Uber fares go through the roof over hours-long Grab outage in Vietnam

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Commuters in Vietnam and other parts of Southeast Asian got into a double whammy on Tuesday evening when they were unable to book a ride with Grab, whereas fares charged by its rival Uber skyrocketed over ‘high demand’.

Users in Vietnam reported they were unable to access the service from 6:00 pm to 8:00 pm, leaving them no other choice than to switch to Uber or hail a conventional cab or xe om (motorbike taxi).

During the outage, the app greeted its user with an error message, saying “Looks like we weren’t able to connect to our server. Please try again in a few minutes.”

Hung, a Ho Chi Minh City resident, said he could not book a ride during this period, when he was trying to travel from his home in Binh Thanh District to District 1.

He made another booking attempt using another phone but also had no success.

A screenshot showing the technical error occurring to Grab on April 3, 2018

“I tried two different smartphones using two different operating systems and eventually had to call for a cab,” Hung recalled.

Duong, who lives in Go Vap District, said she had to switch to Uber after spending nearly 45 minutes on hailing a ride via Grab to no avail.

The unexpected high demand only helped send Uber fares through the roof.

A journey from Tan Dinh Ward, District 1 to Go Vap District, which normally costs about VND54,000 ($2.37), spiked to VND133,000 ($5.83) and VND160,000 ($7) during the Grab outage.

The unexpected high demand only helped send Uber fares through the roof.

A representative of Grab Vietnam admitted on Tuesday night that their booking system encountered an error.

Drivers were also unable to gain access to the app.

According to Hai, a GrabBike driver, the app has suffered from repeated errors over the last few days. For instance, the app was filled with Thai language for a whilte on Tuesday morning, he elaborated.

The technical error appeared to occur not only in Vietnam but also in other Southeast Asian countries.

Grab Singapore updated on Twitter that the problem had been fixed at 11:00 pm on Tuesday, about five and a half hours after it first announced the issue.

In response to queries from The Straits Times, Grab said in a statement on Wednesday that the outage was “due to problems with our underlying infrastructure”.

Grab has recently announced that it will take over Uber operations in Southeast Asia. Uber will be entitled to 27.5 percent of Grab’s shares in return.

Uber will be exiting Vietnam on April 8.

The Ministry of Industry and Trade previously ordered Grab to provide all information and documents regarding its deal with Uber prior to Tuesday, April 3.

However, the request has not been met, thus competent authorities do not have enough grounds to determine the legitimacy of the transaction.

Grab currently offers services in more than 190 cities across Singapore, Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Myanmar and Cambodia.

Source: Tuoi Tre News

​Subscribers shocked to see foreign channels removed from Vietnam cable TVs

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A wide range of popular foreign channels such as HBO, Discovery, AXN and Disney have been removed from two Vietnamese cable providers, angering subscribers, particularly those who already paid for year-long subscription.

The change took effect on Sunday, when subscribers of both VTVCab and its partner NextTV, a cable TV service by military-run telecom giant Viettel, complained that they were unable to find their favorite channels.

“I was confused at first as to why HBO was replaced with Box Movie, Cinemax became Hollywood Classics, and AXN turned into Blue Ant Entertainment,” said Phuong, a NextTV subscriber from Hanoi.

Phuong said she had not been made aware of the change and had no need for the new choices of channels.

Among the list of foreign channels removed from VTVCab and NextTV services are Animal Planet, Discovery, National Geographic, BBC Earth, Disney Channel, Star Movie, HBO, Cartoon Network and other sports channels, according to customers.

Two engineers set up VTVCab for a home TV in Vietnam. Photo: VTV

“When I turned on my TV on Sunday, [these channels] were all gone with no prior announcement,” said Tuan, a VTVCab subscriber from Hanoi.

Some customers felt they had been ‘deceived’ by the cable TV providers, as they had paid for a whole year of subscription in advance and would not be able to immediately stop using the services.

VTVCab: Be patient!

VTVCab general director Bui Huy Nam told Tuoi Tre (Youth) newspaper the change had been announced multiple times since March 20, through different means such as on social media, online portals and on its TV channels.

“We didn’t make the announcement through text messages and email because not many of our customers subscribe to our email newsletter and the number of messages allowed to be sent a day is also limited,” Nam explained.

“In addition, some customers tend to ignore our texts thinking they are spam,” he added.

Bui Huy Nam, general director of VTVCab. Photo: Tuoi Tre

The replacement of the foreign channels with new ones was to “offer subscribers new choices” in the context that all cable TV services in Vietnam were offering essentially the same variety of channels, a VTVCab representative told Tuoi Tre.

“Moreover, foreign cable TVs always make use of this fact to force local providers to obtain broadcasting rights at a high price, knowing we had no other options,” the representative explained.

Such popular channels do not allow the streaming of their programs on mobile devices and through over the top (OTT) distribution, which limits VTVCab’s expansion to streaming platforms.

The change would allow VTVCab and NextTV subscribers to watch their favorite channels on the go, an entirely free add-on service that will become available in May, the representative said.

The new movie channels are also promised to offer Vietnamese viewers a much wider choice of box office hits, with at least twice the number of new movies becoming available each year compared to HBO or Cinemax, according to VTVCab.

“Subscribers should understand that we are watching the content of a channel, not its logo,” the VTVCab representative said.

“I think our customers should be more patient with the change. If they experience the new channels long enough, I believe they will start to see their appeal over the old ones.”

By Tuan Son (Tuoi Tre News)

Vietnam tourist numbers rise 30% in March with influx from China, S.Korea

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Vietnam’s international arrivals rose substantially in March, principally thanks to an influx of Chinese and South Korean holidaymakers.

More than 454,000 Chinese nationals spent their holidays in Vietnam last month, up 52.6 percent compared to the same period last year, according to the latest data from the Vietnam National Administration of Tourism.

South Korea arrivals to the Southeast Asian country also jumped 67.4 percent year on year to 273,000.

Numbering more than 1.34 million, tourists from both China and South Korea yielded an increase of 33.6 percent compared to March 2017, accounting for the largest share by country of arrivals in Vietnam.

In the Jan-Mar period, Vietnam’s tourist numbers topped 4.2 million, representing a healthy 30 percent rise from a year earlier. Vietnam received a record 12.9 million international visitors in 2017.

The rise in international arrivals was attributable to the Vietnamese government’s policy conducive to visa application and convenient direct flights.

But industry insiders are concerned that Chinese arrivals being on the upswing does not necessarily translate into proportionately expected financial benefits.

A large number of Chinese visitors traveled to Vietnam on ultra-cheap tour packages known as zero-dollar tours, in which they bought at shops that evade paying taxes.

This prompted a local government to implement a crackdown.

Facilities at many tourist locations across Vietnam are poor, which is compounded by illicit practices like price gouging and counterfeit goods trading.

By Thai Xuan (Tuoi Tre News)

Fetus dies as abortion pills mistakenly given to mother in southern Vietnam

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Health authorities in the southern province of Tien Giang confirmed on Monday that a local mother had lost her first fetus early last month after taking abortion medicine a staff member of a local medical center administered to her by mistake.

On March 7, Huynh Thi Cuc, a 32-year-old mother who was in her seventh week of pregnancy, was advised to stay in the medical center of Tan Phuoc District since she was at risk of miscarriage.

Two days later, prior to her discharge, doctors prescribed her Miprotone, a type of embryo-nourishing medication.

But a staff member at the dispensary provided her with Misoprostol, used for abortion purposes, after discovering that the embryo-nourishing medication was out of stock.

Later in the day Cuc was rushed back to the center after bleeding from the consumption of two Misoprostol pills.

As doctors at the center said they needed to continue watching her conditions, the family immediately took her to the Tien Giang Gynecological Hospital, where they were told the fetus had died from abortion medicine.

It was discovered later that on March 9, besides Cuc, two other pregnant patients at Tan Phuoc medical center were also mistakenly given Misoprostol. One of them had yet to use it, while the other safely received urgent treatment after the consumption.

A report by the medical center admitted that some of its staff members have failed to follow the regulations on checking and reviewing in terms of drug prescription and dispensing.

The report also said that a piece of software from the center had not been updated on medication information.

Le Van Duc, the center’s director, supposed that the program and the resemblance in name between Misoprostol and Misoprostol were to blame.

Vietnam’s Ministry of Health have ordered the Tien Giang health department to verify the incident and promptly submitted a report to it by 5:00 pm this Thursday.

The ministry also required staff members implicated in the case to be honest in providing information and the medical center to punish those who are responsible without leniency.

In January a pregnancy woman in the south-central province Quang Ngai also lost her six-week-old fetus after a midwife mistakenly gave her an abortion pill instead of pregnancy support drugs.

By Thai Xuan (Tuoi Tre News)

​How any Vietnamese can take action to transform Vietnam’s tourism

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Few first-time visitors to Vietnam return for a second trip, a situation experts think can be improved if each citizen sees themselves as a ‘tourism ambassador’ and parts ways with dishonest business practices.

With years of experience in the tourism industry, Tran The Dung, deputy general director of Vietnam’s The He Tre travel agency, said he had witnessed countless acts by local people that are slowly driving tourists away.

“A box of mung bean cakes that costs VND25,000 [US$1.10] in Hanoi can be sold for three times the price just 100 kilometers from the capital’s center,” Dung said.

Some souvenir stores offer a ludicrous revenue split for tour guides as an incentive for leading customers to their business, at the expense of inflated item prices.

Foreign tourists are smart shoppers, Dung said, and would not purchase an item if they think they are being charged more than the good’s worth.

In the long run, this short-sighted conduct only discourages foreigners from returning to the country and hurt everyone’s business.

Foreign tourists ride bicycles in Hoi An, located in central Vietnam. Photo: Tuoi Tre News

In addition, Vietnam’s short-term tourism planning often means attractions are unprepared for large numbers of visitors.

The fact that service quality offered at a destination often plummets with the growth in tourist numbers is part of the reason why Vietnam’s tourism fails to renew itself despite having natural and cultural conditions to its favor.

Dual pricing and clingy vendors are all problems that experts agree can be easily fixed if citizens are aware they are hurting their own business by not seeing further than their noses.

“I’ve once witnessed a shop owner being criticized by fellow sellers for telling the real price of an item to a foreigner,” said Ho Chi Minh City resident Thuy Van, who works in the tourism industry.

According to Van, while authorities are busy adopting policies to boost Vietnam’s tourism, it is these overlooked acts by those who deal directly with tourists that are driving them away from the country.

It is necessary that each citizen is made aware that they are their own country’s ‘tourism ambassador,’ Van said, so that there would be no more stories of ugly attitudes towards tourists.


Foreign tourists watch as a guide demonstrates how honey is harvested in southern Vietnam. Photo: Tuoi Tre

Out of 90 percent of foreign visitors to Vietnam who are first-timers, only six percent returns for a second visit, according to a 2015 report by the Pacific Asia Travel Association (PATA).

Visitors often complain about the lack of entertainment services in the Southeast Asian countries, and well as poor choices of souvenirs that are unique to the Vietnamese culture.

They are also reportedly unsatisfied with Vietnam’s tax refund policy, which makes it a hassle for tourists to claim a refund unlike other popular destinations in Asia where foreign shoppers can have the tax deducted at the point of sales.

“Though I’m a tour guide, I don’t even know as a fact the steps to claim a tax refund whenever a tourist asks me for advice,” said Nguyen Thai Hung, who works for a local tour operator.

Source: Tuoi Tre News

Foreign banks step up personal banking, increase M&A activity

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The year 2017 has witnessed a series of M&A deals in the banking sector, including Shinhan Bank Vietnam’s purchase of ANZ Vietnam’s personal banking division and the transfer of HCM City branch from Commonwealth Bank of Australia (CBA) to VIB.

The year 2017 has witnessed a series of M&A deals in the banking sector, including Shinhan Bank Vietnam’s purchase of ANZ Vietnam’s personal banking division and the transfer of HCM City branch from Commonwealth Bank of Australia (CBA) to VIB.

The latter, in which VIB bought a division of a foreign bank, was unprecedented in Vietnam. CBA HCM City Branch began its operation in 2008, and now has 22,000 clients.

Meanwhile, Techcombank bought a stake from HSBC, a big shareholder of Techcombank in the last 11 years.

Standard Chartered Bank is considering the divestment from Asia Commercial Bank (ACB).

There have been many M&A deals that some analysts thought were signs of foreign banks leaving Vietnam. However, the deals are just moves to adjust their business strategies.

HSBC’s CEO Pham Hong Hai commented that the finance market in Vietnam is very competitive and some foreign banks have to reconsider their strategies and use investment capital in the most effective way.

Retail banking

In July 2017, United Overseas Bank Ltd from Singapore officially established its 100 percent foreign owned bank in Vietnam after an unsuccessful attempt to take over GP Bank.

HSBC Vietnam has strong retail banking division

There are 9 wholly-owned foreign banks operational in Vietnam under licenses granted by the State Bank. In addition, there are 41 foreign credit institutions, most of which are foreign bank branches, set up to serve businesses from their home countries, and some of them are paying attention to retail banking.

Shinhan Bank Vietnam is from South Korea, one of the biggest foreign direct investors in Vietnam, with relations with South Korean invested enterprises. Shinhan Bank wants to join the retail banking market and the quickest way to do this is to take over an existing network.

Shin Dong Min, CEO of Shinhan Bank, said the personal banking sector in Vietnam would develop strongly in the time to come amid the strong support of fintech and the strong recovery of the economy.

Digital banking services with high security technologies will be the key products of banks.

In personal banking, according to Hai, Vietnamese banks have the advantage in large networks and long-lasting relationships with local communities. Meanwhile, foreign banks’ advantage lies in diverse products and international relations.

Source: VietNamNet

Vietnam’s sex industry and the sticky subject of legalizing it

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‘Sex workers should have the right to make a living, contribute to society, and enjoy welfare in terms of healthcare and education.’

Vietnamese officials have expressed their concerns about the complicated nature of recognizing prostitution as a job.

Despite being illegal in Vietnam, prostitutes can still be found all over the country’s biggest cities, and the rackets controlling them have come up with countless ways to dodge the law with authorities seemingly helpless to stop the industry’s unchecked development.

Data may vary, but figures from the International Labor Organization (ILO) suggest that there are nearly 101,300 sex workers, including 72,000 women, in Vietnam.

“We must recognize that prostitution is an existing issue in our society. Sex workers should have the right to make a living, contribute to society, and enjoy welfare in terms of healthcare and education,” said Cao Van Thanh, vice head of the Social Evil Prevention Department under the labor ministry at a recent meeting in Hanoi.

A new law on prostitution is necessary to help ensure social security, he said, adding that the law should focus on ensuring sex workers’ access to social security.

Echoing Thanh, Tran Van Dat, vice head of the Department of General Affairs on Legislative Development under the Ministry of Justice, said prostitution should be considered a legitimate profession. “The state should legalize prostitution and allow sex workers to operate in certain areas to manage the industry and minimize the transmission of sexual diseases,” he said.

An ILO study in 2016 said sex workers were some of the most vulnerable people in Vietnam as they have to deal with regular police raids and persistent fear of theft and violence.

A full-time worker usually works 10 to 12 hours each day, and women provide services to between six to 10 clients on average, but sometimes up to 30 per day. Male workers serve between three and 10 clients each day, a workload considered “heavy” by many pimps interviewed by the ILO.

Legislators should start working on the law in 2019 and it should and come into effect in 2021, Dat said.

Agreeing with the legalization of prostitution, Nguyen Xuan Lap, head of the Social Evil Prevention Department, said local authorities are collecting opinions on establishing regulated red-light districts in certain special economic zones.

However, it is very difficult to recognize prostitution as a profession, he said.

“Under the law on vocational education, local authorities would have to build standards for the profession, including a vocational training curriculum and salary levels for workers,” Lap said. “It is very complicated.”

But others have expressed reservations. Tran Chi Dung, the director of the Kien Giang Province’s tourism department, said: “This is a sensitive matter.” Vietnam is planning three special economic zones including one in Kien Giang’s resort island Phu Quoc.

Gambling and prostitution have long been considered forbidden vices in Vietnam, but the government has adopted a more lax attitude towards them in recent years.

In 2013, Vietnam abolished compulsory rehabilitation for sex workers in favor of fines no higher than $100.

Some 70 countries in the world have legalized prostitution outright, including Australia and Germany. According to a report by the United Nations Development Program, sex work has been decriminalized in many Southeast Asian countries as police turn their focus on arresting pimps and brothel owners instead of the prostitutes themselves.

Source: VnExpress

As Uber leaves, ride hailing apps enter new period

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Uber, Grab and Easy Taxi spent big money to fight for market share in Vietnam. But after five years, two of them have left the playing field.

On April 21, Thai An would have been working as a taxi driver for Uber Vietnam for two years. He was the head of Bitex Pro, a team of UberMoto drivers in the Bitexco Tower area in district 1, HCM City.

Six months ago, Bitex Pro merged with another team to form a community of 186 members, called ‘Driver Team’ with the aim of supporting and protecting each other from rivals.

However, the two-year anniversary will never come, because Uber notified drivers that from April 8, the service will run on Grab’s technology platform.

Uber has sold its business in Southeast Asia to the Singaporean rival Grab. Following the deal, Grab will take over Uber’s operations and assets in eight countries: Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Prior to that, Grab Vietnam had sent a message to the community of users, informing them about the successful deal.

The ride hailing app market was first exploited five years ago, in December 2013, Easy Taxi, a well known app in Brazil at that time, came to Vietnam.

However, Easy Taxi came to Vietnam too soon, when the e-hailing and shared economy remained unfamiliar concepts for Vietnamese.

In February 2014, Grab arrived in Vietnam. And in June 2014, Uber came.

When the market heated up in 2015, when the competition between traditional taxi and Grab and Uber became stiff, Easy Taxi unexpectedly left the market.

The failure of Easy Taxi was attributed to a lack of money. Analysts commented that money will determine the result of the game.

Alexander Le, who was managing director of Easy Taxi in Vietnam, said in August 2014, that Easy Taxi had spent nearly $1 million by that time just to run sale promotions.

Spending $1 million after nine months of operation, Easy Taxi was optimistic about its business in Vietnam. It planned to expand after it successfully called for $40 million worth of capital from the Russian Phenomen Ventures and German Tengelmann Ventures.

According to the General Department of Taxation, by October 2017, both Grab and Uber had taken a loss in Vietnam. Grab, which has VND20 billion in legal capital, had incurred a loss of VND1 billion.

Source: VietNamNet

TP Bank Expects a $1 Billion Market Value After Vietnam Listing

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Tien Phong Commercial Joint Stock Bank (TP Bank) expects its market capitalization to rise to least $1 billion in the fourth quarter after the scheduled listing this month, according to Chairman Do Minh Phu.

The Hanoi-based lender, known as TPBank, plans to sell about a 15 percent stake to investors via a private placement and issue 28 percent of dividend and bonus shares during the last three months of the year, Phu said in an interview in his office Monday. TPBank expects to raise its registered capital to 8.5 trillion dong ($372 million), up from its current 5.84 trillion dong, this year through the shares issuances, he said.

Tien Phong Bank will list 555 million shares at an initial price of 32,000 dong on April 19 on the Ho Chi Minh City Stock Exchange, which will value the lender at about $781 million. The benchmark VN Index has risen 21 percent this year, the best performer in Asia, prompting companies to sell shares to the public or start trading on the exchanges.

“We think the market will continue rising,” Phu said. Vietnam’s bank stocks have been the VN Index’s best performing sector, rising 37 percent this year through March 30, according to data compiled by Bloomberg.

“As the market conditions are very favorable now and bank stocks are also running very well, listing at this time is good,” said Dang Tran Hai Dang, head of research at Vietinbank Securities JSC.

TPBank expects pretax profit to double this year to 2.2 trillion dong with total assets increasing 17 percent to 140 trillion dong, according to the chairman. The lender aims to keep non-performing loans below 1 percent this year, compared with the government’s sector-wide target of below 3 percent.

Source: Bloomberg

Mountain train from Sa Pa to Fansipan station opens

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Muong Hoa, Vietnam’s longest mountain rail route developed by Sun Group, opens on March 31, connecting Sa Pa Town and the existing cable station to Fansipan Peak.

The 2km rail route starts from MGallery Hotel in Sa Pa Town and ends at the cable station to Fansipan Peak, promising a spectacular journey for tourists.
The two-carriage train can travel at a maximum speed of 10m per second and serve up to 2,000 guests per hour.

It will shorten tourists’ travel time from 20 minutes by car over risky mountainous roads to four minutes by train through valleys, viaducts and tunnels offering beautiful views of surrounding villages as well as nature.

The two carriages were designed and produced by Swiss company Garaventa. Each carriage is 20m in length and 3m wide, weighs 25 tonnes and can carry 200 passengers at once.

The carriage has classic European interiors with antique lights, ceiling fans and huge glass windows.

At the Muong Hoa Cable Station, tourists will continue to take the cable route over Hoang Lien Son range to reach Fansipan Peak, the top of Indochina, at a height of 3,143m.

The new rail route and the world’s most modern three-rope cable car system, Fansipan Sapa, measuring 6,292.5m in length – which was opened to the public on February 2, 2016 – will complete service at the Sun World Fansipan Legend tourism complex.

Located 350km northwest of Hanoi, Sa Pa town in the northern mountainous province of Lao Cai is 1,600m above sea level. The town is dominated by the Hoang Lien Son mountain range which features Indochina’s highest mountain of Fansipan at 3,142 m above sea level.

Sa Pa has many natural scenic sites such as Ham Rong Mountain, Thac Bac (Silver Waterfall), Cau May (Rattan Bridge), Bamboo Forest and Ta Phin Cave. The hill town is home to six main ethnic minority groups, including Kinh, Hmong, Dao, Tay, Day and Xa Pho with various traditional festivals and unique cultural practices, especially the Bac Ha market and Sa Pa love market.

The resort town was recognised as a national tourism site in December 2017.

 

Source: VNA

Most Southeast Asia stocks gain; Vietnam closes at all-time peak

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Vietnam shares ended at an all-time high on Monday, while most other Southeast Asian markets posted gains as broader Asian stocks climbed on the first trading day of the quarter.

Vietnam stocks rose 1.9 percent to close at an all-time high of 1,196.61, helped by financials and real estate stocks.

Joint Stock Commercial Bank for Foreign Trade of Viet Nam and real estate firm Vingroup JSC climbed 5 percent each, with Vingroup setting a fresh closing record.

Vietnam’s steep 21.6 percent rise this year, building on last year’s 48 percent gain, has made it Asia’s most expensive market in price-to-earnings terms.

Philippine shares recovered from early losses, closing up 0.8 percent, on strength in industrials, as trading resumed after the holidays on Thursday and Friday.

Financial stocks fell after a rights issue of Bank of the Philippine Islands was priced at a 23.5 percent discount to the stock’s close on Wednesday. The stock ended 1.7 percent lower in the session.

However, the Philippine market turnover was weak as investors and traders continue to return from the Easter break, said Luis Limlingan, managing director, Regina Capital Development Corp.

Thai shares gained about 0.3 percent as PTT Global Chemical PCL rose 2.1 percent and Kasikornbank ended 1.4 percent higher.

Thailand’s annual headline inflation rate picked up in March, but missed forecasts and was below the central bank’s target range, giving policymakers leeway to keep monetary policy loose to help economic growth.

Singapore shares edged 0.1 percent higher on real estate and industrials, with Jardine Matheson Holdings Ltd climbing 0.9 percent.

Indonesian shares also rose, boosted by consumer staples and consumer discretionary stocks.

Data showed Indonesia’s annual inflation rate accelerated in March compared with a month earlier, but remained well within the central bank’s target range.

Astra International Tbk PT climbed 3.4 percent, while Telekomunikasi Indonesia (Persero) rose 1.9 percent.

The index of the country’s 45 most liquid stocks gained 1.4 percent.

Meanwhile, Malaysian shares slipped 0.3 percent on losses in telecom stocks and financials, with Malayan Banking Bhd shedding 0.8 percent.

 

Source: Tuoitrenews

Itochu positions Vietnam as textile production hub

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Raises stake in Vinatex with eye on Europe

Itochu has increased its ownership of a Vietnam state-owned textile company with an eye toward turning the country into a textile export hub for Europe amid rising labor costs in China.

The Japanese trading house spent about 5 billion yen ($46.9 million) to lift its stake in Vietnam National Textile and Garment Group, or Vinatex, to nearly 15%, becoming the second-largest stakeholder after the Vietnamese government. The company already had a roughly 5% interest, acquired in 2015. It is rare for a foreign company to own more than 10% of a state enterprise in Vietnam.

Vinatex operates about 200 sewing factories in Vietnam. It invested nearly $200 million over the past three years to add facilities for thread and cloth production. The company now handles everything from material production to sewing.

Since its 2015 investment, Itochu has collaborated with Vinatex on suits, shirts and functional undergarments for cold weather, for instance. It plans to boost production of high-performance apparel in Vietnam and export the output to Japan, Europe and the U.S. Itochu may have Vinatex produce such items as sportswear through collaboration with materials makers.

Itochu exports a little over 60 billion yen worth of apparel from Vietnam a year, with half of that produced by Vinatex. The company aims to increase outsourced production and raise exports to 100 billion yen by 2021.

Vietnam has a free trade agreement with the European Union, and is also participating in the Trans-Pacific Partnership, making it a suitable alternative as a manufacturing hub to China, where labor costs are climbing.

By YUJI OHIRA, Nikkei staff writer

Trade Tension With China, U.S. Pushes South Korea Toward Vietnam

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  • Exports to Vietnam soar as firms such as Samsung shift output
  • Vietnam set to become Korea’s second-biggest export market

Facing persistent trade tensions with China and the U.S., South Korea is deepening ties with Vietnam, which is on course to surpass the U.S. as Korean companies’ second-biggest export market.

South Korean President Moon Jae-in is looking to expand trade with Southeast Asia as one way for corporate giants such as Samsung Electronics Co. to diversify production bases and export markets. Seoul sees the U.S. under President Donald Trump as an increasingly demanding and unreliable trade partner, while tensions with China over the U.S. Thaad missile-defense system have dragged on for more than a year.

Korean companies have long built factories in Vietnam but the Thaad dispute has made Vietnam more attractive as a production base and an export market, said Kim Ill-san, a director at the Ho Chi Minh City branch of the Korea International Trade Association.

One result is that South Korea’s exports to Vietnam rose by nearly half in 2017 alone, and have more than doubled over the past three years. Vietnam is now expected to become South Korea’s No. 2 export market by 2020, according to the trade association.

“Korea mostly sells intermediary and capital goods to Vietnam, but as Vietnam’s economy grows, there will be bigger room to sell consumption products,” Kim said.

Growing Profile

Vietnam expected to overtake U.S. as destination for South Korean exports

Vietnam Growing Profile

In a meeting on Monday explaining his March visit to Vietnam, Moon said growing trade protectionism and trade conflict between U.S. and China could hurt the Korean economy, and he urged the country to prepare. Finance chiefs from Korea and Vietnam agreed to meet annually to expand economic cooperation, the Korean ministry said in a separate statement.

Companies like Samsung and Lotte Group are leading the way as Korean investment in Vietnam, once focused on labor-intensive sectors such as textiles, increasingly goes into electronics manufacturing, services and retail.

South Korea is now the biggest foreign investor in Vietnam, with total direct investment reaching a record-high $7.4 billion through the first 11 months of last year, according to the Korea Trade-Investment Promotion Agency. And it overtook the U.S. as Vietnam’s second-largest trading partner last year. About a third of Korea’s shipments to Vietnam are semiconductors and displays destined for electronics production lines, the trade-promotion agency said.

With a fast-growing economy and a young population, Vietnam also offers an attractive market for retailers. Its economy expanded 7.4 percent in the first quarter from the same period a year earlier, and a third of its population is aged 15 to 34.

In the retail sector, Lotte Group, which came under fire in China over its role in the Thaad deployment, is seeking to sell its hypermarket stores there, yet plans to increase the number of retail stores in Vietnam by more than six-fold by 2020 — to 87 from 13. E-mart Inc., Korea’s largest operator of discount stores, is building a second store in Vietnam after withdrawing from China due to poor sales.

Shock Absorber

South Korea’s investment is helping fuel growth and prosperity in Vietnam. Samsung says it employs 100,000 people at its plant in Hanoi, while the number of its affiliate companies and suppliers is estimated to be around 300.

A Samsung Electronics plant in Bac Ninh Province, Vietnam.Photographer: Linh Luong Thai/Bloomberg

Speaking in Hanoi last month, Moon described the growing relationship with Vietnam as a win-win deal.

“About 5,500 Korean companies are now doing business in Vietnam,” Moon said. “One million Vietnamese workers have good jobs, and Korean companies are growing fast thanks to competent and diligent Vietnamese workers.”

Those ties look set to deepen. During Moon’s visit to Vietnam, the two countries and their companies signed 18 memoranda of understanding. It’s part of what Moon calls his New Southern Policy, strengthening connections with members of the Association of Southeast Asian Nations while reducing economic and diplomatic reliance on China and the U.S.

To be sure, expanding trade and production in Vietnam will only provide a limited buffer against Trump and Beijing, particularly if trade tensions worsen further. Many of the products South Korean companies are making in Vietnam are destined for the U.S. and China.

“Vietnam and Asean can’t be alternatives for the U.S. and China, but they are new, complementary markets to prepare against shocks in the two big economies,” said Kwak Sungil, a director at the Korea Institute for International Economic Policy, a government-affiliated think tank.

By Jiyeun Lee, Bloomberg

Experts demand gov’t inspection into notorious Hanoi urban rail line

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The Chinese-funded project has just had its launch date postponed for the fifth time.

Experts in Vietnam have called for a government inspection into an infamous Chinese-funded urban railway line in Hanoi, after the project manager last week asked to have its launch date delayed for another three years.

Since construction of the 13-kilometer Cat Linh – Ha Dong line began in 2011, its completion has been put off five times, totaling six years of delay.

Dr. Pham Sy Liem, vice president of Vietnam Construction Association, put the repeated delays down to a lack of capital, which in turn could be attributed to erroneous initial estimates or mismanagement during the project’s development.

Either way, Liem said, the Ministry of Transport must take charge of launching a thorough inspection into the project to determine how its development capital went off the roof and who are to blame for such inefficient use of funds.

The Cat Linh – Ha Dong urban railway line commenced construction in October 2011 with an initially approved capital investment of US$552.86 million, partially funded by China’s official development assistance (ODA).

In early 2014, the project’s capital investment was raised to $868.04 million, forcing Vietnam to take an additional ODA loan of $250.62 million from China.

The Vietnam Railway Authority, under the transport ministry, is the project developer, whereas the China Railway Sixth Group, a subsidiary of construction conglomerate China Railway Group, is the EPC (engineering, procurement, and construction) contractor.

Under an EPC contract, the contractor designs the installation, procures the necessary materials, and builds the project.

A worker works on the construction site of the Cat Linh – Ha Dong urban railway line in Hanoi. Photo: Tuoi Tre

According to Liem, the project developer must take the highest responsibility in making sure things go on schedule, as the Chinese contractor can’t keep putting off finishing the railway line without permission from Vietnamese management authorities.

Dr. Tran Dinh Thien, president of the Vietnam Institute of Economics, said it was important that the cause for repeated delays of the urban rail line be determined, instead of allowing such absurdity to happen time and time again.

“Postponements of such key projects only lead to cost overruns and many other immeasurable damages to the economy, and slow down our country’s economic growth as a whole,” Thien said.

Fifth time’s not a charm

The Cat Linh – Ha Dong line had been scheduled for official launch in June 2015, meaning construction was initially expected to less than four years.

However, in 2014 it was announced that the project’s launch would be delayed until 2016 with an additional cost of over $315 million.

In early 2016, the transport ministry and its Chinese contractor agreed on a new launch date in December the same year, before correcting themselves that the line would not be launched until early 2017.

In February 2017, the urban railway line’s completion was postponed for another year, with a new launch set for February 2018.

Last week, the project manager submitted a proposal for the line to begin a test run in September, setting the date for an official launch to be in 2021.

The test runs would include both no-load and loaded tests, according to a transport ministry report submitted to the government for approval.

Authorities would rely on test results to make necessary technical adjustments and determine a specific launch date for the entire line.

There is no knowing whether this postponement would be the last.

Workers work on the construction site of the Cat Linh – Ha Dong urban railway line in Hanoi. Photo: Tuoi Tre

According to calculations made in May last year by the project manager, the rail line project was already paying at least VND1.2 billion ($53,000) in loan interests for each day of delay from the initial schedule.

But there could be less visible economic damages as well, experts say.

If the line had been put to use in 2015, residents in Hanoi could have gotten used to the public transport by now and traffic pressure on the Vietnamese capital could have already been relieved.

The saying that ‘third time’s a charm’ seems to have lost its charm on the people of Vietnam, who deserve an answer from responsible authorities for the continuous delays.

 

Source: Tuoitrenews

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