Vietnam Airlines courting new investors

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With the latest approval to list on the HCMC Stock Exchange, potential investors are approaching new opportunities to acquire a large amount of state-held stake in Vietnam Airlines.

The Ho Chi Minh City Stock Exchange (HSX) has approved the listing of 1.4 billion shares of Vietnam Airlines (VNA) (ticker: HVN) at the price of VND10,000 ($0.43) per share. Total assets are at VND82.4 trillion ($3.58 billion), and chartered capital is nearly VND14.2 trillion ($617.4 million), with the state holding 86.19 per cent.

This information pushed HVN up on the unlisted public company market (UPCoM) on April 12 by 4.6 per cent, reaching VND40,900 ($1.78) per share. As planned, the airline will stop listing on UPCoM on April 22.

Short-term effects

Analysts are upbeat about the listing, although they believed that the good news can only bring short-term effects. Researchers at Ho Chi Minh Securities were positive about the HSX debut for Vietnam’s flag-carrier, stating that stock is likely to enter the VN30 Index for the 30 biggest Vietnamese stocks. Inclusion in the VN30 is important as it enables the airline to join in the investment list of various backers, from active ones to exchange-traded funds.

“The HSX listing will improve the liquidity of the airline’s stocks and financiers can borrow money to invest in the stock six months afterwards,” stated the analysts.

Evidently, VNA is appealing to investors thanks to its solid performance in 2018, and future growth potential of the aviation industry, which saw an on-year increase of 12.9 per cent in passengers and a 7.7 per cent on-year rise in cargo volume in 2018. It is also forecast to gain an average growth rate of nearly 14 per cent in the next five years, reaching 150 million passengers by 2035.

According to analyst Che Thi Mai Trang at Bao Viet Securities, the Hanoi-based airline improved profitability in 2018 thanks to better management of the cash flow and a lower ratio of debt over owner’s equity, at only 2.07 compared to 5.13 in 2015. Although fuel costs went up by 25 per cent in 2018, the airline still made profit thanks to hiking fare rates. Another strong point for VNA is that its low-cost subsidiary Jetstar finally reached break-even point last year, building a strong foundation for the years ahead.

“VNA is likely to receive strong attention from overseas investors when they make a listing debut on the HSX. This is a positive point for the airline in the short term,” said Trang. She forecast that the after-tax profit of the parent company in 2019 will raise 15 per cent on-year to reach VND2.9 trillion ($126.1 million).

Thomas J. Treutler, partner and managing director of Tilleke & Gibbins Consultants, said that foreign investors will certainly be interested in well-established airlines. Travel to Vietnam for business and tourism will continue to rise, as will outbound travel for home-grown businesses reaching out internationally and Vietnamese travellers. “Domestic travel within the country is also booming with more affordability. Thus, it certainly has the potential for continued development and can be a lucrative investment,” Treutler told VIR.

Industry insiders said that free trade agreements will likely have a positive effect on the Vietnamese aviation sector. As shown in the last several months, various European countries such as Spain and the Czech Republic have announced expanding co-operation with Vietnam in order to increase air travel.

Longer-term prospects

Experts, however, held that recent fleet expansions may bring challenges for VNA. The carrier is scheduled to receive 22 new planes in 2019, a record number compared to the previous five years. Although the airline is confident that passenger numbers will rise by around 14 per cent in 2019, Trang believed stiff competition, slow growth of Vietnam’s airline industry, and stagnating airfares may prevent this.

In addition, international investors might have to wait for more information until the Ministry of Transport finalises divestment plans for the airline, and for the draft amendments to Decree No.92/2016/ND-CP issued in July 2016 on governing conditional business lines in the civil aviation sector. The ceiling for foreign investment in an air carriage business may be raised to 49 per cent from the previous limitation of 30 per cent.

The current free-float rate of VNA is only 20 per cent, due to concentrations of stocks in the government’s hands and the strategic partner Japan’s ANA Holdings, leaving little room for investors to buy. This is similar to other equitised state-owned companies such as Sabeco, whose 90 per cent of shares a decade ago were held by the Ministry of Industry and Trade, and HEINEKEN. It was only in 2016 that overseas investors began to hear of the divestment, in which Thai Beverage emerged as the sole winner in 2017.

Another possible downside is the airline’s debt in foreign currencies, common for airlines. Analyst Pham Van Tuan at Phu Hung Securities pointed out that fluctuations in the exchange rate may hurt the carrier’s earnings, together with rising fuel costs. VNA, as a full-service carrier, also faces competition from low-cost airlines, although it may benefit from business travellers and wealthy passengers.

“The HSX debut may only affect stocks of VNA positively in the short term,” wrote Tuan. Phu Hung Securities advised investors to keep a close watch on the airline for its long-term prospects and consider whether it can manage its finance in a time of stronger oil prices. A conservative forecast for VNA’s stock price, according to Tuan, is VND36,000 ($1.56) per share.

In spite of the possible challenges, the HSX listing is expected to be optimal way for the airline to fulfil its divestment plan on time, as well as be a springboard for multinational corporations to penetrate into the burgeoning market.

VNA is to sell 35.16 per cent of its state stake in 2019, thus cutting state ownership in the airline to 51.03 per cent under the prime minister’s Decision No.1232/QD-TTg released in August 2017 on a list of state-owned enterprises in state capital divestment plans in the 2017-2020 period.

VNA gained a valuable partner in 2016 when ANA, Japan’s largest airline, bought an 8.8 per cent stake for VND2.38 trillion ($103.5 million). It is seen as possible ANA will move on the opportunity to increase its holding in VNA from its current stake.

According to a report on VIR

LG Electronics is relocating its domestic smartphone production line to Vietnam

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S. Korean production in global smartphone market has decreased rapidly in past 10 years

LG Electronics decided to reduce smartphone production volumes at its factory in Pyeongtaek, Gyeonggi Province, as of this June and halt operations within the year. The volumes are to be produced instead at its factory in the northern Vietnamese city of Haiphong.

The aim of the factory relocation is to increase profitability. As of the fourth quarter of last year, the LG Electronics smartphone sector had recorded losses for 15 straight quarters, with cumulative losses amounting to 3 trillion won (US$2.59 billion). LG Electronics is currently producing smartphones at a total of six locations, including India, Brazil, and China (two factories) along with Pyeongtaek and Vietnam. Shin Da-eun reports on hani.co.kr

With around 1,400 workers, the Pyeongtaek factory is a global production base control tower that mainly produces premium phones, accounting for roughly 15% of all LG Electronics smartphones. The production line is to be relocated to Vietnam while the control tower remains in place, sources said. Haiphong is currently home to a number of factories for major LG affiliates.

LG Electronics plans to reassign its domestic smartphone production workers to other appliance production sites in South Korean cities like Changwon. The strategy is aimed at increasing efficiently by reassigning the workers to new appliances with strong demand, including air purifiers, driers, and clothing care appliances. The company has taken steps to pare down by reassigning workers from its MC project headquarters (smartphone sector) to other divisions. The MC project headquarters is not planning to hire any new employees for the first half of this year.

According to figures from the market research firm Strategy Analytics (SA), South Korean production decreased from 11.4% of the world smartphone market in 2008 to 1.3% in 2018. As of last year, China accounted for 70% of production, followed by India and Vietnam at 13% and 10%, respectively.

To be advised on how to start your business in Vietnam as a foreign investor, contact GBS, a business law firm in Vietnam at: info@gbs.com.vn , hotline: +84903189033 or visit the website: https://gbs.com.vn

Huge investment opportunities for startups in Vietnam offered by Korean investors

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Startup businesses in Vietnam expects to have more opportunities to be invested and supported by Korean investors, who are coming in droves in Vietnam, experts have said.

“It is Vietnam’s turn to have new unicorns,” Korean investor Lee Jae-Woong told the Forbes Vietnam Tech Summit 2019 in mid-March, referring to local startup companies.

Lee Jae-Woong, one of the three founders of Daum Communications (now Kakao) that provides web services (Source: forbesvietnam.com.vn)

According to a report on VNS/VNA, the Republic of Korea (RoK) industrialized in the 1960s, developed information technology in the 2000s, and is now entering the Fourth Industrial Revolution, said Lee, one of the three founders of Daum Communications (now Kakao) that provides web services.

Vietnam has all three conditions, which is perfect for breakthrough growth, he said, highlighting the country’s infrastructure, good labour force and government support as other facilitators.

Nguyen Hoang Hai, CEO of Canavi, a startup that specializes in job placements for women, said Korean investors are showing great interest in Vietnam.

Currently, the RoK is Vietnam’s biggest foreign direct investment (FDI) supplier, he said, adding that apart from investors, startups from the East Asian country have also considered Vietnam a promising place to expand.

Hai took the example of the opening of a representative office in Vietnam earlier this year of Rehoboth Business Incubator, which was formed in 1998 and now has a network of 59 business centres in the RoK.

Woowa Brothers – operator of the RoK’s leading food delivery platform Baedal Minjok – has also acquired Vietnam’s food delivery company Vietnammm, according to the CEO.

Hai attributed the Vietnamese market’s attractiveness to favorable visa procedures and positive impacts of cultural exchanges between the two countries as well as promotion programs between Vietnamese startups and RoK investors.

This year is expected to see tough competition among investors, especially those from foreign countries, who want to invest in quality Vietnamese startups, he said.

“Korean investors are attracted by Vietnam’s consumer market of more than 96 million people” said the officer of the Korea Trade-Investment Promotion Agency (KOTRA).

In the past, investment has mainly went to services, retail, electronics, finance, banking and insurance in Vietnam. In 2019, the fashion sector is expected to become a new magnet for investors.

The abundant, hardworking and skillful workforce, and political stability are also Vietnam’s advantages, other experts said.

However, local startups need consultations to map out specific operational orientations, they noted, suggesting stronger connectivity in the domestic innovative ecosystem to help startups.

To be advised on how to start your business in Vietnam as a foreign investor, contact GBS, a business law firm in Vietnam at: info@gbs.com.vn , hotline: +84903189033 or visit the website: https://gbs.com.vn

HDBank sets profit target of USD 217 million this year

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The Ho Chi Minh City Development Bank (HDBank) plans to collect USD 217 million profit before tax this year, an increase of 27 percent compared to 2018.

The information was released during its Annual General Meeting of Shareholders (AGM) on April 23rd, 2019. VNS/VNA reports.

The bank forecast that total assets this year will be up 16 percent from 2018 to reach nearly USD10.73 billion, capital mobilization will touch 2USD9.62 billion, an increase of 20 percent year-on-year.

In 2019, outstanding loans are expected to be USD6.9 billion, bad debt ratio will be kept below 2 percent.

Return on Asset (ROA) and Return on Equity (ROE) will increase by 1.7 percent and 21.2 percent, respectively.

The bank will continue to expand the network of transaction points, lifting the total number to 308.

In 2019, HDBank will apply modern banking management models to meet international standards, boost technological innovation and apply Basel II standards in risk management, improve financial capacity and competitiveness, diversify mobilized capital sources and restructure assets to increase the proportion of profitable assets.

This year, shareholders will receive cash dividend payment at the rate of 10 percent.

During the AGM, shareholders also agreed with the plan to increase charter capital in 2019 via the issuance of shares for dividend payment and bonus shares. Dividend paid in shares and bonus shares issuance will be kept at the rate of 20 percent.

This capital raising plan will help HDBank to further improve the safety criteria under Basel II and increase capital supply for business activities.

Vietnam’s Hanoi attractions: Temple of Literature

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A rare example of well-preserved traditional Vietnamese architecture, the Temple of Literature honours Vietnam’s finest scholars.

Founded in 1070 by Emperor Ly Thanh Tong, the attractive complex is dedicated to Confucius (Khong Tu) and was the site of Vietnam’s first university (1076). The altars are popular with students praying for good grades; while the pagodas, ponds and gardens of the five courtyards make picturesque backdrops for student graduation photos. It is depicted on the 100,000d note.

Originally University admission was exclusively for those born of noble families, but after 1442 it became more egalitarian. Gifted students from all over the nation headed to Hanoi to study the principles of Confucianism, literature and poetry. In 1484 Emperor Ly Thanh Tong ordered that stelae be erected to record the names, places of birth and achievements of exceptional scholars: 82 of 116 stelae remain standing, mostly atop turtle statues. Paths lead from the imposing tiered gateway on P Quoc Tu Giam through formal gardens to the Khue Van pavilion, constructed in 1802.

 

By lonelyplanet.com

China plastic waste ban throws global recycling into chaos

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From grubby packaging engulfing small Southeast Asian communities to waste piling up in plants from the US to Australia, China’s ban on accepting the world’s used plastic has plunged global recycling into turmoil.

For many years, China received the bulk of scrap plastic from around the world, processing much of it into a higher quality material that could be used by manufacturers.

But at the start of 2018, it closed its doors to almost all foreign plastic waste, as well as many other recyclables, in a push to protect the local environment and air quality, leaving developed nations struggling to find places to send their waste.

“It was like an earthquake,” Arnaud Brunet, director general of Brussels-based industry group The Bureau of International Recycling, told AFP.

“China was the biggest market for recyclables. It created a major shock in the global market.”

Instead, plastic is being redirected in huge quantities to Southeast Asia, where Chinese recyclers have shifted en masse.

With a large Chinese-speaking minority, Malaysia was a top choice for Chinese recyclers looking to relocate, and official data showed plastic imports tripled from 2016 levels to 870,000 tonnes last year.

In the small town of Jenjarom, not far from Kuala Lumpur, plastic processing plants suddenly appeared in large numbers, pumping out noxious fumes day and night.

Huge mounds of plastic waste, dumped in the open, piled up as recyclers struggled to cope with the influx of packaging from everyday goods, such as foods and laundry detergents, from as far afield as Germany, the United States, and Brazil.

Residents soon noticed the acrid stench over the town – the kind of odour that is usual in processing plastic, but environmental campaigners believe some of the fumes also come from the incineration of plastic waste that was too low quality to recycle.

“People were attacked by toxic fumes, waking them up at night. Many were coughing a lot,” local resident, Pua Lay Peng, told AFP.

“I could not sleep, I could not rest, I always felt fatigued,” the 47-year-old added.

TOXIC FUMES

Pua and other community members began investigating and by mid-2018 had located about 40 suspected processing plants, many of which appeared to be operating secretly and without proper permits.

Initial complaints to authorities went nowhere but they kept up pressure, and eventually the government took action. Authorities started closing down illegal factories in Jenjarom, and announced a nationwide temporary freeze on plastic import permits.

Thirty-three factories were closed down, although activists believe many have quietly moved elsewhere in the country. Residents say air quality has improved but some plastic dumps remain.

In Australia, Europe and the US, many of those collecting plastic and other recyclables were left scrambling to find new places to send it.

They face higher costs to get it processed by recyclers at home and in some cases have resorted to sending it to landfill sites as the scrap has piled up too quickly.

“Twelve months on, we are still feeling the effects but we have not moved to the solutions yet,” said Garth Lamb, president of industry body Waste Management and Resource Recovery Association of Australia.

Some have been quicker to adapt to the new environment, such as some local authority-run centres that collect recyclables in Adelaide, southern Australia.

The centres used to send nearly everything – ranging from plastic to paper and glass – to China but now 80 per cent is processed by local companies, with most of the rest shipped to India.

“We moved quickly and looked to domestic markets,” Adam Faulkner, chief executive of the Northern Adelaide Waste Management Authority, told AFP.

“We’ve found that by supporting local manufacturers, we’ve been able to get back to pre-China ban prices,” he added.

CONSUME LESS, PRODUCE LESS

In mainland China, imports of plastic waste have dropped from 600,000 tonnes per month in 2016 to about 30,000 a month in 2018, according to data cited by a new report from Greenpeace and environmental NGO Global Alliance for Incinerator Alternatives.

Once bustling centres of recycling have been abandoned as firms shifted to Southeast Asia.

On a visit to the southern town of Xingtan last year, Chen Liwen, founder of environmental NGO China Zero Waste Alliance, found the once-booming recycling industry had disappeared.

“The plastic recyclers were gone – there were ‘for rent’ signs plastered on factory doors and even recruitment signs calling for experienced recyclers to move to Vietnam,” she told AFP.

Southeast Asian nations affected early by the China ban – as well as Malaysia, Thailand and Vietnam were hit hard – have taken steps to limit plastic imports, but the waste has simply been redirected to other countries without restrictions, such as Indonesia and Turkey, according to the Greenpeace report.

With only an estimated nine percent of plastics ever produced recycled, campaigners say the only long-term solution to the plastic waste crisis is for companies to make less and consumers to use less.

Greenpeace campaigner Kate Lin said: “The only solution to plastic pollution is producing less plastic.”

Source: AFP

Vinhomes Q1 profit reaches $116 million

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Real estate giant Vinhomes JSC recorded a net profit of VND2.69 trillion in the first quarter, according to its newly-released consolidated financial report.
The $116 million net profit is a 33 percent fall year-on-year. The decrease was because the company (stock code: VHM) had largely completed delivery of apartments and villas to customers in its major projects.

Overall, revenue in the first three months of 2019 were VND5.85 trillion ($251.2 million), down more than 44 percent year-on-year, with 83 percent coming from sale of inventory properties.

Revenue from financial activities fell by 2.4 percent year-on-year to VND2.94 trillion ($126.23 million).

During the quarter the company sold Prime Land Real Estate JSC, a subsidiary in which it owned 91.48 percent, for VND1.49 trillion ($63.98 million).

There was a 9.1 percent rise in receivables, while inventory remained largely the same.

The value of newly signed real estate contracts (with deposits received) rose by 69 percent to VND12.08 trillion ($518.67 million) in the first quarter, or more than double first quarter revenue.

By March 31, 2019, Vinhomes had total consolidated assets of VND128.47 trillion ($5.52 billion), and total equity of VND50.76 trillion ($2.18 billion), an increase of VND8.78 trillion ($377 million) and VND2.61 trillion ($112 million) respectively compared to the balances at the end of 2018.

Vinhomes has the second largest market cap on the Ho Chi Minh Stock Exchange behind only Vingroup (VIC), its parent company which is Vietnam’s largest private conglomerate.

Source: Vnexpress

Vietnam teacher arrested for impregnating 14-year-old girl

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A secondary school teacher in the northern Lao Cai Province has been arrested for allegedly impregnating his 14-year-old student.
Nguyen Viet Anh, 36, will be investigated for the crime of “engaging in sexual intercourse or other sexual activities with a person aged 13 to under 16.”

His crime came to light after the girl’s family filed a complaint with the local police Monday, saying that she was 12 weeks pregnant.

Anh has reportedly confessed to the police that he had sex with the girl on multiple occasions at the school since late 2017. The victim was a seventh-grade student then.

According to the victim’s family, he had bought her a cell phone to contact her. They only came to know of the relationship after noticing some abnormal signs in her and taking her to hospital, where they discovered she was pregnant.

Police will carry out a DNA test to identify the father of the child before taking further steps.

Having sex with a child under 13 years of age in Vietnam is ruled as rape, and is punishable by between 12 years in prison and death. Having sex with a child between 13 and 16 years old faces up to 15 years in jail.

This is not the first time a Vietnamese teacher has been involved in sexual abuse of their students.

A court in Da Nang City last month sentenced Nguyen Quang Chung, a former primary school teacher, to life imprisonment for raping several third-grade girls.

Last December, the principal of a boarding school in Phu Tho Province was arrested for molesting many boys at the school over the period of several years.

According to official reports, approximately one in four children in Vietnam is a victim of sex abuse and at least 1,300 cases of sexual violence against children are reported each year. The perpetrators are usually those close to the children or having authority over them.

Vietnam recorded 1,547 child sex abuse cases in 2018, down 2.8 percent from a year ago, according to the Ministry of Public Security.

Source: Vnexpress

Over 600 people killed by traffic accidents a month

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Over 600 people are killed monthly in traffic accidents nation-wide according to a report released at a meeting held by the National Traffic Safety Committee on Wednesday.

According to the committee, although the number of traffic accidents and deaths and injuries had fallen considerably in Vietnam, there were still 1,905 people killed and 3,141 other injured in 4,030 accidents in the first three months of 2019.

Compared to the same period of 2018, the number of accidents fell by 644 or 13.78%, number of deaths fell by 244 or 11.35%, and injuries by 486 or 13.4%, the report said.

Some provinces which saw the highest number of accidents included Gia Lai, Thua Thien Hue, Long An, Hai Duong, Thanh Hoa, Dong Thap, and Vinh Phuc.

The reports showed that most of the accidents were caused by violations on lanes (23.31%), and speed 8.15%).

Addressing the meeting, Deputy PM Truong Hoa Binh who is chairman of the committee said that traffic safety situation was still a big problem in the country with many issues needed to be dealt with.

“In the first quarter of this year, 19 provinces reported rising number of traffic accidents compared to the same period last year,” he said. “Some serious accidents occurred including one in which a passenger bus crashed into a funeral and caused seven deaths and five injuries in Vinh Phuc Province. Traffic jams are also a headache for Hanoi and Ho Chi Minh City.”

Binh urged relevant agencies to closely look at and deal with each problem to improve traffic safety in the country in the second quarter.

“One of the biggest tasks we set now is to reduce the number of accidents caused by drunk and drug-positive drivers,” he said. We have seen an increasing number of tragic accidents recently caused by these drivers.”

Source: Dtinews

Vietnam c.bank’s reference VND/USD exchange rate at all-time high

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The State Bank of Vietnam on Wednesday set the daily reference exchange rate for the dong at VND23,013 per U.S. dollar, up VND9 from the previous day and reaching the highest rate ever. With the current trading band of three percent, the ceiling rate applied by commercial banks for the day is VND23,703 to the dollar while the floor rate is VND22,322 VND per USD.

Since the start of 2019, the central bank’s reference exchange rate has increased by VND179 per USD, equivalent to a rise of 0.78 percent.

The opening hour rates at commercial banks stayed stable. As of 8:15 am, both Vietcombank and BIDV listed the buying rate at VND23,165 per USD and the selling rate at VND23,265 per USD, unchanged from Tuesday.

On Tuesday, the daily reference exchange rate passed the VND23,000-per-USD mark for the first time since it was introduced by the central bank in 2015.

The central bank adjusts the reference exchange rate, or mid-point rate, for the dollar/dong on a daily basis in a bid to stabilize the foreign exchange market. Banks are allowed to trade the greenback within +/- 3 percent of the mid-point.

Speaking with Tuoi Tre (Youth) newspaper, representatives from Vietnamese lenders said the recent constant growth reflects the SBV’s goal of bringing the rate up to par with actual trading forex rates on the market.

Supply of foreign currencies in Vietnam remains plentiful as the forex market shows no sign of tension, insiders said.

Source: Tuoitrenews

Lotte Card has started its credit card services in Vietnam

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Lotte Card begins card business in Vietnam through its subsidiary there, the card firm said Wednesday. It is the first time a Korean card firm has launched a credit card business in the Southeast Asian country.

According to the company, Lotte Finance Vietnam, its Vietnamese operation that was launched in December recently introduced two credit cards.

The cards have no annual fees. With the cards, customers can get discounts of up to 30 percent at around 300 Lotte affiliate stores that operating in Vietnam, including the fast-food chain Lotteria, coffee chain Angel-in-Us and Lotte Cinema. Koreatimes reports

The cards accumulate up to 0.5 percent of purchases in Vietnam and a maximum of 1 percent of purchases outside Vietnam as points. The points can be switched to mileage for Vietnam Airlines.

Lotte Card expects the cards to play a role in attracting Vietnamese tourists to Korea.

The cards accumulate up to 3 percent of purchases at Lotte affiliates in Korea as points, and the platinum card offers services for acquiring Korean travel visas and also provides travelers’ insurance that covers up to $435,200, free of charge.

“The goal of Lotte Finance Vietnam is to become the most trusted and popular finance company for the Vietnamese people,” Lotte Finance General Director Kim Jong-geuk said.

“We will contribute to developing the non-cash payment system and the financial market in Vietnam.”

Lotte Group’s credit card unit opened an office in Vietnam in 2009 to make inroads into the country’s fast-growing consumer finance market. Last year, it acquired 100 percent of shares of Techcom Finance, a subsidiary of Techcombank which is one of Vietnam’s five largest banks, launching Lotte Finance Vietnam.

Vietnam’s consumer finance market is small compared to that of other Southeast Asian countries, but is expected to expand rapidly based on growth in household consumption and the large population of young people.

Lotte Card is set to launch two additional cards in partnership with Lotte affiliates in Vietnam in the latter half of this year. In 2018, it launched customer loan and installment finance services.

Lotte Card is the fifth-largest credit card company in Korea.

How to find the best Location for your business in Vietnam?

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You plan to expand your business in Vietnam’s Industrial Zones, but don’t know how to pick the best location for your business?

Vietnam developed industrial zones to further boost foreign investment into the country. Vietnam Briefing explains the industrial park system, how a businessperson can evaluate industrial zones, and some of the advantages of setting up in an industrial zone.

Industrial Zones are locations that are earmarked by the government for the production of industrial goods and services. Typically, industrial zones complement certain activities – such as production, export, or hi-tech – and have incentives for business that set up there.

Accordingly, industrial zones are a popular investment destination for foreign businesses.

The number of industrial zones in Vietnam continues to rise as foreign investment pours in. As of December 2018, there were 326 industrial zones set up countrywide, with 249 already in operation. The occupancy rate reached 73 percent, according to the Ministry of Planning and Investment.

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By the end of 2018, industrial and economic zones attracted 7,500 domestic projects worth US$41.75 billion and around 8,000 foreign projects with a total capital over US$145 billion. Meanwhile, the Department of Economic Zones Management is in the process of drafting a legal framework to attract more foreign and domestic investments.

While industrial zones work well for many businesses in the country, investors should take the time to learn more before creating a shortlist of locations to visit. Here, we highlight the most important considerations for your business to consider.

Industrial zone locations

Vietnam’s industrial zones are spread out across the country, and are concentrated within three administrative regions – the Northern, Central and Southern regions. Each region has its own characteristics, as well as unique incentive programs.

Northern region

The Northern region comprises of 25 provinces, with the North Key Economic Zone (NKEZ) making up seven several cities and provinces, including Hanoi, Hai Phong, Bac Ninh, Hai Duong, Hung Yen, Vinh Phuc, and Quang Ninh. The area has seen significant development in the past five to 10 years.

This proximity of this area to China is particularly suitable for companies that want to move manufacturing operations to Vietnam but continue operating in China. This is also part of the China plus one strategy.

Central region

The Central Key Economic Zone (CKEZ) compromises of five provinces – Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai, and Binh Danh, with the major of activity occurring around Da Nang.

The Central region is not as established as its neighbors are in the north and south; however, opportunities in this region are likely to materialize in the next few years. Key industries include light industry projects such as food processing.

Southern region

The Southern Key Economic Zone (SKEZ) is made up mainly eight cities and provinces, including Ho Chi Minh City, Binh Duong, Dong Nai, Long An, Ba Ria-Vung Tau, Binh Phuoc, Tay Ninh and Tien Giang. This region, particularly around Ho Chi Minh City, has the most active economic zone across the country. It is known as an industrial hub, which attracts the highest FDI given the favorable investment climate.

Location considerations for industrial zones

Foreign Investment Enterprises (FIEs) should first consider geographic location. This involves research into the advantages and disadvantages of locations of industrial parks considered.

According to the 2018 Provincial Competitiveness Index, the top ranked provinces in 2018 were Quang Ninh (North), Dong Thap (South), Long An (South), Ben Tre (South), and Da Nang (Central); representative of all different regions of Vietnam.

Options can be narrowed down by geographical concentration of industries as some regions host more enterprises from a specific industry than others do (see infographic above). Representing some of Vietnam’s main export sectors, garment and textile manufacturing are concentrated in both north and south Vietnam, while footwear and furniture manufacturing are both concentrated in south Vietnam.

The north is arguably the better choice for an enterprise importing input goods from China, while the south has the advantage of being near the largest commercial port in Vietnam. Proximity to key destinations such as airports, seaports, major cities, main highways, and borders are also important

Industrial zones possess land use rights from the government and essentially sublease their land and existing factories to tenants for a period of up to fifty years, depending on when the industrial zone was established. Prices vary considerably and depend on a number of factors that influence demand, including the location and quality of the industrial park.

Talent in Vietnam’s North, Central and Southern regions

Vietnam’s key attraction to foreign investors is the low cost of labor. Talent is available and competitive in the North. Cities such as Hanoi and Hai Phong in particularly have an ample supply of qualified workers.

Finding the right workers in Central region can prove more challenging than in other regions. Workers in technical fields often find better opportunities in the north and south. Foreign investors are likely to find it challenging to hiring and retaining staff in specialized fields or high-level positions.

In the Southern region, talent is available and supported by various education institutions around Ho Chi Minh City; however, competition is high between employers for talent in this area.

Vietnam’s minimum wage is a tiered system ranging from US$125 to US$180 per month, based on the region. Areas such as Hanoi and HCMC command a higher minimum wage, while Vinh Phuc, Phu Tho, and Bac Giang have lower minimum wage levels.

Average salary can vary from US$500 to US$2,000 for industrial workers and managers, depending on the industry and skill level. Overtime, overtime wages, and social insurance should also be taken into consideration.

Infrastructure development in industrial zones

Infrastructure is often a deciding factor with regard to the success of an industrial zone. Industrial zones that have failed to attract enterprises in the past often lacked good infrastructure and management – the country’s infrastructure has been a bit slow to develop amidst rapid industrialization.

As Vietnam continues to attract FDI, industrial zones have been improving their infrastructure to meet international standards. Improvements include higher quality industrial parks in general, while investors should pay specific attention to assessing the quality of factory buildings and warehouses, sources of electricity and water, wastewater treatment plants, garbage disposals, fire prevention systems, improved telecommunications, access to banks and post offices, logistic services, and internal roads.

Many industrial zones are located near national highways that lead to airports, seaports, and rail stations for easy transport among other conveniences. According to the 2018 Provincial Competitiveness Index, Binh Duong, Da Nang, Vinh Phuc, Hai Duong, and Ba Ria-Vung Tau were the five provinces that were rated as having the best infrastructure.

Types of Industries

The government has designated and provided incentives to certain industries in the North, Central and Southern regions. We look at the three regions and the industry specific sectors unique to them.

The NKEZ consists of eight municipalities and provinces focusing mainly on agricultural products and includes Hanoi, Hai Phong City and the provinces of Bac Ninh, Ha Tay, Hai Duong and Hung Yen.

The CKEZ has been known for its marine economy. Over the next few years, authorities in the CKEZ area aim to increase development in sectors such as oil and gas, ship building, logistics, and other high-tech industries. It includes Da Nang City and the provinces of Binh Dinh, Thua Thien Hue, Quang Nam and Quang Ngai.

The SKEZ is dedicated to the development of commerce, exports, technology, services, and telecommunications. Its areas include Ho Chi Minh City and the provinces of Binh Duong, Ba Ria-Vung Tau, Dong Nai, Tay Ninh and Binh Phoc.

FIEs looking to establish operations in an industrial zone should consider the types of industries already represented by existing tenants and the supporting industries to understand the potential benefits to their own operations. For instance, it would be difficult for a low-end manufacturing company to minimize labor costs in an area with many hi-tech firms.

Incentives available in specialized zones

Vietnam has a series of incentives in place that encourage both domestic and foreign investment depending on various factors, including the regional profile.

Tax incentives include exemptions or reductions of Corporate Income Tax (CIT), Value-Added Tax (VAT) and import tariffs for specific periods, and are granted based on the business lines and location of the FIE.

Regulated encouraged sectors include education, healthcare, sports, culture, high technology, environmental protection, scientific research, infrastructural development, and software manufacturing. Administrative divisions or locations with investment incentives include disadvantaged or extremely disadvantaged areas, industrial parks, export-processing zones, hi-tech zones, and economic zones.

Preferential CIT has been set at 10 percent for a 15-year period for new investment projects in areas with difficult socio-economic conditions, in economic zones, and in high-tech zones.

The preferential CIT is applicable for the entire operational period for companies operating in the sectors of education and training, occupational training, healthcare, culture, sport, and the environment. Other reduced CIT slabs include 15 percent and 17 percent for enterprises involved in farming, breeding, processing of agriculture and aquaculture products.

Large manufacturing projects with investment capital of US$258,000 (6,000 billion VND) or more with minimum revenue of US$430,620,000 (10,000 billion VND) per annum for at least three years after the first year of operations or employing at least 3,000 people after three years of operation, also qualify for CIT incentives.

Additionally, exemptions from import duty and incentives on land rental are also offered to investors. Such incentives and exemptions depend on the industry and the location of investment.

Contact an in-country advisor

FIEs choosing to set up in an industrial zone should carefully consider all the aforementioned factors to leverage suitable benefits for their operations. Location, talent, government incentives and infrastructure factors are key to having a successful operation in such industrial zones.

When weighing these factors, investors that are new to the country should consider using a professional service to learn more about whether an industrial zone makes sense for a given investment. Many factors are difficult to assess from abroad, while conditions on paper don’t always translate on-the-ground.

Note: This article was first published in November 2015 by Vietnam Briefing and has been updated to include the most recent developments.

Source: Vietnam Briefing

Japanese format Who Is The Real Celebrity will be launched in Vietnam

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NBC Universal International Formats has struck two deals for local remakes of entertainment shows with Vietnamese network VTV.

The first will see a local version of Japanese format Who Is The Real Celebrity (WITRC) (pictured) launch on VTV. TBIVision reports on Tuesday.

Produced by MEGA GS Communication and Entertainment, the 13×75’ version titled AI LÀ BẬC THẦY CHÍNH HIỆU will air on Fridays at 9pm on channel VTV 3.

Originally produced by Japan’s Asahi Broadcasting Corporation, WITRC is a comedy game show that tests celebrities’ knowledge and ability of identifying luxury items that come with a first class lifestyle. It sees six groups of celebrities compete in a series of challenges using only their five senses.

The show has played in Japan for over a decade. NBC Universal International Formats acquired the rights to the format from ABC International, a subsidiary of Asahi Broadcasting Group Holdings Corporation.

NBCUniversal International Formats has also signed a deal with MEGA GS Communication and Entertainment to bring a local version of Singer Auction to VTV. Originally co-developed with Thailand’s Zense Entertainment, Singer Auction is a primetime entertainment format that gives unknown vocalists the opportunity to showcase their talent.

The 13×75’ Vietnamese version will also air weekly at 9pm on VTV 3 in July.

Ana Langenberg, SVP, Format Sales & Production at NBC Universal International Formats said: “We acquired the hit Japanese series Who Is The Real Celebrity because we saw great potential in the format, particularly across other territories in Asia. Our co-developed format Singer Auction also has the potential to achieve similar success in Vietnam, so we’re really excited to see how MEGA GS’ adaptations perform. Both deals and shows are a testament to the rich diversity of television across Asia.”

Miss Vu Thi Bich Lien, CEO of MEGA GS Communication and Entertainment added: “We are confident these two shows will appeal to our audience due to their entertainment and comedic elements.”

How can a Vietnam’s blockchain startup raise $3 bln from FPT and SBI?

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Vietnamese tech giant FPT Corporation and Japan’s SBI Holdings have signed a memorandum of understanding to invest US$3 million in Utop, a blockchain startup in Vietnam.

According to news sources seen on the FPT’s website, Utop will apply the blockchain technology of FPT to connect enterprise networks and manage and exchange reward points. Utop will help users accumulate and use reward points in a new and creative way at connected stores and firms.

The convenience offered by Utop is expected to upgrade many firms’ operations and help these firms gain a better foothold in the local market.

Utop was developed based on FPT’s akaChain blockchain platform, which is being deployed in many countries and provides a range of services relevant to the finance, insurance and retail sectors.

Aside from expanding the reach of firms and small stores in the local market, Utop will support them in beefing up the efficiency of their promotional and customer care programs.

Representatives of FPT and SBI signed the $3 million deal in Tokyo. | Source: FPT

“SBI and FPT have cooperated effectively over the past few years. Given the success of akaChain, the technology capacity and the large customer base of FPT, SBI strongly believes this is the most suitable moment to launch Utop,” SBI Chairman and General Director Yoshitaka Kitao said, adding that the startup has high potential for gaining ground in the coming period.

Truong Gia Binh, FPT chairman, said, “Utop will help thousands of Vietnamese firms seize more business opportunities, offering convenient shopping experiences to millions of Vietnamese consumers.” Further, the startup is expected to boost the country’s digital economy development.

Utop had earlier been piloted as part of FPT’s activities in the finance, retail and insurance sectors in end-2018. The cooperation between FPT and SBI will shore up its operations in the future.

In Vietnam, acquisition of funds that helps you to build your startup is an immense challenge, especially if you do not know from where you should start. Confiding to your startup platform, and trailing the incorrect path would keep you away from raising the necessary funds, and it will be a waste of time.

There are various options for securing capital for your business such as investors in marketplaces, crowdfunding, angel investors. Today in the marketplace, it is easier to raise funds than before.

To be advised on how to start you business in Vietnam as a foreign investor, contact GBS – A Business Law Firm in Vietnam at info@gbs.com.vn or visit: https://gbs.com.vn

Former head of Facebook in Vietnam has become CEO of Go-Viet

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Ambitious ride-hailing startup Go-Jek’s Southeast Asia expansion plan suffered a blow when it lost the leadership team behind its business in Vietnam, but now it has replaced them with the former head of Facebook in the country.

Christy Trang Le, who led Facebook’s business in Vietnam for nine months before quitting for family reasons in early 2019 , has become new CEO of Go-Viet, which is the name of Go-Jek business in the country. Le is best known as a co-founder of Misfit, the U.S-Vietnam wearable startup that was acquired by Fossil for $260 million in 2015 — indeed, Misfit CEO Sonny Vu is her husband.

Christy Trang Le

Le, who was previously CFO/COO of Misfit before becoming head of Fossil Vietnam, replaces Nguyen Vu Duc and Nguyen Bao Linh who left their positions as general director and deputy general director, respectively, at the end of March. Go-Jek said that the duo are staying on as “advisors” but their exit sparked suggestions that Go-Jek’s expansion to Vietnam, the first market it moved into beyond its Indonesia homeland, isn’t going as well as had been assumed.

Go-Jek is valued at $9.5 billion and it has also expanded to Thailand and Singapore with the Philippines in its plans. The startup has been pretty boastful of the apparent market share it has picked up in Vietnam, where $14 billion-valued Grab is its main competitor. Go-Jek said in February that it estimated it had gained 40 percent of the two-wheeled taxi market within three months of its launch in August and that its food service became “the leading player among comparable food delivery services.”

Go-Jek said in a statement today that Go-Viet has “completed millions of trips” and is growing at 50 percent per month.

Take all those numbers with a pinch of salt since it isn’t clear where the figures originate from and Go-Jek is in ‘fundraising mode’ right now. Even giving it the benefit of the doubt, any market share it gained on arrival would likely be down to the generous subsidies that are typically dolled out when a new company comes to town.
Still, bringing in a new leader — and one with the background of Le — looks like a coup, although her role building out Go-Viet’s on-demand business will be quite different from that of anchoring Facebook or running Misfit/Fossil.

“I’ve seen how the success of Go-Jek’s multi-service platform has transformed the lives of so many people in Indonesia and want to see the same happen in Vietnam,” Le said in a statement.

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