Reference exchange rate goes down 1 VND

The State Bank of Vietnam adjusted the reference VND/USD exchange rate down by 1 VND from the day ago to fix it at 22,251 VND/USD on March 17.

With the current /- 3 percent VND/USD trading band, the ceiling exchange rate is 22,910 VND per USD and the floor rate is 21,583 VND per USD. 

In the opening hours, commercial banks made slight changes to their rates. 

Vietcombank listed the buying rate at 22,740 VND/USD and the selling rate at 22,810 VND/USD, unchanged from the end of March 16.

Meanwhile, BIDV adjusted its buying and selling rates up 15 VND from the end of March 16, which are now 22,745 VND and 22,815 VND, per USD. 

Vietinbank kept its buying rate unchanged at 22,730 VND and reduced its selling rate by 10 VND to 22,810 VND, per USD. 

Vietnamese shares buoyed by Fed hike

Shares edged up on March 16 on the two national exchanges even though the US Federal Reserve on the previous day hiked the benchmark interest rate for the second time in three months. Property, securities and agricultural stocks were the market momentum.

On the HCM Stock Exchange, the VN-Index increased by 0.25 percent to 714.92 points.

On the Hanoi Stock Exchange, the HNX-Index was up 0.59 percent at 87.97 points.

Liquidity soared with a total of 234.4 million shares worth 4.74 trillion VND (nearly 208 million USD) traded in the two markets, up 31.7 percent in volume and 21.5 percent in value compared to the March 15 levels.

According to market analysts, the Fed’s decision was foreseen and was not expected to shake up markets. Large-cap stocks rose strongly as 22 of the 30 largest by market value and liquidity in HCM City gained, and only five declined.

Agribusiness Hoang Anh Gia Lai Co (HAG) and Hoang Anh Gia Lai Agricultural Invesment (HNG) hit the daily maximum rise of 7 percent.

Property stocks were still the magnet and maintained their growth.

On the HCM City’s bourse, big firms like VinGroup (VIC), HCM City Infrastructure Investment (ITA), Kinh Bac City Development (KBC), Dat Xanh Real Estate Service & Construction (DXG), Hoang Quan Real Estate Trading Consulting Service (HQC) and Khang Dien Investment and Trading House (KDC) advanced by 1-4 percent.

Tasco (HUT) on the Hanoi exchange climbed 10 percent.

All of them were the most heavily-traded stocks in the two markets.

Securities stocks emerged on Thursday as popular stickers. Saigon Securities Inc (SSI) and Saigon-Hanoi Securities Co (SHS) experienced high trading liquidity. SHS rose 8.5 percent while SSI was up 4.7 percent.

On the negative side, shares of Novaland Investment (NVL) lost 1 percent in value despite strong foreign buys. (Foreign investors bought a net value of 230.6 billion VND for NVL shares on March 16). Meanwhile, FLC Faros Construction (ROS) tumbled 3.2 percent.

The market could experience an unexpected slump following its strong performance, stock analysts at Vietnam Investment Securities Co warned, saying the VN-Index was being influenced by large-cap stocks.

The VN-Index rose for two sessions and sank in two this week.

“However, the most important thing is the high trading value, which showed that investors are staying in the market,” they said, predicting money inflows could shift to blue chips when average prices of low-priced stocks has gone up significantly.

New cheese factory opens in Binh Duong

Bel Vietnam, a subsidiary of the French cheese maker Bel group, inaugurated its second cheese plant in the southern province of Binh Duong on March 16.

Built at a cost of 12.9 million EUR, the facility at the Song Than 3 industrial park in Thu Dau Mot City is capable of producing 10,000 tonnes of cheese products per year.

Bel Vietnam said it wants to bring nutritious dairy products for Vietnamese consumers, with a long-term strategy of becoming a supply centre for the entire Southeast Asian market.      

Speaking at the factory’s inauguration ceremony, Chairman of the provincial People’s Committee Tran Thanh Liem said the event marks a new development of the company in line with the local policy on investment attraction.

Binh Duong is committed to creating the best conditions possible for Bel Vietnam to operate effectively, Liem pledged.

Bel Vietnam is the maker of several popular cheese products in Vietnam such as Con Bo Cuoi (Laughing Cow), Kiri and Babybel.

Ninh Thuan aims to become clean energy centre

The south-central coastal province of Ninh Thuan is calling for investment in renewable energy development, aiming to turn itself into a clean energy hub of the country.  

Ninh Thuan boasts great potential for wind and solar power as wind speed in the province averages 7.5 metres per second - the highest in the country, and it has 2,600-2,800 hours of sunlight each year.   

Under the province’s wind power development plan in the 2011-2020 period, the locality has five areas eligible for wind power projects with a total area of 21,432 ha, expected to produce 1,429 MW of electricity. 

According to Truong Xuan Vy, Deputy Director of the provincial Department of Planning and Investment, investors registered to develop 13 wind electricity projects worth over 40.5 trillion VND (over 1.78 billion USD) in the locality, but construction began on only three of them. 

They include the over 1.47 trillion VND (64.5 million USD) Mui Dinh plant in Thuan Nam district, 3.78 trillion VND (nearly 166 million USD) Trung Nam plant in Thuan Bac district, and the Cong Hai 1 plant with an investment of 190 billion VND (8.3 million USD) in Thuna Bac district. These projects are scheduled to be put into operation in 2017.

Besides, about 20 investors who are interested in developing solar power projects have come to seek investment opportunities in Ninh Thuan.  

The Electricity of Vietnam (EVN) is also implementing a four-turbine hydropower plant project with a combined capacity of 1,200 MW in Bac Ai district. The project is hoped to be completed in 2029. 

To encourage wind power development, the local authorities plans to give tax incentives to investors and supported them in land clearance. 

Attention will be paid to calling for investment in support industries such as manufacturing equipment for wind and solar power sectors.

Vietnam has enormous solar potential, especially in its central and southern regions.  Its government has recognised this potential and aims to significantly increase renewable energy production, including wind and solar power.

EVN plans to mobilise total investment up to 1 billion USD for energy development, focusing on wind and solar energy projects.

HCM City: First startup firm in IC development established

The Vietnam High Efficiency Software (VHES) Corporation officially debuted on March 16, becoming the first high-tech startup enterprise formed under the integrated circuit (IC) industry development programme of Ho Chi Minh City. 

The firm launched its first product using smart grid development called high efficiency software (HES), which is an intermediate software system connecting the meter data management system (MDMS) and the terminal network including Modem/DCU and electrometers. 

The software collects and saves data from the terminal equipment, while managing and providing information for the MDMS.

VHES’s products were created with support from the municipal Department of Science and Technology, the IC Design Research and Education Centre (ICDREC) of the Vietnam National University Ho Chi Minh City and the HCM City Power Corporation.   

ICDREC will transfer part of its technologies to VHES to continue perfecting HES.

Nguyen Van Ly, Vice General Director of the HCM City Power Corporation said his firm has outlined a grid modernisation programme to 2020, focusing on building a smart grid, automating operation and collecting data remotely.

According to VHES, the HES application will help save 160 billion VND on managing HCM City’s electricity a year. 

Tran Vinh Tuyen, Vice Chairman of the municipal People’s Committee said smart management will help operate city’s grid safely and stably, adding that municipal authorities plan to order VHES to research management software for other fields.

Vietnam driven to protect domestic automobile industry

Vietnamese policymakers are looking at ways to safeguard the domestic automobile industry against foreign rivals, based on an official document released by the government office.

Vietnam’s automobile industry is expected to face more hurdles in the years to come as the local market opens up to foreign competitors.

Locally-assembled cars could cost 20% more than those imported from neighboring countries such as Thailand and Indonesia in 2018, when tariffs on car imports into Vietnam from other ASEAN countries will be cut to zero from the current 50%, the trade ministry said.

The government has asked trade officials to look at ways to prevent a surge in car imports.

Meanwhile, the finance ministry will review import tariffs on cars and monitor their origin to prevent tax dodging.

Vietnamese policymakers also plan to adjust import tariffs on automotive parts that are not available in the domestic market.

The Southeast Asian country has targeted car manufacturing as a “spearhead industry” that could help it move up the global chain.

However, the fact that it still heavily relies on imported cars to meet local demand has exerted tremendous pressure on local manufacturers.

Vietnam imported 15,270 units in the first two months this year, a 35% jump from a year ago, customs data showed.

The import surge comes as Vietnamese people switch from motorbikes to cars, with more than half of the imported cars classed as midsize sedans, based on official statistics.

Vietnam eyes auto industry safeguards against cheap imports

Vietnamese authorities have been asked to study possible measures to safeguard the country’s auto industry against growing competition from foreign exporters who enjoy increasingly relaxed import duties.

The request was made by Deputy Prime Minister Trinh Dinh Dung, who cited the influx of imported complete built-up (CBU) cars in recent months as a threat to the nation’s domestic car manufacturers.

In the first two months of 2017, Vietnam imported 5,714 CBU cars from Thailand, totaling over US$110 million in turnover, according to the General Department of Vietnam Customs.

As a member of ASEAN, or the Association of Southeast Asian Nations, Thailand currently enjoys a tariff of only 30 percent on CBU car exports to Vietnam, a ten-point reduction from 2016.

The two countries are both signatories to the 2009 ASEAN Trade In Goods Agreement (ATIGA), according to which the import tariff of motorized vehicles originating from ASEAN countries into Vietnam will be gradually reduced to zero in 2018.

According to the Vietnamese Department of Export-Import Tariffs, this tax reduction is responsible for a spate of cheap cars imported from Thailand and Indonesia into Vietnam since the beginning of 2017.

The Ministry of Finance has been asked to increase its monitoring of tax calculations and the origin of imported cars to prevent tax avoidance by importers.

Technical barriers should also be set to ensure that cars failing to meet Vietnamese standards are barred from the market, the deputy prime minister stressed.

However, an official from the Vietnamese Ministry of Industry and Trade said the imposition of such safeguard measures would require a formal request from local auto businesses, followed by investigations into what damage cheap imports have actually caused local manufacturers.

A competition authority would decide on whether or not to take safeguard measures based on evidence gathered from the investigations, the official said.

US firm plans to invest in electric automobile production

Vietnam welcomes foreign investment in electric automobile production in Vietnam, said Deputy Prime Minister Trinh Dinh Dung at a recent reception for Alfred J. Dimora, founder and CEO of Dimora Enterprises, LLC in Hanoi.

Mr Dimora is visiting Vietnam to prepare for the building of an electric car production and assembly factory in the country.

DiMora Motorcar, an affiliate of Dimora Enterprises, is known for the world's most luxurious and expensive car- the US$2 million Natalia SLS 2 sport luxury sedan. 

Deputy Prime Minister Dung said the growing Vietnamese automobile market is quite lucrative for foreign investors. In the first phase, Dimora Enterprises will produce electric cabs for Mai Linh Group.  

Cashew exports edge down

Việt Nam’s cashew exports in the first two months of the year fell by 3.3 per cent to US$255 million, according to the Việt Nam Cashew Association.

Cashew has entered its main harvest season, and raw nut prices have gone up by 30 per cent compared to the same period last year, Nguyễn Đức Thanh, chairman of the association, told a press briefing in HCM City on Wednesday.

Fresh raw cashew is now selling at VNĐ46,000 a kilogramme while dried nuts fetch VNĐ60,000.

The import prices of raw nuts have also gone up by $150 a tonne this week to $2,000.

Phạm Văn Đẩu, a cashew expert, said changes in rainfall and poor weather have created ideal conditions for cashew diseases and pests.

Experienced farmers have managed to keep productivity normal, but in some areas yields are down significantly, he said.

The association last month made a fact-finding trip to cashew growing provinces to assess this year’s output.

It is expected to fall by 80 per cent in Lâm Đồng and Bình Thuận provinces largely due to pests.

But productivity in Bình Phước Province, the country’s main cashew growing area, and Đồng Nai and Bà Rịa-Vũng Tàu has not been badly affected.

The association is implementing a cleaner production programme to improve the quality of nuts, and has urged its members to invest more in deep processing to add value.

It will also continue to help its members promote consumption of cashew products in the domestic and export markets and farmers improve productivity.

Thanh said last year the country produced 1.5 million tonnes of cashew nut, or 50 per cent of the global output and exported 348,000 tonnes of cashew nuts worth $2.84 billion.

This represented an increase of 5.6 per cent in export volume and 18.4 per cent in revenue, and made cashew the country’s second largest agricultural export after coffee, he said.

Tourist arrivals continue to rise in 2017

Việt Nam continued to receive large groups of international travellers in February, reaching a record high of 1.2 million foreign arrivals, a 42.2 per cent increase compared with last year and 20 per cent increase from January 2017. During the first two months of 2017, the country received 2.2 million foreign visitors, up 33 percent from the same period last year, according to the HCM City Department of Tourism.

Many HCM City-based travel agencies like Saigontourist, ICS Travel Group and Liên Bang Travelink have reported excellent figures in February, too. Some companies saw guest arrivals surge by around 40 percent on-year, while some big hotels in HCM City reported occupancies of over 80 percent during the second month of the year.

China remained Việt Nam’s top market, aided by a rising number of flights; HCM City alone receives 10 flights from China per day, and the figure is expected to climb further. 

Bình Định promotes tourism in province’s northern region

The central province of Bình Định plans to boost tourism in the northern region.

The areas include Tam Quan and Lộ Diêu beaches (in Hoài Nhơn District); Hà Ra, Phú Thứ, Mũi Rồng and Tân Phụng seaports (in Phù Mỹ District); An Toàn ecological forest (An Lão District); and other historical sites such as Đào Duy Từ Temple, Tăng Bạt Hổ Temple and some battlefield sites dating back to the American war in Việt Nam.

Nguyễn Văn Dũng, director of Bình Định’s Tourism Department, said the province needed to focus on traffic infrastructure in the area and advertise local tourism through various channels.

Nguyễn Tuấn Thanh, chairman of the province, said the area possessed a seashore, marsh lands, rivers and mountains.

The province will develop tourism routes linking Phù Cát Airport and Phù Mỹ, Hoài Nhơn, Hoài Ân and An Lão districts, with Bồng Sơn Town of Hoài Nhơn District as the centre, he said.

The products will include "relaxing by the sea" tourism, culture-history tourism, ecological tourism and Ba Na ethnic culture exploration tourism.

The province aims to increase the number of tourists to 5.5 million per year by 2020, with total income of VNĐ10 trillion (US$434 million) from tourism.

This year, the province hopes to receive 3.55 million visitors and earn income of VNĐ1,620 billion.

Xiaomi officially enters Vietnam

The Chinese tech giant Xiaomi, which is described as a rival of Samsung and Apple, has launched its key products in Vietnam on March 15.

Xiaomi will co-operate with the distributor Digiworld Corporation to bring its products and services to Vietnamese customers to online as well as offline stores.

A retail agent of Xiaomi said that it would compete with Samsung and Apple in Vietnamese smartphone market as smartphones are Xiaomi's key products and strong points. However, it will bring both premium and affordable smartphones, instead of focusing only on affordable smartphones as predicted.

Asides from three smartphone models including the Redmi Note 4, Redmi 4A and Mi MIX that will be available in Vietnam, Xiaomi will also introduce Mi TVs, Mi wifi routers, home applicants and accessories to customers.

Mi MIX, sold at VND16.9m (USD741) is Xiaomi's top product with ceramic cover, large screen and Qualcomm Snapdragon 821 processor. The Redmi Note 4 is a mid-range product with the price of VND4.69m while the Redmi 4A is more affordable at VND2.69m.

Xiaomi's smartphones are said to have strong hardware configuration and reasonable prices. Several of its products have been brought to Vietnam and gained supports from local customers.

Digiworld has opened two Xiaomi maintenance centres in HCM City, one in Hanoi and another in Danang City.

Founded in 2010, Xiaomi has quickly risen to become of one of top smartphone manufacturers in the world with rising revenues year on year. It sold 7.19 million smartphones in 2012. The number was 18.7 million in 2013, 61.1 million in 2014 and 70 million in 2015.

From 2016, its growth started slowing down as the consequences of fast expansion. Its CEO Lei Jun said they made miracles with such fast expansion but they also faced problems with long-term growth. He thought that it was time to slow down, make improvement and ensure sustainable development.

In the coming time, Xiaomi will expand offline retail stores instead of online shopping as before. Jun said the revenues from e-commerce accounted for 10% of the overall retail market in China, and the online smartphone market only made up 20% of the overall smartphone market.

According to Xinhuanet, Xiaomi is in no rush to expand internationally but will explore overseas gradually, starting with neighbouring markets. The company started to expand overseas three years ago and is now active in over 20 countries and regions worldwide.

Bao Viet opens two new Hanoi branches

Bao Viet Holdings (BVH) has officially opened two new branches in Hanoi - Bao Viet Thang Long and Bao Viet Trang An - increasing its total throughout the country to 75.

The openings are within the network expansion plans of the insurer. Inheriting the experience of existing branches, Bao Viet Thang Long and Bao Viet Trang An will be highly competitive and will develop quickly. Expected revenue in each branch this year is around VND100 billion ($4.4 million), with 60 per cent coming from retail.

With a streamlined retail model, the advantages the new branches possess are direct and indirect sales, with create a spillover effect on other branches within the network. “Fulfilling the target of expanding the network, BVH focuses on the retail business to make the corporation become the number one insurance brand,” Mr. Phan Kim Bang, Chairman of BVH’s Board of Directors, told the opening ceremony. “BVH is strengthening its development and expanding and consolidating its network to actively prepare for a boom in Vietnam’s insurance industry during the 2016-2020 period.”

During the ceremony, Bao Viet Thang Long signed a motor vehicle insurance policy with Hanoi Taxi, while Bao Viet Trang An partnered with Computer Communication Control 3C Incorporation to provide insurance for export products and inland transport. BVH now has more than 300 insurance offices and 30,000 agencies, being the only insurer that covers the entire 63 cities and provinces in Vietnam.

The corporation’s consolidated revenue was estimated at VND24 trillion ($1 billion) in 2016, equal to 105 per cent of its annual plan, while after-tax profit also exceeded plans. Its share price has seen solid gains in recent times. In the first half of last October it increased 20 per cent and reached a one-year high of VND72,000 ($3.2). At the close of trade on March 16 it stood at VND58,900 ($2.6).

Life insurance players in Vietnam made an impressive showing in 2016, with growth reaching 37 per cent, the highest in a decade. Figures from the Insurance Supervisory Authority reveal that premiums totaled around VND86 trillion ($3.8 billion) last year, representing a rise of 22.74 per cent over 2015. In particular, total revenue for non-life insurance was VND36.4 trillion ($1.6 billion), up nearly 14.7 per cent, while revenue from life insurance was over VND49.2 trillion ($2.2 billion), up 28.4 per cent.

Vietnam’s insurance industry remains dominated by Bao Viet and Prudential. Prudential leads the market in terms of total insurance premiums while Bao Viet has the strongest book of new business.

Bao Viet is gaining momentum in terms of a more stable workforce and renewed robust growth while maintaining its niche at the top. Prudential and its new leader must contend with certain challenges in 2017, in particular how to compete within the rigid insurance market in the country. Two other players, Dai-ichi Life Vietnam and AIA Vietnam, have also had a stronger presence in recent years.

Vietnam’s insurance market is poised for robust double-digit growth this year, expected at more than 20 per cent, bolstered by an improved economic outlook and government policies promoting the services sector.

VAMC recoups just 17.8% of purchased toxic debts

The Vietnam Asset Management Company (VAMC) has recouped only 17.8 per cent of toxic debts purchased from troubled banks, primarily by selling properties used as collateral, according to recently released data.

Vietnam has been restructuring a banking sector saddled with bad debts, which had been cut to 2.46 per cent of total outstanding loans in November 2016 from 17.2 per cent in September 2012. The government set up VAMC in 2013 to help consolidate the country’s fragmented banking sector.

While loss of asset value from sales has always been a problem for VAMC’s performance, there is currently a lack of proper policy to improve such sales.

VAMC has purchased VND282 trillion ($12.4 billion) worth of bad debts to rescue 42 banks from either bankruptcy or major losses. Sixty-two per cent of toxic debts, worth VND268.8 trillion ($11.8 billion), purchased by VAMC are real estate mortgages.

Only Vietcombank has finished cleaning up all of its debts sold to the VAMC. The initial amount of cumulative debts was VND6.5 trillion ($288 million), while the value of VAMC’s bonds in exchange was only VND4 trillion ($177 million).

 “Higher credit costs make the economy more rigid,” said Mr. Truong Van Phuoc, Vice Chairman of the National Financial Supervisory Commission, implying that even though those costs are incurred by banks, most companies in Vietnam that remain heavily dependent on bank loans feel a significant impact.

Apart from the establishment of VAMC, the central bank has also adopted several other measures to ensure safety and stability in the banking system, including the buy-out of three troubled lenders: Global Petro Bank, Vietnam Construction Bank, and Ocean Bank.

Vietnam is forecast to need $25 billion to clear toxic debts off bank books, equal to 13 per cent of the country’s GDP, Mr. Phuoc told a National Assembly (NA) meeting late last year.

Overhanging bad debts have been a burden on Vietnam’s economic growth since 2012, when total bad debts, mostly in the real estate sector, reached VND280 trillion ($12.5 billion), equivalent to 11 per cent of GDP.

Though the bad debt rate remains below the limit, it does not reflect the state of affairs in the banking system. “There are some banks with 50 per cent bad debts and some with 1 per cent bad debts,” former SBV Governor Cao Sy Kiem told VET. Bad debts have simply been “parked” at VAMC and Mr. Kiem believes all banks will have to set aside part of their profits each year to hasten bad debt settlement.

Last November, the NA passed the Law on Property Auctions, which would facilitate bad debt resolution where it involves property assets. The Law has been delayed for some time due to differing views on property ownership but will now come into effect on July 1, 2017.

Analysts believe that the VAMC will be empowered by the Law to auction bad debts and collateral belonging to financial institutions. The government will specifically regulate auction procedures for high value debts under the Law, to guarantee the sales of high value assets does not result in debts losing value and causing losses for the State.

SHS to issue $26.34mn in corporate bonds in Q1

The Saigon - Hanoi Securities Joint Stock Company (HNX stock code SHS) will issue a maximum of VND600 billion ($26.34 million) worth of corporate bonds in a private placement in the first quarter.

It will issue 600 bonds with a par value of VND1 billion ($43,900) each and a term of two years. The private placement will be conducted by the issuing agent, the Royal International Securities Joint Stock Company.

The purpose of the issuance is to supplement capital for stock margin lending.

In 2016, SHS recorded revenue of VND563.34 billion ($24.73 million), up 9 per cent against 2015 and 7.75 per cent higher than the annual target of VND522.81 billion ($22.95 million). After-tax profit was VND86.58 billion ($3.8 million), down 26.7 per cent and representing 85.9 per cent of the annual target of VND100.2 billion ($4.4 million).

In the fourth quarter of last year it overtook a number of major names such as SSI and HSC to reach first position in brokerage market share, with 10.6 per cent. For the year as a whole it ranked third, with 7.94 per cent.

SHS shares have improved sharply over the past week, increasing 2.8 per cent to VND7,300 ($0.32) per share on March 16.

It has been the preferred brokerage for a number of State-owned enterprise (SOE) equitizations. On October 22, 2015, it announced it would conduct the IPO of two subsidiaries of the Vietnam National Coal - Mineral Industries Holding Corporation (Vinacomin).

Vinataba divesting from Huu Nghi Foods

The Vietnam Tobacco Corporation (Vinataba) has announced its divestment from the Huu Nghi Foods Joint Stock Company (UPCoM stock code HNF).

It has registered to sell all of its 10,347,630 shares, equal to 51.74 per cent of charter capital. The transaction is expected to be conducted from March 17 to April 14, by agreement matching and order matching.

On March 16, as soon as news of the divestment was made public, HNF hits its ceiling on UPCoM and reached VND32,600 ($1.43); its highest price ever.

Vinataba’s holding in HNF is represented by Mr. Trinh Trung Hieu, Chairman, Ms. Le Thi Lan Anh, General Director, and Mr. Nguyen Chi Nhan, Member of the Board of Directors.

Huu Nghi Foods, formerly known as the Huu Nghi High Grade Confectionery Factory, was established in 1997. In December 2006, Huu Nghi Confectionery was officially equitized, with charter capital of VND22.5 billion ($980,000), and in March 2011 it became a subsidiary of Vinataba. The company has increased its charter capital six times since equitization, with the most recent being December 2014, via a public offering to existing shareholders, employees, and Vinataba. Its charter capital now stands at VND200 billion ($8.78 million).

Twenty million HNF shares first traded on UPCoM on November 3, 2015, with a reference price of VND13,000 ($0.57) per share. 

JLL partners with CapitaLand Vietnam

JLL will cooperate with CapitaLand Vietnam to deliver true international-standard property management throughout Vietnam.

In its latest report JLL notes it has been selected to manage the Vista Verde project in Ho Chi Minh City and Mulberry Lane in Hanoi.

Mr. Chen Lian Pang, CEO of CapitaLand Vietnam, said that JLL has been selected to provide onsite services including customer care, maintenance, operations, and facilities management for Mulberry Lane and its latest flagship Vista Verde project, which will enhance the day-to-day environment and community in both.

Mr. Stephen Wyatt, Country Head of JLL Vietnam, said it is an honor to work with CapitaLand.

Vista Verde is located on 34,056 sq m in Thanh My Loi ward in District 2 and is expected to be completed in the fourth quarter.

It has 1,152 premium apartments offering state-of-the-art recreational facilities such as a gym club and a swimming pool clubhouse, lounging islands, a jogging track, and a tennis court. It will also have a retail mall.

Mulberry Lane, meanwhile, sits on 24,466 sq m and is strategically located in the Mo Lao New Urban Area, an up-and-coming residential area that is the preferred choice of affluent local people and expatriates.

It has 1,478 premium apartments of various types and entertainment areas such as a swimming pool.

CapitaLand previously appointed JLL Singapore as its sole marketing agent for D1MENSION, a luxury residential tower in Ho Chi Minh City. This followed its announcement last September that it had acquired a prime site in the city’s District 1, comprising a 17-story residential tower and a 22-story serviced residential tower, for $51.9 million, with an estimated project value of $106 million when completed in the first quarter of 2018.

Mr. Pang also said that D1MENSION will be the first residential development in Vietnam to offer property management and concierge services by Ascott, the world’s largest international serviced residence owner-operator.

According to Mr. Wyatt, Vietnam is on the rise as increasing levels of foreign direct investment (FDI) have been supporting strong economic growth and have been driving development throughout the country. Its two major cities, Ho Chi Minh City and Hanoi, are at the forefront of the transformation, as more people flock to its urban centers as new high-rise buildings change city skylines.

Hongkong Land on board in Thu Thiem New Urban Area

Hongkong Land has become a strategic partner of the Ho Chi Minh City Infrastructure Investment JSC (CII) in a residential area and North - South axis project at the Thu Thiem New Urban Area in District 2, Ho Chi Minh City.

The project has total investment of over VND2.6 trillion ($114.4 million) and covers an area of 96,000 sq m. It includes a road from Thu Thiem Bridge to Mai Chi Tho Avenue, water, lighting, and a green space.

Though not disclosing the details of the deal, CII said that the choice was made carefully, based on the land price and cost of construction.

“The cooperation with Hongkong Land will not only spur the business results of CII during the 2018-2020 period but also create a firm basis for it to maintain annual growth of 20-25 per cent in subsequent years,” a CII representative said.

Hongkong Land recorded profit of $3.52 billion in 2016, with $2.55 billion coming from real estate. It was one of the first foreign investors to set foot in Vietnam, in the mid-1990s.

A member of the Jardine Matheson Group, Hongkong Land has made capital contributions of more than 50 per cent in three projects and domestic enterprises in Vietnam, including the Central Building Co., the Doan Ket Quoc Te Co., and the Nassim JV Co. (the owner of the high-end Nassim Thao Dien apartment block). The total capital contribution is estimated at $22.3 million.

The partnership with Hongkong Land will help CII boost its real estate business, which now accounts for only 2 per cent of its revenue structure.

According to its 2016 financial report, revenue reached over VND1.2 trillion ($52.8 million), down sharply compared to VND1.77 trillion ($74.8 million) in 2015. This year it targets revenue of VND5.7 trillion ($250.8 million). 

The Thu Thiem New Urban Area is located to the east of the Saigon River, opposite District 1, on a total area of 657 ha. It is to be a new modern central district, enlarging the existing center of Ho Chi Minh City. The city’s People’s Committee continues to call for other investors to develop projects in the urban area.

It has already attracted a huge amount of interest from international investors, who are ready to pour in billions of dollars into building new skyscrapers.

A massive project for a modern trade center with multiple functions worth $4 billion was proposed by three US investors at a meeting with Ho Chi Minh City Party Secretary Dinh La Thang last year.

Another foreign enterprise keen to benefit is the Imex Pan Pacific Group (IPP), owned by overseas Vietnamese Johnathan Hanh Nguyen.

Approved in 2014, the 86-storey Thu Thiem Empire City Tower is now being implemented by the Tien Phuoc - Keppel Land joint venture from Singapore. The highest building in Ho Chi Minh City will cover 8.7 ha.

More CBU autos to be imported from Indonesia

Auto imports from Indonesia have increased sharply, especially after Toyota Vietnam imported completely-built-up (CBU) seven-seat Fortuner models from this country, instead of assembling such vehicles in Vietnam.

Statistics from the General Department of Customs showed that imports from Indonesia in February amounted to 1,285 CBU units worth more than US$18 million, taking the total import volume from this country in the first two months this year to 3,108 units worth over US$53.5 million.

Such figures manifest sharp year-on-year growth.

In all of 2016, Vietnam imported just 3,880 units from Indonesia with a value of about US$44.8 million, while in 2015, the figures were 3,450 units worth US$35.3 million respectively. That means the value of autos imported from Indonesia in the first two months of this year was higher than in 2015 and 2016.

The strong increase of CBU auto imports is attributed to a change in the business strategy of Toyota Vietnam. Since the beginning of 2017, the automaker introduced the new Fortuner multi-purpose models imported from Indonesia, instead of assembling the vehicle in Vietnam as in previous years.

Notably, Fortuner became the second best-selling model of Toyota in 2016 with more than 11,580 units sold, right behind the Vios make with 17,560 units.

According to Toyota Vietnam, it decided to import this model because the price of Fortuner imported from Indonesia is not much different from the locally-assembled Fortuner as the import tax for CBU autos from ASEAN countries into Vietnam has dropped from 40% to 30% since the beginning of this year.

Meanwhile, Thailand is currently the biggest automaker in Southeast Asia and has therefore bolstered auto exports to Vietnam.

Specifically, the number of autos imported from Thailand into Vietnam in the last two months amounted to more than 5,710 units with a total value of over US$110 million.

At a recent meeting on auto development in Hanoi, Toyota Vietnam said it had to reduce the number of auto models manufactured in Vietnam from five before 2017 to four at the moment and maybe to two or three in the near future.

According to Toyota Vietnam, the reduction of auto models assembled in Vietnam allows the automaker to focus on just a few auto makes and reduce costs. In 2016, the company sold more than 57,000 autos of all kinds, including more than 50,000 units assembled in Vietnam.

According to Vietnam’s commitments to the ASEAN Trade in Goods Agreement (ATIGA), the CBU import tariff will be reduced to zero in 2018 compared to the current 30%. With this imminent tax cut, analysts forecast many auto manufacturers will scale down auto assembly in Vietnam or even totally shift to imports.

Leather and footwear sector needs restructuring

The domestic leather and footwear sector needs to be restructured so as to add more value to their products, with priority given to raw material production to raise the ratio of  local content from the current 40-50%, said Pham Chi Dung, director of the Light Industry Department of the Ministry of Industry and Trade.

Speaking at an international conference on trade promotion for the leather-footwear sector held in HCMC on March 15, Dung said the Ministry of Industry and Trade is drafting a master plan for this industry until 2025 with a vision toward 2035.

Accordingly, Vietnam is expected to turn out two billion pairs of footwear by 2025. It is predicted the country can make more than three billion pairs with outbound sales of around US$45 billion ten years after.

The demand for material will then double or triple. If the nation does not develop supporting industries to produce materials and accessories in the coming time, the local leather and footwear sector will likely be more dependent on imports, and cannot achieve these targets.

The sector needs to promote and encourage enterprises to develop plants specializing in processing hide, artificial leather and other materials. The trade ministry has plans to propose the Government assist them via supporting policies.

Enterprises have no other choice but to improve efficiency, cooperate with others, and heavily invest in modern technology and equipment in order to actively join the global supply chain, making Vietnam become a major leather and footwear producer.

As of 2016, Dung said, the country had around 1,700 leather and footwear enterprises, with 1.2 million direct laborers. Notably, foreign direct investment firms employed 70% of the total and earned 80% of the sector’s total export revenues.

The sector has shipped products to over 50 nations, especially major markets like the U.S., the European Union, China and Japan.

As one of Vietnam’s key export sectors, its export value with US$16.2 billion accounted for 9.2% of the country’s total export turnover.

The sector had posted a growth rate between 10% and 20% per annum in 2011-2015. The figure rose by 8.8% in 2016.

Crude cashew prices break record

Fresh crude cashew is now selling at VND46,000 a kilo while the price of dried raw cashew stands at VND60,000, an all-time high. 

According to a news release on business performance in the first quarter and business and production plan for 2017 of the cashew industry issued by the Vietnam Cashew Association (Vinacas) on March 15, the crude cashew price has continuously edged higher since the beginning of the crop, clocking a 30% year-on-year rise.

Imported crude cashew has increased by US$150 a ton in the past days, from US$1,850 last week to US$2,000 this week.

Vinacas last month made a fact-finding trip to cashew growing areas in some provinces to gauge this year’s cashew output.

Cashew output in Lam Dong and Binh Thuan provinces is estimated to fall by 80% against the previous crop largely due to pests.

However, cashew productivity in some other provinces such as Binh Phuoc, the country's biggest cashew growing area, and Dong Nai and Ba Ria-Vung Tau is not heavily affected by pests, and thus crude material output this year is expected to grow.  

Last year, the country produced 1.5 million tons of raw cashew, equivalent to 50% of global output and shipped 348,000 tons of cashew nuts worth US$2.84 billion to foreign markets, according to Vinacas.

Cashew export revenue in the January-February period this year amounted to US$255 million, down over 3% year-on-year, due to the influence of the recent long Tet holiday.

Sai Gon - Ha Noi brokerage plans $26m bond issue     

Sai Gon-Ha Noi Securities Joint Stock Co’s managing board has approved a plan to issue bonds worth VND600 billion (US$26.3 million) to raise capital to finance its margin lending business.

The bonds, with the face value of VND1 billion each, have a two-year maturity period and no pledged collateral.

The interest rate for the first six months is fixed at 8 per cent per year and rates for the next six-month terms will be floated based on the average deposit interest rates of four banks -- BIDV, Vietcombank, Vietinbank and Agribank -- plus a margin of 1.5-2.5 per cent per year.

The issue will be offered in a private placement this month.

The brokerage firm is expected to collect VND600 billion to supply capital for the company’s margin lending activity.

In the last quarter of 2016, Sai Gon-Ha Noi Securities (sticker SHS) unexpectedly surpassed Saigon Securities Inc (SSI) to become the leading brokerage with the highest market share on the Ha Noi Stock Exchange.

The company’s share price has climbed by 67 per cent this year to VND7,700 per share.

Last year, the company posted VND86 billion net profit.

Mazda and local car maker to build new plant     

The Truong Hai Automobile Joint-Stock company (Thaco), in co-operation with Japan’s Mazda Motor Corporation, plans to build a new plant for auto exports in the central province of Quang Nam this year.

Thaco said the joint-venture plant will be built in the Chu Lai-Truong Hai Industrial Complex in Nui Thanh District, at a total investment of VND8.6 trillion (US$380 million).

The new Mazda plant is expected to produce 100,000 Mazda cars per year with a localisation ratio (local made spare parts and accessories) of 44 per cent.

The Japanese car maker is also boosting co-operation with Thaco in the production of spare parts and accessories.

Mazda is the leading Japanese brand in Viet Nam, with the CUV (Crossover Utility Vehicle) CX-5, Mazda3, and Mazda2, in addition to Mazda2 and 3 All-New, and Mazda 6. 

Formosa Ha Tinh to increase investment to reinforce waste treatment

Formosa Ha Tinh Steel (FHS), the Vietnam subsidiary of Taiwan’s Formosa Plastics Group, has asked the local government for permission to increase its total investment in a steel complex in the north-central province of Ha Tinh, in a bid to strengthen waste treatment facilities.

The company plans to add a further $346.3 million to the steel and deep-water seaport project, raising its total investment to $11.03 billion.

The additional capital will be used to strengthen waste management and build environmental protection facilities at its steel mill, a toxic leak from which caused one of the worst marine disasters in the country’s modern history last year. Vietnam is still tying up the loose ends almost a year after the event.

According to a local government report, FHS has disbursed 94.37 per cent of its investment so far in the first phase, or $10.69 billion, making it the largest foreign-invested project in the province to date.

The Taiwanese company has fixed 51 out of 53 violations identified by the Ministry of Natural Resources and Environment following the April incident. The steel mill is expected to come into operation in the second quarter of this year.

The Vietnamese Government has called on authorities to complete compensation payments for all fish farmers in the country’s north-central and central provinces affected by the incident. The executive order, issued at a recent meeting chaired by Deputy Prime Minister Truong Hoa Binh, stated that the provinces of Ha Tinh, Quang Binh, Quang Tri and Thua Thien Hue should complete payments in the next three months. Various ministries and the office of the government have also been urged to send inspection teams to check and assist the compensation process.

Last month, Vietnam publicly named eleven government, provincial, and industry officials responsible for the incident. It named the then Minister of Natural Resources and Environment Nguyen Minh Quang, former Vice Minister Bui Cach Tuyen, and former Chief of Ha Tinh’s provincial Communist Party unit Vo Kim Cu, along with eight other officials, saying they should be disciplined or face review.

FHS polluted more than 200 km of coastline in the incident, killing more than 100 tons of fish and devastating the environment, jobs, and economies in the four provinces. The Taiwanese company admitted to having discharged untreated waste into the sea, and agreed last June to pay $500 million in compensation.

The environment ministry said that the affected region is expected to take a decade to completely recover, while experts predict that the disaster may set Vietnam’s economy back for years to come.

The incident was a wake-up call for enterprises, as they have become more compliant to policies and adopted internal environment regulations, the Vietnam Chamber of Commerce and Industry (VCCI) announced at the release of its Provincial Competitiveness Index (PCI) 2016 report on March 14.

The report points out that since Formosa dumped toxic industrial waste into the sea, businesses have become more aware of their obligations to conform to environmental regulations issued by local authorities despite any higher costs.

Mr. Edmund Malesky from the US-based Duke University, one of the authors of the PCI 2016 report, said enterprises have accepted not to pursue economic growth at the cost of the environment, while also revealing that enterprises are willing to spend more to comply with environmental regulations or to enforce their own internal regulations to avoid causing pollution.

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