BUSINESS IN BRIEF 30/5 Can Tho prepares for large investment promotion conference As many as 500 domestic and foreign delegates are expected to attend a conference to promote investment in the Mekong Delta city of Can Tho, which is slated for August 10, 2018. At a meeting held on May 29 to review preparations for the conference, Vice Chairman of the municipal People’s Committee Truong Quang Hoai Nam said that the city is scheduled to call for investment in 54 projects worth over 100 trillion VND (4.4 billion USD). Among those, the three biggest projects are to develop infrastructure systems for industrial parks in O Mon and Thot Not districts, run by the management board of industrial parks and export processing zones of Can Tho city, with total estimated capital of about 18.2 trillion VND (about 801.7 million USD). Can Tho also hopes to lure investment for a project to build a level-two logistics centre of the Mekong Delta economic sub-region. The project is estimated to cost 150 million USD and covers 242 hectares in Cai Rang district. It is expected to reduce logistics costs for not only Can Tho but the whole region. Themed “Sharing Potential, Developing Together,” the Can Tho investment promotion conference 2018 will introduce the city’s strengths, potential and investment opportunities as well as investment plans and projects, and Can Tho’s commitments to investors. At the same time, the event will highlight major targets of the city, along with a list of projects needing investment in the 2018-2020 period. The city also hopes to learn experience to develop the city into a hub of services, effective agriculture and IT. Investment licences for some projects will also be handed over to investors at the conference. Meanwhile, a number of projects, including Vinmec Hospital and FPT University will also be inaugurated on the occasion. Ho Chi Minh City’s CPI up 0.43 pct in May   Ho Chi Minh City’s consumer price index (CPI) moved up 0.43 percent monthly and 2.9 percent annually in May, said the municipal Statistical Office on May 29.  Among 11 commodity and services groups, eight posted price increases, including transportation (1.99 percent); food and catering services (0.84 percent); and apparel, headwear and footwear (0.16 percent). Medicines and health care services experienced a price hike of 0.1 percent; household equipment and appliances (0.04 percent); other goods and services (0.03 percent); beverages and cigarettes (0.01 percent), and education (0.01 percent).  Others saw lower prices, including housing, water and electricity, fuel, construction materials (down 0.01 percent); culture, entertainment and tourism (0.53 percent); and post and telecommunications (0.23 percent).  During the month, gold and US dollar prices were down 0.43 percent and 0.09 percent, respectively, compared to April. Tra fish export to US increases despite anti-dumping measures Despite high anti-dumping tariff imposed by the US, Vietnam exported to the market 108 million USD worth of Tra fish products between January and April, up 26 percent from the same period last year. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the sum accounted for 17 percent of the total value of the country’s Tra fish exports in the four months, which were close to 600 million USD, an annual increase of 18 percent.  The rise is partly attributable to increases of 5,000-6,000 VND in domestic material prices of Tra fish compared to last year, pushing up export prices during the period. VASEP predicted Tra fish export to the US in the second quarter to increase slightly against last year, but the number of exporters remains under 3. It said anti-dumping tariff and inspection are two main reasons that prevent many businesses from exporting to the market.  Apart from the US, Tra fish exports to China, ASEAN region, and Colombia were also forecast to be on the rise in the coming time. On March 20, 2018, the US Department of Commerce (DOC) announced the final results of the 13th administrative review (POR 13) of anti-dumping duties on frozen pangasius fillets from Vietnam between August 1, 2015 and July 31, 2016, slapping unprecedentedly high rates of up to 3.87 USD per kg.  Vietnam and China are currently the only two suppliers of Tra fish for the US, with Vietnamese Tra fish making up 90 percent of its total imports of the product. Agro-forestry-fishery exports up 9.9 percent in five months The total export value of agro-forestry-fishery products in the first five months of the year reached 15.6 billion USD, a year-on-year surge of 9.9 percent, according to the Ministry of Agriculture and Rural Development. The export value of key agricultural products was estimated at 8.25 billion USD, up 9.6 percent from the same time last year. Meanwhile, seafood products contributed 3.12 billion USD to the total export turnover, up 9.7 percent, and forestry products 3.4 billion USD, up 8.7 percent. The Vietnam Administration of Forestry said that China, Japan, the Republic of Korea and the US were the four largest importers of Vietnamese wood and wood-based products. The export value of forestry products accounted for nearly 22 percent of the total export value. In May alone, the country raked in 347 million USD from shipping abroad some 452,000 tonnes of rice, bringing the total value and volume of rice export in the January-May period to 1.45 billion USD and 2.66 million tonnes, up 40 percent and 13.9 percent, respectively. Average rice price in the period experienced an increase of 12.9 percent to 503 USD per tonne. China remains the largest buyer of Vietnamese rice, holding 33.5 percent of the market share. Vietnam also enjoyed robust shipments of cashew. In the five month period, it sold 139,000 tonnes of cashew abroad and earned 1.37 billion USD, rising 19 percent in volume and nearly 23 percent in value as compared to the same time last year. Some 1.3 million tonnes of cassava and cassava products were sold in foreign countries at a price of 460 million USD, falling 25.6 percent in volume and soaring 7.3 percent in value. Meanwhile, coffee export increased 16 percent to 820,000 tonnes but dropped 0.8 percent in value to 1.6 billion USD. Rubber export also fell 12 percent in value to 620 million USD although the exported amount was estimated at 424,000 tonnes, or 16 percent higher than the same time last year.  The export turnover of pepper experienced a plunge of 37.6 percent.  A total 108,000 tonnes were shipped abroad at a value of 377 million USD. The ministry also said that the country spent 12.29 billion USD importing agro-forestry-fishery products during January-May, a year-on-year increase of 10.6 percent. Hoa Lac Hi-Tech Park boosts investment climate improvement The Management Board of Hoa Lac Hi-Tech Park (HHTP), based in Hanoi, will press on with improving its investment environment to attract more funding. Deputy Minister of Science and Technology Pham Dai Duong, who also chairs the HHTP Management Board, said in the first four months of 2018, the management board granted investment registration certificates for four projects worth nearly 10.92 trillion VND (477.7 million USD) and covering 15.4 hectares of land.  In 2017, certificates were provided for three projects with total investment of more than 5 trillion VND, covering 11.7 hectares of land. Compared to 2016, average investment per hectare of land here has risen by more than two times to 31.5 million USD at present. Duong said projects with investment registration certificates are being swiftly implemented. Notably, the factory of the Hanwha Aero Engines company, invested by the Republic of Korea’s Hanwha Techwin Co. Ltd, has had its construction completed and is operating on a trial basis. This factory project has total registered capital of 200 million USD, which is expected to rise to 260 million USD in 2021. Meanwhile, two of the five projects worth 1 billion USD in total in the HHTP invested by Japan’s NIDEC Corporation received investment certificates last April. They are working to finalise procedures for construction so as to put the plant into operation in the first quarter of 2019. He noted the HHTP Management Board will propose mechanisms and policies for the park to improve investment quality. It will also continue reviewing projects to ensure they are implemented as scheduled and prevent land wastefulness. The board has so far revoked 19 projects that lagged behind schedule or failed to run as planned. It has also reduced land areas used by two other projects, the official added. Located in Thach That and Quoc Oai districts, the 1,586-hectare Hoa Lac Hi-Tech Park is being developed into a science city hosting investors in biotechnology, information – communications, new material technology and automation. Vinamilk named as most favourite brand in Vietnam Vietnam’s leading dairy company Vinamilk was the most chosen consumer brand in Vietnam for four consecutive years from 2014-2017, according to the 2018 edition of Kantar Worldpanel’s Brand Footprint report. With high Consumer Reach Points (CRPs), Vinamilk shines bright as the most chosen dairy brand in Hanoi, Da Nang, Ho Chi Minh City and Can Tho, and rural areas across the country in 2017.  As the most popular fast-moving consumer goods brand in Vietnam, Vinamilk has various dairy products favoured by local shoppers like Ngoi Sao Phuong Nam, Ong Tho and Susu. Unilever, Masan Consumer and Vinamilk were in the top three of brand owners in the four cities and rural areas. In the food sector, Masan and Vinamilk were the two most-chosen brands while Unilever secured its stronghold in the non-food sector. Katar Worldpanel’s annual Brand Footprint study is based on research from 73 percent of the global population, a total of one billion households in 43 countries across five continents.  As part of the study, Kartar Worldpanel tracks more than 18,000 brands around the world across beverages, food, dairy, health and beauty and home care. This year’s ranking analysed the brands in the 12 months to November 2017. Brand Footprint is set apart from other brand rankings by providing information on real consumer behaviour rather than attitude. Consumer Reach Points (CRPs) from the basis of the ranking. The metric measures how many households around the world are buying a brand (penetration) and how often (frequency). Key industries of Hanoi enjoy good growth in five months Some key industries of Hanoi have posted good economic growth since the beginning of 2018, contributing to a year-on-year rise of 7.8 percent in the local index of industrial production (IIP) between January and May. In the five months, industrial production value approximated 223.75 trillion VND (nearly 9.79 billion USD), up 9.1 percent from the same period last year. Notably, the mining industry expanded by 7.5 percent while processing and manufacturing rose 7.9 percent. The production and distribution of electricity and gas and the water supply and waste and wastewater treatment sector respectively grew by 6.9 percent and 7.1 percent, according to the municipal Statistics Office. In May alone, Hanoi’s IIP increased by 5.6 percent from April and 11.3 percent from a year earlier. Industrial production value this month is estimated at nearly 46.75 trillion VND (more than 2 billion USD), up 5.9 percent month on month and 12.6 percent year on year. The Statistics Office said businesses in the capital continued to recruit new employees in May.  Compared to the same period last year, labour recruitment in May grew 9.6 percent in foreign invested companies and 3.2 percent in State-owned enterprises. Meanwhile, it fell 0.7 percent in non-State firms. Supporting firms key to autos The development of Viet Nam’s automobile industry depends a great deal on its supporting industry, which needs to be developed comprehensively, experts have said. Speaking at a conference in HCM City on Thursday, Pham Tuan Anh, deputy director of the Ministry of Industry and Trade’s industrial department, said there are only around 300 manufacturers of car components out of the 12,000 supporting industry companies in Viet Nam. Around 90 per cent of the 300 are foreign businesses, he said. In the case of large vehicles, they are able to meet around 55 per cent of the component demand, but manufacturers of smaller cars have to rely heavily on part imports since they can only source around 10 per cent locally, he said. The domestic companies mostly make simple components such as doors, wheels and wires, yet they are modest in terms of quality and variety and use inefficient machinery and production techniques, he said. With their production size often being small, their prices are not very competitive either and so car manufacturers usually opt to buy from foreign-owned companies or import, he said. Since the demand for vehicles in Viet Nam is still relatively low, large international components makers are not interested in investing in the country, he said. Dr Truong Thi Chi Binh, director of the Supporting Industry Enterprises Development Centre, said with components costing more in Viet Nam, the cost of manufacturing vehicles is higher here than in most other ASEAN member countries. The industry aims by 2020 to meet 35 per cent of local demand and achieve exports of US$4 billion. By 2035 it hopes to increase them to 65 per cent and $10 billion. The speakers at the conference said the Government should focus on supporting these companies, help them invest in better technologies, provide more training and encourage them to acquire international quality certificates. It should also help component and auto manufacturers link up and form partnerships, they said. “The supporting industry is very important for the development of the automobile industry, and there is a lot more that the Government can do to facilitate their growth,” Phan Dang Tuat of the Ministry of Industry and Trade said. HCM City to hold Industry and Trade Promotion Fair     The 2018 HCM City Industry and Trade Promotion Fair will be held from July 24 to 29 at District 11’s Phu Tho Stadium, according to the city’s Department of Industry and Trade. The fair aims to attract 300 businesses and 450 booths, and will organise several events to help businesses promote their brands and products. A wide range of businesses will take part in the event, including companies in food and beverages, clothing, technologies, shoes, accessories and supporting industries. The fair plays an important role in improving firms’ competitiveness and brand promotion and the reputation of Vietnamese goods, according to Hoang Tho Vuong, director of the HCM City Centre for Supporting Industries Development. The fair also helps businesses find potential partners and increase exports. Vinafood 2 deep in losses after successful IPO The outstanding loans of Vinafood 2 (Southern Food Corporation) from banks stood at nearly VND2.3 trillion ($101.25 million) at the end of 2017, including VND1.186 trillion ($52.25 million) owed by the parent company and VND1.113 trillion ($49 million) by the subsidiaries. The parent company Vinafood 2 (code: VSF) conducted its initial public offering (IPO) successfully in last March, selling all 23 per cent of the total capital to investors to gain VND1.159 trillion ($51 million) in proceeds, and listed on UPCOM since April 23. However, the business results of the company are not good as it announced a big loss of VND196 billion ($8.6 million), including VND146 billion from the corporation office, while the equitisation plan was meant to put the corporation VND209 billion ($9.2 million) in the green. For the first time, in 2017 Vinafood 2 lost its leading position and moved to the third rank in rice exports with the volume of 230,000 tonnes, while the country’s rice exports rose by 29 per cent to 6.6 million tonnes. Vinafood 2 faced many difficulties in developing export and domestic markets, which resulted in poor sales. Sales during the year reached only VND17.546 trillion ($773 million), equivalent to 93 per cent of the annual target. In addition to the output markets, loans and debts were also big problems affecting the business results of Vinafood 2 last year. CafeF.vn claimed that the outstanding loans of Vinafood 2 from banks was nearly VND2.3 trillion ($101.25 million) at the end of 2017, including VND1.186 trillion ($52.25 million) held by the corporation office and VND1.113 trillion ($49 million) by the subsidiaries. The outstanding loans of the subsidiary Tra Vinh Food Company were VND367.4 billion ($16.2 million) and could not pay its loans. Thus, the bank also automatically deducted VND258.6 billion ($11.4 million) from the deposit account of Vinafood 2 to recover the debts and overdue interest of Tra Vinh Food Company. This is really a big amount and significantly affected Vinafood 2’s business performance last year. According to Vinafood 2's financial statement in the first half of 2017, accumulated losses were more than VND900 billion ($39.6 million), liabilities were VND4.914 trillion ($216.5 million), while equity was VND3.885 trillion ($171 million). Thereby, the corporation was still able to balance its finances. However, the sharp decrease in market share and business activities of its store chain are bad signs. According to the reports of the 12 subsidiaries operating 84 convenient shops, their sales in 2017 were VND2.28 trillion ($100 million), but profit was negative VND1.9 billion ($83,620), including VND5.9 billion ($260,000) of actual profit at eight subsidiaries and VND7.8 billion ($343,620) in losses at four. This was because inventory in 2016 was too much, increasing production costs. Moreover, Vinafood 2’s subsidiaries failed to follow market trends and only depended on the Chinese market without developing other export markets. Sales volume was low, leading to high costs and losses. Despite the losses in 2017, Vinafood 2 still set out rather high business targets for 2018, including a 15 per cent rise in sales revenue to VND20.156 trillion ($888 million) and profit of VND240 billion ($10.6 million). This plan is based on the assumption that the amount of export consignment will quintuple. Achieving the 2018 plan set forth depends on many factors, including the performance of subsidiaries and reducing losses or interest costs for Vinafood II. Mobile World denies closing thegioididong stores Mobile World Group (MWG)’s announcement of closing of seven mobile stores this year took the market by surprise as this was the first time Mobile World had reneged on its aggressive expansion strategy. However, a company representative clarified that the affected units were transferred to the Dien May Xanh chain instead of being closed. vnreview.vn quoted Dang Thanh Phong, Mobile World’s marketing and communications director , said: “We transferred some thegioididong stores to Dien May Xanh to expand the household electronic appliance business (refrigerators, washing machines, air conditioners). No shops have been closed by MWG.” The firm’s financial report stated that during this year’s first four months, the number of thegioididong stores dropped from 1,072 to 1,065. The total revenue from the chain of mobile stores was VND12.4 trillion ($546.2 million), slightly up 5 per cent on-year. According to the firm's website, MWG has a total of 168 mobile phone shops in Hanoi and 232 in Ho Chi Minh City. In fact, the number of stores is high in certain areas that it may lead to competition between thegioididong stores. vnreview.vn also stated that MWG’s stores are crowding the streets in large cities, with three stores located on the same 3-kilometre street. According to the Ho Chi Minh City Stock Exchange (HSX) the firm’s huge branch network and its unreasonable distribution lead to competition between its own mobile stores. Therefore, the firm needs to restructure the system of its thegioididong stores and temporarily halted opening more stores in late last year. According to HSX, the average revenue growth of each thegioididong store is nearly 0 per cent because the firm has to spend a lot on operating over 1,000 stores in prime locations of large cities. Additionally, as e-commerce is becoming more developed in Vietnam with many popular names, such as Tiki, Lazada, and Shopee, the maintenance of traditional stores like Mobile World’s stores are becoming increasingly felt. Reports of AC Nielsen and GFK identified that the market has reached the saturation point and will gradually go down. This January, the sales of the Mobile World's retail chain fell by 11 per cent on-year. Parallel with the decreasing sales of its mobile phone retail chain, according to enternews.vn, MWG has turned to focus on the development of Dien May Xanh chain specialising in sales electric appliances, and Bach Hoa Xanh - the firm's convenience stores. “We want to develop these two chains into major business segments with their performance doubling that of the MWG chain. If it is successful, sales of the group will surpass the target of VND86.4 trillion ($3.8 billion),” confirmed the leaders of MWG earlier this year. However, this seems a far off ambition as the Bach Hoa Xanh chain is currently deep in red. At the annual general shareholders’ meeting, MWG’s chairman Nguyen Duc Tai indentified that developing the Bach Hoa Xanh chain would be a bit early as the brand is not strong enough.Thereby, the store opening target in 2018 was revised to 500 stores instead of the initial target of 1,000 stores. At the end of the first quarter, total pre-tax losses, loan interest, and depreciation of Bach Hoa Xanh amounted to VND60 billion ($2.64 million) and three shops were closed. This was the major reason behind MWG shares falling by 20 per cent since the beginning of the year. Industry insiders said that MWG’s decision to develop Bach Hoa Xanh is a “step back.” It may be a mistake to apply Dien May Xanh's development strategy to Bach Hoa Xanh. Mobile World Group operates under two distribution formats, including the “thegioididong” which means Mobile World, and “dienmay” which means consumer electronics. Thegioididong.com currently distributes digital mobile devices (mobile phones, tablets, laptops, and accessories) in all 63 cities and provinces of Vietnam. The first store was launched in 2004. Dienmay specialises in the distribution of consumer electronics and digital products. On May 4, 2015, dienmay.com has changed its name to DIEN MAY XANH with 600 stores in its distribution network across 63 cities and provinces. As MWG's business has been pulled down by Bach Hoa Xanh, on May 25, the two sisters of Nguyen Duc Tai, chairman of MWG, surprised the market by registering to sell a large number of MWG stocks for "personal purposes." Since focusing on Bach Hoa Xanh, MWG's stock price fell from VND130,000-140,000 ($5.7-6.1) to VND100,000 ($4.4) on May 24. Ministry of Construction to divest from Viglacera The Ministry of Construction (MoC)’s divestment from Viglacera Corporation JSC may be an opportunity for strategic shareholder VinaCapital to increase its holding in the leading company of the building materials industry? MoC recently released its approved plans to divest 80.57 million shares, equaling 17.97 per cent of Viglacera’s charter capital, in the first phase. The offered stake makes up 33 per cent of MoC’s holding in the company. The sale will be conducted through the order matching method on the Hanoi Stock Exchange, expected to take place in two month's time. After the sale, MoC will decrease its holdings in Viglacera to 161.4 million shares, equaling 36 per cent of the charter capital of the corporation. The selling price will be equal to the ceiling price determined on the transaction session on the same date, but not less than VND26,100 per share or the average reference price of 30 consecutive trading days on the stock market prior to the date the information on the divestment is disclosed. Previously, at the September 14, 2017 transaction, five investment funds under VinaCapital management, namely VOF Investment Ltd., Asia Value Investment Ltd., Vietnam Investment Ltd., Vietnam Investment Property Holdings Ltd., and Vietnam Ventures Ltd., purchased a total of five million shares, raising VincaCapital’s ownership in Viglacera from 16.36 to roughly 21.36 million shares, making it a strategic shareholder. Thus, MoC’s divestment is an opportunity for VinaCapital to buy more shares to increase its holding in Viglacera if it has ambitions to do so. Most recently, Viglacera and Kaisheng Group signed an agreement to establish Yen Phong Ultra-Clear Glass Co., Ltd. to develop an ultra-clear laminated glass factory with the daily capacity of 650 tonnes in the expanded Yen Phong Industrial Zone in the northern province of Bac Ninh. The construction of the factory is expected to kick off in the third quarter of this year and be finished by 2020. Once completed, it will be the first ultra-clear laminated glass factory in the country. Its products will be used to manufacture solar panels. Besides, Viglacera and its partners are accelerating the construction of a $106.4-million ultra-clear glass factory located in the southern province of Ba Ria-Vung Tau so that the factory can go into pilot operation in the second quarter of 2019. In early May, Viglacera and Prodimat Corporation of Cuban Construction Material Company (Geicon) of the Cuban Ministry of Construction signed a contract to launch the 50/50 SANVIG joint venture manufacturing building materials. The project has a total investment of $59.7 million and charter capital of $39.86 million. In the first phase, the joint venture will focus on renovating and upgrading its two existing ceramic tile factories to improve productivity, quality, and change product design in order to meet the designed capacity of three million square metres of tiles and 150 thousand sanitary ware products per year. Then, in the second phase, the joint venture will invest in a brick factory with a capacity of three million sq.m and a sanitary ware factory with a capacity of 500,000 products per year. Standard Chartered Vietnam asks Quang Minh Corporation to pay $4 million debt At the first instance hearing, the representative of Standard Chartered Vietnam asked Quang Minh Corporation JSC (QMC) to pay its debts of VND89.9 billion ($4 million), and Standard Chartered Mauritius also asked for the repayment of over VND38 billion ($1.7 million). In 2013 Standard Chartered Vietnam and Standard Chartered Mauritius granted letters of short-term credit for Quang Minh Corporation JSC (at No.1 Thanh Nien street, Ba Dinh district, Hanoi) limited at $20 million. Then they signed contracts of mortgaging goods, receivables, insurance contracts, as well as all of QMC’s accounts and deposits in banks to secure the loans. Standard Chartered Vietnam lent VND60.9 billion ($2.7 million) at the annual rate of 7.6 per cent first (later adjusted to 8.3 per cent), and an additional VND5.1 billion ($225,000). These debts expired in April 2015, but QMC has only paid VND290 million ($12,775) to date. In 2015, Standard Chartered Mauritius also gave $5.1 million and $0.522 million to QMC. These two debts expired in early 2015 but QMC has only paid $4.2 million, while $1.3 million remains left to be paid. At the first instance hearing, the representative of Standard Chartered Vietnam asked QMC to pay VND89.9 billion ($4 million) to offset its debt and interests. The bank did not wish to take collateral to recover the loans. The representative of QMC acknowledged the loan Standard Chartered Vietnam claimed. However, the corporation has been facing many difficulties and is unable to pay the debts. QMC asked the bank for a grace period to collect the money, but could not give a timeline of payment, and affirmed that the company’s situation is still very difficult. The court identified that the letter of credit is in line with regulations, the agreements are voluntary and valid for all parties, thus accepted Standard Chartered’s lawsuit. QMC will have to return VND89.9 billion ($4 million) to repay the original debt and interest to Standard Chartered Vietnam and VND38.4 billion ($1.7 million) to Standard Chartered Mauritius. QMC has to pay over VND128 billion ($5.7 million) in total. Quang Minh Corporation JSC produces agricultural products, feed for husbandry, as well as processes and trades in cooking oil with the brands Mr Bean, OilLa, and Soon Soon. The corporation had the charter capital of VND989 billion ($43.6 million) in 2010 and produced several accomplishments as one of the 500 biggest businesses in Vietnam. Some banks used to grant letters of credit limited at trillions of dongs (around half a hundred million dollars) for QMC’s large projects. However, QMC ran on a rough patch in 2015 after being named on the list of tax debtors. The corporation closed its website and kept quiet on the market since then. Related to the unrecovered outstanding loans of Standard Chartered Bank, Binh Dinh Sugar (Bisuco) may also not be able to meet its debt obligations. This company is carrying VND800 billion ($35.56 million) in unsettled accounts to creditors, local farmers, its employees, and local tax authorities. A couple of years ago, Standard Chartered Bank was reported by local media to have foreclosed a factory mortgaged by Bisuco, following the company’s failure to keep up with its loan payments. Yeah1 to sell 7.8 million shares on HSX DFJ VinaCapital-backed entertainment group Yeah1 will offer 7.8 million shares for both foreign and local firms before trading 27.4 million shares on the Ho Chi Minh City Stock Exchange (HSX). According to the plan, Yeah1 will start to put these shares on sale with the expectation to acquire $100 million in proceeds at the share price of VND300,000 ($13.17). To date, numerous foreign firms from the UK, Singapore, Japan, and Thailand registered to buy 70 per cent of the offered shares. Some of the largest names lining up for a stake are Capital Asset Management, Probus Group, and TT International Limited, among others. Yeah1 will spend the acquired money on expanding its operations via investments, M&A deals, as well as partnerships. Recently, HSX released that it had received Yeah1’s application to trade 27.37 million shares, equivalent to VND274 billion ($12 million) of charter capital, making it the first local entertainment company to list on the stock market. The first transaction session is expected to be in June. The entertainment group previously approved plans to raise capital from VND238 billion ($10.4 million) to VND312.8 billion ($13.7 million) and raise the foreign ownership ratio to 100 per cent after listing the shares on the stock exchange. As of the end of 2017, the group was owned by Nguyen Anh Nhuong, chairman of the Board of Directors (41.4 per cent), DFJ VinaCapital (35.71 per cent), Ancla Assets Ltd. (12.49 per cent), and the group’s CEO Dao Phuc Tri (4.37 per cent). Established in September 2006, Yeah1 specialises in entertainment for young people in Vietnam and runs a series of entertainment channels including Yeah1TV, Yeah1family, Imovietv, and SCTV2, with nine subsidiaries and four indirect subsidiaries, including Yeah1 Vietnam Co., Netlink Online Corporation, and TNT Media Advertising. In 2008, DFJ VinaCapital, a venture fund of Vietnam’s leading asset manager VinaCapital invested $1.4 million in Yeah1. Yeah1 has partner relations with numerous giants, including Samsung, Unilever, Coca-Cola, Heineken, and Viettel. In addition, the group expanded its operations to Thailand, Indonesia, and the Philippines. MoT conclusion: loose management and advance payments at ACV A series of shortcomings in airport infrastructure projects developed by ACV (Airports Corporation of Vietnam) has just been uncovered by the Ministry of Transport's (MoT) Inspectorate. The Ministry of Transport (MoT) has just completed the conclusions of its ten-month inspection on the mobilisation, management, and usage of capital in ACV. During the inspection all procedures of developing investment and construction projects were reduced since ACV’s establishment in 2012 through the merger of Northern, Central, and Southern Airports Corporation of Vietnam. ACV manages projects using the greatest volume of state capital in the transport sector. Between 2012 and 2016, this corporation developed 85 projects which exceeded the VND15 billion ($0.66 million) of investment value each. The total investment of these projects was over VND42.14 trillion ($1.86 billion), including VND1.42 trillion ($62.6 million) from public capital, VND4.222 trillion ($186 million) from government bonds, VND12.443 trillion ($548.2 million) in ODA capital, and over VND24 trillion ($1.06 billion) from ACV’s counterpart fund. In addition to reviewing the management of basic construction investment, the Inspectorate of MoT also highlighted ten projects and outlined particular conclusions for each. These are: The 64-page inspection conclusion (No. 5045/KL-BGTVT) provides a list of shortcomings in the management of investment at airports developed by ACV. The first issue is the large number of projects that have been completed for a long time but have yet to finalise the balance sheet. 44 of the 85 projects with the total investment value of VND30.4 trillion ($1.34 billion) and total execution value of VND25.298 trillion ($1.11 billion), and total disbursement value of VND24.94 trillion ($1.1 billion). Beside the normal reasons for slow settlement that every developer usually faces, some projects of ACV could not even complete basic construction procedures for a variety of unique reasons. According to MoT’s Inspectorate, the firm was loose in paying in advance for building materials, so the advance payments exceeded the contractual value. Also, the Inspectorate has mentioned another issue occurring at least three times in ACV’s investment management. Accordingly, ACV is a joint stock company, but state-owned capital captures 95.4 per cent of its charter capital. This means ACV’s investment capital is mainly state capital. The Inspectorate said that ACV is an investment decision maker, the developer, and the recipient of the projects. Thus may not be completely objective throughout the management of construction investment. BMW recall of 470 cars in Vietnam may be due to fire risk German car manufacturer BMW’s sudden recall of 470 cars in Vietnam may be related to the car giant’s re-exporting of 88,000 vehicles in the UK due to fire risk. AFP stated that on May 18, BMW expanded a British safety recall for another 88,000 vehicles because of a fire risk. At the same time, BMW Asia Group made a press statement announcing to re-export 470 cars, 106 MINI vehicles, and 55 motorcycles (BMW Motorrad) from Vietnam back to Germany. Accordingly, these vehicles are still in containers at VICT (Ho Chi Minh City) and Cai Mep Port (Ba Ria-Vung Tau). “The Vietnamese General Department of Customs approved BMW and BMW Asia to re-export these vehicles back to Germany. Currently, we are tightly co-operating with the Ho Chi Minh City Customs and the Ba Ria-Vung Tau Customs to complete procedures to recall these BMW vehicles,” stated BMW Asia’ press release. However, the press release did not mention the reason of the recall. To clarify this issue, VIR contacted to representative of BMW in Vietnam who refused to immediately answer questions. According to AFP, last Friday’s press release was BMW’s second press release in two weeks, expanding BMW’s initial recall of 312,000 diesel and petrol vehicles on May 9 due to a risk of the engines cutting out. BMW will now examine another 88,000 cars, plus 200,000 cars that have already been checked. “We are taking the opportunity of the existing recall to proactively check for other issues,” BMW’s spokesman added last Friday. Previously, BBC also stated that BMW is focusing on recalling the BMW 1 Series, the 3 Series, the Z4, and the X1 cars that were produced between March 2007 and August 2011 to check speed brakes. In 2013, BMW also recalled about 500,000 vehicles in the US, Australia, Canada, and South Africa. VOF makes loss on newly-bought state-owned firms VinaCapital’s Vietnam Opportunity Fund seems to have suffered a loss from purchasing a stake in Vietnamese state-owned firms BSR and PV Power after the big firms’ shares fell post-IPO. In the first quarter of this year, VOF spent $45 million acquiring stakes in Binh Son Refining and Petrochemical Company Limited (BSR) and PetroVietnam Power Corporation (PV Power). Both BSR and PV Power are large-scale state-owned firms and their initial public offerings (IPOs) broke records on the stock exchanges. The starting prices for the IPOs were also very high. However, after the successful deals, the share’s value dropped, decreasing the value of VOF’s investment. Notably, VOF spent approximately $25 million acquiring 10 per cent of BSR at VND22,000 per share. Factors that made VOF invest approximately $25 million in BSR include the fact that it is the only operating oil refinery in Vietnam, commanding 33 per cent of the market share, with the remaining 67 per cent of refined products being imported. The refinery business tends to be less affected by oil price volatility than other segments of the oil and gas sector. Besides, the market cap of the company at the starting price was $2 billion, making it one of the largest companies in Vietnam. More importantly to the investment, the starting price was very attractive, at an estimated 2017 P/E of 5.6x and 2017 EV/EBITDA of 3.8x compared to the current market P/E of 20x. However, according to the transaction session on May 22, BSR’s share was valued at VND19,700. Thus, VOF has suffered a slight loss. In PV Power, VOF’s investment was more than $20 million. VOF also saw this as an attractive investment with an estimated P/E of 11.5x at the starting price of VND14,400. However, after the first transaction session at the price of VND17,800, PV Power’s shares decreased by 25 per cent to VND13,300. Most recently, the share value increased to VND14,000, thanks to the impact of the positive business results of the first quarter. VIR contacted VinaCapital to clarify information as well as enquire whether VinaCapital, through VOF, will sell its stakes in BSR and PV Power if the share values continue to decrease. However, VinaCapital declined commenting. Tundra Fonder becomes major shareholder of HSG as others withdraw Tundra Fonder has just bought one million additional shares in Hoa Sen Group (HSG) to become a major shareholder, while Le Phuoc Vu’s wife is selling all her stocks in the group. Tam Thien Tam Co., Ltd., a big shareholder of Hoa Sen Group, has just announced sell its entire holding of 19.21 million HSG stocks, roughly 5.49 per cent of HSG’s charter capital. The transaction is expected to take place between May 23 and June 21. One month ago, Tam Thien Tam Co., Ltd., where Hoang Thi Huong Xuan (HSG chairman Le Phuoc Vu’s wife) is chairwoman, also sold five million HSG stocks to reduce its ownership to 5.49 from 6.92 per cent. Tam Thien Tam divested from Hoa Sen Group as the stock was on a downward trend. The stock had three consecutive sessions of decrease during the last week. At the end of the May 18 session, HSG was around VND14,000. It has decreased by 22 per cent over a single month to the previous bottom price three years ago. Accordingly, Tam Thien Tam will earn around VND269 billion ($11.85 million) after successfully selling 19.21 million shares. Several days ago, Tundra Fonder increased its ownership in HSG to over 12 million shares, equivalent to 3.49 per cent. Along with the HSG shares owned by Tundra Sustainable Frontier Opportunities Fund, Tundra Fonder now owns over 18.1 million HSG shares, equivalent to 5.18 per cent, and is a key shareholder at Hoa Sen Group. Tundra Fonder is a Swedish asset manager specialising in frontier markets and new emerging markets through its Tundra Vietnam Fund, Tundra Pakistan Fund, Tundra Sustainable Frontier Fund, and Tundra Frontier Africa Fund. In early 2018, Tundra’s growth hit 15.4 per cent, which was the highest growth among its markets in Vietnam, Nigeria, Pakistan, and Sri Lanka. Tundra Vietnam Fund started in May 2014, and total asset value has just reached around $165 million. Currently, the biggest shareholders of HSG are Hoa Sen Investment Co., Ltd. (25.1 per cent), Hoa Sen Investment and Tourism Co., Ltd. (20.25 per cent), Le Phuoc Vu (10.7 per cent), Tam Thien Tam Co., Ltd. (5.49 per cent), and Tundra Fonder (5.18 per cent). According to HSG’s business results in the first quarter of 2018, the group’s net profit was only VND115 billion ($5 million), equivalent to 20 per cent of the same period last year, due to increasing costs. HSG gained only VND87 billion ($3.7 million) in profit in the first quarter of 2018, which is the lowest amount within the last four years for this group. Meanwhile, the liabilities of Hoa Sen Group stood at VND18.436 trillion ($0.8 billion), up VND2.167 trillion ($95.5 million) over the beginning of the year. Thereby, the group has to spend around $100,000 per day for interest payments. Walt Disney deal to give facelift to Dai Dong Tien Plastics furnishing As the Vietnamese plastics and packaging industry is luring in a new wave of foreign investors with its strong growth, a domestic plastics manufacturer has teamed up with Walt Disney to take over the market. Most recently, Dai Dong Tien Corporation, a local plastics manufacturer, entered into a co-operation with The Walt Disney Company (Southeast Asia) Pte., Ltd. to develop the former’s plastic products. Accordingly, Dai Dong Tien became the only strategic partner of Walt Disney in the Vietnamese plastic sector authorised to use the images of beloved Disney characters (Avengers, Spiderman, Disney princesses, Frozen, and standard characters) on home furnishing products and to sell such products in Vietnam. Dai Dong Tien expected that the deal will create a new face for local plastic household products which are currently decorated mostly with monotonous images of animals and flowers. Besides, co-operating with the global entertainment group will help Dai Dong Tien gain market share, bringing them closer the target of becoming the leading plastics manufacturer in Vietnam. With its great unexploited potential, the plastics sector is a lodestone to foreign investment. Ho Duc Lam, chairman of the Vietnam Plastics Association, said that the plastics sector will continue to grow on the back of strong growth in the domestic demand. Per capita plastics consumption is projected to increase to 45 kilogrammes in 2020, mainly due to growth in the packaging and construction segments. Co-operating with The Walt Disney Company will help Dai Dong Tien gain market share, bringing them closer the target of becoming the leading plastics manufacturer in Vietnam. Additionally, numerous foreign investors have ambitions to acquire local plastics manufactures via M&A deals. In December 2017, Japan’s Sojitz Pla-Net, the plastics division of Sojitz Corporation, entered into a strategic partnership with Rang Dong Plastic JSC to establish greater co-operation in the market, with Rang Dong Plastic selling a 20 per cent stake in its subsidiary Rang Dong Long An Plastic JSC to Sojitz Pla-Net. (Sojitz Pla-Net concluded an agreement for a strategic alliance with RDP in March 2016). The firms will join forces to develop the Rang Dong Long An factory complex in the southern province of Long An. The first phase of the project started operations in mid-May. With $32 million in investment capital for the first stage, the plastics complex will house three factories on an area of 8.7 hectares. The factories will employ the latest technology from Germany, Italy, Japan, Taiwan, and South Korea. Previously, in September 2015, Dongwon Systems, a packaging unit of Dongwon Group, released the information on its website that it completed the purchase of controlling stakes in Vietnamese packaging firms Tan Tien Plastic Packaging and Minh Viet Packaging for the total cost of $96 million. According to the agreement, Dongwon Systems would transfer technology to the Vietnamese firms to export high-performance packaging materials. The firm expected that it will be able to leapfrog to become a global integrated packaging company with the acquisition of Tan Tien and Minh Viet. In the same year, SCG completed the acquisition of an 80 per cent controlling interest in Vietnam’s Tin Thanh Packing JSC (Batico) for $44.4 million. At the time, the deal was the largest purchase in the Vietnamese plastics sector. At the time, Batico was one of Vietnam’s top five packaging companies, churning out some 230 million square metres of products on average each year and it held a 40 per cent market share in the southern region. Previously, in December 2013, Oji Holdings Corporation acquired 75 per cent of all the issued shares of United Packaging Joint Venture Co., Ltd. The value of the deal was not disclosed. At present, the Vietnamese plastics industry has 3,000 enterprises operating across the country. The 2016 revenue of the plastics industry was estimated to reach nearly $14 billion, a 10.3 per cent increase compared to 2015. Walt Disney deal to give facelift to Dai Dong Tien Plastics furnishing As the Vietnamese plastics and packaging industry is luring in a new wave of foreign investors with its strong growth, a domestic plastics manufacturer has teamed up with Walt Disney to take over the market. Most recently, Dai Dong Tien Corporation, a local plastics manufacturer, entered into a co-operation with The Walt Disney Company (Southeast Asia) Pte., Ltd. to develop the former’s plastic products. Accordingly, Dai Dong Tien became the only strategic partner of Walt Disney in the Vietnamese plastic sector authorised to use the images of beloved Disney characters (Avengers, Spiderman, Disney princesses, Frozen, and standard characters) on home furnishing products and to sell such products in Vietnam. Dai Dong Tien expected that the deal will create a new face for local plastic household products which are currently decorated mostly with monotonous images of animals and flowers. Besides, co-operating with the global entertainment group will help Dai Dong Tien gain market share, bringing them closer the target of becoming the leading plastics manufacturer in Vietnam. With its great unexploited potential, the plastics sector is a lodestone to foreign investment. Ho Duc Lam, chairman of the Vietnam Plastics Association, said that the plastics sector will continue to grow on the back of strong growth in the domestic demand. Per capita plastics consumption is projected to increase to 45 kilogrammes in 2020, mainly due to growth in the packaging and construction segments. Co-operating with The Walt Disney Company will help Dai Dong Tien gain market share, bringing them closer the target of becoming the leading plastics manufacturer in Vietnam. Additionally, numerous foreign investors have ambitions to acquire local plastics manufactures via M&A deals. In December 2017, Japan’s Sojitz Pla-Net, the plastics division of Sojitz Corporation, entered into a strategic partnership with Rang Dong Plastic JSC to establish greater co-operation in the market, with Rang Dong Plastic selling a 20 per cent stake in its subsidiary Rang Dong Long An Plastic JSC to Sojitz Pla-Net. (Sojitz Pla-Net concluded an agreement for a strategic alliance with RDP in March 2016). The firms will join forces to develop the Rang Dong Long An factory complex in the southern province of Long An. The first phase of the project started operations in mid-May. With $32 million in investment capital for the first stage, the plastics complex will house three factories on an area of 8.7 hectares. The factories will employ the latest technology from Germany, Italy, Japan, Taiwan, and South Korea. Previously, in September 2015, Dongwon Systems, a packaging unit of Dongwon Group, released the information on its website that it completed the purchase of controlling stakes in Vietnamese packaging firms Tan Tien Plastic Packaging and Minh Viet Packaging for the total cost of $96 million. According to the agreement, Dongwon Systems would transfer technology to the Vietnamese firms to export high-performance packaging materials. The firm expected that it will be able to leapfrog to become a global integrated packaging company with the acquisition of Tan Tien and Minh Viet. In the same year, SCG completed the acquisition of an 80 per cent controlling interest in Vietnam’s Tin Thanh Packing JSC (Batico) for $44.4 million. At the time, the deal was the largest purchase in the Vietnamese plastics sector. At the time, Batico was one of Vietnam’s top five packaging companies, churning out some 230 million square metres of products on average each year and it held a 40 per cent market share in the southern region. Previously, in December 2013, Oji Holdings Corporation acquired 75 per cent of all the issued shares of United Packaging Joint Venture Co., Ltd. The value of the deal was not disclosed. At present, the Vietnamese plastics industry has 3,000 enterprises operating across the country. The 2016 revenue of the plastics industry was estimated to reach nearly $14 billion, a 10.3 per cent increase compared to 2015. Motorbike sales hit a red light Foreign investors in motorcycle manufacturers witnessed only a marginal increase in unit sales during the year’s first quarter and with Yamaha Motor Vietnam’s reports of unit sales decreasing, concerns are circulating that this market is reaching its saturation point. The total number of motorcycles sold in this year’s first quarter – from the likes of Honda Vietnam, Piaggio Vietnam, Suzuki Vietnam, SYM Vietnam, and Yamaha Motor Vietnam – is 803,204 units, a mere 1.9 per cent increase on-year according to the Vietnam Association of Motorcycle manufacturers (VAMM). Each month the five firms sold nearly 270,000 motorbikes on average, which means that approximately 9,000 motorbikes were sold each day nationwide. There are no details on the individual company sales, but in recent years, Honda Vietnam has been dominating the sector with a market share of about 69 per cent in 2017 according to Honda Vietnam, with Yamaha Vietnam following behind. A fortnight ago, Yamaha Motor announced consolidated business results for the first quarter, saying that “Unit sales in developed markets decreased due to factors such as a decline in total demand and irregular weather in Europe. Unit sales in emerging markets such as Indonesia, the Philippines, and Brazil increased, but decreased in the Vietnamese market.” According to the Ministry of Industry and Trade (MoIT), as more people in Vietnam tend to choose other travel methods than motorbikes, the market has suffered low growth in recent years. Vietnam is the fourth-largest motorcycle market in the world, after China, India, and Indonesia. According to the MoIT’s latest data, the number of motorbikes in Vietnam has already surpassed 45 million, 25 per cent above the government’s plan. It is an astounding figure that one in every two people owns a motorcycle. VAMM has forecast that the market is entering a saturation period. Currently, automatic motorbikes account for 45 per cent of the market share. Tuan Anh, a salesman at the Yamaha store on Kieu Mai Street in Hanoi, said his store receives 40 per cent fewer customers than four years ago. “In the past we would earn several million dong in profit for each Yamaha we sold, but now we are only taking several hundred thousand dong. If we include the cost of rent and employee salaries, we are lost,” said Anh, adding that some Yamaha stores had closed due to sustained losses. Vietnam’s motorbike market is in trouble and will continue to slow down in the near future as the supply has already surpassed demand, a representative of Honda Vietnam told VIR. The competition for a share in the saturated Vietnamese motorcycle market is going to heat up in the next few years, with companies targeting the few remaining niche markets and raising the quality of their after-sale services, according to VAMM. Hoa Lac Hi-Tech Park boosts investment climate improvement The Management Board of Hoa Lac Hi-Tech Park (HHTP), based in Hanoi, will press on with improving its investment environment to attract more funding. Deputy Minister of Science and Technology Pham Dai Duong, who also chairs the HHTP Management Board, said in the first four months of 2018, the management board granted investment registration certificates for four projects worth nearly 10.92 trillion VND (477.7 million USD) and covering 15.4 hectares of land. In 2017, certificates were provided for three projects with total investment of more than 5 trillion VND, covering 11.7 hectares of land. Compared to 2016, average investment per hectare of land here has risen by more than two times to 31.5 million USD at present. Duong said projects with investment registration certificates are being swiftly implemented. Notably, the factory of the Hanwha Aero Engines company, invested by the Republic of Korea’s Hanwha Techwin Co. Ltd, has had its construction completed and is operating on a trial basis. This factory project has total registered capital of 200 million USD, which is expected to rise to 260 million USD in 2021. Meanwhile, two of the five projects worth 1 billion USD in total in the HHTP invested by Japan’s NIDEC Corporation received investment certificates last April. They are working to finalise procedures for construction so as to put the plant into operation in the first quarter of 2019. He noted the HHTP Management Board will propose mechanisms and policies for the park to improve investment quality. It will also continue reviewing projects to ensure they are implemented as scheduled and prevent land wastefulness. The board has so far revoked 19 projects that lagged behind schedule or failed to run as planned. It has also reduced land areas used by two other projects, the official added. Located in Thach That and Quoc Oai districts, the 1,586-hectare Hoa Lac Hi-Tech Park is being developed into a science city hosting investors in biotechnology, information – communications, new material technology and automation. The rise of social network retailers in Vietnam Like many urban Vietnamese women, Nguyen Thu Trang never lets her smartphone out of reach. The first thing she does every morning is checking Facebook on her phone to see what her friends are up to and what items are for sale. “Social networks help me keep in touch with friends and stay up to date with latest trends. It is also a very effective shopping channel,” said the 32-year old office worker in Hanoi. Trang prefers Facebook to local e-commerce sites because she can directly inquire sellers for the specific information she needs. For fashion products such as clothing items or shoes, she can decline to buy the items when they are delivered if they don’t fit or their quality doesn’t match what she expects. Trang is just one of millions of Vietnamese social media savvy users who regularly shop on channels like Facebook, Instagram and homegrown Zalo. They buy everything, from groceries and homemade products, to cosmetics, clothes and household items from informal online family-run businesses. In a user-friendly interface where sellers and buyers are easily connected, many Vietnamese are choosing social network shopping instead of going to big brands in the e-commerce industry which don’t always offer them the items they need.  According to experts, since social networks in Vietnam, especially Facebook, have amassed a huge following with their newsfeed algorithms designed to grab user’s attention and boost engagement, these platforms have become the perfect market place. Vietnam ranked 7th worldwide for number of Facebook users last year, at 64 million or more than half of the country’s population, according to a report by marketing and advertising agency We Are Social. Vietnamese also spend more time on Facebook than users in most other Southeast Asian countries and are much more apt to use it as a platform to start a business, Joe Nguyen, ComScore Inc. senior vice president of Asia Pacific told Bloomberg. Many people sell their items on Facebook just to make some extra income on top of their day jobs. However, there are those who take Facebook seriously and base their entire business on the social network. It is estimated that there are about 50 young Vietnamese from the age of 19 to 20 who have become dollar millionaires for making money online, said Huynh Kim Tuoc, a representative of Facebook in Vietnam in the Vietnam Online Business Forum 2017. “We haven’t seen this scale in other places,” Joe Nguyen said. “Vietnamese are very entrepreneurial. Everyone wants to try to sell something.” Nguyen Thanh Mai, who works at a biotechnology center in Hanoi, is one of them. Customers can order fresh or processed food from her on Facebook and wire her the money or pay cash on delivery. “Selling products on social networks is the easiest way,” Mai said. “I don’t have to pay monthly rent like a brick and mortar business, which is a huge advantage to new ventures like mine.” The online shop has turned the 35-year-old office worker into a successful entrepreneur. After two years, her one-woman business now employs eight people. “As long as the social network is people’s favorite, I can make a living out of it,” Mai said. In Hanoi and Ho Chi Minh City alone, there are at least 27,000 Facebook accounts that use the social media network as a retail platform, according to estimates by local authorities, who have yet to figure out how to collect taxes from these shops. Many, if not most of the Facebook retailers are run by mothers who often start as a way to supplement their income when they are on maternity leave. Their customers, fellow mothers, trust the seller as someone who’s been there, done that. Someone, who is using her reputation and experience as a mother to not simply sell but also share parenting experience with her fellow friends, argues Dr. Nguyen Thu Giang who is studying motherhood in the time of Facebook and food scares. As Vietnamese have a habit of physically “touching” a product, another reflection of trust issues, they often surf the Internet for prices without actually ordering from the online retailers. Facebook retailers, on the other hand, tend to offer a more flexible return policy, allowing customers to physically check out the product first, before paying.  Online sales in Vietnam have expanded rapidly in recent years, currently accounting for 3.39% of the country’s retail market. The total retail market grew 10.9% last year to US$173.27 billion, as reported by local media. The World Bank forecasts that Vietnam’s US$200 billion economy is likely to grow to a trillion dollars by 2035. More than half of its population, compared with only 11% today, is expected to join the ranks of the global middle class with consumption of US$15 a day or more. According to one estimate, about 30% of the population will be buying goods and services over the internet in 2020, with each shopper spending an average of US$350 per year. However, Trang believes there is no reason not to have a favorite cosmetic, fashion or household product delivered at her doorstep with only a small amount of delivery fee after ordering on a social network. “Social networks will continue to be my favorite shopping channel in the future.” E-commerce giants struggle to find profit in Vietnamese market Multiple online retailers in Vietnam have been struggling to gain profits for years due to high operational costs in a competitive market. Tiki.vn, one of the most popular e-commerce firms in Vietnam, recently reported a VND322 billion (US$14 million) loss in two years. The loss in 2017 of the online retailer, which sells a variety of products including clothes, household items and electronic devices, has tripled its charter capital and is seven times its loss in 2016. Tiki.vn is not the only e-commerce company in Vietnam that has been suffering from losses in recent years. Before being acquired by the Chinese giant retailer Alibaba in 2016, Lazada Group said that it has lost US$334 million in 2015 the Southeast Asia market, including Vietnam. This lost is double what it posted in 2014, according to TechCrunch. Some local e-commerce companies like Lingo.vn, Deca.vn and Beyeu.com have also been forced to shut down due to prolonged losses. According to experts, e-commerce is an industry which requires a long time to recover capital and gain profit, therefore the losses of these giants in the Vietnamese market is understandable. Big brands in the field such as U.S.-based Amazon and Alibaba has to go for 10 years before having profit. Operating cost, especially logistics costs, is one of the main reasons for the losses. As large e-commerce firms often require massive warehouses covering thousands of square meters and hundreds of staff to work in them, logistics costs account for 60-70% of online retailers’ revenues, said trade expert Vu Vinh Phu. This enormous cost can be seen from the case of Tiki and Lazada Vietnam, each has a storage of over 4,000 square meters (about 1 acres) with 300 staff in Ho Chi Minh City. It is estimated that the operating cost of one of these storages is VND1 billion (about US$44,000) a month. With three warehouses in operation, the two companies spend about US$2 million a year, according to local media. In addition, marketing also plays a part in the high costs of e-commerce companies in Vietnam. When entering the market, Lazada Vietnam invested heavily in television and online advertising to attract users and gain market share. This company used to spend up to US$2 million per month for advertising programs, local media said. The popularity of shopping on social networks such as Facebook or Zalo is also creating challenges for big online retailers. “There is an unbalanced competition between e-commerce giants such as Lazada, Tiki and Shopee with social network sellers,” said Pham Thai Binh, head of retails at property consultancy Savills Ho Chi Minh City. As businesses on social networks don’t have to pay high costs of investment, item price range is lower which in turn attracts the majority of Vietnamese people, Binh said. On the other hand, famous brands have to invest a great deal in terms of staff, operating system and other relating costs, he added. As Vietnamese has a habit of physically “touching” a product, they often surf the Internet for prices without actually ordering from the online retailers. The lack of information and customer service tools also plays apart in the problem. To compete in the market, retail giants in Vietnam are under pressure of price competition which leads to a loss of profit. Under pressure from investors, many businesses sometimes accept to sell 10 or 20% below market price, local media said. Despite those difficulties, experts believe that there is still great potential for e-commerce in Vietnam in the future. In a survey of about 1,000 participants conducted by CBRE Vietnam, a commercial real estate services and investment firm, 25% said that they will reduce the frequency of shopping at brick and mortal businesses. About half of participants said that they will shop online more in the future. In the annual survey of Vietnam’s Business Studies and Assistance Center (BSA), the number of people shopping online has tripled from 0.9% in last year to 2.7 this year. As young people start to participate more in online shopping, e-commerce is a potential area for retailers to exploit, which will bring many benefits to customers, said a representative of BSA. E-commerce is a fast growing industry as customers’ behavior change every day, said Tran Tuan Anh, CEO of the online retailer Shopee Vietnam. “This year will be the year of e-commerce as Vietnamese people are now very familiar with online shopping,” he said. Price will continue to be an important factor for Vietnamese customers, but product quality and service are becoming more important, he said. As more and more consumers are aware of e-commerce, the brand, service, technology and value added services such as shipping and payment will need to be improved, Anh said. Tran Ngoc Thai Son, CEO of Tiki, also believes that the transition from traditional to online shopping is inevitable. E-commerce, now accounts for 3% of the US$90-billion revenue of Vietnamese retail market, will grow to a 5 or 10% segment in the future, Son said. However, online shopping will not be able to replace brick and mortar businesses, he said.  “The growth rate of Vietnam’s e-commerce market is estimated at about 35%, which is 2.5 times higher than Japan,” said industry expert Duc Tam at the Vietnam Online Business Forum 2017. According to one estimate, about 30% of the population will be buying goods and services over the internet in 2020, with each shopper spending an average of US$350 per year. VN produce to show off at Thai expo     Thirty leading Vietnamese food and beverage companies will showcase their organic produce and other foods that meet global standards, as well as geographical indication-protected products at an expo to be held in Bangkok from May 29 to June 2. This will be the first time the Vietnamese High Quality Products Business Association is sending businesses to ThaiFex – an International Trade Exhibition for Food and Beverages, Food Technology and Retail and Franchise in Asia, said Vu Kim Hanh, chairwoman of the association. The participating companies will include Vinamit JSC; Ben Tre Import-Export JSC; Trung Nguyen Group; VinEco Agricultural Investment, Development and Productions LLC; Lai Phu JSC; Thuan Thien Thanh Food Investment and Development JSC; Co May Co Ltd; Bibica JSC; and Petrolimex Import-Export JSC. The Vietnamese pavilion will have an “organic and natural village” to showcase organic products such as desiccated fruits, rice, processed coconut and milk, alongside products with geographical indication like Phu Quoc fish sauce, Binh Thuan dragon fruit, Binh Phuoc cashew nuts, Ben Tre’s Xiem coconuts and grapefruits, and natural products like Dong Thap lotus. A cookery show by food artisan Bui Thi Suong and the Viet Nam Culinary Conservation, Research and Development Centre will be held on the first three days of the exhibition, to introduce Viet Nam’s unique dishes to visitors, Hanh said. The Vietnamese delegation will organise business matching programmes between Vietnamese and ASEAN firms, and there will be an international seminar with Vietnamese and foreign speakers discussing the potential of the ASEAN market and sharing their experience in developing and commercialising products with geographical indication. Hanh said businesses could promote their products and technologies, seek business partners and get updated on global consumer tastes and market trends in the food and beverages sector. Jointly organised by Koelnmesse Pte Ltd, Thailand’s Department of International Trade Promotion and the Thai Chamber of Commerce, Thaifex is expected to draw the attendance of more than 2,500 exhibitors from over 40 countries and territories. Bamboo Airways to fly 40 routes by 2023 The FLC Group’s Bamboo Airways plans to open 24 domestic routes and 16 international routes by 2023. Given the plan, the 24 aircraft to be received from Airbus in the 2022-2025 period is only part of its overall strategy, according to General Director Mr. Dang Tat Thang. Bamboo Airways has already conducted a number of practical activities, such as signing a memorandum of understanding to purchase 24 Airbus A321neo aircraft and a purchase agreement for ten Boeing 737 Max 9 and five 777X aircraft. While waiting for the handover of aircraft from Airbus, Bamboo Airways will lease 20 Airbus and Boeing aircraft in the fourth quarter of 2018 in order to conduct flights. The “hot” aircraft in the market, the A321neo is suitable for short-haul flights. After a period of operations and performance testing, Bamboo Airways will consider expanding its investments. As soon as the contract for 24 Airbus 321neo aircraft is completed, the FLC Group plans to order 26 Airbus A321 LR (Long Range) aircraft, bringing its fleet to 50. The A321 LR has the longest fuselage among all aircraft and is capable of flying some 7,400 km without refueling, making it suitable for Bamboo Airways’ long-term operations. Boeing has suggested the Dreamliner 787 and Dreamliner 787-10, which are designed with 20 to 45 per cent load capacity, a capacity of 323 passengers, 60 per cent noise reductions, and 20 per cent fuel savings. They would be a suitable option for long-haul international flights, especially to the Americas and Europe, which Bamboo Airways could develop after its launch in the domestic and Asian markets. The FLC Group and Bamboo Airways continue to actively negotiate with many other companies specializing in selling and leasing aircraft in the world to expand its flight services. Established in 2017, Bamboo Airways is a member of the FLC Group, has charter capital of VND700 billion ($31.1 million), and is a pioneer in the hybrid model (a combination between traditional and low-cost carriers). Passengers will be offered the same facilities as traditional airlines at a only slightly higher cost than on budget carriers. In its first year of operations, Bamboo Airways is expected to operate eight to ten routes to priority domestic destinations such as Quang Ninh, Hai Phong, Thanh Hoa, Quy Nhon, and Nha Trang in Vietnam. In subsequent years it will add international routes to Japan, South Korea, China, Thailand, Hong Kong and Taiwan. By 2023 it will open long-haul routes to the Americas, Europe and Africa. Vietnam grants first casino licence in ten years to Laguna Lang Co Laguna Lang Co, one of Asia’s largest integrated resorts with international hospitality operator Banyan Tree as its managing partner, has officially got a casino licence from the Vietnamese government, marking it the first casino license in recent 10 years in Vietnam. Laguna Lang Co is part of a chain of integrated resorts created and managed by Banyan Tree under the Laguna brand and includes Laguna Bintan in Indonesia and the flagship Laguna Phuket in Thailand. Laguna Lang Co’s Phase 1 development, with an investment of US$285 million, comprises both Banyan Tree and Angsana hotels, an 18-hole championship golf course designed by golf legend Sir Nick Faldo, luxury private villas and residences, convention facilities, recreational activities, and beachfront land for six more hotels, part of a 280-hectare project. It will be celebrating its 5th anniversary this month on May 25-27. “With the commemoration of Laguna Lang Co’s 5th anniversary, the issuance of the casino licence is a good start for our second phase,” said Ho Kwon Ping, executive chairman of Banyan Tree Holdings. “Many hotel investors and development funds have been awaiting the casino licence and the selection of a casino operator before finalising their investment into our Phase 2.” This is the first casino licence issued by the Vietnamese government in the past ten years. Laguna Lang Co welcomes world-class casino operators and investment partners to join in the next exciting phase and growth of its integrated resort development in Central Vietnam. Known for its sustainable efforts towards the environment, the local community, and the economy of Hue, Laguna Lang Co is the first luxury resort development of Banyan Tree Holdings Limited in Vietnam and has received numerous international awards. Existing infrastructure, including transportation, electrical, water, and environmental management systems, will allow the rapid development of Phase 2 and future phases. The expansion project running from 2018 to 2022 will see investment capital increase from US$875 million to US$2 billion and include international-scale casino operations on its existing land. Integrating a casino within the beach-golf resort which is in close proximity to three UNESCO Heritage sites provides a unique cultural, sporting, and entertainment experience that will further boost tourism in the central province of Thua Thien-Hue and attract global travellers. Trung Nguyen Legend Coffee expands to China market Trung Nguyen Legend has signed a cooperation deal with Shanghai Qinzhou Trade Co., Ltd, the China’s Food Products Wholesalers, aiming to send G7 coffee products to eastern China where is home to the world’s busiest cities and commercial centres such as Shanghai, Hangzhou, Suzhou and Nanjing. Shanghai Qinzhou Trade Co., Ltd has been considered a “golden distributor” for ten consecutive years in the market. With strong distribution network  on both General Trade (GT) and online channels, including mega malls like Carrefour, Lotus, Auchan, Metro, Tesco, and NGS and websites such as JD, Amazon, RT-Mart, Century Mart, Missfresh.com, and womai.com, Qinzhou will sell Trung Nguyen Legend coffee products, especially G7 instant coffee to customers in eastern China and the rest of the country. Trung Nguyen Legend has also accelerated trade promotion activities in China, introducing G7 instant coffee at Food & Beverage Innovation Forum 2018 (FBIF2018) in Shanghai and selling it on reputable websites such as Alibaba, Taobao.com, tmall.com, Yihaodian.com, and jd.com and at more than 1,000 supermarkets in China. It plans to further promotion activities and open more selling points in China’s major cities. Turnover from China, including Hong Kong and Taiwan, was estimated at more than US$30 million in 2016-2017 and expected to reach US$100 million this year. Trung Nguyen Legend has made great effort to develop Chinese and other foreign markets through promotion activities and building new plants in the country to step by step conquer the world market and consolidate its brand on the international market. Fruit and vegetable exports see robust growth over 4 months Vietnam’s exports of fruit and vegetables jumped 29.1% to US$1.32 billion during the first four months of the year, according to preliminary statistics from the General Department of Vietnam Customs. This is the first time that exports of fruit and vegetables have exceeded the earnings from crude oil (US$668 million) and set the highest record for growth in years. Vietnam’s fruit and vegetables have penetrated 60 countries and territories with many stable markets such as China, Japan, the US, and the Republic of Korea. It is noteworthy that Vietnamese products have been exported to Thailand and Indonesia, which are agricultural strongholds in themselves. China remained the largest importer of Vietnamese products, buying US$988.77 million in four months, accounting for 75% of Vietnam’s total fruit and vegetable exports, up 30.3% against the same period last year. The general picture shows that exports to most markets obtained growth over the period, with leading markets being Southeast Asia (up 19.4% to US$56.39 million), the US (up 12.3% to US$38.84 million), Japan (up 15.9% to US$36.55 million), and the EU (up 11.8% to US$32.22 million). A stand out performer, despite the modest export value of US$0.82 million, Cambodia became the fastest growing market with export growth of 279%. Some markets saw a decline in exports, including Indonesia (down 77.6% to US$0.25 million), Ukraine (down 33.6%), the UK (down 22%), and Russia (down 15%). Fair targets promoting furniture consumption in local market     The Vietnam Furniture and Home Furnishing Fair will promote locally-made wooden furniture, home decor and handicraft products for the domestic market. VIFA Home 2018, to be held in District 11’s Phu Thọ Stadium from November 16-19, will feature 600 booths displaying outdoor and indoor furniture, handicrafts and home decor, household appliances, garden decor, gifts and souvenirs. Huynh Van Hanh, permanent deputy chairman of the Handicraft and Wood Industry Association (HAWA), said: “Unlike previous years when the fair just allowed enterprises that have factories in Viet Nam to take part, this year the fair is also open to woodworking firms from other countries.” Many property firms will also join the fair, creating favourable conditions for woodworking firms to exchange information and explore business co-operation, he said. Hanh said exhibitions and trade fairs offered opportunities for exhibitors to promote their brands and products, expand market share, and enhance co-operation with potential business partners. VIFA Home last year attracted more than 12,000 visitors, including wholesale buyers in the city and from other cities and provinces, leading to many direct sales at the fair. Wooden furniture production for domestic consumption reached US$1.65 billion last year, he said. Viet Nam has become a centre for producing quality wood furniture from legal timber sources for both domestic and export markets. The domestic market is the most promising market thanks to the rapid development of the property market in the last two years. “Normally, wooden furniture demand from the new apartment segment accounts for 40 per cent of total demand, offering a great opportunity for woodworking firms,” he said. According to the fair’s organisers, Hawa and Hawa Corporation, enterprises that register early for the fair will receive special incentives. Building materials market maintains stability     The domestic building materials market has remained stable and is growing well in the first months of 2018, meeting consumer demand, the Ministry of Construction (MoC) said. The MoC said total cement consumption nationwide reached about 29.83 million tonnes by mid-second quarter of 2018, a year-on-year increase of 13 per cent. The production of building glass products was estimated at 105 million sq.m, up nine per cent compared to the same period last year. The country’s ceramic tile production stood at 257 million sq.m, up 9 per cent against the same period in 2017, while porcelain construction production reached 5.3 million products, an increase of 10 per cent. Nationwide production of unleaded bricks was estimated at 2.45 billion units, up 11 per cent. The MoC is currently completing the master plan for the exploration, exploitation, and use of minerals as primary building materials by 2025, with an outlook through 2035. The master plan will be submitted to the Prime Minister by the end of the second quarter of 2018. In the immediate future, the MoC will boost the handling and use of ash in high-power plants and chemical plants, and fertilisers as raw materials for construction materials and construction work, as stated in a Prime Minister’s decision issued last year. Petrolimex to spend 94% profit on dividends     The Viet Nam National Petroleum Group (Petrolimex) will close the list of shareholders on June 15 to pay dividends for 2017 at the rate of 20 per cent. This is equivalent to VND2,000 (8 US cents) per share. The payment is due on June 29, 2018. Petrolimex will spend some VND162 billion ($7 million) to pay dividends to shareholders. The group decided to pay cash dividends at the rate of 20 per cent, equivalent to some 94 per cent of total after-tax profit to distribute among shareholders. Last year, Petrolimex recorded more than VND5.046 trillion in net revenue and VND171.4 billion in after-tax profit. In 2018, the group targets a net revenue of over VND5.53 trillion, a year-on-year increase of 10 per cent. The after-tax profit is expected at VND189.45 billion, up by 11 per cent compared to 2017. The group will also try to spend at least 80 per cent of the entire year’s after-tax profit to pay dividends to shareholders. Green products promoted in HCM City     Many activities and environment projects are being carried out under the "Green Products Consumption Campaign” in HCM City, which has since 2010 sought to improve people’s awareness of environment protection. Organised by Sai Gon Giai Phong (Liberated Sai Gon) newspaper, the departments of Industry and Trade and Natural Resources and Environment, and Saigon Co.op until June 30, the event encourages businesses to be more socially responsible, caring for the environment and consumers’ health, and the public to consume eco-friendly products. Volunteers will go to residential areas around the city to educate and help the community identify and consume products made by businesses that fully comply with environmental regulations. Supermarkets will display “green products” and offer discounts on them to promote consumption of those items. This year, the campaign includes the Green Capacity Project for Community, under which volunteers will visit residential communities to instruct residents in classifying garbage. They will also liaise with waste recycling units to create eco-friendly products. The Green Brand is a key programme that will help the community identify green and eco-friendly products through a smart phone application. There will also be a programme to promote consumption of green products at Co.opmart supermarkets in June. Co.opmart will gift 4,000 “green consumption coupons” to consumers for shopping at its stores. It will also collaborate with green businesses to run promotions to increase consumption of products made by environment-friendly businesses and encourage consumers to use environment-friendly bags and take part in activities to encourage consumption of green products at Co.opmart stores. A representative of Saigon Co.op, which owns Co.opmart, said sales of green products had increased by 50-60 per cent during the campaign. Phung Thi Ai Van, head of the campaign organisation board, said the campaign launched in 2010 has proven effective by raising public awareness of environment protection. People in Viet Nam increasingly consume environment-friendly products and those meeting hygiene and food safety standards, turning their backs on products made by enterprises causing pollution, she said. These are positive signals indicating the green consumption trend has taken root, she said. Saigon Autotech Accessories expo opens     The 14th Saigon Autotech & Accessories, which opened on May 24, hopes to provide networking opportunities for manufacturers and suppliers of automobiles and other vehicles and components. The four-day international expo is being attended by around 200 companies, 60 per cent of them from countries and territories such as China, Korea, Taiwan, and Indonesia. On display are products like cars and electric bikes and their components like lights, braking systems and others. There will also be several forums to provide more networking and learning opportunities for participants besides business matching events. Pham Tuan Anh, deputy director of the Ministry of Industry and Trade’s industrial department, said while the automobile and component industries have been receiving a lot of support from the Government, there is room for improvement. Most local companies in auto supporting industries remain focused on simple parts such as glass, mirrors, seats and wires, he said. “Businesses and authorities need to develop supporting industries and invest more in the automobile sector. If the auto industry is well developed, it will push other industries, especially supporting industries, to grow along with it.” He stressed the importance of organising more networking and investment promotion events and providing learning opportunities. The expo, at the Saigon Exhibition and Convention Centre in District 7, is organised by the Asia Trade Fair and Business Promotion Joint Stock Company. VNN