BUSINESS IN BRIEF 19/7
Can Tho city pledges optimal conditions for RoK investors
The Mekong Delta city of Can Tho is willing to create the best possible conditions for companies from the Republic of Korea (RoK) to invest and do business in the locality, a municipal official has said.
Truong Quang Hoai Nam, Vice Chairman of the Can Tho city People’s Committee, told a investment promotion and networking seminar between Vietnamese and RoK firms on July 17 that Can Tho regards the RoK as a strategic partner.
He listed the RoK’s major investment projects in the city such as the LOTTE Mart commercial centre, the CGV cinema system and Taekwang footwear factory.
The most noteworthy is the industrial technology incubator project worth 22 million USD between the Vietnamese and Korean Governments at Tra Noc 2 Industrial Park in O Mon district, Nam said.
Operational since 2015, the incubator has proven to be effective, helping meet demands of Vietnamese farming businesses and attract foreign investors to Vietnam, according to the official.
Nam expressed his hope that through the trip, the Korean trade association, which hosted the event with the municipal People’s Committee and the Can Tho Business Association, will encourage firms from the RoK and other countries to invest in the locality.
He said between 2018-2020, Can Tho will call for domestic and foreign investments in priority sectors, including infrastructure in industrial parks, transport and tourism infrastructure, high-tech agriculture and agricultural product and seafood processing.
Attention will be paid to luring the flow of RoK investment to raise the city’s provincial competitiveness index, he noted.
Hwang Eun Sik, chairman of the Korean trade association, said his association and most RoK investors and enterprises have a high opinion of the business environment in Can Tho.
He voiced his belief that as an economic centre of the Mekong Delta and with advantages in transport, plus complete commercial infrastructure and abundant human resources, Can Tho will become an attractive destination for RoK businesses.
The association will do its utmost to accelerate the implementation of cooperation projects between the city and the RoK, especially those in information-technology (IT), industry and solar energy, he pledged.
Responding to the Korean side’s proposals, Nam said the city will send trade promotion delegations to the country to call for more investments in high-tech agriculture, IT, manufacturing industry and machine manufacturing for agricultural products and seafood processing for exports.
The city will also help the two sides’ business seek cooperation opportunities in trading products like rice, seafood, garments-textiles, pharmaceutical materials and fertilisers, thus spurring economic growth of Can Tho and the Mekong Delta, he said.
Thua Thien-Hue revokes licences of 37 delayed projects
The central province of Thua Thien-Hue has so far revoked investment licences of 37 projects due to prolonged delay in implementation.
A majority of those projects (21) are in the Chan May-Lang Co economic zone and local industrial parks.
One example is the Lang Co golf course which was initially scheduled to be put into operation in July 2016 but so far not a single construction item has been done.
Another one is the Bai Chuoi resort which was 74 months behind schedule.
The province has made public delayed projects along with cases of violations of land laws on its electronic portal and websites run by provincial departments and sectors.
It will strengthen inspections of investment projects after granting licences and take firm measures to deal with delayed projects.
Since 2000, Thua Thien Hue has licensed 548 investment projects with total registered capital of 168.2 trillion VND (7.4 billion USD), of which 92 are foreign-invested at a total value of 2.62 billion USD.
Among the licensed projects, 285 have become operational and 180 others are under construction.
Vietnam, RoK enhance energy cooperation
Vietnam and the Republic of Korea (RoK) boast huge potential cooperation in energy development, especially clean energy, said a RoK expert.
Yeo Sungku, Director of the Energy Valley Enterprise Development Institute (EVEDI), made the statement at a Vietnam-RoK investment forum held by the Vietnam Chamber of Commerce and Industry’s Ho Chi Minh City Branch (VCCI-HCM) on July 17.
He said that RoK’s energy industry possesses strengths in clean energy production and high-quality technologies while Vietnam’s demand for energy is high and will be on the rise.
Therefore, boosting cooperation between Vietnam and RoK enterprises in the field will help create an energy supply-demand chain to serve the development of both countries, he added.
Talking about advantages of RoK energy firms, Director of BA Energy Company Choi Jiwon said RoK businesses have not only paid attention to producing energy but also seeking solutions to maximise energy saving.
Developing technologies, materials and equipment using natural and renewable power for sustainable development is a priority of RoK firms in their cooperation plans with Vietnamese counterparts, he noted.
VCCI-HCM Director Vo Tan Thanh said Vietnam is looking for solutions for energy efficiency and environmentally-friendly energy, which are advantages of RoK companies, to ensure sufficient supply and environmental protection.
Vietnam and RoK have jointly launched cooperation programmes in thermoelectricity, renewable energy, nuclear energy and energy saving in recent years, he said.
Strengthening partnership between Vietnamese and RoK enterprises will contribute to lifting up value and sustainability of their trade and economic ties, Thanh added.
Ca Mau moves to expand shrimp export market
The southernmost province of Ca Mau aims to seek more export markets for its shrimp products through intensifying trade promotion activities as an effort to realise the locality’s export target of 1.1 billion USD in 2017.
The locality is coordinating with ministries, sectors to prepare a shrimp festival in 2018.
Attention will be also paid to building brand name for shrimp products and expanding domestic consumption.
According Chau Cong Bang, Deputy Director of the provincial Department of Agriculture and Rural Development, Ca Mau continues accelerating agriculture restructuring in the direction of improving added value of products and promoting sustainable development.
The locality focuses on expanding shrimp-farming models with high-productivity meeting VietGap, GlobalGap and Aquaculture Stewardship Council (ASC) standards in order to produce clean materials for processing for-export shrimp products.
Local seafood processing enterprises will be assisted in applying new technologies to better the quality of their products in order to satisfy the demand of each import market.
In the first six months of this year, Ca Mau’s export turnover hit nearly 420 million USD, up 3.3 percent against the same period last year, mainly contributed by shrimp shipments to the US, Japan, the Republic of Korea, Canada, Australia, China, Europe and other markets.
Vietcombank receives approval to set up bank in Laos
The State Bank of Vietnam (SBV) has approved the establishment of the Vietcombank Laos Limited (Vietcombank Laos) in Laos, which is wholly invested by the Bank for Foreign Trade of Vietnam (Vietcombank).
Vietcombank Laos is headquartered in Vientiane, with a charter capital of US$80 million.
Vietnambank Laos must be launched within 24 months since the SBV’s approval and Vietcombank is asked to submit a report to the central bank at least 14 days before the opening of the bank.
Earlier, the State Bank of Vietnam also approved the establishment of Vietcombank’s representative office in New York, the US.
Daiwa-SSI invests in CVI Pharma’s ambition
CVI Cosmetic & Pharmaceutical Co., JSC (CVI Pharma) is partnering with Japanese Daiwa-SSI to venture further into the high-tech field with the ambition of becoming one of the top ten drug producers in Vietnam in the next five years.
In early July, CVI Pharma got a licence to develop a factory in Hoa Lac High-Tech Park (HHTP). The facility valued at nearly VND300 billion ($13.6 million) will have an area of 1.1 hectares.
"This is CVI Pharma's first wholly-invested plant that will deal with all steps of the production of cosmetics and pharmaceuticals. Once put into operation in 2018, the factory will standardise technical barriers, helping the firm to better meet the demands of its target market," Phan Van Hieu, chairman of CVI Pharma, told VIR.
"2017 will mark a milestone for CVI Pharma in the years to come, as Daiwa-SSI has decided to acquire 20 per cent of the company. The Japanese fund will help us connect with potential Japanese and Taiwanese partners, thus enabling us to approach new technologies and export products to these markets," he added.
Established in 2013, when the local pharmaceutical market was already dominated by large-scale Vietnamese pharmaceuticals, such as Traphaco (TRA), Domesco (DMC), and DHG Pharma (DHG), thanks to their strong distribution networks and brand names, CVI Pharma has decided to focus on niche markets to establish itself in the highly competitive market.
"In our product strategies, we avoid market segments where the giants are holding the majority stakes. For example, in the over-the-counter (OTC) market, there are five market segments with revenue of over VND1 trillion," he added
CVI Pharma has been focusing on new high-tech applications to increasing the value of its herbal products. Extraction and nano technology were named in the prioritised development list in the high-tech industry approved by the prime minister.
Currently, CVI Pharma's domestic partner in production is Mediplantex. The firms have recently inaugurated a new factory in Quang Minh Industrial Park in Hanoi, which has the most modern South Korean technology-equipped capsule production assembly lines with a capacity of 1.2 million capsules a day.
This year, CVI pharma will continue to cooperate with research and development centres and institutes, as well as senior scientists to study a set of standards for CVI Pharma products to meet international standards, thus enabling it to penetrate markets like Japan, South Korea, China, and Taiwan as well as others in Southeast Asia.
"We will continue to focus on the OTC market in the future. At present, we have a distribution network spanning 63 cities and provinces with a portfolio of 12 products, including six key products, like Nano Curcumin," he said.
With an annual growth rate of 30-50 per cent, CVI Pharma has nearly 9,000 drugstores as regular customers. It plans to introduce two new products to the market in the first quarter of 2018.
CVI Pharma made VND150 billion ($6.8 million) in revenue in 2016 and the firm aims to double the figure to VND300 billion ($13.6 million) in 2017.
"We plan to launch an initial public offering (IPO) in the next three-to-four years and then list in the stock market. We aim to become one of the top ten drug producers in Vietnam in the next five years, with revenue of VND1 trillion ($45.45 million)," Hieu noted.
Australia initiates VN’s wind towers on dumping
The Anti-Dumping Commission of Australia (ADC) has initiated an investigation into alleged dumping of wind towers imported from Viet Nam.
The investigation follows an application lodged by Australian wind tower manufacturers Keppel Prince Engineering Pty Ltd and Ottoway Fabrication Pty Ltd.
The investigation will examine transactions that took place from January 1, 2015 to December 31, 2016.
The application alleges that goods were exported to Australia from Viet Nam at prices less than their normal value and that the dumping has caused material injury to the Australian industry.
ADC estimated a dumping margin on VN’s wind towers is 15.7 per cent and ADC may apply temporary anti-dumping duties but not earlier than 60 days since the initiation date of June 8, 2017.
A statement of essential facts will be placed on the public record by September 26, 2017 and interested parties have 20 days to response to this statement.
Prior to this, in 2014, Australia also had a dumping investigations on wind towers imported from China and Republic of Korea (RoK), with dumping duties on China’s exporters at 15 - 15.6 per cent and on RoK’s ones ranged from 17.2 to 18.8 per cent.
RoK, VN eye energy partnerships
A delegation of executives from 17 energy start-ups nurtured by the Korea Electric Power Corporation (Kepco) met with their Vietnamese counterparts in HCM City on July 17 to explore business opportunities.
The Korean companies specialise in products like fire-proof sound- absorbing wall panels, knife-switches, electric panels, solar LED security lights, lithium polymer batteries, electric bicycle batteries, charge connectors, energy storage, uninterruptible power supply devices, and hybrid power solutions.
Speaking on the sidelines of the 2017 Kepco Energy Startup in HCM City on Monday, Sung-Ku Yeo, president of the Energy Valley Enterprise Development Institute (EVEDI), said the visiting companies this time had been carefully selected from among energy start-ups across South Korea. They have all developed important energy-saving technologies, he said.
In Viet Nam, they want to introduce their technologies, share experience and seek business co-operation with Vietnamese enterprises, he said.
Vo Tan Thanh, director of the Viet Nam Chamber of Commerce and Industry’s HCM City chapter, said demand for energy to fuel Việt Nam’s strong economic development is one of the top priorities of the Government and a lucrative sector for investors.
But the current challenge is to produce energy to meet the demand and at the same time safeguard the environment, he said.
In this context, energy-saving, efficient and environmentally-friendly solutions are key, he said, adding that Korean start-up companies have focused on developing them.
David Choi of BA Energy Co Ltd said there is huge potential for Viet Nam and South Korea to co-operate in the energy sector, and the event was an ideal platform for his company as well as others on the trip to access the Vietnamese market.
Thanh said South Korea’s investment in Viet Nam had tripled between 2012 and 2016 to US$50 billion. Bilateral trade doubled in the period to $42.8 billion.
In the field of energy, the two countries have many co-operation programmes in thermal power, renewables, energy-saving initiatives and others, with Kepco in particular undertaking many large projects in Viet Nam.
The event was organised by the VCCI in collaboration with EVEDI and the Korea Electrical Manufacturers Association.
Tata Power proposes renewable energy plant in Phu Yen
Tata Power Ltd from India proposed to implement a renewable energy project in the central province of Phu Yen, during a meeting with provincial leaders last week.
This was reported on the province’s website, phuyen.gov.vn.
At the meeting, Tran Huu The, vice-chairman of the provincial People’s Committee, spoke highly of Tata Power’s desire to invest in the region. Phu Yen is committed towards facilitating foreign investment, The said, expressing his confidence that the Indian firm would develop the renewable energy project successfully.
Tata Power Ltd, an affiliate of the Tata Group, is one of the leading businesses in India in the power sector. Earlier, the company was granted permission by the Government to build the Long Phu 2 thermal power plant, expected to cost US$2 billion, in the Cuu Long (Mekong) Delta province of Soc Trang. With a capacity of 1,320 MW, the Long Phu 2 plant is expected to become operational in December 2020.
Over 8,000 construction firms set up in H1
As many as 8,200 construction enterprises were established in the first six months of this year, according to statistics of the Ministry of Construction (MoC).
This number accounted for 13.4 per cent of newly-established enterprises nationwide, up 10.7 per cent over the same period in 2016, of which 2,300 firms operated in the real estate sector.
MoC is currently focusing on speeding up the restructuring and renovation of State-owned enterprises in the 2016-2020 period. The equitisation of four corporations -- Housing and Urban Development Corporation (HUD), Song Da Group, Viet Nam Cement Industry Corporation (VICEM) and Viet Nam Urban and Industrial Zone Development Investment Corporation (IDICO) -- will continue.
The real estate sector in the first half of 2017 continued to maintain stable growth, reflected through the stability in price, transaction quantity, liquidity and declined inventory, MoC said, adding that the structure of goods was adjusted to better fit the diverse needs of the market.
According to statistics from the Ministry of Planning and Investment, in H1, the real estate sector ranked fifth in terms of FDI attraction, with 39 newly-registered projects worth US$461.7 million.
Central bank helps clear collateral confusion
Le Minh Hung, Governor of the State Bank of Viet Nam (SBV) submitted a request to the Ministry of Justice (MoJ) and the Ministry of Public Security (MPS) last week, asking for clarification regarding the use of automobiles as banking collateral and the legal rights of credit institutions and borrowers.
The SBV reported receiving multiple complaints from credit institutions and companies recently, stating that traffic police refused to accept copies of vehicle registration certificates in place of the originals which had been submitted to secure loans.
Further confusion arose when a bank-issued confirmation of the vehicle’s use as collateral was not accepted either by traffic police.
The situation has inconvenienced creditors, banks and other credit institutions as not holding the original documents of collateral ownership increases risks to them, which may lead to them ceasing to accept automobiles as collateral.
This would make it harder for citizens and businesses to get loans, while at the same time not allowing credit institutions to hold either the collateral or its certificate of ownership incurs significant risk.
To fix this, the SBV has requested the MPS to instruct traffic departments to accept copies of vehicle ownership certificates in place of originals, provided drivers can produce legal confirmation of collateral from credit institutions.
Hung had asked the MoJ to adjust related decrees and submit a replacement decree to the Government, permitting creditors to hold any papers related to the collateral as negotiated with the borrowers and in accordance with the 2015 Civil Code.
Bui Quang Tin, lecturer at the HCM City Banking University, commented that these efforts are being applauded by commercial banks, since there is virtually no way to return all certificates of ownership to each individual borrower. Borrowers are happy to have the confusion cleared up as well, especially those who paid for their vehicles in installments.
Banks have held original certificates of ownership for collateral for years, with borrowers receiving a confirmation to use in its place. A check up is performed every three months to monitor the collateral and the loan eligibility.
FLC contributes $101.2 million to State budget
Property developer FLC Group contributed more than VND2.3 trillion (US$101.2 million) to the State budget in the 2015-16 period.
FLC said it employeed over 5,000 people, thus contributing to the country’s scoio-economic development.
The group’s representative office also said FLC often used 1-2 per cent of its after-tax profit to implement corporate social responsibility activities nationwide, including scholarships for poor students, building schools in remote and mountainous areas and house for the poor.
FLC is highly appreciated by local authorities for its large tourism and entertaiment resort complexes in Quang Ninh, Hai Phong, Vinh Phuc and Sam Son, as well as Quang Binh, Binh Dinh provinces, which have contributed to Viet Nam’s tourism growth.
The complexes received thousands of tourists from both inside and outside the country, increasing budget collection for localities and creating jobs.
In June, the municipal People’s Committee honoured FLC for its contribution to the city’s economic development in 2016. FLC has been investing in a range of estate projects, including FLC Landmark Tower, FLC Complex Tower, FLC Green Home, FLC Ecohouse Long Bien and FLC Star Tower.
CC1 to trade 110 million shares on UPCoM
The Construction Corporation No 1 Joint Stock Company (CC1) will float 110 million shares on the Unlisted Public Company Market (UPCoM) on July 20.
The company’s shares will start trading at VND14,200 per share, making its market capitalisation VND1.1 trillion.
CC1 has 49.5 million shares that are untradeable until October 31, 2021 as they were sold to a strategic investor at the company’s initial public offering on July 20, 2016.
CC1 was transformed to a joint stock company on November 1, 2016 and became a public firm on April 12, 2017.
The company’s major business activities are construction of industrial and civil buildings, foundations and infrastructure for urban areas and industrial zones.
The company has five subsidiaries and 10 associate firms, including the Dong Nai Bridge Investment and Construction JSC and the Dak R’tih Hydropower JSC, in which CC1 has 72.5 per cent and 40 per cent stakes.
In 2015, CC1 posted net revenue and post-tax profit of VND5.6 trillion (US$248.6 million) and VND298 billion, respectively. The figures for 2016 were VND6.62 trillion and VND211 billion.
CC1 targets net revenues and post-tax profits for 2017 at VND4.66 trillion and VND110 billion, while the expected numbers for 2018 are VND4.93 trillion and VND152 billion.
IFC seals convertible loan of $57m to VPBank
IFC, a member of the World Bank Group, recently approved a convertible loan of US$57 million to Việt Nam Prosperity Joint-Stock Commercial Bank (VPBank).
The two-year loan term, which can be extended for two additional years, will help VPBank expand its lending scope to small- and medium-sized enterprises (SMEs), a strategic and focal segment of VPBank.
According to the agreement, IFC has the right to convert the principal balance to VPBank’s common shares during the loan term. At present, VPBank is completing legal procedures for this convertible loan.
“IFC’s long-term financing will help VPBank move closer towards its goal of becoming a leading small-and-medium sized bank in Việt Nam, supporting the private sector’s development and contributing to economic growth,” Lâm Bảo Quang, acting IFC country manager for Việt Nam, Cambodia and Laos, said.
“Thanks to IFC’s investment, VPBank can enhance its reputation and brand value through IFC’s supervision and technical support in corporate governance, especially risk management,” CEO Nguyễn Đức Vinh said, reiterating that this loan provided VPBank with medium-term capital for foreign-currency loans.
He added that it also contributed to VPBank’s charter capital to meet capital requirements and strengthen capital adequacy ratio, following Basel II in case IFC implements its right to convert the loan to shares.
Basel II is a new, higher level for Vietnamese banks in accordance with Basel Accords standards set by the Basel Committee on Banking Supervision (BCBS). The application is flexible to different countries but the overall spirit is tighter regulations on banking operations.
In 2016 and early 2017, IFC also provided VPBank with a five-year financial package of $158 million and trade guarantee lines of up to $50 million. This helped VPBank to continue expanding its lending to micro, small and medium enterprises, especially women-owned enterprises, and boost international trade opportunities.
Inter-bank lending rates drop to eight-month low
Inter-bank lending interest rates have slipped to an eight-month low in the wake of the central bank’s recent policy rate cut.
The rates for overnight, one-week and one-month loans in the inter-bank market last week declined by 0.47, 0.49 and 0.67 percentage points against the previous week to 1.28, 1.57 and 2.42 per cent, respectively, according to the latest monetary report by Saigon Securities Incorporation.
As per the central bank’s rate cut on July 10, the refinancing rate has been reduced from 6.5 per cent per year to 6.25; the rediscount rate from 4.5 per cent per year to 4.25; and other rates from 7.5 per cent to 7.25 annually.
The maximum annual short-term interest rate for đồng loans to meet customer demand for capital in prioritised sectors, including agricultural, export and auxiliary industries, small- and medium-sized enterprises (SMEs), and high-tech firms, has also been cut by 0.5 percentage points to 6.5 per cent.
After the central bank’s decision, many commercial banks such as Vietcombank, Agribank, VP Bank, Sacombank and LienVietPostBank have brought down their lending rate by 0.5-1 percentage points.
Around US$384 million injected into industrial parks in HCMC
Export processing zones (EPZs) and industrial parks (IPs) in HCMC attracted around US$384 million in investment in the first half of this year, indicating the continued flow of investment into the city’s manufacturing sector, heard a press conference last Friday.
Nguyen Thanh Binh, deputy administration manager of the HCMC Export Processing and Industrial Zones Authority (Hepza), said the amount of US$384 million has met around 77% of the agency’s target of attracting US$500 million in investment this year.
Domestic and foreign investments saw respective increases of over 24% and 52% to around US$160 million and over US$224 million.
The majority of projects belonged to food, garment-textile, services, and mechanical engineering sectors, as well as supporting industries.
Notably, CJ Cau Tre Food JSC, formerly known as Cau Tre Export Processing JSC, has been developing a 7.1-hectare complex worth around VND1.2 trillion (US$52.8 million) at the Hiep Phuoc Industrial Zone in Nha Be District to process meat and seafood. The facility is expected to be operational next July, with its designed capacity in phase one at around 12,000 tons of products a year.
Binh said the land area available for rent totaled nearly 68 hectares in January-June, 1.74 times higher than the same period last year, while workshops available were measured nearly 60,000 square meters, up 2.5 times year-on-year.
So far, local EPZs and IPs have accommodated more than 1,460 valid projects with registered capital of US$9.7 billion. Their total export turnover is estimated at over US$2.7 billion in the six-month-period, a year-on-year rise of 27.24%.
Hepza has coordinated with the HCMC Transport Department and investors to upgrade infrastructure systems inside and outside the area in a bid to create favorable conditions for enterprises to transport their goods, thereby reducing logistics costs, according to Hepza’s deputy director Nguyen Tan Phuoc.
Phuoc said Hepza has also teamed up with the municipal departments of taxation and finance to remove administrative barriers relating to land lease payment procedures. In addition, they have created sound conditions for secondary enterprises to prop up their investments.
Hepza has also cooperated with district-level governments to speed up site clearance at both existing and new IPs like the 668-hectare Pham Van Hai IP in order to develop new facilities.
In regard to small and medium enterprises, Hepza and the Hiep Phuoc IP have offered 15 plots of land ranging from 750 to 3,000 square meters, and 350-square-meter workshops for lease at reasonable prices.
Especially, Hepza is working with relevant agencies to continue developing high-rise buildings to supply workshops for the 2016-2020 period at the Dong Nam, Linh Trung and Tan Thuan IPs.
The city government has asked Hepza to improve services, reform administrative procedures, and increase well-qualified manpower so as to enhance the city’s competitiveness.
Tan Son Nhat International Airport has new business lounge
Tan Son Nhat Airport Services Company (SASCO) last Friday inaugurated Le Saigonnais Business Lounge capable of seating 150 passengers at the domestic terminal of Tan Son International Airport.
With a total area of 512 square meters, the lounge is separated into different spaces by rattan doors and small gardens to ensure privacy for the passengers.
Speaking at the inauguration ceremony, Nguyen Nam Tien, deputy director of Tan Son Nhat International Airport, said along with upgrading infrastructure, the airport management always attaches special importance to offering high-class services, aiming at improving competitiveness against other airports in the region.
In addition to Le Saigonnais lounge, the airport has another business lounge operated by Vietnam Airlines.
Founded in 1993, SASCO is operating duty-free shops, business lounges and food stalls at Tan Son Nhat International Airport.
The company’s revenues in 2016 reached over VND2 trillion (over US$88 million), including over VND1 trillion from duty-free shops, up 4% year-on-year. Its profits totaled VND887 billion, increasing by VND146 billion compared to 2015.
In the first quarter of 2017, SASCO posted a total revenue of over VND586 billion, up 6% year-on-year, and after-tax profits reached VND66 billion, up 55%.
In April 20, 2017, Jonathan Hanh Nguyen was appointed as SASCO’s chairman of the board of directors, replacing Doan Thi Mai Huong, who assumed the post of general director of the company.
Carabao to build energy drink plant in Vietnam
Thai energy drink group Carabao may invest US$200 million in a factory in Vietnam in the coming time, said Sathien Setthasi, chairman of Carabao Group.
At a meeting with Carabao product distributors last week, Sathien Setthasi said that the plant, with automatic line and capacity of 240 million cans a year, is part of Carabao brand development plan.
According to the market research department of Carabao, Vietnamese energy drink market is very potential, accounting for 17% of the local beverage industry.
There have been about 20 local and foreign energy drink brands in Vietnam since 2000. Red Bull brand of Thailand has been present in Vietnam for a long time with a plant in Binh Duong Province.
Carabao, one of the leading beverage manufacturers of Thailand, has exported its products to the Philippines, Myanmar and Malaysia. Therefore, Sathien believes Carabao products can be well consumed in Vietnam.
According to Euromonitor’s assessment, the local energy drink market is forecasted to develop rapidly with an annual growth rate of 11% compared to 7% of soft drinks in 2014-2017.
In Vietnam, Carabao energy drinks are exclusively distributed by Ngoc Thien Bao Trading Co Ltd and offered at groceries, coffee shops, supermarkets and convenience store nationwide.
Vinacas urges cashew exporters to be more cautious over futures contracts
The Vietnam Cashew Association (Vinacas) has just advised local processors not to sign multiple futures cashew nut export agreements to avoid defaults and damages due to insufficient inventories.
At a review conference last week, Vinacas pointed out advantages and disadvantages of the domestic cashew sector in the January-June period, and unveiled its production and business plan for the rest of the year.
Vinacas warned local exporters not to ink so many futures cashew nut agreements in case their inventories are in short supply, especially contracts with long deliveries. The move is to enable them to be more proactive in price negotiations in the months to come.
The association ascribed unfavorable weather conditions and diseases in many farms nationwide to the dwindling raw cashew supply.
Vinacas forecast the total volume of local raw cashew would reach around 252,000 tons this year at best, down 52,000 tons against the previous year.
Consequently, local processors had to purchase raw cashew from abroad in a bid to fulfill their contracts.
Data of the Ministry of Agriculture and Rural Development shows Vietnam imported 665,000 tons of raw cashew worth US$1.28 billion in the six-month period, up 65% in volume and up two times in value compared to the same period last year.
Besides, 149,000 tons of cashew nut was shipped abroad with a total value of US$1.5 billion during the same period, down over 4% in volume but up roughly 21% in value.
The average export price of the commodity in January-May rose by 25% year-on-year to more than US$9,500 a ton.
Meanwhile, a kilo of raw cashew was locally priced at a record high of VND50,000 (around US$2.2), a steep rise of 32% over the year-ago period.
Therefore, having taken both domestic and international factors into account, Vinacas adjusted this year’s export volume of cashew nut to 320,000 tons from the previous plan of 360,000 tons.
HCMC wants to carry out six PPP projects
The HCMC Transport Department has proposed that the municipal government seek the Prime Minister’s approval to choose investors to implement six urgent traffic infrastructure projects under the public-private partnership (PPP) investment format.
In particular, the projects are intended to build two sections of Ring Road No. 2 from the Phu Huu Bridge to the Hanoi Highway, and from Binh Thai Intersection to Pham Van Dong Street; two North-South Expressway sections from Nguyen Van Linh Street to Hoang Dieu Street, and to Hiep Phuoc Industrial Park; Elevated Road No.1; and Thu Thiem 4 Bridge.
Earlier, the Transport Ministry said traffic congestion frequently occurs around Tan Son Nhat International Airport, Cat Lai Port, and in downtown districts. Therefore, these projects should be carried out soon in order to meet the rising demand for transport in the city.
The Ministry of Planning and Investment also shared the same view, adding the local government should allocate sufficient land, and meet land site clearance requirements for investors to undertake these projects.
The HCMC People’s Council on July 6 opted for PPP as a key fund-raising vehicle given the lack of capital for vital infrastructure development projects.
The council endorsed VND171.8 trillion (US$7.5 billion) for such projects to be carried out in the 2016-2020 period. Of the total amount, around VND22 trillion will come from the central State budget, and VND150 billion from the city’s budget.
The city will use around VND11.2 trillion as reciprocal capital for projects funded by official development assistance (ODA) loans, and VND9.2 trillion for funding PPP projects.
CapitaLand Vietnam introduces first branded residence
CapitaLand Vietnam last week officially introduced D1MENSION, the first branded residence available for sale located in HCMC’s District 1. The project is developed by CapitaLand and managed by The Ascott Limited.
With 102 apartment units for sale across a variety of two, three and four-bedroom apartments and penthouse units, D1MENSION is a highly exclusive development for only a few customers. With ‘sky facilities’ such as the Sky Infinity Pool, Sky Gym and Sky Party House that provide panoramic views of the surroundings, D1MENSION provides a new lifestyle for homebuyers.
In May and June, D1MENSION was recognized by the Property Guru Vietnam Property Awards 2017 as the Best Luxury Condo Development in HCMC and by the Asia Pacific Property Awards 2017-2018 with the Five Stars Awards for Property Single Unit in Vietnam.
For those looking to diversify investment, D1MENSION presents potential buy-to-lease investment opportunities with its strategic location in District 1, with connectivity to key districts of the city, including District 2 and District 7.
It will be the first residential project in Vietnam to offer property management and concierge services by The Ascott Limited, CapitaLand’s serviced residence arm and one of the leading international serviced residence owners and operators. With this, buyers can invest in a project with sustainable value for the medium to long term.
Chen Lian Pang, CEO of CapitaLand Vietnam, said Branded Residences are popular in other developed countries, but are still limited in Vietnam.
“Owning a branded residence with quality management and maintenance means that the property’s value will be sustained and increase more than normal residential properties. We are glad to have our serviced residence partner, The Ascott Limited, to bring their expertise in this field to D1MENSION,” he said.
HCMC to build chemical trading center this year
The HCMC Department of Industry and Trade has submitted to competent agencies drafted bidding documents to choose investors for building a new trading center for aromatic substances and chemicals in the city this year.
At a press conference last Friday to review the city’s trade-industry sector’s performance in the year’s first half, Ngo Hong Y from the department said that the project, approved by the HCMC People’s Committee, includes three phases.
Legal documents will be completed in the first phase. In the second phase, the city will choose investors for the project while chemical trading facilities will be relocated in the last phase. The plan to build a concentrated chemical trading center has been conceived for long due to concerns over the safety at Kim Bien Market, which is the key venue for the chemical trade.
Y said that Tuan Chau Group has proposed building a chemical trading center in Ward 16 of District 8. However, the city decided to choose investors through open bidding due to the unsuitability of Tuan Chau Group’s plan. The new center is to be developed on an area of 11.2 hectares in Ward 7 of District 8.
In another note, Nguyen Nguyen Phuong, head of trade management at the HCMC Department of Industry and Trade, said at the press conference that pork products without clear origin will not be sold at Hoc Mon and Binh Dien wholesale markets in the city from July 31.
The city has encountered numerous difficulties during the implementation of the project such as the modest number of breeding and slaughtering facilities joining the traceability program, the decrease in the number of pigs bearing ID tags, or bearing blank ID tags without information of pigs, Phuong added.
HCMC can ensure 95% of pork supplies if origin of pork products sold at wholesale markets, representing 80% of the total in the city, and 15% from other distribution channels can be controlled.
Phuong also added the city can control the origin of poultry meat and eggs from September 1. Currently, 11 incubating farms, 27 breeding farms, 343 poultry meat providing farms, 13 slaughterhouses, 53 egg providing farms and six egg processing facilities have registered to participate in the project.
In the first half of the year, industrial production index of the city rose 7.51% versus the same period last year, in which, the food and beverage processing industry grew 5.02% while electronics and textile sectors increased 12.74% and 3.82% respectively.
Retail and service revenue in the first six months reached VND500 trillion (US$22.01 billion), up 10.2% year-on-year.
Government urges relaxation of business conditions
The Government has urged ministries and departments to relax business conditions to create a more favorable business environment.
In the resolution just issued to summarize contents at the Government meeting in June 2017, Prime Minister Nguyen Xuan Phuc asks ministries and agencies to heed the Ministry of Justice’s suggestions to review and identify regulations that need to be amended and supplemented. They are told to map out plans to build laws related to land, constructions, housing, investment, business and specialized inspection, and submit such plans to the Ministry of Justice to report to the Government before July 30.
Ministries and agencies shall base on the Government’s resolutions, especially Resolutions No. 19-2017/NQ-CP and No. 35/NQ-CP, to urgently propose relaxing business conditions. Suggestions must be submitted to the Ministry of Planning and Investment to report to the Prime Minister in the third quarter of 2017.
The Ministry of Planning and Investment is asked to strictly oversee the issuance of regulations on investment and business conditions, and make plan to amend Resolution No. 118/2015/ND-CP118/2015/ND-CP regulating some articles of the Law on Investment and submit the plan to the Government in the fourth quarter of 2017.
The Law on Planning should be amended and supplemented to create drastic changes in planning to create stronger momentum for the country’s development. The Government asks ministries to eliminate impractical planning regulations that cause difficulties for enterprises and people and at the same time ensure stability and uniformity for the law system.
The Government asks the Ministry of Planning and Investment to work with the Ministry of Construction and relevant agencies to complete the draft Law on Planning and submit it to the Prime Minister before July 30 to pass to the 14th National Assembly at its fourth meeting.
Mid-sized groceries still grow despite boom of supermarkets
Medium-sized groceries measuring over 100 square meters each have still been growing well over the past decade and will remain so in the next ten years despite the boom of modern shopping malls, said a researcher at a meeting here last week.
Nguyen Huy Hoang, commercial director at the market research firm Kantar Worldpanel Vietnam, told a meeting of Leading Business Club (LBC) last Thursday that small groceries of less than 50 square meters and mid-sized ones of over 100 square meters are not affected by modern shopping channels. Meanwhile, traditional wet markets have been the losers in recent time.
Accordingly to Hoang, during the past decade, groceries have helped consume 60% of goods, specifically small and medium groceries holding market shares of 28% and 33% of commodities respectively.
Traditional wet markets have been affected heavily, going down from 14% to 10% while supermarkets increase their shares by three percentage points to 12.8%.
Online shopping channels only account for 0.4% despite significant development. Of this tiny market share, 43% of goods are sold by traders on Facebook and the remaining 57% are consumed through official e-commerce websites.
Nevertheless, traditional retailing channels comprised of both wet markets and groceries still prevail with 90% of goods sold in Vietnam, in which medium-sized groceries are considered the mainstay.
Hoang gave three reasons of the development of medium groceries. First, groceries owners are more adaptive to market changes and responsive to customers reflected through systematic and eye-catching goods arrangement, competitive prices of commodities and good relationship with customers.
As a result, the channel of medium groceries will still retain its position in the next 10 years. Its market share, Hoang predicted, will increase from 33% to 39% in 2025. Conversely, that of small-sized ones will fall to 21%, he said.
Similarly, convenience stores and mini-supermarkets will have a four-fold growth from 2.1% in 2016 to 8% in 2025 because of the establishment of new urban areas, the reduction of the average family size and the increase in working women.
The growth is also attributed to the participation of many giants such as 7-Eleven, which has just entered Vietnam.
Hoang said that 7-Eleven has achieved success in Thailand but sustained a defeat in Indonesia, closing all its stores by the end of June. Therefore, its performance in Vietnam can only be measured in the next two to three years or when it has about 100 stores in the country.
According to the representative of Kantar Worldpanel Vietnam, convenience store model has both opportunities and challenges in Vietnam, such as the high rental for ideal locations, the required number of retail stores of at least 500 and diversified commodities. Many large brands have struggled to survive despite owning 100 to 200 stores.
In addition, convenience stores often offer products at high selling prices, sometimes 40-50% higher than that of groceries.
1H gasoline imports at $3.31bn
Imports of gasoline in the first half of the year were estimated at 6.4 million tons, down slightly in volume year-on-year but up in value by more than 30 per cent, to VND75.350 trillion ($3.31 billion), according to figures from the General Department of Vietnam Customs.
The imports came as local supply fell short of demand by some 2.6 million tons.
Vietnam now imports gasoline from six countries, most of which are in Asia, though it cut its imports from Taiwan and Hong Kong in the first half.
Singapore continued to be the largest supplier, holding a 42 per cent volume market share. The value of gasoline imports from the country in the first half reached more than VND29.7 trillion ($1.3 billion), accounting for 39 per cent of value and up 44 per cent year-on-year.
South Korea followed, with VND19.85 trillion ($873.4 million) spent on importing 1.45 million tons, increases of 125 per cent and 71 per cent, respectively.
Vietnam’s oil refineries can meet more than 30 per cent of domestic demand, according to the Binh Son Refining and Petrochemical Company Limited (BSR), a member of the Vietnam Oil and Gas Group (PetroVietnam) and which continues to invest in expanding the Dung Quat Oil Refinery to raise its capacity from 6.5 million tons per year to 8.5 million tons.
It is forecast that over the next five years, domestic demand may rise to 15 million tons. With the opening of the Nghi Son Oil Refinery next year, the country’s total output will still only meet about 80 per cent of domestic demand.
Grab, Uber carpool services banned in Hanoi
The Hanoi Department of Transport has banned the ride-sharing services of Grab and Uber that allow people to share rides and split the fare, under a requirement from the Ministry of Transport.
Grab Vietnam introduced its carpool service, GrabShare, in early May, while Uber Vietnam had announced intentions to launch a similar service, called UberPool. The service allows drivers to add additional passengers to the journey in addition to the person who made the original booking. The GrabShare feature in Ho Chi Minh City was embraced by passengers and transport experts as a way of easing traffic congestion, allowing up to three people traveling in the same direction to share one GrabCar rather than hailing three separate cars.
However, the fare-splitting option is regarded as a violation of current laws, according to the ministry. Under law, cars operating within this business model are only permitted to sign one contract per trip.
In Vietnam, Uber and Grab are classified as technology companies that provide passenger transport services via an electronic contract. Users and drivers agree upon the trip and the fare via a “contract” made on their respective smartphone apps. If a GrabCar driver carries two passengers that agree to share their ride with each other, it means the driver is conducting two separate contracts and is therefore in breach of regulations, the ministry explained.
In addition, sharing a car with a stranger may result in possible risks for passengers the ministry claimed, though sharing rides in traditional taxis can be quite common at airports, for example. The ministry used this reason to support its claim that it was necessary to end the car-sharing services.
If Uber and Grab fail to conform with the direction to end their carpool services they will face fines of VND4-6 million ($175-260) per ride. Hanoi authorities have recently said they will manage the operations of app-based taxi services, including Uber and Grab, in a way similar to traditional taxis, to guarantee a fair business environment.
The move follows Hanoi, Ho Chi Minh City, and Da Nang taxi associations begging the Ministry of Transport to call for what they described as “a more equal business environment” in taxi services.
Uber and Grab taxis are also required to display a logo or badge or have their vehicles in a common color. Signposts banning Uber and Grab vehicles may be put up on Hanoi streets.