Ministry to decide on SASCO shares

President of the Imex Pan-Pacific Trading Group Jonathan Hanh Nguyen has asked the transport ministry's permission to purchase more stakes in Southern Airports Services Company Ltd (SASCO).

SASCO is an affiliate of Airports Corporation of Viet Nam (ACV) and is among the largest airport service providers in the country, operating airport duty-free shops, restaurants, guest rooms and transport services.

Jonathan proposed that the ministry allow his group to purchase more stakes in SASCO when ACV, the largest shareholder in the company, withdraws its total investment capital worth 51 per cent. The amount of shares sold by SASCO will be decided by the ministry and ACV.

He further pledged not to transfer the stakes bought from Sasco within a minimum period of five years and to provide human resources training and management technology transfers to help Sasco expand its market and improve the efficiency of its business operation.

Imex Pan-Pacific Group is currently a strategic shareholder of SASCO, with 16 per cent ownership.

SASCO's shares are being traded on the Upcom at a price of VND30,000 (US$1.3) per share.

SASCO has a charter capital of nearly VND1.32 trillion ($58.5 million). It reported a year-on-year increase of 27 per cent in pre-tax profits in the first six months of this year.

Last year, the company earned more than VND2 trillion ($88 million) in turnover, and VND92 billion ($4.08 million) in after-tax profits.

The Imex Pan-Pacific Group has been working with the aviation sector for more than 30 years, and has 25 years of experience in investing in and supplying tax-free goods to several airports in Viet Nam.

Panasonic explains art of projecting

Panasonic Solution Systems Asia Pacific and its distributor in Viet Nam held a conference in HCM City yesterday on the art of projecting.

The company's latest projector series with the brightest white of 20,000 ANSI lumens and latest technologies for 3D projection mapping were discussed.

The series was used at some great light festivals like "Ghost Stories" in the US and UK, the 555th anniversary of the Romanian parliament in Bucharest and the night festival in Singapore last year.

Experts from the Japanese company's visual system solutions team spoke about image adjusting techniques in 3D projection mapping.

Global expertise benefits logistics industry

The logistics and transportation industry in Vietnam is highly competitive with roughly 80% of the market controlled by 25 large multinational firms, said speakers at a recent seminar.

“By investing in the logistics and transportation industry, multinational firms have positioned themselves to better facilitate the flow of goods throughout Vietnam’s consumer market,” said General Director Julien Brun of CEL Consulting Company.

A highly integrated supply chain network in Vietnam linking producers and consumers through multiple transportation modes – including air and express delivery services, freight rail, maritime transport, and truck transport is vital to the economic development of the nation.

In addition, he said statistics from the Trade and Investment Promotion Centre in HCM City show there are an estimated 1,200 transportation businesses in the country, mainly located in Hanoi and Ho Chi Minh City.

Notably 70% of these firms are very small domestic businesses that face big difficulties competing with foreign companies that have greater capital and better competiveness.

Citing a Nielsen report, Brun stressed there is a high correlation between convenience store growth and the logistics and transportation industry as strong development of convenience stores requires logistics services to develop.

“With a 90 million strong consumer market and the rapid growth of the nation’s 400 plus convenience stores, the industry will see rapid growth over the next few years,” Brun underscored.

The e-commerce market has also become a formidable force in Vietnam having reached US$2.97 billion last year.

Though, success in this rapidly growing market is not a given, logistics will be a challenge as e-commerce players attempt to reach more customers over wider geographic regions while improving the quality of their offerings.

The growth of domestic express delivery – most directly tied to the industry – will benefit from the global expertise of multinational companies, and should benefit domestic firms as it spreads to rural areas.

The rapid growth of e-commerce and the subsequent logistics challenges mean e-commerce companies and logistics providers both have an opportunity to move quickly to address their problems.

The solutions are unlikely to come from in-house logistics since market growth makes this approach unsustainable but are more likely to be found in strategic partnerships between e-commerce firms and third-party logistics providers.

Indeed, within a few years, Vietnam can expect to see a transformation in the e-commerce logistics landscape, where e-commerce plus logistics providers will equal market success, Brun concluded.

AB InBev Vietnam celebrates Global Beer Responsibility Day 2015

Anheuser-Busch InBev (AB InBev) employees worldwide and in Vietnam has recently joined to lead the Global Beer Responsibility Day 2015.

The event (GBRD) is part of the brewers’ year-round commitment to promote responsible consumption of their products.

On the event, all employees of AB InBev Vietnam- part of Belgian-based AB InBev, the world’s largest brewer- will work with supermarkets, retailers, and beer clubs to roll out the programme across the country, particularly in Hanoi, Ho Chi Minh City, Nha Trang city and Binh Duong province.

The programme also attempts to raise awareness among consumers through impactful activities such as promoting a responsible drinking spirit on social media as well as distributing leaflets and souvenirs to sellers and consumers at many supermarkets and restaurants.

“We’ve had an exciting year so far opening AB InBev’s new brewery in Binh Duong and continuing to bring world-class beer experiences to Vietnamese consumers. We are committed to investing in Vietnam, growing a healthy market by ensuring our products are always consumed responsibly,” said Ricardo Vasques, general manager of AB InBev Vietnam.

On an international scale, this year marks an important milestone for the GBRD as three of the world’s leading brewers - Anheuser-Busch InBev, Carlsberg and Heineken, as well as local brewers and beer associations - are joining forces to lead the GBRD.

“We know that by coordinating our activities and by making Global Beer Responsibility Day a truly collaborative effort, we can achieve much greater reach and impact with our programmes than if each of us acts alone,” said Carlos Brito, CEO at AB InBev.

“In fact, we look forward to continuing to work with any interested partners to develop programmes that promote responsible and moderate consumption,” Brito added.

The brewers will activate approximately 60,000 employees in 62 countries, with the goal of directly engaging more than one million consumers and close to one million retailers, and reaching another 10 million consumers through communications activities with drink driving and underage consumption prevention initiatives, bartender and server trainings, consumer education tools and brand-led responsibility campaigns, among many other initiatives.

Established in 2015, the Global Beer Responsibility Day is an annual industry-wide initiative, led by AB InBev, Carlsberg and Heineken, to highlight and reinforce the responsibility efforts conducted by brewers, wholesalers, retailers, government and enforcement officials, NGOs and other partners.

Exporters undercut as global rivals benefit more from currency effects

Export earnings from Vietnamese farm commodities have fallen after many countries let their currencies depreciate significantly, giving their exporters more ability to undercut rivals.

Vietnam's farm exports dropped 7.7% year-on-year to around US$9.2 billion in the January-August period, and experts warn that further declines should be expected.

They made the gloomy forecast at a conference held by the Institute of Policy and Strategy for Agriculture and Rural Development recently in Hanoi, news website Saigon Times Online reported.

Nguyen Do Anh Tuan, chief of the institute, better known as Ipsard, said since China, which buys 20% of Vietnam's agricultural exports, depreciated the yuan last month, Vietnamese exporters have been under pressure to reduce their prices to be able to compete with Chinese products.

Some other major competitors such as Brazil, India and Thailand have also let their currencies declined, he said.

Over the past year, the Brazilian real has fallen 72% against the US dollar and the Thai baht, 18%, he said.

Arabica coffee beans sit in a container inside coffee store in Hanoi.

Nguyen Trung Kien, a researcher with Ipsard, was quoted as saying that in 2013, Vietnamese rice accounted for 66% of China's rice imports. But the ratio fell to 47% in the first four months this year, after China sourced more rice from Thailand and Cambodia.

Sales of robusta coffee beans could also shrink, now that arabica beans produced by Brazil and Columbia, which are preferred by roasters, have become almost just as cheap.

Vietnam's seafood products are too facing difficulties, considering that its shrimp is now more expensive than similar products from India, Indonesia and Thailand, Kien said.

Ipsard researchers urged local exporters to boost shipments to the US, as the US dollar has remained strong, especially for products that "have advantages" in that market such as seafood, coffee, pepper, cashew, and wood, the news website reported.

For a mid- and long-term solution, the government should help local businesses diversify their markets, for instance by exporting rice to Ghana and the US, and coffee to Australia and the Republic of Korea, Kien said.

Can Gio company eyes $235m bridge

The Can Gio Urban and Tourism JSC has sought approval from the HCM City People's Committee to do a feasibility study to build a bridge over the Soai Rap River linking the suburban districts of Nha Be and Can Gio.

Can Gio Bridge will help reduce the distance and travelling time between downtown HCM City and Can Gio District, which now entails crossing the Soai Rap by ferry at Binh Khanh Wharf or by boat at An Thoi Dong Wharf.

Besides the obvious economic benefits better connectivity will bring, the bridge will also help develop tourism in the coastal district.

The bridge will measure 3.4km in length and have four lanes and a clearance of 55 metres above the water. A proposed 16km road will link Binh Khanh with Rung Sac Road in Can Gio.

The bridge will cost an estimated VND5.303 trillion (US$235 million) excluding land compensation costs.

The company has proposed a BT (build-transfer) investment mode with the builder getting land in Can Gio Urban Area as compensation.

If the value of the lands is less than the bridge's cost, the city administration would pay the difference in cash or through transferring more lands.

Ministry seeks debts to boost tax collection

The Ministry of Finance would speed up the collection of tax arrears in September as a part of the efforts to fulfil the budget collection goal amid plunging oil prices.

The ministry said that this month tax departments planned to collect more than 50 per cent of the total tax arrears from 600 companies whose names had been publicised under Document 9901/BTC-TCT on July 20.

Checks would be conducted to continue to make public the names of companies with tax arrears, but this must be implemented with accuracy, the ministry said. Publicising the names of firms was considered a solution to increase tax collection.

In Ha Noi alone, the latest updates from the Department of Taxation showed that as of the end of August, 157 out of 268 companies in the city, whose names were made public during the past two months, paid more than VND1.1 trillion (US$48.88 million) or 20 per cent of their total tax arrears.

An estimation by the Ministry of Finance revealed that in August tax arrears totalled VND74 trillion ($3.289 billion) throughout the country, double the acceptable level.

The ministry also suggested measures to be implemented within this month in order to ensure budget collection, saying that low oil prices coupled with uncertainty in the financial markets would continue to affect the budget collection.

Accordingly, there would be a close watch on the fluctuations in oil prices and the financial markets for timely measures to ensure balance in collection and spending.

In addition, the tax and customs departments must enhance management and supervision to prevent tax frauds which cause losses to the Government's budget collection, the ministry said.

In the first eight months of this year, the Government collected VND618.14 trillion ($27.47 billion), an increase of 7 per cent over the same period last year. The collection in the eight-month period was equivalent to nearly 68 per cent of the estimate for the full year.

The Government's spending totalled VND733.3 trillion ($32.6 billion) in the period, bringing the budget deficit to more than VND115 trillion ($5.13 billion).

Seminar eyes smarter VN traffic

A convergence platform for smart city traffic will top the agenda at a seminar on "Viet Nam Information and Communication Technologies Outlook" to be held in HCM City this week.

Viet Nam and other rapidly urbanising countries need to adopt smarter solutions to manage their transport infrastructure, environment, electrical and water systems and population figures, Chu Tien Dung, chairman of the HCM City Computer Association (HCA), said.

The Internet of Things plays an increasingly important role in network connectivity for smart operation, allowing timely information processing and supporting management and forecasting for urban development.

Vu Anh Tuan, HCA's general secretary, said delegates at the seminar would discuss measures to reduce traffic congestion and accidents and improve the efficiency of traffic works.

Dung said Viet Nam is ready for deploying intelligent transport with the Ministry of Transport issuing the required regulations and creating a legal framework for it and many localities, especially HCM City, being very interested in the issue.

Many local IT companies have created these solutions and early tests have proved successful, he said.

To be organised by the HCA next Thursday, the annual seminar will see the participation of 400-500 leading local and foreign ICT experts and users, government officials, and business people.

The HCA said it would organise a function the previous day to give away awards to the country's top 5 ICT companies.

Tuan said the awards are given away every year to recognise, popularise, honour, and encourage firms in the ICT industry and to foster their competitiveness.

Ha Noi Exchange plans ESG guidance

The Ha Noi Stock Exchange has unveiled a plan to build and issue guidance to listed companies on environmental, social and governance (ESG) disclosures next year.

This move comes in response to a call by the United Nations Sustainable Stock Exchanges (SSE) initiative of which the Vietnamese exchange is a member.

"With reference to the SSE's model reporting guidance, we intend to introduce a road map for application of our own customised market guidance on ESG reporting for listed companies in 2016," the exchange said in a statement.

The exchange said the guidance would have a positive impact on enhancing the quality of listed companies and making the domestic securities market more sustainable and attractive to global investors.

Different investors have different information needs, but the financial community has admitted there is a growing level of consistency in incorporating material ESG factors into investment decision-making.

"Investors increasingly incorporate ESG considerations in the investment process," Mark Makepeace, CEO of FTSE Russell London Stock Exchange Group, said. He said companies that incorporated ESG factors into their company's strategy and daily operations would have better access to capital.

In a survey by SSE of more than 1,000 corporate CEO worldwide, 93 per cent said they considered sustainability important to the future success of their business.

However, these CEO said these efforts were constrained by a number of factors, including the failure of markets to adequately price social and environmental costs. Thus, investors do not have adequate information by which to make their investment decisions.

The SSE's campaign to have all exchanges provide companies guidance on reporting ESG information by the end of 2016 has been welcomed enthusiastically. Seven exchanges, such as the HCM Stock Exchange and the Ha Noi Stock Exchange, made public commitments. In addition to the planning of the guidance, the Ha Noi Exchange said it has been promoting activities aimed at sustainable development of the capital markets, including building a transparent and friendly business environment, sustainable corporate development and wise investors.

Initiatives to strengthen Vietnam government bonds

Last July, Moody’s upgraded its rating on Vietnam’s government bonds for the first time since 2005, from B2 to B1, thanks to improvements in the country’s economic stability.

Fitch Ratings soon followed by upgrading Vietnam from B+ to BB- in November. These were good achievements, but we hope that the government will not be satisfied and will set a goal to achieve investment grade status. It should work actively with the rating agencies to lay out an agenda for achieving this within the next 10 years.

An investment grade rating is defined as a rating of Baa3 by Moody’s, or an equivalent rating of BBB- by Standard & Poor’s or Fitch. It is an important benchmark because many global investment adhere to a policy of only investing in investment grade bonds, and are therefore currently prohibited from investing in Vietnamese government bonds. Furthermore, the debt ratings of companies within a country are normally constrained by the “sovereign ceiling”, meaning that it is very difficult for a Vietnamese company to obtain a debt rating higher than that of the government. Global investors with policies against holding non-investment grade debt therefore also cannot buy bonds from Vietnamese companies.

We can see the impact of being an investment grade country on government bond yields by looking at our neighbours. Currently, Indonesia and the Philippines are rated Baa3, the lowest investment grade rating. Thailand is two levels higher at Baa1.

The yield on Thai government 5-year bonds is 2.1 per cent, 3.3 per cent above its inflation rate. Filipino 5-year bonds trade at 3.63 per cent, approximately 3 per cent higher than the inflation rate of 0.6 per cent. Indonesian 5-year bonds trade at 9.23 per cent, which seems high until you compare this to the inflation rate of 7.18 per cent. In contrast, Vietnamese 5-year bonds trade at 6.7 per cent, more than 6 per cent above the current inflation rate. The reason for our high real bond yields is our low sovereign rating. With an investment grade rating and stable inflation, our government’s local-currency borrowing cost could drop below 4 per cent, which would help to reduce the deficit.

Vietnamese companies would also benefit from an improved rating. Currently, foreign direct investment (FDI) companies in Vietnam have an advantage over Vietnamese companies due to their ability to access global capital at cheaper costs. Lower borrowing costs make expansion more affordable and improve profitability.

The government has taken strong steps in order to achieve the latest round of ratings upgrades. The first was to bring inflation under control to its 1H/2014 level of only 4.98 per cent. Since then, Vietnam has had some help in bringing inflation even lower due to global oil prices, which have declined from $107 per barrel in June 2014 to the current price of $47 per barrel. The result has been for domestic petrol prices to decline by 31.3 per cent correspondingly. This affects all sectors of the economy, especially the transportation of food products, and helps to lower inflation. The country’s strong current account balance of $9.7 billion has also helped by bringing in $8.4 billion of foreign reserves in 2014. Additionally, although the dong has devalued by 3 per cent against the dollar this year (along with a 2 per cent increase in the trading band), it has performed very well compared to the currencies of countries that export to Vietnam (notably, China), which has kept the cost of imported goods under control.

Still, assuming we are not satisfied with our B1 and BB- rating, what must Vietnam do in order to reach investment grade? Moving from the current level of B1 at Moody’s, for example, up seven levels to Baa3 will not be easy.

To achieve this, the government must address bank sector reform. The government has set out some reforms with Circular 02 and Circular 09 and the establishment of the Vietnam Asset Management Company (VAMC). Recently, with Directive 02/2015, dated January 27, and Document 5057, dated July 6, the central bank has been urging other banks to sell bad debts to the VAMC and settle non-performing loans (NPLs) by themselves. In 2015, Decree 34 and subsequent Circular 14 have provided more authorities and tools for the VAMC in its mandate. Through the end of August, the VAMC has purchased VND280 trillion ($12.5 billion) of NPLs. Bank NPLs have therefore declined sharply by VND305.3 trillion ($13.6 billion) from September 2012 to VND160 trillion ($7.12 billion) at the end of June 2015. The NPL ratio fell from its peak of 17 to 3.72 per cent during the same time and is likely to drop below 3 per cent this year as targeted.

The government should also improve the budget operation. Vietnam’s Ministry of Finance (MoF) has suggested to cut regular expenditures of ministries and government organisations by 10 per cent from the expected 2015 levels, except for expenditures for special tasks. The expenditures increased 8.2 per cent year-on-year, which is much lower than the growth of state revenue. This brought the deficit to VND115.18 trillion ($5.26 billion), equivalent to only 51 percent of this year’s plan. Depite plunging oil prices and struggling bond issuance, the MoF has stated that the state budget will reach or even exceed the target.

Foreign reserves are also an important part of the sovereign rating. The government’s apparent strategy to increase reserves by joining free trade agreements and encouraging FDI should help to continue building reserves and integrating Vietnam more fully into the global marketplace, which can only be viewed favourably by the rating agencies.

Apartments on sale at CapitaLand’s The Vista

Whether you are a real estate investor or looking for a new home, there is a unit at The Vista available for you.

Singapore-based company CapitaLand presents the final launch of The Vista in Ho Chi Minh City with “Limited Edition Units” featuring units with two-year rental guarantee for investors and the last remaining units with spectacular river view for home-owners.

Tapping on the increasing demand for apartments in District 2, Ho Chi Minh City, CapitaLand has launched its limited units in The Vista with first-ever Rental Guarantee Scheme, with management by The Ascott Limited, the largest international serviced residence owner-operator in the world.

Purchasers of these units will enjoy two years of management from The Ascott for their units and receive rental income at 6 per cent per annum guaranteed by CapitaLand Vietnam. Purchasers shall have freedom of mind with their units being managed by The Ascott Limited, which provides quality management services for its clientele of international expatriate tenants at The Vista.

With over 20 years of presence in Vietnam, The Ascott Limited has more than 10 serviced residences across Vietnam, including three Somerset serviced residences in Ho Chi Minh City.  

Aside from units with rental guarantee, the last remaining units at The Vista are open for final sale, including units with spectacular river view. Boasting panoramic unblocked views of the Saigon River, such ready-to-move-in units are in limited stock in District 2, a well-established residential area with proximity to essential amenities such as international schools, hyper-marts and restaurants.

With quality property management by Savills at The Vista, purchasers can expect to buy a high-end residential lifestyle, with a sense of community and comfort.

The units’ price ranges from VND4 billion ($187,000) per unit, with varieties from 2-bedroom to 4-bedroom, Duplex and Penthouses.

The Vista is CapitaLand’s first residential project in Vietnam. Completed in 2011, the project comprises of 750 residential units and 100 serviced apartments located in 6 towers on 24 floors. Proudly rising up beside the Saigon River, the project has become a popular symbol of District 2 where one can enjoy 5-star resort-style living in the heart of the city. www.thevista.com.vn

Due to limited stock at The Vista, please contact the CapitaLand sales hotline at 1800 599 586 as soon as possible.

Experts strategise on property sector

The Australian Chamber of Commerce in Vietnam (AusCham) held its third annual symposium in Ho Chi Minh City last week to discuss investment strategies for the Vietnamese real estate market.

Stalled projects have become an alluring prospect in the resurgent property sector

Themed “Away to the Races”, the conference attracted the participation of government officials, business leaders, investors, and experts. It aims to provide insight into trends in Vietnam’s real estate market and create an open dialogue for participants to discuss challenges and solutions for developing property in the country.

Former Deputy Minister of Construction Nguyen Tran Nam said that the real estate market, especially the high-end segment, had seen a revival and is likely to develop strongly. In the first eight months of 2015, successful transactions in Hanoi and Ho Chi Minh City reached 13,000 and 12,000 respectively, almost doubling the figures for the same period last year. “Despite the increasing number of transactions in the property market, the price remains stable. Vietnam’s real estate inventory was estimated at VND60 trillion ($2.64 billion) by the end of August this year, a fall of 47 per cent compared to the fourth quarter of 2013. Money is flowing into the property market, especially through foreign direct investment capital and remittances,” he added.

With this positive market outlook, experts have pointed out new investment opportunities from stalled property projects.

“Of the 689 delayed projects in the city, 85 projects are expected to be revoked. Also, the municipal people’s council has directed the people’s committee to revoke other 300 projects in the recent meeting. These delayed projects will become a new source for merger and acquisition deals,” Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, shared. “Novaland, for example, has acquired 50 projects and resumed 20 to date. The firm intends to launch seven projects from now till the end of 2015.”

In this sentiment, Don Lam, VinaCapital’s co-founder and CEO said, “The market is witnessing the rise of local players like Novaland and Vingroup, so we are stepping back and we will play our best as a foreign investor. For VinaCapital, we are also looking for clean and clear projects to develop.”

According to Nguyen Huu Thuy, general director of Vietnam Asset Management Company (VAMC), the company has purchased another VND100 trillion ($4.4 billion) worth of bad debts this year, up $4.4 billion from last year. 68 per cent of assets managed by VAMC are property projects, so the company plans to welcome new investors for these unfinished projects in the future.

Thuy added that the stalled projects were expected to be resumed to create money flow, employment, and income to solve the root of bad debts. Therefore, VAMC is determined to train staff and collaborate with consultants to hand over projects to new investors.

“VAMC is working with relevant ministries and departments to complete profiles and legal documents. We are committed to providing good after-sales service by dealing with arising problems in practice so conditions are favorable for new investors to continue developing projects. VAMC is also co-operating with the Japan International Co-operation Agency (JICA) to establish a set of rules in accordance with international standards, so that foreign investors can get better access to projects,” he noted.

Vietnamese smartphone maker looks to foreign markets for growth: media

Tech firm Bkav is seeking new markets for its smartphone,Bphone, after joining meetings with foreign distributors at a recent global summit on mobile telecommunications in Hong Kong, according to Vietnamese media.

Bkav representatives met with many network operators that also act as smartphone distributors from Thailand, India, Indonesia, and a European nation on the sidelines of the Qualcomm 3G/LTE Summit, which concluded on Wednesday last week, according to news website VnReview.

The firm engaged in talks with True Move, which has a 24.6 percent market share, or 26 million subscribers, in Thailand and Telenor, a provider of mobile services in Europe which is investing in mobile networks in Asia, VnReview reported.

But Bkav, which is based in Hanoi, refused to talk about what was discussed during these meetings, the news website said.

According to the agenda of the three-day summit, Bkav worked with senior leaders of American chipmaker Qualcomm, which is supplying microchips to the Vietnamese company, on the next generation of the Bphone, which is expected to be released in the first quarter of next year.

Andy Chu, director for Bkav Singapore and the Asian region, confirmed the information but declined to go into further detail, according to VnReview.

The tech firm unveiled the first generation of its flagship Bphone at a 2,000-attendee event in Hanoi on May 26.

The Bphone is 7.5mm wide with a Sharp 5.0 inch full HD screen, protected with Corning’s Gorilla Glass, which Samsung and Apple also use for their devices.

The full aluminum body handset is equipped with Toshiba’s 3GB RAM and the Qualcomm CPU Snapdragon 801 quad-core 2.5GHz.  

The Bphone’s 3,000mAh battery is facilitated with a fast-charging technology called Quick Charge 2.0.

It has a 13MP primary camera and a 5MP secondary one, both covered with sapphire glass.

At the summit, Hideki Ogura, general manager of Platform Enabling Group under Toshiba Electronics Asia, used the Bphone to demonstrate the TransferJet connection technology, according to news website VnExpress.

TransferJet is a close-range wireless technology that helps users transfer data like music, high definition videos between mobile devices at very fast speed.

According to Toshiba, this technology can attain a speed of up to 375 Mbps in data transmission, enough to transfer a 20-second HD video file within one second.

Northern holiday home market finds favor

The holiday home market and resort projects tend to be focused in Vietnam’s south but have also seen vibrant performance in the north over recent months.

In July the FLC Group officially opened sales at its FLC Samson Beach & Golf Resort in Sam Son town in the north-central province of Thanh Hoa. According to the developer, hundreds of villas out of the total of 1,000 were sold in the first sale offering.

The BIM Group has recently introduced Van Lien (Lotus Residences), a luxury resort and townhouse project in Quang Ninh province’s Ha Long city. The project has attracted a large number of investors and recorded a considerable number of purchases since its first sale in June.

Hai Phong city, meanwhile, welcomed the announcement of a $1 billion Vingroup eco project in April. The Vu Yen Island Ecotourism Urban Area project is expected to begin construction this year, designed as an ecological urban area that will include ecological villas, a 36-hole golf course, amusement parks, and an ecological park, on an area of 872 ha.

Buying a resort property is considered a good investment amid the recovery of the country’s real estate market after a long period of stagnation. The holiday home market in Vietnam is competitively priced compared with other regional holiday home destinations such as Phuket and Bali, while the quality of the developments in Vietnam is often higher than elsewhere, Mr. Matthew Powell, Director of Savills Hanoi, told VET.

On July 1 two pieces of legislation came into effect: the new Law on Housing and the new Law on Real Estate Business, which open up Vietnam’s real estate market to overseas investment. “We believe these changes in the legal framework will have a positive influence on the real estate market in Vietnam and the holiday home market in particular,” Mr. Powell said.

Falling short

One foreign investor, when asked about Vietnam’s support industries, said that his company even had to import screws from elsewhere to assemble its products in the country. His example gives weight to the notion that the development of support industries in Vietnam has become a pressing matter. In 2013 the Vietnam-Japan Industrialization Strategy Towards 2020 and Vision to 2030 was approved by the two Prime Ministers, targeting to promote support industries in six priority sectors: electronics, automotive, agricultural machinery, agricultural and fishery products processing, shipbuilding, and the environment and energy efficiency, with the aim of creating links among enterprises from the two countries. Japan’s assistance to Vietnam’s support industries has seen positive results but difficulties remain.

Japanese backing

According to a survey by the Japan External Trade Organization (JETRO), more than 70 per cent of Japanese enterprises in Vietnam said they have problems with the supply of raw materials and components. Raw material supplies meet just 33 per cent of demand, lower than China’s 66 per cent, Thailand’s 55 per cent, Indonesia’s 43 per cent. and Malaysia’s 41 per cent. “It is clear to see that Vietnam’s support industries have not developed and are still in the formation stage,” said Mr. Atsusuke Kawada, Chief Representative of JETRO Hanoi.

In recent years JETRO has assisted support industries in Vietnam through a program connecting trade and support industry exhibitions. In 2014 it established a new organization, called the Vietnam-Japan Support Industries Forum, in which private enterprises and government agencies from both countries work together to develop support industries.

In the Japan International Cooperation Agency (JICA) Partnership Program (JPP), the organization has a project to assist support industries relating to steel in southern Ba Ria Vung Tau province. To aid human resources development and build a supporting system for production and technology relating to steel industries in the province, Sanjo city and Ba Ria Vung Tau have implemented the “Human Resources Training and Supporting Steel Industry Promotion in Ba Ria Vung Tau Province” project, under the framework of the JPP.

The project began in December 2013 and four seminars, including two in Japan and two in Vietnam, have been held so far. At the first seminar officials from the Ba Ria Vung Tau PPC (industrial promotion policymakers in the province) heard of Japan’s industrial development history and the industrial development policies both Sanjo city and Japan have implemented. At the second seminar leaders and staff from Vietnamese enterprises and a vocational school heard of the role of the government in promoting industrial development and visited some Japanese enterprises in Sanjo city to learn of their experience and gain know-how.

The third and fourth seminars were held in Ba Ria Vung Tau for government officials. Forty-one young officials were in attendance at the first and heard of the importance of the management of intellectual property and design, etc., and discussed how to promote industry in the province. At the second, participants followed-up discussions at the second seminar in Japan and addressed the current issues they face.

Through the implementation of such activities, JICA said that policymakers, business managers, and vocational teachers in Ba Ria Vung Tau will have acquired the necessary know-how to promote local steel industries, develop businesses, and implement industrial promotion activities.

Difficulties remain

Despite receiving support from Japanese organizations such as JICA and JETRO, Vietnam’s support industries in recent years have not developed to any great extent. According to the Foreign Investment Agency under the Ministry of Planning and Investment, 9,800 out of the more than 18,000 FDI projects registered in the Vietnam are in manufacturing and processing industries, with total registered capital of $143.8 billion, or 56 per cent of the total. This represents a good opportunity for support industries to develop but they’ve long been poorer than those elsewhere in the region.

Domestic firms seem unlikely to leap into support industries, according to many experts. Vietnam has attracted about 500 foreign-invested enterprises with advanced production to invest in support industries, primarily in producing electronic components, metal parts, and rubber components. The number of domestic enterprises in the sector remains low.

Many Japanese investors have complained that they cannot expand investment or production in their projects because local support industries are not adequately developed. Japan is currently the largest investor in Vietnam, but most of its investment projects must still import components and materials from other countries, which results in higher production costs. While components account for as much as 90 per cent of the total production cost, Japanese investors say they have no choice but to import because of the shortcomings of local support industries. Local companies simply assemble imported parts, one investor said.

According to Mr. Endo Hiroyuki, Deputy Director of the Engine Manufacturing Department at Mitsubishi, because Vietnam’s support industries are undeveloped the company is forced to import components from other countries, which add to costs. “If this problem is not resolved it will be difficult for us to expand our operations in Vietnam,” he was quoted as saying.

Despite appreciating the cooperation between Japan and Vietnam in promoting support industries, economic expert Mr. Vu Dinh Anh said that the size and level of development of Japan’s support industries in Vietnam has not achieved the desired results. The number of Japanese firms in support industries in Vietnam remains quite small. In particular, the participation of Vietnamese enterprises in production chains and product support is negligible.

Links between domestic and foreign enterprises, including Japanese enterprises, Mr. Anh said, must be more comprehensive if they are to promote the development of support industries in Vietnam. “Businesses need assistance to grow, in particular removing barriers and discrimination between Vietnamese and Japanese enterprises in the sector,” he added.

Continued support

Many experts believe that while Vietnam’s support industries are weak they still hold a great deal of potential because of the country’s large population and young and diligent workforce. Such factors will help Vietnam to remain an attractive investment destination in the future for foreign firms investing in support industries.

JETRO said it will continue its efforts in developing support industries and plans to organize a supporting technology exhibition in September in Hanoi and in October in Ho Chi Minh City. The exhibitions aim to connect Japanese enterprises looking for components and materials in Vietnam with Vietnamese businesses that can supply them. “JETRO expects to make a positive contribution to the development of support industries in Vietnam,” said Mr. Kawada. “We have established a list of Vietnamese enterprises to enable approaches by Japanese enterprises, to increase the supply of raw materials.”

JICA, meanwhile, has been providing assistance regarding support industries primarily to the central government, by helping establish an industrialization strategy and facilitating finance to small and medium-sized enterprises (SMEs), providing business training courses targeted at executives and managers, organizing human resources development at vocational training colleges, directly advising industries on the Japanese “5S” and “Kaizen” principles, business management, and so on.

JICA is also interested in working with local governments to realize the development of support industries in the future from a shorter-term perspective, as successful examples in provinces will become models that can be expanded nationwide.

FMCG growth doing better in rural areas

While growth in fast-moving consumer goods (FMCG) in six key cities in Vietnam - Hanoi, Ho Chi Minh City, Hai Phong, Can Tho, Nha Trang, and Da Nang - has been slowing down, rural areas have appeared as a new source of growth for many manufacturers, according to the Market Pulse Quarter 2 Report from Nielsen Retail Measurement, released on September 18.

According to Nielsen’s study, rural areas saw better growth than urban areas in the first and second quarters.

While urban areas grew 1.6 per cent in the second quarter, rural areas grew 2.7 per cent, mainly led by volume growth.  

Additionally, while key categories remains challenging in the six key cities, eleven out of 18 categories saw positive growth rate in rural areas, providing huge opportunities for manufacturers and service providers.

Expanding to rural areas in Vietnam brings with it the same challenge seen in other large Asian countries - a high cost in serving geographically-dispersed districts, according to Mr. Ashwin Sukumaran, Senior Manager of Advanced Analytical Consulting at Nielsen Vietnam.

“As we have seen in India and China and now Vietnam, it is more important for manufacturers to be able to prioritize their rural expansion efforts,” he added. “Some parts of rural areas offer better prospects than others, and identifying these therefore becomes very important to ensure maximum Return on Investment.”

In regard to purchase drivers among rural consumers, in addition to valuing the opinions and recommendations of family and friends, consumers also respond positively to recommendations from retailers.

Ninety per cent of retailers recommend products to their shoppers, achieving on average a one-in-three hit rate, with 31 per cent of shoppers buying products recommended by retailers. With up to 27.5 million shoppers visiting retail stores every day, retailer recommendations can be a powerful form of brand endorsement.

The mix of challenges and opportunities in rural areas requires manufacturers to have a great understanding of rural consumers and a proper route to market plan, according to Mr. Alex Jeater, Senior Manager of Retail Management Services at Nielsen Vietnam. “Especially, connecting with and nurturing your brand’s fans to leverage the power of word of mouth, leveraging retailers as brand ambassadors, and tapping into the power of television for mass reach while keeping digital channels in the mix for connecting with younger consumers,” Mr. Jeater said.

The Market Pulse Report is based on the results of the Nielsen Retail Measurement study of FMCG. The Nielsen Retail Measurement provides continuous tracking of product movement through defined retail outlets. The data are used to measure manufacturer and retailer efforts as well as consumer off-take.

PTI insures Vinpearl Luxury Da Nang

The Vinpearl Luxury Resort in Da Nang has taken out an insurance policy with the Post & Telecommunication Joint Stock Insurance Corporation (PTI), with coverage totaling VND1.17 trillion ($52.3 million).

The policy includes asset insurance, fire insurance, business interruption insurance, and public liability insurance.

The public liability insurance covers personal injury or property damage to a third party.

Business interruption insurance will insure the gross profit of the Resort and any higher operating costs caused by damage to insured property.

Vinpearl Da Nang is a five- star luxury resort that includes a 200-room hotel and 39 villas on Vietnam’s central coast.

PTI also insures urban areas and major resorts such as Vinpearl Luxury Nha Trang, Sun Spa Resort, and the Splendora urban area, among others.

Taxes pressuring beer & alcohol companies

Excise tax increases of 5 per cent in 2016 and amendments to certain other articles relating to taxes proposed by the Ministry of Finance will put great pressure on beer and alcohol enterprises, according to Mr. Nguyen Van Viet, Chairman of the Vietnam Beer Alcohol Beverage Association.

For the past three years rising taxes have seen the industry’s tax obligations increase from VND14.7 trillion ($646.8 million) in 2012 to VND18.2 trillion ($855 million) in 2013 and VND19.9 trillion ($875.6 million) in 2014.

Excise tax rising 5 per cent every year from 2016 will see Vietnam be among 20 countries with the highest excise tax on beer and alcohol in the world. Enterprises will struggle to compete, Mr. Viet said, with competition from imported products, especially beer from Laos, the Philippines and Thailand.

In recent years Vietnam’s beer and alcohol industry has seen relatively high growth rates, but beer consumption in the country is not as high as many believe. Around 3.2 billion liters of beer are consumed annually, or 35 liters per person, which is far lower than Laos, for example, with 50 liters and China with 40 liters.

If the government wishes to limit alcohol use it should employ a number of measures, Mr. Viet said, not just tax policy. “People’s spending is limited while demand for beer and alcohol remains high, so instead of producing beer and wine of high quality and low alcohol content, enterprises are forced to manufacture products of lower quality to match the market.”

MB holds successful offering

The Military Commercial Joint Stock Bank (MB) has announced the results of its latest public offering, with 390.6 million shares being sold at a starting price of VND10,000 ($0.44) from September 1 to September 19.

The full offering was sold, with the lowest successful price being VND10,500 ($0.47) per share and the highest VND11,665 ($0.52).

The bank received VND4.28 trillion ($190.41 million) in total, bringing its capital to almost VND16 trillion ($711.84 million).

The offering attracted five institutional shareholders, both existing and new. The State Capital Investment Corporation (SCIC), a new investor, purchased 160 million shares to secure a 10 per cent holding.

Neither Maritime Bank nor Vietcombank participated in the offering, with the former’s holding falling from 12.06 per cent to 8.84 per cent and the latter’s from 9.6 per cent to 7.16 per cent.

BIDV provides LPG derivative

The Bank for Investment and Development of Vietnam (BIDV) and the Van Loc JSC (VLJ) have signed an agreement on the provision of liquefied petroleum gas (LPG) swap price products.

Under the agreement BIDV commits to providing LPG swap price products to help VLJ cope with risks of any volatility in the LPG price during this year and next, to a maximum of $30 million. BIDV will also provide VLJ with consultancy on other derivatives for LPG.

The agreement is conducted based on the success of the first LPG swap price product in Vietnam, when BIDV provided it to VLJ in August. The previous success assisted VLJ to be more proactive in its business strategy and reduce risks from any LPG price volatility.

VLJ was founded in 2006 with main business activities being the import and trading of LPG. It is one of only a few companies to meet all government requirements to be licensed by the Ministry of Industry and Trade to directly import LPG. It has a storage capacity of 3,000 tons.

ADB workshop discusses financial inclusion

The Asian Development Bank (ADB) in cooperation with the State Bank of Vietnam held a consultation workshop on broadening financial inclusion on September 18 in Ho Chi Minh City, drawing some 60 participants from a broad range of stakeholders including concerned agencies, financial institutions, provincial governments, mass organizations, and academia.  

The workshop was part of ADB’s efforts following the Microfinance Development Program, which supported the implementation of the Vietnam Microfinance Development Strategy (2011-2020).

The workshop highlighted the need to deepen financial inclusion, aiming for access to a wide range of financial services including savings, credit, remittance, and insurance for all. Greater financial inclusion will improve people’s lives and promote inclusive growth.

It also discussed the impact and progress made by the ADB program supporting the implementation of the Vietnam Microfinance Development Strategy, identifying emerging issues and opportunities for greater financial inclusion supported by the ADB in the future.

The Park set to launch

On September 27 Vingroup will launch two apartment buildings, Park 1 and Park 6, at The Park complex in Vinhomes Central Park in Binh Thanh district, Ho Chi Minh City.

Vinhomes Central Park includes four complexes - The Central, The Landmark, The Park, and The Villas. The Central and The Landmark have already been successfully launched on the market.

The Park consists of seven apartment buildings considered to have the best and greenest location at Vinhomes Central Park. Facilities at The Park are of five-star quality, with an outdoor gym area, a children’s playground, a BBQ area, a reception area and a guest lounge with staff available 24/7, as well as an automatic camera supervision system and an automatic fire protection system.

The Park 6 apartment building is equipped with a smart-home package, including automatic control systems for curtains, sound and light. It also inherits the infrastructure of Vinhomes Central Park, with the Vinmec international hospital, Vinschool, and Vincom shopping complex, combined with entertainment such as an IMAX high-end theater system and an ice skating rink.

Earlier this month Vingroup introduced model apartments at The Park to visitors, of one to four bedrooms.

Vinhomes Central Park is invested by Vingroup and has a total area of 43.91 hectares, designed as a “mini green city” in Ho Chi Minh City. Expected to be completed in 2016, it will be the “green lung” of the downtown area.

HCMC boosts its cooperation with European countries

A 13 day visit and work in Hungary, Italia and Germany, the city's high ranking led by Chairman of the HCMC People’s Committee Le Hoang Quan has completed successfully and achieved in various fields.

Chairman Le Hoang Quan signed key’s cooperative agreements with big cities of Budapest, Torino and Leipzig.

In Hungary, a friendly cooperative ties between Ho Chi Minh City and Budapest city were signed by Chairman Le Hoang Quan and Mayor of Budapest capital Tarlos Isvan.

In 2013, Ho Chi Minh City and Budapest city signed a memorandum on cooperative relations establishment.

In Italia, Chairman Quan and Mayor of Torino city Piero Fassino also signed a friendly cooperative agreement between two cities.

Friendly cooperative agreements will be important opportunities to not only tighten relations between Vietnam and Italia, Hungary and Germany but also open new cooperations in various fields.

Ho Chi Minh City will strengthen cooperation with Budapest capital in the fields of city planning, public transport, distribution of freshwater resources, wastewater and trash treatment systems. Meanwhile, Ho Chi Minh City and Torinno city pledged to promote further in trade, investment, education and training, science and technology, culture and tourism, environment sectors and others.

Within the framework of the event, Trade and Investment Promotion Center kicked off three seminars at Budapest, Torino, Leipzig city respectively chaired by Mr. Le Hoang Quan, aiming to call on trade investment promotion into HCMC.

At the seminars, foreign firms expressed their desire to invest into Ho Chi Minh City in upcoming times.

During 13 day visit, Chairman Quan and leaders of city’s department, agencies and businessmen visited and learned practical experiences, modern solutions and technology-enabled business trends of the world’s large economic groups such as Budapest Central Wastewater Treatment Plant, Medical Hospital in Germany, Messer Group, German Bank, Porsche Design Group and others.

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