The Indonesian government is encouraging more direct flights connecting Vietnam’s major cities with its capital Jakarta to strengthen connectivity. VnExpress reports.
Ibnu Hadi, Indonesian ambassador to Vietnam, said strengthening connectivity would be an ‘important factor’ in increasing the number of visitors from Vietnam to Indonesia and vice versa.
Indonesian news agency Antara quoted him as saying Indonesia was encouraging the opening of more direct air routes connecting Hanoi and Ho Chi Minh City, Vietnam’s two biggest metropolises, with Jakarta.
In addition, there should be charter flights from Jakarta and Surabaya, Indonesia’s second largest city, to the central coastal city of Da Nang, he said.
Indonesia has been one of the destinations benefiting as increasing numbers of the rising middle class in Vietnam travel abroad for holidays.
The number of Vietnamese tourists to Indonesia last year reached 75,682, while 87,941 Indonesian tourists visited Vietnam, according to the Vietnam National Administration. Last year, 8.6 million Vietnamese people traveled abroad, up 15 percent from a year ago.
In the first seven months of this year, Indonesia, home to Bali, one of the most famous island destinations in Southeast Asia, received 53,000 visitors from Vietnam, up 18 percent year-on-year, Indonesia’s Ministry of Tourism data shows. For 2019, Indonesia has set a target of 20 million foreign tourist arrivals, compared to 15.81 million in 2018.
In order to reach the target of welcoming 123,000 Vietnamese tourists set by the Indonesian tourism ministry, the country’s embassy in Hanoi has launched various activities, including participation in the International East-West Economic Corridor Trade and Tourism Fair and the Tourism and Investment Fair 2019 in Da Nang, as well as the “Bali and Beyond” tourism promotion in Ho Chi Minh City.
Vietnam Airlines, the national flag carrier, has announced the launch of a direct flight from Ho Chi Minh City to the resort island of Bali from October 27 onwards. Low-cost carrier Vietjet Air had launched a direct Saigon-Bali route since last April.
A recent report by Agoda, the world’s leading online accommodation reservations provider, said growing affluence has spurred Vietnamese holiday-goers to spend more on foreign jaunts, and Southeast Asia nations were heavily favored destinations.
Vietnam has climbed in the ranking of best countries in which to invest this year, surpassing other Southeast Asian nations, such as Malaysia, Singapore and Indonesia. Nhandan Online reports.
A recent report by the US News and World Report ranked Vietnam eighth out of 29 economies, up from 23 last year. Meanwhile, some neighbouring nations – Malaysia, Singapore and Indonesia – stood in thirteenth, fourteenth and eighteenth positions, respectively.
According to the report, Doi moi (renewal) economic policy reforms beginning in 1986 have helped Vietnam transition to becoming a more modern, competitive nation.
Vietnam’s continued efforts to lessen international isolation are shown by joining of the World Trade Organisation (WTO) in 2007 and participation in free trade negotiations with the Trans-Pacific Partnership in 2010.
It is also a member of the United Nations, the ASEAN Regional Forum and the Asia-Pacific Economic Cooperation Forum, among other international organisations, the report stated.
US News & World Report is an American media company that publishes news, analysis, consumer advice and rankings. More than 20,000 people from across the globe participated in this study.
The ranking of the best countries to invest in draws from the results of a global perceptions-based survey and ranks countries based on the highest scores among nearly 7,000 business decision makers on a compilation of eight equally weighted country attributes including corruption, dynamics, economic stability, entrepreneurial, favourable tax environment, innovation, skilled labour force and technological expertise.
In this year’s top five, Uruguay came in first place, followed by Saudi Arabia, Luxembourg, India and Poland.
The State Bank of Viet Nam has issued Circular No. 06/2019/TT-NHNN concerning foreign exchange management for foreign direct investment activities in Viet Nam.
The Circular, scheduled to take effect since September 6, 2019, regulates such activities like capital contribution, opening and use of foreign currency and Viet Nam Dong direct investment capital accounts, transfer of capital, profits and lawful incomes abroad, and transfer of investment capital, and transfer of investment projects.
Applicable subjects include: (i) foreign-invested enterprises as specified in clause 2, article 3 of the Circular, (ii) local and foreign investors in foreign-invested enterprises, (iii) foreign investors that are parties to business cooperation contracts, (iv) foreign investors that are parties to public-private partnership, and (v) organizations and individuals involving in foreign direct investment in Viet Nam.
The guidance (Circular 06/2019/TT-NHNN) reflects changes that:
Expand the definition of foreign direct investment enterprises that are subject to direct investment capital account requirements
Provide clearer guidelines on opening and use of direct investment capital accounts
Set out circumstances when foreign direct investment enterprises are no longer required to maintain direct investment capital accounts and their foreign members or non-resident shareholders are required to open indirect investment capital accounts
Clarify the currency and payment for capital transfer transactions (for instance, mergers and acquisitions) in foreign direct investment enterprises
Relax the requirement on inward remittance of funds for the payment of pre-investment expenditures
There is a 12-month transition period to complete the conversion to the appropriate capital accounts (that is, by 6 September 2020)
To be advised more details, foreign investors should contact GBS – A business and legal services company in Vietnam at +84903189033 or visit the website: https://gbs.com.vn
Many foreign companies move factories to Vietnam, showing the potential for strong development of industrial real estate, according to Savills Vietnam.
They included many factories from China operating mainly in the fields of electronics, textiles, footwear and spare parts production, such as Hanwha, Foxcom, Lenovo, Nintendo, Sharp among others.
Sophie Dao, Partner at GBS, an investment consulting firm in Ho Chi Minh City told Vietnam Insider, in Q2-Q4 2019, the number of foreign companies requested GBS to support with formation of new company in Vietnam increased more than 90% with the same period of 2018.
The industrial sector is growing strongly with a tenfold increase in foreign direct investment (FDI) over the last decade. Good land supply is facilitating incoming manufacturing projects and the rise of rental options with ready-built factories (RBF) and built-to-suit (BTS) solutions. Vietnam must be more selective with projects to move up the value chain, improve competitiveness and ensure sustainable growth.
Low labour costs and government incentives, particularly preferential tax rates, will continue to be critical drivers of FDI. However, to maintain the transition to higher-value industries, Vietnam must focus on the quality rather than the number of investments.
By enabling the latest production technologies and increasing workforce training, the government is actively easing qualms around viability, labour shortages and rising costs for a more transparent business environment
Responding to growing needs in the Vietnamese manufacturing and distribution sectors
Daifuku Co., Ltd. – the leading material handling system provider in Japan just announced the establishment of its Vietnamese subsidiary, Daifuku Intralogistics Vietnam Co., Ltd.
The subsidiary has been scheduled to commence operations on October 1, 2019, Daifuku Intralogistics Vietnam will manage local sales, installation and after-sales services of material handling systems for the manufacturing and distribution sectors.
Since 2016, Daifuku and its Thai subsidiary have managed business in Vietnam, selling primarily automated storage and retrieval systems to local manufacturers and Japanese-owned companies. Now, with an abundance of labor and against the backdrop of continuing U.S.-China trade friction, Vietnam has become a prime location for companies relocating their manufacturing facilities. Further, substantial foreign direct investment into Vietnam is leading to wage increases, which in turn has seen growing momentum toward automation.
As part of the global strategy highlighted in the medium-term business plan, Value Innovation 2020, Daifuku promotes affiliate management autonomy to accelerate area-based business development. Daifuku Intralogistics Vietnam provides Daifuku the means to actively expand its business in Vietnam across a range of industries in the manufacturing and distribution sectors.
Christy Le, CEO of Gojek’s Vietnam affiliate GoViet, is leaving her post after five months, Techinasia reported.
This is the second departure from the same role in less than a year. Le’s predecessor, Duc Nguyen, left in March along with chief growth officer Linh Nguyen.
GoViet has confirmed her exit. “When we start out on a journey with new leadership, it is always with the best of intentions. However, after five months at the company, Christy has decided to take a different path. We always work hard to find a mutually agreeable way forward but were unable to do so in this instance, so we wish her the best in her future endeavors,” a spokesperson said.
“We are confident that the existing management team in Vietnam, supported by the knowledge and expertise of our international team, will ensure Go-Viet continues to create a positive impact while enjoying the exponential growth we’ve seen over the past year,” the company representative added.
According to a report by ABI Research, GoViet has 10.3% of the ride-hailing market in the country, compared to Grab’s 72.9%.
Prior to GoViet, Le was the country director of Vietnam for Facebook as well as a co-founder of Misfit Wearables, a smartwatch maker that was acquired by Fossil Group for US$260 million in 2015.
Sixteen gang members have been arrested and 51 dogs were rescued as part of an investigation into the thefts of thousands of dogs in northern Vietnam.
Thousands of dogs have been stolen since the beginning of the year in Thanh Hoa Province, 150km south of Hanoi, according to a report by local police.
In total, the authorities have questioned more than 40 suspects linked to the ring and arrested 16.
“This ring has operated for a long time, stealing many dogs and causing outrage among local people,” a local policeman said on Tuesday (Sept 17).
On Sunday evening, police detained Le Thi Phuong, 34, Tran Van Thang, 33, and Lai Khac Hung, 38, who were identified as the leaders of the gang responsible for carrying out dozens of dog thefts.
The gang has reportedly been riding motorbikes through residential areas late at night to steal dogs using stun guns, baits and bags.
Under Vietnamese law, only thefts of items with a value higher than US$86 (VND 2,000,000) is treated as a criminal offence, which means dog thieves can often avoid being charged.
Earlier this week, food safety officials in Ho Chi Minh City urged locals to stop eating dog meat in an effort to improve the national image. Dog meat is considered a delicacy by many in Vietnam.
The country’s dog meat consumption has made it the target of animal welfare campaigns in the past, and the Asia Canine Protection Alliance estimates that five million dogs are killed and eaten in the country every year.
A new social network has entered the already crowded field in Vietnam as the communist party squeezes U.S. tech giants Facebook and Google with a new cybersecurity law.
Lotus, a social network that allows users to create content and share posts to a home page, had received 700 billion dong ($30.14 million) in funding from tech corporation VCCorp and hoped to raise another 500 billion dong, company General Director Nguyen The Tan said at the launch ceremony.
“Lotus was born not to compete with Facebook or any other social networks,” Tan said late on Monday. “We will focus on content and content creation.”
Information Minister Nguyen Manh Hung, who was at the launch, has urged Vietnamese companies to create viable domestic alternatives to foreign social media platforms which are more difficult for the government to control.
A user opens Lotus, a Vietnam’s new social media application, in Hanoi, Vietnam September 17, 2019. @ Hang Nguyen
Last month, a Facebook-style app, Gapo, also made its debut. Older domestic social platforms such as VietnamTa and Hahalolo have struggled to build large user bases.
Hung said he hoped that eventually the number of Vietnamese people using domestic social networks would be as high as the number using foreign platforms.
There were 58 million Facebook users and 62 million Google accounts in Vietnam as of August, government data showed. There are no comparable figures for domestic networks.
Despite economic liberalization and increasing openness to social change since the 1990s, the ruling Communist Party retains tight media censorship and does not tolerate dissent.
Several activists and dissidents have been arrested or jailed for posting online content considered to be “anti-state”.
Vietnam has tightened internet rules over the past few years, culminating in a cybersecurity law which came into effect in January requiring foreign companies like Facebook to set up local offices and store data in the country.
Reporting by Phuong Nguyen; Editing by Stephen Coates @ Reuters
A yellow-colored Buddhist temple adorned with flags and golden dragons on its pointed roofs in a quiet town outside Tokyo presents a stark contrast to the typically somber-looking Buddhist places of worship usually found in rural Japan.
But the steady stream of out-of-town weekend visitors and their nationality also set it apart, for the temple was built by and serves members of the large Vietnamese community in the Tokyo metropolitan area.
Despite its out-of-the-way location, the Vietnam Temple in Aikawa, Kanagawa Prefecture, located about 50 kilometers from central Tokyo, has become a magnet for many members of the community, drawing them both for the spiritual guidance it offers and the sense of community they find there.
Every Sunday, dozens gather for services while hundreds flock there for major events, with some coming from as far away as central and western Japan.
The temple, whose main building was completed in 2012, attracts a diverse cross-section of the community. Visitors include both younger workers and short-term technical interns as well as refugees who have been in Japan for decades since fleeing their homeland following the collapse of the South Vietnamese government at the end of the Vietnam War in 1975.
“I enjoy coming here because I can meet many Vietnamese friends,” says Vu Thi Trang, 22, who works at a factory making boxed lunches in Sagamihara, Kanagawa Prefecture. “I can relax and I feel better.”
Trang, who came to Japan in March 2017 to work for three years under the technical internship program sponsored by the Japanese government, is one of some 20 volunteers who help with chores at the temple.
The native of Hai Duong, near Hanoi, says she attended Sunday services at a Buddhist temple back home and was introduced to the Aikawa temple by one of her friends after coming to Japan.
Nguyen Dung Hieu, 22, also a technical intern who works for a construction company in Sagamihara, agrees with Trang, saying he finds “relief from stress at work” through his visits to the temple. Hieu says he learned about the site via a Facebook post by one of his friends.
The two took part in the celebration of the Vu Lan festival, known as Mother’s Day in Vietnam, at the temple in August.
In the ceremony, young volunteers clad in blue-gray uniforms distributed artificial flowers to the congregation to express gratitude to their mothers. The flowers were either pink or white depending on whether the worshipper’s mother was still alive or had passed on.
The temple was overflowing with visitors including some who had come from as far away as Kobe, and many had to stand outside the main building to observe the ceremony. Some were wearing Vietnam’s traditional ao dai dress.
The ceremony was followed by a buffet lunch of Vietnamese vegetarian dishes using such ingredients as beans, mushrooms and rice prepared by members of the religious community.
More than worship
Nguyen Thi Huyen Trang, 28, who first came to Japan as a student in 2012 and began attending the temple last September, says she believes Vietnamese Buddhist followers in general share a strong bond.
“We have the same purpose, which is to serve everyone in the temple. Here we can easily make friends with strangers and I feel as if I am back in my hometown,” she says. “This temple has a warm atmosphere and I feel like everyone is family.”
The former student at Kyushu Institute of Information Sciences had also been active in Vietnamese Buddhist gatherings in southwestern Japan before coming to the Tokyo area, emceeing a major service hosted two years ago at a Japanese temple because the area had no Vietnamese place of Buddhist worship.
Although the 330,835 Vietnamese residents of Japan form the third-largest group among the 2.73 million foreign residents living in the country as of late 2018, following Chinese and South Koreans, there are says to be only about 10 Vietnamese Buddhist temples in this country.
After moving to Saitama Prefecture, Trang got married to a fellow Vietnamese and the couple had their wedding ceremony at the Aikawa temple in October last year.
“We didn’t know many people at that time, but even strangers celebrated with us,” she says.
The native of Phu Tho, some 80 kilometers from Hanoi in northern Vietnam, jokingly noted the cultural differences that sometimes set her apart from people from the south of her country but says she can nonetheless consult with them about her work or plans for the future.
A worker at a trading company, Trang says that on one occasion when she discussed her plan to export frozen cakes to Vietnam, a fellow worshipper asked for samples to send to a relative running a coffee chain in the country. Older members of the congregation, meanwhile, gave her advice on whether to buy a home in Japan.
“When our baby is born, I’ll definitely come to the temple regularly with the child,” she says.
The temple’s chief priest, Nhuan An, 41, who arrived in Japan to succeed to the post following the death of his predecessor in 2017, says that Buddhism is a major religion in Vietnam that “people feel close to and is always on their side.”
According to official statistics, Buddhists make up about 12 percent of Vietnam’s population, followed by Catholics at some 7 percent in the former French colony (followers of folk religions account for the majority), but some estimates point to a higher percentage of Buddhist followers.
“Vietnamese followers spiritually rely on Buddhist priests whenever they have troubles as couples, or about children, or economic problems,” An says.
The priest, who runs the temple with a Vietnamese nun, says he thinks his compatriots in Japan are “more stressed, nervous and under heavier pressure” compared with worshippers back home.
He points out that the number of young followers who come to the temple has been sharply on the rise, attributing it partly to the ease of sharing information on social media. Vietnam sends the most technical trainees to Japan, numbering about 164,500 as of December last year.
“I’ve been told that they have had a hard time in the workplace, including cases of bullying. I encourage them so they can feel better and hang in there,” An says.
Construction company intern Hieu, who works on paving roads, complained about having to work outside under the scorching sun and says he feels homesick for his family in Buon Ma Thuot, a southern highland area that is cooler than where he is now.
An, who belongs to a Buddhist temple in Dong Nai near Ho Chi Minh City, stresses the significance of the religious site for Vietnamese in Japan, saying it “offers precious opportunities for them to be in touch with Vietnamese culture and become positive by practicing Buddhist teachings in their everyday life.”
He notes that some children of expats who grow up in Japan cannot speak much Vietnamese, leading to what he called “internal conflicts and difficulty living in two cultures.” He expresses hope that by visiting the temple, they can practice their native language and better adapt to Vietnamese culture.
Founding father: Yu Takefumi helped build the Vietnam Temple by collecting donations. | KYODO
Founding father: Yu Takefumi helped build the Vietnam Temple by collecting donations. | KYODO
Yu Takefumi, 69, a former Vietnamese refugee who received Japanese citizenship about 20 years ago, welcomed the development of the temple, which he and other long-time parishioners helped build by collecting donations and finding a suitable lot.
Before the Aikawa temple was built, many of those attending its services rented spaces at Japanese temples to hold gatherings. Compared with expat communities in other countries such as the United States and Germany, Vietnamese in Japan have fewer places of worship of their own, he says.
“The temple is not only a place for followers to confide in others about their worries, but also serves as a guide in their life so they can do good deeds,” Takefumi says. He adopted a Japanese name when he became a naturalized Japanese citizen.
“Basically, this religious community is supported by members’ volunteer work and it shows they are practicing Buddhist teachings in their life. Their good deeds will eventually benefit them,” he adds.
Priests at the front: Priests and followers celebrate Vu Lan at the Vietnam Temple in Aikawa, Kanagawa Prefecture, in August. | KYODO
An immigrant’s story
The former police officer hailing from near Nha Trang in southern Vietnam is one of the refugees who settled in Japan after fleeing from persecution under Communist Party rule.
By the end of 2005, Japan had accepted some 8,700 Vietnamese as Indochinese refugees. Some of them later acquired Japanese citizenship, with the number of naturalized Vietnamese totaling 1,070 as of March 2018, according to a survey by the aid group Refugee Assistance Headquarters.
In April 1980, Takefumi and his family, which included small children, took to sea in a boat, aiming to reach the Philippines, as he was set to be imprisoned at a re-education camp in Vietnam.
After spending a night at sea, his boat was spotted by a U.S. military aircraft, which called for help from a Japanese shrimp fishing vessel sailing nearby. He and his family ended up landing in Okinawa several days later.
Like other Vietnamese refugees, Takefumi received public support to settle in Japan but only studied the Japanese language for three months at a refugee assistance center set up by the government in Tokyo’s Shinagawa Ward in 1983, cutting short a six-month program because he had to work to feed his family.
Takefumi, a resident of Ayase, Kanagawa Prefecture, with five children, says he feels sorry that many second-generation Vietnamese residents of Japan are not as eager as newcomers such as young interns to support the activities of the Buddhist temple.
“It would be regrettable if we cannot pass on our activities to our children, but we cannot force them,” he says, conceding that they will “act according to their own experiences.”
But Takefumi says technical trainees temporarily staying in the country and Japan-based younger children of regular temple members who come to Sunday services with their parents offer a bright future for the temple.
“I hope this place will continue to be a magnet for various people to gather so that traditional Vietnamese culture will be inherited by the next generation,” he adds.
Mother’s day: Lam Thi My Linh and her 10-year-old son, Lam Thanh Dien, took part in the Vu Lan festival celebrating mothers in August. | KYODO
Mother’s day: Lam Thi My Linh and her 10-year-old son, Lam Thanh Dien, took part in the Vu Lan festival celebrating mothers in August. | KYODO
Lam Thi My Linh, 48, a native of Soc Trang in southern Vietnam, came to Japan 22 years ago and she and her Vietnamese husband, originally a refugee in Japan, have three sons. Only the eldest, now 21, can speak a little Vietnamese.
On the day of the festival, Linh, who has been attending the temple since 2012, came with her youngest son, Lam Thanh Dien, 10, from their home in Atsugi, Kanagawa Prefecture.
But while her youngest child can only speak Japanese, she says the visit was meaningful because it “provides chances to be in touch with Vietnamese people and their culture.”
Kanagawa Prefecture hosts the largest community of permanent and long-term Vietnamese residents in Japan at 4,962, followed by 3,692 in Hyogo Prefecture in western Japan, as of December last year, according to government data.
The two prefectures are believed to have large communities of Vietnamese settlers because Yamato in the prefecture and Himeji in Hyogo Prefecture once hosted centers to promote resettlement of Indochinese refugees, who also included Laotians and Cambodians. Both the centers were closed in the late 1990s.
In Kanagawa, several public housing complexes, known in Japanese as “danchi,” accommodate many Vietnamese residents. Among them, the Icho Danchi that straddles the cities of Yokohama and Yamato is said to have one of the largest Vietnamese communities in the prefecture.
Meanwhile, chief priest An, who is now learning Japanese, is keen to promote good relations with the temple’s neighbors. He makes home visits to ease their worries about noise and the scarcity of parking spaces caused by an influx of worshipers by car.
“We’re learning Japanese culture and customs and I think little by little, Japanese neighbors have come to understand us better, and we’re getting closer to each other,” he says.
Parent company of Hong Leong Bank Vietnam, the Hong Leong Financial Group Bhd (HLFG) and private equity firm TPG inked a share purchase agreement to acquire Columbia Asia Hospitals in South East Asia for US$1.2 billion.
In total, Hong Leong and TPG will acquire 17 Columbia Asia hospitals with a breakdown of 12 hospitals Malaysia, three hospitals in Indonesia and two hospitals and a clinic in Vietnam.
The transaction is expected to be completed by the end of 2019.
“We are extremely excited to be entering the healthcare space and believe Columbia Asia Hospitals, with its current scale and uniquely differentiated business model, offers the right platform to capture the robust healthcare growth in South East Asia.
“We look forward to partnering with TPG, which has a stellar track record as a healthcare investor, and to working closely with Columbia Asia Hospitals’ management team to accelerate its next phase of growth,” said HLFG finance director Soon Seong Keat said in a joint statement today.
Columbia Asia Hospitals serve Asia’s rapidly growing middle-income population with a unique business model delivering accessible, affordable and quality healthcare.
TPG senior adviser Tunku Ali Redhauddin said both parties see a compelling opportunity for Columbia Asia Hospitals to expand and scale regionally as Asia’s healthcare market continues to grow significantly.
“Columbia Asia Hospitals provide affordable and high-quality care in several countries, operating under one cohesive, recognisable brand.
“We are excited by the group’s modern and innovative approach and look forward to working closely with Hong Leong and the hospital’s management team to continue to grow Columbia Asia Hospitals’ footprint across South East Asia,” he said.
Columbia Pacific Management (CPM) managing director Nate McLemore said Columbia Asia Hospitals’ business model to growing middle-class population is highly scalable, will only get strengthened with Hong Leong and TPG’s market expertise, business insights and overall management capabilities.
“We are proud of Columbia Asia Hospitals, and are pleased to have created and grown one of the strongest healthcare companies in the region over the last two decades.
“We look forward to partnering with these two world class organizations to continue to grow and expand the Columbia Asia platform,” he said.
Based in Seattle, CPM oversees an international healthcare business that develops and operates hospitals, clinics and senior living around the world.
L to R: Dilip Kadambi, Group Chief Financial Officer and interim Chief Executive Officer, Columbia Asia Hospitals, Soon Seong Keat, Finance Director at the Hong Leong Group, Nate McLemore, Managing Director of Columbia Pacific Management, Tunku Ali Redhauddin, Senior Advisor at TPG, Ganen Saravananthan, Co-Managing Partner of TPG
It will continue to hold a minority interest in Columbia Asia Hospitals through International Columbia US LLC.
Columbia Asia Hospitals group chief financial officer Dilip Kadambi said over the last 20 year the healthcare provider have been serving the community by building and operating 18 healthcare facilities with 1,494 beds across these three countries in Southeast Asia.
“Healthcare is hugely underserved in the South East Asian markets that we operate in. Under the aegis of Hong Leong and TPG, we will continue to scale this platform further,” he said.
Dilip said the company now have nine ongoing projects adding an additional bed capacity of 898 in Southeast Asia at various stages of development.
“With this expansion and growth baked into the company, we are looking forward to continue delivering care to our communities the ‘Columbia Asia’ way,” he said.
Morgan Stanley Asia (Singapore) Pte. acted as exclusive financial advisor to CPM on the transaction.
Port congestion, rising land prices limit trade-war wins
Businesses says Vietnam may struggle to meet growing demand
Vietnam is finding it’s hard to win a trade war even when businesses are trying to hand you victories. Bloomberg reports.
The Southeast Asian growth engine has a young and growing middle class, a horde of free-trade agreements, and a booming manufacturing industry. Businesses from Alphabet Inc.’s Google to Crate & Barrel Holdings Inc. are lining up to invest in the country as supply chains migrate from neighboring China, which served as the world’s factory for the better part of two decades.
But Vietnam is starting to see expectations outrun reality. More and more businesses are complaining about congested ports and roads, rocketing costs for land and labor, and regulations that aren’t being loosened fast enough. Tapestry Inc., owner of the Coach and Kate Spade brands, has lamented insufficient infrastructure investment that’s left some containers stalled on the waters. Eclat Textile Co., a supplier to Nike Inc., says it needs to diversify beyond Vietnam, including to cheaper locations.
If Vietnam isn’t able to fast-track progress in closing its infrastructure gap, it risks losing its “mini-China” status that has drawn so many of Bain & Co.’s toy-supplier clients there since 2015, said Gerry Mattios, Bain’s Singapore-based vice president. Costs could outweigh the benefits, sending producers to the likes of Sri Lanka or Cambodia, he said.
For now, the money keeps rolling in. Total disbursed foreign direct investment rose 6.3% to $12 billion in the first eight months of the year from the same period in 2018, according to government figures, with the number of new registered projects surging 25% to 2,406.
Here’s what’s at stake across capacity categories as Vietnam tries to lock in those trade-war wins:
Port Congestion
Infrastructure is the big challenge for Vietnam, especially at its ports. China claims six of the top 10 ports by container traffic in the world — including Shanghai at No. 1 — while Vietnam’s two biggest ports, Ho Chi Minh Seaport and Cai Mep, rank No. 25 and No. 50, according to data compiled by Bloomberg Intelligence.
Operations Inside Tan Cang Hiep Phuoc Port
Containers at Tan Cang-Hiep Phuoc Port in Ho Chi Minh City.Photographer: Yen Duong/Bloomberg
Vietnam’s share of global container traffic was just 2.5% in 2017 versus 40% for China. Shipping container capacity will need to grow at almost twice its 10%-12% pace of the past decade, as well as fold in third-party logistics and freight-forwarding practices to keep up with new demand, BI research shows.
What Our Analysts Say
“President Donald Trump tweeting Vietnam as a candidate for a manufacturing shift from China would require a long, drawn-out process. Vietnam lacks maritime infrastructure, large container ports and a shipping network needed for rapid export-capacity growth. It’s unlikely to match China’s deeply entrenched trade apparatus for several years.”
The government estimates it would cost about 80-100 trillion dong ($3.44-$4.31 billion) to develop its ports. Big-figure deals — around new ports or revamping of old ones — have yet to come to fruition.
Congestion at the ports often means rising inventory costs and less diverse production lines that are limited to non time-sensitive goods, according to the BI analysis. What would help: massive investments for warehouses, seaports, rail terminals, and inland container depots, for starters. BI also recommends a national or quasi-national container shipping company in order to support large-scale cross-border trade.
Demand is certainly growing. More than 530 million tons of cargo were shipped through Vietnam seaports last year, up 20% from a year earlier, according to the Vietnam Maritime Administration’s website. The volume of exported goods handled rose 15% to 142.8 million tons. And 18.1 million TEU of containers were transported last year, up 26% from the previous year.
“With the current situation, Vietnam for sure cannot meet the demand of a wave of companies if they move in,” Tsai Wen Jui, chairman of Taiwan-based bicycle saddle manufacturer DDK Group, said in an interview at their Binh Duong office. Even if 5% of Taiwan’s companies in China relocated to Vietnam, the infrastructure would be overwhelmed, he said.
DDK Group has a joint venture with Warburg Pincus-backed Becamex IDC to manage a 200-acre section of the industrial park in Binh Duong province only for Taiwanese companies. While Tsai said he’s pleased with the quality of the roads inside the park, he bemoans the lack of a highway to deal with traffic that keeps getting more congested.
Property Prices
Land prices also are a constraint, said Tsai. The land costs in Bau Bang industrial park have doubled to $80 per square meter from three years ago. The price at some parks in Binh Duong province has increased to $150 per square meter from $65 in 2016, Tsai added.
It’s not just Binh Duong that’s seeing some property fever. Rental prices for industrial property rose by double digits year-on-year in the first half of 2019 for several provinces, including 54.6% in Binh Duong and 31.1% in Tay Ninh, northwest of Ho Chi Minh City. In Hai Duong, east of Hanoi, prices were up 29.4%, according to data compiled by real estate service provider Savills Plc. Occupancy in these areas has also soared, led by a 63.6% growth rate in Tay Ninh province, the data show.
Residential costs have increased in Hanoi and Ho Chi Minh City, with the former seeing a 20% price jump for condominiums in the second quarter from the previous year, and the latter experiencing a 4% jump on the primary market over the same period.
By Michelle Jamrisko and Xuan Quynh Nguyen @ Bloomberg
The flight, operated by the South Korean budget airline T’way Air, was supposed to take off at 10:35 p.m. local time on Friday but ended up being delayed until 9:40 a.m. on Saturday, The Korea Times reported.
An airline official told The Korea Times that the flight was delayed because the pilot lost his passport, so his access to the airport in Ho Chi Minh City was restricted.
Passengers had to wait as the airline tried to get a replacement passport for the pilot, The Korea Times reported.
T’way Air said it was investigating the incident and how the pilot managed to lose his passport. It didn’t identify the pilot.
The airline official said: “We are currently reviewing disciplinary action for the pilot. We are also negotiating compensation with the passengers.”
The official added that the airline put passengers in hotel rooms and fed them breakfast during the delay, The Korea Times said.
The flight, operated on a Boeing 737, was from Ho Chi Minh City to Incheon, in northwestern South Korea.
Just like passengers, pilots typically have to go through security screenings before flying and need identifying documents such as passports, though the process is generally less stringent.
Google and Apple are among those betting on the country as groups seek trade war haven
Outside a former Nokia phone factory in the north Vietnamese province of Bac Ninh, a freshly-posted sign advertises jobs for “hardworking, dynamic” workers over 16 years old. John Reed reports on Financial Times.
The plant, which was bought by Taiwan’s Foxconn in 2016, may soon start making Google’s Pixel phones, according to local officials and to a report by Nikkei, as the Silicon Valley company looks for an alternative to manufacturing in China.
If the investment materialises, it will be a huge windfall both for Bac Ninh, to the east of Hanoi, where Samsung also has a major smartphone manufacturing base, and for Vietnam, which is emerging as one of the main safe havens from the trade war between the US and China.
“Under our policy of welcoming foreign investment, we welcome Google to come to Vietnam,” said Nguyen Huu Quat, the province’s deputy general secretary. He said the company had “decided to choose Bac Ninh” but has not yet finished planning the finer details of the operation, including its exact location. Google declined to comment.
The magnitude of the shift from China to Vietnam is hard to measure, in part because multinationals are keeping their moves discreet to avoid upsetting delicate government and supplier relationships in China.
But Vietnam’s trade numbers, not least its record $39.5bn surplus with the US last year, suggest a significant realignment is under way, as do anecdotes from companies, consultants and suppliers in Hanoi and Ho Chi Minh City.
Apple recently began trial production of its AirPods in Vietnam, according to Nikkei. Amazon and Home Depot are among the retailers that have stepped up sourcing in Vietnam recently, according to Vu Ngoc Khiem, country director for Global Sources, a consultancy that links global suppliers to buyers.
But trade experts said Vietnam is limited in how quickly it can lure manufacturing orders from China.
“Global supply chains are complicated,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi. “There are a lot of players and a lot of workers involved, and you can’t just pick up and move from one day to the next because of tariffs.”
Bac Ninh, a densely settled region of factories, malls, chain restaurants, housing for migrant workers, and other ex-urban sprawl, is the country’s smallest province but has attracted $18.2bn of foreign investment in recent years from Samsung, Canon and Nokia, according to Mr Quat.
It is all about location, officials say. Bac Ninh is a 40-minute drive from Hanoi, half an hour from Noi Bai airport — where Samsung exports its phones from — two hours from the port of Quang Ninh, and an hour and a half from the Chinese border.
Provincial officials offered Samsung land in the Yen Phong industrial park and successfully lobbied the central government for generous tax breaks for both Samsung initial factory built in 2009 and a subsequent expansion from 2015 that helped make the South Korean company Vietnam’s biggest exporter.
VSIP, the industrial park where the Nokia factory sits, is served by a six-lane roadway and is replete with both working factories and available office space, suggesting a region and a country open for business. Samsung buses in some of its workers from several other provinces, and has hostels for them on site.
Hanoi has pulled out so many stops for foreign investors in recent years that the government speaks of levelling the playing field so that Vietnamese companies can compete.
But Vietnam’s manufacturing workforce is only about the same size as that of China’s Guangdong province, and cannot draw on migrant workers from a bigger hinterland. The smaller scale means that manufacturers must dig deep, and work hard, to find local suppliers, workers, and managers.
Vietnam ranks 55th on the World Bank’s Global Competitiveness Index, which assesses infrastructure, labour market efficiency, and education among other factors, compared to 27 for China.
While roads are good in the north around Hanoi, they are less so around Ho Chi Minh City, Vietnam’s business capital. The city’s Tan Son Nhat International airport, in the midst of an upgrade, can be congested and unpleasant.
And while Vietnam’s wages are lower on average, China’s factories sometimes have higher productivity, and often the support of local or even national government. “Chinese manufacturers get tax support from their government,” said Mr Khiem. “They can even sell for zero profit to their buyers to compete directly with Vietnam, and claim their tax back.”
Stelvio Gugliemi, the general manager of ARDA, a furniture-making company outside Ho Chi Minh City, said the skills of factory workers are often lower, and that good staff can be hard to attract. “Middle management is the biggest problem, particularly for us that we are farther out,” he said. “Young people want to live in the city.”
Vietnamese workers also have a reputation for being more restive than their Chinese counterparts. While the country’s trade unions are Communist party controlled, Vietnam saw a spike of wildcat strikes in recent years, which reached nearly 1,000 in 2011.
Since then, the number has gone down to about 300 a year, according to government statistics. Vietnam’s recent accession to the trans-Pacific CPTPP trading group and signing of a free trade agreement with the EU will require Vietnam to begin allowing independent trade unions, although their potential impact is unclear.
“I am sure new workers’ organisations will emerge,” said Chang-Hee Lee, country director for the International Labour Organization in Vietnam. “But I can’t imagine they will disturb companies’ operations, because their number will be small and there is overall political stability.”
Business leaders said that while the notion of Vietnam replacing China was unrealistic, it was now among the main countries manufacturers were choosing as part of a “China plus one” strategy — trade war or not.
“Nobody has what China has, no country in south-east Asia,” said Mr Sitkoff. “But Vietnam can get some of it.”
By John Reed @ Financial Times, Additional reporting by Pham Hai Chung in Hanoi
More than 4,000 runners from 46 countries will participate in the 2019 Vietnam Mountain Marathon (VMM) in Lao Cai province’s Sapa district from September 21-22, an increase of 18% as compared to the 2018 event.
Prominent among the participants are 2018 Ultra Trail du Mont Blanc (UTMB) champion, Francesca Canepa; and winner of the men’s 100km event at the 2018 Vietnam Mountain Marathon, Nguyen Tien Hung.
In its seventh edition, the VMM is promised to become one of the biggest ultra-running events in Asia and the landmark event on the South East Asia calendar.
According to a report on NDO, the two-day event offers runners four distance choices: 21km (half marathon), 42km (marathon), 70km (ultramarathon) and 100km.
Each route will encompass challenging climbs, magnificent rice-terraced fields and ethnic minority villages, which make the event extremely attractive to adventure lovers who want to discover the north of Vietnam.
The race finish line is the Topas Ecolodge, which was voted No.1 on the National Geographic list of places to stay for environmentally friendly people in 2017.
The VMM is among Vietnam Trail Series launched by the Topas Travel Company. Since its first launch in 2013, the series has donated more than US$250,000 to charity activities of Operation Smile and Newborns Vietnam.
This year’s event will fund over VND1 billion for the two organizations and social projects in Sapa, Lao Cai province.
A kindergarten in the northern Vietnamese province of Bac Ninh has been suspended after a three-year-old child was found locked inside its school bus for hours last week, police said on Monday.
Duong Thi Hop owns and runs the private Do Re Mi Kindergarten in Tien Du District of Bac Ninh while her husband, Nguyen Cong Ty, is in charge of transporting students between their homes and the school using a Ford Transit van they own.
On the morning of September 13, Ty picked up students who had registered for the school bus service and dropped them off at the kindergarten, allegedly forgetting one three-year-old boy who sat at the bottom row, Bac Ninh Police said on Monday.
Ty parked the car under a tree on the sidewalk in front of the kindergarten, left the driver’s seat window slightly open with a gap of about ten centimeters, and took off to run some personal errands, according to the police statement.
At around 3:45 pm the same day, Ty returned to the vehicle and found Nguyen Tan L., 3, lying face-up on the floor of the third row from the driver’s seat.
L. is estimated to have been in the locked car for roughly nine hours by the time he was found.
The boy received first treatment at a local clinic and a provincial hospital before being transferred to the Vietnam National Hospital of Pediatrics in Hanoi.
A source from the Hanoi hospital said the three-year-old boy was hospitalized with symptoms of heat stroke, including high temperature, low blood sugar, and dehydration.
As of Monday, L. had regained consciousness and computed tomography (CT) scan results show that the boy will not suffer from any long-lasting brain damage, doctors at the Vietnam National Hospital of Pediatrics said the same day.
The administration of Hoai Son Commune in Tien Du District has suspended the kindergarten for investigation.
The incident in Bac Ninh is the second of its kind that happened in Vietnam in under two months.
On August 6, a first grader in Hanoi died after he was also neglected inside a school bus for nine hours. The bus driver and supervisor have been prosecuted for involuntary manslaughter.
