BUSINESS IN BRIEF 29/3
Manufacturing sector accounts for 84.9% of Q1’s FDI
Vietnam’s manufacturing sector has proven a magnet for foreign direct investment in the first quarter, absorbing US$6.54 billion, which accounted for 84.9% of total registered capital in the period.
The information was released by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.
Economic experts said that Vietnam needs to research and create favourable conditions for foreign direct investment (FDI) businesses to improve the quality and value of manufactured products.
In addition, FDI enterprises should be encouraged to enlarge investment scale, renovate technology and diversify investment goals to meet legal regulations on foreign investment as well as manufacturing development planning.
Real estate came in second in FDI attraction with nearly 344 million USD, making up of 4.4 percent of total capital, followed by whole sales and retail sale with 296.8 million USD.
The FIA reported that by March 20, investment licenses were licensed to 493 projects with a total registered capital of 2.9 billion VND, a year-on-year increase of 6.5 percent.
Meanwhile, 223 operating projects added 3.94 billion USD in capital, up more than 206 percent from the same period last year. There were also 1,077 deals of capital contribution and share purchase by foreign investors with a total value of nearly 853 million USD, a year-on-year surge of 171.5 percent.
As such, total FDI capital poured into the country was estimated at 7.71 billion USD, increasing 91.5 percent over the same time last year.
Exports of the foreign-invested sector in the reviewed period (including crude oil) reached over 31.4 billion USD, up 13 percent from the same period in 2016 and accounting for 71.8 percent of total exports.
Among 71 countries and territories investing in Vietnam, the Republic of Korea is the country’s largest investor with 3.74 billion USD, accounting for 48.61 percent of total investment capital. It was followed by Singapore with 911 million USD and China with 823.6 million USD.
Samsung Display Vietnam in northern Bac Ninh province adjusting its capital up by 2.5 billion USD increased the province’s FDI to 2.61 billion USD, or 33.86 percent of the total, making the locality the largest FDI recipient in the period.
Southern Binh Duong province ranked second with a registered capital of 1.39 million USD, or over 18 percent of total foreign investment and Ho Chi Minh came in third with nearly 600 million USD, or 7.78 percent of the total.
Local reform must be hastened: businesses
The Government of Vietnam has made accelerated efforts to improve the business climate but more drastic measures must be taken at local levels where firms still face obstacles in doing business, according to the Vietnam Chamber of Commerce and Industry (VCCI).
Resolution 19 has already made positive progress toward improving the business climate and national competitiveness, said Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management, at an online conference held on March 23 by the Dien Dan Doanh Nghiep (Business Forum) newspaper.
However, Hieu said the progerss of reform remains slow at many local agencies due to slack officials and lack of accountability, determination as well as cooperation.
"The problem is how the policies are implemented. I have not seen breakthroughs in implementation during the past three years.” Results were still much below the expectations of most firms, he said.
“Challenges are ahead and great effort is needed for this period of reform,” Hieu said, pointing out that reforms must now be hastened in order to realise the Government’s goal of doubling efficient firms to 1 million by 2020.
Hieu said that while several localities were active in quickening reforms, others lacked dynamism. “It is vital to create a transparent and fair working environment to promote the efficiency of State officials. Business associations must play their role in raising their voices and calling for more actions by management agencies to remove difficulties for firms,” said Hieu.
According to Nguyen Van Thoi, President of the Thai Nguyen Province Business Association, policy-makers should force local agencies working directly with businesses to hasten reforms. Due to lack of sanctions, local agencies are stagnant in making changes, he said.
Thoi added that management agencies should regularly hold dialogues with businesses to listen to their difficulties and adopt measures to handle them.
Thoi said that there should be a “meter” to measure results of reforms.
Nguyen Nhan Phuong, President of the Bac Ninh Province Business Association, said administrative procedures remain complicated and time-taking.
Phuong said supports, especially in land policies and credits, targeting small and medium-sized firms should be raised.
At the conference, businesses said that reforms, such as e-tax and e-customs, helped cut business costs significantly, but greater effort were needed.
Experts said that accountability of heads of administrative management agencies must be promoted to speed up reforms. “What businesses want is a reform with quality,” said Dau Anh Tuan, head of the VCCI’s Legal Department.
In April, the Prime Minister will hold a direct dialogue with businesses.
ROK drug companies target Vietnamese market
Leading pharmaceutical companies from the Republic of Korea (ROK) are pouring money into Vietnamese operations as they battle for increased market share in the fast-growing generics segment.
The Vietnam government is initiating a competitive bidding system for generic drugs imported and distributed in the country for which it divides foreign suppliers into five classes and sets a limit on their participation in bidding.
Up until recently the highest rating given to any company from the ROK was to Korea United Pharm, which had a Grade 3, with all other pharmaceuticals from the East Asian country classified into Grade-5 suppliers.
However, in January, Vietnamese officials raised eight Korean pharmaceuticals to Grade 2.
The latest move came after the Korean Ministry of Food and Drug Safety requested Vietnam to recognize its Good Manufacturing Practice certificate and accession to the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation Scheme.
The eight pharma companies are Dongkwang Pharm, Dongkook Pharmaceutical, Myungmoon Pharmaceutical, Samil Pharm, Samjin Pharm, JW Life Science, LG Chem and Korea United Pharm.
The Grade 2 classification benefits the eight ROK pharmaceuticals in the competitive bid process in Vietnam when they submit proposals for medications, ointments, vaccines and other generics.
The National Assembly of Vietnam adopted a new Law on Pharmacy last June and it came into effect January 1, 2017.
The new law specifically allows parallel import of drugs so long as the price of the parallel-imported product is lower than the price of the original brand-name drug currently being circulated in Vietnam.
Though the general concept of parallel imports is not new to the pharmaceutical industry in Vietnam, this is the first time that a regulation on parallel imports has been promulgated under a law.
The pharmaceutical market in Vietnam is forecast to increase from US$4.2 billion in 2015 to US$7.2 billion by 2020, according to a report by BMI Research.
The domestic pharmaceutical segment is still very fragmented and the management standards typically are quite poor, say most industry analysts, which provides strategic investors from the ROK a golden opportunity.
Regional conference: contracts signed for ensuring food security
As many as 49 contracts were signed at the regional conference on food security in Hanoi on March 22-23, said Deputy Minister of Agriculture of the Netherlands Marjolijn Sonnema.
According to the Dutch official, the Netherlands had three major contracts, including its commitment to an investment package worth 150,000 EUR for seafood index building and governance, thereby supporting big seafood firms in Asia, towards the sustainability in aquaculture.
The Netherlands will also help Vietnam implement a project to reduce post-harvest loss, the country and Vietnam will sign a protocol on enhancing cooperation on food security, she said.
According to Vietnamese Minister of Agriculture and Rural Development Nguyen Xuan Cuong, the two-day conference focused on measures to promote cooperation among countries to overcome challenges, towards building a sustainable and smart agriculture, contributing to ensuring food security and safety amidst climate change.
Addressing a press conference in Hanoi on March 23, Sonnema affirmed her country, with its experience, expertise, technology and capacity, can help Vietnam build a sustainable agriculture.
She also highlighted great potential for the two countries to enhance cooperate in agricultural development as both sides are exporters of agricultural products, and both are facing with challenges caused by climate change, especially in water management for agricultural production.
Sonnema was on a visit to Vietnam from March 20-23, during which many events were arranged to boost partnership between Vietnamese and Dutch enterprises, laying a foundation for strengthening economic and trade links between the two countries in the future.
Central localities promotes MICE tourism
Representatives of more than 30 travel agencies in Hanoi and Ho Chi Minh City have visited Danang and Hoi An city of Quang Nam province to survey MICE tourism opportunities.
This year, the central city of Danang is se to host the APEC Summit, the International Firework Festival, the Da Nang International Marathon Competition, the Asia Golf Tourism Festival, the Iron Man competition, and the Da Nang Kite festival.
Quang Nam province will host the 6th Heritage Festival, the Kite Festival, and the International Yachting Race.
Director General of NewStar Tour Company Luong Duy Ngan said Danang city and Quang Nam province have become a potential market for MICE tourism because services are abundant and safe. In Danang, the Fumara Resort can serve 3,500 customers at a time.
Vietnam Airlines now uses Airbus A350 on flights to Japan
Vietnam Airlines carried out its maiden flight to Japan with Europe's new-generation A350-900 for the first time on March 26, as it targets fuel savings and better passenger comfort.
The lightweight carbon-fibre plane landed the debut flight at 2:48pm (local time) at the Haneda Airport, with the pilot reporting that it had performed smoothly.
The Airbus A350-900 is the most popular of the three A350 variants, carrying 325 passengers with a range of 15,000 kilometres. The appeal for airlines is cost effectiveness.
They're workhorses, with durable airframes and low maintenance costs.
PVN shakes hand with US oil supermajor
The Vietnam Oil and Gas Group (PetroVietnam) and the US-based Exxon Mobil Corporation (Exxon Mobil) signed an investment agreement concerning the Blue Whale natural gas well, under the supervision of Prime Minister Nguyen Xuan Phuc.
The Blue Whale well is the largest natural gas project to date in Việt Nam, with an approximated on site reserve of about 150 billion cubic metres.
Exxon Mobil is set to invest in a well head platform for offshore water separation and two underground mining groups, each with four extraction wells and an 88 kilometre-long pipe connecting to the Chu Lai coast.
On land, PetroVietnam will invest in a gas processing factory and a power plant with two generators at 600 to 700 megawatts capacity each.
The Quang Nam province project is expected to become operational in 2023.
Another power plant will be built in neighbouring Quang Ngai province on a similar scale and estimated completion date.
The goal for annual gas production is approximately nine to ten billion cubic metre, in which one billion cubic metre is provided to the Dung Quat refinery for downstream activities.
The Blue Whale project can generate an annual amount of natural gas enough for four to five power plant with over 3,000 megawatts capacity.
It is expected to ensure national energy security, in line with both the PM’s plan for natural gas and electricity and the economic development for Quang Nam province.
The deal between the two oil companies was made as part of a conference on promoting investment in Quang Nam province on March 26th, 2017.
Thailand continues to be top supplier of home appliances to VN
Thailand remains the biggest exporter of electrical appliances and accessories to Viet Nam, according to the customs department.
The first two months of the year saw US$238.5 million worth of electrical appliances and accessories imported into Viet Nam, a year-on-year increase of 5.15 per cent.
Imports from Thailand accounted for $120 million, a 3.1 per cent rise year-on- year.
Imports from China dipped by 2.49 per cent to $42.5 million. Malaysia was Viet Nam’s third biggest supplier, with shipments worth $32.9 million, a year-on-year decline of 8.62 per cent.
Imports from Italy surged by 167.7 per cent, admittedly from a small base, to $1.9 million.
Automated petrol pumps a bust
All 2,400 gas stations owned by the Viet Nam National Petroleum Group (Petrolimex) are designed to accommodate cash free purchases and can switch to an automated pay model to help reduce labour costs, especially late at night, said Bui Ngoc Bao, Petrolimex’s Chairman.
Although automated payment functions are readily available, Petrolimex’s three year test run has yet to be implemented on a larger scale.
In Ha Noi, the company has seven petrol stations with automated pumps for customers paying via credit cards, but they must all be accompanied by normal pumps with workers to supply the demand of the majority who pay by cash.
Bao stated the main reason behind the automated model failure is price difference; banks charge an additional fee for card-based purchases that is not borne by the customers but the company itself and is not included in the circulation and management fee that Petrolimex pays the Government.
Said transaction fee ranges from 0.5 to 1 per cent of total amount paid for domestic cards and 2.5 per cent for international cards.
The circulation and management fee imposed by the Government is about 5 per cent of total price, including importing costs, storage costs, distribution costs or losses, of which labour costs account for 30 per cent in total.
Furthermore, as petrol prices are regulated by the Government, petrol companies cannot change the price to respond to the market’s elasticity.
In reality, the price recorded at Petrolimex’s automatic stations is only VND100 (0.44 US cent) per litre cheaper than those with human workers.
This makes customers hesitant to pump petrol themselves, seeing how they will only save a miniscule amount of money even when the drop in price is solely created by Petrolimex to encourage them and is not included in the Government’s regulated price list.
In addition, since motorbikes, the most common vehicles in Viet Nam, do not have a safety switch to stop petrol from being pumped into the tank like cars, spilling is bound to occur and cause danger to the drivers. This is amplified by the lack of etiquette and regard for public safety in people who use mobile phones and smoke within the vicinity of a petrol station, regardless of prohibiting signs.
To counter this, the company has proposed to the Ministry of Finance and the Ministry of Industry and Trade to adjust the operation costs for petrol from 5 per cent to 10 per cent, a common rate in advanced countries, to push for cash-free purchases and the automated pumping model.
If said transaction fee can be included in regulated petrol price, in the next three years, Petrolimex expects to convert 70 per cent of all petrol stations to automatic model, keeping only 30 per cent with workers, said Bao.
The company aims to make automatic technology more popular to help save time and cut cost for customers and to improve service.
Inter-bank rate hits record high since after Tet
Inter-bank rate has increased for the past three consecutive weeks, with the rate hitting a record high since after Tet (Lunar New Year), according to a report from the Bao Viet Securities Company.
In the week from March 20-24, the rate continuously inched up by 16-17 percentage points for all terms, the report showed.
With the rise, overnight rate reached 4.86 per cent per year. The rates for one-week and two-week loans were 4.92 per cent and 4.94 per cent, respectively.
During the week, the central bank made a net injection of VND3.31 trillion (US$145.99 million) via open market operation to support liquidity for the banking system.
It also did not issue T-bills for all terms in the week.
Liquidity remains strong: State Bank of VN
Liquidity of the banking system remains good and the interest rate level is stable with no pressure on rate hike reported.
The State Bank of Viet Nam (SBV) released the news on Monday in the wake of a recent deposit interest rate hike by some small-sized banks.
According to the SBV, while some banks have increased sharply long-term interest rates offered on certificates of deposit, some others have adjusted interest rate down by 10-30 percentage points per year.
Last week, VPBank announced it is offering a rate of 9.2 per cent per year for five-year certificates of deposit.
VietA Bank and Sacombank have also listed a high rate of 8.2 per cent per year for certificates of deposit.
However, during the week, VIB cut interest rate by 10-30 percentage points per year for all terms, making the rate for 1-2 month deposits stand at 5.1 per cent per year, for 3-5 month deposits at 5.2 per cent, for 6-11 month deposits at 5.6 per cent and for deposits above 12 months at 7.1 per cent.
The rate was also down by 20 percentage points for 18-36 month deposits at Maritime Bank and 10 percentage points at Ban Viet Bank and DongA Bank.
In the report released on Monday, SBV also said the adjustment of interest rate at some banks is normal to fit the banks’ business strategies, adding that some banks could increase interest rate temporarily at this time, but they could then adjust the rate lower next time.
Last week, some experts forecast that interest rate could rise after some banks issued certificates of deposit at high interest rates of up to 8.2-9.2 per cent per year.
The rate was much higher than the average deposit interest rates offered by other commercial banks. Currently, State-owned commercial banks offer a rate of 6.5-6.8 per cent per year for long-term deposits, while it is 7-7.5 per cent at large-sized joint stock commercial banks and 8-8.2 per cent at small-sized banks.
Experts said banks have been forced to hike interest rates on long-term deposits so that they have enough funds to provide long and medium-term loans.
According to statistics, 80-90 per cent of deposits currently are short-term while demand for long and medium-term loans is growing rapidly.
In addition, SBV’s amendments to Circular 36/2014/TT-NHNN reducing the ratio of short-term deposits that can be used for medium and long-term loans from the current 60 per cent to 40 per cent have caused deposit interest rates to rise.
Experts, so far, still say keeping the interest rate stable would be hard work for the central bank this year, especially since it has to meet two other targets of controlling inflation to below 4 per cent and providing support to attain economic growth at least 6.7 per cent this year.
IVS to expand to Japan via merger
Vietnam Investment Securities Company (IVS) will merge with Japan Securities Incorporated (JSI) to boost the number of customers, financial capability and expand the operation to Japan.
After the merger, the capital of IVS will increase to VND372 billion (US$16.53 million), IVS said in its statement at the annual shareholder meeting held on Saturday.
The merger will make JSI a department at IVS, and it will focus on the Japanese market only. Current shareholders of JSI will commit not to withdraw from it in the next three years after the merger is approved by the State Securities Commission.
However, the company did not clarify in its statement when the merger would take place.
The merger was also approved by the shareholders of JSI at the firm’s annual shareholder meeting held on March 14.
Vietnamese shareholders hold 48.87 per cent of JSI’s capital now, including Viglacera Investment and Import-Export JSC (10 per cent).
Japanese shareholders hold the rest of the company’s capital, including the Hong Kong-based Tanamark Investment Ltd (20 per cent), Aizawa Securities Co Ltd (14.5 per cent) and Japan Asia Securities Co Ltd (14.5 per cent).
In 2016, IVS earned a total revenue of VND26 billion and a post-tax profit of VND97.4 million. The figures were 95 per cent and only 5 per cent of last year’s targeted earnings. IVS will not pay dividend for last year’s performance.
In the third quarter of 2016, IVS issued 17.9 million shares to increase its chartered capital from VND161 billion to VND340 billion.
For 2017, IVS has forecast Viet Nam’s economic growth at 6.5 per cent to 6.7 per cent and inflation rate at 4 per cent to 5 per cent, allowing the Government to keep the lending rates low and support the growth of the securities market.
According to the company, Vietnamese economy will reach its short-term peak in three years.
Q1 FDI up 91% y-o-y
Foreign direct investment (FDI) stood at $7.71 billion in the first quarter of this year, according to the Foreign Investment Agency (FIA), more than double the $3.4 billion received in the first two months and up 91.5 per cent year-on-year.
As at March 20, 493 new foreign-invested projects with capital of more than $2.9 billion had been licensed, an increase of 6.5 per cent year-on-year. Additional capital of $3.94 billion also came from 223 existing projects, up 206.4 per cent year-on-year.
Foreign investors also outlaid $852.86 million in buying stock market shares, up 171.5 per cent year-on-year.
There was also a slight increase in FDI disbursement in the first quarter, at $3.62 billion, a year-on-year increase of 3.4 per cent.
Samsung Display Vietnam added $2.5 billion to its ongoing project in the northern province of Bac Ninh, Taiwan's Polytex Far Eastern Company added $485.8 million to its investment in the Bau Bang Industrial Zone in southern Binh Duong province, and Coca-Cola Vietnam added $319.8 million to a project in Hanoi.
Newly-licensed projects included the $284.75 million Vietnam-Singapore Industrial Park III (VSIP 3) in Binh Duong, the $269.54 million Tole Panel Plant in southern Binh Phuoc province, and the $220 million KVT-1 tire fiber project of Kolon Industries Inc. in Binh Duong.
Thanks to the giant Samsung project, South Korea was the largest source of FDI to Vietnam in the first quarter, with $3.74 billion, accounting for 48.61 per cent of the total, followed by Singapore with $910.8 million and 11.81 per cent and China with $823.6 million and 10.68 per cent.
FDI was poured into 18 industries and sectors. The manufacturing and processing sector remained the most attractive, receiving $6.54 billion and accounting for 84.9 per cent of the total. Real estate sector was second, with $343.69 million and 4.4 per cent, followed by wholesale and retail with $296.8 million and 3.85 per cent.
Among 52 localities nationwide that received FDI in the first quarter, Bac Ninh province took the lead, with registered capital of $2.61 billion, or 33.86 per cent, followed by Binh Duong with $1.39 billion, or 18.01 per cent and Ho Chi Minh City with $600 million, or 7.78 per cent.
Bank AGM season underway
The annual general meeting (AGM) season for banks has begun, with the Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) holding theirs and other banks to follow in April.
Many banks have already revealed their business plans for 2017.
ACB set a target for credit growth of 16 per cent, customer deposits and total assets to increase 16 per cent, a bad debt ratio of less than 2 per cent, and consolidated pre-tax profit of about VND2.2 trillion ($96.82 million), a 32 per cent increase compared to results in 2016.
The bank will focus on credit growth for individual customers and small businesses and improving customer service quality to increase fee income from service activities. It will also focus on recovering bad debts and restructuring its headquarter and branch personnel.
Military Bank (MBB) plans pre-tax profit of VND4.7 trillion ($206.3 million), up 29 per cent against 2016. ROE is targeted at 15 per cent, compared to the 12 per cent result last year.
Meanwhile, LienVietPostBank has set a profit target this year of VND1.5 trillion ($65.86 million), up 11 per cent compared to last year.
The Orient Commercial Joint Stock Bank (OCB) plans to submit the following figures to its upcoming AGM: Total assets up 33 per cent to VND85 trillion ($3.73 billion), revenue from fees to increase over 12 per cent, and pre-tax profit to reach VND780 billion ($34.25 million), up 60 per cent compared to 2016.
HD Bank will submit seek approval of its business plan for 2017 at its AGM. Lending is to reach VND123.4 trillion ($5.42 billion), pre-tax profit VND1.6 trillion ($72.15 million), up 28 per cent compared to 2016, and a bad debt ratio of less than 1.5 per cent.
Major banks such as Vietcombank, BIDV, and Vietinbank have not published the documents to be presented to their AGMs as yet, but after a positive 2016 they are expected to set higher targets than last year.
Six banks pledge $1.14bn in finance to projects in Quang Nam
Six banks - BIDV, Vietcombank, VietinBank, Agribank, LienVietPostBank, and SHB - pledged credit of VND26 trillion ($1.14 billion) for ten major projects in central Quang Nam province on March 26 at the Investment Promotion Conference.
The projects focus on key areas such as tourism, services and facilities, infrastructure, industrial zone development, hi-tech agriculture, and hospitals.
Vietcombank has signed a credit and loan agreement with the Truong Hai Automobile Joint Stock Company (THACO) and its member companies and a warehouse project belonging to the Central Gas Limited Liability Company.
BIDV signed a credit agreement for the Holiday Inn Hoi An Resort belonging to the Nam Sao Investment Joint Stock Company and for expansions to the Phu Ninh ecotourism area belonging to the Hung Cuong Tourism Investment Joint Stock Company.
Agribank, meanwhile, granted a working capital loan to the Chu Lai Floating Glass Joint Stock Company, while VietinBank pledged to finance the Nam Hoi An Resort belonging to the Nam Hoi An Development Limited Liability Company and a bridge project on the northern access road to Cua Dai Bridge and urban areas of Hoi An belonging to the Dat Phuong Joint Stock Company.
Lien Viet Post Commercial Joint Stock Bank has signed a credit agreement for an investment project completing infrastructure at the Nui Thanh town residential area and a concrete plant of the An An Hoa Limited Liability Company.
SHB Bank signed a credit agreement for the Tien Phuoc Pacific Polyclinic and Factory producing and processing products from ginseng and medicinal plants, belonging to the Danaco Quang Nam Joint Stock Company.
Banks operating in Quang Nam province had provided loans totaling more than VND46 trillion ($2.02 billion), mainly in priority sectors such as agriculture, exports, and tourism, as at the end of February.
Loans for agricultural and rural development signed under Decree No.55/2015/ND-CP dated June 9, 2015 from the government were estimated at VND7.88 trillion ($346 million), accounting for 17.12 per cent of total loans. Loans for new rural construction was estimated at VND7.3 trillion ($324.6 million), accounting for 16.03 per cent.
Savills merges with Alternaty
Savills Vietnam announced a merger with Alternaty on March 28, a leading hotel advisory company in Indochina, to provide a full-service platform on hotel advisory services in Vietnam’s hospitality market.
The merger highlights Savill’s commitment to accelerating growth in the Asia-Pacific region and particular in Southeast Asia.
The Alternaty team will join the well-established hotel business at Savills to focus on providing hotel advisory services to serve institutional owners, investors, and developers in the hotel and leisure sector.
The merger will give Savills a platform to tap into Indochina’s rapidly growing hospitality markets, in which Vietnam saw a 26 per cent increase in foreign arrivals in 2016. With a growing number of investors actively seeking hotel and resort assets, this will complement Savills’ already substantial investment brokerage platform.
Services in Vietnam will include relevant hotel-related services as:
Hotel & Resort Market Research
Operator Selection & Hotel Management Contract Negotiation
Investment Brokerage & Advisory Service
Mr. Mauro Gasparotti, co-founder and Executive Director of Alternaty Vietnam, said “we are delighted to become part of the Savills family and to leverage Savills’ extensive operations, sales and marketing platform in the region. This merger enables us to further our best practices into untapped opportunities in Southeast Asia.”
“Vietnam’s hotel industry is becoming more dynamic as more players enter the growing market, with the number of five-star hotel rooms in 2015 soaring 37 per cent year-on-year to 24,000,” said Mr. Rudolf Hever, co-founder and Managing Director of Alternaty Real Estate. “This growing trend in hotel development can be seen across all hotel segments, with an estimated 15-20 per cent growth in total hotel supply in the short term. Besides the key cities of Ho Chi Minh City and Hanoi, markets such as Phu Quoc Island, Da Nang and Nha Trang are catching investor attention too. The total hotel transaction volume has reached almost $500 million in the last 24 months.”
Mr. Neil MacGregor, Managing Director of Savills Vietnam, said “the Alternaty team, led by Mauro and Rudolf, are well-known as market leaders in Hospitality in Indochina. Their capabilities will add depth to establish a robust platform, offering a complete suite of services for the hotel development lifecycle. Our ability to offer hotel consultancy will expand our capability and boost other Savills Vietnam business lines, including the project management, investment advisory, research & valuation, and agency businesses.”
Founded in 2012, Alternaty is the only local hotel consultancy in Vietnam, with strong local knowledge and contacts and an extensive track record in commercial property, hotel, and resort advisory throughout the Indochina region.
Construction of Vinpearl Nam Hoi An resort and tourim complex underway
Vingroup held a groundbreaking ceremony for the Vinpearl Nam Hoi An resort and tourism complex in central Quang Nam province on March 26 with the attendance of Prime Minister Nguyen Xuan Phuc.
The project is Vinpearl’s first resort complex, with total investment capital of VND5 trillion ($227.2 million) and located in Binh Duong and Binh Minh communes in Thang Binh district.
The project will cover an area of 200 ha and includes a Vinpearl hotel and villas, a Vinpearl Golf Club, a Vinpearl Land entertainment area, a Vincom Trade Center, and a Hi-Tech Park combined with VinEco tourism.
The project will be implemented in two phases. The first will see the hotel, villas, convention center, restaurant and hi-tech agricultural area being built, with completion expected on April 30, 2018.
The second phase will focus on completing all technical infrastructure and developing items for the amusement park and golf course, with completion expected by 2019.
Mr. Nguyen Viet Quang, Vice Chairman of Vingroup, told the ceremony that the Vinpearl Nam Hoi resort and tourism complex is an important project for Vingroup, not only expanding Vinpearl’s network but also being the first Vinpearl five-star resort complex. “We are committed to implementing the project on schedule and with top quality, contributing to Quang Nam’s tourism sector becoming a key economic sector in the future,” he added.
Vinpearl will continue to operate eight resorts and hotels in Nghe An, Ha Tinh, Hoi An, Cam Ranh, and Phu Quoc Island this year. It has 18 hotels with a total of 11,000 rooms and meets demand among domestic and foreign tourists at a time when Vietnam’s tourism sector is growing strongly.
Construction of IMG Airlines Building gets underway
The IMG Corporation has held a breaking ground ceremony for its IMG Airlines Building project in Ho Chi Minh City, with construction expected to be completed in the third quarter of 2018.
The project is located at 371 Nguyen Kiem Street in Go Vap district, next to Pham Van Dong Boulevard and Tan Son Nhat International Airport and just 20 minutes away from the city center.
The building will have a gross floor area (GFA) of approximately 30,000 sq m, designed with a large open floor plan and centralized air systems and will have international-standard property management.
The IMG Airlines Building will provide the complete package, from office space to complimentary services for logistics and transportation companies. It will dramatically reshape the business landscape in the Tan Son Nhat area.
“The IMG Airlines Building is designed based on our company’s aspirations, applying green technology and using solar energy to supply electricity,” said Ms. Nguyen Thi Thu Hien, Chairwoman of IMG.
The building is a part of IMG Corporation’s sustainable development strategy, establishing a foundation to launch IMG Logistic, which will be a pioneer in providing complete, uniform logistics solutions.
IMG and real estate consultants JLL Vietnam have signed an exclusive agreement, with the latter providing marketing and leasing services for the building to introduce multinational companies to fast-growing Go Vap district.
Mr. Stephen Wyatt, Country Head of JLL Vietnam, said that office vacancy rates in the city have reached an all-time high of 95 per cent. “Occupiers, therefore, are struggling to find good quality office buildings such as the IMG Airlines Building,” he added.
IMG Corporation has a range of subsidiaries, operating mainly in the legal, finance, investment, immigration, communications, airline, and energy sectors.
JLL was previously selected to manage the Vista Verde project in Ho Chi Minh City and Mulberry Lane in Hanoi.
Vista Verde is located on 34,056 sq m in Thanh My Loi ward in District 2 and is expected to be completed in the fourth quarter.
It has 1,152 premium apartments offering state-of-the-art recreational facilities such as a gym and a swimming pool, a clubhouse, lounging islands, a jogging track, and a tennis court. It will also have a retail mall.
Mulberry Lane, meanwhile, sits on 24,466 sq m and is strategically located in the Mo Lao New Urban Area in Ha Dong district, an up-and-coming residential area that is the preferred choice of affluent local people and expatriates.
It has 1,478 premium apartments of various types and entertainment facilities such as a swimming pool.
Office segment still up in Q1
Vietnam’s real estate market was led by Grade B office space in the first quarter of the year, the “Office Market in the First Quarter of 2017” conference held in Hanoi on March 24 heard.
Ms. Nguyen Bich Trang, Director of CBRE Hanoi, said that supply in the office segment has increased slightly.
New supply in the first quarter from the Horison building, with a gross floor area (GFA) of 10,575 sq m, increased the vacancy rate in Grade B space slightly. Horison Tower will be a prominent site in the mid-town area, located within 200 meters of the under-construction Cat Linh urban railway station and set to benefit from the railway’s completion in 2018.
In the months to come, however, the segment will see more competition from the completion of buildings such as the DSD building, with a GFA of 20,000 sq m, the Discovery complex, with a GFA of 49,000 sq m, the Truong Thinh Office Building, with a GFA of 5,400 sq m, and HUD, with a GFA of 70,000 sq m.
In Grade A, a lack of new supply contributed to a 3.3 per cent increase in rents during the quarter compared with the fourth quarter of 2016.
The main factor boosting Grade A absorption continued to be expansion and relocation, especially in the IT/Technology sector.
This increased net absorption reveals current market trends: non-CBD buildings are filling up as companies decentralize from the CBD, an improving economic situation leading to larger spaces for startups and co-working spaces, and a growing desire for better quality buildings.
Ms. Trang also said that green/LEED-certified buildings have become a new topic of focus among developers. Green-certified buildings will soon be expected by office tenants when looking for a new location.
The latest CBRE report noted that after a year of no new supply, Hanoi’s office market welcomed new players during 2016, with one Grade A building and five Grade B buildings. At the end of 2016, total office supply reached nearly 1.2 million sq m of net-leasable area (NLA), of which 65 per cent is Grade B.
Looking forward, rents in both Grade A and Grade B are expected to stabilize in the years to come. Rental growth prospects are limited, as new supply will continue to enter the market, with CBD buildings expected to fare better.
In 2016, average asking rents in Ho Chi Minh City increased due to limited supply combined with strong net absorption and low vacancy rates in each quarter. Supply in 2017 is expected to see strong, steady growth, with new spaces coming in both CBD and non-CBD areas.
New Executive Chef for Pan Pacific Hanoi
Pan Pacific Hanoi announced on March 24 the addition of Chef Simon Volante to the hotel’s team.
With 30 years of experience in the industry, Chef Simon has an extensive background spanning the UK, the US, and Southeast Asia. He will oversee Pacifica Restaurant and all culinary activities at the hotel.
“When your guests are very demanding, they always want the best and want to be looked after,” he said. “That’s part of the excitement. When they leave happy, you know you have delivered that kind of expectation and the team has done well.”
Chef Simon will incorporate his years of experience working in the Pacific Rim region with signature Pacific cuisine. His latest creations have been a premium High Tea package, a brand new buffet concept, and soon a new a la carte menu at Pacifica Restaurant, which promises to be a culinary experience that satisfies all guests.
His culinary career began in his homeland, the UK, where he spent eight years working his way up the ranks in luxury hotels. Working under established Michelin-star chefs in London, he was provided with valuable training and practical opportunities in French and modern British cuisine.
Twelve years in the US followed as his career flourished and he took advantage of the amazing array of ingredients and produce, absorbing all the many regional influences.
A love for Asia arose when he was travelling and he became immediately seduced by the lovely weather, nice beaches, and unique flavors and cuisine. His career move to Asia has since led him to Thailand, the Philippines, Vietnam and Cambodia, where he discovered their distinct cultures and lifestyle.
Strengthening technical barriers to meat imports
Vietnam has not imported any meat from Brazil’s 21 meat-packaging plants under police investigation for allegedly selling unsafe products, according to official information from the Department of Animal Health under the Ministry of Agriculture and Rural Development (MARD).
Previously, from March 23, the MARD signed a decision to suspend imports of meat and poultry from these 21 factories. At the same time, it recommended that consumers who want imported meat and poultry should go to supermarkets and shops with prestige to buy, while considering carefully the origin (the packaging should be clearly labelled) to avoid trade fraud.
Brazil is one of the major suppliers of cattle and poultry to Vietnam. In January 2017, the country spent nearly US$800,000 to import poultry from Brazil.
The import of livestock products is completely normal, in line with international practice. The problem is the mechanism of management and product quality control to prevent unsafe shipments, as especially in the current context, imported meat is increasingly entering Vietnam’s market, both the main and petty categories in both fresh and frozen forms.
For beef alone, there are more than 200 exporters from EU countries licensed to export to Vietnam. In addition, products imported from Australia, Japan, the Republic of Korea and Indonesia also tend to increase. From that point of view, it creates diversification for the market, but also means that there are violations on importing and trading inferior quality goods.
The incident in Brazil has once again raised the alarm bell that Vietnam needs to further strengthen its State management of imported meat products.
There are opinions saying that, as Vietnam commits to opening its market through free trade agreements with several countries and regions, it cannot avoid the "wave" of imported meat. It is a reality to be accepted in the common "playground."
For that reason, in addition to strengthening the management and control of imported products, technical barriers are required to these goods when entering Vietnam to ensure good quality and reasonable prices.
Accordingly, in addition to the normal quarantine in accordance with Circular No. 25/2010/TT-BNNPTNT by the MARD guiding the inspection of food hygiene and the safety of imported goods of animal origin, it is necessary to monitor the residue on each product in a specific and detailed manner.
At the same time, the Department of Animal Health should urge border veterinary agencies to further tighten the control of shipments of meat and poultry products imported into Vietnam.
In the long run, the domestic husbandry industry should further strengthen the application of hi-tech and technical improvements to reduce costs and improve the quality of livestock products, thereby reducing imports of meat and poultry products in general.
Dong Nai carries out cocoa-cashew intercrop project
To help farmers continue planting cashew trees instead of changing to other crops of higher economic value, Dong Nai Province has announced to cooperate with BamBoo Capital Joint Stock Company to carry out a project creating large fields for farmers intercrop cocoa and cashew with a total area of 1,000 hectares.
This announcement was made at a conference on cocoa and cashew intercrop held by Dong Nai Province’s Department of Agriculture and Rural Development in coordination with BamBoo Capital JSC in Trang Bom District, Dong Nai on March 21.
Huynh Thanh Vinh, director of the department, said there are 12 large field projects in the province with the cocoa and cashew intercrop project having the largest area.
According to Vinh, farmers have replaced cashew with other crops due to the unstable cashew price in previous years. However, the cashew area would recover if local authorities help farmers increase productivity and value.
Nguyen Thanh Hung, deputy general director of BamBoo Capital, said the company would adopt preferential policies for seedling, fertilizer and capital and ensure cocoa outlets for farmers participating in the project.
According to Le Thi Minh Tam, head of the cocoa department of Bamboo Capital, the company will shoulder 20% of seedlings cost and 20% of spending on fertilizers. In the following years, cocoa farmers will pay just 50% of the fertilizer fee, and the remaining 50% will be cleared when they sell cocoa to Bamboo Capital. Besides, the company will provide technical support throughout the cultivating process.
In addition, Dong Nai Province will share 30% of costs of watering systems and an additional 30% of expenditures for seedlings with cocoa farmers.
BamBoo Capital expects to cultivate 111 hectares of cocoa-cashew intercrop in Trang Bom District in 2017.
Dong Nai Province currently has 39,000 hectares under cashew farming, down 11,000 hectares compared to a few years ago.
FinLab Cycle No.2 offers US$300,000 prizes for fintech startups
The FinLab Cycle 2 competition will present total prize money of US$300,000 to those fintech startups winning the contest.
After the application round was closed on March 20, there are 30 fintech startups from different countries selected to join the final round that will take place in May in Singapore. The top 10 startups in the round are able to receive cash prizes worth 440,000 Singapore dollars.
In addition, the top 10 startups will be instructed by leading financial experts and enterprises. Through the competition, fintech startups will have the opportunity to join in the global partner network and bring their products to Southeast Asian markets.
Earlier, five Vietnamese startups have excellently introduced their products in the “Propelling your startup dream” event launched by Vietnam’s United Overseas Bank (UOB) and the FinLab early this month.
Felix Tan, executive director of Singapore’s FinLab, said Vietnam will be a favorable environment for fintech startups as the country has seen strong growth in fintech.
The FinLab Cycle 2 is organized by United Overseas Bank Ltd (UOB), and FinLab in coordination with SGInnovate.
Cruise visitors to Hue expected to rise strongly
International cruise ship passengers to the central province of Thua Thien-Hue this year are forecast to double to around 150,000 versus last year.
Le Huu Minh, vice director of the provincial Department of Culture, Sports and Tourism, said a majority of international tourists arriving in Hue on board cruise vessels mainly come from two major lines, Royal Caribbean International and Star Cruises.
Since 2015, cruise passenger arrivals in the province have sharply surged as Chan May Port has been upgraded to accommodate larger cruise ships, Minh added.
The port has one pier handling both cargo and cruise ships. However, after the second pier is complete late this year, the provincial tourism authority expects that the existing pier will be used to receive cruise ships in a bid to attract more international ships to Hue.
The province last year reported some 3.3 million visitor arrivals, a pickup of 10% against 2015. Of the number, international travelers accounted for half.
In addition, the provincial tourism sector this year expects to lure 3.5 to 3.7 million tourists.
Currently, the provincial government is planning to join hands with some partners to launch flights to Hue in an effort to bring in more tourists.
Hanoi Customs: online public service recorded efficiency
The process of administrative procedures through the online public service system at http://pus.customs.gov.vn of Hanoi Customs prove effective, contributing to facilitating import-export activities of local enterprises.
According to Hanoi Customs, the agency received and processed nearly 400 procedures offered by 108 export-import businesses since the system was launched early this month.
As of the beginning of 2017, Hanoi Customs piloted a model of providing administrative procedures on the e-government system, of which 11 procedures were offered at agency level and 24 other services were provided at sub-agency level.
The move not only boosts administrative reform but also reduces pressure for customs agencies while increasing transparency and simplification. In addition, it helps residents and businesses save time, money and papers while handling documents.
Hanoi authorities planned to provide 120 online public services within the first quarter of 2017.
In July 2016, Hanoi launched the portal egov.hanoi.gov.vn where residents can access to perform seven administrative procedures such as registering a birth, death or marriage.
As of December 15 last year, the e-government system was available in all 584 urban wards and rural communes across the city.
The capital city has set a target to provide 80 percent of online public services by 2020.
Sandy soil veggies lift farmers out of poverty
Growing vegetables on sandy fields is helping farmers out of poverty in a coastal commune in the central province of Thua Thien- Hue.
Farmers in Dien Loc commune are reaping success from the new effort, something older generations have not been able to do.
Le Huy, a local farmer, said he is growing vegetables on a 0.5ha sandy land plot and earning an average annual income of 150 million VND (6,600 USD). “This has helped farmers here a lot in improving their income. We are no longer poor,” he said.
Huy said he learnt this cultivation model from a local man, Ho Hoi.
Hoi, whose family had struggled in poverty for many years, initiated the new venture in 2013 by making sandy embankments around his land and digging tiny canals inside the land plot to hold water for his vegetables.
The embankment helps to hold water inside and prevents hot sand from flying around and damaging the vegetables.
Dien Loc commune has a total area of 14sq.km and more than 80 per cent of its area is sandy.
After Hoi piloted the cultivation model and earned 100 million VND in the first year growing lettuce, celery, green mustard and garland chrysanthemum, he expanded his garden.
Today, his family grows vegetables on a one-hectare sandy land plot for an annual income of 300 million VND.
Other farmers in the commune have copied Hoi’s model and succeeded.
“I can’t imagine that I can afford enough for the whole family. My neighbours and I lived in poverty until Hoi sparked this,” said Le Khuyen, another farmer.
Commune Chairman Le Van Thang said a total of 400 farmers are now applying this model on 50ha.
Thang said locally produced vegetables have been bought and consumed in the neighbouring provinces of Quang Binh and Quang Tri. “The model has lifted up the local economy and we have a plan to expand the area to 60ha.”
Dien Loc is among the five communes with highest percentage of sandy soil in the district. The Phong Dien district People’s Committee is planning to apply the model in other communes of Dien Huong, Dien Hoa, Dien Hai and Dien Mon.
District Vice Chairman Nguyen Van Binh said his administration has prepared a plan to supply farmers with electricity lines and pumps in order to improve irrigation and make the model even more effective.
“Farmers will be equipped with knowledge of Vietnam’s GAP (Good Agricultural Practices) standards to produce better quality vegetables, meeting demands of a wider market,” he said.
Quang Nam aims to send 400 workers abroad in 2017
The central province of Quang Nam aims to send at least 400 labourers to foreign countries this year, targeting high-income markets like the Republic of Korea, Japan, Taiwan (China), and those with suitable requirements such as Malaysia and the United Arab Emirates.
According to Le Huy Tu, head of the labour-employment section under the provincial Department of Labour, Invalids and Social Affairs, the province’s labour export has enjoyed inauspicious achievements in recent years.
Some 1,215 guest workers were sent abroad during 2011-2015, averaging 243 per year, he said, adding that the number of workers sent abroad through local employment service centres and labour export companies reached 541 people in 2016.
Overseas workers send home over 120 billion VND (5.3 million USD) every year, he said.
Labour export is touted as an effective measure to tackle jobs and generate stable incomes for people in rural and mountainous areas. Communication activities on guest worker programmes have been promoted to increase public awareness of the available chances.
Le Thi Dung, deputy director of the High Technician Development Company in South Vietnam (HITECO), stressed that localities need to work closely with prestigious labour export companies to reduce violations of labour contracts.
In the coming time, the province will work to provide more information on labour export for local labourers while creating conditions for them to join training courses to enhance professional skills, meeting demands of employers.