of investment capital transfer red into Vietnam and legitimate expenses incurred in relation to the preparation of investment projects in Vietnam.

Along with that, foreign investors are allowed to transfer abroad the charter capital, direct investment capital upon termination of operations (due to ending, the liquidation or the dissolution of the enterprise before maturity), interest and foreign loans, profits and other lawful income relating to operations of FDI activities in Vietnam through the DICA. In case FDI enterprises and foreign investors participating in business cooperation contracts have to close the DICA due to ending, liquidation, dissolution which lead to the termination of FDI activities in Vietnam or conduct investment capital transfer resulting in alteration of the initial legal person of FDI enterprises, foreign investors are allowed to use their DICA, either in foreign currency or in Vietnam dong, opened at authorized credit institutions in order to transfer direct investment capital and legitimate income abroad legally.

Moreover, FDI enterprises and foreign investors can use legitimate income sources in Vietnam dong or foreign currency gained from operations of FDI activities in Vietnam to perform re-investment activities in Vietnam. Simultaneously, they also have the right to use such income sources to purchase foreign currency at an authorized credit institution and transfer abroad within 30 days since the date of buying foreign currency.

The credit institutions have the right to require FDI enterprises and foreign investors to provide legal records and proofs relating to the FDI activities in Vietnam. They are also responsible for regulating, inspecting and storing the documents appropriate with the revenue and expenditure transactions of the DICA of foreign investors to ensure the revenue and expenditure transactions are made complying with the stipulations of this Circular and in accordance with the relevant provisions of the Vietnamese law and regulations; and selling foreign currency to foreign investors to transfer abroad on the basis of foreign currency balances of credit institutions.

The  laws on  investment in Vietnam will continue be adjusted to encourage investment into various sectors of the economy.  The changes of laws will be monitored by ANT Lawyers Foreign Investment Practice  in Hanoi, Da Nang and Ho Chi Minh City to provide clients with updates.

Source: Antlawyers.vn

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IFC looks at investing up to $20m in Canadian Solar for its Vietnam foray

International Finance Corporation, the private lending arm of the World Bank, is partnering a Singapore-based private equity firm to invest in Gia Lai Electricity JSC (GEC), one of Vietnam’s largest private-sector independent small hydroelectric power producers.

IFC together with a private equity fund based in Singapore proposes to invest up to 36% equity stake in GEC, according to its investment disclosure. The investment is meant to support GEC’s renewableenergy development plans in Vietnam.

The quantum of investment as also the name of the PE investor were undisclosed.

GEC is 87% controlled by Thanh Thanh Cong Group (TTC), a Vietnamese conglomerate founded by Mr Dang Van Thanh in 1979. TTC is Vietnam’s largest private sugar manufacturer. It also has 79 MW biomass power plant portfolio owned by its various sugar business units. 

Mr. Thanh was also the founder and chairman for 20 years of Sacombank, one of the largest commercial banks in Vietnam

TTC has identified its next growth opportunity in renewable energy, and set a medium-term strategy to grow GEC into a leading renewable energy business in Vietnam. GEC is thus also considering wind and solar projects in addition to hydel power plants, the filing said. 

Founded in 1989, GEC  owns and operates 15 existing hydro power projects totaling 84 MW in installed capacity. Majority of its portfolio comprises small hydro power projects (HPPs), ranging from 0.3MW to 16MW.

GEC’s business model consists of the development and acquisition of small HPPs, wind and solarprojects. While GEC’s ownership varies from project to project, it assumes an active role in design, construction, and operation depending on the project stage.

GEC is located in Gia Lai province, in the Central Highlands of Vietnam. Many of GEC’s existing small hydro power projects are located in the same province. GEC also has several projects located in different provinces of Vietnam, mainly in the central area of Vietnam.

IFC has been quite active in investing, both debt and equity, in Vietnam as also the East Asian region. Some of its recent proposed investments include a $20-million commitment in Canadian Solar for its Vietnam foray and an acquisition financing loan for Golden Towers in the telecom space.

Source: dealstreetasia

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Due Diligence in Choosing Business Partner

Joint ventures and associate in business will bring many opportunities for the development and success of business. However, it is not easy to choose partners to help maximize the value for business, especially in this difficult time. That is the reason why we should conduct the due diligence research before making any decision.

According to experts, there are enterprises that growing very fast because they choose the right partners involving in the value chain, but also there are well-known enterprises in the market that have to face with a lot of difficulties due to choosing wrong partners. Therefore, how to choose the right business partners, financial partners and strategic shareholders to help enterprises overcome difficulties, develop faster and more sustainable are always issues that concerned by many business leaders.

In challenging conditions as at present, the economic situation in Vietnam and the world places great influence on the partner selection of companies. Currently, the debt crisis in some European countries caused the demand for import from these countries dropped sharply. Therefore, Vietnam enterprises must seek new markets. In this situation, companies should restructure their operations, choosing to produce products that are suitable with the new markets.

There are two key partners that companies need to keep in mind, they are financial partner and business partner. Depending on the objectives of the companies that they will choose the right partner. Normally, with the stable economic condition, companies often choose strategic partner.

However, in difficult situation such as the present, the choice of partners is made for short term so that the company could be able to change and adapt according to the general environmental condition. Many experts believe that, in difficult times, good cooperation will help enterprises to stand firm and “over storm” successfully.

Hence, conducting the due diligence research helps us to have a clearer vision of partners before deciding to cooperate with them in business, especially partners in foreign countries where you still feel strange. Whether choosing business partner or financial partner, companies should be cautious. They should learn from the Japanese companies. Before deciding to cooperate with a partner, Japanese companies often study the partners very thoroughly. Therefore, the cooperation project of Japanese companies often succeeds up to 85%.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Advisory
• Market Entry
• Tax Advice
• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

Source: Antconsult.vn

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IFC, Singapore PE firm may invest in Vietnamese renewable energy firm GEC

International Finance Corporation, the private lending arm of the World Bank, is partnering a Singapore-based private equity firm to invest in Gia Lai Electricity JSC (GEC), one of Vietnam’s largest private-sector independent small hydroelectric power producers.

IFC together with a private equity fund based in Singapore proposes to invest up to 36% equity stake in GEC, according to its investment disclosure. The investment is meant to support GEC’s renewableenergy development plans in Vietnam.

The quantum of investment as also the name of the PE investor were undisclosed. 

GEC is 87% controlled by Thanh Thanh Cong Group (TTC), a Vietnamese conglomerate founded by Mr Dang Van Thanh in 1979. TTC is Vietnam’s largest private sugar manufacturer. It also has 79 MW biomass power plant portfolio owned by its various sugar business units. 

Mr. Thanh was also the founder and chairman for 20 years of Sacombank, one of the largest commercial banks in Vietnam.

TTC has identified its next growth opportunity in renewable energy, and set a medium-term strategy to grow GEC into a leading renewable energy business in Vietnam. GEC is thus also considering wind and solar projects in addition to hydel power plants, the filing said. 

Founded in 1989, GEC  owns and operates 15 existing hydro power projects totaling 84 MW in installed capacity. Majority of its portfolio comprises small hydro power projects (HPPs), ranging from 0.3MW to 16MW. 

GEC’s business model consists of the development and acquisition of small HPPs, wind and solarprojects. While GEC’s ow

GEC is located in Gia Lai province, in the Central Highlands of Vietnam. Many of GEC’s existing small hydro power projects are located in the same province. GEC also has several projects located in different provinces of Vietnam, mainly in the central area of Vietnam. 

IFC has been quite active in investing, both debt and equity, in Vietnam as also the East Asian region. Some of its recent proposed investments include a $20-million commitment in Canadian Solar for its Vietnam foray and an acquisition financing loan for Golden Towers in the telecom space.

Source: dealstreetasia

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Canada energy firm eyes $150m solar power plant in Vietnam

Canadian company CMX Renewable Energy Inc has sought a license to build a 150-megawatt solar powerplant in the central province of Ninh Thuan at an estimated cost of $150 million, newswire Thanhniennews.com reported.

SolarEnergy Power Future in Vietnam

CMX is the latest foreign investor to have expressed interest in setting up a solar energyproduction unit in Vietnam after the government said that it is drafting policies to encourage private investment in the sector. 

According to one of the plans being considered by the government, state company  Electricity of Vietnam and other electricity distributors will be obliged to buy all the output from solar power plants in 10-20 years, the government’s website reported.

The country’s first solar power plant is expected to start functioning next year. It is a 19.2-megawatt plant being built in the central province of Quang Ngai by Vietnamese investor Thien Tan Group at an estimated VND862 billion ($36.12 million).

 Last year South Korea’s SolarPark Korea sought to build a 300-megawatt plant in another central province, Ha Tinh, at $650 million.

 Another Korean investor, Hanwha, also reportedly plans to invest $200 million in developing a 100-200-megawatt plant in Thua Thien-Hue.

 Source: dealstreetasia

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Education Startup Will Flourish in Vietnam

Education startup will become great opportunity for foreign investors to invest in Vietnam as well as the Vietnam startup community.

GotIt!, a Startup, a Mobile App which is built on the question – answer foundation for a long time has been presented in the top 10 educational apps on App Store in the US. GotIt! has received 9 million USD from Capricorn Investment Group. Investors of GotIt! are also the people who invest in companies creating products that have changed the world such as Tesla Motor, SpaceX, and PlanetLabs. They believe that GotIt! will become “the next big thing” when GotIt! provides services in the areas beyond education.

One other education startup which is ELSA – teaching English pronunciation, has just passed 1,200 competitors to win first prize at SXSWedu – a competition in education technology startup, organized in the United States. This application uses artificial intelligence technology to help users improve their English pronunciation.

And yet, a different startup which is Monkey Junior, specializing in foreign language teaching has won the competition “GIST Tech-I 2016” held in the US after passing more than 1,000 competitors from 104 countries in the world. This is the startup contest initiated by the US government and received the backing of Mark Zuckerberg – CEO of Facebook – as well as many powerful individuals in Silicon Valley.

Belongs to the EdTech field, which is attracting the attention of Vietnamese startup community, Monkey Junior application is available on App Store, Google Play and Amazon with a large number of users from the US (accounted for 43%), Vietnam ( 10-20%), Canada, France… Although this app aims to teach foreign languages, the point to make up the difference for Monkey Junior is that the teaching contents are directed at children, especially children under 6 years old.

We have to mention one other EdTech which is Code4Startup. Code4Startup is the online training website. Although training on programming is not new, the basic difference of Code4Startup is that it is not theoretical teaching, Code4Startup goes straight into practice by guiding learners to build real applications. Hence, Code4Startup has successfully calling for capital on KickStarter.

The common point of this 4 startups is that the project have high applicability, developing towards EdTech (educational technology) and “father” of them are all Vietnamese: GotIt! Of Dr Tran Viet Hung; Elsa was founded by Van Dinh Hong Vu Ngo Thuy Ngoc Tu; Monkey Junior of Dao Xuan Hoang and Code4Startup of Leo Trieu (Trieu Quang Anh).

Movement for startup towards EdTech (educational technology) are blooming and the fund as well as foreign investors are increasingly appreciating Edtech in Vietnam.

Every year, Vietnamese spent 3-4 billion USD to send their children to study abroad and the market for online education is very potential on a large scale. Vietnam is a country of more than 22 million pupils and students, is the large customer market that many education companies want to explore. On the other hand, the introduction of this community-based projects to apply in reality is very consistent with preference and development trend of modern education, easy to be welcomed by parents and students in Vietnam.

In addition to the potential of the market, international investors believe that the Vietnam startups in general and EdTech startups in particular have been contributed actively to the social advancement, improve community knowledge and update the world’s new trends in Vietnam; while also contributing to the economic development of the country. Similarly, in the world, such EdTech startups as the Knewton, Coursera, Udemy, Duolingo… are the clear proof of this.

The million dollars online training market has been receiving special attention of foreign investors. By the end of 2016, Vietnam had 309 investment projects in the fields of education and training with total registered capital of over 767 million USD.

Apax English is an example. Recently, ChungDahm Learning Education Corporation (Korea) and Egroup Education JSC have signed a memorandum of cooperation for an additional investment of of 10 million USD for English training in Vietnam. Earlier, ChungDahm Learning and Egroup have brought the Asian’s leading children English program to Vietnam with the brand “Apax”.

From the success of Apax English, many cooperation and investment projects in education are increasingly powerful. Next, there will be the project of SK Telecom (under the SK Group, one of the 3 largest Korean group), bringing the school of programming using intelligent robot to Vietnam. It will become the first cooperation in the education sector with Egroup.

With the above positive signals, hopefully that in the coming time, Vietnam education market will continue to receive “new wind” from the funds and foreign investors.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Advisory
• Market Entry
• Tax Advice
• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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