Vietnamese stock market needs product impetus, say experts

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Featured photo: Commonwealth Bank of Australia (CBA) is one of the foreign investors with longest investment history in Vietnam

Foreign investors found difficult to invest in Vietnamese stock market due to insufficient securities products, a senior official from Vietnam-focused financial institution with long-standing investment experience in Vietnam Dragon Capital has said.

The total capitalization of Vietnam’s stock market reaches about US$145 billion. Of the sum, foreign investors own USS35 billion and the rest room is about US$18 billion, Le Anh Tuan, Deputy General Director of Investment cum Head of Research Department of Dragon Capital, said at the recent seminar in Hanoi.

However, half of the remaining room is owned by five companies including Vingroup (US$7.2 billion), Vinamilk (US$1 billion), Novaland (US$0.6 billion), PetroVietnam Power Corp (US$0.5 billion), Tuan said.

He added that the 751 remaining listed companies have US$8.5 billion for foreign investors. Thus, the average room for foreign investors is US$11 million each company, resulting in difficulties for foreign investors.

Le Anh Tuan

The Dragon Capital’s representative emphasized on the imbalance of capital distribution for the economy. Good companies with low valuation have been out of room while Top 20 currently has the PE of 22.3, negatively affecting the capital mobilization cost.

Meanwhile, many other countries in the region have opened up their markets. That has resulted in the appearance of many securities products such as Non-Voting Depositary Receipt (NVDR).

According to Tuan, Thailand’s NVDR products have the same benefits as common shares with high transparency and transaction convenience. However, it creates opportunities for foreign investors to control the companies. But there has been no dispute between investors and the owners in Thailand’s NVDR market thus far.
The foreign investors bought NVDR although the company still has room. The only difference between ordinary shareholders and NVDR holders was the latter could not be involved in company decision-making.

Tuan proposed to use Thailand’s NVDR as the basement to adjust to Vietnam’s conditions and creating Vietnam’s NVDR, which can be piloted in some companies that are out of room with good management. In which, 15 per cent of NVDR will be issued in the first phase.

During the event themed “Enhancing Vietnam’s capital market accessibility”, co-organized by the Central Institute for Economic Management (CIEM) and the State Securities Commission (SSC), participants also discussed solutions to offer new securities products to diversify the stock market and attract investors, helping businesses mobilize capital for production and development.

Viet Capital Bank names Phan Viet Cuong as its new head of retail banking

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Viet Capital Bank said on Thursday it has named Phan Viet Cuong (Jonas Phan) as its new group head of retail banking as the bank seeks to expand in many of the markets.

Jonas Phan held several roles within Vietnam’s banking industry, including Head of Retail banking at Vietnam International Bank (VIB), Deputy head of Retail banking at VPBank. He also headed the middle market center of wholesale banking division at Vietnam’s Techcombank.

Jonas Phan hold a Master of Business Administration (MBA) degree in International Strategic Management at University of Hertfordshire and M.B.A in Banking and Financial Support Services at Vancouver Island University.

Viet Capital Bank total asset reached VND46 trillion (US$1,973,120,000) in the first three months of the year, a 24 percent increase on the same period in 2018.

In 2019, the bank targets to increase 22 percent its total asset, credit growth at 15 percent and profit up 76 percent from 2018

Doesn’t Trust Huawei, Vietnam’s largest telco decided to opt out of its technology

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Vietnam Doesn’t Trust Huawei An Inch?
China’s closest ideological neighbor wants its own 5G network.

On April 25th 2019, Vietnam joined the 5G club as its first base stations buzzed to life on top of the offices of the nation’s largest telecommunications firm. With reported speeds between 600 and 700 megabits per second, the experiment in fifth-generation network technology was on par with the United States’ and South Korea’s April rollouts, when telecom firms introduced 5G on a limited basis.

But Viettel, a military-owned mobile network operator in Vietnam with ventures spanning from Myanmar to Haiti, is not only planning to deploy 5G. It is also trying to develop its own core technology, vowing that 80 percent of the tech will be developed at home. And while the firm has conceded it may need help from the handful of multinational firms building the hardware, it has emphatically stated that Huawei, the Chinese tech giant, will not be involved. Bennett Murray reports on the Foreign Policy news channel.

Viettel’s decision to opt out of Huawei technology is telling, as even the United States’ closet and wealthiest allies have been tempted by the tech giant’s artificially deflated prices despite warnings from Washington that Huawei may introduce compromised 5G infrastructure on behalf of Chinese intelligence. Although Huawei denies colluding with security forces or ever assisting in espionage, any refusal to cooperate would almost certainly be in violation of Chinese law, which broadly compels local entities to assist in state intelligence work when asked. Hanoi, perhaps because its own ruling Communist Party has a similarly close relationship with the Vietnamese private sector, is not buying Huawei’s denials.

The consensus in Hanoi is that Beijing is the nation’s primary external security threat. China has a long history of imperialism in Vietnam and invaded the country as recently as 1979 in support of the Pol Pot regime in Cambodia, resulting in a brief war in which roughly 70,000 people died. Although relations have improved since the 1990s, Vietnam remains highly wary of its much larger neighbor despite sharing communist rule. As 5G, which will likely become a mainstay of smart warfare in the coming years, goes full steam ahead in China, Vietnam, already spooked by Chinese militarization of the South China Sea, feels it has little choice but to keep pace with its gigantic geopolitical rival to the north.

They may be able to pull that off. As its name implies, 5G is the next generation of broadband wireless following 3G, which brought the internet to smartphones, and 4G, which increased the speed. But advocates claim it is no mere mobile phone upgrade, they say that 5G, which transmits on much smaller frequencies than existing wireless networks, will revolutionize internet access altogether, creating a wireless cloud of data and rendering cords largely obsolete. Viettel plans to make Vietnam an earlier innovator in the tech, punching well above its own weight in the process.

Some cautious optimism is in order. Given that 5G demands a new kit of next generation tech to implement, Viettel, which lacks the resources of its counterparts at Verizon or SK Telecom, will have its work cut out for it. Unlike 4G, which could largely be installed on top of preexisting 3G infrastructure, 5G’s small frequencies do not travel well, requiring a great number of small base stations, coupled with other innovations to facilitate traffic flow, to work effectively. The kinks in implementation are still being ironed out even in the world’s most advanced economies.

Yet Vietnam’s mobile infrastructure has a proven track record of keeping pace with its counterparts in more developed countries. While it was slow to roll out 4G—the government did not even issue licenses until 2016—it has since caught up. In February 2018, the London-based Opensignal clocked Vietnam’s typical 4G speed at 21.49 megabits per second, beating the United States’ comparatively paltry speed of 16.31 megabits per second, as well as every other country in Southeast Asia besides Singapore, the global leader. It continued to perform well on the metrics into 2019—both Viettel and its competitor Vinaphone clocked higher 4G download speeds than any of their U.S. counterparts in the most recent reports.

While Vietnam has a long way to go before rolling out 5G publicly, in the past year the technology has emerged as a political priority for the single-party state, where government agendas generally stay consistent from year to year. Last October, Minister of Information and Communications Nguyen Manh Hung stressed the importance of getting in on the ground floor. Seemingly conscious of Vietnam’s slowness to adopt 4G, he said 5G would give Vietnam a chance to “climb up in the ranking” in global connectivity speeds, and in January, Prime Minister Nguyen Xuan Phuc publicly ordered the Ministry of Information and Communications to improve those statistics. Vietnam is not, however, primarily looking for better broadband access for Vietnamese smartphone users, who may not be able to initially afford the new tech en masse. Instead, Vietnam’s push for 5G is part of its embrace of the so-called Industrial Revolution 4.0.

According to Foreign Policy, the shorthand term for the new wave of automation and artificial intelligence has become an object of fixation in Vietnam, with conferences and workshops abounding in Hanoi and Ho Chi Minh City devoted to reaping the rewards and avoiding the hazards. Although the full potential of 5G technology is largely speculative, its extremely low latency has been touted as a soon-to-be boon for the manufacturing sector, allowing for virtually instantaneous communication between machines and devices within a factory.

Given Vietnam’s increasingly high-tech manufacturing sector and the deep pockets of the accompanying foreign investors, creating sophisticated 5G infrastructure in the right places is an understandably attractive prospect for Vietnam, which worries about not keeping up with the demands of foreign direct investment sources. It also lends justification for the exorbitant price tag—officially, Viettel has already invested $40 billion in 5G. But as a fully owned arm of the military, Viettel can get its hands on even more from state coffers, rather than having to turn to private investors, as the new tech is also in the interest of Vietnamese national security.

Viettel may fully accomplish its goals of establishing 5G using 80 percent locally designed core tech, but it’s quite possible it will be forced to lean on non-Chinese foreign partners more than anticipated. And once 5G is developed, it will likely be limited to major cities and, most critically, hubs of foreign-owned manufacturing in its early years. But for the moment, it has become the most obvious tangible path to putting Industrial Revolution 4.0 rhetoric into practice. As long as Vietnam’s political leadership stays committed, the country will likely be a surprisingly early adopter of what could be a drastically game-changing technology.

How Vietnam Present Upside Potential?

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Vietnam is the best-placed frontier market to prosper over the coming years, according to T. Rowe Price portfolio manager Oliver Bell, as he flags three factors likely to drive performance of the asset class over the remainder of 2019.

Bell, who runs the $276.3m Frontier Markets Equity SICAV, believes various elections, specific countries advancing into the MSCI ’emerging markets’ classification and geopolitical developments will be the primary factors to watch.

In a recent note, he said: “In 2018, Argentina was mired in a crisis, Saudi Arabia struggled with foreign investor perceptions, Sri Lanka faced a leadership vacuum, and harmful tax measures in Kenya and Romania took a toll on their respective financial sectors.

[Vietnam] feels perfectly positioned in terms of the fundamentals of the country getting stronger.”

“As these issues are addressed or fade, 2019 could present a silver lining.”

‘Perfectly positioned’

Bell identified Vietnam as his favored frontier markets, especially due to the ongoing trade tensions between the US and China, saying it “feels perfectly positioned in terms of the fundamentals of the country getting stronger”.

He explained countries such as Vietnam and Bangladesh are likely beneficiaries as China loses its appeal as a manufacturing hub, adding Vietnam is “disproportionately geared into the global economic cycle due to its large export market”.

He said: “Labour in Vietnam costs a third of what it does in China, productivity is good – mostly driven by Korean and Taiwanese companies that are doubling up on foreign direct investment. There do not really appear to be any weak links.”

Various frontier market elections are due to take place this year, including in Argentina, which Bell said looks like a fairly binary outcome.

He said the likelihood of former president Cristina Fernández de Kirchner running against incumbent Mauricio Macri is increasingly likely, if only to avoid further investigation into ongoing corruption allegations.

Current polls indicate Kirchner has a chance of success, which the manager said has created more volatility recently. However, much can change in the country over the coming months, as a series of federal and provincial elections are scheduled to occur ahead of the country’s general election on 27 October.

Were she to win, Bell said: “Our view is that would be extremely bad for markets and we would see a flood of money out as foreign investors ran for the door.”

Regarding future upgrades from frontier status, Bell explained as countries move from frontier to emerging – according to MSCI categories – they tend to attract inflows, largely driven by passive funds that look to “fill quotas” in line with the new weightings.

With Argentina and Kuwait – as well as the current standalone Saudi Arabia – next to be upgraded, Bell said he would not increase exposure to these markets once the countries move up the classifications, but nor is he forced to sell.

“All things being equal we would gradually dilute the position over time, as our investment thesis in each underlying company plays out,” he added.

 

This article was first published by Investment Week

Fitch revised Vietnam’s outlook to positive, forecasted GDP growth at around 6.7 percent in 2019

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Fitch Ratings has revised Vietnam’s outlook to positive from stable, and affirms the country’s Long-Term Foreign-Currency Issuer Default Rating at “BB”.

The revision reflects an improving track record of the Government’s economic management, which is evident in strengthening external buffers from persistent current account surpluses, falling debt levels to high economic growth rate and stable inflation. Vietnam News reports.

Fitch said that the Vietnamese Government’s continued commitment to containing debt levels led to a decline in general government debt to 50.5 percent of GDP in 2018 from a peak of 53 percent in 2016. It expects the ratio to decline further to around 46 percent by 2020.

Meanwhile, the public debt (general government debt including guarantees) has dropped to around 58 percent of GDP by the end of 2018 after being close to the ceiling of 65 percent in 2016.

The decline has been facilitated by a reduction in outstanding government guarantees to around 8 percent of GDP by the end of 2018 from 9.1 percent in the end of 2017. Besides, it has been aided by stable receipts from privatisation of state-owned enterprises, high nominal GDP growth and lower fiscal deficits.

Thanks to policies to stabilise the macroeconomy, GDP growth improved to 7.1 percent in 2018 from 6.8 percent in 2017 while inflation rate remained stable at 3.5 percent.

Fitch forecast Vietnam’s GDP growth at around 6.7 percent in 2019, still within the National Assembly’s target of between 6.6-6.8 percent.

It said that Vietnam’s economic growth is likely to be affected by slowing global growth and the US-China trade tensions. Vietnam would nevertheless remain among the fastest-growing economies in the Asia-Pacific as well as those in the “BB” rating category globally.

Last month, Standard and Poor’s (S&P) Global Ratings raised its long-term sovereign credit rating for Vietnam to “BB” from “BB-“, which is expected to help the country attract more foreign investments into the economy and expand exports. This was the first time S&P upgraded Vietnam’s credit rating since December 2010.

Key takeaways from Rong Viet Securities May 2019 Strategy Report

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The AGM season peaked in April as more than 900 companies already held their AGM.

Key takeaway from Rong Viet Securities is most companies believe their business will find difficulty to grow at 2017–2018 growth rates. Based on rough estimates, planned revenue growth (among 925 listed companies) has gradually decreased from 26% in 2017, to 18% in 2018, and to 17% in 2019. Meanwhile, planned PBT growth has gradually reduced from 40% in 2017, to 31% in 2018, and to 12% in 2019.

The most obvious supportive event is MSCI’s May 2019 semi-annual review later this month. If MSCI announces to include Kuwait into the MSCI Emerging Market Index, the proportion of Vietnam in the MSCI frontier 100 index will be increased to 30% (currently 17%). If so, there may be around USD 60-70 Mn from funds tracking MSCI Frontier to flow into Vietnam.

Although this is unlikely to move the VNIndex in a meaningful way, the news may help to support overall market sentiment.

In the short term, we believe the market is facing more threats than opportunities. First, negative news from US-China negotiations may put pressure on global stock indices (especially S&P500, DJ, and Nasdaq) given those indices rallied strongly in the first months of 2019. Second, Vietnam macro indicators have been weakening in recent months. These factors may, directly and indirectly, affect the Vietnamese equity market.

As such, we believe it is difficult for the market to form an uptrend in May 2019. Having said that, a correction in May would offer a good point to accumulate stocks. Some ideas we suggest for this time are big companies (included in VN30) with strong fundamentals and attractive relative valuations compared to their potential growth in upcoming years.

GoBear, Asia’s fastest-growing fintech startups has raised US$80M in funding

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GoBear, a Singapore-based financial comparison platform has been funded US$80 million in funding by Dutch venture capital fund Walvis Participaties and financial services provider Aegon NV.

The money would be used to develop products and technology, expand its partner network and fill key positions, the company said in a statement.

Adrian Chng, CEO of GoBear, said: “We are also very interested in partnering with and/or investing in other technology companies who have developed exciting new technologies that will enhance our eco-system and our ability to improve people’s financial health”.

“Specific areas include customer on-boarding and fulfilment solutions, personal financial management, alternative credit scoring, financial education, and investment platforms.”

GoBear claims to have served more than 40 million users searching for more than 1,800 personal finance products in Vietnam, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

Its partners are leading financial institutions, banks and insurance providers. According to a report on Vietnam News, the company has partnerships with 14 financial institutions including Standard Chartered, Citibank, FE Credit, Easy Credit, Manulife, and Dai-ichi Life in Vietnam.

“GoBear’s purpose is to improve your financial health. We enable consumers to make informed choices across 10 personal financial product areas, including insurance, personal loans and credit cards, in a simple and transparent way” said Bao Nguyen, Vietnam’s country director of Gobear.

“Our product, technology and financial partners allow users to search for financial products, find the best match for their personal objectives, and make seamless transactions on the GoBear platform. The company would continue to expand its product offerings to best suit Vietnamese consumers’ needs” Bao added.

Vietnam’s domestic coffee prices hit six-year low

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Vietnam’s domestic coffee prices fell to the lowest level in six years on Thursday following a decline on the ICE, while Indonesian premiums to July contract widened further to compensate for the global drop.

Farmers in the Central Highlands, Vietnam’s largest coffee growing area, sold coffee COFVN-DAK at 29,000-29,800 dong ($1.24-$1.27) per kg on Thursday, down from 30,300-31,000 dong last week.

“Fresh concerns about the trade war between the United States and China and the strong sales from Brazil have pushed down global robusta prices,” a trader based in the central Highlands said.

July robusta coffee settled down $5, or 0.4 percent, at $1,290 per tonne, after earlier plunging to $1,267, the lowest since March 2010.

According to a report by Khanh Vu, Mas Alina Arifin on Reuters , traders in Vietnam offered 5 percent black and broken grade 2 robusta COFVN-G25-SAI at a $45 per tonne discount to the July contract, flat from last week.

Customs data released on Thursday showed Vietnam’s coffee exports in April falling 16.7 percent from March to 143,296 tonnes, slightly higher than a government forecast of 140,000 tonnes.

Vietnam is the second largest producer in the world after Brazil, with Robusta coffee accounting to 97 per cent of Vietnam’s total output. However, coffee farmers in Vietnam have always experienced cycles of boom and bust since the 1980s, making the industry a highly volatile one. Despite the fluctuating global coffee prices, importing countries continue paying a steady price while coffee farmers from exporting countries experience the daily price range.

Coffee production has been a major source of income for Vietnam since the early 20th century. First introduced by the French in 1857, the Vietnamese coffee industry developed through the plantation system, becoming a major economic force in the country. After an interruption during and immediately following the Vietnam War, production rose once again after Đổi mới economic reforms, making coffee second only to rice in value of agricultural products exported from Vietnam.

 

Vietnam may be added to expanded U.S. list on currency manipulation: Bloomberg

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The Trump administration will expand the number of countries it monitors for currency manipulation in an upcoming report expected this month, and Vietnam may be named a currency manipulator, Bloomberg reported on Thursday.

Citing people familiar with the matter, Bloomberg said the number of countries on the watch list will rise to about 20 from 12 in the previous report issued in October.

Vietnam may be named a currency manipulator for artificially holding down the value of its currency, the dong, while India and South Korea are expected to be dropped from the watch list, it said.

In October, the U.S. Treasury refrained from naming China or any other trade partner as a currency manipulator as it relied on import tariffs to cut a trade deficit with China.

Bloomberg said the Treasury had so far examined the United States’ 12 largest trade partners and Switzerland for the upcoming report.

“An expanded watch list could include Russia, Thailand, Indonesia, Vietnam, Ireland or Malaysia, all of which have large trade surpluses with the U.S.,” it said.

Bloomberg said the number of countries on the list would increase after the U.S. Treasury Department reduced one of the three criteria it uses to determine manipulators: a current account surplus of 2 percent of gross domestic product, instead of 3 percent.

Reporting by Tim Ahmann; writing by Mohammad Zargham; editing by Eric Beech and James Dalgleish on Reuter

Opening Vietnam up to Industry 4.0

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The country’s big potential in IT and large smartphone penetration are the key enablers for Vietnam to develop its digital economy.

However, a national strategy for 4.0 and sturdy policies in favour of the business community to apply IT solutions is in an urgent need.

At the Vietnam Private Sector Economic Forum 2019 held last week in Hanoi, one of the biggest questions raised was whether Vietnam is now lagging behind the global digital economic waves created by Industry 4.0.

“How will the Vietnamese economy develop in the future without riding the global digital waves hitting the country?” asked Nguyen Trung Chinh, chairman of IT firm CMC Corporation. “How will the country seize the vast opportunities given by Industry 4.0 to develop its digital economy to reach into its own immense potential?”

Digital economy refers to an economy that is based on digital computing technologies.

According to Bui Quang Ngoc, vice chairman of IT giant FPT Group, over the past few years there have been almost no specific policies and actions for developing a digital economy in Vietnam. “For example, in the public administration, programmes on e-government, e-tourism or e-healthcare have failed to be implemented effectively,” Ngoc said.

“A legal framework on applying IT or developing smart solutions has not been implemented either. There has been a gap between policy and action, and while the concept of 4.0 has been widely talked about, few actions have been made – even as the country is bursting with opportunities to develop a digital economy.”

GREAT OPPORTUNITIES

At the forum, Deputy Minister of Planning and Investment Vu Dai Thang said that the digital economy is surging in Vietnam, creating major changes in business methods. “Vietnam has great opportunities to develop a digital economy because it has immense potential,” Thang said.

He cited a recent survey by Google and Singapore’s Temasek valuing Vietnam’s digital market at $3 billion in 2015 and $9 billion in 2018, and estimated it to rise to $30 billion by 2025. Meanwhile, a recent study by Data 61, Australia’s data innovation network, showed that Vietnam’s GDP could rise by an additional $162 billion within 20 years if Vietnam succeeded in digital transformation.

According to the Asia Internet Coalition (AIC), with a population of nearly 100 million people, Vietnam is among the few nations in Southeast Asia with the highest speed of digital transformation. Currently, Vietnam has more than 136 million mobile phone subscribers and 54.2 per cent of the population are connected to broad-band wire-based Internet. Vietnam is also one of 17 nations in the world with the biggest number of Internet users. The Vietnamese government aims to turn the country into one of the 10 largest nations in the world producing software and digital content.

“We think this target will be easily reached thanks to Vietnam’s strong telecommunications industry,” said Do Khanh Ly, AIC representative in Hanoi.

“Vietnam’s online advertising market and e-commerce are also developing strongly. According to the Vietnam E-Commerce Association, the country’s e-commerce market is estimated to be over $5 billion now and can double over the next four years,” Ly said. “The impact of the Internet on the economy is estimated to be equivalent to 2-3 per cent of the GDP, which may increase to 40-50 per cent in the future.”

At a recent workshop on unlocking the full potential of Vietnam’s digital economy in Hanoi, Quint Simon, head of Public Policy in Southeast Asia at Amazon Web Services (AWS), surprised hundreds of business leaders and experts by announcing that Vietnam is one of the nations with the fastest growth of 64 per cent per annum in spending on cloud computing.

AWS is a subsidiary of Amazon.com that provides on-demand cloud computing platforms to individuals, companies, and governments.

“I believe that in the near future Vietnam will develop a digital economy successfully. Cloud computing is a favourite in Vietnam, with many enterprises using it,” Simon said, explaining that with the cloud, businesses can completely protect their information and prevent it from being stolen.

“For example, Amanotes, a fast-growing app publisher, currently has hundreds of millions of users. It is typical of Vietnamese businesses with cloud computing,” Simon continued. “In another case, Masan is also using cloud to manage its stores in Vietnam. It has been a big trend that many Vietnamese agencies and enterprises are seeking our support in cloud applications.”

NATIONAL STRATEGY FOR 4.0

Deputy Minister Thang said that in order for Vietnam to seize opportunities and facilitate enterprises to benefit from Industry 4.0, the Ministry of Planning and Investment (MPI) is compiling a national strategy on Industry 4.0, which will clarify what the digital economy means, with specific tasks for ministries and agencies.

The strategy’s prime targets are to grab opportunities arising from Industry 4.0, increase the country’s GDP and employment, and attract more high-quality foreign direct investment.

“With this strategy, Vietnam stands ready to receive new technologies. However, the country will have to adapt many policies to Industry 4.0,” said Nguyen Thi Tue Anh, vice head of the MPI’s Central Institute for Economic Management (CIEM) which is drafting the strategy.

Under the CIEM’s study on the draft, Industry 4.0 would likely raise Vietnam’s GDP by $28.5-62.1 billion, equivalent to a rise of 7-16 per cent, from now to 2030.

“The benefits for Vietnam will be huge, far higher than those from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which will increase Vietnam’s GDP by 1.32 per cent by 2035,” said Dang Quang Vinh, deputy chief of the CIEM’s Department of Business Environment and Competitiveness.

“Besides, Vietnam will be able to generate 1.3-3.1 million new jobs by 2030 thanks to Industry 4.0,” said Vinh, who is one of the drafters of the strategy. “However, these benefits will only materialise if we have more sturdy policies in favour of the business community.”

According to the CIEM, if medium-level technologies are applied, Vietnam’s Industry 4.0 strategy will likely enable the country to see strong growth in many key economic sectors by 2030 such as manufacturing (16 per cent), wholesale and retail (20 per cent or $9.5 billion), agro-forestry-fishery (12 per cent or $6 billion), supply of electricity, gas, and air conditioning (23 per cent), and finance-banking-insurance (14 per cent or $3.5 billion).

For example, the manufacturing sector will grow by an additional $7-14 billion based on new technology applications, while the communications and industry sector will climb 77 per cent, or an additional $2.5 billion compared to the scenario where the country fails to follow Industry 4.0.

According to the CIEM, new industries arising from Industry 4.0 “will be the key growth propellants for Vietnam, such as the Internet of Things and media. They will also support other sectors by raising their competitiveness, revenue, and developing new products and services.”

The new industries will include e-commerce ($40 billion in revenue by 2030), Artificial Intelligence ($420 million), data analysis ($730 million), cloud computing ($2.2 billion), ride-hailing ($2.2 billion), and fintech ($1.5 billion).

Currently, many nations have been developing their Fourth Industrial Revolution strategies, such as Made in China 2025; Japan Resuscitation Strategy; Malaysia’s My-i4.0; Singapore’s 23 plans on digital transformation; India’s Smart City Mission and Industry 4.0 Centre; Indonesia’s Making Indonesia 4.0; and Thailand 4.0.

“Industry 4.0 offers great opportunities to Vietnam without which, the country will continue lagging behind other nations,” said the CIEM study. “Taking advantage of Industry 4.0 is the shortest way for Vietnam to turn itself into a modern and affluent nation, and develop into a modern industrial nation in the shortest time. Thus, the country needs to mobilise all necessary resources to implement its Industry 4.0 strategy.”

A PROPER LEGAL FRAMEWORK

At the Vietnam Private Sector Economic Forum 2019 last week, CIEM deputy director Nguyen Duc Hieu said that it would be difficult to develop a sturdy legal framework to regulate activities related to the digital economy.

“For example, if an unmanned car causes an accident, who will be largely responsible? Is it the car, the software owner, the car owner or even road designers? We will have to have suitable laws for such cases,” Hieu said.

According to Minister of Information and Communications Nguyen Manh Hung, several key foundations need to be developed to create an effective digital economy in Vietnam.

“When we dare to accept new things, new technologies and global talent will come to Vietnam and new industries will appear,” Hung said. “Then Vietnam will be able to create digital products that can be exported.”

“However, if we dare to accept new things but only follow other nations, we will not be able to create many added-value products,” Hung continued.

According to him, the digital economy in Vietnam must be supported by a good ICT infrastructure characterised by 5G technology and each person in the country owning a smartphone.

“Second, we need to have good policies to spur digital economy and technology. Internet in Vietnam must be globally competitive so that Vietnamese people will not go overseas to establish their enterprises any longer and more foreign enterprises will come to Vietnam to do business,” he said.

“Third, the government needs to develop an initial market for IT enterprises by spending more on IT products and e-government,” Hung added. “Finally, human resources training needs a boost in foreign languages and IT education in schools and universities.”

According to a report on VIR

Ho Chi Minh City mulls ‘special consumption tax’ for mobile phones

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The Ho Chi Minh City People’s Committee proposed that mobile phones and cosmetics should be included among goods subject to a special consumption tax, a move that many say inadequately categorizes certain products.

The city’s administration has submitted its feedback on the finance ministry’s plan to expand the list of commodities subject to an excise tax in order to prevent ‘erosion’ of the state budget.

Vietnam currently applies a special consumption tax exemption to 25 groups of goods and services, which the Ho Chi Minh City administrators say is far more than international standard of four to eight groups.

The administration thus suggested that the ministry consider adding more products to the list, including mobile phones, security cameras, perfumes, cosmetics, game services, and plastic surgery services.

Particularly, the Ho Chi Minh City People’s Committee thinks that perfumes and plastic surgery services are premium services, and applying an excise tax to the purchase of these products will help to “properly regulate tax revenue from high and upper-middle income groups.”

For the remaining aforementioned goods and services, a special consumption tax will help “moderate their use and supply.”

As for smartphones, obviously not a product only used by the rich, the city administration says excising them only affects high and upper-middle income groups, who usually purchase the newest and expensive products.

It appears that in the Ho Chi Minh City administration’s view, premium products should be subject to a special consumption tax, and thus will only affect those with average- and higher incomes.

As a deterrent, excise is typically directed towards three broad categories of harm, such as toxic substances, such as tobacco, or practices that lead to environmental damage, such as fossil fuel.

Some experts thus question the adequacy of imposing excise on such common products as mobile phones.

Source: Tuoitrenews

Man gets life for $192,400 bank robbery in central Vietnam

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Two bank robbers were sentenced to life and 20 years in prison in central Vietnam Wednesday.
Tran Hoang Nhat Hung, 37, got a life sentence, while Dam Minh Quang, 31, was sentenced to 20 years by the Khanh Hoa People’s Court.

Hung and Quang stole VND4.5 billion ($192,450) from a branch of Vietcombank on the 2 Thang 4 Street in Khanh Hoa Province’s Ninh Hoa Commune, 45 minutes north of the popular resort town Nha Trang, last September.

Hung said he needed the money to pay off debts.

Wearing masks and coats, they threatened guards and bank staff with makeshift guns. After the heist, their motorbike, clothes and other evidence were burned.

Of the VND4.5 billion, Hung gave VND800 million ($34,160) to his wife to pay off debts, and buried the rest in an abandoned house near his place.

The two men were apprehended a day after the robbery as they were having a drink about two kilometers from the crime scene.

Source: Vnexpress

Homestays a cheaper, more convenient option than traditional rentals

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Online booking services like Airbnb are offering prices 30-40 percent lower than traditional apartment services, a recent report says.
While high-end apartment supply is limited and mostly focuses on leaders of foreign enterprises, online bookings are increasing their share with more competitive prices in Grade B and C accommodations, says a report prepared by Savills Ho Chi Minh City.

Online booking services like Airbnb are becoming strong competitors to traditional apartment services because of flexible lease durations and prices, it says.

Real estate firm CBRE Vietnam had confirmed the trend in a report last year that said three-star hotels were losing market share to Airbnb which was growing fast.

It said that demand for three-star hotels have been gradually falling because of growth of Airbnb in both HCMC and Hanoi.

As of last Tuesday, the average daily rates in HCMC and Hanoi, $47 and $34 respectively, were lower than the average hotel rates in the same areas, according to data from market research firm AirDNA.

Another reason for the growth of Airbnb-like services is the surge in apartment supply in the last five years. Last year, 35,000 apartments came to the market, with 60 percent of them in Grade A and B. This figure is set to be equal or higher this year.

This has boosted the number of homestays. In Hanoi and HCMC, rentals rose 36 percent year-on-year to over 29,000 apartments in the first quarter of this year, AirDNA says.

Industry insiders say that apart from the rising quantity, homestay quality is also improving as owners invest in other conveniences to attract customers, like cleaning services, high speed wifi, cable TV, swimming pool, cooking and laundry.

Source: Vnexpress

Vingroup conducting project using AI in healthcare

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A project to support doctors in image diagnosis through AI is being implemented by local conglomerate Vingroup.

At the National Forum on Developing Vietnam Technology Companies, “Aspiration, Vision and Strategy for a Prosperous Vietnam”, held on May 9 in Hanoi, Vingroup Vice President Ms. Le Thi Thu Thuy said it is implementing the “Doctor Assistant” project with the goal of improving the quality of healthcare in the country. In charge of the project is Professor Truong Quoc Hung, Director of the VinTech’s VinBrain Institute, under Vingroup, who was formerly a senior leader at Google.

“The US’s healthcare market is worth more than $3 trillion dollars a year,” Ms. Thuy said. “But diagnosis via imagery is not always correct, and this is responsible for about 10 per cent of all deaths. There are no similar figures for Vietnam, but incorrect diagnoses are probably higher here.”

Professor Hung is leading the application of AI combined with computer vision technology and natural language processing (NLP) technology to help minimize diagnostic errors. “If successful, the group will donate the application to all hospitals nationwide,” Ms. Thuy said.

AI is considered a fundamental technology in digital transformation in industries, sectors, organizations, and businesses. It is expected to contribute $15.7 trillion to the global economy by 2030, and 40 per cent of digital transformation initiatives this year will use AI technology.

Vingroup is implementing technology development and application by establishing a research department, investing in new technologies and applying them in products, partnering with leading companies and approaching core technology, training human resources, and expanding its network into developed countries.

Source: Vneconomictimes

Vietnamese users call for better mobile data quality

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Vietnam’s mobile network operators are doing their best to cope with a surge in the amount of data consumed by a growing population of Vietnamese users who spend their time watching videos, sharing photos, and watching live streams online.

Vietnamese users are demanding that mobile network operators upgrade their infrastructure to cope with the massive amounts of internet data they now consume, according to a report published by We Are Social, a social network that provides and facilitates social thinking and collaboration.

YouTube – the most popular platform

During the recent holiday to celebrate Reunification Day (April 30) and International Workers’ Day (May 1), mobile carriers in Vietnam struggled to provide enough mobile data to keep their networks operating at acceptable speeds.

According to Vietnam’s military-run telecommunication company Viettel, the rising number of users accessing the internet on smartphones has caused a spike in the need for mobile data, especially as sharing photos, watching videos, and live streaming become more entrenched in users’ habits.

The total data usage during the holidays reached a record high of 600GB per hour, Viettel said.

Among the current 64 million internet users in Vietnam, 99 percent watch online videos, 55 percent watch streamed TV shows, 53 percent play online video games, 32 percent stream themselves playing video games, and 29 percent watch sports competitions, according to We Are Social report.

Of course, that adds up to a massive amount of mobile data consumption.

Similarly, data-consuming internet services are also preferred by Vietnamese users. According to the same report, 96 percent of Vietnamese internet users use YouTube and 79 percent use Messenger. These, along with Facebook, Instagram and Zalo, make up the top five most-used Internet services in Vietnam.

In addition to the most recent trend of live streaming, these platforms are believed to be the main reason for the surge in mobile Internet data demand in the Southeast Asian nation.

Fewer people are buying 2G and 3G data plans, as Vietnamese users now prefer the newer, faster 4G connection, which is expected to grow tremendously until 2023 and reach its peak in 2024, according to the most recent forecast of the Authority of Radio Frequency Management under the Ministry of Information and Communications.

Improving infrastructure

The total number of mobile phone users in Vietnam reached 57.6 million in March 2019, 11.9 million higher than in 2018, according to the Ministry of Information and Communication, making it apparent that telecommunications is a fast growing industry of Vietnam.

Not only has the number of users increased, the quality of wireless internet connections has also improved significantly, according to We Are Social report.

In 2017, the connection was only at 3.4Mbps when the speed of cable internet was measured at 6.3Mbps. In 2019, the speed of wireless internet was raised six-fold to 21.5Mbps while the cable speed reached 27.1Mbps.

For the five-day holiday at the end of April, the country’s largest telecommunication company had to add another 60 new broadcasting stations, 200 antennas, and install 50 new Wi-fi hotspots in crowded areas and locations with major events and festivals.

In addition, Viettel is also planning to add another 10,000 broadcasting stations for 4G data plans on a 2100MHz channel that was recently approved for 15 biggest municipalities in Vietnam including Ho Chi Minh City, Hanoi, Da Nang, and Hai Phong.

Another telecommunication company that also intends to improve its infrastructure is state-run telecom giant VNPT, which has plans to add more 3G and 4G mobile stations and improve its current configurations in order to guarantee the quality of its service.

Mobifone, a state telecom company, also claimed to have installed another 4,500 4G stations in the first quarter of 2019.

According to a report on Tuoi Tre

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