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Vietnam’s insurance market keeps thriving in first months of 2019

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Vietnam’s insurance industry maintained positive growth in the first four months of this year, with total premiums surging by 17 per cent year-on-year to USD1.9 billion (VND44.3 trillion), the Ministry of Finance reported.

Besides maintaining a high growth rate, the financial status of insurance firms also improved in the period with total assets rising by 21.4 per cent to VND401.9 trillion. VDSC said on its latest Weekly Market Recap.

During the period, insurance companies re-invested VND328.7 trillion into the economy, marking a rise of 26.5 per cent year-on-year. Insurers also paid out VND12.5 trillion to customers, surging 31.2 per cent compared with the same period last year.

According to the Ministry of Finance’s Insurance Supervisory Authority (ISA), the insurance industry is targeting a growth rate of 20 per cent this year. Experts remain upbeat about the industry’s health in the coming years, forecasting that it will maintain an annual growth rate of 10-20 per cent. Many banks that co-operate with insurers to provide bancassurance products even expect an annual growth rate of up to 30-40 per cent.

The ISA reported that the country has 64 insurance companies, including 30 non-life insurers, 18 life insurers, two reinsurance companies and 14 insurance brokerage companies. There are up to 850 non-life insurance products and 450 life insurance products sold on the Vietnamese market.

Trade War: Moving to Vietnam to avoid sanctions

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Companies operating in China are facing stiff increases in tariffs on exports to the United States as the trade war between the two countries escalates.

So, there’s an incentive for manufacturers in China to move their production to countries not subject to these tariffs.

And one of these beneficiary countries has been Vietnam, China’s increasingly business-friendly southern neighbour.

So what can we say about changing Chinese investment into Vietnam?

The first thing to note is that foreign firms, including those from China, have long taken advantage of Vietnam’s cheaper labour and attractive business environment, well before the imposition of the first round of US sanctions last September.

Rising Chinese foreign direct investment into Vietnam @ BBC

“Vietnam has already been gaining as wages have been rising in China,” says Mary Lovely at the Peterson Institute for International Economics, a US-based think tank.

But there are also indications that investment has accelerated since the imposition of US sanctions on China last year.

In the first four months of 2019, Chinese investment into Vietnam has already reached about 65% of the total for 2018.

So there’s certainly been an upsurge in Chinese investment, but how much of this is to do with tariffs?

Vietnam’s success story

Vietnam’s economy has grown rapidly in the past decade.

Its manufacturing industry has done particularly well, with multinationals like IKEA, for instance, bolstering operations there.

And while the growth of industry is a long-term trend, experts say there’s growing evidence that an increasingly stringent US tariff regime on Chinese goods is driving further investment into Vietnam.

“Many companies were investing in production outside of China, particularly in South East Asia, before the current trade conflict”, according to corporate law firm, Baker & McKenzie, based in Hong Kong, but “the recent trade friction has simply accelerated this evolution.”

There are, however, clear signs that the pressures of rapid growth in Vietnam are taking their toll.

There were just over 14.5 million people in 2018 working in industry in Vietnam, according to the International Labour Organization.

That compares with more than 200 million in China.

Labour costs in Vietnam are rising, and the pool of new labour to draw on is much smaller than for its giant neighbour.

The ability for Vietnam to continue to absorb foreign investment will also be constrained by rising land and factory costs.

According to JLL Vietnam, a firm that specializes in real estate, industrial rental prices rose by 11% in the second half of 2018 in southern Vietnam. This has been attributed to the shift of producers from China, partly because of tariffs.

Ho Chi Minh City in southern Vietnam, the country’s main manufacturing region

Sanctions against Vietnam?

For firms moving all or part of their supply chains from China to Vietnam to avoid US sanctions, there is a risk that the US could take action against Vietnam as well.

Some multinationals are taking on a “China plus one” approach – firms keeping a foothold in China while also operating in a low-wage economy elsewhere in Asia.

The US administration is aware of the shift into production operations outside China as a way to avoid sanctions.

President Trump recently tweeted: “Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!”

In the escalating trade war between the United States and China, the label “Made in Vietnam” may not in the future be enough to avoid US tariffs.

By Reality Check team, BBC News

Vietnam’s Bamboo Airways adds more flights between Vietnam and Taiwan

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Vietnam’s Bamboo Airways Increases Flights to Taiwan in time for the busy summer travel season. The Vietnamese carrier that started operating in January of this year will launch non-stop flights between Taiwan Taoyuan International Airport and the popular tourist destination of Ha Long Bay in Vietnam on June 29, via the country’s new Van Don International Airport.

Round-trips will be operated every five days between the two destinations utilizing Bamboo’s Airbus fleet fitted with business and economy class cabins. Albert Kuan reports on airlinegeeks

Ha Long’s Van Don International Airport opened on Dec. 30, 2018, and is Vietnam’s newest airport and first privately-owned airport owned by Vietnam’s Sun Group. The airport serves Vietnam’s famous Ha Long Bay, a famous tourist destination and UNESCO World Heritage site.

Currently, the airport only has feeder flights to the capital, Ho Chi Minh City, but this summer the airport will see international services, with Donghai Airlines’ weekly flight to Shenzhen launching on June 18 and now, Bamboo Airways’ weekly flight to Taipei launching on June 29.

Bamboo Airways is Vietnam’s 5th and newest airline with ambitious plans to compete with the national carrier, Vietnam Airlines, at an international scale. According to Bamboo Airways, the airline is aiming at offering flights on up to 40 domestic and international routes, increasing the frequency of daily flights to 100 per day. This year alone, the airline aims to serve 5 million passengers.

The airline currently operates a fleet of Airbus jets — Airbus A319s, A320s and A320neos — and has signed an order for 20 Boeing 787s to extend its flights from Vietnam to Taiwan and onward to the United States in the future.

Bamboo Airways said it also expects to service other routes to neighboring countries such as Japan, Singapore and South Korea by 2022.

Vietnam considers adding laughing gas to banned narcotic list

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Vietnam could become the first country to designate laughing gas as an illegal narcotic.
The Ministry of Public Security has said the sale and use of laughing gas balloons for recreational purpose in Vietnam are dangerous and potentially deadly, and there needs to be tougher punishment for them.

In response to a resident’s question regarding the control of laughing gas, the ministry said on its website earlier this month that it would closely monitor the import, management and sales of nitrous oxide (N2O), and demand guarantees from distributors that the chemical would not be used on humans.

After identifying the extent to which laughing gas is used recreationally and considering existing international regulations, it would seek to add nitrous oxide to the list of known narcotics and precursors to suitably punish the illegal sale, transport and production of the substance, it said.

Nitrous oxide is capable of inducing feelings of euphoria due to its impact on the neurological system, and so can be used as a recreational stimulant.

But overuse may lead to memory or sleep disorders and a tingly sensation at the extremities, among other effects.

The substance has been involved in numerous drug incidents in Vietnam, some deadly. Last year seven people died of an overdose at a Hanoi electronic music festival, prompting authorities to suspend all music festivals in the capital until further notice. The police confirmed that balloons containing nitrous oxide were present at the scene.

Nitrous oxide is however listed as a chemical regulated by the Ministry of Industry and Trade and has practical applications as an anesthesia in medicine among other uses.

Violating regulations relating to its production or sale could result in a fine of VND12-25 million ($515-1,070).

No country in the world has listed nitrous oxide as a narcotic. The sale of nitrous oxide for recreational use is prohibited in Australia and the U.K. and many U.S. states have laws regulating its possession, sale, and distribution. But the substance is legal and wildly available in many countries.

Source: Vnexpress

Should students use mobile phones in schools?

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Though school regulations do not allow students to use mobile phones in classes, I’ve seen many cases, including my nephews, carrying smartphones and using them publicly in schools.

Mobile phones, especially smartphones, have become an essential part of our daily lives. I can’t imagine going one day without touching my iPhone, as I need to make calls, reply to messages, draft emails, and scroll my social feeds. Of course, I’m already an adult.

I first had my phone about 10 years ago when I was 16, and I felt okay with having it at that age. However, I believe that’s not the case these days as even my 10-year-old nephew has asked his father for a phone.

That’s why when I noticed the topic of phones in schools, I had mixed feelings as to whether mobile phones are beneficial or distracting for students.

I spoke with four people, two of them four or five years younger than me, and the others two years older, and they all agreed that mobile phones can have either positive or detrimental effects on students, depending on how adults guide them.

“I have a younger sister who is 15 years old,” Ngọc Anh, 25, said. “She was given my dad’s old mobile phone two years ago. It’s from Nokia and my sister is perfectly fine with it since she has been taught to use the phone to call my dad after school for pick up and emergency cases only.”

Meanwhile, my aunt, 48, told me that my nephew’s inability to live without his phone had become a frustration for her family.

“Huy An is now 16, and I allowed him to have a smartphone about three to four years ago. I didn’t think much as Huy An was familiar with using my iPad, and I didn’t have time to carefully take care of him so I thought a phone could make his life easier, as well as make myself feel less guilty,” my aunt said.

“Now his teachers have told me that Huy An constantly watches YouTube videos during class, so I’ve become particularly concerned,” she added.

My aunt’s case isn’t rare as many parents are encountering a similar problem.

According to educational experts, it’s difficult for anyone to not have a smartphone these days since they are essential items.

Xuân Nhã, 34, a teacher at a secondary school in HCM City, told me that she often saw her students hide their phones under their skirts, texts under desks, or use “bathroom passes” to finish posting their thoughts to social media.

“This has occurred for about four to five years. I was upset at first as phones distracted my students from listening to my lectures, but I came to realise that there’s nothing I can do to stop students from carrying their phones to school,” she said

“That’s when I started to set some class rules and be strict with my punishment. I informed parents at a teacher-parent meet-and-greet session at the beginning of the academic year about how I would keep a student’s phone if I spotted one using his or her phone during my lecture,” she said.

“Of course, students’ phones are not mine to keep forever, so I will return them at the end of the academic year,” she added.

Nhã said that most students’ parents had been supportive and that surprisingly her new students had made life much easier for her.

“My ninth grade students recently taught me to use kahoot.it, a free game-based learning platform that makes it fun to learn a subject. Instead of handling out 15-minute quizzes like every teacher has done, my students told me to create multiple-choice quizzes on kahoot.it and let students join the game using their smartphones!” she said.

“It’s interactive and so much fun! Smartphones can be excellent learning devices.” Nhã said, adding that she’d found using phones in class to be positive as well.

Being tech-savvy myself, I still have doubts about letting students or even my future children carrying phones to school.

However, thinking back about how I got through that “chaotic period” when first having a smartphone, I have experiences that I would like to share to ones in need.

When I first got an iPhone, which was around the 12th grade, I was quite aware of the negative impact a smartphone could have, partly because I wrote so many assignments on the topic and also because my mother was straightforward with how she would like me to use my phone.

With that said, parents’ support and guidance plays an important role in how to make mobile phones, especially smartphones, useful devices for their kids.

From my research, effective communication between parents and their children is not only essential to their relationships but also for the children’s well-being.

If parents communicate openly and effectively and both sides contribute to the conversation, chances are that their children will feel respected and easily understand the matter.

My aunt agreed with me, adding that, “Since children these days are very smart, we shouldn’t try to ban them from using the phones, but should introduce smartphones into their lives in a ‘smart’ way.”

“I’ve done it with Huy Mạnh, Huy An’s younger brother, and so far, he’s doing great!” my aunt said.

In addition to parents’ support, Hoài Thương, 23, said that giving student digital breaks between lessons could be a great idea for schools to use to limit the potential distraction in class.

“I think keeping a close eye on how mobile phones are being used in schools has sort of become teachers’ new duty in the modern era,” Thương added.

The use of mobile phones these days can bring about both negativity and positivity for students. It’s a balancing act between teachers and parents to educate them on how to use mobile phones effectively.

Banning mobile phones is not the ultimate solution.

Source: VNS

Women in ‘corpse-in-concrete’ case admit to murder during cult-like activities

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Four women who are involved in a ‘corpse-in-concrete’ case in the southern Vietnamese province of Binh Duong have confessed to murder, claiming that they and the victims were Falun Gong followers.

An official from the provincial Department of Police confirmed to Tuoi Tre (Youth) newspaper that the suspects had admitted to killing one man, while stating that another had committed suicide.

“We are conducting further investigation to determine the exact role of each woman in the murder, as well as their motive,” the policeman stated.

The four suspects include Pham Thi Thien Ha, 31, her mother, 66-year-old Trinh Thi Hong Hoa, along with Le Phu Hanh, 54, and Le Thi Phuong Thao, 29.

The victims have been identified as Tran Tri Thanh, a Ho Chi Minh City resident, and Tran Duc Linh, who hailed from north-central Nghe An Province.

They were said to be between 30 and 35 years old.

Authorities break concrete at a house in southern Binh Duong Province, where the murder happened, on the night of May 15, 2019. Photo: Ba Son / Tuoi Tre

According to the suspects’ statements, they and the two victims were followers of Falun Gong, a Chinese religious spiritual practice.

Their group rented a house on D2 Street in Ben Cat District, Binh Duong Province to practice the spiritual discipline.

After some members left the group, the other followers decided to relocate to keep their activities a secret.

Ha then rented the house of Nguyen Minh Vuong in Bau Bang District, also in Binh Duong, in October 2018.

During their practices, the two men developed some conflicts with the four women.

One of the men, Linh, eventually committed suicide by jumping off the house roof.

The other members then kept Linh’s body inside a room. As his body began decomposing, they put it into a barrel and covered it tightly with tape.

The house where the bodies were discovered. Photo: Ba Son / Tuoi Tre

After a while, the women thought that Thanh was no longer a suitable member, so they planned on murdering him.

The suspects first rendered him unconscious by electrocuting him, before strangling him to death.

The women also kept Thanh’s body inside a room while they continued their religious exercises.

As the corpse started to smell, they threw it into another barrel and filled it with concrete.

In April 2019, they returned the house to Vuong, who then sold it in May.

The new owner discovered the concrete-filled barrel on Wednesday night and found Thanh’s body as he was breaking up the concrete.

Police officers then searched the house and found Linh’s body the following day.

The women were apprehended on Friday night when they were staying at a hotel in Thu Dau Mot City, Binh Duong, about 50km from the murder scene.

Source: Tuoitrenews

The North Korean restaurant accused by a think tank of using software sales to bypass sanctions

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With its bold red paintwork, bright signage and blue Korean unification flag on prominent display, the Koryo restaurant in the northern Vietnamese city of Hanoi does little to hide its North Korean ties.

Inside, waitresses meander about serving cold noodles and kimchi to customers. However, online records show the restaurant could also be a cover for a company selling high-tech facial recognition software.

Two prominent US think tanks say the sales could be a possible violation of United Nations sanctions imposed in 2017, which had intended to clamp down on businesses generating cash to support leader Kim Jong Un’s regime.

“Our understanding is that programmers who are working overseas generate as much as hundreds of thousands of US dollars for the regime every year, so they have a disproportionate capacity to raise funds overseas,” said Jason Arterburn, an analyst specializing in North Korea and China at the Center for Advanced Defense Studies, which is better known by its acronym C4ADS.

Furthermore, experts warn that North Korean software designers who create and sell these products online could be building hidden back doors for Pyongyang’s well-trained hackers to exploit.

Profits through software

North Korea is barred from selling weapons abroad — though the UN alleges that the country is still attempting to do so — but it’s not clear if high-tech software that isn’t used for military purposes is subject to that arms embargo. The UN Panel of Experts on North Korea, the body charged with monitoring sanctions enforcement, did not respond to an email seeking comment.
Facial recognition software could provide a loophole in existing sanctions that seek to limit Pyongyang’s ability to make money overseas.

“(Information technology) services aren’t covered by the United Nations sanctions,” said Cameron Trainer, an analyst studying North Korean illicit finance at the James Martin Center for Nonproliferation Studies (CNS). “It’s still a way North Korea can procure currency that is then funneled to its nuclear program.”

The UN Panel of Experts’ annual report alleges that North Korea’s operations abroad are meant to evade sanctions and earn money for the country to contribute to North Korea’s bottom line. Those funds undercut the effect of UN sanctions levied against the country in response to its nuclear weapons development.

Experts say the Hanoi restaurant’s alleged software sales raise concerns that other North Korean restaurants around Asia could also be used to sidestep sanctions. Police and investigators usually detect sanction evasions at points of entry, like harbors. Customs officials from countries in the region do not track online software sales, said George Lopez, a former member of the UN panel charged with investigating North Korean sanctions enforcement and efficacy.

“The irony that these operate in such plain sight make it more difficult to discover what exactly they are contributing to sanction evasion, other than wages being sent back,” Lopez said.

“And that, I think, is the scary part to people who are really nervous about this.”

The ‘Future Tech Group’

The link between the restaurant in Hanoi and sales of high-tech software was detailed in a report by Arterburn at C4ADS.
Both C4ADS and CNS found that a software company called Future Tech Group had ties to both the restaurant and a mysterious Malaysian company called Glocom, which the UN has long said North Korea uses to conduct illicit weapons sales.
A domain search shows Glocom’s website shares its IP address — the unique identifier assigned to a specific connection to a network — with Future Tech Group’s.
Future Tech Group appears to have removed its website, but a cached version shows the company advertised facial recognition products and design calculation technology, among other types of software.

That’s how Future Tech Group and Glocom appear to be connected. However, Future Tech Group’s connection to the restaurant in Hanoi is a little more complex.

Vietnamese business records list a North Korean national named Kim Jong Gil as the owner of a catering and restaurant company in Vietnam called Mudo Vina. It happens to have the identical street address as Koryo restaurant in Hanoi.

Kim is tied to Future Tech Group through a series of online profiles for software experts, Arterburn explains. The profiles appear on various freelancer websites, where the users advertise themselves as software developers and facial recognition software experts. The profiles used variations of the username kjg197318. Kim Jong Gil was born on 01/08/1973, according to Mudo Vina’s Vietnamese business filings. Some of the freelance profiles also included work samples that were found on Future Tech Group’s cached website, Arterburn said.

“Essentially, what we see is that the owners of companies registered at the address of the restaurant also appear associated with freelance profiles used to sell advanced facial recognition technology to clients around the world,” Arterburn said.

“We feel with pretty high confidence we were looking at agents within the same network engaged in an array of commercial activities, including both North Korean restaurants (in Vietnam) and high-tech technology sales.”

CNN visited the Koryo restaurant in March and an employee confirmed that Mudo Vina owned the restaurant. The employee would not say whether Kim Jong Gil worked there.

There was no indication that software was being sold on the premises, but that did not mean it was not happening, Trainer of CNS said.

“Software doesn’t have to be physically handed over, it can be produced in remote locations and you wouldn’t really know it,” he said.

‘The most visible part of a larger, syndicated structure’

On the surface, it doesn’t make sense to house a restaurant and a facial recognition technology company under the same roof.

But analysts say the move fits North Korea’s tendency of grouping multiple businesses together. Arterburn said it was helpful to understand such restaurants as “overseas commercial outposts” rather than just places to eat.

“It makes economic sense that they would house a number of commercial activities in the same location,” he said.

UN sanctions imposed in 2017 are supposed to effectively shutter these restaurants. Countries were supposed to bar North Koreans from working abroad and banned North Korean “joint ventures or cooperative entities” from operating in foreign countries, but the Koryo restaurant in Hanoi remains open. Vietnam’s Ministry of Foreign Affairs did not respond to an email seeking comment.

North Korean restaurants are some of the country’s best-known exports abroad, especially in China and Southeast Asia, despite the sanctions. There are dozens throughout Asia, with the majority in China, according to experts.
They’re popular with tourists because they provide a rare opportunity for people to interact with North Koreans, as the vast majority of people inside the country are barred from leaving.

Most of the waitresses at the restaurants are women who are trained performers and musicians. They’re selected for their talent, looks and regime loyalty, according to many North Korean defectors.
But these establishments pose legal and ethical dilemmas for the countries that allow them on their soil — and the customers that dine there.

Pyongyang has been accused of treating its overseas workers like slaves, restricting their freedom of movement and keeping most of their wages to fund regime priorities, like nuclear weapons development.
Many defectors, however, say the waitresses abroad have better lives than they would back home. Their employment overseas offers them an opportunity to see the world outside of North Korea and make more money for their families than they could at home.

But the fact that the Hanoi restaurant remains open highlights the limitations of the UN’s control over North Korea’s assets around the world. The UN does not have its own international police force so relies on individual countries to enforce its rulings.

Lopez, the former UN investigator, said regulators were concerned about what he called “the law of numbers.”

One North Korean restaurant may not make that much money, even if it could be a front for more lucrative — and potentially illegal — dealings. But scores of them?

“This is … the most visible part of a larger, syndicated structure in which not only citizens are repatriating money, but the enterprise that they’re part of also has other tentacles and is helping (to) evade sanctions,” Lopez said.

“If this is the only part of this you see, you better cut this off right away and see where the other parts are, because it’s a growing monster.”

Reporting by Joshua Berlinger, CNN

Companies looking to quit China to avoid potential risks from trade war

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Trump tariffs seal the deal for companies looking to quit China

US President Donald Trump’s new tariffs are helping to erode China’s appeal as a place where stuff gets made.

According to a report on Bloomberg, Ricoh Co is moving some manufacturing from China to Thailand to avoid potential risks from the US-China trade tensions, the Japanese office-equipment maker said on Thursday (May 16). That came hours after a report that Taiwan’s Kenda Rubber Industrial is investing in Vietnam to do the same.

Those two examples are just the most recent from a chorus of executives who are citing the trade war as the final straw in their shift out of China, with margins already squeezed by rising labor costs, tougher environmental standards and domestic competition. Last week, Trump hiked tariffs on US$200 billion of Chinese imports and the US is readying the expansion of that treatment to the remainder.

“The purpose is to minimize the impact of tariff increases,” Ricoh said in a statement, referring to the newly announced US tariffs on the rest of imports from China. The firm will produce all US-bound multi-function printers in Thailand instead of Shenzhen in southern China.

The company said it will consider various changes to its production structure including moving more production to Thailand from China, to “respond to various risks and improve efficiency”, it said.

Big consumer brands Samsonite International SA, Macy’s Inc and Fossil Group Inc have all said on recent calls with analysts that they are continuing to move production and sourcing out of China. Bloomberg reports.

“We’re generally under an initiative to kind of shift what we can from China, which we were doing even ahead of tariffs,” Samsonite CEO Kyle Gendreau said on a call on Tuesday. “And we’re just continuing to accelerate on the mix of what’s coming from China to kind of mitigate the impacts there as well.”

The threatened tariffs of 25 per cent on all exports to the US, which accounts for a fifth of China’s total outbound shipments, are set to give China the stiffest test of its role as the core of the global supply chain. For Cisco Systems Inc, shipping from other nations is the way to go.

“We still have some manufacturing happening in China, but we have greatly, greatly reduced our exposure working with our supply chain and our suppliers,” chief financial officer Kelly A. Kramer said on a call with analysts on Wednesday, when asked about the impact of the tariffs. “So the impact that we’re expecting, again we are trying to mitigate.”

Some businesses have already moved following last year’s tariffs on the first batch of Chinese products. Communication equipment producer Sierra Wireless Inc has almost completed moving some production to Vietnam, and that has reduced the firm’s exposure to further trade flaring, CFO David McLennan said on May 9.

UBS Group found in a November survey that around 37 per cent of 200 export manufacturers said they had transferred production in the past year, while another 33 per cent plan to do so in the next six to 12 months. That relocation comes at a cost for companies such as aluminum producer Granges AB, which had to move production out of its most cost-efficient facility in China to a plant in Sweden.

Even Chinese firms are moving to dodge the tariffs. China-based Jason Furniture (Hangzhou) Co revealed plans to build factories overseas in its annual report last month, and Xilinmen Furniture Co started to build a production base in Thailand.

While Chinese exporters reel at the escalating tensions, other countries and businesses are extending invitations to those driven out of the Asian nation.

If the trade war between the US and China continues it opens “a door for South America to occupy this space”, Fernando Queiroz, chief executive officer of the Sao Paulo-based meat producer Minerva SA, said on a Wednesday call.

How this largest consumer credit company in Vietnam changed consumer lending

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FE Credit, one of Vietnam’s oldest and the largest consumer credit company, worked with EY and several FinTech partners to implement a robo-lending platform app, suitably named as $NAP, which digitizes the whole process of customer on-boarding, loan application, know-your-customer (KYC), credit underwriting, loan approval and disbursement.

As a result, FE Credit reduced the borrowing process from 4-5 days to less than 15 minutes, thus drastically increasing its appeal to customers, while overcoming the challenges inherent in the traditional lending model.

The better the question

How to improve customer experience so that they would do more business with us?

With digitization, FE Credit transformed the consumer loan borrowing process for Vietnamese customers.

The consumer lending industry in Vietnam has been seeing remarkable growth. According to a report by the National Financial Supervision Commission, which advises the prime minister on matters related to the financial markets, consumer lending in Vietnam has been growing fast since 2015, with growth rate at 65% in 2017 compared to 50.2% in 2016, and with the percentage of consumer lending in total credit rising to 18% in 2017 from 12.3% in 2016.

In this context, various players, both domestic and foreign, are eyeing a slice of the market. Banks and corporates have opened their consumer credit units, and many foreign consumer credit companies have come to Vietnam, either setting up greenfield ventures or acquiring existing players.

With so many players in the market, the consumer experience still leaves much to be desired. Even though most Vietnamese customers are tech savvy (84% of the population were smartphone users at the end of 2017), the process of securing consumer credit is mostly manual and consequently, slow from a customer’s perspective.

The typical process is as follows: A customer files an application either online or offline and submit paper documents to the credit company. The company then assesses the documents, and then calls or texts the customer if the loan is approved. The customer then signs a paper contract with the company, and only then the company remits the money to the customer’s bank account. The process usually takes at least 4-5 days.4

FE Credit, originally founded as the Consumer Finance Division of Vietnam Prosperity under Vietnam Prosperity Joint – Stock Commercial Bank, was established in 2010 and is one of the early players in the market.

As of 2018, FE Credit has served millions of Vietnamese across 63 provinces and cities nationwide with a wide range of products consisting of personal loan, consumer durable loan, two-wheeler loan, credit card and insurance.

The company boasts a database of 25 million customers (or 27% of the population of Vietnam), of which 12 million were applicants. The company has given out 8 million loans, and issued 1 million credit cards over the past 8 years, capturing a market share of over 50%, and bringing more people into the fold of organized finance than the whole banking sector put together.

Kalidas Ghose, FE Credit’s CEO, thinks there is still much room for growth for the company’s revenues and customer base.

FE Credit previously had a basic app, but besides filing the loan application on the app, customers still had to submit physical documents and sign the contract offline before receiving the loan disbursement in their bank account. This app was hence not a significant improvement from the customer’s perspective in terms of time and convenience.

Meanwhile, in China and India, many consumer lending companies have launched a complete digital process of loan application, approval and disbursement, taking only 10-15 minutes for customers to receive the money.

FE Credit recognized that if it can provide a similar process in Vietnam, the benefits would be two-fold – customers will gladly adopt the FE Credit app, and the cost of operation for FE Credit will be reduced.

As the Vietnamese consumer lending market heats up with many players, the risk would be high for FE Credit to lose market share to competition if it doesn’t move fast.

The better the answer

Greater challenge creates room for more remarkable improvement.

FE Credit, its FinTech partners and EY made robo-lending work in a paper-based system.

FE Credit worked with EY and several FinTech companies to create an end-to-end digital lending platform app.

The lending platform for the $NAP app was created by integrating through APIs a host of digital technology and FinTech solutions on a flexible workflow solution guided by a versatile rule engine. It combines new technology with traditional lending science without any compromise on KYC, verification, underwriting, compliance or customer service.5

The platform digitizes the entire customer journey (or lifecycle) from application through mobile device to receiving disbursal through bank account or retail outlets (in cash) and allowing them to service the loans up to termination through the same device. This eliminates human intervention at all stages of the lifecycle, as opposed to only onboarding.

The technologies incorporated on the platform, beyond the ability to support Vietnamese language and script, include features such as facial recognition, AI-based optical character recognition (OCR), voice based virtual assistant, speech to text, device based scoring, telco data scoring, eSignature, and more.

Though the EY team had experience launching a similar digital lending app in India, the challenge in Vietnam was unique as most documents required in the lending process, namely ID, utility bills and pay slips, are still stored in paper form.

To overcome this challenge, the new FE Credit $NAP app uses OCR and intelligent character recognition (ICR) to verify the customer’s identity, by optically reading documents that customers submit through the app in the form of images.

A total of 15 integrations had to be done with internal and external systems including various bureaus, payment gateways and banks to achieve end-to-end digitization.

As this is the first app of its kind in Vietnam, all templates had to be created from scratch. Moreover, as customers in Vietnam have never used such an app before, the app has to be very simple, self-explanatory and intuitive.

Over the course of four months, the EY team from India advised FE Credit on the industry best practices in application design, vendor selection, and prototyping.

$NAP was launched in August 2018, enabling customers to fill out a loan application, receive approval and disbursement within 24 hours. As of October, the app had over 10,000 downloads.6

The better the world works

Making use of mobile for large-scale customer acquisition.

FE Credit is leading the pack in acquiring customers at a speed never imagined before.

By eliminating traditional paper-based application and face-to-face KYC procedures, this platform decreased the risk of losing a lead due to inconvenient and time-consuming procedures, and thus reduced the cost of acquiring and on-boarding customers for FE Credit.

In Vietnam, mobile phones have enabled digital connectivity to the unbanked population and mobile transaction platforms are key to acquiring customers in the unbanked market due to its convenience and accessibility.

FE Credit now has a first-mover advantage in the Vietnamese consumer lending market. Moreover, by using AI algorithms and KYC insights to further analyze the market segment, FE Credit has successfully penetrated the unbanked market as they managed to understand their customers’ needs and wants.

The company is now working with some of the leading new-age lenders to bolt on to the platform as white label partners, giving them access to Vietnam while offering more options for inclusion which would not be possible without the platform.

The ASEAN Financial Innovation Network (AFIN) initiative of the International Finance Corporation (IFC) has recognised the platform to be a ready-to-use, highly suitable demand-side use case replicable across markets by partner financial institutions (FIs) to complement their supply-side platform. In addition, the FE Credit platform is capable of integrating with the AFIN platform when the latter is ready.

FE Credit is working on the possibility of extending its lending services to the rural areas, in collaboration with IFC, to add to its urban and suburban presence.

With all these moves, FE Credit, in partnership with IFC, aims to create a mobile-centric, digitally driven financial ecosystem driving financial inclusion and support economic progress by driving the wheels of domestic business, both on the supply and demand sides.

This article first appeared on EY.com

Why 500 Startups invest in Vietnam?

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Accelerator’s general partner Eddie Thai discusses potential of Vietnamese startup ecosystem

Since its foundation nearly a decade ago, 500 Startups, a Silicon Valley-based global startup accelerator and incubator, has built up over 2,200 companies in more than 70 countries.

Last year, its global network added seven companies to the club of unicorns — startups valued at $1 billion or more — bringing the total to 10 as of the end of 2018. They include Grab and Canva.

Particularly in Vietnam, 500 Startups prides itself on having played a critical role in building up the startup ecosystem.

“Now it’s much the case that Vietnam is a hot market in Southeast Asia,” Eddie Thai, general partner of 500 Startups Vietnam, said in an interview with The Investor.

“Many Koreans are seeing the opportunity here in the startup scene. Chinese, Singaporean and Indonesian investors, who a few years ago were looking at Indonesia, are now looking here. International investors usually at a later stage started to look here to see what was coming.”

Eddie Thai, general partner of 500 Startups Vietnam, speaks during a recent interview with The Investor at its headquarters in Ho Chi Minh City.
Son Ji-hyoung/The Investor

Born in the US, with a background in consulting and private equity, Thai, along with his partner Binh Tran, has helped expand the accelerator’s presence in Vietnam since its launch in March 2016. Based in Ho Chi Minh City, his team consists of eight members.

Of the $454 million that 500 Startups had committed worldwide as of end-2018, $14 million will go to Vietnam-connected startups. The fund announced a final closing with oversubscription last year.

500 Startups Vietnam has since been focusing on early-stage round funding, involving 42 portfolio companies as of May this year.

All this did not come easy, Thai said, adding that it takes more than fast economic growth and high internet penetration.

“500 Startups Vietnam has actually changed a lot in the ecosystem,” Thai said. “Prior to our entry, we saw that people weren’t all convinced by the opportunity and timing regarding Vietnam just yet. We had to spend a lot of time explaining about Vietnam, telling people what was happening, where we saw the market going and why it made us invest.”

While 500 Startups has run some 50 batches of startup accelerator programs around the world, its Vietnamese unit has yet to host even one.

Still, things are looking up, as its new startup accelerator program is on deck. The program, dubbed “Saola Accelerator,” will be launched in June, in collaboration with Seoul-based online commerce platform operator GS Shop. It was named after saola, an endangered species also known as the “Asian unicorn,” which inhabits wet forests and is only found in eastern Indochina, including parts of Vietnam and Laos.

“We see it as a Silicon Valley-inspired, Vietnam-based accelerator program,” Thai said.

Around eight startups will participate in the three-month-long program.

The launch of Saola reflects the high pace of growth in the Vietnamese startup ecosystem, which is supported by three pillars — e-commerce, logistics and digital payment.

Some two-thirds of venture financing in Vietnam went into either of these three categories, while the ultimate winner in each category has yet to be seen amid fierce competition, according to Thai.

“In the coming years, there will still be a lot of financing because all three categories require a lot of cash,” he said. “That’s a high-burn bloody battle.”

In the meantime, startups dealing with solutions to deeper problems faced by consumers and enterprises are expected to thrive, as the Vietnamese economy grows and startup ecosystem matures, he added.

“E-commerce information, ride-hailing, digital payment are what’s been historically happening till now (in Vietnam), but what’s happening after that is a lot related to what any middle-class family is concerned about anywhere in the world,” he said.

“After you have fed your family and put food on the table, after you have your roof over your head, what you are looking at is how to save for the long term, how to educate your children, how to insure against risks and how to take care of their health. That makes for a much more complex space but also much more exciting space if you find and back the winners.”

By 2020, 500 Startups Vietnam aims to invest in 80 to 100 startups with its $14 million fund.

By Son Ji-hyoung (consnow@heraldcorp.com)
This article was sponsored by the GBS - a business and legal services company in Vietnam

In a first for Asia, the legislature of this country voted to legalize same-sex marriage

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Taiwan’s legislature voted Friday to legalize same-sex marriage, that makes Taiwan the first place in Asia with a comprehensive law both allowing and laying out the terms of same-sex marriage and a boost for LGBT rights activists who championed the cause for two decades.

Lawmakers, pressured by LGBT groups as well as church organizations opposed to the move, approved most of a government-sponsored bill that recognizes same-sex marriages. It gives couples many of the tax, insurance and child custody benefits available to male-female married couples. AP reports.

Taiwan’s Constitutional Court in May 2017 said the constitution allows same-sex marriages and gave Parliament two years to adjust laws accordingly.

Taiwan legalizes same-sex marriage in historic first for Asia

The court order mobilized LGBT advocacy groups pushing for fair treatment, as well as opponents among church groups and advocates of traditional Chinese family values.

“It’s a breakthrough, I have to say so. I could not imagine that could happen in just a few years,” said Shiau Hong-chi, professor of gender studies and communications management at Shih-Hsin University in Taiwan.

Thailand is also exploring the legalization of same-sex civil partnerships.

According to AP, Taiwan’s acceptance of gay and lesbian relationships began in the 1990s when leaders in today’s ruling Democratic Progressive Party championed the cause to help Taiwan stand out in Asia as an open society.

Opponents have raised fears of incest, insurance benefit scams and children confused by having two mothers or two fathers. Both sides of the issue have held colourful street demonstrations and lobbied lawmakers.

In November 2018, a majority of Taiwan voters rejected same-sex marriage in an advisory referendum.

Bills on the table Friday include one authored by the government. Another version plays to both sides of the debate by allowing marriages but with conditions such as calling them “unions” and imposing restrictions on adopting children.

Opinion surveys in 2012 and 2015 found that slight majorities of Taiwanese backed legalizing same-sex marriage.

After Taiwan, Vietnam Among Asia’s Most Progressive on LGBT Rights.

The past decade has seen so many policy changes in favor of LGBT rights in Vietnam – most notably the repeal of a heteronormative definition of marriage – that NBC News said the country is “now more progressive than America.” In 2015, the Southeast Asian nation officially abolished regulations that prevent “marriage between people of the same sex.”

At the time, Phil Robertson, deputy director of Human Rights Watch’s Asia branch, told Bangkok Post: “No other country in Southeast Asia has taken as big a step toward accepting same-sex marriage as Vietnam.”

Everything foreign investor should know before forming a company in Vietnam

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Foreign investors can either forming a company in Vietnam for the first time or signing a Business Cooperation Contract with a local partner. In both cases, the investors need to obtain an investment certificate.

The application process depends on the location of the registered office of the company or Business Cooperation Contract (inside or outside special zone).

Company formation

Foreign investors can form foreign invested companies in Vietnam under the form of: Limited liability (LLC), or Joint Stock (JSC) companies. They can be either 100% foreign owned or joint venture with local partners.

The incorporation process is the same for all forms of companies. However, it may vary depending on the following factors:

Location (inside or outside special zone).
Whether the investor will rent a simple office or lease land and request a construction permit.
Special requirements (e.g. a feasibility study) apply to projects above VND300 billions (about USD14 million).

With simple office lease in Ho Chi Minh City

Outside special zones
In Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA)
In Management Authority for Southern Area Development (MASD)
In Saigon Hi-Tech Park (SHTP)
In Investment & Construction Authority for Thu Thiem urbanized area (Thu Thiem ICA)
In North West Metropolitan Area Authority (NWMA)

With Land Lease

Outside special zones
In HCMC Export Processing and Industrial Zones Authority (HEPZA)
In Management Authority For Southern Area Development (MASD)
In Saigon Hi-Tech Park (SHTP)
In Investment & Construction Authority for Thu Thiem urbanized area (Thu Thiem ICA)
In North-West Metropolitan Area Authority (NWMA)

Business Cooperation Contract

Foreign investors can invest in Vietnam without forming a company. They can sign with a Vietnamese company or individual a business cooperation contract (BCC), in which parties jointly undertake business activities and share the resulting profits. The Vietnamese company can be owned by nationals, by foreigners or be a joint-venture.

Outside special zones

In HCMC Export Processing and Industrial Zones Authority (HEPZA)
In Management Authority for Southern Area Development (MASD)
In Saigon Hi-Tech Park (SHTP)
In North West Metropolitan Area Authority (NWMA)

To be advised in detail, you may contact the incorporation agency in Vietnam, such as GBS at: info@gbs.com.vn, hotline, Whatsap at: +84903189033 or visit the website: https://gbs.com.vn

How Vietnam can escape the middle-income trap?

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Vietnam is one of the great economic success stories of the 21st century thus far. Just a generation ago, the country was one of the poorest in the world, scarred by decades of conflict and with an economy stifled by a central planning system.

Following three decades of virtually uninterrupted rapid growth, Vietnam has emerged as a thriving middle-income economy. Foreign investors are beating a path to its door, demanding to participate in and contribute to its growing prosperity. However, as can be seen from Figure 1, Vietnam’s transition to becoming a prosperous and modern economy has only just begun. Vietnam’s per capita income is currently only about 40 percent of the global average. Sebastian Eckardt reports on the Brookings

Related: How to set up 100% foreign invested company in Vietnam

Figure 1: Vietnam’s transition to a modern economy is not yet doneVietnam’s transition to a modern economy is not yet done

T = Year when reforms began

In order to become a high-income country by 2045, Vietnam will need to sustain average growth rates of at least 7 percent over the next 25 years—this would bring GDP per capita to about $25,000. While Vietnam has the potential to meet this aspiration, without reforms, the country is likely to experience a slowdown in growth and fall short of its own aspiration (see Figure 2). A rapidly aging population, tepid productivity, and sluggish investment growth all weigh on Vietnam’s medium-term growth potential. Many of the drivers that propelled the country’s growth in the past will diminish over the next decade. Gains from structural transformation—workers moving from lower-productivity agriculture to higher productivity manufacturing and services—is running its course. Wages are rising and will start to erode Vietnam’s current comparative advantage in relatively low-value, labor-intensive segments of global value chains.

Figure 2: Vietnam’s growth potential is lower than other Asian Tigers Vietnam’s growth potential is lower than other Asian Tigers

According to Brookings, Vietnam will also need to navigate shifting global trade patterns and disruptive technologies, which are both reshaping opportunities and creating new risks. World trade volume has grown by just over 3 percent per year since 2012, less than half the average rate during the previous three decades. Meanwhile, the increasing adoption of advanced manufacturing technologies—robotics, 3D printing, smart manufacturing—in labor-scarce economies and in China exacerbates concerns over wage competitiveness. For example, the sports apparel company Adidas has plans to re-shore production from Vietnam and other low-cost manufacturing hubs to a new 3D printing factory in its home country, Germany. These trends could challenge Vietnam’s ability to continue to emulate the success of Asian Tiger economies but they may also create new opportunities for faster technological catch-up and even leapfrogging. Some evidence from early adopters suggests that new manufacturing technologies may, in fact, boost trade. For example, the production of hearing aids shifted almost entirely to 3D printing over the last decade. Contrary to conventional expectations, this was in fact associated with an expansion of global trade in hearing aids.

So what will it take for Vietnam to take advantage of these new opportunities but also to manage downside risks? We suggest four priorities.

First, accelerate productive investment. Vietnam’s economy is still relatively capital-scarce. This means much is to be gained by boosting the productivity of the country’s abundant labor force with investment in productive infrastructure, machinery, and technology. This will require a more efficient financial system that reduces the cost of financing and allocates Vietnam’s significant domestic savings into productive private sector and infrastructure investment. It will also require removing bottlenecks to private sector investment to de-risk and raise the returns on these investments.

Second, promote a productive workforce with 21st-century skills. Vietnam’s rapidly developing economy requires a new and more complex set of skills and production processes than in the past. According to the recently released World Bank Human Capital Index (HCI), which ranks Vietnam 48 out of 157 countries, the lifetime productivity of a child born in Vietnam today will be only 67 percent of their potential with full education and health. Despite remarkable achievements in expanding educational attainment and quality, only two in three children complete high school and less than one in 10 current workers have a university degree or vocational training. Already today more than half the firms in Vietnam report difficulties in finding workers with relevant skills. Vietnam will need a big reform push to build inclusive and competitive vocational training systems and world-class universities not only to ensure competitiveness but also to enable its people to participate productively in the opportunities offered a rapidly growing economy.

Third, foster innovation. Innovation will need to become a more important driver of increased productivity, both through the upgrading of processes, technologies, and products by existing firms, as well as the entry of high-productivity and exit of low-productivity firms. Opportunities abound for firms in Vietnam to adopt existing knowledge and technologies. Secure intellectual property rights, competition—easy entry and exit of firms—as well as openness to trade and investment are key ingredients to stimulate innovation among firms. For example, Vietnam’s increasing integration into global value chains can serve as a vehicle for diffusion of technology and ideas.

The final and perhaps most important priority: institutions! Institutional legacies, including the still large state-owned sector, incomplete market institutions, and a cumbersome investment climate continue to impede the development of Vietnam’s private sector. With the state still involved in productive activities and resource allocation, questions about a level playing field, independent regulation of markets, and an effective competition framework remain pertinent. This is compounded by fragmentation within and across levels of government, implementation gaps, and weak accountability. If left unaddressed these governance weaknesses may become a drag on future growth and social outcomes.

New Austrian Foreign Trade Centre Opened in Vietnam

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Highlights of the trip are the opening of the new Foreign Trade Centre in Ho Chi Minh City on 16 May and the signing of a cooperation agreement in Singapore on 17 May to establish the new Accelerator Programme “Go Southeast Asia”, which will start in autumn.

Foreign Trade Center in Vietnam opens doors to growth region

“The new base in Ho Chi Minh City opens the door for our companies to the growth hotspot of the future. Vietnam is booming, has competent specialists, a rapidly growing middle class and the government is investing massively in the expansion of its infrastructure. This means great opportunities for our companies with their first-class know-how,” says Chamber President Harald Mahrer.

The focus is on innovation and future technologies.

Through the international exchange of knowledge and technology, Austria is to move up into the group of innovation leaders.

So far, the Vietnamese market has been served from Thailand, and around 30 domestic companies are already present in Vietnam.

Preparations for the launch of “Go Southeast Asia” in Singapore

In Singapore, the course is set for the new accelerator program “Go Southeast Asia,” which will start in the fall of this year.

A cooperation agreement will be signed with NUS Enterprise, the entrepreneurial arm of the renowned National University of Singapore.

According to Vienna International News, the opening of the new Foreign Trade Center and the launch of Go Southeast Asia are important steps in the implementation of the foreign trade strategy presented in December 2018 together with the BMEIA Federal Ministry for Europe Integration and Foreign Affairs and the BMDW Federal Ministry for Digital and Economic Affairs.

Vietnam eyes to export of avocados to the U.S market

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Vietnam is seeking to export avocados to the United States, the Southeast Asian country said on Thursday, after U.S. President Donald Trump’s threat to shut the U.S.-Mexico border raised fears American consumers could see a shortage.

Avocado prices in the United States jumped by nearly 50% in April on fears that Trump would halt shipments from Mexico, which accounts for some 80% of its supply. Both processors and wholesalers began to stockpile the fruit as a result.

The United States imported more than 900,000 tonnes of Mexican avocados last year worth nearly $2.1 billion, 10 times the value it buys from the rest of the world, according to crop forecaster Gro Intelligence.

Avocados, typically used in guacamole or spread on toast, could be a high export earner for Vietnam, the government said in a statement on its website.

According to a report by Khanh Vu on Reuters, Avocado consumption is on the rise in Vietnam as living standards improve, fuelling interest amongst domestic buyers.

FILE PHOTO: A woman eats guacamole in this picture illustration, in Mexico City, 
Mexico April 2, 2019. REUTERS/Luis Cortes/File Photo