Hanoi secures 6.5 billion USD in FDI projects

The capital city of Hanoi has become the most attractive locality for foreign direct investment (FDI) in Vietnam for the first time, with total registered capital estimated at 6.5 billion USD. 

The information was announced at the 16th conference of the municipal Party Committee, which was held on November 28 to evaluate socio-economic development in 2016-2018.

In the three-year period, the city lured nearly 13.25 billion USD in FDI projects, 2.12 times more than 2011-2015 and 48.6 percent of the amount recorded during 1986-2015.

This year, investments have focused on information and technology, manufacturing, processing, real estate and whole and retail sales, among others. Notable projects include smart city construction in Dong Anh district by Japanese Sumitomo Corporation and BRG Group, OPC drum production project of Japan’s Mitsubishi Chemical at Hoa Lac High-tech Park and Heineken Hanoi Brewery in Thuong Tin district. 

Standing Vice Chairman of the municipal People’s Committee Nguyen Van Suu attributed the results to the city’s efforts to improve the business climate, remove bottlenecks for local firms and improve State management in land planning, urban order and environmental protection.

Conference seeks ways to boost e-commerce

The Central Institute for Economic Management (CIEM) held a conference on November 28 to discuss measures to develop e-commerce.

CIEM Director Nguyen Dinh Cung said e-commerce has high potential amid Industry 4.0, thus the development of e-commerce is an obvious necessity.

He said the centre is consulting other agencies to set up a national innovation and development centre. 

Nguyen Anh Duong, head of the CIEM’s Department of Macro-Economy, said domestic and international e-commerce activities of Vietnam are increasing with larger scale.

A series of free trade agreements have facilitated the activities, along with higher awareness of e-commerce and Industry 4.0, higher purchasing demand of people, widespread online shopping and higher foreign direct investment in the field.

A report from the Policy Office of the Department of E-Commerce and Digital Economy under the Ministry of Industry and Trade showed the online retail market rose more than 20 percent per year.

Last year, Vietnam’s retail market reached 6.2 billion USD, with e-commerce revenue of 3.6 percent over total retail value. In 2020, the e-commerce market is expected to hit 10 billion USD.

Le Thi Ha from the office said the e-commerce market in 2013-2017 rose rapidly. E-commerce has become more common due to diverse forms and stronger engagement.

At the same time, e-commerce on mobile devices has become popular, she said, adding the sector is a target for large firms.

However, Ha pointed to problems in e-commerce management, including the control of quality of goods and trans-national transactions.

Meanwhile, Duong said the sector’s management mechanisms aren’t suitable, while the infrastructure has yet to be systemised.

The CIEM proposed the completion of institutions and policies for the development and application of digital economy, and the establishment and operation of infrastructure for e-commerce, and support to the digital transformation of enterprises.

Representatives from the Ministry of Industry and Trade highlighted the need to revise the Law on Commerce 2005 with new regulations on e-commerce.

Connectivity essential for businesses when joining CPTPP: seminar

Vietnamese enterprises will benefit little from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) if they lack connectivity, heard a seminar themed “CPTPP: Opportunities and Challenges for Vietnamese Businesses” held in Hanoi on November 28.

Associate Prof., Dr Dinh Trong Thinh from the Hanoi University of Finance said life would be more difficult for single enterprises if they don’t get connected by the time the CPTPP comes into effect.

Connecting firms in the same sector is crucial, Thinh said, noting that this is a weak point of Vietnamese companies as they often operate single-handedly.

According to him, the biggest challenge facing businesses is that they must acknowledge the agreement’s opportunities and challenges for firms on their own. Without full consciousness, enterprises won’t be able to reform themselves and have strategic vision and response measures.

Phan Thi Thanh Xuan, Secretary General of the Vietnam Leather, Footwear and Handbag Association (LEFASO) emphasised the need to help businesses, particularly those of small and medium size, to access information and intensify connectivity.

She also suggested State agencies consider upgrading infrastructure and logistics.

According to the Ministry of Industry and Trade, the CPTPP will become effective in the first countries ratifying the agreement on December 12, 2018, namely Mexico, Japan, Singapore, New Zealand, Canada and Australia.

Vietnam ratified the agreement on November 12, 2018 and informed New Zealand of the ratification on November 15. Therefore, the agreement will take effect in the Southeast Asian nation on January 14, 2019.

The CPTPP covers a market of about 490 million people and has a combined GDP of 10.1 trillion USD, 13.5 percent of the globe’s GDP, and average per capita income of more than 19,000 USD a year.

The deal is expected to bolster economic growth, create more jobs, alleviate poverty and improve the living quality in member states. 

The accord is expected to increase Vietnam’s GDP by 2.01 percent by 2035, according to the Ministry of Planning and Investment.

Enterprises need to up their game to join global value chain

Vietnamese enterprises’ ability to take part in the global value chain will depend on the quality of their products and a willingness to use advanced technology, speakers said on November 28 at the Vietnam Export Forum 2018 held in HCM City.

Vo Tan Thanh, vice chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that local companies must take the initiative in innovation and technology application to meet international standards from buyers.

For markets such as the US, the EU, Japan and the Republic of Korea, in addition to general global standards, exporters should be prepared to meet technical trade barriers that could change unexpectedly, he noted.

Vietnam exports are expected to reach nearly US$240 billion this year, a rise of 10-12% over last year.

With positive export results in the past few months, Vietnam may end the year with a trade surplus, contributing greatly to economic growth, he added.

The US this year was among the largest export markets with US$39 billion, 12.8% higher than the same period last year, followed by the EU with US$34.9 billion, up 9.9%, and China US$32.1 billion, up 21.3%.

Of the 13 free trade agreements (FTAs) the country has signed, 10 FTAs have taken effect. The highly anticipated Comprehensive Partnership Agreement on Trans-Pacific Partnership (CPTPP), which will come into force in December, will open up even further trade opportunities.

Experts attributed the positive export results to administrative reforms and the issuance of certificates of traceability for export products by the Ministry of Industry and Trade.

Although the country is expected to have a trade surplus of US$7 billion by the end of the year, it may not be sustainable because of dependence on FDI enterprises, experts said. FDI enterprises account for 70% of the total exports. 

In addition, most equipment, technology and raw material exports in Vietnam mainly depends on imports, accounting for more than 60%. As a result, the export value is not high as it could be.

To Chi Binh, a representative from Bee Logistics Company in HCM City, said that domestic logistics activity was still limited and that Vietnamese enterprises only accounted for 25% of all export companies.

Most domestic enterprises are small scale. 

In addition, many Vietnamese businesses have unstable operations, weak customer services, and a low level of innovation, causing loss of customers’ trust, Bình said. 

More than 90% of Vietnamese enterprises are small- and medium-sized, while only 21% of them are able to supply goods or services to foreign buyers.

Ron Ashkin, director of USAID LinkSME, said that USAID had recently launched a new five-year US$22 million Linkages for Small and Medium Enterprises (LinkSME) project.

LinkSME aims to improve and expand supplier-buyer relationships between Vietnamese and foreign firms. 

The project is expected to raise productivity and increase Vietnam’s capacity to supply products to larger companies both inside and outside the country.  

Foreign firms will also reap efficiency benefits from increased local sourcing, he said, adding that LinkSME would help local entrepreneurs up and down the value chain pursue new opportunities and provide new jobs.

Tran Van Cong, deputy director of the Department of Agro-product Processing and Market Development at the Ministry of Agriculture and Rural Development, said the ministry was working with agencies to support export enterprises to meet global standards. 

With preferential policies on land investment and value-added and corporate taxes for both domestic and foreign enterprises, the number of investment projects for key exports is expected to increase, he said. 

The largest contributors to exports this year included telephones and components with US$40.7 billion, up 10.6%; garments and textiles with US$25.2 billion, up 17.1%; electronics, computers and components with US$24.3 billion, up 15.2%; machinery and equipment with US$13.5 billion, up 28.3%; and footwear with US$13 billion, up 9.7%. 

In addition to manufactured products, earnings for some agricultural and aquatic products also increased during the period.

The Vietnam Export Forum 2018 was organised by VCCI in association with the American Chamber of Commerce’s HCM City Chapter and the Japanese Chamber of Commerce and Industry.

Trade deficit not a cause for concern

Despite Vietnam’s large trade deficit with the Republic of Korea, concerns are being allayed with the latter boosting investment and exports for production and re-export in the former, to take advantage of tax cuts under a regional trade pact.

Over the past few months, the Republic of Korea (RoK)’s LG Display Vietnam has been boosting recruitment for its US$1.5 billion plant in the northern port city of Haiphong, producing OLED products for mobile phones, smart watches, televisions, and tablets. The company is in need more employees.

Elsewhere, South Korean giant Samsung is also doing the same with its production focused on mobile phones and home electronics appliances, both locally-consumed and exported.

Both companies are taking the lead in Vietnam’s export of electronics items, including mobile phones, laptops, and others. In the first 10 months of 2018, the country earned US$40.7 billion, up 10.6% on-year, from exporting mobiles and spare parts, and fetched US$24.3 billion, up 15.2% on-year, from exporting laptops, parts, and other electronics items to foreign markets.

The General Statistics Office (GSO) reported that in the first 10 months of 2018, Vietnam spent US$39.2 billion on imports from the RoK, up 2.1% on-year, with import of electronics products climbing 14.1% on-year.

Vietnam also earned US$15 billion from exporting to the RoK, up 23.5% on-year, with export of electronics products augmenting 50.4% on-year, and mobile phones and parts up 14.9% on-year.

Thus, Vietnam suffered from a US$24.2 billion trade deficit from South Korea, down from the US$26.6 billion recorded in the same period last year.

Over the past few years, the RoK has always been Vietnam’s second-largest supplier, and sixth-largest buyer.

Last year, Vietnam witnessed a trade deficit of about US$31.8 billion with the RoK, up from US$20.8 billion in 2016, and US$18.7 billion in 2015.

Samsung’s export turnover sat at about US$51 billion last year, holding over 25% of Vietnam’s total export turnover of US$214 billion. The company also occupied 95% of the total export turnover of South Korean companies operating in Vietnam.

The RoK’s Thelec newswire last week said that leaders of Samsung plan to visit Samsung Electronics in Yen Binh district of the northern province of Thai Nguyen later this week to approve construction for a new mobile phone plant. When the plant is completed after approval, Samsung will have three phone production plants in Vietnam: two in Yen Binh and one in Yen Phong district of the nearby Bac Ninh province.

However, according to the Korean Chamber of Business in Vietnam (KorCham), the trade deficit is not a negative for Vietnam because many businesses have been boosting investment and exports of machinery, equipment, and materials to the country to serve production here. A large part of made-in-Vietnam products are also exported to foreign markets, including the RoK.

“Many are showing concern about a big trade deficit for Vietnam from the RoK. However, they should not be concerned because Vietnam’s imports from the RoK are largely conducted by South Korean companies in Vietnam, especially big ones like Samsung and LG. The imported products are mostly machinery, equipment and materials for production. They are used for making products in Vietnam and then exported,” a KorCham representative told VIR.

“Meanwhile, Vietnamese exports to the RoK, mostly end-products and consumer goods, have risen quickly by more than 31% in 2017, against the previous year’s 28% ascension,” he added.

Under the ASEAN-Korea Free Trade Agreement, this year 86% of import tariff lines will be reduced to 0%, from an average 50% early this year. Additionally, Vietnam will completely remove import duties on 89.9% of products from the RoK over 15 years.

For example, Vietnam will remove its 30 and 20% tariffs imposed on South Korean air conditioners and rice cookers over the next 10 years. The average tariffs for foodstuffs and consumer goods will gradually decrease from the current 16-17 to 0% in the next five years.

The Korea International Trade Association recently issued a survey on 1,015 South Korean small- and mid-sized export businesses. Results demonstrated that more than 33% of respondents plan to expand their facilities in and to Vietnam, followed by China (19%), ASEAN members (10.7%), and India (8.3%).

Vietnam’s food safety demand an opportunity

Increasing demand for safe and traceable foods is throwing up plenty of opportunities for food producers, the 7th IFC International Food Safety Forum heard in HCM City on November 28.

The two-day forum, hosted by the International Finance Corporation, discussed how investments in food safety and fostering a food safety culture could help companies unlock business opportunities, create jobs and contribute to economic growth.

Executives representing key players in the global food industry discussed the case for companies to adopt food safety standards and practices.

Gabor Fluit, general director of De Hues Vietnam, a subsidiary of the Dutch-based Royal De Heus Group, said 10 years ago when his company first entered the Vietnamese market, there was very little talk about food safety.

However, with the economy booming, consumers’ demands are increasing and people with high incomes are becoming more and more concerned about the quality and origin of the food they eat, he said.

“That is an opportunity for food producers to produce safe and traceable food to meet the demand of consumers in Vietnam.”

He said if local producers could do so, there would be a double benefit: consumers could buy local products instead of imports and the high quality would enable producers to export.

The Government needs to enhance monitoring of food safety issues by collecting samples without prior notice at restaurants, supermarkets and wet markets, he said.

“If anyone violates regulations, their licence should be suspended immediately. This will increase consumers’ trust.”

Foreign experts and practitioners also shared their experiences in instilling a food safety culture and promoting stronger standards across food supply chains.

Rana Karadsheh, regional industry director of manufacturing, agribusiness and services for IFC, said investment in food safety management systems is a prerequisite for growing a country’s agribusiness sector.

“Internationally-recognised standards have a proven track record of delivering results that include better risk management and better access to markets. In addition, for investors, a strong, effective food safety management system is a sign of a sustainable business.”

Agribusiness is one of IFC’s focuses. It recently invested VND230 billion (US$10.2 million) in Vietnamese food producer PAN Farm JSC to support the expansion of its seed business and new export-quality flower, fruit and vegetable operations.

Nguyen Quoc Hoang, general director of PAN Food, said the IFC also brings in experts to help his company develop food safety standards. Thanks to this the company got a global food safety certificate last year.

The forum resumes on November 29 with more panel discussions on risk management in small holder supply chains and private sector investment in food safety.

Song Hong Garment lists on HCMC exchange     

Song Hong Garment Joint Stock Company listed more than 47.6 million shares on the HCM Stock Exchange on November 28.

MSH listed at a reference price of VND45,000 (US$1.93) and soon rose to the ceiling of VND54,000 where it ended the day.

At VND54,000 the company’s market cap was worth over VND2.57 trillion ($110.2 million).

Bui Duc Thinh, the company’s chairman, said Song Hong, established in 1988 in Nam Dinh Province, has grown from a small company into one of the country’s leading garment and bedding products manufacturers, with nearly 11,000 employees and more than 20 factories.

It makes products for global brands such as Nike, Levi’s, Calvin Klein, Tommy Hilfiger, DKNY, Karl Lagerfeld, Hurley, Converse, Jordan, Columbia Sportswear, Gap, Bugatti, Dillards, and Express.

It produces and exports 60 million products a year, including jackets, pants, fashion shirts, dresses, t-shirts, polo neck shirts and others.

Song Hong’s bedding products brand has been one of the leaders in the domestic market for the last 10 years and has expanded exports to markets such as Japan and South Korea.

In the first nine months of this year the company reported profit before tax of VND335.5 billion on revenues of nearly VND3 trillion, 107 per cent and 21 per cent up year-on-year.

Since 2015 it has paid cash dividends of 45 per cent every year. A 35-40 per cent payout is planned for 2018 and 35 per cent for 2019.

It plans to expand capacity by 30 per cent from 2020 by investing in another production facility in Nam Dinh Province. 

VIB allowed to apply Basel II     

Vietnam International Bank (VIB) has received approval from the State Bank of Viet Nam (SBV) to apply capital adequacy ratio following Basel II standards.

This approval followed SBV’s Circular No 41/2016/TT-NHNN on regulating capital adequacy ratio for banks, branches of foreign banks, effective from January 1, 2019.

“Meeting strict Basel II standards, VIB is capable of operating safely in accordance with advanced general rules of developed countries around the world to prevent credit, market and operation risks,” the bank said in a statement.

Basel II is the second edition of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on banking supervision.

Basel II comprises minimum capital requirements, supervisory review and market discipline. It aims to enhance competition and transparency in the banking system and make banks more resistant to market changes.

Three years ago, SBV selected the first 10 commercial banks to pilot Basel II standards. To date, only VIB and Vietcombank are the two banks among 10 to join the pilot scheme successfully.

“The successful implementation of Basel II helped VIB develop business strategies and better form customer, products, risk management and price policy to optimise capital and risk assets,” the bank’s CEO Han Ngoc Vu said.

Previously, in July 2018, VIB became the fifth bank in Viet Nam’s banking system to completely buy all bad debts sold to Viet Nam Asset Management Company (VAMC) to bring its real balance sheet back to “one number” – an important step to implement Basel II.

November sees trade deficit of $400 million     

Viet Nam reported a trade deficit of US$400 million in November, equivalent to 1.9 per cent of total export value, according to the General Department of Viet Nam Customs.

The nation’s foreign trade this month was valued at an estimated $43.6 billion, down 1.6 per cent from the previous month. Of that figure, the total export revenue went down by 4.1 per cent to $21.6 billion, while import value increased by 1.1 per cent to $22 billion.

The November figure brought the 11-month foreign trade value to $440.45 billion, up 13.4 per cent from the same period in 2017. Despite the deficit in November, there was still a trade surplus worth more than $6.8 billion for the January-November period.

The items with the highest export revenue in the period were telephones and parts with $46.14 billion, up 11.5 per cent year on year. They were followed by the textile-garment sector with $27.77 billion, up 17.4 per cent, and computers, electronics and parts with over $27 billion, up 13.9 per cent.

As regards imports, from January to November, the country spent $38.7 billion on computers, electronics and parts, a year-on-year increase of 13.6 per cent and $11.76 billion on fabric, up 13.6 per cent against the same period in 2017.

The areas with declining imports were machinery, equipment, tools and spare parts with $30.71 billion, down by 0.7 per cent. Phone accessories and components were also down at $14.43 billion, 0.8 per cent lower than in the same period last year. 

Forestry export value up almost 17% in 11 months     

Viet Nam gained an estimated US$8.49 billion in the first 11 months of this year from the export of forestry products, according to the Ministry of Agriculture and Rural Development’s Viet Nam Administration of Forestry (VAF).

The export value rose 16.6 per cent year on year and accounted for 23.42 per cent of the total agro-forestry-fishery exports. The forestry sector’s trade surplus was estimated at nearly $6.4 billion in the first 11 months. Major export markets of local forestry products included Japan, the European Union, China and South Korea, making up nearly 87.33 per cent of the total.

The nation expects to gain $9.3 billion in total this year from the export of forestry products. According to the administration, the export results were attributable to the restructuring of forestry sector over the past five years. In the near future, the Forest Law Enforcement Governance and Trade Voluntary Partnership Agreement, which was signed between Viet Nam and the EU in October in Brussels, will help Viet Nam expand export markets and improve regulations on forest management.

The agreement will also deal with illegal wood exploitation and trade, contributing to the sustainable development of Viet Nam’s wood processing sector. It will benefit Viet Nam in socio-economic and environment terms, contributing to stepping up Viet Nam’s exports of wood and wooden furniture to markets outside the European Union such as the US, Japan and Australia, thus achieving the goal of earning $12-13 billion from wood exports by 2020.

According to the administration, during the 11-month period, the import of wood and wooden furniture reached $2.1 billion, up 6.17 per cent year on year, mostly from China, Cambodia and Thailand. 

14 firms win Vietnam HR Awards     

Fourteen local and multinational companies were honoured for their human resource strategies at the 2018 Vietnam HR Awards in HCM City on Tuesday.

They won a total of 28 awards.

In group A for businesses which have been in Viet Nam for 15 years and have at least 100 employees and over VND500 billion (US$21.4 million) in annual revenues, Unilever Vietnam was the overall winner.

There were awards for leading HR strategies in five categories: Best HR Strategy, Leading Workforce Planning and Resourcing, Leading Total Rewards, Leading Talent Management, and Leading Working Management.

The other winners in the group were FrieslandCampina, Techcombank, FPT Corporation, Nestle, Novaland Group, Vietinbank, and DHL-VNPT Express.

In group B Mobile World won the overall award.

Other winners in the group were FTV-Nokia Manufacturing Service, Bosch, and Sun Life.

Two judges’ choice awards went to Olam (Industry Pioneer) and Hoan My Medical Corporation (Excellent Execution-Talent Acquisition).

Speaking at the event, Deputy Minister of Labour, Invalids and Social Affairs Nguyen Thi Ha said: “Vietnam HR Awards has not simply stopped at being a competition; it has evolved into a common playground for businesses and the HR community in Viet Nam.

“As a result, individual businesses’ pride and joy in winning each award has managed to spread exponentially, bringing excellent policies and strategies to the whole community.”

Tieu Yen Trinh, Talentnet CEO, vice chairwoman of the awards organising committee and member of the jury, said: “Through every season, the Vietnam HR Awards brings with it a wish to accompany businesses in Viet Nam in their journey to self-assess their strengths and limitations in their own HR strategies, while encouraging businesses to learn from each other to optimise their policies to match their business goals.”

As part of the awards ceremony, a seminar on the topic “Bold Reflection” was held featuring “untold stories” from successful local and multinational corporations to encourage business leaders and HR professionals to constantly “look back” to improve strategy and unleash their growth potential.

Organised by Lao dong& Xa hoi (Labour and Social Affairs) newspaper and Talentnet, the third biennial awards attracted over 200 applications from local and multinational enterprises, with the number of the former going up by 30 per cent from the last edition. 

Over 3.6 trillion VND collected from G-bond auction this week

The State Treasury of Vietnam raised more than 3.6 trillion VND (154.8 million USD) from Government bonds (G-bonds) in this week’s auction, according to the Hanoi Stock Exchange (HNX). 

The auction offered 4.5 trillion VND (193.5 million USD) worth of G-bonds with different maturities. 

Three tenures were available, including five-year bonds worth 500 billion VND (21.5 million USD) and ten-year and 15-year bonds each worth 2 trillion VND (86 million USD). 

The auction of 10-year bonds mobilised over 1.9 trillion VND (81.7 million USD) at the average yield rate of 5.1 percent per year, up 0.04 percent from that of the previous G-bond auction on November 21.

Meanwhile, the 15-year bond auction collected 510 billion VND (21.93 million USD) at the average interest rate of 5.3 percent per year, the same as the last auction.

There was no successful bid for five-year bonds.

So far this year, the State Treasury has raised nearly 137.3 trillion VND (5.9 billion USD) from G-bond auction at the HNX.

According to the Ministry of Finance, Vietnam expects to issue 180 trillion VND (7.7 billion USD) worth of G-bonds this year, with the focus being on long-term maturity and keeping the interest rate at low levels.

G-bonds valuing at 159.9 trillion VND (7.03 billion USD) and having an average maturity of 13.52 years, up 4.81 years against 2016, were issued last year. The bonds had an average annual interest rate of some 6.07 percent, down 0.2 percentage points against 2016.

VientinBank Laos launches branch in Vientiane

The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) opened a new branch in the Lao capital of Vientiane on November 28, the second Lao branch the bank has opened since 2015.

The launching ceremony drew leaders of the Bank of Laos, representatives of the Vietnamese Embassy in Laos, VietinBank Deputy General Director and Chairman of the Board of Members Nguyen Duc Thanh, and General Director of VietinBank Laos Le Quoc Nam, among others.

Opening the event, Nam said that as the second largest Vietnamese bank in Laos with a stable growth of over 20 percent annually and a bad debt rate of under 0.5 percent, VietinBank Laos has shown a strong performance in fostering the investment partnership between Vietnam and Laos, contributing to boosting the economic growth and trade relations of Laos.

The bank currently has total assets worth 357 million USD and has accompanied many big Vietnamese and Lao business projects in the country, he said.

According to Nam, the opening of the Vientiane branch will help VietinBank become more self-reliant in business activities, expanding the network in the southern economic area of Vientiane. This is also an important step for VietinBank Laos and the capital city branch to enhance their capacity in serving the business community and customers in the key economic area.

Meanwhile Phutthaxay Sivilay, Director of the Department of Commercial Banks under the Bank of Laos, said that the banking sector plays an important role as the blood vessels of the whole economic system.

Therefore, the Government of Laos and the Bank of Laos have focused on reforming mechanisms and different tolls to create optimal conditions for investors who wish to form commercial banks in Laos, thus boosting the growth of the sector in both quality and numbers, he said.

He noted that currently, six commercial Vietnamese banks are operating in Laos.

The official affirmed that the launching of the Vientiane branch of VietinBank Laos will facilitate the growth of trade and investment, showing his belief that VietinBank Laos will make important contributions to the socio-economic growth of Laos, providing local customers better access to high quality services.

Indian firms work to further explore Vietnam’s garment and textile market

India is one of the major material suppliers of Vietnam’s garment and textile sector, but trade value between the two sides remains modest. Therefore, Indian firms are working to promote trade activities in the Vietnamese market.

Earlier this month, the Indian Consulate General in Ho Ch Minh City worked with the Vietnam Cotton and Spinning Association (VCOSA) to hold a meeting between Vietnamese firms and their Indian counterparts joining the 18th International Textile and Garment Industry Exhibition. 

According to the General Statistics Office, in 2017, trade between Vietnam and India hit 7.62 billion USD, with Vietnam’s exports at 3.75 billion USD.

In the first nine months of 2018, bilateral trade hit 8.27 billion USD, up 47 percent over the same period in 2017, bringing the countries closer to the target of 15 billion USD in two-way trade in 2020. 

The two sides have defined garment and textiles as a prioritised sector in bilateral ties.

Indian General Consul in Ho Chi Minh City K Srikar Reddy cited Indian statistics showing that in the 2017-2018 fiscal year, India’s global exports of garment and textile hit 36.73 billion USD, including 555 million USD to Vietnam, up 42 percent over the previous fiscal year.

From April to August 2018 of the 2018-2019 fiscal year, India earned 257 million USD from selling garment and textile products to Vietnam, up 59 percent over the same period a year earlier.

Although trade of garment and textile between the two countries has enjoyed impressive growth in the past two years, the two sides have much potential to continue boosting partnership in the area.

The Vietnamese garment and textile sector imports cotton, accessories and fabric for production.

Under the free trade agreement between India and the ASEAN, most cotton and woven cotton fabric and knitted fabric imported from India will enjoy tax exemption from January 1, 2019, making India a competitive supplier of garment and textile materials and machines for Vietnam.

Last year, Vietnam imported 19 billion USD worth of materials, mostly yarn and fabric from major suppliers such as China, the Republic of Korea and Taiwan (China). However, imports from India were modest.

Shailesh Martis from the Cotton Textile Export Promotion Council of India (Texprocil) said Vietnamese firms should explore the 1.3 billion-strong market of India.

Statistics from Texprocil showed that in 2017, India was the world’s second largest exporter of cotton products, top cotton and jute producer and the second biggest fibre producer.

Indian businesses have shown increasing interest in Vietnam from which they can enter the Southeast Asian market.

Indian businesses have invested in 201 big projects in Vietnam with a total investment of about 876 million USD, ranking 27th out of the 126 foreign countries and territories investing in Vietnam. But Indian General Consul K Srikar Reddy said that if counting India’s investment to Vietnam through a third country, the figure is 1.4 billion USD.

ViettelPay information security certified     

Viettel Pay’s digital banking service has received the certificate of the Payment Card Industry Data Security Standard, the international information security standard for organisations that handle branded credit cards.

It was created to increase safety for cardholder data to reduce credit card fraud.

The service has completed Trustwave’s Self-Assessment Questionnaire and Vulnerability Scan.

The standard is mandated by the card companies and administered by the Payment Card Industry Security Standards Council.

MasterCard, American Express, Visa, JCB International, and Discover Financial Services established the council in 2006.

Four months after it began operations, ViettelPay has more than 2.75 million subscribers.

It has over 200,000 transaction spots where customers can withdraw and put money into their account, 11 times than number of ATMs in the country.

It allows customers to transfer money, make payments, deposit money, and even offers loans and assists mobile phone users in performing financial transactions without being physically present at a bank.

Last month (October) ViettelPay won a gold medal at the 18th annual Asia Pacific Information Communication Technology Awards in China. 

S Korean insurer to acquire stake of VietinBank Insurance
     
South Korea’s Hyundai Marine & Fire Insurance Co Ltd (HMFI) has announced it will acquire a 25 per cent stake of VietinBank Insurance (VBI).

VBI will issue 16.7 million shares to HMFI to raise the Vietnamese insurer’s charter capital to VND667 billion (US$28.5 million). The deal is expected to be completed in the first half of 2019 after the Ministry of Finance approves in principle the charter capital change.

VBI held its annual general meeting of shareholders (AGM) to approve the capital hike plan through the private placement of shares to foreign investors.

According to the document submitted to the AGM, by June 2018, three foreign investors had sent official offers to VBI, expecting an acquisition. After consideration, Hyundai Marine & Fire Insurance Co Ltd (HMFI) was selected for negotiation of the deal.

The offer price will not be lower than the book value of VBI on December 31, 2017. Shares issued to foreign investors can not be transferred within 10 years of the completion of the offer, except for in some special cases.

The Korean investor requires that there should be at least one foreign investor on the Board of Directors who is not involved in management activities, to ensure the best support for VBI. This person will join VBI’s Board of Directors when the Ministry of Finance revises VBI’s licence to increase its charter capital and record foreign shareholders.

Hyundai Marine & Fire Insurance Co. Ltd. provides non-life insurance and other related insurance services in South Korea and internationally. It also engages in building and facility management, asset management, investment advisory, reinsurance brokerage and claims service businesses.

According to experts, foreign investors have decided to take part in the Vietnamese market thanks to its high growth. Viet Nam’s insurance sector has targeted revenue of VND129.24 trillion ($5.52 billion) this year, up 22.38 per cent against 2017. If it hits the target, it would be the fifth consecutive year the insurance industry has posted annual growth of more than 20 per cent. The industry’s total revenue surged by 21.2 per cent to VND105.61 trillion in 2017. 

F88 raises funding from European investor     

Ha Noi-based pawn shop chain F88 has successfully raised a new round of financing from Dublin-based investor Granite Oak Advisors.

The information was announced at the signing ceremony held in HCM City on Tuesday.

Financial details of the investment were not disclosed but F88 said the fund valued the firm at nearly VND1 trillion (US$43.5 million).

F88’s chairman cum general director Phung Anh Tuan said the new investment would be used to expand the chain of F88 stores in HCM City from the current 45 ones as well as increasing outstanding loans.

The company planned to open 300 stores across the country by 2021, Tuan added.

This is the first deal for Granite Oak in Viet Nam. The firm has invested in emerging markets in Europe and Africa across sectors spanning hotels, leisure, commercial projects and finance.

“Viet Nam’s consumer lending market is newly developed, highly fragmented and has large room for growth. We decided to invest in F88 to scale up the company to capture the growth,” said Simon Wagner, CEO of Granite Oak.

At the announcement ceremony, F88 also signed co-operation deals with Payoo payment gateway and Momo e-wallet to provide financial services to customers at all F88 stores nationwide.

Founded in 2013, F88 pioneered the commercialisation of pawn services in Viet Nam. The company currently provides loans on diverse assets such as cars, motorcycles, mobile phones, laptops and jewellery.

Last year, Mekong Enterprise Fund III Ltd (MEF III), managed by private equity firm Mekong Capital, also invested in F88 with an undisclosed figure.

Credit growth to slow to 14% in next five years
     
Credit growth in the next three to five years is forecast to be around 14 per cent per year, lower than the average rate of 18.1 per cent in the 2015-17 period.

As part of a recent report on the prospects of the country’s banking industry in 2019, the Bao Viet Securities Co (BVSC) projected that the lower credit growth was due to a decline in both capital supply and demand.

Specifically, on the capital demand, the country’s economic growth next year is projected to slow to 6.4-6.5 per cent, which will have a domino effect on capital demand as local firms will not need as much capital as previously to expand production and business.

In addition, forecasted interest rates hike of some 0.25-0.5 percentage points in 2019 will also cause a decline in loans from borrowers, BVSC analysts said.

The credit supply next year will be also restricted due to the central bank’s new regulations on increasing the risk weighting of real estate loans in the banking system from the current 200 per cent to 250 per cent from early next year. The rule means that for every new real estate loan extended, risk weighted assets increase by two and a half times the amount of the loan. This significantly disincentivises banks from providing new loans to the real estate market and helps take some of the heat out of the sector.

A central bank regulation on reducing the proportion of short-term funds to medium and long-term loans at banks from the current 45 per cent to 40 per cent from the beginning of 2019 will also reduce banks’ capital supply.

BVSC analysts also estimated that due to the application of Basel II in the country’s banking system from 2020 as per the central bank’s plan, the estimated capital needed to meet credit growth of 14-15 per cent per year at listed banks will be about VND237 trillion (US$10.13 billion). The largest capital needs are anticipated at Vietinbank, LienVietPostBank and Sacombank, with annual average capital growth rates of 22 per cent, 16 per cent and 13 per cent per year, respectively.