A Chinese fishing boat is held by Vietnamese coastguards for illegally entering Vietnam’s waters, as seen in a file photo by VnExpress.
The act was to back China’s nine-dash line which claims most of the South China Sea as its own, the official said.
Vietnam’s maritime security has seen “complicated” developments in the first few months this year with the penetration of many Chinese ships in Vietnamese waters, a top defense official said on Tuesday.
Many Chinese fishing vessels accompanied by special forces were casting nets within Vietnamese waters, only 40 sea miles from Ly Son Island off Vietnam’s south central coast, said Senior Lieutenant General Le Chiem, Deputy Minister of National Defense.
“There were times when several tens of fishing boats, under the support of Chinese law enforcement forces, declared that the waters was theirs and chased Vietnamese fishers away,” Chiem said at the ongoing summer session of the legislative National Assembly in Hanoi.
In April, Chinese fishing boats showed up illegally near Vietnamese coast thrice and sometimes they were only 30 nautical miles from Da Nang, which is considered Vietnam’s third most important city after Hanoi and Ho Chi Minh.
Chiem described that as an act of “invading” Vietnamese waters and spreading propadanda in an attempt to support China’s nine-dash line policy, which violates Vietnam’s waters sovereignty and has been dismissed by the international community as illegal. The U-shaped line is a demarcation line that claims most of the 3.5-million-square-kilometer South China Sea, including large swathes of Vietnam‘s Exclusive Economic Zone, as China’s territory.
“We were determined to persuade them to leave and chase them away from the area,” Chiem said. The official said Vietnamese fishers have also violated the territories of nearby countries, calling for efforts to raise their sovereignty awareness.
Vietnamese officials have been on edge about China’s recent moves in the South China Sea, which is known as the East Sea in Vietnam.
The Chinese air force announced on May 18 that several of its bombers, including the long-range, nuclear strike capable H-6K, had carried out landing and taking off drills at an island airfield in the Paracel Islands. The drills came weeks after U.S. news network CNBC reported that China had installed anti-ship cruise missiles and surface-to-air missile systems on Fiery Cross Reef, Subi Reef and Mischief Reef in the Spratly Islands.
Vietnam has spoken against both moves, demanding that China respect its sovereignty and end both activities, which it said has “increased tensions” in the region.
HCM City at night. Light pollution has worsened in recent years, experts say. — VNA/VNS Photo
HCM CITY — Việt Nam is faced with increasing outdoor light pollution, which can be harmful to physical and mental health, according to local experts.
Professor Lê Huy Bá, former head of the Institute of Environmental Science, Engineering and Management at the HCM City University of Industry, said that many areas in the country’s large cities have abused the use of artificial light at night, causing light pollution which is “silently affecting people’s health and lives”.
In many alleys of HCM City, for instance, many 0.6-1.2m fluorescent and halogen lights are used to light streets. Because the lampshades are made from aluminum, they cannot prevent harsh glare from the lights.
In a study about artificially lit surfaces of the Earth at night, scientists from Germany, Spain, US and the UK used the first-ever calibrated satellite radiometer designed for night lights.
The results of their study, published in Science Advances journal in November 2017, showed that Earth’s artificially lit outdoor area grew by 2.2 per cent per year from 2012 to 2016, with a total radiance growth of 1.8 per cent per year.
Lamps on HCM City’s many streets are installed improperly and the light is so strong that it enters people’s homes, according to Vietnam News Agency reporters who spoke with many people in all areas of the city.
Some lights are too bright because of very high voltage, which could be dangerous for people on the streets.
In addition, LED lights on outdoor advertising signs and displays on Hàng Xanh, Điện Biên Phủ and other streets also contribute to light pollution in the city. Signs and displays have different sizes of lights as well.
The website Health.com cited a 2016 study conducted by the Stanford Sleep Epidemiology Research Center in the US that found nighttime light exposure in urban areas was three to six times more intense than in small towns and rural areas.
People with high outside light exposure slept less per night — a difference of 10 minutes a night, on average — than people with low light exposure, the center found.
At night, light throws the body’s biological clock and circadian rhythm out of whack, disturbing sleep, according to Harvard University’s Medical School website. Research shows that it may contribute to the causation of cancer, diabetes, heart disease and obesity.
Experts at the Harvard Medical School said that people should use dim red lights for night lights. Red light has the least power to shift circadian rhythm and suppress melatonin.
People should also avoid looking at bright screens two to three hours before going to bed.
People who work a night shift or use electronic devices at night should consider wearing blue light-blocking glasses or install an app that filters the blue/green wavelength at night, the experts suggested.
Exposing yourself to lots of bright light during the day will boost your ability to sleep at night, as well as your mood and alertness during daylight, they said.
Effect on plants, animals
Research in environmental fields shows that plants do not grow well with excessive artificial light.
In 2010, residents in the communes of Thanh Phú, Mỹ Yên, Tân Bửu in Long An Province’s Bến Lức District along the HCM City-Trung Lương Expressway complained about their rice paddy fields that they say were damaged by high-voltage lighting systems on the expressway.
Scientists say that animals such as owls and bats move to other areas to live when the light is too bright.
According to Bá, the country should issue a regulation limiting the number of hours when advertising signs and displays on streets and high-rises can be lit.
More trees should be planted to scatter the light, Bá said, adding that public lights should have lower voltage.
People should also use fewer fluorescent lights and use a timer to turn off lights when they are not needed, Bá said. — VNS
Thai investors are expected to increase their presence in Vietnam through capital contribution and M&A deals, analysts say. This will pose a challenge for Vietnamese goods.
The first Thai investors came to Vietnam in 1992 and poured $50 million into Vietnam after the first two years.
However, the Thai investment has become stronger in the last few years. Thai investments can be seen in nearly all important business fields.
A report found that Thai FDI (foreign direct investment) to Vietnam began increasing significantly in 1995, after Vietnam officially joined ASEAN.
By March 2018, Thailand had registered $9.3 billion worth of FDI capital to implement 490 projects.
Thailand now ranks 10th among 126 countries and territories which have FDI in Vietnam.
Thai investors are expected to increase their presence in Vietnam through capital contribution and M&A deals, analysts say. This will pose a challenge for Vietnamese goods.
In March, Thai investors registered total capital of $30.16 million, including $17 million injected into capital contribution deals.
Most recently, Nawaplastic Industries, a subsidiary of SCG, bought more shares of Binh Minh Plastics (BMP), raising its ownership ratio in BMP to 50.9 percent. With the ownership ratio of over 50 percent, BMP is now in Thai hands.
SCG, a conglomerate from Thailand, has invested in 21 companies in Vietnam, up to billions of dollars. However, SCG is still eyeing more businesses for its M&A plan.
An analyst commented that most of the big M&A deals made recently included Thai investors. These included the acquisition of 51 percent of Sabeco shares by TCC Holdings. It was TCC Holdings which took over Metro Vietnam and renamed it as MM Mega Market. The group took over Phu Thai Group, is holding 19 percent of Vinamilk shares and owns many properties in Vietnam.
TCC and SCG are not alone. Analysts say that many other Thai investors are eyeing the Vietnamese market.
The participants at a 2017 M&A Forum all mentioned Thailand’s ‘quick-win’ strategy. Thai businesses have capital and are willing to pay a lot to buy Vietnamese enterprises with great development potential.
The Vietnamese enterprises targeted by Thai investors are mostly corporations which hold large market share. In general, retail and consumer goods are the business fields that Thai investors target. Besides, they have also been eyeing other promising industries.
Vietnam has remained an attractive destination for foreign investors with total foreign direct investment FDI capital hitting $36 billion in 2017, a record over the past 10 years.
Some Vietnamese businesses are trying to make domestic brands better known internationally through franchise contracts. If they can find partners, they will be able to accomplish their goals more quickly.
RedSun ITI, the company which owns Thai Express, Khao Lao and King BBQ, has officially brought its Truly Viet restaurant chain to Australia.
The menu of the first restaurant in Melbourne, Australia set by RedSun ITI and its Australian partner has four traditional dishes – goi cuon (summer roll), pho (noodle served with beef or chicken), banh my (Vietnamese sandwich) and bun cha (rice noodle with grilled fatty pork).
RedSun ITI has also teamed up with a Lao partner to develop King BBQ chain there, specializing in South Korean dishes.
Prior to that, Goi & Cuon, the owner of Wrap & Roll, franchised the brand to MSJ Gourmet Group in Singapore which has opened four shops so far.
In late 2017, Redwok, the new name of Goi & Cuon, opened the second franchised restaurant in Shanghai, raising its total number of franchised restaurants in Asia to six.
It signed a franchise contract with Weilamei Shanghai and opened the first restaurant in July 2017 with investment capital of $150,000.
The restaurants in Shanghai could be the springboard for the company to conquer the world’s most populous market.
Redwok plans to open 10-12 franchised restaurants overseas.
However, the number of Vietnamese franchisers remains very modest. According to the Ministry of Industry and Trade, only a few brands are franchised, such as Pho 24, Cafe Bobby Brewers, T&T and Iced blended.
Vietnamese students in Singapore said they can find many restaurants specializing in Vietnamese dishes in the country. Nam Nam Restaurant in Singapura, for example, is always crowded and clients have to queue for their turns.
Nguyen Tuyet Nhung, director of Nanna’s, a newly established business in Singapore, said she can see great potential in the market, not only because Vietnamese dishes are favored by foreigners, but also because any business model (from kiosk to restaurant) and any dishes can be developed.
She said Singaporeans often eat out, while food courts are located everywhere, including in areas near subways.
Nguyen Phi Van, a franchise and retail expert, said that all kinds of Vietnamese products, from food to healthcare services, could reach the world through franchising. Vietnamese products and materials could be exported at values much higher than raw exports.
The number of e-banking service users had reached 81 percent by the end of 2017, according to IDG.
Meanwhile, according to the Vietnam Card Association, 132 million cards had been issued with associated services.
Vietcombank in early March announced fee increases applied to a number of services. The account maintenance fee was raised from VND8,000 a month to VND10,000.
The bank has decided to collect the fee of VND2,000 for every inner-network remittance transaction via Mobile Banking and Mobile BankPlus.
Following Vietcombank’s move, Eximbank has announced the collection of fees for transactions via monthly Internet Banking instead of annually as previously applied.
The monthly collection is VND10,000, commencing from May 7. Every month, clients will have to pay VND30,000 for SMS Banking, Internet Banking and Mobile Banking services.
Dong A Bank and VIB Bank have also begun collecting fees from services which were previously free.
Explaining their decisions, banks said the adjustment of service fees will be associated with new services with higher quality.
In early May, all four state-owned banks namely Agribank, BIDV, VietinBank and Vietcombank announced the new fees for ATM cards.
Clients will have to pay VND1,500 for every inner-network transaction of withdrawing cash from ATMs instead of VND1,000.
The representative of the Vietnam Card Association said the cost for one transaction of cash withdrawal is VND7,000-10,000, so the VND1,500 fee is still very low.
Banks’ clients said the explanations are ‘unconvincing’ and voiced strong protests against the decisions. The State Bank then asked commercial banks to stop the fee increases.
An official of the State Bank said the service fee frame was set by the watchdog agency in 2013 and commercial banks have the right to set service fees themselves, provided that the fees are not higher than ceiling levels.
“However, the State Bank’s view is that everything needs to be transparent. When banks raise fees, they have to satisfy both clients and banks, and they must give reasonable answers to the question about why they need to raise fees,” he said.
A branding expert said: “Local newspapers have reported a series of cases in which ATM card holders lost their money. Banks still have not fixed the problems with their ATMs and clients still have to queue up to withdraw cash on rush hours or Tet days.”
A local newspaper said this means that the fee increases may still be implemented.
Vietnam currently lags behind other Southeast Asian countries when it comes to financial inclusion. Can foreign players and fintech solutions fill the gap?
In Vietnam financial technology is increasing bank penetration, promoting financial services and offering the large unbanked population access to payment solutions. With a population of almost 93 million and a surging middle class, foreign banks are also keen to penetrate the market.
Asia-Pacific focused consulting firm Solidiance, in its recently published report, «Unlocking Vietnam’s Fintech Growth Potential,» credits the growth of financial services in the country to several factors.
Quickly Adapting
Among the main drivers are high rates of internet and smartphone penetration, the increasing adoption of e-wallets and a fast growing liking for e-commerce. All of which are underpinned by swiftly rising salaries and a burgeoning consumer sector.
More traditional banking services are growing in the country too with banks from more mature North Asian markets deepening their penetration. Korean institutions have been particularly aggressive in developing onshore business in Vietnam.
Technology Leap
Shinhan Bank, which acquired ANZ Bank Vietnam’s retail division in April 2017 as finews.asia reported, opened four more branches recently, bulking up its network to 30 branches. Fellow Korean lender Woori Bank will also open six more branches this year.
With a limited population and an over-banked domestic market, Singaporean banks see Vietnam as a new banking hinterland. Singapore’s United Overseas Bank received its in-principle foreign-owned subsidiary bank licence in Vietnam in 2017.
The foreign banks entering Vietnam bring with them advanced systems and growing expertise in financial technology. They are also exporting their softer skills in training and advising on the development of regulatory infrastructure.
Suspects are held at the police station after officers raided a hotel in District 3, Ho Chi Minh City in mid-May 2018. Photo: Ho Chi Minh City Police
Police officers have apprehended 71 suspects, including four foreigners, who were caught red-handed gambling inside a hotel in downtown Ho Chi Minh City.
A source close to Tuoi Tre (Youth) newspaper confirmed on Tuesday evening that the municipal Department of Police had raided Lotus Hotel, situated on Cach Mang Thang 8 Street in District 3 in mid-May, and discovered the illegal operation on the ninth floor of the building.
A total of 71 people, including four foreigners, were found gambling via poker and were then escorted to the police station.
Two of the foreigners come from the U.S., the rest from Finland and France.
About VND1 billion (US$44,000) in cash, along with relevant exhibits, was also confiscated.
Officers later initiated legal proceedings against 24 suspects for gambling and 10 others for organizing gambling. The rest were released on bail.
Initial information showed that the gambling ring was operated within a poker club managed by Bridge & Poker Saigon JSC, based in District 1.
Dang Van Quy, 45, is the legal representative of the firm.
Money and other exhibits found at the gambling ring in this photo supplied by officers
Club members are allowed to practice playing poker in a manner similar to other types of sport.In accordance with Vietnamese law, poker is considered a sport. In order to start a poker club, a permit must be granted by competent agencies.
If there is a tournament, organizers must seek permission from authorities and submit all details regarding the competition and its prizes.
Quy and his accessories took advantage of activities within the poker club to organize gambling.
In order to play, gamblers were required to transfer real money into poker chips and pay Quy 10 percent of the amount of cash they wanted to transfer.
The minimum amount was VND2 million ($88).
After four hours, players had to exchange their chips back into money.
If they wanted to continue playing, they would need to make another cash-to-chip exchange and again, pay 10 percent to Quy.
Quy admitted to earning VND30 million ($1,320) to VND50 million ($2,200) from the gambling ring on a daily basis, adding that he started the illicit operation in April.
The Sugar and Sugarcane Association has objected to the proposal by the Ministry of Finance to levy a special consumption tax of 10% on sugary soft drinks.
The Ministry of Finance has been completing and gathering opinions for the laws on a special consumption tax since late 2017. The ministry recently proposed levying a 10% special consumption tax and an increased VAT rate of 2% on sugary soft drinks, excluding dairy products.
According to the ministry, they want to curb obesity and diabetes. 25% of the Vietnamese adults are obese. The obesity rate among children under five years old went up from 0.6% in 2000 to 5.3% in 2015. This rate in HCM City was 10.8%, much higher than the world average rate of 6.9%. They also cited the World Health Organisation on the harmful effects of sugary soft drinks.
However, the Sugar and Sugarcane Association said this was not a common practice and the government must consider the impacts on the sugarcane and soft drinks industries. They said the government should levy the tax on high-fructose corn syrup sweetener which is being exempted taxes when being imported from ASEAN countries, China and South Korea.
It went on to say that only four countries in the Pacific-Asia region levy special consumption tax on soft drinks including Thailand, Brunei, Laos and Cambodia. Many other countries have dropped this tax due to its ineffectiveness such as Denmark, Indonesia and Egypt.
It also cited statistics from the World Health Organisation to prove that obesity rate still increased after soft drinks were taxed. For example, Thailand has implemented the tax for 30 years but the obesity rate among five to 19-year-old people increased from 3.1% in 2000 to 11.3% in 2016. The obesity rate among nine to 15 years old in Brunei also increased from 6.4% in 2000 to 14.1% in 2016.
According to the Sugar and Sugarcane Association, both tax and health experts can’t be sure about the effectiveness of the tax since there are many reasons that cause obesity and diabetes. Moreover, the consumption in the city, where residents with middle to high incomes live, isn’t likely to go down.
With properties priced at a discount to those in neighbouring Singapore and Thailand, Vietnam is rapidly drawing Hong Kong and China investments its way and becoming a popular investment destination.
Buyers from the mainland, Taiwan and Hong Kong last year accounted for 25 per cent of the Southeast Asian nation’s total transactions by foreign buyers, up from 21 per cent in 2016, according to data from CBRE Vietnam.
Carrie Law, chief executive of online agency Juwai.com, said that given Beijing’s ongoing controls on capital outflows, Vietnam’s relatively low prices were very appealing to Chinese buyers.
“Buyers with limited assets overseas are able to purchase properties in a rapidly growing market and diversify their investments. You can buy a 700,000 yuan (US$109,781) home in Vietnam with the money you have overseas, even if you can’t afford to buy a 5 million yuan home in Australia or the US,” she said.
“Chinese buyer demand for Vietnam properties in the first quarter of 2018 was more than 300 per cent higher than the first quarter of 2017. The country is still lower on the preference list than Thailand or Malaysia, but demand is growing,” said Law.
To capitalise on the demand, CapitaLand will launch its new mid-to-high end residential project in Ho Chi Minh City, De La SOL, for sale in Hong Kong on Saturday, with 60 to 100 square metre (645.8 to 1,076.4 square feet) units going for HK$1.8 million (US$229,321), or HK$2,800 per sq ft. This compared with HK$15,000 a sq ft in Singapore and HK$6,000 a sq ft in Thailand.
Chen Lian Pang, chief executive officer of CapitaLand Vietnam said Hong Kong remained its largest source of foreign buyers since the company launched its first project in the city in 2016.
“We have some from Singapore and mainland China but they are not in big numbers. We had sold at least 300 units to the Hong Kong market in the past two years,” he said.
The De La SOL development, scheduled for completion in the last quarter of 2020, is the Singapore-listed firm’s 12th project in Vietnam – 10 in Ho Chi Minh City and two in Hanoi. Vietnam, it said, was its third core market after Singapore and China.
The US$177 million project – located in the city’s district 4 and is similar to Hong Kong’s Sheung Wan district – comprises 482 units in three towers. It is about 10 minutes by car to the core business district, or district 1. The initial down payment is 10 per cent of the purchase price, and the remaining 90 per cent can be paid by instalments over two years starting from January 2019 to the last quarter of 2020.
“For such a price, you can only buy public housing in Singapore. Home prices in Singapore have saturated and [we are] unsure how long it will remain flat. Thailand [housing market] is oversupplied and prices are not cheap anymore,” he said.
Prices of high-end properties in central Ho Chi Minh City at US$3,000 to US$6,000 per sq m were about half of the US$7,000 to US$9,000 per sq m for equivalent properties in Bangkok, and less than 10 per cent of those in Hong Kong, said agents.
Asia’s priciest address on offer as five villas set for en bloc sale at The Peak, asking US$298 million
Vietnam, a member of the Association of Southeast Asian Nations, opened its property market to foreign investors in July 2015, long after fellow member nations Thailand and Malaysia.
Developers are allowed to sell 30 per cent of the units in each building to foreigners since the law allowing non-local residents to own apartments under a 50-year lease took effect in 2015.
Chen compared Ho Chi Minh City to Shanghai’s Pudong area from more than 10 years ago, when the area was undergoing a series of infrastructure construction including the subway system and airport terminals that when completed, helped boost property prices. Ho Chi Minh City could follow in the Chinese city’s footsteps, with home prices rising four to five times over the next 10 years, he said.
Interest in Ho Chi Minh properties has been growing among foreign buyers, even though Vietnamese bank home loans are not made available to them.
Abhinav Maheshwari, who works in Hong Kong’s finance industry, and his mainland Chinese wife paid HK$2 million for a 87 sq m apartment in the city.
“Our purchase is for investment. Given the political stability of the socialist government, we see Vietnam as having the possibility to grow just like China,” Maheshwari said.
“In the long run, we also feel it provided us diversification, instead of just holding assets in the Hong Kong currency which is pegged to the US dollar. I may think about other cities in Vietnam, perhaps Da Nang, where some of my friends have bought villas,” he said.
Hanoi’s housing market is drawing a buzz, a decade after the bust
Home prices in Vietnam have been rising in recent years, propelled by the country’s recovery from the housing slump between 2009 to 2013. They rose modestly last year on the back of a 6.8 per cent economic growth and rapid increase in direct foreign investments.
New home prices in Ho Chi Minh City increased 3.6 per cent during the year to the last quarter of 2017, and those for villas and town house rose 13.6 per cent in the same corresponding period, according to JLL.
Just as the returns are attractive in a developing market like Vietnam, the risks could also be high.
“Vietnam is a less stable market than the advanced nations over, and there may be a greater risk of property bubbles and crashes. I would advise buyers intend on purchasing in Vietnam to do their due diligence and look for properties with enduring elements of value, such as water views, convenient locations, and high-quality construction,” said Law of Juwai.
While most real estate industry insiders expected the Vietnamese property market to continue to grow in 2018, she said some feared that prices could hit bubble levels next year, especially if more land was not made available for development.
“The worst for Vietnam property market is over,” said Chen of CapitaLand, which has more than US$1 billion of assets in the country and was one of the first foreign developers to enter the market in 1994.
But he also cautioned prospective buyers to choose developers which have the financial strength to complete construction of the development and offer sound property management services.
Kingston Lai, founder and chief executive of Asia Bankers Club, a Hong Kong-based agent for overseas properties, said investors would have to pay a total transaction cost of 2 per cent of the selling price when they sell their apartments in Vietnam. But they would earn a 6 to 8 per cent rental yield in Ho Chi Minh City, compared with a lower 2 per cent in Hong Kong, Lai said.
He said foreigners were allowed to sublet and resell their properties to local and other foreign investors. “But they are restricted from buying apartments from local people who are allowed to own freehold properties.”
Ho Chi Minh City will host three continental taekwondo championships later this month.
The 23rd Asian Taekwondo Championships, the fifth Asian Taekwondo Poomsae Championships and the fourth Asian Para-Taekwondo Open Championships will be held at Phu Tho Gymnasium from May 24-28.
According to Truong Ngoc De, President of the Vietnam Taekwondo Federation cum deputy head of the organisers, the tournaments will lure nearly 700 athletes from 50 countries and territories.
Many of them including the hosts consider the tournaments as chances to warm-up ahead of the 18th Asian Games which will be held in Indonesia in August.
Powerhouses such as the Republic of Korea, Iran, China and Thailand will bring their strongest athletes to Vietnam this May.
Vietnamese hopes in the kumite (combat) events such as Ho Thi Kim Ngan and Truong Thi Kim Tuyen are ones to watch. However, De said it would be difficult to take the top podium because their rivals were the strongest in Asia and the world.
In the poomsae (performance) disciplines, coach Nguyen Thanh Huy said his players were ready to triumph after their training in the Republic of Korea recently. The artists will do their best for not only the Asian championships but also the Asian Games where poomsae is set to be held for the first time in history.
Vietnamese consumers spend more than half of their time online on mobile phones, offering significant potential for mobile marketing, but there are nuances advertisers need to take note of to better engage this audience.
The Asian country has become one of the world’s fastest growing e-commerce markets, growing 35% annually, with 65% of its population having made payments via their apps at least once. The average consumer also spends USD$62 (£46.01) online, and this figure is projected to climb to USD$96 (£71.25) by 2021, says Rohit Dadwal, Asia-Pacific managing director for Mobile Marketing Association (MMA), citing figures from eshopworld.
These growing numbers have been fuelled by Vietnam’s rising smartphone adoption and mobile usage, notes Dadwal, who urges marketers looking to target local consumers to look closely at the country’s unique traits.
In this Q&A with ExchangeWire, he explains why brands need to reassess their ad formats and campaigns and focus on Vietnam’s rural population, which accounts for 65% of the country’s total population.
ExchangeWire: Highlight key standout stats for Vietnam’s digital and mobile ad markets, and how these compare to others in the region.
Rohit Dadwal: The growing mobile penetration and data usage in urban and rural Vietnam are fuelling significant growth in mobile ad spend, estimated at USD$77.1m (£57.22m) in 2017 and doubling since 2016. It’s forecasted to grow to USD$231.7m (£171.96m) by 2021.
We’ve also seen an increase in 3G/4G penetration in Vietnam, which will help enrich user content consumption on mobile and drive further growth potential for diverse mobile ad solutions. Currently, Vietnamese users are spending 2.5 hours on their mobile phones everyday. Of this, 80% is spent online and evenly split between mobile web (browser) and mobile apps.
Mobile ad spend last year also increased from between 20% and 40% out of the total digital spend, to an average of 50% to 60% and upwards of 80% this year. This makes Vietnam one of the strongest growth market for mobile ad spending in Asia-Pacific, contributing to the region’s digital ad spend increase of a projected 45% in 2018, according to Zenith’s latest forecast.
The percentage of smartphone users in Vietnam browsing online, participating in social networks, making internet and video calls, playing mobile games, watching full-length videos, and streaming music online is also higher than the global average.
What are the growth drivers for the spikes in Vietnam’s mobile consumption and ad spend?
Global mobile connections have surpassed the global human population and will continue to increase by almost 30% to 9.1 billion connections by 2021. It has also been noted that the growth in mobile ad spend is driven by the growth of digital ad spend in general, accounting for around 24% of total media spending in 2017, compared to 16% in 2016.
The high smartphone penetration – of more than 80% in urban areas and 60% in rural areas – combined with the launch of 4G in 2017, provides consumers in Vietnam a chance to consume richer and more diverse content on mobile. While still limited, there is potential for increased consumption of video, audio, and other streaming content on mobile in the near future. For example, local platform Zing will continue to grow, as well as social platforms that provide video, audio, and streaming content such as Facebook, YouTube, and Instagram.
The potential growth for diverse mobile ad solutions, including mobile video and native advertising, follows. A growing and more engaged app usage, backed by burgeoning smartphone and mobile internet penetration, leads to a growing community who are favouring a mobile-app economy in Vietnam. The increase in 3G/4G penetration in Vietnam will help to enrich users’ content consumption on mobile and will continue with the potential growth of diverse mobile ad solutions.
What is the growth outlook for the next one to two years, and how does this compare to other growth markets in the region?
Out of the total 115.3 minutes spent online, Vietnamese consumers currently spend 80.6 minutes on mobile phones. This demonstrates huge potential in the mobile space, as most online time is spent there.
In addition, our report indicates that mobile users in Vietnam are installing an average of 33 apps on their smartphones, on par with other developing countries in the region. They also tend to install more apps than uninstall, on average.
A report by eMarketer also states that mobile phones are the most common device used to access the web in Vietnam, with over a third of the country’s population currently social-network users. It further estimates that, by 2020, 46.7 million people will be on social networks, driven by mobile phones.
As I highlighted earlier, we’ve also seen an increase in 3G/4G penetration in Vietnam and that local users spend 2.5 hours daily on their mobile phones, with time spent online evenly split between mobile web and mobile apps.
How much of their budgets are Vietnamese marketers spending on digital ads and campaigns, as well as mobile ads and campaigns?
About 50-60% of Vietnam’s digital spend is now on mobile. This figure climbs up to 80% for some brands with a target audience of mobile-heavy users. This is an impressive growth, compared to the previous year, when mobile ad spend only accounted for about 20% to 40% of total digital spend.
What nuances should marketers take note of when targeting Vietnamese mobile consumers?
First, internet speed. Despite the growth of smartphone ownership, which grew from 34% in 2014 to 60% in 2016, 3G subscription is limited to only 33% of the nation’s population. Hanoi is the exception, whith 53% in the city using 3G services.
It is important for advertisers to consider the format in which their ads are presented. Campaigns that don’t require large data consumption is recommended, as it will load quicker on mobile web and mobile apps.
Second, timing. In urban Vietnam, primetime for smartphone usage to access the internet starts at 5pm and peaks between 8pm and midnight. Understanding the hours of usage can help marketers better tailor their campaigns to more effectively reach a larger audience.
Finally, understand the rural population. Mobile is deemed very important in helping brands penetrate or expand their footprint and sales into rural areas where there is untapped growth potential, especially given that rural accounts for 65% of Vietnam’s total population.
At the same time, mobile penetration remains comparatively low at 33% despite the growth of 3G and 4G in rural areas. Hence, marketers may not be as receptive to more data-consuming formats like video.
What key challenges do mobile marketers in the country face and how can these be addressed?
Mobile consumption is nonlinear. Unlike a magazine or TV show, where content is arranged from top to bottom, mobile consumers constantly shift between content, for example, spending an average of only 1.7 seconds on each story seen on Facebook’s newsfeed. This calls for a shift in mindset when creating content made for an audience with a shorter attention span.
Apart from consumption, ad measurements are also a challenge for mobile marketers since clients are still conservative when making decisions on mobile media investments. Issues of transparency, viewability, and brand safety remain critical in digital and mobile advertising.
There are also issues of mobile inventory – both quantity and quality – and performance. Marketers often question how they can maximise its effectiveness and returns on investment (ROI) and justify business results driven by mobile advertising.
How have growing global concerns over data privacy and security impacted Vietnamese sentiments about the collection and use of their personal data?
According to a Lexicology report on data security and cybercrime in Vietnam, while the country’s data protection laws have been developed to meet international standards, enforcement can be unpredictable. This is especially true in e-commerce, where the area is rather grey and data privacy can be quite an ambiguous issue.
The pressure for more debt/equity swaps has increased as 50 percent of Vietnam’s domestic debt matures in the next three years.
In recent years, the Ministry of Finance’s (MOF) announcements on imposing new taxes or raising tax rates is no longer stirring long debates.
The 2012 Macroeconomy Report released by the National Assembly’s Economics Committee showed that in addition to an annual 2-digit ‘inflation tax’, Vietnamese have to bear the ratio of taxes and fees to GDP that is 1.4-3 times higher than other regional countries because of overlapping taxation and local business protection policies.
However, MOF still insisted on raising the environmental tax on petrol near the ceiling level in 2018.
Most recently, MOF has proposed taxing houses worth VND700 million or VND1 billion and more.
An analyst said that while GDP growth is beyond expectations, the state budget is not plentiful.
Formosa and Samsung were the two enterprises which made great contributions to the miracle GDP growth rate of 6.81 percent last year, but the tax collections from them increased insignificantly as they were both enjoying tax incentives.
The public debt in 2017 decreased to 61.3 percent of GDP, but the amount was still very high, over VND3,000 trillion. More seriously, Vietnam is among the countries with the highest debt-to-GDP ratios (up by 10 percent in 2012-2017), according to the World Bank.
For the last three years, Vietnam has been borrowing money to pay old debts. In 2016, Vietnam borrowed VND95 trillion in debt swaps. In 2017, Vietnam borrowed VND144 trillion to pay loan principal.
The report on Vietnam’s public spending prepared by the government of Vietnam and the World Bank, released in October 2017, showed that Vietnam is still under pressure that forces it to mobilize capital for rollover with 50 percent of domestic debts getting matured in three years.
As for foreign debts, MOF said that debt payment obligations will be due in 2022-2025 when many ODA loans become mature.
The analyst attributed the high spending and high debt to ineffective use of loans.
Vinashin, which was the leading shipbuilder, incurred a huge loss of VND86 trillion according to a Government Inspection’s report.
Meanwhile, 12 super projects of the Ministry of Industry and Trade incurred foreign debts of VND20 trillion.
Of the two solutions to ease the public debt burden – increasing tax collections by protecting sources of revenue, and reducing spending, Vietnam is inclining towards the second.
Vietnam plans to borrow VND195 trillion to offset overspending in 2018. The figures were VND254 trillion in 2016 and VND172 trillion in 2017.
Vietnam is among the countries with the highest selling price of cars in the world.
There are also many kinds of official taxes and fees on cars. These include the car part import tax for domestically assembled cars (assemblers pay this tax and take it into consideration when setting selling prices), import tax (paid by importers) of 50-150 percent, luxury tax at 40-60 percent, VAT of 10 percent and corporate income tax of 22 percent.
Currently, the imports from ASEAN, including Thailand and Indonesia, don’t bear import tax any more as per Vietnam commitments in FTAs. Meanwhile, the imports from non-ASEAN sources, including Europe, the US, India and Japan, still bear the tax.
To put cars into circulation, car owners will have to pay about 10 kinds of fees. These include the ownership registration fee (10-15 percent), number plate granting fee, vehicle registration fee (VND240,000-560,000), technical safety assurance certification fee (VND50,000-100,000), emission testing fee, fuel consumption testing fee, energy labeling certification fee and others.
As for road maintenance fees, car owners have to pay twice, when they register as owners of the vehicles and when going through BOT fee collection stations.
The car prices in Vietnam are among the highest in the world because of too many kinds of taxes and fees. It is estimated that the taxes and fees make up over 50 percent of the total prices.
Though the tariff on imports from ASEAN has been cut to zero percent, the selling prices still have not decreased as expected by consumers.
Car owners have been warned that they may bear another kind of tax – asset tax. The Ministry of Finance has proposed a tax of 0.3 percent or 0.4 percent on cars valued at VND1.5 billion or more.
An analyst said if the tax takes effect, it will mostly affect luxury car imports, most of which have value of over VND1.5 billion.
Decree 116, with its strict regulations, restricts car imports. And the number of car imports will decrease further if the tax is applied.
Luxury imports are mostly from Japan, the US and Germany, which are taxed 40-150 percent, depending on cylinder capacity.
Nguyen Xuan Thuy from the Ministry of Industry and Trade confirmed that some car models are 60-80 percent more expensive than in Indonesia and Thailand.
In 2017, a total of 272,750 cars were sold, according to the Vietnam Automobile Manufacturers’ Association (VAMA).
The Vietnamese Government has issued a decree, known as Decree 27, for the removal of many business regulations which will make it easier to conduct business on the internet.
Details of the decree were introduced to the public at a conference held by the Ministry of Information and Communications (MIC) on May 22.
MIC Deputy Minister Hoang Vinh Bao said that Decree 27 was adopted in accordance with the new situation and eliminates unreasonable requirements in order to support enterprises which provide internet-based services.
Specifically, several regulations concerning the provision of online games and information have been relaxed.
The time for licensing the establishment of an online information website or a social network will be cut from 15 working days to 10 working days.
Decree 27 also amends the regulations on protecting national interests in the registration and use of new generic top-level domains and stipulates the conditions for internet domain registrars in accordance with the reality.
Việt Nam’s fintech market is estimated to increase from US$4.4 billion last year to $7.8 billion by 2020, driven by rising bank penetration, according to research of Solidiance.
According to the white paper “Unlocking Việt Nam’s Fintech Growth Potential” released recently by the APAC-focused consulting firm, Việt Nam’s fintech market is poised for growth thanks to surging internet and smartphone penetration, burgeoning e-commerce sector, an increasingly supportive regulatory environment, and improvements in telecom infrastructure.
Fintech is disrupting Việt Nam’s financial services ecosystem. As the country aims to move towards a cashless society, Việt Nam’s Government targets to reduce cash transactions to 10 per cent and increase bank accounts in the population by 70 per cent in 2020.
Although bank penetration in Việt Nam is consistently growing, it still trails other Southeast Asian nations in the region. Việt Nam’s ratio of banked citizens only reached 59 per cent in 2017 while Thailand and Malaysia accounted for 86 per cent and 92 per cent respectively in the same year. As Việt Nam catches up with other neighbouring countries, increasing internet and smartphone penetration, improvements in telecommunication infrastructure (3G & 4G), and growing income levels from the middle-class have significantly given rise to opportunities in Việt Nam’s fintech space.
Among the three different fintech product segments – digital payment, personal finance, and corporate finance – digital payment solution leads the fintech service market share at 89 per cent. However, personal and corporate finance is expected to grow at a faster rate through 2025.
Việt Nam’s burgeoning e-commerce sector with growing order value has further promoted intermediary payment platforms and digital payment services. Currently, there are some 35.4 million online shopping users and it is expected to accelerate to some 42 million, accounting for 42.5 per cent of the projected population by 2021. The average spend of US$62 online will grow to $96 by 2021 and Cash on Delivery – the major means of payment – is expected to be replaced by digital payments & other modern payment methods, signifying ample opportunity for fintech firms to tap into.
According to Solidiance, although fintech has garnered considerable market attraction, barriers persist. Challenges including lack of regulatory clarity, capital limitation, management knowledge constraints, and trust issues must be observed in Việt Nam’s financial services industry. At present, the National Payment Corporation of Việt Nam (NAPAS) is the sole payment service provider for fintech and e-commerce innovation in Việt Nam. Peer-to-Peer lending platforms are growing but only banks and credit institutions in Việt Nam are legally permitted to operate in the lending business.
Furthermore, many local fintech companies are largely lacking capital resource to implement their business plan. Operational and management capabilities are hindered by knowledge constraints, especially for fintech start-ups. Building a strong reputation around an unknown brand like a start-up can be slow to build and may take significant investment, time, and energy.
