Mergers and acquisitions (M&A) in the banking industry are expected to remain high for the rest of the year as the industry continues the digital transformation process, according to experts.

According to PricewaterhouseCoopers (PwC), the financial services (FS) industry’s need for digital capabilities, combined with sustained pressure from regulators and disruption from platforms and fintechs, means M&A will continue to be a driver for transformation.

It also explains why FS is second only to technology, media and telecommunications (TMT) in terms of M&A investment, accounting for almost a quarter of deal value in the first half of 2022. A continued focus on technology, the growing demand for sustainable investment options, and lower valuations will keep M&A activity high during the second half of this year.

Ong Tiong Hooi, PwC Vietnam’s Partner, said: “Despite macro-economic headwinds, 2022 will be another robust year for M&A transactions in Vietnam. M&A activities continue to attract a lot of attention from foreign investment funds. We're seeing an acceleration of strategic decisions to enhance portfolio optimisation, as dealmakers divest to free up capital to focus on acquiring capabilities and transforming core business areas through M&A."

Yoshisawa Toshiki from Aozora bank also said M&A activities will increase sharply after the pandemic, of which M&A in finance and banking in Vietnam will be better, thoibaonganhang.vn reported.

Currently, the Vietnamese Government has policies such as equitising State-owned enterprises and banks, and restructuring weak, undercapitalised and substandard banks. This is an opportunity for foreign organisations to make investments. Japan’s medium-sized banks are also considering the financial market and M&A in Vietnam, Toshiki said.

A banking expert, who declined to be named, also shared there are many factors expected to attract foreign investors to M&A activities in the near future. Despite being under a lot of pressure, Vietnam is still controlling inflation well, while economic growth is recovering strongly with high consumer demand. When the economy grows positively, banking activities also prosper as banks are able to expand their credit and boost retail activities.

In order to increase the attractiveness for foreign investors to participate in M&A deals in the banking sector, experts recommended the Government loosen the foreign ownership room in domestic banks. Expanding foreign ownership not only helps banks increase capital but also makes foreign investors feel secure to invest more in the Vietnamese market. However, the expansion should be given only to reliable foreign investors, who have been proven as large banking and financial institutions in developed countries.

Land plot proposed for bus terminal to Tan Son Nhat

A land plot inside Gia Dinh Park is being considered as a potential bus terminal for the Tan Son Nhat International Airport in HCMC.

The HCMC Management Center of Public Transport, under the HCMC Department of Transport, suggested parking buses servicing the airport’s passengers on a 1,476-square-meter land area near Hong Ha Street.

The proposed plot has a concrete floor and was once used as an airport bus terminal.

The HCMC Management Center of Public Transport will collaborate with the airport’s administration to allow passengers to check-in for flights directly at the terminal.

According to the agency, increasing bus lines connecting the airport would require vacant land to park buses in the surrounding areas.

In response to the rising demand, the Southern Airports Authority (SAA) and the HCMC Transport Department, in July, proposed a new parking lot at the Tan Son Nhat International Airport.

The 3,500-square-meter planned location is close to the airport’s international terminal, along Bach Dang, Truong Son and Hong Ha streets. The SAA is now in charge of the plot.

The Civil Aviation Authority of Vietnam recommended that the site be reclaimed from the SAA and leased to the airport for a parking lot.

The current eight-story parking building at the airport has a total floor space of 67,000 square meters and can house 6,000 motorcycles, 1,500 vehicles and 700 taxi cabs.

On average, around 6,600 motorcycles and 4,500 cars visit the airport daily. During the two summer travel months, the facility has been overwhelmed as it serves up to 9,500 motorcycles and 6,500 autos daily.

Thousands of social housing units to be built in HCMC

Two social housing projects with 2,064 apartment units will start at the end of August in Thu Duc City and District 7, using 20% of commercial residential land.

With a total area of over 30,000 square meters, the two projects will help increase the supply of social housing and create homeownership opportunities for low-income people, according to the HCMC Department of Construction.

The social housing project located in the Tan Thuan Tay Residental Area in District 7 will break ground on August 30. With a scale of 1,300 apartments and a total area of ​​nearly 12,800 square meters, the project can easily access technical infrastructure and traffic connections.

The project in Thu Duc City will be built in Phu Huu Ward with a total area of nearly 19,000 square meters and a scale of 764 affordable apartments. Some low-cost commercial housing units with technical infrastructure have already been built in this area.

Apart from the above two projects, HCMC will execute three more projects to repair and rebuild aging apartment buildings in District 1 and Tan Binh District with a scale of nearly 900 apartments. The three projects comprise apartment buildings at 100 Co Giang Street and 23 Ly Tu Trong in District 1 and at 350 Hoang Van Thu Street in Tan Binh District. The total area of the three renovation projects is over 30,000 square meters.

HCMC’s social housing projects are favorable to workers and low-income people due to their affordable prices. These projects are part of the program to replace aging apartment buildings and slums with affordable housing units.

In 2016-2020, HCMC built many social housing projects with a total area of over 1.2 million square meters. However, only one housing project for workers was put into use with 756 rooms, satisfying the housing needs of some 4,600 people and accounting for 13% of the target.

Lotte shifting its investment focus towards Vietnam

South Korean conglomerate Lotte is shifting its investment focus towards Vietnam as part of its strategy to pull out of China.

Lotte Group aims to make Vietnam its third-largest market behind South Korea and Japan, making a deeper penetration into the Southeast Asian market.

As reported by the newswire the Korea Herald, Shin Dong-bin, chairman of Lotte Group plans to travel to Vietnam in September for a groundbreaking ceremony of Lotte E&C's construction of the Eco Smart City complex in Ho Chi Minh City. Some $900 million have been invested in the construction of the 60-story building on 680,000 square metres for residential and commercial use.

The chairman will also meet with top Vietnamese officials. Shin's trip to Vietnam indicates that the group has shifted its strategic focus from China. The South Korean retail giant has been looking for ways to grow its retail-to-construction business abroad due to the tension between South Korea and China in recent years.

Lotte announced its withdrawal from China in 2018. Over the following year, the group gradually closed its five department stores in China. At a board meeting last month, Lotte decided to sell its only remaining department store in China.

Meanwhile, Lotte Group has actively expanded its operation in Vietnam. Lotte Group first made its entry into Vietnam in 1998 with its fast-food business Lotteria and has since expanded to 270 locations. The group has a total of 15 Lotte Mart stores nationwide, two department stores, two hotels, and two duty-free stores in Vietnam.

Top institutions seek green credit answers

International organisations and financial institutions are waiting for specific criteria for green projects to unlock financing flows that can support deployment of green and sustainable initiatives.

At the end of July, the government approved tasks and solutions to work out commitments of the COP26 climate summit and a decision on adopting the National Climate Change Strategy to 2050, demonstrating the government’s eagerness towards greenhouse gas mitigation for sustainable development. The decision clarifies specific targets on emissions, developing natural ecosystems, and renewable energy sources, as well as action plans to adapt to climate change.

According to statistics from the Ministry of Planning and Investment, Vietnam needs to mobilise $360 billion for implementing its green and sustainable development goals by 2030, half of which will come from the private sector. Besides that, GDP losses could reach up to 14 per cent by 2050, putting huge burdens on both public and private finances.

Being aware of the importance of financing capital inflow to implement green and sustainable development goals, the SBV promulgated documents guiding procedures for credit loans several years ago. Meanwhile, the SBV has reviewed information from 21 international organisations, including 14 banks and seven investment funds, and sees that the number of organisations investing in green sectors since 2020 is double the figure during 2010-2015. The SBV acknowledges there are many barriers to mobilising green finance sources, and one of the biggest barriers is the lack of national regulations about the criteria for green projects and businesses.

Elsewhere, international banks and financing institutions reflect that while financing sources to support Vietnam to implement green development goals are abundant, the importance is an open mechanism and specific policies for unlocking these capital inflows.

In Vietnam’s draft Power Development Plan VIII for the 2021-2030 period with a vision towards 2045, the total generation capacity of Vietnam by 2045 will be 333GW, of which 42 per cent will consist of solar and wind energy. The total needed investment is $127.5 billion, according to HSBC.

Public capital disbursement slow

The country disbursed over VND177.8 trillion of public investment capital between January and July, meeting a mere 29.7% of the entire year’s target, according to the Ministry of Finance.
The public capital disbursement is forecast to amount to VND212.2 trillion at the end of August, meeting only 35.5% of the full-year target.

According to the Ministry of Finance, 35 ministries and 20 cities and provinces posted low disbursement rates of below 35%, while there were 27 ministries and three localities with disbursement rates at lower than 20% of the targets.

In addition, among the ministries, the Ministry of Health reported the lowest disbursement rate at 4.17%.

The slow capital disbursement was attributed to obstacles over mechanism and policies on land, natural resources, public investment, bidding and State budget plans; rising prices of materials, oil and gasoline products; and slow site clearance.

Vietnam's foreign trade reaches over US$30 bln in first half of August

Viet Nam’s total trade value hit over US$30 billion in the first half of August 2022, the Department of Customs reported.

Of the figure, the nation earned US$15.13 billion from exporting, down 7 percent in comparison with the second half of July.

During the period, five export items joined the US$1 billion export club, including phones and accessories (US$2.71 billion), machines, equipment and tools (US$1.94 billion), computers, electronics and accessories (US$1.87 billion), garments (US$1.8 billion) and footwear (more than US$1 billion). 

Meanwhile, Viet Nam spent US$15.24 billion on imports in the first fifteen days of August, up 7.8 percent. 

FTAs provide new impetus for Viet Nam’s exports

Total turnover of exports enjoying preferential tariffs from free trade agreements (FTAs) in 2021 was estimated to attain US$69.08 billion, accounting for 32.66 percent of the export value to Viet Nam's FTA partners.

During the 2021-2022 period, Viet Nam's trade with the rest of the world increased by 2.7 times from US$203.6 billion in 2011 to US$545.3 billion in 2020.

Remarkably, in 2021 when the country was dealing largely with the consequences of COVID-19, the country's trade value set a record of US$668.5 billion.

In the first seven months of 2022, the nation's export and import values reached US$216.35 billion and US$215.59 billion, witnessing respective growth rates of 16.1 percent and 13.6 percent. 

Noticeablly, exports to member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) such as Canada, Mexico and Peru were estimated at US$5.3 billion, up 20.8 percent, US$4.6 billion, up 44.5 percent and US$560 million, up 84.4 percent, respectively. 

During the reviewed period, Viet Nam's major importers were the EU (US$27.67 billion, up 21.1 percent), ASEAN (US$20.38 billion, up 25.8 percent), the Republic of Korea (US$13.9 billion, up 14.5 percent) and Japan (US$13.3 billion, up 12.2 percent). 

The Center for World Trade Organization (WTO) and International Trade announced that Viet Nam has 15 effective FTAs. The two others have been negotiated.

Russian firms expect to expand in Vietnam

Russian firms want to navigate more parts of Vietnam, one of the most promising markets in Asia, they said at the Vietbeauty & Cosmobeauté Vietnam 2022 event underway in Ho Chi Minh City.

Solomatin Alexey from the government centre for export support in Moscow said nine participating Russian firms specialise in health and beauty care products. They want to seek partners and agents in Vietnam.

According to Alexey, the products on display are popular in Russia and many Vietnamese people living there send them as gifts for their relatives at home.

As Russia and Vietnam have a friendly relationship, he suggested both sides boost trade not only in beauty products but also in food and pharmaceuticals.

After visiting Russian stalls and learning about their products, Director of the Dinh Phong Consultancy and Trade Company Tran Van Lam decided to sign a memorandum of understanding (MoU) on cooperation with Silcamed to import and distribute dental care products in Vietnam.

Lam said after signing the MoU, his company will discuss procedures to import products as soon as possible. They will be sold by supermarkets, e-commerce floors, and convenience stores.

Vietnam’s leather, footwear exports exceed 14 billon USD in 7 months

Overseas shipments within the first seven months of 2022 earned more than 14 billion USD for the leather and footwear sector, an annual increase of 13%.

During the period, the export revenue of the products from North America and the EU grew by 24% and 17.5%, respectively.

The export value also saw good recovery in markets signing a free trade agreement with Vietnam, for example an 18.2% increase in exports to Vietnam-EU FTA members, and a 10.5% rise in CPTPP member markets.

Vietnam earned 20.78 billion USD from the export of leather and footwear in 2021, up 4.6% from 2020, including 17.77 billion USD from footwear alone, up 6.1%.

Domestic retail sector presenting bright picture

The consequences of the pandemic seem to no longer haunt the domestic retail industry, as sales of consumer goods and services continuously record stellar growth.

According to data published by the General Statistics Office, Vietnam's total retail sales of consumer goods and services in the first seven months of the year increased by 16 per cent over the same period last year, reaching more than $139 billion.

Winmart in the first half of this year achieved revenues of more than $608 million, an increase of nearly 6 per cent compared to the same period last year.

WinCommerce, a subsidiary of Masan Group in charge of developing Winmart and Winmart+, said the brand plans to open more than 700 new WinMart+ stores and more than 20 super- or hypermarkets by the end of 2022. It also wants to accelerate with the franchise model towards the goal of holding 10,000 points of ownership and 20,000 franchised stores by 2025.

In addition to expanding its network, the chain also opened a separate brand called Beng's, specialising in convenient, good-quality food at affordable prices.

Other retailers have also planned to expand their investment and system expansion to meet the needs of consumers.

Saigon Co.op, the domestic retailer that owns the Co.op Food, Co.opSmile, and Cheers chains, plans to open 80-100 new points of sale before the end of the year.

Nova Market is still a new name in the retail sector but has opened three stores in the form of small supermarkets selling food, drinks, and fresh vegetables. Its goal is to open 300 stores of various sizes across the country. By 2025, the business is expected to develop 2,000 vendors of sale to increase its presence in all localities.

Despite the market boasting strong development opportunities, not all retail businesses have impressive business results.

After a long period of losses, the Bach Hoa Xanh retail chain under Mobile World Investment Corp (MWG) was forced to close 400 stores in order to restructure.

Bach Hoa Xanh is also one of the domestic brands holding the largest market share in the retail sector. By the end of July, it had 1,735 stores, and revenues in the first 7 months of 2022 reached $660 million, down 14 per cent compared to the same period last year.

MWG has plans to sell 20 per cent of Bach Hoa Xanh shares to a foreign partner and the deal is expected to be completed in early 2023.

The results of a Global Consumer Insights Survey conducted by PwC in 25 countries and territories, including Vietnam in July, showed that more than 75 per cent of consumers are expected to continue to maintain or increase spending in the next six months, despite high inflation.

DOC not yet issued final decision for trade remedies on hardwood plywood
     
The US Department of Commerce (DOC) has not yet issued the final determination on the imposition of anti-dumping and countervailing duties on certain hardwood plywood products and veneered panels exported from Viet Nam.

The Viet Nam Timber and Forest Products Association (VIFOREST) has confirmed that the DOC on April 15 extended the deadline to issue a final determination to October 17.

The DOC initiated the anti-dumping and anti-subsidy investigation on hardwood plywood from Viet Nam on June 17, 2020, to enforce the trade remedies measures on Chinese hardwood plywood.

The US is currently applying anti-dumping of 183.36 per cent and anti-subsidy duties from 22.98 per cent to 194.9 per cent on hardwood plywood products from China.

On July 25, DOC announced its preliminary determination that hardwood plywood exported from Viet Nam, which was assembled in Viet Nam using hardwood plywood imports sourced from China, were products of China and were subject to the anti-dumping duty and countervailing duty orders on hardwood plywood from China.

The DOC also preliminarily determined that certain hardwood plywood assembled in Viet Nam using hardwood plywood inputs sourced from China circumvented the anti-dumping and countervailing orders on hardwood plywood from China.

Accordingly, the DOC will instruct the US Customs and Border Protection to continue to suspend liquidation and require a cash deposit of estimated duties, at the applicable rate, that was entered or withdrawn from the warehouse for consumption on or after June 17, 2020.

Paperwork hinders rollout of credit package

Inspection and screening procedures have prevented the target beneficiaries of the preferential credit package access to soft loans with an interest rate discount of two percentage points, bankers said.

Pham Toan Vuong, deputy director of the Vietnam Bank for Agriculture and Rural Development (Agribank), said the bank has loaned only VND1.5 billion under the program so far. He was speaking at a conference in Hanoi yesterday on removing hurdles in the rollout of the relief package under Decree 31/2022/ND-CP.

The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), meanwhile, has lent just VND6.6 billion to 20 beneficiaries, Phan Duc Tu, board chairman of BIDV, said.

According to the State Bank of Vietnam (SBV), loans taken out under the interest subsidy package have totaled just VND4.4 trillion, benefiting only 550 customers so far. And outstanding loans with interest reduction now stand at VND4.3 trillion, just a fraction of a total of VND800 trillion.

Tardy disbursement has discouraged borrowers from taking out a loan, SBV said.

It is hard to identify the beneficiaries of the credit package, as customers came from various business lines, said Nguyen Tran Manh Trung, deputy director of Vietnam Joint Stock Commercial Bank for Industry and Trade. 

Besides, there are no guidelines on determining the debt recovery rate, leading to banks coming up with their own ways to carry out the decree, he added.

Institutional customers are hesitant to take out a loan as they are concerned about inspection and auditing procedures that can go on for three or four months after joining the program, thereby affecting their business operations, Trung said. 

Agribank has made it easier for individuals and households to apply for a loan, as they account for 96% of the banks’ customers; however, they still could not meet the package requirements because nearly half of them did not have a business registration certificate, Vuong said. 

According to Nguyen Hung, general director of Tien Phong Commercial Joint Stock Bank, households without a business registration certificate are not eligible for interest support. Besides, the Civil Code states that only legal entities and individuals are allowed to borrow from banks.

This has made Hung worry about recovering debts, expected to face difficulties due to the absence of specific guidelines.

In response to banks’ complaints, deputy governor of SBV Dao Minh Tu said relevant authorities need to clarify the contents of the decree so that banks can proactively join the stimulus program.

Two Vietnamese ports among top 49 busiest container ports in 2022

Two local seaports have been named among the top 49 biggest & busiest container ports this year, as complied by World Shipping Council, a global organisation headquartered in Washington, Brussels, and Singapore.

The list compiles a total of 49 ports ranked by the volume of container traffic represented in million TEU. The period of measuring dates is from 2016 to 2020.

The Port of Saigon in Ho Chi Minh City ranked 26th place in the list, with the site being the main trade hub and accounting for roughly two-thirds of the economy of southern Vietnam.

Furthermore, the Port of Hai Phong makes up the busiest and largest container port in northern Vietnam. Built with high safety standards, the port features a range of modern equipment which makes it suitable for both domestic and international trade and cargo transport.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes