New developments aid merger & acquisition activities

New developments have brought opportunities for Merger and Acquisition deals made between foreign investors and Vietnamese firms, according to speakers at the M&A Forum Viet Nam 2016 held on August 18 by the Viet Nam Investment Review in HCM City.

The government in the 2016-2020 term is making every effort to boost economic growth together with sustainable development and to help businesses address difficulties, by reducing production costs and improving their competitiveness and effectiveness, according to Nguyen The Phuong, Planning and Investment Deputy Minister.

Changes in the laws on investment and enterprises effective a year ago and dozens of guiding decrees that recently took effect and regulations on doing business are now more transparent and are providing favourable conditions for investment and trading.

The Government is speeding up the restructure and equitisation of State-owned enterprises to improve performance and offer a higher rate of selling their stakes to investors.

Joining free trade agreements with the ASEAN, Korea, the EU and the expected Trans-Pacific Partnership as well as the formation of ASEAN Economic Community (AEC) has given an impetus for Vietnam to speed up improvement of its market economic policies and economic restructuring, resulting in more opportunities for merger and acquisition (M&A) activities.

According to experts, by doing so, the country has taken a long step into global integration, helping Vietnamese businesses improve competitiveness and join the global supply chain, a factor that makes it a sought-after investment destination.

Another factor encouraging businesses is the Law on Investment, which went into effect in early 2015, simplified capital contributions to hold stakes in local businesses.

Most of the M&A deals were made by foreign investors who purchased local firms with different purposes: targeting local facilities and materials like the case of Semen Gresik-Thang Long Cement transaction. The acquisition by the Indonesian firm opened up ways for the cement products to go to the markets of Indonesia, Singapore and the Middle East.

Meanwhile, Thailand's Singha Asia's US$1.1 billion stake in the Massan Group brought hope to both partners to enhance growth in the ASEAN region with a focus on Vietnam, Thailand, Myanmar, Cambodia and Laos.

The Thai Central Group, together with its Vietnamese partner Nguyen Kim Trading JSC, acquired supermarket chain owner Big C Vietnam earlier this year. It is said to be aiming at strengthening distribution capacity.

Retail has proven to be one of the sectors with potential growth in Vietnam.

Vietnamese companies are also buying businesses around the world, though on a much smaller scale.

Earlier this year, the Vietnam Dairy Products Corporation (Vinamilk) announced the Ministry of Planning and Investment's approval for its additional US$3 million investment in Driftwood Dairy. This would make its total investment to $10 million for its whole ownership of the American company.

The Corporation for Financing and Promoting Technology (FPT) also bought RWE IT Slovakia, an affiliate of a leading German energy group. The acquisition brought in nearly 400 IT specialists and new customers in Europe for FPT.

According to figures from MPI's Foreign Investment Department, foreign investors paid $2.984 billion to buy stakes in 3,140 local companies from last July to now. Of the amount, around $1.9 billion was for buying stakes of more than 50 per cent.

During the first seven months of the year, purchases worth $1.512 billion were made by foreign investors in businesses for stakes of more than 50 per cent, excluding smaller percentage stakes.

The first seven months saw M&A deals worth more than a total of $3.2 billion, compared to the figure of the past five years, which is $18 billion.

The deals covered most economic sectors, especially retail, consumer goods and real estate, according to Phuong.

Property developer Tien Phuoc, for example, attracted foreign investors to four of its projects in the past eight years, including the sale of 40 per cent of Empire City in HCM City's District 2 for $94 million, to Singapore's Keppel Land.

But Keppel Land also had an additional three purchases from other stakeholders in the project, bringing total investment to almost $235 million.

Prof. Christopher Kummer of the Institute for Mergers, Acquisitions and Alliances of Switzerland agreed that M&As with Vietnamese companies had reached a new record (at around $5.2 billion) last year and anticipated that this year the figure might peak at $6 billion with 600 deals.

"A couple of factors have contributed to this development. Local companies in Vietnam have continued to use M&A to realise strategic growth within growing markets," he said.

"The forecasted growth this year in the country is one of the highest worldwide and this growth attracts foreign companies to expand their markets and footprint in Vietnam. Well-positioned trade agreements by the Vietnamese government have helped increase this overall attractiveness," he added.

Fuel prices gain nearly VND700 per litre

The prices of RON 92 petrol and bio-fuel E5 were raised VND675 and VND975 per litre from 3:30 pm on August 19.

Following a joint decision by the Ministry of Industry and Trade and the Ministry of Finance, the prices of diesel 0.05S and kerosene also increased VND253 and VND200 per litre, respectively.

fuel prices gain nearly vnd700 per litre hinh 0

It is the first fuel price hike after four consecutive falling adjustments in recent times.

Under the joint decision, RON 92 and E5 are sold at no more than VND15,374 (US$0.69) and VND15,225 (US$0.68) per litre, while the ceiling prices of diesel and kerosene went up to VND11,914 (US$0.53) and VND10,496 (US$0.47) per litre.

The two ministries also decided to keep subsidies on gas and oil unchanged.

US Mart opens 2nd store in HCM City

After successfully operating its first store in HCM City for three years, US Mart has opened a second store in District 7.

Situated on Nguyen Duc Canh Street, the store sells around 10,000 items, 70-80 per cent of which are imported directly from the US, Phan Kim Ngan, the company's director, said.

The other 20-30 per cent are Vietnamese high-quality products, especially specialties like Hoa Loc mango, Vietgap custard apple, Ben Tre green-skinned grapefruit, and Tien Giang thick-skinned orange, she said.

With increasing incomes, Vietnamese consumers tend to buy more imported goods, especially American for their safety and high quality, she said, adding that the first store in District 1 achieved very good growth over the last three years.

A third store will open in Tan Binh District on Sunday.

At the new store in District 7, consumers got a taste of various US food and beverage products as part of the Taste of America programme, a joint effort with the US Department of Agriculture.

Gerald H.Smith, senior attache for Agricultural Affairs at the US consulate, said the programme aims to promote the quality and diversity of US food and beverage products.

Trade between the US and Viet Nam in food and agricultural products was worth US$5.9 billion last year, with Viet Nam's exports accounting for $3.3 billion, he said.

Viet Nam is the 11th largest market for US food and agricultural products, he added. 

Vietbeauty 2016 opens in HCM City

A business-to-business beauty exhibition, Vietbeauty 2016, opens on August 18 at the Sài Gin Exhibition and Convention Centre in HCM City's District 7, bringing opportunities for domestic and foreign companies in the beauty industry.

As the country's premier international beauty exhibition, Vietbeauty 2016 has attracted over 150 exhibitors from 15 countries and territories showcasing products, services and techniques as well as equipment.

The international pavilions include Japan, Korea, Singapore, Thailand, China, Taiwan and India.

"The field of aesthetics has grown strongly over the past decade and surely will break out in quality and quantity in the coming years. The event is very necessary and is a good background business-to-business for the meeting of beauty and aesthetics professionals to explore the latest products, technologies, advances and treatments from many leading manufacturers, distributors, cosmetics brands and aesthetic technology companies," said Le Hanh, president of HCM City Society of Aesthetic and Plastic Surgery.

Along offering co-operation chances, the exhibition includes many conferences on the latest trends of the beauty industry such as advancements steps in aesthetic plastic surgery and cosmetic medicine, hosted by the HCM City Society of Plastic and Aesthetic Surgery.

The other conference on "Essential Oils – Flavours – Cosmetics and Life" is hosted by the Viet Nam Essential Oils, Aromatherapy and Cosmetics Association.

With these conferences, the exhibition aims to help participants improve their knowledge and upgrade their skills and at the same time find appropriate solutions to business challenges.

"As the only business-to-business platform in Viet Nam, Vietbeauty 2016 is an event for all trade professionals seeking to take their business to the next level, in turn contributing to the long-term development of the Vietnamese beauty business as a whole," said M Gandhi, managing director of UBM Asia, ASEAN Business, the organiser of the event.

The event will be open until August 20. 

Quang Tri launches brown rice milk project

The central province has commenced construction of 110ha farm for brown rice development and a rice milk plant project – the first organic farm – in Hai Lang District.

The provincial administration said the VND160billion (US$7.1 million) project will produce 100 million litres of rice milk and nutrition drinks from brown rice for domestic use and export from next year.

It will be the first organic farm project and an agricultural processing plant in the central region that is expected to promote the province as a high-tech farming site in Viet Nam.

The province also plans a 14,000ha farm as a high-tech zone that will produce lotus milk and have a freshwater fish culture centre.

In the 2011-15 period, Quang Tri attracted 262 domestic and foreign projects with a combined investment capital of about VND50.3 trillion (more than US$2.23 billion).

The province has granted investment licences to 15 projects worth VND10 trillion ($444 million).

The province, situated in the East-West Economic Corridor and Trans-Asia road link with Laos, Thailand and Myanmar, has called for foreign investment in organic and hi-tech farming and the processing industry.

IFC to give VPBank $125m finance package

IFC has approved a US$125-million finance package for the Vietnam Prosperity Joint Stock Commercial Bank (VPBank). This is the largest loan IFC -- a member of the World Bank Group – is providing to a Vietnamese bank in 2016 to date.

The funds are expected to help VPBank expand lending to micro, small- and medium-sized enterprises (SMEs), especially those owned by women, as well as import and export firms. The package comprises a $100-million five-year syndication loan from the IFC's own account and from Cathay United Bank. The IFC will also provide VPBank a trade guarantee of up to $25 million under the Global Trade Finance Programme (GTFP).

The long-term loan will be divided into two contracts of $50 million each. The first contract was signed earlier this week in Hanoi and the second one is expected to be signed in the fourth quarter of 2016. In 2012, IFC helped the lender develop a comprehensive plan to strengthen its corporate governance practices.

As SMEs are the focal segment of VPBank's strategy to become a leading retail bank in Viet Nam, Nguyen Duc Vinh, VPBank chief executive officer, said the finance package would help his bank to accelerate the realisation of this ambitious target and provide practical benefits to local customers. He said the IFC's investment also reaffirmed VPBank's operational efficiency and transparency in the financial market.

As the largest global development institution focusing on the private sector in emerging markets, IFC has particularly focused on SMEs that are an important part of the economy, accounting for 97.6 per cent of the total active enterprises in Viet Nam and employing a large part of the population. Yet, access to finance is seen as a key obstacle to their business growth and expansion, as only about 30 per cent of the enterprises have access to formal financial services.

VPBank, which also focuses on retail banking and SME segments, has a countrywide footprint of operations, with 214 branches and transaction offices, 64 SME centres, 433 branded automated teller machines (ATMs) and 16,000 linked ATMs. VPBank is rated by Moody's with a long term rating of B3 and a stable outlook. It is also among the 10 banks selected by the State Bank of Vietnam (SBV) to pilot the Basel II implementation road map in Viet Nam. 

Bankers discuss internal capital assessment for Basel II

Banking experts shared their experiences in applying the Basel II capital adequacy guidelines at an IFC -hosted workshop today in Ha Noi on August 18.

Nguyen Toan Thang, general secretary of the Vietnam Banks' Association (VNBA), said the workshop would enhance bankers' understanding of the internal capital adequacy assessment process (ICAAP), a key component of central bank regulations worldwide. ICAAP is also central to Basel II, which are international banking guidelines that require financial institutions to have sufficient capital to support the risks incurred in banking operations.

According to banking experts, applying Basel II is indispensable for local banks, especially when Viet Nam has become part of the Trans-Pacific Partnership, with most banks of other member countries having applied Basel II or even Basel III.

Thang said the sharing of how ICAAP was used within a bank's strategy and risk management framework would encourage local commercial banks to develop and use better management techniques to monitor and manage their risks by exploring practical experience, good practices, challenges and the lessons learned.

Supported by the government of Switzerland's State Secretariat for Economic Affairs (SECO), the workshop was jointly organised by the IFC, a member of the World Bank Group, the Swiss Finance Institute (SFI) and VNBA.

According to experts at the workshop, undertaking an ICAAP would help banks to assess the capital level required to support current and future risks, including a buffer for stress scenarios.

Well-run banks across the world view ICAAP as a core strategic activity that safeguards operations such as in times of stress, rather than as a compliance exercise.

"The need for improving risk management and integrating it with business and capital planning through an ICAAP process has become much more important," Kyle Kelhofer, IFC country manager for Viet Nam, Cambodia and Laos PDR, said. "Demonstrating credible capital buffers to absorb material risks, beyond regulatory minimum requirements, can generate positive impact on a bank's operations and resilience, contributing to sustainable growth of both Viet Nam's banking sector and the entire economy."

Le Trung Kien, deputy director of the State Bank of Viet Nam's Department for Banking Operation Safety Policies, said the central bank has initiated a timeline for the adoption of Basel II to promote a more resilient banking sector and further use of international standards in Viet Nam. The pilot programme, launched earlier this year, is being implemented by 10 local commercial banks.

Kien said the SBV would soon issue ICAAP guidelines and regulations for commercial banks.

According to Jamal Ahmad, chief risk officer (CRO) of Standard Chartered Bank Viet Nam, ICAAP was not the same in banks because of the dynamic working environment. He, however, said it was vital that the board and business section co-operated as closely as possible for the most effective ICAAP.

Le Anh Ha, deputy CRO of Vietinbank, which started studying and applying Basel II in 2013, highlighted the co-operation between the board and business for a good ICAAP, and said the greatest challenge were human resources, adding that in the local banking system, they lacked people who had experience working with Basel II, except the few who had worked with foreign banks before.

Thus, Ha said Vietinbank was investing a lot in this by training young and talented staff along with learning from international consultants from IFC, SFI and VNBA for the best results.

Ha said while waiting for the SBV's ICAAP guidance, the bank had prepared several plans for various scenarios.

VietinBank was among 10 banks chosen to implement Basel II from February, with the others being the Bank for Investment and Development of Viet Nam (BIDV), Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank), Viet Nam Technological and Commercial Joint Stock Bank (Techcombank) and Southeast Asia Commercial Joint Stock Bank (ACB), besides Viet Nam Prosperity Bank (VPBank), Military Commercial Joint Stock Bank (MB), Maritime Bank and Sacombank, as well as Viet Nam International Commercial Joint Stock Bank (VIB).

Regent returns to VN, partners with BIM Group

Global luxury hospitality brand Regent Hotels and Resorts is working with prominent Vietnamese property developer BIM Group to develop world-class resorts in Viet Nam and turn them into lifestyle destinations.

As a member of Taiwan-listed multi-sector FIH Regent Group, with its foothold in Beijing, Berlin, Porto Montenegro, Taipei and Singapore, Regent Hotels and Resorts have been eyeing ways to expand in Asia, especially Viet Nam.

"With its pleasant climate, rich culture, wonderful food, fascinating natural sights and improved transport infrastructure, Southeast Asia is considered a popular tourist destination," Ralf Ohletz, the group's president of design and concepts, said in a speech at BIM Group's media briefing on August 17.

Ohletz said rapid economic growth was transforming the region from a budget travelers' must-visit hotspot to one of the top choices for luxury travelers, where Vietnam was a hidden gem waiting to be discovered.

Ohletz said there was a shortage in hospitality products that were exclusive and classy in phu Quoc and Ha Long, the country's popular tourist destinations.

"Regent Hotels and Resorts wants to bring a whole new luxury accommodation experience to all the guests traveling to Viet Nam," he said.

Le Minh Dung, executive director of BIM Group's property business, said at the briefing that BIM Group was working with Regent Hotels and Resorts to develop a luxury resort in Ha Long and in Phu Quoc.

This would mark the return of the global hospitality brand to Viet Nam after years of absence.

Previously, Regent Hotels and Resorts joined in the development of the luxury resort The Nam Hai in Viet Nam's central region.

The participation of global brands in Viet Nam's hospitality market will boost competition and set new market benchmarks, according to Ohletz, who added that quality would become the decisive factor in its success.

BIM Group has partnered with many leading global hospitality brands, such as the InterContinental and Fusion Suites, on many of its developments, offering world-class products and services.

Quang Ninh Province–based BIM Group's flagship projects include 155ha mixed-use Phu Quoc Marina on Phu Quoc Island and the 248ha Ha Long Marina Urban in the northern province, which consists of a line-up of high-profile component projects. 

Novaland unveils Park Avenue promotion

Housing developer Novaland Group has unveiled a new promotion for The Park Avenue office-tel and apartment complex in HCM City's District 11.

Customers buying the project this weekend will have a chance to win diamonds valued at VND75 million (US$3,400) in a lucky draw.

Customers, who have to pay 35 per cent down, can borrow from banks without interest for the first two years.

Buyers in districts 5, 6, 11, 10, Tan Binh and Tan Phu will get a discount of 1 per cent.

The Park Avenue, situated on Ba Thang Hai Street, is easily accessible from districts 3, 5,6,10, 11, Tan Binh and Tan Phu.

Besides office-tel and apartment units, it also has a shopping centre, swimming pool, coffee shops, and restaurants.

Apartments cost around VND38 million per square metre. 

Mekong Capital fund sells Mobile World shares

Mekong Enterprise Fund II (MEF II) registered to sell more than 2.7 million shares of investment corporation Mobile World, in a context that prices of the shares have reached the highest level ever.

Nh?p c?u Ð?u tu (Investment Bridge) online reported that the US$50 million growth capital private equity fund, managed by Mekong Capital, will carry out the put-through transactions within nearly a month beginning August 19.

MEF II currently holds 9.24 per cent of Mobile World's equity, and this stake will fall to 7.39 per cent if the transactions are successful.

Shares of Mobile World closed down three points at VNÐ151,000 ($6.7) per share on August 18 on the HCM City Stock Exchange, after reaching a record high of VNÐ154,000 per share on August 17.

MEF II began investing in Mobile World in 2007, when Mobile World's share prices were around VNÐ3,900 per share.

If the prices continue to hover around August 17's peak, MEF II will collect around VNÐ415.8 billion from the share sales. This means the fund will gain a profit 40 times higher than its initial investments.

MEF II already sold 2.5 million shares of Mobile World early last month, when Mobile World's share prices reached some VNÐ130,000 per share. It gained about VNÐ325 billion from this transaction.

Established in 2001, Mekong Capital is a Vietnam-focused private equity firm, whose investee companies are in consumer-driven sectors such as retail, restaurants, consumer products and distribution.

Mobile World runs two retailing chains, including mobile devices chain thegioididong.com and consumer electronics chain dienmay.com.

The company announced on its website that it planned to reach about VNÐ34.17 trillion in revenues this year, an increase of 26 per cent over last year.

It projected an after-tax profit of about VNÐ1.39 trillion for 2016, a year-on-year increase of 23 per cent. 

Breakthrough solutions needed to gain export goal

The export growth target of 10% for 2016 is unlikely to be achieved if no breakthrough solution is taken, experts have said, noting challenges face the country such as technical barriers and trade protection measures under new-generation free trade agreements set to be signed this year.

breakthrough solutions needed to gain export goal hinh 0 According to the Ministry of Industry and Trade, Vietnam recorded export growth of 5.3% in the first seven months of 2016, much lower than the 9.2% of the same period last year.

This was attributed to fluctuations in import markets, experts said, adding that many countries have strengthened technical barriers and applied stricter regulations on food safety, quality, and goods origin.

Vietnam’s rivals such as Thailand, Indonesia and India are competing in quality and price, they said.

Rice, for example, fetched US$1.32 billion from shipping 2.93 million tonnes abroad from January-July, down 18.4% in volume and 14.4% in value year-on-year, according to the Ministry of Agriculture and Rural Development.

The reduction was attributable to weak demand and instable production under the impacts of drought and salt water intrusion during the first half of this year, said Secretary General of the Vietnam Food Association Huynh Minh Hue, adding that key importers like China and other Asian countries (accounting for 70-75% of the market) imported less rice in the seven-month period.

Similarly, the garment-textile and footwear industry faces several difficulties. As of July 2016, the sector only fulfilled half of its yearly export target of US$17 billion. The current growth of below 6% is the lowest over the past 10 years.

Chairman of the Vietnam Textile and Apparel Association Vu Duc Giang said businesses are facing fierce competition and transport cost hikes. Added to this are shortcomings of domestic management policies on materials quality and the use of machinery and equipment.

Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers, highlighted difficulties that the seafood sector is facing such as weather, prices and administrative procedures on imported spices and additives.

Despite the setbacks, the sector grossed US$3.2 billion in revenue in the first half of 2016, a year-on-year rise of 4%, he said.

Shrimp exports increased 5% to reach US$1.35 billion, Hoe said, adding that the free trade agreement with the Republic of Korea, which comes into force in 2016, has had positive impacts on shrimp exports to this market.

He added that while the FTAs with the EU and the TPP are yet to take effect, demand from relevant markets has picked up.

Minister of Industry and Trade Tran Tuan Anh said food safety and hygiene is the primary standard for not only seafood but also other products, adding that besides implementing financial and monetary policies, businesses and localities should devise specific measures for individual sectors.

He vowed that the ministry will push forward with simplifying administrative procedures and creating more documents explaining FTAs to enterprises, he added.

Moscow seminar highlights Hanoi Goods Week

Made in Vietnam spices, food and consumer goods have become more and more familiar to Russian people, said Ambassador to Russia Nguyen Thanh Son at a seminar in Hanoi on August 17 to promote Hanoi Goods Week in Moscow.

moscow seminar highlights hanoi goods week hinh 0 The 200 million population nation boast huge potential for Vietnam businesses to full tap, especially in the fields of consumer goods, handicrafts, garments and textiles and food.

Russian people prefer Vietnamese products to Chinese ones because of reasonable prices and higher quality. If Vietnam businesses have proper investment strategies, they will find easier to reap success on the lucrative market, the Vietnamese diplomat noted.

However, he said tax obstacles businesses are facing were basically removed after the signing of the free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EEU) in late May last year.

During the first Vietnam high quality product fair in Moscow late last year, numerous Vietnam businesses set up partnerships, paving the way for their efficient operations, Son said.

Annual trade the two countries is still far below their full potential, reaching merely US$6-7 billion and the figure is expected to hit US$10 billion by 2020.

At the event, 100 leaders from 50 businesses were also updated on the second Hanoi Goods Week in Moscow scheduled to take place on September 9-19.

Vietnam Airlines will offer discount return tickets for two business representatives while the Hanoi-Moscow Complex (Incentra) gives free rental charges for pavilion space and communications fees and 50% of accommodation fees.

The HCM City Goods Week is set to transpire on October 6-16 at Incentra, Moscow. For more information, plz contact hotline 0965 945 666.

VNREA submits proposals to Construction Minister

The Vietnam Real Estate Association (VNREA) submitted a number of proposals to develop the real estate market to Minister of Construction Pham Hong Ha at the latest meeting between the Minister, ministry leaders, and representatives from and members of VNREA on August 12.

According to Mr. Nguyen Tran Nam, former Deputy Minister of Construction and now Chairman of VNREA, Vietnam’s property market still faces many risks, such as an imbalance between supply and demand, a shortage of affordable housing, a lack of comprehensive information on general market performance, and weak capacity among developers in investing, implementing and managing projects. To solve these problems and lead Vietnam’s property market towards stable development, Mr. Nam submitted a range of proposals to Minister Ha.

Firstly, the Ministry of Construction (MoC) should direct its departments and city and provincial construction departments to improve awareness of legal procedures relating to the property market. MoC should also review all procedures relating to purchasing future-built apartments to reduce any illegal activity.

As for procedures on foreigners purchasing houses and property in Vietnam, VNREA proposed that MoC issue detailed and specific directions for procedures on money transfers from abroad for property purchases and locations where foreign ownership is limited because of national security concerns.

VNREA also looks forward to MoC’s support and approval for it cooperating with departments at MoC and in localities to receive monthly information on Vietnam’s property performance. An information database could then be established, providing assistance to market management by local authorities and the investment of enterprises.

MoC should also support VNREA in conducting an annual property exhibition, an annual property forum, promoting the development of green construction materials, projects, and urban areas, and issuing new standard rankings in architecture, construction, and new construction materials. All proposals aim at directing the development of Vietnam’s property market in a stable manner into the future, Mr. Nam said.

Minister Ha appreciated the proposals and the contribution made by VNREA to the industry and directed related agencies to study the proposals and report back as soon as possible.  

According to enterprises at the meeting, one of the challenges they face when implementing their projects is complicated legal procedures. They now spend an average of 166 days on being granted an investment license, up from 114 days last year. “Departments of Construction in localities should work on simplifying these procedures,” Ms. Huong Tran Kieu Dung, CEO of the FLC Group, told the gathering.

According to VNREA, in the first half of this year Vietnam’s property market saw stable performance. There were a total of 15,300 transactions in Hanoi and Ho Chi Minh City, lower than in the same period last year (18,000), but transaction value was higher. Property prices increased 3-7 per cent in the first half compared to 3-5 per cent in the first half of last year.

Jollibee opens new Hanoi outlet

The Jollibee Vietnam Company Limited will officially hold an opening ceremony for its fifth fast food outlet in Hanoi on August 23, raising its total number of outlets in Vietnam to 81.

“The outlet in To Hieu Street in Cau Giay district is a key, strategic location for us to serve customers," Ms. Tran Ngoc Hoai Thuong, Public Relations Manager at Jollibee Vietnam, told VET.

Jollibee strives to become a popular fast food brand in Vietnam and to provide good locations for customers, Ms. Thuong added.

“We have been paying attention to expanding our network,” she said, and this will help it bolster its market share.

Vietnam’s fast food market has been seeing increasingly fierce competition every year. The recent withdrawal of Singapore’s New York Dessert Coffee (NYDC) chain raised some concerns among other fast food and coffee shop chains in the country.

According to Ms. Thuong, in such a fierce market the maintenance and development of a fast food brand requires vision and a mission that is attached to customers. All brands therefore face difficulties in winning over customers.

She also confirmed that with the company’s expansion plans together with its efforts in providing food that meets the tastes of Vietnamese customers it believes its brand will develop sustainably into the future.

NYDC’s departure also sends a warning to foreign players looking to establish franchises in Vietnam. Despite the country being one of the hottest franchising markets in Southeast Asia, careful planning and perfect execution are required if a brand wants to do well.

Jollibee Vietnam revealed plans early this year to open an additional 20 outlets in Vietnam each year, according to Ms. Tran Thi Lan Anh, Vice Chairman of Jollibee Foods Corporation and Country General Manager of Jollibee Vietnam.

The Filipino fast food brand has now opened 81 outlets in Vietnam during its 20 years in the market. Last year it announced it would seek partners to further expand through franchising.

Jollibee has fewer restaurants than its fast food rivals in Vietnam, including Lotteria, which has more than 200 outlets, and KFC, with more than 140.

MEF II to sell 2.7mn shares in Mobile World

The Mekong Enterprise Fund II (MEF II), whose member of the Board of Directors (BOD) Mr. Chris Freund is also member of the BOD of the Mobile World Investment Corporation (MWG), has registered to sell 2,708,371 shares in the latter from August 19 to September 17 via put through.

The sale would reduce its holding to 10,833,482 shares, or 7.39 per cent, from 9.24 per cent.

MEF II is one of the five largest shareholders in MWG. It previously sold 2.55 million shares of MWG, on July 9, reducing its holding from 10.94 per cent to 9.24 per cent.

In the first six months of this year MWG’s share price soared 64.5 per cent, from VND79,000 ($3.46) to VND130,000 ($5.7).

Managed by Mekong Capital, MEF II was one of the earliest institutions to invest in MWG, in 2007. It was once its largest shareholder, with over 30 per cent.

The fund has continually divested from MWG to realize profits. In December 2014 it held 15.27 million shares of MWG and then conducted several sales.

Another shareholder, NTAsia Discovery Master Fund, sold 1 million shares of MWG on June 29.

The five largest shareholders of MWG are Retail World Investment Consultancy Ltd. Co., with 13.15 per cent, Tri Tam Ltd. Co. with 9.86 per cent, MEF II with 9.24 per cent, PYN Elite Fund with 7.07 per cent, and CDH Electric Bee Ltd with 5.27 per cent.

In the first six months of this year MWG earned revenue of VND19.6 trillion ($861.8 million) and net profit of VND835 billion ($36.6 million). The company opened 305 new stores nationwide, including 263 new thegioididong.com stores and 42 new dienmayxanh.com stores. As at June 30 it had 938 stores, including 827 thegioididong.com stores.

Book building mulled to boost SOE restructuring

The Ministry of Finance has proposed applying book building to initial public offerings of State-owned enterprises as a measure to speed up the restructuring of SOEs in addition to share auctions.

The ministry has added book building to a draft Government decree on converting enterprises wholly owned by the State into shareholding companies.

Book building is the process in which an underwriter tries to determine a share price to offer at an IPO based on demand from institutional investors and builds a book that indicates the number of shares they desire and the price they are willing to pay.

The ministry said book building, which has been popular in the world, should be studied for application to step up the equitization of SOEs in Vietnam.

The draft decree also clarifies requirements for unsold shares at SOEs. Accordingly, if no investor registers to buy SOE shares, the steering committee for equitization would let its employees and labor union acquire the shares in line with an approved plan and at the same time complete procedures to turn the enterprise into a shareholding company.

In case just one investor registers to purchase, it would be allowed to acquire the shares it registers at a price which is not lower than the starting price. As for the volume of shares unsold at an auction, the committee would continue to find investors and those who offer the highest bid would be the winners.

The draft decree regulates that shares for strategic investors must be sold at an auction on a stock exchange after the IPO and an enterprise can have more than three strategic shareholders.

Strategic investors are required to operate in the same core sectors of SOEs and run at a profit in the two consecutive years before they sign up for acquiring shares at SOEs. Their equity and financial reports must be checked by independent auditing firms and they must prove that they are capable of buying the shares they register.

The draft decree, which has put forth on the ministry’s website, will replace the Government’s Decree 59/2011/ND-CP if it is issued.

Over 3,000 enterprises to join Online Friday

The 2016 Online Friday will be held on December 2, attracting more than 3,000 enteprises with 50,000 promotional products under the guarantee of the organising board.

The information was released by Deputy Director of the Vietnam E-Commerce and Information Technology Agency (VEITA) under the Ministry of Industry and Trade Lai Viet Anh at a press briefing in Hanoi on August 18.

This year, the organising board will ask enterprises to sign a commitment on properly providing promotional products as well as publicise the original and listed price before the Online Friday.

Major commodities showed at this year will be electronics, household appliances, fashion and tourism produced and distributed by numerous famous bands in Vietnam, offering most preferred prices to consumers.

The first Online Friday was held in 2014, with over 160,000 purchases and a total transaction value of VND154 billion (around US$6.9 million). In 2015, 2,500 enterprises participated in the Online Friday, generating around VND500 billion (around US$22.4 million).

The 2016 Online Friday is expected to gain a total revenue of VND1 trillion (around US$44.8 million) from purchasing promotional products and services.

According to the plan for development of e-commerce during the 2016-2020 period, the turnover from business-to-consumer type of e-commercial transactions will reach US$10 billion in 2020, increasing 20% per year; meanwhile turnover from business-to-business will account 30% of export turnover.

Slow procedures, site clearance hit metro projects

Though HCMC has found sufficient capital for metro lines No. 2 and 5, it has been able to put these projects on fast track because of time-consuming procedures and site clearance.

According to the HCMC Management Authority of Urban Railways (MAUR), VND41.6 trillion (US$1.86 billion) needed for the first phase of Metro Line No. 5 stretching 8.9 kilometers from the Saigon Bridge to Bay Hien Crossroads in Tan Binh District has been pledged by the Spanish government, Asian Development Bank (ADB), European Investment Bank, German Reconstruction Bank and the Vietnamese Government.

However, because the metro line is a big-ticket project, its investment plan must be approved by the National Assembly (NA) in line with the prevailing laws. Therefore, the Ministry of Transport will have to submit it to the Government and then to the legislature before the project can proceed to the next steps, the authority explained.

At a working session between Deputy Prime Minister Trinh Dinh Dung and the city government last week, Le Nguyen Minh Quang, head of MAUR, suggested the Government present the project to the NA soon, citing the pressure from aid providers.

As expected, MAUR will prepare land and auctions from now to 2017 and kick off construction in early 2018. The project is scheduled for completion in 2023.

Meanwhile, construction of Metro Line No. 2 from Ben Thanh to Tham Luong has been stalled due to design adjustment and slow site clearance.

MAUR expected the design adjustment to be finalized in the second quarter so that it can go before the Ministry of Transport in the third quarter and the city government for approval in the last three months of this year.

Regarding site clearance, district authorities have pledged to allocate land to the project in June 2017. If this is the case, the project could be completed in 2023 or 2024 at best.

Metro Line No. 2 previously had a total investment of VND26.1 trillion (US$1.37 billion), with US$540 million to be lent by the ADB, 240.7 million euros from German Reconstruction Bank (including 85.74 million euros in non-refundable aid and 155 million euros in ODA loan), 150 million euros from European Investment Bank and the remainder from the Government’s counter capital.

However, the investment is projected to shoot up to more than US$2 billion due to the new design. In October 2015, the three lenders agreed to add nearly US$725 million to the project.

So far, the total investment capital for the project has not been decided.

Turkey extends anti-dumping duties on Vietnam bike tires

Turkey will continue slapping anti-dumping tariffs on bicycle tires imported from a number of markets including Vietnam, the Vietnam Competition Authority has said.

The anti-dumping taxes are from US$0.73 to US$2.02 per kilo, the authority under the Ministry of Industry and Trade said, citing the trade section at the Vietnamese embassy in Turkey.

Turkey’s import management agency last week announced the extension of the anti-dumping duties on bicycle tires imported from Sri Lanka, Taiwan and Vietnam after a review of anti-dumping measures imposed on bicycle tire imports from these markets. 

Accordingly, an anti-dumping tax rate of US$0.73 is slapped on a kilo of bicycle tire imported from the markets with code HS 4011.50 and US$2.02 on the product with code HS 4013.20.

Late last month, Turkey announced to levy anti-dumping tax rates of 29% and 49% on motorcycle tires with respective codes HS 4011.40 and HS 4013.90.00.00.11 imported from Vietnam.

Huge capital needed for transport infrastructure in Mekong Delta

The Mekong Delta will need more than VND125 trillion (US$5.6 billion) to carry out transport projects and improve connectivity between provinces in the region in the 2016-2020 period.

A source from the Southwest Steering Committee said the sum is projected in a draft program on transport and logistics infrastructure development in the delta in the next five years. The draft, prepared by the Transport Development & Strategy Institute under the Ministry of Transport, will be discussed at a conference in Can Tho City next Monday.

The delta is expected to implement 45 new road projects with combined investment capital of VND90.3 trillion, making up 72% of the total capital demand in the period. Of which, some 22 projects worth VND23.9 trillion will be funded by the State budget and 14 projects worth VND38.5 trillion financed by official development assistance (ODA) loans and local authorities will find private investors for nine others worth a total of VND27.8 trillion.

As for the maritime sector, the delta will prioritize 22 projects worth a total of VND18 trillion, or 14.4% of the total capital needs, using State and private capital. Regarding inland waterway, there will be 14 projects with a total investment of VND10.3 trillion.

Meanwhile, localities in the region will implement four projects in the aviation sector, costing a total of VND5.18 trillion.

The total investment, according to the institute, will help develop transport infrastructure and improve connectivity between provinces in the Mekong Delta.

Local authorities will finish and upgrade several main roads and bridges such as Vam Cong, Cao Lanh, Dai Ngai and Rach Mieu 2. Meanwhile, inland waterway projects will help maximize the efficiency of four packages of the World Bank-funded Mekong Delta Transport Infrastructure Development Project, also known as WB5.

In addition, the delta will complete passage building on the Hau River and upgrade Cai Cui port complex while raising capacity and service quality of local airports. Relevant agencies will also seek investment for a railway system from HCMC to My Tho and Can Tho cities.

However, as capital needs are huge, the institute said the region should focus on key projects that can solve current traffic bottlenecks.

According to a report of the institute, the region has finished 46 transport infrastructure projects in the 2010-2016 period, including 39 road projects. Of the total investment of VND76.4 trillion, 47% is funded by proceeds from government bond sales, 19% from the State budget and the remainder from other sources.

Regarding the investment structure, road projects make up 79% of the total capital, the maritime sector 13% and inland waterway sector 1%.

Huge unpaid taxes likely to be written off

The Ministry of Finance has proposed the Government write off nearly VND8 trillion (US$357 million) in taxes owed by companies and family-owned businesses that had been dissolved, become insolvent or been suspended before January 1, 2014.

Besides, VND6.73 trillion (US$301.8 million) in tax arrears should be frozen for firms that went into dissolution, bankruptcy or suspension between January 1, 2014 and December 31, 2015, according to the proposal.

If debt is frozen, taxpayers would be free from late tax payment penalties, so it is not seen as a debt write-off.

According to the ministry, the legal provisions on tax debt relief and freezing do not reflect reality. In many cases, dissolved or bankrupt companies were still counted as tax debtors and many debts were uncollectible even after tax authorities had taken strong measures.

Therefore, the Finance Ministry and the General Department of Taxation recommended erasing and freezing back taxes and fines to help cut debt for the economy. Taxpayers eligible for debt removal and freezing have been thoroughly considered.

At the same time, the ministry proposed sanctions against those that have deliberately closed their companies and then opened others to evade tax debts. Founders or legal representatives must wait for at least two years to start up a new business after the date of dissolution or bankruptcy of their previous company.

Earlier, the Finance Ministry also sought approval from the Government to write off tax debts owed by State-owned enterprises which had been equitized or restructured. However, the proposal has provoked strong public criticism.  

Tariff cut spurs auto import in Vietnam

The Ministry of Industry and Trade yesterday said that over 60,600 CBU (completely built unit) automobiles worth US$1.4 billion were imported into Vietnam during the first seven months this year.

Thailand continued to be the largest auto supply market of Vietnam with 18,837 automobiles being imported during the seven months, followed by South Korean, India, China and Japan.

Indonesia has been an emerging auto exporter to Vietnam with the export volume strongly rising to 1,347 autos worth US$17.8 million.

Thai cars have been favorites of Vietnamese thanks to various lines of products and affordable price. Most of them are priced less than VND1 billion (US$45,000) including taxes and fees.

According to the ministry, ASEAN tax reduction has caused the strong import of automobiles from Thailand and Indonesia.

Import tariff rate from ASEAN market has reduced from 50 percent to 40 percent, which will continue sliding to 30 percent next year and 0 percent in 2018.

In addition, other free trade agreements such as the Trans-Pacific Partnership, Vietnam-EU and Vietnam-South Korea comprise clauses to remove auto tariff in the roadmap of 10-15 years.

The Law on Special Consumption Tax effective on July 10 also reduces the tax rate from 45 to 40 percent on lines of automobiles with the cylinder capacity of below 1.5 liters. It will fall to 35 percent in 2017.

The rate will fall to 40 percent on items with the capacity of 1.5-1 liters.

PM approves WB infrastructure project

The Prime Minister has approved a technical assistance project in service of the World Bank’s City Infrastructure Financing Facility (CIFF) project.

The project is worth 666,000 USD, including 630,000 USD from the WB’s non-refundable official development assistance (ODA) and the remaining to be sourced from the State budget funds as corresponding capital.

It aims to help the Ministry of Finance set up a legal framework and operating procedures, encompassing management, finance, and inspection mechanism, to ensure effective implementation of the CIFF.

The project is also intended to refine and supplement legal regulations for loans to provincial governments as well as identify commercial banks that will lend CIFF funding and the criteria for receiving this funding.

It is working to develop capacity for financial officials, local authorities and commercial banks.

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