The average room rate for five-star hotels in Vietnam in 2017 recovered from a 2.2 percent decline from the previous year, picking up 4.2 percent to 107.6 USD, according to a recent survey by US-based audit, tax, and advisory service provider Grant Thornton.
Four-star hotels experienced a similar trend, seeing their rates climb 1 percent to 75.2 USD last year, the Hotel Survey 2018 by Grant Thornton revealed.
This year’s report marks the 15th consecutive year of the US firm conducting the comprehensive research on high-end hotels and resorts in Vietnam.
According to the survey, Vietnam welcomed 86 million domestic and international visitors in 2017, an increase of 19 percent from 2016. To accommodate the increasing arrivals, a large amount of investment was pumped into the country’s hospitality industry.
The revenue per available room (RevPAR) continued to go up in both star categories, with a 7.6 percent rise at four-star hotels and a 10.2 percent rise in five-star hotels. The RevPAR growth last year is lower than that of 2016 at four-star hotels, while much higher in the five-star category.
Revenue structure varied between the northern, central, and southern regions. In the south, revenue from added services increased while that from rooms dropped. Visitors spent more money in dining services in central and southern Vietnam than in the north. In addition, domestic tourists appeared to spend more at hotels and resorts in the north than foreigners.
The survey also found that holidaymakers and visitors travelling in a group accounted for 60 percent of guests at luxury hotels. Those on business trips slight rose by 0.5 percent.
Travel agencies and tour operators remained the largest booking channel for four-star and five-star hotels, making up 33 percent of the booking market share
The changes in tax policy and investment incentives are the issues of greatest concern for foreign investors in Việt Nam.
Bui Ngoc Tuan, deputy general director of Deloitte Vietnam said on Tuesday in Hanoi, at a workshop themed “Investment incentives, related party transactions: situation and solutions,” the workshop was co-organised by Vietnam’s Ministry of Planning and Investment and the Ministry of Finance. VNS reported
“The factors impacting foreign direct investment activities often include the fluctuation of the tax rate through the years, available incentives in the country, flexibility in the application of incentive schemes, time for investment procedure and advantages and disadvantages of administrative investment procedures,” Tuan said.
The Vietnamese Government continues to make policy adjustments toward a flexible and transparent orientation to create the most favourable conditions for foreign investors to enhance their national competitiveness, Tuan said.
The tax system reform strategy for the 2011-2020 period has brought achievements, said Nguyen Thu Thuy, a representative from the Taxation Policy Department of the Ministry of Finance.
Under the reform, tax policies create a fair and equitable environment without discrimination between different economic sectors, forms of ownership and taxpayers.
However, Thuy said, many foreign invested enterprises (FIEs) are taking advantage of strong investment incentives, such as land rent, Corporate Income Tax (CIT) and Personal Income Tax (PIT), to transfer prices and profits.
An analysis of financial statements of FIEs from 2012 to 2016 shows that the number of FIEs reporting losses is between 44 per cent and 51 per cent.
At the same time, the increase in scale of investment and business activities from these FIEs reporting losses is higher than the increase in the number of FIEs reporting losses, which shows that the problem of transfer price in the FDI sector is increasing and becoming more complex, Thuy said.
Besides the price transferring activities of FIEs from Vietnam to abroad, there are also cases of the backward transfer of profits (from abroad to Việt Nam) of some large FIEs enjoying high incentives in CIT rates and CIT exemptions and reduction periods.
“This is shown by the data that the average return on equity (ROE) of FIEs in some sectors over the years has always remained very high, such as electrical components computer, peripherals, telecommunications and software, with ROE before tax more than 30 per cent.”
There should be a control mechanism to limit the FIEs reporting losses or losses in capital that still continue to invest in expanding operations in order to enjoy incentive tax, Thuy added.
Transfer pricing is an integral part of global trade, hence it cannot be avoided, said Thomas McClelland, General Director of Deloitte Viet Nam.
“Transfer pricing is not only about margins and benchmarking analysis, it also requires business performance assessments,” McClelland said.
He added that tax authorities need to understand the business realities and then take an appropriate course of action. They also need to enforce basic compliance first rather than cherry picking taxpayers for audit.
The national legal system needs to be internationalised in order to promptly catch up with international trends. For example, more bilateral treaties should be signed, he said.
“If Vietnam currently does not have mechanisms in place to measure the impact of their incentives, it is strongly advisable that a monitoring and evaluation system (M&E) be implemented,” said Wim Douw, a senior expert for trade and competitiveness policy at the World Bank.
Such a system should be based on clearly defined policy objectives and would track the performance of both the costs and benefits of the incentives offered.
The strong rise of online sales has brought great opportunities to the transport industry, especially light cargo transport.
In the competition for market share, technology is a great competitive edge.
In March, Ninja Van, the South East Asian last-mile logistics company, announced its official operation in Vietnam after a two-year trial.
Phan Xuan Dung, chief representative of Ninja Van Vietnam, said 35 million people are often buying goods online and the figure is expected to increase to 42 million by 2021, offering opportunity for Ninja Van to provide delivery solutions to online sellers.
Nguyen Tran Hieu, managing director of Bac Ky Logistics which joined the market in 2009, has increased its capital to VND173 billion and scaled up its business.
In late 2017, UPS Vietnam enhanced services in 10 provinces/cities, cutting transportation time for imports/exports from Asia to one day and time for imports/exports from Europe to two days.
Ninja Van, which has more than 300,000 orders a month, has become a partner of big players in the e-commerce sector, such as Lazada, Sendo and Tiki.
The logistics companies have also spent big money on technology.
In late January, Ninja received investments to expand its business in Vietnam. Dung said the company now has over 1,000 deliverymen.
With an increasingly high number of orders, Ninja Van has to use technology algorithms to manage and optimize the system and delivery.
With the technology, Ninja Van allows goods owners to access the management system, enabling them to do order posting, order management and shipment tracking.
They can also schedule receipt of goods. In addition, customers can easily track the order in real time on the website or contact Ninja Van’s customer services.
To become more competitive, Bac Ky Logistics in early May began deploying the Oracle Transportation Management Cloud, using IoT Fleet Management to manage waterway and domestic inland transportation.
With the solution, Bac Ky Logistics has the ability to automate the planning of the transportation and manage delivery, thus heightening transparency and service speed and optimizing the cost. The technology platform helps the company mobilize vehicles in an effective way, improve the billing process, and choose shipment sub-contractors.
The company management officers can check vehicles’ current positions as well as drivers’ behaviors, thus anticipating breakdowns and troubles.
Meanwhile, based on real-time data, Bac Ky’s drivers and officers on the spots can make the right decision in different cases.
State Bank of Vietnam on Wednesday adjusted up its reference exchange rate between Vietnamese dong and U.S. dollar by 7 Vietnamese dong to 22,647 Vietnamese dong per U.S. dollar.
With the current trading band of plus or minus 3 percent, the ceiling exchange rate is 23,326 Vietnamese dong per U.S. dollar, and the floor rate is 21,968 Vietnamese dong per U.S. dollar, said the State Bank of Vietnam.
Meanwhile, listed rates at big commercial banks in Vietnam went up slightly against Tuesday. Vietcombank raised both rates by 5 Vietnamese dong, buying the greenback at 23,005 Vietnamese dong per U.S. dollar and selling at 23,075 Vietnamese dong per U.S. dollar.
Rates at Bank for Investment & Development of Vietnam remained unchanged at 23,005 Vietnamese dong per U.S. dollar for buying and 23,075 Vietnamese dong per U.S. dollar for selling.
Last week, the reference exchange rates saw one up and two downs with total magnitude of 8 Vietnamese dong and 20 Vietnamese dong, respectively.
According to the central bank, as of June 11, the reference exchange rate rose 0.63 percent against the end of 2017, while the average rate offered by commercial banks advanced 0.47 percent.
Police in Vietnam on Tuesday arrested a former chairman of one of the country’s largest mobile carriers and a senior official of the Ministry of Information and Communications on allegations of economic mismanagement, as the communist-led government widens a crackdown on corruption.
Le Nam Tra, former chairman of state-owned Mobifone Corp. and Pham Dinh Trong, head of the ministry’s enterprise management department, were accused of “violating regulations on state capital management and usage, causing serious consequences,” the Ministry of Public Security said in a statement.
The arrests of Tra and Trong came after the government accused Mobifone of overpaying for a 95 percent stake in a loss-making private pay TV provider, causing losses to the state budget.
Mobifone Corp., one of Vietnam’s three largest mobile carriers by subscription, bought the stake in Audio Visual Global JSC (AVG) for nearly 8.9 trillion dong (US$386.30 million) in late 2015.
A plan to sell a stake in Mobifone has been touted as one of the most anticipated in Vietnam’s privatisation drive, but has never materialised.
The government earlier this year said AVG was making losses at the time of the purchase, with accumulated losses standing at 1.63 trillion dong (US$70.75 million) as of March 31, 2015.
The government said in a separate statement earlier this year that it plans to sell a stake in Mobifone in an initial public offering in 2019, adding that Sweden’s Comviq had shown interest.
Calls to Mobifone and the Ministry of Information and Communications seeking comment went unanswered.
The Ministry of Public Security said in Tuesday’s statement it was carrying out further investigation into the case.
Tuesday’s arrests come amid a corruption crackdown in Vietnam that has seen several senior government officials and executives of state-owned enterprises arrested and jailed.
Earlier this year, Vietnam jailed former Politburo member Dinh La Thang for 31 years for financial irregularities at PetroVietnam, formally known as Vietnam Oil and Gas Group.
Thang, 57, who denied any wrongdoing at his trial, was the highest-level politician to have been jailed in Vietnam for decades.
New vehicle sales in Vietnam declined by 3.7% to 21,913 units in June from already weak year-earlier sales of 22,750 units, according to member data released by the Vietnam Automobike Manufacturers Association (VAMA).
Despite strong economic growth in the country, estimated at 7.1% in the first half of 2018, the vehicle market is struggling to recover from last year’s decline.
Vehicle importers and distributors are still adjusting to regulatory changes introduced by the Vietnamese government at the beginning of the year, including new minimum standards for emissions, warranties and aftermarket services.
The government also cut import tariffs to zero on built-up vehicles originating from neighbouring ASEAN countries and cheaper imports are eventually expected to lead the market higher once procedures are improved.
Total vehicle sales in the first six months of 2018 were down by 1.9% at 123,060 units from 125,490 units in the same period of last year, driven lower by a more than 20% drop in commercial vehicle sales to 40,470 units from 51,049 units a year earlier.
Sales of pickup trucks, many of which are imported from Thailand, were almost 49% lower at 5,888 units, according to the association, while passenger vehicle sales increased by almost 11% to 82,590 units.
Truong Hai (Thaco) group, the local assembler and distributor of brands such as Kia, Mazda, Peugeot and Hyundai and a significant player in the commercial vehicle segment, reported a 5.3% year-on-year rise in group sales to 50,397 units in the first half of 2018.
Mazda sales alone were up by over 27% to 16,502 units, while Kia sales rose by close to 16% to 13,781 units.
Toyota remained the leading vehicle brand in the country over the six-month period, albeit with sales falling by more than 13% to 25,750 units, while Honda’s sales more than doubled to 11,181 units. Ford’s sales fell by over 33% to 9,579 units and GM’s were just over 9% lower at 5,197 units.
Kong: Skull Island director Jordan Vogt-Roberts revealed in a new profile that he was almost killed in a club attack by gangsters in Vietnam last year.
The filmmaker, 33, opens up about the attack in a lengthy interview for GQ discussing the extent of his injuries following a random attack in Saigon, Vietnam in September 2017. Vogt-Roberts was jumped by two Canadian-Vietnamese gang members after he exchanged contact information with a woman who had previously turned down their advances.
Kong: Skull Island (2017), which starred Brie Larson, Tom Hiddleston and Samuel L. Jackson, was partially shot in Vietnam.
In security footage described in detail in the article, Vogt-Roberts is seen being attacked repeatedly by two men and their friends in the middle of a night club. The director spent 10 days in the hospital suffering a concussion, fractured skull and hemorrhaging. The worst injury came when a bottle was broken over his head.
“This was not a fight. I was almost killed as were others,” Vogt-Roberts said in the profile. “This was a f—ing assault by insane gangsters.”
CHIANG RAI, Thailand (Reuters) – Rescuers freed the last four of 12 Thai boys and their soccer coach from deep inside a flooded cave on Tuesday, a successful end to an extraordinarily perilous mission that gripped the world for more than two weeks.
The “Wild Boars” soccer team, aged between 11 and 16, and their 25-year-old coach became trapped on June 23 while exploring the cave complex in the northern province of Chiang Rai when a rainy season downpour flooded the tunnels.
“We are not sure if this is a miracle, a science, or what. All the thirteen Wild Boars are now out of the cave,” the Navy SEAL unit, which led the rescue, said on its Facebook page, adding all were safe.
British divers found the 13, hungry and huddled in darkness on a muddy bank in a partly flooded chamber several kilometers inside the Tham Luang cave complex, on Monday last week.
After pondering for days how to get the 13 out, a rescue operation was launched on Sunday when four of the boys were brought out, tethered to rescue divers.
Another four were rescued on Monday and the last four boys and the coach were brought out on Tuesday, prompting rounds of spontaneous applause as ambulances and helicopters passed.
Celebrations were tinged with sadness over the loss of a former Thai navy diver who died on Friday while on a re-supply mission inside the cave.
“I want to tell the coach thank you so much for helping the boys survive this long,” said one Chiang Rai woman wearing a traditional dress, tears brimming in her eyes.
“I remember all of their faces, especially the youngest one. He’s the smallest one and he doesn’t have as much experience as the others… I felt like he was one of my own children and I wanted him to come home.”
The last five were brought out of the cave on stretchers, one by one over the course of Tuesday, and taken by helicopter to hospital.
Three members of the SEAL unit and an army doctor, who has stayed with the boys since they were found, were the last people due to come out of the cave, the unit said.
Police and military personnel use umbrellas to cover a stretcher near a helicopter and an ambulance at a military airport in Chiang Rai on July 9, 2018. (Photo: AFP/Lillian Suwanrumpha)
Officials did not comment on the rescue mission as it took place, so details of the final day of the rescue and the condition of the last five to be brought out were not immediately known.
The eight boys brought out on Sunday and Monday were in good health overall and some asked for chocolate bread for breakfast, officials said earlier.
Two of the boys had suspected lung infections but the four boys from the first group rescued were all walking around in hospital.
Volunteers from as far away as Australia and the United States helped with the effort to rescue the boys. U.S. military personnel also helped.
U.S. President Donald Trump hailed the rescue.
“On behalf of the United States, congratulations to the Thai Navy SEALs and all on the successful rescue of the 12 boys and their coach from the treacherous cave in Thailand,” Trump said on Twitter.
“Such a beautiful moment – all freed, great job!”
Authorities did not reveal the identity of the boys as they were brought out, one by one. Parents of the four boys rescued on Sunday were allowed to see them through a glass window at the hospital, public health officials said on Tuesday, but they will be quarantined for the time being.
The boys were still being quarantined from their parents because of the risk of infection and would likely be kept in hospital for a week for tests, officials said earlier.
Reporting by Panu Wongcha-um, Juarawee Kittisilpa, Patpicha Tanakasempipat, John Geddie and James Pomfret in CHIANG RAI, and Aukkarapon Niyomyat, Panarat Thepgumpanat, Amy Sawitta Lefevre and Chayut Setboonsarng in BANGKOK; Writing by James Pomfret; Editing by Robert Birsel and Nick Macfie
Ho Chi Minh City has been listed among Asia’s ten best destinations to visit in the year ahead by global travel guidebook publisher Lonely Planet, which revealed its 2018 ‘Best in Asia’ list on Tuesday.
For this third edition of the annual list, Lonely Planet’s in-house Asia experts have named the “eclectic” and “vibrant” city of Busan in South Korea as the number one destination, while the jeweled architecture and ancient cities of Uzbekistan are in second place.
In third comes Vietnam’s Ho Chi Minh City, “a supercity that somehow keeps getting cooler.”
“Aging apartment blocks are being colonized by vintage clothes stores and independent coffee shops, innovative breweries are fuelling one of the best craft beer scenes in Southeast Asia, and…eclectic venues are strengthening the local music scene,” Lonely Planet writes in its introduction of the southern metropolis on the list.
“Add in long-standing attractions [such as] The War Remnants Museum and a pioneering street food scene…and this buzzing Asian megalopolis is in no danger of going out of style,” the description goes on.
Ho Chi Minh City, also widely known by its former name of Saigon, is the Vietnam’s largest city by population.
It is also one of the country’s most popular tourist destinations among global travelers, having welcomed over six million foreign visitors in 2017, according to the municipal tourism department.
An aerial view of Ho Chi Minh City, Vietnam. Photo: Tuoi Tre
Other destinations featured in this year’s Best in Asia list include Western Ghats (India), Nagasaki (Japan), Chiang Mai (Thailand), Lumbini (Nepal), Arugam Bay (Sri Lanka), Sìchuān Province (China), and Komodo National Park (Indonesia).
Lonely Planet’s Asia-Pacific media spokesperson Chris Zeiher regards Asia as a “vast and diverse continent” for anyone dreaming of an escape.
“Our experts have combed through thousands of recommendations to pick the best destinations to visit over the next 12 months…this is a line-up to inspire a multitude of travelers – whether they’re based in Asia, or maybe they’ve already visited some of the region’s heavy-hitting destinations,” he said.
The 2018 list is available online, with accompanying articles for each destination, at lonelyplanet.com/best-in-asia.
Lonely Planet, based in Tennessee, the U.S., is the world’s leading travel guidebook publisher, having printed more than 145 million guidebooks over the past four decades and grown a large global community of travelers.
Ho Chi Minh City has been listed among Asia’s ten best destinations to visit in the year ahead by global travel guidebook publisher Lonely Planet, which revealed its 2018 ‘Best in Asia’ list on Tuesday.
For this third edition of the annual list, Lonely Planet’s in-house Asia experts have named the “eclectic” and “vibrant” city of Busan in South Korea as the number one destination, while the jeweled architecture and ancient cities of Uzbekistan are in second place.
In third comes Vietnam’s Ho Chi Minh City, “a supercity that somehow keeps getting cooler.”
“Aging apartment blocks are being colonized by vintage clothes stores and independent coffee shops, innovative breweries are fuelling one of the best craft beer scenes in Southeast Asia, and…eclectic venues are strengthening the local music scene,” Lonely Planet writes in its introduction of the southern metropolis on the list.
“Add in long-standing attractions [such as] The War Remnants Museum and a pioneering street food scene…and this buzzing Asian megalopolis is in no danger of going out of style,” the description goes on.
Ho Chi Minh City, also widely known by its former name of Saigon, is the Vietnam’s largest city by population.
It is also one of the country’s most popular tourist destinations among global travelers, having welcomed over six million foreign visitors in 2017, according to the municipal tourism department.
Other destinations featured in this year’s Best in Asia list include Western Ghats (India), Nagasaki (Japan), Chiang Mai (Thailand), Lumbini (Nepal), Arugam Bay (Sri Lanka), Sìchuān Province (China), and Komodo National Park (Indonesia).
Lonely Planet’s Asia-Pacific media spokesperson Chris Zeiher regards Asia as a “vast and diverse continent” for anyone dreaming of an escape.
“Our experts have combed through thousands of recommendations to pick the best destinations to visit over the next 12 months…this is a line-up to inspire a multitude of travelers – whether they’re based in Asia, or maybe they’ve already visited some of the region’s heavy-hitting destinations,” he said.
The 2018 list is available online, with accompanying articles for each destination, at lonelyplanet.com/best-in-asia.
Lonely Planet, based in Tennessee, the U.S., is the world’s leading travel guidebook publisher, having printed more than 145 million guidebooks over the past four decades and grown a large global community of travelers.
Vietnam’s PM has asked the information minister to oversee final resolution of the imbroglio over an inaccurate map of Vietnam carried by Facebook.
Prime Minister Nguyen Xuan Phuc has also asked Minister of Information and Communication Truong Minh Tuan to make sure steps are taken to prevent such mistakes in the future.
Earlier this month, the social networking giant wrongfully depicted Vietnam’s Hoang Sa (Paracel) and Truong Sa (Spratlys) archipelagoes as part of China.
Facebook’s error came at a time when the international community had backed criticism of China’s recent actions in the disputed South China Sea, which Vietnam calls the East Sea.
The map not only showed the islands as part of China, a live version displayed the name “Sansha” over the South China Sea.
“Sansha” is the name of a city China has illegally and unilaterally established in the disputed waters that includes Vietnam’s Paracel and Spratly Islands, as well as the Scarborough Shoal, which is claimed by the Philippines.
A Facebook representative responded that there was some “confusion” over the map, that it was a technical error without political intention.
Facebook also stated that all its maps were provided by third-party companies like OpenStreetMap and HERE Maps.
Later on, the social media giant removed the two islands from its map of China and issued a press release apologizing for the mistake. It said a patch to fix the error has been deployed globally.
Vietnam has consistently affirmed that it has full legal basis and historical evidence to assert its sovereignty over the Paracel and Spratly Islands.
China seized the Paracel Islands from South Vietnam by force in 1974, and has been illegally occupying a number of reefs in the Spratly Islands since 1988.
After two months postponing the increase in service fees for ATM cash withdrawals as required by the central bank, some commercial banks have now resumed the plan, announcing that a new service fee framework will apply from the middle of this month.
Three big banks Vietinbank, Vietcombank and BIDV will officially increase service fees for ATM cash withdrawals from VNĐ1,100 to VNĐ1,650 for each transaction in their system from July 15.
Earlier, commercial banks had to cease their plans to hike service fees as required by the State Bank of Việt Nam (SBV). The SBV on May 9 directed commercial banks to stop increasing ATM cash withdrawal fees at that time after the public expressed their disagreement over increased fees on ATM transactions and e-banking services at many banks.
According to SBV, it regulates a fee framework for ATM cash withdrawals and commercial banks must follow it to set their own fees. The banks’ recent fee hike doesn’t violate the SBV’s regulation.
The central bank’s Circular 35, which came out in 2012, allowed banks to collect ATM fees from March 2013. The maximum fee of VNĐ3,300 for each transaction has been permitted since 2015 but most banks have kept their fees at either VNĐ1,100 or VNĐ1,650.
However, SBV noted, for any fee adjustments, besides making information transparent, banks should look into the interests of customers to ensure a balance between the two sides.
E-wallets on the rise
As banks have hiked service fees on ATM withdrawals as well as online and mobile banking, e-wallet service providers are applying free services to attract customers.
Nguyễn Ánh Hồng in Hà Nội said that she used e-wallet Vi Viet to pay online for utilities, internet, and her mobile phone bills every month. She even used this app to pay when going out with friends or family. Recently, as numerous banks had moved to adjust service fees, she had used the e-wallet more frequently.
Local media have quoted leaders of some banks confirming that customers are turning towards e-wallets to pay bills, shop, and transfer money. E-wallets also provide some extra services to compete with banks’ internet and mobile banking services. Notably, it is very easy to register new accounts via smartphone.
Bùi Quang Tín, a banking expert, told vietnamnet.vn that the 132 million cards issued by banks did not mean banks can control the market. To date, 25 non-bank institutions had been providing intermediary payment services.
While Vietnamese banks were still busy collecting fees, payment companies were not, because they strove for a long-term business strategy, Tín said, adding that they had calculated thoroughly when accepting losses in the first phase of operation.
If payment companies could attract more users, they would have huge capital to use which could bring bigger benefits than the fees they collect from services.
“The competition in the payment market is getting fierce. If banks don’t change their strategy, they will lose their share in the home market,” Tín warned.
There are now about 20 e-wallet service providers in Việt Nam, including well-known names such as Momo, Ngan Luong, VTC Pay and Payoo. However, there is no official report from the SBV about the number of Vietnamese e-wallet users. Service providers estimate that 10 million e-wallets are in use in Việt Nam, which is a modest figure compared with the great potential of the market, analysts say.
Fuelled by the fear of Grab acquiring their member firms, the taxi associations from the three regions proposed the Ministry of Transport (MoT) to issue solutions to stop business co-operation contracts between Grab and traditional taxi firms.
Notably, these taxi associations asked MoT to cancel business co-operation contracts between Grabtaxi and its traditional taxi firm partners before the new decree, which will replace the existing Decree No.86/2014/ND-CP, is issued.
Besides, these taxi associations required MoT to manage Grab’s operations as if it was a traditional taxi firm.
Furthermore, these taxi associations also proposed MoT to decrease business conditions (including lowering fares and lower the frequency of periodic health checks for the taxi drivers) so that they can increase their competitive capacity.
These proposals were made after traditional taxi associations grew worried that if the authorities do not bring Grab’s activities under stricter management, it will continue to dominate the Vietnamese taxi market.
This is not the first time that taxi associations object against Grab. Notably, in March, before Uber left Vietnam, taxi associations requested temporary policies to hamper Uber and Grab while local authorities build a new decree on business and conditions for transportation business by automobile.
The taxi associations of Hanoi, Ho Chi Minh City, and Danang submitted documents to Prime Minister Nguyen Xuan Phuc to protest the government’s decision to extend the pilot programmes on using technology applications to connect and manage transport activities until the new decree replacing the existing Decree No.86/2014/ND-CP comes into effect.
According to the three taxi associations, local authorities’ extending the pilot ride-hailing service programme (which came into effect in January 2018) instead of tightening the operations of Uber and Grab would disturb the Vietnamese transport market and make it difficult for traditional taxi firms to maintain operations.
Along with taxi associations’ protests, traditional taxi firms have merged with each other to fight Grab.
Most recently, taxi operator Mai Linh Group will merge Mai Linh Central JSC and Mai Linh Northern JSC in an effort to streamline its cumbersome operations and concentrate resources to compete with Grab.
Besides, the representative of Vietnam Taxi Company (Vinataxi) announced the plan to merge with ComfortDelgro Savico Taxi—the taxi brand that had to suspend operations in March due to heavy competition.
Backed by ComfortDelGro Corporation Limited from Singapore, the merger between Vinataxi and Savico Taxi may help them overcome the competition with Grab and other ride-hailing applications.
As startup enterprises are commonly suffering losses, with examples of firms running in the red for an entire decade, Tiki may have a long three years ahead.
Repeated losses
After seven years, Tiki has accumulated nearly VND600 billion ($26.43 million) in losses, including VND308 billion $13.56 million) in 2016 and VND284 billion ($12.5 billion) in 2017.
Its revenue in 2016 reached VND62.4 billion ($2.74 million), up six times against 2015. However, the e-commerce platform took losses of nearly VND179 billion ($7.9 million) in the same year due to overly high sales expenses. Accordingly, sales expenses in 2016 were over VND222.5 billion ($9.8 million), tripling against 2015.
In fact, Tiki JSC only reported revenue from services, as well as e-commerce trading recorded by its subsidiary Tiki Trading. In 2016, the subsidiary’s revenue hit VND817 billion ($36 million) with the gross margin of 9 per cent. Despite this, Tiki Trading suffered a loss of VND41 billion ($1.8 million) as sales expenses exceeded the business’ profit.
Dry spell may not be over
Suffering losses to succeed later is quite common for startups, while startups reporting profit from the get-go are really rare. Investors pouring money into the firms commonly expect returns in 5-10 years.
Tiki CEO Tran Ngoc Thai Son also stated that the losses are part of the firm’s long-term development plan. Tiki is expanding its scale of operations by investing in infrastructure, warehouses, human resources, and technology.
Maybe due to the firm belief in their development potential, Tiki and other e-commerce platforms receive high valuationes. In 2016, Tiki was appraised at VND1 trillion ($44 million) despite only being in business for six years. At the time, VNG Group poured VND383 billion ($17.02 million) to acquire 38 per cent in Tiki for VND104,000 ($4.57) per share. Thanks to this, Tiki recorded a surplus of nearly VND340 billion ($15 million) in late 2016.
Different from other firms, the value assessment standards for startups like Tiki revolve not around profit, but market share, revenue, per customer purchase value, and the rate of returning customers.
According to Financial Times, Tiki has annualised gross merchandise value—an indicator by which ecommerce sites measure their sales—of about $240 million, and delivers across Vietnam.
Due to the satisfying revenue despite the losses, Tiki has even received foreign investment. In the middle of January 2018, Chinese-based JD.com poured VND1 trillion ($44 million) into the e-commerce platform.
In the world, many of the contemporary giants look back on a difficult first decade. These include US-based Tesla Motors and sandwich chain Charleys Philly Steaks. For seven-year-old Tiki, three more years of losses is well within the realm of possibilities.
Retail chains specializing in products for mothers and children now have to compete with private shops and vendors, whose low cost is a great advantage.
VI Group has announced it has pumped capital into Kids Plaza. The group, which is managing $400 million worth of assets, has become the minority shareholder of the retail chain, but declined to give detailed information about its ownership ratio.
Analysts commented that the investment in Kids Plaza will lead to cutthroat competition among the three big players in the market. The Kids Plaza chain has the lowest number of shops among the three.
Prior to that, Bibomart received investment from ACA Investments belonging to Sumitomo Group. Meanwhile, Con Cung, the leading retail chain, got support from Daiwa-SSIAM II co-managed by Daiwa and SSIAM.
Trinh Lan Phuong, chair of Bibomart, once said the mother-and-kid product market value had exceeded $7 billion, triple the figure predicted by FTA, a market analysis firm.
With millions of babies born every year and the increasingly high income of parents, the mother-and-kid market has had a two-digit growth rate in the last few years.
While the products available in the market are mostly imports, distribution is being undertaken mostly by domestic companies. The number of distribution chains bearing foreign brands in Vietnam remains modest.
“At this moment, I cannot see any foreign owned chains which are big enough to change the face of the market,” said Luu Anh Tien, founder of Con Cung JSC, which owns Con Cung and ToyCity retail chains.
This is the largest chain of its kind, with 318 shops across the country, including 288 Con Cung shops and 30 Toy City shops. Tien said 130 shops were opened in 2017, a part of the plan to open more than 1,000 shops by 2020.
Bibomart was established in 2006, but only since 2014 has the retail chain begun its expansion. To date, it has 140 shops, mostly in Hanoi and HCMC.
Meanwhile, Kids Plaza has 74 shops in seven cities, two-thirds of which are in Hanoi. Having relatively high revenue of VND390 billion in 2016, the profit made by Kids Plaza was VND500 million only.
However, BiboMart, Con Cung and Kids Plaza are not the only influences in Vietnam’s market. They have many other rivals such as e-commerce floors, social networks and private-run shops.
An analyst said Vietnamese mothers are buying more items via social networks. The retail cost via the channel is low, partially because sellers don’t pay tax. This allows sellers to sell products at more competitive prices.
