BUSINESS IN BRIEF 18/9

Reference exchange rate down by 2 VND at week’s beginning



Deputy PM lauds Belgian company’s energy projects in Vietnam, 17th Int’l Textile and Apparel Accessories Exhibition slated for November, Nearly 11,000 real estate firms established in eight months



The State Bank of Vietnam set its reference VND/USD exchange rate at 22,439 VND/USD on September 18, down by 2 VND from the end of last week. 

With the current  +/- 3 percent VND/USD trading band, the ceiling exchange rate is 23,111 VND per USD and the floor rate is 21,767 VND per USD. 

Major commercial banks continued keeping their rates unchanged.

Vietcombank offered 22,690 VND (buying) and 22,760 VND (selling), per USD, unchanged from the end of last week.

BIDV also kept its rates unchanged, offering 22,690 VND (buying) and 22,760 VND (selling), per USD.

Vietinbank offered its buying rate at 22,690 VND, up by 10 VND, and its selling rate at 22,760 VND, per USD, unchanged from the end of last week.

Deputy PM lauds Belgian company’s energy projects in Vietnam

Deputy Prime Minister Vuong Dinh Hue has applauded the investment in wind and solar energy in Vietnam of Belgium’s Rent-A-Port and suggested the company work on connecting wind power with Vietnam’s national power grid. 

The Deputy PM visited the headquarters of Rent-A-Port, an engineering and investment company specialising in the development of marine infrastructure and industrial zones, as part of his visit to Belgium from September 15-19.

He was briefed on the company’s successful investment models which combine industrial zones with port complexes, transportation services and energy production, with the most noteworthy being the Antwerp port area. 

In Vietnam, Rent-A-Port has worked with the People’s Committee of the northern port city of Hai Phong to develop Dinh Vu Industrial Zone/Deep-C on the Dinh Vu peninsula, regarded as one of the most successful industrial park projects in northern Vietnam.  

The company is expected to build more industrial parks in Hai Phong and the northern port province of Quang Ninh, focusing on high-tech and renewable energy projects.

Deputy PM Hue made fact-finding trips to Rent-A-Port projects, including Antwerp, the second largest port in Europe in terms of cargo volume and one of the main gateways of Europe to sea, along with C-Power, the first far-shore wind farm in Belgium. 

Rent-A-Port leaders expressed their hope to replicate its successful models in Hai Phong and Quang Ninh, and that the Vietnamese Government will continue to support the company’s projects, especially those on sea dyke construction and wind and solar power projects in Hai Phong. 

In response, Deputy PM said the Vietnamese Government welcomes and creates the best possible conditions for foreign firms to expand their business in Vietnam. 

After touring Antwerp, the official visited Ostend city, where he attended a banquet hosted by the city’s Mayor Johan Vande Lanotte, also former Deputy PM of Belgium.

Lanottee and Rent-A-Port leaders affirmed their support for the establishment of a free trade agreement between Vietnam and the EU. 

Later the same day, Deputy PM visited the Vietnamese Embassy in Belgium.

17th Int’l Textile and Apparel Accessories Exhibition slated for November

The 17th International Textile and Apparel Accessories Exhibition will be held at Ho Chi Minh City’s Saigon Exhibition and Convention Centre from November 22-25, according to the Vietnam Cotton and Spinning Association.

The event is expected to draw about 500 firms from countries including Vietnam, China, India, the Republic of Korea and Taiwan (China), across about 700 booths. 

Firms registered for the event include Barudan, Epson, Heinz, Walz, Hikari, Juki, Mitsuyin, Ngai Shing, ROQ (Artend), Supreme and Tajima.

The exhibition will spotlight new solutions, technology and equipment for the apparel sector, including automatic sewing, cutting and fibre processing machines, printing machines in fabric, and embroidering machines.

The event is being organised by the Yorkers Trade and Marketing Service Company, the Vietnam National Trade Fair and Advertising JSC in collaboration with the Ministry of Trade, the Hon Kong Apparel Machinery Association, Guangdong Sewing Equipment Chamber of Commerce, and the Vietnam Cotton and Spinning Association.

Vietnam a ready, willing partner for Canada

“Vietnam has moved well beyond the devastation of the war years and is a ready and willing partner for Canada”, wrote Stewart Beck, President and CEO of the Asia Pacific Foundation of Canada in a recent article for Canada-based The Globe and Mail.

Beck was in Ho Chi Minh City, Vietnam last week for the 24th Asia-Pacific Economic Cooperation (APEC) Small and Medium Enterprises Ministerial Meeting. 

“The memory of the Vietnam War is still vivid in the minds of many from my generation”, he opened the article. After the war, Canada accepted about 60,000 Vietnamese refugees from 1979 – 1980, established an embassy in Hanoi in 1994 and a consulate-general in HCM City in 1997, the article said.

Since then, Vietnam has become Canada’s 11th largest source of international students and trade between the two countries reached 5.5 billion USD in 2016. With its extraordinary economic growth, increasingly liberalised economy, commitment to global integration, its membership in la Francophonie and large diaspora, Vietnam is a key collaborator in ASEAN and APEC.

Beck mentioned that Vietnam’s GDP grew 6.2 percent last year, more than four times higher than Canada’s. About 43.7 million of the country’s population have connected to the internet and its middle class is burgeoning, he described, adding that “the explosive success of Vietnam's startup community has generated a "reverse brain-drain," with young Vietnamese entrepreneurs returning home from abroad to establish or work in startups, bringing with them new knowledge and skills that will invigorate Vietnam's economy for years to come.”

He believed now is the time for Canada to engage deeper with Vietnam and its APEC and ASEAN partners and like these countries, Canada sees micro, small and medium-sized enterprises (MSMEs) as the engines of growth and innovation in APEC. 

According to Beck, Vietnam has about 600,000 registered MSMEs, a number that is growing by more than 100,000 annually. An estimated 14,500 new MSMEs were established in the first two months of 2017 with total registered capital of some 8.2 billion USD.

Canada can leverage its expertise in technological innovation, entrepreneurship and green growth to strengthen these MSMEs in Vietnam and the APEC region, he noted.

“There is also an opportunity to connect Canadian businesses with new and like-minded partners in APEC economies such as Vietnam, where Canadian companies will find opportunities in sectors such as agri-food, education and training, information and communication technologies, clean tech and financial technology, as well as other services.”

He suggested Canada engage in the development of Vietnamese start-ups at early stages, providing them mentorship and technological help. He also urged Canada to collaborate with Vietnam in e-commerce and virtual education and training.

Foreign brands stirring up a passion for fashion in Vietnam

The time of fast fashion in Vietnam has finally arrived, according to the latest report released by consulting firm Savills.

The Southeast Asian country has emerged as one of the most promising markets for fast fashion brands such as Zara, Old Navy and H&M over the past year, and it's showing no signs of slowing down.

In the fall last year, when Spanish brand Zara made its debut in Saigon, it was just the beginning. 

Zara itself is expanding and a new store will be opened in Hanoi soon. Its cousins, Stradivarius, Pull & Bear and Massimo Dutti, have also dipped into the market targeting over 90 million potential Vietnamese customers who have developed an appetite for fashion.

Vietnam's fast fashion market is moving and shaking at a dizzying speed, said Pham Thai Binh, head of retail at Savills. The country is in a period of economic transition, and its consumer behavior is changing.

Reasonably priced clothes are the key to winning customers, the report noted. By setting prices for selected items at 15-20 percent less than its stores in Malaysia and Singapore, Zara has triggered a craving for fashion in Vietnam.

While Zara fever has yet to cool, Swedish giant H&M, another casual fashion brand, has stepped in. 

Last Sunday, the opening of its first store in Saigon attracted around 4,000 shoppers. It's the fifth new market the brand has set foot into over the past two years.

Affordable prices have also been the trump card for H&M's success in more than 53 countries.

Japanese giant Uniqlo and American Forever 21 are also rumored to be getting in on the action. 

Fast fashion competition in Vietnam is heating up and most of the key players are foreigners, so Binh warned domestic fashion retailers to be more sensitive to changes in consumer behavior in order to stay in the game. 

Vietnamese teacher revives traditional fish sauce craft

A high school teacher has persisted in his personal quest to give fish sauce produced in his home village in the central city of Danang a face and a name it deserves.

While younger generations in Nam O, a centuries-old village in Lien Chieu District, have turned away from making traditional fish sauce, Vietnam’s signature condiment, Bui Thanh Phu, 33, has been fighting to bring the long-standing craft back to life.

Phu teaches computer science at Pham Phu Thu High School and has obtained the nickname ‘Phu fish sauce’ in recent years.

Upon his graduation from university with a degree in information technology in 2009, Phu declined several job offers to become a high school teacher while pursuing his dream of developing his family’s four-generation-old fish sauce factory. 

The aspiring young businessman also completed a business administration program and obtained his master’s degree to best prepare himself.

He would ride his bike around on his own and to other fish sauce making villages to meticulously study the craft.

Phu’s house is nestled in the craft quarter on Nguyen Luong Bang Street, which has maintained its reputation for conventional fish sauce for decades. 

The quarter brims with wooden barrels and ceramic containers filled with layers of fish and sea salt – producing the distinctive smell of fermented fish, and from which the amber-colored, flavorful dipping sauce is extracted.

Unlike most young people, including Phu’s three siblings, who have opted to find office jobs elsewhere or at local state agencies, the teacher has taken the less-frequented path despite his parents’ objections.

In 2010, he gave up his position as secretary of his high school’s Ho Chi Minh Communist Youth Union chapter to focus on his teaching job and fish sauce business.

His decision astonished his school principal and his colleagues as the position would guarantee promotion opportunities during his teaching career.

Before he launched his startup based on his family’s small-scale fish sauce facility in 2011, he talked to owners of other household operations throughout Nam O Village to discover their needs and wants.  

“We consider fish sauce not only a means of livelihood but also a legacy passed down from our ancestors,” Phu shared.

A number of retired fish sauce producers still make several barrelfuls of the condiment once a year to give as gifts to their relatives and friends and as a piece of nostalgia, Phu added.

A crushing blow was dealt to the local industry in 2014 as a project to expand Nguyen Tat Thanh Street along the coast ‘encroached’ on houses in Nam O Village, shrinking the number of fish sauce makers from more than 100 to 52.  

For the past six years, in addition to his teaching, Phu has spent the rest of his spare time on his fish sauce barrels.

“He’s more infatuated with making fish sauce than his parents,” Phu’s 62-year-old mother, a seasoned fish sauce maker, said.

The teacher-turned-entrepreneur works between 12 and 16 hours a day and undertakes everything himself, ranging from managing the production process to shipping his product.

With his parents’ counsel and trade secrets, his company has secured a firm footing in the industry and attracted a wide clientele throughout the city and in neighboring Quang Nam Province as well as Thua Thien-Hue and Quang Binh Provinces.  

Phu revealed that in order to distill the premium sauce that pleases even the most discriminating of palates, he hand-picks the fish and buys quality salt from salt hubs in the south-central province of Ninh Thuan.

He also goes to great lengths to scour for decades-old ceramic or terra cotta containers from households across the central region.

“Based on the science, such age-old holders give the seasoning sauce a distinctive taste and enrich its flavor,” Phu said.

The determined businessman promotes his product on Facebook and has bought a domain name for Nam O to develop their brand.

“Making quality traditional fish sauce products is quite a challenge, as it requires considerable expertise and resolve to keep the products free of chemicals and additives,” Phu noted.

Local authorities and the municipal Department of Industry and Trade have enthusiastically hailed Phu’s startup model and provided him with the machinery to expand his operation.

“Thanks to enterprising young people like Phu, Nam O products have made their way much further,” Tran Ngoc Vinh, chair of the Nam O Traditional Fish Sauce Village Association, said.

The village currently processes approximately 200 metric tons of fish for use in fish sauce every year.

Phu’s company sells thousands of liters across the country each month.

High sales volumes have necessitated the need for expansion, however, the municipal People’s Committee is planning to relocate the village from its current residential area to a more concentrated zone.

The Dong Nai dilemma: Frontier risk and reward

As the real estate sector in the southern province of Dong Nai booms with investment opportunities, investors should be cognisant of potential scams and con artists.

Dong Nai, which covers an area of 5,900 square kilometres, is located right next to bustling Ho Chi Minh City. The province is well-connected with a network of national highways, ports, railways, and the upcoming Long Thanh International Airport. Thanks to its geographical advantages, Dong Nai has historically been a hotspot for foreign investments, which include real estate projects.

Reports from Savills Vietnam show that Dong Nai currently has 55 residential housing projects, with a total of 30,200 units and land plots for sale on both the primary and secondary market. Mega projects in Long Thanh and Nhon Trach wards, with a combined 2,100 land plot units, take up 46 per cent of the future supply in the province.

According to Su Ngoc Khuong, director of investment at Savills Vietnam, Dong Nai is now ready to return to the big picture. Residents and newcomers to Ho Chi Minh City are looking to move out of the congested city centre, and the neighbouring province has proven to be a great destination with its traffic connectivity and thriving urban areas.

This topic was discussed in depth last week at a talk named “Real estate Investment in Dong Nai: Opportunities and Challenges”, co-organised by VIR and Eximrs. At the event, industry experts shared their advice on how investors can capitalise on the new boom in Dong Nai properties.

Nguyen Thanh Lam, deputy director of the Dong Nai Department of Construction, advised investors to prioritise projects that are located near existing urban areas, including the city of Bien Hoa and nearby wards (Long Thanh, Long Khanh, and Trang Bom). Those with a longer investment horizon (between five and seven years) can branch out to the fringe areas of these urban clusters.

“It’s very important to think carefully before investing in projects near Long Thanh International Airport. About 21,000 hectares of land surrounding the airport have not been earmarked for development yet, and a bubble can burst very easily,” Lam warned. 

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, has said that he considers Dong Nai the “extended arm” of Vietnam’s largest city. He advised property investors to monitor development updates on the Dau Giay Highway, which extends to the central province of Binh Thuan, and Cat Lai Bridge, which links District 2 with Dong Nai’s Nhon Trach ward and the Ho Chi Minh City metro lines.   

Despite their optimism about the new chapter of Dong Nai properties, experts still voiced their concerns about reckless speculation. In fact, the province is not new to such horror stories, as properties in its Nhon Trach ward already went through a boom-and-bust cycle 10 years ago. 

Specifically, investors and developers at the time flocked into the ward, hoping that it would soon become a first- or second-tier city, complete with urban facilities. However, the plan fell through and to this day, Nhon Trach remains an agricultural ward, filled with a haunting slew of abandoned properties. Experts say it is important to not repeat the same mistakes this time.

“Dishonest real estate agents have used lots of scamming methods to trick investors. They may blow up the price, overstate the amount of existing facilities, or even change the name of the project developers,” said lawyer Lam Dang Phuc, deputy managing director of Nguyen Giap Law Firm.

Lam from the Dong Nai Department of Construction revealed that he recently received a complaint letter from 300 individuals, claiming that they had been conned in two real estate projects in the province. The investigation process is now underway, and Lam reminded all investors to have a thorough check on the projects’ legal status before signing any deals.

This advice is echoed by Tran Thi Cam Tu, CEO of Eximrs. Tu recommended investors to slow down, think rationally, and double-check all the claims made by real estate agents.

Experts also emphasised the importance of urban facilities such as schools, hospitals, supermarkets, and parks in drawing in investors.

Nguyen Minh Khang, acting managing director of LDG Group, said that the company had developed these facilities in Trang Bom ward before putting any real estate on sale.  

“Not only Dong Nai, but the entire real estate market in Vietnam needs honest and transparent dealers. There should be real people wishing to live in the province, not just reckless speculators,” Khang said.     

Soc Trang is seeking tech support for its agriculture

Situated in the lower section of the Hau River and bordering the East Sea, Soc Trang province features a diversified ecosystem, fertile land, and mild climate, which have proven conducive to agricultural development.

Soc Trang province is home to some distinctive agricultural products which have built up the Soc Trang “brand” in domestic and export markets, such as the Vinh Chau purple onion, Soc Trang fragrant rice varieties, and the brackish-water shrimp. Agricultural products have generated more than $600 million for Soc Trang in export value each year, accounting for over 95 per cent of the province’s total export value.

Part of the Mekong Delta, Soc Trang has restructured its agricultural infrastructure to push up production, with the value coming out of one hectare now averaging VND141 million ($6,400). 

As for the rice crop, cultivated area covered 357,331ha last year, turning out more than two million tonnes of production output annually. The province is focusing on high-quality speciality varieties, particularly proprietary rice breeds, which have seen a continuous increase in growing area.

Last year, speciality rice varieties were grown on 148,463ha, accounting for 41.5 per cent of the province’s total rice areas.

Fruit trees cover nearly 29,000ha in total area, producing more than 198,000 tonnes of fruit per year. Specialised fruit tree areas have gradually taken root in the province, such as green-skinned grapefruits and star apples in Ke Sach district, thick-skinned oranges in My Tu district, custard apples in Nga Nam town, and yellow-flesh longans in Vinh Chau town.

Soc Trang is also home to an esteemed purple onion variety which has grown in the province for generations, mainly in Vinh Chau town, and is now cultivated on over 7,400 hectares, with annual production output touching 138,500 tonnes. These onions are grown following Global GAP standards, and the products have made forays into countries such as Thailand, India, the Philippines, Malaysia, and Indonesia, in addition to serving the domestic market.

Soc Trang is also home to a spacious sugarcane cultivation area, concentrated in Cu Lao Dung and My Tu districts. Last year, the sugarcane area covered 9,547ha, generating 883,040 tonnes of production output.       

With its ample riverside areas and 72km coastline, the province has also proven conducive to aquaculture.

Aquaculture areas span over 69,000 hectares, and generated 237,122 tonnes of production output last year. Soc Trang is one of the leaders in terms of industrial-scale shrimp farming area nationwide, with about 111,000 tonnes of output annually.

As for animal husbandry, pigs, cattle, and poultry are the province’s major livestock. By the end of last year, the province was home to 43,633 heads of cattle, including 9,905 dairies, producing 12,235 tonnes of milk per year.

Like many other localities, Soc Trang has attracted few projects in agricultural production, mainly due to poor infrastructure.

To boost production, according to the Soc Trang Department of Agriculture and Rural Development’s director Luong Minh Quyet, the province spent VND848 billion ($38.5 million) for agricultural infrastructure development from 2014-2016. Most of the sum went to improving infrastructure in aquacultural areas, safe water and environmental hygiene infrastructure in rural areas, and irrigation projects.

The province has also focused on promoting distinctive agricultural products.

To avail of local potential, Soc Trang is calling on domestic and foreign investors to help develop breeds and material sources, as well as the processing and trading of high added-value agro-seafood items. Businesses have been encouraged to develop production in conjunction with product consumption. Developing high-tech agriculture powered by solar energy has been set as a priority.

Soc Trang is said to have among the most sunny hours and highest daily radiation density of any province, qualities which are very favourable for solar energy development.

The combination of solar energy production and agricultural development on the same land area is a common trend worldwide, as it helps investors save money by leveraging a low-cost power source.

Bao Viet Securities teams up with Tokai Tokyo

Japan’s Tokai Tokyo Financial Holdings (Tokai Tokyo) is forming an operational tie-up with Vietnam’s Bao Viet Securities as part of its broader push to expand its business in Asia, under which it may acquire a stake in the Vietnamese securities firm in the future, foreign newswire Nikkei Asian Review has reported.

The two partners are looking to cooperate in the investment banking sector as well as jointly provide market research reports and financial products for individual investors. They will also exchange employees for training.

Tokai Tokyo will use the tie-up to broker acquisitions of local firms by Japanese corporate clients. The company has particularly deep connections with manufacturers in Nagoya. Vietnam aims to attract foreign capital amid efforts to equitize State-owned enterprises.

Bao Viet Securities is a subsidiary of Bao Viet Holdings, Vietnam’s largest State-affiliated financial group. Last year, Bao Viet Securities was named by the Global Banking & Finance Review as “Best Brokerage House Vietnam” and “Best Equity House Vietnam”.

Founded in 1929, Tokai Tokyo has evolved to become a financial service group, with securities brokerage firm Tokai Tokyo Securities as its operating nucleus. The company has vigorously pursued joint venture securities operations with regional banks in order to build a strong customer network.

Through its subsidiaries and affiliates, Tokai Tokyo offers a comprehensive range of products and solutions to meet the financing and asset management needs of two high-priority customer segments: medium-sized businesses and high-net-worth individuals. The company has subsidiaries involved in trading and brokerage, underwriting and sale of securities, and other activities associated with financial instruments.

Tokai Tokyo directly engages in the securities business abroad through two subsidiaries: the London-based Tokai Tokyo Securities Europe and the Hong Kong-based Tokai Tokyo Securities (Asia). It has also established an information gathering subsidiary in the US and a fund management subsidiary in Singapore.

Tokai Tokyo has expanded its partner network to Asia, Europe, and the US, thereby globalizing the company’s portfolio. Tokai Tokyo’s key business partners in Asia have come to include Guotai Junan Securities in China, Daewoo Securities in South Korea, and Saigon Securities in Vietnam.

As at the end of the second quarter of this year, Bao Viet Securities ranked fifth by market share on the Ho Chi Minh Stock Exchange (HoSE), the country’s main bourse. Saigon Securities ranked first with a market share of 15.35 per cent, followed by Ho Chi Minh City Securities (HSC), Viet Capital Securities (VCSC), and VNDirect Securities (VNDS), with 9.38 per cent, 6.8 per cent, and 6.74 per cent, respectively, of market share on HoSE.

Branding still a mystery for many

Evaluating the current role of branding for businesses, CEO of Mibrand, Mr. Lai Tien Manh, told the “Building Strategic Branding for Businesses” workshop hosted by the Vietnam Trade Promotion Agency on August 30 in Hanoi that while awareness of and demand for brand building have increased there is still a long road ahead before awareness becomes action.

“Many businesses are still constrained by limited knowledge about branding while not spending enough to improve their own expertise, and low-cost marketing campaigns reflect their unclear vision and misunderstanding about branding,” Mr. Manh said.

Many businesses are still stuck with old mindsets, thinking a business can naturally grow and shine. In the digital age, “we need to change our thinking about marketing and branding in the new context,” he said, adding that businesses need to engage with communications agencies to advertise their products on prestigious media channels.

According to Mr. Vu Xuan Truong from the Institute for Brand and Competitive Strategy, advertising still has many failings in Vietnam, including inappropriate advertising channels. “Many businesses still favor the idea of running ads during peak hour on TV, while the facts show that most TV viewers are not businesspeople,” Mr. Truong said, adding that messages delivered via ads generally contain weak content.

Following marketing campaigns, few Vietnamese businesses evaluate their impact and effectiveness and make timely adjustments, which is extremely important for brand building.

“Businesses should measure the number of customers that are aware of their brands and know and understand their behavior,” Mr. Truong went on. “A brand’s battle is not decided by tricks that we can see and touch, but in the minds of customers.”

A tight budget might concern businesses when it comes to brand building, but experts believe that it’s best to have a clear vision when selecting a strategy, whether in the short or long term. “Strategies require a long-term vision, but tactics are for the short term,” Mr. Truong said. “Trying to build brands quickly will not guarantee sustainability.”

Mr. Manh suggested that businesses leave aside the cost issue and build their brand by putting customers as their main priority. Gone are the days when brand building was just about designing a logo or stamping a brand on the product. “Brand building is about how long the product remains inside customers’ minds,” he explained. “To successfully build a brand, businesses should position themselves clearly and differently, and they need to be aware of product quality to attract and satisfy customers.”

The National Branding Program is the only program launched by the Vietnamese Government to promote the national image and brand via product branding. It is a long-term trade promotion program aimed at building and promoting the image of Vietnam as a country with high quality goods and services, to create prestige and enhance the competitiveness of Vietnamese enterprises in both local and international markets. Through the program, Vietnam will be shown as a country with a good reputation for diversified goods and services, while enhancing awareness among distributors and consumers both local and foreign about its branded products, building an image of Vietnam associated with the values of “Quality - Innovation, Creativity - Pioneering Capability” and contributing to encouraging tourism and attracting foreign investment.

Bringing a wide range of insightful knowledge to participants, the program is a chance for managers, enterprises and organizations to exchange experience in brand building while at the same time providing an opportunity to promote the National Target Program, stimulating the country’s exports and building Vietnam’s national brand on the international area. This is also the main purpose of the National Branding Program - the only program where the Prime Minister has assigned the Trade Promotion Department under the Ministry of Industry and Trade to be the standing agency for deployment.

Nearly 11,000 real estate firms established in eight months

The HCMC Department of Planning and Investment reported that 26,614 businesses were established during the first eight months this year with the total registered capital of VND148,396 billion (US$6.53 billion).

The newly established companies concentrate in Districts 1, Go Vap, Tan Binh, Binh Thanh and Binh Tan.

Of the number, there are 10,912 real estate companies accounting for 41.4 percent. Notably, 95 percent are brokerage firms. The remaining number are subsidiaries of big property companies, they were set up to develop new projects.

The real estate market is now developing strongly again, investors have implemented a slew of projects with thousands of apartments. They need a big sales team to sell these products. Therefore, many companies have just paid attention to developing projects and let brokerage companies undertake sales.

Vegetable and fruit export, import turnover rockets up

Vegetable and fruit export turnover posted a year on year increase of 47 percent to top $2.3 billion while import doubled the same period last year to hit $1.06 billion during the first eight months this year, reported the General Statistics Office of Vietnam.

The commodities were most imported from Thailand. According to the General Department of Vietnam Customs, import turnover from Thailand was $516.8 million in the first eight months of 2017, accounting for 50 percent of the country’s total.

Ministries and authorized agencies said that the high import growth was normal.

In export, China, Japan, the US and South Korea are the four largest markets of Vietnam making up 85 percent of total export value.

Vietnam has gained fast vegetable and fruit export growth for the last 3-4 years. Total export turnover neared $900 million in 2012 and topped $2 billion in 2016. It is expected to approximate $3 billion this year.

HCM City to host hardware, hand tools expo

As many as 250 enterprises from 20 countries and territories will participate in the Việt Nam Hardware and Hand Tools Expo 2017, organised from December 6 to 9 this year.

The expo will be held at the Saigon Exhibition and Convention Centre (SECC) in HCM City.

The event will be organised by the Việt Nam National Trade Fair and Advertising Company (Vinexad) and supported by the Việt Nam Association of Mechanical Industry (VAMI) and the HCM City Association of Mechanical-Electrical Enterprise with the aim of increasing opportunities for Vietnamese people to access to hardware and handy products.

Spreading over an area of 5,000sq.m, the expo will focus on both the manufacture of hand tools and introducing these products in daily life. It will also act as a platform for cooperation and exchange between buyers and sellers and provide an overview of Việt Nam’s hardware and hand tools industry for local enterprises.

The exhibition will also focus on several main sectors, including Tools-DIY (Do It Yourself) and Building Hardware-Fasteners-Securities, Locks and Fittings, along with special commercial programmes and seminars aimed at promoting and developing products.

Till date, 87 per cent of the exhibitors that attended last year’s event have confirmed participation at this year’s expo.

Shares maintain uptrend     

Shares rose steadily on the two stock exchanges on Monday morning on rising investor confidence in market outlook.

The VN-Index on the HCM Stock Exchange was up 0.27 per cent at 808.02 points. The key index gained 0.6 per cent last week.

On the Ha Noi Stock Exchange, the HNX-Index increased 0.68 per cent to 105.20 points. The northern market index also expanded 0.54 per cent in the previous week.

Market breadth was positive with 229 stocks on the two exchanges advancing, 167 declining and 320 remaining flat.

Large-cap stocks continued to lead the market upturn.

Eighteen of the top 30 largest shares by market value and liquidity on the southern bourse gained value and only nine slumped.

Gainers were industry leaders such as Vinamilk (VNM), Sabeco (SAB), Vietinbank (CTG) and BIDV (BID), as well as Hoa Phat Group (HPG), Hoa Sen Group (HSG), VinGroup (VIC), Saigon Securities Inc (SSI) and Mobile World Group (MWG).

Liquidity improved with 158 million shares worth VND2.7 trillion (US$119 million) traded on the two markets.

Afternoon trade starts at 1pm. 

Investors suspicious of uptrend forecast     

The benchmark VN-Index confirmed a steady uptrend with a forth consecutive rally week, but suspicion lingers in the context of modest liquidity and dominant role of large-cap stocks.

Easing investor worries about a possible correction after a long rally, the VN-Index hit a new 10-year high at 806.32 points on Thursday, the highest level since February 15, 2008. It decreased slightly on Friday on exchange-traded funds (ETFs) trading but still closed the week up 0.6 per cent at 805.82 points.

On the Ha Noi Stock Exchange, the HNX-Index also increased 0.54 per cent for the week, closing Friday at 104.49 points.

The market started the week in the negative zone under rising profit-taking pressure but quickly regained in the following sessions thanks to growth of heavyweight stocks.

Major stocks such as Masan Group (MSN), Vietcombank (VCB), Petrolimex (PLX), PV Gas (GAS), VinGroup (VIC), Hoa Phat Group (HPG), Bao Viet Holdings (BVH), Vinamilk (VNM) and Saigon Beer-Alcohol-Beverage (SAB) took turns to lead the market.

However, liquidity declined and remained modest, even when two FTSE and V.N.M ETFs conducted their portfolio trading on Friday. This indicates cautious psychology among investors.

An average of about 187.4 million shares worth over VND4 trillion (US$177.8) were traded in the two markets per session, down 30 per cent in volume and 13 per cent in value compared to the previous week.

“Although the market had a week of rallying, the divergence remained wide along with weakening cash flows and low liquidity,” said Tran Duc Anh, a stock analyst at Bao Viet Securities Co.

In fact, the recent uptrend has been strongly supported by positive movement of large-cap stocks. If the market liquidity makes no improvement, the market will likely enter a short-term downtrend, Anh wrote in a note.

The VN-Index has been on a steady upswing, with growth of 5.8 per cent in the last four weeks and over 21 per cent since the beginning of this year.

According to analysts on the financial website vietstock.vn, the VN-Index is heading for a new level of 815 points. Growth of stock in financial services, natural resources, real estate and construction and food-beverage sectors are exptected to continue to prop up the market.

Though the macro-economic condition is backing a market uptrend, analysts at BIDV Securities Co (BSC) have warned of negative impact of foreign trading on the local market.

“Though in doubt, the VN-Index will likely continue heading to new highs next week with rotation of large-cap growth. However, the market risk will also increase at the same time if it cannot attract domestic investors and foreign investors continue their net selling activity,” BSC’s analysts wrote in a report.

Foreign traders concluded the second week of net selling with a value of VND333 billion last week, lifting the two-week net sell value to VND407 billion in the two markets.

Vietcombank (VCB) topped the most sold last week with a value of over VND214 billion, followed by VinGroup (VIC) and Vinamilk (VNM) with over VND100 billion each.

Kido Frozen Foods to debut 56 million shares on UpCom

Kido Frozen Foods, a KIDO Corporation subsidiary, has been approved by Vietnam Security Depository (VSD) to debut 56 million shares on the Hanoi Stock Exchange (HNX)’s UpCom trading platform under the code KDF, according to information published on VSD’s website. 

However, the specific date of the listing has yet to be disclosed.

Previously, KIDO Corporation (KDC) planned to list KDF on UpCom in the second quarter of 2017 after the completion of its initial public offering (IPO) in April. Notably, KDF put 11.2 million shares, equalling 20 per cent of the company’s chartered capital, at the initial price of VND52,000 ($2.3).

The IPO received attention from a lot of multinational investors. Many investors expressed willingness to purchase KDF’s shares at VND60,000 ($2.6) apiece, higher than the corporation’s offering price.

A Malaysian investment fund wanted to buy 100 per cent of KDF for $200 million. In addition, a Japanese company also expressed intention to buy 35 per cent of KDF for VND60,000 ($2.6) a share, a much higher price than the expected listing price of VND52,000 ($2.3).

However, Tran Le Nguyen, deputy chairman of mother company KDC said that the IPO’s target is to attract more individual and institutional investors, so they did not accept the above offers. After the IPO, KDC will only hold 65 per cent of KDF’s chartered capital.

KDF’s listing on UpCom is expected to attract both domestic and foreign investors due to its development potential.

Notably, KDF has become the leader of the Vietnamese ice cream industry with a 35 per cent market share in 2016 with its flagship brands Merino and Celano, which take up 19 and 13 per cent, respectively.

Besides, in 2016, KDF started expanding its frozen food manufacturing facilities, which is considered a lucrative sector with the increasing of four-fold in the scale of the frozen food supply chain in Vietnam for the past decade.

KDF was founded in July, 2003, as a product of KDC’s acquisition of Wall's from Unilever. Following this, KDF has inherited the international-standard ice cream manufacturing system, including the most modern ice cream factory in Southeast Asia.

KDF owns two factories, namely Cu Chi ice cream factory and Bac Ninh frozen food factory with a total designed capacity of 50 million litres per year, including 25-25 million litres of ice cream and yogurt per year.

KDF’s exponential growth in recent years is expected to attract investors. In 2016, KDF's revenue reached $61.28 million, increasing 31 per cent on-year. Its before- and after-tax profits reached $7.72 and $6.27 million, signifying increases of 77 and 85 per cent, respectively.

Korean firms prep for new TP decree

In the face of regulatory changes regarding transfer pricing in Vietnam, multinational corporations from South Korea are proactively preparing to ensure compliance with the new tax law.

Accounting for approximately 26 per cent of all foreign direct investment (FDI) in Vietnam last year, Korean investment – which started in the 1990s – has transitioned from labour-intensive manufacturing to high value-added sectors such as power, real estate, and retail.

According to Ha Do, senior partner at KPMG in Vietnam, Korean investors are starting to pay greater attention to tax regulations with regards to corporate income tax (CIT), and are increasingly concerned about investment incentives and the health of the economic environment.

Korean subsidiaries and multinationals investing in Vietnam, whose transactions are often under scrutiny from the tax authorities when it comes to transfer pricing (TP) arrangements, are familiarising themselves with the details of Decree No.20/2017/ND-CP, which provides guidance on transfer pricing management of intra-group service charges, interest, payments for intangibles, and capital expenditures, among other transactions.

“Along with the increased FDI, there is a rise in two-way trade, which naturally creates related-party transactions between the parent companies, affiliates, and subsidiaries. Determining appropriate arm’s length transfer prices of these transactions for tax purposes will not just be the job of the businesses themselves, but also the tax authorities in both jurisdictions,” said Hoang Thuy Duong, partner in charge of Integrated International Tax at KPMG in Vietnam, on the sidelines of a briefing on TP and customs for Korean businesses in Vietnam in early September.

Duong pointed out new TP reporting and documentation requirements, which are now more complex and in line with the Organisation for Economic Co-operation and Development’s (OECD) recommendations against base erosion and profit shifting (BEPS). A TP documentation package, which should now include a master file, local file, and a country-by-country report, is to be prepared before Vietnam’s annual CIT finalisation deadline. Should a TP audit be required, such a package is to be submitted within 15 working days upon request by the tax authorities.

Jung Goo Kang, vice president of the electronics and technology firm Elentec Co., Ltd. – which owns subsidiaries in Hanoi and Ho Chi Minh City and is a main supplier for Samsung Vietnam – has experience in logging both Korean and Vietnamese TP audits. He told VIR that while the transfer pricing rules are the same in theory, the local regulations are more complicated in the sense that tax authorities in different countries do not follow the guidelines in precisely the same way.

“Many of our Korean clients in Vietnam are concerned about double taxation and the uncertainty that follows due to differing views and audit practices maintained by the Vietnamese and Korean tax authorities,” said Seung Mok Baek, a partner specialising in TP at KPMG in South Korea. “TP audits conducted in Vietnam recently have been quite aggressive, and in many cases huge amounts of additional taxes were due as a result of these audits.”   

“Korean firms experienced difficulties in solving double taxation issues through the Vietnamese local appeals process and Vietnam-Korea mutual agreement procedures (MAP) – mainly used as an international ‘appeals’ process for the relief of double taxation occurring due to TP adjustments in recent years in the contracting states,” Baek added.

In the opinion of Gil Won Kang, partner in charge of Global Transfer Pricing Services at KPMG in South Korea, since the introduction of BEPS, Korean firms in Vietnam are increasingly concerned about double taxation following TP tax audits. It is his hope that the Vietnamese tax authorities will take the concerns of foreign investors seriously through implementation of an APA (Advance Pricing Agreement, mainly used as a proactive measure to eliminate uncertainties regarding TP in future tax years) and MAP procedures.

“As the new regulations have only come into force in 2017, it might take some time for the capacity building of tax officers. This is a complicated matter,” Duong added.

Thai Nguyen maintains rank in top investment areas

By promoting investment, facilitating administrative procedures, enhancing the investment environment, and providing enterprises with timely support, the northern province of Thai Nguyen is becoming one of Vietnam’s hottest investment destinations.

According to statistics from the Thai Nguyen People’s Committee, during the first seven months of 2017, Thai Nguyen granted business registration certificates for 461 enterprises at a total registered capital sum of more than VND2.7 trillion ($118.8 million), and adjusted business registration certificates for 458 enterprises. By the end of July, there were 5,906 enterprises in Thai Nguyen in total, with registered capital of over VND42.3 trillion ($1.9 billion).

In the same period, Thai Nguyen approved the investment plans of 33 new projects with registered capital of around VND3 trillion ($132 million), and adjusted investment certificates for 16 projects.

On the back of the country’s increasing wave of foreign direct investment (FDI), in the seven-month period Thai Nguyen granted investment certificates for 10 foreign-invested projects with total registered capital of $6.86 million. Of the total, eight are projects in the processing and manufacturing sector with registered capital of $6.67 million, and the two remaining are projects in the service sector with registered capital of $194,053.

To date, there have been 126 effective foreign-invested projects in the province, with total registered capital of more than $7.2 billion. The disbursed amount has so far come to over $6.6 billion.

Regarding export, in the first seven months of 2017, the total export value in Thai Nguyen was estimated to be $13.9 billion, an increase of 32.5 per cent compared to the same period last year.

In addition, luring investment into the province’s industrial zones (IZs) is a specific target. In the first half of 2017, Thai Nguyen IZs hosted 31 investors and enterprises in the exploration of IZ investment opportunities.

To date, there are 170 investment projects in Thai Nguyen’s IZs. Half of them are foreign-invested projects and the rest are home-grown, with a total capital sum of more than $7 billion and $560 million, respectively.

“A favourable investment environment, clear policies on luring investments, and social security being ensured; these things are the three most important factors to attract investors,” said Hoang Thai Cuong, director of the Thai Nguyen Department of Planning and Investment.

“In addition, Thai Nguyen has the third-largest education system in Vietnam, with plenty of universities, colleges, and vocational schools. Every year, there are hundreds of graduates with university and college degrees, and skilful workers joining the labour market here. Thus, investors will have many choices to find appropriate candidates for their businesses.”  

In 2017, Thai Nguyen’s targets are to attract more than 10 projects into its IZs at a combined registered capital sum of at least $200 million, reach an export value of $21 billion, contribute VND4 trillion ($176 million) to the national budget, and bring about job opportunities for more than 3,000 workers.

To reach these targets, Thai Nguyen will focus on some solutions to spur investment growth. In particular, the province will try to simplify its administrative procedures, so that time spent on them will be reduced to one-tenth the amount previously stipulated.

Meanwhile, Thai Nguyen will actively figure out difficulties in businesses to provide enterprises with timely support. The province is focusing on industries where it wants to drive investment, so that projects which involve high-tech and are friendly to the environment will be promoted.

Along with supporting the business community, Thai Nguyen promises to closely monitor enterprises’ environmental protection activities, including the resolution of emissions, solid waste, and wastewater. In addition, site clearance is also one of the top priorities. Local authorities are required to follow up on land clearance and compensation, so that these activities are implemented as scheduled to ensure local residents’ benefits.

Cuong said that the province is also promoting supporting activities for small and medium-sized enterprises (SMEs) in training, counselling, and providing information about markets. At present, Thai Nguyen has established a credit guarantee fund to support SMEs.


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