Investment in startups expanded

More than 300 enterprises have been certified as science-technology firms, along with 43 organisations recognised to operate in high technology area, according to the Ministry of Science and Technology.

At the same time, eight technology exchange floors are operating in Hanoi, Ho Chi Minh City, Da Nang, Quang Ninh, Hai Phong, Bac Giang, Thai Binh and Nghe An, while 63 centres for the application and transfer of science-technology advances.

Particularly, the startup ecosystem has been expanded with 40 adventure investment funds, 30 incubation facilities, 10 organisations for business promotion, contributing to rapidly increasing the number of startups to more than 3,000 firms, nearly doubling that in 2015.

Both number and value of investments have remarkably increased. Notably, food app Foody sold US$64 million worth of shares while the Mekong Capital investment fund announced an investment of US$4.9 million in the English teaching system YOLA.

The online trade website Tiki.vn received US$44 million of investment from Chinese firm JD.com, and online tourism service provider Vntrip said that it has got a US$10 million from Hendale Capital, a Hongkong-based company.

Phu Yen separates itself from the pack

Aside from the advantages common to most other central coastal provinces, such as a coastline and a section of National Highway 1, Phu Yen possesses distinct advantages that can be seen in few other places.

For example, an airport is nestled next to the city of Tuy Hoa, the heart of the province of Phu Yen. The province is also a location which possesses a raft of natural attractions recognised nationwide.

Almost every locality on the southern and central coast has its own airport. Phu Yen is the region’s only coastal province with an airport situated in its biggest city, aside from Danang. In the province of Quang Nam, Chu Lai airport is located more than 30 kilometres from Tam Ky city. In Binh Dinh province, Phu Cat airport is nearly 40km from Quy Nhon city.

In addition, convenient transport infrastructure is in place connecting Tuy Hoa airport with Tuy Hoa city and the coastal road from Tuy Hoa to Vung Ro.

To boost its capacity, the Airports Corporation of Vietnam, Vietnam’s largest state-owned airport operator, has pumped capital into building Tuy Hoa airport’s civil aviation logistics.

Among other things, the project consists of different components such as building plane parking spaces, a passenger terminal, and car parks, as well as upgrading the runway and road system.

With about VND400 billion ($18 million) in total investment capital, the airport plans to receive flights from Ho Chi Minh City and Hanoi, marking distinct progress in the airport’s development in both appearance and service quality, focusing on the criteria of modernity and friendliness.

The project’s completion bears great significance to realising Phu Yen’s social and economic development strategy, particularly regarding the use of the province’s tourism advantages.

In an attempt to meet the sharply rising demand from local residents and investors, Phu Yen has issued several proposals to the Ministry of Transport to allow upgrading and expansion of Tuy Hoa airport in order to boost the passenger and freight transport capacity.

“Expanding and upgrading the airport to increase flight frequency not only serves the people’s travel demands and attracts investment, but also actively supports Phu Yen in realising its tourism development breakthrough strategy,” said Phan Dinh Phung, Deputy Chairman of the Phu Yen province People’s Committee.

Several other large projects are in development in the province, including the landmark Bac Van Phong Special Economic Zone, soon to be established.

Compared to other localities on the south-central coast, Phu Yen benefits from a multitude of natural attractions which are very appealing to visitors. The most popular destinations are Ghenh Da Dia, Bai Mon-Mui Dien, Xuan Dai bay, Da Bia mountain, Bai Xep, and Thap Nhan.

To utilise these advantages, provincial leaders have committed to attracting more domestic investment, in addition to stepping up their efforts to woo foreign capital flow and enable technology and modern management skill transfers.

“Unlike other localities in the region, Phu Yen needs to make a change in its economic structure that suits its potential and capacities, keeping an edge in development and economic structure transformation,” said Nguyen Chi Hien, Deputy Chairman of the Phu Yen People’s Committee.

According to Hien, the province is deploying an action programme on tourism with concrete development plans and measures in specific development stages.

They are grouped into several key measures, namely paying heed to planning, policies, and mechanisms for tourism development; investing in essential materials at tourism centres; improving service quality; creating several distinct products; forming several distinct tourism centres in accordance with the Tourism Law; and establishing tours linking to other localities’ tourism centres.

MSI changes named to KB Securities Vietnam

Hanoi-based Maritime Securities Incorporation (MSI) has been officially renamed to KB Securities Vietnam (KBSV), in line with Decision No.07/GPDC-UBCK issued by the State Securities Commission.

Established in June 2008, KBSV became a member of Korea’s leading financial institution KB Financial Group (KBFG) on October 9, 2017, after KB Securities (a KBFG subsidiary) successfully took over 99.4 per cent of MSI’s holdings last year.

Together with the name and brand identity changes, KBSV will also upgrade all of its offices and facilities across the country in a bid to offer clients the best services and convenient trading. The launch of KBSV’s new logo and upgraded office is expected to take place in late January.

KBFG is known for its largest customer base and the most extensive branch network in Korea. KBFG’s key subsidiaries include KB Kookmin Bank (with a presence in Vietnam through its Ho Chi Minh City branch), KB Securities, KB Insurance, KB Card, and KB Capital.

In an earlier interview with VIR, then-CEO of MSI Mac Quang Huy noted that the acquisition has a significant impact on MSI as it is now effectively a foreign securities company operating in Vietnam. MSI will now have access to the financial, technical, and technological resources as well as global client base of KBFG and its local subsidiary.

“Together with the KB brand, we will be able to grow our business in Vietnam more quickly through more competitive products and better services,” Huy said at the time.

Vietnam to remain an investor magnet in 2018

Vietnam will continue luring in foreign capital this year, as the country puts more state firms on sale and continues its quest to become an emerging market.

In its 2018 strategy report, Maybank Kim Eng Securities (MBKE) pointed out that the equitisation process of state-owned enterprises (SOEs) in Vietnam is picking up. First, SOEs are now required to list within one year of the first public sale. About 15 SOEs are gearing up to trade on the stock exchanges this year—a move that MBKE believes will add at least $9 billion to Vietnam’s market capitalisation.

Some notable IPOs include PV Oil, Vietnam’s second largest oil retailer and sole exporter of crude oil; PV Power, the second biggest electricity retailer; Binh Son Refinery, the operator of Vietnam’s first oil refinery; and Vinachem, a national chemical group.

Beside these high-profile IPOs, Vietnam will also welcome further state divestments. According to the approved plan, the government will withdraw from at least 150 SOEs from now until 2020—with 2018 being the busiest year.

Recent successful stories, such as Vinamilk and Sabeco, mean that the government is on a good path to attract buyers for its divestments this year. “IPOs and share sales will provide more high-quality products for the Vietnamese financial market, luring in foreign capital and improve the business efficiency of SOEs,” wrote MBKE.

The second important factor, according to the brokerage house, is Vietnam’s on-going quest towards becoming an “emerging market.” According to MBKE, investors will remain positively enamoured if Vietnam continues to open its market to foreigners, ensuring equal access to all investors and enhancing corporate governance standards.

“Improvements in both quantitative and qualitative factors will bring Vietnam extra points in investors’ eyes,” said the report.

Other factors include the prospective business results of listed firms, especially those in the banking, real estate, and consumer goods sectors. Oil and gas businesses are also up for a good year if global oil prices continue their recovery.

The MBKE report also noted that stable macroeconomics will provide strong support for the stock market. The brokerage expects Vietnam’s GDP to grow by at least 6.5 per cent, monetary policies to remain accommodating to growth, and foreign investment figures to stay high in 2018.

Ha Long Bay cruise offering $3,000 cash prize

Paradise Cruises, the leading luxury cruise provider in famed Ha Long Bay, has launched a limited-time promotion that will end with one lucky customer becoming thousands of dollars richer.

Between now and February 13, anyone booking a cruise with Paradise Cruises through its official website, www.paradisecruise.com, will be entered into a lucky draw to win $3,000.

The prize is about five times the cost of a standard overnight cruise with Paradise, which operates nine luxury cruise ships in Ha Long Bay, a UNESCO World Heritage site about four hours by car from Hanoi.

“We wanted to kick off the new year with something different, something special,” said Mr. Nguyen Cao Son, Paradise’s Chief Operating Officer. “And while the contest isn’t over yet, we already know we want to do more of this type of thing in the months to come.”

The Paradise Jackpot Deal winner will be announced on February 28, when the company pulls a number out of a hat.

The contest is designed to encourage travelers to book directly with Paradise and boost its online revenue. “This is the first promotion of its kind in Ha Long Bay and therefore aligns with our long-standing mission of standing apart from the competition,” Mr. Son added.

Indeed, last year Paradise became the first cruise provider in Ha Long Bay to offer all-inclusive packages to guests. It also launched several new products, including Paradise Prestige, a two-night continuous cruise of a caliber never previously seen in the bay.

This year, the decade-old brand will roll out a new website in concert with a fresh marketing strategy devised late last year.

Paradise Cruises is part of Paradise Vietnam, which also owns and operates a pair of upscale hotels in Ha Long Bay and seven highly-rated restaurants around the country.

Ministry urged to finalise specific mechanisms for trans-national expressway

The Ministry of Transport (MOT) should accelerate the construction of specific mechanisms for the North-South Expressway projects and submit them to the Government for consideration, Deputy Prime Minister Trinh Dinh Dung has urged.

At a conference held this morning to review the ministry’s operations in 2017 and deploy the 2018 tasks, Deputy PM Dung asked the Government Office to coordinate with the MOT to complete a governmental draft resolution in order to implement the National Assembly (NA) resolution on building several sections along the trans-national expressway in the east of the country during 2017-2020.

The draft document should be submitted to the government for consideration and approval at the regular cabinet meeting this January, he added.

Last November, the NA issued a resolution on the construction of several routes on the North-South highway in the east of the country during 2017-2020. Accordingly, during 2017-2020, 654 km on the route will be invested in and divided into independent sub-projects with specific forms and scales of investment suitable to each component.

The NA has assigned the Government to develop mechanisms in order to mobilise resources to invest in the project. Therefore, Deputy PM Dung asked the relevant agencies to soon submit it to the Government for promulgation of the draft resolution to implement the project, ensuring its completion by 2021.

Dung requested the MOT to organise open and transparent bidding to select the qualified investors to deploy the packages, while ensuring the project’s quality and progress and avoid any losses.

Praising the ministry’s contribution to the national socio-economic development in the past year, he suggested that, in 2018, the MOT should focus on handling issues around toll collection in BOT projects to ensure harmonious benefits for both sides. It was asked to review and reduce the cost of services at airports, while strengthening the control over overloaded vehicles.

Agribank posts profit of over VND5 trillion in 2017

Agribank reported a pre-tax profit of over VND5 trillion (US$220 million) in 2017, up 20% from the previous year and thus contributed VND1.2 trillion to the government budget.

The profit figure is the best recorded result for the state-owned lender, fully known as the Vietnam Bank for Agriculture and Rural Development.

Agribank’s general director Tiet Van Thanh informed a meeting to review its performance over past year that he bank’s total assets reached nearly VND1200 trillion (US$52.8 billion).

He said that Agribank’s ratio of non-performing loans stood at 1.54% as the bank began its comprehensive bad debt resolution plan by establishing two centres to deal with non-performing loans in both the north and the south.

In 2017 Agribank continued to maintain its position among the top 500 largest enterprises in Vietnam in terms of revenues, profits and assets.

Its total loans in 2017 rose 17.6% from the previous year and were estimated at VND900 trillion (US$39.6 billion), of which 73.6% were arranged for agricultural production and rural development.

BIDV contributes over VND5.5 trillion to State budget

The Bank for Investment and Development of Vietnam (BIDV) contributed over VND5.5 trillion (over US$242 million) to the State budget in 2017.

The information was reported at a conference held by the lender in Hanoi on January 17 to review its performance in 2017 and devise tasks for 2018.

In the past year, BIDV has almost achieved and exceeded its targets, with its total assets reaching VND1,176 trillion (nearly US$51.8 billion), a year-on-year increase of 16.7%.

The bank mobilised over VND1,106 trillion (over US$48.7 billion) from its depositors, up 17.9% from the previous year, while its total outstanding loans and investments were nearly VND1,137 trillion (approximately US$50.1 billion), up 18%.

The lender fulfilled 113.5% of the plan concerning its pre-tax profits in 2017, with VND8.8 trillion (over US$387.56 million).

BIDV continued to affirm its role as a key force in implementing a monetary policy under the direction of the Government and the State Bank of Vietnam as well as being among the top enterprises contributing to the State budget.

In addition, the bank was highly praised by both domestic and international rating agencies over the past year with numerous prestigious awards, such as the Top 1000 World Banks 2017 award announced by The Banker magazine and the Best Retail Bank in Vietnam in 2017 voted by The Asian Banker magazine.

Greater efforts needed to develop affordable housing

According to incomplete statistics, the current area of social housing and low-cost commercial housing, commonly called affordable housing in Vietnam is approximately four million square metres, meeting nearly 40% of the target set out in the national housing development strategy until 2020, vision to 2030.

This fact shows that the potential of this segment still remains vast, especially in Hanoi and Ho Chi Minh City. However, the affordable housing market has been showing signs of slowing down recently, making many people’s dreams of a stable life seem distant from reality.

A few years ago, the Government issued a VND30 trillion (US$1.32 billion) housing credit package, creating favorable conditions for the development of the affordable housing segment and contributing to meeting the housing demand for the majority of the people and gradually stabilising the property market. But since the expiry of this support package, the affordable housing segment has also “sunk” as a result.

The implementation of the next support funding sources is taking place quite slowly, making the supply of affordable housing even scarcer. Over the past year, there have been only a few newly launched affordable housing projects, especially social housing, except for those which have already been implemented before. The allocation of 20% of the cleared land fund in urban area development projects for the construction of social housing has yet to be seriously implemented, thus causing difficulties for the implementation of construction work and reducing businesses’ interest in this segment. Besides, some affordable housing projects are located far from the centre, with inconvenient traffic and insufficient infrastructure, making them less attractive to the people.

In order to accelerate the affordable housing segment, a new approach is needed, especially an approach that focuses on addressing the two obstacles of capital and supply. The effectiveness of the housing support package has been made clear, so the State should consider creating a stable support fund annually. Amid the limited resources, it is essential to allocate roughly VND1-2 trillion (US$44-88 million) for the development of housing types that suit most low-income groups, which is not a large amount compared to the annual socio-economic investment demand of the whole country. According to preliminary calculations, a dollar invested by the State in the development of affordable housing will attract about 16 dollars of investment from the society. Such support packages will generate more benefits to low-income residents in addition to the generation of an array of entailed markets.

In order to create a stable supply, in addition to drastically and transparently implementing the use of the cleared land fund for social housing development, commercial housing projects should also dedicate part of its coverage area to the development of affordable housing with flexible and suitable areas, aiming to ensure that low-income earners can also enjoy the same living and entertainment infrastructure as other groups of people. This will help to improve the quality of life for people, whilst making the affordable housing segment more appealing.

At the same time, transparency in the real estate market should be strengthened by tight credit policies, in order to avoid the exploitation of preferential policies to profiteer and minimise the speculation of affordable houses, towards ensuring a double objective of stably developing the property market and ensuring social security.

Higher PIT threshold sought

Tax experts have called for a higher personal income tax (PIT) threshold for household businesses and salaried workers as the current level is too low, putting pressure on them.

Last week, hundreds of Grab drivers in HCMC turned off the mobile app in protest against the new policy of ride-hailing firm Grab to raise the discount rate from 20% to 23.6%.

The firm explained that the hike, equivalent to 4.5% of 80% of Grab drivers’ income, is aimed at compensating for the tax the firm has to pay on behalf of its member drivers including 3% for value added tax and 1.5% for personal income tax.

Under the prevailing rules, Grab and Uber drivers will be taxed if their revenues reach VND100 million per year or VND277,000 a day.

Nguyen Thai Son, a tax expert who is former head of the personal income tax division under the HCMC Department of Taxation, said the PIT threshold is unreasonable as household businesses’ revenues include earnings from sales and profits.

Notably, setting a low taxable income threshold is unfair for Grab drivers and vendors at traditional wet markets as they are under the management of companies or market management boards while others are exempted from tax.

In a related development, the Ministry of Finance earlier proposed increasing the PIT threshold to VND150 million a year. However, the proposal was no longer mentioned though the ministry repeatedly submitted draft amendments to the Law on Personal Income Tax last year.

The low PIT threshold also affects salaried workers as those with income from VND9 million a month or VND108 million a year must pay the tax, plus a deduction of VND3.6 million a month for each of their dependents.

In the latest draft law the ministry has sent to the Government, the PIT threshold is kept unchanged.

The current threshold has been in place since 2013 while consumer goods’ prices have increased by over 20% in the period. Meanwhile, value added and special consumption taxes may be raised in the coming time, sending goods prices up.

Therefore, it is a must to increase the PIT threshold to a minimum of VND12 million for wage earners and a deduction of 40% of the amount for each of their dependents.

Ngo Tri Long, another tax expert, commented on the draft law, saying the Ministry of Finance should take inflation into account while proposing tax rates to ensure workers’ benefits.

Moreover, he proposed regulating the deduction in the PIT threshold for workers’ dependents on a percentage basis instead of a specific number.

The PIT threshold must be suitable to the country’s inflation, workers’ salaries and minimum wages to ensure fairness for workers. The ministry should also maximize the number of taxpayers to raise State budget revenue.

Traders: Environment tax on E5 bio-fuel still high

Fuel traders have complained about the high environment protection tax on E5 bio-fuel, saying it has made the retail price of E5 unattractive, news website Dan Tri reports.

E5 is now subject to an environment protection tax rate of VND2,850 per liter. According to the current Law on Environmental Protection, the tax on fuels, except for those mixed with ethanol, is VND3,000 per liter.

The tax on the bio-fuel is equivalent to 95% of that on other types of fuel while the tax on diesel oil is VND1,500 per liter.

The Government earlier ordered the use of E5 with Euro 4 emissions standards nationwide from January 1. E5 is more environmentally friendly than those fuels meeting Euro 2 emissions standards such as diesel oil.

But fuels meeting Euro 2 and 4 emissions standards are subject to the same environment protection tax of VND1,500 per liter, which enterprises said is unreasonable.

Vietnam National Petroleum Group (Petrolimex), the country’s biggest fuel trader, has written to competent agencies proposing a policy that encourages the consumption of Euro 4 and 5 fuels and applies a lower environment protection tax on these fuels, equivalent to 90% of the tax on Euro 2 fuels.

In addition, Petrolimex suggested the environment protection tax on E5 and E10 bio-fuels should make up 80% and 70% of the tax on the fossil gasoline respectively, starting from July 1.

Govt to apply same price to all wind farms

The Government will set a single price for wind farms nationwide, which will be higher than the current level, said Bac Lieu Province chairman Duong Thanh Trung.

Speaking at a press conference on Wednesday on the province’s upcoming investment promotion program, Trung said the Government last week agreed on a same price for all wind power projects and that the price for offshore wind farms is probably 9.97 U.S. cents per kWh.

Cong Ly Construction-Trading-Tourism Co. is selling its wind power at 9.8 cents per kWh.

To spur wind power investment, Trung proposed wind power purchase contracts with foreign investors be revised in a way that protects the interests of foreign investors.

The current wind power purchase contracts put foreign investors at a disadvantage, he said, because the contracts make no mention of an entity that will take final responsibility in case Vietnam Electricity Group (EVN), which signs the contracts, incurs losses and declines to continue buying wind power.

Therefore, if the Government guarantees wind power purchases, investors would be more willing to invest in wind farms.

Trung said the province has many times proposed the Government revise such contracts. “Many big investors, when working with the provincial government, have asked us to join them to request revisions to wind power purchase contracts.”

Dong Nai proposes internal roads for Long Thanh airport project

The government of Dong Nai Province has proposed the Ministry of Transport develop an internal road network in the Long Thanh International Airport project site to facilitate construction work, Nguoi Lao Dong newspaper reports.

At a meeting with the ministry on January 17, the provincial government proposed amending some regulations on resettlement and land compensation such as those owning large areas of land.

The province’s vice chairman Tran Van Vinh stressed the need to develop internal roads to facilitate construction of the airport, otherwise, the big-ticket project might face delays if such roads are not existent.

He added a plan for building and upgrading roads and bridges would be also needed to keep the project from affecting local residents.

Demining activities as part of the project will cost an estimated VND300 billion (US$13.2 million), according to the local government. However, this component is not included in the VND22.9 trillion fund for resettlement and compensation.

Around 5,000 hectares of land will be cleared to make room for the project, with 4,730 households and 26 organizations to be relocated. About 70% of 15,000 affected people are farmers and the rest are rubber workers and those working for other sectors.

Capital found for Long Xuyen bypass

A road bypassing An Giang Province’s Long Xuyen City will be constructed using surplus funding from the Mekong Delta infrastructure development project, according to the provincial Department of Transport.

Ngo Cong Thuc, director of the department, told the Daily that Long Xuyen bypass is the fourth component of the Mekong Delta infrastructure project, which also consists of Vam Cong bridge, Cao Lanh bridge and a road connecting these two bridges, known as My An.

According to Thuc, the first three components of the project are prioritized, so the fourth component can only be executed when there is surplus capital. 

In an announcement earlier this year of the Government Office, the Ministry of Transport was asked to report to the Prime Minister on the use of surplus capital from Vam Cong bridge for the road linked to National Highway 91 and Long Xuyen bypass.

Long Xuyen bypass, around 15 kilometers long, needs an investment of some VND2.1 trillion and surplus capital from the Mekong Delta infrastructure development project.

The building of the bypass is necessary for local economic development as roads in Long Xuyen were built in the 1960s and the province’s population is rising, ranking sixth in the nation.

No system-wide interest rate cuts in sight

There is little sign of interest rates being lowered across the banking system as small banks are still grappling with limited liquidity, Thoi Bao Kinh Doanh newspaper reported.

The newspaper quoted finance-banking expert Nguyen Tri Hieu as saying that the Government wants interest rates slashed to support the corporate sector, but only big banks with good liquidity could lower rates.

Profit margins of banks are getting narrower. While the profit margin is normally 3% in many countries, it is below 2.5% in Vietnam, or even 2% at some banking institutions. 

If rates are cut, banks would have to cut deposit rates, something which is seen as unrealistic under the current circumstances. If savings rates are revised down, clients would go to banks with higher rates.

It is difficult to cut rates for now, Hieu said. But if after the Lunar New Year holiday in February, the central bank increases liquidity in the banking system and lowers base rates by 50 basis points on the interbank market, lending rates might drop, he added.

Regarding credit growth last year, the Vietnam Institute for Economic and Policy Research (VEPR) said the loan growth rate was still below the Government’s target.

Credit growth was 16.96% by December 20, 2017, compared to 16.46% in the same period of 2016 and 17.02% in the same period of 2015. This growth rate was higher than growth in deposits, which was 14.5%. 

Credit mainly went to industries and trade, at 78.4%, which partly explains strong growth in processing-manufacturing and services.

The National Financial Supervisory Commission’s 2017 economic development report showed credit represented 135% of gross domestic product (GDP) at the end of last year, well above other countries at similar development levels.

According to VERP, the central bank needs to monitor money supply growth as high inflation might recur.

The banking system had ample liquidity last year as the central bank bought US$7.5 billion and raised nearly VND31 trillion from treasury bill issues.

Stable liquidity helped keep interbank market rates low last year. Though interest rates rose slightly in the final quarter, overnight and one-week rates were low, at 0.88% and 1.06% respectively. Rates for long-term deposits (12 months or longer) ranged from 6.4% to 7.2%.

Experts back State capital management committee project

Experts have thrown their weight behind a project to set up a committee responsible for managing capital at State-owned enterprises (SOEs).

Speaking at a workshop held in Hanoi City on January 16 by the Vietnam Institute for Economic and Policy Research, former Minister of Trade Truong Dinh Tuyen said he backed this committee project.

The establishment of such a committee would free ministries and other government agencies from the direct governance of SOEs, he noted, adding the committee should also be assigned to speed up the very slow pace of SOE equitization.

This planned committee should be responsible for directly managing the State Capital Investment Corporation (SCIC) and a couple of key enterprises active in the fields which the private sector cannot get involved in or do not want to get involved in.

“If this committee manages so many companies at the same time, it could not get the job done,” he noted.

SCIC now represents State holdings in enterprises and invests in key sectors and essential industries to strengthening the lead role of the State corporate sector. Established in August 2006, SCIC now manages a portfolio of over 500 enterprises in various sectors such as financial service, energy, manufacturing, telecoms, transportation, consumer goods, health care, and information technology.

Also at the workshop, economic expert Le Dang Doanh said the establishment of the committee would help get rid of interest groups while ministries can have more time for State management and policy development.

Another economic expert, Pham Chi Lan, said those in charge of the committee should be technocrats rather than politicians because technocrats have a deep understanding of market mechanisms and economic principles.

Meanwhile, economist Vo Tri Thanh said the committee should have a transparent operating mechanism and be manned by professionals and those competent.

Prime Minister Nguyen Xuan Phuc has recently set up a working group to prepare for establishment of a committee responsible for managing capital at SOEs. The group is responsible for giving the PM advice to instruct the committee establishment process.

The Government wants to equitize 137 SOEs and finish capital divestment from enterprises in line with a plan approved by the Prime Minister by 2020.

The Government will focus on handling loss-making business groups, corporations and projects, meeting international standards for corporate governance, enhancing business and production efficiency, product quality, competitiveness of SOEs, and improving management and supervision of SOEs and State capital.

Govt relaxes rules on e-commerce sites

It is now easier to launch e-commerce websites as a new Government decree removes a number of restrictive rules provided in Decree 52/2013/ND-CP on e-commerce.

Under Decree 08/2018/ND-CP, individual and institutional traders can set up e-commerce websites if they have personal income tax codes, and give prior notices to the Ministry of Industry and Trade.

They are no longer required to have websites with valid domain names and comply with regulations on Internet information management. Besides, they no longer need to include structures, features and essential information on their service websites.

They are not obliged to have the fields of operation stated in their business registration certificates and have their detailed operation plans appraised by the trade ministry.

Traders and organizations providing e-contract certification services are no longer told to meet the technical and financial requirements of the trade ministry.

Bitconnect shuts down lending and exchange platform

Bitconnect, a cryptocurrency lending platform, has announced the shutdown of its lending program and exchange platform, news website Vietnamnet reported, citing a statement on BitConnect website.

BitConnect will stop lending immediately, and transfer all outstanding loans to BitConnect e-wallet.

BitConnect exchange platform will be closed in five days. The firm is suspending its lending and exchange services while BitConnect.co website will operate for e-wallet services, news and educational purposes only.

The firm said the closing of the lending and exchange platform would allow BitConnect to be listed on large exchange markets such as Bittrex and Binance.

It does not mean the firm will stop supporting BitConnect coin. It will continue providing other cryptocurrency services in the future despite the closing of some services on the website.

BitConnect, also known as a multi-level marketing program, is one of the most popular lending platforms in the world. It is one of 20 most powerful cryptocurrencies and has attracted numerous investors.

According to BitConnect, the shutdown was mainly attributed to two cease and desist letters from the U.S. states of Texas and North Carolina which accused BitConnect of trading virtual assets without registration.

BitConnect coin price has hovered around US$240 each compared to the record high of US$400 last week. After the shutdown, the price has plunged to US$35.

The shutdown has panicked Vietnamese investors who have participated in the market.

HCMC suspends several BOT projects

The government of HCMC has put off several projects that would upgrade and widen highways under the build-operate-transfer (BOT) format, said the director of the city’s Department of Transport.

Bui Xuan Cuong said his department has reviewed BOT projects that would be carried out in the city. Due to shortcomings associated with BOT road investment, the municipal government has decided to suspend a number of BOT projects and is seeking other financing methods.

Particularly, a BOT project for expanding a 58-kilometer-long section of National Highway 22 from An Suong to Moc Bai border gate and another for widening a National Highway 1A section between HCMC’s An Lac and neighboring Long An Province have been put on hold.

Cuong said BOT would be chosen for new roads only and that where to locate tollgates and how to determine toll fees would be carefully weighed.

Data of the department shows the city now has nine operational BOT infrastructure projects, of which seven are managed by the city and the other two by the Ministry of Transport.

Toll collection is ongoing at three BOT projects – An Suong-An Lac section of National Highway 1A, Phu My Bridge and Nguyen Van Linh Parkway. Four projects under construction are the second phase of Binh Trieu 2 Bridge, a road connecting Vo Van Kiet Avenue and HCMC-Trung Luong Expressway, Hanoi Highway expansion and a road connecting Nguyen Duy Trinh Street and Phu Huu Industrial Zone.

Defense ministry approves VietBamboo Airlines project

The Ministry of National Defense has given the nod to an air transport project of VietBamboo Airlines, a subsidiary of FLC Group JSC, Giao Thong newspaper reports.

Lieutenant General Phan Van Giang, Deputy Minister of National Defense, has written to Binh Dinh Province saying the airline will have to ask for a business license in line with Vietnamese law.

The airline has provided details about its structure, capital, flight network, aircraft fleet and plan to use Phu Cat Airport in Binh Dinh Province in accordance with the Law on Civil Aviation of Vietnam and the Government’s Decree 92 on conditional business sectors or activities in the civil aviation industry.

Under the project, VietBamboo Airlines will provide air transport services at home and abroad.

VietBamboo Airlines would be the first airline to be headquartered in Binh Dinh Province, instead of Hanoi and HCMC. The carrier with total chartered capital of VND700 billion (US$30.8 million) will combine normal and low-cost services.

In 2019, VietBamboo Airlines will operate domestic flights using Airbus A320, Airbus A321 and Boeing B737 narrow-body aircraft.

The airline has plans to operate 24 domestic routes, mainly to resorts of FLC, and 16 international routes to some Northeast Asian countries such as South Korea and Japan by 2023. VietBamboo Airlines expects to hold 3-5% of the local air passenger transport market and contribute some US$52 million to the State budget.

80% of shops report revenue growth in 2017

Average revenue of shops in Vietnam last year was VND1.3 billion each, and 80% of them recorded higher revenue than in the previous year, according to a survey of Sapo.

The survey was conducted with 1,000 shops among a total of some 10,000 using Sapo sales management software nationwide. The participating shops have one to three branches and seven employees per shop on average.

The survey showed that shops tended to combine offline and online sales, with 90% of them making use of online platforms to win more customers and expand business. Of nearly 80% of the shops that posted revenue growth last year, 44% recorded growth of over 10%.

Fashion, and mother/baby care products were the groups that posted the highest growth, at 92% and 83% respectively. Meanwhile, 60% of pharmacies saw their revenues unchanged or down last year.

The survey pointed to a correlation between revenue growth and marketing spending. 33% of shops with no increase or a decline in revenue said they did not spend on marketing, and 65% of shops said they spent less than VND20 million per month.

Around 62% of shops with monthly marketing cost of higher than VND20 million achieved revenue growth of over 30% against 2016.

Shops generating less than VND500 million in annual revenue each accounted for 30%, VND0.5-1 billion 32% and over VND1 billion 38%. A fashion shop earned some VND1.8 billion on average.

The five channels credited for good sales were physical shops with 87%, Facebook 80%, websites 53%, Zalo and Instagram 51%, and agent networks 49%.

Among the favorite marketing channels in Vietnam, Facebook took the lead with 87%, followed by physical shops with 70%, and online marketing like email marketing, online forums and YouTube with 51%.

As for payment methods, direct cash payment was most common, 41% of shops accepted payments by credit and debit cards, and e-wallets accounted for 18%.

The survey found offline and online sales channels were supporting each other. Well-performing shop owners were those understanding and making use of multiple sales channels, and knowing how to utilize technology to boost sales.

Govt should offer more tax incentives for auto parts

Hyundai Thanh Cong Vietnam Auto JSC has proposed the Government offer more tax incentives for cars and auto parts to make domestically assembled cars more competitive than completely-built-up (CBU) cars to be imported from other ASEAN countries.

Le Ngoc Duc, general director of Hyundai Thanh Cong, the car distributor of South Korean automaker Hyundai, was quoted by Nguoi Lao Dong newspaper as saying at a review conference held by the Ministry of Industry and Trade in Hanoi City on January 15 that the Government has clearly set targets for the domestic auto industry.

The Government wants the local auto industry to become a major sector which can meet domestic demand.

Besides, the auto sector will serve as a driving force for other industries, and improve its competitiveness to become a provider of parts and accessories in the global auto production chain.

Therefore, the Government has issued Decree 116/2017/ND-CP on auto manufacture, assembly, import, maintenance and warranty services, and Decree 125/2017/ND-CP exempting auto producers from paying import tariffs on auto parts to fulfill the target.

General director Duc said these policies are aimed at encouraging local auto producers to make big investments in the short- and long-term periods to boost output of domestically assembled vehicles, and localization, as well as export cars to neighboring countries.

However, he said the incentives provided in Decree 125 are not strong enough to create distinct advantages for domestically assembled autos compared to CBU cars imported from other ASEAN countries. Instead, according to him, they solely help shorten the competitiveness gap between them.

He said prices of locally assembled autos can fall 12-15% at best in line with Decree 125 while import tariffs on CBU cars from ASEAN countries are down to zero from the previous 30%, leading to their prices dropping 23-25%.

Local investors shoulder numerous costs in the process of developing and operating their factories and warehouses, and in the promotion and distribution of their products, he added.

Given those difficulties, he suggested, the Ministries of Industry-Trade and Finance should work together to amend relevant tax and fee policies.

In particular, he proposed the Government remove special consumption tax from locally made auto parts.

He said Malaysia, Indonesia and India have long used this method to prop up their auto industry, encouraging enterprises to make heavy investments in supporting industries and raising the ratios of local content.

Earlier, the Finance Ministry rejected this option, saying it is not in compliance with the General Agreement on Tariffs and Trade (GATT), an agreement between many countries whose overall purpose is to promote international trade by reducing or eliminating trade barriers such as tariffs and quotas.

The leader of Hyundai Thanh Cong also proposed slashing material import tariffs for foreign parts producers who have factories in Vietnam. However, they should commit to long-term investment and technology transfer.

He said the solution may help attract auto parts makers at home and abroad. With lower input costs, they can offer locally-made products at more competitive prices than imports.

As such, they may easily join in the value chain of the global auto industry, thus reducing prices for domestically assembled cars.

He expects the Government to come up with mechanisms and policies to lure multinational corporations to invest in large-scale projects.