Vietnam Economic News: 28.6 - 05.7.2024
Summary of Vietnam Economic News: 28.6 - 05.7.2024
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Summary of Vietnam Economic News: 28.6 - 05.7.2024 ---
VIETNAM MISSES OUT ON INTEL, LG CHEM INVESTMENTS DUE TO LACK OF INCENTIVES
Reuters News – 5 July 2024
Vietnam has missed out on multi-billion dollar investments by multinationals including Intel and LG Chem because it lacks sufficient investment incentives, the country's investment ministry said. U.S. chipmaker Intel had proposed to invest $3.3 billion in a project in Vietnam and asked the country for "cash support" of 15%, but later decided to move the project to Poland, the ministry said in a ministry document dated June 29. South Korea's LG Chem Ltd also skipped Vietnam to invest in a battery project in Indonesia, after having asked Vietnam to cover 30% of the investment cost, the document said. "Recently, many large groups have come to explore investment opportunities in Vietnam but have later decided to move to other countries as Vietnam lacks regulations on investment supports," the ministry document said. Vietnam, which is an important manufacturing base for companies such as Samsung Electronics, Foxconn and Intel, is heavily reliant on foreign investment for growth. Companies with foreign investment account for about 70% of its total exports. The document added that Austria-based semiconductor manufacturer AT&Shad decided to invest in Malaysia after its request for investment support in Vietnam was not met, and said Samsung Electronics was moving some production to India. AT&S and Samsung Electronics could not immediately be reached for comment. Multinationals have been watching Vietnam's plans to set up the investment incentive fund after the country's parliament last year approved the OECD-led global minimum corporate tax rate of 15%, raising the effective tax level paid by companies.
MAYBANK AIMS TO DOUBLE VIETNAM ASSETS BY 2027, EXPAND INVESTMENT
Reuters News – 5 July 2024
Malayan Banking Bhd (Maybank) plans to double its assets in Vietnam to US$2 billion by 2027, becoming the leading foreign bank in terms of syndicated loans to capitalize on a booming economy, according to foreign media. According to Maybank Vietnam Country Chief Executive Officer Michael Foong, Vietnam’s robust economic trajectory and burgeoning financial sector present significant opportunities for growth, thus it is a key market where the lender will continue to intensify investment in the coming years. Maybank also aims to strengthen its role in foreign direct investment in Vietnam and will target new mid-tier corporate clients with annual revenues ranging from US$50-100 million, Foong said. According to Foong, the bank's brokerage and investment banking unit will expand its margin businesses and also in wealth management, and aims to boost its capital from VND2.2 trillion (US$86 million) at present. The bank has a 16.39 percent stake in An Binh Bank and is taking steps to improve service and product offerings for retail and small and medium enterprises customers, he added.
FOXCONN GETS LICENCE TO INVEST $551 MLN MORE IN VIETNAM
Vietnam News – 4 July 2024
Foxconn Singapore has been awarded a licence to invest $551 million in two projects to produce smart entertainment products and smart-system equipment in Vietnam's northern province of Quang Ninh, state media reported. The
company already has major operations in Vietnam. Through its unit Foxconn Singapore, the Taiwanese giant has been awarded a licence for a $263.7 million project to produce smart entertainment products with an annual capacity of 4.18 million units per year, the Quang Ninh newspaper reported. The second project with an investment of $287.2 million and on an area of 12.4 hectares (30.64 acre), will make smart-system equipment, the paper said. According to the investment certificate, the two projects will complete construction in July, 2026. After a period of machinery installation and trial operation, they were due to launch official production in May, 2027. Last year, Foxconn said it would invest about $250 million in two new projects in Quang Ninh to make electric vehicle and telecom parts. Foxconn has invested more than $3.2 billion in Vietnam since first entering the Southeast Asian country in the 2000s. Most of its manufacturing plants are located in the northern provinces of Bac Ninh and Bac Giang. Last month, Vietnamese state media said Foxconn has also been awarded a licence to invest $383 million in a factory to produce printed circuit boards.
VIETNAM ALLOWS FACTORIES TO BUY ELECTRICITY DIRECTLY FROM SUPPLIERS
Reuters News – 3 July 2024
Vietnam's government said on Wednesday it had issued a new decree to allow factories to directly buy electricity from power suppliers, in a move that could help unleash the country's rich renewable energy potential. Under the new rules, power consumers can buy electricity directly from renewable power generators via private transmission lines at negotiated prices, the government said in a statement. Vietnam, a regional manufacturing hub, has been seeking to boost solar and wind in its power mix, but weak transmission infrastructure and regulatory hurdles have kept several projects from getting hooked to the national grid. The country has this year been ramping up coal burning and expanding its generation capacity and grid to avoid a repeat of last year's crippling blackouts. The reform could increase renewable energy production and make it easier for multinationals to access clean power sources - which is crucial in particular for exporters to avoid higher tariffs and meet environmental, social and governance (ESG) requirements. This means Vietnam-based manufacturers, such as Germany's Bosch, Denmark's Lego or Apple's suppliers, can directly buy electricity from producers, effectively ending the monopoly grid of Vietnam Electricity (EVN), the state-owned distributor. The decree also allows consumers to buy electricity via the national power grid operated by EVN, as long as the sellers have a generation capacity of at least 10 megawatts. In May last year, Vietnam approved a long-awaited master power development plan that would raise the country's total installed power generation capacity to over 150 gigawatts (GW) by 2030 from over 80 GW at the end of last year. Under that plan, the country's solar capacity will reach 12.8 GW and wind capacity 27.88 GW by 2030. Vietnam's onshore wind energy potential is estimated at 221 GW and offshore wind potential at 600 GW, while solar energy potential is estimated at 963 GW, according to the plan.