BUSINESS NEWS IN BRIEF 9/1

Lalamove knocked out by fierce food delivery competition

Lalamove from Hong Kong has kissed its ambitions good-bye after proving unable to beat Grab and Go-Viet to seize the local delivery market and has called it quits.

Similar to ride-hailing and e-commerce, investment in food delivery is a race of heavy investment to secure a large market share. In this battlefield, players with smaller financial potential and less competiveness are easily beaten – a lesson highlighted by Lalamove’s failure.

Accordingly, after only three months of its launch, Lalamove’s food delivery application named Lala: Food Delivery has completely disappeared from the iOS and Android app stores. Furthermore, the food order function on its website lala.vn no longer works.

Based on information announced on the website, there is a high chance that Lalamove will transfer its business form B2B2C (business to business to customers) to B2B (business to business). Thus, Lalamove will focus on business solutions for firms and quit delivering food to customers.

When it entered Hanoi in October, Lalamove set the goal of employing 10,000 drivers by the end of the first quarter of 2019 to directly compete with Grab and Go-Viet thanks to its backing from Scommerce Group as well as its brother Ahamove’s 10,000 shippers.

Despite high demand in urban areas, the local food delivery market is not a fertile ground for many firms because of low profit. A representative of a firm running in the segment stated that in favourable conditions, profit growth could reach 10-12 per cent. Food delivery requires preservation, swift delivery, and separate storage space from other kinds of goods like clothes.

As a result, in a fierce battlefield, it is unavoidable for weak players to keep dropping out. Before Lalamove, the market also saw the retirement of Foodpanda which decided to sell itself to local food delivery company Vietnammm.

Lalamove was established in late 2013 under the name EasyVan. The Hong Kong delivery service has come to be known for delivering goods within an hour, and was named the “Asian Uber.”

Lalamove as officially launched in Hanoi on October 3, following a year of operations in Ho Chi Minh City. Focusing on clients in urban areas and committing to deliver goods within 55 minutes, Lalamove was forecast to be a redoubtable opponent to Grab and Go-Viet, another newcomer.

Vietnam Airlines Group achieves $120 million profit in 2018

Vietnam sets higher targets in global supply chain, Danang aims to bolster hi-tech agrotourism, HCM City lures US$7.07 billion in FDI during 2018, Agricultural sector reaches peak levels in 2018

Vietnam Airlines Group has announced a record profit figure in its long history with VND2.8 trillion ($121.7 million). With this the group concludes yet another year of growth and innovation due to robust demand for air travel, optimised operational efficiency, and enhanced control, together with the implementation of market-driven solutions to offset high fuel prices.

For the first time, Vietnam Airlines and its member airlines (including Jetstar Pacific and VASCO) have exceeded the VND100 trillion ($4.35 billion) mark in total consolidated revenue, generating approximately VND102 trillion ($4.43 billion).

Pre-tax profit reached VND2.8 trillion ($121.7 million), exceeding the planned figure by 15 per cent. Vietnam Airlines pocketed VND73.5 trillion ($3.2 billion) pre-tax revenue and more than VND2 trillion ($87 million) pre-tax profit. Its contribution to the state budget is roughly VND6.6 trillion ($287 million). The financial fortune is attributed to the operating profit margin of 4.38 per cent and debt to equity ratio below 3, lower than at the beginning of 2018.

In addition to the positive financial results, Vietnam Airlines has carried over 22 million passengers on 142,000 flights and 350,000 tonnes of cargo in 2018. Vietnam Airlines is among the world's leading airlines in on-time performance, scoring OTP at 90 per cent averagely.

The airline made significant progress in modernising its fleet and investing in technology with two wide-body Airbus A350 and three narrow-body A321Neo crafts. As a 4-star airline recognised by Skytrax for three consecutive years, Vietnam Airlines takes great pride in providing the best flying experience using one of the youngest and most modern fleets in the region.

Reflecting on the year, Duong Tri Thanh, president and CEO of Vietnam Airlines, said: “Vietnam Airlines’ strong earning performance capped another year of extraordinary achievement, including surpassing the VND2 trillion ($87 million) mark in profit. We made significant progress on several key initiatives in 2018, including improved human resources management as well as enhanced product portfolio and on-time-performance index. 2018’s success offers an unparalleled opportunity for Vietnam Airlines to unlock further growth and bolster service quality.”

In 2019, Vietnam Airlines will continue to complete the remaining procedures related to privatisation: increasing charter capital and transferring to the Ho Chi Minh Stock Exchange; completing its 2021-2025 fleet development plan with vision to 2030, incorporating new digital industrial technology known as Industry 4.0, and synchronising its IT system and leveraging digital business.

Danang aims to bolster hi-tech agrotourism

Danang City recently approved the use of over 160,000 square meters of land for the development of hi-tech agriculture, including a rest stop for tourists, indicating the central coastal city’s keenness to promote hi-tech agrotourism.

A 162,137-square-meter site, located across the Hoa Khuong and Hoa Phong communes in the city’s Hoa Vang District, will be set aside for the production of safe agricultural products that apply advanced technology.

In addition, the zoned land will include a safe vegetable garden, a nursery, a production area, a public house for workers, a processing plant and small stations in the vegetable garden for taking care of the plants.

The project was expected to exploit the city’s potential agrotourism, as tourists have a high demand for both common travel activities and for experiencing local culture and daily activities, according to many tour operators. 

European and American tourists, for instance, are greatly interested in agriculture-based tours with a wide range of activities, such as spending one day working as farmers to try growing rice plants, catching fish and living with local households.

Therefore, if travel firms, local authorities and farmers team up to invest in travel residences plus agrotourism activities, local products will be promoted and local farmers can improve their incomes.

The project is reportedly part of the city’s approved plan to develop seven hi-tech agricultural zones in Hoa Vang. The city currently calls for investment in hi-tech agricultural projects with a range of preferential policies, such as subsidizing 50% of the costs of site clearance and constructing processing facilities or the cost of developing and displaying hi-tech agricultural production models.

The municipal People’s Committee in October last year pledged to support the city’s Farmer Association to develop a hi-tech, safe vegetable production model, with total costs reaching VND10 billion.

Vietnam's largest brewer a foreign owned business now

After a US$4.78 million debt restructuring, Vietnam's largest brewer Sabeco is now owned by a Thai company.

In December 2017, Thai Beverage (ThaiBev) acquired a 53.59% stake in Sabeco from Vietnam's Ministry of Industry and Trade for US$4.78 billion through a local entity, Viet Beverage (VietBev).  

VietBev, which had 100-percent Vietnamese ownership at the time with VND682 billion ( US$29.33 million) in charter capital, was loaned VND111.21 trillion (US$4.78 billion) by ThaiBev to complete the transaction.

VietBev was used as a financial vehicle to get around a 49% foreign ownership cap in place at the time.  

The  US$4.78 billion loan was then converted to shares under a debt-to-equity conversion agreement between VietBev and ThaiBev. As a result, VietBev now has a chartered capital of VND111.89 trillion ( US$4.81 billion), increasing ThaiBev's ownership in VietBev to 99.39%. 

The adjustment in capital was approved by local authorities, and made possible after authorities raised Sabeco's foreign ownership cap to 100% at the end of 2018. The conversion was completed a few days ago.

ThaiBev has since announced it is committed to ensuring shareholders' benefits on share prices and annual dividends after this restructure. 

With a charter capital of VND111.89 trillion, VietBev is among a few businesses in the country with chartered capital of hundreds of trillions of dongs, along with state-run oil & gas giant PVN (VND285 trillion or about $12.26 billion); Vietnam's sole power distributor and biggest producer EVN (VND163.8 trillion or US$7.04 billion); and telecoms provider Viettel (VND121.52 trillion or US$5.23 billion). 

Recently, Sabeco was caught up in legal trouble with tax authorities, who blocked its bank accounts in order to withdraw VND3.1 trillion (US$135.73 million) to collect overdue special sales tax from 2007 to 2015 and penalties for administrative violations. However, this enforcement action proved futile as accounts handed over to the tax authorities were empty. 

After the recent share conversion, the Prime Minister has directed the tax agencies to suspend their enforcement, in order to carefully consider regulations as it involves "foreign factors."

Vietnam sets higher targets in global supply chain

Despite increasing protectionism and trade war around the world, Vietnam has consistently supported free trade with an eye toward opportunities for expansion. Both the Vietnamese government and businesses aim to participate more actively in the global supply chain.

During more than 30 years of renewal, Vietnam has implemented policies on opening the market and increasing integration. But statistics show that only 21% of Vietnam’s small and medium-sized enterprises have taken part in the global value chain, much lower than the 46 percent in other ASEAN members.

The proportion of Vietnam’s added value in the global supply chain hasn’t yet been on par with its potential or its determined target.

Vu Kim Hanh, chairwoman of the Vietnamese High Quality Product Business Association, said “We are slowly resolving the difficulties facing our integration into the world economy. Production phases in each company have found it hard to connect with each other. Companies in the same field also lack connection.”

At the Vietnam Business Summit in September, Prime Minister Nguyen Xuan Phuc pointed out these challenges. He said although Vietnam has gained initial success in global supply chains, Vietnamese businesses have only joined these chains in fields such as assembling or product packaging, which are lower in value and lack sustainability in supply chains.

“Facing that fact, Vietnam needs to move to a higher position in global value chains and strengthen the connectivity between Vietnamese and FDI businesses. Vietnam is implementing a policy to link domestic and foreign businesses,” said Mr. Phuc.

The government has pledged to support businesses and development reduce business conditions and logistical costs. 

Vietnamese businesses have improved their management capacity and expertise and pursued long-term visions. They now focus on improving product quality and increasing the application of IT to link production networks and supply chains to enhance their competitiveness.

Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, said “Now businesses and lawmakers have become well aware that joining a supply chain needs not only to cut costs but also increase productivity and competitiveness. It’s necessary now to apply a digital shift which naturally means digitization and super-connection which help connect physical production, service, goods, and distribution.”

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, said “VCCI will work closely with the government to realize the goal of moving to a higher position in the global chain. We have a Business Information Center which supports businesses to digitize their management and trading.”

Vietnam has a stable political environment with high economic potential, an abundant workforce, the best-trained and youngest labor structure in ASEAN, and ever-greater participation in free trade agreements. All of these factors are helping Vietnam participate more deeply in the world market.

HCMC strives to finalize Ben Thanh - Suoi Tien metro line by 2020

The much-delayed Ben Thanh-Suoi Tien metro line project in Ho Chi Minh City continues to be problematic, amid rushed attempts to put it into operation by 2020.

The municipal People’s Committee appointed Bui Xuan Cuong, who is the director of the city’s Department of Transport, as the head of the Ho Chi Minh City urban railway management board, on January 4. He will represent the city in their quest to finally have the project finished by 2020.

Le Nguyen Minh Quang had previously resigned from his position as the head of the management board, due to personal reasons. His resignation was approved by the municipal People’s Committee on January 2. 

Nguyen Thien Nhan, secretary of the municipal Party Committee, said the Politburo gave in-principle approval to continue implementing the city’s mega metro project which includes the first Ben Thanh-Suoi Tien metro line. The Government has been assigned to work alongside Ho Chi Minh City to implement the project.

Nhan further said the city will team up with ministries and sectors to spur on the project and have the metro line operational by 2020 as scheduled as well as beginning the implementation of other lines.

Earlier, VOV Online reported the Ben Thanh-Suoi Tien metro line project suffered from a lack of up to VND20.5 trillion (US$873.7 million) for its continued development.

Some VND28 trillion (US$1.19 billion) are needed to maintain work and finalize the project by 2020. However, the Ministry of Planning and Investment have only allocated VND7.5 trillion (US$319.65 million) for the project. 

To ensure progress, the city has advanced the budget to pay a total of VND2.3 trillion (US$98.02 million) for construction contractors.

Construction on the project, funded by Japanese loans, began in 2007. The execution of the project could be halted in December 2018 if no fresh payments are made, Japanese Ambassador to Vietnam Umeda Kunio said in a letter sent to the city’s Party Committee and the Vietnamese Government last November.

According to the local government, the total capital needed to complete the metro line has skyrocketed from an initial VND17.4 trillion (US$741.5 million) to VND47.3 trillion (US$2.01 billion). The additional injection of capital is under scrutiny.

The Ben Thanh-Suoi Tien metro line is part of a comprehensive public transport network plan to connect the southern city with neighbouring provinces as well as ease severe traffic congestion affecting the city. 

The first metro line, stretching nearly 20km, is to connect the bustling inner city market of Ben Thanh to Suoi Tien Park in District 9. It has been delayed several times, taking it to the current estimated completion date of 2020.

Dong Nai: FDI disbursement hits record high

The disbursement of foreign direct investment (FDI) in the southern province of Dong Nai hit a record high of US$1.6 billion in 2018, accounting for 86.4% of total foreign attraction in the year.

According to Vice Director of the provincial Department of Planning and Investment Nguyen Huu Nguyen, the local disbursement figure is much higher than those recorded in other cities and provinces nationwide.

Of the total US$28 billion in FDI accumulated in Dong Nai province so far, US$20.5 billion has been disbursed.

Regarding policies to attract further foreign investment in 2019, Deputy Head of the Dong Nai Industrial Zones Authority Mai Van Nhon said that the province will reject any project that is likely to cause environmental pollution or uses out-of-date technology, instead prioritising clean, green investments.

Before granting investment licences, local authorities will consider the projects’ production value, labour productivity, and disbursement rate, among others, he added.

The Department of Planning and Investment said that the province is now home to 1,861 FDI projects with a total registered capital of US$33.63 billion. Among them, 1,379 projects worth some US$28 billion are operational, while the other 482 have had their licences withdrawn.

Most of the province’s projects have been run by investors from the Republic of Korea, Japan, and China.

The FDI capital was injected into the supporting industries in the fields of electronics; garment, textiles, and footwear; and the manufacturing of machinery products.

Vietcombank to sell 3% stake to foreign investors

Vietcombank, Vietnam's largest bank by market cap, has received permission from the securities watchdog to sell a 3% stake to foreign investors.

The green light from the State Securities Commission (SSC) will allow the lender to make a private placement of 3% as part of its plan to ultimately sell 10%.

The 3% could fetch around US$270 million based on its current stock price. 

Vietcombank last month received approval from the State Bank of Vietnam (SBV) to increase its charter capital by selling 10% to the Government of Singapore Investment Corporation (GIC) and existing strategic partner, Japanese bank Mizuho.

Now GIC will buy 2.55% while Mizuho Bank will buy the remaining 0.45% to keep its current 15% stake unchanged.

Last September the SBV approved Vietcombank’s proposal to increase its charter capital from VND35.98 trillion (US$1.55 billion) to VND39.57 trillion (US$1.7 billion). The capital has remained unchanged since 2016.

Vietcombank is one of many Vietnamese lenders that have been seeking to increase capital to meet international capital adequacy norms.

The country’s banks need to increase their charter capital to meet the Basel II capital adequacy ratio (CAR). 

The accords prescribe capital of 8% of risk-weighted assets for all financial institutions, including in Vietnam, to cover operational risks.

State-owned BIDV, the second biggest bank by market capitalization, said last October it wanted to sell new shares to the Republic of Korea’s KEB Hana Bank, giving it a 15% stake in the company. The sale would be worth US$735 million.

Vietnam caps foreign ownership of banks at 30%. The country has nine wholly-owned foreign banks, four state-owned banks and 31 domestic joint-stock banks.

Bright prospects lay ahead for Haiphong real estate market in 2019

Housing, retail properties, and apartments for rent in the northern city of Haiphong are predicted to gain big interest from foreign real estate developers in 2019, according to a Savills expert.

Do Thi Thu Hang, head of the Research and Consultancy - Advisory Services Division belonging to Savills Hanoi, told VOV Online that Haiphong’s real estate market enjoyed flourishing growth across many sectors in 2018. The low-end sector is expected to lure an additional five projects in the near future, with four coming from domestic investors and one project from investment by foreign real estate developers.

Hang went on to add that the apartment market is also predicted to welcome additional big foreign investors, while Vincity-branded apartments developed by domestic real estate giant Vingroup will be added to the city’s supply of apartments. 

She noted how Haiphong has a fledgling real estate market with limited supply. The city’s apartment supply is low in comparison to that in Hanoi and Ho Chi Minh City while the majority of buyers are locals who have bought apartments to reside and rent.

This translates into huge opportunities for real estate developers who know how to ultilize their advantages in capital and construction techniques in creating housing products at reasonable prices.

Regarding luxury properties, large domestic real estate firms such as Vingroup, Sun Group and FLC Group would be able to begin high-end hotel and resort projects in the inner city and its two tourism hubs like Cat Ba island and coastal Do Son district. Meanwhile, Hilton, Nikko and Pullman would engage more in the market with five-star hotel projects in the future.

Last year, the Haiphong real estate market experienced a flourish in growth due to a number of infrastructure projects put into operation. These projects include Ha Long – Hai Phong expressway, Vu Yen I bridge that connects the Vietnam - Singapore Industrial Park in Haiphong to Vu Yen island, and Haiphong International Container Terminal (HICT). 

The Haiphong market was also boosted by the city’s robust economic growth and foreign investment inflow. The northern city lured up to US$2.49 billion in registered foreign investment during the first 11 months of 2018, behind only Hanoi and Ho Chi Minh City.

Haiphong was ranked 9th among nationwide localities in the 2017 Provincial Competitiveness Index.

Last year, the occupancy rate of apartments reached 90 percent with rentals kept at competitive levels against Hanoi. In addition, some progress was made in the lower-end housing market with better planning across a number of urban areas. Vingroup, Hoang Huy Group, and Him Lam Corporation were among the top investors in the housing sector.

Profits soar despite slow in bank credit growth

The banking sector is sending positive signals right from the get-go in 2019 as business outcomes of some commercial banks highlight noticeable growth in earnings.

News outlet VnEconomy cited preliminary business reports released by a number of commercial banks to conclude that overall credit growth in the sector remained weak during 2018, but profit growths shot up.

Saigon Thuong Tin Joint Stock Bank (Sacombank) in particular was estimated to attain a credit growth rate of some 14% while its profits soared. This information was released at a conference held last December reviewing the bank’s performance throughout 2018.

The consolidated pre-tax profits of Sacombank were forecast to reach over VND2.2 trillion (US$93.7 million) in 2018, 20% higher than the figure planned for the year. Hence, Sacombank’s profit growth was estimated at over 47% on year. 

Other commercial banks also reported impressive profit growth figures throughout 2018. Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) reaped a credit growth rate of 14.9% on year, whilst its consolidated pre-tax profits were predicted to be over VND18.3 trillion (US$779.9 million), an estimated growth of 62% compared to 2017.

Tien Phong Bank (TPBank) recently announced their preliminary business outcomes in 2018 with their pre-tax profit nearly doubling against 2017 to reach VND2.258 trillion (US$96.23 million).

In addition, Vietnam International Bank (VIB) was estimated to have their pre-tax profit growth in 2018 increase by 95% on year, however, their credit growth remained low at some 17.5%.

Meanwhile, HDBank was said to exceed the profit target set for 2018 with estimated growth of more than 60%. 

Experts blamed the outcomes on the State Bank of Vietnam’s (SBV) policy of tightening credit growth, which was implemented from mid-2018.

Commercial banks in turn sought to raise their non-credit revenues and paid more attention to higher margin segments, including retail credit, digital banking, and insurance services.

These business outcomes are part of the overview of the banking sector in 2018. In late January, all of Vietnam’s commercial banks are slated to announce their 2018 financial reports.

The SBV is scheduled to release the official credit growth figure of 2018 with orientations set for 2019 next week, but credit growth had previously been predicted at around 14%.

Tea sector urged to improve product quality amid growing supply source

The Vietnamese tea sector must improve its competitive edge and product quality if it is to see an increase in value amid lower global demand and growing supply sources.

tea sector urged to improve product quality amid growing supply source hinh 0 According to the General Department of Vietnam Customs, Vietnam exported 128,000 tons of tea worth US$219 million during 2018, down 8.4 per cent in volume and 3.4 per cent in value against the same period last year. Notably, the proportion of green tea exports increased to 45.7 per cent from 39.4 per cent.

According to the Import-Export Department under the Ministry of Industry and Trade, Vietnam’s tea exports are predicted to still face a number of challenges due to a lowering global demand in 2019. In addition, many nations have continued to expand their own production despite the fact that supply sources already exceed the current demand.

The Food Agriculture Organization of the United Nations estimated that in 2018 the redundant quantity of tea stood at 75,000 tons. This figure is forecast to rise to 128,000 tons by 2020. 

The Import-Export Department advised tea export businesses to further invest in processing technologies and mix tea with other kinds of drinks to create a diversified flavor in order to keep pace with the changing tastes of tea around the world.

CPTPP boosts economic integration in Asia Pacific

The Comprehensive and Progressive Agreement on Trans-Pacific Partnership took effect on December 30, creating a free trade area of 11 countries in the Americas, Asia, and Oceania. The trade pact is expected to help member economies overcome challenges caused by strongly emerging protectionism.

cptpp boosts economic integration in asia pacific hinh 0 The CPTPP is a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Signed in Santiago, Chile, last March, the deal will reduce tariff barriers between member countries.

Australia, Canada, Japan, Mexico, New Zealand, and Singapore were the first countries to ratify the deal which will come into force in Vietnam on January 14.

Chilean Foreign Minister Heraldo Munoz said the CPTPP is expected to boost economic growth, generate jobs, improve people’s quality of life and strengthen cooperation of the 11 member countries. The agreement will create one of the world’s largest free trade area with a market of 500 million people and a GDP of more than US$10 trillion.

Australian Prime Minister Scott Morrison said the CPTPP is one of the most ambitious and comprehensive agreements in history. The agreement will help Australian enterprises grow and contribute US$11 billion to the national economy by 2030. 

New Zealand’s Minister for Trade and Export Growth David Parker said the deal will bring New Zealand from 800 million to US$2.6 billion each year.

The CPTPP is expected to boost the annual growth of Malaysia, Singapore, Brunei, and Vietnam 2% by 2030. Before submitting the agreement to the National Assembly for approval, Party General Secretary and President Nguyen Phu Trong said Vietnam’s participation in the agreement shows a strong commitment to renewal and international integration.

The benefits of the CPTPP are attracting other economies. Indonesia, South Korea, the Philippines, and Thailand are considering joining the pact. Colombia has already proposed joining. The UK has expressed interest in the deal after leaving the EU. British officials say that the CPTPP might be a foundation for the UK’s future economic cooperation.

With trade protectionism growing, the CPTPP needs to admit more members to increase global free trade. The 11 current signatories deal will discuss admitting new members later this month. Japan will continue to lead this process.

Ministry probes into dozens of real estate projects

A string of real estate projects will undergo inquests during 2019 in accordance with an annual inspection scheme recently approved by the Ministry of Construction.

Under the Decision No. 1369/QD-BXD, the Ministry of Construction (MIC) is planning to carry out 90 inspections regarding terms of construction management, infrastructure, and real estate projects among others.

Inspections are to be carried out at a number of real estate projects in the central coastal province of Khanh Hoa, including at Mövenpick Resort Cam Ranh invested by Eurowindow Nha Trang Investment and Tourism JSC, ALMA Resort Cam Ranh of Paradise Bay Resort Co. Ltd, and Prime Resorts and Hotels run by Cam Lam Holdings.

The ministry is to implement inspections of two housing projects in Hanoi that have received investment by Military Petrochemical Joint Stock Company (Mipec) such as Mipec City View in Ha Dong district and Mipec Riverside in Long Bien district. 

Another military - run entity, MBLand Holdings, which owns the Square Field hotel and shopping mall complex located in the southeast province of Tay Ninh, along with the Golden Field complex and Grand Plaza in Hanoi, is also subject to the MIC inspection.

A number of housing projects are also to undergo scrutiny. P.H Nha Trang social housing project owned by P.H Nha Trang Commercial Investment JSC in Khanh Hoa province tops the list.

Sunshine Group and Lac Hong Investment Corporation are the two real estate developers with a large number of housing projects to be inspected in 2019.

They include Sunshine City, Sunshine Center, and Sunshine Riverside in Hanoi, as well as the latter’s N01 T5 high-end housing complex in Hanoi along with its housing project in Quang Ninh province. 

Meanwhile, the MIC inspectorate is scheduled to execute surveys on the control of housing and real estate market of many provincial construction departments.

Vietnamese Airbnb startup raises US$3 mln from venture capitalists

Vietnamese homestay platform Luxstay has raised US$3 million from CyberAgent Ventures and other foreign investors in its bridge round.

Representatives of Luxstay, the Vietnamese homestay booking start-up, said the total capital raised could rise to $5 million as negotiations are still ongoing with interested investment funds.

CyberAgent Ventures (CAV), a Japan based investment firm specializing in incubation and investment in early-stage companies, played a leading role in directing the structure and execution of this funding round, the third for the firm after the seed and pre- Series A rounds.

This is also the second time the firm has injected capital in Luxstay, after its initial investment in the company’s pre-Series A round in early 2018. 

Dzung Nguyen, CyberAgent managing director for Vietnam and Thailand, believes that the "sharing economy" is a development trend in many business areas, and it will impact both tourism and real estate markets. 

"We believe the Luxstay model capitalises on this trend, and will create a major impact on the market in the coming time," he said.

According to Luxstay, there may be millions of townhouses, condominiums and holiday villas that are willing to participate in the short-term accommodation market. 

Therefore, the company has targeted having several hundred thousand properties participating in its home-sharing platform over the next 5 years.

The founder of the application, Nguyen Van Dung, said that with the current development speed and market potential, Luxstay will focus on accumulating resources to speed up technological development towards building an effective ecosystem to lead this new industry.  

The startup plans to find new investors for its next Series A round in mid-2019 with a potential scale of US$10 million.

Launched in 2016, Luxstay now has a network of nearly 10,000 properties across the country. This is a short-term rental booking platform for apartments, villas and other homestay accommodations positioned in the mid and high-end segments of Vietnam’s real estate market. 

A pioneer in building a platform allowing Vietnamese homeowners to participate in the rental market, the company has created new accommodation facilities for increasing numbers of youth and professionals who travel for work or leisure. 

Luxstay had also received much attention from foreign funds in its previous venture rounds. According to Crunchbase, an online database on investment activity, Luxstay raised US$500,000 in its seed round in June 2017 from Vietnam-based ESP Capital and Japanese Genesia Ventures.  

Another $2.5 million was raised in May 2018 in its pre-Series A round from CyberAgent Ventures (Japan), Genesia Ventures (Japan), ESP Capital (Vietnam) and Nextrans (the Republic of Korea). 

In September 2018, the startup became a Vietnamese strategic partner of Rakuten Travel, the tourism branch of Japanese e-commerce giant Rakuten. Y1 Venture and other firms were also involved in the bridge round.

Vietnam wants urban residents to pay bills without cash

The Vietnamese government wants cashless transactions made viable for all household bill payments by the end of this year.

A recent government resolution on changing the business environment to improve competitiveness and labor productivity contains a push to accelerate use of cashless transactions.

Provincial and municipal leaders have accordingly been tasked with instructing all schools and hospitals, as well as electricity, water, sanitation, telecommunications and postal companies in urban areas to coordinate with banks and intermediary payment service providers in collecting bills and fees via cashless transactions.

The government has recommended that establishments prioritize mobile payments and payment via card readers, and requested that the task be completed before December this year.

Vietnam Electricity, the national utility, has been asked to ensure power companies work with banks and intermediary payment service providers to collect electricity bills via cashless methods and promote the use of electronic and mobile payments. The target for the year is to double the number of customers using e-payments to pay their electricity bills.

The State Bank of Vietnam has been asked to come up with solutions that would promote the use of electronic wallets, wherein users can deposit cash into their e-wallets without the need for a bank account. The central bank has also been asked to find ways to remove imitations on e-transactions before the third quarter of this year.

The State Bank must also require commercial banks and intermediary payment service providers to implement the QR code standard, and work with the Ministry of Finance to come up with a list of types of transactions that have to be done through banks, as well as make amendments to existing regulations to promote cashless payments for real estate transactions. 

According to the World Bank's statistics released last July, Vietnam was the country with the lowest percentage of cashless transactions in the region with only 4.9%, while this value for China and Thailand were 26.1% and 59.7% respectively.

While Vietnam rolled out an e-payment system for taxes in 2014 with 95% of companies registered, currently only 70% of tax money is collected via this method and many businesses still prefer paying their tax directly with cash.

Similarly, while Vietnam has had policies to encourage consumers to pay electricity bills through banks and intermediary payment service providers, currently only 4.5 million people, or 20% of electricity consumers, pay their bills through these channels.

The government's resolution does not include rural and remote areas as the majority of Vietnamese living in such areas still lack access to modern payment methods.

HCM City lures US$7.07 billion in FDI during 2018

HCM City attracted US$7.07 billion in foreign direct investment (FDI) during 2018, a rise of 7 per cent on-year, according to the HCM City People’s Committee.

During 2018, HCM City organized over 200 trade and investment promotional events domestically and abroad through trade fairs and exhibitions.

The city also worked alongside over 300 delegations including trade promotion agencies, businesses as well as both local and foreign investors from the Republic of Korea, Japan, Thailand, the US and Canada to gain a better understanding into the environment and investment projects in HCM City.

Additionally, a number of online and direct dialogues between businesses and local authorities were held to answer and business queries in terms of tax, investment and information technology. 

Trade and investment promotion activities have been implemented since the beginning of the year, therefore helping to support the city’s economic restructuring and increasing the proportion of export for processed products with a high value.

These activities, in particular, have contributed to increasing investment attraction and improving trust from businesses in the country’s investment and business climate.

For example, the total registered and additional capital reached over VND995 trillion, up 7.2 per cent against the same period last year.

Of which, 44,126 businesses were newly established with a total registered capital of VND537 trillion, a 6% rise in the quantity of businesses which accounted for 89% of registered capital compared to the corresponding period last year.

The city has also granted investment licenses to 950 FDI projects with a value of US$800 million, a 12.4% increase in new projects and equal to 34 per cent of investment capital against the same period last year. 

During 2019, the city hopes to implement solutions to improve the quality of growth and the national economy’s competitive edge.

This will take place along with the restructuring of the economy in an in-depth and effective manner with the aim of creating a favourable and healthy investment climate to facilitate creativity among startups, and urge businesses to apply advanced technologies to production.

The city also aims to establish 46,200 new businesses, including households being transformed into businesses.

Agricultural sector reaches peak levels in 2018

The Ministry of Agriculture and Rural Development has reported that local agro-forestry-aquatic products, shipped to over 180 countries and territories throughout the world, raked in US$40.5 billion in 2018, making Vietnam the world’s 15th largest farm produce exporter.

2018 can be considered a successful year in agricultural development as the sector reached record highs.

Agricultural production recorded a growth rate of 2.89 percent, at the peak level since 2012. Meanwhile, aquatic and forestry production witnessed respective growth rates of 6.46 percent and 6.01 percent.

The structure of agricultural production in 2018 shifted the focus to quality and high value exports over quantity.

Vietnam has a number of products which it has advantages in and enjoyed an increase in growth over the last year. These include aquatic items, fruit and vegetables, and wooden products, while those suffering from oversupply in the previous years were reduced. Of note, more attention was paid to increasing the production of high quality products. 

Economic expert Vu Dinh Anh attributed the positive results to the joint efforts made to put farm produce exports on the right track. He added that Vietnam has numerous advantages in agricultural production and export but it needs to expand high quality farm produce for the sake of improving the export value.

The proportion of Vietnamese farm produce exports also rose in 2018. China topped the list when making up the largest proportion with 22.9 percent, a year on year rise of 3.6 percent. This was followed by Japan (19.1 percent), the US (17.9 percent), and ASEAN countries (10.64 percent).

Additionally, the value of all key farm produce exports increased last year. Notably, rice exports during the first 11 months of 2018 amounted to 5.7 million tons, bringing in US$2.9 billion, up 5.6 percent in volume year on year and 17.7 percent in value.

Meanwhile, fruit and vegetable exports during the 11-month period reaped US$3.5 billion with tra fish shipments recording peak levels with US$2 billion, a 27.4 percent rise from year. 

Phung Duc Tien, Deputy Minister of Agriculture and Rural Development, said there is still a huge capacity for Vietnam’s agricultural production and the export of farm produce to grow.

Tien puts high hopes on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that is expected to leverage Vietnamese farm produce and allow for deeper penetration into the world market. “Fishery production is predicted to gain many benefits from the CPTPP as medium-term capital will be poured into developing fishing logistics centers and breeding stations.”

In 2019, Vietnam has set the target of bringing its agricultural growth to 3 percent and agricultural exports up to US$43 billion. The MARD has plans to speed up negotiations on additional export deals while redoubling efforts to preserve the market share from regular importers.

The ministry also mapped out a scheme aimed at utilizing opportunities emerging from free trade agreements that Vietnam has signed, particularly the CPTPP and pending EU-Vietnam Free Trade Agreement (EVFTA).


Vietnam sets higher targets in global supply chain, Danang aims to bolster hi-tech agrotourism, HCM City lures US$7.07 billion in FDI during 2018, Agricultural sector reaches peak levels in 2018
 
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