FDI sector`s return on asset (ROA) reached the highest among Vietnam`s economic groups in 2016 with 6.9%, followed by the state sector with 2.6% and the private sector with 1.4%.

In 2016, the FDI sector recorded the highest growth rate in revenue among Vietnam's economic sectors, at 134% compared to 2011, but contributed the least to the state budget, according to the General Statistics Office (GSO).  

During the 2011 - 2016 period, the FDI sector's annual revenue averaged VND560.7 trillion (US$24.13 billion), up 18.6% compared to 2011. It was lower than the VND880.5 trillion (US$37.9 billion, up 12.3%) of the private sector recorded during the same period, informed the GSO in its latest report. 

The private sector came second in terms of revenue growth, up 78.8% in 2016 against the figure number posted in 2011, while accounting for the largest proportion of the total revenue, 55.9%. 

The state sector's revenue growth rate in 2016 was the lowest among the three economic groups in 2016, up 8.9% compared to 2011 and accounting for 16.7% of the total revenue. The average growth rate in revenue of the sector was 1.7% during the 2011 - 2016 period. 

Notably, the FDI sector's return on asset (ROA) reached the highest among others in 2016 with 6.9%, followed by the state sector with 2.6% and the private sector with 1.4%. 

Meanwhile, the private sector had the lowest return on sales (ROS), at 1.9%, in 2016, much lower than that of the FDI and state sectors, reaching 6.7% and 6.6%, respectively. 

It is, however, noteworthy that the private sector paid the largest proportion of tax, at 38.7% in 2016, higher than that of the state and FDI sectors, at 32.2% and 29.1%, respectively. 

Pham Dinh Thuy, the GSO's director of the Industrial Statistics Department, pointed to tax incentives as one of the main reasons for foreign invested companies (FIEs) paying the least amount of tax. The low contribution from FIEs is partly due to a number of preferential policies offered to attract FIEs into priority fields. 

With regard to corporate income tax (CIT), while domestic enterprises have to pay the maximum 22%, the highest amount payable by FIEs operating in high-tech fields is only half of this for the first 30 years, he said. "FIEs are also exempted from paying taxes in the first four years and then pay 50% for the next nine years. FIEs in the high-tech sector are also exempted from many tax lines, such as import tariffs for parts and accessories."

"This is one of Vietnam's most attractive factors for foreign investors and FIEs," Thuy added. 

Regarding this matter, Le Thi Duyen Hai, director of the Department for Tax Declaration and Accounting under the General Department of Taxation, said in addition to tax payment, state owned enterprises have to contribute a considerable amount in dividends and after-tax profit to the state budget, which amounted to VND67 trillion (US$2.88 billion) in 2017 and VND65 trillion (US$2.79 billion) in 2016. 

"This has a significant impact on the structure of state budget contribution from economic groups," Hai added.

Vietnam's one million enterprise goal by 2020 challenging but feasible

Stabilizing macro-economic conditions and creating favorable environments for enterprises development are some key recommendations to achieve the one-million enterprise target.

Taking into account the number of enterprises recorded in January 2017 of 517,900, the target of having one million enterprises by 2020 is challenging but still feasible, stated Pham Dinh Thuy, director of the Industrial Statistics Department under the General Statistics Office (GSO). 

Excluding the number of enterprises suspended operation at around 12,000 per year, Vietnam would need an average of 120,000 newly established enterprises in the 2018 - 2020 period to achieve the target, said Thuy in a GSO meeting on September 19.
"This would bring the total number of enterprises to 130,000 per year," Thuy stated. 

However, only 110,000 enterprises were established in 2016 and 126,900 a year later. If such growth rate does not change, Vietnam is unlikely to meet the target of having one million enterprises by 2020, he added. 

The solution to increase the number of newly established enterprises, according to Thuy, would be to stabilize macro-economic conditions and create a favorable environment for enterprises development. 

Moreover, the government needs to step up effort in removing obsolete business conditions and helping enterprises have better access to capital. 

Of the 517,900, small and medium enterprises (SMEs) accounted for 98.1% or 507,860, up 52.1% or 174,000 enterprises compared to January 2012. 

Upon breaking down, medium enterprises were 8,500, up 23.6% or 1,600 compared to 2012 and accounted for 1.6%, while the number of small enterprises reached 114,100, accounting for 22% of the total and up 21.2% or 20,000. 

The remaining was micro enterprises with 385,300, contributing 74.4% of the total and up 65.5% or 152,000. 

In January 2017, Ho Chi Minh City had the largest number of enterprises at 172,600, accounting for 33.3% of the total. The city also attracted the largest workforce of 5.3 million, accounting for 37.7% of the total number. 

FDI sector employs the largest workforce

The number of state-owned enterprises (SOEs) and its workforce in January 2017 decreased by respective 18.4% and 23.1% compared to the same period of five years ago. This resulted in an annual decline of 4% in the number of enterprises and 5.1% in workforce in the 2012 - 2017 period, which showed modest progress in the restructuring of the public sector, Thuy said.

Meanwhile, in early 2017, the number of foreign invested companies (FIEs) increased by 54% and its workforce 62.8% compared to January 2012. This translated in an average increase of 9% in the number of enterprises and 10.2% in employees, double the number of SOEs.

The number of private companies during the same period increased by 52.3% and its workforce 27.9%, averaging 8.8% in the quantity and 5% in workforce in the 2012 - 2017 period.   

Credit growth in Vietnam has surpassed M2 money supply expansion since early July after the State Bank of Vietnam (SBV) withdrew cash from the banking system to reduce pressure on the exchange rate, according to the Bao Viet Securities Company (BVSC).
 
Accordingly, the difference between M2 growth and credit growth fell from VND238 trillion (US$10.24 billion) as at June 20, 2018 to only VND124 trillion (US$5.33 billion) August 22, 2018. 

Vietnam's credit growth hit 8.18 % in the first eight months of 2018, lower than a 10.8% expansion in the same period of 2017, 9.64% in January-August 2016, 10.21% in in January-August 2015 and the full-year target of 17%, informed the Ministry of Planning and Investment (MPI).

Meanwhile, according to the State Bank of Vietnam (SBV), as of August 22, 2018, M2 money supply growth was 8.3%, capital mobilization growth was 8.72%, and credit growth was 8.54% compared to the end of 2017. 

The consumer price index (CPI) rose by 0.45% in August compared to the previous month, while the average CPI in the January - August period increased by 3.52%, quite closed to the 4% target of the government. 

From BVSC's view, inflation risks in the four final months of 2018 are still unpredictable amid high domestic pork prices and global oil prices. Therefore, the SBV will continue to manage the monetary policies in a cautious but flexible manner, based on the actual inflation and capital demand of the economy.

Under this context, Oxfam has played a pioneer role in contributing to ASEAN's vision through the Enterprising For Development (EFD) project, Hoa added. 

Pham Kieu Oanh, founder and executive director of the Center for Social Initiatives Promotion (CSIP), a Vietnam-based enterprise incubator, informed that as part of the inclusive business, EFD's ultimate purpose is to support the vulnerable communities, especially small-scale farmers, poor women and youth, to gain employment, to see their incomes increase and have more access to relevant products and services for better living standard.

Under this context, EFD carries this goal through supporting SMEs which are creating positive impacts for vulnerable groups engaged in their value chain, helping them develop sustainably and thus bring sustainable influence for these groups. 

Almost all of the SMEs confront with different challenges in management, leadership and operation; specific challenges could be different among the SMEs depending on strategic direction, operating fields or the value chain that the enterprises engage in, Oanh continued.

According to Oanh, EFD's supports focus on enhancing business management capacity and business development of the enterprises through in-depth training courses and business coaching packages tailor-made for SMEs. 

During the three-year period of the EFD from 2015 to 2018, the project supported 33 SMEs qualified for Oxfam's requirements and resulted in positive impacts on society. 

Specifically, 33 SMEs created 3,321 jobs, of which 77% were occupied by women. The SMEs provided stable livelihood for the farmers participated in their value and supply chains by guaranteeing to buy the entire inputs of 5,196 farming households, and purchasing by seasons from more than 5,698 other households. Additionally, 13,150 households regularly supplied materials to those enterprises.  

"The EFD project has helped to change the awareness of our management team towards more professional business management. We have also better defined our vision and strategy for long-term development," said Vo Van Dai, director of Van Phan Dien Chau JSC, one of the companies selected for the EFD.

"The EFD contributed 50% to the success of the company," Dai added.

Nguyen Thi Mai, deputy director of Vinh Ha Safe Food Producing and Trading Company  stated the EFD project addressed weaknesses in each company's operations and provided substantial changes for greater efficiency.

Hoa, deputy Country Director of Oxfam in Vietnam, told Hanoitimes that the strong development of SMEs in subject reflect the success of the EFD project. 

"They are confident of the future," Hoa said. 

"Those enterprises no doubt will bring positive impacts on the society and create spillover effects on other SMEs. In the next few months, we will proceed with the next phase of the project, hopefully there will be more enterprises joining our effort," she concluded. 

The State Bank of Vietnam (SBV) has approved the proposal of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) to increase the latter's charter capital by 10% through private placement, announced the SBV.  

Under the decision, Vietcombank, Vietnam's largest lender by market value, will now increase its charter capital from VND35.97 trillion (US$1.55 billion) to VND39.57 trillion (US$1.7 billion) by selling 10% stake to foreign investors. 

"Vietcombank is responsible for increasing its charter capital in compliance with the law. After completing legal procedures, Vietcombank have to submit to the SBV's governor related documents for review and approval," SBV stated. 

The Vietnamese lender announced its plan to sell a 10% stake to a maximum of ten foreign investors at its annual shareholders' meeting in May. 

"The offer for sale has attracted many foreign investors, including Singaporean sovereign wealth fund GIC. Japan's Mizuho Bank, the bank's largest foreign shareholder with a 15% stake, is also entitled to buy more shares to maintain its stakeholding at the bank," Vietcombank CEO Pham Quang Dung told local media. 

He also emphasized that the lender would favour foreign investors with a strong financial track record. Vietcombank is also considering allocating board seats to foreign investors after the stake sale. 

On September 13, the Hanoi Stock Exchange (HNX) informed that Vietcombank will auction 53.4 million shares out of the total 150.6 million shares it holds in Military Bank (MB). The auction is scheduled to be held on October 15 at the HNX. 

At the starting price of VND19,641 (US$0.84) apiece, Vietcombank is expected to book proceeds of at least VND1.04 trillion (US$44.52 million). 

Once completing the sale of 53.4 million shares in MB, Vietcombank will reduce its holding at the bank to 4.5% and is no longer MB's major shareholder. 

Vietcombank previously divested its shares in a number of credit institutions, including SaigonBank, Cement Finance Company (CFC) and entire shareholding in Orient Commercial Bank (OCB) on September 6. 

In the first six months of 2018, Vietcombank's pre-tax profit reached VND8 trillion (US$349.4 million), up 53% year-on-year, according to the lender's quarterly consolidated financial statement. 

As of June 30, the bank's total assets were valued at VND977.6 trillion (US$42.7 billion), down 5.6% compared to the beginning of the year, mainly due to the bank's reduction in deposits at the State Bank of Vietnam (SBV) and other credit institutions. 

With a growth rate of 14% year-on-year, it is estimated that exports of vegetables and fruits could reach US$4 billion by the end of 2018, Tien Phong newspaper reported.

Export turnover of Vietnam's fruits and vegetables in the first eight months of 2018 stood at a record high of US$2.7 billion, up 14.1% year-on-year and US$500 million higher than the revenue from rice exports, according to the General Department of Vietnam Customs (GDVC).  

With a growth rate of over 14% year-on-year, it is estimated that exports of vegetables and fruits could reach US$4 billion by the end of 2018, marking the second consecutive year that revenue from those products is higher than that of rice. 

China remained Vietnam's largest fruits and vegetables importer with US$1.99 billion, up 11.6% year-on-year and accounting for 74.1% of Vietnam's total export value of fruits and vegetables.

The US came in second place with US$87 million, followed by Thailand and Australia. 

Meanwhile, Vietnam also imported US$1.15 billion worth of vegetables and fruits during the January - August period, up 13.4% year-on-year. 

According to the Processing and Market Development Authority (AgroTrade) under the Ministry of Agriculture and Rural Development, the signing of multiple free trade agreements (FTAs) has opened new doors for Vietnam's products to new markets. 

However, exports of fruits and vegetables in the remaining months of the year could face difficulties due to unfavorable weather conditions, the agency warned. 

In the coming months, the Ministry of Industry and Trade predicted that the escalation of the US - China trade spat could have negative impacts on Vietnam's agricultural exports. 

Under pressure from the US' increase of import tariffs on Chinese exports, China's agricultural products will have to find alternative markets and put more pressure on Vietnam's similar products. 

Meanwhile, to avoid China's high import tariff at 25% for US agricultural products, the US is likely to promote exports of agricultural products to Vietnam, including fruits as well as meat of cattle and poultry.

WeWork targets Vietnam office market: JLL

WeWork is scheduled to launch its first co-working space center with area of over 5,000 square meters in Ho Chi Minh City in December, making it the largest in Vietnam to date.

US-based WeWork, one of the biggest global co-working chains, is likely to enter Vietnam's office market and grow in a number of locations in Ho Chi Minh City within the coming 12 months, stated a reported by real estate and investment management firm Jones Lang LaSalle (JLL).

In early 2018, WeWork acquired a large co-working space unit of China NakedHub for US$400 million, paving the way to enter Asia, including Vietnam, where nakedHUB currently has two centers under its name in Ho Chi Minh City and Hanoi. 

According to JLL, WeWork is scheduled to launch its first co-working space center with area of over 5,000 square meters in Ho Chi Minh City in December, making it the largest in Vietnam to date. 

Co-working space has been a new concept in Vietnam in the last few years, for which only a few companies operate in this kind of business model, such as Regus, Toong, Up, Dreamplex and CoGo, among others, according to CafeF.

With an average annual growth rate of 58% in the last two years, the co-working space market in Vietnam will increase strongly in both quantity and size, reaching over 90,000 square meters by the end of the year, real estate service company CBRE has said in its reported. 

The market, however, is relatively small compared to that of traditional office, as Hanoi and Ho Chi Minh City currently have over 1 million square meters each of typical office. 

In Southeast Asia, flexible work spaces have grown by circa 40% compound annual growth rate (CAGR) in the last three years and how take up 2% of the office stock, from 0.5-1.0% in 2015, according to JLL. 

The growth of flexible work spaces in Southeast Asia is in line with the rapid growth in Asia Pacific, where flexible space stock recorded a CARG of 35.7% in 2014-2017, much higher than in the US (25.7%) and Europe (21.6%) over the same period.

JLL predicted that as much as 30% of corporate portfolios could be flexible space by 2030. What initially began as a platform for freelancers and startups, flexible space providers are now tailoring their offering to accommodate corporate users. 

These corporate users are experimenting with coworking via pilot schemes. Key drivers behind corporate demand for flexible spaces include (1) flexibility to accommodate headcount changes; (2) 

convenience with plugand-play one-stop service; (3) fostering collaboration and innovation; (4) sense of community from activities and events and (5) cost effectiveness. 

Following that trend, co-working space has started booming in Vietnam. CoGo, a local co-working space operator, was launched in early June 2018 but has already had two large centers with a total floor area of over 5,500 square meters. 

In early August, the third center of CoGo in Ho Guom Plaza in Ha Dong district, Hanoi, was put into operation, increasing the total area to over 7,000 square meters. Under the plan, CoGo will have five centers with total area of over 12,000 square meters by the end of 2018.

Vietnam top 53 IT firms see revenue of US$16 billion in 2017

Most of the IT firms on the list focus not only on business performances, but also on investing in new technologies and taking part on digital transformation.

Vietnam's 53 leading IT companies in 2018 have total revenue of VND374.43 trillion (US$16.06 billion) and employ nearly 93,000, according to Vietnam Software and IT Services Association (VINASA), which compiled the list.
 
These companies have been maintaining high annual growth rate in recent years, and are considered to have major impact on the development trend of the Vietnam IT market. They include military-run Viettel Group, FPT, MISA, CMC, and VNG, among others, local media reported.

Mai Liem Truc, former deputy minister of Information and Communications, said that there have been breakthroughs in many applications developed on the platform of the Fourth Industrial Revolution by local enterprises. 

Truc anticipated that there will be more Vietnamese IT joining the Fourth Industrial Revolution and taking the Vietnam's IT industry to the next level. 

According to VINASA, in addition to criteria such as personnel, market and customer base, technology, products, revenue and corporate governance, the organizers want to find companies adopting achievements of the Fourth Industrial Revolution through new products and solutions applying artificial intelligence - AI, Internet of Things - IoT, Big Data, blockchain in resolving socio-economic issues. 

Most of the IT firms on the list focus not only on business performances, but also on investing in new technologies and taking part on digital transformation. 

For example, FPT is developing program to operate self-driving car and has provided services to some major car manufactures in Japan and Europe. Additionally, Viettel has adopted new technologies in projects related to e-government, education, agriculture and smart city. Recently, VNG also established a test center for IoT and AI applications. 

Nevertheless, VINASA has expressed concern over the lack of qualified personnel for the Fourth Industrial Revolution, especially when Vietnam is pushing for digital transformation. 

Vietnam e-commerce sales grow 20% annually

E-commerce sales are forecast to reach US$10 billion by 2020, accounting for 5% of total retail and services revenue, while 30% of the population will shop online, spending an average of US$350 per person annually.

Vietnam's e-commerce market has witnessed high growth rate since 2013, with online sales increasing from US$2.2 billion in 2013 to US$6.2 billion in 2017, averaging annual growth rate of 20%, the government portal reported.
 
In the 2013 - 2018 period, e-commerce has been vital in transforming and modernizing the distribution system in particular, and Vietnam's commerce market in general, stated Cao Quoc Hung, vice minister of Industry and Trade, in a conference on September 14. 

Vietnam currently has 50 million internet users, accounting for 54% of the population and higher than the world's average of 46.64%, Hung informed. 

In 2017, around 33 million people shopped online at least once a year, while the retail e-commerce sale increased from US$2.2 billion in 2013 to US$6.2 billion in 2018, contributing 3.8% to the total retail and services revenue. 

Le Thi Ha, head of the policy office of the Department of E-Commerce and Digital Economy, said e-commerce sales are forecast to reach US$10 billion by 2020, accounting for 5% of total retail and services revenue, while 30% of the population will shop online, spending an average of US$350 per capita annually.

Additionally, e-commerce activities have become more diversified, not only via the computer, but also in other devices such as smartphones and tablets.

Moreover, Vietnam's legal framework and policies, especially Decree No.52 on e-commerce, have played a key role in creating favorable conditions for high growth rate of the retail e-commerce market. 

The decree aims to ensure fairness between e-commerce and traditional commerce, of which enterprises operating in e-commerce must comply with laws and regulations in equal to that of traditional one. 

From 2013 to date, the most popular products sold online included clothing, footwear and domestic (59%), electronic devices (47%), and household appliances (47%), among others, while payment and delivery methods have been used flexibly by enterprises. 

Satisfaction of customers when shopping online increased from 29% in 2013 to 54% in 2017, according to the ministry. 

However, the rapid advancement of technologies in the context of the Fourth Industrial Revolution has made an significant impact on e-commerce activities, but at the same time created opportunities for change.

Hung pointed to new models of e-commerce which have not been covered in the current legal framework, especially the issue of managing cross-border e-commerce activities and tax collection that should be in the focus of the government in the coming time.