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BUSINESS IN BRIEF 5/8

Last update: 15:10 | 05/08/2017

Volkswagen Vietnam expands dealership network

In order to provide better service for Volkswagen enthusiasts in North Vietnam, Volkswagen Vietnam has expanded its dealership network, ringing the total number of genuine Volkswagen dealers in the country to six.

After nine months of construction to satisfy Volkswagen’s latest standards for factory equipment, infrastructure, and training staff under the 4S model (Sales–Service–Spare parts–Global System), VW Long Bien opened on July 1 Hanoi's Long Bien district.

With the total investment capital of over VND30 billion ($1.3 million), VW Long Bien is built on a total area of 3,000 square metres, comprising of two main areas: a 900-sq.m showroom displaying all Volkswagen models distributed in Vietnam, including Polo, Jetta, Passat, Tiguan, Touareg, Sharan, and Scirocco, and a 70-sq.m state-of-the-art training centre.

The impressively large Volkswagen Long bien will have a 900-square metre showroom displaying all VW models in circulation in Vietnam

The workshop of VW Long Bien is expected to have a capacity of 7,000 vehicles per year.

Up to now, Volkswagen Vietnam has put five official dealers into operation in Hanoi, Ho Chi Minh City, Nghe An, Buon Ma Thuot, and Nha Trang. Opening VW Long Bien is also one of the three main goals of the company this year to provide a great experience for customers who love the German car.

$2.3-billion Nam Dinh power plant making headway

The consortium including Saudi Arabian ACWA Power and South Korean Taekwang Power Holdings Co., Ltd. officially received an investment certificate for the $2.3-billion Nam Dinh 1 thermal power project, making it the seventh foreign-invested build-operate-transfer power project licensed in Vietnam.

The licensing ceremony was held on July 2 in the northern province of Nam Dinh. The event marks an important milestone for the delayed project, which should significantly contribute to Vietnam’s electricity supply in the future.

Paddy Padmanathan, president and CEO of ACWA Power, said, “Being granted the investment certificate represents a significant step in the project’s development and, more importantly, it demonstrates a commitment by the Vietnamese government to protect foreign investors and encourage the participation of private investors in the country’s infrastructure projects.”

According to investors, after nearly nine years of development, getting the investment certificate is one of the most important milestones after the investment agreement was signed between the Ministry of Industry and Trade and investors in January 2016.

Rajit Nanda, chief investment officer at ACWA Power, said, “Ceremonies like the one taking place today reaffirm ACWA Power’s commitment to Vietnam. The country has built a comprehensive plan for power delivery and paired it with a robust legal and economic system that encourages private international investment in critical infrastructure projects.”

He added that ACWA Power looks forward to supporting Vietnam in meeting its energy needs over the decades to come.

Nam Dinh 1 is the seventh foreign-invested power project licensed in Vietnam since the country opened its doors to foreign direct investment three decades ago.

The 1,200-megawatt (MW) plant is an independent greenfield power project to be developed on a build-operate-transfer (BOT) basis. It is part of the 2,400MW Nam Dinh thermal power complex.

The project is scheduled to commence construction in early 2018. The first unit will enter commercial operations within 51 monts, while the power facility will take 57 months.

The investment consortium will operate for 25 years. The project will be financed by Export-Import Bank of Korea and Korean Trade Insurance Corporation.

South Korean Posco E&C has been selected as a preferred bidder for the engineering, procurement, and construction (EPC) contractor of the project.

The plant’s annual production will be 7,800 gigawatt-hours, which will be a considerable contribution to power generation in northern Vietnam, in line with the development strategy presented in the nation's power development strategy.

The investment of the Nam Dinh 1 project with international financing sources will help ease the financial burden brought on by the increased power demand during the 2020-2025 period and later on.

High-tech road solutions to keep Vietnam moving forward

The 1,811-kilometre north-south expressways is under construction in Vietnam. The ITS package developed by Japanese companies has been adopted along a 55km section of the expressway.

Such state-of-the-art systems are vitally important social infrastructure for emerging-market countries.

Against the backdrop of globalisation, Japan, through its capabilities and experience in social infrastructure technology, is contributing to enhancing the infrastructure of countries undergoing rapid economic growth. One example is Vietnam, whose GDP per capita growth since 1990 has been among the fastest in the world.

A 55km section to the east of Ho Chi Minh City, which connects the second city to the southern province of Dong Nai, shortens the usual three-hour journey between the two places to a single hour. This stretch of the highway will feature an intelligent transportation system (ITS) conceived and installed by a Japanese consortium.

The ITS system for Vietnam Expressway Corporation is but one fruit of the consortium of Japanese companies led by Toshiba. This is the first comprehensive ITS solution put together by Japanese companies for an overseas customer. The equipment had been tested and installed, and then officially opened to the public in March 2017.

Motorbikes, mainly commuter bikes, have long been the dominant form of private transportation in Vietnam. However, the country's rapid economic growth means they are increasingly sharing limited road space with a growing number of SUVs and other car models.

With Vietnam’s roads already thronged with traffic and congestions, gridlocks are everyday realities for long-suffering road users in the bustling country. Bringing the transportation system up to speed through the addition of more and better roads, including expressways, subways, and other transportation infrastructure, is a pressing national priority.

“Toshiba has more than 50 years of experience in road projects,” explains Atsushi Kawami, Highway and Traffic Solutions Engineering Department, Social Systems Division, Infrastructure Systems & Solutions Company. “But the maturity of the Japanese market has prompted us to seek new growth opportunities overseas. Our market surveys revealed the high potential of Vietnam where major road projects are gaining traction.”

“At the heart of an ITS is cutting-edge information processing technology for integrated processing of information on people, roads, vehicles, and so on, to reduce disruptions along road networks and inconveniences to users—traffic backups, accidents, and other glitches,” Kawami said, warming to his theme. “ITS consist of various subsystems, including those for traffic control and toll collection. In this project, the consortium is responsible for every element of the system, central or peripheral, for the 55km stretch of expressway.”

According to Kawami, Vietnam’s massive plan for road construction is an opportunity for Toshiba's total solutions incorporating traffic management and toll collection systems.

The project involves a toll collection system including ETC and installing vehicle detectors for measuring traffic flows and automatically sensing backups at 52 points. Additionally, cameras are installed to monitor 16 areas, sensors to assess weather conditions, and wireless communications equipment for use by the technicians supervising the expressway.

 Ba Ria-Vung Tau seeking new developer for prime land plot

The southern province of Ba Ria-Vung Tau is looking for a potential developer to rebuild the Vung Tau Paradise Resort which has been delayed for 25 years now.

On June 16, the authorities of Ba Ria-Vung Tau presided over a meeting with potential developer Housing Development and Trading Joint Stock Company (HDTC) to discuss the proposed investment plan for the resort.

Han-Guk Architects & Engineers from South Korea, invited by HDTC as the project consultant, presented the ideas to revive the project.

Accordingly, two options were put on the table. Option one is an 18-hole golf course project, which accounts for about 30 per cent of the total land area. The remaining 70 per cent would be allocated to villas, hotels, shopping malls, sea villas, floating resorts, amusement parks, and performance stage.

Option two is 27-hole golf course accounting for 52 per cent of the total land area. The rest of the complex would include a villa area, a hotel area, and a casino.

Chairman of the Ba Ria-Vung Tau People's Committee Nguyen Van Trinh asked the local Department of Construction to support the consultant in designing the project by reviewing and adding some items to meet the requirements of local tourism development. 

Trinh also said that the aim of the province in the management of the Paradise Resort is selecting qualified developers to implement projects that can promote the tourism industry of the province. Particularly, the requirements of the committee when selecting developers included a $2-billion investment capital at least, 25 per cent of which must be equity, and that the project would be finished within three years.

Vung Tau Paradise lies on 220 hectares of land and was licensed to Joint Venture Vietnamese Vung Tau Intourco Resort JSC and Taiwanese Paradise Development and Investment Company in 1991, with an expiration time of 25 years. The project has the total investment capital of over $97 million, of which 25 per cent was contributed by the Vietnamese partner. However, the joint venture expired at the end of 2015.

Human resources training needs improvement

The so-called fourth industrial revolution, also known as Industry 4.0, will provide more development opportunities for businesses but will also require businesses to prepare qualified human resources to meet the industry’s standards, according to experts.

To prepare for the new wave, many businesses have invested in buying modern machines and equipment and in training human resources. But in the Saigon Hi-tech Park, for example, high-tech firms still lack qualified staff to meet their demand. Deputy Director of the park Lê Thành Nhân said businesses in the park need workers capable of operating modern equipment and technology.

CEO of the Meetech Technology Joint Stock Company Phạm Bá Khiển said the number of high-quality workers who could map out ideas or operate modern equipment was limited. They mostly come from universities, but the rate of applied research for start-ups was low, he said.

Nguyễn Văn Thụ, chairman of the Việt Nam Association of Mechanical Industry, said at a recent conference in Hà Nội that investing in human resources should be considered the most important task for local manufacturers, in addition to fostering technical innovation and enhancing co-operation among businesses to maximise efficiency and avoid overlapping investments.

To deal with the problem, the Training Centre of the Saigon Hi-tech Park has supported businesses in training workers to meet their demands for high-quality human resources.

Experts also warn that besides focusing on training high-quality human resources, it is also necessary to upgrade or reform training programmes and methods so that employees can meet the demands of Industry 4.0.

Trần Quang Binh from the HCM City Technical and Economic College said demands for a high-tech workforce were growing, while well-trained human resources supply capacity was limited.

Head of HCM City Economic College Lâm Văn Quản said the labour market would face a serious gap between supply and demand. Vocational training must equip learners with basic skills and knowledge, together with creative thought and ability to adapt to challenges and jobs’ requirements.

Vocational training centres should strongly renovate from training activities to school management to “create” workers who are capable of working in a competitive and creative environment, he said.

Old training methods that targeted supply instead of demand are an obstacle to this reform, he said.

In response to rapid technological change, the General Department of Vocational Training said virtual training and digitalising education would be the trend of vocational training in the near future. Centres should shift to the models of training that the market needs, according to the department.

Experts say one of the most reasonable solutions for improving workforce quality is to co-operate with businesses.   

Đặng Thị Nhật Minh from the HCM City-based Lý Tự Trọng Technical College says vocational training schools should co-operate with businesses and scientists to analyse socio-economic conditions and build appropriate training models.

Businesses regularly invest in new equipment and employ professional and skilled experts, both of which could be placed at the disposal of students, he said. Students would also have opportunities to work and practice in a real working environment and directly learn from experts so their training meets business demand.

Minh Nguyên Logistics Joint Stock Company in HCM City, for example, has worked with universities to select qualified graduates. The company also regularly co-ordinates with strategic partners from the Republic of Korea and Japan to organise training courses for management staff and high-quality engineers.

Vietnam now Canada's largest ASEAN trading partner

Canada has been a partner of Vietnam for more than 40 years and the bilateral relationship is multi-faceted, H.E. Ping Kitnikone, Ambassador of Canada to Vietnam, told celebrations of Canada’s 150th anniversary of confederation held in Hanoi on June 28, and the last two years have seen Vietnam become its largest trading partner in ASEAN, with $4.25 billion in two-way trade last year.

There is also an ever-increasing number of Vietnamese students studying in Canada, Ambassador Kitnikone added.

“We are committed to building our strong and long-standing relations with our Vietnamese partners and finding ways to deepen our ties,” he said. “Some of these ties include Canada’s support to building capacity toward supporting the rights of individuals, including LGBTI and women’s rights. The Canada Fund for Local Initiatives in Vietnam has supported and will continue to support similar initiatives in Vietnam.”

Over the past year, Canada ramped up the development programming related to areas of great importance to Vietnam, with recently announced development projects including a $11.8 million Safe Food for Growth project, a $11.6 million project to support Vietnamese small and medium-sized enterprises (SMEs) address climate change, and $154.2 million through the Asian Development Bank to catalyze private investment in climate change mitigation and adaptation in Asia and the Pacific.

This past year saw increased high-level exchanges in Vietnam, with visits from Canada’s Foreign Affairs Minister Stéphane Dion, Agricultural and Agri-Food Minister Lawrence MacAulay, and, most recently, International Trade Minister François-Philippe Champagne, who attended the APEC Ministers Responsible for Trade meeting in May.

“We look forward to many more such visits in the coming months and years,” Ambassador Kitnikone said.

1H trade deficit at $2.7bn

The latest figures from the General Statistics Office (GSO) show that Vietnam’s export turnover in June reached $17.8 billion, up 20.9 per cent year-on-year, and $97.8 billion in the first half, up 18.9 per cent.

Exports by the domestic sector totaled $27 billion, a 13.8 per cent increase, while those of the foreign-invested sector (including crude oil) reached $70.8 billion, an increase of 21 per cent.

Excluding price factors, export turnover rose 12.9 per cent in the first half year-on-year.

Import turnover in June, meanwhile, was $18 billion, up 21.6 per cent year-on-year, for a first half figure of $100.5 billion, up 24.1 per cent.

Imports by the domestic sector stood at $39.9 billion, an increase of 18.2 per cent, and $60.6 billion by the foreign-invested sector, up 28.3 per cent.

Excluding price factors, import turnover rose 17.3 per cent year-on-year in the first half.

The trade deficit in June was therefore $200 million and $2.7 billion in the first half.

The domestic sector recorded a trade deficit of $12.92 billion while the foreign-invested sector recorded a trade surplus of $10.22 billion.

According to the GSO, export turnover in the service sector was $6.4 billion in the first half, up 7.1 per cent, of which tourism services totaled $4.3 billion and transport services $1.2 billion.

Import turnover in the service sector was estimated at $8.2 billion, up 3.5 per cent, with transportation services at $3.9 billion and tourism services $2.4 billion.

The deficit in the service sector was therefore $1.8 billion, or 27.3 per cent of service sector exports.

Masan Consumer targets having 12 leading brands by 2020

Under the leadership of new Chairman Truong Cong Thang, Masan Consumer targets building at least 12 leading brands in Vietnam by 2020.

As VET reported recently, Mr. Thang has replaced Mr. Nguyen Dang Quang as Chairman of Masan Consumer, the fast-moving consumer goods (FMCG) arm of the Masan Group.

Masan Consumer’s extra-ordinary shareholders’ meeting on June 23 elected Mr. Thang as Chairman and approved an increase in the number of board members in the 2014-2019 term to six.  

Mr. Thang has set a revenue growth target of 25 per cent per year in the 2018-2022 period, with a net profit margin of 20-25 per cent. At the same time, Masan Consumer will strive to become one of Vietnam’s three most-favored workplaces by 2022.

In the second half of this year, Masan Consumer will introduce eight major business campaigns to reaffirm the power of its brands in the market, restructure some product lines, expand the consumer market, and introduce new products to consumers.

“We will promote productivity through new innovations, apply science and technology, build strong brands, and focus on serving the daily lives of the majority of people,” Mr. Thang said.

Mr. Thang was previously CEO of Masan Consumer but resigned for personal reasons. In his six years as CEO, he helped it dominate the FMCG market with three main product lines: spices (Chinsu and Tam Thai Tu), instant noodles (Kokomi and Omachi), and beverages.

The change in Masan’s leadership comes in the context of a slowdown in the company’s core business. Masan Consumer’s sales fell nearly 17 per cent in the first quarter of this year. In 2016, though revenue grew 4.4 per cent against 2015, pre-tax profit fell nearly 8 per cent. The company has been undergoing a downturn since 2014.

IFC kicks off food safety initiative

The International Finance Corporation (IFC), a member of the World Bank Group, signed an advisory agreement with the Bel Ga JSC, a Vietnam-based poultry breeding firm, and launched its Vietnam Food Safety Project at a conference held on July 1 in Ho Chi Minh City.

The project aims to address food safety standards and practices in the country. Improving the quality of food products will help businesses unlock new markets, reduce costs, and contribute to better food security.

By installing modern food safety management systems, the project will increase total sales by $30 million at participating companies. The financing that these companies can source is likely to increase by $25 million within a year after the project’s completion.

Annual food consumption in Vietnam accounts for roughly 15 per cent of GDP, with average annual growth rate at approximately 18 per cent. But, inadequate safety standards can inhibit the sector’s growth potential, jeopardizing consumer health and reducing market opportunities for local food companies in the modern food value chain.

Over the next three years, the IFC will work with agribusiness lead firms and their supply chains to improve food safety and secure internationally-recognized certifications. Firms can then retain key clients and gain better access to new markets. The project will also help build capacity by raising awareness among key industry players and by training consultants to develop a cadre of experts.

“A strategic priority for Vietnam’s poultry sector is to cater to the domestic market and export quality products that adhere to food safety standards at competitive prices,” said Mr. Nguyen Xuan Duong, Deputy Director of the Animal Husbandry Department at the Ministry of Agriculture and Rural Development.

The Bel Ga JSC is the first to join the initiative. The IFC will advise 54 poultry houses of three independent Vietnamese farms among Bel Ga’s downstream poultry farms on acquiring the Global G.A.P. Certification.

It will establish a system for breeding activities for these farms, which will focus on hygiene and biosecurity, among other matters. “Food safety is becoming increasingly important in Vietnam,” said Mr. Kay De Vreese, General Director of the Bel Ga JSC. “By implementing a food safety management system, we commit to producing safe, affordable and traceable poultry products.”

The project is being implemented in partnership with the Slovak Republic. “We are very pleased to support the IFC’s efforts to improve Vietnam’s food safety,” said H.E. Igor Pacolák, Ambassador of the Slovak Republic in Vietnam. “We believe the private sector has an important role to play in promoting sustainable and inclusive economic growth through this food safety initiative, which will benefit Vietnam’s businesses and consumers.”

“Modern food safety management systems make businesses more competitive,” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia, and Laos. “It helps them with improved efficiency and cost savings and contributes to a stronger brand value, preparing them for both new and more sustainable market opportunities.”

1H credit growth at 6-year high

Total outstanding credit in Vietnam’s banking system grew 7.54 per cent in the first half of this year compared to the end of 2016, hitting a six-year high, the General Statistics Office (GSO) revealed in a report released last week.

“This indicates that enterprises’ capital absorption capacity and banks’ earnings from interest have improved significantly,” the government-run office noted.

Lending far outpaced money supply, increasing 5.69 per cent in the six-month period. Deposits at banks, meanwhile, rose 5.89 per cent from end-2016 compared to 8.23 per cent in the same period of 2016.

According to the GSO, annual interest rates commonly range between 6 per cent and 9 per cent for short-term loans and 9 per cent to 11 per cent for long-term loans, which are higher than those in many regional countries.

Together with a recovery in agricultural production and the service sector, faster credit growth helped Vietnam’s GDP growth accelerate to 6.17 per cent in the second quarter of this year from 5.15 per cent in the first quarter.

Strong credit growth, however, also means a rapid accumulation of debt. The debt to GDP ratio is now about 122 per cent, up from 95 per cent in 2012 and will likely continue to rise further. In addition, though the central bank has kept its monetary policy steady, it expects money supply (M2) to rise by 16-18 per cent this year due to such credit expansion.

Rapid credit expansion is typically accompanied by rising bad debt. This challenged Vietnam during the 2008-2012 period, and while the reported non-performing loan (NPL) ratio appears low at present, at 2.6 per cent, it does not include NPLs sold to the Vietnam Asset Management Company (VAMC) and “special mention” loans.

According to the State Bank of Vietnam (SBV), if bad debts managed by the VAMC were to be included, bad debts in the overall system were likely around 8.9 per cent of the total as at end-2016.

Though improved economic performance could lower NPLs, the rapid and sustained increase in credit growth poses risks to financial stability in the medium-term. The Development Bank of Singapore (DBS) Group Research, in its June 27 report, noted that policymakers may be better off focusing on productivity gains instead of credit expansion to achieve sustainable growth.

Concerning the exchange rate, the Vietnam dong has depreciated about 2 per cent against the US dollar since the second half of 2016, partly due to deteriorating external balances. While the depreciation was marginal, pressure will remain in the coming months given the backdrop of US monetary policy normalization and the drag from external balances, the DBS report noted.

A weaker currency on top of strong domestic demand fueled by credit expansion also means that the economy will be prone to any inflationary shock. Although inflation remains benign for now, the high NPLs within the financial system could impede the central bank’s ability to mitigate any potential inflationary risk via rate hikes.

Hanoi's retail market recovers in Q1

Hanoi’s retail market recovered in the first half of this year, according to the latest report from CBRE.

Ms. Nguyen Hoai An, Director of Research and Consulting Services at CBRE Vietnam, told a recent press conference on Hanoi’s real estate market that in the second quarter there were two new retail projects in Thanh Xuan district providing approximately 33,400 sq m, increasing the city's total by 4.4 per cent quarter-on-quarter and 12 per cent year-on-year.

The average leasing price was $33.4 per sq m per month, up 1 per cent quarter-on-quarter.

New supply in the retail segment is expected to be between 40,000 and 86,000 sq m over the remainder of 2017 and leasing prices are expected to increase.

Strategic and suitable customers are important factors in the success of the retail segment, according to CBRE, but there are also many issues relating to location and occupancy.

In Ho Chi Minh City’s retail market, the second quarter of 2017 saw 37,389 sq m of new space, bringing the total to 853,425 sq m. All new projects in the quarter were located in the non-CBD area.

The city will have more retail outlets in the future, coming from apartment for sale projects to be handed over shortly.

Except for projects with good locations or good brands, occupancy will not be as good as in the first quarter of the year. Projects expected to struggle include CBD Home Premium, Vincom Plus Homyland, and Vincom Plus Saigonres, which have from 30-75 per cent of rental areas unoccupied.

The report also noted that a series of international fashion brands are showing interest in Vietnam. Some have confirmed the opening of stores in Hanoi, such as Zara and H&M.

Food and beverages (F&B) is still fiercely competitive, with a number of brands from the Asia-Pacific region arriving in the country. Convenience stores is also developing strongly, marked by the recent arrival of 7-Eleven.

“Investors are putting great faith in Vietnam’s growth in the time to come,” Ms. An said. “This is the driving force for the development of the real estate sector.”

Hanoi’s safe vegetable shop project turns out to be failure

Many out of nearly 40 safe vegetable shops operated by Hapro are selling other kinds of products or sub-leased.

In 2010, Hanoi authorities assigned Hapro to open 37 shops to sell safe vegetables which are mostly located in the city-centre areas.

However, to date, a number of these shops have been turned into convenience stores; meanwhile many have combined vegetable sales with different products or have been sub-leased to other firms.

For instance, the shop at 68 Hang Bong Street stopped selling vegetables two years ago and is a convenience store. The same situation is seen at another shop of Hapro at 51 Le Dai Hanh Street. Meanwhile, another shop on Thai Thinh Street has been sub-leased to another business.

Staff at a Hapro shop on Luong Dinh Cua Street said that the vegetable sales for the Hapro shop chain have been very low, estimated at around 5-7 kilos per day at each branch. They also said it was not easy to preserve vegetables which often need to be sold within the day.

“Hapro has bought vegetables, but we can’t compete with traders. The vegetable revenues at our shops are very modest which is usually just less than VND1 million (USD47) a day. So, we have to sell other products to make up for the losses,” said a representative from the corporation.

He also added the shop layout was often not suitable for selling vegetables.

SCIC divests from Điện Biên Company

State Capital Investment Corporation (SCIC) will sell 673,256 shares, or 47.23 per cent of charter capital, of Điện Biên General Services and Travel Trading Joint Stock Company.

Accordingly, from June 28 to July 6, SCIC will sell shares at the agreed price of VNĐ68,200 (US$3) per share (6.82 times higher than the par value).

Earlier, SCIC planned an auction of all its shares at the starting price of VNĐ68,200 per share. However, the auction was not successful.

Điện Biên General Services and Travel Trading Joint Stock Company has charter capital of more than VNĐ14 billion, operating in the wholesale food and passenger transport segment.

Wholesale market opens in Dong Nai     

The Dau Giay Agro-products and Foodstuff Wholesale Market was inaugurated in the southern province of Dong Nai on Wednesday.

Built near the Dau Giay T-junction in Xuan Thanh Commune, Thong Nhat District, the 55ha market cost more than VND1.4 trillion (US$61.67 million). In the first phase, it has 216 stalls for fruits, vegetables and flowers, which can handle over 500 tonnes of the goods a day.

Vo Van Chanh, deputy chairman of the provincial People’s Committee, said the province has great potential in agriculture, but the uncertainty in demand used to cause farmers big losses. The new wholesale market would help consume farmers’ products, he said.

The market would provide safe agricultural produce meeting VietGap and GlobalGap standards to the locality as well as neighbouring provinces and cities, he said.

It is situated close to three main national highways - National Highways 20 and 1A and the HCM City-Long Thanh-Dau Giay Expressway. 

Equitisation of State-owned enterprises remains sluggish

The progress of equitisation of State-owned enterprises (SOEs) in the first six months of this year was slower than the same time last year with only 19 SOEs receiving approval for their equitisation plan by mid-June.

At a press conference on the issue held in Hanoi on June 29, Deputy Head of the Corporate Finance Department under the Ministry of Finance Dang Quyet Tien said the Vietnam Southern Food Corporation Limited (Vinafood 2) and the Vietnam Rubber Group are among those which need to speed up equitisation. 

The official attributed the delay to the hesitation and lack of drastic measures on the side of the firms’ management as well as the market’s low absorption capacity.

Divestment activity was also ponderous. Report from the Ministry of Finance showed that state-owned groups and corporations divested a total 3.4 trillion VND (149.5 million USD) from non-core business areas and recovered 14.8 trillion VND (651 million USD). However, over 11 trillion VND (483.8 million USD) of which was collected from selling shares of Vinamilk.

Regarding the draft amendments to Decree No.91/2015/ND-CP on the investment of State capital in enterprises and the management and use of capital and assets in enterprise, the Finance Ministry said one of the changes will deal with principles for the transfer of State capital and SOEs’ capital invested in other businesses.

New regulations will be added on the determination of the initial prices when transferring State capital and SOEs’ capital invested in other businesses related to land use right.

HCM City’s CPI stable in June

The consumer price index (CPI) of Ho Chi Minh City in June remained unchanged from the previous month, but rose 3.27 percent compared to the same period last year, reported the municipal statistics office on June 29.

According to the office, the prices of four out of 11 goods brackets represented marginal month-on-month increases, with the highest rate of 0.46 percent in the group of housing, electricity, water, fuel and construction materials.

The price of home appliances was up 0.11 percent, while that of garments, hats and footwear and of beverage and cigarette grew 0.02 and 0.01 percent, respectively.

The office said that in June, goods groups with declining prices included transport (down 0.79 percent); culture, entertainment, and tourism (0.15 percent); education services (0.11 percent); and restaurant services (0.11 percent).

Medicine-health services and postal services – telecommunications witnessed no monthly change in prices.

In June, gold and US dollar prices dropped 0.52 and 0.18 percent from May.

Vietnam economy rebounds strongly with GDP at 6.2%

The Vietnam gross domestic product jumped to 6.2% for the three months leading up to July on the back of a resurgence in exports of Samsung Electronics, reports the Nikkei Asian Review.

Most of the recovery is attributable to Samsung, which makes smartphones and ordinary mobile phones at factories located throughout northern and southern Vietnam, says Nikkei. 

Following widespread recalls of the fire-prone Galaxy Note 7 phones by Samsung, the GDP of Vietnam fell to 5.1% for the first quarter of the year because of the company’s depressed exports.

Samsung accounts for roughly 20% of the exports for Vietnam, says Nikkei.

Samsung is not the only business based out of the Republic of Korea that is driving the growth of the Vietnamese economy, Nikkei notes, saying that LG Electronics, the Lotte Group and others are also expanding their footprint in the Southeast Asian country.

Nikkei adds that these companies from the ROK have been the largest source of foreign direct investment in Vietnam for the past three consecutive years, starting in 2014, which has some experts concerned the two economies are too closely tethered.

While forays by companies from the ROK have fueled GDP growth over the past several years, the manufacturing sector in Vietnam still faces many obstacles in getting its competitiveness up to the level of other ASEAN countries.

Chief among the complications is finding the finances to develop railroads, highways and other infrastructure, says Nikkei.

Bosch to invest US$47 million in Dong Nai

The Bosch Group, a leading global supplier of technology and services, will invest an additional US$47 million in Bosch Gasoline Systems in southern Dong Nai province to meet the market demand and pursue its business target.

Vo Quang Hue, Managing Director at Bosch Vietnam Company Ltd, said as Vietnam accelerates its the industrialization and urbanization process it is looking towards a smart economy. These trends provide an opportunity for Bosch to diversify its products, especially in connectivity solutions for smart city and Industry 4.0.

Two years ago, Bosch invested more than US$23 million in improving production capacity in Vietnam. It continued to pour US$22 million for Gasoline Systems plant to produce CVT Pushbelts in Dong Nai in 2016 and around US$1 million in waste water treatment for the plant in 2015.

Currently, Bosch employs more than 3,100 associates in Vietnam, more than 40% of whom are based at its two R&D facilities in HCM City. It focuses on Vietnam’s potential to develop state-of-art technologies through connectivity solutions, especially in smart city and industry 4.0.

Premium segment apartments see price rise in second quarter

The second quarter of 2017 witnessed a fall in the number of apartments for sale and apartments sold, as well as a rise in the prices of the premium segment, as reported by commercial property and real estate services firm CBRE.

In the second quarter of 2017, there were 8,086 apartments for sale in the market, representing an increase of 23 per cent compared to the same period last year, but a reduction of 14 per cent on-quarter.

Notably, most new apartments for sale were offered on the next open sale of some big projects. 68 per cent of new apartments for sale were located in western and southwestern Hanoi, and 20 per cent were supplied by a new project in Ecopark urban area.

Regarding segments, the apartments in the mid-range price segment accounted for the highest proportion of total sales in the past few years. In particular, this segment accounted for 55 per cent of the total batch of new apartment for sale in the period.

There were a total of 4,650 apartments sold in the second quarter of 2017, a reduction of 24 per cent on-quarter.

Explaining this decrease, a representative of CBRE said, “In the first quarter of 2017, there was a wide range of apartments for sale, thus, the number of apartments sold was about 15-20 per cent higher than in the corresponding period of 2016. To prepare for each open sale, developers need time for the compile detailed plans, therefore we may have to wait for about three months for a new open sale and the next surge in apartment sales. Besides, when looking at the figures of the last two years, the number of apartments sold in the second quarter of this year is on the medium level, not too low.”

Moreover, there were few changes in the average home price in the primary and secondary markets. Notably, in this quarter, prices only rose in the premium segment by 1-3 per cent in the primary and secondary markets.

CBRE’s representative said that the premium segment has diversified clients in comparison with some other segments.

Target customers of the premium segment may be investors who purchase apartments for the purpose of leasing or foreigners who purchase luxury apartments for their high living standards.

Besides, most apartments in the premium segment are located at prime location, and they hold huge investments in their design, administration or facilities, boosting their selling price in both markets by a significant margin.

VCCI identifies unsuitable elements of Law on Investment

Sixteen of the 243 clauses in the Law on Investment that was amended in 2016 are unsuitable and ten need adjustments to State management, Mr. Dau Anh Tuan, Head of the Vietnam Chamber of Commerce and Industry (VCCI)’s Legal Department told a workshop on business conditions and doing business in Vietnam on June 30.

“When reviewing conditional business sectors, VCCI found that some clauses don’t have any significant impact on business,” he said. “Some should be removed and substituted by other State management methods and others are being managed more than necessary.”

The 16 unsuitable clauses are those on service activities of commercial arbitration institutions (Clause 17), business debt trading services (36), the manufacture and repair of liquefied petroleum gas (LPG) bottles (43), the business of temporary import and re-export of frozen food (57), rice exports (55), business warranty services and maintenance of motor cars (78), trading in sea transport and shipping agency services (90), business services in artistic performances, fashion shows, beauty contests, and modelling (212), business services for logistics (60), business management services and operations of condominiums (119), business management services and operations of crematoriums (120), production of motorcycles and motorcycle helmets (203), the dissemination of business services for production (206), business travel services (210), advertising to the public (215), and business in printing services, except in packaging (128).

The ten sectors in need of adjustments to State management are those relating to the sales of food under management by the Ministry of Industry and Trade (Clause 52), the food business under the management of the Ministry of Agriculture and Rural Development (172), the food business under the management of the Ministry of Health (194), the aquatic seeds business (177), franchises (59), the seafood business (150), trading in aquatic feed and animal feed (151), sales of plant protection products (161), sales of fertilizers (174), and sales of plant varieties and animal breeds (176).  

In 2014, there were 267 conditional business lines in the Law on Investment, which was reduced to 243 by amendments in 2016. “However, this does not mean that 23 conditional business lines were omitted,” said Mr. Truong Thanh Duc, Chairman of the law firm BASICO. “In fact, some businesses were added into one business line when being rearranged.” Though amended, he complained, the law is still quite complicated.

According to Mr. Tuan, there are 5,719 business conditions in the Law on Investment. If each sector or conditional business had one less procedure, the number of business conditions will quickly fall and enterprises and society will save time and money.

VNA/VNS/VOV/SGT/SGGP/TT/TN/Dantri/VNEVET

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