BUSINESS NEWS 28/5

Minors over 14 no longer eligible for green cards through parents’ investments

Vietnamese children aged 14 or older cannot be guaranteed green cards through their parents’ investor visas in the United States at present since the number of applicants has exceeded the annual quota for Vietnam, stated an immigration expert at a seminar in HCMC today, May 22.

Held by the Saigon Times Group and Global Residents LLP, a member of American Immigration Group, the seminar, called “Reduce risks and protect assets of EB-5 participants,” was aimed at providing participants with useful information and advice on the risks and frauds seen with the immigration program.

Qendrese Sadriu-Rrustemi, managing director of the licensed EB-5 regional center Global Residents LLP, headquartered in New York, gave a brief introduction of the EB-5 Immigrant Investor Visa Program administered and processed by the United States Citizenship and Immigration Services (USCIS).

EB-5, which is short for “employment based,” is a U.S. government program through which foreign investors can obtain a green card for themselves, their spouse and their children. The program was created as an economic stimulus program to help the U.S. economy and create jobs for American workers.

To be approved, an investor must invest at least US$500,000, plus fees worth roughly US$85,000, into a new project approved by USCIS. The project must also create 10 jobs for U.S. workers.

The total cost amounts to only US$85,000 once the original US$500,000 is returned (through profits). This makes the EB-5 a very smart investment, Sadriu-Rrustemi remarked.

The investor must prove the funds were legally obtained and must submit an application form, called the I-526, to USCIS. The processing time is usually 16-28 months.

After the application is submitted, USCIS sends the investor a letter of receipt within three weeks, confirming that the funds have been received and transferred to the project. USCIS then begins to process the application.

Currently, after the I-526 is approved, the investor will have to wait for a visa to become available since the number of applicants from Vietnam has exceeded the country’s visa quota on an annual basis, she said.

The wait time for a visa is estimated to be 4.5 years after the approval of the I-526. She stressed that many companies in Vietnam promise a visa in two years or right after the filing of the I-526, but this is simply not possible at all.

She added that the wait time is a variable that depends on many factors, such as the number of investors from Vietnam applying that year and the introduction of new proposed legislations that may give Vietnam more visas and reduce the wait time.

There are many reasons for the high incidence of misinformation, including fraud and scams, a lack of knowledge and expertise, a focus on sales and commissions and an oversaturated market, according to Sadriu-Rrustemi.

She suggested that investors work directly with licensed professionals who can provide the facts and most up-to-date information to prevent lies and fraud from spreading. These professionals have a responsibility to the U.S. government.

She pointed out that the EB-5 is still a pilot program, so lawmakers can vote each year to reauthorize or terminate the program. Further, the EB-5 is always changing as new laws, age limits for children and requirements from USCIS are added.

For example, only a few months ago, a 16-year-old child could receive a green card through their parent’s investor visa, which is no longer possible since the child age limit is now 14.

Meanwhile, Kenneth K. Nguyen, senior partner at Global Residents LLP, also provided insights into some of the fraudulent claims being advertised in Vietnam.

Many Vietnamese people have been led to believe that they can buy a home and receive a green card. “Deceptive advertisements like these imply that you will receive a home when you invest. The EB-5 is an investment program, not a home purchase,” stated Nguyen.

Another rumor is that the EB-5 investment requirement has dropped to US$400,000. He pointed out that this is fraudulent and illegal, adding that the minimum investment requirement of US$500,000 is clearly posted on the USCIS website.

Claims that paying more money will result in faster processing for green cards are also false. He stated that there is no fast-track process. In theory, the EB-5 program runs under a “first in, first out” policy, so families that invest first will typically receive their green cards first.

Meanwhile, only children aged below 14 can be guaranteed a green card through their parents’ investor visa. Those aged 14 and above would have to apply as separate investors.

Nguyen also pointed out scam advertisements that suggest investments will attract large monetary gifts or kickbacks. He stressed that no one is giving money away, adding that these tricks and gimmicks are used by con artists.

He also addressed an advertisement claiming, falsely, investors would receive an interest rate of up to 4%. He noted that the EB-5 was not created to give investors interest. “Any experienced investor will know that high interest means high risk,” he said, adding that the key words in this advertisement were “up to,” which could mean anything from 0% to 4%.

Tollgates earn VND1 trillion per month

BUSINESS NEWS 28/5

The Directorate for Roads of Vietnam has announced the revenues generated by build-operate-transfer (BOT) road projects nationwide, stating that these projects earned over VND1 trillion per month on average.

There are 57 BOT projects collecting toll fees in the country, with total revenue in the first quarter reaching over VND3.3 trillion. In January, these projects earned over VND1.2 trillion, while revenue recorded in February and March were VND989 billion and VND1.1 trillion, respectively.

Even though the BOT projects reaped high revenues, many BOT operators have lamented the investment losses.

Aside from 27 projects that earned a higher revenue in 2018 than forecast in their financial plans, the revenue of 26 others was lower than forecast. The remaining four projects were put into service only recently, so their financial evaluations have not yet been completed.

Phap Van-Cau Gie topped the list of projects that saw a positive growth in revenue last year, generating over VND700 billion, up 110% against the target.

Securing second place was an expansion project for two National Highway 1A sections that run through the northern-central province of Quang Binh, with total revenue exceeding VND220 billion, up 111%. The volume of traffic on the roads of these projects was much higher than the estimates.

Meanwhile, the lower-than-expected number of vehicles using BOT roads was blamed for the low revenue seen by 26 projects. Apart from that, toll fee reduction and exemption policies for vehicle owners living near BOT tollgates may be responsible for revenues falling short of expectations.

Among the projects that saw a drop in revenue, an expansion project for a section of National Highway 1A running from Hanoi to Bac Giang Province saw an 87% decline in revenue, at VND460 billion last year, followed by the Phu Gia-Phuoc Tuong and Deo Ca tunnel projects, both dropping by over 90%.

Besides this, some projects recorded a stable volume of traffic, such as the Hanoi-Haiphong Expressway and the Nam Cau Gie project, but their revenues still dropped due to the staggering number of vehicle users buying monthly or quarterly discounted tickets, which was higher than forecast, or due to the toll fee reduction and exemption policies.

The fall in revenue may prompt BOT investors to incur losses and thus mounting bad debts for banks that granted loans for these projects.

To reduce possible risks in granting loans and encourage credit institutions to continue funding traffic projects, the State Bank of Vietnam asked the Ministry of Transport to propose measures for removing existing obstacles to toll collection to the prime minister for approval, while promoting the launch of a nonstop toll fee collection service nationwide.

Spain shows interest in HCMC market

Spain’s ambassador to Vietnam and Spanish enterprises have expressed interest in the local HCMC market, heard attendees at a launch ceremony for a new commercial office in the city.

The HCMC Economic and Commercial Office, under the Spanish Embassy in Vietnam, on May 23 inaugurated the new office on the seventh floor of the Diamond Plaza building at 34 Le Duan Street in HCMC’s District 1.

Speaking at the event, Spanish Ambassador to Vietnam Maria Jesus Figa Palop said that this marked the third relocation of the office, adding that she was pleased with the new location of the office at the center of the city.

HCMC is the most popular destination for the Spanish community in Vietnam, she said, adding that Spanish firms expected to gain ground in Vietnam and to sound out more business opportunities in the local market.

Over the past few years, Vietnam’s rapid economic growth has attracted many Spanish firms. Multiple well-known brands in Spain have entered the country, such as fashion brand Zara. Besides this, the ambassador also hailed Vietnam as a potential market even though its high competitiveness, complicated procedures and language-related obstacles have hindered Spanish firms from doing business in Vietnam.

Addressing the inauguration ceremony, Tran Phuoc Anh, deputy director of the HCMC Department of External Affairs, said that the Spanish enterprise community in HCMC has been growing recently. The city is creating more favorable conditions for Spanish firms to operate in Vietnam and removing obstacles to cooperation between the two countries’ enterprises.

Bilateral trade revenue amounted to US$3.7 billion in 2018 from US$300 million in 1997, Anh said.

Due to rising Spanish interest in HCMC, Anh also introduced 210 projects being promoted for investment by the city to Spanish firms attending the event.

VinID acquires MonPay e-wallet

Vingroup’s loyalty program VinID has acquired digital wallet app MonPay, a central bank source says.

The takeover procedures have been completed, the source told VnExpress, but did not disclose its form and value.

Earlier this week, a new feature called "My Wallet" has appeared on the VinID app where customers can accumulate points from goods and services bought from Vingroup’s ecosystem, which includes real estate, education and shopping.

From this feature, customers can deposit and withdraw money as with any electronic wallet, and all transactions go through MonPay. MonPay is a product created and run by local firm People Care JSC.

Previously, at the end of 2018, People Care completely replaced its management board with three key executives from VinID, including Nguyen Thi Diu, deputy general director of Vingroup and general director of VinID; and Nguyen Minh Hong, one of three founding shareholders of VinID.

VinID JSC was established in July 2018. It has a chartered capital of VND3 trillion ($128.81 million) and is 80 percent owned by Vingroup, Vietnam’s biggest private conglomerate.

People Care JSC is one of 29 enterprises that have been granted the payment intermediary license from the State Bank of Vietnam. The company doubled its charter capital from VND68 billion ($2.92 million) to VND138 billion ($5.93 million) at the end of 2018, after it had reappointed its board of directors.

The government is working to accelerate the use of cashless transactions. In a resolution released January, it tasked the central bank to come up with solutions that would promote the use of e-wallets, which allow users to deposit cash into their e-wallets without the need for a bank account.

However, Vietnam is still far away from becoming a cashless society, given low financial literacy and the lack of an ecosystem, experts say.

The use of cash in Vietnam remains high. World Bank's statistics released last year showed that the country had the lowest percentage of cashless transactions in the region with only 4.9 percent, while this value for China and Thailand were 26.1 percent and 59.7 percent respectively. 

Toll fees at BOT T2 station may be cut

After its meeting with numerous parties, the Ministry of Transport on May 24 proposed reducing toll fees at the BOT T2 tollgate on National Highway 91 in Thot Not District, Can Tho City, rather than relocating it.

The Directorate for Roads of Vietnam also asked four localities, including An Giang, Dong Thap and Kien Giang provinces and Can Tho City, and the BOT T2 tollgate investor, to reduce toll fees for vehicles passing through the tollgate.

Additionally, Can Tho-An Giang National Highway 91 Investment JSC, the operator of the tollgate, was asked to prepare to slash toll fees for drivers near the tollgate in Dong Thap and An Giang provinces, along with Can Tho City.

Apart from the fee reductions, the Directorate for Roads of Vietnam assigned the IV road management bureau to examine and identify the types and volume of vehicles passing through the intersection of National Highways 80 and 91, and the intersection of National Highway 80 and Vam Cong Bridge, to find appropriate solutions.

The inspection time is expected to last three days, from May 25 to 27 and the inspection team will report to the directorate on May 28.

Earlier, the Automobile Transport Association of An Giang Province and drivers voiced their objection to the wrong location of the BOT T2 tollgate.

Numerous drivers traveling from An Giang Province through the tollgate stopped their vehicles and argued with toll collectors, causing a traffic snarl on May 24.

Despite the explanations from the traffic police of Can Tho City, these drivers were unwilling to pay their tolls, the local media reported.

The operator of the tollgate was then forced to allow vehicles to pass at no charge, due to the long back-up of traffic.

FMCG growth in value hits highest peak in Q1

BUSINESS NEWS 28/5

The growth in value of the Vietnamese fast-moving consumer goods sector (FMCG) in the first quarter of 2019 rose to a four-year high thanks largely to the shopping spree during the Lunar New Year holiday, or Tet, according to Kantar Worldpanel.

The market research firm said in its latest FMCG monitor report that despite the Lunar New Year season in February, Vietnam’s consumer price index was kept under control during the quarter, recording the lowest rate in three years. The domestic demand of consumer goods continued to thrive, posting robust growth of 13%.

In the long term, the local FMCG market shows a continued slowdown in four key urban cities, namely the capital city of Hanoi, the central coastal city of Danang, HCMC and the Mekong Delta city of Can Tho, while seeing an impressive performance in rural areas.

Also, the market looks brighter in the short run, thanks to the spending spree of consumers during the Tet season.

Healthy growth has been observed across all sectors in key cities and rural areas, bolstered by an increase in consumption.

In addition, beverage and dairy are the respective sectors driving the market growth in urban and rural areas, while personal care has been developing quickly in both regions.

According to the report, ready-to-drink milk was among the top growing categories in the quarter, especially in rural areas. Its growth was mainly driven by new buyers and also the increasing volume of consumption in the rural region.

However, the category is still underdeveloped and holds high potential to expand further, in terms of both its consumer base and consumption.

Also, modern trade has made a significant movement, especially in the four key urban cities, backed by both large and small retail, as well as online channels.

In rural areas, medium-size street shops remain the best recruitment channel in terms of winning new shoppers. Positive growth has been seen across modern and traditional channels, emphasizing the more-fragmented retail landscape, as well as the growing importance of omnichannel shopping trends in Vietnam.

This month, some 60% of Gen Z -- referring to those born in the late 90s -- in HCMC shopped for foods and beverages in convenience stores for out-of-home consumption during the first quarter of 2019. The figure is almost double the shopper base among Gen Y and Gen X as those born in the 80s and early 90s.

While Japanese retailer FamilyMart earned the most spending from all age groups, B’smart is the number one store chain among Gen Z.

The key success factor of B’smart is to encourage much higher spending among students when they are in store, yet still sees a large gap in terms of traffic, including penetration and shopping frequency, compared to other convenience store chains, according to the report.

Israeli startups seek to cooperate with Vietnam

 

More than 5,000 Israeli startups expect to cooperate with businesses in Vietnam, especially in HCMC, said Gilad Cohen, director general for Asia-Pacific at the Israeli Ministry of Foreign Affairs.

At a meeting in HCMC on May 24, HCMC Vice Chairman Vo Van Hoan said Israel is an important partner of HCMC, and Vietnam as a whole. Trade between the two countries has grown gradually in recent years, reaching over US$1 billion per year on average.

In the fourth Industrial Revolution, Vietnam will improve the development of technologies and a smart city project, in which Israel has strengths, Hoan added.

Meanwhile, Vietnam has advantages in human resources. HCMC is a hub for economy, education, healthcare and science in the country, the municipal vice chairman said, expecting that the two sides can soon execute their cooperation plans.

Cohen shared Hoan’s view, saying that Israel also seeks to expand its cooperation with Vietnam in the hi-tech, agriculture, auto and aviation sectors.

The two countries have yet to fully tap their cooperation potential. In the near future, Vietnam and Israel will start a new round of negotiations over their free trade agreement, which is expected to help bolster the value of bilateral trade when it takes effect, Cohen said.

Saigon 3 Jean opens garment plant cluster

BUSINESS NEWS 28/5

Saigon 3 Jean JSC, a member of Saigon 3 Group, put into operation a garment factory cluster covering 50,000 square meters on May 24 at Nhon Trach Industrial Zone in the southern province of Dong Nai.

The cluster was built at a cost of VND900 billion in the first phase, including a wash factory, a garment plant and a completion center.

Saigon 3 Jean was established in 2018, with charter capital of VND300 billion. Work on the construction of the company’s plant cluster started in July 2018. The wash facility was completed in November 2018 and put into operation in December 2018. The wash factory is expected to turn out 17 million units per year in the first phase and 35 million per year in the second phase.

The construction of the factory cluster was finished in early 2019. On March 15, its two facilities, including a garment plant and a center, were put into service.

The firm, whose main products are Jean and Khaki, in combination with other factories operated by Saigon 3 Group, will contribute to garment production chains in the country and are able to meet the high-quality fashion demands of Japanese, European and U.S. customers.

Nguyen Khanh Linh, vice chairman of Saigon 3 Group’s board, said that the firm receives very large orders from well-known fashion brands throughout the world each year, with 50% of the volume exported to Japan, and the remaining half shipped to European and American markets.

The Nhon Trach garment facility was built and operated in line with LEED Certification of the U.S. Green Building Council, featuring a wastewater treatment system with a capacity of 2,500 cubic meters per night.

Some 500 employees will work at the wash factory, while the garment facility, with 15 production lines, will be in need of 800 laborers to manufacture eight million garments per year. Meanwhile, its completion center will employ 600 workers to fulfill the target of 13 million products per year.

Beverage and Dairy driving FMCG market

Vietnam’s FMCG market is seeing a continual slowdown in the long term in Urban 4 key cities (Ho Chi Minh City, Hanoi, Da Nang, and Can Tho) while performing impressively in Rural areas, according to the latest report from Kantar Worldpanel Division Vietnam. Value growth has hit its highest peak in the last four years in both Urban 4 key cities and Rural.

Healthy growth is observed across all sectors in both, driven by an increase in volume consumption. The Beverage and Dairy sector is driving market growth in both, while Personal Care is also developing quickly.

Ready-to-drink milk was among the top growing categories in the first quarter, especially in Rural areas. Growth is mainly driven by acquiring new buyers and also uplifting volume consumption in Rural. However, the category is still underdeveloped and holds major potential to expand further in terms of both consumer base and consumption.

According to Kantar Worldpanel, modern trade has made a significant movement, gaining three share points in Urban 4 key cities, thanks to both big and small retail formats as well as online channels. In Rural, medium-sized street shops remain the best recruitment channel in terms of winning new shoppers. Positive growth has been seen across modern and traditional channels, emphasizing the more-fragmented retail landscape as well as the growing importance of omni-channel shopping trends in Vietnam.

In Ho Chi Minh City, 60 per cent of Gen Z shopped for food and beverages at convenience stores (CVS) for out-of-home consumption in the first quarter, which is almost double the shopper base among Gen Y and Gen X. While FamilyMart earns the most spending from all age groups, B’smart is the number one chain among Gen Z. The key success factor of B’smart is encouraging much higher spending by students when they are in-store, but it still has a big gap in terms of traffic (both penetration and shopping frequency) compared to other CVS chains.

Got It launches first on-demand Expert Service Cloud for analytics

Got It, an on-demand expert platform and artificial intelligence (AI) innovator, launched Querychat for cloud data warehouses, starting with Google BigQuery, on May 22.

The first on-demand Expert Service Cloud for analytics, Querychat creates a scalable and elastic pool of vetted analytics experts to add business intelligence (BI) team capacity with usage-based pricing, and automatically delivers deep learning training data into a natural language processing (NLP) AI system.

“Analytics tools and cloud data warehouses are extremely sophisticated products,” said Mr. Peter Relan, Chairman and CEO of Got It. “We help users get ten times more value from these products by empowering them to collaborate with our Querychat analytics experts anytime, just as we do for Microsoft Excel and Google Sheets users with Excelchat. Our on-demand platform with an analytics Expert Service Cloud now also gives line-of-business users and BI teams access to vetted analytics experts within 30 seconds for a 20-minute chat messaging workflow to help them create the right query or dashboard.”

He added that BI teams can now scale easily to handle unlimited requests, via a low-cost, usage-based pricing model. “Plus, we are solving the single biggest problem in machine learning: quickly getting the training data needed to build and train a company schema-specific AI model,” he said.

Got It takes advantage of the advanced, full-sentence NLP in Google BERT, which is already pre-trained on a massive English corpus of 3.5 billion words. Leveraging BERT transfer learning for NLP and the data exhaust from user-expert chat conversations to train Got It’s deep learning AI model, Querychat breaks the constraints of keyword search-based, auto-complete Q&A available today.

Either from the Querychat TrueNLP AI or an on-demand Querychat expert, BI teams using columnar data warehouses in the cloud now have a way to guarantee answers to questions instantly, empowering marketing, operations, business, and product managers to ask ad-hoc questions in plain English sentences.

By only providing access to the data warehouse schema and not relinquishing control of or access to the data, companies are able to ensure data privacy while avoiding the long installation and configuration time issues of existing solutions. BI teams also get a workflow to verify Querychat results.

Currently, Querychat supports Google BigQuery cloud data warehouses carrying Google Analytics and Salesforce CRM data. Got It plans to extend Querychat support to the Azure Cloud Data Warehouse and other environments in 2019.

Delivering product usage and engagement help for software products rather than traditional technical support, Got It has built the world’s largest on-demand expert service cloud with over 10,000 vetted, trusted experts from more than 79 countries and territories and hosted millions of chat messaging sessions already on the Got It Platform for products like Microsoft Excel, Google Sheets, and columnar data warehouses.

Spun out from Mr. Relan’s YouWeb incubator and backed by the Capricorn Investment Group and Kinzon Capital, Got It is headquartered in Silicon Valley with an R&D group in Vietnam.

GrabFood marks one year in Vietnam

In celebration of GrabFood’s first anniversary in Vietnam, Southeast Asia’s leading super app Grab announced on May 23 that its on-demand food delivery service has earned Vietnamese consumers’ vote as the most popular food delivery platform for seven consecutive months, since October last year.

Thanks to strong support from consumers, this phenomenal milestone was achieved within only four months of GrabFood’s official launch in Vietnam, in June last year.

On top of being the most popular food delivery brand, market research conducted by Kantar Worldpanel also showed that the proportion of Vietnamese consumers in Ho Chi Minh City and Hanoi who chose GrabFood as their most-often used food delivery brand grew from 48 per cent in October 2018 to 81 per cent in April 2019.

Daily completed orders grew 250-times from June 2018 to May 2019, and it expanded to 15 cities and provinces in Vietnam in January, from just one, Ho Chi Minh City, in June 2018.

“We have moved beyond just a ride-hailing app in Vietnamese consumers’ minds, and truly serve their essential daily needs as an everyday super app,” said Mr. Jerry Lim, Country Head of Grab Vietnam. “More than 80 per cent of surveyed consumers in Vietnam choosing GrabFood as their top-of-mind brand is a strong vote of confidence. We are happy to have made a difference, making on-demand food delivery an integral and indispensable part of Vietnamese people’s lives, just like e-hailing.”

To celebrate its one-year anniversary with consumers, Grab also announced that it will co-create a wider variety of “GrabFood Signature” menus with food merchant partners to better satisfy consumers’ cravings.

Food and beverage menus can be offered exclusively on the GrabFood platform to bring more exciting surprises to consumers, while merchant partners can better understand consumers’ cravings and cater to their needs. This will not only help enhance the efficiency of individual food businesses, but most importantly also encourage the whole F&B industry to constantly develop new food items that can satisfy today’s consumers’ cravings as much as possible, ultimately leading to higher business revenue and growth.

“We continuously strive to provide greater value add to our food merchant partners, as their success is important to us,” said Mr. Lim. “We started GrabFood to empower these offline food merchants to come online so they can better reach out to today’s highly mobile and digital consumers. There’s a lot more we can offer to merchant partners through technology.”

“In the past, a food merchant would develop his or her own food menus, pre-order the ingredients, wait for in-store orders, and then whip up the dish. Often, most didn’t track what was the most popular order of the day, while ingredients could go to waste if there’s no take up rate for certain food items. Today, with a digital shopfront on GrabFood, they have greater visibility of top or least-ordered food items, what consumers order during peak versus non-peak hours, trending food items, or whether adding a food visual will attract more orders, and more. These insights have helped tremendously in boosting the revenues of GrabFood’s merchant partners and at the same time benefited consumers by having food offerings that best suit their taste and cravings.”

KPMG providing support to SMEs

Accounting for 97 per cent of the total number of businesses operating in Vietnam, small and medium-sized enterprises (SMEs) play an important role in Vietnam’s economy, as they make up about 45 per cent of GDP and 31 per cent of total revenue, according to the Vietnam Chamber of Commerce and Industry (VCCI). This group, however, is facing many obstacles and challenges, especially in the context of Industry 4.0.

Ms. Lam Thi Ngoc Hao, Partner and Head of Private Business at KPMG in Vietnam, said most SMEs in Vietnam are having difficulties maintaining growth rates after their first development steps, which leads to a reduction in competitiveness. In addition, the evolution of Industry 4.0 has clearly showed that digitalization is rapidly disrupting traditional business models. According to Mr. Nguyen Quang Phuc, Director and Head of Enterprise Services at KPMG in Vietnam, it is imperative for all Vietnamese businesses, small or big, to embark on their digital journey.

Understanding the situation, KPMG NEXT, one of KPMG’s corporate social responsibility (CSR) programs in Vietnam, was designed to support SMEs in the process of developing and taking their business to the next level, not only in the region but also in the world. Based on practical needs and business operations during the 25 years KPMG has been in Vietnam, KPMG NEXT provides an overview of the difficulties and challenges on the path towards sustainable business development SMEs may encounter and how they need to prepare to cope with those barriers. Over the past three years, the program has attracted more than 100 Vietnamese entrepreneurs from different regions and various sectors.

This year, with a message of “To the next level”, the program continues to present practical topics to SMEs looking to fast-track their growth and sustainable development and take their business to the next level. As Industry 4.0 has become an indispensable trend in the sustainable development of businesses, the program will equip SMEs with essential knowledge to enable them to seize the advantage and create a leap forward in competing by applying new technologies to business operations.

Japanese aluminum can maker expands in Vietnam

The Showa Aluminum Can Corporation (SAC), a consolidated subsidiary of Showa Denko (SDK), headquartered in Tokyo, will invest $68 million in building a new can manufacturing factory in southern Ba Ria Vung Tau province.

This third base in Vietnam is to expand its business in the country. SAC has also decided to expand the capacity of can end production lines at its existing factory in Vietnam’s north.

The Hanacans JSC (Hanacans), an affiliate of SAC incorporated in Vietnam, has lines to produce can bodies and can ends at its factory in northern Bac Ninh province, and lines to produce can bodies at its factory in central Quang Nam province.

The new factory will have capacity of 1.3 billion can bodies per year, and an additional line to produce 1.1 billion can ends per year will be installed in the Bac Ninh factory. As a result of these measures, Hanacans will have three factories covering all areas of Vietnam, with a total capacity of 3.1 billion can bodies and 3.3 billion can ends per year.

The total investment in the construction of the new factory and the additional can-end production line is expected to be about $68 million. The new facilities are scheduled to start production in July 2020.

The company will primarily supply aluminum cans to local brewers, as many in Vietnam are moving from using bottles to cans, as they are easier to carry and store in a refrigerator.

In its medium-term consolidated business plan, “The TOP 2020”, which was launched in January, SDK classifies its aluminum can business in the category of “Change”. It aims to expand or strengthen overseas bases and improve profitability in its domestic operations.

The aluminum can business in Vietnam has been expanding sales mainly in northern and central parts of the country. The group will continue expanding the scale of its aluminum can business in the country, where the market for aluminum cans is expected to expand in the future, so that it can change the aluminum can business into an individualized business.

In the Japanese market, the group will improve the profitability of its aluminum can business by streamlining production capacity, reducing fixed costs, and promoting the formulization of sales prices of aluminum cans, with links to the market price for aluminum.

Vietnam’s progress mirrored in that of East Asia: WB

Vietnam is a country on the move, whose progress is broadly mirrored in the progress of East Asia, where several countries have progressed from low-income to middle-income status in the past half century, said Country Director for the World Bank in Vietnam Ousmane Dione at a conference that was opened on Wednesday.

Speaking at the eighth plenary conference of the Public Expenditure Management Network in Asia (PEMNA) in the northern province of Quang Ninh from May 22 to 24, Dione said that Vietnam has experienced growth rates of 6.5% on average in the last five years while poverty has fallen from roughly 21% in 2010 to 9.8% in 2016.

PEMNA is a peer learning network of public financial management practitioners in Asia, grouping boasts 14 members, comprising all ASEAN countries plus China, Mongolia, and South Korea. Established in 2012 as an initiate of the World Bank and South Korea’s Ministry of Economy and Finance, it aims to support governments across the region to address public financial management challenges and improve the efficiency and effectiveness of public spending through forums and experience sharing between members in the East Asia and Pacific region, according to the Vietnam News Agency.

Dione noted at the conference that Vietnam’s sovereign credit rating was upgraded to “BB,” demonstrating the improvement of government institutions and long-term economic growth.

He said that East Asia’s rise is reflected in the emergence of its five large ASEAN economies, including Vietnam. The aggregate growth of the region, however, still hides major disparities that countries are striving to address. For example, Vietnam’s per capita income is only about 5% of the high-income average in the region.

The success of East Asia’s development model is mainly based on three pillars: outward orientation (i.e., integration into the global economy), investment in human capital, and sound economic governance, according to the WB official.

He said that East Asia’s policymakers have recognized that sustained development requires credible and capable economic governance, starting with macroeconomic stability and long-term fiscal discipline.

This governance is reflected in the region’s gradual improvement of its scores for “governance effectiveness,” including factors such as quality of public services, quality and independence of the civil service and quality of policy formulation and execution.

In the mid-1990s, developing countries in East Asia ranked considerably lower than other low- and middle-income countries globally, but by 2016, ten countries had collectively caught up and surpassed the middle-income average. Of course, within this bloc, some have done better than others against the average.

“Let me emphasize that new challenges are emerging on multiple fronts, and countries will need to refine and adjust the approaches that have worked for them in the past if they hope to navigate effectively in the new global environment,” he said.

He cited a recent WB report, pointing out that its economists had uncovered three challenges to the region’s growth model: slowing productivity growth, risks to inclusive growth and challenges to governance effectiveness.

This reflects a rapidly growing middle class across the region, which is more vocal and informed about the quality of public services and expects the government to perform better, he said.

More recent global challenges included the growing use of protectionist trade policies among major economies, continued political uncertainty in Europe and the rising debt levels among developing countries as they try to accelerate capital spending.

In facing these emerging challenges, Dione suggested the ministries of finance play a facilitating role in creating effective fiscal policies and improving fiscal risk management in middle-income countries.

The global lender's s research revealed that domestic revenue mobilization in developing countries of East Asia is very low relative to the middle- and high-income countries in other regions.

Many countries in East Asia rely on indirect taxes, such as value-added tax and excise taxes, which are more regressive, whereas direct taxes, such as personal income tax, tend to make up only a small proportion.

Dione said that tax systems need to adapt and address the rising risks of transfer pricing and profit shifting across countries and the explosion in cross-border digital services.

As demand for public services rises, these systems will need to have the capacity to mobilize adequate resources to ensure sustainable financing while maintaining an efficient and growth-friendly tax environment.

Vietnam and other East Asian countries need to focus on budget restructuring since many find themselves with limited fiscal space to respond to citizens’ demands, according to Dione.

Countries are thus searching for strategies to reduce the growth of recurrent spending, which consumes the lion’s share of the budget, and reorient spending toward priority sectors.

Dione also referenced the adoption of accrual accounting and prudent, sustainable debt management. He said that the rapid acceleration of global infrastructure financing may lead some countries into unsustainable debt levels, so greater transparency in public and private debt is desperately needed.

 
 
 
 
 
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