HCM City in dire need of affordable houses

Around 81,000 people in HCM City need accommodation each year in the 2016-2020 period as the city continues to attract people from the countryside, according to the HCM City Real Estate Association (HoREA).

HoREA said that the southern metropolis’ current population stands at 13 million, including 500,000 who live in rented apartments. Around 3 million people that have moved to the city for work also need accommodation. However, the supply of apartments of one or two bedrooms priced at around VND1 billion (USD45,000) remains limited.

Le Hoang Chau, HoREA Chairman said that low-cost housing projects still face many difficulties in implementation related to site clearance and loans, leading to the modest supply.

Under current regulations, commercial housing projects of 10ha or more are required to allocate 20% of the land to social housing, which Chau claimed may not be suited to specific projects. He suggested an option that investors can exchange land lots or apartments of equal value at other locations, or pay the required 20% land allocation in cash to localities so that they can use the money so that their upmarket developments would not be affected by low income earners.

The State Bank of Vietnam’s Circular 36 issued early 2016 restricts credit in the property market, so lending interest rate for this sector has grown.

Chau also noted that it takes investors up to two years to complete procedures for building affordable housing projects, which should be shortened.

Besides cheap apartments, investors should also focus on building houses for low-income earners to lease, he said.

HCM City seeks investors for prime real estate spot downtown

The People’s Committee of HCM City is calling for investment in a mixed-use property project to be located on prime real estate downtown.

The land plot of 1.31 hectares is enclosed by Nguyễn Huệ, Hồ Tùng Mậu, Huỳnh Thúc Kháng and Ngô Đức Kế streets in District 1.

The People’s Committee has asked the Department of Planning and Investment to invite and select investors in the first quarter.

Construction is expected to cost more than VNĐ2.8 trillion (US$127 million), while land clearance compensation will cost VNĐ4.68 trillion ($210 million).

The city will grant a land-lease licence for 50 years, including 72 months to complete construction.

Last August, the city’s People’s Council adopted a resolution on the restoration of eight land plots that had been withdrawn from cancelled projects or used for other purposes. The so-called golden land plot in District 1 was one of them.

Last June, the Vạn Thịnh Phát Group Corporation sought approval from the People’s Committee to invest in the plot. The company plans to build a complex with a height of no more than 40 stories.

Binh Dinh to attract 47 investment projects in 2017     

The central province of Binh Dinh aims to attract 40 domestic projects and seven foreign projects with a total investment capital of US$510 million in 2017, according to the provincal Department of Planning and Investment.

To create the most favourable conditions for investors right from the beginning of 2017, the central province’s People’s Commitee has requested relevant agencies to urgently accelerate the construction of technical infrastructure projects at Nhon Hoi Economic Zone and at other industrial parks in the province, said Huynh Thi Thanh Thuy, Deputy General Director of the provincial Department of Planning and Investment.

The province’s authority also asked the Department of Planning and Investment and the Economic Zone Management Board to regularly update the guidelines and policies related to domestic and foreign investment promotion, resolve problems for investors and prioritise investors applying high-tech, modern and environmentally friendly technologies.

In order to attract more domestic and foreign investors, Binh Dinh must facilitate and prioritise strong and capable strategic investors and contact potential and reputable investors to promote trade and investment in the province, said Chairman of Binh Dinh’s People’s Commitee Ho Quoc Dung.

Binh dinh granted investment certificates to 40 projects with a total registered capital of VND9.7 trillion ($427.6 million) in 2016, up VND857 billion compared to 2015. So far, the province has attracted a total of 63 foreign direct investment (FDI) projects with a total registered capital of $738 million. 

Vietnamese auto-manufacturer loses $11 million in fire

An earlier fire this month at Truong Hai Auto Corporation (Thaco)’s factory in the central province of Quang Nam caused VND250 billion ($11 million) in damages to the company.

According to information released at the February 12 press conference held by Thaco and the Quang Nam People’s Committee, the fire at Thaco’s bus factory in the Chu Lai-Truong Hai complex in Nui Thanh district on February 2 was caused by electric malfunction. 

The company said that before the fire, the company had taken out an insurance for the factory in which the value of the facility was set at VND600 billion ($26.43 million)

The company’s initial calculations showed that the fire caused about VND250 billion ($11 million) in damages. Thaco chairman Tran Ba Duong said that the factory resumed operations five days afterwards.

“It was fortunate that our workers detected the fire early on and moved our assets to safety,” he said. “Otherwise the damage would have been even higher.”

Duong said that this year Thaco targeted a revenue of VND71 trillion ($3.12 billion). “This equals to VND250 billion ($11 million) of revenue each day, and we expect to submit to the budget of Quang Nam province VND50 billion ($2.2 million),” he said.

Uber fails to meet legal standards to rideshare

The Ministry of Transport has rejected Uber BV’s authorisation for Uber Vietnam to join a rideshare trial scheme because of its insufficient legal foundation.

“Uber Vietnam’s development of the trial scheme and proposing the ministry’s approval under authorisation of Uber BV is not enough of a guarantee to tie down Uber BV’s responsibility for implementation of the scheme,” the Ministry of Transport (MoT) said in its Document No.634/BGTVT-VT recently sent to Uber Vietnam.

MoT received the firm’s proposal for this trial scheme in late 2016. The scheme is about applying information technology to support the management and connection of commercial passenger transportation by contract.

“The business lines of Uber Vietnam registered in its business licence cover management consulting, as well as market research and public opinion polls which are not related to the authorised activity,” the document explained.

If Uber Vietnam is authorised to build, propose, and implement the trial scheme, this firm needs to add the business line to its business licence, while directly building, signing, and taking responsibility for business contracts with transportation units, and contracts supplying connection services with passengers in Vietnam, according to the MoT document.

Regarding the contents of the e-contract application, MoT also asked Uber Vietnam to supplement to the trial scheme the detailed description and analysis of contents and process of its transportation contracts.

The contents of the e-contracts must abide by Decree No.86/2014/ND-CP, dated September 2014, covering business conditions for automobile transportation business, and MoT’s Circular No.63/2014/TT-BGTVT on management of automobile transportation and road transportation facilitation services.

In terms of protection of customers’ rights, the trial scheme does not clarify the rights and responsibilities of sci-tech service providers and transportation businesses for customers’ rights, nor does it include co-ordination regulations to deal with customers’ complaints.

According to reports by Hanoi and Ho Chi Minh City departments of Transport, many individual cars used Uber software to run passenger transportation business without a licence. Thus, MoT has asked Uber Vietnam not to co-operate with individual car owners to operate such an unlawful business until it completes all the contents of the trial scheme in line with local rules. 

In January 2016, MoT started applying information technology to support the management and connection of commercial passenger transportation by contract (known as GrabCar), over a two-year trial period.

The GrabCar project was submitted to MoT in August 2015 by GrabTaxi Co., Ltd., and the government approved the pilot project submitted by the ministry a few months later. Under the project, five cities and provinces - Hanoi, Ho Chi Minh City, Danang, Quang Ninh, and Khanh Hoa - have been selected to test the trial service.

Customs sector to offer online public service next month

The General Department of Viet Nam Customs has asked localities to pilot its online public service system by late February 28 before running it officially from March 1.

So far, 18 out of the 35 custom departments processed online administrative services. They got 492 dossiers and proceeded 221 ones.

Up to 17 customs departments have yet received administrative services on the system.  

According to the General Department, the outcomes would seriously affect the implementation of the Government’s Resolution 36a/NQ-CP, dated October 14, 2015 on e-government for promoting e-government development, enhancing the operational quality and efficiency of state organizations.

Hence, the General Department tasked local customs agencies to review performance; improve training work; and pilot the system.  

The customs sector considered the deployment of online public services as the top task in 2017.  

Pyn Elite Fund's medical equipment investee deep in loss

Japan Vietnam Medical Instrument Joint Stock Company (JVC), where PYN Elite Fund (non–UCITS) holds 7.14 per cent, is now deep in loss.

JVC’s financial year starts on April 1 and ends on March 31 each year, so the third quarter in JVC’s financial year is actually the last quarter of 2016. In spite of the reduction in production costs in the quarter, JVC suffered a net loss of VND5.7 billion ($251,434) in operating activities. Meanwhile, in the same period last year, they made a profit of nearly VND27 billion ($1.2 million). 

Sales and services revenue these three months were VND124.5 billion ($5.5 million), down 38 per cent on-year. Gross profit this quarter was only VND5.56 billion ($245,258). Financial revenues were trivial, while the interest expenses on loans were VND1.1 billion ($48,522).

JVC’s revenue mostly comes from sales and the provision of medical equipment. Total sales in this quarter reached VND83.62 billion ($3.7 million), down 55 per cent compared to last year. However, the segment still helped to earn VND15.5 billion ($683,723) in gross profit. Associated medical supplies were VND15 billion (661,667) in loss, despite a revenue of VND32.47 billion ($1.43 million).

During the period, the sales costs were VND8.3 billion ($366,123), decreasing by more than VND10 billion ($441,112) on-year.  Besides, management costs were over VND2 billion ($88,222), dropping VND7 billion (308,778). JVC also had a discount of more than VND4 billion ($176,445) from suppliers and VND1.7 billion ($74,989) from asset liquidation.

During the last three quarters of 2016, JVC achieved VND373.75 billion ($16.5 million) in revenue, down 8 per cent compared to last year, and reported a loss of VND45.35 billion ($2 million).

Earlier, from December 1, 2016 to January 3, 2017, PYN Elite Fund bought 1,172,690 shares issued by JVC, raising its holding to 8,027,890 shares or 7.14 per cent stake.

Singapore leads ASEAN investors in VN in January

Viet Nam drew US$1.423 billion in both new and additional foreign direct investment (FDI) in January, up 23% year on year, according to the General Statistics Office. 

Singapore was the biggest foreign investor, accounting for nearly one third of the total investment in Viet Nam, followed by the Republic of Korea and China.   Singapore’s investment projects have proved effective, greatly contributing to Viet Nam’s job generation, export and economic growth. Notably, the Viet Nam-Singapore (VSIP) Industrial Zone is a symbol of the friendship and cooperation between the two countries.

The Foreign Investment Agency estimated that disbursement was estimated at US$850 million, an 6.3% increase over the same month last year, helping to lessen pressure on the nation’s balance of payments and exchange rate.  They have been present in 55 of 63 cities and provinces, mainly in Ho Chi Minh City, Ha Noi, southern Ba Ria-Vung Tau and Binh Duong, central Ninh Thuan and northern Hai Duong provinces.

In the first month of this year, FDI pledges mainly flowed to the manufacturing sector, with 834.9 million or more than two thirds of total investment, followed by US$297.4 million in the property sector.

In the month, the southern province of Binh Duong was the largest recipient of FDI, attracting over US$666 million.   Bac Giang and Ba Ria – Vung Tau came in second and third with US$159.5 million and US$108.7 million, respectively.

The two economic hubs of Ho Chi Minh City and Ha Noi received respective pledges of US$ 75.2 million and US$30 million.

Line of investment hanging on My Thuy port

International investors are lining up to join the $630 million My Thuy International Sea Port project in the central province of Quang Tri’s Dong Nam Economic Zone, despite it is still being considered by the government.

Line of investment hanging on My Thuy port

Last week, Singaporean company Dinamo met with Nguyen Quan Chinh, Deputy Chairman of the Quang Tri People's Committee, and expressed its interest in investing in this.

At the meeting, Dinamo chairman Eric Rockerfeller, after learning about the development and economic prospects that the port can bring the locality and investors, affirmed that his firm will study possibilities of joining the port development in the coming time. Dinamo is capable of raising the necessary funds for the project as well as call on port experts to join the study.

In late 2016, a South Korean firm with solid experience in port management also paid a visit to the province and worked with Mai Thuc, vice chairman of the People's Committee, on the possibilities of joining the operation of the port as a secondary investor. 

"Not only these Singaporean and South Korean firms, but also tens of other foreign investors have shown interest in the project," an official at the provincial Department of Planning and Investment told VIR.

Currently, My Thuy International Port Joint Venture Company (MTIP) has been nominated as the investor of the 685-ha project. A number of partners , including South Korean Sungjee-CJ partnership, PineStreet Infra Co., Ltd., and US financial fund Emp Infra LLC, have pledged to finance $535.5 million for the project.

In August 2016, the committee sent a proposal to the prime minister (PM), asking him to approve the project. The PM then asked the committee to reach agreement with the Ministry of Transport on the My Thuy port's scale and capacity before making a decision on the investment.     

According to a VIR source, local authorities are talking the Ministry of Transport through technical issues.  

As planned, the project will be constructed in three stages, with the first running from 2017-2020 ($230 million). According to design, the 17.5-metre deep port will be able to accommodate vessels of 100,000 deadweight tonnes (DWT).     

To prepare for the development, MTIP has inked co-operation deals with several companies, including Sungjee-CJ partnership, South Korean Daewoo Engineering & Construction, and Daewoo Construction Co., Ltd. for constructing the port’s infrastructure, and South Korean Aju Total Company to supply equipment to load and unload cargo at the port.

At present, many projects in the EZ are awaiting approval. About 10 projects have been registered in the EZ with a total investment capital of VND62.3 trillion ($2.83 billion), focusing on seaport services, thermo-power, energy and infrastructure.  

“Many local and foreign strategic investors currently want to invest in the zone, such as Vietnam’s Becamex and Vingroup, Thai Amata, and South Korean Hyundai. However, they say they will invest here if the My Thuy port is constructed,” said Chinh.

Owners’ stand-off immobilises Splendora

The Splendora project, in which Posco E&C holds 50 per cent, does not look like it is going to be completed by 2018 as was planned earlier due to a recent proposal submitted to the local authorities to adjust the 1/500 planning of the project.

According to a recent report to shareholders on the progress of the North An Khanh project, also known as Splendora, in Hoai Duc district of Hanoi, general director of Vietnam Construction and Import-Export JSC (Vinaconex) Do Trong Quynh said that the company would continue with the procedures to adjust the 1/500 planning of the project in order to deploy phase II in time, which consists of apartments, villas, shophouses, and the park in the centre.

Phase II was supposed to start construction in mid-2012. The delay was due to a conflict between the two partners.

In 2013-2014, Vinaconex considered transferring its 50 per cent stake in joint venture An Khanh JVC, developer of the Splendora project, but decided eventually otherwise. In 2016, Vinaconex once again declined the right to buy Posco E&C’s 50 per cent stake, despite being unable to find other buyers. It also still hadn’t succeeded in finding a buyer for its stake.

The disagreement started in 2012-2014, when the real estate market was frozen. At the time, Vinaconex wanted to drag the project out to wait for the difficult period to be over, then launch it for sales. Meanwhile, Posco E&C wanted to maintain the progress in order to avoid negative effects on the Posco brand.

Because they both hold 50 per cent, neither has the right to decide what happens to the project. Thus, they considered dividing the project into two parts to be implemented by each, but they could not reach an agreement on that either.

When the first phase was opened to residents, there were many conflicts between the customers and the developer because of the planning and the quality so the image of the Splendora urban area is not very positive in investors’ eyes. An Khanh JVC reported a loss of VND340 billion ($15 million) in 2015 and VND83.5 billion ($3.68 million) in 2016. These results are disappointing, especially in the context that the real estate market has been picking up during the period.

Splendora urban area sprawls over 264.13 hectares adjacent to Thang Long Boulevard. According to the previously approved planning, the project includes shophouses, villas, a 6.6-hectare artificial lake, gardens, trees, international schools, entertainment areas, offices, and shopping areas. The project has a total of 6,440 apartments and 1,311 villas and shop houses. In the first phase, the project has finished 496 apartments, 236 shop houses, and 317 villas. The second phase was expected to start in mid-2012, but as of now it remains idle.

MoST & MoIT agree to science and technology cooperation

The Ministry of Science and Technology (MoST) and the Ministry of Industry and Trade (MoIT) have signed a cooperative program on science and technology coordination between the two ministries in the 2017-2020 period.

Recognizing its important role, the industry and trade sector has already applied science and technology to its industrialization, modernization and sustainable development efforts.

Science and technology has become a key factor in improving productivity, product quality, and competitiveness in major industries, expanded the scale and pace of export growth, promoted both quality and quantity of products in this sector. MoIT also wants to bolster food production and processing via the application of technology.

Leaders from MoIT have identified six important solutions to restructure the industry and trade sector, of which science and technology is one.

The sector has set a target for manufacturing growth to average 13 per cent per year in the 2017-2020 period, with growth in industrial added value to average 7 per cent per year and growth in industrial production to average 13 per year, while the share of industry and construction is to account for 42-43 per cent of GDP.

The role of science and technology is even more important given international competition and MoIT understands it can boost Vietnam’s industry.

MoST and MoIT therefore agreed to coordinate activities in science and technology from 2017 to 2020. This is a highlight of effective cooperation between two ministries and represents a strong commitment to strengthen science and technology activities in the field of industry and trade.

Dat Xanh releases 2016 financials

The Dat Xanh Group (DXG) has released its financial report for the fourth quarter of 2016 and the year as a whole.

After-tax-profit during the quarter reached VND393 billion ($17.3 million), an increase of 337 per cent year-on-year and higher than the accumulated profit in the first three quarters of the year.

Annual after-tax-profit came in at VND664 billion ($29.29 million), in which the after-tax profit of shareholders of the parent company was VND537 billion ($23.69 million), or 60 per cent higher than in 2015. The figure also exceeded the targeted VND506 billion ($22.3 million) . Earnings per share stood at VND3,964 ($0.17).

DXG achieved a range of success in 2016. The year marked a significant change in the group’s real estate investments and it also acquired a number of projects of large scale in key locations, such as Gem Riverside in Ho Chi Minh City’s District 2 (6.7 ha), Petroland in District 9 (6.3 ha), Saigonres in Thu Duc district (6.7 ha), and Vidoland in District 7 (1.1 ha).

Its total land for the apartment segment is now 80 ha, which is sufficient to implement sales and ensure profitability over the next three to five years.

DXG was one of the ten largest real estate development companies in Vietnam in 2016, according to Vietnam Report, and it has developed rapidly in recent times. “This is recognition from the market as well as experts regarding the ongoing efforts of DXG,” said Mr. Vu Quoc Viet Nam from Dat Xanh.

The company has set a target of becoming one of the ten largest real estate development companies in Southeast Asia in the near future.

Oddup expands to HCMC

Oddup, a data-driven research platform that focuses on startups, has announced a network and coverage expansion to Ho Chi Minh City, extending its coverage to 13 major cities globally.

“Ho Chi Minh City has a unique startup culture with a solid entrepreneurial community,” said Mr. James Giancotti, CEO of Oddup. “A young and vibrant country with a fierce work ethic can only help entrepreneurs in a positive way. It is a very interesting landscape for potential investors.”

With the increasing need for startup knowledge among investors and the finance industry, demand is high for reliable sources of data and transparency regarding startups. With deep market and startup experience, Oddup provides in-depth analysis, data and insight on startups, as well as the Oddup Score, a rating from 0 to 100, which is seen as a barometer of the health of a startup. The Oddup Score is based on factors such as the company’s product, team, competitors, and growth potential.

The expansion to Ho Chi Minh City is part of Oddup’s ASEAN city launch, which started in late-2016 and includes Jakarta, Bangkok, Kuala Lumpur and Manila, enabling investors to gain more insights and up-to-date startup news from around the world to help them make informed investment decisions faster, quicker and more accurately.

“We are proud to have a strong presence in these Southeast Asian cities,” said Mr. Giancotti. “The ASEAN city launch allows us to have a wider scope, and in turn allows potential startup investors to gain more knowledge about the differences and potential of these locations. Our plans for this year are even more exciting.”

This is also an opportunity for startups in Vietnam to gain international exposure and media coverage on Oddup’s network and partners, enabling them to reach potential investors from around the world.

Oddup also provides trends and current and expected valuations of startups. The company’s vision is to bring insights and transparency across the startup landscape to enable smart startup investing.

Tuong An Vegetable Oil issues shares

The Tuong An Vegetable Oil Company (TAC), the largest subsidiary of the Vietnam Vegetable Oils Industry Corporation (Vocarimex), has approved a plan to issue shares in order to increase its charter capital.

The company held an extra-ordinary shareholders’ meeting on February 10 to announce the plan, under which it is expected to issue shares at a ratio of 10:7.

The number of TAC shares will increase to 32,226 million and its charter capital from VND190 billion ($8.36 million) to VND322.7 billion ($14.2 million).

This is the first time TAC has increased its charter capital since being listed in 2006 and after the Kido Group Corporation (KIDO) purchased a 65 per cent stake.

TAC is the second-largest cooking oil company in the country, with a 22 per cent market share. In 2016 its net revenue reached nearly VND4 trillion ($176 million), up 10.7 per cent against 2015. After-tax profit stood at VND67 billion ($2.9 million), down 4 per cent year-on-year and 3 per cent less than the target set for the year.

KIDO was granted a license last October by State Audit of Vietnam (SAV) to bid to purchase a 65 per cent stake in TAC, representing 12,337,130 shares.

The move “is considered a long-term commitment by KIDO with TAC to strengthen the development of TAC’s core businesses activities,” according to a TAC statement.

TAC’s shareholding structure changed significantly in July, with nearly 65 per cent changing hands. The Viet Long Securities Investment Fund Management Corporation (VLFM) purchased 4.55 million shares, or 24 per cent, from Vocarimex.

In January, KIDO was given permission to hold more than 51 per cent in Vocarimex without needing to conduct a takeover bid.

The green light was necessary for KIDO to acquire a controlling stake and become Vocarimex’s parent company. KIDO currently holds 24 per cent and is expected to increase its ownership to 51 per cent during the first quarter of this year.

KIDO’s net revenue reached over VND2.2 trillion ($96.8 million) last year, down 28.7 per cent against 2015. Gross profit was VND880 billion ($38.72 million), thanks to consolidating TAC’s profit.

FDI in textiles & garments slows

Inflows of foreign direct investment (FDI) into Vietnam’s textile and garment sector will slow down due to the collapse of the TPP, according to Mr. Le Tien Truong, CEO of the Vietnam National Textile and Garment Group (Vinatex) and Deputy Chairman of the Vietnam Textile Association (Vitas).

He emphasized, however, that the sector still has a bright future due to other free trade agreements (FTAs), in particular the EU-Vietnam Free Trade Agreement (EVFTA).

“Without the TPP, the speed of investment in Vietnam may fall but will remain strong in the future thanks to the FTA with the EU,” he believes.

The “yarn-forward” rule of origin, he went on, was a requirement in the TPP that would have brought FDI to Vietnam. The end of the TPP may therefore impact much more on investors in textiles and dyeing than those in fashion items.

The EVFTA, to take effect in 2018, has a “fabric forward” rule of origin, which will now become a focal point of investors. Most investors primarily invest in weaving and dyeing activities.

The EU is a larger market than the US. Demand for garments in the EU is about $240 billion; double the figure in the US. Vietnam’s textile exports to the EU remain modest, at about $4 billion per year, so the EVFTA represents a huge opportunity for foreign investors in Vietnam, Mr. Truong added.

Data from Vitas shows that 68.8 per cent of retailers and foreign brands choose Vietnam when moving from China or Bangladesh. China has become less attractive to investors while Bangladesh still faces political instability. Vietnam will therefore continue to be a popular destination for foreign textile investors. 

Exports of textiles and garments reached $28.5 billion in 2016, up 5.4 per cent against 2015. Key markets declined: in the US by 4.5 per cent and the EU 3 per cent, while only Japan increased, by more than 1 per cent.

2016 was a year full of difficulties. The 5.4 per cent growth was the lowest since 2010 but growth in absolute value was higher than in previous years. The difficulties stem from the problems besetting the global market.

Total global demand did not increase last year. Moreover, many countries that are not in the TPP but wished to retain their market share have already adopted policies to reduce its impact.

Vietnam’s textile and garment sector targets export growth of 6.5-7 per cent this year, to $30 billion.

The industry has recorded strong results because enterprises focused on increasing productivity and met deadlines when delivering goods, he said. 

Further, reforms to administrative procedures have improved the business environment and supported garment exporters by increasing their competitiveness. 

PwC among world's most powerful brands

PwC has retained its position as the Number 1 professional services brand in the Brand Finance Index 2017 and is one of the world’s Top 10 most powerful brands.

The Brand Finance Index is an annual assessment of the brand value of over 500 of the world’s best-known businesses. PwC achieved the highest score (AAA+) for the seventh year in a row, with the brand assessed as being “exceptionally strong and well managed”. 

Since 2007, the Brand Finance Index has ranked PwC among the Top 100 global brands and the leading “commercial services” brand, despite heavy competition from the technology and consumer sectors.

The assessment measures a range of metrics, including brand awareness, satisfaction and recommendations, financial performance and internal investment, market share, and revenue. It also examines corporate social responsibility, governance, and the views of internal and external stakeholders.

Organizations are then judged relative to their competitors. PwC achieved the highest ranking and score among its closest sector rivals.

“The Brand Finance Index is an independent assessment that validates the strength of the PwC brand,” according to Mr. Ian Duncan, Global Brand Managing Director at PwC. “We have retained a position on the Top 10 most powerful brand list at a time when technology brands are challenging traditional company names, which shows the strength of our foundations built around our people, quality and services.”

PwC aims to build trust in society and resolve important problems. It is a network of firms in 157 countries with more than 223,000 people committed to delivering quality in assurance, advisory, and tax services.

PwC Vietnam established offices in Hanoi and Ho Chi Minh City in 1994. Its team of more than 750 local and expatriate staff has a thorough understanding of the business environment in Vietnam and a wide knowledge of policies and procedures covering investment, tax, legal, accounting and consulting matters in the country. It also has a foreign law company in Vietnam, licensed by the Ministry of Justice, with a head office in Ho Chi Minh City and a branch office in Hanoi.

It always goes the extra mile to help its clients achieve their objectives. PwC possesses skill sets and industry knowledge that clients require at a local level across its network. It also offers integrated services, bringing a breadth of skills and depth of resources to clients wherever they do business - throughout Asia and around the world.

IFC plans additional $57mn investment in VPBank

The International Finance Corporation (IFC), the private equity arm of the World Bank Group, is contemplating a $57 million quasi-equity investment in the Vietnam Prosperity Joint Stock Commercial Bank (VPBank).

“The two sides are still in negotiations,” a representative from VPBank told VET. The purpose of the loan facility is yet to be revealed.

This latest move comes after the IFC arranged a $125-million syndicated loan to the bank several months ago.

The new financing will assist VPBank in “raising long-term funds for its lending program to micro, small and medium enterprises,” the IFC told DealStreetAsia.

It will potentially use the IFC Financial Institutions Growth Fund and the IFC Emerging Asia Fund, both managed by IFC Assets Management Company, to finance the deal.

The facility last year was set to expand the fund’s support for small and medium-sized enterprises (SMEs), especially female-led companies.

The $50 million loan was the first phase in a $125 million financing package from IFC to help the bank extend lending to local enterprises and help boost international trade opportunities, the IFC said in a statement.

The loan comprises $25 million from the IFC’s own account and another $25 million from Cathay United Bank.

Twenty-five per cent of the funding will be exclusively set aside for women-owned SMEs.

VPBank’s CEO Nguyen Duc Vinh said that small businesses have been the focal point of its strategy, and the IFC financial package will help accelerate its realization.

Previously known as the Vietnam Joint Stock Commercial Bank for Private Enterprises, VPBank was founded in 1993 as a dedicated bank for the retail and SME segments. It was the sixth-largest lender in terms of total assets among private banks in Vietnam in 2015 and saw a 35 per cent increase in after-tax profit, to more than $114 million, in the first nine months of 2016, according to its latest financial statement.

The record high profit helped it become the fourth strongest in terms of profit making during the period, following three major State-owned banks - Vietinbank, Vietcombank and BIDV.

“The project will facilitate increased access to finance in Vietnam, which remains one the most common constraints to business expansion, according to the 2015 World Bank Enterprise Survey,” the IFC said.

The project reiterates IFC’s aim to support SMEs in Vietnam, following its earlier syndicated loan to VPBank in September 2016 and an $18.4 million investment in TPBank in August last year.

In addition to providing long-term funding to VPBank, IFC will also help the bank diversify its funding structure and assist it in building institutional capacities close to international standards.

The IFC has been investing in and working with TPBank, ABBank and fund management firm Dragon Capital to deepen the funding routes for private companies in Vietnam.

Since the launch of its Global Trade Finance Program in the country in 2007, more than 950 guarantees have been issued by participating banks to support $4.2 billion worth of trade finance, making Vietnam one of IFC’s top trade-finance markets.

Rice export gloomy, domestic demand strong

The rice export prospect for this year is bleak but domestic consumption has shown positive signs, evident in a recent price rise.

Vietnam exported an estimated 325,000 tons of rice worth US$136 million last month, up 32% in volume and 35.1% in value year-on-year, according to the Ministry of Agriculture and Rural Development. The Vietnam Food Association (VFA) has forecast there are a lot of adverse factors affecting the country’s rice export performance this year.

In particular, the volume of rice in the export contracts carried forward from 2015 to 2016 totaled around 1.3 million tons while inventories were some 700,000 tons. The volume of the export deals carried forward from last year to 2017 was only 547,000 tons but inventories amounted to 990,000 tons.

This has put enormous pressure on the country’s rice shipments in the early months of this year. If the situation does not improve, it would have an adverse effect on the full-year target.

The market for rice in the Mekong Delta has been booming, especially the fragrant type,  since the end of Tet.

Ngo Ngoc Yen, director of HCMC-based rice firm Yen Ngoc, said prices of unprocessed OM 4900 and jasmine rice are around VND5,200-5,450 a kilo, a rise of VND200-300. A kilo of fresh IR 50404 rice costs VND4,600-4,700, up 200-250 against the pre-Tet period. 

Pham Thai Binh, director of Trung An Co Ltd in Can Tho, said his firm is purchasing jasmine rice at VND5,250 a kilo, up from VND4,800 in the same period last year.

Yen said rice products at Ba Dac wholesale food market of Tien Giang Province have marked up by VND200-500 a kilo against the pre-Tet period, with jasmine rice quoted at VND10,000-11,000, ST 21 at VND10,800-11,000 and OM 4900 at VND10,000.

Farmers in some Mekong Delta provinces are focusing on sticky rice production, leading to a shrinkage of jasmine rice acreage. There has been a surge in local demand for jasmine rice while the product has been in short supply, causing its price to edge up, she explained.

She added the situation is also attributable to a huge reduction in rice output in recent crops.

Binh said rice export prices are higher than in end-2016 given a steep rise in domestic consumption.

Govt mindset towards business changed

Deputy Prime Minister Vuong Dinh Hue has said the Government will find ways to create favorable conditions for investors to do business and face less cost and legal risk, instead of coming to the rescue of firms in trouble as at present.

The Government has long focused too much time and energy on removing hindrances to business and investment activities.  

Hue, who also heads the Steering Committee for Enterprise Reform and Development, was speaking at a meeting in Hanoi yesterday on preparations for a forthcoming conference between the Prime Minister and the business community. 

According to the Ministry of Planning and Investment and the Vietnam Chamber of Commerce and Industry (VCCI), the Government’s Resolution 35/NQ-CP on support for businesses has produced good results.

Business confidence in the Government’s promises to support their operations has improved. Central and local authorities are more aware of business support.

Last year saw the number of startups soaring to a record high of 110,100. Their registered capital totaled VND891 trillion, up a staggering 49% year-on-year. 

The average capital of a startup was VND10 billion, a 40.9% pickup from a year earlier.

New foreign direct investment (FDI) projects went up 23.3% with combined capital pledges of US$26.89 billion. FDI businesses disbursed US$15.8 billion, rising 9% and reaching an all-time high.     

Ministries and agencies were told to look into company earnings, wages and incomes of workers to gauge the health of the business community.

VCCI chairman Vu Tien Loc said the Government and central agencies were striving to execute Resolution 35 but many local authorities are not.

The Ministry of Finance is a pioneer in implementing the resolution, which Loc said could be seen through its tax and customs procedure reform. The Ministry of Public Security comes second thanks to its electronic visa issuance mechanism, which will help boost tourism and investment.

Nguyen Phuoc Thanh, deputy governor of the State Bank of Vietnam, said ministries, agencies and localities should treat the handling of administrative paperwork as a public service as this minset change would help do away with hindrances to business.

Deputy Minister of Finance Tran Xuan Ha said the ministry had taken various measures to fuel growth in the capital market.

PM calls for shift to innovation-based industry

Prime Minister Nguyen Xuan Phuc has urged the industry and trade sector to proceed with a shift to innovation-based industry, with science and technology serving as a driving force, and a platform for improving competitiveness and attaining sustainable development.

To do this, there must be a strategy to reduce the nation’s heavy dependence on unsustainable competitive advantages that are based on natural resources, said the Prime Minister at an online conference which reviewed the sector’s 2016 performance and discussed plans for 2017.

In the immediate future, industry will still rely on natural resources while adding more value to its products and increasing scientific and technological application, the Government said on its news website.

The Prime Minister underlined the need to further encourage the private sector to get involved in the industrialization and modernization process. Private firms should be helped to grow business.

He basically agreed with the tasks and solutions set out by the Ministry of Industry and Trade. In 2017, the ministry and the business groups under its management will shore up divestment, equitization and restructuring of State-owned enterprises. The ministry must focus on dealing with the loss-making and inefficient projects which it is in charge of, according to the Government leader.

Action programs should be deployed in accordance with Resolution 19-2016/NQ-CP dated April 28, 2016, Resolution 35/NQ-CP dated May 16, 2016 and Resolution 01/NQ-CP dated January 1, 2017 on the main tasks and solutions to carry out the socioeconomic plan and budget estimates for 2017.

Major balances in the medium and long terms in sectors like electricity, coal, petroleum, fertilizer and chemicals must be ensured to stabilize the macro economy. This should be seen as the political task of the Ministry of Trade and Trade.

Industrial development should be accelerated, coupled with environmental protection in the implementation of key projects.

The industry and trade authority should strive to achieve or even beat the export target set by the National Assembly for 2017. An appropriate mechanism should be developed for rearranging border trade, and creating a breakthrough in e-commerce.

A focus should be given to the solutions to enhance the rational management and control of technical barriers and trade defense. Proper policies should be drawn up to support the development of the spearhead industries, such as automotive, electronics and mechanical engineering.

Research institutes and schools should form a powerful link with manufacturers to increase intellectual, scientific and technological content of made-in-Vietnam products.

Ministries split over proposed environmental tax hike for fuels

The Ministry of Finance still sticks with its proposal to impose a higher environmental tax on fuels though other ministries have expressed concern over the impact of the hike on the country’s socio-economic growth.

The Ministry of Finance sought an environmental tax of VND4,000-8,000 per liter of gasoline compared to the current VND1,000-4,000, VND3,000-6,000 per liter of jet fuel, VND1,500-4,000 per liter of diesel oil, VND300-2,000 per liter of kerosene, VND900-4,000 per kilogram of heavy fuel oil, and VND900-4,000 per kilogram of lubricant.

In a report on the impact of draft amendments and supplements to the environmental protection law, the Ministry of Finance said the proposed environmental tax spike would leave no negative impact. However, the ministry has not mentioned its quantitative assessment which is required for such a report.

The ministry said there are grounds for the proposal as the environmental tax hike would help raise public awareness of environmental protection, limit consumption of pollution-causing goods, and match a roadmap to offset reductions of import tariffs in line with the country’s commitments to international trade deals.    

The ministry said Vietnam cut the import tax on fuels to 0% last year and will lower that on gasoline to 8% in 2021, 5% in 2023 and 0% in 2024 as required by the trade pact among the ASEAN countries.

Under a free trade agreement between ASEAN and China, Vietnam lowered tariffs on oil imports to 5-8% last year. The import taxes on oil and gasoline will be brought down to 0% and 10% respectively in 2018 in accordance with the ASEAN-South Korea FTA.

An environmental tax increase reflects a trend in regional countries and will help prevent fuel smuggling. Therefore, the draft revision of the environmental protection law is necessary, the ministry said. 

In their comments on draft amendments and supplements to the environmental protection law, a number of ministries have expressed concern over the negative impact of the environmental tax increase on the country’s socio-economic growth.

The Ministry of Foreign Affairs called for the ministry to weigh the viability of the environmental tax hike and devise an appropriate road map for it as many enterprises are still grappling with a host of difficulties and fuels now bear multiple taxes and fees.  

The Ministry of Finance was urged to assess the impact of the environmental tax spike on the country’s growth.

Meanwhile, the Ministry of Justice said the draft amendments and supplements have many overlapping contents. It asked the Ministry of Finance to evaluate the effect of the draft revised environmental protection law, particularly the spike of the environmental tax on groups of goods, fuels and lubricant products.

Govt’s Resolution 19 puts ministries under pressure

With the 2017 version of Resolution 19 recently issued, the Government has clearly indicated its resolve to further improve the business environment but ministries and local authorities will feel the heat of it as they will have a lot of work to do in the coming time.

Nguyen Minh Thao, director of the Business Environment and Competitiveness Department at the Central Institute for Economic Management, said that given the strong determination of the Government leader, Resolution 19 would produce good results.

The resolution contains 250 objectives regarding the business climate, innovation, competitiveness and e-government. The three previous versions of Resolution 19 focused on 10 objectives concerning the business environment based on the World Bank’s Doing Business report.

The latest resolution delegates specific tasks to ministries. For example, the Ministry of Information and Communications is asked to review Decree 60/2014/ND-CP on printing business and clearly define those subject to the decree.

Regulatory restrictions provided in this decree, such as those on cooperation between printing houses, and import of machines used for post-press services, as well as the requirements that leaders of printing houses have college degrees in printing and that contracts with printing houses abroad must be licensed should be abolished.

The Ministry of Science and Technology is told to propose revising Circular 23/2015/TT-BKHCN governing import of used machinery, equipment and technology. Specific criteria should be set out for each area, rather than imposing the blanket limit of “no more than 10 years old” on all machinery and equipment.

Thao, who has got involved in the drafting of all the four versions of Resolution 19, said the objectives stated in the resolution were allocated to the right ministries and agencies to elevate a sense of responsibility.

“Responsibilities of ministers are made clearer than those in the previous versions of Resolution 19,” Thao said.

HCMC seeks Finland’s support to build startup ecosystem

HCMC is seeking cooperation with and experience from Finland to develop a startup ecosystem in the city.

Speaking at a meeting on February 8 with Ilkka-Pekka Simila, ambassador of Finland to Vietnam, Nguyen Thanh Phong, chairman of the HCMC People’s Committee, said the city is supporting creative startups in mechanical engineering, electronics-information technology, chemicals-plastics-rubber, food and foodstuff processing, supporting industries, and nine service sectors.

Phong said the city needed Finland’s experts to come here to share experience in building a digital startup ecosystem, startup training programs at universities and an electronic government mechanism for the city.

The Finnish ambassador said Finland could also cooperate with the city in other fields such as education and information technology.

Finland has invested in seven projects in HCMC with total investment capital of US$2.16 million.

Manufacturers in Vinh Phuc face critical manpower shortage

Foreign sector manufacturers at the Vinh Phuc Industrial Park in northern Vietnam report they are facing a chronic shortage of highly skilled apprentices and unskilled production workers.

Whether it be production linemen, machine operators, warehouse personnel or in the front office— the manufacturing segment is facing a critical worker shortage and struggling to meet its needs, said Nguyen Tien Hanh.

Mr. Hanh, who serves as the director of Investment Promotion and Support Department for the province of Vinh Phuc, noted many parks in the province urgently need industrial workers, particularly skilled machinists.

He said, at the Khai Quang Industrial Zone in Vinh Yen City there is an immediate need for 5,000 workers to assemble electronic components with average monthly earnings ranging US$260-US$350 (VND6million-8 million).

At another park, AMOVINA, needs roughly 500 unskilled workers with initial starting wages of US$180 per month.

Mr. Hanh, added that in total another 25,000 jobs will open once construction of the facilities for the Japan-based Sumitomo Group at the Thang Long Vinh Phuc Industrial Park is finished.

The biggest problem, said Mr. Hanh, is in finding workers with the proper training and the worker shortage crisis isn’t going away until the government resolves the question of who should fund the cost of it.

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