Vietnamese prefer overseas sites for online shopping

Vietnamese online shoppers spend significantly more on overseas purchases than they do domestically as they believe international e-commerce platforms offer better products and service quality, a new report has said.

The report, from the Vietnam E-commerce Association or VECOM, said that many global retailers like Amazon and eBay have made it easier for Vietnamese consumers to buy online.

“Meanwhile, a majority of Vietnamese e-businesses, especially small- and medium-sized companies, have yet to make significant investments in market research catering to consumers,” said the report.

Local online shopping sites are less competitive in terms of product diversity and quality, return policy, and order placement costs, the report highlighted.

“I shop on both eBay and Amazon,” Quoc Hung, a VnExpress reader said in a comment. “I can just send a product back if I don’t like it.”

Most Vietnamese online businesses don’t offer free delivery and free return, another reader pointed out.

Chinese online retail giant Alibaba is also attracting more Vietnamese customers. Internet company OSB, Alibaba’s authorized agent in Vietnam, said the company's customer base in Vietnam has expanded to 500,000 after sharp increases over the past three years.

The online shopping trend is growing rapidly in Vietnam, where 30% of the population will be buying goods and services over the internet by 2020, according to the Vietnam E-Commerce and Information Technology Agency.

The agency, run by the Ministry of Industry and Trade, said revenue from online retail is expected to account for 5% of the country’s retail market in 2020, up from only 2.8% in 2015.

Vietnam's e-commerce market, which has one of the world's fastest growth rates, jumped 37% in 2015 to around US$4 billion, based on government statistics.

The growth rate is about 2.5 times faster than that in Japan, based on some estimates by industry experts.

Dung Quat, Chu Lai EZs cooperate for further growth

The Dung Quat Economic Zone in Quang Ngai and the Chu Lai Open Economic Zone in Quang Nam have attracted a large number of Vietnamese and foreign investors.

10 years ago, the two provinces signed a cooperation agreement to support the growth of the two economic zones.

The 10km coastal route connecting the two Economic Zones has facilitated transportation between them while National Highway 1A, the North-South railway, and the Da Nang-Quang Ngai Expressway connect the region with other provinces and cities in Vietnam. 

Quang Nam and Quang Ngai province have focused their investment in seaports and have agreed that Quang Nam’s ports will receive small cargo ships while big container ships will dock at the deep sea ports of Quang Ngai.

The 3,400 ha Chu Lai airport in Quang Nam province is being used by Vietnam Airlines, Vietjet Air and Jetstar Pacific offering 34 flights per week to and Hanoi and Ho Chi Minh city. 

Do Xuan Dien, Director of the Chu Lai Open Economic Zone’s Management Board, says that the two provinces agreed the sectors of investment to avoid overlap.

He said, “The sectors that have proved to be effective in Quang Ngai are not invested in Chu Lai and vice versa. This keeps investment in Quang Nam from overlapping in Quang Ngai or Da Nang.”

The Chu Lai Open Economic Zone and Dung Quat Economic Zone have been chosen as the location for Vietnam’s first oil refinery center. Mr. Le Viet Chu, Secretary of the Quang Ngai Provincial Party Committee, says close cooperation will boost local economic restructuring.

He said, “The Prime Minister has asked the two provinces to strengthen cooperation  in extracting gas from the Blue Whale gas field which spans Quang Nam and Quang Ngai province.”

The number of investors in the two economic zones has increased in recent years thanks to incentives in land rent and human resource training.

In innovation, Vietnam said to be losing competitive edge

The competitive edge of the Vietnam domestic economy has eroded sharply over the last year, since the ASEAN Economic Community (AEC) came into force, according to the Vietnam National Textile and Garment Group.

Le Tien Truong, general director of the Group cited statistics showing that the rate of growth of domestic sector exports from Vietnam to other AEC member economies actually declined significantly in 2016. 

Truong said that official statistics indicated that for the period 2006-2010 the country’s ASEAN exports averaged 12.5% annually, slowed slightly to 12% for the five years 20122-1015 but in 2016 following the formation of the AEC in late 2015 tumbled to a 4.8% growth rate.

Products made of leather such as footwear and handbags were particularly hard hit having risen at a snail’s pace of only 1.7% in 2016.

Some of the problems were clearly attributable to bad weather and agriculture, said Truong, but the fundamental deficiency actually went much deeper and was founded in the lack of creativity and innovativeness of domestic sector businesses.

Truong noted that local businesses have found themselves in a perpetual race to the bottom ever since the AEC came into effect. They have constantly been trying to lower their price and their quality standards to, in their minds, better compete with their counterparts in countries like Thailand, Indonesia and Myanmar.

They have chosen this dead end path in lieu of stepping up, facing the challenges head on and learning how to sharpen their competitive and innovative skills. He added that the business community needs to invest more in technology, scientific research and education, which are all drivers of innovation and competitiveness.

The government has often said that in the future, national prosperity will depend on Vietnam becoming an ‘innovation economy.’ But as of yet there has been no coordinated innovation agenda put in operation, Truong averred.

Minister Tran Tuan Anh, of the Ministry of Industry and Trade is in agreement with Truong, noting he has now assembled a task force to specifically target the development of new products and coordinate their introduction into ASEAN.

We are following the lead of countries such as Singapore, Taiwan and Finland that successfully pursued policies explicitly designed to stimulate innovation and nurture a broader ‘ecology of innovation.’

Minister Anh called the task force’s mission ‘a wake-up call.’

Over all, the most innovatively competitive nation in history was Singapore, which embarked on a national innovation strategy many years ago, investing heavily and recruiting leading scientists and technologists from around the globe.

One of our overarching goals is to have government programs in place to attract investment and talent and improve work force skills of local people.

The task force will also research and suggest specific recommendations including incentives for domestic companies to innovate at home, ranging from research tax incentives to work force development tax credits.

The Ministry will also conduct research to identify market demands in the AEC, and analyse competitive ability with products from China and other member economies in order to identify key export items targeted to specific countries.

Agricultural items, consumer goods, timber products, electronics and components, and rubber are considered the goods with the greatest potential for export within the AEC, said Mr Tuan Anh.

Most importantly, the Ministry has set its sights on negotiating with other AEC economies to enhance cooperation mechanisms and complete the free trade region’s legal framework. 

Fujiwara considers Vietnam solar panel assembly joint venture

Japan-based Fujiwara is mulling a manufacturing joint venture in the province of Binh Dinh that could produce the solar panels needed to meet Prime Minister Nguyen Xuan Phuc’s energy targets.

Fujiwara’s strategy for Vietnam includes solar panel manufacturing, said President Osamu Kimura of Fujiwara in an interview in Hanoi.

To build a large-scale manufacturing plant to obtain efficiency and economics of scale equal to that of others in the industry will require much government support, said Kimura, so there is much to evaluate.

Vietnam could also play a role in the manufacture of power-storage solutions, he noted, but no final decision has been made.

Fujiwara is one of the premiere clean energy manufacturers in Japan having been an industry leader for more than six decades.

Presently, a contingent of personnel from the Japanese company, are in the province of Binh Dinh gathering more information needed to fully evaluate the venture.

Low tax on Uber, Grab 'unfair' for traditional cabs: taxi chairman

Taxi-hailing service providers Uber and Grab enjoy exceptionally low taxes compared to traditional taxi companies in Vietnam, the chairman of Ho Chi Minh City Taxi Association has said.

Conventional taxi companies are subject to a 10% VAT and 20% corporate income tax on revenue while companies like US-based Uber are able to bag as much as 20% of the amount passengers pay for a ride while only paying a three percent VAT, Ta Long Hy said at a conference on February 24.

That translates into a tax of 0.6% of Uber’s total revenue, Hy told the event on fair competition in the taxi industry.

The remaining 80% of total revenue lands in the pockets of its partnered drivers, each of whom is also subject to a VAT of only 3%, equivalent to 2.4% of the service’s total revenue.

In total, Uber and its drivers pay a 3% of tax on their revenue, approximately ten times lower than the tax imposed on traditional taxi companies.

“In 2016, taxi companies in Ho Chi Minh City contributed over VND1 trillion [US$44.64 million] in taxes and other fees to the city’s budget,” Hy said.

“How much tax does the city take in from Uber, considering the fact that there are many more Uber and Grab vehicles than traditional taxis?”

The number of taxis in Ho Chi Minh City has been maintained at 11,000 since 2010, Hy said, while authorities licensed over 20,000 cars to offer transportation service on contract during the same period.

“The way [Uber and Grab] are taxed is not only unfair for traditional taxi companies, but also causes huge losses in tax for the city,” Hy concluded, proposing that ride-hailing service providers be taxed 5% instead of the current rate.

In response, Nguyen Van Thanh, chairman of Vietnam Automobile Transportation Association, said the association would be working with the Department of Tax Policy under the Ministry of Finance to discuss new taxation policies for Uber and Grab.

In the meantime, he advised taxi businesses to apply technology in their operation to reduce costs and improve service quality in order to keep up with their competitors.

Stock market, a good channel for capital mobilization

Ho Chi Minh City contributes 90% of Vietnam’s stock market value. Last year the city recorded capitalization growth of 30% and market liquidation of 24%. The authorities and businesses expect that the stock market will do better this year.

At the Ho Chi Minh City Stock Exchange (HOSE)’s first trading session of the New Year, Secretary of the municipal Party Committee Dinh La Thang  said with last year’s results and acceleration of state-owned enterprise equitization, the city’s stock market will have momentum to grow this year.

Mr Thang pledged “to help businesses become stronger and more efficient. We’ll help businesses and the Stock Exchange grow because their success is Ho Chi Minh City’s success.”

Economists say the stock market continues to be an effective channel for mobilizing resources for the economy. Ministries and sectors have stepped up national economic reform and state-owned enterprises equitization. 

Last year large-cap stocks pushed the market up, with seven of the 10 highest-valued stocks gaining, including Vinamilk, BIDV, Vietcombank, Vietinbank, and insurer Bao Viet Holdings.

In January, the Vn-Index surpassed 697 points, up 5% since late 2016. It was VN-Index’s highest mark in 9 years. 

Economist Tran Hoang Ngan said, “This year, Vietnam’s stock market will have more commodities. Market capitalization will amount to about 50% or 60% of the national gross domestic product.”

Vice General Director of the Ho Chi Minh City Stock Exchange Le Hai Tra recommends raising Vietnam’s stock market ranking to attract foreign investment. 

He said, “We have to increase the number of big companies on the bourse and the rank of Vietnam’s stock market. It will help draw foreign investment to Vietnam.”

According to Vu Bang, Chairman of the State Securities Commission (SSC), there will be more opportunities for HOSE to grow stronger in 2017 as the government continues to remove difficulties for enterprises.

“We’ll continue to reform the structure of Vietnam’s stock market and bourses in HN and Ho Chi Minh City to make them more dynamic,” said Bang.

Equitization of state-owned enterprises will increase commodities for the stock market and create a new investment wave for HOSE in particular. In addition, flexible monetary policies in 2017 and steady interest rates will create more growth opportunities for the stock market.

Vietnam's foreign visitors hit all-time high

More Chinese tourists flocked to Vietnam in February as flights to Ho Chi Minh City and central Vietnam grew.

Tourists from around the world continued to flood into Vietnam in February, when the country saw a record 1.2 million foreign arrivals.

The figure represents a 42.2% leap from last February and a 20% increase from the previous month, Saigon Times Online reported, citing data from the Department of Tourism.

During the first two months of 2017, the country received 2.2 million foreign visitors, up 33% from the same period last year.

Many local travel agencies, such as Saigontourist, ICS Travel Group and Lien Bang Travelink, reported excellent outbound tourism figures in the month of February as well.

Some companies saw guest arrivals surge by around 40% on-year, while some big hotels in Ho Chi Minh City reported occupancies of over 80% during the second month of the year.

Saigontourist reported impressive foreign cruise ship arrivals: to wit, 46,900 foreign tourists and 28,600 crew members during January-February.

China remained Vietnam's top market aided by a rising number of flights; Ho Chi Minh City alone sees 10 Chinese flights per day — a figure that's expected to climb.

Tu Quy Thanh, director of Lien Bang Travelink, said Chinese visitors surged 40% in February from the same month last year. 

“We are having headaches in finding accommodations for our guests because the city doesn't have enough 3-4 star hotels to meet rising demand,” Thanh said, adding that his company expects its Chinese customer base to grow 60% (on-year) in March.

Chinese tourists spend about $100/day on package tours to Ho Chi Minh City, slightly lower than the rate for a visitor from Europe, according to Lien Bang Travelink’s Thanh.

Citizens from 40 countries, including China, Japan, South Korea, the U.S., the U.K., Germany and Sweden, were eligible to apply for 30-day single-entry electronic visas to Vietnam starting on February 1.

Apart from visa exemptions for tourists from the Association of South East Asian Nations (ASEAN), Vietnam offers 15-day visa exemptions for visitors from the U.K., France, Germany, Spain, Italy, Russia, Japan, South Korea, Denmark, Norway, Finland, Sweden and Belarus.

Vietnamese tourism authorities expect to receive 11.5 million foreign arrivals this year, up 15% from 2016.

Innovation centres can breed startups: Deputy PM     

Businesses should be innovative and creative in using Information Technology (IT) advances to grow, Deputy Prime Minister Vu Duc Dam said on Sunday.

Inaugurating the CMC Innovation Centre in Ha Noi, he called for such centres to be established in many localities, especially in big universities.

The country has very few innovation centres, while other countries have hundreds, he said, adding “If we increase the number of innovation centres, we will have more start-ups.”

The deputy PM said he expected the number of both local and foreign venture funds in the country to increase.

He acknowledged that while many Vietnamese youth have tasted success with unique start-up ideas, the Government, enterprises and investment funds should contribute more to building a start-up ecosystem.

The support can include businesses registration, intellectual property rights and preferential taxes, he said

Stressing the importance of an ecosystem, he said: “Each group and business has its own strengths. But they will have new opportunities if they connect and share with each other,” he said.

The success of Nguyen Ha Dong with his famous “Flappy Bird” game and other similar stories should be shared to encourage and support others, Dam said.

The deputy PM also spoke of the need for policies to encourage investment in IT infrastructure and facilitate ICT application in some key economic sectors.

Improving the nation’s business environment and competitiveness are factors that will affect the development of both big firms and start-ups, he said.

Nguyen Trung Chinh, CMC Group chairman and general director, said there was no way for businesses to develop other than by promoting innovation.

He said the new centre will play an important role in facilitating the establishment of innovative firms. The CMC Innovation Fund as well as other venture funds will invest in good ideas, aid in technology transfer and provide commercial funding for feasible projects, he said.

The VND50 billion (US$2.2 million) centre will prioritise projects relating to the Internet of Things (IoT), Cloud, security, Big Data, artificial intelligence (AI) and Robotics, he added.

Covering an area of 600sq.m, the centre is expected to be a location for sharing and exchanging technologies, new trends, a technology incubator and a supporter of innovative projects of the CMC Group and the start-up community.

Yesterday’s inauguration was also marked by the signing of agreement between CMC Group and the Department of Technology Application under the Ministry of Science and Technology (MoST) to build a technology map and co-operate in other relevant activities.  

HDBank further strengthens ties with Japanese businesses     

The Housing Development Commercial Joint Stock Bank (HDBank) last Tuesday met with a Japanese business delegation led by the deputy mayor of Sakai city.

The delegation included executives from 12 companies that manufacture machinery and equipment.

At the meeting, the two sides spoke about each other’s strengths and discussed possibilities and opportunities for boosting mutual co-operation towards building a comprehensive and long-term co-operation between HDBank and Sakai city.

Through the event, HDBank expected to be a bridge connecting Japanese firms from Sakai and Vietnamese enterprises.

In recent years economic co-operation and cultural exchanges between Việt Nam and Japan have developed rapidly.

In 2014 HDBank and the Japan-based Hyakugo Bank Ltd established a Japan desk to support Japanese companies in Viet Nam.

In May last year HDBank signed an agreement with Senshu Ikeda and Aichi banks to enhance the delivery of services to Japanese firms.

The Vietnamese lender, together with Hyakugo Bank and Banrai Trading Company, organised a business-matching seminar for the Vietnamese and Japanese food industries.   

First Japanese apartment in Phu My Hung successfully launched     

Giant housing developer Phu My Hung Development Corporation on Saturday successfully organised the first sale of apartments at its new complex, Phu My Hung Midtown.

The corporation said it was its first sale in the Year of the Rooster, 2017, involved The Grande Building, the first tower in Phu My Hung Midtown. Within 3 hours, 98 per cent of the condos were sold

Despite the traditional belief among Vietnamese that the first month of the lunar year is a time to relax and enjoy life and not buy something big or valuable, many people came to the event.

At 7 o’clock, the lobby of the Adora Convention Centre, where the sale took place, was filled with customers.

Phu My Hung said more than 800 customers had been invited.

They were chosen from 1,539 who had registered to buy condos in Phu My Hung Midtown.

Then, as stipulated by the law, the developer drew lots since the number of prospective customers was much higher than the number of condos to be sold. This method had been successfully used before by Phu My Hung and received lots of good feedback from customers.

Each guest has to put in their invitation in a box at the entrance. Of the guests in then invited to the stage to carry out the lucky draw. The names that are drawn from the box are immediately announced.

Each customer has the right to buy one condo.

The guests were very happy with the draw of lots.

A woman from District 7 said: “Though there isn’t a great chance to buy a condo because only 1/4 are to be chosen, I am still very happy. I feel this is very good method and offers an equal chance to everyone.”

After the lucky customers were announced, they were asked to make their choice of condos.

The units sold ranged from 69sq.m to 249 sq.m, 62 per cent of them with two bedrooms and the rest with three.

Many foreigners had come to the event. According to Phu My Hung’s estimation, 30 per cent of them were foreigners, including many customers from Japan, China, South Korea, and Dubai… Many won the right to buy.

In three hours 98 per cent of the condos were sold, a good sign for a new year.

Kazuya Sawamoto, general manager of Daiwa House Industry Company Ltd, said customers buying housing often look for facilities like schools, hospitals and services, and all are available there.

He is right since Phu My Hung Midtown project is developed in the Southside District of Phu My Hung City Centre, very near Viet – France Hospital, Tâm Đức Hospital, Canada International School and several other international schools for children from various countries.

Notably, this is the first project that Phu My Hung Development Corporation has developed jointly with others, in this case three Japanese companies.

For the first time in Viet Nam, the concept of “self-contained” housing has been developed, enabling residents to enjoy all facilities within their building (The Grande), within the project (Phu My Hung Midtown) and within Phu My Hung City Centre.

Residents can enjoy everything needed for daily life or even a holiday.

Customers like the project not only for its facilities and services but also the landscape.

A sakura park where developers will plant sakura trees on a road of 600m length will be developed next to the project. Together with the river which runs along the project, the park will create an amazing landscape.

The facilities and landscapes will be upgraded further when Phu My Hung Development Corporation builds more schools and expands Crescent Mall. Moreover, the company is planning to improve the green cover in the Southside District where Phu My Hung Midtown is being developed.

Units in the Grande building will be handed over to buyers in the second quarter of 2019. The project is guaranteed by South Saigon Vietcombank and Vietnam International Bank (VIB). 

Property market heats up     

Roughly 86,000 unfinished apartments were eligible for sale in Ha Noi and HCM City as of February.

Statistics from the Ha Noi Department of Construction showed that there were 113 projects eligible for transactions with a total of more than 54,000 apartment units.

In January alone, more than 2,500 apartments were added to the capital’s property market.

In the southern city, 79 housing projects were eligible for transactions with more than 32,400 units in total. 

Property stockpile 77% below peak     

Property inventories totaled more than VND29.5 trillion (US$1.2 billion) as of February 20, dropping by nearly 77 per cent from its peak in the first quarter of 2013, statistics of the Ministry of Construction showed.

Nearly half the inventory value were in Ha Noi and HCM City.

Inventories were mainly in suburb areas with inadequate infrastructure

Successful transactions dropped slightly in January, the month of Tet, the national biggest holiday.

There were 1,300 successful transactions in Ha Noi, a decrease of 7.1 per cent over the previous month and 1,400 in HCM City, declining 3.4 per cent.

Purchases were mainly on mid- and high– end apartments.

Duong Thuy Dung from CBRE Viet Nam said that the market was shifting its focus toward affordable homes this year. 

Social housing crucial: City leaders     

HCM City has asked relevant organisations to accelerate social housing development following Prime Minister Nguyen Xuan Phuc’s directive to build homes for low-income earners.

The task has become urgent as the southern city faces a shortage of affordable homes.

Demand for affordable homes in the southern city might amount up to one million units within the next decade, according to Le Hoang Chau, president of HCM City Real Estate Association.

Chau estimated the city’s population had reached nearly 13 million while the official figure was just 8.3 million. “I think demand for affordable homes in HCM City is being underestimated.”

More than 20 per cent of the city’s population are immigrants, plus more than 400,000 students and 50,000 newly-married couples every year, according to Chau.

Chau cited statistics of the HCM City Institute for Development Studies that 500,000 families in the city did not own houses and 81,000 would be in need of social housing units from 2016-20.

The market was short of apartments priced below VND1 billion (US$44,500) per unit, Chau said.

Under the municipal Department of Construction’s social housing development plan, by 2020, the city plans to develop 39 projects with a total of 45,000 apartments, two thirds of which would be completed and put into operation within the next four years.

In 2017, four social housing projects with a total 1,654 apartments are expected to be completed.

According to Chau, HCM City could build apartments with area of 30 sq.m each at selling prices of VND100 million ($4,500) per unit like those in southern Binh Duong Province.

Low-cost apartments should be developed in areas with traffic and social infrastructure and near to industrial zones.

The association recommended that those projects be built in Linh Trung Processing Zones, Quang Trung Software Park, and HCM City National University, with about 10,000 apartments in total.

Previously, HCM City asked the municipal Department of Construction to study the feasibility of VND100 million apartments in the city.

These apartments were developed successfully by Binh Duong Province where there was high demand for affordable homes for workers.

Tran Trong Tuan, Deputy Director of HCM City’s construction department said that the city could build VND100 million apartments if there was available land and infrastructure.

“However, this is not the best solution for the city,” Tuan said, adding that this apartment model was only suitable for industrial zones.

In addition, these apartments could affect the city’s urban development, Tuan said. “There should be various types of affordable homes to match demand,” he said, adding that the prices could vary from VND500 million, VND600 million, VND800 million and to more than VND1 billion. “Not every low-income earner wants a VND100 million apartment,” he said.

At the end of January, PM Phuc issued a directive to boost social housing development to fulfill a goal set in the National Housing Development Strategy to 2020 with a vision to 2030.

The national housing development strategy aims to build 250,000 apartments for poor, low-income earners. However, by the end of 2016, 179 social housing projects were completed, only 28 per cent of the goal.

In the directive, Phuc asked agencies to improve housing quality while lowering prices and encouraging investment in social housing development.

Nguyen Van Lam, president of Ha Noi Urban Planning Association, said that the Government should bear land-related costs for social housing developers to lower home prices.

According to the HCM City Real Estate Association, attention should be given to the prices of apartments in the city amid an imbalance in supply and demand to prevent intermediaries from pushing up prices unreasonably.

Markets face further correction     

The domestic stock market will likely experience another correction in early sessions this week, as selling pressure continues to build around the short-term peak on the main exchanges, experts say.

The benchmark VN-Index on the HCM Stock Exchange decreased in the last two weekend sessions, but still gained 1 per cent for the week, closing Friday at 714.5 points.

The southern market index increased 7.5 per cent this year.

Liquidity remained high last week, averaging some 221 million shares worth VND3.83 trillion (US$167 million) per session, an increase of 26.8 per cent in volume and 15 per cent in value, compared to the previous week’s figures.

These numbers were 100 and 50 per cent higher, compared to January’s daily trading volume and value, respectively.

On the smaller exchange in Ha Noi, the HNX-Index increased 0.5 per cent for the week, ending Friday at 86.3 points. The northern market index gained 7.7 per cent this year.

Liquidity was positive in the northern market, with over 53 million shares worth VND484 billion traded during each session.

“Investors should be watchful of short-term market trends, as the VN-Index has advanced for nine consecutive weeks and many stocks have gained substantially, which intensified selling pressure on the market,” BIDV Securities Co’s weekly review said.

The report noted that the VN-Index moved some 715 points in the last three sessions, with over 200 million shares traded, which is signaling a possible reversal in the short term.

“The market needs new impetus to break the level points, whereas liquidity is continuously increasing and has triggered a risk of downward possibilities,” the report said.

Apart from blue chips, property and agricultural stocks were the biggest gainers.

Van Phat Hung Corp (VPH), FLC Group (FLC), Thu Duc Housing Development JSC (TDH), Hoa Binh Construction and Real Estate Corp (HBC) were among the top 10 largest runners on the HCM Stock Exchange, with total gains of between 22 and 34 per cent for the week.

These were the companies having posted impressive business results for 2016.

Other companies, such as Novaland Investment (NVL), Hoang Quan Consulting-Trading-Service Real Estate (HQC), Tan Tao Investment Industry Corp (ITA) and Kinh Bac City Development Share Holding Corp (KBC), also performed well on positive outook for the real estate market this year.

An Giang Fisheries Import Export JSC (AGF) recorded over 17.4 per cent last week.

Agribusiness Hoang Anh Gia Lai Co (HAG) dropped nearly 7 per cent in Friday’s trade, but still increased 4.7 per cent for the week and 41.7 per cent this year.

According to analysts at Vietnam Investment Securities, the VN-Index will likely decline in the early session today to test the 715-point level, and can bounce back towards the end of the session.

“Cash inflows remain very strong... and we believe the upturn will come back in later sessions of the week,” they wrote in a market report.

Foreign investors were net buyers for a second week, lifting their total net buy values to VND631 billion on the two exchanges. Their buys focused on large-cap stocks, such as dairy giant Vinamilk (VNM), real estate developer VinGroup (VIC), Vietcombank (VCB), Eximbank (EIB) and brewery Sabeco (SAB).

AIA delivers another excellent set of results

The Board of Directors of AIA Group Limited (AIA) today announced that AIA has delivered excellent results for the year ended November 30, 2016.

Highlights are that the value of new business (VONB) increased 28 per cent to a new record of $2.75 billion and 31 per cent increase in annualised new premiums (ANP) to $5.123 billion. The firm’s IFRS operating profit after tax (OPAT) rose 15 per cent to $3.981 billion.

“AIA has delivered an excellent set of results in 2016. We have achieved record new business profits, significant earnings growth, strong free surplus generation and a step up in shareholder dividends. Today’s headline figures, with VONB up by 28 per cent, and our consistent track record of year-on-year profitable growth are the direct result of the strong fundamental growth drivers in the Asia-Pacific region, our highly-diversified and resilient business model and our commitment to building a high-quality, sustainable business for the long term,” Mark Tucker, AIA’s group chief executive and president, said.

AIA Board of Directors has recommended a further step up of 25 per cent in the 2016 final dividend from higher base in 2015 to 63.75 Hong Kong cents per share. This dividend uplift reflects the firm excellent financial performance and its confidence in the future outlook for AIA.

“We have made an excellent start to 2017 with strong value of new business growth in the first two months of our financial year. We have clear strategic priorities in place and are committed to building on our strong competitive advantages by helping our customers meet their long-term financial needs through our products and services. This provides us with a strong foundation to deliver profitable growth and long-term value for our shareholders, as we help our customers live longer, healthier, better lives and plan for a brighter future,” Tucker said.

Established in Vietnam in 2000, AIA has been protecting the financial health and welfare of Vietnamese people. Today, 17 years after its inception, AIA Vietnam has grown to be a trusted brand in Vietnam. AIA Vietnam serves the holders of over 660.000 policies across the country. Until the end of December 2016, AIA has paid out a total of over VND2.548 trillion for insurance benefits with up to more 340,000 cases.

“AIA Vietnam is proud to be part of the group’s excellent set of financial results in 2016, with Vietnam being a key market in the region. The strong business performance is attributed to the increased quality of agency force through our Premier Agency strategy, our expansion of innovative distribution models across Vietnam and our partnership with banks. Our success is also a result of our leading the market with innovative customer services centres such as nest by AIA, AIA Exchange and AIA NEXT,” said Wayne Besant, AIA Vietnam’s CEO.

Most notably, 2016 marked the launch of AIA Vitality in Vietnam, which is the first of its kind app-driven wellness programme that motivates our customers to live healthier lives. 

“We are excited about the opportunities ahead of us and will keep striving to make a positive difference to the lives of Vietnamese people," said Besant.

Temasek sees no way out from falling debtor

Temasek sees no way out of falling debtor Hoang Anh Gia Lai (HoSE: HAG), except to exchange some of its HAG bonds into stocks of HAG subsidiary HAGL Agrico (HoSE: HNG) at a price higher than its current market price.

On February 20, the board of directors of Hoang Anh Gia Lai (HoSE: HAG) approved the plan to swap VND200 billion ($8.77 million) worth of HAG exchangeable bonds for HNG stocks.

The swap is expected to be finished in March 2017. With the converting price of VND10,000 (44 US cent), higher than the VND8,600 (38 US cent) that HNG ended at on February 24. Temasek will then hold 20 million HNG shares, equal to 2.6 per cent of its current share volume in circulation.

The move pretty much takes the company out of the frying pan and into the fire, as both HAG and HNG are making huge losses. Moreover, there is no information as to how Temasek and HAG are going to do away with the remaining HAG bonds in Temasek’s holding. 

According to the 2016 annual report released recently by the company, HAG had a 2016 revenue of VND6.46 trillion ($283 million), up 3.3 per cent on–year. However, the company reported VND1.415 trillion ($62 million) in net after-tax losses, compared to last year’s profit of VND602.36 billion ($26.4 million).

Meanwhile, HNG reported a net loss of VND989 billion ($43.35 million), compared to last year’s net profit of VND744 billion ($32.6 million).

The VND200 billion ($8.77 million) exchangeable bonds are part of the VND1.13 trillion ($49.5 million) bond package issued on July 15, 2011 to Northbrooks Investment (Mauritius) Pte., Ltd., a subsidiary of the Singaporean government’s investment company Temasek Holdings. As agreed, the buyer can exchange some or all of these bonds to HNG stocks before the day of maturity, which is July 14, 2017.

After the swap, besides the remaining exchangeable bond volume, Temasek would still be holding VND1.1 trillion ($48.21 million) in convertible bonds that can be converted into HAG stocks. These bonds were issued on August 31, 2010 and will mature on August 31, 2018. These bonds are convertible at a price between VND5,200 (23 US cent) and VND19,645 (86 US cent) a share, as negotiated. The current price of HAG shares was VND7,580 (34 US cent) at the end of the trading session on February 24.

HAG is in the process of divesting its hydropower projects in Laos and its whole sugar business to settle some of its debts. Talking to newswire VnExpress, Vo Truong Son, CEO of HAG, said the sales are expected to be completed in the first quarter of this year.

“The sale of these operations aims to facilitate restructuring the company and decreasing the debts related to our hydropower and sugar business lines. After the sales are completed in the first quarter of this year, the debt of the company is going to decrease significantly,” he said.

According to the annual report, as of the end of 2016, HAG had received VND1.94 trillion ($85 million) as an advance payment from purchasers of its hydropower projects, which means that the company received VND500 billion ($22 million) only in the fourth quarter.

Deputy PM: Vietnam prioritizes businesses ready to connect with local partners

At a function for the 2017 Spring Forum held by the Asia Business Council in Ho Chi Minh City on February 23, Deputy Prime Minister Vuong Dinh Hue said that Vietnam prioritizes foreign businesses ready to connect with Vietnamese partners and operate in fields suitable with the country’s economic restructuring.

Mr. Hue, who is also a Politburo member, said that Vietnam welcomes all foreign investors, especially those with high technology and good management skills.

He noted that Vietnam recorded solid economic growth last year, with exports increasing by 9 per cent, while foreign direct investment increased and more than 110,000 new enterprises were established.

He confirmed Vietnam’s consistent policy of actively engaging in the global economy and being a reliable partner of all countries and investors.

Vietnam is working to increase its economic competitiveness and develop more effective, productive, and innovative economic models, he said.

It has transformed its growth model from relying on natural resources, labor, and investment, to creation, productivity, quality and efficiency.

He stressed that the new model aims to no longer sacrifice the environment and social equality for growth targets.

Chairwoman of the Asia Business Council, Ms. Lubna Olayan, said the Council is impressed with Vietnam’s growth over the past five years amid the global economic travails.

She highlighted the country’s determination to promote sustainable economic growth to become a young, dynamic economy with abundant and highly-skilled human resources.

The 2017 Spring Forum took place on February 24-25, focusing on sustainability and creation as investments for the next 50 years.

HBC & Kajima Corporation strategic partners

The Hoa Binh Construction and Real Estate Corporation (HBC) became a strategic partner of Japan’s Kajima Corporation on February 24, with the aim of expanding to foreign markets.

The two will bring new applications in engineering and technology to projects in Vietnam, providing more products and services of international quality to Vietnam’s construction market.

They believe now is right time to bring more added value to key projects, including those in resorts, serviced apartments, hotels and houses that Kajima is planning to develop in Vietnam and in Southeast Asia.

HBC also won the Design & Build (D&B) bid for the Dam Vac Golf and Time Garden Vinh Yen project in northern Vinh Phuc province, invested by the Urban Infrastructure Development Investment Corporation (UDIC).

The total value of the contract is VND2 trillion ($88 million). The project covers 27 ha with 558 villas and three apartments buildings, including a trade center and an entertainment area.

This was the second project where HBC has won a construction bid as a constructor this year. The first was a luxury apartment project in Ho Chi Minh City’s District 9, invested by the Khang Dien House Trading and Investment JSC, which was worth VND1 trillion ($44 million).

HBC has also won construction bids at the Sunhome Phu Quoc project and the Hon Thom Cable Car & Entertainment Complex invested by the Sun Group. The value of the contracts was VND171 billion ($7.5 million).

Founded in 1987, HBC has 6,000 employees and has contributed to completing 80 high-rise projects and is currently carrying out approximately 50 projects around the country.

It recently won the tender for construction and equipment installation at the International Terminal 2 at Tan Son Nhat International Airport in Ho Chi Minh City and the tender for the construction of the entire structure, architecture, and M&E packages for the Office Building Project - Saigon South Office 1 in District 1.

TH Group kicks off construction of new major hi-tech agricultural project

Locally-owned TH Group, famous for its TH true MILK brand, has officially added to its hi-tech agricultural investment portfolio by a new US$136.4 million project in the northern province of Thai Binh.

With its construction commenced on February 24, the project, based in the province’s Vu Thu district, will be focused on producing organic fruits and vegetables, and high-quality rice. It will covers a total area of 3,000 hectares of land, of which about 2,000ha will be for producing rice and rice oil.

Being the first hi-tech agricultural project in Thai Binh, this integrated project will be built under the financial consultancy of BAC A BANK. It will cover all stages of production, from incubation, cultivation, extraction, and harvesting to processing, packing and distribution of products. All products are made under the Global GAP and Organic standards.

The standards include five “no”, including “no chemical-based fertilizer”, “no chemical-based pesticide”, “no growth stimulation”, “no preservative”, and “no variety with genetically modified organism.”

“We highly appreciate TH Group’s great contributions to Vietnam’s construction of hi-tech agricultural sector. This project is expected to help Thai Binh province to develop its hi-tech agricultural sector and create many jobs for locals,” said Deputy Prime Minister Trinh Dinh Dung who attending the ground-breaking ceremony.

At present, while constructing a US$2.7 billion hi-tech concentrated dairy and fresh milk production project in Russia, TH Group is considering the construction of a major similar project in the Republic of Bashkortostan, a federal subject of Russia.

Since 2009, TH Group has also been operating a US$1.2 billion, 37,000ha hi-tech concentrated dairy and fresh milk production project in the central province of Nghe An’s Nghia Dan district.

In addition to agricultural projects, TH has also been focusing on developing educational and training projects, which Dung said that “We also highly appreciate TH Group’s investment in the education and training sector, which is now in critical need of reform under international standards.”

Two weeks ago, the group officially inaugurated its TH school system in Hanoi, marking its new engagement in the Vietnamese education and training sector. TH said this system will lay firm groundwork for it to develop universities and colleges throughout Vietnam in the near future.

The first TH-branded school, based on Chua Boc street of Hanoi, covering nearly 20,000 square metres, includes a well-equipped system of playground, swimming pool, labs, and gyms.

The school includes 17 classrooms for 340 pre-school pupils, 25 classrooms for 625 primary-school pupils, 24 classrooms for 600 secondary-school pupils, and 21 classrooms for 525 high-school pupils.

The school uses Cambridge-standard English-language curricula which have already been successfully applied worldwide for multi-millions of pupils.

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