Buy-to-let sector reaps rich dividends

With new high-quality properties coming on the market, investors have found a stable return in buy-to-let projects

The buy-to-let trend has been sweeping across major cities in Vietnam, offering high yields and a stable investment strategy for buyers.

With new high-quality properties coming on the market, investors have found a stable return in buy-to-let projects

In the southern province of Dong Nai, near Ho Chi Minh City, an investor declining to be named has bought a dozen villas in the Dai Phuoc project. The villas will be available for leasing at weekends and during festive periods.

A source at Dai Phuoc Lotus Villas said that the advantageous location of these ecological villas had caught interest from customers who hoped to  re-lease them as resort residencies for visitors from Ho Chi Minh City.

According to Kenneth Atkinson, executive chairman of Grant Thornton Vietnam, the buy-to-let industry in Vietnam has become a lucrative investment channel.

Atkinson has purchased several apartments in Vietnam, one as a buy-to-live property and two as buy-to-let. “After a time of using those apartments for lease, I realised that rental yields in some areas such as districts 1, 2 and Binh Thanh, are currently quite attractive,” he told VIR.

According to CBRE Vietnam’s latest research, buy-to-let potential is now a factor with ever-increasing importance.

Dung Duong, director and National Business Line leader of CBRE Vietnam, said that the buy-to-let industry had become more and more popular thanks to its high profit generation.

Dung also noted that the relaxation of foreign housing ownership regulations, combined with promotional sales programmes offered by developers, was already reaping results just three months after implementation.

“We are seeing a lot of interest from Singaporean, South Korean, Japanese, and Malaysian buyers who live and work in Vietnam, most of whom are buy-to-let investors,” she said.

For some high-end condominium projects in districts 2 and 7 in Ho Chi Minh City, gross rental yields are estimated by CBRE to stand at 6 to 8 per cent, while net yields are roughly 4.5 to 6.5 per cent.

“Compared to net yields of 2-3 per cent in Singapore, or 3-4 per cent in Bangkok, this rate is very attractive,” Dung said.

With a large pool of tenants readily available in these districts, especially near international schools, investors tend to fill up their vacant apartments quickly.

Previously, investors predominately focused on re-selling their properties to gain a small profit on their purchases. However, the buy-to-let trend now offers investors the stability and benefits of a long-term investment.

Furthermore, the current economic situation means that other investments, such as gold and securities, are no longer the most efficient channels for investors.

In Ho Chi Minh City, properties at a variety of projects in districts 2 and 7 are being snapped up by leasers.

Meanwhile, foreigner immigration has led to a surge in projects that boast an infrastructure system containing features such as healthcare centres, spas, schools, trading centres, and leisure facilities.

In Hanoi, the most desirable areas for foreign leasers are still around West Lake and in the central business districts (CBD), while domestic leasers tend to focus on non-CBD, such as Hadong and Tu Liem.

More foreign investors eye real estate market

Foreign direct investment in the local real estate sector is expected to rise in 2016 given the positive property development outlook.

David Blackhall, managing director of VinaCapital Real Estate, said that, “Since early 2015, Vietnam has been on the radar of foreign investors in general, particularly for real estate investment opportunities. Recent real estate transactions show that the majority of foreign companies investing significant capital in Vietnam are based in Asian countries such as Japan, South Korea, the Philippines, Singapore, Hong Kong, and Malaysia.”

“Both foreign and local investors have become more active as liquidity continues to improve and interest rates gradually depreciate. Since the Housing Law and Real Estate Business Law both came into effect on July 1 2015, VinaLand’s projects have received numerous enquiries from foreign real estate investors. A strong recovery is certainly underway in Vietnam’s real estate sector and this trend will continue into 2016,” noted Blackhall.

According to the Ministry of Planning and Investment, foreign direct investment (FDI) inflows to the real estate sector reached nearly $2.32 billion in the first 11 months of this year, almost double year-on-year. FDI?for the real estate sector accounted for 11.5 per cent of the country’s total registered investment capital and ranked third after the manufacturing and processing sector.

The Thu Thiem New Urban Area received two sizable investments, including $1.2 billion from Empire City Limited Liability Company for the Empire City Complex project, and VND2,000 billion ($91.74 million) from Lotte Group for the Thu Thiem Smart Complex, which is worth roughly $2 billion. Recently, Bitexco forged an alliance with Dubai’s  Emaar Properties PJSC to jointly develop a Binh Quoi – Thanh Da urban area worth $1.37 billion in Ho Chi Minh City.

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment Professor, said that, “an increasing number of foreign investors are expected to flock to Vietnam’s real estate market in 2016. It is forecasted that FDI inflows into the sector will account for around 30 per cent of the country’s total registered FDI  capital. Buoyant growth will stimulate trading, merging and acquisition activities, which will help revive many delayed projects in the market.”

“FDI inflows into the realty market accounted for 40 per cent of the total registered investment capital in Vietnam during 2007. When the market became stagnate in 2008, foreign investors registered new projects, but failed to implement them. However, now the upward trend of FDI has returned, and is expected to continue for the foreseeable future,” he added.

According to property advisory company CBRE Vietnam, the establishment of the ASEAN Economic Community (AEC) and free trade agreements such as the Trans Pacific Partnership will increase cross-border investments within the ASEAN market. Well-developed markets such as Singapore and Malaysia could offer investors a “core” or “value-added” investment profile, while “opportunistic” investments could be sourced from emerging markets such as Vietnam and the Philippines.

Vietnam embraces new path of development

A new path of development began when Vietnam achieved a 6.68 percent GDP growth rate in 2015, signed a number of free trade agreements, and joined the ASEAN Economic Community.

In 2015 Vietnam signed free trade agreements with the Republic of Korea and the European Union. Negotiations on the Trans-Pacific Partnership agreement concluded and the ASEAN Economic Community (AEC) was established on December 31.

The FTAs and the AEC will help Vietnam boost growth, create new jobs, increase incomes, reduce poverty, stimulate exports, attract foreign investment, restructure its economy, and increase its competitiveness in achieving sustainable growth. Vietnam’s economic development policies in 2016 will therefore focus on integration-related issues.

Economist Le Dang Doanh said “In 2016 Vietnam will continue to restructure its economy and fierce competition is expected in the domestic market. I hope that Vietnam will carry out institutional reforms and continue to improve the competitiveness of its products so that they will be able to compete with imported ones.”

Former deputy director of the Central Institute for Economic Management Vo Tri Thanh said government policies and the role of businesses are an important factor in increasing the competitiveness of the economy. Effective reforms will make Vietnam attractive for investments. It will still be difficult for Vietnamese businesses to join chains and networks. But with flexible policies Vietnam will likely achieve more rapid growth.

Vietnam achieved a 6.68 percent GDP growth rate in 2015, its highest in 8 years and Vietnam is implementing a policy of economic transparency and public information, improving its business environment, and restructuring its economy to maintain a 6.5-6.7 percent growth rate over the next 5 years.

Nguyen Dinh Cung, Director of the Central Institute for Economic Management, said “Vietnam’s economy is expected to see slow but certain recovery in 2016. The macro-economy will continue to be stable and the prices of raw materials will remain low. According to the World Bank, Vietnam’s business environment index will increase 10 levels in 2016.”

Restructuring the economy, improving the business environment, and increasing competitiveness are what Vietnam needs to do to follow a new path of development and integration.-

Forestry sector records high growth rate in 2015

Forestry production growth in 2015 recorded a relatively high increase of 7.9 percent over the previous year, announced the Ministry of Agriculture and Rural Development.

The sector’s total output value increased by 10.89 percent and exports rose by 10 percent, exceeding 7.1 billion USD, Nhan Dan newspaper quoted the source as saying.

This is a noticeably high growth rate, as ten years ago the industry growth rate was only about 1-2 percent.

The high growth is thanks to the strongly growing domestic consumption and exports to foreign markets, forest plantation and production.

Preliminary timber harvested in 2015 was estimated at 8.3 million m3, an increase of 11.9 percent over the same period last year.

Newly-planted areas reached 244,800 ha, up 10.8 percent year-on-year, in which newly-planted protective and special-use forests made up 24,900 ha, an increase of 14.6 percent, while afforestation for commercial forests reached 220,000 ha, up 10.4 percent.

Diplomatic sector to increase support for economic ties expansion

The diplomatic sector will continue fostering political relations to provide optimal conditions for the development of economic-trade ties, Deputy Prime Minister and Foreign Minister Pham Binh Minh has said.

In the TV programme “People ask, Ministers answer” aired on January 3, he said economic diplomacy is one of the three pillars of diplomacy, alongside political and cultural diplomacy.

The foreign ministry and its overseas representative agencies have actively supported enterprises and localities in promoting relations with partners and countries through investment and trade forums.

He cited the ministry’s assistance to the military-run telecommunication group Viettel to invest in many countries, including African nations, as an example, adding that high-ranking leaders’ visits to foreign countries were also chances for Vietnamese firms to advertise their products.

Political connections will be strengthened in 2016 so as to facilitate economic-trade relations, attract foreign investment and official development assistance (ODA), and encourage other nations’ opening of their markets, Minh stressed.

He added that his ministry will also support businesses in exploring cooperation opportunities with foreign partners.

With regard to the ASEAN Community, which officially took shape on December 31, 2015, the official said the biggest opportunity to be created is a peaceful and stable environment and a common economic and trade area with a single production base.

All people, regardless of producers or consumers, can benefit from a common market with a 625 million-strong population and a combined annual GDP of 2.6 trillion USD.

However, big chances are accompanied by numerous challenges and fierce competition, he noted, underlining people and enterprises’ insufficient awareness of the ASEAN Community, which could expose Vietnam to a risk of missing the opportunities.-

Bac Lieu targets 785 million USD in export turnover

The Mekong Delta province of Bac Lieu strives to rake in 785 million USD from exports in 2016, up 400 million USD against the previous year.

Director of the provincial Department of Agriculture and Rural Development Luong Ngoc Lan said the locality will continue to promote its economic strengths in seafood and rice processing.

A number of measures and policies have been designed to support businesses with capital and technology to sharpen their skills and enable quick access to market information and trade promotion, he said.

Local authorities have encouraged enterprises to step up investment and build new production chains as well as diversify and increase highly-added values of products, especially aquatic ones, he added.

The agriculture sector will prioritise the implementation of combined production models such as rice-shrimp and shrimp-crab-fish and pour grid investment in industrial shrimp breeding on 15,000 hectares in the southern part of the province to meet Vietnam Agriculture Practice (VietGap) standards.

Local businesses and farmers also pay heed to developing large-scale fields according to VietGap standards and embrace links with partners in southern Ho Chi Minh City to sell products and erect a food processing plant for export in Hong Dan district.

Strict management will be conducted on veterinary medicine and seafood trading activities to ensure their origin, while many off-shore fishing groups will be set up, Lan said.

Purchasing power highly increases at supermarkets

Supermarkets in Ho Chi Minh City have reported a high increase in purchasing power during New Year holidays from December 31 to January 1, according to Sai Gon Giai Phong newspaper.

Saigon Co.op supermarkets in Ly Thuong Kiet and Dinh Tien Hoang Streets and near Binh Trieu Bridge were seen overcrowded with customers.

The best selling items comprise fresh and dried food, confectionary, beer, beverage and clothes.

According to calculations by the supermarket, the number of customers sharply increased because of the long holiday and many promotional programs covering thousands of items.

Saigon Co.op system’s sales were double and triple normal. It was quadruple to beers, beverage and confectionary. Gift baskets priced from 500,000-600,000 VND were much in demand.

Similarly, Big C supermarkets reported that purchasing power was half as much again normal with the most chosen items including fast moving consumer goods, processed food, clothes and gift baskets.

Other supermarkets and trade centers such as Aeon, Citimart, Maximark, Metro, Vincom, Union Square and Diamond also attracted a lot of customers.

Right after the solar New Year, most supermarkets have started launching new promotional programs, with thousands of commodities at a discount of up to 49 percent, to sustain the purchasing power from now until the lunar New Year festival in February.

On the contrary with supermarkets, traditional markets were rather quiet during the last New Year days. Purchasing power slightly increased from 10-20 percent to fresh food.

The volume of goods at markets was abundant so there had no price change. Food, vegetable and fruit prices were stable.-

Vietnam’s deficit with China rises 12.5% to US$32.3bil

Vietnam suffered a massive US$32.3 billion trade deficit with China, where it imported from a needle to an elephant, in 2015.

Last year imports from China reached nearly US$50 billion, while Vietnam’s exports to its northern neighbor were only some US$17.7 billion, according to data by the General Statistics Office.

The US$32.3 billion deficit in 2015 is 12.5% higher than that of one year earlier, and is the highest-ever negative trade balance Vietnam has had with China.

Vietnam logged a US$23.7 billion and US$28.9 billion deficit with China in 2013 and 2014, respectively.

The massive deficit in 2015 was largely due to the rising imports of steel, metal, cars, car components, and raw materials for footwear and textile production, according to the General Statistics Office.

What is most worrying is that Vietnam still bought a huge volume of agro-products from China, despite being an agriculture-exporting country itself.

In the Jan-Nov period in 2015, the Southeast Asian country imported US$165 million worth of fruits and vegetables from China, up 21.2% from a year earlier, according to customs data.

There was, however, a huge amount of Chinese produce brought to Vietnam across the border, which was not included in the data.

Vietnam even imported products that can be grown locally, and thus domestic produce has eventually lost its home market to the Chinese imports.

Price really matters, as Chinese fruits and vegetables are 30% to 50% cheaper than the Vietnamese-grown products, according to industry insiders.

“Customers have real demand for Chinese products, so we just cannot stop sourcing them,” said Do Thi Lanh, a small trader at An Suong Market in District 12, Ho Chi Minh City.

Lanh said Chinese fruits and vegetables can always find buyers easily thanks to their much cheaper prices compared to the Vietnamese produce.

“Chinese cabbages fetch only VND8,000 (US$0.39) a kg, compared to VND40,000 (US$1.79) a kg for those grown in Da Lat or Hanoi,” she said.

Upon being imported, Chinese fruits and vegetables are distributed to wholesale markets in Vietnam, from where they will be transported to smaller markets, supermarkets and especially those restaurants, eateries and firms that supply meals in large quantities to factories, hospitals or schools.

“Chinese products are always available no matter how many of them you want to source,” said Hung, who sells spices at the Hoc Mon wholesale market in Ho Chi Minh City.

“The domestic products are more expensive and are of varying quality, so people prefer Chinese ones.”

Hung added the Chinese garlic or chili will be ground and sold to restaurants to make sauces, so “no one knows whether they are eating Vietnamese or Chinese spices.”

Besides fruits and vegetables, Vietnam also bought different seafood products from China.

In 2015 the country imported US$54.6 million worth of seafood products from mainland China and Hong Kong, a massive 42.2% year on year increase, according to the Vietnam Association of Seafood Exporters and Producers.

Vietnam’s trade deficit with China is expected to continue widening in the coming years, as the Southeast Asian country still has to rely heavily on Chinese raw materials for several sectors, including rubber, footwear, and textile and garment production.

For instance, Vietnam last year spent more than US$1 billion importing plastic products, because “no domestic firms are able to produce these materials,” said Tran Viet Anh, deputy chairman of the Ho Chi Minh City Rubber Plastic Manufacturer Association.

“We will have to do so in the next ten years, as there are no domestic suppliers for the materials,” he said.

Diep Thanh Kiet, deputy chairman of the Vietnam Leather, Footwear and Handbag Association (Lefaso), said the footwear industry is much too reliant on imported materials.

“While the industry needs 210 million square meters of faux leather a year, domestic supply can only cover 4.2% of that,” he said.

“Similarly, only 12.5% of the annual demand for 92 million square meters of nonwoven fabrics can be met domestically.”

Vietnam therefore has to import most of the needed materials, and it is difficult to find other suppliers than China, Kiet admitted.

“There is no nation that can supply the materials in huge quantities, at cheap prices and with diverse designs and patterns like China,” he explained.

The Lefaso official added that the heavy reliance on Chinese materials “may persist in dozens of years to come,” if Vietnam’s policy to develop supporting industries remains ineffective.

Hanoimilk’s IZZI brand named among top 10 food brands of Vietnam

Hanoimilk’s IZZI brand on January 3 was named by the Ministry of Industry and Trade among the top 10 food brands of Vietnam.

The top brand award is one of the ministry’s activities to help develop the distribution system of Vietnamese goods, which goes with the “Vietnamese consumers use Vietnamese goods” campaign in the 2014-2020 period.

Aiming to help brands that meet certain quality standards and whose production meets certain environmental standards set by the Ministry of Industry and Trade (MoIT) be known by consumers and get the position they deserve in the market, this year’s award honoured the IZZI brand from Hanoimilk, besides brands from other companies such as Duc Viet Foods, Masan Consumer, Long Hai and Hanoli.

“The top brand award is a recognition of Hanoimilk’s effort to make IZZI the top milk brand for children in Vietnam,” said Ha Quang Tuan, chairman of Hanoimilk.

Earlier, in April of last year IZZI was among the top 20 food brands of Vietnam, as voted by the Ministry of Health, the MoIT and the Ministry of Agriculture and Rural Development. In November IZZI was voted by consumers in a poll organised by the Vietnam Economic Times as most loved by mothers and children for the third consecutive year.

Hanoimilk was established in 2001 and officially started production in 2003. The company’s brands now include IZZI, Yotuti and Hanoimilk 100 per cent fresh milk.

Vietnam’s demand for milk and products made from milk is high and on an increasing trend with the country’s growth in population of about 1.2 per cent per year and GDP growth of 6-8 per cent per year. According to market research company Euromonitor International, in 2014, the size of the milk market in Vietnam was VND75 trillion ($3.5 billion), up 20 per cent on year. The growth came mostly from the powder and liquid milk, which account for a combined 74 per cent of the value of the market.

Notable players in the market include Vinamilk, TH Milk, NutiFood and Friesland Campina.

Rubber industry to develop made-in-Viet Nam brand

The Vietnam Rubber Association is in the process of executing a plan to build a brand name for Vietnamese natural rubber and rubber products to nurture trust among consumers.

A worker exploits rubber latex. The Vietnam Rubber Association is in the process of executing a plan to build a brand name for Vietnamese natural rubber and rubber products to nurture trust among consumers. - Photo baodautu.vn

In 2014 the VRA created quality standards for Viet Nam Rubber to certify products made by companies committed to meeting certain the standards.

This was the first step in the plan to develop the Viet Nam Rubber brand, according to the VRA.

By 2020 all products made by VRA members would be certified based on the Viet Nam Rubber quality standards.

Viet Nam is the world's third largest rubber producer and rubber accounted for 1.2 per cent of the country's exports last year.

However, according to Tran Thi Thuy Hoa, the chief of the VRA office, the Viet Nam rubber brand is not well established and its rubber quality is inconsistent.

"Only a few large businesses have the capability to build their own brands, while the national rubber brand does not have a strong position among domestic and international customers."

Thus, the creation of a Viet Nam rubber brand is imperative, she added.

The VRA is registering Viet Nam Rubber quality standards in target markets.

Vietnamese rubber matches global standards, Tran Ngoc Thuan, general director of the Viet Nam Rubber Group (VRG).

Viet Nam has some very good products with competitive prices, he said.

But it requires an agency to supervise the quality of natural rubber, he said.

"The Ministry of Agricultural and Rural Development is partnering with VRA and VRG to develop a strategy to control the quality of rubber and the national rubber brand."

The Government has instructed the Ministry of Agriculture and Rural Development to equitise VRG after the latter had, in September, submitted a proposal for it.

After the equitisation in 2016 the Government will retain a 75 per cent stake.

The Government also ordered VRG to equitise its subsidiaries Ba Ria Rubber Limited Company and Tan Bien Rubber Limited Company. The company will retain more than 65 per cent ownership in both.

Last year VRG reported net profit of VND2.3 trillion ($102 million) on revenues of VND17.3 trillion (US$767.3 million).

It has already equitised many of its subsidiaries like the Saigon – Ha Noi Commercial Joint Stock bank and the Sai Gon – Ha Noi securities JSC.

Thu Thiem takes shape in south

The Thu Thiem New Urban Area is pushing forward with its infrastructure development through a string of vital projects.

Nguyen The Minh, deputy head of the Thu Thiem New Urban Area Management Board, told VIR that the four main roads as well as the infrastructure in the residential area in the northern section of Thu Thiem Peninsula were on schedule for completion in 2017.

In 2016, the 9-hectare central square and the 20ha riverside park projects under the build-transfer (BT) model will start construction. The local authorities are also planning to build other bridges to connect Thu Thiem to Ho Chi Minh City’s centre and surrounding areas.

“In addition to Thu Thiem Bridge 1 and the tunnel under the Saigon River, which have connected the area with the centre of Ho Chi Minh City, a second bridge to Thu Thiem connected to the city centre is being constructed. Meanwhile, the Ho Chi Minh City Department of Transport is preparing  to begin work on Thu Thiem Bridge 4 linking districts 7 and 2,” Minh added.

Thu Thiem has made significant progress, with developers clearly committed to implementing their projects according to a high standard.

Dai Quang Minh, a pioneer in developing the Thu Thiem New Urban Area, has invested in upgrading public infrastructure by building four main roads, the central square, and the riverside park. Under a build-transfer contract, the municipal authorities have granted land to the company in exchange for its investment.

In July 2015, Dai Quang Minh launched the first residential project, known as the Sala Urban Area, in Thu Thiem, marking a new milestone in the development. The company has sold 374 out of 414 apartments in the Sarimi project in 2015, while clients have made reservations for 70 per cent of the Sadora Apartment projects and 60 per cent of the Sarica Condominium project.

Meanwhile, a joint venture between Tien Phuoc JSC, Tran Thai Co. Ltd, and Denver Power Ltd (under Gaw Capital Partners) received an investment certificate in June 2015 to develop the Empire City complex, which is worth $1.2 billion.

The consortium is in the early stages of development, and has so far completed its 1/500 scale master plan. The 15ha area will consist of an 86-storey building, a 5-star hotel, a shopping mall, and an office building.

The Thu Thiem New Urban Area also received VND2 trillion ($88 million) from South Korean conglomerate Lotte and its Japanese partners Mitsubishi and Toshiba for The Eco Smart City, which is worth about $2 billion. The development is expected to feature luxury trade centres, hotels, office buildings, and apartments over a 10ha area.

Vingroup was also chosen to develop a sports and entertainment complex in Thu Thiem, while Quoc Loc Phat JSC is planning the Song Viet commercial complex, which has the total investment capital of over $310 million, and is scheduled to begin construction in 2016.

Neil MacGregor, managing director of Savills Vietnam, said that “We have seen a number of foreign investors including Lotte, Gaw Capital Partners, and GS E&C commit to Thu Thiem. We expect that the interest from foreign investors will continue into 2016 and 2017.”

McGregor added that the foreign investor interest in Thu Thiem was being driven by the fact that these investors had precious few viable projects on such a scale elsewhere in the city. For instance, although there are many foreign developers keen to develop projects in District 1, the land source in this area is either limited or comes with a huge price tag for land clearance. They have therefore turned their attention to areas adjacent to the central business district (CBD), or within commutable range – in this case, Thu Thiem.

Minh told VIR that Thu Thiem New Urban Area was being planned as a modern world-class city centre in Ho Chi Minh City. As such, the local government is calling for foreign investors in finance, banking, trade, and services to invest in it. However, many foreign companies that have visited the area are awaiting completion of the infrastructure before they will commit. To help entice those investors still sitting on the fence, the Vietnamese government will introduce preferential policies.

Quang Nam eyes new industrial zone

Construction of a South Korea-invested industrial zone (IZ) was kicked off yesterday in the central Quang Nam Province's Nui Thanh District.

A photo taken the zone's breaking ground ceremony on Tuesday. - Photo Tan Thanh

Spanning in 200ha in Tam Anh Bac Commune, the VND525 billion (US$23 million) IZ is slated for completion in the fourth quarter of 2017. It will serve several industries such as machinery, engineering and automobile manufacturing and assembly.

In his speech at the ground-breaking ceremony, Lee Chung Keun, Chairman and General Director of C&N VINA Co - the project's investor - spoke highly of the facilitation of local authorities and relevant agencies in investment licensing and land clearance.

He vowed that his company would speed up construction so that the project could become operational as scheduled while calling on more Korean enterprises to invest in the zone.

Vice chairman of the provincial People's Committee Huynh Khanh Toan said in the past few years, the provincial leaders have paid due attention to investing in industrial infrastructure as part of the efforts to fine-tune the local investment climate.

Taiwan Excellence marks another successful year in Vietnam

2015 marked the successful sixth year of Taiwan Excellence, the annual series of events by the Taiwanese Bureau of Foreign Trade (BOFT), Ministry of Economic Affairs of Taiwan (MOEA) and implemented by the Taiwan External Trade Development Council (TAITRA), in Vietnam.

Taiwan Excellence was introduced in Vietnam for the first time in 2010 with only 17 brand representatives. After 6 years, the number of brands has increased significantly, reaching 70 brands in various areas from home-living, health care, sport, transportation and information technology. The significant increase reflected the positive attitude of Vietnamese consumers towards high quality made-in-Taiwan products.

Besides the significant increase, Taiwan Excellence 2015 also had several other advanced differences compared to previous years. The campaign was official launched in June with Taiwan Excellence Experiencing Zones at Vincom Mega Mall, Royal City in Hanoi, and attracted thousands of Vietnamese to experience the “Excellent Lifestle” of Taiwan Excellence.

In September this year, a Taiwan Excellence Pop-up Store was set up for the first time in Ho Chi Minh City. As a continuation of the Taiwan Excellence Experiencing Zone event, which had been held in both Hanoi and Ho Chi Minh city, Taiwan Excellence Pop-Up Store was a convenient place for local consumers to buy products from honoured Taiwanese brands.

2015 also marked the first time TAITRA cooperated with Life 1 - a major retail store in Vietnam and the largest e-commerce platform Lazada, to adapt both a physical and a virtual channel to introduce “Taiwan Excellence collections”. Taiwan Excellence also attended two biggest commercial fairs of the year, namely Saigon Autotech Show 2015 and Vietnam Expo 2015, which attracted 140,000 people attending and opened many partnership opportunities for both Vietnamese and Taiwanese organisations.

Taiwan Excellence was also the gold sponsor for the biggest race in Ho Chi Minh City -  HCMC Run 2015 – a playground to promote sports as well as encourage healthy lifestyles among young people. HCMC Run 2015 attracted nearly 6,500 attendances, 22,000 likes and shares on Facebook, which proved the great attention from young generation towards the event. In 2016, Taiwan Excellence will continue to sponsor HCMC Run, which will be held on January 23 and 24.

Taiwan Excellence 2015 has brought valuable chances for Vietnamese consumers to visit and experience the latest products from Taiwan. It was also an opportunity for Taiwanese brands to receive feedback from customers. Singer – actress Minh Hang was selected to be the new celebrity endorser of Taiwan Excellence 2015 in Vietnam. Her dynamism and full energy made her the best representative of Taiwan Excellence.

“The interest of Taiwanese organisations in Vietnam has increased significantly after the Trans-Pacific Partnership and the EU – Vietnam Free Trade Agreement FTA were signed. Till September 2015, Taiwan had invested in 2,476 projects in Vietnam with total capital of US$29.4 billion, ranking fourth out of 105 countries and territories currently having investment projects in Vietnam.

This figure proved the increased attention of Taiwanese organisations towards the Vietnamese market. There is a high expectation from Taiwan Excellence to continue the success of this campaign in many more years, to continuously deliver more excellent quality made-in-Taiwan products to satisfy and enhance the quality of life of many Vietnamese consumers,” said Tang Ming Hui, director of the Taiwan Trade Center, representative office in Ho Chi Minh City.

According to the most recent market research, the brand awareness of Taiwanese ICT, electronics, home and living products in Vietnam reached 80%, which is even higher than that of South Korean products and is close to that of American products.

It means that out of 10 respondents, 8 out of 10 recognized and highly valued the excellent quality and smart design of made-in-Taiwan products. The figure showed that Taiwanese products were earning more trust and satisfaction from Vietnamese consumers.

The symbol of Taiwan Excellence was established in 1992 by the Taiwanese Ministry of Economic Affairs, and subsequently the Taiwan Excellence Selection was launched the following year.

The selection is based on the distinct criteria of research and development, quality, design and marketing. Taiwan Excellence awarded products, using cutting-edge innovation and meeting the highest quality standard, will represent Taiwan internationally to reinforce buyers’ confidence and continue building a favourable impression of Taiwanese products.

This year marked the 23rd selection with 489 winners from 215 companies. Among them, there were many recognised brands in the international market such as Acer, ASUS, HTC, ADATA and BenQ.

ASEAN countries disadvantaged by poor English skills

English is now the global language of business and the official language of the ASEAN Economic Community (AEC)— as the regions’ leaders have opted to heed the advice of leaders from multinational companies.

Multinational companies such as – Tokyo headquartered Rakuten, Lenovo, Audi, Lufthansa, Daimler-Chrysler, Nokia, Renault, Samsung, and Microsoft – to name just a few, have mandated English as their official language.

Adopting a common mode of speech isn’t just a good idea; it’s a must for any company that wants to be a serious competitive contender in the international business arena, these business leaders say.

Hiroshi Mikitani, chairman and CEO of Japan's biggest e-retailer, Rakuten, who is reported by US Forbes magazine as one of the globe’s leading businessmen having a net worth of US$7 billion, is one of them.

As far back as 2010 he announced the company’s goal was to become the number one global computer services company and simultaneously mandated English as the company’s official language.

The dictate affected some 7,100 Japanese employees, he said at the time, declaring the expanded world view the English language offers as essential to the company’s long-term success.

Today, Rakuten is the leading challenger to Amazon.com in both the US and European markets.

Lenovo, headquartered in Brazil, is another one of the growing number of multinationals from the non-Anglophone world that have made English their official language, according to the company’s CEO Yang Yuanqing.

He made the decision to adopt English as the official language of the company in 2005 following the lead of Singapore, a small company with global ambitions, and today virtually all of the company’s business is conducted in English.

Audi may use a German phrase - Vorsprung durch Technik, or progress through engineering – in its advertisements, but it is impossible to progress through its company’s management ranks without good English.

When Christoph Franz became boss of Lufthansa in 2011 he made English its official language even though all but a handful of the airline's 50 most senior managers were German.

There are obvious reasons why multinational companies want a common language business leaders say –  as it makes it easier to recruit top global talent, reach global markets, assemble global production teams and integrate foreign acquisitions.

A worldwide study concluded by Canadian Research firm Ipsos in mid-2015 indicated that 25% of all jobs everywhere require employees to interact with people in other countries, increasing to 50% for many countries in the ASEAN region.

Of these jobs, two-thirds require employees to communicate fluently in English, the study concluded.

One reason English is the dominant language of business and of the Internet is that it is the native language in over more than 60 nations, and increasingly the official secondary language elsewhere.

While companies in native English-speaking countries are at a distinct advantage, so are those in countries where English proficiency is high such as Singapore, Malaysia, Scandinavia, and the Netherlands.

Businesses in other nations such as many in ASEAN where English proficiency is significantly lower (or virtually non-existent) such as Vietnam, Thailand and Cambodia—are conversely disadvantaged, the survey concluded.

Current credit arrangements stifle farmers

As Vietnam joins the Trans-Pacific Partnership (TPP) and other trade pacts, experts call for more effective credit solutions to assist Vietnamese farmers.

During a recent seminar in Ho Chi Minh City, organised by British non-profit organisation Oxfam, experts in the agricultural sector expressed concern for Vietnamese farmers. As the country opens up for the world economy, farmers will become vulnerable to lowered tariffs and a surge of imported agricultural products.

“It is estimated that farmers make up 60% of the Vietnamese population, the majority of whom are employed by small farming households. With scant resources regarding technology, finance, and skills, they are susceptible to falling behind amidst Vietnam’s global integration process. This is a particularly pressing issue, given that the country will soon sign the Trans-Pacific Partnership (TPP) Agreement, which includes developed countries with modern agricultural economies,” said Vu Thi Quynh, representative of Oxfam in Vietnam.

Hoa urged the government to provide prompt assistance to small Vietnamese farming households, especially in terms of credit and capital funds. Without sufficient funding to improve product quality, it would be virtually impossible for domestic farmers to compete with imported goods, Hoa said.

Nguyen Hong Mai, general director of Tam Anh Investment, then noted the two main difficulties that Vietnamese farmers faced when applying for bank loans. First, they often conduct business without written receipts, making it difficult for banks to monitor activities and assess their financial capacity. Second, preferential loans from the government are usually allocated on a regional basis, rather than assessing the funding needs of specific local farmers.

“To solve these problems, I suggest that banks develop a comprehensive list of financial necessity for all agricultural sectors, then set interest rates and loans accordingly. We should also encourage Vietnamese farmers to collect receipts and apply for certifications such as ISO and GAP (Good Agricultural Practice), which will allow them to take up loans with greater ease,” noted Mai.

Dr. Tran Minh Hai, lecturer of Economics at An Giang University, acknowledged that recent regulations had paved the way for unsecured lending to farmers. According to the decree, which took effect in June 2015, farmers can borrow up to VND10 billion (US$443,800) without incurring any collaterals.

“However, in order to implement Decree 55, banks must seize farmers’ documents of house or land ownership, which is a form of collateral in essence. This is an understandable procedure from the banks’ perspective, but one which excludes real progress from the farmers’ perspective, who are already struggling and may turn to loan sharks to avoid collaterals,” Hai said.

Hai then stressed the importance of co-operatives and other local unions that can act as middlemen for farmers when dealing with banks and inspectorates for credit programmes. Hai also added that farmers, via co-operatives, should work with manufacturing firms to develop a sustainable supply chain.

“By utilising a supply chain, it will be much easier for farmers to disclose their business activities to banks. A modern supply chain is also what the Vietnamese agricultural sector needs in order to compete with foreign players, thus allowing farmers to kill two birds with one stone,” Hai suggested.

Vietnam embraces new path of development

A new path of development began when Vietnam achieved a 6.68% GDP growth rate in 2015, signed a number of free trade agreements, and joined the ASEAN Economic Community. New opportunities and challenges await Vietnam in the new year.

In 2015 Vietnam signed free trade agreements with the Republic of Korea and the European Union. Negotiations on the Trans-Pacific Partnership agreement concluded and the ASEAN Economic Community (AEC) was established on December 31.   

The FTAs and the AEC will help Vietnam boost growth, create new jobs, increase incomes, reduce poverty, stimulate exports, attract foreign investment, restructure its economy, and increase its competitiveness in achieving sustainable growth. Vietnam’s economic development policies in 2016 will therefore focus on integration-related issues.

Economist Le Dang Doanh said “In 2016 Vietnam will continue to restructure its economy and fierce competition is expected in the domestic market. I hope that Vietnam will carry out institutional reforms and continue to improve the competitiveness of its products so that they will be able to compete with imported ones.”

Former deputy director of the Central Institute for Economic Management Vo Tri Thanh said government policies and the role of businesses are an important factor in increasing the competitiveness of the economy. Effective reforms will make Vietnam attractive for investments. It will still be difficult for Vietnamese businesses to join chains and networks. But with flexible policies Vietnam will likely achieve more rapid growth.

Vietnam achieved a 6.68% GDP growth rate in 2015, its highest in 8 years and Vietnam is implementing a policy of economic transparency and public information, improving its business environment, and restructuring its economy to maintain a 6.5%-6.7% growth rate over the next 5 years.

Nguyen Dinh Cung, Director of the Central Institute for Economic Management, said “Vietnam’s economy is expected to see slow but certain recovery in 2016. The macro-economy will continue to be stable and the prices of raw materials will remain low. According to the World Bank, Vietnam’s business environment index will increase 10 levels in 2016.”

Restructuring the economy, improving the business environment, and increasing competitiveness are what Vietnam needs to do to follow a new path of development and integration.

BIDV opens rep.office in Russia

The Bank for Investment and Development of Vietnam (BIDV) on December 31 was allowed by the State Bank of Vietnam (SBV) to set up a representative office in Moscow, Russia.

BIDV is the sole Vietnamese bank to have its rep.offfice in Russia.

BIDV Chairman Tran Bac Ha said the rep.office will help spur economic, trade and investment cooperation between Vietnam and Russia. It will collect information, conduct market research, establish cooperative relations and serve as a bridge to connect BIDV and relevant agencies, partners and potential and existed clients in Russia.

In a long-run, BIDV plans to set up a subsidiary bank in Russia at a suitable time, Ha revealed.

Russia is one of BIDV’s key markets. Since 2006, BIDV has cooperated with VTB- one of Russian biggest banks – to establish a Vietnam-Russia Joint Venture Bank (VRB). It has also set up relations with more Russian commercial banks and financial institutes.

Earlier in November 2015, BIDV in coordination with relevant agencies organized a series of business events in Russia, such as a world-wide conference of Vietnamese entrepreneurs, a Vietnam business forum and a high-quality Vietnam goods fair, which attracted hundreds of Vietnamese and Russian businesses to take part in.

On the occasion, BIDV and VTB launched two-way payment channels which was a bottleneck for trade between the two countries over the past year.

Russian businesses pour over US$2 billion into Vietnam

Russian businesses have directly invested in 113 projects in Vietnam with a total registered capital reaching US$2.066 billion.

With these valid projects Russia is ranking 17th among 105 foreign investors in the country, according to the Foreign Investment Agency (FIA).

However, since early this year Russian investment into Vietnam has been modest with only more than US$12 million expanded on 8 projects.

The FIA reported that the biggest was the US$1 billion project to build a bus component manufacturing plant of the Bus Industrial Center Co., Ltd. from Russia which received an investment certificate in 2013.

However, the project has not been implemented. Taking into account all active projects, the real Russian investment value in Vietnam is just over US$1 billion.

The manufacturing and processing industry attracted the lion’s share of Russian investment with 37 projects totally valued at US$1.13 billion, accounting for 32.7% of the number of projects and 57.4% of the total registered capital.

Mining ranked second with US$581.2 million or 29.5% while real estate trading came third with US$72.7 million or 3.7%.

Binh Dinh province topped among 24 provinces and cities having Russian investment, followed by Hanoi, Ba Ria-Vung Tau, Phu Yen and HCM City.

Currently, among Russian projects in Vietnam, Vietsopevtro joint venture is considered a typical example for the successful cooperation between the two countries.