First independent assurance for Vietnamese sustainability report

PwC Vietnam and Vietnam’s largest insurance company Bao Viet Holdings have just inked a contract wherein the former will provide sustainability assurance services for the financial-insurance giant.

This marks the first time that a Vietnamese firm has sought external, independent reviews of its annual sustainability report, in line with regional and international trends.

The contract signing took place in Hanoi on November 26, under the witness of top officials from the Vietnam Business Council for Sustainable Development (VBCSD) and the State Securities Commission (SSC).

In detail, PwC Vietnam will review Bao Viet’s current reporting against international best practices, identify operational improvements, and provide independent assurance of the data in Bao Viet’s sustainability report.

The standard for assurance to be applied is ISAE3000, which is issued by the International Federation of Accountants (IFAC).

“Seeking independent assurance is an appropriate and wise move towards building trust among stakeholders and raising the efficiency of business operations, as it helps to improve business procedures, risk management and the use of opportunities,” said Dinh Thi Quynh Van, general director of PwC Vietnam.

“I strongly believe that together, Bao Viet and PwC Vietnam will contribute positively to realising the national green growth strategy and restructuring the securities market towards sustainable development,” added Nguyen Quang Phi, CEO of BaoViet.

Sustainability reporting is voluntary, but there is an increasing move by governments to make it mandatory, as they recognise that a resilient economic system is one that accounts for long-term risks, including environmental, social and economic impacts.

Vinh Phuc revokes investment certificate of development project

Authorities in the northern Vinh Phuc Province have revoked the investment certificate of an infrastructure development project for Ba Thien industrial park in Binh Xuyen District.

The licence, granted to Compal Viet Nam Ltd, a subsidiary of the Taiwanese group Compal in 2007, was cancelled because its construction project was behind schedule.

The project had a total registered capital of US$76.59 million and covered an area of 327ha.

Though the project received the investment certificate several years ago, it had completed only a few tasks such as site clearance, several roads and wastewater treatment and water drainage systems.

Some businesses want to invest in the park, but the province lacks land with developed infrastructure. The province will now give the licence to another investor who is able to develop the infrastructure as soon as possible.

Rice exports rebound in November

Figures from the Ministry of Agriculture and Rural Development (MARD) show that in November rice exports recorded an unexpected increase in volume over November 2014 and far exceeded the forecasted figure of 800,000 tons. In the first ten months of the year exports had continually fallen compared to the same period last year.

Export turnover in agriculture, forestry and fisheries in November was estimated at $2.57 billion, for a total of $27.41 billion in the first eleven months, down 1.9 per cent year-on-year. Exports of agricultural products fell 4 per cent and fisheries products were down 16.4 per cent, while forestry products rose 8.2 per cent.

Rice exports in November reached 885,000 tons, worth $372 million; double the figure in previous months. The year-to-date volume stands at 6.24 million tons worth $2.65 billion, a 3.6 per cent increase in volume but 4.9 per cent decline in value year-on-year.

China remains Vietnam’s largest rice importer, according for 34.49 per cent, up 7.21 per cent in volume but down 1.36 per cent in value. Following were the Philippines, Malaysia, Ghana, Ivory Coast, and Russia.  

MARD has therefore forecast exports volumes of 6.8 million tons for the year as a whole, up from the 6.02 million tons forecast in late September.

Meanwhile, cashew nut exports are heading towards a new record. Volumes are estimated at 25,000 tons worth $186 million in November, for an eleven-month figure of 300,000 tons worth $2.18 billion, up 7.3 per cent and 19.2 per cent, respectively, year-on-year. The average export price rose to $7,269 per ton, up 11.3 per cent year-on-year.

Pepper exports reached 6,000 tons worth $65 million in November, for a year-to-date total of 124,000 tons worth $1.18 billion, down 17.3 per cent in volume but up 2.8 per cent in value. The average pepper price was $9,521 per ton, 24.9 per cent higher than in the same period last year. Germany, the UK, and South Korea were Vietnam’s three largest markets.

The export value of wood and wooden products in November was $569 million, for $6.1 billion so far this year, up 8.6 per cent year-on-year. The US, Japan, and China remained the three largest markets, accounting for 67.29 per cent of total export value.

Rubber, coffee, seafood doing it tough

Contrary to the rise in rice exports, coffee exports are still struggling. Exports were estimated at 85,000 tons worth $162 million in November, bringing the year-to-date volume to $1.13 million tons and value to $2.3 billion, down 27.7 per cent and 30.2 per cent, respectively, against the same period last year.

The rubber export volume reached 108,000 tons worth $134 million. As at November the volume stood at 983,000 tons for the year, valued at $1.35 billion, up 3.6 per cent in volume but down 15.5 per cent in value year-on-year. The average rubber export price fell 18.7 per cent over the course of the year. China, Malaysia, and India remained Vietnam’s three largest markets, accounting for 72.36 per cent of total exports.

Seafood exports, meanwhile, remain sluggish. Export value reached just $593 million in November, for an eleven-month figure of $6.01 billion, down 16.4 per cent year-on-year. The US remains the leading importer of Vietnamese seafood, accounting for 19.71 per cent of total turnover. Exports to Japan and South Korea also fell significantly, by 13.36 per cent and 13.59 per cent, respectively. Notable growth, however, was seen in exports to Thailand, up 19.77 per cent, and the UK, up 9.11 per cent.

ANZ: November consumer confidence up a touch

ANZ has released the ANZ-Roy Morgan Vietnam Consumer Confidence Index for November, which edged up 1.2 points to 142.3 and remained above the 2014 average of 133.3. November’s gain was driven by higher confidence among respondents in their personal financial situation compared to a year ago and improved sentiment on buying major household items.

Thirty-four per cent of respondents said their families are “better off” financially than at this time last year, unchanged compared to last month, while 11 per cent said their families were “worse off” than at this time last year, down 5 percentage points (ppt).

Fifty-six per cent of respondents (down 1 ppt) expect their families to be “better off” financially this time next year, while 3 per cent (down 2 ppt) expect to be “worse off”.

Regarding the overall economy, 55 per cent (down 2 ppt) of respondents expect Vietnam to have “good times” financially during the next 12 months. Conversely, 9 per cent (down 1 ppt) expect “bad times”; the lowest recorded since last March.

Over the longer term, 59 per cent (down 5 ppt) of respondents expect Vietnam to have “good times” economically over the next five years. Meanwhile, a record low of 4 per cent (down 1 ppt) expect the country to have “bad times” economically.

Finally, 42 per cent (up 2 ppt) of respondents felt “now is a good time” to buy major household items, compared to 8 per cent (down 3 ppt) who felt “now is a bad time”. The latter represents the lowest value recorded for the indicator since November 2014.

“The Vietnamese economy has remained immune to a regional trade recession and the local consumer confidence is consistent with domestic sectors that are well insulated from the slowdown in trade growth regionally and internationally,” said Mr. Glenn Maguire, ANZ Chief Economist, South Asia, ASEAN & Pacific.

“The immunity and resilience of the Vietnamese economy has been highlighted by the PMI returning above the threshold 50 level in October and the general tone of macro-economic data remaining firm. Indeed, the improvement in both perceptions about personal finances over the next year and the increased readiness among households to purchase big-ticket household items suggest that domestic income conditions within the Vietnamese economy are improving, instead of deteriorating. Nonetheless, it was a surprise that longer-term confidence in the local economic outlook fell over the month. As the full details of the TPP continue to be revealed and the unambiguously strong medium-term benefits it is expected to bring to Vietnam become more evident, medium-term confidence in the Vietnamese economy should also rise,” he said.

JYSK opens second store in Hanoi

Global furniture brand JYSK from Denmark, under a franchise agreement with its Vietnamese partner NeatClean JSC, opened its second store, at Mandarin Garden in Hoang Minh Giam Street, Cau Giay district, Hanoi, on November 27, following its first store at Aeon Mall Long Bien in the capital’s Long Bien district a month ago.

“Vietnamese customers welcomed JYSK’s products from the early days,” Mr. Doan Hong Hai, Chairman of NeatClean, told a press conference just before the grand opening ceremony. “We expect to open 10-20 JYSK stores in Vietnam over the next three to five years, depending on consumer behavior and reaction.” NeatClean’s business strategy targets middle-class customers, providing furniture services such as consulting and design and interior décor for houses and apartments at as low a cost as possible.

JYSK stores are found in many countries around the world and the company is working on expansion plans, according to Mr. Frederik Kroun, JYSK’s Franchise Director. “This year we have opened stores in four new countries, including Vietnam,” he said.

Regarding competition in Vietnam, which has many furniture items produced by local manufactures, Mr. Kroun hopes that local customers will love the Scandinavian products with their light style and bright colors. “What we have seen in many countries is that many people like the light Scandinavian style we have,” Mr. Kroun told VET. “We believe Vietnamese customers are similar.”

According to Mr. Nguyen Cong Vinh, Director of NeatClean, a package of JYSK furniture to fill a two bedroom apartment with an area of 80 sq m would cost VND150-200 million ($6,700-$8,900) on average.

JYSK is the leading furniture retailer in Denmark and has more than 2,200 stores in over 40 countries. Established in 1979 by Mr. Lars Larsen, it sells a wide range of products, such as mattresses, furniture, and interior décor items.

NeatClean JSC was founded in April 2015 by Mr. Nguyen Quoc Vinh and Mr. Doan Hong Hai, who also founded Canifa, one of the famous Vietnamese fashion brands. Both have over 20 years experience in the retail market.

Textile exports targeted at $27.5 billion

Member of the Party Central Committee and Deputy Head of the Party Central Committee’s Commission for Economic Affairs, Mr. Pham Xuan Duong, said that Vietnamese enterprises, especially those in the textiles industry, must overcome barriers caused by loose connections and link more closely, while also utilizing advanced technology from overseas for the development of the sector.

In the period from 2011 to 2015 Vietnam’s exports of textiles and garments have overcome difficulties and maintained steady growth and stability. Total exports in the first nine months of 2015 reached $20 billion, up 10 per cent compared to the same period of 2014. In 2015 the target for export turnover is $27.5 billion, an increase of 11.3 per cent compared with 2014, with the localization rate to be 51 per cent.

The textiles and garments sector therefore exceeded the objective of reaching $14-16 billion in 2015 contained in the strategic development plan for textiles, where average growth was to be 14.74 per cent. The textiles sector is expected to become the country’s second-largest exporter, with Vietnam remaining among the Top 5 leading textile exporting countries.

In 2016 the sector aims to reach $31 billion in exports and $45- 50 billion in 2020. Total employees in the textile industry stand at 2.5 million and will rise to 2.8 million in 2016 and 3.3 million by 2020.

Chairman of Vietnam Textile and Apparel Associationf Vitas Vu Duc Giang said that in the next stage, when the TPP takes effect, tariffs on exported textiles to the US will be eliminated, which will also happen when the EU-Vietnam FTA comes into being.

“In the long term, these agreements will promote the development of the textiles industry, create jobs, attract investment into raw materials, dyeing and finishing, and boost competitiveness in the global textiles value chain,” Mr. Giang said.

Binh Duong paper plant given green light

Prime Minister Nguyen Tan Dung has approved the construction of the Cheng Loong Binh Duong Paper Plant, which will produce industrial packaging paper at the Singapore Ascendas - Protrade Industrial Park in southern Binh Duong province, with investment from the Cheng Loong Vietnam Paper Investment Co..

The large-scale project will contribute significantly to the local economy and community once opened. It is consistent with the overall planning for the province’s socioeconomic development to 2020 and towards 2025 under Decision No.893 / QD-TTg.

The factory is expected to produce 1 million tons of industrial paper per year and 50,000 tons of consumer paper per year.

The PM asked the investor of the Singapore Ascendas - Protrade Industrial Park to make adjustments and add paper production from recycled materials to the categories for attracting investment to the park under the Law on Environmental Protection.

He also requested the management board of provincial industrial parks issue Cheng Loong Vietnam an investment certificate, provide support, and supervise the implementation of the project to ensure it is conducted on schedule and meets environmental protection commitments.

Decree to assist start-up community

Vietnam’s startup community will now have easier access to funding following the release of Decree No. 118/2015/ND-CP, providing guidance on the implementation of certain articles of the Law on Investment, in which the government has expanded the list of prioritized investment fields.

The government said it will provide support and incentives to investment projects involved in high-tech nursery, biotechnology development, information technology software manufacturing, and recycling and clean energy production.

The announcement has excited some in the domestic startup community. “This is a positive development and I’m very optimistic about Vietnam’s startup ecosystem,” Founder of taembe.com, Mr. Phan Kim Don, said. “I think the current startup situation is picking up and will develop sharply after this decree.”

According to the CEO of Emotiv System, the Decree will create the conditions for investors to deploy plans and business operations. It provides a legal framework facilitating investment with incentives in infrastructure, production areas, and operations as well as taxes, which are issues for startups in Vietnam. He added that it opens up the prospects for Vietnam’s software technology development in line with today’s global trends, such as big data.

Vietnam’s startup community has held meetings with Deputy Prime Minister Vu Duc Dam at the Office of the Government, where many said there was inadequate government support, including a lack of tax incentives for internet-based service providers, while barriers in receiving foreign capital remained significant.

While startups contacted by VET were aware of the Decree they were still largely in the dark. “I’ve heard about it but haven’t researched it fully, and I think we need clearer instructions to help us access the incentives,” a representative from a software manufacturer said.

“The Decree needs to clearly state what benefits businesses can access,” he added. The government, he went on, should assist the startup community to bring ideas to the market and connect with investors and funds, and create a clearer legal framework that guides the community to operate more effectively.

TMV opens Toyota Binh Thuan

On November 25 Toyota Motor Vietnam (TMV) officially announced it has opened a new dealership and authorized service center in the central region to better meet the increasing demand in the market and ensure customer satisfaction.

Toyota Binh Thuan officially began operations on October 29. Located on National Highway 1A in Ham Thuan Bac district, Binh Thuan province, in the first stage it will follow the 2S model (Service and Spare Parts). Its establishment brings to 44 the number of dealerships and authorized service centers TMV has nationwide.

With investment of $3.6 million and a total area of 4,000 sq m, Toyota Binh Thuan meets all the latest standards and requirements of Toyota Global regarding human resources, workshop equipment, and infrastructure. The facility is divided into two areas: the office spans more than 1,000 sq m with a 650 sq m showroom, while the service and maintenance workshop, which measures 2,100 sq m, consists of ten general repair stalls and 14 body and paint stalls. The paint stall follows the latest international standards, with secluded paint mixing technology to ensure environmental friendliness. The service workshop is expected to be able to conduct 20,000 services each year.

With professionally-trained staff and modern infrastructure and facilities meeting Toyota Global standards, Toyota Binh Thuan will provide the best warranty, repair, maintenance and spare parts services with dedication and expertise.

Apart from its headquarter in northern Vinh Phuc province and two branches in Hanoi and Ho Chi Minh City, TMV has 44 dealerships and authorized service centers in 21 cities and provinces throughout Vietnam. Fifteen are in the north, 19 in the south, and ten in the central region. With the opening of Toyota Binh Thuan TMV has strengthened its determination to provide the best satisfaction and benefits to customers through the continuous expansion of its sales and service networks to different regions around the country.

Agro-aqua-forestry export value reduces in November

The Ministry of Agriculture and Rural Development reported that the export turnover of agricultural, seafood and forestry products was estimated to reach US$2.57 billion in November, taking the industry’s export value for the last 11 months to US$27.41 billion--a year on year fall of 1.9 percent.

In November, export value of agricultural products was US$12.74 billion, down 4 percent over the same period last year. The most value reduction was from coffee with 30.2 percent and rubber with 15.5 percent.

Seafood export value hit US$6.01 billion, a year on year drop of 16.4 percent. The most decrease was from U.S. market with 25.21 percent.

Forestry items brought US$6.4 billion in export value, up 8.2 percent.

Traders and businesses in the Mekong Delta were found stepping up purchase to implement contracts that had been signed with Indonesia and the Philippines.

Vietnam's beer market bubbles

Vietnam is becoming a promising market for foreign beer producers.

According to a Lotte Mart representative, Vietnam's beer and beverage market is experiencing an average annual growth rate of 30 percent and beer-drinking is still on the rise.

The Vietnam Beer Alcohol Beverage Association reported that 3.14 billion litres of beer were consumed last year, an increase of 8.1 percent on 2013. As of November, 2015, over 2 billion litres of beer were produced, an increase of 6.8 percent on last year. It is predicted that 3.3 billion litres of beer would be consumed this year.

Market research company Kantar Worldpanel Vietnam said Vietnamese were buying more high-end beer and Vietnam was in the top five beer drinking countries in Asia.

It has been attracting increasing numbers of investors.

Mikio Masawaki, director of Japanese brewing company Sapporo Vietnam, said the local market still had lots of room for expansion and opportunities for high-end beers. He went on to say that competition would be tough due to the participation of many foreign companies. Sapporo in Long An Province is producing 40 million litres of beer each year.

Early this year, Belgium-based Anheuser-Busch InBev opened a 50 million litre per year factory in Binh Duong Province. SABMiller, a multinational brewing and beverage company based in London, is also planning to invest in Vietnam.

Nguyen Huy Hoang, director of Kantar Worldpanel in Vietnam predicted that mergers and acquisitions would become more common and weak domestic companies may lose market share.

Jetstar Asia inaugurates Singapore-Da Nang direct flight service

Low-cost carrier Jetstar Asia launched a direct air route linking Singapore and Vietnam’s central city of Da Nang on November 27.

This is the second low-cost flight linking Singapore and Vietnam to be inaugurated by Jetstar Asia after Ho Chi Minh City.

Passengers on the air route are provided with three flights a week every Tuesday, Friday and Sunday, using the 180-seat Airbus A320 aircraft.

Deputy Director of Da Nang city Department of Culture, Sports and Tourism Tran Chi CUong highly appreciated contributions made by low-cost carriers operating in the Southeast Asian region to boosting Da Nang’s tourism and economic development.

The opening of the Da Nang-Singapore flight service will create favourable conditions for local travel agencies and other relevant agencies to foster tourism between the two destinations, he said.

CAR of banks higher than late last year

The capital adequacy ratio (CAR) of local banks stood at 13.32% by the end of September, unchanged from the previous month but above 12.8% in end-2014, according to a recent report of the State Bank of Vietnam.

That ratio does not cover banks with negative equity.

Despite the improvement, the CAR of local banks was lower than that of those in other countries in the Asia-Pacific region and almost equivalent to the average of China and India at the end of last year.

The average CAR was 19.8% recorded for banks in Indonesia, 17% for banks in the Philippines, 16.4% for Singapore, 15.6% for Thailand, and 14.4% for the U.S.

The report showed total assets of banks in Vietnam had risen by 5.43% as of the end of September compared to end-2014, above 2.32% by end-July and 3.66% by August 30.

Notably, total assets of those banks majority owned by the State grew strongly, from 5.95% in end-August to 8.2% in end-September compared to late last year.

The report also indicated a sharp rise in the proportion of using short-term funds for medium and long-term loans at banks, at 28.48% in end-September compared to 25.9% at the end of August, 20.2% in end-2014 and 19.3% in the same period last year. This is not a positive signal for local banks.

Compared to the end of 2014, chartered capital of banks rose from 3.17% in end-August to 4.84% in end-September. Their equity increased from 10.20% in end-August to 11.73% in end-September.

However, the return on asset (ROA) and return on equity (ROE) remained unchanged from the previous month at 0.32% and 3.54% respectively because they have not been updated since the second quarter of 2015.

According to statistics of international financial institutions, ROE and ROA of Vietnam are still among the lowest in the region. For example, in late 2014, ROE was 16.2% for banks in Thailand, 17.1% for Singapore, 19% for China, 18% for Indonesia, and 13.5% for Malaysia and the Philippines.

Honda,Vietnam Register at odds over SMART Key issue

VietnamRegister has requested Honda Vietnam to recall 12,000 SH scooters to fix ananti-theft system defect but Honda said that is not a defect though theJapanese firm is ready to replace it at no charge.

HondaVietnam last month announced on its website a part replacement campaign forSH125 and SH150 scooters equipped with Honda SMART Key.

Thereplacement campaign comes after it found an error relating to the smartanti-theft system which is designed to make the alarm automatically go off andsound for 10 days in case the scooter is stolen.

But thesystem works for 10 minutes only. Such a part will be replaced free of chargeat Honda’s authorized dealerships nationwide. Honda Vietnam also affirmed theminor error does not put riders at risk and violate national technicalstandards.

Nonetheless,Vietnam Register disagreed and requested Honda Vietnam to recall the affectedscooters. Vietnam Register has met representatives of the firm many times todiscuss the issue but the manufacturer has insisted on a repair throughcustomer service.

The localnews site VnExpress on Wednesday quoted Vietnam Register as saying that it willrequire Honda Vietnam to recall 12,000 SH scooters due to this error.

HondaVietnam said it had not received any official document from Vietnam Registerabout the recall as of 11 a.m. on November 26.

A sourcefrom Honda Vietnam told the Daily that the company itself discovered the errorand worked out a repair program. The smart anti-theft system is just an add-onitem, has nothing to do with the safety of users and is not a compulsorytechnical detail of a bike.

According tothe source, the company and Vietnam Register have different views over theterms of recall and customer service. According to Vietnam Register, the errordoes not affect the safety of riders but it relates to asset protection. Theymight lose their scooters when it fails to work as designed.

An expert inthe auto industry said in some foreign countries, manufacturers only recallautos if such vehicles fail to meet safety and environmental standards. Inother cases, manufactures just need to repair and replace parts.

In the caseof Honda Vietnam, according to the expert, Vietnam Register requested thescooter to recall in accordance with what is specified in Circular30-2011/TT-BGTVT.

The Ministryof Transport circular says vehicles with a technical defect are those havingthe defect made in the process of designing, manufacturing, assembling aproduct, which potentially threatens the lives and assets of users and badlyaffects safety and the environment.