Business giants work to drive relationship

In late October, PetroVietnam and RusHydro JSC of Russia signed a framework agreement,

under which the latter would consider the purchase of 51 per cent of shares in the 125 megawatt Dakdrinh hydropower project which is under construction in Quang Binh province.

PetroVietnam holds a 75 per cent controlling share in the project, which has investment capital of VND3,500 billion ($175 million). The two sides are expected to come to a final deal later this year.

Also in late October, the Bank for Foreign Trade of Russia (VTB) signed a credit agreement with Vietnam’s Bang Huu Minerals JSC (Amigo Minerals), under which VTB bank would provide a $20 million loan package for the Vietnamese partner to build a titanium integrated processing line, with an overall capacity of 200,000 tonnes per annum.

VTB, meanwhile, inked another deal with BIDV to establish the Vietnam-Russia Investment Fund, which has a capital scale of $500 million, with some $100 million to be raised for the first phase of operation.

The fund plans to mobilise capital from Russia, Japan, Korea and the Middle East investors and will focus on Vietnam’s potential and key projects including electricity, water, energy, metal and mining, infrastructure, chemicals, environment, transportation and telecommunications.

BIDV is responsible for introducing potential investment projects for the fund, projected to make debut by the end of 2011. The Vietnamese bank will also provide banking and finance services, while VTB bank is to carry out marketing activities, capital mobilisation and investment consultancy service provision.

“Trade relations between Vietnamese and Russian enterprises have not been supported by financial institutions,” said Andrey L. Kostin, VTB Bank’s president.

“The number of such funds like the Vietnam-Russia Investment Fund and the Vietnam-Russia Joint Venture Bank [opened in 2006]  has been also limited, which is very crucial to help boost investment cooperation of both countries’ businesses,” Kostin said.

Vu Tien Loc, chairman of Vietnam Chamber of Commerce and Industry, said the two countries should focus on promoting large firms’ cooperation in strategic projects to boost bilateral ties.

Bilateral cooperation between Vietnam and Russia has been successful in the energy industry, particularly oil and gas exploration and exploitation.

Bilateral energy industry ties have achieved an important new growth as Russia’s State Atomic Energy Corporation Rosatom will take charge of building the first nuclear power plant in Vietnam in the next several years.

“Nuclear power development cooperation is a new way for both countries to make progress with their strategic partnership in economic area in the future,” Loc said.

Rosatom’s general director Sergey Kirienko said the group would not only join with Vietnam’s state-run Electricity of Vietnam (EVN) to build the first nuclear power in the country, but also help develop nuclear energy industry in Vietnam.

Russian firms have so far registered in 55 projects with an overall capital of $302.9 million in Vietnam, ranking 23rd of investors in the South East Asian country.

Vietnamese firms have invested in 11 projects with a total investment capital of $34 million in Russia.