BUSINESS IN BRIEF 4/7 Vietnam Airlines adopts QR Pay Vietnam Airlines has signed a deal with Việt Nam Payment Solution Joint Stock Company (VNPAY) – the biggest QR code payment firm in Viet Nam, to apply QR code technology for online ticket bookings. With the deal, Vietnam Airlines becomes a pioneer in Việt Nam’s aviation sector by using QR codes for online ticket booking at :vietnamairlines.com Customers will have a new, safer and more convenient way to pay for their flights. Accordingly, QR Pay will be implemented both online and at Vietnam Airlines’ official ticket office system nationwide from the beginning of this month. After successfully booking their tickets, customers will be able to use the QR code to pay without entering bank account of card information. The QR Pay system ensures safety thanks to two-factor verification including mobile banking sign in and one-time pass (OTP) through SMS or fingerprint verification. Payments via smartphones have risen in the last couple of years, thanks to the introduction of QR code technology. The function is already in use by many banks. Vietnam Airlines has taken advantage of the technology to co-operate with VNPAY and meet customers’ demands while ensuring security as part of the Fourth Industrial Revolution. Việt Nam’s aviation sector is one of the top 5 rapidly growing markets. With huge potential, airlines have been improving their services and prices to bring the best experiences to customers with the help of digital technologies. Like banks, local airlines have adopted fintech to catch up with trends worldwide. A representative of Vietnam Airlines said the mobile payment trend in general and QR codes in particular have become more convenient and popular in Việt Nam. Vietnam Airlines’ application of QR Pay is an effort to bring even better services to customers. There are 12 taxi and bus firms with more than 4,000 vehicles and over 20,000 payment points integrated with QR Pay. QR Pay is available with the mobile apps of many big banks in Việt Nam, such as Vietcombank, VietinBank, Agribank, BIDV, ABBANK, SCB, NCB, IVB, MaritimeBank, SHB and VIB, with more than 8 million users. Trade openness grows with sub-contracting Vietnam’s wider trade openness than other regional countries simply reflects the sub-contracting nature of the domestic economy. In other words, it does not mean the country has a higher level of global economic integration and trade liberalization. Opinions have recently surfaced about Vietnam’s very high degree of trade openness, and the country is even among the economies with the highest degree of trade openness in the world. But this also means the country may be more vulnerable to external economic changes. The important question regarding this issue is whether or not this high degree of trade openness results from Vietnam’s trade policy and it needs policy revision, especially amid the global trade war, mainly the ongoing U.S.-China trade friction together with its unpredictable risks. It is first necessary to differentiate between trade openness and trade liberalization of an economy. Trade openness denotes the relative scale of foreign trade in an economy, measured in total import-export value against the Gross Domestic Product (GDP). Meanwhile trade liberalization reflects factors obstructive to cross-border commodity trade of a country, such as taxes, import and export quotas, and technical barriers. With the total import-export value/GDP at 185% as per the 2016 data, Vietnam ranks third in Asia and eighth in the world in trade openness. However, the country has low ranking in trade liberalization. According to the ranking by the World Economic Forum in 2016, Vietnam is ranked 73rd out of 136 countries in the trade promotion index, much lower than regional competitors like Malaysia (37th), China (61st), Thailand (63rd). Vietnam ranks even below Indonesia (70th). High import tariffs and complicated procedures are two of the biggest trade barriers of Vietnam in comparison with other regional countries. It may come as a surprise for many people that the openness of an economy is not entirely related to the free trade policy of a country, but is dependent more on the structural factors of that economy. First, countries with bigger economies have lower openness, as they can produce almost every item and commercial relations take place mainly within their economies. For instance, according to the 2016 figures, the three biggest economies in the world, namely the U.S., China and Japan, have low degrees of trade openness, at 27%, 37% and 31%, respectively. On the contrary, countries with small economies like Vietnam have higher degrees of trade openness. Second, developing economies with low per capita income tend to have high degrees of trade openness. In developed countries, the service sector has the largest share in the GDP and is impacted little by international trade relations. Meanwhile, in developing countries, the agriculture and industry sectors, which are greatly impacted by international trade relations, have large shares in the GDP. These countries also have a relatively large non-official economic sector, so the total import-export value/GDP is generally overstated. In the ASEAN (Association of Southeast Asian Nations), Vietnam and Cambodia have higher degrees of trade openness, at 185% and 127% respectively, compared with more developed economies like Thailand (123%), the Philippines (65%) and Indonesia (37%). Third, trade openness is particularly high for countries which are regional trade transit hubs like Hong Kong and Singapore, or sub-contracting economies like Vietnam. These three economies rank first in Asia in trade openness and their foreign trade values are double counted, both in imports and exports. In sum, Vietnam’s trade openness is essentially the result of structural factors reflective of the development level of the economy; it is not a policy option that Vietnam can easily change and revise over the short-term. The free trade policy is only one of the factors that affect trade openness of an economy. In the case of Vietnam, the higher degree of trade openness versus other regional countries simply reflects the sub-contracting nature of the domestic economy, and does not means that Vietnam has a higher level of global economic integration and trade liberalization. The degree of trade openness may decrease when Vietnam can gain a higher position in the global production chain and have a larger service sector thanks to higher per capita income. Countries with high degrees of trade openness are generally affected more when the global market jitters and are more negatively impacted by global economic shocks. However, for sub-contracting economies like Vietnam, the impact may not be too big as reflected by the degree of trade openness. Economic shocks, once materialized, would affect directly and the most strongly to the foreign direct investment (FDI) sector. However this sector currently does not have close relations with the domestic sector. Trade openness is widely used partly because it is highly summarized and easily calculated with available data, but it is not a complete benchmark to reflect the severity of external shocks on the economy. It does not tell many factors like the essence of trade relations, competitors, the nature of imports and exports and the diversification of trade partners. To put it differently, Vietnam’s trade openness is very high versus other regional countries, but this does not means the country is more impacted by global trade jitters. Jasan Vietnam Textile and Dyeing Company, efficient FDI enterprise in Hai Phong   Established in 2014 at the Vietnam Singapore Industrial Park (VSIP) in Hai Phong, Jasan Vietnam Textile and Dyeing Company has gained remarkable achievements in production and trading. This proves the attractive investment environment of Hai Phong City. Jasan Vietnam Textile and Dyeing Company is a subsidiary of the Jasan Group in Hangzhou, China. The group chose Hai Phong as the base to expand its market because of its convenient transportation system, a seaport, and policies to support investors. Tran Thuy Trang, Deputy Director of Jasan Vietnam Textile and Dyeing Company, said, “We invested in Hai Phong due to its preferential policies for FDI enterprises: we are exempted from corporate income tax for the first four years. In the next nine years, we will receive half of the tax reduction. All employees in the company are entitled to personal income tax deductions. In addition, Hai Phong is a very convenient place for export activities.” Initially, Jasan Vietnam Textile and Dyeing Company rented only three hectares and invested US$14 million in VSIP. The improved investment environment, the company has expanded its scale of production by an additional 7 hectares with a total investment capital of US$50 million. All of the information regarding investment licensing procedures has been posted on the city's portal. All investor queries are addressed within a day to make sure Jasan and other foreign investors feel satisfied. Trang noted “Another advantage is that we are very satisfied with employees, ranging from highly skilled workers to blue-collar workers. They all have good sense of working hard.” Currently, Jasan Vietnam employs 1,500 workers. It plans to double that number by the end of 2018. The company has a good remuneration policy for employees according to their performance, a special welfare program for female workers, organizes free annual travel activities, and offers bonuses during holidays and gifts for workers. Pham Thi Kim Hue in charge of the garment workshop 2 said, “Over the past three years, I have been promoted from team leader to head of a group. With a good remuneration package and a convenient working environment, I am happy to work for the company.” Jasan Vietnam now has more than 1,500 workers and 40 foreign experts. Many important positions in the company are held by Vietnamese people. The company has increased their recruitment of qualified Vietnamese laborers and conducted a transfer of dyeing techniques to their Vietnamese employees. Currently, the most important section of the company is the technical section where 12 of the total 21 workers are Vietnamese. It is expected that by the end of this year, the company will reduce the maximum number of foreign managers and experts while making full use of the Vietnamese labour pool in all production stages of the company. Jasan is the only company to have a closed production line from dyeing to export. Jasan 1 was put into operation in 2015. Two year later, Jasan 2 was set up, and Jasan 3 will likely come into operation by the end of this year. With their 2000 looms, 2015 was the first year when Jasan began to produce and export 20 million pairs of socks. It is expected to produce 120 million pairs of socks by 2020. According to Trang, Jasan will certainly expand and aims to raise the current investment value from about US$50 million to US$120 million in the coming years. Hoang Anh Gia Lai bets on banana, Chinese market in agriculture switch Once a leading property developer, Hoang Anh Gia Lai has reinvented itself as a hi-tech agriculture giant. About a decade ago, Hoang Anh Gia Lai (HAGL) was a leading property developer in Vietnam. Today, it is more known for its agricultural prowess. Agriculture is now everything to HAGL, chairman Doan Nguyen Duc told shareholders at the group’s general meeting last week. Under a major restructuring effort launched in 2010, the group invested heavily in rubber plantations and livestock farming. Five years later, the rubber arm was renamed HAGL Agricultural Joint Stock Company (HoSE: HNG), and it started growing fruit in 2016. After two years, Duc has identified banana as a strategic fruit thanks to its high economic efficiency and huge demand from China. There is some doubt among shareholders about his betting on the Chinese market, with many cases recorded of Vietnamese farm produce being stuck at the Vietnam-China border or even being sent back. Duc, however, is confident that there will always be demand in the market of more than one billion people. “From market research, I’ve seen that the whole world wants to tap into China’s one billion people market. I had no worries after learning that we could not meet their massive demand,” he said, adding that it was not just HAGL, but suppliers from the Philippines and South America who have being selling bananas to China. Still, the demand has not been met. Duc said the group estimates China’s banana consumption at 15 million tons per year, while its annual banana export is no more than 240,000 tons. However, to reduce excessive reliance on the Chinese market, Duc is seeking to have about 20 percent of the group’s banana exports shifted to the Republic of Korea and Japan. The business tycoon reassured investors about the economic feasibility of his plan, saying the cost of production is only VND8,000 (US$0.35) per kilogram, but the company sells it for VND14,000-VND23,000 (US$0.6-1), depending on the season. Banana prices reach their peak between September and February or March as it corresponds to the winter in China. Duc seeks to expand the group’s banana plantations to 10,000 ha as it is now one of his core businesses. Its agricultural unit HNG grew 1,500 ha of banana last year and targets another 4,000ha this year. It expects to harvest 106,200 tons of banana in 2018, which will yield around VND1.7 trillion in revenue and VND983 billion in gross profit. Besides, it also looks to earn billions from dragon fruit and chili. HNG, which owns 13,000ha of orchards, posted VND1.64 trillion in revenue from its fruit sector last year for a gross profit of VND893 billion, a margin of 54%. HAGL has set an annual revenue target of VND3.7 trillion for HNG this year, more than 80% of it coming from selling fruit for a gross profit of nearly VND1.7 trillion. Supermarkets free from mandatory holiday, sales schedules The Ministry of Industry and Trade has stopped drafting a decree that would have required supermarkets to remain open through holidays and have at least three annual promotions a year. Trade Minister Tran Tuan Anh signed the order suspending the controversial decree’s drafting process, saying it was not practical, given “current market needs and management practices.” Supermarkets will no longer have to open from 10 a.m. to 10 p.m. during holidays and hold a minimum of three promotional events per year. The decree’s provisions were severely criticized by experts as well as industry insiders who said the state should leave the day-to-day running of a business to businesses. The Vietnam Chamber of Commerce and Industry said the decree interfered too deeply in the operations of businesses, and violated the Supermarket Investment Law, that allowed businesses to operate freely in compliance with relevant laws. The Vietnam Retailers Association objected to the proposed regulations saying they would not be practical for all businesses, and some would not be able to comply because of the type of products they dealt with. Other provisions of the proposed decree were also deemed impractical and restrictive, including one that set space specificatoins to categorize businesses. It said supermarkets should have an area of 250 square meters or more, while trade centers had to have more than 10,000 square meters each. China reduces imports of Vietnam’s cassava Although exports of cassava and cassava products saw strong growth over the first five months of this year, exports to China dropped 25.4% to just 1.1 million tons, according to the General Department of Vietnam Customs. Vietnam shipped 223,400 tons of cassava and cassava products worth US$100.1 million in May, bringing the total export amount for the five months to 1.3 million tons valued at US$468.1 million, down 23.6% in volume but up 10.1% in value against the same period last year. The increase in export value was attributed to the 44.4% rise in export prices, hitting US$356.9 per ton. China was the largest consumer of Vietnamese cassava products, buying up 88.5% of the country’s total exports with 1.1 million tons worth US$408.2 million, down 25.4% in volume but up 8.7% in value. The Republic of Korea came second with 43,400 tons valued at US$11.7 million, up 7.9% in volume and 30% in value, followed by the Philippines (18,900 tons), Malaysia (18,800 tons), Taiwan (17,300 tons) and Japan (10,100 tons). Over the five-month period, the Philippines witnessed the sharpest decrease, dropping 40.4% in volume and 15.7% in value. Meanwhile Japan was the highest growth market, ballooning 3.8 times in volume and 2.6 times in value. Russia becomes Vietnam’s top wheat supplier Russia has become Vietnam’s top wheat supplier, selling 1.7 million metric tons of wheat to Vietnam between July 2017 and April 2018. The Bloomberg news agency reported that Russia has benefited from lower production costs and a good harvest, while another report by the United States Department of Agriculture noted that Australia, which has been exporting wheat to Vietnam for years, was hit by a drought that saw its export of the grain drop by a third in 2017-2018 season. Tom Basnett, manager at Market Check marketing company in Australia, told Bloomberg that Australia typically exported 10% of its wheat to Vietnam, but the country has been loosing market share in recent years to wheat from Russia. However, Russian traders are worried that Vietnam could stop importing their wheat after weed seeds were spotted in shipment. Specialists were sent to Vietnam to discuss the issue. According to a report by the UkrAgroConsult Agency, besides Vietnam,  Russia has also increased its share of the world market by supplying wheat to the Republic of Korea, Kenya, Peru, Philippines, Malaysia and several other countries. Japanese business builds packaging factory in HCM City United Packaging Co.,Ltd from Japan has broken ground on the building site for a new 5ha manufacturing facility at Tan Phu Trung Industrial Zone (IZ) in Cu Chi district, Ho Chi Minh City with a total investment of more than US$15 million. The company is owned by Oji Holdings Corporation, one of Japan’s leading paper and packaging groups. They chose to locate the factory at Tan Phu Trung IZ due to favourable geographic and planning conditions­­ with the aim of implementing a strategy of expanding investment, diversifying and improving the quality of products to meet increasing market demand, and to sharpen their competitive edge. The factory is expected to come into operation by May 2019. Tan Phu Trung IZ has drawn more than 80 investors and many factories have been established in the IZ. A representative of the IZ says its managing board have always facilitated investors and created the best possible conditions for their production, bringing them long-term sustainable value. KPMG and LIN reach three-year CSR partnership LIN Center for Community Development (LIN) and KPMG Vietnam signed a Partnership Agreement for a three-year strategic corporate social responsibility program called “Partnership for a Vibrant Vietnam” at the conference “How Doing Good is Good for Business 2018” in HCM City on June 28. Under the agreement, LIN will work with KPMG to enable KPMG employees to engage in CSR programs, gain fresh perspectives, improve leadership skills, and get involved in professional and legal work for the public good through pro bono. Within three years, KPMG and LIN aim to empower their staff and non-profit organization communities for cross-sectored collaboration toward sustainable socio-economic development, and support businesses in dealing with social and environmental issues. The conference “How Doing Good is Good for Business 2018” was jointly held by LIN, the Canadian Chamber of Commerce in Vietnam and the French Chamber of Commerce in Vietnam at the Park Hyatt Saigon. The event was attended by more than 270 guests who are senior leaders, marketing and HR managers, CSR executives of multinational corporations, and representatives of non-profit organizations and small and medium enterprises wanting to optimize their CSR tools as a strategy to grow their businesses, or looking for innovative models and win-win approaches. Focusing on “Business Impact and Community Impact – Where to Meet?”, the conference discussed and showcased models of creating shared value (CSV) and CSR that build value and sustainable impact, encourage and enable businesses to continue to grow sustainably, create and continue positive social and environmental impacts, and strengthen partnerships with key stakeholders. Cashew nut exports up 17% in first half of 2018 Vietnam exported around 33,000 tons of cashew nuts worth US$300 million in June, bringing the total volume of shipments during the first half of this year to 176,000 tons, valued at US$1.41 billion, up 17% in both volume and value, according to the Ministry of Agriculture and Rural Development (MARD). The US, the Netherlands and China remained the three largest importers of Vietnamese cashew nuts with market shares of 37.9%, 13.1% and 10.9%, respectively. In the opposite direction, Vietnam imported around 151,540 tons of raw cashew nuts worth US$304.4 million in June, bringing the total amount of imports in six months to US$1.14 billion, down 13% over the same period of last year. This month’s price of cashew nuts in the world market was quite stable as there were no fluctuations in demand. The average export price of Vietnamese cashew nuts reached US$9,068 per ton in June, down 3.6% compared to May. The MARD’s Agro Processing and Market Development Authority (AgroTrade) forecast that export markets will be favourable in the coming time as importers accelerate their purchases to serve increasing year-end demands. In the context of the downward trend in the price of cashew nuts, the Authority also advised domestic businesses to reduce processing capacity, link with farmers to develop high quality material zones and focus on intensive processing to improve the value of products. Stricter controls needed to combat counterfeit goods Businesses need to devise effective security measures which will protect intellectual property, business tactics, customers’ information and distribution system, emphasizes Associate Prof. Dr. Nguyen Quoc Thinh from the Vietnam University of Commerce. The rampage of fake and counterfeit goods in the domestic market has raised major public concern in spite of relevant agencies’ great control efforts. Some businesses deceptively sell fake goods for illicit earnings while genuine businesses which refuse to deal in counterfeit products are often failing to cooperate with law enforcement agencies in the fight against bogus goods. According to a survey of 100 fine arts and handicraft businesses conducted by the Vietnam University of Commerce, 90% of businesses are afraid of their products being faked for the market, while up to 70% of them are willing to replicate the product designs of other businesses. Another survey, which covered 350 businesses operating in multiple fields in Hanoi, Thai Nguyen and Thanh Hoa, showed that only 208 of those businesses thought it worth their effort to pay special attention to brand protection. However, just 18 out of those 208 businesses have registered trademarks, patents or other intellectual property rights (IPR) to be concerned with. One out of the 18 businesses has registered for industrial designs while the remaining 17 businesses have signed up for brands. Quoc Thinh says that any type of product can now be faked in a sophisticated manner, adding that counterfeit goods are publicly circulated on the market, making it difficult for law enforcement agencies to identify suspect products “Consumers are confused about fake and unfaked goods. Even the trademark owners find it difficult to distinguish between their products and fakes,” says Mr Thinh. Mr Thinh points out that there has been a strong increase in the number of counterfeit foods and IP violations. Up to 98.37% of violations get administrative fines while only 1.63% of prosecuted cases were settled in court. Mr Thinh attributed the flood of fake goods onto the market to the lack of duly punishments and an imperfect legal framework. Most trademark violations were punished with fines of just VND20-30 million, which is minute compared to the huge profits from selling counterfeit goods, he noted. Sharing the same viewpoint, Mr Nguyen Vu Quan,of the Vietnam Industrial Property Association (VIPA), says administrative punishments on IT infringements are mostly used as the procedure for  dealing with these cases to save costs and reach a swift conclusion. But these remedies are not strong enough to resolve cases of IPR violations. In addition, the penalties for violations often depends on the different assessment results of the Vietnam Intellectual Property Research Institute or VIPA, which can lead to difficulties for law enforcement agencies. According to Dr. Vo Tri Thanh, director of the Institute for Trademark and Competition Research Strategies, the efforts to fight fake goods and protect intellectual property are not simply related to real or counterfeit goods but also pertain to business methods, competition, creativity, consumer trust and the prestige of Vietnamese businesses. To prevent the prevalence of fake goods and the infringement of brands, Associate Prof. Dr Nguyen Quoc Thinh insists there is a need to change the thinking behind management and law enforcement agencies, and in the business community. Mr Thinh notes that businesses need to establish their IPR by registering trademarks or industrial designs patents. Nearly 90% of surveyed businesses have yet to devise protective measures and have no recognized intellectual property, he adds. The story of fake goods remains a thorny issue if there are loopholes in management agencies, organizations and associations which have been tasked with preventing fake goods but aid and abet fraudulent trade activities. Many experts suggests severe punishments should be imposed on the manufacture and trade of counterfeit goods but harsher punishments are needed for those aiding and abetting businesses in faking goods, so that businesses can regain the trust consumers. Tech can improve competitiveness of Vietnam’s corn Over the last five years, the high demand in the Vietnamese corn sector combined with the limited available land and the continuous increases in imported corn volume – the imported corn volume is 1.3 times higher than the local corn volume – force Vietnamese farmers and the local corn sector to apply science and technological solutions to increase their capacity. Corn is one of Vietnam’s most important crops. In the period 1995-2010, Vietnam saw an increase in corn production quantity thanks to expansions of the cultivation area and a higher capacity of the corn seeds. However, over the past five years, Vietnam spent massive amounts of money importing corn seeds to serve the local animal feed processing industry. Notably, in 2016, Vietnam’s corn import turnover reached $1.65 billion, equalling 75 per cent of the country’s rice exports. In the first four months of this year, the imported corn volume increased in terms of quality and value, while the price of imported corn seeds has been continuously increasing, creating disadvantages for the local agricultural sector in general and the corn sector in particular. Vietnam reached a breakthrough in corn production with an increase from 1.1 million tonnes in 1995 to 4.6 million tonnes in 2010, with the government’s approval to use a new generation of corn seeds and to expand the cultivation area considered key factors for the development. In order to achieve another revolution in the corn sector as well as meet the target to increase corn production by 40 per cent against the backdrop of climate change and limited available land, Vietnamese farmers need new support policies in order to be able to approach the issue with international standards of technology. Helping farmers to acquire new corn seeds to increase their capacity and to improve the quality of the corn, ultimately resulting in a greater capacity and value of their products, is considered an important step. One of the technologies chosen by more than 18 million farmers across the world over the past two decades in order to produce high-quality commercial seeds is pest-resistant and herbicide-resistant technology. With this technology, the plant is protected from damage caused by insects and weeds as well as from fumomisin – the carcinogenic toxin produced by the mold caused by insect pests. This helps to maximise productivity as well as quality. This technology started to be applied in Vietnam in 2015 and has brought significant benefits so far. Aruna Rachakonda, CEO of Dekalb Vietnam stated, “During its 20 years of accompanying farmers, Dekalb Vietnam has always been striving to bring technology solutions to help Vietnamese farmers increase the quantity and quality of their crops. Dekalb Vietnam’s corn hybrids helped Vietnamese farmers in numerous regions increase corn yield by 40 per cent compared to local corn seeds.” In 2015, Dekalb Vietnam introduced insect-resistant and herbicide-tolerant corn seeds to farmers for the first time. After two years, farmers reported that the quantity of corn increased by 20 per cent, resulting in a 20-30-per-cent increase in income. In 2017, the income from all fields applying the pest- and herbicide-resistant corn seeds saw signs of increase. Notably, farmers reported a 20-per-cent increase in capacity and a 20-30-per-cent increase in economic gains. Better corn grain quality, reducing the risk of aflatoxin contamination arising from pest bites, is one of the key elements of this technology to help farmers increase their competitiveness with imported products, which are produced with similar technology. After receiving the new corn seeds, almost all farmers were satisfied with their bumper crops. According to Nguyen Van Dang, a farmer in the Mekong Delta province of An Giang, the new corn seeds created higher profit than the previously used ones. “I spent VND700,000 ($30.9) more on the new corn seeds from Dekalb Vietnam and earned VND3.5 million ($154.52) more in profits – five times the investment cost. Along with the increase in profits, I saved a lot of time on weeding and costs to spray pesticide, thanks to the new variety DK6919S,” Dang stated. “We are very excited about the results of the application of new corn varieties,” said Tran Quang, a farmer in the southern province of Dong Nai, who is also chairman of the Xuan Tien Corn Co-operative. “The area in the co-operative reaches 150 hectares. All 125 members of the co-operative have chosen to cultivate the new corn hybrid DK6919S, since it helps us to save costs and labour and improves our profits. The average yield of the dried seeds is 10 tonnes per hectare – double the national average.” Masan Consumer and Jinju Ham form strategic partnership Saigon Nutri-food JSC, a wholly owned subsidiary of Masan Consumer Corporation - one of Vietnam’s largest branded food and beverage companies, has just formed a strategic partnership with Jinju Ham Limited, a leading Korean branded processed meat company.   This was announced today by Masan Consumer, a subsidiary of Masan Group - one of Vietnam’s largest private sector companies. Accordingly, Jinju Ham has acquired a 25 per cent stake in Saigon Nutri-food JSC (SNF) via a primary issuance. The entity will be renamed Masan Jinju. The strategic partnership will create significant synergies that will ultimately benefit Vietnamese consumers: combining Jinju Ham’s cutting-edge know-how with Masan’s deep understanding of Vietnamese consumers and brand building capabilities. “Our aim is to improve Vietnamese consumer’s meat experience by providing innovating and delicious products. We will not only develop products that are delicious, but will focus on nutrition and affordability,” said Truong Cong Thang, chairman and CEO of Masan Consumer. “This partnership aligns with our mission to enhance the daily physical and spiritual lives of 90 million Vietnamese consumers. I look forward to partnering with Jinju to transform the processed meat segment and deliver on our mission in the near future,” Thang added. In the words of Park Jungjin, CEO of Jinju Ham, Vietnam’s processed meat market has the same dynamics as Korea and China 20 years ago. This segment is in an early phase of development, contributing less than 1 per cent to the overall meat market. “We believe that synergizing our respective platforms will enable Masan-Jinju to drive the process meat contribution to 20-50 per cent over the long-term, similar to China and Korea today, respectively. Our objective is to be at the forefront of this transformation and build a championship position over the course of the next five years,” said Jungjin. New innovations under this strategic partnership are expected to launch in the second half of 2018. Jinju Ham, established in 1963, is the oldest sausage producer in South Korea with market leading positions in the sausage and home meal replacement segments. The company has over 30 years of experience in the processed meat market and has developed best-in-class R&D and technological know-how. Masan Consumer boasts its market leadership in large consumer categories such as seasonings, convenience food, and beverages. Masan Consumer’s portfolio includes some of Vietnam’s most trusted and loved brands such as Chin-su, Nam Ngu, Tam Thai Tu, Omachi, Kokomi, Heo Cao Boi, Vinacafé, Wake-Up, Vinh Hao, and Quang Hanh. PVIRe taking the initiative on the reinsurance market Vietnam’s reinsurance market is witnessing stiff competition between two local players, the Vietnam National Reinsurance Corporation, which came into being in 1994, and PVIRe, a pillar of leading financial insurance institution PVI Holdings. Figures released by the Ministry of Finance’s Insurance Supervisory Authority showed that last year, Vietnam’s non-life insurance market’s size reached $2 billion and insurance premium value jumped by 12 per cent on-year to reach VND43.6 trillion ($1.94 billion). Non-life insurers retained 68 per cent of insurance premium value, whereas the remaining 32 per cent was ceded to reinsurers to transfer risks, helping to shape a secondary market barely known to the Vietnamese public, the reinsurance market. Worldwide, this market is the playing field of long-standing financial institutions with a value reaching several hundred billion dollars, such as Swiss Re, Munich Re or legendary billionaire Warren Buffett’s Berkshire Hathaway Group, which boasts the second-largest revenue in the US. In Vietnam, the reinsurance market’s size reached VND13.07 trillion ($596.8 million) last year, up 9.1 per cent on-year, but 72 per cent of the market share was in the hands of foreign reinsurers, while the remainder was shared by Vietnam National Reinsurance Corporation (Vinare) and PVIRe. Vinare is the more well known brand of the two, as the company made its debut on the Vietnamese stock market in 2006. The stock’s trading liquidity remains low however, as the state shareholder State Capital Investment Corporation (SCCI), foreign shareholder Swiss Re, and other corporate shareholders hold nearly 96 per cent of the company’s circulating stock volume. Meanwhile, comparatively juvenile PVIRe, which is also smaller in capital size, has been developing vigorously, leveraging the brand value and advantages of parent company PVI Holdings. After three years of operations, PVIRe reached premium revenue from reinsurance services surpassing VND1.6 trillion ($71 million) in 2014, almost equal to that of Vinare. In the past three years, PVIRe has adjusted company’s underwriting guidelines from top to bottom lines. Therefore, despite a slight fall in reinsurance premium revenue to about VND1.3 trillion ($57.7 million) a year, its efficiency has been stable. Of particular interest is PVIRe’s combined ratio, which averaged 80-82 per cent, the best level in Vietnam’s insurance market and much lower than the world’s average combined ratio of 95 per cent. After seven years, PVIRe has built a solid foundation for development. Its corporate governance complies with the new model outlined in the new Law on Enterprises, with one independent member of board of directors. The company boasts strong human resources, consisting of experienced managers and staff members. Its strong information technology system provides the key to ensure efficient operations in a sector where success often leverages statistical database. PVIRe’s recent annual general shareholder meeting (AGM) approved a rise in the company’s 2017 dividend payout ratio from 14 per cent, a target set early in the year, to 16 per cent in cash. This is also the third consecutive year PVIRe paid shareholders more than 14 per cent, the top level in the insurance industry. The AGM also passed 2018 business plans with the target for reinsurance premiums set at VND1.21 trillion ($53.7 million) and the goal for the payout ratio set at 14 per cent in cash. The AGM also elected the board of directors for the period 2018-2023, boasting well-known faces of the Vietnamese insurance market - including Nguyen Anh Tuan, chairman of PVI Holdings; board chairman Pham Khac Dung, former board chairman of life insurer PVI Sunlife (now Sunlife); and Duong Thanh Danh Francois, Asia Australia director of HDI Global. As the company’s return-on-equity (ROE) ratio hovered around 14-16 per cent over the past three years, the new board of directors has committed to keep the ROE ratio at no less than 14 per cent a year in the new tenure. To keep abreast of burgeoning development requirements, PVIRe is set to raise its charter capital, find strategic partners, and make its debut on the stock market. The new board of directors expects the new plan to help PVIRe boost its capacity on the domestic market, expand its share in regional markets, and make avail of PVI’s system strength, laying the initial stepping stones to grow PVIRe into a leading reinsurer on the Vietnamese market and a prestigious player on the regional market. Samsung wins EPC contract for Long Son Petrochemical complex Samsung Engineering Co., Ltd. has released that it won an engineering, procurement, and construction (EPC) contract worth $536.7 million for Long Son Petrochemical Complex (LSPC) located in Long Son commune of Ba Ria-Vung Tau province, according to newswire Business Korea.  Notably, on June 28, Samsung Engineering and Thai investor SCG signed an EPC contract to develop Package B worth $304.14 million and Package C worth $250.46 million for two plants to be built in LSPC. According to the plan, the Package B plant has a designed capacity of 450,000 tonnes of high density polyethylene (HDPE) and the Package C plant was designed with the capacity of 400,000 tonnes of polypropylene (PP) per year. Previously, in early February, two South Korean contractors signed a $2.7 billion deal for Long Son complex. Notably, SK E&C announced that it will co-operate with Technip of France to develop an ethylene plant project with the total investment capital of $2 billion ($1 billion from each). The ethylene plant is one of the segmented parts of the project, including a polypropylene and a polyethylene plant. SK E&C will build the ethylene plant and other utility facilities. The construction will be implemented in the form of a turnkey system, including basic design, detailed design, purchasing, construction, and test runs. The construction will last for 53 months. On the same day, POSCO E&C announced signing a contract with Vietnam Long Son Petrochemical (LSP), a joint venture of SCG and PetroVietnam, for the construction of a wharf facility worth $680 million in Ho Chi Minh City to serve the Long Son complex. Previously, in October 2017, Hyundai Engineering and Construction Company (HEC) won a $320 million contract to build facilities at LSPC. The project would be carried out on a turnkey basis, meaning HEC would be responsible for the entire construction, from design to test operations. The company estimates construction will take 47 months after ground is broken. Back to LSPC, in February, Vietnam Long Son Petrochemical (LSP) officially kicked off its long-awaited LSPC after more than ten years of development. In late May, SCG reached an agreement to buy PetroVietnam's 29 per cent in the LSPC, leaving it king of the hill. This step once more confirms SCG's determination to implement the petrochemical complex that was delayed for more than 10 years. LSPC is located in Long Son commune of Ba Ria-Vung Tau province, 100 kilometres from Ho Chi Minh City. This integrated petrochemical complex will have a total olefin production capacity of 1.6 million tonnes per year. The complex is designed to produce various petrochemical products, including essential plastic materials such as polyethylene, polypropylene, and other products in excess of two million tonnes per year, enabling it to substitute imported polyolefin products. Non-petrochemical supporting infrastructure, such as a deep sea port and other facilities, are also included. Vietjet Air: 700,000 cheap tickets to mark launch of HN-Osaka services Budget carrier Vietjet Air is offering 700,000 tickets at prices starting from just 0 VND, excluding taxes and fees, to celebrate the launch of a direct route between Hanoi and Osaka, Japan. The promotional tickets are available on the airline’s official website: www.vietjetair.com from July 4 – 6. The special offers are applicable to all domestic fights and international services to Osaka; Seoul, Busan and Daegu (the Republic of Korea); Hong Kong (China); Kaohsiung, Taipei, Taizhong and Tainan (Taiwan, China); Singapore; Bangkok, Phuket and Chiang Mai (Thailand); Kuala Lumpur (Malaysia); Yangon (Myanmar); and Phnom Penh and Siem Reap (Cambodia) for travel between August 14 and December 31 (excluding holidays). They are also subject to flights between Nha Trang and Siem Reap from September 21 and between Hanoi and Osaka from November 8. The daily two-way Hanoi – Osaka services will be provided from November 8, taking more than four hours per leg. Departures from Hanoi will be at 1.40am and arrivals in Osaka at 7.50am (local time). The return flight will be at 9.20am and 1.05pm, respectively, all local time. Last month, the airline made its debut flight from Hanoi to Taichung (Taiwan). The new route operates five flights per week on Monday, Wednesday, Friday, Saturday, and Sunday, with each leg taking 2 hours and 30 minutes. Aiming to become a “Consumer Airline,” Vietjet Air is continually opening new routes, adding more aircraft to its fleet, investing in modern technology and offering more added-on products and services. With a fleet of over 60 aircraft, including the A320 and A321, Vietjet Air operates 385 flights each day. The airline has already transported over 60 million passengers on a network featuring 93 routes in Vietnam and across the region to international destinations such as Thailand, Singapore, the Republic of Korea, China’s Taiwan and Hong Kong, mainland China, Malaysia, Indonesia, Myanmar and Cambodia. The carrier plans to operate more than 120,000 flights and serve over 24.1 million passengers by the end of 2018 on a total of 39 domestic and 61 international routes. VNN