BUSINESS IN BRIEF 1/4
R&D centres – a boost to higher value-added production
Samsung Electronics will soon break ground on a mobile research and development (R&D) centre in downtown Hanoi, the largest project of its kind that the conglomerate has built in Southeast Asia.
According to Nhan Dan newspaper, the new building in Hoang Mai district will replace a rented one at the PVI Tower in Cau Giay district.
Established in the capital in 2012, Samsung’s mobile R&D centre has been in charge of the company’s software market for mobile phones and tablets across Southeast Asia. It accounts for 10 percent of Samsung’s global revenue in the arena.
Investing 300 million USD in the construction of the new R&D centre reflects Samsung’s intention to make Vietnam a new Silicon Valley, rather than a manufacturing destination. The company also plans to expand its R&D workforce from 1,600 to 1,800 engineers. This means Vietnam will be producing more value-added products.
Samsung is not the only foreign investor eyeing R&D expansion in Vietnam. Apple – Samsung’s major rival in the mobile phones and tablets market – may inject a billion USD into a data and R&D centre in Hanoi. The facility will serve demand from the entire Asian region. Construction time and location remain unknown.
Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises, said those upbeat market signals show a new wave of foreign direct investment flowing into Vietnam that boasts much higher value-added production.
The trend has begun some years ago, with Hewlett-Packard, Piaggio, Panasonic, Yamaha and General Electric being among big names that have invested in their own R&D establishments in Vietnam.
A huge amount of capital has been poured into the country from overseas for many years, mostly focusing on real estate and light industries such as garment-textiles and footwear. The emergence of R&D projects will speed up the technology transfer process. More Vietnamese will have opportunities to access advanced technology from global conglomerates .
Do Duc Dung, a project manager at Samsung’s R&D centre, said Vietnamese staff are as competent as their foreign peers.
Vo Quang Hue, Vice President of Robert Bosch Vietnam, which is a subsidiary of Robert Bosch Germany and has two software and engineering R&D centres in Dong Nai and Ho Chi Minh City, said Vietnamese engineers have improved rapidly in recent years.
They are qualified to take part in R&D projects from foreign enterprises, he noted.
Statistics authority conducts survey on business
The General Statistics Office of Vietnam (GSO) started conducting a survey on businesses on March to evaluate their preparedness for global integration and technology application, as well as build a business database.
According to GSO Director-General Nguyen Bich Lam, the data is useful for management and planning at the national and local level.
The survey will collect data from both public and private sectors, including 31 State-owned groups and corporations in the fields of postal service, telecommunications, electricity, insurance, aviation, railways and banking.
It includes questionnaires on employees, earnings, assets, equity, performance, taxes and so on.
The results will be released in December.-
Foreign ownership plans excite markets, investors
Plans of increasing the percentage of foreign ownership will continue gripping the attention of investors when companies propose them in their annual general shareholder meetings (AGM) normally taking place in the second quarter of the year, securities experts said.
Securities officials and researchers, who met to talk about investment trends in a recent online conference, said if public companies announced their plans, the market will become agitated.
Doan Thi Thanh Truc, from Rong Viet Securities Company, said foreigners continued to be net sellers since the beginning of the year. However, foreign investors are becoming net buyers again of late.
Truc said foreigners would continue to be net buyers in the next quarter, thanks to better price earnings ratio and potential earnings per share.
Pham Van Thinh from Deloitte Vietnam said more openness to foreign investment was mandatory now as Vietnam has signed more agreements such as the Trans-Pacific Partnership (TPP) and free-trade agreements. At the same time, State-owned enterprises (SOEs)’s equitisation plans will make more than 200 SOEs sell their shares at IPOs this year and, thus, investors will have an opportunity to choose good stocks at a reasonable price on the primary market for long-term holding.
IPOs of large enterprises such as Mobifone, Satra and the Ben Thanh Group are receiving a lot of attention from investors in 2016.
Under the TPP, foreign investors can own a 65% stake in a local enterprise, instead of 49% as at present.
Working in the garment and textile industry, which is considered to be the industry that will gain the most by the TPP, Chairman of the TNG garment company Nguyen Van Thoi said his firm would allow 100% foreign ownership.
Seven stocks have raised their maximum foreigner ownership limit so far, such as 100 percent in SSI, VHC and EVE; 49% in BIC and REE; and 20% in MBB.
Last week, TSC and AAA also announced their plan to offer 100% stake to foreigners.
Director of the State Securities Commission Nguyen Son said though raising the stake limit for foreigners in public companies could be an attraction in the local market, it was not the trend for all companies.
Son said of the 700 listed companies, only 30 have raised their foreign ownership ratio to the maximum, while the rest have low or no foreign ownership.
Australian firm invests in Kon Tum
Viet Nam’s KPA and Australia’s 4 Ways launched an agricultural project to transfer high-tech seed production techniques to the Central Highlands’ Kon Tum Province.
Vice Chairman of the provincial People’s Committee Nguyen Huu Hai said local authorities welcomed the investors and vowed to create the most favourable conditions for them to carry out their project.
Hai said he hoped that the project would supply high-quality agricultural products, helping promote Kon Tum vegetable, fruit and flower brands among domestic and international customers.
Helping people grasp work opportunities
Vietnam’s labour market has been in transition away from agriculture toward a free market led manufacturing and services economy with a fast-growing middle class for the past three decades.
Observed through an employment lens, there are innumerable signs that the labour market has not kept pace with market demand and thus far has placed constraints on the stride of the country’s economic growth.
Moreover, the transition from an agrarian, rural and informal economy, to an urban, manufacturing and services-based and formal economy is not complete and by all appearances the lack of qualified workers may continue to plague future economic growth.
“Almost half of the country’s workforce is still engaged in small-scale agriculture,” said Yoshiteru Uramoto, at a recent conference in Hanoi addressing the shortcomings of the nation’s labour forces.
The current deputy to the director general of the United Nations Industrial Development Organization (UNIDO) said these workers are stuck in largely unproductive work with low pay and poor working conditions.
Transitioning them out of agriculture and into the manufacturing industry, where they can become highly productive and earn a middle income salary has to be a top priority undertaken post haste, he said.
Doan Mau Diep, deputy minister of the Ministry of Labour, Invalids and Social Affairs (MoLISA) in turn agreed.
“The government has been making steady progress and fully expects that headway to continue over the next year,” said Mr Diep.
All of the economic indicators for 2016 are positive, said Mr Diep, and by the end of the year the nation will have 77.8% of the working age population, an estimated 55.3 million people, in the formal workforce.
“This is an all-time record high,” said Mr Diep, but more importantly he said, by the end of the year “the number of workers in the transport and storage industries will increase by 8.8%.”
In addition, the number of workers in manufacturing and processing will jump by 8.2% and there will be an additional 4.5% bump in the number of workers in the information and communications technologies fields.
So all told by the end of this year, then nation will see a 21.5% hike in the number of workers transitioned into employment that will put them on an upward trajectory to lift themselves out of poverty and into the middle class.
“So far, the process has been three pronged,” said Mr Diep. The first prong has been the country’s long transition from a mainly planned to a modern, free market-led economy with a larger middle class.
The second prong, urbanization, has led to the movement of people and jobs from rural villages to urban centres.
Finally, said Mr Diep, through formalization relatively insecure and unproductive jobs have begun to be replaced by others that offer better protection and more productive opportunities.
Still, Mr Diep admits, a lot more needs to be done to help people grasp work opportunities, if the change process started in the mid-1980s with the doi moi reforms are to become a reality for the benefit of all of the nation’s peoples.
Honeywell surveys local business environment
Honeywell, a Fortune 100 company that invents and produces a variety of consumer products, engineering services and aerospace systems, is surveying the Vietnamese market and investment environment.
Katherine L. Adams, Honeywell’s senior vice president and global general counsel, said at a meeting on Tuesday with HCMC vice chairman Nguyen Trung Tin that she was leading a Honeywell senior leadership delegation to Vietnam to explore opportunities.
Adams seemed to be interested in the areas of green city development, particularly with respect to energy efficient products and building solutions.
Gerard Willis, Honeywell vice president and general counsel in Asia Pacific Region, said, “As Vietnam continues its impressive growth, Honeywell has decided that it will seek to make a significant contribution to the Vietnamese economy.”
Honeywell’s leaders also showed interest in other areas, such as oil-refinery and petrochemical technologies, and electric and automatic equipments.
For the part of the city, Tin said one of the city’s focuses was to develop hi-tech industries and that the city would be willing to engage Honeywell in this process.
The city has 15 operational industrial parks (IPs) and export processing zones (EPZs), especially the Saigon Hi-Tech Park (SHTP) in District 9, he said.
Senior vice president of global head of government relations Sean O’Hollaren told the Daily that Honeywell was a major company with 122,000 employees worldwide, including 19,000 engineers and scientists.
Honeywell has about 100 subsidiary companies and provides aircraft engines, weather radar units, integrated avionics and landing systems for Boeing, Airbus, Sikorsky, Northrop Grumman, Lockheed Martin, the U.S. Department of Defense and NASA, among others.
It is also the supplier of automation and control solutions, transportation systems and specialty materials.
Korea firms sound out market for machine tools
Five major enterprises in the Korea Machine Tool Manufacturers Association (KOMMA) visited Vietnam on Tuesday for the first time to sound out the market potential for high-tech machinery.
Hee-Chul Park of the association told the Daily on Tuesday that Asia including Vietnam is emerging as a strong buyer of Korean machines after other big markets like the U.S. and Europe.
“China, the U.S. and Europe are major markets for machines and tools. They consume 50% of Korea’s machine-tool exports of about US$2 billion per year. Asia, however, is emerging as a potential market with a promisingly high demand,” he said.
Park added that KOMMA forecast high Vietnamese demand for high-tech products, so the association was now seeking business opportunities.
“Vietnam is now assembling automobiles but incapable of manufacturing high-tech and automatic machines and complicated components,” he said.
KOMMA sees demand in this and is seeking local distributors. Park said the association also wants to consult and transfer high technologies to Vietnamese enterprises.
Vietnam needs a lot of support to produce its own machines and tools, he said.
The five companies visiting Vietnam are Ilrim Nano Tec, Komatec, S&T Dynamics, Samickteck and Stauff Korea. The mission is due to have a match-making meeting in Hanoi on Thursday.
KOMMA was established in 1979 and has 170 member companies covering 80% of total machine-tool production worth US$4 billion per annum.
The association pursues creation of new demand for members and relationships with overseas organizations to exchange information.
Enterprises roll up their sleeves for price stabilization
Several out of 14 enterprises that are partakers in the HCMC price stabilization program have put on shelves commodities for consumers since on Tuesday, while others are rolling up their sleeves for the program.
Under the program initiated by the city’s Department of Industry and Trade, these trading enterprises will stock sufficient volumes of eight essential commodities and offer them to consumers at prices some 10% softer than market prices. The program is effective between now and the Lunar New Year 2011.
A representative of Saigon Co.op said the retailer had finished stockpile and marketing steps and the necessities have been available in Co.opMart, Co.op Food and Co.op store chains since on Tuesday.
Vissan Co. Ltd., a major food processor in the city, has also begun pork sales at stabilized prices and displayed information of the program at its stores.
Meanwhile, Saigon Trading Group (Satra) has yet to stock enough necessities for its stores.
“We have barely begun the program as we received instructions from the city government just a few days ago. Satra is focusing on stockpiling and purchasing now,” Nguyen Doan Phu, Satra deputy sales director, told the Daily on Tuesday.
Vong A Loc, head of the financial planning division under the city’s Department of Industry and Trade, said that the enterprises still need more time for preparations given the new decision.
“The retailers are supposed to complete preparations within this month and the department will begin checking their implementation of the program then,” Loc said.
Joining the program, the enterprises are regulated to offer lower prices of the commodities than the market to bring benefits for consumers.
Although the market has yet to respond actively to the program, the local government expects the commodity prices to come down in the future and more enterprises will join the competition to lure customers.
Duong Thi Quynh Trang, Public Relations Manager of Big C, said that the retailer would stabilize prices by itself to offer best prices for consumers. The Big C supermarkets have also launched discounts on hundreds of items.
Similarly, Maximart supermarkets have offered 10% to 50% discounts for many products until next year.
Nanotech holds big potential in Vietnam
Market growth potential is high for nanotech in Vietnam thanks to its various applications, experts said at a seminar in HCMC on Monday.
Dang Mau Chien, head of the Laboratory for Nanotechnology, or LNT, under Vietnam National University HCMC, told the Daily that nanotech has been in use in various fields in the country, such as materials, medicine, energy efficiency, and water treatment.
But most of the nanotech devices and applications have so far been imported, he said.
Vietnam, Chien said, is a major exporter but its application of hi-tech is not enough to meet demands of international customers.
Therefore, he wants to promote the research and application of nanotechnology to help raise the awareness of this technology and seek solutions for urgent scientific issues such as developing nano-structured materials to deal with environmental pollution, and nano-therapy.
The Laboratory for Nanotechnology can research, design, make and apply items using nanotech as well as transfer them to business for mass production in clean-tech industries, Chien said.
Last year, he noted, LNT transferred its research in LED and solar cells for a company in HCMC, and it is going to bring its know-how of making advanced tiles from the laboratory to business.
Quang Nam proposes canceling five hydropower projects
The central province of Quang Nam has suggested the Ministry of Industry and Trade to cancel five ineffective hydropower projects reported to be causing negative environmental and social impacts on the province, said an official of the ministry.
Do Duc Quan, deputy director of the ministry’s Department of Energy, told the Daily on Monday that the province had suggested canceling five medium-sized and small hydropower projects in Nam Tra My District after nearly 50 hydropower projects of those sizes had been approved there.
Quan said Quang Nam was the first province to propose canceling ineffective hydropower projects after the ministry instructed the industry and trade departments at 35 provinces and cities last month to check the licensing of medium and small hydropower projects.
“Quang Nam proposes canceling the five approved hydropower projects because they were assessed to be causing bad effects to a nearby forest and farming land and negative environmental impacts for local people,” he said.
Previously, the province had cancelled six other hydropower projects due to negative environmental impacts.
In April this year, the ministry had also proposed the Government eliminate 38 approved hydropower projects in the highland province of Daklak.
Quan said that in 2005 the industry ministry had made a master plan for building 300 medium-sized and small hydropower projects nationwide. However, to date, the total number of approved medium and small hydropower projects has nearly tripled to 880, with a total designed capacity of 5,900 MW.
The projects are mostly scattered in the Central Highlands and the central and the northern provinces. Lao Cai has the most small and medium projects, at 110.
“Like other provinces and cities, the northern province of Lao Cai is also carrying out overall checks with a view to canceling ineffective medium and small hydropower projects,” he said.
A lot of forest areas near the hydropower plants under construction has been illegally destroyed without reforestation due to weak management by the provincial governments and the developer. Some developers deliberately disobey regulations protecting the environment during construction of power plants and water reservoirs.
According to some experts, if well managed, medium and small hyropower projects with a maximum capacity of 30MW can contribute positively to economic development of provinces as well as creating more power for the national grid.
VDB funds electricity, fertilizer projects
Vietnam Development Bank (VDB) last Thursday signed a contract with Electricity of Vietnam (EVN) to provide VND5.3 trillion for the latter, which will use the fund for electricity projects with total designed output of 2,000MW.
EVN will spend the capital on the site clearance and compensation as well as purchase of equipment for Son Lan, Dong Nai 3, Song Tranh 2 and Ban Ve hydropower plants.
VDB will start disbursing the capital for the projects from this year.
VDB has so far offered loans of over US$5.6 billion sourced from official development assistance (ODA) and around VND31 trillion pooled from other sources for power generation projects.
On the same day, VDB also signed a credit contract worth US$180 million with the Vietnam National Oil and Gas Group, or PetroVietnam, to supply funds for the Ca Mau Fertilizer Plant.
Banks: Deposit rates will decline
Commercial banks will have no choice but to cut deposit interest rates in months to come as the central bank has indicated its resolve to get tough on those using high interest rates to compete for funds from the public.
The State Bank of Vietnam has made clear that it will launch inspections into any banks offering unusually high deposit rates.
Since the central bank’s warning came out, a number of banks have slashed their deposit rates. For example, Vietnam Asia Commercial Bank in HCMC has revised down its rate from 11.8% a year to around 11.5%, the highest level banks must abide by in their commitment to the Vietnam Banks Association.
Other banks such as Trust Bank, An Binh Bank, VPBank, and ACB have marked down their rates for all terms to less than 11.5%. But banks such as SCB, Kien Long, South Asia, and Vietnam Russia maintain their deposit rates higher than the upper level.
Nguyen Ngoc Tam, deputy general director of South Asia Commercial Bank, told the Daily that the bank would take a gradual approach toward deposit rate adjustments based on the balance of capital demand and supply.
The leader of a Hanoi-based bank said certain banks borrowed a lot of funds on the interbank market in the past.
However, the central bank asked banks to restrict borrowing from their peers, so they had to resort to deposit rate hikes to lure public funds to offset the amount they failed to raise on the interbank market, the bank executive said.
This led to a chaotic race for deposit rate increases because banks were afraid they would not be able to attract as much capital as needed.
The central bank has shown its strong determination to support banks in need of capital in a bid to stabilize the market. As monetary policy usually takes time to produce any results, the Hanoi-based bank’s leader expects deposit rates should ease in the next one or two months.
Nguyen Hung, CEO of VPBank, said that two months ago, interest rate negotiations between institutional clients and banks were common, but this had declined strongly.
Interbank rates have also slid sharply, Hung said, adding some banks did refuse to take one-month deposits.
“Conditions to borrow money from the central bank via open market operations, swap, or refinancing have been made far easier in recent times than before,” Hung said.
Furthermore, coupons for Government bonds are seen falling to 10%-10.5% per year in the near future.
An auction of bonds issued by the State Treasury last Thursday was successful. The issuer offered VND1 trillion worth of three-year bonds and VND1 trillion worth of five-year bond, while the value of all bids amounted to VND6.72 trillion worth of three-year debt paper and VND3.6 trillion worth of five-year paper.
The winning coupons were 10.6% a year for three-year bonds and 10.95% for five-year bonds.
This proves banks have plenty of capital, so it is highly possible that banks may reconsider deposit rates in the rest of the year.
Saigon Co.op stocks food for price stabilization
The HCMC Union of Trading Co-operatives (Saigon Co.op), the operator of Co.opMart, Co.op Food and Co.op store chains, is preparing to stockpile about 10,000 tons of food and essential goods for Tet 2011.
Saigon Co.op is one of 14 city-based businesses joining forces in a price-stabilization program that has a budget of over VND380 billion, or about US$20 million.
The Saigon Co.op goods include nearly 2,200 tons of rice, 500 tons of sugar, nearly 1,000 tons of cooking oil, over 2,900 tons of cattle meat, poultry meat, nearly 400 tons of processed food and 2,260 tons of vegetables.
From June 1 to December 31, 2010, all these products from Saigon Co.op are at least 10% lower than market prices, at 20 Co.opMart supermarkets, 10 Co.op Food convenience stores and 86 Co.op stores.
Saigon Co.op has also collaborated with manufacturers to turn out products, including foods, under the Co.opMart brand, which also have lower prices. Saigon Co.op so far has 300 items under the Co.opmart brand, said Nguyen Thi Hanh, general director of Saigon Co.op.
The HCMC Department of Industry and Trade announced the price-stabilization program, an annual activity held by the city’s government to balance supply of and demand for some necessities, especially foods, which otherwise would become scarce and expensive during the long holidays.
After seven years of implementing market-stabilization programs during Tet, the city has decided to apply an intensive program that is able to keep markets and prices stable for a longer period – the whole year.
Businesses that take part are being granted zero-interest-rate loans to keep their prices constant and their supplies stocked. Money received must be spent on reserving eight kinds of essential consumer goods comprising rice, sugar, cooking oil, cattle meat, poultry meat, eggs, processed food and vegetables from June 1 to December 31, 2010.
The program will help keep a balance in supply of essential food and foodstuff items, ensure consumers’ requisites, and contribute towards achieving the city’s social and economic targets.
One new point of the program this year is that lower-priced staple goods will be available not only via modern distribution channels but from small traders at traditional markets. Businesses taking part in the program must register soft prices with the city Finance Department.
‘Market prices’ means those announced by the city’s Statistics Department at the time suppliers register their participation.
Last year the program cost the city over VND422 billion in loans for 13 companies to store more than 50,000 tons of food.
Citimart replaces Family Mart at Parkson stores
The city-based Dong Hung Co., owner of the Citimart store chain, has opened its stores at Parkson department stores in HCMC after acquiring the premises from Malaysia’s Family Mart outlets, the managing director of Citimart said on Monday.
Nguyen Thi Anh Hoa said her company had opened four Citimart supermarkets in HCMC’s Parkson department stores including Parkson Saigontourist, Parkson Hung Vuong, Parkson Flemington, and Parkson C.T, to replace Family Mart outlets.
“The four Family Mart outlets have already been renamed as Citimart, raising the total number of Citimart stores in the city to 20,” Hoa said.
According to Hoa, it was Family Mart’s customers, not its brand name, that had attracted Citimart. The customers of the Malaysia-based Parkson chain tend to have high incomes, exactly what Citimart wants.
“Our stores in Parkson are operating smoothly. We have plans to open more stores at Parkson department stores if Malaysia’s leading retailer group Parkson Corporation open more ones in the city,” she said.
The company is working on a chain-expansion plan, especially in HCMC, Hanoi and some other places in the country’s south, Hoa said, adding that this year her company would open seven to ten more stores in HCMC.
Dong Hung opened the first Citimart in 1994. The expansion plan is aimed at getting ready for the competition after Vietnam opens up the retail market to foreign competition in line with the country’s commitments to the World Trade Organization, she said.
She said the retail market in Vietnam was holding strong growth potential.
The Ministry of Industry and Trade reported that the total revenue from retail of goods and services in the first five months of 2010 reached VND620 trillion, up nearly 27% over the previous year. The ministry predicted this momentum would carry through to 20% year-on-year growth for the whole 2010 to a total of VND1.44 trillion (US$76 billion).
The buoyant retail market has kept demand for retail premises strong, even though the real estate market remains quiet overall.
CBRE Vietnam reported that average rents in the central area of HCMC have reached US$100 per square meter per month. The city is the magnet for many big investment projects by big retail groups.
At the Vietnamese Retailers’ Association, Dinh Thi My Loan says Vietnam will count 850 shopping centers and supermarkets and a few thousand convenience stores by the end of 2010.
The association mentions Vietnam’s high and stable GDP growth rate and its young consumer population as important factors behind the success of the domestic retail sector.
It is estimated that Vietnam’s total retail revenues will hit US$85 billion by 2012.
Medicine prices will be stable, administration says
The Drug Administration of Vietnam has forecast that medicine prices will be stable in the second half of the year after slight rises this year.
Truong Quoc Cuong, head of the administration, told the Daily on the telephone on Monday that he expected medicine prices to be stable in the rest of the year as the exchange rates between Vietnam dong and foreign currencies like the U.S. dollar and euro are forecast not to fluctuate and raw-material prices are going down.
According to Cuong, medicine prices have in the year to date grown 5% to 10%, mainly in the case of imported drugs. The prices of raw materials had been stable, particularly those from China and India.
To stabilize medicine prices in the rest of the year, the administration said it would tighten monitoring of price declarations and take measures against those that hike prices without a good reason, possibly including the withdrawal of licenses.
“In May, we withdrew the license of Dasan Medichem due to wrong price-declaration and not submitting a business-operation report to the administration,” he gave an example.
Along with close supervision, the administration is suggesting the Government revise drug-promotion regulation in the medicine sector to reduce commercial frauds among manufacturers, traders and retailers.
The administration recently reported that Vietnam’s medicine market had seen rapid growth, at an annual rate of 25%, and the size of the market is forecast to amount to US$2 billion by 2012. Last year the country spent US$1.7 billion on pharmaceutical products, up 18.9% from 2008.
Last year, medicine expenditure per capita was over US$19, an increase of US$3.32 from the previous year.
Binh Dinh rolls out red carpet for FDI
The south-central coastal province of Binh Dinh is scaling up efforts to enhance the local investment climate, with the ultimate goal of increasing its appeal in the eyes of both domestic and foreign investors.
In a recent talk with VIR, Chairman of the Binh Dinh People’s Committee Ho Quoc Dung stressed that there are no barriers impeding investors when they come to Binh Dinh in search of investment and business opportunities.
The province will ensure the best conditions for the implementation of domestic and foreign investors’ projects that operate in priority fields. US investors are one of the province’s target investors.
Binh Dinh is now home to 59 foreign-invested enterprises, with the total investment capital of $554 million. The US investment capital in the province is still modest, with a total of more than $35 million from three projects, including the $11.25 million project on starch processing from Lucky Star Co., Ltd., the $3 million project on shrimp breeding from Asia Hawaii Ventures, and the $21 million project on animal feed production from Cargill Vietnam Limited’s Binh Dinh branch.
The bilateral trade between Binh Dinh and the US market stood at only around $45 million in 2015. The traded products are mainly apparel, wooden furniture, pharmaceuticals, seafood, machinery, and equipment.
“Vietnam is currently a leading trade partner of and biggest exporter to the US. The upcoming enforcement of the Trans-Pacific Partnership could provide a catalyst to bolster Vietnamese-US trade ties, providing numerous opportunities for investment expansion and job creation in the two countries, including in the province of Binh Dinh,” Dung said.
He added that the province was looking for multinational US companies in certain fields, saying that “Binh Dinh has the tremendous demand for investment capital in energy, technology, finance, banking, and building infrastructure such as roads, seaports, and airports.”
Binh Dinh has committed to creating favourable conditions for any prospective investors coming from the US or other developed countries. In particular, the investors will be supported in all stages of their projects, from conceiving ideas or searching for investment opportunities to construction and project deployment.
According to director of the Binh Dinh Investment Promotion Centre Nguyen Bay, to better serve investors doing business in the province, Binh Dinh is reviewing its plans for socio-economic development as well as plans for industrial parks, economic zones, and tourism development.
The quality of investment promotion will be improved and the province will create a wish-list of priority investment projects, working directly with targeted investors in particular fields and hosting meetings and direct dialogues. Investment incentives, including policies on attracting talent, worker training, branding, and trade promotion, will be revised to match investor requirements.
Reviewing administrative reforms is also necessary for introducing more effective measures, according to Bay.
Part of the south central coastal region, Binh Dinh is easily accessible by road, waterway, railway, and air. The province’s Quy Nhon international seaport provides a convenient gateway to the sea.
As a convergent location between National Highways 1A and 19, businesses can conveniently transport goods to the north, south, or central highlands region, or even to locations in Laos, Cambodia, and Thailand.
Binh Dinh also boasts a 134-kilometre stretch of coastline with stunning beaches and a thriving ecosystem, which is conducive for the development of tourism, aquaculture, and seafood processing.
Nielsen: 91% of Vietnam respondents have subscription TV
When it comes to watching video entertainment, viewers in Vietnam in particular as well as in Southeast Asia in general are increasingly watching broadcast or video-on-demand (VOD) programming on connected devices in addition to traditional TV viewing, according to latest report from Nielsen.
Ninety-one per cent of respondents in Vietnam have a subscription TV service and 13 per cent subscribe to an online service provider.
Within Southeast Asia, consumers in Vietnam have the highest claim of watching any type of VOD programming on TV, computer, and mobile devices (91 per cent), with close to 67 per cent saying they watch VOD content at least once a day.
In regard to devices used to watch VOD content, 81 per cent use computers, 79 per cent use mobile phones, 61 per cent use smart TVs, and 53 per cent use tablets.
When it comes to popular program genres, comedies (54 per cent), news shows (48 per cent), reality shows (45 per cent), and dramas (44 per cent) rank highest among Vietnamese respondents.
Sixty-two per cent of Vietnamese respondents would prefer to only see ads for products that interest them, while 67 per cent of those who watch VOD say online ads displayed before, during, or after VOD programming are distracting and 63 per cent wish they could block all ads.
Conversely, 53 per cent respondents in Vietnam who watch VOD somewhat or strongly agree that ads in VOD content give them good ideas for new products to try and 54 per cent said they don’t mind getting advertising if they can view free content.
“The growth of VOD programming options, where viewers can download or stream content from either a traditional TV package or an online source, is giving consumers greater control over what, when, and how they watch than ever before,” said Mr. Craig Johnson, Managing Director, Marketing Effectiveness and Reach Portfolio, at Nielsen Southeast Asia, North Asia and Pacific. “What’s really interesting is that we’re seeing viewers expand their repertoire of viewing platforms and also the amount of media they’re consuming. Online and traditional services are in fact complementary rather than mutually exclusive.”
The Nielsen Global Video-on-Demand Survey polled over 30,000 online respondents in 61 countries to gauge worldwide sentiment about VOD viewing and advertising methods.
VIB and BMW come together
BMW Group Segment Financial Services has signed a strategic partnership with Vietnam International Bank (VIB), which will enable BMW Group customers who wish to purchase any BMW, MINI or BMW Motorrad vehicles to enjoy the wide range of financing facilities offered by VIB under the BMW Group Segment Financial Services brands.
Services include preferential interest rates, competitive fees, diverse life insurance products, and in particular quick approval of motor car loans, within 24 hours of completing an application.
VIB will dedicate a specialized team to serve BMW and MINI customers in line with the brands’ international standards, including a separate customer service hotline, senior support specialists, and a separate evaluation process.
“VIB is delighted to be in this partnership with the BMW and MINI dealers in Vietnam and BMW Group Segment Financial Services,” said Mr. Godfrey Swain, Head of Retail Banking at VIB. “Our expertise, experience, and reputation will put us in a good position to provide seamless financing services to the customers of BMW, MINI and BMW Motorrad vehicles, both new and pre-owned. VIB will also assist BMW customers in proactively making a sound financial decision to completely enjoy the experience of buying BMW Group vehicles.”
Mr. Nguyen Dang Thao, General Director of Euro Auto, the authorized importer of BMV, MINI and BMW Motorrad, said the strategic partnership will bring many benefits to customers. The preferential financing services of VIB will help buyers more easily identify financial solutions for purchasing the vehicles.
Chubb Life and Viet Capital Bank launch bancassurance
Chubb Life, the global life insurance division of Chubb Limited, and Viet Capital Bank announced the commencement of a bancassurance partnership on March 22.
The new partnership will maximize the benefits for Viet Capital Bank’s customers by leveraging the services and products of both parties. Through the distribution channel the two companies will offer diversified life insurance products and services with preeminent benefits, which will suit a wide range of individual customers at Viet Capital Bank’s branches in key cities and provinces in Vietnam, provide financial protection solutions and additional benefits to those who are working for Viet Capital Bank’s partners, such as business groups and corporations, through individual and group insurance products, and increase additional benefits for Chubb Life’s customers when enjoying the bank’s services.
“One of Chubb Life’s objectives is to expand and diversify our distribution network to better serve our customers with life insurance solutions,” said Mr. Lam Hai Tuan, Chairman and Country President of Chubb Life in Vietnam. “This collaboration will also allow Viet Capital Bank’s customers to access more value-added financial management services in parallel with suitable financial protection plans from Chubb Life.”
“In addition to diversifying our products and financial services, Viet Capital Bank continually looks to provide customers with more quality benefits,” said Mr. Nguyen Hoai Nam, Deputy General Director of Viet Capital Bank. “Our strong network, together with Chubb Life’s wide product portfolio, is core to this cooperation. We strongly believe in the bancassurance model as a way to provide better customer service and products.”
Foreign retailers to lead rentals
Foreign shops are expected to lead in rental space, with a Savills report in February saying that international retailers are now excited to enter Vietnam following the announcement of various free trade agreements, which offer the prospect of reduced tariffs and simplified procedures.
AuchanSuper, 7-eleven, and Robinson Department Store have already staked out a sizeable presence in Vietnam’s retail market. Following the trend in other Asia Pacific countries, convenience stores are expected to gain a much larger proportion of the retail market share in the future.
Opposite to the strong investment wave from foreign outlets, there are only five large domestic retailers: Big C, Saigon Co.op, Mobile World, Nguyen Kim Trading, and Saigon Jewelry. Big C, however, is likely to be bought by a foreign retailer sometime soon. These domestic retailers have not revealed plans for expansion.
Among cities and provinces, Ho Chi Minh City will reach a key turning point in 2016, the report added. In the view of a CBRE report in January, meanwhile, the Ho Chi Minh City market will welcome 15 more stores from French retailer AuchanSuper this year. “This can improve the presence of foreign supermarket brands in Ho Chi Minh City, which is not quite strong at the moment,” CBRE wrote.
“The young population and rapidly growing middle class are the two major factors that are driving retail market growth,” the Savills report stated. “These customers are now more aware of their spending power and are seeking modern and convenient retail environments. We are now seeing a growing number of such shopping centers in new residential areas like District 2, District 7, and Go Vap district, to meet this blooming demand.”
VSV Accelerator seeking startups
Vietnam Silicon Valley Accelerator (VSV Accelerator), an organization under the Ministry of Science and Technology to develop startups, is calling for applications from startups to connect with investors, with a deadline of April 2.
If startups meet requirements and gain approval from VSV Accelerator they will be provided with between $10,000 and $20,000 in seed funding to develop their products. VSV Accelerator will also link selected startups with one of its 60 global mentors.
They also have the chance to work for four months at VSV Corner, a co-working space of the Ministry, where they can boost their relationships with consultants and the media. Selected startups can also connect with angel investors and venture capital funds in Vietnam and overseas.
VSV Accelerator is the first Vietnamese organization modeled after business accelerators in the US. It provides seed funding and consults startups to ensure their development within four months.
After three years VSV Accelerator has nurtured successful startups such as Lozi, which received capital from Golden Gate Ventures in Singapore and Design One in Japan, TechElite, which received capital from a Russian venture, and LoanVi, which received investment from Chile and South Korea.
VND30-trillion housing support package proposed to be extended
The State Bank of Vietnam (SBV) on March 23 announced that it has submitted a proposal to the government to extend the VND30-trillion (US$1.35 billion) housing credit package until the package is fully disbursed.
If the credit package has not been fully disbursed by June 1, 2016, the SBV will make a report to the government to consider the extension of the package until it completes disbursement so that low-cost home buyers could continue to enjoy loans with preferential interest rates.
The suggestion was made amid the worries of many home buyers under the credit package that they would have to pay commercial interest rates for the loans disbursed after the conclusion of the package on June 1.
As of March 10, 2016, commercial banks had pledged loans of over VND30.1 trillion for more than 46,200 customers with over VND21.3 trillion disbursed.
Earlier, Deputy Minister of Construction Pham Hong Ha also sent a proposal to the SBV to ask for the continued disbursement of the credit package.
The housing credit package was launched in June 2013 aiming to assist home buyers and housing developers in gaining access to bank loans with a preferential interest rate of 5% per year.
ICDREC, Dien Quang clinch deal
The Integrated Circuits Design Research & Education Center (ICDREC) on March 22 inked a cooperation agreement with Dien Quang Lamp Joint Stock Company to develop and produce microchips for Dien Quang’s lighting products.
Under the 5-year deal, Dien Quang will use ICDREC chips for its smart lighting control systems including those for street and traffic light control, and industrial lighting. These chips will be developed based on the SG8V1 chip of ICDREC, a unit of the Vietnam National University HCMC.
ICDREC will also develop LED driver chips for Dien Quang’s LED lights.
Ngo Duc Hoang, director of ICDREC, said smart chips are crucial to lighting products and that smart lighting control systems and energy-saving LED lights are favored by consumers at home and abroad.
Most microchips used for Dien Quang’s products are imported from the U.S., Japan and Taiwan. Ho Quynh Hung, chairman of Dien Quang, said the company has to import millions of chips a year for its products.
According to Hoang, if cooperation between ICDREC and Dien Quang is successful, it will help not only develop the HCMC microchip industry in the lighting device sector but also reduce spending on chip imports and prices of lighting products.
ICDREC is the first unit in Vietnam to research and commercialize SG8V1 chip, which has been used for many products like monitoring devices for cars and motorbikes and data collection devices.
Experts said Vietnam is considered a potential market for semiconductor production suppliers and producers as it needs around 20 billion chips a year with most of them imported.