Thứ Bảy, 22 tháng 2, 2014

BUSINESS IN BRIEF 23/2

Regional economic community promises retail rivalry
Thailand’s leading retailers are pushing ahead with aggressive expansion plans into Vietnam as the deadline for the launch of the ASEAN Economic Community (AEC) nears, according to the Vietnam Investment Review (VIR).
Chairman of the Hanoi Supermarket Association Vu Vinh Phu told VIR that scores of foreign retailers, including those from Thailand, had recently entered the market on anticipation of the establishment of the AEC by 2015.
“Once AEC becomes a reality, enterprises in ASEAN would have more sale and business opportunities as there will be greater regional economic integration and market convergence. Thai investors are well-known for their marketing capacity and are anticipating these opportunities,” said Phu, who is also Vice Chairman of the Association of Vietnam Retailers.
AEC is likely to attract further foreign investors to Vietnam eager to make the most of tariff advantages, he added.
According to the AEC Blueprint, a single ASEAN market and production base will be established, making ASEAN more dynamic and competitive thanks to the free flow of goods, investment, skilled labour and easier capital flows. Goods will also cross borders more easily thanks to zero percent tariffs and the substantial dismantling of other trade barriers.
Thailand’s leading retailer Central Group recently announced its expansion in Vietnam with next month’s launch of a Robins department store.
The first Robins store, the group’s first international branch, will occupy 10,000 square metres of retail space at Hanoi's Royal City. A second Robins store will be opened in Ho Chi Minh City by the end of 2014. The two stores will together hire 1,000 local workers.
Thai billionaire Dhanin Chearavanont, Chairman of Charoen Pokphand Group (CP Group), was recently rebuffed by German retailer Metro Group AG in negotiations to buy Metro Cash and Carry in Vietnam, in a deal that was valued at more than 500 million USD. CP may well return to the table with an improved offer.
Korsak Chairasmisak, Managing Director of CP, said that Thailand wanted to take advantage of AEC. CP anticipated promoting small- and medium-sized Thai enterprises to the wider ASEAN market.
Thailand’s Berli Jucker (BJC), owned by billionaire Aswin Techajaroenvikul, also previously bought the Vietnamese Family Mart’s 42 retail outlets to establish a joint venture with Vietnam’s Phu Thai Group. Phu Thai and BJC recently launched B’mart, with Phu Thai saying that details of the deal would officially be released in September this year.
In December 2012, BJC hooked up with Mongkol Group in a 32.4 million USD joint venture to set up Thai Corporation International Vietnam (TCI) to open a supermarket chain in Vietnam.
TCI Director Mongkol Banthrarungroj said the joint venture’s target was to promote its brand name in Indochina and export Thai products to Myanmar, Laos, Cambodia and Vietnam. TCI expected to increase its sales in Vietnam to 3 trillion VND (150 million USD) once AEC becomes operational.
Marketing communications and management consultancy company AT Kearney in a recently survey of corporate leaders on their AEC expansion, merger and acquisition and brand plans found that the majority of companies in ASEAN member countries such as Thailand, Singapore, Malaysia, the Philippines and Vietnam planned to enter new markets, and create new products and brands to reach more consumers across the economic community after 2015.
“There is a big opportunity for Southeast Asian companies to embrace the ASEAN mantle and create regional brands,” said Bob Hekkelman, Southeast Asia CEO for world leading marketing firm JWT.
He added that companies with insight into local tastes, cultures and attitudes had an inside track, but they would need to work hard to expand their reach, up their quality and build competitive brands if they want to woo the region’s discerning consumers.
Phu added that besides AEC, under Vietnam’s WTO commitments, from January 11, 2015, Vietnam would permit the establishment of 100-percent-invested retail businesses. Currently, foreign firms are constrained by being forced to enter into joint ventures with Vietnamese partners or franchising.
“AEC and WTO will provide opportunities, but also major challenges due to competition with foreign players,” said Phu.
He recommended domestic retail enterprises to enter partnerships to build bigger firms in anticipation of a massive influx of foreign retailers following the further opening of the retail market to foreign investment.-
Khanh Hoa restricts inshore fishing activities
Fishermen in the central coast province of Khanh Hoa have been told to minimise their exploitation of fish stocks in a number of local lagoons and bays that have great ecological, tourism and economic value.
According to the province’s recent regulations on the management of marine resources, inshore fishing in Van Phong and Nha Trang bays and Thuy Trieu and Nha Phu lagoons will be strictly monitored in order to protect and develop local resources which will bring long-term benefits of the locality.
Under the new regulation, fishing boats with capacity between 20 and 90 CV will not be allowed to operate in the areas.
All types of fishing in the ecological recovery zones at Hon Mun marine reserve park will be banned. In Nha Trang bay, lobster trapping will also be prohibited.
Before now over 8,600 out of 9,800 local fishing vessels were exploiting aquatic products inshore, exhausting local marine resources as well as directly affecting the ecosystem and bringing down incomes from fishing.-
Projects in Ho Chi Minh City launch apartment sales
With positive signs on the real estate market since last year’s second half, some property enterprises are preparing to launch apartments to grasp business opportunities in the early months of the year, a local newspaper reported.
The Saigon Times Daily quoted Phu My Hung Corporation as saying it would offer Green Valley apartments for sale this quarter. The Green Valley project consisting of four buildings of 20-27 floors supplies 546 apartments having an area of 88-194 square meters each.
Phu My Hung has not announced the selling price but said the apartments were for medium-income earners and affordable to buyers with financial supports from banks.
Also in Saigon South, The Park Residence located on Nguyen Huu Tho street with around 1,000 apartments of 52-73 square metres each has been put up for sales. The selling prices of such apartments start from 700 million VND (33,000 USD) per unit.
The Park Residence’s investor is receiving bookings and will finish the project in 2016.
Meanwhile, in District 6, Him Lam Land Company is about to sell apartments of the Him Lam Cho Lon project located near the district’s administrative centre. The project supplying around 1,400 apartments is almost finished.
Khang Dien House Trading and Investment Joint Stock Company is going to launch the sale of Mega Residence townhouses in District 9.
Khang Dien will sound out the market by offering for sale around 160 adjoining houses at a price starting from 13.5 million VND per square metre, or some 1.99 billion VND per unit.
With its location near Ho Chi Minh City-Long Thanh-Dau Giay Expressway and the belt road and especially a price equivalent to that of an apartment, the investor expects to attract many buyers to Mega Residence in the coming time.
Besides, there are many other projects offering apartments for sale such as Lexington Residence in District 2 at around 20.6 million VND per square metre, PARCSpring in District 2 at 17.4 million VND, Sunview Town in Thu Duc district at 11.2 million VND and An Phu 2 in District 8 at 16.8 million VND.
According to Cushman & Wakefield, the apartment sales volume was better last quarter, mainly in the budget segment having selling prices hovering around 15 million VND per square metre.
Cushman & Wakefield forecast the price might continue to decline this year.
In related news, property enterprises said they would develop projects based on their existing land and would not spread investments this year like before.
According to Nguyen Van Duc, Deputy Director of Dat Lanh Real Estate Company, the company started the year with a small apartment project having around 150 units in Go Vap district and develop infrastructure for a townhouse project in Hoc Mon district.
Duc said that these were the two final projects on the company’s land left. More projects will be carried out when it can find partners with financial capabilities, he added.
Luong Tri Thin, General Director of Dat Xanh Group, said Dat Xanh would not invest in individual apartment projects but develop clusters like small urban areas of 10-20 hectares each. It will be in charge of all investment stages, from investment to construction and distribution.
Dat Xanh earned 66 billion VND in profit last year, doubling that of the previous year.
Statistics of the Ho Chi Minh City’s Department of Construction showed that around 5,000 among the apartment inventory of nearly 14,500 units found buyers last year.
According to market observers, the market will continue to incline towards buyers this year. Finished projects would be more attractive to customers than those under construction.
New law gets tough to revoke business licences
A new regulation on revoking investment certificates of foreign invested projects in Vietnam is expected to make it easier to cancel poorly performing ones.
Under Article 57 of the draft amendment to the existing Investment Law, an investor could have his investment certificates revoked if he has failed to begin implementation or has proved incapable of implementing the project after 12 months, or if the project has ceased operations and local authorities cannot contact either the investor or his authorised representatives within a year.
The revocation of the newly defined investment registration certificate shall also be made by a tribunal or arbitrators.
“The new regulation will provide local authorities with stronger legal foundations to rescind investment certificates. The current regulations are too vague, making it currently very difficult for foreign invested projects to be cancelled,” attorney-at-law Tran Trong Binh from Hanoi-based Audier and Partners told VIR.
The current Investment Law issued in 2005 simply states in Article 64 on the revocation of investment certificates that “if after 12 months, the investor has failed to proceed with implementation of the project in accordance with the schedule undertaken without a legitimate reason, the issued investment certificate shall be revoked.”
“But to what extent can a project be considered to have been carried out? What conditions should the investor have to meet to prove themselves capable of deploying the project according to their schedule? And what is a ‘legitimate’ reason?” Binh said.
However he added that the draft regulations were still vague as the only applied to production-oriented projects.
“Meanwhile, many investors operating in investment consultancy, distribution and intermediary sectors are coming to Vietnam. I think these types of projects should be covered in the revised law,” he said.
Echoing this view, a representative from the Quang Ninh Provincial Investment Promotion Agency’s Investment Promotion Division, said the new regulations were still not clear enough. “What does ‘failure to be implemented after 12 months’ mean? What if after a year the investor has only constructed fences and employed some workers on a project with a 50-year life-span, does that mean the project hasn’t been implemented? This regulation needs to be clarified.”
According to the Ministry of Planning and Investment (MPI), the author of the draft amendment, although it is currently easy to grant an investment certificate for an investment project, it is next to impossible to withdraw its certificate due to the currently unclear regulations.
“Despite having the certificate, many investors don’t implement their projects, but instead hold onto the land and exploit their plot to do other things not related to their projects. Therefore specific regulations are needed to terminate these types of projects,” said MPI Minister Bui Quang Vinh.
Last year saw representative offices of German-backed Metro Vietnam and US-backed Avon Vietnam forced to stop operations in the northern province of Quang Ninh.
The Bac Ninh Provincial Department of Planning and Investment reported that the province revoked the investment certificates of nine foreign invested projects worth $71.8 million in 2013. The province so far has revoked 74 foreign invested projects with the total registered investment capital of $298.3 million.
The Dong Nai Provincial Department of Planning and Investment also reported that the province had withdrawn investment certificates for 22 foreign invested projects registered at $87.3 million last year. The province has cancelled 314 foreign invested projects worth nearly $4.35 billion in total.
MobiFone urged to detach from VNPT
MobiFone, one of Vietnam’s three largest mobile network operators, should be separated from its parent company VNPT, which is also the operator of Vinaphone – MobiFone’s rival in the market, experts with knowledge on the matter said at a seminar on Friday.
The two said mobile operators, along with military-run Viettel, are dominating the country’s telecom market with nearly 95 percent market share.
But paradoxically, all of these three players of the competitive market belong to the government, which holds a 100 percent stake at each business, said Pham Hong Hai, head of the telecom department under the Ministry of Information and Communications.
Moreover, even though they are rivals, MobiFone and Vinaphone are under the same umbrella as they both belong to VNPT, fully known as Vietnam Posts and Telecommunications Group.
Under a master plan to restructure VNPT, the Prime Minister has chaired several meetings to determine whether MobiFone or Vinaphone should be split from VNPT.
The final solution reached upon was that MobiFone would be separated and privatized to become the Mobile Information Corporation, according to Hai.
VNPT CEO Tran Manh Hung said detaching MobiFone from the parent company would yield better result than with Vinaphone, as MobiFone is strong enough to compete with the two rivals following the separation.
The detached, privatized MobiFone will also take over the liability worth VND1.6 trillion (US$75.47 million) from VNPT, which its CEO Le Ngoc Minh confirmed that the company is totally capable of handling.
VNPT chief Hung also said the sum is modest compared to MobiFone’s total earnings last year, which topped VND6 trillion
Khanh Hoa scythes stalled projects
The Khanh Hoa Provincial People’s Committee has just revoked investment certificates on eight tourism projects in the Bai Dai beach area of Cam Ranh city, and will turn its attention to 30 more stalled projects this year.
Le Dung, head of the Investment Co-operation Office under the Khanh Hoa Provincial Department of Planning and Investment told VIR last week that the province checked a series of delayed tourism projects in the Bai Dai beach area at the end of last year. Eight investment certificates have already been withdrawn, including one foreign invested project - the $80 million Swiss Attixs, and the province would continue checking nearly 30 delayed tourism projects worth VND19.3 trillion ($900 million) including two large scale foreign invested projects this year.
The first foreign invested project is the five-star Manna Luxury Holiday Resort, which is a joint venture between Israel’s Rafaeli Group and a domestic developer, Golden Beach. The developers received an investment certificate in July 2010 to develop the resort with the total investment capital of VND355 billion ($17 million). But they have so far failed to meet any of their commitments.
Similarly, the five-star Mirax Cam Ranh Resort, a VND2.1 trillion ($100 million) joint venture in which Russia’s Gerrad Investors Holdings Limited has a 70 per cent stake, has failed to begin construction having become embroiled in a land clearing compensation dispute with local residents. The project was granted an investment certificate in August 2008, and scheduled to be completed by 2011, but it has yet to break ground.
Klim Akhmetkereev, technology director of Mirax Cam Ranh Resort told the local media that the project had not yet started due to slow process in land clearance and compensation for local residents, and because the Northern Cam Ranh Peninsula Tourist Area had still not installed a waste water processing system.
However Dung claimed the key problem was that the developers lacked the finances to conclude the project. If these projects were to materialise, many predict the beach front to become Cam Ranh city’s most attractive tourism destination, capable of making a remarkable contribution to the local economy.
Services and tourism industries presently account for more than 45.6 per cent of the province’s economy, according to figures from the Khanh Hoa Provincial Department of Planning and Investment.
According to the Khanh Hoa Provincial People’s Committee, the prevalence of delayed projects was because developers lacked the financial ability to complete them or were land speculation investments, rather than the result of the slow process of land clearance by provincial authorities.
In an aim to reduce the number of delayed and stalled projects to an absolute minimum, this year the province will demand developers pay a deposit of VND100 billion ($4.7 million) as a guarantee of their commitment to completing their projects.
New IP looks to Korean investors
The central province of Quang Nam is aiming to attract more investors from South Korea by asking the Vietnamese government to make the Vietnam-South Korea Chu Lai Industrial Park an official part of strategic co-operation between the two countries.
In a document recently sent to Deputy Prime Minister Nguyen Xuan Phuc, Chairman of the Quang Nam Provincial People’s Committee Le Phuoc Thanh argued that the proposal would help put the industrial park (IP) on the radar of large South Korean companies looking for investment locations in Vietnam.
“The establishment of a South Korean-centric IP and township to which the province can attract industrial manufacturing and processing projects, supporting industries, infrastructure and tourism projects from South Korea, is completely suitable with global investment trends and the development plan of the Chu Lai Economic Zone,” said Thanh.
In 2012, the provincial committee first drew up plans for a Vietnam-South Korea Chu Lai IP within the existing Chu Lai Economic Zone. The province signed an agreement with a South Korean developer C&N Vina-South Korea to develop a 1,600 hectare project comprising 700 hectares for an IP, 350 hectares for a township and 550 hectares for tourism.
While much of the plan remains on paper, in April 2013 C&N Vina-South Korea obtained an investment certificate to develop the 200 hectare Tam Anh IP within the proposed Vietnam-South Korea Chu Lai IP, at a cost of $25 million.
According to the province’s documents, ten foreign investors have agreed to set up projects in Tam Anh.
“The project is small scale,” said Thanh, implying that it is difficult to attract big foreign investors to the park.
The proposal of Quang Nam shows that this province is trying to improve its investment climate in the fields of industrial manufacturing and processing, especially from South Korean companies.
According to statistics from the Ministry of Planning and Investment’s Foreign Investment Agency, South Korea is the third largest source of foreign direct investment to Vietnam in terms of committed capital, following Japan and Singapore. But in terms of project numbers, South Korea ranked top with 3,546 projects as of the end of 2013, proving that Vietnam is a popular destination for South Korean companies.
The Quang Nam Provincial People’s Committee proposal also indicates that the province does not want to lag behind its neighbouring Quang Ngai province in the race to lure new foreign direct investment. Though Chu Lai was the first economic zone in Vietnam, Quang Ngai province’s Dung Quat Economic Zone is by far the busiest in the country. This economic zone is now home to an oil refinery, a manufacturing complex of South Korea’s Doosan Heavy Industries, and an IP and township complex of VSIP – the country’s leading industrial park developer. In addition, Japan’s JFE Steel is planning to build a $4.5 billion steel manufacturing complex there, Singapore’s Sembcorp Industries is studying to build a $2 billion thermal power plant and US’ ExxonMobil in association with state-run PetroVietnam is studying the feasibility of a gas treatment and thermal power complex.
Meanwhile, the biggest project in the Chu Lai Economic Zone is the auto assembling complex of Vietnam’s Truong Hai Auto Corporation. Foreign investors have mostly overlooked Chu Lai for large scale projects.
“In this period, we need some big projects to make Chu Lai a dynamic and effective economic zone,” said Thanh.
Vietnam mulls expanding cooperation with Samsung
Vietnam is seeking to expand cooperation with South Korean electronics giant Samsung Group in a wide variety of fields, the Government Office has said in a document, citing orders from Deputy Prime Minister Hoang Trung Hai.
The deputy premier has assigned the Ministry of Planning and Investment to collaborate with relevant ministries, departments, and agencies to select the key projects that need foreign investment in the national master plan from now to 2015 and introduce them to Samsung for consideration.
It is hoped that the South Korean group will join in these recommended projects.
Meanwhile, the Ministry of Industry and Trade should work with Samsung on the invitation for the latter to join in the Vung Ang 3 thermal-power plant project. The transport ministry is assigned to speak with Samsung about the possibility of cooperation in the Long Thanh International Airport project.
Samsung has recently offered to cooperate with the Ministry of Information and Communications in ICT and online government aspects, and the ministry has been requested to consider the suggestion, according to the Government Office.
Finally, the municipal government of Hanoi has been asked to introduce suitable locations for Samsung to implement their research and development as well as relevant supporting projects in the capital city.
Samsung Electronics Vietnam is operating a mobile phone plant in northern Bac Ninh Province and has broken ground on the second facility in Thai Nguyen, another northern province about 70km from Hanoi.
Last year mobile phones surpassed textiles to become the export commodity to earn the most for Vietnam, for which Electronics Vietnam was largely responsible.
In 2013, Vietnam exported as many as US$21.5 billion worth of mobile phones and spare parts, while export values of textiles, traditionally the export staple of the country, topped $17.8 billion, according to data from the Ministry of Industry and Trade.
Imported beer selling well in Vietnam despite high prices
Expensive prices do not seem to discourage Vietnamese consumers from drinking millions of liters of imported beer every year.
Vietnamese drinkers surprise foreigners not only with their huge beer consumption, but also with their desire to drink imported alcohol regardless of exorbitant prices.
While a number of new breweries capable of producing billions of liters of beer per year are under construction across Vietnam, beers from international brands are also being imported in large quantities.
The imported products dominate the deluxe segment of the market, of which 3 billion liters of beer were consumed last year.
Imported beer available in Ho Chi Minh City includes Budweiser, Oettinger, Steiger, Asahi, Corona, and Heineken, even though the Dutch brewing company has breweries in Vietnam.
In 2012, 122 batches of beer imports passed through the Ho Chi Minh-based Cat Lai Port. These included 40 different brands from the US, Germany, the Netherlands, the Czech Republic, Japan, and Thailand.
Import volumes dropped only slightly in 2013, but the port received more new brands from China and South Korea like Tsingtao, ICING, and Loroyse.
In Hanoi, beer products imported from France, Belgium, and the US are also widely available.
Imported beer is considered a deluxe product, and is thus not cheap. A bottle of the popular Corona, for instance, fetches some VND34,000, while Stella Artois is sold for VND43,000 a bottle.
However, these products are imported at much lower prices. The import price for Corona is only VND7,700 per bottle, while Stella Artois is imported at VND7,300 per bottle.
The exorbitant retail price of these beers is the result of a number of expenses including the import tariff, excise and value-added tax, and profits for the importers and distributors.
The owner of a beverage shop in Phu Nhuan District said his beer sales are always higher than those of soft drinks.
The man added that he could sell up to 70 cartons of beer in only a few days before the Lunar New Year late last month, while soft drinks like coke were less popular.
“It seems to me that people drink more beer than water,” he joked.
Similarly, Kim Phuong, another beverage seller in the same district, said she emptied her stock of 200 beer cartons during the Tet season, while only half of the coke stock was cleared.
Meanwhile, the manager of a restaurant said beer accounted for 60 percent of the total expenses at each table. The restaurant sold around 40 cartons, or some 320 liters, of beer on a daily basis, she said.
The beer consumption per capita in Vietnam is currently 27 liters per year, while in 2000, it was only 10.04 liters, according to a preliminary report by the Vietnam Beer, Alcohol, and Beverage Association.
A food expert said the real figure could be much larger thanks to the explosive growth of the brewing companies. “While their capacity used to be millions of liters per year, it is now counted in billions,” he said.
Michel de Carvalho, owner of the Heineken brand, told reporters that in 2010, Vietnamese consumers drank 200 million liters of his beer, only behind the US and France in the list of 170 worldwide markets where Heineken is available.
Carvalho forecast that in 2015, Vietnam would become the world’s largest Heineken consuming market.
Tens of thousands of industrial land lay vacant
Tens of thousands of hectares of abandoned industrial zones currently litter Vietnam’s landscape.
After 23 years of development, only 64 percent industrial zones built are currently in full operation, said Professor Vo Thanh Thu from the Economics University in HCMC. There are 184 large industrial zones and 1,000 small industrial parks being used.
In the Mekong Delta, 65.6 percent of the 42,559-hectares of industrial zones lay vacant. The area currently has 74 large industrial zones and 214 small industrial parks.
Almost 100,000 households in the Mekong Delta have been relocated due to construction for industrial zones. However, construction has yet commenced in many of the areas. These people are unemployed and without farmland.
Only 46 percent of industrial zones built across the country are used by businesses. Several industrial zones are abandoned due to a shortage of traffic and electricity infrastructures.
Many of the newly built zones lay vacant, according to the Management Board of Industrial Zones in Binh Duong.
The government has removed preference policies on business investment since 2009 yet several businesses hesitate to invest.
The economic recession in 2008 has slowed investment in industrial zones, according to HCMC Management Board on Industrial Zones and Export Processing Zones.
Provinces have developed industrial zones spontaneously, said Professor Thu. Both central and local authorities have not had cooperative strategies on this field.
A few real estate companies have built industrial zones and transferred investments due to a loophole in management.
Masan appoints Korean CEO
Seokhee Won will join Masan as CEO of Masan Consumer Corporation and deputy CEO of Masan Group in early 2014.
Won is a seasoned executive with 22 years at global consumer goods company Unilever. In his most recent role he was senior vice president, responsible for Unilever’s skincare business in Asia and the Ponds brand globally.
Won’s experience includes senior management roles in Unilever’s businesses in China, South Africa, Thailand, Korea and Vietnam.
He spent eight years with Unilever Vietnam, from 1997 to 2005, as marketing director and then as vice president, during which he was responsible for Unilever’s entire personal care portfolio.
“My experience in Vietnam taught me a lot about how to win in an emerging market, where I learned how to tailor the expertise of a multinational company to meet the needs of a local market,”Won said.
According to Nguyen Dang Quang, chairman of Masan Group, the appointment of Won is a major step in transforming Masan Consumer into a more regional player, and Masan Group into a more consumer oriented business group.
Seokhee Won will officially assume his new roles in early 2014 and succeed current CEO Truong Cong Thang.
Ho Chi Minh City based Masan Group is one of Vietnam’s largest private sector business groups.Its Masan Consumer Corporation is a leading food and beverage company with a portfolio of Vietnam’s most popular brands.
AEC promises retail rivalry
Thailand’s leading retailers are pushing ahead with aggressive expansion plans into Vietnam as the deadline for the launch of the ASEAN Economic Community nears.
Vu Vinh Phu, chairman of Hanoi Supermarket Association told VIR that scores of foreign retailers, including those from Thailand had recently entered the market on anticipation of the establishment of the ASEAN Economic Community (AEC) by 2015.
“Once AEC becomes a reality, enterprises in ASEAN would have more sale and business opportunities as there will be greater regional economic integration and market convergence. Thai investors are well-known for their marketing capacity and are anticipating these opportunities,” Phu added in his additional position as vice chairman of the Association of Vietnam Retailers.
AEC is likely to attract further foreign investors to Vietnam eager to make the most of tariff advantages, he added.
According to the AEC Blueprint, a single ASEAN market and production base will be established, making ASEAN more dynamic and competitive thanks to the free flow of goods, investment, skilled labour and easier capital flows. Goods will also cross borders more easily thanks to zero per cent tariffs and the substantial dismantling of other trade barriers.
Central Group, Thailand’s leading retailer recently announced its expansion in Vietnam with next month’s launch of a Robins department store.
The first Robins store, the group’s first international branch, will occupy 10,000 square metres of retail space at Royal City in Hanoi. A second Robins store in Ho Chi Minh City will be opened by the end of 2014. The two stores will together hire 1,000 local workers.
Thai billionaire Dhanin Chearavanont, chairman of Charoen Pokphand Group (CP Group) was recently rebuffed by German retailer Metro Group AG in negotiations to buy Metro Cash and Carry in Vietnam, in a deal that was valued at more than $500 million. CP may well return to the table with an improved offer.
Korsak Chairasmisak, managing director of CP, said that Thailand wanted to take advantage of AEC. CP anticipated promoting small and medium-sized Thai enterprises to the wider ASEAN market.
Thailand’s Berli Jucker (BJC), owned by billionaire Aswin Techajaroenvikul, also previously bought the Vietnamese Family Mart’s 42 retail outlets to establish a joint venture with Vietnam’s Phu Thai Group. Phu Thai and BJC recently launched B’mart, with Phu Thai saying that details of the deal would officially be released in September this year.
In December 2012, BJC hooked up with Mongkol Group in a $32.4 million joint venture to set up Thai Corporation International Vietnam (TCI) to open a supermarket chain in Vietnam.
TCI director Mongkol Banthrarungroj said the joint venture’s target was to promote its brand name in Indochina and export Thai products to Myanmar, Laos, Cambodia and Vietnam. TCI expected to increase its sales in Vietnam to VND3 trillion ($150 million) once AEC becomes operational.
Marketing communications and management consultancy company AT Kearney in a recently survey of corporate leaders on their AEC expansion, merger and acquisition and brand plans found that the majority of companies in ASEAN member countries such as Thailand, Singapore, Malaysia, the Philippines and Vietnam planned to enter new markets, and create new products and brands to reach more consumers across the economic community after 2015.
“There is a big opportunity for Southeast Asian companies to embrace the ASEAN mantle and create regional brands,” said Bob Hekkelman, Southeast Asia CEO for world leading marketing firm JWT. He added that companies with insight into local tastes, cultures and attitudes had an inside track, but they would need to work hard to expand their reach, up their quality and build competitive brands if they want to woo the region’s discerning consumers.
Phu added that besides AEC, thanks to Vietnam’s WTO commitments, from January 11, 2015, Vietnam would permit the establishment of 100 per cent-invested retail businesses. Currently, foreign firms are constrained by being forced to enter into joint ventures with Vietnamese partners or franchising.
“AEC and WTO will provide opportunities, but also major challenges due to competition with foreign players,” said Phu.
Phu recommended domestic retail enterprises to enter partnerships to build bigger firms in anticipation of a massive influx of foreign retailers following the further opening of the retail market to foreign investment.
Arab Sheikh amazed at VN’s Son Doong cave
Sheikh Hamad bin Hamdan Al Nahyan, a member of the Abu Dhabi Royal Ruling Family in the United Arab Emirates (UAE), said he is held in awe by the splendor of Son Doong Cave, the world’s largest of its kind, during his visit to Vietnam in early Feb.
According to Oxalis Co., which provides tours to Son Doong in Quang Binh province’s Phong Nha-Ke Bang National Park, the sheikh, his friend and two assistants have just returned safely to Phong Nha after their trip to the cave.
The sheikh and his companions began their trip to the cave on Feb 6 after marveling at the cave’s magnificence from ads on foreign magazines.
He exclaimed that he has yet to see such an imposing, splendid place in the world, which made a strong impression on him and fully satisfied his adventurous pursuits.
The Sheikh added that he will promote the cave on one of his kingdom’s major tourism magazines and expressed hopes that local tourism officials will work hard to preserve Son Doong Cave’s pristine beauty and better tap into its adventure tourism potentials.
He stressed that he will return with his family to Phong Nha soon.
Sheikh Hamad bin Hamdan Al Nahyan, also known affectionately as The Rainbow Sheikh, has retired from his army service and diplomatic life and now devotes most of his time to the development of new vehicles in the world.
Sheikh Hamad owns some of the world’s largest cars and trucks. He also holds the Guinness Book of World records for the world’s largest caravan, which is on display at the Emirates National Auto Museum.
Vietnam’s Son Doong Cave, which has a large fast-flowing underground river inside, was found by a local resident named Ho Khanh in 1991.
The cave became public after a group of British scientists from the British Cave Research Association, led by Howard and Deb Limbert, conducted a survey in Phong Nha-Ke Bang, a UNESCO World Heritage Site in Apr 2009.
According to the Limberts, Son Doong Cave is five times larger than the Phong Nha Cave, previously considered the biggest cave in Vietnam. The biggest chamber of Son Doong is more than five kilometers long, 200 meters high, and 150 meters wide.
With such large dimensions, Son Doong overtakes Deer Cave in Malaysia to take the title of the world's largest cave.
Late last year Quang Binh province decided to launch tours to Son Doong Cave on a piloting basis.
Bike market sees further challenges in 2014
Motorbike producers have forecast more challenges ahead in 2014 due to fierce competition among manufacturers in terms of design and among dealers in sales prices and customer services, as the demand is poised to stay flat.
Honda Vietnam, a leading manufacturer with a 60% market share, expected this year’s consumption to be 2.8 million bikes, which is equal to that in 2013.
Bike consumption in the country in 2013 dropped 10% against the previous year, marking the second consecutive year of decline. In 2012, there were over 3.1 million bikes sold, down 6.6% from 2011.
Explaining the problem, the manufacturer said economic difficulties remain and people will keep on cutting expenditure. Masayuki Igarashi, general director of Honda Vietnam, said that the bike market will certainly be in distress as macro economic indicators have yet to improve.
Producers and dealers will see tough competition as inevitable with more promotional and discount programs launched. Last year, despite a lot of promotion programs, bike sales remained sluggish even in high seasons such as the year-end or the new school-year.
Dealers of large firms such as Honda, Yamaha, Suzuki and Piaggio said that sales have declined over the past two years, forcing them to reduce their profit margins to offer lower prices directly to customers. Some have even sold bikes at less than the price levels suggested by producers to meet revenue targets.
Many dealers said that they are mainly earning profits from repair services.
Given the hardship, Honda Vietnam estimates to sell 1.8 to 1.9 million bikes in 2014, equal to that in 2013. With the figures, its two factories in Vinh Phuc Province will be running under capacity.
However, the enterprise has still decided to launch a third plant with an annual capacity of 500,000 bikes into operation in Ha Nam Province within this year. It also has plans to speed up exports given slow consumption in Vietnam.
A leader of Piaggio Vietnam said that the firm will tap new markets after exporting scooters to many regional nations.
Aside from Honda Vietnam, Yamaha Vietnam has two plants with a capacity of 1.5 million bikes a year, SYM with three plants capable of producing 500,000 units, Suzuki 300,000 bikes and Piaggio 300,000 bikes. The five manufacturers report total capacity of five million bikes, not to mention other smaller firms such as Kymco and 100% domestic enterprises.
Compared to market consumption in the last two years, bike production capacity is almost twice the demand.
HSBC: Vietnam to earn huge benefits from TPP
HSBC Bank in its latest global report mentioned the huge benefits for Vietnam once the Trans-Pacific Partnership (TPP) is signed, saying that key Vietnamese export products will be flowing into the U.S. given tariff removals.
The bank, however, said that the real value of TPP lies in its potential to spur State-owned enterprise (SOE) reform and service sector deregulation and raise productivity.
Once signed, the TPP would create a large free trade zone covering 40% of the global gross domestic product (GDP) and 30% of global trade. Japan, Malaysia, and Vietnam are poised to be the big winners in Asia, it said in the report.
All the three countries are expected to reap long-term income gains from the agreement. The boost is likely to be particularly large in Vietnam, which has a large exposure to the U.S. market.
Key Vietnamese exports face relatively high U.S. import tariffs with average duties ranging from 4.5% to 14% for apparel, and 10.4% for footwear. Once implemented, the TPP would lower U.S. import duties on Vietnamese products, boosting its exports.
HSBC’s comments are not new. The benefits mentioned in the report were earlier forecast by organizations and researchers.
In fact, problems remain. In the textiles, apparel and footwear sector, rules of origins for textiles and apparel have become one of the biggest sticking points of market access negotiations.
That poses a problem for Vietnam, which sources a significant share of its raw materials from China for apparel exports. To solve the problem, Vietnam must make a lot of investment in material production, which is virtually impossible at the moment.
Both sides are speeding up TPP negotiations to finalize the agreement within this year. Then, member nations will spend from 12 to 18 months on internal approvals before launching the agreement into effect.
HSBC also mentioned barriers during negotiations. U.S. President Barack Obama wants to seal the deal well in advance of the November congressional elections. The TPP has not been an easy sell to U.S. lawmakers, many of whom want stricter provisions on currency manipulation and intellectual property protection among others.
Another headache for the president is the lack of “fast track” trade promotion authority (TPA). TPA gives the president the ability to negotiate trade agreements without fear of an eventual Congressional amendment or filibuster.
Vietnam’s benefits are strongly attached to the U.S. market, so developments stateside country have drawn much attention from the public.
Construction ministry wants easier rules for property market
The Construction Ministry on Wednesday said it would propose changes to the Law on Real Estate Trading with an aim to create a better legal corridor for all business stakeholders, especially foreign investors.
In a working session with the National Assembly’s Economic Commission in Hanoi on Wednesday, the ministry said the amended law should ensure market-oriented mechanisms for all businesses, with all liberal rules to attract financial resources. The final aim is to create favorable conditions for all investors, domestic and foreign alike, to engage in the property market, and at the same time to improve professional norms for all property brokers, traders and consultants.
The draft amendments if endorsed will open the property market wider for foreign investors as well as Vietnamese overseas, according to the ministry.
Foreign individuals and organizations as well as Vietnamese nationals residing overseas will be able to invest in the property market with easier requirements. They will also be allowed to lease, buy and own offices for working and for lease as well as houses in the country.
At the meeting, the NA Economic Commission’s Chairman Nguyen Van Giau suggested that the law should also include previously-issued by-laws that have been applied in reality.
Seven years since the Law on Real Estate Trading was enacted in 2006, many problems have emerged that need to be addressed, according to the ministry. Deputy Minister of Construction Nguyen Tran Nam said at the meeting that there were not sufficient legal provisions on the creation and development of properties.
State management agencies have not been able to ensure that properties are developed in conformity with zoning plans or urban planning, and rampant developments have caused adverse impacts on the economy, including bad debts and high inventories.
The deputy minister observed that property prices had plunged by 10%-30% last year, with certain projects seeing prices plummet by half. However, there appeared signs of thawing on the property market, with more products finding buyers towards the end of 2013, Nam said.
The draft amendments to the Law on Real Estate Trading will be completed and submitted to the National Assembly’s Standing Committee in March.
HN destined for second int’l travel mart
The second Viet Nam International Travel Mart (VITM 2014) will take place in Ha Noi from April 3-6.
Under the motto: “Tourism Promotion – New Destination, New Opportunity, and Travelling for Sustainable Development,” the VITM 2014 will consist of 500 stalls including 150 international ones from 25 countries and territories.
Up to 450 domestic and international tourism agencies will attend the international tourism fair.
Japan was invited as the honorable guest at the event.
A tourism promotion program will be launched at the VITM 2014 with the participation of hundred of travel agencies and tourism service centers.
Especially, Vietnamese travel products in both mountainous and maritime regions are expected to help fulfill the goal of handling 40 million domestic guests in 2014.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
BUSINESS IN BRIEF 23/2
Regional economic community promises retail rivalry
Thailand’s leading retailers are pushing ahead with aggressive expansion plans into Vietnam as the deadline for the launch of the ASEAN Economic Community (AEC) nears, according to the Vietnam Investment Review (VIR).
Chairman of the Hanoi Supermarket Association Vu Vinh Phu told VIR that scores of foreign retailers, including those from Thailand, had recently entered the market on anticipation of the establishment of the AEC by 2015.
“Once AEC becomes a reality, enterprises in ASEAN would have more sale and business opportunities as there will be greater regional economic integration and market convergence. Thai investors are well-known for their marketing capacity and are anticipating these opportunities,” said Phu, who is also Vice Chairman of the Association of Vietnam Retailers.
AEC is likely to attract further foreign investors to Vietnam eager to make the most of tariff advantages, he added.
According to the AEC Blueprint, a single ASEAN market and production base will be established, making ASEAN more dynamic and competitive thanks to the free flow of goods, investment, skilled labour and easier capital flows. Goods will also cross borders more easily thanks to zero percent tariffs and the substantial dismantling of other trade barriers.
Thailand’s leading retailer Central Group recently announced its expansion in Vietnam with next month’s launch of a Robins department store.
The first Robins store, the group’s first international branch, will occupy 10,000 square metres of retail space at Hanoi's Royal City. A second Robins store will be opened in Ho Chi Minh City by the end of 2014. The two stores will together hire 1,000 local workers.
Thai billionaire Dhanin Chearavanont, Chairman of Charoen Pokphand Group (CP Group), was recently rebuffed by German retailer Metro Group AG in negotiations to buy Metro Cash and Carry in Vietnam, in a deal that was valued at more than 500 million USD. CP may well return to the table with an improved offer.
Korsak Chairasmisak, Managing Director of CP, said that Thailand wanted to take advantage of AEC. CP anticipated promoting small- and medium-sized Thai enterprises to the wider ASEAN market.
Thailand’s Berli Jucker (BJC), owned by billionaire Aswin Techajaroenvikul, also previously bought the Vietnamese Family Mart’s 42 retail outlets to establish a joint venture with Vietnam’s Phu Thai Group. Phu Thai and BJC recently launched B’mart, with Phu Thai saying that details of the deal would officially be released in September this year.
In December 2012, BJC hooked up with Mongkol Group in a 32.4 million USD joint venture to set up Thai Corporation International Vietnam (TCI) to open a supermarket chain in Vietnam.
TCI Director Mongkol Banthrarungroj said the joint venture’s target was to promote its brand name in Indochina and export Thai products to Myanmar, Laos, Cambodia and Vietnam. TCI expected to increase its sales in Vietnam to 3 trillion VND (150 million USD) once AEC becomes operational.
Marketing communications and management consultancy company AT Kearney in a recently survey of corporate leaders on their AEC expansion, merger and acquisition and brand plans found that the majority of companies in ASEAN member countries such as Thailand, Singapore, Malaysia, the Philippines and Vietnam planned to enter new markets, and create new products and brands to reach more consumers across the economic community after 2015.
“There is a big opportunity for Southeast Asian companies to embrace the ASEAN mantle and create regional brands,” said Bob Hekkelman, Southeast Asia CEO for world leading marketing firm JWT.
He added that companies with insight into local tastes, cultures and attitudes had an inside track, but they would need to work hard to expand their reach, up their quality and build competitive brands if they want to woo the region’s discerning consumers.
Phu added that besides AEC, under Vietnam’s WTO commitments, from January 11, 2015, Vietnam would permit the establishment of 100-percent-invested retail businesses. Currently, foreign firms are constrained by being forced to enter into joint ventures with Vietnamese partners or franchising.
“AEC and WTO will provide opportunities, but also major challenges due to competition with foreign players,” said Phu.
He recommended domestic retail enterprises to enter partnerships to build bigger firms in anticipation of a massive influx of foreign retailers following the further opening of the retail market to foreign investment.-
Khanh Hoa restricts inshore fishing activities
Fishermen in the central coast province of Khanh Hoa have been told to minimise their exploitation of fish stocks in a number of local lagoons and bays that have great ecological, tourism and economic value.
According to the province’s recent regulations on the management of marine resources, inshore fishing in Van Phong and Nha Trang bays and Thuy Trieu and Nha Phu lagoons will be strictly monitored in order to protect and develop local resources which will bring long-term benefits of the locality.
Under the new regulation, fishing boats with capacity between 20 and 90 CV will not be allowed to operate in the areas.
All types of fishing in the ecological recovery zones at Hon Mun marine reserve park will be banned. In Nha Trang bay, lobster trapping will also be prohibited.
Before now over 8,600 out of 9,800 local fishing vessels were exploiting aquatic products inshore, exhausting local marine resources as well as directly affecting the ecosystem and bringing down incomes from fishing.-
Projects in Ho Chi Minh City launch apartment sales
With positive signs on the real estate market since last year’s second half, some property enterprises are preparing to launch apartments to grasp business opportunities in the early months of the year, a local newspaper reported.
The Saigon Times Daily quoted Phu My Hung Corporation as saying it would offer Green Valley apartments for sale this quarter. The Green Valley project consisting of four buildings of 20-27 floors supplies 546 apartments having an area of 88-194 square meters each.
Phu My Hung has not announced the selling price but said the apartments were for medium-income earners and affordable to buyers with financial supports from banks.
Also in Saigon South, The Park Residence located on Nguyen Huu Tho street with around 1,000 apartments of 52-73 square metres each has been put up for sales. The selling prices of such apartments start from 700 million VND (33,000 USD) per unit.
The Park Residence’s investor is receiving bookings and will finish the project in 2016.
Meanwhile, in District 6, Him Lam Land Company is about to sell apartments of the Him Lam Cho Lon project located near the district’s administrative centre. The project supplying around 1,400 apartments is almost finished.
Khang Dien House Trading and Investment Joint Stock Company is going to launch the sale of Mega Residence townhouses in District 9.
Khang Dien will sound out the market by offering for sale around 160 adjoining houses at a price starting from 13.5 million VND per square metre, or some 1.99 billion VND per unit.
With its location near Ho Chi Minh City-Long Thanh-Dau Giay Expressway and the belt road and especially a price equivalent to that of an apartment, the investor expects to attract many buyers to Mega Residence in the coming time.
Besides, there are many other projects offering apartments for sale such as Lexington Residence in District 2 at around 20.6 million VND per square metre, PARCSpring in District 2 at 17.4 million VND, Sunview Town in Thu Duc district at 11.2 million VND and An Phu 2 in District 8 at 16.8 million VND.
According to Cushman & Wakefield, the apartment sales volume was better last quarter, mainly in the budget segment having selling prices hovering around 15 million VND per square metre.
Cushman & Wakefield forecast the price might continue to decline this year.
In related news, property enterprises said they would develop projects based on their existing land and would not spread investments this year like before.
According to Nguyen Van Duc, Deputy Director of Dat Lanh Real Estate Company, the company started the year with a small apartment project having around 150 units in Go Vap district and develop infrastructure for a townhouse project in Hoc Mon district.
Duc said that these were the two final projects on the company’s land left. More projects will be carried out when it can find partners with financial capabilities, he added.
Luong Tri Thin, General Director of Dat Xanh Group, said Dat Xanh would not invest in individual apartment projects but develop clusters like small urban areas of 10-20 hectares each. It will be in charge of all investment stages, from investment to construction and distribution.
Dat Xanh earned 66 billion VND in profit last year, doubling that of the previous year.
Statistics of the Ho Chi Minh City’s Department of Construction showed that around 5,000 among the apartment inventory of nearly 14,500 units found buyers last year.
According to market observers, the market will continue to incline towards buyers this year. Finished projects would be more attractive to customers than those under construction.
New law gets tough to revoke business licences
A new regulation on revoking investment certificates of foreign invested projects in Vietnam is expected to make it easier to cancel poorly performing ones.
Under Article 57 of the draft amendment to the existing Investment Law, an investor could have his investment certificates revoked if he has failed to begin implementation or has proved incapable of implementing the project after 12 months, or if the project has ceased operations and local authorities cannot contact either the investor or his authorised representatives within a year.
The revocation of the newly defined investment registration certificate shall also be made by a tribunal or arbitrators.
“The new regulation will provide local authorities with stronger legal foundations to rescind investment certificates. The current regulations are too vague, making it currently very difficult for foreign invested projects to be cancelled,” attorney-at-law Tran Trong Binh from Hanoi-based Audier and Partners told VIR.
The current Investment Law issued in 2005 simply states in Article 64 on the revocation of investment certificates that “if after 12 months, the investor has failed to proceed with implementation of the project in accordance with the schedule undertaken without a legitimate reason, the issued investment certificate shall be revoked.”
“But to what extent can a project be considered to have been carried out? What conditions should the investor have to meet to prove themselves capable of deploying the project according to their schedule? And what is a ‘legitimate’ reason?” Binh said.
However he added that the draft regulations were still vague as the only applied to production-oriented projects.
“Meanwhile, many investors operating in investment consultancy, distribution and intermediary sectors are coming to Vietnam. I think these types of projects should be covered in the revised law,” he said.
Echoing this view, a representative from the Quang Ninh Provincial Investment Promotion Agency’s Investment Promotion Division, said the new regulations were still not clear enough. “What does ‘failure to be implemented after 12 months’ mean? What if after a year the investor has only constructed fences and employed some workers on a project with a 50-year life-span, does that mean the project hasn’t been implemented? This regulation needs to be clarified.”
According to the Ministry of Planning and Investment (MPI), the author of the draft amendment, although it is currently easy to grant an investment certificate for an investment project, it is next to impossible to withdraw its certificate due to the currently unclear regulations.
“Despite having the certificate, many investors don’t implement their projects, but instead hold onto the land and exploit their plot to do other things not related to their projects. Therefore specific regulations are needed to terminate these types of projects,” said MPI Minister Bui Quang Vinh.
Last year saw representative offices of German-backed Metro Vietnam and US-backed Avon Vietnam forced to stop operations in the northern province of Quang Ninh.
The Bac Ninh Provincial Department of Planning and Investment reported that the province revoked the investment certificates of nine foreign invested projects worth $71.8 million in 2013. The province so far has revoked 74 foreign invested projects with the total registered investment capital of $298.3 million.
The Dong Nai Provincial Department of Planning and Investment also reported that the province had withdrawn investment certificates for 22 foreign invested projects registered at $87.3 million last year. The province has cancelled 314 foreign invested projects worth nearly $4.35 billion in total.
MobiFone urged to detach from VNPT
MobiFone, one of Vietnam’s three largest mobile network operators, should be separated from its parent company VNPT, which is also the operator of Vinaphone – MobiFone’s rival in the market, experts with knowledge on the matter said at a seminar on Friday.
The two said mobile operators, along with military-run Viettel, are dominating the country’s telecom market with nearly 95 percent market share.
But paradoxically, all of these three players of the competitive market belong to the government, which holds a 100 percent stake at each business, said Pham Hong Hai, head of the telecom department under the Ministry of Information and Communications.
Moreover, even though they are rivals, MobiFone and Vinaphone are under the same umbrella as they both belong to VNPT, fully known as Vietnam Posts and Telecommunications Group.
Under a master plan to restructure VNPT, the Prime Minister has chaired several meetings to determine whether MobiFone or Vinaphone should be split from VNPT.
The final solution reached upon was that MobiFone would be separated and privatized to become the Mobile Information Corporation, according to Hai.
VNPT CEO Tran Manh Hung said detaching MobiFone from the parent company would yield better result than with Vinaphone, as MobiFone is strong enough to compete with the two rivals following the separation.
The detached, privatized MobiFone will also take over the liability worth VND1.6 trillion (US$75.47 million) from VNPT, which its CEO Le Ngoc Minh confirmed that the company is totally capable of handling.
VNPT chief Hung also said the sum is modest compared to MobiFone’s total earnings last year, which topped VND6 trillion
Khanh Hoa scythes stalled projects
The Khanh Hoa Provincial People’s Committee has just revoked investment certificates on eight tourism projects in the Bai Dai beach area of Cam Ranh city, and will turn its attention to 30 more stalled projects this year.
Le Dung, head of the Investment Co-operation Office under the Khanh Hoa Provincial Department of Planning and Investment told VIR last week that the province checked a series of delayed tourism projects in the Bai Dai beach area at the end of last year. Eight investment certificates have already been withdrawn, including one foreign invested project - the $80 million Swiss Attixs, and the province would continue checking nearly 30 delayed tourism projects worth VND19.3 trillion ($900 million) including two large scale foreign invested projects this year.
The first foreign invested project is the five-star Manna Luxury Holiday Resort, which is a joint venture between Israel’s Rafaeli Group and a domestic developer, Golden Beach. The developers received an investment certificate in July 2010 to develop the resort with the total investment capital of VND355 billion ($17 million). But they have so far failed to meet any of their commitments.
Similarly, the five-star Mirax Cam Ranh Resort, a VND2.1 trillion ($100 million) joint venture in which Russia’s Gerrad Investors Holdings Limited has a 70 per cent stake, has failed to begin construction having become embroiled in a land clearing compensation dispute with local residents. The project was granted an investment certificate in August 2008, and scheduled to be completed by 2011, but it has yet to break ground.
Klim Akhmetkereev, technology director of Mirax Cam Ranh Resort told the local media that the project had not yet started due to slow process in land clearance and compensation for local residents, and because the Northern Cam Ranh Peninsula Tourist Area had still not installed a waste water processing system.
However Dung claimed the key problem was that the developers lacked the finances to conclude the project. If these projects were to materialise, many predict the beach front to become Cam Ranh city’s most attractive tourism destination, capable of making a remarkable contribution to the local economy.
Services and tourism industries presently account for more than 45.6 per cent of the province’s economy, according to figures from the Khanh Hoa Provincial Department of Planning and Investment.
According to the Khanh Hoa Provincial People’s Committee, the prevalence of delayed projects was because developers lacked the financial ability to complete them or were land speculation investments, rather than the result of the slow process of land clearance by provincial authorities.
In an aim to reduce the number of delayed and stalled projects to an absolute minimum, this year the province will demand developers pay a deposit of VND100 billion ($4.7 million) as a guarantee of their commitment to completing their projects.
New IP looks to Korean investors
The central province of Quang Nam is aiming to attract more investors from South Korea by asking the Vietnamese government to make the Vietnam-South Korea Chu Lai Industrial Park an official part of strategic co-operation between the two countries.
In a document recently sent to Deputy Prime Minister Nguyen Xuan Phuc, Chairman of the Quang Nam Provincial People’s Committee Le Phuoc Thanh argued that the proposal would help put the industrial park (IP) on the radar of large South Korean companies looking for investment locations in Vietnam.
“The establishment of a South Korean-centric IP and township to which the province can attract industrial manufacturing and processing projects, supporting industries, infrastructure and tourism projects from South Korea, is completely suitable with global investment trends and the development plan of the Chu Lai Economic Zone,” said Thanh.
In 2012, the provincial committee first drew up plans for a Vietnam-South Korea Chu Lai IP within the existing Chu Lai Economic Zone. The province signed an agreement with a South Korean developer C&N Vina-South Korea to develop a 1,600 hectare project comprising 700 hectares for an IP, 350 hectares for a township and 550 hectares for tourism.
While much of the plan remains on paper, in April 2013 C&N Vina-South Korea obtained an investment certificate to develop the 200 hectare Tam Anh IP within the proposed Vietnam-South Korea Chu Lai IP, at a cost of $25 million.
According to the province’s documents, ten foreign investors have agreed to set up projects in Tam Anh.
“The project is small scale,” said Thanh, implying that it is difficult to attract big foreign investors to the park.
The proposal of Quang Nam shows that this province is trying to improve its investment climate in the fields of industrial manufacturing and processing, especially from South Korean companies.
According to statistics from the Ministry of Planning and Investment’s Foreign Investment Agency, South Korea is the third largest source of foreign direct investment to Vietnam in terms of committed capital, following Japan and Singapore. But in terms of project numbers, South Korea ranked top with 3,546 projects as of the end of 2013, proving that Vietnam is a popular destination for South Korean companies.
The Quang Nam Provincial People’s Committee proposal also indicates that the province does not want to lag behind its neighbouring Quang Ngai province in the race to lure new foreign direct investment. Though Chu Lai was the first economic zone in Vietnam, Quang Ngai province’s Dung Quat Economic Zone is by far the busiest in the country. This economic zone is now home to an oil refinery, a manufacturing complex of South Korea’s Doosan Heavy Industries, and an IP and township complex of VSIP – the country’s leading industrial park developer. In addition, Japan’s JFE Steel is planning to build a $4.5 billion steel manufacturing complex there, Singapore’s Sembcorp Industries is studying to build a $2 billion thermal power plant and US’ ExxonMobil in association with state-run PetroVietnam is studying the feasibility of a gas treatment and thermal power complex.
Meanwhile, the biggest project in the Chu Lai Economic Zone is the auto assembling complex of Vietnam’s Truong Hai Auto Corporation. Foreign investors have mostly overlooked Chu Lai for large scale projects.
“In this period, we need some big projects to make Chu Lai a dynamic and effective economic zone,” said Thanh.
Vietnam mulls expanding cooperation with Samsung
Vietnam is seeking to expand cooperation with South Korean electronics giant Samsung Group in a wide variety of fields, the Government Office has said in a document, citing orders from Deputy Prime Minister Hoang Trung Hai.
The deputy premier has assigned the Ministry of Planning and Investment to collaborate with relevant ministries, departments, and agencies to select the key projects that need foreign investment in the national master plan from now to 2015 and introduce them to Samsung for consideration.
It is hoped that the South Korean group will join in these recommended projects.
Meanwhile, the Ministry of Industry and Trade should work with Samsung on the invitation for the latter to join in the Vung Ang 3 thermal-power plant project. The transport ministry is assigned to speak with Samsung about the possibility of cooperation in the Long Thanh International Airport project.
Samsung has recently offered to cooperate with the Ministry of Information and Communications in ICT and online government aspects, and the ministry has been requested to consider the suggestion, according to the Government Office.
Finally, the municipal government of Hanoi has been asked to introduce suitable locations for Samsung to implement their research and development as well as relevant supporting projects in the capital city.
Samsung Electronics Vietnam is operating a mobile phone plant in northern Bac Ninh Province and has broken ground on the second facility in Thai Nguyen, another northern province about 70km from Hanoi.
Last year mobile phones surpassed textiles to become the export commodity to earn the most for Vietnam, for which Electronics Vietnam was largely responsible.
In 2013, Vietnam exported as many as US$21.5 billion worth of mobile phones and spare parts, while export values of textiles, traditionally the export staple of the country, topped $17.8 billion, according to data from the Ministry of Industry and Trade.
Imported beer selling well in Vietnam despite high prices
Expensive prices do not seem to discourage Vietnamese consumers from drinking millions of liters of imported beer every year.
Vietnamese drinkers surprise foreigners not only with their huge beer consumption, but also with their desire to drink imported alcohol regardless of exorbitant prices.
While a number of new breweries capable of producing billions of liters of beer per year are under construction across Vietnam, beers from international brands are also being imported in large quantities.
The imported products dominate the deluxe segment of the market, of which 3 billion liters of beer were consumed last year.
Imported beer available in Ho Chi Minh City includes Budweiser, Oettinger, Steiger, Asahi, Corona, and Heineken, even though the Dutch brewing company has breweries in Vietnam.
In 2012, 122 batches of beer imports passed through the Ho Chi Minh-based Cat Lai Port. These included 40 different brands from the US, Germany, the Netherlands, the Czech Republic, Japan, and Thailand.
Import volumes dropped only slightly in 2013, but the port received more new brands from China and South Korea like Tsingtao, ICING, and Loroyse.
In Hanoi, beer products imported from France, Belgium, and the US are also widely available.
Imported beer is considered a deluxe product, and is thus not cheap. A bottle of the popular Corona, for instance, fetches some VND34,000, while Stella Artois is sold for VND43,000 a bottle.
However, these products are imported at much lower prices. The import price for Corona is only VND7,700 per bottle, while Stella Artois is imported at VND7,300 per bottle.
The exorbitant retail price of these beers is the result of a number of expenses including the import tariff, excise and value-added tax, and profits for the importers and distributors.
The owner of a beverage shop in Phu Nhuan District said his beer sales are always higher than those of soft drinks.
The man added that he could sell up to 70 cartons of beer in only a few days before the Lunar New Year late last month, while soft drinks like coke were less popular.
“It seems to me that people drink more beer than water,” he joked.
Similarly, Kim Phuong, another beverage seller in the same district, said she emptied her stock of 200 beer cartons during the Tet season, while only half of the coke stock was cleared.
Meanwhile, the manager of a restaurant said beer accounted for 60 percent of the total expenses at each table. The restaurant sold around 40 cartons, or some 320 liters, of beer on a daily basis, she said.
The beer consumption per capita in Vietnam is currently 27 liters per year, while in 2000, it was only 10.04 liters, according to a preliminary report by the Vietnam Beer, Alcohol, and Beverage Association.
A food expert said the real figure could be much larger thanks to the explosive growth of the brewing companies. “While their capacity used to be millions of liters per year, it is now counted in billions,” he said.
Michel de Carvalho, owner of the Heineken brand, told reporters that in 2010, Vietnamese consumers drank 200 million liters of his beer, only behind the US and France in the list of 170 worldwide markets where Heineken is available.
Carvalho forecast that in 2015, Vietnam would become the world’s largest Heineken consuming market.
Tens of thousands of industrial land lay vacant
Tens of thousands of hectares of abandoned industrial zones currently litter Vietnam’s landscape.
After 23 years of development, only 64 percent industrial zones built are currently in full operation, said Professor Vo Thanh Thu from the Economics University in HCMC. There are 184 large industrial zones and 1,000 small industrial parks being used.
In the Mekong Delta, 65.6 percent of the 42,559-hectares of industrial zones lay vacant. The area currently has 74 large industrial zones and 214 small industrial parks.
Almost 100,000 households in the Mekong Delta have been relocated due to construction for industrial zones. However, construction has yet commenced in many of the areas. These people are unemployed and without farmland.
Only 46 percent of industrial zones built across the country are used by businesses. Several industrial zones are abandoned due to a shortage of traffic and electricity infrastructures.
Many of the newly built zones lay vacant, according to the Management Board of Industrial Zones in Binh Duong.
The government has removed preference policies on business investment since 2009 yet several businesses hesitate to invest.
The economic recession in 2008 has slowed investment in industrial zones, according to HCMC Management Board on Industrial Zones and Export Processing Zones.
Provinces have developed industrial zones spontaneously, said Professor Thu. Both central and local authorities have not had cooperative strategies on this field.
A few real estate companies have built industrial zones and transferred investments due to a loophole in management.
Masan appoints Korean CEO
Seokhee Won will join Masan as CEO of Masan Consumer Corporation and deputy CEO of Masan Group in early 2014.
Won is a seasoned executive with 22 years at global consumer goods company Unilever. In his most recent role he was senior vice president, responsible for Unilever’s skincare business in Asia and the Ponds brand globally.
Won’s experience includes senior management roles in Unilever’s businesses in China, South Africa, Thailand, Korea and Vietnam.
He spent eight years with Unilever Vietnam, from 1997 to 2005, as marketing director and then as vice president, during which he was responsible for Unilever’s entire personal care portfolio.
“My experience in Vietnam taught me a lot about how to win in an emerging market, where I learned how to tailor the expertise of a multinational company to meet the needs of a local market,”Won said.
According to Nguyen Dang Quang, chairman of Masan Group, the appointment of Won is a major step in transforming Masan Consumer into a more regional player, and Masan Group into a more consumer oriented business group.
Seokhee Won will officially assume his new roles in early 2014 and succeed current CEO Truong Cong Thang.
Ho Chi Minh City based Masan Group is one of Vietnam’s largest private sector business groups.Its Masan Consumer Corporation is a leading food and beverage company with a portfolio of Vietnam’s most popular brands.
AEC promises retail rivalry
Thailand’s leading retailers are pushing ahead with aggressive expansion plans into Vietnam as the deadline for the launch of the ASEAN Economic Community nears.
Vu Vinh Phu, chairman of Hanoi Supermarket Association told VIR that scores of foreign retailers, including those from Thailand had recently entered the market on anticipation of the establishment of the ASEAN Economic Community (AEC) by 2015.
“Once AEC becomes a reality, enterprises in ASEAN would have more sale and business opportunities as there will be greater regional economic integration and market convergence. Thai investors are well-known for their marketing capacity and are anticipating these opportunities,” Phu added in his additional position as vice chairman of the Association of Vietnam Retailers.
AEC is likely to attract further foreign investors to Vietnam eager to make the most of tariff advantages, he added.
According to the AEC Blueprint, a single ASEAN market and production base will be established, making ASEAN more dynamic and competitive thanks to the free flow of goods, investment, skilled labour and easier capital flows. Goods will also cross borders more easily thanks to zero per cent tariffs and the substantial dismantling of other trade barriers.
Central Group, Thailand’s leading retailer recently announced its expansion in Vietnam with next month’s launch of a Robins department store.
The first Robins store, the group’s first international branch, will occupy 10,000 square metres of retail space at Royal City in Hanoi. A second Robins store in Ho Chi Minh City will be opened by the end of 2014. The two stores will together hire 1,000 local workers.
Thai billionaire Dhanin Chearavanont, chairman of Charoen Pokphand Group (CP Group) was recently rebuffed by German retailer Metro Group AG in negotiations to buy Metro Cash and Carry in Vietnam, in a deal that was valued at more than $500 million. CP may well return to the table with an improved offer.
Korsak Chairasmisak, managing director of CP, said that Thailand wanted to take advantage of AEC. CP anticipated promoting small and medium-sized Thai enterprises to the wider ASEAN market.
Thailand’s Berli Jucker (BJC), owned by billionaire Aswin Techajaroenvikul, also previously bought the Vietnamese Family Mart’s 42 retail outlets to establish a joint venture with Vietnam’s Phu Thai Group. Phu Thai and BJC recently launched B’mart, with Phu Thai saying that details of the deal would officially be released in September this year.
In December 2012, BJC hooked up with Mongkol Group in a $32.4 million joint venture to set up Thai Corporation International Vietnam (TCI) to open a supermarket chain in Vietnam.
TCI director Mongkol Banthrarungroj said the joint venture’s target was to promote its brand name in Indochina and export Thai products to Myanmar, Laos, Cambodia and Vietnam. TCI expected to increase its sales in Vietnam to VND3 trillion ($150 million) once AEC becomes operational.
Marketing communications and management consultancy company AT Kearney in a recently survey of corporate leaders on their AEC expansion, merger and acquisition and brand plans found that the majority of companies in ASEAN member countries such as Thailand, Singapore, Malaysia, the Philippines and Vietnam planned to enter new markets, and create new products and brands to reach more consumers across the economic community after 2015.
“There is a big opportunity for Southeast Asian companies to embrace the ASEAN mantle and create regional brands,” said Bob Hekkelman, Southeast Asia CEO for world leading marketing firm JWT. He added that companies with insight into local tastes, cultures and attitudes had an inside track, but they would need to work hard to expand their reach, up their quality and build competitive brands if they want to woo the region’s discerning consumers.
Phu added that besides AEC, thanks to Vietnam’s WTO commitments, from January 11, 2015, Vietnam would permit the establishment of 100 per cent-invested retail businesses. Currently, foreign firms are constrained by being forced to enter into joint ventures with Vietnamese partners or franchising.
“AEC and WTO will provide opportunities, but also major challenges due to competition with foreign players,” said Phu.
Phu recommended domestic retail enterprises to enter partnerships to build bigger firms in anticipation of a massive influx of foreign retailers following the further opening of the retail market to foreign investment.
Arab Sheikh amazed at VN’s Son Doong cave
Sheikh Hamad bin Hamdan Al Nahyan, a member of the Abu Dhabi Royal Ruling Family in the United Arab Emirates (UAE), said he is held in awe by the splendor of Son Doong Cave, the world’s largest of its kind, during his visit to Vietnam in early Feb.
According to Oxalis Co., which provides tours to Son Doong in Quang Binh province’s Phong Nha-Ke Bang National Park, the sheikh, his friend and two assistants have just returned safely to Phong Nha after their trip to the cave.
The sheikh and his companions began their trip to the cave on Feb 6 after marveling at the cave’s magnificence from ads on foreign magazines.
He exclaimed that he has yet to see such an imposing, splendid place in the world, which made a strong impression on him and fully satisfied his adventurous pursuits.
The Sheikh added that he will promote the cave on one of his kingdom’s major tourism magazines and expressed hopes that local tourism officials will work hard to preserve Son Doong Cave’s pristine beauty and better tap into its adventure tourism potentials.
He stressed that he will return with his family to Phong Nha soon.
Sheikh Hamad bin Hamdan Al Nahyan, also known affectionately as The Rainbow Sheikh, has retired from his army service and diplomatic life and now devotes most of his time to the development of new vehicles in the world.
Sheikh Hamad owns some of the world’s largest cars and trucks. He also holds the Guinness Book of World records for the world’s largest caravan, which is on display at the Emirates National Auto Museum.
Vietnam’s Son Doong Cave, which has a large fast-flowing underground river inside, was found by a local resident named Ho Khanh in 1991.
The cave became public after a group of British scientists from the British Cave Research Association, led by Howard and Deb Limbert, conducted a survey in Phong Nha-Ke Bang, a UNESCO World Heritage Site in Apr 2009.
According to the Limberts, Son Doong Cave is five times larger than the Phong Nha Cave, previously considered the biggest cave in Vietnam. The biggest chamber of Son Doong is more than five kilometers long, 200 meters high, and 150 meters wide.
With such large dimensions, Son Doong overtakes Deer Cave in Malaysia to take the title of the world's largest cave.
Late last year Quang Binh province decided to launch tours to Son Doong Cave on a piloting basis.
Bike market sees further challenges in 2014
Motorbike producers have forecast more challenges ahead in 2014 due to fierce competition among manufacturers in terms of design and among dealers in sales prices and customer services, as the demand is poised to stay flat.
Honda Vietnam, a leading manufacturer with a 60% market share, expected this year’s consumption to be 2.8 million bikes, which is equal to that in 2013.
Bike consumption in the country in 2013 dropped 10% against the previous year, marking the second consecutive year of decline. In 2012, there were over 3.1 million bikes sold, down 6.6% from 2011.
Explaining the problem, the manufacturer said economic difficulties remain and people will keep on cutting expenditure. Masayuki Igarashi, general director of Honda Vietnam, said that the bike market will certainly be in distress as macro economic indicators have yet to improve.
Producers and dealers will see tough competition as inevitable with more promotional and discount programs launched. Last year, despite a lot of promotion programs, bike sales remained sluggish even in high seasons such as the year-end or the new school-year.
Dealers of large firms such as Honda, Yamaha, Suzuki and Piaggio said that sales have declined over the past two years, forcing them to reduce their profit margins to offer lower prices directly to customers. Some have even sold bikes at less than the price levels suggested by producers to meet revenue targets.
Many dealers said that they are mainly earning profits from repair services.
Given the hardship, Honda Vietnam estimates to sell 1.8 to 1.9 million bikes in 2014, equal to that in 2013. With the figures, its two factories in Vinh Phuc Province will be running under capacity.
However, the enterprise has still decided to launch a third plant with an annual capacity of 500,000 bikes into operation in Ha Nam Province within this year. It also has plans to speed up exports given slow consumption in Vietnam.
A leader of Piaggio Vietnam said that the firm will tap new markets after exporting scooters to many regional nations.
Aside from Honda Vietnam, Yamaha Vietnam has two plants with a capacity of 1.5 million bikes a year, SYM with three plants capable of producing 500,000 units, Suzuki 300,000 bikes and Piaggio 300,000 bikes. The five manufacturers report total capacity of five million bikes, not to mention other smaller firms such as Kymco and 100% domestic enterprises.
Compared to market consumption in the last two years, bike production capacity is almost twice the demand.
HSBC: Vietnam to earn huge benefits from TPP
HSBC Bank in its latest global report mentioned the huge benefits for Vietnam once the Trans-Pacific Partnership (TPP) is signed, saying that key Vietnamese export products will be flowing into the U.S. given tariff removals.
The bank, however, said that the real value of TPP lies in its potential to spur State-owned enterprise (SOE) reform and service sector deregulation and raise productivity.
Once signed, the TPP would create a large free trade zone covering 40% of the global gross domestic product (GDP) and 30% of global trade. Japan, Malaysia, and Vietnam are poised to be the big winners in Asia, it said in the report.
All the three countries are expected to reap long-term income gains from the agreement. The boost is likely to be particularly large in Vietnam, which has a large exposure to the U.S. market.
Key Vietnamese exports face relatively high U.S. import tariffs with average duties ranging from 4.5% to 14% for apparel, and 10.4% for footwear. Once implemented, the TPP would lower U.S. import duties on Vietnamese products, boosting its exports.
HSBC’s comments are not new. The benefits mentioned in the report were earlier forecast by organizations and researchers.
In fact, problems remain. In the textiles, apparel and footwear sector, rules of origins for textiles and apparel have become one of the biggest sticking points of market access negotiations.
That poses a problem for Vietnam, which sources a significant share of its raw materials from China for apparel exports. To solve the problem, Vietnam must make a lot of investment in material production, which is virtually impossible at the moment.
Both sides are speeding up TPP negotiations to finalize the agreement within this year. Then, member nations will spend from 12 to 18 months on internal approvals before launching the agreement into effect.
HSBC also mentioned barriers during negotiations. U.S. President Barack Obama wants to seal the deal well in advance of the November congressional elections. The TPP has not been an easy sell to U.S. lawmakers, many of whom want stricter provisions on currency manipulation and intellectual property protection among others.
Another headache for the president is the lack of “fast track” trade promotion authority (TPA). TPA gives the president the ability to negotiate trade agreements without fear of an eventual Congressional amendment or filibuster.
Vietnam’s benefits are strongly attached to the U.S. market, so developments stateside country have drawn much attention from the public.
Construction ministry wants easier rules for property market
The Construction Ministry on Wednesday said it would propose changes to the Law on Real Estate Trading with an aim to create a better legal corridor for all business stakeholders, especially foreign investors.
In a working session with the National Assembly’s Economic Commission in Hanoi on Wednesday, the ministry said the amended law should ensure market-oriented mechanisms for all businesses, with all liberal rules to attract financial resources. The final aim is to create favorable conditions for all investors, domestic and foreign alike, to engage in the property market, and at the same time to improve professional norms for all property brokers, traders and consultants.
The draft amendments if endorsed will open the property market wider for foreign investors as well as Vietnamese overseas, according to the ministry.
Foreign individuals and organizations as well as Vietnamese nationals residing overseas will be able to invest in the property market with easier requirements. They will also be allowed to lease, buy and own offices for working and for lease as well as houses in the country.
At the meeting, the NA Economic Commission’s Chairman Nguyen Van Giau suggested that the law should also include previously-issued by-laws that have been applied in reality.
Seven years since the Law on Real Estate Trading was enacted in 2006, many problems have emerged that need to be addressed, according to the ministry. Deputy Minister of Construction Nguyen Tran Nam said at the meeting that there were not sufficient legal provisions on the creation and development of properties.
State management agencies have not been able to ensure that properties are developed in conformity with zoning plans or urban planning, and rampant developments have caused adverse impacts on the economy, including bad debts and high inventories.
The deputy minister observed that property prices had plunged by 10%-30% last year, with certain projects seeing prices plummet by half. However, there appeared signs of thawing on the property market, with more products finding buyers towards the end of 2013, Nam said.
The draft amendments to the Law on Real Estate Trading will be completed and submitted to the National Assembly’s Standing Committee in March.
HN destined for second int’l travel mart
The second Viet Nam International Travel Mart (VITM 2014) will take place in Ha Noi from April 3-6.
Under the motto: “Tourism Promotion – New Destination, New Opportunity, and Travelling for Sustainable Development,” the VITM 2014 will consist of 500 stalls including 150 international ones from 25 countries and territories.
Up to 450 domestic and international tourism agencies will attend the international tourism fair.
Japan was invited as the honorable guest at the event.
A tourism promotion program will be launched at the VITM 2014 with the participation of hundred of travel agencies and tourism service centers.
Especially, Vietnamese travel products in both mountainous and maritime regions are expected to help fulfill the goal of handling 40 million domestic guests in 2014.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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