Tax procedures posted the highest score among nine groups of key administrative procedures rated by the report Administrative Procedure Cost Index 2022 (APCI 2022).

This reflected the unremitting efforts of tax management authorities to maintain the achieved achievements and continue to strongly reform administrative procedures to make it easier for businesses and people in performing tax administrative procedures.

Prepared by the Government’s Advisory Council for Administrative Procedure Reform with the support of the US Agency for International Development through the technical assistance project Linkages for Small & Medium Enterprises (USAID LinkSME), the survey shows the rate of filing and receiving online results of tax administrative procedures is at an absolute level.

In 2021 and the first months of 2022, the tax sector cut the number of administrative procedures to 234 from 304.

In addition, the General Department of Taxation has expanded channels to receive and process support requests of the people via Hotline, email, website, Chatbot, and Zalo; as well as built an automatic question-and-answer system on electronic invoices based on artificial intelligence (AI) technology to support taxpayers.

The report recommends the tax industry to continue improving and upgrading the online tax declaration and payment system on the General Department of Taxation’s portal; completing the application of e-invoices nationwide and improving the quality of law-making in the taxation field.

Sales promotions launched in HCMC

The administration of HCMC has launched the “Summer Shopping 2023” sales promotion program, with supermarkets and businesses offering attractive discounts to entice consumers.

The HCMC Department of Industry and Trade reported that around 3,000 companies are participating in 7,000 sales promotions over three months, from June 15 to September 15.

The promotional program is divided into three phases. The first phase, known as the “cashless month,” began on June 15 in collaboration with Tuoi Tre newspaper. This is followed by the river tourism festival and concludes with a super promotion for luxury brands starting on August 15.

Various fashion and consumer goods retailers are offering discounts ranging from 30% to 50%. Small traders at retail markets are also participating, with prices slashed by 5% to 50%.

Nguyen Nguyen Phuong, deputy director of the HCMC Department of Industry and Trade, said that the three-month promotional program aims to stimulate the current low purchasing power.

This year’s program includes the participation of travel companies, hotels, and restaurants offering summer tours and vouchers. It is noteworthy that the high-end segment has joined the promotional program for the first time, targeting affluent buyers and travelers.

New 500 kV power line planned for northern region

Vietnam will start building a new 500 kV power transmission line in 2025 to provide additional power for the northern region, said the Central Vietnam Power Projects Management Board.

This project will facilitate the transmission of electricity from the southern and central regions to the north, ensuring stable power supply for the northern region.

During a recent meeting, the Central Vietnam Power Projects Management Board presented a plan to connect thermal power plants and renewable energy facilities in the north-central region to the national grid.

The 500 kV power transmission project is important as it will relieve the load on the two existing 500 kV lines and ensuring power security for northern Vietnam in the coming years.

Covering a length of nearly 317 kilometers, the power lines will pass through several provinces in the central region, including Quang Binh, Nghe An and Thanh Hoa.

The project is scheduled to be completed within 50 months from the date of the feasibility study being done, assuming no complications arise during site clearance and compensation.

The 500 kV Quang Trach-Quynh Luu-Thanh Hoa transmission line project has received approval from the Prime Minister to be included in the National Power Development Plan for the 2021-2030 period, with a vision to 2045 (the Power Development Plan VIII), according to the Government news site at baochinhphu.vn.

Credit growth remains sluggish

Outstanding loans in Vietnam had surpassed VND12.3 quadrillion in the year to mid-June, a 3.36% increase compared to December 2022 and a 8.94% rise against the same period last year.

These figures were disclosed during a press conference held on June 21 by the State Bank of Vietnam (SBV), the country’s central bank.

Since the beginning of the year, the SBV has focused on monetary policy aimed at controlling inflation, ensuring macroeconomic stability, and accelerating growth.

Thus far, the central bank has made four key interest rate cuts, reducing refinancing rates by 1.5 percentage points and interbank rates for electronic payments and compensatory lending for capital shortfall by two percentage points.

The maximum deposit interest rate for tenors below six months has decreased by 0.5 to 1.25 percentage points, while the maximum interest rate for short-term loans for priority sectors has been lowered by 1.5 percentage points.

Commercial banks have been encouraged to cut expenses in order to further reduce lending rates and support manufacturers.

Deputy Governor Dao Minh Tu stated that average deposit rates at banks have dropped by 70 basis points compared to December 2022, while lending rates have decreased by 100 basis points to 5.8% and 8.9% per year, respectively.

However, despite the swift interest rate cuts, credit expansion has remained slow due to weak demand. Tu attributed this sluggish credit growth to a lack of robust demand rather than tight lending criteria.

“From a banker’s perspective, accelerating credit growth is necessary, but not at the expense of lowering credit standards, as doing so would increase the risk of instability in the banking system,” Tu said.

In February, the central bank set the credit growth limit at 11% for commercial banks, targeting a credit expansion rate of around 14-15% for the year.

However, credit has only grown by 3.36% year-to-date, indicating a weak absorptive capacity in the economy stemming from various internal and external factors.

With surplus liquidity in the system, the SBV’s leader emphasized that loans would be provided to cash-strapped businesses and sectors with good repayment capabilities.

The SBV has pledged to implement its monetary support policy for businesses, encourage banks to further reduce interest rates, and facilitate loan accessibility for individuals and businesses.

Deferment of excise tax payment allowed for local auto businesses

The Government has issued Decree 36, allowing local auto manufacturers and assemblers to extend their payments of special consumption tax or excise tax until November of this year.

Under the decree, local auto makers with outstanding special consumption tax amounts payable for the tax period of June, July, August, and September could opt to make their excise tax payments no later than November 20.

Taxpayers can request an extension of excise tax payment online through tax authorities or directly work with tax officers for eligibility.

The deferment of tax payments also applies to the branches and car dealers of local auto manufacturers, who are required to make tax declarations with the direct tax authority.

This marks the fourth time since 2020 that the Government has deferred excise tax payments for locally manufactured and assembled cars. Last year, this policy supported local businesses with a deferred excise tax amount of over VND9,600 billion.

Decree 36 will be effective from June 21 until the end of this year. Following the extension period, special consumption tax must be paid in accordance with the applicable law.

Retail sales growth maintains while goods sales increase

According to the country’s figure until mid-2023, retail sales growth nationwide continued to remain high in May at 11.5 percent and sales of goods increased by 10.9 percent compared to the same period.

Up to now, domestic purchasing power has rebounded after a strong decline caused by the Covid-19 pandemic when the country’s economy begins to return to pre-pandemic levels and consumers get ready to resume.

Along with that is a significant improvement in the implementation of investment capital from the state budget.

Localities have spent approximately VND2,419.5 billion from their state budget on construction and major repair in May 2023, up 4.3 percent over the previous month and up 9.5 percent over the same period.

Meanwhile, in contrast to the decline of industrial production nationwide, the index of industrial production (IIP) of Ho Chi Minh City increased by 1.5 percent in comparison to April) and 5.5 percent compared to the same period last year. In the first 5 months of 2023, the IIP index in the city increased by 1.6 percent over the same period.

The country's merchandise exports were still 6 percent lower than a year ago in May. Imports saw a year-on-year decrease of 18.4 percent, representing a continued decline in imported inputs which indicated that export activities will keep falling in the coming months.

While Ho Chi Minh City maintained a good growth rate with the total export turnover of goods in the first 5 months of the year through the national border gate reaching US$20.7 billion, up 7.9 percent over the same period while the total import turnover of goods in the first 5 months of the year was estimated at $28.4 billion up 11.6 percent over the same period.

Although the State Bank has cut the refinance interest rate from 5.5 percent to 5 percent and the overnight lending rate from 6.0 percent to 5.5 percent, the country's credit growth continues to slow down, decreasing 9.0 percent against the same period in May.

Particularly in Ho Chi Minh City, under the flexible management policy of the State Bank, credit growth tends to be improved. Total mobilized capital of credit institutions in the southern largest city is estimated to reach VND3,262 trillion (US$139,264,467,957) by the end of May, up 0.5 percent over the previous month and up 0.8 percent over the same period last year.

The total credit balance of credit institutions is estimated to reach vnd3,305 trillion by May 31, 2023, up 0.7 percent over the previous month and up 7.2 percent over the same period last year.

Ho Chi Minh City certainly still faces a lot of pressure when the total state budget revenue in the area decreases, while the total expenditure increases, leading to challenges in full budget collection.

Therefore, despite significant improvements in macroeconomic control and the growth of key industries, industrial production will continue to slow down in the country generally and in Ho Chi Minh City particularly.

This leads to a shortage of jobs, so policymakers should set out a policy of looking for alternative jobs and activate social protection - a security system that can protect all employees.

In the remaining 6 months of 2023, the government should drastically simplify administrative procedures, remove legal barriers to unleash development as well as clarify why domestic consumption demand is stable and quite sustainable but credit demand is weak and low. Moreover, the government should make it clear why retail revenue always grows well but service revenue declines.

HCMC continues to accelerate the disbursement of public investment capital to support aggregate demand and economic growth in the short term while prioritizing investment in digital and green technology, infrastructure and human resources to promote long-term sustainable development.

Northern region expected to have sufficient power supply

The Northern region is currently in the midst of the flood season, and the inflow of water into the hydropower reservoirs is forecasted to continue to rise.

It will possibly ensure a steady electricity supply, with an estimated load of approximately 421 million kWh per day.

On June 21, the Ministry of Industry and Trade announced that it had implemented the Prime Minister's directives regarding electricity supply during the dry season in 2023 and had taken prompt action to address the power shortage situation in June. The ministry has implemented various specific measures to conserve electricity, ensure the availability of coal and gas for power generation, actively introduce new power sources, monitor and prompt priority thermal power plants to resolve any operational issues in their units, and ensure a stable transmission capacity.

According to Mr. Tran Viet Hoa, Director of the Electricity Regulatory Authority of Vietnam, in recent days, the water inflow into hydropower reservoirs in the Northern region has improved. The water level of hydropower reservoirs such as Son La, Lai Chau, and Tuyen Quang has risen above the dead water level by 4-7 meters, while that of Lai Chau reservoir is approximately 15 meters above the dead water level. As the Northern region has entered the flood season, the water volume flowing into hydropower reservoirs is forecasted to continue to increase. This increase in water volume is expected to ensure the electricity supply with a calculated load of approximately 421 million kWh per day.

In the event of extreme conditions with no incoming floods, the Northern region can still rely on the remaining water volume in the reservoirs, along with natural water inflows, to meet the load demand. However, it will have an impact on the capacity to store water for emergency purposes.

In recent days, certain areas in Hanoi and the Northern provinces have experienced localized power outages, but they have been limited in scope and short in duration. Some scheduled power cuts were initially announced but later postponed or canceled. This situation is attributed to erratic weather conditions, resulting in fluctuating electricity demand and peak capacity differences by day. For instance, on June 19, the electricity production in the Northern region reached 383.1 million kWh, with a peak power capacity of 17,313 MW. However, on June 20, the electricity production increased to 405.9 million kWh, with a peak power capacity of 18,872 MW.

In the Central and Southern regions, electricity supply operations are currently secure, and there is no immediate requirement for oil-fired power generation. However, in cases of abnormally high or unforeseen increases in load demand or thermal power plant incidents, oil-fired power sources will be flexibly utilized to meet the demand.

Vietnam Electricity Group has recently held a conference with 24 investors of coal-fired thermal power plants in the Northern region. They have been requested to ensure the operational readiness of their power units, with a particular focus on addressing any incidents that may arise. The investors are also urged to proactively arrange an adequate fuel supply to meet the high demand for power generation and fulfill the electricity consumption needs of people in the last six months of 2023.

German corporates seeking Vietnamese partners in medical technology

Delegates from German corporates announced seeking Vietnamese partners in medical technology.

Representatives of German corporates made the announcement at a meeting with the Center for Statistics and Science and Technology Information of Ho Chi Minh City (CESTI) under the Department of Science and Technology and the German Chamber of Commerce and Industry in Vietnam (AHK) and German corporates to connect and transact German’s medical technology for health care in Vietnam.

At the meeting, Head of CESTI’s Technology Transaction Department Vo Duy Khanh introduced the working model of the city’s technology exchange floor, the Ho Chi Minh City Technology Portal and some other activities relating to the technology market.

AHK delegation expected CESTI to provide consulting services, information services about domestic market and partnership as well as other services to help German businesses approach the local market so that German businesses can pour money into their activities in Ho Chi Minh City or carry out investment connection and technology transfer to other provinces.

Representatives of German businesses also expected to find partners for medical solutions such as air cleaning systems for operating rooms - sterile rooms, X-ray information systems, radiographic imaging centers - clinic imaging.

High prices make it sweet harvest for fruit farmers

Currently prices of fruits are quite stable making it a sweet harvest for farmers across the country.

Mr. Xuan said that traders were flocking to orchards offering VND11,000-VND13,000 a kg of white flesh dragon fruit and VND40,000-VND43,000 a kg of red flesh dragon fruit and VND30,000-VND32,000 VND a kg of smaller red flesh dragon fruit. Deducting all farming expenses costs, farmers earned a hundred million Vietnamese dong per crop.

Meanwhile, from before the Lunar New Year until now, almost all traders have bought the fruit in Binh Thuan Province, which is considered the capital of dragon fruit. No more booths of dragon fruit with great discounts on the roadside were seen or farmers were no longer feeding their cows with dragon fruits like in previous years.

Mr. Huynh Canh, Chairman of Binh Thuan Dragon Fruit Association, said that the price of dragon fruit has been stable since the beginning of the year at between VND12,000-VND20,000 a kg, farmers are quite delighted as the consumption market is stable and the fruit can be exported to many countries.

Durian farmers in Da Huoai District of the Central Highlands Province of Lam Dong made substantial profits when traders buy the fruit at VND65,000-VND70,000 a kg of Dona variety in the orchard and VND45,000-VND50,000 a kg of Ri6 variety.

Huynh Thanh Hoa, an owner of a durian garden, said that most durians are sold to China and a few are consumed domestically while Nam Hien, who has 10 hectares of durian near Nam Cat Tien National Park, said that the garden has not yet been harvested, but more than a month ago, traders paid in advance for VND75,000 a kg, much higher than that prior years.

As the largest consumer market in the country, fruit sold in Ho Chi Minh City is not too expensive at this moment. Durian sellers on roads such as Truong Chinh in Tan Binh District, and Nguyen Tri Phuong in District 10 said the Ri6 variety was sold from VND70,000-VND85,000 a kg. Some other fruits such as avocado, mangosteen, and rambutan are also sold in abundance at some traditional markets in districts 3 and Tan Binh. Prices of avocado ranged from VND25,000-VND30,000 a kg while Thai rambutan fetched VND30,000 a kg and mangosteen was at VND40,000- VND50,000 a kg.

In addition to traders purchasing at stable prices, supermarkets, or tourism programs helped consume domestic fruits in the past time. Typically in Ho Chi Minh City, a series of activities to support gardeners such as fruit festivals and fruit week are taking place in District 8, Cu Chi District, Suoi Tien Cultural Tourist Area, as well as at the supermarkets including MM Mega Market, Go!, BigC.

According to a retail supermarket in Ho Chi Minh City, this summer, city dwellers have eaten up to hundreds of thousands of tons. For instance, 800 supermarkets of Saigon Co.op are launching a promotion campaign to sell domestically grown fruits at the fruit festival to stimulate consumer demand with discounts from 20 percent to 30 percent.

Central Retail Vietnam Group has also signed cooperation agreements with many localities to sell Vietnamese agricultural products, including fruits in order to help farmers.

According to Ms. Nguyen Thi Bich Van, Communications Director of Central Retail Vietnam, this year the group is expected to consume about 300 tons of Luc Ngan lychee, along with hundreds of tons of other fruits such as mango, durian, and avocado.

In a talk with an SGGP newspaper reporter, Mr. Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association said that in the first 6 months of the year, the revenue from fruit export has reached more than US$2.2 billion taking the year’s turnover to $4.5 billion, one and a half times higher than last year. In which, durian and dragon fruit products account for a high proportion. In particular, durian has the opportunity to become a billion-dollar item when more planting areas have been granted official export codes to China. In general, Vietnam's fruit and vegetable exports in the second half of the year will be better.

First agricultural fair simultaneously presents direct, online selling

For the first time, a fair selling agricultural products of regions throughout the country will be live streamed from 9 am to 3 pm on June 24.

The fair attracts more than 60 display booths of cooperatives, businesses, and farmers’ associations from Hanoi and provinces including Hung Yen, Thanh Hoa, Lao Cai, Thai Nguyen, Cao Bang, Bac Kan, Tuyen Quang, Kon Tum and Quang Ngai, featuring local specialties such as Ly Son garlic, Muong Khuong chili sauce, Ba Lang fish sauce, Lao Cai’s Seng Cu rice, Cao Bang grass jelly, Thanh Hoa pennywort, Nghe An cured veal meat, Dak Lak macadamia nuts, Soc Trang Specialty rice ST25, Kon Tum ginseng and more.

According to Director of the Trade Promotion Center for Agriculture Nguyen Minh Tien said that the North, Central, and South regions are entering the peak fruit exporting and harvesting season. The highlight of the agricultural fair is a combination of direct and online selling on social networks to offer a diversified shopping experience to clients.

The fair themed “Promotional week of tea and tropical fruits” opened at the Exhibition Fair, Economic Transaction and Commercial Area at No.489 on Hoang Quoc Viet Street in Hanoi’s Cau Giay District on June 21.

The event held by the Trade Promotion Center for Agriculture under the Ministry of Agriculture and Rural Development will run until June 24.

The next fair promoting OCOP products of Lang Son Province will be held in August.

Bad debt potential in banks

The challenges faced by businesses impact the implementation of monetary policies, and there are growing concerns about potential bad debts in certain banks.

On June 21, Mr. Dao Minh Tu, Deputy Governor of the State Bank of Vietnam (SBV), said that the SBV's current policy implementation had been encountering significant difficulties in simultaneously achieving multiple objectives.

Specifically, in credit management for the year 2023, with the goals of attaining economic growth of approximately 6.5 percent and inflation of around 4.5 percent, as set by the National Assembly and the Government, the SBV has aimed to guide credit growth to be around 14-15 percent in 2023. This target will be adjusted accordingly to accommodate evolving trends and actual circumstances.

Furthermore, credit management aims to fulfill the credit capital requirements of the economy, thereby contributing to inflation control and supporting economic growth. As of June 15, the total credit outstanding in the entire economy stood at approximately VND12.32 quadrillion, marking a 3.36 percent increase compared to the end of 2022.

Nevertheless, as highlighted by Deputy Governor Dao Minh Tu, a significant concern currently exists where many businesses are encountering difficulties caused by factors such as order shortages, high inventory levels, disrupted financial resources, escalating prices of raw materials across different sectors, and a decline in domestic and international purchasing power. These challenges faced by businesses are impacting the implementation of monetary policies, and there are growing concerns about potential bad debts in certain banks.

The SBV will adjust interest rates following macroeconomic equilibrium, inflation, and monetary policy objectives. Furthermore, it will continue encouraging commercial banks to reduce costs and lower lending rates, aiming to support business recovery and foster production and business development.

Viet Nam calls on EU countries to promptly ratify investment deal

Deputy Prime Minister Tran Luu Quang called on the EU member countries to soon ratify the EU-Viet Nam Investment Protection Agreement (EVIPA).

Deputy Prime Minister Tran made the call on Tuesday during his reception for the European Parliament Delegation for Relations with the Countries of Southeast Asia and ASEAN led by its Chairman Daniel Caspary.

Tran also took the occasion to urge the European Commission to soon remove “yellow card” warning against Vietnamese seafood exports to the EU for mutual benefits. 

In reply, Caspary spoke highly of the role and position of Viet Nam in the region and the world.

He said Viet Nam is also a role model in poverty reduction, foreign direct investment attraction, infrastructure development.

Both sides also exchanged views on several regional and international issues of shared concerns.

Lenders reinforce security measures

By harnessing the power of chip-embedded ID cards, AI, and reliable population data, banks in Vietnam are reinforcing security measures and revolutionising banking services for their customers.
 
Asia Commercial Bank (ACB) last week partnered with FPT Information Systems to introduce chip-embedded national ID card authentication. ACB plans to pilot an online credit card opening feature in July, utilising this authentication method.

ACB seeks to gradually implement customer authentication based on the comprehensive population database, ensuring a seamless transition without compromising the customer experience.

Similarly, PVcomBank has collaborated with Quang Trung Digital Service and Technology to leverage chip-embedded national ID cards and electronic Know Your Customer (eKYC) methods for account opening.

In a synchronised effort to elevate the industry, other major banks including BIDV, Vietcombank, and VietinBank have already connected and tested transactions such as deposits, withdrawals, and account opening through customer authentication based on the national population database.

Furthermore, some Vietnamese banks are venturing into digital-based lending, enabling customers to access credit without physically visiting a bank branch. A number of banks have also experimented with citizen credit-scoring systems based on population data.

By utilising this data-driven approach, banks can extend unsecured personal loans in smaller amounts, thereby curbing illegal lending activities and enabling competitive interest rates for consumer credit.

Vietcombank has undertaken a pilot initiative to integrate its system with the national population database for customer authentication and identification through the employment of VNeID. Concurrently, the bank is exploring a citizen credit scoring model as a supplementary metric in the evaluation and endorsement of modest-value consumer loans and the issuance of credit cards to clientele accessing VCB Digibank.

Likewise, Tran Cong Quynh Lan, deputy CEO of VietinBank, accentuated the paramount importance of precise data extraction from the chip-embedded citizen ID cards to mitigate potential inaccuracies arising from optical character recognition when procuring personal particulars.

While eKYC has gained significant traction in recent years, there are some certain challenges to address, including accurate recognition and recording of information from faded or old identification documents, as well as the risks of fraud.

To combat these challenges, the incorporation of AI and the utilisation of accurate data from the national population database play crucial roles in ensuring precise customer identification. The encryption and digital signatures employed to safeguard the data of 80 million chip-embedded national ID cards, thus fortifying the security of financial transactions.

Phan Thanh Toan, director of the ID Check project at FPT Information Systems, said the key obstacle lies in determining authenticity.

What is more, the State Bank of Vietnam’s (SBV) Agency for Prevention of Money Laundering and the Ministry of Public Security are planning to leverage personal identification and immigration information services to support anti-money laundering efforts facilitated by the SBV.

Tools within reach to establish robust stock market

A talk show in Hanoi last week provided valuable insights into the development narrative of financial products, regulatory frameworks, and potential investment opportunities.

At the talk show, themed “Unleashing capital influx in the stock market” and held by VIR, Ta Thi Thanh Binh, head of the Market Development Department at the State Securities Commission (SSC), noted that to establish a robust market presence, well-managed and publicly listed companies played a pivotal role.

Consequently, the SSC has directed efforts towards enhancing corporate governance practices by integrating state-of-the-art technologies in environmental, social, and governance management. This initiative seeks to create a solid business foundation that meets domestic standards while gaining access to the international capital market.

In light of recent volatility in the derivatives market, Binh highlighted the importance of diversifying the range of available commodities.

In a proactive move, Binh revealed that the SSC plans to introduce a secondary market for individual corporate bonds in July. This development is expected to play a vital role in addressing recent bottlenecks within the corporate bond market.

Dang Thanh Tam, chairman of Kinh Bac Urban Development Corporation, said that foreign capital essentially comes in two forms: long-term institutional investment and individual investments.

The former is usually linked to macroeconomic policies and the quality of commodities on the stock market. Additionally, individual investments are of crucial importance, with accounts from abroad increasing in Vietnam. If regulatory procedures from account registration to fund transfers become more convenient and liberalised, this will undoubtedly hasten the process, he added.

Tam is confident that with Vietnam’s increasing exports and subsequent growth in foreign currency, the government will gradually ease regulations, creating opportunities for foreign individual investors to effectively utilise short-term capital.

The importance of trust was also underscored, particularly following the recent decrease in confidence domestically and internationally.

Tam said that if there were specific guidelines, the implementation process would be smoother. Even though progress has been made in the past year with more favourable trade and investment policies, further refinements were necessary since individual investors significantly impact the market.

Helping businesses in times of need is essential for the economy, according to Tam. Immediate action is needed to boost falling GDP, and the government should expedite legal procedures and increase the money supply, he said.

Tran Huy Doan, director of the Derivatives Market Division at ACB Securities Company (ACBS), believes that in the second half of the year, a continued push for public investment disbursement will improve capital inflows and stimulate the economy.

Nguyen Vu Long, chairman of VNDIRECT, also highlighted two main themes for potential investment opportunities, including interest rate reduction and accelerated public investment disbursement.

Landmark M&A transactions highlight hospitality allure

The hotel and resort segment is proving enticing to foreign investors in mergers and acquisitions.

The ibis Saigon South and Capri by Fraser were among the latest transactions announced last week by JLL Hotels & Hospitality Group.

In its latest announcement, JLL said that a landmark transaction, including two developments in Vietnam and one in Indonesia, settled for $106.1 million, marking the first hotel portfolio sale in the Southeast Asia region for 2023. Three hotels are strategically located in the key gateway cities of Jakarta and Ho Chi Minh City, representing 632 rooms.

The Capri by Fraser and ibis Saigon South are the only internationally branded hotels situated in walking distance of offices tenanted by multinational companies and the Saigon Exhibition and Convention Centre, the city’s largest exhibition facility.

As a consultant who regularly contacts investors, Phan Xuan Can, chairman of Sohovietnam, a company specialising in the transfer and sale of real estate projects, said that there were currently a number of domestic and international investors with capital resources in hand, looking for 4-star and 5-star hotels.

Potential buyers are funds specialising in hotel and resort investments from wealthy families around the world. These funds have clear strategies and criteria for the Vietnamese market.

The second potential group is foreign companies and corporations operating in other fields, such as essential consumer goods and medical equipment, and want to expand their portfolio into the hotel and resort segment.

In the past 10 years, Vietnam market has been the focus of the property mergers and acquisitions sector with dozens of deals carried out involving foreign capital. The most favoured destinations are Ho Chi Minh City, Hanoi, Danang, Phu Quoc, Dalat, and Quang Nam.

Hanoi and Ho Chi Minh City both have a hotel merger and acquisition (M&A) market outperforming the rest, while the latter is the leader in terms of transaction value across the country.

In the past, Ho Chi Minh City was not only the centre of high-class hotel M&A transactions on a national level, but also entered the top 10 most popular hotel M&A deals in the Asia-Pacific region.

Among the deals were Indochine Park Tower, Movenpick Saigon, Riverside Serviced Apartments, New World Saigon Hotel, Duxton Hotel Saigon, and Intercontinental Asiana Saigon.

Foreign investors struggle to conclude fruitful real estate M&A transactions

Foreign investors are growing enthusiastic about Vietnamese real estate, yet there are few successful deals.
 
Jones Lang Lasalle Group (JLL) announced on June 14 that it has effectively advised on the sale of a portfolio of three prominent Southeast Asian hotels, one in Indonesia and two in Ho Chi Minh City.

The three hotels, including the Pullman Jakarta Central Park (Indonesia), the Ibis Saigon South, and the Capri by Fraser (both in District 7, Ho Chi Minh City), were sold smoothly in transactions exceeding $106 million in value. According to JLL, this is their first sale of a hotel portfolio in the Southeast Asian market in 2023.

At the end of May, Keppel Group announced spending approximately $135 million to acquire stakes in two properties from Khang Dien House Trading and Investment JSC in Thu Duc city – Emeria (6 hectares) and Clarita (5.8ha). Consequently, Keppel Group now owns 49 per cent of the two enterprises, while Khang Dien retains the remaining 51 per cent.

Neil MacGregor, managing director of Savills Vietnam, stated at the end of last month that the company's investment consulting division was working on more than five merger and acquisition (M&A) transactions worth between $50 and $100 million each.

In addition to the three negotiations involving office structures in operation in Ho Chi Minh City and Hanoi, with institutional investors from abroad as the purchasers, a number of domestic investors also have their sights set on hotel properties.

According to the Vietnam Association of Realtors (VARS), the number of outside investors engaged in and gaining knowledge about M&A deals for real estate projects is rising dramatically.

Notable is the array of Singaporean, South Korean, Taiwanese, Japanese, and Malaysian investors. However, according to VARS, the number of successful transactions to date has been extremely low, and no major M&A transactions have yet been disclosed.

According to VARS, the challenging economic climate has compelled multi-industry businesses to concentrate on their core markets, leaving them with only the capacity for small- and medium-sized transactions.

Only a few real estate developers in the country are able to organise the capital flows needed to buy, in light of their diminished liquidity and elevated financial costs. Therefore, VARS believes that foreign capital inflows alone can increase the volume of billion-dollar transactions. However, the majority of these are still in the evaluation and negotiation stages.

In addition, legal barriers make many projects ineligible for transfer, even if they desire it. This is due to the inconsistency of the legal system and the complexity of land administration procedures, VARS added.

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