$1 billion plan taxis onto runway to upgrade int’l airports in Vietnam

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Aviation agencies want more money for new terminals and runways near top tourist destinations.

Vietnam’s aviation agency has proposed a plan to upgrade three international airports near popular tourist destinations Ha Long, Hoi An and Hue over the next three years.

The project is expected to cost VND23.3 trillion (more than $1 billion) and includes new passenger and cargo terminals, buildings and runway upgrades, the Civil Aviation Authority of Vietnam (CAAV) said in its proposal to the transport ministry.

It said the money would be spent at Cat Bi Airport, which is 70 kilometers (43 miles) from Ha Long Bay, Phu Bai Airport just outside the former royal capital Hue, and Chu Lai Airport, 77 kilometers south of Hoi An.

The CAAV said Phu Bai and Chu Lai were operating far above capacity last year, while Cat Bi, which offers the shortest route to Hai Phong, is likely to be overloaded next year.

Vietnam’s aviation market is growing at the third fastest pace in Asia-Pacific and the country is grappling with an acute dearth of airport capacity.

Aviation authorities estimated that the number of passengers on domestic flights soared 35 percent to 28 million in 2016, accounting for more than half of the total air travel in the country.

Airports across the country served more than 55 million passengers during the first seven months of this year, according to the CAAV. The number in July alone reached 9.1 million, up 12.2 percent against the same month last year.

In March, the Airports Corporation of Vietnam asked for VND32 trillion ($1.4 billion) from the state budget to upgrade large airports across the country.

Source: Doan Loan

Vietnamese boxer wins historic WBC Asia Super Flyweight title

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He knocked out his Indonesian opponent in just 45 seconds to become the first Vietnamese boxer to hold a WBC title.
Vietnamese boxer Tran Van Thao won the country’s first World Boxing Council (WBC) title on Thursday in the WBC Asia Interim Super Flyweight Championship.

Thao, who is also the first Vietnamese boxer to fight for a WBC title, won the belt in stunning style against Indonesia’s George Lumoly in Bangkok.

Thao floored his opponent with a flurry of punches early in the first round, and despite getting back to his feet, Lumoly was back on the canvas and knocked out in just 45 seconds.

Thao, 25, started boxing at the age of 16. He became Vietnam’s number 1 boxer in the super flyweight class (51-52 kilograms, or 112-114 lbs) by winning the National Boxing Championship last year. Before the fight with Lumoly, Thao boasted a professional record of 6 wins, including 4 by knockout, and no losses.

Lumoly, 26, has been a professional boxer since 2013, and entered the ring on Tuesday with a record of 8 wins, 3 draws and 1 loss.

Source: Xuan Binh

Hanoi and Saigon grab a bite on list of world’s best places for food

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Just one more reason why globetrotters should put the two biggest cities in Vietnam on their menus.

Hanoi and Ho Chi Minh City have been named among the world’s best food destinations by Caterwings, a site that offers online food ordering service in Europe.

Saigon rode in at 80th position, while Hanoi secured 87th spot, on the list of 100 destinations ranked by 20,000 food journalists and restaurant critics.

The research began by analyzing thousands of food hubs to determine the final list of the top 100 cities based on expert opinions of their culinary scenes, quality of service, diversity of cuisine, affordability for locals and visitors, vegetarian and vegan options, the ratio of restaurants per 10,000 citizens, rating of high end restaurants, hours worked at minimum wage to afford a dinner for two, the fast food outlet to restaurant ratio, and quality of street food and food trucks.

The top 10 cities on this year’s list are San Sebastian (Spain), Tokyo, New York, Barcelona, Singapore, Paris, Madrid, Lima, London and Munich.

“Every delicious destination in this index can offer inspiration to food industry professionals such as ourselves, as well as burgeoning chefs, gastronomes and globetrotters,” said Manuel Queiroz, CEO of Caterwings.

Hanoi and Saigon have received global gourmet plaudits more than a few times.

In February, The Telegraph published a list of the world’s 17 greatest cities for food, and the Vietnamese capital grabbed second spot after Tokyo.

CNN praised Hanoi’s bun cha (noodles with grilled pork) in its food show, “Anthony Bourdain: Parts Unknown”, as well its egg coffee.

The signature coffee has also appeared in stories by NatGeo and The New York Times.

The American channel also aired a short film introducing street food in Saigon that was viewed and shared thousands of times in just two days.

Dishes that have gained international recognition such as banh mi, pho and summer roll are all easy to find in Hanoi and Saigon.

Source: Minh Nga

A Guide to Investing in Vietnam

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Vietnam may be familiar to the American public, thanks to a lengthy war fought in the 1960s and 1970s, but the country has only recently began to attract the attention of investors. After shifting from a highly centralized planned economy to a socialist-orientated market economy, the country has become significantly more attractive to international investors looking to diversify into frontier markets.

In this article, we will look at Vietnam’s changing economy, how investors can gain exposure, and some important benefits and risks to consider.

Vietnam’s Changing Economy

Vietnam’s economy began as a largely agricultural feudal system until French colonization in the mid-19th century. After the country’s regions developed very different economies, they became further politically divided in 1954, with the north embracing communism and the south embracing capitalism, eventually setting the stage for the Vietnam War.

Between the 1970s and 1990s, Vietnam was a member of Comecon and heavily dependent on the Soviet Union and its allies. The dissolution of Comecon led to trade liberalization, currency devaluation, and a policy of economic development. Throughout the ensuing 1990s, tens of thousands of businesses were created and the economy grew at a rapid clip.

The growth briefly came to an abrupt halt during the Asian Financial Crisis in 1997, pushing the country to focus on macroeconomic stability rather than growth.

Since then, the economy has grown to a gross domestic product (GDP) of $219.8 billion, stable credit rating, strong exports to the U.S., and modest public debt relative to its growth rates.

The country’s economy is heavily reliant on foreign direct investment to attract capital from overseas, but that capital has been producing strong economic growth.

PricewaterhouseCoopers recently estimated that the country may be the fastest growing of the world’s economies with a potential annual GDP growth rate of 5.2%, which would make it the world’s 20th largest economy by 2050.

Investing in Vietnam with GBS

The easiest way to invest in Vietnam is using company formation services of Global Business Service (GBS) – a Business and Legal Services company in Vietnam, which provides the services for hundreds of foreign investors in Vietnam annually.

GBS offers Company formation services, Investment Consulting Services, Business and Legal services as well as Labor and Taxes services.

Investors should be aware that, some factors may make investors overexposed to financial concerns – such as legal framework or interest rate changes.

Benefits & Risks of Investing in Vietnam

Vietnam’s economy involves a number of different benefits and risks that international investors should carefully consider. While the country’s rapid growth rates may attract investors, they should carefully consider the higher risk profile, government controls, and reliance on key industries to support that growth over the long-term. These factors may make the country too risky for some portfolios.

Benefits of investing in Vietnam include:

  • Rapidly Growing Economy. Vietnam’s economy has been growing at between 4% and 8% since its recovery from the Asian Financial Crisis of 1997.
  • Self-Powered Economy. Vietnam relies on the petroleum industry for its domestic energy consumption and for export; crude oil product is expected to gradually decline.

Risks of investing in Vietnam include:

  • Socialist-orientated Economy. Vietnam may have transitioned from a centrally planned economy, but the government still controls many key industries.
  • Early Stage Market Economy. Vietnam remains at an early and vulnerable stage of its economic development and is therefore more risky than developed markets.

Key Points to Remember

  • Vietnam may be familiar to the American public, after a lengthy war fought in the 1960s and 1970s, but the country is just starting to gain investor attention.
  • Investors should keep in mind the many benefits and risks associated with investing in Vietnam, including its economic circumstances and reliance on key industries.

Any support you may need, please contact GBS via:

Vietnam’s top taxi firm wheels out motorbike service in the race against Uber, Grab

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For months, Mai Linh has been blaming the foreign ride-hailing firms for falling revenue.

Major Vietnamese taxi company Mai Linh on Monday launched its own motorbike hailing app in its latest attempt to claw back customers from Uber and Grab, the ride-hailing firms from the U.S. and Malaysia that have been outshining local cab firms.

The app, Taxi Mai Linh, is now available in Ho Chi Minh City, Hanoi and Da Nang, and has around 5,500 drivers.

Ho Huy, Mai Linh’s chairman, said what makes his company’s new service different from Uber and Grab is that the fare is kept constant at VND11,000 (48 cents) for the first two kilometers and then drops to VND3,800 per kilometer from the third kilometer onwards.

Uber and Grab charge their passengers similar rates but raise fares during rush hours and bad weather.

He also said the company will run a campaign to encourage traditional xe om drivers to join its team in an effort to avoid fights between them and tech-savvy drivers, something that both Grab and Uber have experienced.

So far, the strategy seems to be working, and many Uber and Grab drivers have shown up at Mai Linh’s door to switch sides.

“I applied because I heard Mai Linh is offering a better deal for its drivers,” said Cuong, who has worked as a GrabBike driver for over a year.

“My income has fallen because Grab now deducts up to 20 percent of the fares that drivers receive from passengers instead of 15 percent as before, and more and more people are working as GrabBike drivers, which means more competition,” he said.

Uber takes a cut of 25 percent from its drivers.

Mai Linh’s drivers will not have to hand over any of their earnings for the first two months, after which time the company will take a 15 percent share.

Mai Linh reported that it lost 6,000 employees in the first half of this year, or 20 percent of its total drivers.

Its business results did not read much better during the same period, with revenue falling more than 5 percent on-year to VND1.72 trillion ($75.8 million).

In all, Mai Linh suffered a loss of VND47.5 billion from its taxi business, twice as much as last year, the company said.

Its rival Vinasun, the biggest taxi firm in Vietnam, lost 10,000 employees in the first nine month, and its revenue in that period only reached 58 percent of the company’s annual target.

They have both pointed the finger at Uber and Grab, saying the two foreign firms enjoy preferential policies as they are classed as transport software providers which, unlike traditional taxis, are not accountable for passenger and traffic safety.

In its latest attempt to battle Uber and Grab, Vinasun has rolled out a hailing service via Facebook Messenger.

Source: Phuong Dong, Anh Tu

World Travel Awards to be held in Phu Quoc next month

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The World Travel Awards – the most prestigious awards program in the world’s travel industry – will take place in Vietnam’s Phu Quoc Island District next month.

World Travel Awards has confirmed that both Grand Final Gala Ceremony 2017 and World Spa Awards will take place on the evening of December 10 at the JW Marriott Phu Quoc Emerald Bay Resort & Spa on the pristine island of Phu Quoc – a lush, hidden paradise off the southern coast of Vietnam.

“Having taken the decision to combine both the World Travel Awards Grand Final Gala Ceremony and World Spa Awards Gala Ceremony, it is a pleasure to confirm they will both take place in early December at the incredible JW Marriott Phu Quoc Emerald Bay Resort & Spa,” World Travel Awards President Graham Cooke said.

The event will bring together many representatives from the top hotel chains and groups, resorts and spas in the region and in the world to attend the prestigious “24th World Travel Awards” and “3rd World Spa Awards”.

The decision to combine World Travel Awards Grand Final Gala Ceremony and World Spa Awards Gala Ceremony will give nominees and delegates a heightened exposure on the night, as well as increasing the networking opportunities on offer.

The event will be a showcase of both the best of Vietnamese hospitality and the global spa and wellness industry so that this is an opportunity not only for global travel industry activists to cooperate with each other but also for Vietnam to promote its image on a global scale and brig the beauty and friendliness of Vietnam to an even greater audience.

This is the second time Vietnam has been selected to host the important event of the world’s tourism industry.

Established in 1993 to acknowledge, reward and celebrate excellence across all sectors of the tourism industry, the World Travel Awards brand is recognized globally as the ultimate hallmark of quality, with winners setting the benchmark to which all others aspire.

Each year World Travel Awards covers the globe with a series of regional gala ceremonies staged to recognize and celebrate individual and collective successes within each key geographical region.

World Travel Awards Gala Ceremonies are widely regarded as the best networking opportunities in the travel industry, attended by government and industry leaders, luminaries, and international print and broadcast media.

World Spa Awards is a dynamic awards program, launched in 2015, and is designed to drive up standards within spa and wellness tourism by rewarding the organizations that are the leaders in the field.

Source: Hanoi Times

Singapore investor acquires 10% Vinamilk stake

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The Singapore-based automotive group, Jardine Cycle and Carriage (JC&C), has made additional purchases of Vinamilk’s shares after its maiden US$616.6 million investment on November 10.

JC&C group now has an aggregate interest in nearly 145.6 million Vinamilk shares, representing approximately 10.0 per cent of Vinamilk’s issued share capital.

This has increased its ownership in Viet Nam’s largest dairy producer to 10 per cent.

According to the group’s announcement on Friday, Platinum Victory Pte Ltd, a wholly-owned subsidiary of JC&C, has made further on-market purchases to acquire an additional of nearly 16.5 million shares from Vinamilk, representing approximately 1.1 per cent of the issued share capital of Vinamilk.

Following the acquisition, the JC&C group now has an aggregate interest in nearly 145.6 million Vinamilk shares, representing approximately 10.0 per cent of Vinamilk’s issued share capital.

On November 10, JC&C beat other bidders to purchase a 3.33 per cent stake in Vinamilk from the State Capital Investment Corporation (SCIC) at an open auction on the HCM Stock Exchange. It also acquired another 2.2 per cent stake via order-matching transactions to bring its holding to up to 5.53 per cent.

Currently, JC&C is the third-largest shareholder of Vinamilk, after SCIC with 36 per cent and Singapore’s food and beverages company Fraser&Neave, with 18.74 per cent.

Foreign investors hold a combined 56.44 per cent of Vinamilk. The firm’s market capitalisation reached VNĐ265.88 trillion ($11.71 billion) on Friday morning, rising 7.45 per cent from the $10.9 billion value on November 10 when the automotive major made the first investment in Vinamilk.

JC&C, a subsidiary of Jardine Matheson, has been present in Việt Nam for over a decade. It now owns a 25.1 per cent stake in automobile producer, Thaco, and nearly 23 per cent in the Refrigeration Electrical Engineering Corporation (REE Corp).

In addition to operating in real estate, hotel and financial services, Jardine Matheson, the parent company of JC&C, also holds shares of many franchise brands in Viet Nam such as KFC and Pizza Hut.

Source: VNS

Ban on casino entry lifted

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From December 1 this year Vietnamese who can show a minimum income of VND10 million (US$440) a month can gamble in casinos.

Circular No 102/2017, issued by the Ministry of Finance in early August to guide Decree No 03/2017 on casino businesses, lifts the ban on Vietnamese entering casinos that is in place now. Only foreigners are currently allowed into the country’s casinos.

Once the ban is lifted, to enter people must also prove they are over 21 years old.

As for the income, they have to show it is taxable at level 3 or higher or have certified copies of a lease agreement showing they receive rent of at least VND10 million a month or a bank statement showing interest income of that sum.

Since 1992 the Government has been acknowledging that casinos would help attract tourists and bring revenues.
This resulted in the first casino appearing in 1994 in the beach resort of Do Son in Hai Phong.

Now there are eight casinos and more than 50 electronic gambling facilities nation-wide.

The new circular is expected to encourage the opening of casinos around the country, especially in special administrative-economic zones like Van Don in Quang Ninh Province, Bac Van Phong in Khanh Hoa and Phu Quoc in Kien Giang.

In Van Don, the province people’s committee has licensed real estate developer Sun Group to build a US$2 billion luxury resort-amusement complex with a casino on 2,500 hectares in the special economic zone.

Both Quang Ninh and Kien Giang provinces want the Government to choose casinos in their locality to trial entry for Vietnamese.

Other provinces, including those without special economic zones, also want a piece of the action.

The Thua Thien-Hue Province People’s Committee has sought permission to increase the charter capital of the Lang Co Laguna Project from US$874 million to US$2 billion and open a casino.

The new circular has attracted some public criticism, with people saying the regulations limiting entry based on income cannot be enforced since it is difficult to prove income.

To gain entry, a person has to be paying income tax at level 3 or higher, but in Vietnam 70% of payers are assessed at level 1.

Others said the daily maximum gambling limit of VND1 million is too low to attract high income earners and help the Government achieve its revenue target.

Meanwhile, the existing casinos are operating at just a third of their capacity and claim to be losing money.
The Hoang Gia International Construction Investment Joint Stock Company said its casino business made a gross loss of VND35.8 billion last year and a net loss of VND101 billion in the first nine months of this year.

Analysts blame this on the rapidly growing competition, with more and more casinos fighting for fewer gamblers from overseas, most of them from China and Taiwan.

Vietnamese gamblers usually cross the border into Cambodia, where many casinos target them.

The Government’s decision to lift the ban is expected could not have come sooner for the casinos.

Exporters fret as foreign currency loans set to dry up

The circular that allows the extension of foreign currency lending to enterprises involved in export activities will expire in a month.

Economists are concerned this could affect borrowers.

Last November the State Bank of Vietnam (SBV) issued a circular amending and supplementing some articles in an earlier circular guiding lending in foreign currencies.

This allowed enterprises with short-term foreign currency requirements for their production and export activities to continue borrowing in foreign currencies until the end of 2017.

Interest rates for foreign currency loans are only around half the on dong loans.
They are currently at 2.8%-6%.

Interest rates for non-priority đồng lending stand at 6.8%-9% for short-term loans and 9.3%-11% for long- and medium-term loans.

Exporters are understandably worried they would lose this big advantage from next month.

Analysts fear there will be a double whammy for exporters. Firstly, their costs will shoot up, hitting their bottom line. Secondly, demand for dong loans will go up sharply, pushing up loan interest rates even higher, particularly at banks that have liquidity issues.

The situation is predicted to become quite dire since growth in foreign currency lending is on an upward trend.
In the first nine months of this year credit growth was 12.9% compared to 5.4% a year earlier.
Export enterprises pointed out that if they have to borrow in dong to finance their operation costs would rise significantly, affecting the competitiveness of their goods.

They wanted the central bank not to have a one-size-fits-all policy since export enterprises’ business strategies are very different from those of other businesses.

But economists justified the SBV’s policy saying the increasing demand for credit means dollarisation of the economy is a real threat and could undermine the Government’s anti-dollarisation efforts.

To preclude this, it is necessary to switch completely from lending and borrowing the greenback to buying and selling it.

Others said, however, that to do this there should be flexibility in exchange rates and businesses must be allowed to freely buy foreign exchange when they require.

Moody’s upgrades VN banking outlook
Moody’s Investors Service has upgraded the outlook for Vietnam’s banking system to “positive” for the next 12-18 months from “stable”.

According to a statement from the credit rating agency, the Vietnamese banking system’s positive outlook reflects strong economic prospects, with the banks’ operating environment benefiting from robust economic growth, based on ongoing improvements to infrastructure, favourable demographics and the Government’s continued focus on reform to support foreign direct investment.

But it also warned Vietnam of rising asset risks as the nation boosts credit growth to drive the economy.

Rapid credit growth will continue to erode capital buffers and capitalisation will deteriorate as the banks struggle to replenish capital against rapid loan growth, it warned further.

Source: VNS

Man Utd legend Ryan Giggs dreams of Vietnam place at World Cup 2030

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Manchester United icon Ryan Giggs has said he cherishes a dream that Vietnam will make it to the FIFA World Cup 2030, as he signed a contract with a young football academy in the country on Monday.

The former Wales international will be Director of Football at PVF Football Academy, run by Vietnamese conglomerate Vingroup, for two years pursuant to the contract.

The contract was signed during the opening ceremony of the PVF’s training center in the northern province of Hung Yen on Monday.

Former Manchester United player Paul Scholes speaks at a press conference in Hung Yen, northern Vietnam, on November 20, 2017. Photo: Tuoi Tre

Giggs is honored to take the directorial post at PVF, he said, adding that the academy’s property and facilities are comparable to world’s top training centers.

The former superstar, who made 672 appearances and scored 114 goals for Manchester United, the only club in his entire career, will be in charge of supervising PVF players in terms of technique, physique and nutrition.

Giggs said his 25 years of experience with Manchester United and two years as a young talent trainer will help him fulfill his job at PVF.

Former Manchester United player Ryan Giggs gives autographs to fans in Hung Yen, northern Vietnam, on November 20, 2017. Photo: Tuoi Tre

He added that he will be in Vietnam for a couple of times a year to directly work with coaches, experts and players on several issues, including the training plans for Vietnamese football talents.

Giggs said what he has experienced first-hand in Vietnam has enabled him to reveal his dream that the Southeast Asian country will be able to play at World Cup 2030.

Paul Scholes, another Manchester United legend, has also been appointed a technical consultant for PVF.

Players are seen at the PVF training center in Hung Yen, northern Vietnam. Photo: Tuoi Tre

Speaking after Giggs’ speech, Scholes expressed his belief that PVF will succeed in training great and potential players for Vietnam’s football in the future.

The former English international underlined the importance of dreaming and believing and encouraged PVF players to believe that they may be able to make it to the FIFA World Cup 2030.

Following the opening of the Hung Yen training center, PVF also organized a four-team international tournament, comprised of under-15 sides from Stoke City in England, Australia’s Central Coast Mariners, South Korea’s Busan IPark and the PVF team.

Giggs and Scholes joined the audience in the first game between Stoke City and PVF.

Source: Tuoi Tre News

Free screenings of Korean blockbusters available in Ho Chi Minh City

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Cinema lovers in Ho Chi Minh City are now treated to six days of free screenings of Korean blockbusters as part of the Ho Chi Minh City-Gyeongju World Culture Expo 2017.

Running from November 17 to 22, the movie fest is packed with blockbusters ranging in genres from action, horror to comedy and family movies.

All 12 selected films, including eight from South Korea and four from Vietnam, were produced between 2015 and 2017.

They will be screened at the BHD Star cinemas, on the third and fourth floor of the Bitexco Financial Tower in downtown District 1.

The film festival is aimed at broadening the understanding of Korean and Vietnamese movies and fostering cultural exchange through the participation of directors, actors and film industry personnel.

A scene from Korean movie ‘Co Ba Sai Gon’ (The Tailor), to be screened in Ho Chi Minh City this week.

In Vietnam, Korean movies have been gaining popularity, evidenced by the dominance of South Korea-owned multiplex cinema chains CJ CGV and Lotte Cinema, which together account for more than 73 percent of the local cinema market, according to a 2016 report by KDB Daewoo.

Joining the week-long event is Kim Dong-ho, co-founder and chairman of the organizing committee of the Busan International Film Festival, among directors of the Korean blockbusters to be screened.

The Korean-Vietnamese Film Festival will also include a free workshop on filmmaking with a smartphone, aimed at aspiring young filmmakers in Vietnam who want to foster their passion on a budget.

Participants will be taught basic skills in shooting a movie by the South Korean directors themselves, and by the end of the workshop will be given a chance to produce short movies, the best of which are set to be shown for public viewing on Tuesday night.

The Ho Chi Minh City-Gyeongju World Culture Expo 2017, co-hosted by two local governments, run for 23 days from November 11 to December 3.

This year’s expo is the third of its kind to be held overseas – following ones in Angkor Wat, Cambodia in 2006, and Istanbul, Turkey in 2013 – since the event’s inception in 1998.

The event in Ho Chi Minh City features 30 programs that combine the traditional cultures of the two countries with information and communication technology, and bring to light the values of the world’s historical and cultural heritage in Gyeongju and Vietnam under the theme of “The Exhibition on Civilization Exchanges through Old Sea.”

The programs include an opening ceremony, a parade, a variety of performances, a special exhibition on the two countries’ cultural exchanges and an event involving Koreans in the Southeast Asian country.

Source: Tuoi Tre News

Are foreign-invested firms enjoying too many incentives in Vietnam?

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Preferential treatments including tax and land use incentives are a key factor in the Vietnamese government’s bid to attract foreign investment; however, domestic enterprises are beginning to voice their complaints.

Foreign companies in Vietnam are enjoying massive tax and other incentives, giving them an advantage over already less-competitive domestic businesses.

For example, Samsung, which is operating in Vietnam through various entities, topped the Vietnamese finance ministry’s list of 100 foreign companies with the biggest tax reductions in 2016.

All of Samsung’s various subsidiaries in Vietnam collectively had their taxes reduced by nearly US$1 billion last year. Of these, Samsung Electronics Vietnam Thai Nguyen alone enjoyed total tax incentives worth VND10.36 trillion ($456.39 million), according to finance ministry data.

A finance ministry official said that these incentives are legally granted as per Vietnam’s policy of attracting foreign investment and boosting productivity.

The incentives are available to any company meeting specific criteria, but the problem is that very few Vietnamese companies qualify, the official added.

While the tax reductions foreign companies can enjoy can total as much as 91.9 percent of their corporate income tax bill, Vietnamese companies and state enterprises can be entitled to a mere 17.8 percent and 4.8 percent reduction respectively, according to the same finance ministry official.

Another expert from the finance ministry said that besides reductions in corporate income tax, some foreign businesses are also given incentives in import and value-added taxes.

“For a few foreign businesses, the total amount of tax reductions they have enjoyed since beginning operations in Vietnam is larger than their total investment in the country,” he added.

Unfairness

Firms that benefit from the preferential treatment in Vietnam say they are doing nothing wrong.

A Samsung Electronics Vietnam representative told Tuoi Tre (Youth) newspaper that Samsung is receiving the same tax breaks as other foreign tech companies in the country.

The incentives include a corporate income tax exemption for the first four years of operations, and a preferential tax rate of five percent over the next nine years. From the 14th year of operations onward, the tax rate will be set at ten percent.

However, experts believe that the current preferential treatment of foreign companies is weakening the competitive edge of local enterprises, both private and state-run.

Lawyer Bui Quang Tin, who is regarded as an economic expert, said that Vietnamese companies are being treated unfairly.

“Offering incentives to attract foreign investment is the right policy, but the other side of the coin is that local businesses will become less competitive,” he said.

Tin suggested that the government review the policy to ensure fairness between domestic and foreign enterprises.

“We should focus on enabling domestic companies to grow, rather than only on attracting foreign investment,” he said.

Dinh The Hien, another economist, echoed Tin’s view that there is unfairness between foreign and domestic businesses when it comes to tax incentives.

Hien recommended that the government give fewer preferential treatments to foreign companies, so all companies, domestic or foreign, can compete equally.

“Tax incentives should be given to companies based on their field of investment rather than whether they are domestic or foreign,” he added.

​Ho Chi Minh City inks deal with military-run Viettel to build ‘smart city’

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Ho Chi Minh City has joined hands with military-run mobile network operator Viettel to turn the southern metropolis into a ‘smart city.’

The municipal People’s Committee on Friday evening signed a cooperative agreement with the telecoms group regarding the establishment of a smart city in 2017-20, with a vision toward 2025.

Viettel executives underlined several obstacles the southern hub has been facing in its development, including traffic congestion, environmental pollution, and limited infrastructural development resources.

The military-run firm asserted the necessity of creating a centralized monitoring center to resolve the issues.

The center will consist of several units in charge of different tasks, namely supervising traffic and fighting crime, receiving and analyzing emergency information such as firefighting and search and rescue missions, monitoring and ensuring information safety, managing media information, and answering citizens’ inquiries regarding public services.

The centralized facility will access data from local camera systems to manage traffic situations and ensure order and security.

Regarding emergency requests, a unit will operate in a manner similar to the 911 service in the United States, with the ability to locate callers, access surveillance camera footage, and send rescue teams in a prompt manner.

Press and media information will also be monitored closely to prevent an information crisis.

According to Tong Viet Trung, deputy general director of Viettel, the centralized monitoring center will be helpful for local authorities thanks to its sufficient and accurate database.

All information kept at the center will be protected with maximum security measures, Trung added.

Chairman of the Ho Chi Minh City administration Nguyen Thanh Phong stated that the smart city project had been approved by the municipal Party Committee and People’s Council.

A meeting will be convened on November 25 to discuss a detailed plan, Chairman Phong continued.

The official considered the handshake between the city and Viettel a significant millstone, which will play an important part in achieving sustainable development.

Source: Tuoi Tre News

The tax man faces off against Facebook retailers in Vietnam

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Authorities have asked social media retailers to pay up, but enforcement remains a challenge in a cash-driven country.

Dinh Thu Huyen’s broadcasts of everyday life, including feeding chickens and working in allotments, have helped her attract nearly 50,000 Facebook followers in Vietnam.

The web broadcasts have also earned her hundreds of millions dong a year from selling the products she cultivates online. However, she has never paid any tax.

Vietnam levies a 0.5 percent income tax and a 1 percent value added tax on sales of more than VND100 million ($4,400) per year. But the government is failing to collect taxes from many online traders as they mainly use cash transactions that are difficult to track.

However, local tax authorities have recently stepped up efforts to collect taxes from online businesses that use Facebook and other social media sites such as Instagram and YouTube.

District tax departments in Ho Chi Minh City have sent out tax demands to nearly 13,500 Facebook retailers in a move to target tax avoidance by online businesses.

In a similar move, the Hanoi Department of Taxation has sent text messages to 13,422 Facebook accounts that use the social media network as a retail platform.

The retailers have been urged to go to the department’s website to register their businesses and declare tax, Vien Viet Hung, the department’s deputy director, said.

To minimize tax losses, the Ministry of Finance is considering a plan to impose value added tax and income tax on sales with a value of VND1 million ($44) upwards, or multiple sales of a lesser value.

But the plan has not worried Huyen. “Tax authorities have not contacted me. Most of my customers pay in cash, so I don’t think they will be able to evaluate my sales and tax them.”

Many other online retailers on Facebook have the same attitude as Huyen. They don’t think tax authorities will be able to control their sales because they only promote fashion products via Facebook. The items bought usually change hands offline and payments are usually made in cash. Even goods shipped to the recipients can be sent either through the postal system or by private courier.

“I post photos and clips of my products on Facebook, but all transactions are conducted outside the platform,” said Nguyen Huy Dung, who has been selling watches online for several years. “How can tax authorities claim that my sales are large enough to be taxed?”

Many online retailers do not even register their businesses with local authorities.

Nguyen Thi Cuc, chairwoman of the Vietnam Tax Consultant Association, said Vietnam’s tax policy for online businesses is incomplete and therefore not compulsory. This poses a challenge for tax authorities when most transactions are still in cash.

Some experts have raised concerns that many online retailers use anonymous accounts for transactions, making it hard for tax authorities to regulate activities.

Many online retailers have said they would pay tax, but want a reasonable policy in place first.

Nguyen Thi Nhung, who sells cosmetics online, said: “It’s not fair if online retailers do not pay tax when brick and mortar businesses have to pay a raft of taxes and fees.”

“However, authorities should consider specific policies for retailers like me who conduct our business online,” she said.

Stressing the necessity of collecting taxes from online retailers, economist Nguyen Minh Phong said the state should complete tax and business regulations, facilitating tax collection to increase state budget revenues and ensure justice for all kinds of businesses.

Lucrative market

Vietnam’s young population – almost 60 percent are under 35 – is drawn to Facebook and the country has become one of the leaders globally in terms of penetration of social networks, Bloomberg quoted Monica Peart, senior forecasting director at EMarketer Inc, as saying.

The Vietnamese spend more time on the social network than users in most other Southeast Asian countries and are much more apt to use it as a platform to start a business, said Joe Nguyen, ComScore Inc.’s senior vice president of Asia Pacific.

“We haven’t seen this scale in other places,” he said. “Vietnamese are very entrepreneurial. Everyone wants to try to sell something.”

Online sales in Vietnam have expanded rapidly in recent years, currently accounting for 3.39 percent of the country’s retail market. The total retail market grew 10.2 percent last year to $118 billion, mainly fuelled by a growing middle-class with expanding disposable incomes and an increasing number of internet users.

The World Bank forecasts that Vietnam’s $200 billion economy is likely to grow to a trillion dollars by 2035. More than half of its population, compared with only 11 percent today, is expected to join the ranks of the global middle class with consumption of $15 a day or more by that time.

According to one estimate, about 30 percent of the population will be buying goods and services over the internet in 2020, with each shopper spending an average of $350 per year.

Just three years ago, Vietnam was ranked the smallest e-commerce market in Southeast Asia in terms of sales. Now its online retail is gaining momentum, with more than half of the country’s 95 million people increasingly turning to online shopping.

According to Internet World Stats, Vietnam is currently ranked 14th in the world in terms of number of internet users.

Source: Ngan Anh

Vietnam approves bill letting banks be declared bankrupt

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The move came about five years after the start of a banking crisis that Vietnamese authorities still have not fully resolved.

The National Assembly, Vietnam’s legislature, on Monday gave authorities the ability to declare troubled banks bankrupt, through an amendment to a law on the operation of credit organizations, the government website said.

Approval of a bill establishing the right to declare bankruptcies came about five years after the start of a banking crisis that Vietnamese authorities still have not fully resolved.

State Bank of Vietnam Governor Le Minh Hung said recently that bad debts and potential bad debts amounted to 8.61 percent of total credit at the end of September. The level of non-performing loans in September 2012 was 17.21 percent.

Under the law’s new provision, which takes effect on January 15, the first step for dealing with a troubled bank would be to put it under the “special control” of the central bank.

The government could then consider a merger, transfer of the bank to other investors or a break-up before the financial institution would be allowed to file for bankruptcy as a last resort.

Any bankruptcy declaration would have to be approved by the government.

Nguyen Minh Phong, an economist at Hanoi Institute for Socio-Economic Development Studies, said the option of allowing a bank to declare bankruptcy was useful for the central bank.

But bankruptcy would unlikely to be declared in practice, Phong said, as authorities would only take this step as the last resort when banks fail to improve.

On October 31, Moody’s Investors Service changed its outlook for Vietnam’s banking sector for the next 12-18 months to positive, from stable.

Source: Reuters/Mi Nguyen

Vietnamese women become largest source of foreign brides in South Korea

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Statistics show the trend is being driven by the popularity of K-Pop and Korean soap operas in Southeast Asia.

Vietnamese women now account for more foreign brides in South Korea than any other country for the first time, according to new data on multicultural marriages.

Statistics Korea said in a report last week that Vietnamese women accounted for 28 percent of foreign brides in the country last year, followed by 27 percent from China and 4.3 percent from the Philippines. The report recorded 21,709 multicultural marriages in 2016, down 3.4 percent from 2015.

According to the report, in the past Chinese women always ranked first in terms of the number of foreign brides in South Korea, but their number dropped to 5,838 last year while the number of Vietnamese brides grew to 6,054.

Vietnamese women, many from poor rural families, have been marrying South Korean men for years hoping for better lives in the more developed nation. However, it hasn’t been a fairytale ending for all of them, despite the fact that reports of suicides and fatal beatings have fallen.

Statistics Korea said the marriage trend has been driven by the popularity of K-Pop and Korean soap operas in Southeast Asia.

“Favorable impressions of Korea lead to Vietnamese women applying for jobs in Korean companies and coming to study in Korea,” it said, as cited by the Chosun Ilbo.

The newspaper interviewed employees of Lotte Mart and Samsung in Vietnam who said that the Korean businesses had painted a positive image of their country.

“A lot of our Vietnamese staff want to learn Korean and experience Korean culture,” a Samsung worker told the newspaper.

The electronics giant currently has six factories in Vietnam and employs 136,700 workers. Products from its factories are exported to 52 countries around the world.

South Korea is currently Vietnam’s biggest foreign investor.

According to the Korea Trade Investment Promotion Agency, South Korean firms invested more than $50 billion in Vietnam between 1988 and 2016, making up more than 30 percent of total foreign investment with over 6,000 projects.

The strong inflow of investment has coincided with a cultural wave that has seen local fans fainting at the sight of Korean stars. K-Pop fever hit Vietnam in the early 2000s when Korean TV shows and pop songs achieved an unusually high level of popularity, long before Psy’s “Gangnam Style” took the world by storm.

Although there have been signs of waning interest, South Korea’s largest multiplex cinema chain CGV is dominating the movie industry in Vietnam and is unlikely to let that happen quickly.

Source: Vi Vu

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