Australian state invites Vietnamese investors
The Australia Vietnam Business Council (AVBC) and Canberra University recently held a workshop in Sydney to call on Vietnamese businesses to make investment in Australia’s New South Wales.
Addressing the event on February 16, Suzanne Gilham, a senior official from the NSW Department of Industry, introduced the Australian business visa programme in 2017, which offers many incentives for entrepreneurs and investors from China, Malaysia and Vietnam.
She said the state’s government regards Vietnam as a potential and promising market to develop this new model in Australia.
Local authorities are coordinating with Vietnamese agencies and organisations to promote this programme in Hanoi and Ho Chi Minh City in June this year, she added.
President and founder of the AVBC Laurence Strano said the programme aims to encourage Vietnamese enterprises to do business in New South Wales.
He cited two-way trade surged from 45 million USD in 1990 to 10 billion USD at present.
Bilateral trade is expected to double in the coming time, he said, adding that he hopes more Vietnamese businesses will make investment in Australia and vice versa.
Work on container factory starts in Nghe An
A ground breaking ceremony for a container factory of the TKV Group from the Republic of Korea was held in the central Nghe An province on February 18.
The project in the Dong Nam Economic Zone has a total registered capital of 550 billion VND (24.2 million USD). It is expected to complete in June 2018 and produce 6,000 containers a year.
At the ceremony, Le Ngoc Hoa, Vice Chairman of the Nghe An People’s Committee, pledged that the province will create favourable conditions on policy and investment environment for investors.
The TKV Group is hoped to continue cooperating with Nghe An to implement several projects in the future, including high technology university, health waste treatment factory, and electronic and soft fields.
14.3-million-USD cattle-feed factory inaugurated in Nghe An
A cattle-feed factory with total investment of 325 billion VND (14.3 million USD) was inaugrated in central Nghe An province on February 18.
The Mavin Austfeed Nghe An factory has a capacity of producing 300,000 tonnes of domestic animal feed per year and generates jobs for 300 local workers.
It was built since September 2015 on an area of 3.6ha in Block B, at the Nam Cam Industrial Park of the Dong Nam Economic Zone
Speaking at the inaugural ceremony, Nguyen Xuan Duong, Chairman of the provincial People’s Committee, said that the factory will be a driving force for investment in the Dong Nam Economic Zone, contributing to the socio-economic development of Nghe An province.
IP rights experts of APEC opens 44th meeting in Nha Trang
The APEC Intellectual Property Rights Experts’ Group commenced its 44th meeting (IPEG 44) in Nha Trang city, the south central province of Khanh Hoa, on February 18.
The meeting, chaired by the National Office of Intellectual Property of Vietnam (NOIP), drew more than 100 delegates from the 21 APEC member economies. The Vietnamese delegation was led by NOIP Deputy Director Le Ngoc Lam.
The agenda surrounds the common targets of the APEC cooperation in IP, including increasing dialogue about IP policies, and discussing measures to promote the effectiveness of the IP protection system and to implement the WTO’s Agreement on Trade-Related Aspects of IP.
The IPEG 44 looked into efforts to ensure the effective implementation of APEC Collective Action Plan on IP to achieve the Bogor Goals on trade and investment liberalisation by 2020.
It also discussed the development of IP manpower for developing and underdeveloped economies, the enhancement of communication activities to raise public awareness of IP, and the encouragement of using, exploiting and commercialising IP.
On the sidelines of the event, the Vietnamese delegation had bilateral meetings with some APEC economies like the Republic of Korea and the US to discuss IP cooperation plans.
The IPEG 44 is scheduled to wrap up on February 19.
Also on February 18, seven other meetings and workshops took place in Nha Trang, touching upon such issues as emergency response capacity, illegal logging, policy cooperation in science-technology, and promoting the social commitment to corruption fight.
They were activities on the first day within the framework of the first APEC Senior Officials’ Meeting (SOM 1), which will last until March 3.
APEC Vietnam 2017 takes the theme of “Creating New Dynamism, Fostering A Shared Future”. Vietnam joined APEC in 1998 and hosted APEC events in 2006.
Firms to observe laws when investing abroad
Experts urged Vietnamese businesses to comply with established laws and attach special attention to environmental protection and corporate social responsibility when investing abroad, considerations that are all said to be vital for sustainable investment.
Speaking at a Friday conference titled “Sustainable agriculture investment of Vietnamese businesses in the Mekong sub-region”, Dau Anh Tuan, head of the Viet Nam Chamber of Commerce and Industry (VCCI)’s Legal Department, said businesses need to have reliable sources of information to make careful preparation for their overseas investment projects.
“Now, firms should not only comply with laws but also focus on CSR and environment protection to shift towards sustainable values,” Tuan said.
According to Doan Thanh Nghi from the Ministry of Planning and Investment’s Foreign Investment Agency, Laos and Cambodia are major destinations for Vietnamese investments.
Nghi cited the ministry’s statistics: as of January, Vietnamese firms poured a total of nearly US$21.4 billion into more than 1,190 projects in 70 countries and territories. Laos ranked first with 270 projects, worth $5.12 billion, followed by Cambodia with 191 projects, worth $2.89 billion.
Nghi said that overseas Vietnamese investments are mainly poured into agriculture, telecommunications and mining, which serve to Viet Nam’s advantage for cooperation with Laos and Cambodia.
In order to promote Vietnamese investments in Laos and Cambodia, Nghi said that information exchanges must be improved together and the transparency and stability of the business climate must be enhanced.
In addition, the negotiation and signing of bilateral and multilateral cooperation agreements must be sped up to create favourable investment conditions.
Pham Quang Tu, a representative from Oxfam Viet Nam said that the organisation’s research found that there were a number of bottlenecks in implementing investment projects in Laos and Cambodia, such as issues related to land ownership, labour, conflicts in compensation and difficulties in contacting local authorities.
Tu said that policies and instructions to encourage Vietnamese firms to pay attention to CSR when investing overseas.
He added that countries which received investments should develop a database with regular updates to provide reliable information to investors.
A research group of PanNature, VCCI and Oxfam was drafting instructions for Vietnamese businesses to invest in agriculture overseas, which aimed to reduce risks in investing and build the image of Vietnamese investors in particular and the national image in general.
The instruction included regulations in investing abroad, foreign investment attraction policies of destination countries as well as social and environmental issues arising from investment.
VIB deposit certificates a superior investment tool
Vietnam International Bank (VIB) officially issued certificates of deposit (CD) worth VND18 million and VND24 million for personal and corporate customers to meet customers’ investment demands for deposit on February 17.
“Along with savings account, CD is now one of the investment channels preferred by corporate and personal customers with a large source of finance,” VIB said.
“For investors who look for security and flexibility in the use of capital, CD will adequately meet this criterion as it is an investment channel belonging to a group of investment assets which generates a fixed income and suits medium-and-long-term investors,” it said.
According to the bank, when customers apply for a 18-month CD valued at a minimum of VND1 million, they will enjoy a fixed interest rate of 6.68 per cent; while the a 24-month CD will bring them a fixed interest rate of 6.88 per cent.
CD holders can also resell the CD to VIB after six months from the issue date at the price equivalent to its face value and enjoy an interest rate at the reselling date based on the interest rate listed on the CD, the bank said, adding that the CD’s interest rate will be fixed during the tenor and be paid on the date of maturity or on the reselling date, and customers can apply for as many CDs as they need to invest.
Besides this, customers can also inherit, give and transfer VIB’s CD freely on the secondary market. In urgent cases, customers can use the bank’s CD as collateral for a loan at VIB and enjoy a preferential lending interest rate. Furthermore, it can also be mortgaged for loans at other banks by law.
On the maturity date of the CD, if customers do not contact VIB, the CD will be automatically converted into a regular deposit account with the same tenor or a shorter tenor if the former is not available, the bank noted.
Increasing the value of Vietnam’s fruit specialties
In 2016, Vietnam, for the first time, earned nearly US$2 billion from exporting vegetables and fruits with the Mekong Delta being the main contributor.
The turning-point opened a new direction for the restructuring of Vietnam’s agriculture whose key export items will include rice and fruit specialties.
During the early days of 2017, mango growing cooperatives in Dong Thap province invited foreign businesses and domestic exporters to come to scout cooperative opportunities.
Huynh Thanh Ba, Deputy Director of the My Xuong Mango Cooperative, said that selling prices are higher and more stable thanks to the production of safe farm produce.
Ba says My Xuong cooperative and many other producers are producing qualified products that meet the standards of demanding import markets.
“Local farmers have tried to export 70% of their total output, selling the rest to the domestic market. If they hit this target, they will have a stable income and can get rich”, he added.
Last year, 74% of Vietnam’s total vegetable and fruit export revenue come from the Mekong Delta. The region’s blue dragons, longans, watermelons, and mangoes have conquered demanding markets including Japan, the US, France, the Netherlands, Belgium, Germany, Australia, and the Republic of Korea.
Our fruits fetch high prices. Cat Hoa Loc mangoes, for example, sell for up to US$12 each at the Japanese city of Fukuoka’s fruit auction”, said Professor Vo Tong Xuan, a leading Vietnamese agronomist.
Le Minh Hoan, Secretary of the Party Committee of Dong Thap, the leading province in agricultural restructuring, said that if the quality of input materials is well controlled, Vietnam’s future revenue from vegetable and fruit exports could double or even triple over 2016.
“It’s not easy to penetrate a market, but it’s even harder to keep it. Vietnamese farmers and cooperatives should keep the trust of customers and think of long-term business and farming targets. Enterprises should guide farmers”, Hoan said.
Affordable cars a wild dream for Vietnamese buyers
High import duties on foreign cars and unfavorable policies on the domestic auto industry are leaving few affordable options for car buyers in Vietnam.
A Hyundai i10 sedan imported from India arrives in Vietnam at the average price of only VND84 million (US$3,750), according to Hyundai-Thanh Cong, the authorized dealer of the Republic of Korean carmaker in Vietnam.
The five-door hatchback is among the best-selling Hyundai models in Vietnam, with Hyundai-Thanh Cong sales topping 20,000 units in 2016, a company representative told Tuoi Tre (Youth) newspaper.
However, despite the car’s cheap import price, its retail price may be as high as VND350 million - 450 million (US$15,625-US$20,090) due to an import tax of 70 percent and other duties and expenses that added to the cost, the representative said.
While taxes imposed on foreign cars are high, the domestic auto industry has been slow to seize the opportunity to gain a foothold in the affordable car market segment.
In fact, the leader of Vinaxuki, once considered a giant in Vietnam’s auto industry, has at one time unveiled his vision to manufacture affordable cars for the Vietnamese people.
The ambitious leader invested in a costly manufacturing complex and hired Japanese experts to take care of the designs, but his risky venture soon plunged into unrecoverable losses that led to the closing of the factory and a huge debt on his part.
Some experts have attributed Vinaxuki’s failure to the fact that the condition in Vietnam is only suitable for car assembly rather than manufacturing from scratch.
One official at the Industrial Policy and Strategy Institute under Vietnam’s Ministry of Industry and Trade has acknowledged that “the safest path for [domestic] auto companies now is to import from foreign manufacturing countries”.
Earlier this week, the chief representative of the Ho Chi Minh City office of the Japan External Trade Organization (JETRO) said that Japanese carmakers might leave Vietnam for other regional markets to improve profit, citing Vietnam’s unsatisfying production capacity compared to its regional peers such as Thailand and Indonesia.
In 2016, Vietnam produced around 400,000 cars, while its neighbors Thailand and Indonesia made 2.3 million and 1.5 million cars, respectively, according to EU-ASEAN Business Council.
Thailand is expected to reach a yearly production of 3.4 million cars in 2023, while the Philippines and Malaysia is forecast to emerge with 800,000 and 700,000 cars respectively by that year.
Meanwhile, Vietnam’s car production is forecast to drop to 300,000 cars in 2020 before bouncing to 500,000 in 2023, according to the same source.
According to a representative of Japanese automotive manufacturer Toyota, which has assembly lines in Vietnam, production numbers of its Vietnam factory is relatively low while the costs to source locally produced components are even higher than to have them imported.
Meanwhile, the trend of companies opting to import cars instead of having them manufactured or assembled in Vietnam is putting government policies on the auto industry under the question.
According to an official at the Ministry of Industry and Trade, there was a sudden high demand for multipurpose SUVs in Vietnam during the 2008-09 period.
But instead of introducing favorable taxes to encourage domestic production, Vietnam’s policymakers at the time decided to raise taxes on the industry, causing foreign brands to relocate their factories to Indonesia.
“Up until now, the Vietnamese government says it is doing its best to facilitate cars production but has yet to introduce any concrete policy on the issue,” the official said.
There will be an estimated 33 million people belonging to the middle class in Vietnam in 2020, according to Dr. Le Anh Tuan, head of the research unit at Dragon Capital asset management foundation.
The expansion of Vietnam’s middle class is expected to improve the country’s cars consumption in the years to come, provided that local policies are relaxed to allow for the growth of affordable auto production.
Brazil to import robusta coffee from Vietnam
Brazilian Ministry of Agriculture’s manager in charge of coffee Silvio Farnesi has said that the government has approved the importation of robusta coffee for the first time in history, including those from Vietnam, in order to meet domestic demand for instant coffee production.
The approval on February 15 forced imported robusta to be subject to a 2 percent tariff.
Brazil plans to import one million sacks of coffee, each equivalent to 60kg, by this May with a maximum 250,000 sacks per month.
As the world’s top green coffee producer and instant coffee exporter, Brazil produced 49.6 million sacks of coffee, up 14.8 percent annually. However, robusta, accounting for 17 percent of the total production, were packed into 8.3 million sacks, down 25 percent from 2015 and hitting a low record in the past 12 years.
Arabica is mainly used for roasted and ground coffee production while robusta is for instant coffee.
RoK strawberry imports face new rules
Boxes of fresh strawberries exported from the Republic of Korea (RoK) to Vietnam must have “for Vietnam” written on them, according to new rules released on February 16 by Vietnam’s Plant Protection Department.
Under the new regulations, RoK fresh strawberries exported to Vietnam must be produced, packaged, treated and stored at facilities registered with the RoK’s agricultural goods authorities, said the department under the Ministry of Agriculture and Rural Development. The boxes of strawberries must also have the name or registration code of the production and packaging facilities.
The exports must also undergo quarantine checks by the RoK’s plant quarantine agencies and receive quarantine certificates, reported baohaiquan.vn.
The boxes must also not have soil, leaves or any other parts of strawberry trees in them.
Korean strawberries are highly competitive thanks to strict quality management and are exported to 20 countries and territories around the world including Hong Kong, Singapore, Malaysia and Thailand.
Vietnam agreed to import RoK strawberries in 2016 after years of negotiation on quarantine issues between the two sides.
In Vietnam, RoK strawberries sell for 600,000-800,000 VND per kilo.
Korean strawberries are grown on smart farms according to the management good agricultural practice (GAP - good agricultural practice) so they have high quality and reach international food hygiene and safety standards.
Misconduct charges irk trade official
Ho Thi Kim Thoa, Deputy Minister of Industry and Trade, and her family have made headlines for owning significant stakes in Dien Quang JSC – a dominant lighting firm – as investigations began to determine if there are any conflicts of interest.
The matter of transparency in equitised Vietnamese firms has come to the public eye once again as Thoa’s family was found to possess approximately 34 per cent of Dien Quang’s shares. In fact, various members of Thoa’s family have a matrix of intertwined connections with the lighting firm.
First, prior to her appointment as a deputy minister of Industry and Trade in 2010, Thoa had worked at Dien Quang for 18 years and held the highest position of chairwoman and CEO for five years. After leaving Dien Quang to serve as deputy minister, Thoa continued to scoop up shares of the firm throughout the years. She currently owns 4.91 per cent after making multiple purchases.
Thoa’s brother Ho Quynh Hung, meanwhile, became Dien Quang’s chairman and CEO in 2010 when Thoa took office. Hung currently owns 7 per cent of the firm’s shares.
Moreover, Thoa’s daughters and mother also own a substantial amount of the company. Her daughter Nguyen Thai Nga, with 12 per cent ownership, started working for Dien Quang in 2012 and has since been appointed as deputy CEO and board member. This means Nga is reporting directly to her uncle Ho Quynh Hung.
Nguyen Thai Quynh Le, Thoa’s other daughter, is also a shareholder of Dien Quang, owning 6.5 per cent of the company. Tran Thi My Xuan, Thoa’s mother, has purchased 3.83 per cent of the firm thus far.
Another curious family tie is Thoa’s other brother Ho Duc Lam, who is the chairman and CEO of Rang Dong JSC, Dien Quang’s major competitor in the Vietnamese lighting equipment market. In other words, the two brothers run their own lighting firms while their sister has significant shares in one and simultaneously serves in office.
The controversy goes deeper with Ho Duc Dung – Ho Duc Lam’s son and nephew to Thoa and Ho Quynh Hung. In 2014, Dung bought VND25.74 billion ($1.17 million) worth of Dien Quang’s shares, which were put on sale by State Capital Investment Corporation as part of the divestment plan. A year later, Dung sold the entire stake to his uncle Ho Quynh Hung.
The complexity of Thoa’s involvement in Dien Quang, all while serving as a deputy minister, has raised questions of whether she has committed any serious legal infractions.
On February 16, Nguyen Phu Trong, Party General Secretary, ordered relevant authorities to look closely into this issue.
Nguyen Hoang Hai, deputy head of the Vietnamese Financial Investors’ Association, told VIR that there is a legal gap on this matter. He urged the government to investigate whether as a deputy minister, Thoa has launched any regulations in favour of Dien Quang.
“We need to find out if any regulations or laws have given Dien Quang an undeserved edge against its competitors in the market. Moreover, Thoa has been accused of buying Dien Quang’s stocks at low prices to benefit from price surges afterwards. This also requires further investigation,” said Hai.
Truong Thanh Duc, a lawyer at BASICO law firm, noted that public officials are prohibited from setting up or running their own companies in Vietnam. However, there has yet to be any rules on the officials’ share ownership in equitised firms.
“Due to this ambiguity, the deputy minister does not seem to have broken any laws outright. That said, the Ministry of Industry and Trade, where Thoa serves, has direct control over Dien Quang, so there is the possibility of a conflict of interest,” said Duc.
Geo-political advantages lure investors to Quang Nam
With the advantages of infrastructure, geographical location, policies, and long-lasting co-operation with big brand names, the central province of Quang Nam has become promising for domestic and foreign investors.
With a strategic geographical position and a consistent transportation infrastructure including an airport, ship transport, and a network of railroads and roadways, Quang Nam has many advantages for overseas investors.
Quang Nam lies in the south central coast of Vietnam and is bordered to the north by Danang – the commercial, service, and educational centre of Central Vietnam – by Quang Ngai province to the south, and by the country of Laos to the west. The province is also located on the East-West Economic Corridor, which is an easy road for transport to Laos, Cambodia, Thailand, and Myanmar, and for maritime transport to the other members of ASEAN.
Chu Lai International Airport is ensconced near the city of Tam Ky and is one of the biggest airports in the region. The airfield will be upgraded to an international airport with two runways and two terminals for both passengers and cargo, and a maintenance centre. Tam Ky is 70 kilometres away from Danang International Airport, but the distance will be shortened after the completion of Danang- Quang Ngai Expressway.
The province’s Ky Ha Port, a deep water port, is located in Chu Lai Open Economic Zone where ships under 10,000 tonnes have access to land. In the near future, investments will be made to widen the port so that ships of tens of thousands of tonnes are able to dock. From there, commodities can be transported to other countries, making this port ideal for transit to many international sea destinations.
Currently, many national highways across Quang Nam including Ho Chi Minh Highway, Danang-Quang Ngai Expressway, the Danang-Hoi An- Chu Lai coastal route, and roads within the East-West Economic Corridor linking to Vietnamese Central Highlands’ provinces to southern Laos and northeastern Thailand.
According to the Quang Nam People’s Committee, to date, the province has attracted around 115 foreign direct investment (FDI) projects from various international investors from South Korea, Japan, Singapore, the US, China, France, Germany, and Italy, with the total registered capital of approximately $1.7 billion. Moreover, the province has also conducted a great number of co-operation activities with prestigious international organisations for development planning and to boost investment, as well as building a socio-economic infrastructure and providing a culture exchange.
Over the years, the province has been able to attract investments, contributing to the province’s socio-economic growth and increasing job opportunities for locals.
Many international companies have long-standing commitments in Quang Nam which has provided stability for the region. These firms include Truong Hai Auto, Suntory PepsiCo Vietnam Beverage, Vietnam Brewery, INAX, a Japanese ceramic tile and sanitary ware manufacturer, German textile producer Groz-Beckert, and many internationally-renowned resorts and spas.
Remarkably, Sasaki Shoko Vietnam, which specialises in manufacturing chochin cage nets and other types of aquaculture netting, established a factory in Dien Nam-Dien Ngoc Industrial Park in Quang Nam in 2016. In addition, 46 Japanese companies supplying spare parts, production materials, and equipment for Mazda Automobile Group have had a working visit for investment opportunities to Chu Lai Open Economic Zone. In April 2016, VinaCapital and Hong Kong-based Gold Yield Enterprises broke ground on a $4 billion project in southern Hoi An area.
The province continues to create favourable conditions with open and transparent policies for investors to do business in the region. Quang Nam has applied competitive prices and depending on land investment sectors, projects may be exempt from land rent for 11 years, 15 years, or during the duration of the project. Beside general policies and regulations, the Quang Nam People’s Committee, in collaboration with investors, will examine certain policies applied for large-scale projects and submit to the government for approval.
According to Chairman of the Quang Nam People’s Committee Dinh Van Thu, the province will try its utmost to improve its investment climate and create favourable conditions for investors to do business in the province. Accordingly, Quang Nam will pay attention to administrative reform and support businesses in shortening administrative procedures.
South Hoi An project back on a rough path?
With main investor Chow Tai Fook in a surprise power change, the $4 billion South Hoi An project, now named Hoiana, is once again facing possible difficulty.
The South Hoi An project in the central province of Quang Nam, a complex including a residential and a commercial area, a resort, and various gaming facilities, was licensed in December 2010.
VinaCapital and VinaLand Limited, a closed-end fund managed by the former, planned to develop the project with Malaysian company Genting Berhad. However, in September 2012, Genting withdrew from the project, leaving VinaCapital to adjust the project plan in mid-2013, rescheduling the first phase to start operation by the end of 2015.
In September 2015, VinaCapital announced its newfound partnership with Hong Kong company Chow Tai Fook in the project. According to their arrangement, Chow Tai Fook and VinaCapital are the strategic investors and SunCity, which is 70 per cent owned by Chow Tai Fook, will cooperate in the management of the resort.
The construction of the first phase then started on April 24 last year. The plan was for the first phase to open for operation in early 2019 and for the whole complex to be complete in 2035. In December 2016 VinaCapital announced that the property would be called, "Hoiana".
"Hoiana is set to rank among Asia's most renowned resort destinations, bringing a self-contained world of entertainment, leisure, pleasure and luxury lifestyle," said Hoiana chairman, Don Lam, in an announcement.
Construction has only started for less than a year when a power change at Chow Tai Fook started brewing. Chairman Henry Cheng has recently taken an abrupt leave due to an unspecified illness.
While rumours of an alleged stroke are categorically denied, no information is forthcoming and the business community stands at the ready for son Adrian Cheng, heir apparent to New World Development Co. and Chow Tai Fook Jewellery Group Ltd., to take over the family empire earlier than expected.
When the relatively young Adrian (36) takes over, he will find himself in charge of one of Hong Kong’s largest property developers, which had a revenue of HK$59,570 million ($7.7 billion) in the 2016 financial year, and a jewellery chain that was reported by Bloomberg to generate about 80 per cent more revenue than Tiffany & Co. globally.
Despite clearly having been groomed for succession and being solidly embedded into the management of the group’s companies and affiliates, experts gave voice to concerns that the untimely and unprepared transfer could cost the family and the empire dearly.
The principal concern is that Adrian would be taking over at a difficult time, when New World Development is experiencing declining margins and Chow Tai Fook sees falling demand for its jewellery products.
Exacerbating troubles, a succession of this magnitude usually causes great disturbance in company operations, as even at the best of times crucial personal connections get tangled up and lost. Arriving largely unprepared to the table, retaining his father’s personal ties and maintaining investor confidence may just be too hard a task.
The Cheng empire is present in Vietnam principally via its subsidiaries. Besides the South Hoi An project, on November 20, 2015, the property development arm acquired 36 per cent in Beames Holdings Limited, which owns equity interests and operates various hotel properties in Hong Kong and Southeast Asia. Through the acquisition, New World Development Co. gained interest in Renaissance Riverside Hotel Saigon and New World Hotel Saigon, both in Ho Chi Minh City.