BUSINESS IN BRIEF 8/3

Japanese fund invests in Ho Chi Minh City’s real estate

Creed Group, a Japanese investment fund, signed a contract on March 6 with Phat Dat Real Estate Development JSC (PDR) and An Gia Investment company to implement a property project worth 500 million USD in Ho Chi Minh City.

Accordingly, the River City project, with 12 buildings comprising about 8,000 apartments, will be deployed in District 7.

Chairman of the Japanese fund Toshihiko Muneyoshi said that Vietnam’s international integration has opened up more opportunities to draw large investors from across the world.

He added that the Creed Group wishes to transfer technology and share experiences in real estate development with the property sector in Vietnam, especially in HCM City.

Last year, the Creed Group cooperated with the An Gia Investment in two high-quality apartment projects to supply 2,000 units to the market.

On the occasion, Chairman of PDR Nguyen Van Dat revealed that the company will implement a project worth 5 trillion VND (217 million USD) this year to build the Thu Thiem 4 bridge which will link Nguyen Van Linh avenue with the Thu Thiem New Urban Area.

Thua Thien-Hue looks to draw 350-400 million USD in FDI

The central province of Thua Thien-Hue is looking to attract 15 new foreign direct investment (FDI) projects with total registered capital of about 350-400 million USD.

Meanwhile, FDI enterprises in the province aim to earn total revenue of 700 million USD and contribute 80 million USD to the state budget this year.

Thua Thien-Hue will focus on attracting investors from Japan , the Republic of Korea , Singapore , and Thailand to develop tourism and logistics services as well as industrial parks, including the Chan May-Lang Co economic zone.

Since 2015, the province has licensed 9 new FDI projects and allowed three existing projects to increase investment, with total registered capital of 450 million USD.

Last year, the total revenue in the province’s FDI sector reached 650 million USD, up 18 percent against the previous year.

The FDI enterprises also created jobs for over 17,500 workers in the period.

So far, the province has attracted 85 foreign investment projects from 21 countries and territories worth a combined over 2.6 billion USD.

Singapore leads the foreign investors with registered capital of 875 million USD, followed by Hong Kong ( China ) with over 300 million USD.

Quang Ninh licenses cattle farming project within three hours

The northern province of Quang Ninh completed procedures for licensing and granted the investment registration certificate for a cattle farming project within only three hours on March 5.

The project of the Phu Lam Co. Ltd has a total investment capital of nearly 2.26 trillion VND (101.3 million USD).

It will use more than 1,000 hectares of land in Quang Nghia commune of the border city of Mong Cai, which is a particularly disadvantaged area, to raise beef and breeding cattle.

When operational, the project using high technologies is expected to help to boost local economic development and provide jobs for local residents.

Quang Ninh authorities have pledged to create favourable conditions for investors in the local agricultural sector.

In mid-December 2015, the province issued several incentives to stimulate agricultural development, including interest subsidy for new and expanded investment projects in the field.

Earlier, it introduced an investment invitation list, comprising of 12 projects with total investment capital amounting to hundreds of billions of VND.

Tourism to intensify promotion work for more visitors

The tourism sector will continue with extensive promotional activities to increase the number of foreign travellers to Vietnam, with focus on new and potential markets, according to an official of the Vietnam Administration of Tourism (VNAT).

Head of the VNAT’s Market Department Dinh Ngoc Duc told the Vietnam News Agency in a recent interview that besides the European and Northeast Asian markets, which contribute around half of international visitors to Vietnam, due attention will be paid to ASEAN member countries considering the formal establishment of the ASEAN Economic Community at the end of last year.

Another priority is Russia and countries using Russian, alongside Australia and India.

Duc said e-marketing will be spearheading promotional work, and the VNAT will mobilise resources from travel agencies, airlines and domestic and foreign partners to supplement the limited funding from the state budget for tourism publicity.

He added that the administration has proposed establishing a tourism development fund for the purpose.

The sector will go on with conventional promotional activities by attending tourism fairs and organising fam trips and press trips for both foreign and domestic travel agencies and media, according to Duc.

The official also informed that his agency is planning to propose visa exemption for tourists in package tours regardless of their citizenship, in order to facilitate both the organisation of such tours and the management of foreign visitors.

Twenty-three Vietnamese fish farms qualified for exports to US

The US Department of Agriculture (USDA) has announced a list of foreign catfish farms from four countries eligible to export their products to the US under the USDA inspection program for Siluriformes fish including tra and basa fish.

The list defines qualified fish establishments including 19 from China, 13 from Myanmar, seven from Thailand, and 23 from Vietnam.

The inspection program for Siluriformes fish took effect on March 1, 2016 and has a 18-month transitional period. By the end of the transitional period on September 1, 2017, the program will be fully applied.

During the 18-month transitional period, the USDA’s Food Safety and Inspection Service (FSIS) will re-inspect and conduct species and residue sampling on imported Siluriformes fish shipments at least quarterly at US import establishments on a random basis.

After the transitional period, foreign countries seeking to continue exporting such products to the US must submit adequate documentation showing the equivalence of their Siluriformes inspection system with that of the US.

Japan investments in Vietnam hit US$38 billion

By June, 2015, Japan had become Vietnam’s second largest investor with more than 2,600 projects worth a total of US$38 billion. 120 of its projects were located in Da Nang.

A program to promote Japanese investments in central Da Nang city was held on March 6.

Vice-chairman of the municipal People’s Committee Dang Viet Dung said the city boasts numerous advantages in investment attraction as it is located on the East-West economic corridor and has an abundant labor force, many industrial parks, a convenient transportation system, and a high-tech zone under construction.

“We want to cooperate with Japanese businesses in support industries, information technology, and high-tech areas in addition to healthcare and building an international hospital and resorts. Da Nang city is committed to facilitating the operations of Japanese and Vietnamese businesses,” Dung said.

CBRE names sole distributor of Madison project

Novaland property developer has appointed CBRE as the official sole distributor of its Madison project in District 1 in HCM City.

The agreement between the two companies was signed earlier this week.

Madison is a luxury project combining apartments, service apartments, a trade centre and officetels. It is located on an area of nearly 2,400sq.m in the centre of HCM City and faces Thi Sach and Cao Ba Quat streets.

The project is 19 floors in height with three basements. It offers many facilities such as a BBQ area, gym centre, playing yard and swimming pool.

The project is set to be handed over in 2018.

Sacomreal to develop Carillon 3 apartments

The Sai Gon Thuong Tin Real Estate Joint Stock Company (Sacomreal) earlier this week announced that it would develop the Carillon 3 Project in HCM City.

Located on Hoang Hoa Tham Street of Tan Binh District, the Carillon 3 project contains 97 apartments in a 14-storey building. Of the apartments, 90 will have one or two bedrooms. The other six spaces are shophouses and one penthouse. The size of each apartment ranges from 46sq.m to 129sq.m.

Gym, spa, and kindergarten services are available.

Sacomreal said the price for the two-bedroom apartment would be around VND1.68 billion (USVND1,716,522,500).

The company will start selling projects this month and it would be completed in the first quarter of next year.

Sacomreal has been established for 12 years. It has developed many projects, including the Belleza Apartments, Carillon Apartments and Sacomreal Hao Binh. The projects’ standards range from normal to luxury.

Budget overspending hits 10% of annual quota

National budget overspending reached VND25.5 trillion (US$1.1 billion) in the first two months of this year, representing 10.6 per cent of the annual quota.

The Ministry of Finance reported on Thursday that State budget revenues grew by 2.4 per cent year-on-year in the first two months at more than VND160 trillion.

Budget revenues from domestic sources alone reached nearly VND140 trillion, equivalent to 17.8 per cent of this year’s target, while revenues from import – export activities declined 17.6 per cent year-on-year at VND31.2 trillion.

The budget revenues from crude oil tended to decline, falling from more than VND3 trillion in January to roughly VND2.7 trillion in February. The cumulative two-month revenue of VND5.7 trillion was less than half of that in the same period last year.

The ministry attributed the fall in the crude oil revenues to global oil prices continuing to go down in the face of redundant supplies. The oil prices averaged $29.8 per barrel in February, 6 per cent lower than January’s average.

Meanwhile, State budget spending hit VND185.6 trillion in the first two months, reaching 14.6 per cent of the quota for 2016.

The ministry said it would manage government bond issuance following a proper schedule, and guide the state treasury to control budget spending in the coming months.

It will also closely collaborate with other ministries in managing the prices of goods and services, and speed up equitisation of State-run enterprises and divestments in non-core lines of business to assure the national budget balance.

VMware unveils new platforms at Viet Nam market

VMware, Inc, a global leader in cloud infrastructure and business mobility, unveiled in Viet Nam on March 2 a new platform for delivering secure digital workspaces for flexible workstyles.

It also released its cloud management platform.

They included a new platform for delivering secure digital workspaces for flexible workstyles and bring your own device (BYOD). Using the principles of consumer simple and enterprise secure, the digital workspace delivered by VMware will address the end user and enterprise IT business mobility needs by aggregating all devices, applications and services while securely managing them through unified common access and identity.

The other one is its cloud management platform, VMware vRealize Suite® 7. The suite’s new product updates are designed to help customers readily address the most common use cases VMware has identified in customers’ journey to the cloud.

Ngo The Quang, regional director of VMware Viet Nam, said at present, Vietnamese enterprises have recognised importance of a digital economy and interests of using cloud platforms. In addition, Viet Nam has had many start-up companies that often apply modern technologies for their production and business.

Therefore, Viet Nam would be a potential market for cloud platforms, Quang said, and added that VMware Vie Nam expected local enterprises would promote to apply cloud platforms for their production and business in the future.

“In the mobile cloud era, employees, devices, applications and data increasingly live beyond the physical walls of the workplace, the datacentre, or the network,” Sanjay Poonen, executive vice president and general manager, End-User Computing, VMware, said.

“Digital enterprises are struggling to deliver a unified digital workspace due to disjointed technology and teams.”

While, digitisation is disrupting every industry and causing massive changes to traditional businesses and operating models, VMware said. Organisations are responding by innovating with new online and connected customer experiences by leveraging big data, cloud computing and mobility. These companies are realising new opportunities and revenue streams by taking on a modern approach to business enabled by technology.

Moody’s confirms Sacombank’s B3 rating; outlook stable

 Moody’s on Feburary 29 confirmed Sai Gon Thuong Tin Commercial Joint-Stock Bank’s (Sacombank) deposit and issuer ratings of B3.

The rating agency has also confirmed the bank’s standalone baseline credit assessment (BCA) and adjusted BCA of caa1, as well as its counterparty risk assessment of B2 (cr).

The outlook on all ratings is stable, the rating agency reported.

This action concludes the review, with direction uncertain, initiated on October 2015, when Sacombank announced its merger with Phuong Nam Commercial Joint Stock Bank (Southern Bank).

The confirmation of Sacombank’s ratings reflects Moody’s review of the bank’s consolidated financial report for 2015, which includes the operations of Southern Bank, and discussions with the management of Sacombank.

The consolidation of Southern Bank has resulted in an increase in Sacombank’s asset base by 37 per cent. The post-merger Sacombank ranks as the largest privately-owned bank in Viet Nam by assets, and fifth largest if State-owned banks are considered.

In Moody’s opinion, while the impact of the merger is negative for Sacombank’s key financial fundamentals, the risks associated with the addition of Southern Bank are reflected in Sacombank’s rating level of B3 and BCA of caa1.

Moody’s noted that the transaction results in a higher level of problem assets for the enlarged Sacombank. Problem assets – such as non-performing loans, special mention loans, and the bonds of Viet Nam Asset Management Company (VAMC) – increased to 8.4 per cent of gross loans at end-2015, from 7.4 per cent before the merger in September 2015.

The merger also contributes to higher non-interest-generating assets, such as interest income and fees receivables, and repossessed collateral. Repossessed collateral, which is mostly real estate, increased to around 38 per cent of shareholders’ equity at end-2015 from 7 per cent at end-2014.

Overall, non-interest yielding assets comprised 26 per cent of assets at end-2015, up from 15 per cent at end-September 2015. In Moody’s view, these assets contribute to a lower net interest margin for Sacombank.

In addition, the capital buffer of the merged bank has weakened moderately. Its tangible common equity-to-adjusted risk weighted assets (RWA) fell to 8.2 per cent at end-2015 from 9.4 per cent at end-2014.

Sacombank’s liquidity position has also weakened, with cash, money market, interbank, and available-for-sale and trading securities making up 14 per cent of total assets at end-2015, compared to 22 per cent at end-September 2015.

The inclusion of additional problem assets in the fourth quarter of 2015 resulted in a net loss of VND520 billion (US$23.6 million) in that quarter, due to new loan-loss provisions of VND1.1 trillion.

For the full year of 2015, credit costs consumed 60 per cent of pre-provision income. As a result, the return on average assets decreased to 0.4 per cent in 2015 from 1.2 per cent in 2014.

Moody’s expects that Sacombank’s profitability will remain weak in 2016 due to the need to create additional provisions against problem assets.

Singapore firm to develop waterfront JV in VN

 Singapore’s Keppel Land Limited (Keppel Land) has signed a conditional investment agreement to claim a 40 per cent stake in Empire City Limited Liability Company (Empire City), worth US$93.9 million.

The other joint-venture partners in Empire City would be Vietnamese companies Tien Phuoc Real Estate Joint Stock Company (Tien Phuoc) and Tran Thai Real Estate Co. Ltd (Tran Thai), as well as Hong Kong-based real estate private equity fund Gaw Capital Partners, Keppel Land’s press release said.

These companies will jointly develop a prime $1.2-billion waterfront site in the Thu Thiem New Urban Area in HCM City.

The 14.6ha project will comprise premium residential apartments, office and retail properties as well as an 86-storey integrated mixed-use tower complex.

Chief Executive Officer of Keppel Land Ang Wee Gee said, “We are very excited to participate in the growth of the upcoming Thu Thiem New Urban Area, which is poised to become the future central business district of HCM City.”

“Our planned projects will bring the best in waterfront and urban lifestyles to HCM City, as well as augment Keppel Land’s quality portfolio of prime residential and commercial properties in the city,” Gee said

Keppel Land, a subsidiary of Keppel Corporation Limited, is recognised for its sterling portfolio of award-winning residential developments and investment-grade commercial properties, as well as high standards of corporate governance and transparency.

In Viet Nam, Keppel Land operates 19 projects and plans about 22,000 homes in Ha Noi, HCM City, the southern Dong Nai Province and Southern Vung Tau Province.

8 top motorcycle brands to come to 1st Vietnam Motorcycle Show

Eight famous motorcycle manufacturers, five of them making vehicles in Viet Nam, and dozens of parts makers, will take part in the first Vietnam Motorcycle Show in HCM City next month.

Honda, Piaggio, Suzuki, SYM, and Yamaha will be joined by Benelli, Ducati and Kawasaki.

Dubbed “Ride high! Together”, the first expo will showcase unique designs, the latest technologies and impressive performances, according to Yano Takeshi, chairman of the Vietnam Association of Motorcycle Manufacturers (VAMM).

“Viet Nam is now the fourth largest motorcycle market in the world.”

According to VAMM, the market has developed steadily, achieving 4 per cent growth last year, with growing demand now for modern scooters, sports motorcycles and high-powered vehicles.

Visitors can buy regular models with the newest technological upgrades and see the latest sports models, while there will also be dozens of stalls put up by supporting industry brands like Total, NGK, GS, Nissin, Eagle, KMC, and Koyoei.

Besides an exhibition area of 6,000sq.m, there will also be 2,500sq.m of outdoor space for interactive – recreational activities, test riding, motorcycle performances, and games with many attractive gifts.

The expo, to be held from April 7 to 10 at the Saigon Exhibition & Conference Centre, is expected to attract 100,000 visitors and become an annual event that brings together manufacturers, distributors and motorcycle lovers.

“Viet Nam is gradually becoming the biggest manufacturing hub for many brands,” Takeshi said.

Vietnam to take action on dumped coated steel sheet imports from China, Korea

Vietnam’s Ministry of Industry and Trade has decided to carry out an antidumping probe into coated steel sheets imported from China and the Republic of Korea, the Vietnam Competition Authority (VCA) said on March 4 on its website.

Measures will be enacted to prevent such products imported from China, including Hong Kong, and the Republic of Korea from being dumped in the Vietnamese market, the VCA added.

The probe is applicable to the period from October 1, 2014 to September 30, 2015.

On December 24, 2015, the VCA received appeals from four steel firms, including China Steel Sumikin Vietnam JSC, Phuong Nam Co. Ltd., Nam Kim Steel JSC, and Dong A Steel JSC, demanding the implementation of measures to prevent coated steel sheets shipped from these markets from being sold at cheap prices in Vietnam.

The four firms have accused companies from the markets of dumping their products in the Southeast Asian country, which seriously affects local businesses.  

From 2014 to 2015, the proportion of coated steel sheets imported from China increased dramatically, said Nguyen Thanh Trung, general director of Dong A Steel JSC.

In 2015, China exported about 1.6-1.8 million metric tons to Vietnam, covering nearly half of the total products currently manufactured by local enterprises, Trung estimated.

Despite low quality, many of these are illegally labeled under reliable brands in Vietnam, thus selling at much cheaper prices, about 30-40%, than the genuine.

In October, 2014, Vietnam started to prevent dumping on stainless steel imported from China, Indonesia, Malaysia, and Taiwan by applying tariffs of 3.41-37.29%, depending on their manufacturing nations, in a five-year period.

Vietnam remains globe’s biggest cashew exporter

Vietnam maintained its 10-year lead as the world’s top commodity exporter of raw cashew nuts in 2015, according to a March 4 announcement by the Vietnam Cashew Association (Vinacas).

“Vietnam exporters shipped 330,000 metric tons of cashew nuts valued at US$2.5 billion to foreign markets in 2015,” said Vinacas. The major overseas markets included the US, China and the EU.

However, other countries are gaining in sales, so the Vietnamese industry needs to continue to innovate and improve its processing technology with a focus on enhancing product quality, food safety and hygiene in processing, said Vinacas.

Vietnam gives thumbs down to state oil giant’s bid to monopolize market

Oil and gas behemoth PetroVietnam has demanded that all local fuel businesses be obliged to buy products of its refinery before purchasing from foreign sources, but the demand has been turned down by relevant ministries.

PetroVietnam is the developer of Dung Quat, the country’s sole operating refinery located in the central province of Quang Ngai, which is on the verge of close-down due to surplus supply.

The state-run oil and gas giant has thus insisted that local fuel wholesalers buy all of the domestically produced fuel products to save Dung Quat from a shutdown.

“Firms should only be given quotas to import fuel once the domestic supply is used up,” PetroVietnam said in the proposition.

The proposal is made based on estimates that Vietnam will churn out some 18.1 million cubic meters of fuel in 2018, whereas total demand is expected to be around 17.3 million cubic meters, or a supply surplus of 800,000 cubic meters.

As such a request may make PetroVietnam and its refinery a market monopoly, relevant ministries have shaken their heads.

The Ministry of Industry and Trade said the fuel consumption estimated by PetroVietnam is much lower than government data.

According to the development plan for Vietnam’s oil and gas sector in 2018-22, approved by the government in October last year, the country is forecast to consume 21.2-26 million cubic meters of fuel, instead of only 17.3 million cubic meters as per PetroVietnam’s calculation.

Meanwhile, Deputy Minister of Planning and Investment Nguyen Van Hieu said the proposal of PetroVietnam “is not in line with Vietnam’s commitments to the World Trade Organization.”

Setting quotas to restrict imports is only applied to four types of commodities, namely cigarette materials, poultry eggs, unrefined and refined sugar, and salt, the deputy minister said in a report.

“By forcing local businesses to purchase the entire domestic fuel supply, PetroVietnam will become a monopoly in supplying fuel products in the country,” the report notes.

In a separate development, Vietnam’s largest fuel wholesaler Petrolimex said on Thursday it enjoyed an enormous pre-tax profit of VND3.76 trillion (US$167.86 million) in 2015, more than ten times the 2014 figure of VND321 billion.

The company posted the solid profit growth even though its revenue dropped 29.1% from 2014 to VND146 trillion (US$7 billion) on account of slumping oil prices.

The pre-tax profit generated from the fuel business of Petrolimex, which also operates in the fields of mechanics, construction and insurance, was VND1.98 trillion (US$88.39 million), or only VND222 per liter of gasoline.

The company said it managed to post a higher profit as the import fuel prices were regulated more commensurately with the market developments in 2015 than a year earlier.

HNX offloads $1.26b of government bonds in February

The Ha Noi Stock Exchange (HNX) sold VND28.3 trillion (US$1.26 billion) worth of government bonds issued by the State Treasury of Viet Nam in eight auctions in February.

This marked an increase of 15.8 per cent compared with January.

The coupon rate of the three-year bonds sold ranged from 5.5 per cent to 5.75 per cent per year, while for the five-year bonds, it ranged from 6.29 per cent to 6.6 per cent per year. The coupon rate of the 15-year bonds was 7.65 per cent per year.

Compared with January, the coupon rate of the three-year bonds in February fell by some 0.28 per cent per year, five-year bonds dropped by some 0.29 per cent per year and 15-year bonds remained the same.

On the secondary market, the total volume of government bonds sold by the outright method reached more than 493 million, worth VND51.6 trillion ($2.3 billion), in February, marking a 52.1 per cent increase in value over January.

Trading volume through repurchase agreements (repos) was 261 million bonds, worth over VND25.3 trillion ($1.13 billion), up 111 per cent compared with the previous month.

Foreign investors bought more than VND6.5 trillion ($291 million) worth of bonds and sold more than VND3 trillion ($134 million) of them under the outright method.

Sales transactions under the repos method by foreigners reached a value of VND90 billion ($4.03 million), while no buying transactions were recorded.

Three major goals for HN zone planning figured out

A meeting between officials of ministries, agencies and localities was held on March 3 to discuss the general construction planning for Ha Noi capital area up to 2030, with a vision towards 2050.

The PM approved the plan at Decision No. 1758/QĐ-TTg at the end of 2012 for the area that included Ha Noi and nine neighboring provinces of Vinh Phuc, Bac Ninh, Hai Duong, Hung Yen, Ha Nam, Hoa Binh, Phu Tho, Thai Nguyen and Bac Giang. The total construction zone of urban and rural areas is 24,314 km2 with the population of 17.6 million.

The three major goals of the plan are:

Firstly, the plan needs to meet development goals, planning management and construction requirements, ensure the national resource allocation effectively, limit shortcomings of the urbanization process on the environment and mitigate climate change consequences to develop the region more sustainably and prosperously.

Secondly, it will facilitate urban areas to uphold their roles to promote the development of neighboring areas in terms of economics, culture-society and balances between rural and urban areas.

Thirdly, it will be a foundation for the establishment and adjustment of the overall plans of neighboring provinces and regions, the planning on construction of new rural establishment and technical infrastructure as well as a database for management work to propose regional management models and policies.

Accordingly, by 2050, the Ha Noi zone will become a huge urban region with its functions as synthesized economics of the nation and the Asia-Pacific region.

The capital city will become a city of “Green – Culture – Civilization – Modern”, and the urban of highly competitive, efficient, dynamic development, among other features.

PEB Steel invests in Myanmar

The $15 million facility, PEB’s first in Myanmar, is due to officially open in the third quarter of 2016 and is located in Thilawa Special Economic Zone (TSEZ) and occupies an area of approximately 30,000m2.

Advanced technology, formulated and developed by PEB, is a key feature of the construction which also makes use of innovative materials including PebHybrid for the joists and mezzanine beams, an improved ridge ventilation system (RV 3.0) and PebFoam insulation for improved energy efficiency.

After being established 21 years ago, PEB has become a leading player in the global steel fabrication industry. This extensive experience of fabrication and construction projects in combination with continuous research, development and technical improvements has helped to create pioneering products and buildings.

These innovative structures include the Taekwang Vina factory, used for production of Nike shoes which has achieved LEED certification at Tay Ninh. Other notable projects include the Jooco Dona factory in Dong Nai which has a clear span of 96 metres, the four-story Aeon Mall car parking lot in Cambodia and a 127m hangar for Lufthansa Airlines in the Philippines.

Speaking about PEB Steel’s strategic decision to invest in Myanmar the executive chairman, Mr. Sami Kteily stated: “We have been successful in Vietnam. Our commitment to continuous development and the application of the latest industry developments and standards in our practical operations has resulted in some remarkable projects being completed. Due to these factors, PEB Steel is absolutely confident of becoming a success in Myanmar”.

Agency opens to help enterprises with VKFTA

The Korea – Vietnam FTA Support Center has been opened in Hanoi to support enterprises from both countries in taking advantage of and overcoming any difficulties from the Vietnam – South Korea Free Trade Agreement (VKFTA).

The new center will be under the management of the Korea Trade – Investment Promotion Agency (KOTRA).

According to Deputy Minister of Industry and Trade Do Thang Hai, the VKFTA presents major opportunities for enterprises from both countries to develop stably. Trade turnover has grown by an average of 23 per cent per year over the last decade. In 2015 South Korea was Vietnam’s third-largest trading partner, with $34.3 billion, an increase of 29 per cent against 2014. South Korea holds advantages in the export of computers, electronic components, machinery, and textiles to Vietnam. Vietnam’s exports to South Korea, meanwhile, are primarily textile products, crude oil, seafood, and wood and wooden products.

Mr. Kim Jae Hong, Chairman of KOTRA, said the new center will support enterprises in implementing articles contained in the FTA and in their exports to China, the US and Europe, which have experienced economic downturns in recent times.

Mr. Hoang Quang Phong, Deputy Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that South Korea possesses strengths in technology, capital investment, and modern business management, which will guarantee success in its partnership with Vietnam.

The VKFTA officially took effect on December 20, 2015.

Taiwan & South Korea lead investment in Dong Nai

As at the beginning of 2016 Taiwan and South Korea were the two leading investors in terms of foreign direct investment (FDI) in southern Dong Nai province. Taiwan had 283 projects with total registered capital of almost $5.13 billion, while South Korea had 312 projects with total capital of more than $5 billion, according to the Dong Nai Department of Planning and Investment.

Over the last few years Taiwanese and South Korean enterprises have made new investments and expanded existing investments in sectors such as manufacturing and processing shoes and sandals, textiles, wooden products, technology components, and supporting components.

Mr. Park Hyun Bae, Chairman of a South Korean business in Dong Nai, said that many of his compatriots wish to invest in the province due to its convenient transport links, in particular its proximity to Long Thanh International Airport. Some, however, still hesitate because of the procedures involved, so he hopes that the province will open a specialist unit to support South Korean investors and shorten and simplify investment procedures.  

According to the Dong Nai Industrial Zones Authority (DNIZA) the province is in the process of restructuring procedures and transparency to attract investment. Enterprises experiencing difficulties in the province can contact DNIZA to seek support. FDI enterprises can also directly contact leaders at DNIZA to meet directly.

DNIZA has set a target of attracting investment of $1 billion. From the beginning of 2016 to the end of February the province’s industrial zones attracted 14 FDI projects with registered capital of $170 million, an increase of 2.6-fold against the same period last year.

Vietnam to become major manufacturing center says foreign expert

Vietnam will become the largest manufacturing center for exported goods to the US, the EU, and Japan, Mr. Jang Soo-young, an expert on free trade agreements (FTAs) and the TPP at the Korea Trade-Investment Promotion Agency (Kotra), told a seminar on the Vietnam – South Korea FTA in Hanoi on March 2.

External and internal factors will see Vietnam become a major global manufacturing and export center, he said, especially its participation in significant trade deals such as the TPP and the Regional Comprehensive Economic Partnership (RCEP) and being member of the ASEAN Economic Community (AEC).

“Investment by TPP and AEC members into Vietnam will continually increase,” Mr. Jang believes. “As at the end of 2015 investment by TPP and AEC members accounted for 59 per cent of all foreign direct investment in Vietnam.”

Regarding internal factors, he pointed to two important matters that could make Vietnam become a global manufacturing center. “Increases in the minimum salary in Vietnam have been lower in the last four years,” he said. The increase was 17.5 per cent in 2013 then 14.9 per cent, 14.8 per cent, and 12.4 per cent in 2014, 2015 and 2016, respectively.

Another factor lies in the working age of the population, which totaled 54 million in 2015, or 58 per cent.

When comparing the competitive advantages held by Vietnam to regional countries, Mr. Jang said that the minimum salary is only a touch higher than in Myanmar and Cambodia but their infrastructure remains poor.

The seminar was attended by Deputy Minister of Industry and Trade Do Thang Hai, Mr. Ryu Hang Ha, Chairman of the Korean Chamber of Commerce in Vietnam (Kocham), and Mr. Jeahong Kim, Chairman of Kotra Vietnam, among others.

Another event held in Hanoi on March 2 to help boost trade cooperation between Vietnam and South Korea witnessed the signing by Kotra and Vietnam’s Directorate for Standards, Metrology and Quality (STAMEQ) of a memorandum of understanding that will ease the burden placed on South Korean enterprises by cumbersome procedures. For this purpose, the Korean Institute of Accreditation will transfer technology and safety inspection systems from South Korea to Vietnam.

KienLongBank expands network

KienLongBank has gained approval from the State Bank of Vietnam (SBV) to open a new branch and 13 more transaction offices in 2016, bringing to 117 its branches and transaction offices nationwide, in most cities and provinces.

Under Official Document No. 1014/NHNN-TTGSNH dated February 25, it was authorized to open a branch in Nha Be district, Ho Chi Minh City, and 13 transaction offices, in La Gi and Ham Tien in Binh Thuan province, Buon Ho in Dak Lak province, Tran Van Thoi and Nam Can in Ca Mau province, Thap Muoi in Dong Thap province, Nga Bay in Hau Giang province, Can Giuoc in Long An province, Thanh Tri in Soc Trang province, Cai Lay and Go Cong in Tien Giang province, and Ba Ria and Tan Thanh in Ba Ria Vung Tau province.

KienLongBank has in recent years invested heavily in technology, staff, and its operational network along with retaining stable business growth. In the 2012-2015 period total assets increased by an average of more than 10 per cent annually, outstanding credit by 18.76 per cent, and capital mobilization by 23.58 per cent. Its bad debt ratio has been controlled at under 2.5 per cent while other limits and safety ratios meet SBV regulations.

The bank hopes its network expansion will contribute to its plan to develop distribution channels, increase the number of clients, and enhance its competitive capacity in the domestic market.

OCB increases charter capital

The Orient Commercial Joint Stock Bank (OCB) has just announced it will increase its charter capital by VND452.85 billion ($20.2 million), from VND3.55 trillion ($159.2 million) to VND4 trillion ($179.4 million).

The increase is contained in Document No. 9829/NHNN-TTSGNH signed by the Governor of the State Bank of Vietnam (SBV) on December 23, 2015 following a resolution from OCB’s Board of Management.

In 2014 the SBV agreed to OCB increasing its charter capital to VND4 trillion ($179.4 million) but the bank failed to do so.

According to the resolution it plans to issue almost VND953 billion ($42.74 million) in additional stocks, including 5 per cent of profits from 2014 and VND780.6 billion ($35 million) in a private offering to certain entities (excluding major shareholders, Members of the Board, Members of the Supervisory Board, and the General Director).

OCB also released the results of its private offering of 28 million shares at VND10,000 ($0.45) per shares to two individuals.

Ms. Nguyen Thi Thu Trang purchased 14.5 million shares, bringing her holding to 3.63 per cent, and Mr. Nguyen Duc Toan purchased over 13.5 million shares, bringing his holding to 3.99 per cent. Neither were previously shareholders of OCB.

HCMC’s retail market to soar in 2016

Ho Chi Minh City’s retail market is expected to reach a key turning point this year, with strong growth prospects in mid-level commercial centers, according to Mr. Neil MacGregor, Managing Director of Savills Vietnam.

He pointed out that consumer spending is increasing at a rapid rate when compared with other regional markets, resulting in a more sustainable model going forward.

International retailers are now excited to enter the local market following the announcement of various free trade agreements offering the prospect of reduced tariffs and simplified procedures.

Vietnam’s young population and rapidly growing middle class are two major factors driving retail market growth. 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, particularly in new residential areas like District 2, District 7, and Go Vap district, to meet this blooming demand,” he said.

In 2015 total retail sales of consumer goods and services in Vietnam increased 9.5 per cent compared to 2014, which was one of the highest rates globally. Many active merger and acquisitions (M&As) took place in the retail segment in 2015. Demand for business premises will therefore be quite high.

Mr. MacGregor also indicated that although local and international retailers are both seeking better quality shopping centers in prime locations the number of options remains limited.

Improving economic conditions have led to a rise in the fortunes of Vietnam’s property market, with urbanization, tourism, and retail development leading the way. Residential developers are now more focused on design, landscaping, and facilities as well as management services, as higher quality projects provide more confidence to buyers.

Vietnam is an attractive destination in the region. While other countries such as Indonesia and the Philippines are at the top of the market cycle, Vietnam is only around 12 months into a market recovery phase. Foreign developers and investors are showing greater interest in the country’s real estate market and Savills sees this trend continuing throughout this year and beyond.

Kinh Do renamed Mondelez Kinh Do

Kinh Do Binh Duong Joint Stock Company was officially renamed Vietnam Kinh Do Mondelez Joint Stock Company (Mondelez Kinh Do) on March 1.

Mondelez International, one of the world’s largest snacks companies, invested VND7,846 billion (US$370 million) in the purchase of 80 percent stakes of Kinh Do’s confectionary part on June 30 last year.

The company’s products have been presented in 165 nations in the world.

Mr. Vu Quoc Tuan, deputy director general of Mondelez Kinh Do, said that the company would succeed and develop the brand name and product quality of Kinh Do.

VN plastic products shipped to 159 countries worldwide

German Chamber of Industry and Commerce in Vietnam in coordination with Mess Dusseldorf and Vietnam Plastic Association organized the conference themed “Current situation of global plastic and rubber industries, trend development of plastic machineries and raw material sectors. An overview of K 2016 – International trade fair No.1 worldwide for plastic and rubber industries in Germany” on March 2, in Sai Gon Exhibition Convention Center, District 7, HCMC.

In the 2010 -2015 period, the plastic industry was one of the country’s key industrial sectors with its growth rate from 16 percent to 18 percent per year (only behind telecommunications and garment & textile sectors).

According to Chairman of the Vietnam Plastic Association, Ho Duc Lam, in 2015 alone, the plastic industry manufactured & consumed nearly five million tons and Vietnam’s plastic products were exported to 159 countries & territories worldwide including high demand markets such as Japan, the U.S, Germany, Thailand and the European with growth rate of 12,4 percent over previous year. The export turnover of plastic products reached US$ 2.405 million last year.

However, Mr. Lam said although the plastic industry has developed strongly in the recent years but it is appreciated as a technical economic industry depending on outsourcing because plastic industry has to import from 85 to 90 percent of input material to meet production demand every year.

In addition, domestic plastic industry needs average 3.5 million tons of input raw materials such as PE, PP, PS… and hundreds of subsidiary chemicals. It is estimated that the country’s plastic enterprises will need about 5 million tons of raw materials to meet their production demand by 2020.

Vietnam plastic producers should focus on high technology machineries of plastic & rubber industries

“To take advantage of integration situation, the country’s plastic enterprises should improve and invest new technologies, production chain, focus on environmentally friendly and safe products, aiming to enhance the industry’s higher export value & sustainable growth”, Mr. Lam confirmed.

The Chairman added that K 2016 will be good opportunity for plastic enterprises to exchange and seek partners & new cooperation.

Mr. Gernot Ringling, Managing Director of Messe Dusseldorf Asia hoped Vietnam plastic enterprises will be able approach new technologies through K 2016 which is scheduled to take place in October in Germany. K 2016 will introduce new trends of plastic & rubber industries including resource efficiency; higher material efficiency & availability; Zero waste production; light weigh construction and additive manufacturing.

Mr. Gernot Ringling said K 2013 attracted around 200,000 visitors across the world, of these, there were 800 Vietnamese enterprises.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR