Thousands of cheap apartments in Ho Chi Minh City to be launched in 2017

Following the development of cheap apartment projects in 2016, investors plan to bring thousands of cheap apartments to Ho Chi Minh City in 2017. 

 Numerous developers have already started building affordable apartment projects. 

After starting sales of 300 apartments in block A under the Him Lam project (District no.9, Ho Chi Minh City), Him Lam Land announced that they will start selling nearly three blocks of apartments totaling almost a thousand in 2017.

“Developing cheap apartment projects has been a strategy of Him Lam Land since 2016,” according to Mr. Ngo Quang Phuc, Deputy General Director of Him Lam Land. “We will bring supportive policies to customers such as offering 72-month deferred payments and giving free furniture.”

Vingroup has developed land resources in Ho Chi Minh City with plans to build 200,000 cheap apartments. In district 9, Vingroup has completed the leveling out of more than 200 hectares of land to implement the project.

Hung Thinh Corporation launched four projects with apartment prices under VND 1.7 billion ($75,100) in 2016. In 2017, they announced that they would start apartment sales for the Richmond City project on Nguyen Xi Street, Binh Thanh district. The total number of apartments in this project is 880 and they cost under VND1.8 billion ($79,558) per apartment.

Vietcomreal announced that they would focus on projects for affordable housing. They plan to develop the Venus project (district 8), the Ventosa project (district 5), and Viva Riverside (district 6).

Dat Xanh Group and Nam Long Company too, will launch a thousand cheap apartments during the first six months of 2017.

In 2016, expensive apartments in Ho Chi Minh City comprised of 31 per cent of all apartments while medium and cheap apartments were 49 per cent and 20 per cent respectively, according to HoREA.

Real estate companies will focus on land and villas. The Cat Tuong Group will continue to sell the rest of their land under the Cat Tuong Phu Sinh project at VND 500 million ($22,100) per portion.

The Tran Anh Long An Real Estate Joint Stock Company will launch Bella Villa, a villa project that goes for just VND1.5 billion ($66,298) per unit. This project spans an area of more than 92,000 m2 with 422 townhouses and villas northwest of Ho Chi Minh City.

According to Mr. Nguyen Huy Vu of BANVIETLAND, 2017 will witness various medium price projects in Ho Chi Minh City. Investors will go to the suburbs to develop projects.

“In my opinion, in the first six months of 2017, the eastern areas – namely district 9, Thu Duc district, district 2 – and the western areas (including district 8, district 7, and Binh Chanh district) will be the focus of investment for medium projects,” he said.

ACV makes bank on yen fluctuations

Airports Corporation of Vietnam (AVC) recorded VND2.049 trillion ($90.4 million) of after-tax profit in the fourth quarter of 2016, mostly thanks to the depreciation of the Japanese Yen.

According to ACV’s consolidated financial report for the fourth quarter of 2016, the revenue was VND4.044 trillion ($178 million). The cost of goods sold in this quarter was VND3.171 trillion ($140 million), therefore, the gross profit only amounted to VND873 billion (over $38 million), equivalent to a gross profit margin of 22 per cent.

However, income from financial activities was VND2.319 trillion ($102.4 million), mostly thanks to an unrealised exchange rate difference gain of VND1.646 trillion ($72.82 million), a realised exchange rate difference gain of VND236 billion ($10.42 million), and the VND223 billion ($9.85 million) gained from interests on deposits.

By the end of 2016, ACV’s total liabilities stood at ¥72 billion (VND14.227 trillion/$630 million), make up 31 per cent of its total funds. Thus, the fluctuations of the Japanese Yen significantly affect the company’s profit. During the second quarter of 2016, ACV had a loss of VND63 billion ($2.8 million), but in the next quarter, it gained a profit of VND757 billion ($33 million) due to exchange rate differences.

ACV has a monopoly over the administration and exploitation of twenty two commercial airports in Vietnam. According to Rong Viet Securities, ACV has long-term opportunities to grow because (1) Vietnamese income is at a low level but is rapidly rising, (2) airport services (land leasing, advertising, and selling goods) are very profitable but are limited and rudimentary in Vietnam in comparison with other countries, and (3) Important projects will be implemented more efficiently and effectively with enhanced private sector involvement. Perhaps the crowning jewel of these projects will be Long Thanh Airport, awaiting development at the hands of ACV.

Garco 10 expects revenue growth despite unravelling TPP

Garment 10 Corporation-Joint Stock Company (Garco 10) set the goal of VND3.1 trillion ($137 million) in revenue this year, up 6.3 per cent on-year, despite the more opaque prospects of the Trans-Pacific Partnership Agreement (TPP).

According to Nguyen Thi Thanh Huyen, General Director of Garco 10, in spite of the slowing or straight out faltering demand for textile exports in 2017, Garco 10 expects a profit of VND62.5 billion ($2.7 million) and will pay a 15 per cent dividend.

Huyen added that in 2017, along with the expansion of investment activities, the Garco 10 and its unit members will try to reduce production costs so that they can increase the competitiveness. For instance, they will invest in modern technology, improve organization and improve the workers’ skills so as to improve the productivity, which might offset the increase in minimum wage.

In 2016 Garco 10 earned VND2.9 trillion ($129 million) in revenue, rising 6.42 per cent compared to 2015. 

The contribution of Garco 10 to the government budget was VND58.75 billion ($2.6 million), 24.18 per cent greater than in 2015. In addition, the average income of the company’s workers reaches VND7 million ($310) per person per month, an increase of 4.33 per cent compared to 2015. Also, labour productivity reaches $21.43 a person per day, 4.87 per cent higher than in 2015.

Garco 10 operates 18 factories and has 12,000 employees, spanning 8 provinces and cities.

Sabeco reports all-time record profit

Saigon Beer-Alcohol-Beverage JSC (Sabeco)’s 2016 after-tax profit reached VND 4.655 trillion (over $205 million), increasing 33 per cent on-year, a company record since its establishment.

The figure was reported in Sabeco’s recently released consolidated financial report for the fourth quarter of 2016. Revenue was VND30.66 trillion ($1.35 billion), up 12.9 per cent on-year. Earnings per share (EPS) in 2016 was VND6,978 (about 30 US cent). At the end of the trading session on February 2, 2017, the stock reached VND219 thousand ($9.66), which was equivalent to the price-earnings ratio of 31.

Numbers released at the company’s conference to review its performance in 2016 showed that the output was 1.603 million litres, of which 1.584 million litres were sold. The company submitted VND16.5 trillion ($730 million) to the state budget in tax. 

In the fourth quarter of 2016, Sabeco earned a revenue of VND8.834 trillion (over $390 million), up 80 per cent on year. Although gross profit declined due to growing prices, it still rose by 11 per cent compared to the fourth quarter of 2015.

Income from financial activities rose by 48 per cent in this quarter to VND172 billion (nearly $7.6 million), while financial expenses were reduced to VND31 billion (about $1.37 million). Some other expenses, such as general, administrative, and sales expenses remained nearly unchanged.

As a result, Sabeco recorded VND997 billion (nearly $44 million) in after-tax profit, a 16 per cent growth in the fourth quarter of 2016.

Toyota reign showing cracks

Though the Toyota Vios model still ranked first in terms of sales in 2016, other Toyota cars that topped the charts in 2015 were bumped down and some disappeared from the top 10 best selling cars in Vietnam in 2016.

The Toyota Innova and Fortuner, though still making it into the list of the best-selling cars in Vietnam in 2016, dropped from their second and third spots to make place for the Kia Morning and the Ford Ranger.

The Altis and the Camry, meanwhile, did not make the cut.

According to data realeased by the Vietnam Automobile Manufacturers’ Association, in 2016, Vietnamese customers bought a total 304,427 units, up 24 per cent against last year. Of the volume, passenger car sales was up 27 per cent, commercial vehicle sales 25 per cent, and special-purpose vehicle sales 33 per cent versus last year.

Sales of completely knocked down cars was up 32 per cent and completely built up cars 5 per cent.

VAMA forecast that 2017 sales volumes would be about 10 per cent higher than in 2016.

Below is the graph of the 10 best-selling cars of 2016 with their total sales figures.

State-owned banks lead in employee efficiency

Four big state-owned banks, namely Vietcombank, VietinBank, BIDV and Agribank, produce the highest profit per employee in the Vietnamese banking system.

Nghiem Xuan Thanh, chairman of Vietcombank, claimed a consolidated after-tax profit of VND8.5 trillion ($375 million). Of all state-owned commercial banks, the number of staff in Vietcombank is the lowest (barely over 14,000) and the most efficient in turning profit: each individual make VND600 million ($26,514) on average in a year, which means VND50 million ($2,210) every month.  This is also the reason why Vietcombank staff gets the most satisfying wages and benefit packages in the current banking sector.

With the profit of VND8.25 trillion ($365 million), VietinBank goes virtually head-to-head with Vietcombank, however, breaking it down amongst the 21,000 employees, Vietinbank’s profit per employee averages VND474 million ($21,000) a year and nearly VND40 million ($1,700) a month, .

Ranking third is BIDV. Thanks to its 24,000 employees, the bank turned VND7.5 trillion ($331 million) in profit in 2016, which means a contribution of VND312 million ($14,000) per employee throughout the year, or VND26 million ($1,150) per month.

The last one is Agribank, whose profit is over VND4 trillion ($17 million) made by a staff of 40,000, meaning that each worker makes VND100 million ($4,400) in profit a year, or VND8.3 million ($366) a month.

In the joint-stock commercial banking sector, many banks have yet to announce their profit, but the few figures announced so far show uneven productivity.

Up to this point, the highest profit was made by Military Commercial Joint Stock Bank (MB). In 2016, the bank’s pre-tax profit was VND3.711 trillion ($164 million), which means each employee made VND510 million ($22,536), or nearly VND43 million ($1,900) per month. VIB employees made VND14.6 million ($645) and VPBank about VND15 million ($662) per month.

At some banks currently undergoing restructuring, each employee only made a profit of VND2-3 million ($88-$132) per month. Overall, there are more than a dozen banks whose profit per employee is below VND10 million ($441) a month.

Of course, this figure is not an accurate depiction of the productivity of each specific employee in each bank, because these numbers summarise a lot of factors, especially the allowances for bad debt expenses, risk provisions, operating costs, etc. Not to mention  some of these profit figures are unreliable. Many banks report high profit figures, but indeed, interest accruals are included and bad debts in the off-balance sheet are not counted yet.

Looking at the bad debts and the banks’ profits, it is clear that the most transparent data in the current banking system is provided by Vietcombank. By the end of 2016, this bank has bought up itsbad debts from Vietnam Asset Management Company (VAMC), putting all bad debt items in one ledger, no longer having liabilities in or off the balance sheet like other banks. The bank’s provisions for credit losses are also very high, up to 121 per cent of the bad debt volume.

In almost all other banks, although bad debts are now lower than three per cent (slightly over one per cent at some), there still exist thousands of billions of dong in bad debts that have not been handled (being at VAMC). In the years to come, when bad debts will be required to be calculated correctly and fully, including the balance sheet and off-balance sheet liabilities, then trillions of VND of banks’ profits will be spent on risk provision for bad debts.

The good news is from 2017 the government will implement a range of practical solutions in order to facilitate dealing with bad debts. Together with the improving business environment, this will increase banks’ profits and make bank employees’ performance more effective and efficient.

Consumption of beer in January 2017 rose 20 per cent compared to the same period of 2016 in Vietnam

Consumption of beer in January 2017 rose 20 per cent compared to January 2016.

Vietnam sold nearly 322 million liters of beer during the Lunar New Year month, up more than 9 per cent compared to the same period in 2016 This is according to the Economic – Social Report in January 2017 generated by the General Statistics Office of Vietnam.

In particular, bottled beer and draft beer were the two most consumed product lines having reached sales of 6.7 million, and 154.4 million liters respectively. That’s an increase of 20.6 per cent and 23.3 per cent respectively compared to the same period in 2016.

Canned beer consumption decreased by 2 per cent, reaching nearly 159 million liters, while other beer products reached only 1.6 million liters, an increase of 6.9 per cent compared to same period last year.

Other consumer products such as cigarettes, milk, and processed seafood increased compared to January 2016. Cigarette consumption reached nearly 419 million, up 0.6 per cent compared to the same period.

Electrical appliances and transport also recorded an increase for the Lunar New Year.

In electronics, televisions were the most sought after in January 2017 with 670,600 units sold, up 35.2 per cent compared to January 2016. Cars and motorcycles increased significantly, reaching 19,400 and 342,000 units respectively.

According to reports of the Ministry of Industry and Trade, the volume of beer sold in 2016 was 3.788 billion liters meaning each person in Vietnam drank 42 liters of beer. That shows an increase of approximately 4 liters each compared to the previous year.

In 2016 cars and motorcycles saw record sales with 3.12 million cars and more than 300,000 motorcycles having been sold. That’s an increase of 24 per cent and 9.5 per cent respectively over the same period in 2015.

Numerous enterprises established in the first month of the new year

During the first month of the new year 8,900 enterprises were established with a total registered capital of over VND90 trillion ($3.96 billion). That’s an increase of 8.1 per cent in number and 52.3 per cent in registered capital, according to the latest Socio-economic report from the General Statistics Office.

These newly established enterprises are expected to create 104,100 jobs. That figure is 83.9 per cent more compared to the same period of 2016.

Notably, the number of businesses resuming operations after being temporarily suspended reached 5,564, up 14.2 per cent per cent compared to the same period of 2016.

Arts and entertainment is the most attractive sector with newly established enterprises up 2.4 per cent in number and 658 per cent in registered capital. The next is health and social assistance activities with an increase of 57.6 per cent in number and 455.5 per cent in registered capital.

Although the manufacturing index of the mining sector fell to 13.9 per cent, the number of newly established enterprises rose by 3.4 per cent and registered capital rose by 401.2 per cent.

Meanwhile, the number of enterprises ceasing operations was 1,583, up 18.3 per cent compared to the same period last year, and were mainly small-scale enterprises with capital less than VND10 billion ($440,000).

The number of enterprises temporarily ceasing operations was quite high with 13,289, up 6.7 per cent year-on-year.

Vietnam targets to have at least 1 million by 2020 and the private sector would account for 48-49 per cent of the country’s GDP, according to the Government Resolution No. 35 to support and develop enterprises.

Vietnam embarked on a thorough process of improving its business climate and national competitiveness in 2014, with the issuance of Government Resolution No. 19.

The government is also promoting an entrepreneurial spirit and making Vietnam conducive to establishing startups as part of efforts to develop the private sector, which has been defined as the driver of socio-economic growth.

A law on supporting small and medium-sized enterprises (SMEs) is being drafted. There are now more than 500,000 enterprises in Vietnam, of which approximately 97 per cent are SMEs.

Hoa Phat sees profit up 89 per cent in 2016

Vietnam’s steel giant Hoa Phat Group (coded: HPG) has announced its revenue for 2016 at $1.5 billion and profit after tax at about $292 million. Those figures show an increase of 34 per cent and 89 per cent compared to the previous year. This is the highest profit and revenue Hoa Phat has ever seen since its foundation.

This is the first time that the company has reached the leading position in the domestic market share of construction steel consumption. It had a total output of 1.8 million tons per year. Consuming nearly 500,000 tons of different kinds of steel pipe, Hoa Phat continues to lead in consumption volume, accounting for 26 per cent of the market share in the country.

In the real estate sector, apart from Pho Noi A Industrial Park in the Hung Yen province and Hoa Mac Industrial Park (IP) in Ha Nam province, Hoa Phat is going to construct two big projects in 2017 including Yen My IP covering 200 ha and Pho Noi New Urban Area covering 260 ha in Hung Yen province. Those projects will significantly contribute to meet the very high demand on housing for residents in industrial zones and the areas surrounding Hanoi.

For the agricultural sector, Hoa Phat said its array of animal feed production has already been put into operation and has been preparing to complete its second factory in Long Khanh IZ in Dong Nai province. It will have a capacity of 300,000 tons per year.

Hoa Phat this year continues to implement construction of its third plant, with a similar capacity, in Phu Tho province to serve the northwestern region.

In recent news, the government has agreed on the investment policy of Hoa Phat’s iron and steel complex in Dung Quat EC in Quang Ngai province.

For a long time now the Hoa Phat Group has been seeking permission from local authorities to take over the the Guang Lian Dung Quat steel mill project in Quang Ngai province, which has been delayed for ten years.

The Hoa Phat Group plans to build a $3 billion iron and steel complex at the Dung Quat Economic Zone (EC) with a capacity of 4 million tons a year which will be divided into two phases and have an operational duration of 70 years.

In early September, the Quang Ngai People’s Committee decided to revoke 337 hectares of land from the Guang Lian Dung Quat steel factory, due to its long delay in construction and for violating the Land Law.

FDI disbursement up 6.3 per cent y-o-y

Total disbursement of foreign direct investment as of January 20 this year stood at $850 million, up 6.3 per cent year-on-year, according to the latest report from the Ministry of Planning and Investment (MPI).

New and additional FDI capital totaled $1.42 billion, up 6.6 per cent compared to the same period in 2016.

As of January 20, 175 new projects had been granted investment licenses with a total registered capital of $1.243 billion, up 37.8 per cent in terms of projects and 23 per cent in terms of capital compared to the figures in the same period last year. In addition, 76 existing projects added $179.2 million in capital.

The manufacturing and processing sectors attracted FDI the most, with a total capital of $834.9 million, accounting for 67.1 per cent of the total registered capital in January.

Real estate was second, with a total capital of $297.4 million or 23.9 per cent of the total. The remaining sectors accounted for $111.5 million, or 9 per cent.

Twenty-six cities and provinces received investment, led by Binh Duong province with a new total capital of $666.2 million, or 53.6 per cent. Bac Giang province was second, with $159.5 million, or 12.8 per cent, followed by Ba Ria-Vung Tau province, Ho Chi Minh City, Hai Duong, Tay Ninh, Hanoi, with $108.7 million, $75.2 million, $61.8 million, $32 million and $30 million, respectively.

Foreign investment came from 31 countries and territories, led by Singapore, with an investment of $416.7 million, or 33.5 per cent of the total. South Korea followed, with $347.8 million, or 28 per cent; China with $310.1 million, or 24.9 per cent; Japan with $56.8 million, or 4.6 per cent; Malaysia with $44.1 million, or 3.5 per cent and Samoa with $20 million, or 1.6 per cent of the total.

ACV records profits over VND2 trillion

The Airports Corporation of Vietnam (ACV) has announced its consolidated financial report for the last quarter of 2016 with net revenue of over VND4 trillion ($176 million). 

Cost of sales in the fourth quarter accounted for over VND3.1 trillion ($136.4 million) making gross profits decrease to VND873 billion ($38.4 million) equivalent to a gross profit margin of 22 per cent.  

In the fourth quarter, ACV’s financial revenue stood at VND2.3 trillion ($101.2 million), mainly thanks to the revert of the exchange rate differences of VND1.64 trillion ($72.1 million), exchange rate differences interest of VND236 billion ($10.3 billion) and interest on deposits of VND223 billion ($9.8 million).

By the end of 2016, the corporation’s loan balance amounted to 72 billion Japanese yen ($636.6 million) and accounted for 31 per cent of the total company capital. The fluctuations of the Japanese yen, therefore, have made a significant impact on the ACV’s profitability.

ACV recorded over VND2 trillion ($88 million) after-tax profit in the fourth quarter of which the profit after tax of the parent company reached VND1.9 trillion ($83.6 million).

In November 2016, ACV was given permission to trade on the Unlisted Public Company (UPCoM) market under the code ACV, with a total of 2.18 billion shares and a registered stock value of more than VND21.7 trillion ($976.5 million).

ACV is a joint stock company operating under the form of the parent-subsidiary company, with the State holding a majority stake. In October 2015 the government approved its equalization plan, with State ownership to fall to 75 per cent. In March 2016 it held its first shareholders meeting.  

ACV will become the largest enterprise by charter capital on UPCoM. It manages 22 airports throughout Vietnam, of which seven are international and 15 are domestic with 21 being directly managed by the corporation. It also has a range of joint ventures with other companies.

From 2012-2014 it served 132.6 million passengers at a growth rate of 16 per cent per year, and handled over 2.28 billion tons of cargo with growth of 15.29 per cent per year.

After officially becoming a joint stock company in March, 2016, ACV now has a charter capital of over VND21 trillion ($940 million), equal to 2.177 billion shares at a price of VND10,000 ($0.44) each. The government still holds 95.4 per cent.

Its targets for 2016 include welcoming 73 million passengers, a 12.4 per cent increase against 2015, 53 million of which are domestic, and to cater to 516,000 commercial flights. Revenue is targeted at almost VND12.1 trillion ($541.9 million) and pre-tax profit at over VND2 trillion ($89.5 million).

It recently recorded its first-ever losses for the second quarter of 2016. It was VND124 billion ($5.58 million).

A number of State enterprises are also listed, such as the Hanoi Alcohol Beer & Beverages Corp. (Habeco), the Hanoi Construction Corporation (Hancorp), and Vinacomin Viet Bac.

Truong Thanh Furniture faces delisting for heavy losses

After a dismal business performance in 2016’s fourth quarter, the final decision to delist Truong Thanh Furniture’s (TTF) shares now lies in its audited financial statement.

The company’s consolidated financial statement for 2016’s fourth quarter showed a total loss of VND145 billion ($6.4 million) bringing its full year’s loss to VND1.63 trillion ($72 million) of which its cumulative losses amounted to VND1.768 trillion ($7.8 million). Moreover, the wood company has had a negative owner’s equity of more than VND195 billion ($8.6 million) as of December 31, 2016.

From September-December gross loss stood at nearly VND27 billion ($1.2 million), financial costs surged as high as VND65 billion ($2.9 million), and administrative costs were VND34 billion ($1.5 million). TTF’s shares are currently being put under a special control list by the Ho Chi Minh Stock Exchange (HoSE) and its shares are fluctuating around the VND5,000 ($0.22) price range. In just four months TTF’s shares fell dramatically from VND43,700 ($1.92) on July 19 to VND4,000 ($0.18) on November 18.

As VET had earlier reported, there are only two options for TTF to avoid delisting – have a profit of VND160 billion ($7 million) in the fourth quarter last year to balance cumulative losses vs. charter capital, or request that Tan Lien Phat go ahead with its loan.

Tan Lien Phat became a major TTF shareholder in May last year after acquiring 72 million shares for VND25,000 ($1.1) per share TTF then saw some instability in its senior personnel. On August 12, founder Mr. Vo Truong Thanh was dismissed from his duties as Chairman of the Board of Management after not taking sufficient responsibility as Chairman during TTF’s tough times. He was replaced by Vingroup’s Deputy Managing Director Ms. Vu Tuyet Hang.

TTF’s shares fell dramatically after the Tan Lien Phat Company, a subsidiary of Vingroup, suddenly announced in mid-July the suspension of its loan of VND1.2 trillion ($53.8 million) to TTF in exchange for 69 million of TTF’s shares after finding serious discrepancies in data relating to inventories as well as questionable debts.

Since Tan Lien Phat has announced plans to offload its holdings in TTF from 49.9 per cent to 29.9 per cent, the second option is off the table. Current policy regulates that an enterprise will be delisted if its cumulative losses surpass its charter capital based on audited financial statements. With the recent announcement of its business performance in the fourth quarter, the final decision for its delisting will lie in its audited financial statement.

But despite its difficulties, the company continued to increase its borrowing last year. Liabilities increased by another VND568 billion ($25.1 million) during the year of which short-term loans accounted for VND2.6 trillion ($115 million) and long-term loans VND30 billion ($1.3 million). For short-term loans, Viet A Bank has the largest outstanding loan of VND653 billion ($29 million), Dong A Bank with VND124 billion ($5.5 million), SHB with VND56.5 billion ($2.5 million) ,and Kien Long Bank with nearly VND60 billion ($2.65 million).

According to TTF, all those loans were taken to increase the mobilizing capital to meet the business needs, including payment for wood materials and other costs. As of December 31, 2016, interest rates of those loans varied from 10.25 per cent to 11 per cent for VND loans and 5 per cent to 6.9 per cent for foreign currency loans. For long-term loans, TTF owes VND36 billion ($1.6 million) to Kien Long Bank and VND3 million ($132,600) to Agribank.

ACB hit VND73.7 million in 2016’s pre-tax profit

ACB’s pre-tax profit in 2016’s fourth quarter reached VND422 billion ($18.6 million), up 89 per cent year-on-year. The full year figure was VND1.667 trillion ($73.7 million), up 26.8 per cent year-on-year. This is according to the bank’s consolidated financial statement for 2016’s fourth quarter.

During the fourth quarter, ACB recorded a net interest income of VND1.946 trillion ($86 million), up 17.6 per cent year-on-year, giving the full year net interest income an increase of 17 per cent year-on-year, at VND6.9 trillion ($305 million).

Other activities of the bank continued to rise from September-December. Services brought a net income of VND283 billion ($12.5 million), up 35 per cent year-on-year, foreign currencies trading had a net income of VND79 billion ($3.5 million), up 23 per cent year-on-year, and securities trading had a net income of VND74 billion ($3.3 million), up 14 times year-on-year.

Notably, operating costs surged by 62.5 per cent to VND1.2 trillion ($53 million) during the quarter. But thanks to its business performance, net operating income was up 3.7 per cent times year-on-year and stood at VND1.07 trillion ($47.3 million). The bank has set aside VND654 billion ($28.9 million) for risk provision cost which is 10 times higher year-on-year. For the quarter, ACB recorded VND422 billion ($18.6 million) in pre-tax profit, up 89 per cent year-on-year.

For the full year, it posted VND1.667 trillion (73.7 million) in pre-tax profit, up 26.8 per cent with after-tax profit VND1.325 trillion ($58.5 million), up 29 per cent year-on-year. As of December 31, 2016, the bank’s total assets stood at VND233 trillion ($10.3 billion), up 16 per cent compared to the start of the year.

Customer lending reached VND163 trillion ($7.2 billion), up 20.7 per cent year-on-year and customer deposits reached VND207 trillion ($9.15 billion), up 18.3 per cent year-on-year. Total bad debts as of the end of the year stood at VND1.42 trillion ($62.7 million), down 20 per cent year-on-year. Its bad debt rate had fallen from 1.31 per cent to 0.87 per cent as of December 31,2016.

The bank’s management report issued last month indicated that ACB’s management board has shown interest in acquiring Posts and Telecommunications Finance Ltd (PTFinance). Founded in 1998, PTFinance has a charter capital of VND500 billion ($22.1 million) and is 100 per cent owned by the State-run telecom provider VNPT.

PTFinance posted a rather modest profit of VND2.8 billion ($123,760) during 2016’s first half. Its total assets stood at VND384 billion ($17 million) by the end of 2016’s second quarter, in which short-term investments took up a huge portion with VND260.4 billion ($11.5 million).

Mergers and acquisitions (M&A) between banks and financial companies has been a trend for the last few years. SHB finished the M&A deal with Vinaconex-Viettel Finance (VFF) after two years of negotiating. With the acquisition of a financial company, banks can participate in the unsecured lending sector, which incurs high risks but even higher returns than other ordinary loans.

In an interview with Forbes last month, ACB’s Chairman Mr. Tran Hung Huy revealed that the bank has been conducting research to acquire a financial company in order to develop unsecured lending products. However, Mr. Huy affirmed that ACB has no plan to grab a piece of this fruitful activity yet due to a fear of deriving bad debts.

ACB’s shares price closed as high as VND24,200 ($1.07) after the trading session on February 3. The bank’s share value has gone up by 36 per cent since the trading session on January 2 when it closed at VND17,790 ($0.79) per share.

Sacombank saw a business downturn in 2016

Sacombank recorded a total loss of VND18.5 billion ($817,145) during the fourth quarter of 2016. This confirms the pre-tax profit for the whole year 2016 of only VND531 billion ($23.4 million), down 64 per cent year-on-year, the bank’s consolidated financial statement for 2016’s fourth quarter showed.

As of December 31, 2016, the bank’s total assets stood at VND333.3 trillion ($14.7 billion), up 14 per cent from the start of the year. Customers lending was recorded at VND198.8 trillion ($8.8 billion), up 6.9 per cent year-on-year while customer deposits reached VND291 trillion ($12.85 billion), up 11 per cent year-on-year.

During 2016’s fourth quarter, net interest income reached VND1.4 trillion ($61.8 million), up 54 per cent year-on-year but the full year figure went down by 22 per cent year-on-year and stood at VND5.12 trillion ($226.1 million). Most of the bank’s activities during the September-December period were less than satisfactory except services which brought a net income of VND418 billion ($18.5 million), up 19 per cent year-on-year.

Foreign currencies trading saw a heavy loss of VND275.2 billion ($12.1 million) even though loss of this activity in 2015’s fourth quarter was only VND29 billion ($1.3 million). Against a profit of VND16 billion ($706,720) in 2015’s fourth quarter, securities trading recorded a loss of VND2.6 billion ($114,842) in 2016’s fourth quarter. Net loss from investment securities was recorded at VND37.4 billion ($1.6 million) for the quarter.

During the fourth quarter, operating costs surged by 29 per cent to VND1.58 trillion ($69.8 million). But the total loss of the quarter, despite being recorded at VND18.5 billion ($817,145), was only “secured” because Sacombank had cut down its credit risk provision from VND1.13 trillion ($50 million) in 2015’s fourth quarter to VND23.5 billion ($1.04 million) in 2016’s fourth quarter. Its net operating revenue during the period stood as low as VND5 billion ($220,850), down 91 per cent year-on-year.

The bank revealed its full year’s pre-tax profit of VND531 billion ($23.4 million), down 64 per cent year-on-year, and an after-tax profit of VND372 billion ($16.4 million). Its charter capital remained at VND18.85 trillion ($832.6 million) as of December 31, 2016.

Last month, Sacombank was named one of the top five banks to undergo restructuring in 2017, together with the three zero dong banks that the central bank acquired for the price of zero dong in 2015: the VNCB, PG Bank, Ocean Bank and Dong A Bank. It became the fifth-largest lender in the local banking sector in 2015 after the voluntary merger with Southern Bank.

But while the State Bank of Vietnam (SBV) has praised the joint entity, saying it had synergy that brought greater benefits to shareholders and customers, Moody’s confirmed the merger resulted in high solvency and liquidity risks for Sacombank. In its October 2016 report, it changed the bank’s outlook to negative because its problem assets had been increasing substantially since the pre-merger period and its credit provisions were slim by the end of June.

That’s not the only thing working against Sacombank, as related risks include its corporate behavior, opacity and complexity. The corporate behavior risks originate from the situation where the majority of Sacombank’s shares are managed by the SBV, which creates uncertainty around the financial health and future development of the bank.

Opacity risks stem from the fact that the bank has not yet published its audited financial report for 2015, which raises the possibility they may be restated. “The negative outlook for Sacombank reflects the uncertainty around the strategic direction of the bank, its unclear ownership structure, and the true scope of asset quality challenges,” wrote Moody’s.

In its latest response, Sacombank Chairman Mr. Kieu Huu Dung declared that Sacombank is not a weak bank, pointing out that it still leads the commercial group. He also revealed that many potential investors are keen to lend a hand to address the consequences of the Southern Bank merger, and, in the meantime, the bank’s restructuring plan is to be submitted to the central bank. “We are determined to start the process as soon as the plan is approved,” he added.

ASIA DMC has new group managing director

ASIA DMC, one of the leading regional tour operators, is setting its sights on accelerated growth this year with the hiring of dynamic travel professional Mr. Linh Le in the role of Group Managing Director as it charts an expansion course across the region.

The move follows the rebranding of the Hanoi-headquartered company at the World Travel Market in London last year after 20 years of operating under HG Travel. This was done in order to set the stage for growth in Southeast Asia and enable the company to offer exceptional tailor-made travel experiences to upscale travellers from around the world.

Mr. Le joined ASIA DMC following a six-year tenure with boutique luxury tour operator Trails of Indochina and is now tasked with consolidating ASIA DMC’s position in Vietnam, Thailand, Myanmar, Cambodia and Laos where it has offices. He is also expected to expand into Sri Lanka, China, India, and the Philippines this year.

“We are delighted to welcome such a motivated and modern leader to our team,” said HG Holdings CEO Tran Thanh Nam. “Mr. Linh’s knowledge of luxury travel experiences around the region is second to none and his ethics and relationships stand out making him the ideal ambassador for ASIA DMC as we grow.”

Mr.Nam will stand down from his existing position as CEO of ASIA DMC to focus on developing the hospitality arm of HG Holdings which is the owning company of ASIA DMC.

During his 14-year career in tour operations, Mr. Le has been internationally recognized, and awarded for his holistic knowledge of the worldwide travel industry. He also received the 2016 Highest Growth Award from Virtuoso Asia Pacific whilst acting as Global Director of Trails of Indochina.

“It’s a privilege to be aligned with a company of such great quality, vision – particularly in terms of social responsibility which is the cornerstone of all plans and strategies – and indeed growth potential,” said Mr. Le.

Following its rebranding in November, ASIA DMC quickly moved to fulfill its mission to provide unique, tailor-made journeys and engaging activities for travellers seeking a more fulfilling travel experience.  

With the company’s commitment to social and environmental responsibility, an innovative approach to destination management, and motivated leadership, ASIA DMC is now looking confidently to the future.

Coffee and rice exports decline sharply in January 2017

Vietnam’s coffee and rice exports in the first month of 2017 decreased sharply regarding both volume and value compared to the same period of last year.

Specifically, Vietnam shipped an estimated 127,000 tonnes of coffee abroard in January and brought in approximately US$287 million in revenue, down 26.5% in volume and 3.6% in value year on year.

The average coffee export price in 2016 was US$1,872 per tonne, representing a 6% fall against 2015.

Germany and the United States remained the two largest consuming markets of Vietnamese coffee last year with respective market shares of 14.8% and 13.5%.

Vietnam’s 2016 coffee export turnover surged in most of the country’s major markets, including Algeria (up 64.5% year on year), the Philippines (up 63.6%), China (up 45%), the US (up 43.6%), Germany (up 37.6%), Belgium (up 33.1%), Italia (up 23.6%), Japan (up 17.7%) and Russia (up 14%). Spain was the only market to see a decline (down 8.3%).

Meanwhile, rice exports over the past month were estimated at 325,000 tonnes worth US$136 million, down 32% in volume and 35.1% in value compared to the same period of 2016.

The average rice export price in 2016 was US$449 per tonne, up 6.2% against 2015.

China remained the largest importer of Vietnamese rice last year with a market share of 36%, with Vietnam earning approximately US$782.3 million from shipping 1.74 million tonnes to the market – down 17.5% in volume and 8.6% in value.

Ghana followed in second place with a market share of 11.5%. Vietnam exported 503,700 tonnes of rice to the market (up 38.9%) and brought in US$248.9 million (up 34.5%).  

U.S., EU major importers of Vietnamese-made phones

Vietnam fetched US$34.3 billion from exports of phones and phone components in 2016 with the U.S. and the European Union (EU) emerging as key importers.

A General Department of Customs report says phones and phone components became the biggest export earner last year with their export revenues rising by 13.8% versus 2015. Apparel came second by revenue with nearly US$24 billion, followed by computers, electronics and components with around US$19 billion.

Last year saw the country obtaining export revenue of over US$34 billion for a single item for the first time despite Samsung’s suspension of Galaxy Note 7 smartphone production over battery fire incidents. Samsung’s two production plants in the northern provinces of Bac Ninh and Thai Nguyen make around 35% of the firm’s mobile phones for world markets.

Phones and phone parts remained the biggest export earner with their revenues accounting for 27.1% of the country’s total exports in 2016.

According to the General Department of Customs, Vietnam’s phones and phone components were shipped to many foreign countries last year. Notably, sales to the EU neared US$11.24 billion, up 11.1% from a year earlier, and those to the U.S. exceeded US$4.3 billion, up 55.5%, the United Arab Emirates US$3.83 billion and ASEAN nations some US$2.27 billion.

Given increasing investments by phone producers and phone component suppliers, analysts have forecast phones and phone components would continue to be the biggest contributor to Vietnam’s export turnover this year as their outbound sales are projected to climb to US$39 billion.

Data of the General Department of Customs shows Vietnam’s 2016 import-export turnover grew 7.1% against 2015 to US$350.74 billion. Of which, exports reached US$176.63 billion, up 9%, and imports totaled US$174.11 billion, a 5.2% increase, leaving a trade surplus of over US$2.52 billion.

The top 10 export earners brought nearly US$126.85 billion, making up 71.8% of the total.

The Ministry of Industry and Trade has predicted import-export turnover would keep rising this year, backed by a number of free trade agreements to which Vietnam is a signatory. In addition, foreign direct investment (FDI) is expected to flow from other regional nations, including China, to Vietnam.

The ministry noted that despite opportunities brought by the ASEAN Economic Community (AEC) and other trade deals, challenges will exist, especially in terms of market development and competitiveness on home and overseas markets.

Minister: Multiple challenges still weigh on local economy

Minister of Planning and Investment Nguyen Chi Dung has said Vietnam will continue coping with a host of challenges this year given lingering domestic weaknesses and considerable uncertainty for the global economy.

Many weaknesses remain in the economy of the nation related to low growth quality, labor productivity and competitiveness, Dung said. Institutional and legal reform and new pro-growth policies have not produced as many positive results as expected, especially for enterprises.

Dung said in an interview with the Government’s news website on the occasion of the Lunar New Year that a large number of enterprises have been established but they will have to face a rough ride.

Difficult access to finances and land, and cumbersome administrative procedures are still major barriers to business operations, Dung pointed out.

These make it hard for domestic firms to survive, grow and compete on par with global rivals.

However, Dung noted that challenge would come along with opportunities and that enterprises should be active in cashing in on such opportunities. Notably, Vietnam’s business environment has steadily improved, according to foreign and domestic business leaders at the Vietnam Business Forum last December.  

In spite of the improvement, Vietnam is now ranked fifth in the 10-member ASEAN. Vietnam still finds it hard to move higher in the regional grouping and is likely to be left behind as other countries in the lower positions are striving for higher places while those in the upper rankings will not let Vietnam catch up. 

Ministries and agencies have made greater efforts to better institutions, governance and policies and lessen state intervention in economic activity. But Dung emphasized the importance of eliminating interest groups to enhance law and discipline enforcement.  

He said the ministry participated in building a number of medium-term development plans. As an agency responsible for State management of public investment, the ministry helped the Government and the Prime Minister draw up a public investment plan for 2016-2020.

The public investment plan is aimed at restructuring and improving public investment in support of the country’s five-year socio-economic development plan at a time of rising financial constraints for public investment projects and programs.

The public investment plan was built to ensure mobilization of sufficient capital for major infrastructure projects designed to fuel growth, including the north-south expressway project, and at the same time for social welfare, environmental protection and climate change adaptation schemes.

The ministry will closely cooperate with other ministries and agencies in effectively allocating available funds to contribute to the successful implementation of the five-year socio-economic development plan and the economic restructuring plan for 2016-2020. Dung added that the National Assembly approved the economic restructuring plan.

To reach the targets envisaged in the plans, there are many tasks to complete, Dung noted.

Tourism growth strong in Jan

The nation’s tourism sector has got off to a good start this year, with more than one million international visitor arrivals reported in January, up a staggering 23.6% year-on-year, according to the Vietnam National Administration of Tourism (VNAT).

More than 247,000 Chinese visited the country last month, surging 67.9% over the same period last year and representing one-fourth of all international tourists to the country in the first month.

Other major source markets for the tourism sector are South Korea and Japan. Around 172,000 Koreans came to Vietnam, a 155% year-on-year increase, and Japanese visitors numbered 66,000, up 4%.

Russian tourist arrivals showed strong growth last month, with nearly 59,000 Russians coming, up 36.5% compared to the same period last year.

According to VNAT, the country will continue seeing robust tourism growth this year, with forecasts putting international arrivals at 11.5 million and domestic visitors at 66 million. Tourism revenue is projected to amount to VND460 trillion (US$20.3 billion).

Last year the country had more than 10 million international visitors, a 26% increase against the previous year, and 62 million domestic tourists, up 9%. Tourism revenue was put at VND400 trillion, surging 19% from a year earlier.

There are 21,000 lodging facilities with over 420,000 guest rooms nationwide.

Thua Thien-Hue aims to attract 6 trillion VND of investment in 2017

The central province of Thua Thien-Hue has set a target of luring 20 projects to its economic zones and industrial parks with a total investment of about 6 trillion VND (272 million USD).

To this end, the province’s Economic Zone and Industrial Park Management Board will launch investment promotion programmes with focus on fostering partnership with investors in infrastructure as well as financially strong firms, said Nguyen Que, deputy head of the Board.

Que revealed that currently, the board is working with major domestic firms including FLC Group, VinGroup, Bitexco and Viglacera, and strengthening coordination with foreign partners including JICA, KOICA and JETRO in investment promotion.

For projects being implemented in Chan May-Lang Co Economic Zone, including the second phase of the Lang Co Laguna, Minh Vien Lang Co resort and Wharf 3 in Chan May Port, the provincial authorities have been assisting in construction process and capital disbursement. 

According to Chairman of the Thua Thien-Hue People’s Committee Nguyen Van Cao, the province has applied a number of measures to call for more investment, including improving investment and business environment and fixing the consequences of the sea environment incident that happened last year.

In the coming time, Thua Thien-Hue will also enhance the quality of business associations and trade organizations to better the connectivity among enterprises. The province will invest over 2 trillion VND in socio-economic infrastructure and industry development programmes in 2017.

At the same time, Thua Thien-Hue will also restructure its vocational training system and step up administrative reform, striving to conduct over 50 percent of administrative procedures online and apply the one-stop shop model at the provincial and district administration centres, thus raising the satisfaction rate among local residents and businesses to over 80 percent, said Cao.

Last year, local economic zones and industrial parks attracted 14 projects with total investment of nearly 4.9 trillion VND, bringing the total number of projects located in their facilities to 140 worth over 63.7 trillion VND. Of the projects, 36 are run by foreign investors with registered capital almost reaching 31 trillion VND (approximately 1.4 billion USD).

Vietnam’s stocks to rise on lunar year optimism

Shares may continue rising this week as investor confidence increases at the beginning of the lunar year, analysts say.

Banking stocks are expected to take the lead with investors expecting improvements in the sector, they add.

The benchmark VN Index on the HCM Stock Exchange on February 3 fell 0.4 percent to end last week at 700.35 points, after rallying 3 percent in the previous five sessions to reach a nine-year high of 703.18 points on the previous day.

At the Hanoi Stock Exchange, the HNX Index rallied for a fourth day, increasing 0.5 percent to end at 85.03 points. The northern market index has moved up 2.4 percent in the last four sessions.

Investor sentiment is often high at the beginning of the lunar year, and this will be an important factor that could lift the market, as seen in the five consecutive days ending on February 3.

“Positive investor sentiment at the beginning of the lunar year will help increase investment in the stock market, especially when the resistance range of 690-700 points has been surpassed for the first time since September 2016,” said Phan Dung Khanh, head of the investment consultancy at Maybank Kim Eng Securities Co Ltd.

Before the Tet (Lunar New Year) holiday, the VN Index had crossed the 690 point level, and the nine-year high was reached after the market returned from a one-week break.

This caused both regret and excitement among investors because they had pulled out of the stock market during the pre-Tet holiday period, missing the opportunity to participate in the market’s improvement, Khanh said.

The stock market will also be lifted by investor expectations of Government policies to support the economy and businesses, along with the release of companies’ earnings reports, and by large-cap groups that are preparing to be traded on the stock market, he added.

The VN Index corrected itself on February 3 after a five-day rally.

According to Vu Minh Duc, head of individual customer analysis at the Viet Capital Securities Company, the correction on February 3 was a must-decline session so that the VN Index can continue increasing in the near future.

More specifically, the benchmark index might decline during some of the first trading days this week to test the support range of 695-700 points, then increase to the middle-term resistance level of 740-750 points within months, he said.

Banks will lead the market in the coming week, and this year, as investors are counting on the restructuring plan for the entire banking system, as well as on the possibility of a policy that allows banks to lift the bar for foreign investment this year, as Prime Minister Nguyen Xuan Phuc told Bloomberg TV in January, Duc said.

Bank stocks, such as Vietcombank (VCB), BIDV (BID) and Vietinbank (CTG), weigh heavily on the market, as do other blue chip firms including dairy producer Vinamilk (VNM) and brewer Sabeco (SAB). While the price-to-earnings ratios of the large-cap bank stocks are lower than that of the latter, it also means the potential for bank stocks to grow is quite high, Duc said.

Investors may also take earnings reports of listed companies into account this week, according to Nguyen Ngoc Lan, head of the broker division at Agribank Securities Company.

Companies that saw yearly increases in their earnings for 2016 include dairy producer Vinamilk, steelmaker Hoa Phat Group (HPG), real estate group FLC (FLC) and Faros Construction Corp (ROS).

PM tours shrimp processing corporation in Ca Mau

Prime Minister Nguyen Xuan Phuc inspected the operation at the Minh Phu Seafood Corporation in the southernmost province of Ca Mau on February 5, one day ahead of a national conference on developing shrimp sector. 

Minh Phu is Vietnam’s leading shrimp exporter, shipping products to more than 50 foreign markets. Shrimp export alone earns the corporation 535 million USD in 2016, according to its management. The corporation is employing 12,000 workers. 

The PM hailed the company’s research into various models for shrimp farming, noting that any model should ensure the protection of the environment.

He expressed his hope that Minh Phu will earn two billion USD from exports by 2021, contributing to realising the national target of 10 billion USD in shrimp export value.

The company reported to the Government leader that it is developing a chain of shrimp farmers to ensure supply of clean raw materials meeting the quality requirements of strict markets and the easy verification of product origin.

It proposed a mangrove-based shrimp farming model, which could be an effective way for Ca Mau to reduce poverty and develop the local economy, considering the fact that the province currently has 100,000 hectares of mangrove forest.

Interest rate under pressure to stay steady

The State Bank of Vietnam has targeted keeping interest rate stable in 2017, however, the market’s developments in the first half of January 2017 show that lending rates are suffering from many pressures.

Analysts say the goal to stabilise interest rates this year may face many challenges, such as the recovery trend of commodity prices in the world market, including petroleum; the price adjustment of essential commodities of electricity, health service and education; and the risks of climate change and natural disaster.

Besides this, economist Bui Quang Tin said the exchange rate would also put pressure on interest rates in 2017.

Tin said the US dollar was forecast to continue strengthening due to the expectation that Fed would continue increasing interest rates this year and in 2018 and 2019. This trend would make it difficult for local commercial banks to reduce interest rates because at that time, the exchange rate between the US dollar and other currencies, including the VND, would hike.

“If Vietnam lowers interest rates, it will make the US dollar/VN dong exchange rate increase, resulting in imported goods becoming expensive and making it difficult for businesses,” he said.

In addition, the central bank’s regulation on reducing the ratio of using short-term capital for medium and long-term loans from 60 percent to 50 percent from January 1, 2017, would also affect deposit rates, especially terms that are more than 12 months. 

Prime Minister Nguyen Xuan Phuc also admitted interest rate was a serious problem for the central bank in 2017, especially in the context that inflation must be curbed and the macro economy must be stabilised. The country this year is targeting a GDP growth of 6.7 percent and inflation at some four percent.

In a bid to stabilise interest rate and control inflation, Tin suggested the central bank adjust inter-bank rates reasonably through the open market operation (OMO). Commercial banks can borrow capital from the OMO market to stabilise liquidity and deposit interest rates.

Besides preparation to cope with the US’s Fed policy on increasing interest rates, measures to support commercial banks enhancing medium- and long-term capital sources must be also taken, Tin said.

Economist Ngo Tri Long recommended the government continuously regulate prices of petroleum, electricity and public services according to the market mechanism with the State’s management.

Any changes in the prices of such commodities and services must be considered carefully and taken at a suitable time to avoid strong negative impact on the price level, Long said.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR

As soon as Deca.vn and Lingo.vn closed, Shopee.vn and aeoneshop.com were launched. There is no lack of vibrancy in Vietnam’s e-commerce arena.

Players keep popping up

In Vietnam today there are three popular e-commerce models: C2C (which connects customers to customers), B2C (business to customer) and Marketplace (which provides a platform to process transactions).

In the pure C2C model, similar to classified advertisements which connects the buyers and the sellers only in terms of information, chotot.vn remains the most prominent.

However, to Vietnam’s e-commerce, buyer’s trust and delivery have been the issues, and supplying information seems not enough. Many companies provide a platform with third-party services such as shipping or payment.

Among this group, Sendo.vn, owned by tech giant FPT Group, is a prime example. Recently Zalo of VNG Corporation, a technology company, also ventured into this market. But the name that has received the most attention recently was Shopee, a company started by Singaporean tech company Garena.

After nearly two years in Vietnam, this company has been downloaded two million times on mobile and processed 10,000 orders per day. Customer base and volume of orders have been growing 20 per cent per month.

In the B2C group, after the departures of Lingo.vn, and Deca.vn earlier, and while Adayroi.vn of property giant VinGroup has not made any breakthrough and Lotte.vn remained an unknown, Tiki.vn has continued to be the leader.

Founded in 2010 as an online bookstore, Tiki.vn has expanded into other fields such as cosmetics and electronics.

According to Tran Ngoc Thai Son, chief executive officer of Tiki.vn, book sales accounted for 70 per cent of the company’s revenue in 2014, but that ratio is only 30 per cent today with the rest of revenue coming from other fields. Now, Tiki receives 15,000 to 20,000 orders per day.

Even though Cdiscount.vn, the online shop of Big C supermarket which was acquired by Thailand’s retail giant Central Group, was closed and merged with Zalora, the e-commerce space remains attractive to other retail companies.

Not long after Korea’s Lotte Group entered Vietnam’s e-commerce with the Lotte.vn website, Japan’s biggest retailer Aeon also arrived with aeoneshop.com at the beginning of the year.

Finally, in the Marketplace group, Lazada.vn has seen no match with its 30 per cent market share (by revenue) in Vietnam’s online retail market.

Fierce competition

The race will intensify in the coming months, because up to now no company has made a profit in e-commerce in Vietnam, so they will compete fiercely for larger market share. The prizes await the final winners of this race.

Alexandre Dardy, chief executive officer of Lazada Vietnam, said Lazada will focus on attracting more brands to do business on its website in 2017. Its goal is to attract 10,000 companies, triple the current number.

As for Tiki.vn, the focus will be on sustainable growth. In 2017, Tiki.vn will continue to invest heavily in fulfillment, a service in which sellers just need to send their products to Tiki’s warehouses and let Tiki handle marketing and sales. Currently the company has two warehouses in Ho Chi Minh City and one in Hanoi, with total area of 10,000 square meters.

Meanwhile, although arriving late, traditional retail companies are always considered strong contenders. While Lotte.vn focuses on cosmetics and fashion that are the strength of Korean brands, aeoneshop.com targets electronics and baby products carrying Japanese brands. Currently aeoneshop.com owns a chain of large modern retail stores from shopping centers to convenience stores.

In addition directly owning four shopping centers in Ho Chi Minh City and Hanoi, Aeon bought 30 per cent stake in Fivimart and 49 per cent share of Citimart in 2015, and now indirectly owns 18 Fivimart stores in Hanoi and 66 mini-shops in Ho Chi Minh City.

In essence, the race between purely e-commerce companies and traditional retail companies in Vietnam has not seen the clear winners, and purely e-commerce firms currently have an edge. However, with the determination of retail companies to expand online, the competition will be exciting to watch in 2017.

VIR

Opened in 2010, Dien May Xanh in late 2014 reported revenue of VND1 trillion a year. Since early 2015, Dien May Xanh has been gearing up with the application of digital technology to internal administration and sales management. 

In August 2015, Dien May Xanh began conquering the northern market. It had opened 75 supermarkets by the end the year which brought the turnover of VND4.4 trillion, holding 5 percent of the market share. The figure reportedly had increased to 14-16 percent by the end of 2016.

According to Tran Kinh Doanh, CEO of The Gioi Di Dong JSC, the owner of Dien May Xanh brand, after two years of following the ‘fast fight fast victory’ strategy, with 266 supermarkets, Dien May Xanh has become the biggest partner of home appliance manufacturers and distributors in Vietnam.

The owner of Dien May Xanh hopes its revenue in 2016 can reach VND12 trillion and the figure would be double in 2017 to VND25 trillion.

Analysts commented that unlike other retailers, Dien May Xanh has been following its own business strategy because it arrived later than other rivals. 

A Dien May Xanh center covers 800-1,000 square meters, while the standard area for one home appliance supermarket is 4,000-5,000 square meters. With such a scale, the cost for one Dien May Xanh is VND6-10 billion, which is much lower than the traditional model.

Meanwhile, Dien May Xanh can receive financial support from The Gioi Di Dong which is believed to have powerful financial capability. 

Analysts also praised Dien May Xanh’s policy on developing centers in city suburbs and provinces. This is believed to be a reasonable decision as retail premises in the central business districts of Hanoi and HCMC have become too expensive.

Other home appliance retail chains, having realized the efficiency of Dien May Xanh’s small-center model, have also followed the development model.

The centers of Media Mart developed recently, for example, have an area of between 700 and 1,500 square meters.

Even Nguyen Kim, which only developed large shopping centers, has also changed its strategy. Eight of 14 supermarkets put into operation in December 2016 run under the shop-in-shop model with the average area of 300 square meters. They are located in big shopping malls such as Big C in HCMC, and the provinces of Binh Duong, Binh Thuan and Thanh Hoa.

Meanwhile, strong brands including Thien Hoa, Nguyen Kim, Phan Khang and Dien May Xanh all have spent money to develop online sales. The number of customers buying goods on nguyenkim.com rises by 400 percent during sale promotions.

Vi Ha

Central bank eyes lower bank lending rates

The State Bank of Vietnam revealed recently that it would continue to keep bank lending interest rates unchanged from last year’s levels.

But analysts think this will be a very difficult task for the central bank since many factors are expected to impact the rates this year.

The first reason they mention is the imminent rise in the dollar after the US Federal Reserve increases interest rates an expected three times this year as economic growth and inflation pick up.

They say interest rates on the dong always have a close correlation with the value of the greenback.

The second reason is that Circular No.06, which caps the ratio of short-term funds that can be used for medium- and long-term loans, will reduce it from 60 percent to 50 percent this year.

This has forced banks to restructure their finances and increase interest rates on medium- and long-term deposits.

The hike in wages this year is likely to bring inflationary pressure on the economy.      

In the event, some even predict lending interest rates to go up by 1-2 percentage points.

One of the measures the central bank is proposing is cutting deposit interest rates.

Many state-owned banks such as BIDV and Agribank have started to lower the rates on deposits of one to five months by 0.2-0.3 points. 

Other lenders have also reduced the deposit interest rates, though by a more modest 0.05-0.1 points.

Sacombank has cut the rates on deposits of two and three months by 0.1 point to 4.9 percent and 5.2 percent.

The Ministry of Planning and Investment seeks to push lending interest rates to under 5 percent by 2020, but many analysts are sceptical about this too.  

They said the rates cannot be cut any further since current rates are rather low compared with the average deposit interest rates.

The interest rates are around 6-7 percent for priority sectors for short-term loans and 9-10 percent for medium- and long-term loans.

The rates for normal production and business activities are between 6.8 and 9 percent for short-term loans and 9.3 percent and 11 percent for medium- and long-term loans.

SMEs positive about business future

Some 48 percent of 501 Vietnamese small and medium-sized enterprises (SMEs), which participated in The Future of Business survey, have positive views about the current situation.

This was revealed in findings unveiled by Facebook last week.

The survey, developed by the Organisation for Economic Cooperation and Development (OECD), World Bank and Facebook, is a source of information on SMEs looking to learn from other businesses.

This includes insights on how businesses are more confident if they trade internationally and how those that trade internationally are using digital tools at a higher rate.

The percentage is not so high but still higher than the global average of 42 percent, according to the survey, which was conducted last December, a month that was significant since it ended one year of the country’s economic development.

The December survey revealed some 69 percent SMEs were hopeful of a positive future, nine percent higher than the global average rate.

Thirty-eight percent of SMEs said they created jobs in the past six months and 66 percent said they want to create jobs in the next six months.

Among the key findings for Vietnam, the survey revealed the most common challenges for business, which included attracting customers, increasing revenue and maintaining profitability.

“Some 78 percent of Vietnamese small businesses said they used online tools to advertise to potential new customer products and services,” according to the survey.

Facebook said 21 percent of small businesses surveyed engaged in international trade. This was high considering 70 percent of these businesses have fewer than 10 employees and are not large multinationals.

The most commonly reported challenges for small businesses engaging in international trade are finding business partners, market access limitations and different regulations in other countries, which comprised 82 percent, 64 percent and 54 percent of the participants, respectively.

Meanwhile, women running businesses were found to be as confident about the current and near-term outlooks of their businesses and reported facing the same challenges as male-run businesses.

Women-run businesses used digital tools for two of the six purposes included in the Future of Business survey, more than male-run businesses.

Small businesses represent more than 90 percent of enterprises in all economies and also constitute a majority of a country’s employment virtually worldwide. OECD, World Bank and Facebook teamed up to create an online monthly survey of small businesses to understand their sentiment, activities and challenges. Timely information about businesses provides a pulse on the current and future economic environment in which businesses operate and gives insight on ways to help businesses grow.

Nearly 6,100 Vietnamese businesses took part in the monthly surveys in 2016, according to reports.

National power firm plans 2017 expansion

The National Power Transmission Corporation (EVN NPT) said it plans to put 63 projects worth more than VNĐ21.2 trillion (US$934.43 million) into operation in 2017. 

The key power transmission projects include the 500kV Thăng Long – Long Phú – Ô Môn line, the 220kV Long Phú – Sóc Trăng, and Long Phú – Cần Thơ – Trà Nóc lines, the 500kV Lai Châu transformer station, and transmission lines connected to Thái Bình thermal power plant. 

Several major upgrade projects will also be completed, such as the 500kV Việt Trì transformer station, the 220kV Đồng Hới – Đông Hà and Đông Hà – Huế lines and the 220kV Bình Long – Tây Ninh lines.

The corporation will operate projects designed to ensure power supply for Hà Nội, HCM City, and key economic zones. 

In 2017, EVN NPT hopes to complete procedures to launch 42 upgrade and support projects, while drafting investment plans and arranging funding for those to be put into operation after 2017. 

The corporation will also make efforts to ensure the pace of projects funded by loans from foreign agencies. 

EVN NPT Deputy Director General Trần Quốc Lâm said the corporation has urged leaders of its subsidiaries to build plans for the approved projects and aim to hit targets from the beginning of the year. 

The corporation will strengthen technology application while bettering relevant documents and management and supervision to enhance efficiency of the projects. 

In 2017, EVN NPT will also work with localities to accelerate land clearance for transmission projects.

Kon Tum green lights beverage factory     

Kon Tum People’s Committee has approved in principle the development of a factory producing beverages extracted from sim fruit (rose myrtle) in the province’s Kon Plong District.

The factory, expected to cost approximately VND29 billion (US$1.3 million) will be developed by Sim Thien Son Co. It is expected to produce five million litres of beverages per year.

The committee also granted approval for several hi-tech agricultural projects in the district with combined investment of VND140 billion ($6.2 million). 

Exports to Algeria up 16%

Vietnam exports to Algeria in 2016 increased by 16% to US$271.42 million against the previous year, according to Vietnam Customs.

Main export items included coffee (64,050 tons valued at US$112.96 million), telephones and components (down 26% to US$76.86 million), and rice (40,097 tons worth US$15.36 million).

The export products that obtained a growth were pepper, steel, seafood, computers, electronics and components, machines, equipment and tools.

The achievements were attributed to diverse trade promotion activities organized by relevant agencies last year.

The Vietnam Trade Office in Algeria held five trade promotion workshops introducing import-export potentials of both countries. It also supported Vietnam business people to attend fairs and exhibitions in Algeria.

The Ministry of Industry and Trade conducted working visits to Algeria for Vietnamese policy and market researchers to discuss measures to further promote trade in 2017 and coming years.

A series of trade events will be held this year to mark the 55th anniversary of diplomatic ties. A Vietnamese business delegation will attend the Alger International Fair and four trade and economic cooperation workshops will be held on this occasion.

Algeria is currently the fourth largest importer of Vietnam products in Africa, trailed by South Africa, Ghana and Egypt.

Vietnam earns record US$34 billion from smartphone shipments in 2016

Smartphones accounted for 27.1% of Vietnam’s total exports in 2016 with a value of US$34.32 billion, customs data showed. 

Phone exports are expected to rise 13.6% to reach US$39 billion this year, the Saigon Times cited experts as saying.

Vietnam’s economic growth is being fueled by steady inflows of foreign direct investment into export-oriented sectors, especially smartphones and tablet computers, and many of them are made by Samsung Electronics.

Samsung has invested a total of US$15 billion to produce phones in Vietnam, according to the Association of Foreign-Invested Enterprises, equivalent to 10% of the country’s total foreign investments over the past three decades.

About 130,000 workers at Samsung’s two manufacturing facilities in the southern provinces of Bac Ninh and Thai Nguyen are involved in assembling 35 percent of all Samsung’s smartphones globally, including its flagship Galaxy Note 7.

Despite Samsung’s parent company scrapping the Galaxy Note 7 following a series of unresolved battery fires last year, Samsung Vietnam’s smartphone shipments in 2016 rose 8% from US$32.7 billion in 2015, accounting for nearly a fifth of the country’s total export revenue.

The company is targeting a 7-10% increase in exports from Vietnam this year, said Deputy Director Bang Huyn Woo.

The General Statistics Office said exports in 2016 rose 9% to $176.6 billion, while imports increased 5.2% to $174.11 billion. Vietnam’s trade surplus was estimated at about US$2.52 billion, it said.

Vietnam’s top 10 foreign exchange earners, including mobile phones, textiles, electronic and computer components, footwear and seafood products, accounted for 71.8% of total exports in 2016.

The government has set an economic growth rate target of 6.7% this year, which would be the fastest pace since 2007.

Vietnam Airlines pilot salaries revealed

Vietnam Airlines has approved a fourth salary rise for its staff since 2008 to ensure that the income of the firm’s staff remains among the region’s top airlines.    

Meanwhile, the average salary of Vietnam Airlines flight attendants is VND25.5 million, while the figure for staff in other positions is VND17.4 million.

The salary increase at Vietnam Airlines is based on staff capacity and productivity.

Earlier in early 2015, the Ministry of Transport instructed Vietnam Airlines to review its salary policy, citing the high number of pilots who wanted to leave the company for better pay.

Vietnam Airlines and its subsidiaries earned combined revenue last year of more than VND76 trillion (USD3.34 billion) in 2016, an increase of more than 10% against 2015. Pre-tax profits stood at almost VND2.5 trillion (USD110 million), up 140% and 7% higher than the annual plan.

The national flag carrier is operating 85 planes and has 7,100 staff.

Multi-level marketing firm attempts to deflect accusations

Amway Vietnam said they had difficulties with administrative procedures after it was found out that they had failed to inform the authorities of changing business licence content.

On January 16, the Ministry of Industry and Trade announced a number of wrongdoings at two multi-level marketing companies, Amway Vietnam and Thien Ngoc Minh Uy. According to the ministry, Amway Vietnam couldn’t prove that it had informed several departments of industry and trade across the country when it changed its business licence content on multiple occasions.

In addition, even though the company have training courses for their distributors, it doesn’t have any measures to ensure that the distributors have followed and understood the courses.

On January 18, Bui Khanh Nguyen, Amway Vietnam Company’s PR director, said they had had difficulties with the administrative procedures. He went on to say that the Ministry of Industry and Trade was gathering opinions from all agencies and multi-level marketing firms for a new draft about multi-level marketing management.

He said, “Our difficulties have been known. The new draft will have many changes to tighten control over multi-level marketing but also create favourable conditions for the firms to continue business.”

Nguyen said the company didn’t have any other violations.

Dai-ichi Life VN gets nod to up capital

Insurance provider Dai-ichi Life Vietnam has received a licence to raise its capital to 117 million USD, from 100 million USD, so as to invest in new distribution channels in Vietnam.

With this go-ahead from the finance ministry, Dai-ichi Life Vietnam will become one of the top life insurance companies in terms of market capitalisation in the country.

“Dai-ichi Life Vietnam commits to become a ‘lifetime partner’ with Vietnam and Vietnamese people by striving to pioneer new aspects, bring significant change for the sake of the community and realise our objective of becoming the best life insurer in Vietnam,” said Takashi Fujii, chairman of Dai-ichi Life Vietnam.

In 2016, Dai-ichi Life Vietnam’s total premium for the year crossed 5,300 billion VND (235.5 million USD), an increase of 51 percent over 2015, and a 14.4-time rise since it was established in 2007.

Over 21 trillion VND poured into national power transmission network

The National Power Transmission Corporation (EVNNPT) said it plans to put into operation 63 projects worth over 21.2 trillion VND (934.43 million USD) in 2017.

The key power transmission projects include the 500kV Thang Long – Long Phu – O Mon line, the 220kV Long Phu – Soc Trang, and Long Phu – Can Tho – Tra Noc lines, the 500kV Lai Chau transformer station, and transmission lines connecting with the Thai Binh thermal power plant.

Several major upgrade projects will also be completed in the year, such as the 500kV Viet Tri transformer station, the 220kV Dong Hoi – Dong Ha and Dong Ha – Hue lines, the 220kV Binh Long – Tay Ninh lines, 

The corporation will put into operation projects designed to ensure power supply for Hanoi, HCM City, and the key economic zones in the north and the south.

In 2017, EVNNPT hopes to complete procedures to launch 42 upgrade and support projects, while drafting investment plans and arranging funding for those which need to be put into operation after 2017. 

At the same time, the corporation will make efforts to ensure the pace of projects funded by loans from foreign agencies.

EVN NPT Deputy Director General Tran Quoc Lam said the corporation has urged leaders of its subsidiaries to build detailed plans for the implementation of approved projects and embark on its targets right from the beginning of the year.

The corporation will strengthen technology application while bettering relevant documents and management and supervision to enhance efficiency of the projects.

In 2017, EVN NPT will also work closely with localities to accelerate land clearance for transmission projects.

Quang Ninh announces 2016 competitiveness index

Authorities of northern Quang Ninh province held a conference on January 23 to announce the 2016 competitiveness index of its departments, agencies and districts. 

The index was based on a set of criteria for information transparency and access, leadership dynamism, time cost, unofficial expenses, fair competition, support for enterprise, legal regulations and top officials’ responsibility. 

The provincial People’s Committee in coordination with the provincial Business Association and Vietsurvey group polled 989 local businesses, 15 departments and agencies, and 14 districts to compile the index. 

Accordingly, Co To island district leads the 14 districts in the province with 76.78 points, followed by Hoang Bo district (64.85 points), Uong Bi city (64.09 points) and Mong Cai city (55.69 points). 

The Quang Ninh Taxation Department tops the competitiveness rankings of 15 provincial departments and agencies with 81.87 points, followed by the provincial Department of Planning and Investment (70.15 points), the Department of Industry and Trade (59.23 points), and the Customs Department (53.52 points). The provincial Department of Agriculture and Rural Development and Hai Ha district are at the bottom. 

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, hailed Quang Ninh’s initiatives such as building an administrative centre and establishing an independent and effective investment promotion agency. 

Chairman of the provincial People’s Committee Nguyen Duc Long said the province has paid special attention to improving business climate over the past time. Provincial authorities have held regular meetings with more than 1,100 enterprises and investors in Quang Ninh to promptly remove difficulties, while cutting time to process administrative procedures involving taxation, customs, social insurance and business registration. 

In 2015, Quang Ninh ranked third among 63 cities and provinces nationwide in terms of the provincial competitiveness index.

Banks hike deposit rates for liquidity

During the run-up to Tet many banks have increased deposit rates to sustain liquidity.

Sacombank has hiked the rates on two- and six-month deposits by 0.1 and 0.2 percentage points to 5 percent and 5.9 percent.

DongABank hiked the rates on one- and six-month deposits by 0.1 and 0.3 points to 5 percent and 5.5 percent.

Some other banks have also increased the rates by 0.1-0.3 points.

Besides, banks are also scrambling to launch lucrative promotion programmes to attract deposits.

Vietinbank is offering bonuses of nearly 8 billion VND to depositors, SHB has earmarked 7.2 billion VND.

Market observers said many banks face liquidity pressure though the State Bank of Vietnam is pumping in a lot of money through open market operations (OMO).

A major part of almost 55 trillion VND were absorbed by the banks as of January 16.

The observers attributed the low liquidity to the fact that banks had to out a lot of money to enterprises and financial institutions, something that often happens a few weeks before Lunar New Year.

But other analysts dismiss the claim of low liquidity, pointing to banks’ transactions in the last few months of 2016. Most lenders had enough liquidity, with some even having plentiful cash, that they were ready to meet the payment demands of the market. 

This was also proved by the fact that interest rates kept falling on the inter-bank market.

The liquidity helped the government successfully issue bonds totally worth 281 trillion VND.

Buddhism spring festival to open in Son Tay town early February

The Khai Nguyen Pagoda in Hanoi’s suburban town of Son Tay will host a Buddhism spring festival from February 4-7 (the 8th-11th of the first lunar month).

Most Venerable Thich Dao Thinh, head monk of Khai Nguyen Pagoda, said at a press briefing on January 23 that the festival aims to promote the country’s traditional cultural values, pray for a New Year of happiness, health and peace and encourage understanding, love, and community connection. 

Highlights at the event include a flower exhibition, a fair of vegan food and sport and folk games like tugs of war, walking on stilts and boat racing.

Around 60 vegetarian restaurants across the country are expected to attend the event, introducing vegetarian dishes and products at 60 booths. The Khai Nguyen Pagoda and participating restaurants hope to set a Guinness record with 1,000 hot pots of vegetarian food at the festival.

The festival is co-organised by Khai Nguyen Pagoda, the An Lac business group, the Hanoi martial art association and the Vietnam Laughter Yoga club.

Vietnamese firms ignorant about EU FTA

Up to 69% of Vietnamese exporters to the European market said that they only heard about the EU-Vietnam Free Trade Agreement (EVFTA) and were unaware of its content.

The information was mentioned in a survey about impacts of EVFTA on Vietnam’s policy and mechanism reforms released by the Central Institute for Economic Management (CIEM) recently.

Up to 69% of Vietnamese exporters to the European market said that they only heard about the EU-Vietnam Free Trade Agreement (EVFTA) 

According to the survey which covers 120 companies which have signed export contracts with EU partners, 26% said that they only knew a little about EVFTA while only 5% admitted that they have thorough knowledge of the agreement which is scheduled to take effect early 2018.

Due to the ignorance about the agreement, up to 63% of the interviewed exporters have not made any preparations for the agreement which is scheduled to take effect in early 2018.

The in-principle agreement reached on August 4 2015 includes the elimination of over 99% of all tariffs. Vietnam will liberalise tariffs over a ten-year period and the EU will do likewise over a seven-year period.

Experts, however, warned that the EVFTA is a new deal with more commitments to cut tariffs, create commercial advantages, and improve the investment and business environments, competition, and sustainable development. It will also create challenges because the EU is one of the most competitive markets in the world.

Vietnamese companies are advised to study more information about European markets, pay more attention to raising their product quality as well as packaging. Many Vietnamese companies said that a taskforce should be set up to provide information about EVFTA for the business community.

DPM approves adjustment of Ha Tinh’s socio-economic development master plan

Deputy PM Vuong Dinh Hue has approved the guideline to adjust Ha Tinh province’s socio-economic development master plan, on the basis of the proposal from the provincial People’s Committee.

Accordingly, the Ha Tinh provincial People’s Committee is assigned to select a qualified and experienced advisory organization that meets the requirements of reviewing and updating the master plan until 2030, with a vision to 2050, in accordance with current regulations.

Earlier, in his Decision No. 1786/QĐ-TTg dated November 27, 2012, the Prime Minister approved a master plan on socio-economic development for Ha Tinh province until 2020, with a vision to 2050, targeting to build Ha Tinh into a province with an advanced economy, a synchronous and gradually modernized infrastructure system, the capabilities of environmental protection and adaptation to climate change, and constant improvements in local people’s material and spiritual lives.

Deutsche Bank: Growth to reach 6.4%

Deutsche Bank has forecast that Vietnam’s GDP will grow 6.4 per cent this year, exceeding the 6.21 per cent recorded in 2016.

Ms. Juliana Lee, Senior Economist at Deutsche Bank, wrote in the Macroeconomic Prospects report that growth would be based on the sustainable recovery of agriculture and exports.

“We recognize that Vietnam continues to deploy improvement plans to boost economic growth potential in the long term,” she said.

However, when Vietnam achieves significant improvements in economic reform, with supporting foreign capital inflows into the country and increasing exports, the value of the Vietnam dong (VND) will increase.

State-owned enterprise (SOE) reform is very important for the country’s financial situation because it will increase efficiency in public spending and bolster the proceeds from SOE equitization.

Ms. Lee emphasized the importance of resolving bad debts and boosting credit risk management in ensuring the stability of the banking system if interest rates rise in the medium and long terms. “Restructuring banks and resolving bad debts should drastically increase growth but policies need improvements,” she said.

Conditions for business and investment in Vietnam are favorable, according to Senior Economists at Deutsche Bank.

Deutsche Bank offers trade finance services, cash management and securities custody services as well as business consulting services for enterprises operating in Vietnam.

Kido to secure controlling stake in Vocarimex

The Kido Group Corporation has been given permission to hold more than 51 per cent in the Vietnam Vegetable Oils Industry Corporation (Vocarimex) without the need to conduct a takeover bid, an extraordinary shareholders meeting of Vocarimex on January 20 heard.

The green light was necessary for Kido to acquire the controlling stake and become Vocarimex’s parent company. Kido currently holds 24 per cent and is expected to increase its ownership to 51 per cent during the first quarter.

Established in 1992, Vocarimex had total consolidated assets of VND2.4 trillion ($109 million) as at the end of March 2016. Its unrefined cooking oil accounts for 94 per cent of total revenue and 89 per cent of Vietnam’s unrefined oil supply. Vocarimex had 343 employees as at the end of 2015 and seven subsidiaries and associated companies. It also has three vegetable oil joint ventures: the Golden Hope-Nha Be Edible Oils Company, the North Oils & Fats Industries Company (Nortalic), and the Cai Lan Oils & Fats Industries Company (Calofic).

Vocarimex has two other large shareholders: the State Capital Investment Corporation (SCIC), with 36.3 per cent, and VPBank Securities (VPBS) with 8 per cent. VPBS will be permitted to divest prior to the due date, and the Vegetable Oil Extraction Joint Stock Company (VOE) will be merged with Vocarimex, the extraordinary shareholder meeting also heard.

In previous news, Kido spent some VND1 trillion ($44.35 million) last November acquiring 65 per cent of the Tuong An Vegetable Oil Company (TAC) – the largest subsidiary of Vocarimex and the No.2 player in the domestic cooking oil market.

Kido’s operating revenue stood at VND2.24 trillion ($99.3 million) in 2016, with VND1.53 trillion ($67.8 million) in financial revenue earned primarily from selling the remaining 20 per cent of its subsidiary, the Kinh Do Binh Duong JSC, to Mondelez International.

The No.1 player is Calofic, who held a 39.2 per cent market share in financial year 2015 and is 24 per cent owned by Vocarimex. It reported 2015 revenue of VND11 trillion ($493 million); three times higher than its nearest competitor, Tuong An. Calofic has won the trust of a wide range of customers with its famous brands, including Neptune, Simply and Meizan.

Last year the Singaporean-based Wilmar International bought 45 per cent of Bunge Ltd’s oilseed crushing factory. Bunge is Vietnam’s largest producer of soybean oil, the world’s largest palm oil processor, and one of the largest soybean buyers, and aims to strengthen its presence in Vietnam’s cooking oil market.

With Kido aiming to turn Vocarimex into a subsidiary and with Wilmar’s strategic deal, the country’s cooking market is set to see fierce competition. Vietnam’s cooking oil market now has 40 companies producing and selling cooking oil products, 70 per cent of which are palm oil, 23 per cent soy bean oil, and 7 per cent vegetable oil, according to data from the Ministry of Industry and Trade.

MWG’s vuivui.com to overtake thegioididong & dienmayxanh in revenue

MWG Chairman Nguyen Duc Tai confirmed with VET that vuivui.com will earn higher revenue than its other two chains – thegioididong.com and dienmayxanh.com – in the five years to come. The website operates under the Business to Customer (B2C) model, similar to the other websites, but “the difference is quality management and the speed of delivery,” he said. “Eighty per cent of products sold on the website come from thegioididong.com and the remainder from other suppliers.”

Controlling input, the company is responsible for handling complaints and suppliers if customers buy counterfeit or low quality products. Project Director Pham Van Trong said that vuivui.com also commits to compensating customers if delivery is slower than committed. The website will have three delivery timelines: 11am, 4pm and 8pm.

Mr. Tai expects that the number of visitors to the website will reach 200,000 per day with estimated revenue of VND20 billion ($896,000) by the end of this year. It will operate in Ho Chi Minh City this year and at this stage there are no further details regarding expansion plans.

Online business accounts for 5 per cent of total retail turnover and will expand to 20 per cent in the future. “MWG plans to become the No. 1 online retailer in Ho Chi Minh City in 2017 and in Vietnam by 2020,” he said.

MWG also officially opened the 286th dienmayxanh.com store, in Duong Dong town on Phu Quoc Island, the first consumer electronics chain on the island. The chain accounted for 16-17 per cent of total consumer electronics retail share as at last October and is expected to reach 30 per cent by the end of this year.

The company’s business plan for 2017 is for total revenue and after-tax profit to reach VND63.3 trillion ($2.83 billion) and VND2.2 trillion ($98.6 million), respectively, up 85 per cent and 58.5 per cent against 2016.

In early November he announced that after-tax profit for 2016 has been estimated at VND1.5 trillion to VND1.6 trillion ($67.5 million to $71.7 million).

The company planned to earn revenue of VND34.2 trillion ($1.53 billion) in 2016 but in the first eleven months it already stood at VND39.6 trillion ($1.77 billion), up 76 per cent year-on-year and equal to 116 per cent of the annual target.

After-tax profit in the first eleven months was VND1.4 trillion ($627.8 million), up 51 per cent year-on-year and equal to 104 per cent of the annual target. Turnover at thegioididong.com was VND28 trillion ($1.25 billion), a 50 per cent increase year-on-year, and VND11.7 trillion ($524.6 million) at dienmayxanh.com, 207 per cent higher year-on-year. Online turnover reached VND2.94 trillion ($131.8 million), up 103 per cent year-on-year and equal to 89 per cent of the annual target.

Thaco & South Korean partner to produce agricultural machinery

The Truong Hai Automobile JSC (Thaco) has held a signing ceremony for a cooperative agreement with South Korea’s LS Mtron in producing and distributing agricultural machinery, beginning in October.

LS Mtron will transfer technology to Thaco for the construction of a plant in central Quang Nam province producing machinery and equipment used in agriculture, which will have a localization rate of 50 per cent and be branded Thaco and be distributed by the Vietnamese partner. The second stage will expand production for export to Southeast Asia.

“This is a new business endeavor under Thaco’s development strategy to be the multi-industry group, which places mechanical and automobiles as key industries,” Thaco Chairman Tran Ba Duong said. “It is also part of its responsibility in participating in Vietnam’s agriculture production in the context of it being a key sector of the economy heading towards industrialization and high-tech application, so that it may continue to develop in the future.”

“I believe that with a similar vision and business philosophy and with growth based on the partnership, the cooperation between the two sides will succeed,” said Deputy Chairman of LS Mtron Ja Eun Koo. “We will become the leading company in agricultural machinery in Vietnam and Southeast Asia.”

Mr. Nguyen Ngoc Quang, Chairman of the Quang Nam Provincial People’s Committee, said the partnership is a notable event for the local company, the province, and the country’s agriculture sector, marking a milestone in Thaco’s development in production and providing a foundation for developing the new field in the future. Mr. Hoang Van Thang, Deputy Minister of Agriculture and Rural Development, highlighted that the country’s agriculture sector has ten key items with total export value of $32 billion and employs more than 90 million people. “Manual workers in the industry are large in number but capacity is low,” he said. “The cooperation between these two companies will open up new prospects and contribute to speeding up the industrialization of agriculture and enhance the competitiveness of the industry and farmers’ livelihoods.”

LS Mtron began operations in agricultural machinery in 1997. LS tractors account for the largest share in South Korea and it has established a business network in the US and factories in China and Brazil. It exports to 40 countries and 12,000 tractors annually to North America – the largest agricultural machinery market in the world.

Thaco began expanding the Truong Hai-Chu Lai Mechanical Automobile Industrial Zone last year, with investment of $35.3 million. It also began operations at a new production line of trailers and special purpose vehicles, and begun to export to South America.

Vietcombank’s after-tax profit rises 28%

Vietcombank, Vietnam’s biggest lender by market value, saw its 2016 after-tax profit surge 28 per cent while its bad debt ratio was kept at 1.48 per cent as at December 31, the bank’s consolidated financial statement for the fourth quarter of 2016 reveals.

Pre-tax profit stood at VND2.2 trillion ($97 million) in the fourth quarter, for VND8.5 trillion ($377.5 million) during the year as a whole, up 24 per cent against 2015. After-tax profit reached VND6.85 trillion ($303.3 million), up 28 per cent.

Customer deposits totaled VND590 trillion ($26.14 billion), a 17.7 per cent increase year-on-year, while customer loans stood at VND460 trillion ($20.38 billion), 18.8 per cent higher.

Total assets were VND788 trillion ($34.92 billion), up 17 per cent year-on-year, and charter capital rose 35 per cent to VND35.9 trillion ($1.59 billion) as at December 31.

In the fourth quarter alone, Vietcombank’s interest income rose 10 per cent to VND4.88 trillion ($216.2 million), contributing significantly to the annual figure of VND18.5 trillion ($819.7 million), which was a 19.8 per cent increase year-on-year.

Operating costs during the fourth quarter stood at VND2.48 trillion ($110 million), up 5.2 per cent year-on-year. Risk provision costs surged 40 per cent in the quarter, to nearly VND1.9 trillion ($84.2 million), with full-year risk provision costs standing at VND6.41 trillion ($284 million).

Earnings-per-share (EPS) improved, rising 16 per cent to VND1,897 ($0.08). As at the end of 2016, bad debts totaled VND6.84 trillion ($303 million), equal to 1.48 per cent of total outstanding loans and down 0.36 per cent compared to the beginning of the year.

Vietcombank was the first lender to buy back all debts it sold to the Vietnam Asset Management Company (VAMC). The initial amount of cumulative debts was VND6.5 trillion ($288 million), while the value of VAMC’s bonds in exchange was only VND4 trillion ($177 million).

Its share price rose 36 per cent during the year, giving it a market value of $6.2 billion. The lender trades at about three times the book value, compared with an average of 1.1 times for listed Vietnamese banks.

According to foreign media, Singaporean sovereign fund GIC Pte has hit a snag in seeking government approval for its planned investment in Vietcombank. GIC said in August it had reached preliminary agreement to purchase 305.8 million new Vietcombank shares, equal to a 7.7 per cent holding, at a discount to the market price, for less than $400 million.

The deal, originally expected to be completed by the end of last year, is yet to be approved by Vietnamese authorities while the government has withheld approval in part because GIC proposed buying the stock at less than the market price, according to Bloomberg.

Vietcombank’s biggest shareholder, the State Bank of Vietnam, owns 77 per cent, while the Mizuho Financial Group Inc. is its second largest shareholder, with 15 per cent.

MSI lists sectors with potential in stock market

A report from Maritime Securities Incorporation released on January 19 listed six sectors and one company in Vietnam’s stock market with potential in 2017: gas, food and beverages, insurance, construction and industrial production, automobile and retail, and building materials, as well as subsidiaries belonging to Vinachem.

The construction and industrial production sector is expected to achieve the highest growth, of 24 per cent, followed by food and beverages with 18 per cent, insurance, automobiles and retail with 17 per cent each, and building materials 10 per cent.

Crude oil prices may bounce back to $60 per barrel, which will support gas enterprises to improve their businesses performance.

Food & beverage enterprises, including Sabeco, Habeco, Vissan, and Quang Ngai Sugar, are expected to grow strongly in 2017.

Real estate may be risky because credit to the sector is limited and the supply of apartments is increasing significantly.

Fisheries and textiles have a poor outlook due to rising labor costs and falling exports.

The three sectors with the highest growth in 2016 were construction and industrial production (83 per cent), building materials (82 per cent), and automobile and retail (82 per cent), while real estate sector increased just 1 per cent.

MSI: VN-Index to reach 770 points this year

The VN-Index is expected to reach 770 points in 2017, according to a Maritime Securities Incorporation (MSI) report released on January 19.

Based on forecasts for Vietnam’s economy in 2017, cash flow analysis, and market liquidity in 2016, MSI believes that 2017 will be a successful year for the country’s stock market.

“The stock market in 2017 is expected to be more favorable than last year,” according to Vice President of Research at MSI, Mr. Bui Duc Hoan.

The VN-Index may have two periods of significant increases, from January to May and from August to December. In the first period, MSI believes the VN-Index will move from 680 to 750 points and adjust to between 730 and 760 points in June and July before reaching 770-790 points in the third quarter and adjusting to 770 (+/- 10 points) late in the year.

In 2016 the VN-Index recovered from 515 points to 680 points.

The VN-Index stood at 1,170 points in March 2007. The size of the stock market was small, with only 150 enterprises listed on HSX and HNX.

The 2009-2011 period was a difficult time, with the VN-Index bottoming out at 235 points. It has been on a relatively steady upwards trajectory ever since.

MB Ageas Life comes into being

The MB Ageas Life Insurance Company Limited, known as MB Ageas Life, was officially launched on January 16.

The company is a life insurance joint venture between Belgium’s Ageas Group, Thailand’s Muang Thai Life Assurance, and Vietnam’s Military Commercial Joint Stock Bank (MB).

The Ministry of Finance issued License No. 74/GP/KDBH on July 21, 2016, establishing MB Ageas Life with charter capital of VND1.1 trillion ($48.4 million). It specializes in life insurance, health insurance, and financial investment and its head office is in Hanoi.

MB Ageas Life is a move by MB in response to the government’s strategic development of Vietnam’s insurance market under Decision No. 193/QD-TTg issued in 2012.

The strategy is directed at developing insurers with strong financial capacity, governance of international standard, effective operations, and competitiveness in the country and the region.

A number of cooperative agreements were also signed at the launch ceremony, including an insurance agency contract between MB Ageas Life and MB and a cooperation contract to provide insurance products between MB Ageas Life and the Mcredit Co., Ltd.

These are important partnerships that will help MB Ageas Life provide products and services with added value to customers, promoting the development of distribution systems through banking channels.

Mr. Le Huu Duc, Chairman of MB, emphasized at the launch ceremony that MB is now building a strategy to become a diverse financial corporation, in which the bank is the parent company with subsidiaries specializing in securities, fund management, real estate, insurance, debt management, and consumer finance.

“The strategy aims to provide financial solutions to customers, contribute to revenue growth, and bring the greatest benefits to shareholders, partners and customers,” he said.

MB Ageas Life believes that it will be successful in the Vietnam, contributing to the development of the insurance industry and bringing quality services to every Vietnamese citizen.

Nation’s retail sales up 10.2% in 2016

Vietnam’s retail sales of goods and services were estimated at VND3.53 quadrillion (US$156.7 billion) in 2016, up 10.2% from last year, as indicated by data released by the General Statistics Office (GSO).

The retail sales of goods, which accounted for 75% of the total sales, reached VND2.67 quadrillion (US$118.9 billion), up 10.2% from last year.

The revenue in some sectors saw a handsome increase. Food and food products, for instance, surged 13 per cent year-on-year, household appliances rose 12 per cent, garments and textiles went up 11 per cent and transport services increased by 6 per cent. However, the sales of educational and cultural products grew at a low rate of 2 per cent.

The retail sales of accommodation, restaurant and catering services reached approximately US$18.4 billion, which accounts for 12% of the total revenue, posting an 11% year-on-year rise. This is mainly thanks to effective tourism policies that led to a significant increase in the number of tourists in the later months of 2016.

Localities that posted high accommodation, restaurant and catering services as well as retail sales include the southern provinces of Binh Duong and Binh Thuan at 18% and 17%, respectively; the northern city of Hai Phong (16%), Hanoi (14%) and Ho Chi Minh City (9%).

The sales of other services in 2016 reached an estimated US$18 billion, making up 11.4% of total revenue and surging 9.3% compared to the previous year.

Government approves development programme for support industries by 2025

The Prime Minister has issued Decision No. 68/ QD-TTg on a development programme for support industries in the 2016-2025 period.

The program will provide assistance through activities such as promoting domestic and international investment for production at support industries; furthering the development of domestic markets and the export of products from support industries; providing information and data on support industries; recognizing enterprises adapting to standards; assisting start-up enterprises and encouraging technology transfer and production testing; creating management systems of international standards for enterprises in support industries; and enhancing cooperation between enterprises in support industries and multinational corporations and improving personnel training in management and scientific and technical services for production in support industries.

Six specific programmes will be introduced. Activities to assist the research and development of technological applications and transfer in production testing of components and materials will receive the highest investment, of VND890 billion ($39.7 million), or 51.7 per cent of the total.

The programme which aims to assist enterprises in applying international standards in business and production management is expected to provide consultancy to 2,000 enterprises on the application of international management standards.

The investment promotion programme for support industries aims to attract foreign direct investment in support industries through organising fairs and promoting such investments in the media.

Agricultural sector aims for higher targets in 2017

Overcoming challenges from extreme weather and market volatility, the agricultural sector ended 2016 on a positive note when output rose by 1.44%.

It is noteworthy that amid difficulties faced in export markets, the export value of agricultural products did not fall but however climbed by US$1.7 billion to approximately US$32.1 billion thanks to a timely shift to goods that there is still room for growth.

The accelerated growth of the sector in the second half of 2016 had a significant contribution of such goods as seafood, and fruit and vegetables in particular. In 2015 fruit and vegetable exports reached only US$1.9 billion, lower than rice, but soared to US$2.4 billion in 2016, far surpassing the US$1.9 billion revenue recorded by rice exports.

But despite such positive figures, it is easy to see that Vietnam’s agriculture still faces many problems. In general Vietnam’s agriculture remains small in scale, largely based on households with 13.8 million smallholders cultivating on 78 million parches of land. Therefore, agricultural restructuring aligned with building new rural areas is an urgent task to foster production, improve income and ensure social security for the rural regions which account for 70% of Vietnam’s land area and 46% of population.

2017 is seen to be a key year in the implementation of the national socio-economic development plan and the agricultural development plan for the 2016-2021 period amid anticipated challenges. Nevertheless, the sector still targets a GDP growth of 2.5-2.8% and export revenues of US$32-32.5 billion. In order to achieve these targets and beyond, the agricultural sector will place a major focus on key products, particularly those with export values reaching US$1 billion and higher.     

Restructuring of State-owned enterprises requires dual goals

The project on restructuring State-owned enterprises (SOEs) for 2016-2020 period requires dual goals, including resolving backlogs and weakness of the restructuring activities and improving the efficiency and competitiveness of SOEs.

The statement was made by Politburo member and Deputy Prime Minister Vuong Dinh Hue, who is also Head of the Central Steering Committe for the Innovation and Development of Enterprises, after listening to a report made by the Ministry of Finance (MoF) in Hanoi on January 20 on building a project to restructure SOEs in the 2016-2020 period

The Deputy PM asked the MoF to analyse the results in restructuring SOEs over the past years in order to identify the limitations and unachieved goals in order to overcome them in the coming time, such as the high capitalisation rate of the State, the arrangement of SOEs in the major fields of the economy and the improvement of the efficiency, productivity, scientific and technical application and competitiveness of the enterprises.

It is essential to ensure the consistency and efficiency of the SOEs as well as promote their role for the economy while implementing the project, added Deputy PM Hue.

He noted that the project should clarify measures to mobilise resources from the market to actively participate in restructuring the SOEs.

In addition, the project needs to clearly assign and decentralise the Government, PM and the Steering Committee for Enterprises’ Innovation and Development as well as ministries and localities, to decide on issues related to restructuring the SOEs, the Depty PM noted.

Regarding legal issues, he asked the ministries to review and further amend and supplement the system of regulations on the State management function, representatives of the State in enterprises, equitisation, SOE valuation methods, and supervision of investment resources of SOEs.

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