A Vietnam-Philippines business forum took place in Ho Chi Minh City on January 11 with more than 120 businesses from both countries taking part. 

Speaking at the event, Deputy Director of the Ministry of Industry and Trade (MoIT)’s Vietnam Trade Promotion Agency Bui Thi Thanh An said two-way trade between the two countries grew 11 percent on average from 2008-2016. 

In November 2015, Vietnam and the Philippines established the strategic partnership, marking a step forward to promote bilateral trade and investment. 

Do Quoc Hung, Deputy Director of the MoIT’s Asia-Pacific Market Department, said the event, held concurrently with a trade seminar, affords a good chance to introduce Vietnamese firms’ capacity of manufacturing and goods supply to Filipino partners as well as facilitate business networking. 

Representative from the Ho Chi Minh City Investment and Trade Promotion Centre (ITPC) Nguyen Quoc Vinh said the city hopes for Filipino investment in building elevated roads, improving water quality and developing high-tech agriculture, education and health care. 

A lot of incentives are available for foreign investors to build Ho Chi Minh City into a modern economic and trade hub of the region, he said. 

President of the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc Angel Ngu hailed Vietnam as one of the most promising ASEAN markets of the Philippines, evidenced by the successful operation of Liwayway (Oishi) and Jollibee from the Philippines. 

In the foreseeable future, the Philippines wants increasing trade in farm produce, construction materials, iron and steel, office equipment, consumer goods, leather and footwear, he said. 

Two-way trade between Vietnam and the Philippines was estimated at 3.23 billion USD last year, up 10.8 percent annually, two-thirds of which was Vietnam’s exports to the Philippines, mostly farm produce, construction materials and spare parts. 

Vietnam is importing machinery, office equipment and chemicals from the Philippines.

The event was co-hosted by the MoIT, ITPC and FFCCCII.

Vinacomin urged to focus on strong structure

The Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin) should have a suitable structure to develop its members to become a strong economic group, said Deputy Prime Minister Trinh Dinh Dung.

Speaking at the conference held in Hanoi on January 11, Dung said Vinacomin should focus on two main tasks of coal exploitation and trading to ensure national energy security. In addition, it should improve competitiveness for its products and protect the environment to contribute to the country’s socio-economic development.

“In addition, Vinacomin must be one of the key State-owned enterprises in ensuring coal supply to the economy. The group should not only produce coal but ensure the competitiveness of exported coals, materials and operation for plants using coal,” he said.

He added that the electricity demand has been on the rise. Thermal power plants account for 34 percent of total electricity plants in Vietnam.

In the near future, the number of thermal power plants will be higher as hydropower plants have not increased while the development of renewable energy plants has been slow.

“This year, the coal balance for local demand has been enough. However, the country will have to import 20 million tonnes of coal by 2020, 50 million tonnes by 2025 and 80-100 million tonnes by 2030. This will be a big challenge for the economy in general and the energy sector in particular,” he said, adding that Vinacomin should be active in their coal exploitation and imports to meet local demand.

The Deputy PM also asked Vinacomin to improve the quality of exploration of coal and other natural resources. These will form a scientific foundation for exploitation planning and the prevention of environmental disasters.

He also required the group to improve the quality of investment projects to avoid losses. The coal sector should have solutions in place to protect the environment in coal exploitation, transport and usage. In addition, Vinacomin should concentrate on restructuring and reviewing its key products in each investment period. It should also invest in technologies and human resources to increase productivity and labour safety.

Vinacomin’s general director Dang Thanh Hai said it has set a target of 36 million tonnes of coal this year, an increase of 1.5 million tonnes from 2016, while domestic coal consumption will be 34.5 million tonnes, and 1.5 million tonnes for export.

It also targeted a turnover of 107 trillion VND (4.75 billion USD), posting a 6 percent year-on-year increase.

Hai said the Government has allowed coal exports in the 2017-20 period to help the sector’s activity in production and trade.

He said the coal price for electricity production has been increased following market prices. However, the costs of production, exploration, labour and environmental protection has also been higher, decreasing the sector’s profits, while increasing need for capital investment.

He said Vinacomin will produce coal according to the market’s demand, ensuring suitable investments in coal, minerals, electricity, industries and support services.

“We will continue to complete restructuring which focuses on technology renewal and management mechanisms to reduce production costs and enhance competitiveness. The issues of salary, working conditions and welfare for labourers would be also given attention,” he added.

Vietnam’s shrimp exports to EU increase 7.5 percent

Vietnam earned 589 million USD from shipping shrimp to the EU in 2016, a yearly increase of 7.5 percent, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

Vietnam’s shrimp exports to the EU in November 2016 reached 50.5 million USD, up 14 percent compared to the same period in 2015.

The EU remains Vietnam’s second largest shrimp importer, after the US, making up 19 percent of the total amount of exported shrimp.

The UK, the Netherlands and Germany are the three main markets of Vietnamese shrimp in the EU.

Shrimp shipment to the UK and the Netherlands increased by 4.3 percent and 34.7 percent respectively while shipment to Germany fell 3.2 percent by last November.-

HCM City enterprises borrow 12.5 bln USD from banks in 2016

The bank – enterprise connection programme enabled around 22,000 businesses in HCM City to borrow over 280 trillion VND (12.5 billion USD) from banks last year.

They had three kinds of loans available, with the city authorities acting as intermediaries for two: low-interest credit packages and loans for key sectors like agriculture, support industries, high-tech application and exports.

For the third, district- and lower-level authorities helped bring the banks and enterprises together to address the latter’s funding needs.

Sixteen banks joined the programme with total capital of nearly 212 trillion VND.

“The programme expanded with total loans last year being 60 percent more than in 2015, and the number of customers increased by 2.3 times,” Nguyen Hoang Minh, deputy director of the State Bank of Vietnam (SBV)’s HCM City office, told a January 10 meeting reviewing the programme.

According to the SBV, complaints from businesses about difficulties in getting credit have decreased, and in fact banks are meeting with enterprises in a bid to find customers since they are awash in funds.

This year the programme will focus on high-tech agriculture, start-up businesses and household businesses that were developed into enterprises, and seeks to lend 241 trillion VND (10.7 billion USD) with short-term interest rates of under 7 percent and medium- and long-term rates of 8–10 percent.

The city’s annual price stabilisation programme around Tet was also discussed at the meeting.

“The programme has played a very important part in stabilising the market,” Vo Van Viet, head of the Ministry of Industry and Trade’s domestic market department, said.

Before the programme began in 2011, city authorities had spent 50-300 billion VND a year to stabilise the consumer market by lending money to enterprises agreeing to sell at low prices.

In 2012-14, they used both public funds and bank credit for the programme.

But since 2015, bank funding has been enough, with lenders providing 13-14 trillion VND a year.

Nguyen Phuoc Thanh, Deputy Governor of the SBV, taking about the bank – enterprise connection programme, said: “It should be expanded to benefit more enterprises.”

But he also stressed that the banking sector needs a clear framework to be created by the authorities to work with the business community.

“Local authorities should create favourable conditions for enterprises to complete legal requirements related to their assets.”

Vietnam attends Vibrant Gujarat Global Summit in India

A Vietnamese delegation led by Deputy Minister of Industry and Trade Cao Quoc Hung is attending the eighth Vibrant Gujarat Global Summit in India from January 10-13, which focuses on sustainable socio-economic development.

The event attracted many heads of state, senior government officials and leaders from global economic corporations and institutes.

Speaking at the summit, Indian Prime Minister Narendra Modi highlighted his country’s remarkable accomplishments. 

He said India has become a bright spot in the global economy, referring to the “Make in India” initiative as the country’s ever biggest brand.

Total foreign direct investment (FDI) poured into India hit 130 billion USD over the past two and a half years, he cited.

The PM revealed that India is the largest recipient of foreign investment in the Asia-Pacific region.

He affirmed that creating a favourable business enviromment to attract investment is a top priority of India.

On the sidelines of the summit, Deputy Minister Cao Quoc Hung took part in a meeting with the heads of delegations from other countries and directors of Indian and international firms.

He later had a working session with the Infrastructure Leasing & Financial Services Limited (IL&FS), which invested in the Hanoi – Hai Phong highway project in Vietnam.

The official also visited Gift City – the first smart city in India, and worked with India’s Ministry of Steel and Ministry of Energy.

Czech pharmaceuticals firms target Vietnamese market

Pharmaceuticals distributors from the Republic of Czech are targeting the Vietnamese market, according to Prague radio on January 11. 

Lekarnici 95 pharmaceuticals company, which owns a network of pharmacies in Karlovy Vary and Plzen provinces, plans to expand operations to Southeast Asia, including Vietnam. 

Director of Lekarnici 95’s regional pharmacy network Petr Koudelka said the firm began studying Vietnamese pharmacies and hospitals’ demand for pharmaceuticals. It plans to import products from other countries besides its existing stocks to sell in Vietnam. 

Last November, the Vietnamese embassy partnered with the Czech Management Association to hold a seminar on trade and investment in Vietnam. 

Two-way trade currently accounts for nearly 1 billion USD but bilateral investment remains limited due to a lack of information about Vietnam’s business climate. 

Ivo Gajdos, Executive Director of the Czech Management Association hailed Vietnam as a promising market with a population of 90 million.

Forum explores Vietnam-Bashkortostan business partnership potential

A business forum between Vietnam and the Republic of Bashkortostan, Russia, was held in Hanoi on January 11, exploring business partnership potential between the two sides.

The forum was held by the Vietnam Chamber of Commerce and Industry (VCCI) and the Russian trade office in Vietnam on the occasion of a working visit by Bashkortostan Prime Minister Mardanov Rustem Habibovich.

Opening the event, VCCI Vice Chairman Doan Duy Khuong highly valued cooperation between Vietnam and the federal subjects of Russia, including Bashkortostan.

He noted that Vietnamese firms have invested in 20 projects in Russia with total registered capital of nearly 3 billion USD while Russian companies have 114 investment projects worth 2.08 billion USD here.

That modest investment is expected to expand in the future, he said, adding that bilateral trade is thriving with an average growth rate of 3.6 percent each year. Vietnam’s trade revenue with Bashkortostan is just about 15 million USD, most of which is Bashkortostan’s exports to Vietnam.

Khuong said to boost trade between his country and Bashkortostan, it is necessary to encourage businesses to do market surveys while increasing information exchange and the introduction of each other’s business climate.

Bashkortostan has many advantages in the spheres Vietnam is interested in such as textile-garment, footwear, consumer goods, agricultural production and fisheries, he added.

Kharinov Vyachslav Nikolaevich, head of the Russian trade office in Vietnam, said during this visit, the Bashkortostan PM is accompanied by business delegates from the oil and gas, energy, medical equipment and food processing sectors. Many of them want to seek Vietnamese partners in food processing and the production of milk, microbiological fertiliser and medical equipment.

Though the current bilateral trade remains modest, Bashkortostan believes in Russian goods’ competitiveness in the Vietnamese market, he said, adding that the potential in industrial cooperation is also significant thanks to the Vietnam-Eurasian Economic Union Free Trade Agreement. Bashkortostan pledges tax and land incentives for Vietnamese firms, the trade official said.

He also suggested the two sides strengthen affiliation in tourism.

Vietnam to attend World Economic Forum in Switzerland

A Vietnamese delegation led by Prime Minister Nguyen Xuan Phuc will attend the annual World Economic Forum (WEF) 2017 in Davos, Switzerland from January 17-20. 

Themed “Responsive and Responsible Leadership”, the event will feature more than 300 sessions on improving global governance, coping with insecurity and crises, promoting inclusive and sustainable growth amid global economic slowdown, economic restructuring and social reform. 

Participants will also discuss WEF’s initiatives in the fields of consumption, digital economy and society, natural resources and environment, finance-monetary, food security and agriculture, health care, investment and international trade. 

Nearly 3,000 delegates are expected to join the event, including leaders from China, Germany, Japan, the Netherland; representatives from the US President-elect Donald Trump’s power transition team, United Nations Secretary General and executives from the World Bank, the International Monetary Fund and prestigious scholars. 

Since Vietnam and WEF established ties in 1989, senior Vietnamese leaders have frequently attended the WEF’s annual meetings in Davos and East Asia. Both sides are working closely together in agriculture. 

Currently, 11 Vietnamese corporations and groups are WEF’s members, including the military-run telecoms provider Viettel, FPT Group and VinGroup.-

Vietnamese products making inroads into India

Commodities from Vietnam have begun to make inroads into the Indian market as seen through the country’s first-ever trade surplus with India, standing at 70 million USD last year.

Bui Trung Thuong, head of Vietnam’s trade office in India, made the comment during an interview with Vietnam News Agency on the occasion of 45 years of bilateral diplomatic ties (January 7, 1972) and 10 years of strategic partnership with India.

He said since Vietnam and India set up a strategic partnership in 2007, bilateral trade has increased more than five-fold from 1.01 billion USD in 2006 to 5.5 billion USD in 2016, according to the General Department of Vietnam Customs.

Vietnam’s exports to India jumped 19.34 times during that period with average growth of 253 percent annually.

The structure of traded commodities has also changed dramatically, from mostly animal feed, corn and pharmaceuticals in the past to a wide range of goods at present such as agricultural and aquatic products, electronic devices, mobile phones and components, machinery, pharmaceuticals, chemicals, garments and automobiles.

Thuong said that the two countries have huge cooperation potential, especially after ties were elevated to a comprehensive strategic partnership during a visit to Vietnam by Indian Prime Minister Narendra Modi last year.

He said India is currently a big supplier of textile and garment materials for Vietnam, with the Southeast Asian nation importing 423 million USD worth of cotton, fibre, fabric, other materials and apparel products from India in 2013, up nearly 50 percent from the previous year. This figure reached 460 million USD and 457.47 million USD in 2014 and 2015, respectively.

However, it accounted for less than 3 percent of Vietnam’s total imports of cotton, fibre, fabric and other textile-garment materials – about 18.3 billion USD in 2015.

Indian businesses consider Vietnam as a new partner in automobile, machinery, spare part and equipment production. Many big enterprises have come to Vietnam to seek partnerships such as Tata Motors, Mahindra & Mahindra, Eicher and Escort, Thuong said.

He also highlighted pharmaceutical and health care which are strong industries of India. According to the Pharmaceuticals Export Promotion Council of India, this country’s exports of those products approximated 25 billion USD in the fiscal year 2014-2015. Vietnam imported more than 2.3 billion USD of pharmaceutical products in 2015.

In terms of agriculture, the two countries share a similar climate, allowing them to boost agricultural cooperation by transferring technology, exchanging experience and information, and building shrimp and tra fish farms.

Thuong noted data from India’s Ministry of Commerce and Industry showing that bilateral trade reached 9.2 billion USD in 2014-2015 and 7.83 billion USD in 2015-2016. He hopes it will be about 9 billion USD at the end of fiscal year 2016-2017.

He said to facilitate trade, the two Governments should remove tariff and non-tariff barriers and stop anti-dumping and anti-subsidy investigations into each other’s exports.

They also need to promote existing mechanisms such as the joint sub-committee on trade, enhance locality-to-locality and business-to-business partnership, and hold trade fairs and forums. It is also necessary to carry out the ASEAN-India Trade in Goods Agreement, ratify other ASEAN-India agreements on services and investment, and finish negotiations on the Regional Comprehensive Economic Partnership.

He urged both sides’ agencies and enterprises to optimise cooperation opportunities. Vietnamese companies should also make use of incentives from the “Make in India” initiative.

Vietnam’s auto sales reach 20-year record

The total number of automobiles sold in 2016 reached 304,427 units, the highest level recorded by Vietnam’s auto market in the past 20 years, the Vietnam Automobiles Manufacturers Association (VAMA) announced on January 11.

The figure is much higher than the previous records of 244,914 units in 2015 and 160,000 vehicles in 2009.

According to VAMA, in December alone, the sales of automobiles in the domestic market were 33,925 units, up 17 percent from November. Of which 23,565 vehicles were assembled locally and 9,730 were imported.

The sales of locally-assembled vehicles upped 32 percent in 2016, while the sales of imported ones increased by 5 percent.

The Truong Hai Auto Corporation (Thaco) accounted for the largest market share of 41.5 percent with 112,847 vehicles sold in 2016.

Japan’s Toyota sold 57,036 units, making up 21 percent of the market share, while Ford Vietnam’s sales were 29,011, equivalent to 10.7 percent of the market share.

Motorbike sales surge 9.5 percent in 2016

The sales of motorbikes exceeded 1,676,800 units in the second half of 2016, raising the year’s total number to over 3.12 million, up 9.5 percent from 2015.

The Vietnam Association of Motorcycle Manufacturers (VAMM) reported that its members, namely Honda, Piaggio, Suzuki, SYM and Yamaha, produced 55 models during the year.

Honda Vietnam (HVN) accounted for 70 percent of the market share with the sales of over 2.14 million units, up 7 percent from the previous year.

According to the Ministry of Industry and Trade, the country’s motorbike output exceeded 3.39 million units, up 3.2 percent from 2015.

Viejtet reduces night flights' ticket price by 40 percent during Tet

Vietjet Air will reduce ticket prices by 40 percent for night flights from Tan Son Nhat International Airport in Ho Chi Minh City to other provinces to meet travel demand of passengers during Lunar New Year (Tet).

The announcement was made by Luu Duc Khanh, Operational Director of Vietjet Air, at a meeting with Deputy Minister of Transport Le Dinh Tho in Ho Chi Minh City.

The promotion applies for flights from 22:00 – 7:00 from January 20 to February 7. Tickets can be purchased from January 12.

Previously, the Civil Aviation Administration of Vietnam has agreed on airlines’ plans to increase domestic flights to 1,270 during Tet. 

Mekong Delta city targets 5.6 million tourists in 2017

The Mekong Delta city of Can Tho expects to welcome 5.6 million tourists in 2017, including over 600,000 foreigners.

The tourism sector aims to rake in 2 trillion VND (88.6 million USD) in revenue, Deputy Director of the municipal Department of Culture, Sports and Tourism Le Minh Son revealed at a conference in the city on January 11.

Can Tho will implement a project to build tourist sites, including Ninh Kieu Wharf, Cai Rang Floating Market, and dunes along the Hau River, he said.

The municipal authorities also aim to speed up a project preserving and developing the Cai Rang Floating Market to turn it into a special tourism product of the Mekong Delta and Can Tho city, he added.

Son also proposed the Ministry of Culture, Sports and Tourism set up the Mekong Delta tourism development coordination committee, and approve a project establishing the municipal Department of Tourism - separate from the Department of Culture, Sports and Tourism.

In 2016, Can Tho greeted over 5.3 million vacationers, up 14 percent against the previous year, and earned over 1.8 trillion VND (79.7 million USD) from tourism.

The city has launched new tourism services such as the pedestrian bridge connecting Ninh Kieu Wharf and Can Khe Islet, five-star hotels, trade centers, high-end resorts, and golf courses.

Global economy to grow slightly in 2017

The World Bank predicts a slight recovery of the global economy in the coming years amid rallying oil and commodity prices and the expansion of emerging markets and developing economies.

In its “Global Economic Prospects” report, the World Bank says global economy will grow 2.7% this year and 2.9% next year, better than last year’s 2.3%. 

The World Bank report says emerging markets and developing economies will grow 4.2% in 2017 and 4.7% in 2018, compared with 3.4% last year.

These economies are projected to contribute this year, for the first time, for 60% of the global growth. 

The World Bank retains its projections of 6.5% and 6.3% growth for the Chinese economy in 2017 and 2018. 

The Indian economy is predicted to grow 7.6% this year, 0.6% more than last year as reform measures boost labor productivity. 

According to the report, the Russian economy has recovered from crisis thanks to policy adjustments and weathering the adverse effects of record low oil prices.

The World Bank estimates developed economies will grow 1.8% this year and next year, slightly more than last year, citing the effects of low inflation and rising instability of policy adjustments. 

The US economic growth rate is projected to be 2.2% in 2017 and 2.1% in 2018, but changes made by President Donald Trump’s administration could impact the world’s largest economy in unpredictable way.

While predicting that the US economy’s strong growth will provide momentum for global growth, the World Bank warns that the Federal Reserve Bank’s raising its prime interest rates and tightening financial conditions will negatively affect emerging economies which are dependent on external financing.

The World Bank is calling on developing economies to adopt supportive financial policies and ensure a rational balance between financial adjustments and reforms to spur growth.

Interbank interest rates surge

The interbank market has seen interest rates for Vietnam dong loans rising sharply over the past two days, an unprecedented market movement, market participants said.

Financial organizations said an upsurge in interbank rates indicated that the domestic currency and foreign exchange markets would undergo unexpected developments this year.

Interbank rates for tenors of less than two weeks climbed by 18-46 basis points on January 10. Overnight and one-week rates each rose to 4.96% per year, the two-week rate 5.04% per year and the one-month rate 5.2% per year. On Monday, interbank rates for all tenors edged up 10-50 basis points. 

On open market operations (OMO), the State Bank of Vietnam (SBV) on January 10 issued VND15 trillion of debt with 58% of it acquired by credit institutions. Meanwhile, some VND994 billion fell due, thus leaving a net injection of VND7.73 trillion into the system.

As of January 9, the total volume of money had surpassed VND30.07 trillion on OMO.

Despite ample Vietnam dong currency liquidity, interbank rates have gone up due mainly to pressure from the foreign exchange market. The U.S. dollar has strengthened against the dong over the past few days. The exchange rate stood at VND22,525-22,530 per dollar in Monday morning trade and soared to VND22,575-22,580 in the rest of the session.

The SBV on January 10 announced the reference exchange rate of VND22,167 to the dollar, down VND1 from the previous day. Accordingly, commercial banks could quote their dollar buying and selling prices in a range of VND21,502 and VND22,832.

The reference exchange rate was VND22,168 on Monday, up VND14 versus last Friday. The central bank quoted the dollar selling price at VND22,783, VND50 lower than the allowable ceiling.

The exchange rate stood at VND22,585 on the interbank market, up VND25 compared to the previous trading day. 

On the informal market, the dong-dollar exchange rate was VND22,920-22,940, down from last Friday.

Meanwhile, the annual overnight rate for dollar loans stands at 1.2% at present, the one-week rate 1.35%, the two-week rate 1.5%, the one-month rate 1.6% and the three-month rate 1.82%. 

On the secondary Government bond market, bond yields for all tenors are slightly volatile.

The greenback has weakened against other currencies on world markets due to U.S. Federal Reserve (Fed) officials’ unclear words about the tightening of monetary policy.  

The global gold price has gone up amid the dollar’s depreciation. Spot gold has climbed 0.65% to US$1,182.46 an ounce.

On the home market, Saigon Jewelry Company (SJC) quoted a tale of gold at VND36.3 million for buying and VND36.62 million for selling, down nearly VND100,000 a tael. A tael equals to 1.2 troy ounces.

Domestic gold was VND4.3 million a tael higher than the world level.

VND281.2 trillion lent in business matching program

Banks provided more than VND281.2 trillion in loans for enterprises in HCMC last year in a business matching program, equaling the total amount of loans made in four previous years in the program.

The program last year benefited 21,914 businesses, 2.3 times higher than four years ago. It is being implemented by the HCMC branch of the State Bank of Vietnam (SBV), the HCMC Department of Industry and Trade, district authorities and relevant agencies.

Speaking at a 2016 review conference on the program in HCMC on January 10, Nguyen Phuoc Thanh, deputy governor of the central bank, said the program had been successful thanks to the involvement of authorities. Local government knows what banks and enterprises actually need.

In the program, lender banks should look for enterprises to offer loans, not the other way round, Thanh noted.

Nguyen Thi Thu, vice chairwoman of HCMC, said the tripartite link between banks, district authorities and business organizations and people had contributed partly to the city’s gross regional domestic product (GRDP) of VND1,023,926 billion in 2016, a rise of 8.05% from 2015.

Thanks to this, enterprises have been able to access funds to expand business operations while districts have seen budget revenues rising, she said.

Tran Hai Anh, vice chairman of the HCMC Business Association, said the 2008-2011 period had been extremely difficult for businesses, with bank interest rates surging above 20%. Consequently, many loss-making enterprises were forced to go out of business, and the mutual trust between banks and enterprises was undermined.

This program has helped the two sides rebuild trust. This is an optimistic period for HCMC-based firms, Anh said.

Anh suggested banks expand services to company employees who want to buy a house or a car, provide enterprises with information about foreign customers, offer them advice on investment and development, and give big and small firms equal access to credit.

This year, 16 joint-stock banks and a foreign bank (Standard Chartered) have registered to offer their credit packages totaling VND241.1 trillion and US$10 million through the program. Interest rates are not higher than 7% per year for short-term loans in Vietnam dong and 8-10% for medium and long-term ones.

PV Gas to pour US$2 billion into major projects

PetroVietnam Gas Joint Stock Corporation (PV Gas) would inject over US$2 billion into big projects this year, company chairman Le Nhu Linh told a press conference on the firm’s 2017 business plan on January 10.

The firm is focusing on seaport and warehouse projects to facilitate the import of liquefied natural gas (LNG) for Nhon Trach 3 and Nhon Trach 4 thermal power plants.

Linh told assembled reporters that PV Gas would step up the implementation of big-ticket projects this year.

It will carry out phase two of Nam Con Son 2 gas pipeline project at a cost of US$1 billion at the end of the year to put it into operation two years later. Meanwhile, the first phase of this project will connect to Su Tu Trang oil field. 

PV Gas is boosting work on the Ca Mau gas processing plant project with an investment of US$300 million and will test run it at the end of quarter two this year before its full operation by the year-end.

The company is conducting the feasible study for the Ca Rong Do gas pipeline project which costs some US$1 billion. Work on this project will start this year and be complete in 2019.

“We will concentrate on a project to raise the efficiency of liquefied petroleum gas (LPG) collection at Dinh Co gas processing complex with an investment of US$15-20 million,” Linh said.

The firm is also working on a project to produce plastic balls with an annual capacity of 400,000 tons to meet rising demand on the home market.

Apart from those big-ticket projects, the company will implement small projects in 2017, Linh added. 

PV Gas is building a number of facilities in the central province of Binh Thuan and the southwestern and northern parts of the nation to store imported gas. The firm said domestic gas consumption in the next 10-15 years would be mostly met by overseas suppliers. 

Linh said if the Government allows PV Gas to sell the State stake, the company would select strategic partners to help it fund big-ticket projects in the long run.  

This year, the firm looks to carry 9.3 billion cubic meters of gas ashore, down from 10 billion cubic meters in 2016.  PV Gas explained low oil prices would prompt oil producers to slash output, thus affecting gas output.

The average oil price stood at US$43-45 a barrel in 2016, much lower than in previous years and representing 85% of the 2015 average. PV Gas said it adopted a number of measures so as to attain revenue of roughly VND60 trillion and after-tax profit of VND7.19 trillion last year.

At present, PV Gas supplies gas for the thermal power plants that are responsible for 30% of Vietnam’s electricity output, and the fertilizer facilities that meet 70% of total urea fertilizer needs. It also holds 70% LPG market share.

New capital requirement for gambling service providers

Firms must have chartered capital of at least VND200 billion (US$8.83 million) each if they want to get a license to provide gambling services for foreign passport holders from February 15 this year.

The requirement is part of the Government’s Decree 175, which amends and supplements Decree 86 on gambling business in Vietnam.

The revised decree specifies that gambling services providers that have already obtained investment or business registration certificates can continue the business until the new regulation goes into force in mid-February.

Eligible enterprises should send all required documents to the Ministry of Finance in accordance with the new decree. They can get approval from the ministry within 30 working days from the date of all the papers being submitted. The ministry will make clear types of and machines for gambling services in line with the prevailing regulations and their current licenses.

In case the investment or business registration certificates make no mention of an exact number of slot machines, enterprises can operate one machine for every five guest rooms they have.

The period in which enterprises are allowed to run machines for gambling services is the same as the validity of their investment or business registration certificates or clarified in relevant documents issued by competent authorities.

Vietnam’s outbound travel growth second highest in Asia-Pacific

Vietnam would obtain annual growth of 9.5% in the number of Vietnamese traveling abroad in the next five years, the second highest rate in the Asia-Pacific region, according to a MasterCard report on the future of outbound travel in the region.

Myanmar will take the lead with yearly growth of 10.6%, followed by Vietnam with 9.5%, Indonesia with 8.6%, China with 8.5% and India with 8.2%.

The number of Vietnamese traveling overseas is forecast to rise from 4.8 million last year to 7.5 million in 2021.

The report showed the number of people traveling abroad from emerging countries in the region, including Malaysia, Thailand, Indonesia, Philippines, Vietnam, Myanmar and Sri Lanka is now 1.5 times higher than developed countries in the region. In addition, outbound travel growth in developing countries tends to be higher than their gross domestic product (GDP) growth.

Eric Schneider, senior vice president of MasterCard Advisors in Asia Pacific, said besides young Asians with passion for travel, the emerging middle class would make great contribution to outbound travel growth in the region.

HCMC authorities promise to meet budget revenue target

Finance authorities of HCMC will make concerted efforts to meet the higher budget revenue target for this year set by the central Government.

Le Ngoc Thuy Trang, deputy director of the HCMC Department of Finance, told a meeting in the city on January 10 that the city would have to collect VND347.8 trillion (US$15.3 billion) for the State budget this year.

The department, she noted, will worker closely with the departments of tax and customs, and the State Treasury to make sure budget collections will go as planned. In addition, the department will carry out rigorous tax inspections, take drastic measures for collecting tax debt, and prevent transfer pricing and tax evasion.

The department will work towards creating favorable conditions for enterprises to do business so that budget collections can be sustainable.

The budget collection burden is heavier for the city this year as the VND347.8 trillion target is 15.6% higher than the 2016 estimate. However, the city can keep a mere 18% of annual shared revenue in the 2017-2020 period.

The city’s budget collections totaled VND307.1 trillion (US$13.6 billion) last year, 2.9% higher than the estimate and a 12.3% year-on-year increase. If crude oil was excluded, the figure would be VND292.9 trillion (US$12.9 billion), 4.6% above the estimate.

In particular, revenues from domestic sources amounted to VND191.8 trillion (US$8.4 billion), surpassing the estimate by 8% and jumping 22.5% year-on-year, while those from crude oil exports and import-export activities met 98.6% of the target at VND101.1 trillion (US$4.4 billion).

A report of the Finance Department showed the tax department stepped up tax payment inspections and collections of tax arrears at over 19,600 firms last year.

As a result, it collected tax arrears and fines of VND3.03 trillion (US$134.5 million) and over VND10.82 trillion (US$479.4 million) in tax debts owed in 2015. Meanwhile, the customs department collected around VND380 billion (US$16.8 million).

Housing crisis brews in Vietnam as low-income homebuyers forgotten

Industry leaders warn that the market will suffer a severe imbalance in supply if developers keep chasing after upscale buyers.

Major cities in Vietnam have been told to prepare for more urban challenges ahead as the housing market is expected to fail the large number of low to middle income earners over the next 10-15 years.

This group, believed to account for 80% of the market, has been consistently overlooked by developers who mostly focus on the lucrative high-end segment.

Housing demand is rising fast in Vietnam, which has one of the highest urbanization rates in Southeast Asia. Just 15 years ago, only 24.6% of its population lived in cities. Today, about 32 million people live in urban areas, accounting for approximately 34.1% of the total population.

Urban planners estimated that Vietnamese cities will be home to 40 million people by 2025. But not all will be able to find a home.

Since the country pushed through economic reforms 30 years ago, Vietnam's urban housing policy has been radically changed and reshaped by involving private developers. However, even as more products hit the market, they are mostly beyond the reach of low-income households and migrants.

Marc Townsend, general manager of property consultancy firm CBRE Vietnam, said that in the next 10 years, Hanoi and Ho Chi Minh City will still struggle with the supply-demand imbalance of affordable housing. The company also believed home prices could increase by about 3% annually.

“By 2030, the largest cities Hanoi and Ho Chi Minh City will remain thirsty for low-cost housing,” said Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association.

He said Ho Chi Minh City’s supply of affordable housing has kept shrinking in recent years, estimated at 27% of the whole market in 2014, down to 25% in 2015 and then to 20% in the first nine months of 2016.

In an effort to meet the expected demand for low-cost housing, same developers have started going down market, shifting their attention from high-end condominium complexes to affordable apartments.

Property giant Vingroup, for instance, has recently unveiled its new brand Vincity targeting low-income residents. Apartments will range from VND700 million (US$30,800) to VND1 billion (US$44,000).

To put the figures into perspective, the country’s average annual income was estimated at US$2,200 last year, according to the General Statistics Office.

Vingroup planned to build between 200,000 and 300,000 of these affordable apartments over the next five years on the outskirts of seven cities, including Hanoi and Ho Chi Minh City.

“The new supply of affordable home priced between VND700 million and VND1 billion is expected to catch up with the demand, as the result, mitigating the risk of a housing bubble,” said Chau from the association.

Stephen Wyatt from consultancy firm Jones Lang LaSalle said investors have been courting Vietnam’s expanding middle-class population with higher incomes and they prefer high-end apartments, which they believe can quickly bring back the money.

However, since 2015, experts have warned of an imbalance between supply and demand in the luxury segment. Sales of high-end homes fell 10% in the first nine months of 2016, while those in the affordable segment increased 10% from a year ago, according to Dragon Capital market data.

As several property giants announced large-scaled plans for affordable housing, the year 2017 may mark a big move for the real estate market, said Wyatt.

Exports to Canada up almost 10%

Vietnam exports to Canada rose 9.54% to nearly US$2.5 billion for 11 months leading up to December 2016, according to Vietnam Customs.

Among export items, garment ranked first with US$459.5 million (accounting for 18.9% of total export value but down 5.78%), trailed by footwear (up 16.88% to US$223.5 million) and computers, electronics and components (up 1.92% to US$204.3 million).

In the reviewed period, 58.3% of export products obtained a growth while 41.7% saw a decline.

It’s noteworthy that although rubber exports reached a value of just US$5.6 million, it enjoyed the highest growth rate of 21.8%.

Have Vietnam’s relaxed rules caught on with foreign homebuyers?

Insiders say it may take time to fully evaluate the impacts of the new policy that allows foreigners to own a home here.

When Vietnam opened up its housing market to foreigners in July 2015, many thought there would be so many buyers rushing in to grab the villas and apartments here.

But after a year and a half since ownership restrictions were removed, it seems nothing like that has happened.

Troy Griffiths, deputy managing director of real estate company Savills Vietnam, said that the relaxed rules make Vietnam as appealing as Malaysia and Thailand, which have already taken similar initiative to drive home sales to foreigners.

But the new policy, he said, has not been doing much for the Vietnamese economy so far. “It’s not been anywhere near as sensational as we all expected,” Griffiths told VnExpress International.

He estimated that the number of sales has not reached thousands yet. His company has reported less than a hundred sales, mostly in high-end products, and smaller apartments to Taiwanese and Singaporeans.

There are around 80,000 foreigners working and living in Vietnam. Before July 2015, each of them could only buy one apartment here, under conditions that they were either married to Vietnamese nationals, held managerial positions, or had contributed to the country.

Industry insiders believe that easing ownership restrictions have at least created more interest in the local housing market. But many often complain that regulations and paperwork in general are still very complicated for foreign buyers.

Griffiths said that theoretically, there should be no regulatory problem with the new policy.

He said it is not easy to say for sure why the policy has not been a big success as expected. But he said the country might need more time for the new rules to work out, pointing out the case of Malaysia, which has implemented a similar law for more than 10 years and has only seen 3,000 foreign buyers a year at most.

Real estate was Vietnam’s best growing economic sector in 2016 with 3,126 new companies in 2016, a staggering 84 percent annual increase.

But it also saw a nearly 70% rise in closures, only after agriculture and healthcare.

“It’s an extremely competitive sector,” Griffiths said.

He said the competition will continue in 2017 with a lot of supply coming on.

A report released by Savills Vietnam on January 9 showed strong growth in all asset classes in Ho Chi Minh City, the country’s most crowded city, in the last quarter of 2016.

Tourism boom, new public transport projects, and the current low rate of urban citizens will be key drivers for Vietnam’s property market in 2017, it said.

More than 60,000 apartments are expected to enter the market in 2017 and 2018, with a strong growth in the mid-end and affordable segments, the report said.

Only 34 percent of Vietnamese are living in urban areas, and according to Griffiths, there’s a lot of room for residential development.

An oversupply will be good for the competition, Griffiths said, dismissing concerns of a bubble similar to the one that hit the market nearly a decade ago. “The good developers will continue on and the poor ones will drop away,” he said.

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