Local firms keep attached to offshore investments

A teller counts Vietnamese dong notes at a bank in HCMC in a file photo. Despite credit tightening and challenges on the home and global markets, several domestic firms have still managed to continue their projects abroad.

Hoang Anh Gia Lai (HAGL), Saigon Invest Group (SGI), Tanimex and Saigontourist are among those on the list of Vietnamese companies committed to their investments in foreign markets and are trying to seek funds to feed their offshore projects.

SGI said construction has been going on at a hotel that got off the ground in the Lao province of Sam Neua since last year. Scheduled for opening next year, this VND50-billion hotel is also the step of SGI’s long-term strategy to penetrate into Laos.

Talking to the Daily on the phone yesterday, HAGL chairman Doan Nguyen Duc confirmed work was on schedule for growing rubber trees and building hydropower plants in Laos and Cambodia.

For Tanimex, the local market has turned out to be sour for the industrial park and housing developer when the real estate sector is experiencing tough times. However, the company’s deputy general director Tran Quang Truong said that though the company had had to halt apartment and office projects, it is still pressing ahead with its investment plan in the United States.

Tanimex is working with two local partners to set up a joint venture to distribute processed food products imported from Vietnam to supermarkets and retail stores and to invest in the real estate sector stateside. Truong told the Daily at the company's 30th anniversary earlier this month that Tanimex would hold 40 per cent to 49 per cent in the $3 million venture.

Tanimex and its partners are looking for a go-ahead from Vietnamese authorities for the venture to enter the U.S. market, where the company can acquire property at prices that are at least 50 per cent lower than several years ago.

Like Tanimex, Saigontourist Holding Company is waiting for a licence for its investment plans abroad, and the local leading tourism company’s general director Tran Viet Hung told the Daily yesterday that these plans remained unchanged.

Previously, Saigontourist unveiled it and Van Thinh Phat Corp. had established Saigon An Phat Joint-Stock Co. to acquire and operate a hotel in San Francisco in the U.S. The two sides have agreed to set up the joint venture on a 50-50 footing.

Two years ago, Saigontourist disclosed a plan to buy hotels in certain foreign countries, including the U.S., Japan and Germany, with an aim to expand the company’s brand and business aboard and to bring more international travelers to Vietnam. The company has chosen the hotel in the U.S. as the top priority.

Apart from their own capital, Saigontourist and Van Thinh Phat will together seek additional capital from banks for Saigon An Phat to turn the hotel acquisition in the U.S. into a reality.

But, bank loans are not always easy to access, particularly in the current time of credit tightening as the government’s effort to fight swelling inflation. That’s why HAGL has to resort to overseas capital sources together with its own capital to fuel hydropower and rubber plantation projects in the two neighboring countries.

Duc of HAGL said the Gia Lai province-headquartered group had just mobilised another $55 million from Temasek Holdings by issuing convertible bonds of its HAGL Rubber Corp. for the Singaporean investment company.

The bond issue, which was completed earlier this month, was the second of its kind between HAGL and the Singaporean investor. Less than one year ago, Temasek bought convertible bonds worth some $55 million from HAGL and reserved the option to convert these bonds into shares the group. This time, the second five-year bonds will be converted into shares of the corporation upon maturity in July 2015 if the foreign investor wants, Duc said.

Over the past year, HAGL has been able to raise over $260 million from share and bond issues, including $90 million worth of five-year bonds on Singapore Stock Exchange and $60 million through secondary listing on the London Stock Exchange.

Duc said HAGL was now in negotiations to issue five-year convertible bonds valued at $120 million for investors in Europe and the Middle East to have more finance for rubber plantation projects in Vietnam and Laos.

HAGL Hydropower Corp. is operating and developing hydropower projects with combined generation capacity of 420 megawatts and investment capital of over $330 million in Vietnam and Laos. The plants in Laos will contribute 70 per cent of this total generation capacity.

Duc said it was difficult for HAGL to take out bank loans in Vietnam and transfer this capital to its projects overseas. But, the group will easily have approval of the State Bank of Vietnam and the Ministry of Planning and Investment to channel the capital raised offshore to projects in foreign markets.

According to the ministry’s Foreign Investment Agency, Vietnamese enterprises had registered combined investment capital of US$1.8 billion for their offshore projects in the January-April period. Earlier, the ministry set this year’s outbound investment target of $1.5-2 billion.

The agency calculated Vietnamese enterprises were licensed to invest about $3 billion in 25 countries and territories last year. As of the end of February, local companies had pledged $23.7 billion for around 575 projects in 55 countries and territories.