Ho Chi Minh City’s authorities are seeking to create favourable conditions for local businesses to develop trademarks and brands to compete with foreign rivals at home and abroad, its leader has said.

Nguyen Thanh Phong, Chairman of the municipal People’s Committee, told a conference on December 20 that developing trademarks and brand names for enterprises and their products is a sustainable advantage for them to affirm their positions.

Before attracting foreign companies, the city needs to ensure local players improve their competitiveness, innovate and, especially, develop brands and trademarks, he added.

Tran Vinh Tuyen, Vice Chairman of the municipal People’s Committee, said when the city has famous trademarks and brand names, its images and products would become globally renowned.

He instructed the municipal Department of Industry and Trade to set up institute a programme for developing such trademarks and brand names.

Pham Thanh Kien, Director of the Department of Industry and Trade, said, “Enterprises with products which have trademarks and brand names can sustain rapid growth in turnover and profit.”

Not only large companies but also small and medium-sized ones should pay more attention to this, he said.

“The department will continue to assist and train enterprises to address their problems in developing brands and, especially, trademark registration.”

It would help businesses take part in city promotion programmes that provide loans for developing and acquiring technologies, expanding production and entering global supply chains, he said.

Nguyen Quoc Thinh of the Institute for Brand and Competitiveness Strategy said HCM City needs several large enterprises to take the lead in developing trademarks and brands and then train others in the task.

The city’s brand name would develop based on its businesses’ brand names and trademarks rather than famous destinations, he added.

Nguyen Duc Son, CEO of US company Richard Moore Associates and chairman of Plato Academy, said the city and enterprises should apply international standards and new methodologies in branding.

Dr Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, said the city’s programme for developing brand names and trademarks should dovetail with the national branding strategy.

Array of domestic and foreign exhibitors participate in Da Lat Flower Trade Fair

p to 140 exhibitors from Vietnam and across the world are currently taking part in the Da Lat Flower Trade Fair, with the event opening in the Da Lat Urban Cultural Park in the Central Highland province of Lam Dong on December 20.

array of domestic and foreign exhibitors participate in da lat flower trade fair hinh 0
The trade fair represents one of the main activities of the eighth Da Lat Flower Festival 2019 with the occasion aiming to promote local products to enterprises globally whilst simultaneously contributing to spurring the country’s socio-economic development.

A total of 250 booths belonging to 140 separate exhibitors are on display from localities nationwide, in addition to foreign countries such as the Republic of Korea and Hong Kong (China).

Most notably, a diverse range of agricultural products, handicraft items, and cosmetics, are on show throughout the seven-day event.

A representative from the Cacaoken Company in Da Lat city stated that the fair provides an opportunity for participants to introduce high-quality chocolate products to consumers in the hope that made-in-Vietnam chocolate will become a popular treat in the future.

In particular, the fair’s cuisine booth has proven to be one of the most popular spots for visitors.

Furthermore, many guests are keen to browse various travel agencies from across the country who are introducing tours at reasonable prices to tourists.

Northen provinces, cities to develop as a key economic hub

Seven provinces and cities in the north of Vietnam discussed mechanisms to form the Northern Key Economic Region (NKEC) of the country.

The first forum of the NKEC was organised by the Vietnam Chamber of Commerce and Industry (VCCI), Business Forum Newspaper and the relating municipal departments of Planning and Investment in Hai Phong city on December 20.

Spanning more than 15,000 sq.km, the NKEC includes seven provinces and cities, Hanoi, Hai Phong, Quang Ninh, Hai Duong, Hung Yen, Vinh Phuc and Bac Ninh.

As the NKEC’s three pillars, Hanoi, Quang Ninh and Hai Phong have three airports and 44 industrial parks that are home to many key industries such as cement, cars, electricity.

Nguyen Hong Long, Deputy Head of the Steering Committee for Enterprise Innovation and Development told the forum: "NKEC contributed nearly 32 percent of GDP and 31 percent of the national budget.”

Earlier, Prime Minister Nguyen Xuan Phuc said together with maintaining the role of a political, economic, cultural and scientific centre for Vietnam, the NKEC should develop as an another economic hub with breakthroughs that helps restructure the economy and foster growth.

The PM told the NKEC to become the country’s hub of processing and manufacturing industries; hi-tech agriculture; information technology, tourism and other services and later become a trading centre of the region and the world.

Most recently, the city of Hai Phong agreed an investment project with VinFast manufacturing and trading complex in Van Phong and Nghia Lo communes, Cat Hai district.

Nguyen Van Thanh, Vice Chairman of the Hai Phong People's Committee, said private groups such as Vingroup, Sungroup, Geleximco, FLC had so far invested 200 trillion VND (8.6 billion USD) in the city.

Next Hai Phong, Hai Duong province also received an investment project for an automobile assembly and manufacturing factory of Ford Vietnam Co., Ltd.

Hung Yen province also has been receiving huge capital inflows from real estate companies such as Vingroup, T&T Group, Hoa Phat.

In Quang Ninh, Sungroup has built and operated the first private airport of Vietnam, Van Don International Airport at the total investment of 7.4 trillion VND.

Seeing the potential of the NKEC, Long said: “It still relies mainly on the foreign direct investment (FDI) sector.”

He also added the remaining problem of the economic region included uneven development among localities in the region with low index of the Provincial Competitiveness Index (PCI).

“There are two provinces in the top ten and five in the top 20 but there are also two provinces at the bottom of the list.”

According to the Planning and Investment Ministry, the growth rate of the service industry which is the motivation of the NKEC’s development, was not sustainable.

It increased by 9.05 percent in 2016 but only 7.54 percent last year. Export growth in 2018 only increased by 20 percent, lower than the rate of 31.2 percent in 2017.

The forum aims to receive contributions, analysis and policy recommendations from leading economic experts, investment organisations, and the business community to develop solutions to strengthen the investment resources for the NKEC.

Cai Mep International Terminal uses blockchain technology

As the world modernises at a mindboggling pace, more and more companies are switching to blockchain technology.

Cai Mep International Terminal (CMIT) said they are the first in their line of business to adopt blockchain to better serve their clients.

Earlier this month, CMIT announced it had joined the TradeLens digital platform, an open and neutral blockchain-based platform that is digitising the global supply chain and transforming trade.

A joint venture between Vinalines, Saigon Port and APM Terminals, CMIT is one of the largest terminals in Cai Mep-Thi Vai deep-water gateway port complex, which currently accommodates mainline vessels with a capacity up to 194,000DWT/21,500 TEU connecting Vietnam with Europe, North America and Asia.

The move is part of CMIT’s commitment to innovate and apply e-solutions and high tech to ensure the business runs smoothly, said Jan Bandstra, General Director, adding that joining Tradelens enables immediate updates on cargo data, directly supporting our customers’ supply chain planning efficiency.

Nguyen Xuan Ky, Deputy General Director said working in this high-tech way will ultimately increase efficiently.

According to Ky, the platform brings together all parties in the supply chain – including cargo owners, freight forwarders, inland transportation providers including rail and trucking, ports and terminals, ocean carriers, customs and other government authorities into a single, secure data-sharing and collaboration platform.

Developed in collaboration between Maersk and IBM, TradeLens is currently supported by more than 100 diverse organisations across the industry.

Bac Ninh’s property market likely to be in full swing next year

The property market in the northern province of Bac Ninh is likely to continue to be in full swing in 2020 thanks to waves of investment into industrial real estate.

About 30km away from Hanoi and Noi Bai International Airport, Bac Ninh city, the provincial capital, lies on the Vietnam – China economic corriodor and in the economic triangle of Hanoi – Hai Phong and Quang Ninh. The city is dubbed by real estate investors and brokers as an emerging “dragon” among provinces to the north of Hanoi since its property market has experienced strong growth over the last few years.

In the first 10 months of this year, the city has seen the launching of 10 major projects with highlights being Him Lam Green Park, Phuc Ninh Urban Area, Dabaco Van An Urban Area, Vuon Sen Urban Area, Dabaco Lac Ve Urban Area, Khai Son City Thuan Thanh and Sing Garden at the Vietnam – Singapore Industrial Park (VSIP) Bac Ninh.

The Vietnam Association of Realtors (VARS) said in its lates report for the third quarter of 2019 that the province’s real estate market is growing rapidly with a large number of offers since the beginning of this year.

The report also emphasised that most of the projects on sale have been launched in the previous period and there are very few launch of new projects because the province has tightened control on investment licence granting.

In 2020, the local propety market will thrive as it is beneficial from the exciting waves of industrial real estate, said Nguyen Van Dinh, VARS Vice President. The supply shortage will bring more excitement to the market, he added.

Sharing Dinh’s views, other experts said with Bac Ninh’s prospects in the industral real estate, viewed among the best among nothern provinces, the local housing market will further expand as the city’s average prices of land lots have remained relatively low.

The robust infrastructure development coupled with strong foreign direct investment (FDI) flows into the city and booming industrial real estate will continue boost the city’s property market.

New investors – mostly from Asian countries like Japan, the Republic of Korea, and China – will remain interested in Vietnam’s industrial real estate, according to a report recently released by the global real estate service firm JLL Vietnam.

As many international major manufacturers are relocating from China, more investment are expected to be bumped into Vietnam, particularly five key industrial provinces in the north. Growing housing demand, which results from a surge in the numbers of migrant workers and foreigners, will also give another push to Bac Ninh’s property market, not only in the residential but also the leasing segment.

The market is being given a great chance to thrive further as Bac Ninh is looking to become a centrally-run city in the next two years. As property prices remain relatively low at present, it is forecast to keep vibrant for many years more and promise to bring great profits to investors.

A total of 135 projects have been put into operation at IPs in Bac Ninh province so far this year, raising the total number of operational projects in local IPs to 1,070.

Firms in Bac Ninh’s IPs generated over 1,151 trillion VND (49.45 billion USD) in industrial production value, exported 22.6 billion USD worth of products, and contributed 11.5 trillion VND to the state budget.

From the outset of the year, the management boards of the local industrial parks revoked investment certificates and investment registration certificates of 237 projects with total registered capital of 942.6 million USD.

After two decades, the industrial parks have become an important part of the local economy, promoting the economic structure transform, while improving the province’s capacity in production and technology transfer, enhancing production efficiency and engaging deeper into the global production chain.

Deputy PM asks for stepping up industrialisation strategy

Deputy Prime Minister Trinh Dinh Dung on December 20 requested stepping up the implementation of the Vietnam’s industrialisation strategy within the framework of the Vietnam – Japan cooperation towards 2020 with a vision to 2030.

During a meeting of the steering committee for the strategy in Hanoi, Deputy PM Dung, who is also its head, lauded achievements over the past seven years, saying that six prioritised sectors under the strategy, including agro-fisheries processing, electronics, automobiles and spare parts, environment industry and energy saving, shipbuilding, and farming machinery, have made important contributions to Vietnam’s economy and industry in particular.

He said it has created a driving force for the support industry and made it easier for Vietnamese firms to join the global value chain. However, he also admitted that breakthrough has yet to be made in automobile manufacturing, shipbuilding and electronics, with low productivity and competitiveness.

Dung said it is a result of the lack of resource mobilisation policy and limited workforce quality.

He took the occasion to urge ministries and agencies to attract further involvement of Japanese agencies and businesses in the effort.

The ministries of industry and trade, agriculture and rural development, information and communications, and transport were assigned to review the action plan to realise the strategy.

The Ministry of Planning and Investment was asked to work with ministries and agencies concerned to draw and improve the efficiency of investment in Vietnam, especially Japanese investment in prioritised sectors.

The Finance Ministry will build a preferential taxation policy and allocate budget for the effort.

The strategy was built under the auspices of the Japanese Embassy in Vietnam, the Japanese Ministry of Economy, Trade and Industry, the Japan International Cooperation Agency, and other Japanese agencies with consultation from scientists and businesses.

Its aim is to promote technological adoption, enhance labour output and global competitiveness, and turn out high added-value products for domestic and foreign consumption.

According to a report, foreign direct investment in the six prioritised sectors accounted for 27 percent of the total registered capital in Vietnam from 2013 to March 2019, with a focus on electronics, automobiles and energy saving.

Bac Ninh holds fair to promotes made-in-Vietnam goods

The northern province of Bac Ninh is hosting its second made-in-Vietnam fair under the programme of encouraging the consumption of Vietnamese products.

The fair, which opened on December 17, features nearly 400 pavilions run by businesses in northern provinces.

Addressing the opening ceremony of the fair, Standing Vice Chairman of the provincial People’s Committee Nguyen Tien Nhuong said Bac Ninh’s economy has developed in terms of scale, value, forces of production and product quality. Many locally-made products have high competitiveness on both the domestic and foreign markets, such as garments, electronic goods, bronze products and Dong Ho folk paintings.

However, domestic goods have faced fierce competition from imports as a result of international economic integration, while a number of consumers still favour imported goods over locally-made counterparts, he said.

Therefore, the campaign “Vietnamese give priority to Vietnamese goods” is one of important solutions to stimulate patriotism and national pride in building a consumption culture favourable for domestic goods.

Pavilions at the fair mainly show agricultural products and services, and typical products of industries and craft villages in Bac Ninh and adjacent provinces in the Red River Delta.

The fair also provides good opportunities for participating businesses to promote their goods and services, and seek partners in not only Bac Ninh but also other localities in the northern region.

The event helps introduce the potential and production and business capacity of local businesses, creating a momentum for them in regional and international economic integration.

The fair will run through December 24.

Bac Ninh has led the country in industrial production value, and is also among the leading localities in various economic indicators.

Hanoi, AEON join hands to cut out single-use plastic from supermarkets

Hanoi’s Department of Industry and Trade and AEON Vietnam Co., Ltd will work together to reduce single-use plastics in supermarkets and AEON Mall Ha Dong under a project launched on December 19.

Speaking highly of AEON’s efforts to cut plastic waste, Vice Director of the department Tran Thi Phuong Lan expressed her hope that AEON will outline more long-term and sustainable plans to reduce plastic waste in its production and distribution sectors in order to protect the environment.

Currently, Hanoi has 24 shopping malls, 142 supermarkets, and nearly 1,700 convenience stores, which use a huge amount of plastic every year. Data from the department showed that about 6,000 tonnes of waste is discharged in the city every day, of which 8 – 10 percent is plastic waste mainly generated from industrial production and consumer distribution.

The capital has targeted a ban on non-degradable plastic bags and to sort waste at source at all supermarkets by December 31, 2019, Lan said, adding that her department had issued Plan No. 3692/KH-SCT on reducing plastic waste in production and distribution, which had received positive feedback from the business community.

Deputy general director of the back-office at AEON Vietnam Sasamori Hiroaki said that AEON Vietnam will make unceasing efforts to ditch 30 percent of plastic bags from its outlets by the end of 2020.

The company also plans to charge for plastic bags from 2020.

AEON Vietnam wants to work with local authorities to improve public health and the environment by cutting out single use plastic products, he said.

The project with Hanoi is part of an initiative launched at AEON – Tan Phu Celadon in September.

2019: The year Vietnam’s aviation sector sprouted new wings

With a new airline launching operations and three more waiting in the wings, Vietnam's aviation market is set to explore new horizons.

Vietnamese skies espied a new logo and color in January as Bamboo Airways launched its first flights, looking for a share of a market traditionally dominated by the blue and red of Vietnam Airlines and Vietjet.

Within the year, the rookie had operated 14,378 flights (January-October), launched an international route to the Republic of Korea (RoK), and received its first wide-body Boeing 787-9 Dreamliner as part of a fleet that is set to expand to 30 jets.

The airline is eyeing non-stop flights to the US, something that even the national flag carrier, Vietnam Airlines, has not achieved to date; and has also packed its fleet with narrow-body aircraft to compete with budget carrier Vietjet.

Until the entry of Bamboo Airways, Vietnam’s aviation industry was dominated by two carriers - Vietnam Airlines in the high-end market and Vietjet in the budget territory.

Meanwhile private conglomerate Vingroup in August applied for a commercial airline license with an investment of VND4.7 trillion ($202 million). It wants to start flying July 2020.

Hospitality firm Thien Minh Group in August also applied for licenses to be the next carrier, planning to launch its KiteAir in June next year with short-haul ATR-72 aircraft.

Tourism firm Vietravel Airlines in September raised VND700 billion ($30 million) through bonds to launch its maiden flight next year using either the narrow-body Airbus A321neo or Boeing 737.

The budding market entrants are looking to cash in on surging air travel demand in a fast growing economy. In 2012, 37 million passengers passed through Vietnam's airports, but this is set to triple to 112 million this year, according to the Airports Corporation of Vietnam.

Reports have said that Vietnam is set to have the highest air passenger number compound annual growth rate in Southeast Asia in 2016-2021 at 17.4 percent, compared to the 6.1 percent average in ASEAN.

Aviation officials say that the number of air passengers in a developed aviation market should be 1.5 times its population, and even double, as in the US and the RoK. As this figure is 0.74 in Vietnam, the market is deemed to have plenty of room for growth.

Existing carriers have been posting strong business results. Vietjet last year saw its revenue rise 24 percent from 2017 to VND52 trillion ($2.24 billion), while that of Vietnam Airlines climbed 17 percent to VND96.8 trillion ($4.18 billion).

Jetstar Pacific also recorded its first after-tax profit last year at VND34.26 billion ($1.57 million).

However, the addition of more carriers has also raised concerns about how existing airports, already stretched to beyond their capacity, can manage more flights.

"New airlines mean more aircraft, while infrastructure is already overloaded. Authorities will face difficulties in managing new aircraft and ensuring their safety," said aviation expert Nguyen Thien Tong.

The biggest airport in the country, the Tan Son Nhat International Airport in Ho Chi Minh City, served 38 million passengers last year against a designed capacity of 28 million, while the Noi Bai International Airport in Hanoi needs to repair two of its runways after they have been overused for some time.

Aging airport infrastructure has limited authorities from licensing new carriers. Vietstar Airlines got its air operator certificate this year, two years after it was first rejected because of the high after being rejected in 2017 due to high traffic at the Tan Son Nhat Airport.

Bamboo Airways has chosen to headquarter itself at the Phu Bai International Airport in Thue Thien-Hue Province, where the traffic is less.

The shortage of human resources is another concern. While major airlines are focused on expanding their fleet, the CAAV has been struggling to hire aviation safety officers to manage more aircraft.

The country now has 256 aircraft, but this figure is estimated to reach 450 in 2025, with Vietnam Airlines, Vietjet and Bamboo Airways all having placed orders for new jets.

For every 10 new aircraft, CAAV needs two more flight safety officers, who are required to be former pilots. However, current regulations allow it to recruit only one for every two retired officers, said CAAV deputy head Vo Huy Cuong.

More difficulties arise from the fact that pilots tend to remain at local airlines for higher pay rather than work for the government, he added.

At least seven more flight safety officers are needed next year, and 37 more by 2025, to handle the surging fleet, he said.

Pilot shortages also pose a big challenge. In June, many Vietjet flights were delayed by up to seven hours as the airline had to withdraw some overworked pilots from flights to comply with safety regulations.

Vietnam Airlines, the country's flag carrier, is struggling to hire 193 now pilots. In May, the state-owned carrier filed a complaint with the Ministry of Transport about losing its pilots to Bamboo Airways.

Vietnam Airlines has been limiting operations of the wide-bodied Boeing 787 due to a lack of experienced pilots amidst a global shortfall, said the carrier's deputy general director Le Hong Ha.

Despite the problems, officials see space for more carriers. Dinh Viet Thang, head of CAAV, said that Vietnam could still increase the number of commercial airlines from five to eight.

The current number is still low compared to Thailand at 16 carriers, Indonesia at 12, Philippines at 10 and Singapore at 6, he said at a recent forum.

Local airports served 103.5 million passengers last year, and Thang said this figure could reach 150-180 million by 2025.

Vietnam wants to step up cooperation with Gazprom: Party official

The Party and State of Vietnam treasure and want to strengthen the comprehensive strategic partnership with Russia in general and its energy group Gazprom in particular, said a senior Party official.

Vietnam considers energy, and oil and gas cooperation as an important pillar in bilateral relations with Russia, Politburo member and Chairman of the Party Central Committee’s Economic Commission Nguyen Van Binh said at a meeting with Vitaly Markelov, Member of the Board of Directors and Deputy Chairman of the Management Committee of Gazprom, in Hanoi on December 19.

There remained much room for bilateral cooperation, he said, proposing Gazprom continue expanding investment in the fields of oil and gas exploration and exploitation, crude oil supply, gas-fueled electricity and liquefied natural gas.

Binh, who is also Secretary of the Party Central Committee, spoke highly of Gazprom’s strategic cooperative agreement and long-term investment in Vietnam.

Markelov said Gazprom wants to become a prestigious partner of Vietnamese oil and gas companies.

Bilateral partnerships will further develop as Gazprom and Vietnam Oil and Gas Group (PetroVietnam) are scheduled to soon sign a new strategic cooperative deal for the next 10 years, he said.

Also on December 19, Binh hosted a reception for a delegation of professors from the US-based Havard University.

Prof. Akash Deep, head of the delegation, shared international experiences in improving the legal framework to successfully develop the public-private partnership (PPP) in Vietnam.

Binh highly appreciated Deep’s valuable experiences, which, he said, will help Vietnam build a strong PPP law so as to attract more private investment in infrastructure development projects and public services.

Dragon fruit prices skyrocket in Binh Thuan

The price of dragon fruit in Binh Thuan province has enjoyed a steep rise during the past two weeks, a two-fold increase in price.

dragon fruit prices skyrocket in binh thuan hinh 0The trend has been particularly prevalent in the districts of Ham Thuan Nam, Ham Thuan Bac, and Bac Binh with the purchasing price hovering between VND 10,000 and 12,000 per kilo.

In large gardens, dragon fruit is being sold at between VND13,000 and VND14,000 per kilo, representing a two-fold increase in price in comparison with three months ago.

According to several gardeners in the area, despite dragon fruit output not experiencing any fluctuations, the purchasing price has been rising due to increasing consumption demand from the Chinese market.

The increase in dragon fruit prices is a positive sign for farmers while the consumption of the fruit is expected to rise in near future with the Lunar New Year just around the corner.

Lao Cai to link ASEAN-China economic relations

The northern mountainous province of Lao Cai was set to become a bridge connecting economic and external relations between Vietnam, ASEAN countries and the southwest of China, Deputy Prime Minister Trinh Dinh Dung said last week.

The vision is to turn the province into a hub of tourism, services, iron and steel, and chemical-free agriculture.

The long-term plan is to develop synchronised and modernised socio-economic infrastructure and transform the province into a centre of research and preserve the identities of ethnic groups in the northwest of Vietnam.

The Deputy Prime Minister has asked for local infrastructure improvements while focusing on disadvantaged areas and improving the lives of local people.

The plan also specifies the effective use of natural resources, while preserving historic and cultural values and natural heritages.

The province has been encouraged to apply advanced technology and digitalise data as part of the plan.

Local authorities must analyse, assess and forecast development conditions including infrastructure and land use, Dung said.

Domestic and international factors that could affect the province’s growth should be taken into consideration.

Lao Cai, almost 300km from Hanoi, is located in the centre of Vietnam’s north and shares a 200km border with Yunnan, China.

Covering nearly 640ha, the province is home to the well-known tourism town of Sa Pa. Tourism is a bright spot in economic development.

The province’s GDP reached 10.23 percent last year and ranked 3 out of 14 northern mountainous localities, and Lao Cai’s Provincial Competitiveness Index ranked 12 among 63 provinces and cities last year.

Prime Minister Nguyen Xuan Phuc previously asked the province to strive to become one of the top 15 developing localities in the country.

Ministry launches websites to deal with counterfeit goods

The Ministry of Industry and Trade (MoIT) on December 18 launched three websites to fight counterfeit goods and help consumers resolve e-commerce disputes.

The e-commerce market is growing in Vietnam, but it is also used to trade counterfeit goods with increasingly sophisticated activities online,” said Deputy Minister of Industry and Trade Cao Quoc Hung.

The MoIT opens the portals to fight against and prevent such issues in e-commerce, creating trust for consumers, he said.

The portals including a website for managing and monitoring e-commerce exchanges at Online.gov.vn, a website for reporting disputes in e-commerce at chonghanggia.online.gov.vn and a website for reporting on e-commerce activities of businesses at baocao.online.gov.vn

Hung said the MoIT has issued a plan to strengthen the fight against counterfeit goods, unidentified goods and goods that infringe intellectual property rights in e-commerce, and the portals are part of the plan.

The portals will connect and share information between the ministry and the relevant offices, such as the Department of Electronic Commerce and Digital Economy, the General Department of Market Management, Department of Competition and the Consumer Protection Department.

They also manage and solve complaints and disputes for consumers.

Earlier in April, the MoIT signed commitments with adayroi.com, lazada.vn, shopee.vn, sendo.vn and tiki.vn to ensure fake goods are not sold online.

Retail, banking sectors see big-ticket M&A deals in 2019

Acquisitions worth well over a billion dollars took place this year in retail and banking, and the trend could persist in 2020, experts say. 

Vingroup made headlines earlier this month by announcing it would merge its retail arm, Vinmart, with food giant Masan to focus on industry and technology.

The deal’s value has not been disclosed, only that over 2,600 VinMart and VinMart+ outlets will be controlled by Masan, which is set to become the biggest retail player in the country.

It was the latest in a series of merger and acquisition (M&A) deals in retail this year as industry players seek to grow in the competitive market.

In May the Republic of Korea's company GS Retail acquired all 49 outlets of local player Zakka Mart and turned them into GS25 outlets. The value of the deal was not disclosed.

The rising income of citizens is one of the reasons for the booming retail market. Market research company Euromonitor said by 2030 Vietnam would be the third largest urban market in Southeast Asia in terms of consumer numbers and fifth largest in terms of spending.

Rapid urbanization is another reason. Vietnam’s urbanization rate rose from 23.7 percent in 1999 to 38.4 percent last year, with the economic growth rate in urban areas being 2.5 times that of rural areas, according to the Ministry of Construction.

These figures translate into growth for the retail industry, though it is mostly the big players who will benefit.

"Major M&A deals this year show that the retail market is filtering out small players as conglomerates pour big bucks into expansion," economist Le Dang Doanh said.

But in the crowded market only deep-pocketed players could survive, and even fiercer competition is expected in future as bigger companies bring in a variety of products at lower prices, he said.

Vietnamese players dominate the scene, with experts explaining it is due to their better understanding of local needs. Besides VinMart, grocery chain Bach Hoa Xanh has 953 outlets and Saigon Co.op. has 878.

Most foreign players continue to struggle. In June French supermarket group Auchan Retail pulled out due to losses. Japanese chains Ministop and FamilyMart are far from executing their plans to have 800-1,000 stores.

The banking industry too saw some major M&A deals in 2019 as local banks sought to increase their capital to back their expansion.

BIDV sold a 15 percent stake to the Republic of Korea (RoK)’s KEB Hana Bank in November. The deal, valued at VND20.2 trillion ($872 million), made BIDV the largest bank by charter capital in the country.

Vietcombank earlier this year sold a 3 percent stake to foreign investors for VND6.2 trillion ($270 million) as part of its plan to eventually sell 10 percent.

Economist Can Van Luc said as Vietnam’s economy continues to expand rapidly and banks’ profits are set to grow by 20-30 percent this year, investors are keen to buy into them.

More M&A deals are expected since the government would not allow new foreign banks until the end of 2020 as it restructures its financial system, including by selling ailing banks to foreign investors, he added.

Nguyen Tri Hieu, another economist, said the government wants to create a Vietnamese bank that can expand into the region and even globally, and one of the critical conditions for this is having a large capital base.

This means smaller banks could consider merging to achieve this target, he added.

Other notable M&A deals this year include the Republic of Korea's SK Group’s purchase of a 6.15 percent stake in Vingroup for nearly $1 billion and a 9.5 percent stake in Masan for $470 million.

The total value of M&A deals last year was $7.6 billion, analysts said at the 2019 Vietnam Mergers and Acquisition Forum. They forecast it to be $6.7 billion this year.

HCM City seeks to boost ornamental fish exports

HCM City’s ornamental fish breeding industry is seeking to expand its overseas markets. 

It earned US$21 million from exports in the first 11 months of the year, a rise of 5 per cent year-on-year, according to the city Fisheries Sub-department.

The city, the country’s largest producer of ornamental fish, has 89ha of ponds devoted to raising ornamental fish in outlying districts, mostly in districts 9, 12, Binh Chanh, and Cu Chi, with more than 290 households involved in the business.

They raise more than 60 species of fish. Of the figure, more than 40 are bred while the rest are caught from rivers and springs.
They export to 43 countries and territories, with the EU being the biggest market, buying slightly more than half of all exports.

To develop the industry, the city has undertaken many programmes, including setting up a model under which participating companies have to properly manage their business.

They have to comply with requirements related to controlling risks, preventing the fish from contracting diseases, reducing the impacts of climatic conditions, and improving their fish-raising skills.

Thanks to this, breeders have been able to improve quality, thus raising the profile of the Vietnamese ornamental fish industry.

A key promotional event for them is the annual Ornamental Fish Festival in November. Companies raising ornamental fish promote their brands and introduce their breeding models here, Pham Thiet Hoa, director of the city Investment and Trade Promotion Centre, said.

Exports have risen sharply since 2015 when they were worth only $12 million.

However, exports remain far short of potential since fish breeding remains small-scale and scattered, which makes it difficult to fulfil large orders, Nguyen Trong Phu, owner of an ornamental fish farm in District 12, said.

To address the problem, a specialised area should be zoned off for raising various ornamental fishes, he suggested.

A lack of research means there are no unique products in the market.

To expand the domestic market and increase exports, the city plans to upgrade breeding infrastructure and boost promotion of ornamental-fish brands.

It also plans to set up a website to boost online transactions for businesses and help them with advertising.

The city is a major centre for breeding ornamental fish, accounting for 50 per cent of the country’s total exports, according to its Centre for Agricultural Consultancy and Support.

It breeds many species, both imported and local, and has many fish feed production plants.

More investment flows into SHTP

The Ho Chi Minh City People’s Committee released its approvals of nine investment projects, including a foreign direct investment (FDI) project and eight domestic ones, into the Saigon Hi-tech Park (SHTP) with a total value of 777.29 million USD.

Techtronic Industries from Hong Kong (China) is the investor of the FDI project into Techtronic Tools (Vietnam) Co. Ltd. The company works in the field of microelectronics. It has a comprehensive capital of 650 million USD, 130 million USD of which is used to construct a component manufacturing plant for smart handheld devices in industries and daily life, along with a new Research & Development (R&D) Centre.

Two domestic production projects are Orgalife Nutrition Science Co. Ltd., which creates enzyme and related nutrition products, with the total investment capital of 700.6 billion VND (about 30.23 million USD), and Vietnam Standard Reference Material Factory, invested by Vietnam Standard Reference Material Joint Stock Co., with the total amount of 270 billion VND (11.65 million USD).

Meanwhile, the six R&D projects are for HDKING R&D Centre for High Technologies, invested by iSmartcity Joint Stock Co. with the total capital of 420 billion VND (18.12 million USD); DFM R&D Centre for Technology by DFM Tech Joint Stock Co., worth 115 billion VND (4.96 million USD); Vietnam-Japan Hi-tech R&D Centre by CNC Vietnam-Japan Investment Co. Ltd. worth 360 billion VND (15.53 million USD); the R&D Centre for Robot Manufacturing and Automation by CNC Idea R&D Centre worth 115 billion VND (4.96 million USD); the R&D Centre for Irradiation Technology by An Phu Irradiation Joint Stock Co. worth 877.68 billion VND (37.87 million USD); and the R&D Centre for Plant Cells and Medicine Material Production by Goldenlife Pharmaceutical Product Joint Stock Co. with 478.5 billion VND (20.64 million USD).

According to Le Bich Loan, head of SHTP Management Board, the approval of the nine projects has helped her organisation to achieve the goal of attracting FDI and domestic investment in 2019. Noticeably, SHTP contributes 55 percent to the total new FDI investment capital of the city.

Vietnamese trade representative office opens in Ukraine

The Vietnamese Embassy and Vietnam’s trade office in Ukraine have recently inaugurated a new trade representative office in Kiev, Ukraine.

Upon addressing the ceremony on December 17, Vietnamese Ambassador to Ukraine Nguyen Anh Tuan affirmed that the move aims to implement the amendments to the Law on Overseas-based Representative Missions of Vietnam, as previously approved at the fourth session of the 14th National Assembly on November 21, 2017.
Ambassador Tuan voiced his hope that the new trade representative office will make further contributions to promoting bilateral relations, especially co-operation in the economic and trade fields between Vietnam and Ukraine.

Ho Trung Thanh, head of Vietnam’s trade representative office in Ukraine, underlined the importance of the opening of a new trade representative office in Kiev. Indeed, the move indicates the growing demand for the development of economic and trading ties between the two countries.

Thanh noted that the new office is located right in the centre of the Ukrainian capital and is situated close to several government agencies, associations, and large companies. It is therefore hoped that the office will serve as a reliable address in order to strengthen transactions and linkages among various agencies and firms from the two countries.

The trade office is expected to further promote its role in effectively supporting businesses between the two countries, and contribute to accelerating economic and trade relations between Vietnam and Ukraine in the future.