App for goods exchange on way

The app Dobody Global will be launched on January 16, facilitating the exchange of goods and services over the internet.

Dobody connects people together by matching supply with demand, just like other popular third party apps like Uber. It searches for people with goods for sale and links them with people searching for such goods. It also helps people connect with the poor to pass on goods they no longer need.

The app has both web and mobile platforms (iOS, Android). Dobody’s system has four basic functions: selling goods, searching for goods, exchanging goods, and passing on unwanted goods. It will initially be free for users and be continuously improved.

Mr. Phan Ba Manh, CEO and Founder of Dobody, said that in 2014, during a trip to central Quang Binh province, he found that many people were short of goods while many city-dwellers had goods they no longer needed. He then came up with the idea of an app that brings to two together.

Mr. Manh and his team started working on the project in June last year. Three months later, “Dobody” was undergoing a pilot run. “The project is to help people optimize the use of products and resolve inventories from overproduction,” said Mr. Manh. “Once in operation it will save resources, reduce waste, and help the economy during periods of financial difficulty.”

GPBank to adopt new branding

Global Petro Bank (GPBank) will officially announce a change in its branding on January 19, a bank official told VET.

Its headquarters at 109 Tran Hung Dao Street in Hanoi’s Hoan Kiem district already bears the new branding.

Gone is the old red icon, replaced by three polylines that are half blue and half yellow. In the name, the red dot between letter GP and Bank has been removed, with GP Bank appearing as one word.

Its slogan has also changed, from “Commitment to Excellence” to “New Belief, New Value”.

The management of GPBank was taken over by Vietinbank three months ago. At the January meeting of Vietinbank, Chairman Nguyen Van Thang said that GPBank’s deposit growth has increased 3 per cent and its business has gradually stabilized.

GPBank was the third bank the State Bank of Vietnam took over for a purchase price of VND0, following the Vietnam Construction Bank and OceanBank.

HCMC sees demand increase in Class A office space

The Ho Chi Minh City Real Estate Association reported that last year office leasing capacity was 1.47 million square meters from 224 projects with Class A offices, being in higher demand and prices than others.

Leasing capacity averaged 93 percent and prices averaged VND541,000 per square meter a month. Class A category were rented out at VND950,000 (US$46) per square meter a month.

Real estate companies said that there will be no Class A office building to come into operation this year.

Therefore, market research companies forecast that office renting demand will increase about 13 percent this year and 14 percent next year in HCMC. It is expected to be 11 percent and 15 percent in Hanoi.

Seafood industry faces lot of difficulties

Last year Vietnam’s seafood export turnover fell short of expectations with US$6.7 billion accounting for 84.5 percent of the number in 2014. The industry is forecast to continue facing a lot of difficulties this year especially to tra fish fillet, according to the Vietnam Association of Seafood Exporters and Producers (Vasep).

The seafood export turnover was a year on year reduction of 16.5 percent in 2015.

The sharpest fall was from shrimp. Despite holding 44 percent of the total seafood export turnover, shrimp yielded only US$3 billion accounting for 75 percent of that in 2014. Its market was narrowed by one third.

Tra fish also dropped 10.4 percent over 2014 with export value approximating US$1.58 billion. This product met with low consumption demand and prices in most export markets besides stricter requirements in quality and food safety.

The fish export value to the U.S and EU-- two largest markets of Vietnam-- dropped by 5.6 percent and 14.3 percent to US$318 million and US$295 million.

The number of tra fish exporters to the U.S. has shrunk to only 10.

According to Vasep, the seafood export decline last year was part of the world’s economic recession.

Besides anti-dumping tax, tra fish will see more barriers from the catfish inspection program of the U.S. Department of Agriculture. The program will start an 18 month transitional implementation period on March 1 for both domestic and international producers.

The shrimp industry’s competitiveness has been low because of high cost price.

Vasep secretary general Truong Dinh Hoe said that Vietnam’s cost price much higher than its rivals’ because input materials for shrimp breeding such as breed, feed and veterinary medicine have long depended on import.

Production cost of a baby shrimp in Vietnam is double that in India while feed is 40 percent higher.

The successful ratio of shrimp farming in Vietnam is only 33-40 percent due to many factors comprising diseases while it reaches 70 percent in India and Indonesia.

These reasons have caused the price of a kilogram of Vietnamese shrimp US$1-3 a kilogram higher than its rivals.

Vasep forecast that the shrimp industry will continue to be under influences of price fall and competitive pressure.

Positive impacts from free trade agreements with South Korea, Japan, the EU and ASEAN might slightly increase the seafood export turnover to near US$7.12 billion, up 6.3 percent over 2015.

These FTAs will bring Vietnam more comparative advantages than rivals like Indonesia, Thailand, the Philippines, Ecuador, Argentina and India as these counties have yet to sign FTAs with large import markets such as the US, EU and Japan.

It is expected that shrimp export turnover will see a year on year increase of 12 percent to reach US$3.3 billion, tuna up 8 percent to US$507 million.

Tra fish is unlikely to recover and forecast to fall 5 percent to US$1.5 billion.

Proper policies needed to attract Japanese investors

Vietnam should formulate proper policies and take the initiative to catch the wave of Japanese investment, said experts.

Professor Tran Van Tho from Japan’s Waseda University said Japanese entrepreneurs flocked to overseas markets every time the yen appreciated, pushing up production costs in their country.

The wave of Japanese investment swept over Asia in 1986 and 1987, but back then Vietnam had just opened its mindset. In 1993-1995, when the yen appreciated for the second time, Japanese firms invested heavily in Vietnam.

Unstable policies, cumbersome procedures and poor infrastructure in Vietnam discouraged many Japanese investors, making them switch to China, Tho told the Daily.

Now, Japanese entrepreneurs do not want to depend on China anymore and they are eyeing the neighboring countries, including Vietnam. Such an opportunity should not be missed and the Government should introduce appropriate policies to lure Japanese investors, said Tho at a workshop on the occasion of the 20th anniversary of Vietnam Asia-Pacific Economic Center (VAPEC) held in HCMC.

He suggested Vietnam should soon develop open and stable policies along with good infrastructure. Then, the nation’s leaders should directly call for investment into the key projects.

“After that, they cannot leave everything to their subordinates, but they themselves have to supervise such projects and give them instructions,” he stressed.

Takahisa Onose, director of Indochina Leader of Japan Business Services at Ernst & Young Vietnam, informed population, labor cost, legal transparency, tax, infrastructure and economic situation were among the concerns of Japanese investors.

Large population and cheap labor cost are the advantages of Vietnam, but tax and transparency pose big obstacles, he told the Daily in an interview via email.

He proposed the Government further improve the business environment to attract investors from Japan.

“Previously, we focused on investment in China, but we have realized that it is very risky to invest in only one nation. Therefore, taking into account the markets and the costs, we are shifting investment to Southeast Asia, particularly Vietnam and Indonesia,” he said.

Most of the large companies in Japan have already made investment in Vietnam. Now, small and medium enterprises are coming, and this trend will grow in the coming time, he said.

“Of course, Japanese do not come to Vietnam only. Therefore, what matters is the way of investment attraction. I believe the Government of Vietnam will be more active in investment attraction as this is the greatest chance ever,” he said.

Japan was the biggest investor in Vietnam last year with total fresh and additional capital of over US$5.1 billion, or nearly 40% of the total FDI approvals in Vietnam.

In the first quarter of 2013, Japan remained on top with newly pledged and additional capital totaling US$3.15 billion, accounting for 52.3% of total FDI inflow into Vietnam.

Bulk FDI inflow fosters electronics export growth

Export of electronics products is forecast to grow rapidly in the coming time given the massive foreign direct investment (FDI) flow into this sector.

Vietnam has been luring funds from the giants in hi-tech, electronics and research & development (R&D), which is a bright spot in the FDI attraction picture, said the property consultancy firm CBRE Vietnam.

CBRE has assisted Panasonic in setting up the project Eco-Solution Factory in Binh Duong with total investment of some US$38 million. Following the success of its component factory in the northern region, the Japanese electronics corporation has decided to move to the south and the new factory is scheduled to start operations in late 2014.

CBRE has also helped LG Electronics select a suitable location for a factory and deal with the issues of labor and tax incentives. The South Korean corporation intends to spend US$300 million building a factory in Haiphong, where labor cost is still low and the fight for employees is not so harsh as in Bac Ninh and Bac Giang.

Early this year, Fuji Xerox of Japan began work on a US$119-million factory specializing in production of printers and photocopiers at the urban and industrial complex VSIP Haiphong. It is expected that the factory will be inaugurated in August and start operations in November.

During its first phase, the factory will have a capacity of two million products per year, creating jobs for around 500 workers. This will be the first production facility of Fuji Xerox in Vietnam.

These new projects together with the operational ones will contribute to the tremendous growth in electronics export in the coming time and prove electronics the major export item of Vietnam, said experts.

Heavy investment in electronics in recent years has helped this sector win the first place in terms of exports from textile-garment in 2012 and the first quarter of this year.

Foreign-invested enterprises significantly contributed to export of cell phones, electronics products, computers and components last year, with over US$20.52 billion.

Samsung Electronics Vietnam alone exported US$12.7 billion worth of cell phones, twice as much as the figure of US$6 billion in 2011. Intel of the U.S., Canon, Nidec and Fujitsu of Japan and Foxconn of Taiwan also made great contributions, according to the General Statistics Office.

Samsung has recently started work on a new production facility in Thai Nguyen with total investment of US$2 billion, which may be raised to US$3.2 billion in the future.

Winter Corporation of Taiwan, a producer of touch screens for iPad and iPhone, last year poured an additional US$870 million into its factory at Quang Chau Industrial Park in Bac Giang, taking its total investment in Vietnam to US$1.12 billion.

With the investment increase of Samsung and Wintek, along with the factory of Nokia under construction in Bac Ninh and the mobile phone plant of Kyocera in Hung Yen, robust electronics export growth is in sight.

Investors pledge huge funds for Northwest

Twenty six projects worth a total of nearly VND9.5 trillion were granted investment certificates at the Conference for Investment Promotion and Social Security for the Northwest held in Tuyen Quang Province on Wednesday.

In addition, the event witnessed the signing of 15 agreements on over VND20 trillion worth of loans for investors in the Northwest. Banks also pledged to provide more than VND500 billion for social security in this region.

Deputy Prime Minister Nguyen Xuan Phuc, who is the head of the Northwest Steering Committee, expressed his pleasures at the above pledges.

The largest projects licensed on Wednesday are the VND1.6-trillion rubber planting project of Dau Tieng Rubber Corp. in Lai Chau, the Cam Thuy 1 hydropower project worth VND1.2 trillion to be developed by Infrastructure Investment and Transportations Construction Co. in Thanh Hoa and the VND885-billion lead factory of Tay Giang Corp. in Yen Bai.

Among the loan agreements, that of the highest value is the one signed between VCB, BIDV, Vietinbank, Agribank and EVN, in which the banks will lend EVN VND14.5 trillion to build Lai Chau hydroelectric plant. Meanwhile, Dong Ta Phoi Co. under Vinacomin will receive VND1.7 trillion from Vietinbank to extract copper ores in Lao Cai.

Vietnam Bank for Social Policies signed a memorandum with the Northwest Steering Committee, with an aim that credits for the Northwest would have an annual growth rate of 10-15% from now to 2017. In the period 2015-2017, outstanding loans for the region will increase by VND16 trillion and reach VND38 trillion by the end of 2017.

The Conference for Investment Promotion and Social Security for the Northwest was organized by the Northwest Steering Committee and the government of Tuyen Quang Province. The event was attended by 17 members of the Party Central Committee and over 1,000 delegates who are leaders of the Government, ministries, the World Bank and businesses.

The conference was held to seek ways to promote socio-economic development in the region consisting of 14 provinces with the highest percentage of poverty-stricken households in Vietnam.

Although Hanoi-Lao Cai Expressway funded by ADB is near completion, infrastructure remains the major bottleneck for the Northwest, said delegates.

BIDV Chairman Tran Bac Ha suggested: “This region is full of minerals, so the policy of infrastructure in exchange for minerals would work.”

However, the opinion of the leader of BIDV, the bank that pledged over VND1.3 trillion for four projects at the conference, was not supported.

Minister of Planning and Investment Bui Quang Vinh told the media on the sidelines of the conference: “Such an idea is very outdated, inconsistent with the view of the Government and the Ministry of Planning and Investment.”

He explained mineral and forest resources had been depleted and the Government did not agree to grant licenses for miners to export crude ores.

To develop the traffic system in the Northwest, he suggested calling for private investors to build the lifeblood roads under the formats of PPP, BOT and BT.

Decree 61 on incentives for investors in remote areas, including the Northwest, compiled by the planning ministry has been submitted to the Government.

Vinh said the Northwest had attracted only US$2.45 billion of foreign direct investment, very modest compared to over US$200 billion of the entire nation.

Victoria Kwakwa, the World Bank’s country director for Vietnam, said the Northwest is the poorest region in Vietnam and the bank would continue to assist the region in poverty reduction.

BIDV is offering households in the region loans worth US$500 million financed by the World Bank. Kwakwa urged the authorities to set aside small loans for local households to help them escape poverty.

Long Thanh Airport compensation to hit VND10 trillion

Some VND10 trillion will be needed for compensation and resettlement of households forced to relocate to serve the development of Long Thanh International Airport, said Ngo The An, vice chairman of Dong Nai Province’s Long Thanh District.

The government of Dong Nai last week had a meeting with the provincial departments and Airports Corporation of Vietnam, investor in Long Thanh Airport, to discuss issues regarding this project, he said.

At the meeting, Dong Nai Vice Chairman Tran Van Vinh asked Long Thanh District and relevant agencies to carry out compensation and resettlement work now so that the airport project can get off the ground in 2015.

The total cost of compensation and resettlement for the households forced to move by site clearance for Long Thanh Airport was estimated at VND7.5 trillion in 2009. However, due to inflation, the cost has surged to around VND10 trillion, said An.

As per the zoning plan, Long Thanh Airport will cover 5,000 hectares, encompassing the communes of Long Phuoc, Bau Can, Long An, Binh Son, Suoi Trau and Cam Duong in Long Thanh District. Nearly 5,400 households with over 17,000 people will have to relocate to serve the development of the airport project.

Four resettlement areas for relocated households will be formed in Binh Son, An Lam, Long An and Loc An, covering nearly 550 hectares.

The project owner is seeking assistance of Dong Nai’s government in developing the systems of medium voltage cable, water supply and wastewater treatment for the airport.

Some components of Long Thanh Airport will be completed by 2020 and the first flight will be launched then, according to the Dong Nai Department of Construction.

In line with the development of the airport, Dong Nai is drawing up a zoning plan for the surrounding areas to connect to the airport when it starts operation.

The Long Thanh Airport project will be developed in three phases. The first from 2015 to 2020 requires US$6.7 billion for construction of two runways, taxiways, aircraft parking zones and two terminals with an annual throughput capacity of 25 million passengers and 1.2 million tons of cargo.

In the second phase until 2030, another runway will be built. During this phase, the capacity of the passenger terminal will be doubled and the cargo one will be able to allow for 1.5 million tons per year.

In the third phase after 2030, the airport will have a total of four runways and its terminals will be capable of handling 100 million passengers and five million tons of cargo per year.

Air-con sales triple in scorching weather

Owing to the on-going abnormal hot spell, sales of air conditioners has shot up sharply and the increased demand for the products is expected to last until June.

Dinh Anh Huan, general director of Dienmay.com, referred to a report of a market research firm as saying that over 150,000 air conditioners were sold in the local market last month alone, three times higher than the months before and after Tet.

Lien An Thach, sales director of Dien May Cho Lon supermarket, deemed the sales volume mentioned above reasonable, explaining sales of air conditioners has sharply risen since early last month.

“The demand for air conditioners has strongly surged, so our delivery and installment teams don’t have enough workers to help buyers at certain times,” he said.

Similarly, air conditioner retail websites like Dienmay.com and maylanhgiare.com are also facing overloads in sales. Some retailers even propose customers delay assembling the products while others let customers do the job by themselves.

High coffee prices discourage importers

The local coffee prices have picked up some VND100,000 to over VND43 million per ton, weakening the buying energy of importers and making them switch to other markets.

However, coffee exports did not decline significantly in March, said Nguyen Viet Vinh, general secretary of the Vietnam Coffee and Cocoa Association (Vicofa).

Coffee price increase is ascribed to the prolonged drought, making coffee output in the 2013-2014 crop forecast to drop by one-third from 1.2 million tons in the previous crop. Therefore, many farming households in the Central Highlands are hoarding coffee, waiting for better price.

“Currently, each ton of coffee sells for VND43.3 million in Daklak and VND43.4 million in Gia Lai. Compared to early this year, coffee prices have risen by nearly VND200,000 per ton,” said Vinh. However, he said the increase was not significant and would not cause any fluctuation in the market.

Another reason why importers are buying less coffee from Vietnam is coffee prices of Indonesia are falling as this country enters the harvest season.

Vietnam and the world’s second largest Robusta coffee producer Indonesia represent nearly a quarter of the global coffee output. South Sumatra, the main coffee growing area in Indonesia, produced about 9.7 million 60-kilo bags in the 2012-2013 coffee crop, up 16.9% over the previous crop, contributing to a more abundant supply for the market.

Dong Nai aims for higher PCI ranking

The government of Dong Nai Province will spare no effort to resolve perennial problems with land access, competition and fees to obtain a higher position in the Vietnam Provincial Competitiveness Index (PCI) this year.

Dong Nai ranked 42th out of 63 provinces and cities in the PCI announced by the Vietnam Chamber of Commerce and Industry (VCCI) in April last year. The low ranking was attributable to difficult land access, unhealthy competition and informal fees.

Tran Van Vinh, vice chairman of Dong Nai Province, told a media conference on the province’s socio-economic performance on January 13 that the ranking was low, so provincial leaders should act to improve it.

To solve the issue of informal fees, Vinh said Dong Nai will make all administrative procedures transparent and set up phone hotlines for residents and businesses to raise concerns. The local government will attend to all their comments and take appropriate steps to solve any problems they raise.

Leaders of Dong Nai Province will conduct unexpected inspections at local agencies and units to see how their officials treat residents and businesses when it comes to paperwork processing.

Dong Nai sees the development of enterprises as one of the key drivers for its growth, so the province will focus more on removing hurdles to their operations.

“This year, we will exert greater effort to make improvements,” Vinh said.

Dong Nai has strived to woo investors to industrial zones and clusters with central wastewater treatment systems and at the same time check firms operating outside the zones to minimize the impact of their operations on the environment.  

Vinh said Dong Nai posted 2015 gross regional domestic product (GRDP) of VND150 trillion (around US$6.75 billion), up 8.5% over 2014, and GRDP per capita of nearly US$3,090.

Last year, exports of Dong Nai increased by 10% year-on-year to nearly US$14.5 billion and foreign direct investment approvals rose 33.7% to almost US$2.5 billion. The province’s development investments reached around VND76.58 trillion.  

The province targets 2016 GRDP growth of 8-9%, GRDP per capita of US$3,300-3,350, export revenue increase of 10-12%, and total development investments of VND75-78 trillion.

Pig, cow herds in city up strongly

The livestock sector in HCMC reaped success in 2015 as pig and dairy cow herds expanded sharply compared to the previous year, according to the municipal Department of Agriculture and Rural Development.

The city had a total dairy cow herd of 160,000 head in 2015, up nearly 26% year-on-year and accounting for over 58% of the national herd, heard a meeting on the department’s activities in 2015 and its plans for 2016 on January 13.

Dairy cows in the city could produce 275,000 tons of fresh milk, up 9% and making up 43% of the country’s total fresh milk output.

The department said the pig herd grew by over 30% last year to 360,000 head.

However, the department wanted the livestock sector to focus more on quality than herd expansion. Therefore, the department plans to reduce the herds of dairy cows and pigs to 100,000 and 350,000 head respectively.

A delegate at the meeting cast doubt on the feasibility of reductions in dairy cow and pig herds in the city since reality showed that numbers of cows and pigs have climbed year after year. This suggested that farmers in the fields could still earn profit.

A report of the department showed the dairy cow herd in the city increased by an average of 10% per year and milk output picked up by an average of 6% a year while the pig herd grew 4.2% per year in the 2011-2015 period.

EVN seeking hefty financing for power projects

Vietnam Electricity Group (EVN) has been in negotiations over loans totaling at least US$2 billion for its power generation and transmission projects that will be carried out across the country in the coming years.

EVN has secured a significant part of the funding from domestic and foreign lenders. The total amount does not include US$785 million in official development assistance (ODA) and concessional loans EVN obtained last year.

Dinh Quang Tri, deputy general director of EVN, was quoted by the Vietnam News Agency as saying that by the end of 2015 the State utility had found sufficient finances for major power generation and transmission projects in the coming years.

In the 2011-2015 period, domestic and foreign lenders disbursed more than VND320 trillion (US$14.3 billion) for EVN’s power generation and transmission projects.

EVN signed borrowing contracts worth US$4.8 billion with international ODA donors such as the World Bank (WB), Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), German Development Bank (KfW) and French Development Agency (AFD) in the five-year period.   

EVN will use the finances to complete major power projects in the next five years, including Duyen Hai 3, extended Duyen Hai 3, Vinh Tan 4 and extended Vinh Tan 4 thermal power plants.

The group aims to mobilize more than VND600 trillion to fund power projects from 2016 to 2020, including around VND133 trillion this year. It will put into operation nine generators with a total capacity of 2,534 megawatts (MW).

The generators to be put into operation are those of Lai Chau, Huoi Quang, Trung Son, Song Bung 2 and extended Thac Mo hydropower plants; and Duyen Hai 3, Thai Binh and Vinh Tan 4 thermal power plants.

Around 690 power transmission projects will be completed and get off the ground in the coming years.

Over the past five years, the group has commissioned Vinh Tan 2 and Duyen Hai 1 thermal power plants to meet increasing demand for the southern region. It has put into use 865 110-500kV transmission lines and transformers with a total capacity 55,600 MVA.

EVN has invested VND492 trillion in projects, a 2.42-fold rise over the previous five-year period.

National Power Transmission Corporation (EVNNPT) alone has arranged VND77.2 trillion (around US$3.5 billion) for implementation of 200 power transmission line projects in the past five years.

EVNNPT said the total sum included VND34.8 trillion from domestic capital sources and VND42.4 trillion from foreign capital. It has financed construction and operation of power transmission line projects across the country.

The corporation obtained after-tax profit of VND610 billion in the 2011 -2015 period.

EVN said by the end of 2015, the country’s power generation capacity had risen to 38,800 MW, 1.8 times higher than in  2010. EVN and power generation corporations account for 23,580 MW of the total capacity.

Workers yet to move freely in AEC

Though workers of ASEAN countries in some sectors are in theory allowed to work in any member states of the ASEAN Economic Community (AEC), Vietnamese workers abroad and foreign employees in Vietnam still have to observe the country’s prevailing regulations.

Deputy Minister of Labor, Invalids and Social Affairs Doan Mau Diep told a seminar in Hanoi on January 13 that doctors, nurses, dentists, engineers, surveyors, accountants, architects and tourism workers can move freely within the AEC in theory, but many issues need to be solved in reality. These issues include sharing experience and signing reciprocal agreements on social insurance, poverty reduction and social security.

Even if the AEC is not in place, workers, mainly unskilled ones, could still move within the region, Nguyen Quang Viet from the Research Institute for Vocational Training Science said at the seminar on the Vietnamese labor market after the AEC is in place.

But now with the AEC translating into reality, labor movements will be mostly related to skilled workers in the eight professions, which account for a mere 1% of Vietnam’s workforce. Therefore, impact of the AEC on the Vietnamese labor market would be modest.

Viet said there would be some natural barriers to labor movements such as culture, language, social integration, religion and job skills. In addition, educational qualifications are different in different countries.

Simon Matthews, Manpower Group country manager for Vietnam, Thailand and the Middle East, said at the seminar that skilled laborers should prove their qualifications, language competency and soft skills if they want to find jobs in any member states of the AEC.

Regarding the AEC’s Mutual Recognition Agreements (MRA) framework used to assess laborers, Ha Thi Minh Duc, deputy head of the ministry’s International Cooperation Department, said ministries are in charge of negotiations over the MRA in the sectors under their management.

For instance, the Ministry of Construction goes with MRA negotiations over engineers while the Ministry of Health is responsible for doctors and nurses.

According to Matthews, the AEC is not like the European Union (EU), which allows citizens of a member state to work in any other member countries. With the AEC, there are many barriers to foreign labor.

FDI approvals in city exceed US$4.5 billion

Just-updated data of the HCMC Department of Planning and Investment showed foreign direct investment (FDI) approvals in the city surpassed US$4.5 billion last year.

The new figure was 1.5 times higher than that reported earlier by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

The city attracted 595 new FDI projects having total registered capital of US$3.4 billion in 2015, up 5.6% from a year earlier. Foreign enterprises also pledged US$1.47 billion (up 283%) for 192 operational projects.

Overall, FDI pledges for projects in HCMC amounted to US$4.51 billion last year, a year-on-year increase of 38.28% against 2014.

FIA collected data for its report until December 20 while the municipal Department of Planning and Investment updated its figure until December 31.

Samsung Electronics HCMC CE Complex Co. Ltd on December 29 committed to pouring an additional US$600 million into its electronic items and household appliances production facilities at Saigon Hi-Tech Park (SHTP) in District 9. A number of suppliers of Samsung also pledged hundreds of U.S. dollars for their projects in the city in late December.

Earlier, the FIA reported that the northern province of Bac Ninh took the lead with  US$3.46 billion for new and existing projects, accounting for 16% of Vietnam’s total in 2015. HCMC came in second as it made up 14.6% of the total.

Notably, 49.2% of the FDI in HCMC was pledged for the real estate sector while 27% went to the processing-manufacturing sector.   

In contrast, of the total FDI approvals in Vietnam, 67% flowed into the processing-manufacturing industry and 10.5% into the property market.      

HCMC now has around 5,790 new and operational FDI projects capitalized at a total of US$38.95 billion, with the property sector accounting for 36%.

Data of the FIA indicated that as of December 20 last year over US$15.57 billion had been registered for 2,013 new FDI projects and US$7.18 billion for 814 existing projects. In all, FDI approvals in the country neared US$22.76 billion last year, an increase of 12.5% versus 2014.

The Reverie Saigon listed in Best New Luxury Hotels 2015

The Reverie Saigon which was opened last September has been recognized as one of the Ten Best New Luxury Hotels in 2015 by high-end travel rating company Luxury Travel Intelligence.

The luxury hotel with 62 suites and 224 rooms is 5th on the list. Mandarin Oriental, Marrakech (Morocco) comes first while second, third and fourth place getters are Sant Francesc, Palma Mallorca (Spain); Aman, Tokyo and Villa Rene Lalique, Alsace (France).

Other winning properties were Temple House, Chengdu (China); Sujan Rajmahal Palace, Jaipur (India); La Fiermontina, Puglia (Italy); Six Senses, Douro Valley (Portugal) and Gansevoort, Dominican Republic.

The Reverie Saigon is located at the Times Square Building at 22-36 Nguyen Hue Boulevard & 57-49F Dong Khoi Street in HCMC’s District 1.

Falling oil price hitting industry

The continued tumble in global oil prices has battered oil and gas shares on Vietnam’s stock market in recent times and is a problem for the industry in country, according to Mr. Le Minh Hong, Deputy General Director of PetroVietnam (PVN).

Leaders in Vietnam’s oil industry, such as the PetroVietnam Exploration Production Corporation (PVEP), have all felt the pinch and made little in the way of profit in 2015.

Vietsovpetro, a joint-venture between Vietnam and Russia with sales in the billions of dollars each year, is also facing tough times. General Director Tu Thanh Nghia confirmed it is experiencing the greatest difficulties in its history. Last year it had to cut costs, reduce staff, and slow down less-important projects. It even closed exploitation wells with high production costs. Despite these efforts it still lost more than $200 million.

PVN’s normal exploitation price is $24.4 per barrel. If crude oil dips below $20 per barrel the impact on the industry and the State Budget will be substantial. PVN has prepared plans in case the price continues to fall, emphasizing that it would complete existing projects on schedule to prevent extra costs. Notably, it already planned to cut costs by 20 to 30 per cent.

Despite oil being one of Vietnam’s most important industries it is not the biggest. “The falling oil price is a concern for countries that rely only on oil to grow,” said Dr. Tran Ngoc Tho, Head of Corporate Finance at the HCMC University of Economics. “It is a problem for oil companies in Vietnam but not for the country as a whole.”

Hanoi villa/townhouse segment showing promise

After three quiet quarters, the villa/townhouse segment in Hanoi became vibrant during the fourth quarter of 2015, with transaction volumes reaching the highest quarterly figure in two years, Ms. Do Thu Hang, Head of Research and Consultancy at Savills Vietnam, told a conference releasing its Hanoi Real Estate Market Report (Q4).

The report showed that total stock in the villa/townhouse segment was 31,125 dwellings (13,677 primary and 17,448 secondary) from 121 projects, up 2.5 per cent quarter-on-quarter and 3.8 per cent year-on-year. Seven new projects and a new launch of an existing project provided 755 dwellings, 85 per cent of which were townhouses.

The average secondary price of villas was down 1.4 per cent quarter-on-quarter and 2 per cent year-on-year, while the secondary price for townhouses was up slightly, by 0.3 per cent quarter-on-quarter and 2.5 per cent year-on-year.

Thanh Xuan district had the highest average primary price for villas, at $8,280 per sq m, while Cau Giay district saw the highest average primary price for townhouses, at $6,255 per sq m. New projects are located in Tu Liem, Cau Giay, Thanh Xuan, and Ha Dong districts.

Notably, 90 per cent of new supply was townhouses/shop houses. Good sales performance was observed in new projects, with absorption rates reaching 47 per cent.

Shop houses have attracted attention due to their dual-purpose functionality and are generally priced higher than townhouses. Savills predicted that, in 2016, 16 projects will provide approximately 2,740 dwellings.

Ms. Hang also stressed that the villa/townhouse segment has entered a new development stage. “Projects now focus more on location with convenient transport and utilities, while previously they often focused on building on large land plots,” she said.  

“Buyers now purchase a villa not only to live in but as an investment,” she added. “Investors also build projects to ensure the highest profitability possible.”

The Hamptons Ho Tram launched

Tanzanite International officially introduced The Hamptons Ho Tram on January 13, a high-end beachfront resort community in Ba Ria Vung Tau’s Ho Tram.

“The Hamptons Ho Tram is inspired by The Hamptons in the US, just hours away from New York City and a luxurious and exclusive retreat for affluent vacationers,” said Mr. Nguyen Nam Son, Chairman of Tanzanite International. “Tanzanite International is dedicated to recreating the luxury and convenience of The Hamptons in Vietnam, within a two-hour drive of Ho Chi Minh City.”

On an area of 16.8 ha along 518 meters of pristine tropical beach, Phase 1 of The Hamptons Ho Tram covers 12 ha and includes 288 resort suites in Tower 1 and 23 luxury beachfront villas, surrounded by over 4,000 palm and other trees and over 10,000 sq m of lakes and water features. Tanzanite International designed the project to keep site coverage at less than 13 per cent and a plot ratio of 0.51 - among the lowest in Vietnam.

The master plan for The Hamptons Ho Tram provides open spaces, with over 129,000 sq m of lush landscaping. Boasting an enormous infinity pool, a children’s center, three restaurants and a poolside bar, a spa, and gym facilities, The Hamptons Ho Tram is tailored for a fun and relaxing vacation.

Plans are for Ho Tram itself to become a comprehensive hospitality center over the next five years with an estimated 7,000 rooms needed to meet great market demand in the future, according to Mr. Son. “The Hamptons Ho Tram is expected to become a ‘golden’ hospitality project for investors, where the value of beachfront suites and villas may see growth of many times as Ho Tram develops,” he added.

Tanzanite International has gathered together a development team and board with more than 100 years of combined experience in real estate development and investments throughout Asia.

It is now one of the largest beachfront landowners in Ho Tram. Over the next decade it plans to invest in Ho Tram to develop the area into a high-end beach resort and luxury lifestyle destination.

Driving force

When asked by VET how the EU - Vietnam Free Trade Agreement (EVFTA) will impact on trade and investment between Vietnam and the Netherlands, Mr. Aldrik Gierveld, Director European Agriculture and Fisheries Policies and Food Security and Deputy Director General Agriculture and Nature at the Ministry of Economic Affairs of the Netherlands, said that after it officially takes effect developments in the agricultural sector are expected to proceed very quickly in Vietnam and a modern and professional sector will be seen within a couple years.

As the quality of production increases the next step is to invest in post-harvest processing. “The Netherlands is well prepared to facilitate this process in Vietnam and is always looking for investment opportunities in the country,” Mr. Gierveld said, adding that Europe is interested in buying high value and exotic products that meet the highest standards. “Our ambition is to intensify our investment relationship with Vietnam in the time to come,” he said.

The confidence of Mr. Gierveld about the development in trade and investment between Vietnam and the EU is shared by H.E. Bruno Angelet, EU Ambassador and Head of the EU Delegation. The EU, he said, was the third-largest foreign investor in Vietnam in 2015, rising from sixth in 2014. EU investors have been pleased to hear that the Vietnamese Government is preparing to attract investment from the bloc over the next two years, he said.

Ms. Cecilia Malmstrom, the European Commissioner for Trade, believes the signing of the EVFTA is good news for both Vietnam and the EU. The EU will have access to Vietnam’s market of 90 million consumers, large emerging middle class, and young and dynamic workforce, while the agreement will further promote Vietnam’s economic growth. It’s clear that most analysts and authorities believe the EVFTA will be a positive for investment in Vietnam.

In 2015, although the EU and its members continued to grapple with the consequences of the global economic downturn as well as growing political uncertainties, trade and investment between Vietnam and the EU maintained its growth momentum. And after the EVFTA officially takes effect investment flows from the EU into Vietnam will only increase.

According to figures from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, at the end of 2015 there were 1,710 projects from 23 countries in the EU in force in Vietnam with total registered capital investment of $21.48 billion, accounting for 8.7 per cent of project numbers and 7.9 per cent of registered capital.

EU investors have invested in most sectors, with processing and manufacturing leading the way with 590 projects and total investment capital of $6.62 billion, accounting for 34.5 per cent and 30.8 per cent, respectively. Electricity production and distribution ranked second, with 19 projects and capital of $3.54 billion, accounting for 1.1 per cent and 16.5 per cent, respectively, followed by real estate with 37 projects and capital of $3.4 billion, accounting for 2.1 per cent and 15.9 per cent, respectively. The Netherlands, the UK, France, Luxembourg, and Germany accounted for 82 per cent of all EU capital invested in Vietnam.

Ambassador Angelet said that EU investors will be very much interested in corporate social responsibility, employment conditions, and bringing added value to the market. “With this orientation, it is important to consider how Vietnam will prepare to attract EU investors,” he said, adding that the country needs to improve its market economy in order to seize the opportunities the EVFTA will bring. With 99 per cent of tariff lines to be cut to zero under a roadmap of ten years for Vietnam and seven years for the EU, this will be a good opportunity for Vietnam’s exporters to prepare and penetrate deeper into the EU. He also believes that Vietnam will enhance its competitiveness within ASEAN under the agreement, especially in the field of agriculture.

The EVFTA will create favorable conditions for high quality EU investment flows into Vietnam, according to Deputy Minister of Industry and Trade Tran Quoc Khanh, establishing an open and transparent investment environment. Vietnam will open up to EU investment in areas such as professional services, environmental services, telecommunications, banking, insurance, shipping, food processing, and beverages. “With their size and potential, EU investors can also use Vietnam as a transit point, connecting their commercial activities with ASEAN as well as in with any other country with which Vietnam has signed an FTA,” he said. “All of this will result in a positive change in Vietnam’s investment environment.”

Agreeing, Mr. Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), said that when the EVFTA comes into being it will have a positive impact on the country’s institutions. Vietnam’s laws will be closer to international practice and the investment environment will therefore be improved. “The EVFTA will certainly promote investment from the EU into Vietnam,” Mr. Mai said. “The important thing is that Vietnam pays due regard to the business strategies of international investors to understand what they need, while at the same time being aware of the country’s own strengths and weaknesses during the process of cooperation.”

The EVFTA will also unquestionably attract foreign enterprises to Vietnam to invest in footwear production, according to Ms. Phan Thi Thanh Xuan, General Director of the Vietnam Leather, Footwear and Handbag Association (LEFASO). The footwear market in Vietnam, she said, and the market in the EU are mutually supportive. While Vietnam produces many high-quality sport shoes and mid-range leather shoes, EU countries mostly produce high-quality leather shoes, which will allow both sides to develop their strengths.

The agreement is great significance because within ASEAN, Vietnam joins only Singapore in having an FTA with the EU. This creates an incentive for investors in the bloc to come to Vietnam and benefit from the region and the FTAs Vietnam has signed with other countries. “We are looking at Vietnam to invest in partly because we want to benefit from exports to the EU being subject to lower tariffs,” a business representative from Thailand said when visiting Vietnam to study the investment possibilities.

HCM City calls for investment in rural areas

A conference featuring the 2016 agriculture sector's implementation plan was organized in Ho Chi Minh City on January 13.

Speaking at the conference, Deputy Chairman of the Ho Chi Minh City People’s Committee Le Thanh Liem stressed: “GDP growth rate in agricultural sector accounts for lower than the other sectors”. However, it plays an important role in society stability and upgrading rural resident's lives.

The income gap between the city's urban and rural areas has been narrowed for past five years as the city has developed new rural program.

As planned,  in the next five years, the city’s agricultural sector will continue to develop towards modern, sustainable and effective urban agriculture, contributing to improve high- tech agriculture and biotechnology.

Moreover, Ho Chi Minh City will implement preferential policies as well as infrastructure development in rural region to attract foreign investors.

New enterprises rise strongly after effectiveness of Law on Enterprises

The number of newly-established enterprises has continued to increase in the past months particularly after the effectiveness of the 2014 Law on Enterprises in early July, 2015, according to Director of the Business Registration Management Agency under the Ministry of Planning and Investment Tran Thi Hong Minh.

From early July to December 2015, about 50,000 enterprises were founded with a total registered capital of over VND300 trillion (US$13.5 billion), up 30% in terms of number of enterprises and up over 90% in terms of registered capital compared to the same period in 2014 thanks to significant reforms of the newly effective Law on Enterprises.

The 2014 Law on Enterprises sees basic legal changes which allow enterprises to do what is not prohibited by law, providing the direction for building regulations related to business registration.

However, Director Minh said that the Business Registration Management Agency still faces difficulties while implementing the 2014 Law on Enterprises as several legal documents on business conditions are outside of the agency's competence or yet to be amended, and there lacks a catalogue of conditions and capital ratios applied to foreign investors among others.

Minh noted that to effectively implement provisions of the Law on Enterprises, there needs to be efforts and co-ordination from relevant State management agencies including the Ministry of Planning and Investment and provincial People's Committees along with initiative from enterprises.

She also suggested promoting online business registration to reduce pressure on business registration agencies and save time and costs for enterprises.

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