BUSINESS IN BRIEF 1/11
No sign of housing market cooling in HCMC
Director of the HCMC Department of Construction Tran Trong Tuan, speaking at a meeting last Friday on the city’s socio-economic performance, said it is too soon to conclude the housing market is cooling.
The property market, which has turned red hot in the last three years thanks to the loosening of home credit, should be thoroughly reviewed, Tuan told the meeting. There were only 7,000 condo units sold in 2013, only 28.9% of the total offered, but condo sales shot up to 16,950 units (51.8%) in 2014 and 36,160 (56.8%) in 2015.
Growth momentum has continued this year. But there is speculation that the market is cooling, something which requires a careful review.
“In the first six months, the number of condos sold accounted for 31.7% of the total on offer (14,970/47,252 units). This is the first-half figure, which cannot be used to justify the claim that there is some cooling in the market; otherwise, the market would be negatively affected,” Tuan said.
He said with confidence that condo sales will improve from now until the end of the year. This year his department has issued 52 permits for property developers to raise capital from the public to fund their projects. Around 57,000 homes will be launched onto the market next year, with 9% of them in the medium-end segment.
Though acknowledging a discrepancy between supply and demand, Tuan said the city’s support for low-cost housing projects would pay off as housing products on the market could be diversified to meet different needs of different groups of homebuyers.
“With 39 low-cost housing projects underway, the Department of Construction will seek to accelerate their development and put the project approval process on fast track to boost the supply of affordable homes. From now to 2020, 30,000 budget homes will be made available on the market,” Tuan noted.
At the meeting, HCMC Vice Chairman Le Van Khoa said the city has put under control what might lead to a property market bubble and that next year the market may remain stable.
Khoa, however, told the construction department to closely monitor supply and demand, and take tax and other policy measures to prevent the market from volatility.
“The Department of Construction should join forces with the State Bank of Vietnam to make sure the relationship between property firms and lender banks is healthy.”
30 businesses recognised for fair disclosure
The Hanoi Stock Exchange (HNX) will celebrate 30 listed businesses deemed 2015-16 industry leaders in fair disclosure as part of the Exchange’s annual listed businesses conference on November 11. — Photo tinnhanhchungkhoan.vn/ HA NOI (Biz Hub) — The Hanoi Stock Exchange (HNX) will celebrate 30 listed businesses deemed 2015-16 industry leaders in fair disclosure as part of the Exchange’s annual listed businesses conference on November 11.
The conference’s goal this year is to provide a comprehensive overview of the implementation of fair information publishing and corporate management within HNX’s listed companies, to boost the quality of disclosure, and to find a solid reference for new policies on administration.
The conference will focus on a total of 344 validated companies currently listed on the HNX.
The 102 evaluation criteria of a company’s fair disclosure policies, based on the core principles of corporate management, include compliance and willingness in practice.
Data used in the process of fair disclosure evaluation came from the listed companies’ official reports on their websites and from HNX’s homepage and other publications issued by the companies.
Overall evaluation showed that on a scale of 100 per cent, the average score of fair disclosure for HNX’s listed companies in 2016 was 51.3 per cent, an increase of 0.5 per cent compared to 2015.
The Asia-Pacific Institute of Management of the National Economics University is in charge of collecting the needed data and conducting the analysis.
Australia enhances partnership with Vietnamese localities
The Foreign Ministry’s Department of Foreign Affairs of Localities and the Australian Chamber of Commerce in Vietnam (AusCham) have signed an agreement on beefing up partnership between AusCham and 63 Vietnamese provinces and cities.
Secured as part of a conference held in Hanoi on October 31, the memorandum of understanding on cooperation also allows Vietnamese localities to access the Australian market via the AusCham’s network.
Speaking at the conference, Deputy Foreign Minister Bui Thanh Son said the event aims to improve mutually beneficial ties between Vietnam and Australia, contributing to the development of the Asia-Pacific region.
He suggested both sides work together to promote trade and bring Vietnamese goods to Australia.
He added that Vietnam also wants to import quality products from Australia and welcomes Australian businesses to invest in local public-private projects and human resources development.
Australian Ambassador to Vietnam Craig Chittick said his Government will stimulate cooperation with Vietnam in trade, defence-security, creative innovation and personnel’s capacity building.
Chittick proposed a working session between Australian firms and representatives from 63 Vietnamese localities in 2017 to exchange information and investment opportunities.
Solutions sought for sustainable development of pepper cultivation
Solutions for the sustainable development of pepper cultivation were the focus of a forum held in the southeastern province of Binh Phuoc on October 31 in the context of a surge in pepper tree acreage across the country.
The acreage of pepper plants, at 110,000ha, has now surpassed plans by 51,000 ha, with total peppercorn output estimated at 176,000 tonnes a year.
The Central Highlands and Southeast regions account for more than 93 percent of pepper acreage and 95 percent of peppercorn output.
Policy makers said the unplanned expansion of pepper cultivation, prompted by rising prices of peppercorn, faces potential risks from the lack of quality pepper varieties, the spread of diseases and substandard cultivation techniques.
The Cultivation Department under the Ministry of Agriculture and Rural Development (MARD) reported that it is reviewing the ecological conditions in pepper growing areas in order to find areas most suitable for the industrial crop.
The MARD will help with the selection of varieties while encouraging the use of advanced and clean cultivation methods, with priority given to certified farming models, in order to enhance quality of peppercorn products.
Chairwoman of the Vietnam Pepper Association Nguyen Mai Oanh forecast that peppercorn export can surpass 150,000 tonnes, adding that 132,000 tonnes were shipped abroad in the first nine months of this year, earning more than 1.2 billion USD, up 32 percent year on year.
Oanh said towards sustainable development, farmers and exporters should work together to build a chain value and obtain certificate of origin for domestic pepper products.
Masan Group’s 9M revenue up 58%
The Masan Group has announced revenues in the third quarter of VND11 trillion ($495 million) and gross profit of VND3.2 trillion ($144 million), both up 26 per cent year-on-year.
Though financial revenue decreased by half the group’s profits from joint ventures increased sharply, with after-tax profit reaching VND1 trillion ($45 million), an increase of 114 per cent year-on-year.
Masan’s net revenue was VND30 trillion ($1.35 billion) in the first nine months of the year, up 58 per cent year-on-year. Revenue from animal feed reached VND17.5 trillion ($787.5 million), double the figure in the same period last year. Gross profit in animal feed also doubled, to VND3.9 trillion ($175.5 million). Its profit margin remained stable at 22 per cent.
Food and beverages, meanwhile, recorded VND9.7 trillion ($436.5 million) in revenue, up 9 per cent year-on-year, and profit reached VND4.2 trillion ($189 million).
Profits from its joint ventures continues to increase and brought in more than VND700 billion ($31.5 million). In the first nine months, after-tax profit was VND2.53 trillion ($113.8 million).
Masan Consumer, a key company of the group, recorded revenue of VND3.2 trillion ($144 million) in the third quarter, up 9 per cent year-on-year. Gross profit reached VND1.5 trillion ($67.5 million), up 13 per cent, and after-tax profit reached VND719 billion ($32.2 million).
Its revenue for the first nine months was VND9.1 trillion ($409.5 million), up 6 per cent compared to the same period last year, while after-tax profit fell 4 per cent to VND1.68 trillion ($75.6 million).
Masan is one of Vietnam’s largest companies, focused on domestic consumption and building leading businesses in food and beverages and the animal nutrition value chain.
Businesses include Masan Consumer Holdings, the producer of some of Vietnam’s most trusted and loved brands, such as Chin-su, Nam Ngu, Tam Thai Tu, Omachi, Kokomi, Vinacafe, Wake-up, Vinh Hao and Su Tu Trang, and Masan Nutri-Science, Vietnam’s largest local animal feed company, with brands including Proconco and Anco.
The group’s other businesses include Masan Resources, one of the world’s largest producers of tungsten and strategic industrial minerals. Masan also has a major shareholding in Techcombank, a joint stock commercial bank in Vietnam.
MWG’s 9M online profit up 99%
The Mobile World JSC (MWG) has announced revenue of VND30.7 trillion ($1.37 billion) in the first nine months of this year, up 76 per cent year-on-year and equal to 90 per cent of its annual target.
After-tax profit was VND1.2 trillion ($53.8 million), up 88 per cent year-on-year and equal to 64 per cent of the annual target. Online turnover was VND2.2 trillion ($98.6 million), up 99 per cent year-on-year and equal to 67 per cent of the annual target.
The company opened 419 new stores nationwide in the first nine months, including 338 new thegioididong.com stores and 81 new dienmayxanh.com stores. As at September 30 it had 1,052 stores, including 902 thegioididong.com stores and 150 dienmayxanh.com stores.
It also closed 22 retail stores within the Big C Vietnam supermarket chain, as required by Big C. Mr. Dang Thanh Phong from MWG confirmed with VET that the stores are closing one year after opening. “This is being done under a normal business agreement,” he said. “Our stores in Big C are in the mobile phone business. We planned to change to the electronics business but Big C did not agree.”
Turnover at these stores has been lower than at MWG’s 1,000 other retail stores so the closure will have no effect on its total turnover. The first thegioididong.com store under the model opened at Big C Dong Nai in March 2015.
Six funds belonging to the London-based Genesis Emerging Markets Fund have acquired 4.03 million shares in MWG worth nearly $30 million. They are among 12 foreign investment funds that purchased more than 5 million MWG shares in total from Mekong Capital, CDH Electric Bee, the Vietnam Growth Stock Income Mother Fund, and the CAM Vietnam Mother Fund on October 21.
Established in 1989, Genesis Emerging Markets Fund Ltd (LSE: GSS) is a large Guernsey-incorporated, London-based closed-end investment fund focused predominantly on holdings in the stock markets of emerging economies.
Turkey imposes anti-dumping duty on Vietnam plywood
The Turkey Ministry of Economy (TMoE) has issued its final decision on the anti-dumping tax avoidance measures into plywood imported from some countries including Vietnam, the Vietnam Competition Authority quoted information from the Vietnam Trade Office in Turkey.
Accordingly, only two Vietnamese businesses which provided full information for investigation agencies on schedule are not subjected to these measures.
Other Vietnamese businesses are levied an anti-dumping tax of US$240 per cubic metre of plywood (equivalent to the anti-dumping duty that has been applied to the goods imported from China’s enterprises).
The decision is valid since its announcement day.
Turkey initiated an investigation on May 27, 2015 into a possible avoidance of anti-dumping tax of plywood imported from some countries including Vietnam from 2010 up to now.
Vietnam mulls taxing multiple-house owners
Vietnam’s Ministry of Finance is weighing up a policy that requires those who own more than one house to pay extra tax, a plan to which local experts have mostly responded positively.
The ministry has tasked its tax policy department with developing the plan, deputy minister Huynh Quang Hai confirmed to Tuoi Tre (Youth) newspaper on October 30.
Hai admitted that it is unlikely that the new tax policy will be issued before next year, but “it must be enacted in the future,” given the current tight state budget and the fact that “other countries have been collecting this kind of tax for years.”
The finance ministry began considering taxing multiple-home owners as early as 2009, with three possible tax plans on the table then.
The first plan was to levy fixed taxes on the second and any subsequent homes. Buildings under two stories would be exempted, while those with three stories and above would be subject to a tax of VND2,000 per square meter per year, according to the tentative tax plan.
The second plan considered a 0.03 percent tax on the value of the second and any subsequent homes after deducting VND1 billion (US$44,643). For example, if the house is valued at VND1.2 billion (US$53,571), the owner would pay a 0.03 percent tax on a VND200 million (US$8,929) value per year.
The final proposal sought to tax the extra area of the house, after deducting 200 square meters, with the tax ranging from VND2,000 to VND4,000 a square meter per year. This meant that if the house measured 300 square meters, the ‘taxable area’ is 100 square meters.
The plan failed to meet with approval from the lawmaking National Assembly, with lawmakers saying it was not the right time to impose housing taxes and that taxes collected would not contribute significantly to the state coffers.
However, seven years on, the finance ministry and several experts now believe it is high time the plan was reconsidered.
In an interview with Tuoi Tre on Sunday, Professor Dang Hung Vo, former deputy minister of natural resources, said that Vietnam is lagging way behind other countries in imposing property tax.
Vo said homeowners must pay taxes, and that tax rates must be progressively increased on the second and any subsequent homes.
“Some houses are built on very large land plots so the owners should pay taxes that ensure social equality,” he underlined.
Prof. Vo explained that the current social inequality meant that the state only collects a modest amount of land use tax from homeowners, which is insufficient to cover expenses that maintain working public amenities.
Vietnam sets a land use tax of 0.03-0.07 percent based on the government-stipulated property prices, while other countries impose taxes of 1 to 1.5 percent on the property’s market price, according to the professor.
“The government’s prices are always much lower than market prices,” he said.
“For instance, I have a 150 square meter house in Hanoi but only have to pay VND1 million (US$45) in land use tax per year, which is unreasonably low.”
Assoc. Prof. Nguyen Dinh Chien, from the tax department of the Academy of Finance, backed the idea that people who own multiple homes pay taxes that ensure social equality.
“Multi-home owners only live in one of their many houses, and the remaining are up for rent,” Chien said, implying that their rental incomes are to be taxed.
Dr. Do Thi Thin, another tax expert, said people who own multiple houses are high-income earners so “regulating their income via tax” will create fairness.
Other industry insiders said the multiple-home tax will prevent property speculation.
“As they do not have to pay any taxes for the ‘extra’ properties, and the land use taxes are modest, many people are willing to ‘stockpile’ homes in the hope of deriving profit,” one financial expert said.
Property speculation sometimes sends house prices skyrocketing, making them unaffordable for buyers with shallow pockets.
Vietnam needs 1.8 million tons of gas next year
Vietnam needs around 1.84 million tons of gas next year, a year-on-year increase of 8%, according to the Vietnam Gas Association (VGA).
VGA forecast that next year domestic output will be stable at around 45% and imports, 55%. As a result, Vietnam is able to meet all energy requirements for production and consumption activities.
This year, Vietnam imported 1.7 million tons of gas, a rise of 10% compared to last year.
It is predicted that gas price in the world will remain stable next year and fluctuate at around US$318-518 per ton. Domestic price is around VND250,000-400,000 per 12kg gas tank.
Cooking gas price rises in the south
The retail price of a 12 kg cooking gas canister in Ho Chi Minh City and southern localities climbed by VND19,000 (US$0,85) to nearly VND300,000 (US$13.44) per canister from November 1.
Tran Van Phuc from the Saigon Petro Company attributed the rise to an increase in the October world gas price by US$60 compared to October 2016 to US$415 per tonne.
The new price has been informed to local gas distributors and consumers. It has been applied since 7:30am of November 1.
Roadmap is needed for new emission standard
Though major changes are on the horizon for the domestic auto industry, the Vietnamese government has so far failed to provide a roadmap for new emission standards, and carmakers are getting concerned.
In light of the prime ministerial Decision No.49/2011/QD-TTg, from January 1, 2017 newly manufactured, assembled, and imported cars are obliged to meet European emission level 4 standards (Euro 4) to be eligible to register for circulation in Vietnam.
Decision 49 provides a roadmap for the application of these exhaust emission standards.
The Vietnam Automobile Manufacturers’ Association (VAMA) has continued to propose the prime minister and authorised management agencies that the organisation present the Euro 4 standards and provide the roadmap.
VAMA’s first application of the same content was sent to the government this May, but it has not received any feedback.
“Euro 4 fuel has yet to be supplied to the Vietnamese market. VAMA is particularly concerned that Euro 4 engine cars and still using Euro 2 fuel-this could seriously affect the engine operation and durability, the car user benefits, and harm the environment”, VAMA said in a statement.
In its latest proposal, VAMA asked not to change the content regulated in Decision 49, which states that petrol-fueled cars must meet Euro 4 standards from January 1, 2017. The timeline for diesel engine cars will be one year later, starting January 1, 2018.
VAMA also proposed that the government ensure a nationwide supply of Euro 4 fuel prior to implementing the new standards.
VAMA chairman Yoshihisa Maruta suggested converting from the usage of Euro 2 to Euro 4 fuel to avoid fraud during the fuel supply process.
Management agencies are also concerned about the fast-approaching milestone. The Ministry of Industry and Trade (MoIT) recently met relevant management agencies, the oil and gas sector’s management authorities, and relevant business associations and enterprises to review the implementation of Decision 49.
The MoIT has proposed diverse measures to ensure a balance in interests between oil and gas producers and traders, and auto and motorbike importers and traders.
The measures also aim to ensure the production, import, and supply of fuel to meet the actual requirements for implementing the new exhaust emission standards roadmap.
Car firm representatives commented that they would not face any difficulties in the application of Euro 4 emission standards.
After January 1, 2017, domestic carmakers will begin to place orders for the production of Euro 4-compliant engines from abroad. They will then modify them locally, with corresponding components and control software.
Vingroup announces Q3 growth
Vingroup Joint Stock Company (Vingroup) has announced its third quarter net revenue of VND34.6 trillion (US$1.5 billion), an 80 per cent rise compared to the same period last year.
The net revenue accounts for 77 per cent of Vingroup’s annual plan, as per its financial report for the first nine months of 2016.
The company’s total revenue after tax is VND3.09 trillion ($138 million), more than triple the amount during the same period last year, and slightly higher than the post-tax revenue target for 2016 of VND3 trillion ($134 million).
The accumulated revenue from all of Vingroup’s brands, such as Vinhomes, Vincom Retail, Vinpearl, Vinschool and VinMart, has increased by 47 per cent compared to the same period in 2015.
As of end September, Vingroup’s total worth has touched VND173.2 trillion ($7.7 billion), a rise of VND27.6 trillion ($1.2 billion) from December 31, 2015, with the owners’ equity totalling to VND41.9 trillion ($1.87 billion), up by VND4.3 trillion ($192.4 million).
Five of Vingroup’s brands are in Việt Nam’s top 50 most valuable brands list, as per British business valuation consultancy Brand Finance. This includes Vinhomes, which ranks the fifth most valued domestic brand.
Bank to lend to develop HCMC grassroots-level hospitals
The Housing Development Commercial Joint Stock Bank (HDBank) last week signed an agreement with the HCM City Department of Health to provide credit to buy medical equipment for grassroots-level hospitals and set up a social work division at all hospitals by 2020.
The bank also donated 100 beds worth VND300 million (US$13,333) to the Cu Chi District Hospital.
Besides, it will provide a credit line worth VND1 trillion ($44 million) to develop the city’s health sector.
Industrial production index up 7.2 percent in 10 months
Vietnam’s industrial production index (IPI) in the first ten months of 2016 rose 7.2 percent year-on-year, lower than the 9.8 percent level recorded in the same period last year due to a continuous downturn in the mining industry.
According to the General Statistics Office (GSO), the IPI of the mining industry fell 5.5 percent, while the production of crude oil and natural gas dropped 7.5 percent.
Meanwhile, a surge from 14 to 16.7 percent was seen in the IPI of the metal industry, textiles, engine production, electronics, computer and optical products.
In the reviewed period, the production of some industrial products soared compared to the same period last year, with the highest rise in television at 79.2 percent, steel sheet at 25.7 percent, automobiles at19.7 percent, and animal feed at 19.7 percent.
The GSO also reported that the central province of Quang Nam posted the highest IPI rise at 29.2 percent, followed by the northern province of Thai Nguyen with 26.6 percent. Hai Phong, Da Nang and Can Tho cities saw an increase of under 20 percent in the index.
The IPI of thetwo major cities of Ho Chi Minh City and Hanoi was up 8.1 and 6.8 percent, respectively.
As of October 1, the inventory index of the processing and manufacturing sectors expanded 8.9 percent year on year, down 0.9 percent compared to the growth of the same period last year.
Notably, some industries saw a decrease in the inventory index such as electric devices with a fall of 7.9 percent, pharmaceuticals and pharmaceutical chemistrywith 8.9 percent,prefabricated metal products 12.7 percent, leather and relevant products 24.9 percent.
However, the index surged 55.4 percent in paper production, 45 percent in electronic, computer and optical products, and 42.6percent in engined vehicles.
Local shipbuilder partners with Russia
The local Song Thu Shipyard Corporation has agreed to cooperate with Vostochnaya Verf shipyard (Primorye), Russia, in the production of cruise ships for tourism development in Vietnam.
General Director of the Da Nang-based shipbuilder Ha Son Hai said the two sides will start construction of ships to serve local property developer Sun Group’s tourism projects in Da Nang, before expanding to mass production in Vietnam’s market and for export.
Hai said Song Thu had inked an agreement on education, science and innovation development projects with the Admiral Nevelskoy Maritime State University, in Vladivostok, Primorye of Russia.
Russia is a very new market for local ship builders when it launched a dredger, the TSHD2000, for Russia’s Rosmorport company in 2015.
Song Thu Corporation, which is a major shipbuilder in Vietnam, in cooperation with the Damen Group from the Netherlands, has exported 40 vessels, including fast-crew supply ships, rescue ships, salvage tugs and drive tugs, besides patrol boats to the Middle East, South America, Europe and the domestic market, with an annual export volume of 55 million USD.
Asian countries splash out on Dong Nai in 10 months
The Republic of Korea, Japan and China’s Taiwan were the top three investors in the southern province of Dong Nai in the first 10 months of 2016.
During the period, Dong Nai reeled in 1.75 billion USD worth of foreign capital, surpassing its yearly plan by 75 percent.
Of the total, 1 billion USD were poured into 79 new projects, while the remaining sum was invested in 77 existing projects.
The Republic of Korea topped the foreign direct investment (FDI) list with 32 projects worth 146 million USD, followed by Japan (11 projects, 52 million USD) and Taiwan (9 projects, 40.5 million USD).
Notable projects included the Thai-funded Amata Long Thanh city registered at 309 million USD and a Korean-funded project by Dong Won Vietnam Co. Ltd at 60 million USD.
According to the Department of Planning and Investment, Dong Nai is home to 1,233 valid projects with total capital hitting 25.5 billion USD. Investment from the RoK, Taiwan and Japan have been taking the lead among 44 countries and territories investing in the province.
European home appliances brand Beko enters Vietnam
Turkish home appliances brand Beko on October 29 announced its official entrance into the Vietnamese home appliance market with a product launch at Crescent Mall in District 7 of Ho Chi Minh City.
At the launch, Beko introduced its product lineup. A brand of Arçelik Group, Beko offers product lines that include major appliances, air conditioners and small appliances.
According to Pornchai Trakultechadej, Arçelik Group’s Asia-Pacific marketing and product management director, the company is committed to continuously developing technology to respond to the needs of the new generation, without sacrificing the environment both from the products and manufacturing process.
“Beko has been successful in Europe, as the number one brand in Europe with the fastest growth in the past seven years. For Beko, the smart generation is the greatest source of inspiration in pioneering future solutions. Beko is inspired by people’s ever-changing needs and lifestyles and strives to help make consumers’ lives easier with smart home appliance solutions. Under our global brand message ‘The Official Partner of The Everyday’, we aim to position Beko to be the partner of everyone at every stage of life,” he said.
Ho Xuan Loc, general manager of Arçelik Group’s subsidiary Vietbeko said the Vietnamese market is an emerging Asian market and is very interesting and potential to Beko.
“We believe with the outstanding strengths of Beko, our products will be ideal choices for young generation consumers who are tech-savvy and fond of stylishly – designed products in their unique home,” he said.
Beko is one of the most important players in the UK’s home appliances market and also holds top position in the French freestanding and Polish total white goods market. Additionally, Beko has become the fastest growing white goods brand in the German market, the biggest white goods market in Europe, in the last five years with nearly three-fold growth.
In Vietnam, Beko would be competing with established players in the white goods market such as Electrolux, South Korean companies Samsung and LG and several Japanese names such as Sanyo, Panasonic, Sharp and Toshiba.
Starting up a movement
Vietnam is mulling possible incentives to boost its startup ecosystem, with special emphasis put on establishing private investment funds involving local and foreign investors.
The National Assembly is scrutinising a draft law on supporting small- and medium-sized enterprises, which includes a separate section highlighting the country’s first-ever programme for establishing and supporting startups, also known as innovative firms.
The programme covers a wide range of incentives for startups to access the markets. For example, high-tech experts working at startups will have preferential personal income tax. They will also be supported by the government in technology transfer, piloting products, and participation in corporate incubators.
According to the Ministry of Planning and Investment (MPI), startups will also be supported in training, governance, legal consultancy, investment attraction, brand promotion, and intellectual property protection.
Notably, the new law will facilitate the establishment of private investment funds to provide loans for startups. These funds will be created by capital contributions from local and foreign investors, organisations, and individuals.
According to the draft law, the government will “detail the establishment, organisation, and management of private investment funds for innovative companies, as well as instruct the procedures for capital and profit transfer by these investors in and out of Vietnam”.
MPI Deputy Minister Dang Huy Dong said the incentives for startups will help develop Vietnam’s private firms, whose number is estimated to reach one million by 2020. This will also help improve the competitiveness of the economy.
Dong said that though the details of incentives have yet to be revealed, “the incentives are expected to create a wave of startups in Vietnam”.
According to MPI, many localities and investors have established investment funds for young businesses, from which they see great development potential.
For example, Ho Chi Minh City will launch a VND1 trillion ($45.5 million) support package for young businesses, including tech startups. This fund is expected to be launched in November 2016.
Eligible projects will be granted VND2 billion ($91,000) each to operate a prototype. The long list of eligible projects include mechanics, electronics, chemicals, food production, finance, banking, insurance, commerce, transport, tourism, logistics, communication, real estate, healthcare, education, and technology.
The city will also launch a programme to connect startups with investment funds.
In March 2016, local giant FPT and investment group Dragon Capital inked a co-operation deal on the establishment of a fund named Vietnam Innovative Startup Accelerator (VIISA) to finance startups in Vietnam.
VIISA is an open-ended fund with the participation of many large firms. It trains and invests in startups in the sectors of information technology, mobile, internet, and finance.
Currently, over 20 foreign venture capital firms have expanded to Vietnam, where 1,800 startups are in operation. Funding into Vietnamese startups has come from many regional venture corporations, such as Golden Gate Ventures, Gobi Partners, and Expara Ventures, while IDG Ventures and VinaCapital DFJ are seeking exits for their portfolios. VinaCapital DFJ is also mulling over a second fund next year.
EU logistics centre anticipates EVFTA
The first national-scale logistics centre in Belgium has been planned by Belgium-based Herfurth Group and state-run Vietnamese shipping group Vinalines, to facilitate trade and logistics operations in advance of the EU-Vietnam Free Trade Agreement.
Herfurth, one of the world’s leading shipping, logistics, and forwarding firms, last week signed a Memorandum of Understanding (MoU) with Vinalines on establishing the logistics centre. The centre – called Vietnam House – will be located at the port of Antwerp in Flanders, the second-largest seaport and the largest conventional cargo port in Europe. Vietnam House will be a point of entry into Europe for further distribution into the continent and the world.
“The project will help improve the competitiveness of goods produced in Vietnam, as it will offer competitive rates and value-added services. It will also have incentives for firms in Vietnam when they export and import goods to Europe. Instead of being treated [the same as any foreign export], Vietnamese goods using logistics and warehousing services at the centre will enjoy tax reduction, improved trading conditions, customs facilitation, and other incentives,” Le Quang Trung, director of Vinalines’ Business and International Cooperation Department, told VIR.
The Herfurth-Vinalines centre project comes amid the growth of 15-18 per cent in the import-export of commodities between Vietnam and EU countries over the past several years. The EU-Vietnam Free Trade Agreement, which was signed in December 2015 and is expected to take effect in 2018, should serve to increase the bilateral trade between Vietnam and the continent. It also better positions Vietnam to get direct access to a market that accounts for around 22 per cent of the world GDP, 25 per cent of overall export value, 21 per cent of the import value, and 40 per cent of the global foreign direct investment sum.
There have been other Vietnamese attempts at setting up warehousing centres overseas. However, they specialise in just retail business, and suffer from a lack of local and international links. Vietnamese goods exported to the EU as of now are dispersed – which prevents them from enjoying any competitive costs and service advantages. As it stands, most Vietnamese import cargoes are shipped on an FOB (free on board) basis, with the export shipped on a CIF (cost, insurance, and freight) basis. This reflects the fact that Vietnamese importers and exporters do not have much control over transportation of their cargo.
As a focal distribution point of Vietnamese goods to the EU, Vietnam House will take further advantage of integrated logistics solutions and supply chain management. It will help facilitate import and export between Vietnam and the EU with the involvement of a wide range of foreign shipping lines, cargo owners, and exporters and importers operating in Vietnam.
“This facility, as part of Vinalines’ overseas logistics expansion, is the combination of resources from the Vietnamese side, with Vinalines and its partners – including Vinafood, Vinatex, and Lefaso – and the European side, with Herfurth’s Antwerp Port [operation] as well as existing facilities to save investment,” Trung said.
To ensure the success of the project, Vinalines must seek the support of shipping lines, cargo owners, and other partners.
Mitsui O.S.K. Lines, a leading Japanese transportation company which operates many direct routes to Europe, is one of the project’s early supporters.
“The project could be successful if the key points are [there]. What are the advantages you can bring to Vietnamese exporters and importers, and how can you help Vietnamese exporters promote their cargoes in Europe?,” said Nguyen Dinh Tri, general manager of northern branches at Mitsui O.S.K. Lines (Vietnam) Ltd.
Local trade associations are also intrigued by the possibilities Vietnam House will offer. Nguyen Tuong, deputy general secretary and head of the northern representative office of the Vietnam Logistics Business Association (VLA), said that the project is in line with VLA’s proposals to place some logistics centres abroad, particularly in Europe. 45 per cent of VLA’s logistics providers do business with Europe.
But Tuong also sees some challenges. He said, “Vinalines and Herfurth should consider some issues. The first is competitiveness in this area, as nearly 800 European distribution centres are located there, by well-known names such as Nike, Toyota, Honda, Volvo, and Samsonite. The other is how to get support from cargo owners, as the majority are importing on an FOB basis, and exporting on a CIF basis.”
According to Vinalines’ Trung, after signing the MoU, the two sides will work on the investment model for the project and capital investment for the Vinalines-Herfurth joint venture to operate the centre. The centre is slated to begin operation in the next eight months. After implementing this, Vinalines plans to establish similar logistics centres in Cuba, Myanmar, and Malaysia.
Two-thirds of int’l tourists come from Asia
Asian visitors make up more than two-thirds of all international arrivals to Vietnam in January-October.
Data of the General Statistics Office showed international tourist arrivals to Vietnam in the first 10 months of the year amounted to eight million, up 25.4% year-on-year, with Chinese, South Koreans, Japanese, Taiwanese and other Asians accounting for six million.
Asian visitors from China, South Korea and Japan number four million, half of all international arrivals.
October marks the start of the international travel season, which lasts until early next year. Some tour firms said they are seeing good business prospects.
Saigontourist Travel Service Company’s cruise tourism services have fared well as the local travel firm on October 25-26 served 1,600 tourists and crew members who came to Vietnam onboard the SuperStar Virgo ship of international cruise line Star Cruises. The vessel is touring northern and central provinces such as Danang, Hoi An, Hanoi and Halong.
Saigontourist Travel will arrange local tours for 8,000 international tourists who will arrive onboard this ship this November, whose ports of call will be in Danang, Halong, Nha Trang and Phu My (Ba Ria-Vung Tau Province).
The HCMC-based tour operator served around 185,000 international cruise passengers in January-September, a 137% increase over the same period last year.
The Russian market has also shown positive signs after a difficult period. Hoang Thi Phong Thu, chairwoman of Pegas Misr Travel Vietnam Co Ltd, which serves the biggest number of Russian visitors to Vietnam, said Russian visitor arrivals have gradually rebounded, with a 20% year-on-year rise.
VCCI: Mekong Delta needs restructuring
The Mekong Delta economy has long been dependent on industry, agriculture and services, so it is time to restructure it to allow the delta to gain further growth, said Vo Hung Dung, director of the Vietnam Chamber of Commerce and Industry (VCCI) in Can Tho City.
Speaking at a conference in Can Tho last Friday on socio-economic development in the southwestern region after 30 years of renovation (doi moi), Nguyen Xuan Thang, director of the Hochiminh National Academy of Politics, said the delta has grown fast but unsustainably over the years.
If the delta still sees agriculture as a major sector, he said, the industrial sector, especially processing, should be developed in a way that helps farmers and businesses boost farm exports to foreign markets. He noted that adding value to farm produce and improving its quality need due attention.
Speaking to the Daily on the sidelines of the conference, Dung of VCCI said Vietnam should draw on experience of regional countries such as Thailand, Malaysia, Bangladesh and Myanmar to study and devise a new economic structure for the next 50 or 100 years.
Dung said this is necessary to build scenarios and solutions to select an appropriate economic structure for the Mekong Delta, with unexpected factors like climate change taken into account.
He said the pillars of industry, agriculture and services are no longer appropriate for the city, so they should be restructured.
One scenario has one result so that the Mekong Delta region can pick the best one, he said, and for instance, rice farming is good in the short term but uncertain in the long run, so another scenario such as industrialization should be chosen.
Dung said industrialization would lead to environmental pollution rising and farmland dipping in the long run. There are many growth models for the Mekong Delta and none of them are perfect, so the region should opt for the most appropriate one, he said.
Dong noted most people think agriculture is the key contributor to economic growth in the region but this is a conservative thought.
Dung said agriculture now accounts for 5-10% of gross domestic product but agriculture is a long-established sector of Vietnam. He suggested the Mekong Delta venture into new sectors such as solar power, biotechnology and information technology, and that agriculture is important but not the number one sector.
Int’l conference promotes sustainable concrete development
The 7th International Conference of the Asian Concrete Federation (ACF2016) took place in Hanoi on October 31, focusing on ways to develop sustainable concrete.
Themed “Sustainable concrete for now and the future”, the event was organised by the Vietnam Concrete Association (VCA) and the Asian Concrete Federation under the auspices of the Ministry of Construction and many international organisations. It saw the participation of about 400 experts from 250 domestic and foreign organisations.
In his opening speech, Deputy Minister of Construction Nguyen Quang Hung, who is also President of the VCA, said the conference helps promote experience sharing in developing sustainable concrete for the construction sector.
According to Hung, concrete becomes the most popular building material in the world. About 35 billion tonnes of concrete are produced globally each year and the figure is forecast to keep increasing in the coming years.
Prof. Han Manyop, ACF President, said the event offers a chance for major enterprises and corporations in the field to promote their products, technologies, services and solutions as well as set up links in scientific research and trading.
He also underlined the need to improve sustainability of concrete in order to meet the global socio-economic development at present and in the future.
Within the framework of the conference, participants paid field trips to major infrastructure works and new urban areas in Hanoi.
Centrally-run localities look to green economy
The Central Institute for Economic Management (CIEM) held a seminar in Hanoi on October 31, focusing on making centrally run provinces and cities aware of green growth as part of their socio-economic plans.
According to CIEM, the national master plan on green lifestyle and consumption consists of promoting sustainable development in urban areas and an environmentally friendly lifestyle among residents. Provinces and cities are urged to proactively tailor these goals to their population characteristics and economic conditions, with priorities given to waste treatment and pollution level.
As heard at the seminar, many localities have faced difficulties building a green economy due to financial shortage, low capacity of personnel and uneven local awareness on the matter, among other factors.
Participating experts recommended local authorities to learn from successful green growth models and come up with solutions to mobilize resources.
They said each locality should study their pollution level and pay attention to build a green production and lifestyle.
The application of advanced technologies and organisation of awareness-raising campaigns are also important, they added.
Tran Trung Hieu, deputy head of CIEM’s economic institution, said building a green economy should be included in socio-economic plans of provinces and cities nationwide between now and 2020, boosting its contribution to the local GDP.
ABBank, Efora launch co-branded debit card
ABBank and Euro-Asia Trade Joint Stock Company have launched a co-branded ABBank-Efora debit card, with incentives offers for customers.
Efora, run by Euro-Asia Trade JSC, is a distribution system that sells genuine leather products made by well-known international brands. To date, Efora has opened 16 stores in nine large cities and provinces in Viet Nam.
The ABBank-Efora debit card, which was launched late last week, is aimed at customers who make purchases at Efora stores but don’t have accounts in ABBank.
The card will allow customers to make online transactions, withdraw cash from ATMs as well as pay for goods and services at points of sales nationwide. The card will be available in three categories: VIP, Premium and Platinum. Customers will not be charged a card issuance fee and will enjoy fee free for current account maintenance.
Cardholders will become VIP members of Efora and get 5 per cent discount on all purchases as well as other attractive incentives.
“The co-branded card will lay a foundation for the two enterprises to accelerate our co-operation comprehensively in the near future, in an attempt to help each other’s customers,” said Le Dieu Loan, CEO of Euro-Asia Trade JSC.
Trade surplus surpasses 3.5 billion USD in ten months
Vietnam recorded a 3.5 billion USD trade surplus in the January-October period of this year, statistics show.
Total export revenue reached 144 billion USD in the period and import value amounted to 140.5 billion USD.
Major foreign currency earners are phones and phone parts, electronic goods, textile and garments, computers, machinery and equipment, foot wear and aquatic products.
Phones and phone parts brought in an estimated 28.3 billion USD, up more than 10 percent year on year, while textile and garments earned nearly 20 billion USD, an increase of 5.2 percent.
The export value of agro-forestry-fishery products reached 26.4 billion USD, a year-on-year increase of 6.3 percent.
Regarding imports, 22.7 billion USD worth of computers, electronic goods and parts were imported in the period, a 17.5 percent increase from the same period last year.
Meanwhile, 22.5 billion USD were spent on machinery, equipment, tools and other parts, down 1.5 percent year on year.
The import value of phones and parts was estimated at 8.55 billion USD, falling 6.3 percent.-VNA