Startups still looking for capital from venture funds
Few venture funds have been set up in Vietnam, and few startups have successfully called for capital from the funds.
Vietnam is striving to become a ‘startup nation’, but the number of venture funds operating in Vietnam remains so modest that all their names are known by startups.
These include FPT Ventures (Vietnam), Seedcom (Vietnam), IDG Ventures (the US), Cyber Agent (Japan), Golden Gate (Singapore) and 500 Startups (US).
Some funds have been set up, but they just exist on paper because they are still under the fundraising process. These include the IDT startup fund, and the fund of First project and VSF.
The number of venture funds is small, while the number of projects successfully calling for capital is even smaller. There are over 15,000 startups in Vietnam, mostly in Hanoi and HCMC. But only 20-30 startups have successfully called for capital from the funds in Vietnam.
The number of investment deals worth $1 million or more is modest. The investments in Momo, Lozi, vatgia and ononpay are among them.
Analysts said Vietnamese startups don’t have feasible business strategies which can convince venture funds to make investments. Many funds have money, but they cannot find potential startups.
The problem is that most startups have small targeted markets which do not fit venture funds. In general, funds have requirements on capital management and minimum investment amounts ($500,000 at least), while Vietnamese startups cannot satisfy the requirements.
In developed countries, venture funds can easily divest from businesses at any time by selling a stake on the stock market. But this is not an easy thing in Vietnam. Meanwhile, the success rate of investments, according to experts, is just 10 percent.
In many countries, investment funds are established by the government, aiming to give support to startups. But there is no such fund in Vietnam.
Though Vietnamese startups cannot call for much capital from venture funds, they still have close relations with the funds. In many cases, they receive advice, which to some extent is more valuable than money.
CEO Tran Nguyen Le Van of Vexere said his company received strong support from CyberAgent Ventures. The investor even gave consultancy and helped Vexere successfully call for capital the second time from Pix Vine Capital.
CEO Nguyen Ngoc Diep of vatgia.com has expressed his gratitude to Nguyen Hong Truong, former vice president of IDG Ventures, for Truong’s strong support to Vatgia, including development strategy planning.
Mai Chi, VNN
Chủ Nhật, 19 tháng 11, 2017
Petrolimex stocks fall with sinking performance
Vietnam National Petroleum Group (Petrolimex, coded PLX), has witnessed a sharp drop in share prices after a vast wave of investors started selling its stocks and setting up stock discounts, following the drop in profitability since April 2017.
In the wake of Petrolimex's bad performance since April, shareholders went on an aggressive sales campaign
Prior to the falling business performance, the ticker stood at a record price of VND69,000 ($3.03) in September.
The current price of Petrolimex plunged to VND56,200 ($2.47), a roughly 20 per cent drop from the September record.
According to the group’s consolidated income statement for the first three quarters, the consolidated before-tax profit was only VND3.5 trillion ($156.13 million), which was 87.3 per cent of the same period in 2016 and 75.7 per cent of the target.
On the contrary, the consolidated revenue of the first three quarters was VND112.4 trillion ($4.95 billion), up 27.7 per cent against the same period in 2016.
Despite the burgeoning revenue growth in the first nine months, the company’s profit went on a steep downward slope.
Speaking about losing profitability, Petrolimex’s spokesperson clarified that the key elements negatively affecting the company’s petroleum trade were incurred costs, such as social insurance expenses and outsourcing services, as well as Korean import tariffs (which is lower than the existing applicable 10 per cent value-added tax on all imports and domestically-manufactured goods).
Besides, the petroleum business also encountered obstacles in other business lines, such as petroleum aviation and bitumen in road construction.
Many economists asserted that Petrolimex might be undergoing significant pressure to improve business performance. One of the group’s business enhancement strategies was to initiate the supply of the bio-fuel RON 92 E5 from the beginning of 2018.
Nguyen Quang Dung, deputy director general of Petrolimex, noted that the petroleum group put great maximum effort into assuring that 100 per cent of the group’s petrol stations would be capable of supplying E5 bio-fuel by January 1, 2018.
Dung also added that most of the petroleum input would be acquired from domestic bio-fuel plants that meet the company’s fuel quality requirements.
In addition, regarding business administration, the petroleum provider also applied the enterprise resources planning (ERP) and enterprise gas (Egas) with the intent of enhancing business performance in 2018.
Petrolimex is a Hanoi-based company founded in 1956. The petroleum provider primarily operates in the businesses of petroleum, transportation, gas, and petrochemicals. It also provides design and engineering, commercial, as well as insurance and banking services.
Thứ Bảy, 18 tháng 11, 2017
BUSINESS IN BRIEF 19/11
Airlines to provide flight info all by electronic means
All airlines active in Vietnam will provide flight information by electronic means instead of paper documents from tomorrow, and all to the single national portal instead of different agencies, according to the Civil Aviation Authority of Vietnam.
The regulation is part of the one-door mechanism in the aviation sector which will come into force tomorrow. Regulations on managing aircraft at international airports separately issued by various State agencies have caused management overlap, according to the authority.
Take the customs sector for example. The border security and immigration management agencies ask airlines to provide passenger information in advance while the airport authorities also request them to offer this kind of information for general management.
Providing paper-based information makes it tough for management agencies to share and use general information. Besides, this practice makes life difficult for airlines.
Airlines will send relevant information to management agencies via the one-stop-shop customs system called the Vietnam National Single Window at vnsw.gov.vn at a single time. The one-door aviation mechanism will help connect general flight information with the systems of all management agencies in the sector.
The move will help shorten customs clearance and offer support to logistics companies, and enterprises involved in export and import activities via airlines.
Data of the General Department of Vietnam Customs shows all airlines have signed up for the one-door mechanism in the aviation sector.
Vietnam to apply new power retail prices
The Ministry of Industry and Trade is drafting a set of regulations on new electricity retail prices, according to a Vietnamnet report.
The draft states that electricity retail prices would be set for each category of customers, namely producers, businesses, lodging facilities, administrative agencies, and households.
The retail price for households is still divided into six groups. Families who consume up to 50 kWh of electricity per month would pay 92% of the average retail price. Those using from 51 to 110 kWh will pay 95% of the price, 101-200 kWh 110%, 201-300 kWh 138%, 301-400 kWh 154%, and over 401 kWh 159%. The move is to encourage household customers to save electricity.
The Government will subsidize poor households with an amount equal to the retail price of 30 kWh per month.
Earlier in July, the Government issued a new mechanism stipulated in the Prime Minister’s Decision 24/2017/QD-TTg allowing the State-run Vietnam Electricity Group (EVN) to hike the average power retail price when input cost rises 3% instead of 7% as before.
Depending on the input cost increase, EVN will decide the price hike of between 3% and less than 5% before reporting to the ministries of industry-trade and finance.
For increases from 5% to less than 10%, EVN can raise prices after obtaining approval from the trade ministry.
For hikes from 10% or beyond the permissible price frame, which could potentially impact the macro economy, the two ministries will work together to look into the power price plan presented by EVN.
The average power retail price has remained unchanged since March 2015.
ASEAN Port Association meets in Ba Ria-Vung Tau
The 43rd Conference of the ASEAN Port Association (APA) opened in Vung Tau city, the southern coastal province of Ba Ria-Vung Tau, drawing representatives of the ASEAN member countries, excepting for land-locked Laos.
Participants at the two-day event discussed measures to manage and exploit seaports, while sharing experience in developing seaports in the region.
At the same time, they shared experience in simplifying administrative procedures at the port, strengthening the application of information technology, and developing a network to share information.
They will also exchange ideals and initiatives to protect maritime economy, making seaport greener and friendlier to the environment.
Ho Kim Lan, General Secretary of the Vietnam Seaport Association (VSA) said that the annual meeting aims to review operation of regional seaports in 2017 and map out the association’s plan of actions for 2018.
Lan added that through the event, the VSA will introduce the deepwater seaport system and the formation of Thi Vai-Cai Mep port cluster, one of the most modern of its kind in Vietnam, thus seeking partnership with regional countries and world supply chains.
VSA also will discuss cooperation with APA members in developing high quality human resources for the region and the world.-
Strong industry, trade sectors account for 33% of HCMC’s GRDP
HCM City’s industry and trade sectors were among the leading, the city’s Department of Industry and Trade, said on Wednesday.
Compared with 2016, the index of industrial production (IIP) this year is expected to increase by nearly 8.5 per cent; turnover from retail goods and consumer services by 10.9 per cent; and export turnover by 15.1 per cent.
Industry and trade reached added value of around VND356 trillion (US$15.8 billion), accounting for 33.6 per cent of the city’s GRDP.
“The breakthrough growth of four key industries — food processing, chemistry-rubber engineering, electronics and information technology — saw significant achievements with IIP 1.83 times higher than that of national industry,” Pham Thanh Kien, director of the department, said.
“Infrastructure for modern trade included an additional 18 supermarkets, three shopping malls, and 218 convenience shops compared with 2016. There was remarkable growth of online trade, which contributed to commodity retail and consumer service turnover,” he added.
City authorities have launched many support policies for enterprises. Enterprises in the industry and supporting sectors can now borrow capital of up to VND200 billion ($8.9 million) per project, with preferential-loan interest periods lasting seven years.
This year, the city organised 35 trade promotion campaigns by connecting international retail groups with local producers and helping enterprises expand market share in neighbouring provinces and international markets.
Rapid establishment of new enterprises, with nearly 330,000 this year, an increase of 8.45 per cent, also contributed to growth.
However, most of the new enterprises were micro and small-sized companies, which have difficulty accessing preferential capital from the Government and banks.
The supporting industry has gained initial achievements, but is not strong enough to meet material demand for local producers.
“In the coming time, the trade and industry department will promote trade focusing on key markets with trade surpluses with Viet Nam of over $1 billion, like China, South Korea, Singapore, Taiwan and Thailand,” Kien added.
“We will focus on policies to help supporting enterprises so they can take advantage of free trade agreements, and develop technical barriers to minimise any negative impact from such agreements,” he added.
Economists have said that HCM City must identify its export advantages and focus all resources to promote key export industries like electronics, computers, software and digital content and services.
VN foodmakers urged to up quality
Vietnamese food producers need to focus on improving product quality, invest in new technologies and build brands to meet consumer demand and increase export value, experts said at the Vietnam Food Forum held in HCM City on Thursday.
With consumers increasingly concerned about product hygiene and food safety, more attention should be paid to the food chain’s different stages, where hazards can occur, according to Nguyen Song Ha, assistant chief representative of the Food and Agriculture Organisation (FAO) of the UN.
Good Agricultural Practices (GAP) should be applied to improve safety and quality, he said.
“Vietnamese businesses should invest more in GAP to enable our products to be more delicious and safer so as to improve our position in the world market,” Ha said.
The volume of VietGap-certified products remains modest compared to market demand, he added.
According to FAO’s forecast, consumption of high-quality food products will increase significantly until 2020, Hai noted.
Speaking on the sidelines of the forum, Nguyen Huong Quynh, managing director of Nielsen Vietnam, said consumers were willing to pay for high-quality, prestigious products.
“Vietnamese food producers have paid a lot of attention to export markets and are selling products that they have, but haven’t focused on what consumers really need,” she said.
Businesses should not forget that the domestic market has great potential and that many foreign players want to jump in, she added.
Quynh suggested that they focus more on domestic consumer demand, develop suitable products and improve their technology and product designs.
Speaking at the forum, Do Thang Hai, deputy minister of Industry and Trade, said the food industry had greatly contributed to export revenue, creating jobs and improving workers’ incomes.
Export of agricultural and food products were worth US$29.6 billion last year, a year-on-year increase of 12.7 per cent. But 90 per cent of Vietnamese farm exports are raw products, with low added value.
Leon Trujillo, an expert in branding, said: “Viet Nam has become a food production powerhouse, but not every country is aware of this.”
He urged Viet Nam’s food sector to develop a brand identity that brings value to products, the country and its food producers.
More investment in technologies is needed to raise the ratio of processed products, delegates said, adding that more research and development was necessary to increase competitiveness and add more value to products.
Nguyen Trung Anh, R&D director of the PAN Group, said the company had developed a farm-food-family closed value chain to offer trusted and traceable products.
It has also worked with local and foreign partners to transfer technologies, develop new products and automate production.
In addition, it has invested in R&D and built linkages with farmers to develop its own material sources, he said.
Deputy minister Hai said the Ministry of Industry and Trade in collaboration with ministries, business associations and companies are implementing measures to develop markets, improve quality and build brands for Vietnamese food products to gradually raise the export value of products.
At the forum, the Vietnam Trade Promotion Agency (Vietrade) signed a memorandum of understanding with the Hong Kong Trade Development Council for co-operation in trade promotions between Hong Kong and Vietnamese businesses.
Vietrade also signed an MoU with Nielsen Vietnam for co-operation in market research and development.
At the event, Jocelyn Tran, from Walmart, also described how companies could become suppliers to Walmart.
The forum included a business-to-business meeting between Vietnamese producers and foreign importing groups from France, the US, Italy, Japan and China, as well as local and foreign supermarkets and hypermarkets such as Walmart, CJ Group, Lotte, Central Group, Vinmart and Satra.
Held on the sidelines of the Vietnam Foodexpo, the forum was organised by Vietrade, the FAO and VP Bank.
Banks fail to meet businesswomen’s capital needs
A new study has found that only 37 per cent of women-owned SMEs Viet Nam have accessed bank loans in the last two years, compared to 47 per cent of male business owners. The study authors urged banks to design uniquely tailored products and services for women-owned small- and medium-sized enterprises (SMEs) in order to support the under-tapped potential of this segment.
The study, by the International Finance Corporation (IFC) under the World Bank, “Women-Owned Enterprises in Viet Nam: Perceptions and Potential”, released on Thursday, said that investing in women and promoting gender equality helps businesses reach new markets and expand.
The IFC report identifies Viet Nam’s women entrepreneurs as one of the significant forces within the SME sector. Their 95,900 firms account for 21 per cent of the country’s total formal enterprises, and 42 per cent of women’s businesses are SMEs.
Running nearly 45,000 SMEs across sectors, women entrepreneurs were found to bring in average annual revenue similar to that of male entrepreneurs. Despite their strength, women entrepreneurs are less likely to access loans than their male peers.
“One of the key difficulties that women-owned businesses find is limited capital access in banks. They feel they are not taken seriously as the customer segment,” said Rubin Japhta, senior operations officer of the IFC’s Banking on Women/SME Banking division.
Speaking with the Viet Nam News on the sidelines at the seminar, Rubin said women more often find informal forms of financing. For example, they borrow from their families or take personal loans from banks and use the money for their businesses.
“This is a more expensive financing option for business,” Rubin said. “Banks need to change their services and see the women-owned SMEs as a distinct market segment. You need to think and look through what we call the gender lens.”
The financing gap is estimated at $1.2 billion for women-owned SMEs in Viet Nam. Though Viet Nam has policies to encourage women’s entrepreneurship, most banks see this segment as less profitable, higher risk and lacking in financial management skills.
The IFC’s research showed that women business owners want to borrow more to invest in their companies and they typically record higher revenue per employee and lower default rates than their male counterparts.
“Vietnamese women are great at doing business. They are more aware of risk than male counterparts which allows them to better run their businesses,” said Craig Chittick, Australian Ambassador to Viet Nam.
Vietnamese women have a large role in their families but they are very good at balancing family responsibilities and running businesses, the ambassador said. He endorsed the idea that banks should provide better services to women entrepreneurs.
Dao Gia Hung, deputy head of SME Banking of the Viet Nam Prosperity JSC Bank (VPB), said VPBank initiated its pilot women strategy one year ago and the percentage of businesswomen in its SMEs portfolio increased from 15 per cent to 25 per cent this year.
“The non-performing loan (NPL) rate among women-owned businesses is lower than among men,” Hung said, adding that he believes women are more risk-averse than men and they make payments carefully. “We see a big opportunity in the over $1 billion market of women entrepreneurs.”
On Thursday, IFC also launched the study “Tackling Childcare: The Business Case for Employer-Supported Childcare” which encourages companies to support childcare for women employees. By doing so, they can hire and retain talented women, boosting profits and productivity.
IFC has invested more than $1 billion in private-sector banks via its Banking on Women programme and has provided advisory services to banks that want to better serve the women’s market.
Empire 88 Tower to be new HCMC focal point
Empire 88 Tower, part of the Empire City project, is set to become HCM City’s new focal point, sculpting a symbiotic vision of nature and living within city space.
Situated on the central peninsula of the Saigon River, Empire 88 Tower comprises an integrative environment that fuses natural landscape with the rapidly growing metropolis. As a result, new qualities of urban living will emerge in this mixed-use environment of work, life, culture, entertainment and public enjoyment.
The project will comprise three skyscrapers, which will soar above a mountain-shaped, garden-like podium, with the central tower reaching a height of 333m. Its 88 floors will encompass residences, apartments, a hotel and a public observation deck. Breaking open the shaft of the tower and projecting vertical gardens at towering heights, the expressively undulating platforms of the “Sky Forest” will elevate the podium’s urban landscape into the sky. Hovering terraces will cantilever in manifold directions around the tower’s central axis, reaching out into the urban context and the peninsula’s natural surroundings as a gesture of reconciliation between the city and the countryside.
Another highlight of the project, the Cloud Space, is located at the very top of the highest tower, with various possibilities to hold events and recreational activities.
In addition to the soaring landmark tower, two accompanying high-rises will comprise more traditional office typologies and residential spaces atop the landscape podium.
Empire City Project is developed by Empire City Limited Liability Company, a multi-national joint venture of prominent names in real estate development in Vietnam, Singapore and Hong Kong – Tien Phuoc Real Estate JSC, Keppel Land Ltd., Gaw Capital Partners and Tran Thai Lands Co., Ltd.
Deals signed for Hilton hotel expansion
Hotel chain Hilton and Viet Nam’s BRG Group Jsc recently signed two hotel management agreements in HCM City and Vung Tau City.
The two new facilities are branded Hilton Garden Inn and DoubleTree by Hilton, respectively.
With these additions, Hilton now has 11 hotels in operation or under construction in Viet Nam, eight of which are owned by the BRG Group.
Guy Phillips, Senior Vice President Development - Asia & Australasia at Hilton Worldwide, stated that both hotels should play an important role in marking the continued expansion of the Hilton chain in Viet Nam.
In the past three months, the company has signed three hotel management contracts in Viet Nam, showing the country’s potential for hotel business development.
Nguyen Thi Nga, Chairwoman of BRG Group, agreed with Phillips, saying that both the DoubleTree by Hilton in Vung Tau City and the Hilton Garden Inn in HCM City are the result of a long-term partnership between the two companies.
She hoped that the new hotels entering the market would attract a large number of domestic and foreign tourists to Viet Nam.
The Hilton Garden Inn is situated in District 1, HCM City, where most of the administrative offices, embassies and multinational companies are located.
The DoubleTree by Hilton Hotel in Vung Tau City is located in the heart of an already popular tourist destination with coastal stretches and natural hot springs.
By initial estimation, the two hotels will officially open in the first quarter of 2022.
The agreements between Hilton Worldwide Holdings Inc. and BRG Group were signed during a visit to Viet Nam by the former’s representative during the 2017 Asia Pacific Economic Cooperation (APEC).
Vinasun, MoMo partner on smart payments
Taxi service provider Vietnam Sun Corporation (Vinasun) and MoMo E-wallet developer M_Service Company signed a strategic cooperation agreement on Wednesday to provide smart payment service to customers.
Under the agreement, customers using Vinasun’s services can use the MoMo E-Wallet on their smartphone to scan QR codes provided by taxi drivers to pay taxi charges.
In addition, passengers who book a car via the Vinasun app can choose to link with the MoMo E-Wallet integrated in the app and the system will automatically pay the exact amount after each trip.
Once the trip and payment is completed, a message will be sent and the transaction history will be saved on the customer’s e-wallet application. This helps customers find information and manage their spending effortlessly.
Money in the MoMo E-wallet can be deposited directly from accounts at 11 banks and through international cards of users or topped up at more than 5,000 transaction points of MoMo nationwide.
Local car maker to debut new Mazda car model
Truong Hai Automobile Joint-Stock company (Thaco), in co-operation with Japan’s Mazda Motor Corporation, has launched a new Crossover Utility Vehicle model, the Mazda New CX-5, in Chu Lai-Truong Hai Industrial Complex in Quang Nam Province.
Thaco said the new Mazda will prelude the new Mazda plant – the second Mazda factory in Quang Nam Province – which is under construction.
The new Mazda plant, built at a total investment of US$380 million from 2016, is expected to produce 100,000 Mazda cars per year with a localisation ratio (local made spare parts and accessories) of 44 per cent.
The Japanese car maker also plans to boost co-operation with Thaco in producing spare parts and accessories locally.
Mazda is the leading Japanese brand in Viet Nam, with the CUV (Crossover Utility Vehicle) CX-5, Mazda3, and Mazda2, in addition to Mazda2 and 3 All-New, and Mazda 6.
Thaco has invested $400 million in constructing a logistics centre, car production factories, a vocational training college, a seaport, storage facilities and shipping services.
It plans to produce a total annual capacity of 215,000 trucks, vans, commercial cars, and achieve a localisation ratio of 16 per to 46 per cent, and expect a revenues of $3.1 billion in 2017.
It currently manufactures and distributes Korea’s Kia model, Japan’s Mazda and France’s Peugeot.
Thaco will become the new official importer of BMW and Mini vehicles in Viet Nam in January 2018.
Vietnam Cycle 2017 opens in Hà Nội
As many as 50 major manufacturers from France, Italy, Japan and the Republic of Korea, as well as China and Viet Nam, are displaying renowned brands of bicycles and electric bikes at the 6th Vietnam International Bicycle Exhibition (Vietnam Cycle 2017) in Ha Noi.
Speaking at the opening ceremony held on Thursday, Deputy General Director of Vietnam National Trade Fair and Advertising Company Trinh Xuan Tuan said the event was the perfect opportunity for cycle makers to introduce their latest products from different countries and territories, including United Kingdom, France, Italy and Japan, as well as the Republic of Korea, China, Taiwan and Viet Nam.
The event has 150 booths, of which some 60 per cent are for bicycles, including sports bikes and bikes for kids; 30 per cent are electric bikes; and 10 per cent are bike parts and components.
Many kinds of bicycles and electric bikes have been designed in modern, young and creative styles to serve customers of different ages.
On the opening day, giant electric bike makers Takuda and Yadea introduced brand names Honda and Yumi, respectively, which are their latest products this year.
The event is also an opportunity for Vietnamese manufacturers to develop trade links and seek domestic and international partners and distributors while enhancing brand identification and connecting enterprises and Vietnamese customers.
The event is on until November 19. Significant activities will be held on the sidelines of the event, including a seminar on bicycles and electric bicycles hosted by the National Traffic Safety Committee, during which the committee will answer inquiries of enterprises on urban planning for transportation and procedures for import and registration for vehicles; a bicycle fashion show; a creative photo corner with bikes; and a playground to experience new cars.
According to the organisers, Vietnam Cycle 2016 exhibition attracted more than 10,000 visitors. Some 400 bicycles were sold and 47 contracts were signed.
The event has been organised by Vinexad and the Vietnam Auto Motorcycle and Bicycle Association under the patronage of the Ministry of Industry and Trade in collaboration with the National Traffic Safety Committee.
FLC plans roadshow in Republic of Korea
Property developer FLC Group will organise a large-scale roadshow and seminar in the Republic of Korea (RoK).
The November 20 event is aimed at informing participants about investment opportunities in the hospitality real estate sector as Vietnam has been named Asia-Pacific’s premier golf tourism destination 2017.
The roadshow is part of a series of events to advertise Vietnamese resort properties and golf courses to foreign countries, as well as to expand FLC’s partners in the RoK.
The event is expected to attract more than 400 investors, financial organisations, investment funds and estate and tourism firms in Vietnam, the RoK and Asia.
FLC said a seminar would focus on the latest trends in the resort property and golf course market in Vietnam. In addition, this would be an opportunity for Republic of Korean suppliers in the areas of tourism, construction and hi-tech agriculture to search for cooperation potential with prestigious firms in Vietnam.
The event follows the success of FLC’s roadshows and seminars in Singapore and Japan this year. It would be a pre-condition for the group to establish representative offices in foreign countries.
FLC established its first representative office in Japan earlier this month.
CPTPP offers global cooperation opportunities
Attendees at the 2017 APEC Economic Leaders’ Week agreed to change the name of the TPP to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) without the participation of the US.
Minister of Industry and Trade Tran Tuan Anh and Japanese Minister in charge of Economic Revitalisation Toshimitsu Motegi at a press conference on November 11th, 2017.
The new CPTPP agreement was reached by 11 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) on the sidelines of the just concluded 2017 APEC Economic Leaders’ Week in Da Nang.
The agreement maintains the content of the old TPP deal but allows member countries to temporarily postpone a number of their obligations.
The 11 APEC economic ministers agreed that the CPTPP is a comprehensive and highly standardized agreement on the basis of benefits of its member nations with regard to their development level.
The CPTPP salvagtes the TPP which received a severe blow when the US announced its withdrawal. Economists call it a breakthrough for free trade in the region that counters a growing trend of protectionism and nationalism.
Vietnamese Minister of Industry and Trade Tran Tuan Anh said all members, including Vietnam, will re-assess their requirements, benefits, and the equilibrium point that will keep the new deal viable.
Minister Tuan Anh said, “All the remaining TPP members have affirmed their determination and desire to continue the deal without the US. The nature and quality of the new agreement is reflected in 2 added words - Comprehensive and Progressive - which all 11 TPP ministers agreed reflect the agreement’s overall objective.”
The CPTPP deal embraces a globalization that is characterized by connectivity, cooperation, and development.
Minister Tuan Anh said that, together with Japan, Vietnam plays an important role in creating more global cooperation opportunities, adding: “Negotiating a TPP-11 that maintains the balance of the 12-member TPP has been difficult. Vietnam conducted researches to assess the requirements of its reforms and integration as well as its political, social, and economic requirements to ensure its benefits in participating in TPP 11 and also contributed to the realization of the deal.”
Japanese Minister in charge of Economic Revitalisation Toshimitsu Motegi says TPP members agree on the importance of the deal. Freezing some clauses is the easiest way to realize the agreement right now, and leave open the possibility of the US returning in the future.
“The agreement will be translated into French and English. It will take effect 60 days after at least 6 members approve it. The new deal will temporarily freeze 60 clauses of the initial TPP agreement, 12 of which relate to intellectual property. Four other clauses are set aside for further discussion. Though we still have many points of disagreement, we agreed that we must reach consensus on the deal at the Da Nang meeting. We are trying to balance and preserve the quality of the original agreement and at the same time ensuring its practicality,” Minister Motegi said.
The agreement reached in Da Nang is expected to boost economic growth, generate jobs, improve people’s living conditions, facilitate trade, and enhance economic cooperation among CPTPP members.
Da Nang to host ASEAN Banking Council Meeting
The 47th ASEAN Banking Council Meeting hosted by the Vietnam Banks Association (VNBA) is scheduled to take place at Furama Resort in central Da Nang City on November 23-24.
The major annual event of the regional banking community will be presented by banking associations of ASEAN countries - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
This is the third time the VNBA has held such a meeting with the first one in 2000 and the second in 2007.
The meeting will focus discussions on sustainable financial development, financial inclusion, the application of state-of-art technologies, human resource training and others as well as proposing cooperation initiatives and action plans.
It will be an excellent opportunity for participants to share experience and strengthen cooperation among regional banks and partners.
Vietnam halts exportation of silica sand used in glassmaking
Customs departments across Vietnam have been asked to stop clearing the export of silica sand as per a government order to preserve the resource.
Silica sand is quartz broken down by water and wind into tiny granules used as the primary component in glassmaking.
According to statistics acquired by Tuoi Tre (Youth) newspaper, Vietnamese companies shipped nearly 800,000 metric tons of silica sand to foreign markets last year.
The General Department of Vietnam Customs had previously added silica sand to its list of price-sensitive goods subject to government control over their export rate.
Accordingly, the sale of washed silica sand to foreign buyers was given a price floor of US$20 and price ceiling of US$116 per ton.
In March, a series of investigative reports by Tuoi Tre revealed that Vietnam’s sand was being transported to Singapore to fuel an ongoing megaproject in the city-state.
The revelation sent a shockwave through the local public and authorities, prompting Vietnamese Prime Minister Nguyen Xuan Phuc to take firm steps to put an end to the resource drainage, including a decision to indefinitely halt saline sand exports from September.
The recent dispatch by the General Department of Vietnam Customs asking its subordinate bodies to cease their clearance of silica sand for export is therefore seen as another move toward preserving Vietnam’s natural resources.
SOE reform to fuel higher economic growth
Shosuke Mori, senior managing executive officer at Sumitomo Mitsui Banking Corporation, told yesterday’s Nikkei-led forum on Vietnam’s growth outlook in Hanoi that the Vietnamese economy boasts great potential for higher growth with higher quality.
“The Vietnamese economy has been consistently growing over 20 years. Vietnam is the only country among the ASEAN-5 that has consistently achieved more than 5 per cent growth since 2000,” Mori said.
According to him, along with this high growth, Vietnam’s economy has undergone transformational changes since 1990. The country’s GDP per capita has grown by 22-fold, from $98 in 1990 to $2,172 in 2016, and nominal GDP has expanded about 31 times, from $6.5 billion in 1990 to $201 billion last year.
“These figures are expected to accelerate even further. According to the International Monetary Fund, Vietnam’s GDP per capita is projected to reach $3,300, and nominal GDP $300 billion by 2022,” Mori stressed.
However, Mori also underlined Vietnam’s slow equitisation of state-owned enterprises (SOEs) as one of the biggest challenges for the economy in general and the country’s investment attraction.
“I think the SOE reform will be the key in driving the evolution of the Vietnamese economy,” Mori said. “The SOE sector accounts for about 30 per cent of the GDP in Vietnam, and is linked to many industries.”
“The reform of SOEs would bring Vietnam to the next stage of its development. The average growth rate of the SOE sector from 2006 to 2016 was around 3.8 per cent, lower than the private sector’s at 4.9 per cent, and the foreign invested sector’s 7.7 per cent.”
He also highlighted the government’s efforts to revamp the SOE sector.
“Since SOE reform was mentioned in 1986 in the doi moi policy, I understand that the Vietnamese government has been taking proactive steps in this regard,” he said.
For example, rules on corporate governance and disclosure, which were a long-standing issue, were established in 2015, and individual directions for the equitisation of SOEs were also announced last year under the strong leadership of the government.
The number of SOEs in which the government has more than 50 per cent ownership decreased from 4,000 to 2,800 over the past ten years due to the government's efforts.
“SOEs are key drivers of Vietnam’s economic growth, and with these reforms, I believe they can help transform domestic industries,” Mori stressed.
Kenmark Industrial Zone calls for buyers again
Bank for Investment and Development of Vietnam (BIDV) today announced for the second time putting Viet Hoa-Kenmark Industrial Zone (IZ) on sale via an auction, with the initial price of VND830 billion ($36.6 million).
A notable piece of information is that the property includes land use rights until 2057 for 440,707 square metres of land in Viet Hoa-Kenmark IZ, a favourable investment destination adjacent to Highway No.5, approximately 52 kilometres from Hanoi and 53 kilometres from Haiphong.
Additionally, all properties are attached to the land (buildings, factories, infrastructure) in the area of Viet Hoa-Kenmark IZ. All existing properties (including machinery, equipment, furniture, vehicles…) and those to be formed during the investment and implementation period will also form part of the estate.
Accordingly, interested investors will need to submit their application to participate in the auction within seven days of the announcement.
Earlier in March, BIDV called on buyers for the Kenmark property to recover capital, but received little interest from investors.
Viet Hoa-Kenmark IZ was licensed in 2005. At the time, the developer Kenmark Group from Taiwan promised to inject $500 million into turning the empty land into a mammoth IZ and an urban township.
During the first phase, Kenmark was set to disburse about $98 million and, in fact, spent $44 million building internal roads, workshops, as well as a wastewater treatment facility and an electricity generation system.
However, in 2010, the developer abruptly returned home, suspending the project without further notice.
The problem is that previously Kenmark borrowed $67.6 million from three banks ($39.1 million from BIDV, $18.5 million from SHB, and $10 million from Habubank). Subsequently, Habubank was merged with SHB, who inherited Habubank’s loans.
When Kenmark left, its suspended payments on its $67.6-million debt to Vietnamese banks, causing major headache with no solution on the horizon.
To open a path to dealing with the debt, Kenmark chairman Hwang Ding Kuo flew to Vietnam numerous times to work with relevant lenders and local management authorities.
They came to a consensus on selling the IZ to recoup the investment capital and pay off bank debts. However, all negotiations with potential buyers failed due to transfer price-related issues.
At the moment, as the IZ’s price is fixed by the lenders instead of the developer, the IZ promises to be more appealing to investors, paving the way for a happy ending to a fraught journey of adversity.
Finnish firm pours over 33 million USD into clean energy project in Hanoi
Kimmo Tuppurainen, sales director for Southeast Asia for Watrec, said his company has launched a clean energy project worth 30 million EUR (more than 33 million USD) in Hanoi.
The waste-to-energy project is designed to treat some 600 tonnes of waste per day, he said.
It aims to collect, classify and convert urban solid waste into biogas and other materials to produce electricity, he added.
Watrec is negotiating with partners to arrange capital for the project.
Watrec is a leading biogas technology company in Finland, which treats 31,500 tonnes of organic waste each year.
The waste-to-energy project in Hanoi is intended to manage mixed waste without classification and treat urban solid waste, Tuppurainen noted.
Saku Liuksia, Finpro’s programme manager of waste-to-energy and bioenergy, said Vietnam has a lot of potential to develop clean energy projects from urban waste and agro-forestry waste products.
FinPro has focused on converting waste into energy and bioenergy in Vietnam for about two years, so it understands the country’s challenges and potential, he said.
In fact, many Finnish businesses have invested in this sphere in Vietnam and made progress.
The Doranova company is building a landfill treatment factory worth 6 million EUR (7 million USD) on the outskirts of Ho Chi Minh City, aiming to convert 35,000 tonnes of waste into energy.
A year ago, Doranova was one of the Finnish enterprises to implement a waste-to-energy project in the southern province of Binh Duong.
Matti Miinalainen, Valmet’s director for Asia Pacific & China, said Vietnam is a priority investment destination for Valmet.
He suggested defining the feasibility of projects and introducing new technologies to customers.
A representative from FinPro said Finnish businesses will work with Vietnamese companies and transfer technology to local firms.
Vietnam needs to build brands in RoK
Vietnamese businesses need to get involved in the Republic of Korea (RoK)’s goods value chains via distribution channels and pay more attention to positioning products and label designing to build brands in the market.
Deputy head of the Ministry of Industry and Trade’s Department of Asia and Africa Markets Le An Hai said a notable feature in trade relations between Vietnam and the RoK over the past 25 years is the supplementary import-export structure.
He named some made-in-Vietnam products sold in the RoK such as coffee, pho, chutney, fish sauce and dragon fruit.
Though the RoK is a promising market, businesses face many challenges, such as strict regulations on food safety, quality of products and registration for product labels, he noted.
Furthermore, the distribution system in the RoK is complicated with hundreds of supermarkets and tens of thousands of convenience stores, resulting in high competition, he said.
The Ministry of Industry and Trade is working to support businesses to access the RoK via Lotte Mart, Seven Eleven and E-mart, he added.
Vietnam is also seeking to make full use of the free trade agreement with the RoK to penetrate the market.
Apart from obeying regulations on quality and food safety, Vietnamese firms should focus on creating eye-catching products and study customers’ demand, Hai suggested.
Yoon Sang Ho, director of the Koran association of small- and medium-sized enterprises, said a strong brand will help enterprises secure market shares at home and abroad.
He advised Vietnamese enterprises to learn the Korean customers’ habits to increase their presence in the market.
Trade between Vietnam and the RoK rose nearly 87 fold over the past two decades to reach 43.4 billion in 2016 from 0.5 billion USD in 1992. In the first nine months of 2017, the figure continued to increase to hit 45.09 billion USD. The RoK is the third biggest trade partner of Vietnam, after the US and China.
Vinapharm clinches strategic partnership with Sanofi
Vietnam Pharmaceutical Corporation (Vinapharm) has inked an agreement on strategic partnership with French-invested drug producer Sanofi Vietnam.
According to a statement of Sanofi Vietnam, the signing ceremony took place on the sidelines of the APEC CEO Summit in the central coast city of Danang with the attendance of Deputy Minister of Health Truong Quoc Cuong and Sanofi executive vice president Olivier Charmeil.
Vinapharm will become a strategic partner of Sanofi Vietnam, a Good Manufacturing Practice (GMP) drug plant at the Saigon Hi-Tech Park in HCMC. The plant is capable of annually producing 150 million boxes of high-quality medicine.
Sanofi has been present in Vietnam for more than 50 years. The expansion of the cooperation with Vinapharm since 1993 to strategic partnership demonstrates the company’s commitment to Vietnamese people’s health, said Nguyen Anh Tuyen, general director of Sanofi Vietnam.
Vinapharm chairman Le Van Son said Sanofi as a multinational drug firm is excellent at all phases of supply chains of healthcare products. The collaboration with such a pharmaceutical giant will help Vietnamese patients gain access to drugs meeting international standards.
Sanofi Vietnam has more than 1,000 employees and its three plants in HCMC meeting WHO-GMP standards account for 80% of Sanofi’s products in Vietnam. Last year, Sanofi Vietnam held a market share of 4% in Vietnam.
HCM City asks ministry to rethink extending toll collection from old expressway
The HCMC government has requested the Transport Ministry to reconsider toll collection from the HCMC-Trung Luong Expressway for an additional period of eight years and two months, saying the expressway tollgate is close to another tollgate on National Highway 1A.
The ministry wants to extend the fee collection on the expressway to raise funds for building another expressway running from Trung Luong to My Thuan and the Mekong Delta city of Can Tho.
According to a recent document sent to the Government Office, the city agrees with the ministry on the need to accelerate the construction of Trung Luong-My Thuan-Can Tho Expressway to reduce traffic congestion on National Highway 1 and promote socioeconomic development in the key southern economic region.
The Trung Luong-My Thuan-Can Tho Expressway under the initial plan should be completed by the end of 2018, but despite two kick-offs, the project has not got off the ground over multiple delays.
As pointed out by the city, the toll station on the HCMC-Trung Luong Expressway is quite close to the An Suong-An Lac toll station on National Highway 1, which has a long toll collection duration.
The ministry has approved the adjusted feasibility study of the expressway section between Trung Luong and My Thuan, under which the section will have four lanes in phase one, instead of two lanes.
With an investment of nearly VND15 trillion in the first phase, the Trung Luong-My Thuan section is 51 kilometers long and has 4.5 kilometers of approach road. It will be connected with the HCMC-Trung Luong Expressway at Than Cuu Nghia intersection and end at an intersection with National Highway 30.
Under the initial plan, the section was proposed to have two lanes in phase one and six lanes in phase two and use official development assistance (ODA) capital.
The Trung Luong-My Thuan Expressway is part of the expressway connecting HCMC and Can Tho City. Of the three sections of this expressway, the 40-kilometer section from HCMC to Trung Luong has been put into use since February 2010.