Export-reliant economy faces trade wars, rising U.S. rates
Inflation accelerates to 4.7 percent in June, government says
Vietnam’s economy posted steady growth in the second quarter with the help of solid foreign investment and exports, but risks are mounting with the prospect of a global trade war. Bloomberg reported
Highlights of GDP report
Gross domestic product rose 6.8 percent in the second quarter from a year earlier, compared with a revised 7.5 percent in the previous three months, the General Statistics Office said in Hanoi on Friday
The economy expanded 7.1 percent in the six months through June compared with a year earlier
Export-reliant Vietnam is trying to sustain its stellar economic performance in the face of global trade protectionist moves and rising U.S. interest rates. Prime Minister Nguyen Xuan Phuc requested ministries in May to increase their monitoring of international markets and to take suitable and timely action to minimize any negative effects.
Growth eased in the second quarter from the prior three months due to reduced mining and public investments, Nguyen Bich Lam, head of the General Statistics Office, told reporters in Hanoi on Friday.
“Medium term prospects of Vietnam’s economy are good, but the global context is uncertain,” Victoria Kwakwa, the World Bank’s vice president for East Asia and Pacific, said earlier this week. “The uncertainty in the global context is an area of risk” for Vietnam, being an export-driven and open economy, she said.
Fitch Ratings, which upgraded Vietnam’s credit score to BB in May, expects some slowdown in the economy in the rest of the year, amid a pick-up in trade risks and a possible easing in China’s growth.
Vietnam is one of a handful of economies in Asia, including China, India and the Philippines, which are still growing more than 6 percent a year.
Other Details
Exports increased 16 percent in the first six months from a year ago
Industrial production rose 12.3 percent in June from a year earlier
Consumer prices rose 4.7 percent in June from year earlier. The government aims to cap average price gains at 4 percent this year
By Nguyen Dieu Tu Uyen, with assistance by Michelle Jamrisko
Russia boosts sales to Vietnam; is now nation’s No. 1 supplier
World’s top shipper grabbed more market share in recent years
To see how far Russia has expanded its grip on the global wheat market, just look at Vietnam.
Bloomberg reports, for the first time, Russia is the top supplier of wheat to Vietnam, the seventh-biggest market in Asia. Exports jumped 13-fold in the 10 months through April, compared with the previous season, according to UkrAgroConsult.
The increase followed Vietnam scrapping an import tax on Russian grain and a poor Australian harvest, but also shows how competitive prices are helping Russia offload its record crop around the world.
Wheat Takeover
Russia is now the biggest wheat supplier to Vietnam
Bigger harvests and relatively cheap production costs have helped Russia grab export-market share from major suppliers such as the U.S., European Union and Australia in recent years. The Black Sea country, which is expected to remain the world’s biggest shipper next season even with a smaller crop, now sells grain to more than 130 nations around the world.
“In terms of the Black Sea stealing market share from Australia, this is happening without question and has been the case for a number of years now,” said Tom Basnett, general manager at commodity consultant Market Check in Sydney. “Vietnam, much like our other traditional buyers, have become more accustomed to using cheaper Black Sea-origin wheat.”
Trade Boost
Vietnam bought 1.7 million metric tons in the July-April period after canceling an import tax as part of a trade accord that took effect in late 2016, Kiev-based UkrAgroConsult said. That’s up from 124,000 tons in the entire previous season. Scrapping the levy has been the main driver of Russia seizing almost half of Vietnam’s market, UkrAgroConsult analyst Marina Sych said.
Russia may have also benefited from declining output in Australia, which is a key shipper of wheat to Asia, Market Check’s Basnett said. Australia’s wheat exports slumped by a third in the 2017-18 season after drought hurt crops, according to the USDA.
Vietnam has traditionally been one of Australia’s top five export destinations, typically accounting for about 10 percent of its wheat sales, Basnett said.
South Korea’s Woori Bank Co. won the Vietnamese financial authorities’ approval to open six additional branches in the Southeast Asian country, moving a step closer to its goal to operate more than 20 branches in the country by 2020.
Pulsenews reported, the Korean leading bank said Wednesday that its local subsidiary Woori Bank Vietnam will open six new branches in Vietnam after it gained licenses for the business from the State Bank of Vietnam. This is the first time a foreign banking unit has obtained multiple licenses to open branches at the same time in Vietnam, according to the company.
The new branches will open this year in Thai Nguyen, Hai Phong and Ha Nam in the north of Vietnam, as well as in Ho Chi Minh, Nhon Trach (Dong Nai) and Binh Duong in the south. These cities are popular business bases for Korean companies that have made inroads into the country.
Woori Bank Vietnam, which is currently running three branches in the country, aims to expand the business base in major cities of Vietnam by running a total of nine outlets by the end of this year and more than 20 by 2020.
Woori Bank opened its first outpost in Hanoi in 1997 and incorporated Woori Bank Vietnam as an independent local subsidiary in January 2017 to bolster its local financial services in the Southeast Asian country.
Its current three branches are located in Hanoi, Ho Chi Minh and Bac Ninh providing various financial services for Korean companies and their local partners. It is also reinforcing its retail banking services by providing mortgage-backed loan service and issuing credit cards. It has also introduced its mobile banking service Global Wibee Bank to lure young clients.
‘In Vietnam, the rapid advancement of the middle and affluent classes is promoting the next wave of demand.’
Ranked high for development prospects in the Asia-Pacific region, Vietnamese real estate is attracting increased investment interest.
Big names in the global real estate industry are choosing Vietnam as their next investment destination because it shows great potential for future development, a recent report says.
Tokyo-based Nomura Real Estate made a notable transaction in January when it bought a 24 percent stake in Ho Chi Minh City’s Sun Wah Tower.
The Asia Pacific Investment Quarterly report for the first quarter of 2018 says that the purchase of a stake in the grade A building in HCMC’s District 1 shows that the city’s office market continues to record healthy demand and high occupancy.
The report, prepared by global real estate service provider Savills, says that apart from office spaces, the hospitality sector in Vietnam is also seen as an attractive investment option for foreign investors.
Japan’s Mikazuki Hotel in January announced plans to invest $100 million in a project in the central Da Nang city.
The development will include a five-star hotel, a waterpark and a food-and-beverage complex on an area of 11.5 hectares.
Another real estate segment that has been attracting developers is the mixed-use projects with residential components in major cities.
Singapore-headquartered real estate firm, CapitaLand, acquired in March a 0.9-hectare prime location in Hanoi’s Tay Ho District which has 380 residential units and over 21,000 square meters of office space.
This latest deal expands the company’s portfolio to 12 residential developments, one integrated development and 21 serviced residences across six cities in Vietnam, the Savills report said.
These acquisitions show that Vietnam continues to draw investment interest, and Ho Chi Minh City stands out on investors’ lists, securing top positions for investment and development prospects in Asia Pacific, it added.
Demand wave
“In Vietnam, the rapid advancement of the middle and affluent classes is promoting the next wave of demand,” said Simon Smith, head of Research and Consultancy at Savills Hong Kong.
Demand for premium property will continue to rise as the number of middle class citizens is expected to reach 44 million by 2020 and 95 million by 2030, estimates market research firm Nielsen.
Foreign investors are also showing interest in Vietnamese real estate because the country has been seeing a record-high number of international tourists, the Savills report said.
In the first five months this year, 6.7 million tourists came to the country, an increase of 27.6 percent compared to the same time last year. Average growth in the number of international tourists visiting Vietnam reached 30 percent in the last three years.
Another reason for the increased presence of foreign investors is the result of the modifications to Vietnam’s housing law, said Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment.
The barriers in Vietnam’s pre-2014 legal framework had made foreign investors doubt their chance to succeed in the country’s real estate market, Vo told VnExpress International.
But Vietnam has shown more openness with the 2014 housing law, which allows foreign investors to own property up to 50 years with the possibility to renew for another 50 years.
The law also allows foreign business to own properties in the country after obtaining permission from local authorities.
Positive changes in the legal framework have helped, too.
“It took time for international investors to believe that Vietnam is actually unlocking the door of opportunities for them,” Vo said.
He also said that the presence of international investors in the country will be a challenge for local real estate investors, as most of them don’t have the ability to compete with foreign firms with higher budgets.
“But this will also be a great opportunity for them to increase their capabilities,” the former deputy minister said.
PG Bank had to set aside a provision of VND383 billion ($17 million) in 2017 so its profit was not enough to pay dividends. Will the merger with HDBank improve the business activities of PG Bank?
According to PG Bank’s report on its general shareholders’ meeting, the total assets of the bank in 2017 were nearly VND29.3 trillion ($1.3 billion), up 18 per cent on-year, while total deposits were approximately VND25.3 trillion ($1.12 billion), up 20 per cent, and the outstanding balance of the entire bank was VND21.42 trillion ($0.95 billion), up 22 per cent.
In 2017, PG Bank gained VND80 billion ($3.5 million) in pre-tax profit, equivalent to 54 per cent of the plan set forth. At the annual general shareholders’ meeting yesterday, PG Bank’s chairman Bui Ngoc Bao said that the reason for the low profit was unsatisfactory deposits and lending, and the increase of provisions.
The total bad debts of PG Bank were VND691 billion ($30.44), increasing by VND258 billion ($11.37 million) against 2016, equalling 3.23 per cent compared to the 2.47 per cent of 2016.
The report shows that the bank reached most of all business targets in 2017, but profit was little as provisions were set at VND383 billion ($17 million). PG Bank intends not to pay dividend in 2017.
In 2018, PG Bank set the target of nearly VND30 trillion ($1.3 billion) in total deposits, up 19 per cent on-year, and VND24 trillion ($1.06 billion) in outstanding lending, up 12 per cent.
In the end of 2018, the total assets of the bank are expected to rise by 17 per cent to VND34.2 trillion ($1.5 billion) throughout the year. Pre-tax profit is expected to hit VND183 billion ($8.6 million), a 2.3-fold increase against 2017’s performance, because the bank intends to set aside provisions of VND33 billion ($1.45 million), while it set aside VND460 billion ($20.26 million) in 2017.
PG Bank and HDBank are collaborating to complete the merger in this August. PG Bank maintains its leadership until the merger is finalised in the next several months.
“The final target of the leaders is to merge and develop PG Bank into a large-scale bank and bring benefits to all shareholders. The merged entity will keep all jobs, employees, as well as develop the bank,” Bao stated at the annual general shareholders’ meeting yesterday.
As PG Bank has been in the red for a while now, it remains questionable whether HDBank could improve its situation. Also, should shareholders expect dividend at the next AGM?
Earlier, on April 19, Vietnam National Petroleum Group (Petrolimex), the parent company of PG Bank, signed a strategic co-operation agreement with HDBank. Their plan outlined the estimated swap ratio of PG Bank and HDBank shares at 1:0.621, meaning one share of PG Bank will be converted into 0.621 shares of HDBank.
Additionally, HDBank plans to pay a bonus equivalent to 20 per cent of the total shares for shareholders. If the merger plan is approved, Petrolimex will also get an additional 20 per cent of the bonus shares based on the total number of swapped shares after the merger. Moreover, the merger will also create a surplus estimated at VND5 trillion ($220.3 million), which will benefit all shareholders, including Petrolimex.
HDBank holds great experience in the management and administration of mergers and acquisitions activities. By this merger, the charter capital of the two banks is estimated at VND15.345 trillion ($676 million).
PG Bank and HDBank expect to become an outstanding financial and credit organisation, and its network of individual customers and small- and medium-sized enterprises will expand drastically.
The latest report from the Pew Research Centre in the US shows that smartphone usage in many countries has increased significantly, including Viet Nam.
The centre conducted a survey of nearly 40,500 participants in 37 countries from February 16 to May 6 last year.
The survey also included trends and habits of internet and social network use.
South Korea ranked first in the smartphone category with 94 per cent of people using the devices, followed by Israel (83 per cent), Australia (82 per cent), Sweden, the Netherlands, and Lebanon (80 per cent).
Viet Nam ranked 25th on the list, with about 53 per cent of people owning smartphones.
In terms of internet penetration, Viet Nam, with more than 64 per cent of the population online, is below the world average (75 per cent).
South Korea continued to lead in this category with over 96 per cent, followed by Australia and the Netherlands (93 per cent), Sweden (92 per cent) and Canada (91 per cent).
In terms of social media, Viet Nam’s social-networking usage rate is at 53 per cent.
The two leading nations in this category are Jordan and Lebanon with more than 70 per cent, higher than technological powers such as the US or South Korea.
Vietnamese beer brands still hold 70 percent of market share, but tastes are changing and people are spending more on high-end products.
According to the Vietnam Beer, Alcohol, Beverage Association, the growth of beer production has been slowing down. Prior to 2010, the growth rate was always at two-digit levels, but it is now 5-8 percent only. However, Vietnam remains one of the few beer markets in the world which is still maintaining high growth.
The high-end beer market segment has been witnessing a strong rise with an annual growth rate of 15 percent, much higher than the 4.8 percent of the low-cost segment.
Also according to the association, high-end beer products hold 30 percent of market share, a two-fold increase compared with 2014.
There are many well-known brands in the market segment, including foreign ones such Heineken, Tiger, Sapporo, Budweiser and Carlsberg, and Vietnamese such as Truc Bach, Hanoi Premium, Saigon Special, Saigon Large and Saigon Gold. However, Heineken remains the best known.
Heineken, though positioned as a luxury product, still has high output, just lower than Sabeco. The gap between Heineken and the largest Vietnamese beer brand has narrowed.
In 2017, of 4 billion liters of beer produced, Sabeco had 1.7 billion liters, accounting for 40 percent of market share, while Heineken had 1.1 billion, or 28 percent of market share.
BCG, a consultancy firm, released a report showing that the middle class in Vietnam has been increasing more rapidly than in any other country in South East Asia.
It is expected that Vietnam will have 33 million people with monthly income of $714 and more, or one-third of the population, by 2020.
The rapid increase of the middle class is supporting the strong rise of the high-end beer market.
The prediction has prompted brewers to invest in high-end products. AB Inbev, which has two breweries in Vietnam, plans to invest $7 million more to improve production capacity, while Sapporo can produce 100 million liters a year
Vietnamese brewers including Habeco and Sabeco have also paid higher attention to making high-end products. Sabeco has Saigon Special, while Habeco has Hanoi Premium, both of which maintained a high growth rate of 15 percent in the last few years.
Meanwhile, popular products have seen sales decreasing. Bottled Hanoi Beer 450 ml is an example. The sales of the product dropped by 60 million liters in 2017.
A teacher in Vietnam’s Mekong Delta has Facebook to thank after he was found and brought home by his colleagues, ten days after going missing during a tour on one of the country’s famous island.
Nguyen Anh Lan, 54, recalled having lived on wild fruits and rain water during the ten days of getting lost on Phu Quoc, an island and tourist magnet off the southern province of Kien Giang.
Lan and his colleagues at My Hiep 2 Primary School in Cao Lanh District of Dong Thap Province visited the island during a tour package on June 15.
After touring several attractions on the island, the teachers returned to the hotel for a meal later the day and realized that Lan was nowhere to be seen, according to school principal Nguyen Van Ngoi.
Lan’s colleagues reported the case to local police, chipped in to print multiple leaflets of him and took motorbike taxi rides on a number of roads there to fetch him.
As many days passed, the effort proved to be in vain.
The school then had recourse to Facebook to find Lan, and started to see information about him coming.
Stumbling across the post, a cab driver who claimed to carry Lan showed the area where he put the teacher off.
But Lan was not there when the My Hiep 2 teachers reached the place, said Phan Van Khanh, the school’s vice principal.
Colleagues and neighbors talk with Nguyen Anh Lan near his house in Dong Thap Province, Vietnam. Photo: Tuoi TreNguyen Van Khoi smiles at seeing Nguyen Anh Lan’s recovery in Dong Thap Province, Vietnam. Photo: Tuoi Tre
On the tenth day, a hunter spotted Lan wandering with no clothes on in the uninhabited mountains on the island.
The teacher looked gaunt and grew a long moustache at the time, said Khanh.
Other residents who saw Lan were scared to approach him and intended to go away.
Fortunately, one of them remembered the man-finding post on Facebook and contacted the teacher’s family to retrieve him, Khanh added.
The teacher was taken home on Tuesday.
Lan got lost because he was old and absent-minded, according to him and some of his colleagues.
Around VND30 million (US$1,290), from the coworkers’ contribution, has been spent to tend Lan, who lives in a poor house built from wood and corrugated iron sheeting.
As of Wednesday, Lan has regained the use of his legs but is still suffering mental instability.
From the cascading rice terraces of Sapa, to the islands of Ha Long Bay, caves of Phong Nha, mountains of Da Lat, the sand dunes of Mui Ne, and the maze of rivers and rice paddies of the Mekong Delta, Vietnam has a diverse offering of bucket list attractions to offer travelers. Here we have mentioned all the best places in the country to go explore, so you can make yourself an itinerary that will exhaust your 30-day visa. Happy travels!
Hanoi
The chaotic capital of Vietnam is a great place to start your journey, or end it, depending on whether you plan your backpacking trip from the north to the south or vice versa. Upon landing, what will scare you most is probably the overwhelming amount of motorbikes on the streets, and you’ll suddenly feel like a five-year-old again, hoping an adult will hold your hand while you cross the street. But don’t worry, you get used to it.
The city has many attractions to see, most of which are lakes, pagodas and museums, and of course, the Old Quarter. It might be a good idea to spend two days here, just to acclimate. What makes Hanoi great is that, as a central hub, you can easily catch transport to the rest of the region. Make sure you try a bowl of pho before you leave though.
Sapa
Sapa is Vietnam’s premier trekking base and you can not leave the country without at least a day of hiking through the rice terraces, lush valleys and endless karst peaks of the region. Include Heavens Gate, Mount Fansipan (the highest peak of Indochina) and Muong Hoa Valley in your itinerary, and you’re good to go. Instead of booking a boring hotel, strip back the comfort and spend the night in a village homestay with a tribal family to truly experience the real Sapa. Let them show you what their day-to-day life is like up in the north. “Happy water” (home made rice wine) is a huge part of it, and it’s a lot of fun till it’s not. Check out Sapa O’Chau Travel Enterprise for authentic tours into the region.
Ha Long Bay, crowned one of the new seven natural wonders of the world, is the epitome of Vietnamese coastline, with its thousands of limestone karst peaks jutting out of its emerald waters and the hundreds of uninhabited islands topped with dense jungle, scattered around the bay. Taking a tour here is the easiest way to get around as it is a UNESCO Heritage protected site, and most are all-inclusive, with drinks and water activities usually coming at an extra cost. Check out Cat Ba National Park, explore Dau Go cave, and make sure you go kayaking!
You can get to Ninh Binh directly from Ha Long Bay if you do not wish to go back to Hanoi. Often referred to as the “Ha Long Bay on land,” Ninh Binh is another fantastic destination to surround yourself with Vietnam’s amazingly lush nature. There are four areas of interest here; Tam Coc, Trang An, Van Long Nature Reserve and Cuc Phuong National Park, the last of which is awesome for camping. Don’t spend less than two days here as there is a lot of mountains, rivers, caves, peaks, ancient pagodas, and goats to take in. Yes, goats.
In Phong Nha, as usual, there is spectacular scenery above ground, but what is even more jaw-dropping here is what is found underground. Phong Nha is known for its numerous caves and the world’s largest cave system, Hang Son Doong, is located here. Sadly, you probably won’t be exploring that anytime soon as it costs a staggering $3,000 for an excursion here by Oxalis which is the only company allowed to offer expeditions into the cave and area. Plus, not to mention, there’s a two or so year waiting list. Don’t let this dishearten you though as you can opt for Hang En cave, the third largest in the world, or Paradise Cave. The Phong Nha Ke Bang national park is also the largest in Vietnam, and home to the last wild populations of black bears, elephants and tigers in Vietnam, so you may want to curb the backpacker instincts of wanting to wander off alone.
This stop should be a mix between Da Nang and Hoi An, but you should stay and spend most of your time exploring the latter, as it is not an ordinary coastal city like Da Nang. There are plenty of places to explore in Hoi An – from bronze casting, pottery, coconut and fishing villages in the outskirts of the city and An Bang/Cua Dai beach on the opposite coast to Tra Que vegetable village, the first organic vegetable village in Vietnam, and of course, the enchanting UNESCO World Heritage protected Ancient Town. You can also get something tailored while here. Check out BeBe Tailor, who can do just about anything.
From Hoi An you can take day trips to Da Nang, where you can spend some time exploring the Marble Mountains and My Son Temples. The beaches in Da Nang aren’t too bad either, but the ones in Hoi An are a calmer, more local option. If you don’t drive a motorbike, make sure to book an easyrider in Da Nang and take the Hai Van Pass through mountains and along the coast, up to Hue, where there is a bunch of things to see, namely the Imperial City, the former capital of Vietnam.
Nha Trang
Nha Trang is a good luxury mid-stop in your travels. Indulge in one of the high rise hotels or beachside resorts and spoil yourself in this town. It’s the perfect way to take a break from traveling as it can get exhausting. You can do some hiking, shopping and partying here and of course partake in lots of beach activities. Nha Trang is the diving capital of Vietnam and defends the title well.
After the hot and humid beaches of Nha Trang, the cool weather of Da Lat is welcoming change. The best things to do here is to rent a bike and explore the many waterfalls Da Lat is famous for. A popular activity is canyoning, or rappelling up a waterfall, and then jumping into it. You can check out Da Lat Canyoning Tours for more information. 100 Roofs Café and Crazy House are also worth a visit.
While Hanoi is the more cultural hub of Vietnam, Ho Chi Minh City is the international one. Within the city are many exciting things to explore, such as Ben Thanh Market, the War Remnants Museum, and China Town, but you should also make time to visit the Cu Chi Tunnels, and the Mekong Delta. If you still crave more beach after making your way down the coast, head to Vung Tau which is only two hours away and famous for their seaside pancakes, banh khot, or even better, go to Mui Ne, which actually has sand dunes, believe it or not.
If Ho Chi Minh City is your last stop, head to one of the famous rooftop bars, and end your journey with a brilliant panoramic view of the city that never sleeps, while reminiscing about the amazing journey you just had.
The Vietnamese organic product market, which includes both food and non-food, has been taking shape in the last few years, but there are still few importers of organic products.
Most of the products are carried to Vietnam across border gates. Customers have to buy products at high prices, and cannot enjoy post-sale services.
Organic communities like ‘tieu dung huu co’ (organic consumption’ and ‘song huu co’ (organic life) on the internet and Facebook share knowledge about organic agriculture and also sell organic products.
However, the bills issued by shops overseas are the only evidence that prove the ‘organic’ characteristic of products in some cascades.
Sometimes, when supermarkets overseas run sale promotion programs, the members of the communities order in groups to share shipping fees.
At a high-end food shop on Nguyen Thi Minh Khai street in district 1, HCM City, next to shelves displaying products imported through official channel which have sub-labels in Vietnamese with sufficient information, there is a shelf for organic products imported through unofficial channels.
Reporters noted that most of the products are organic spices with little information about names and selling prices. Detailed information is written in Japanese. Buyers have to rely on information provided by sellers or have to search for information on the internet.
The representative of Thien An Le Trade & Service Company in HCMC, which specializes in ‘non-chemical products’, said the company is one of a few retailers which sell officially imported products.
There are only a few importers which import these products. These include NTP, which specializes in importing dairy products, grains and cooking oil. Solomon specializes in organic dairy products and Fire Phoenix in cosmetics.
Meanwhile, most imports don’t have documents to show their origin.
According to Pham Phuong Thao, managing director of Organica which owns Organica shops, the Vietnamese organic food market is still small. Some companies only import products in small quantities.
Phan Thi Hong Quyen, co-founder of Solomon International, the exclusive distributor of Organic Valley, said it took two years to negotiate with Organic Valley to obtain the right to distribute its products.
However, Quyen complained that the import procedures are complicated and the import tariff on dairy products from the US is high (30 percent import tariff and 10 percent VAT).
Vu Kim Hanh, chair of High Quality Vietnamese Product Business Association, said organic foods have become very popular in Vietnam. The market is worth VND3.5 trillion a year.
Tokyo seeks to plant business seeds as Asian cities urbanize
Nikkei reported, Japan hopes to pave the way for its companies in Vietnam and other Asian markets by exporting techniques for real estate appraisal, creating opportunities by fostering urbanization and financial industries.
Vietnam’s northern coastal city of Haiphong will consider introducing the methods this summer with specialists commissioned by Japan’s land ministry. Property prices have seemingly been growing as the city urbanizes, but land prices provided by the Vietnamese government do not fully reflect actual market values, leaving the country without a benchmark to use in business.
The Japanese government looks to provide Vietnam with expertise on how to determine its official land prices, a basic guideline for real estate transactions, for free. It will offer calculation methods and help build information technology systems for computing prevailing prices. Appraisals, registration and other tasks will be covered as well.
The land ministry aims to stir more opportunities for Japanese companies. The initiative is expected to benefit a wide variety of businesses, including real estate developers, construction companies, systems developers and financial institutions that provide mortgages. Japan plans to expand it to Bac Giang Province in north Vietnam and Dong Nai Province in the south during fiscal 2019 and reach other countries as well.
Asia’s market for infrastructure development is growing as economies develop in the region. Japan aims to get ahead of rivals like South Korea in laying the groundwork for business.
General Motors (GM.N) has agreed to transfer its Vietnamese operation to VinFast Trading and Production LLC and distribute Chevrolet cars through the local carmaker, in a move that could help drive up its modest sales in the country.
The U.S. automaker will transfer full ownership of its Hanoi factory to VinFast for the Vietnamese firm to produce small cars under a GM global license from 2019, the companies said in a statement on Thursday, without disclosing a value for the deal.
As part of the deal, VinFast, a unit of Vietnam’s biggest private conglomerate – Vingroup JSC VIC.HM, will be the exclusive distributor of the Chevrolet in Vietnam.
“The GM-VinFast strategic partnership will best position the Chevrolet brand and dealer network for long-term growth in Vietnam by leveraging GM’s global scale and expertise, married with VinFast’s domestic strength and insight,” said Barry Engle, executive vice president and president of GM International.
The transfer, which includes GM’s Hanoi plant, dealer network and employee base, is expected to be conducted by the end of 2018, the companies said in the statement.
GM used its Hanoi plant to assemble Chevrolets with parts imported from South Korea – a country where the U.S. automaker came close to bankruptcy as it struggled to turn around its debt-laden unit. GM Korea is GM’s biggest production base in Asia excluding China.
The plant will be used solely to produce VinFast cars after the transfer, while Chevrolet cars will be imported.
VinFast said this partnership with GM was “integral” to its plan to “launch a portfolio of five VinFast vehicles in 2019”.
It is building a $1.5 billion factory in the northern province of Hai Phong and plans to launch a sedan and sport-utility vehicle in the third quarter of 2019, and a small car, electric car and electric bus by end-2019.
“Our vision is to build an automobile manufacturing eco-system that will include assembly plants, local automotive suppliers and dealers, and a string of supporting industries,” said VinFast CEO Jim DeLuca.
Vietnam’s automobile sales grew 24 percent in 2016 but fell 10 percent last year to 272,750 units, data from the Vietnam Automobile Manufacturers’ Association (VAMA) showed. Sales fell 6 percent in the first five months of 2018.
While GM’s sales in Vietnam have been rising since 2014, its numbers last year were only an eighth of the country’s market leader, local Truong Hai Auto Corp, and a sixth of runner up Japanese rival Toyota Motor Corp (7203.T), VAMA data showed.
Sales of the Chevrolet, the only vehicle GM offers in Vietnam, grew 8.5 percent to 10,576 units in 2017, lagging gains of 34.5 percent in Indonesia and 25.7 percent in Thailand.
The company is a subsidiary of Vingroup, the largest private company in Vietnam
When people think about things that are made in Vietnam, cars probably don’t even rank as an afterthought, but a Vietnamese consortium known as Vingroup (aka the largest private enterprise in the country) is trying to change that.
According to a report by CNET, VinFast will be the country’s first high-volume producer of cars, and while we have no idea what kind of vehicles the company will be making, apparently we can expect to find out at the Paris Auto Show later this year.
The move to build cars in Vietnam is a big one, culturally, as the country is mostly known as a haven for motorcycles and scooters due to their low cost of ownership and Vietnam’s crowded streets. A shift to cars, if they’re meant to be sold domestically, could radically alter the way the country gets around.
This logo is pretty much all we’ve got in advance of the brand’s debut in Paris later this year.
VinFast already has a good start on things, having broken ground on its factory in Hai Phong City in September of 2017. While facts are thin on the ground here, the press release from VinFast’s new PR agency PFPR states that:
“VinFast products will share a number of characteristics and values: Vietnam, Style, Safety, Innovation, and Pioneering. Its cars will meet international standards and customer expectations in terms of premium design, quality, dynamics, in-car features and ownership experience.”
Precisely what that means is kind of nebulous, but the international standards bit is interesting. Will VinFast be able to carve a space for itself outside its home country with vehicle exports from China rapidly expanding?
Aerospace giant Boeing has agreed to sell 20 Dreamliner commercial jets to Vietnamese start-up airline Bamboo Airways in a deal worth up to $5.6 billion, the companies announced Monday, just weeks after the airline struck a similar $3 billion deal with French competitor Airbus.
The Washington Post reported, the new airline is a project of FLC Group, a publicly traded resort developer in Vietnam. FLC executives said they initially want to ferry tourists to their resorts in disparate parts of the country. But the choice to buy 787 Dreamliners — a wide-body airplane built for long-haul flights — hints at broader ambitions.
FLC Chairman Trinh Van Quyet said he wants to expand to 16 domestic routes and 10 international routes, starting with regional flights next year before later expanding to the United States and Europe.
“The deal with Boeing today is only the first step for us. We want to have more than 100 planes in the future,” he said.
The deal was celebrated in a signing ceremony at the U.S. Chamber of Commerce attended by Vuong Dinh Hue, Vietnam’s deputy prime minister. After the ceremony, the group held an investor conference at Trump International Hotel, where a stream of prepared videos praised FLC’s tourist resorts. Ted Osius, a former U.S. ambassador to Vietnam, joined a handful of U.S. and Vietnamese panelists to discuss the future of the country’s aviation industry.
Vietnam is still an officially socialist country with a largely state-controlled economy, but the government has undertaken reforms in recent years to attract foreign investment and tourism.
“Vietnam has great potential for aviation,” said Dang Tat Thang, Bamboo Airways’ newly appointed chief executive. “We chose the name Bamboo because we want to be the spirit of Vietnam.”
FLC Group is undertaking substantial risk by wading into the airline business in such spectacular fashion. While start-up airlines are not unheard of, placing such a large order without testing the market first is seen as highly unusual.
“To purchase twenty 787s indicates a degree of confidence — some would say arrogance — and very deep financial pockets,” said Henry Harteveldt, a commercial aerospace analyst with Atmosphere Research. “It indicates a willingness to ignore basic financial planning for an airline, where you usually buy a few and wait for the market to materialize. It’s a very bold, very risky move.”
Richard Aboulafia, an aerospace analyst with Teal Group, said he is skeptical that Vietnam’s aviation market can sustain another airline.
The country has three airlines regularly serving various parts of the country.
“You can lose an awful lot of money in the airline business. You’re putting all your eggs in one basket, and exposing yourself to an awful lot of expense and debt,” Aboulafia said. “But if you’re working in a controlled economy, it just might work out for you.”
General Motors is to transfer its Vietnam operation to local rival VinFast in a strategic partnership that will see the Vietnamese group become the country’s exclusive distributor of Chevrolet cars.
According to a report by Financial Times, the car-making arm of Vingroup, Vietnam’s biggest conglomerate, said on Thursday it would implement “a significant investment program” to launch next year an all-new, global small car licensed from GM and manufactured and sold under its own brand.
The Vietnamese company, which is already building a factory in the north of the south-east Asian country that will make mopeds and passenger cars, said the US group would become its preferred automotive technology partner, and that this would open “potential pathways for future product-sharing and technology transfer”.
The two sides, which did not reveal how much they would invest in the partnership, said GM’s operation in Vietnam, including its Hanoi plant, dealership network, and employee base, would be transferred to VinFast by the end of this year.
Jim DeLuca, VinFast chief executive, was a GM head of production before going to work for the fledgling Vietnamese brand.
Vietnam, with a population of 96m and a growing number of people graduating from two-wheeled transport into cars, has taken steps recently to protect its local car market, using non-tariff barriers to impede imports from Thailand — home to the region’s largest car industry — and other countries.
In response, some foreign carmakers have been looking for opportunities to produce or assemble cars locally. Japanese carmaker Mazda in March opened a factory in central Vietnam in partnership with Thaco, the country’s biggest carmaker.
For Vingroup, founded and chaired by Pham Nhat Vuong, Vietnam’s richest man, the deal with GM will mark a deepening commitment by the sprawling company to the promising but risky business of making cars. Vingroup styles itself as a “cradle to grave” provider of goods and services to Vietnamese consumers, with businesses in retail, real estate, education, and other areas. This month it said it had established a unit that will make and sell smartphones.
GM’s Hanoi plant made about 7,600 vehicles in 2017 but has the capacity to produce 30,000 a year, according to LMC Automotive.
“VinFast can use the GM facility to produce their car, and access to GM technology could help them lower research and development costs — one of the largest costs in the automotive industry,” said Titikorn Lertsirirungsun, manager of LMC Automotive in Bangkok. “This partnership means VinFast will not have to start from scratch manufacturing, a dealer network, and a supply chain.”
EDAG develops first EV for Vietnam Vinfast
VinFast is investing $1.5bn in the first phase of a program to make cars and mopeds at a greenfield factory on Cat Hai island near Haiphong in north-east Vietnam. The car brand has bought in technology and services from Germany’s BMW, Italian design house Pininfarina, and supplier groups Bosch and Siemens, among others, to produce two planned car models.
Stephen McKeever, head of sales with Ho Chi Minh City Securities, wrote in a recent note on VinGroup that it “ascribed zero value” to the VinFast car project, adding that this was “arguably generous” because of the likely scale of operating losses that would need to be incurred before it achieved the scale needed to reach profitability.
