BUSINESS IN BRIEF 29/11

Market economy to drive Vietnam’s growth

Next year is expected to bring a flurry of stock listings by Vietnam`s state-owned enterprises — a development symbolized the country`s shift from a government-led economy to one powered by market principles.

The “new driving force of Vietnam is the acknowledgment that the state will not mobilize or distribute or regulate resources, but direct [companies] via policies,” Nguyen Duy Hung, chairman and chief executive of Saigon Securities, said on Nov. 15 at the Nikkei Asian Review Forum in Hanoi. 

Already, the government’s changing approach is encouraging companies to be more proactive about expanding their businesses, spurring positive changes in the economy that will promote a better environment for both local and foreign investors.

While the government has moved to allow greater foreign ownership and is pushing its approximately 700 SOEs to list, the pace of initial public offerings has been slow so far.

Progress is expected to pick up in 2018, however, as the government is warning there will be consequences for those in charge of state companies that miss the deadline for restructuring and equitization.

Shosuke Mori, deputy head of international banking at Sumitomo Mitsui Banking Corp., noted that the SOE sector has seen slower growth than the private sector and foreign-owned companies in Vietnam. “I think SOE reform will be the key in driving the evolution of the Vietnam economy,” Mori said.

A number of forum participants from Vietnamese companies said they have had positive experiences welcoming overseas shareholders. Vietnam Airlines Chairman Pham Ngoc Minh said its Japanese partner, ANA Holdings, “satisfied all criteria” for an investor. ANA holds an 8.8% share, and the strategic partnership can “support Vietnam Airlines’ expansion and growth,” Minh said.

Nguyen Quoc Khanh, executive director of research and development at Vietnam Dairy Products (Vinamilk), said the company will “improve itself in every field” to attract investors. Vinamilk was the first in the country to completely remove limitations on foreign ownership, paving the way for international investors to hold more than 58% at present. Large shareholders include Singapore-based peer Fraser and Neave.

Following a successful second auction of Vinamilk shares in early November, the State Capital Investment Corp. began to inform potential investors of the divestment procedures for its four blue chip companies, including information technology player FPT and Tien Phong Plastic.

Nguyen Quang Dung, the deputy CEO of Vietnam National Petroleum Corp., or Petrolimex, hailed a partnership the company forged last year with Japan’s JX Nippon Oil & Energy. The two sides are working closely in numerous areas, including corporate management and market development, he said.

In the background of all this is the Trans-Pacific Partnership trade agreement, to which Vietnam is a party. Saigon Securities’ Hung said the TPP negotiations have prompted domestic companies to adhere to international business standards, further improving the environment for investors from abroad.

Meanwhile, Pham Hong Son, vice chairman of the State Securities Commission of Vietnam, said his organization is planning to launch bond futures at the local stock exchange. “Besides covered warrants products to be launched later this year, we are planning to launch government bond futures next year,” said Son during his opening speech at the forum. This follows the opening of the derivatives market at the Hanoi Stock Exchange in August this year.

Vietnam city proposes subsidizing airlines flying to local airport

The administration of a city in southern Vietnam has suggested using state money to provide subsidy to airlines opening new routes to its unmarketable airport.

The proposal has been submitted to the municipal People’s Council for review and approval.

According to the proposal, all airlines opening new routes to the Can Tho International Airport will be subsidized based on ticket price.

Specifically, passengers flying from the airport would enjoy an airfare of just 70% the normal cost, with the remaining 30% paid for by the city.

The subsidy is expected to encourage local and foreign airlines to open new routes to the airport, which is operating well below its design capacity of five million passengers a year.

Located in Can Tho’s Binh Thuy District, Can Tho International Airport was upgraded from the former Tra Noc Airport between 2006 and 2011 with a view to boosting the Mekong Delta’s economy as well as improving defense, security and international integration.

Can Tho is considered the economic hub of the delta.

However, airlines have been reluctant to operate flights to the airport due to low demand, as it sits only 180 kilometers away from the busy Tan Son Nhat International Airport in Ho Chi Minh City.

Airlines eligible for the planned subsidy must be committed to operating at least three flights weekly for domestic routes and at least two flights weekly for international routes.

All routes must be available for a period of at least three years.

According to the administration of Can Tho, the airport is expected to welcome over 612,000 passengers in 2017, which is only about 20% of its current maximum capacity.

Despite being an international airport, it currently serves predominantly domestic routes, including those to and from Hanoi, Phu Quoc, Con Island and Da Nang.

The only international route between Can Tho and Taipei is only available during the Lunar New Year travel season.

Formosa exceeds emission limit after raising capacity for evaluation

Recent reports of emissions exceeding the permissible amount at Formosa steel mills in north-central Ha Tinh Province were the result of a raised capacity to evaluate the company’s emission treatment system, Vietnam’s Ministry of Natural Resources and Environment (MONRE) has said.

The ministry gave the explanation on November 25 following rumors that the Taiwanese steel business was once again bringing harm to Vietnam’s environment.

Hung Nghiep Formosa Ha Tinh Steel Co. Ltd., or Formosa for short, is the Vietnamese steel business of Taiwan’s Formosa Plastics Group.

Last June, the firm’s top executives admitted wrongdoing and pledged a hefty monetary compensation of US$500 million after wastewater from its factories was found responsible for mass fish deaths along the central coast of Vietnam two months earlier.

Formosa has been allowed to continue doing business in Vietnam regardless, though with increased monitoring and inspections by local authorities to ensure such incidents never repeat.

In a statement released on November 25, MONRE acknowledged that some readings on Formosa’s emissions had exceeded the permissible amount recently.

Specifically, the sulfur dioxide (SO2) and nitrogen oxides (NOx) levels in Formosa’s emissions were above the standards at some points.

However, such incidents were due to the company raising its capacity above the usual level to inspect and evaluate the emission treatment system.

According to the ministry, responsible authorities have kept a close watch on the company’s operations and emissions since the scandal last year, and so far have found no violation of environmental standards.

A US$100 million SO2 and NOx treatment system is being installed at its steel plants, with the completion date scheduled for June 2019.

In the meantime, the company is obliged to use clean fuel to power its mills to make sure no air contaminants are produced and emitted to the environment.

The ministry also dismissed claims that it was drafting a new set of environmental standards to legalize Formosa’s emissions.

Vietnam promotes Vietnamese brands in RoK

Vietnam-Republic of Korea trade ties are flourishing with trade revenue growing from US$500 million in 1992 to US$45 billion in September this year. But the number of Vietnamese brands in Korea remains small.

Trung Nguyen coffee is the only Vietnamese product widely distributed in the Republic of Korea. Other brands like Trung Thanh chili sauce and Nam Ngu fish sauce are only sold here and there in smaller shops.

Do Kim Lang, Deputy Director of the Trade Promotion Department of the Ministry of Industry and Trade, said Vietnam has 90 enterprises recognized as national brands. But they still pay little attention to promoting their brands globally. Most Vietnamese businesses are small and medium-sized businesses that export products with little added value.

Le An Hai, Deputy Director of the Asian–African Market Department, urged Vietnamese businesses to learn Korean food safety, product quality, and trademark registration in order to secure a firm foothold in the Korean market.

Hai said “We have to export our products through Korean distributors, who have their own standards and requirements in design and packing. Securing a market share in the Korean market depends on the competence of each company.”

Pham Duy Khuong, Director of SB Law, a law firm specializing in intellectual property, said “Domestic enterprises should increase their market study and professional evaluation. We need legal experts who will help us check and verify legal issues with our trading partners and whether our trademark and packing meets the host country’s standards.”

Vietnam products introduced at Prague International Christmas Fair

A full range of Vietnam’s traditional products like silk cloth, fine arts and handicrafts, healthy drinks and special dishes were introduced at the International Christmas Fair on November 26 in Prague, the Czech Republic.

The annual event organized by the Diplomatic Spouses’ Association (DSA) in the Czech Republic aims to raise funds for charitable activities in the resident country.  This year’s fair provided an opportunity for visitors to buy special and unique products and savour traditional food of 48 countries from across the world.

Myung-Ji Suh, Korean Ambassador’s wife and DSA president, said since 2000, the Association has donated 66 million CKZ to charity programs in the Czech Republic through the fair, making such an event become more well known to the international public.

She said she hopes that the event will help bring different cultures closer towards tightening friendships among countries and promoting humanitarian activities in support of unprivileged people in society.

The organizers said around 30 charity projects will receive aid from the DSA in the coming time. Last year roughly 2.8 million CKZ (VND2.8 billion) was allocated to 34 programs.

Distinguished businesswoman sets shining example of patriotism

Hoang Thi Minh Ho, wife of patriotic businessman Trinh Van Bo, passed away on November 5 at 104, was a great patriotic spirit, dedicated to the nation.

Hoang Thi Minh Ho was born in the capital city to a Confucian scholar and wealthy merchant in the early 20th century. Her husband, Trinh Van Bo, was the son of Trinh Phuc Loi, also a well-known merchant.

In 1932, Trinh Van Bo married Hoang Thi Minh Ho. Together, they leveraged their inherited silk store to even greater prosperity. The couple showed great generosity to disadvantaged people and they were totally dedicated to the revolution. 

Responding to a Gold Week launched by the government in the early days of the 1945 August Revolution, they donated more than 5,000 tael of gold equivalent to more than US$8 million at the current rate and mobilized another 1,000 tael of gold from other businesses in Hanoi.  During the catastrophic famine of 1945, Ho’s family donated money and delivered porridge to starving people on the streets. 

90-year-old Dinh Quang Thieu of Dong Da district, Hanoi, recalled “At that time, we had absolute confidence in President Ho Chi Minh. Everyone voluntarily responded to his appeal to contribute to the revolution. Ho’s family’s generous donations showed their patriotism and devotion to the nation”.  

During the struggle against the French colonialists, Ho and Bo received a delegation from the interim Government, who travelled from the Viet Bac military base to their house at 48 Hang Ngang street, Hanoi, to lead the 1945 Revolution. At that time, the couple did not know the delegation, which included President Ho Chi Minh and several senior officials of the Government. In this house, President Ho Chi Minh wrote the Declaration of Independence establishing the Democratic Republic of Vietnam. Later, Ho and her husband donated the house to the government as a historical relic site.

Nguyen Xuan Ha, Ho’s daughter in law, said: “For my mom, money is not too important. She said giving creates happiness”. 

Mr. Trinh Van Bo passed away in 1988. Bo and his wife were awarded the Order of Independence, first class, by the State.

A street in Cau Giay District, Hanoi, will be named for Trinh Van Bo.

Youngsters show off talent in performing Cai Luong 

A national competition on performing reformed opera and drama for young artists took place in Dong Nai province recently drawing 20 art troupes nationwide. The contest created an opportunities for the young performers to show off their talents and preserve the traditional art form.

Art troupes from Long An, Tien Giang, Can Tho, Dong Thap, Ca Mau, Bac Lieu and Kien Giang province were among the contestants.

Performing three excerpts, 4 young artists of the Huong Tram troupe of Ca Mau province were highly applauded by both judges and the audience for their excellent, and emotional performing skills. 

Artist Quoc Tin of Head of the troupe said “We tried our best to enable young artists to demonstrate their talent. 2 of our contestants were newly recruited and don’t have experience. But we want them to participate in the contest to learn experience from other artists from across the country.”

Emeritus Artist Dinh Minh Man, Head of the Dong Thap troupe, said that they set up a new play for the contestants while senior artists played supporting roles. 

“We invited some Emeritus artists to the play to assist the young ones. Emeritus Artists Trong Duong and Hai Yen played supporting roles for young artists”, said Mr Man.

Performances of the Tay Do troupe province received much applause from judges thanks to their thorough preparation. 

Director of Tay Do Theater Hong Quoc Khanh said “Our young artists received good comments that made them very happy. But to be honest artists of other troupes are much better than us because they perform more regularly. This contest created an opportunity for our artists to gain more experience.”

Organizing the contest, the Ministry of Culture, Sports and Tourism hopes to honor artists with outstanding achievements, creativity, and talent.

Footwear exports enjoy 13 percent rise during Jan-Oct

The export turnover of Vietnamese footwear products hit 11.82 billion USD in the first ten months of 2017, up 13 percent year-on-year.

Exports to Indonesia recorded the highest growth, at 53 percent, followed by Singapore (45 percent), Hungary (34 percent), India (33.7 percent) and Poland (33 percent).

The Vietnam Leather, Footwear and Handbag Association predicted that the footwear sector’s production will enjoy a growth rate of 5 percent this year compared to last year, while the export value of footwear and handbags will reach nearly 18 billion USD, or a 10-percent rise a year-on-year.

Vietnam is aiming for 24-26 billion USD in leather, footwear and handbag exports by 2020, 35-38 billion USD by 2025 and 50-60 billion USD by 2035.

Sabeco towering over stock market

The value of Saigon Beer, Alcohol, and Beverage Company (Sabeco)’s shares flew to a new record, surpassing VND300,000 ($13.21) apiece to become the largest value ticker on the Vietnamese stock exchanges.

According to information published by the Ho Chi Minh City Stock Exchange (HoSE), as of half of the transaction session on November 27, the value of Sabeco shares reached VND319,000 ($14.09), increasing its capitalisation to VND200 trillion ($8.8 billion).

Being a point of extreme interest among investors, the state divestment from Sabeco has been accelerated after the Ministry of Industry and Trade asked the HoSE to organise roadshows in Singapore and the UK.

Within the framework of the roadshows, a representative of Sabeco would provide general information about the corporation, its manufacturing system, subsidiaries, distribution network, its financial potential (through the financial reports from the past three years), as well as its plans to develop after being equitised.

Accordingly, on November 24, the roadshow was organised in Singapore and the next roadshow is in the UK today.

Back to Sabeco’s share value, it is not the first time that Sabeco’s shares are pushing records. Previously, on the first transaction day on December 6, 2016, Sabeco’s shares increased by the ceiling set by the HoSE. Notably, from a reference price of VND110,000 ($4.9), the ticker opened the day already at VND132,000 ($5.84), a 20 per cent increase from the get-go. 

After eight transaction sessions, Sabeco’s shares increased to VND211,500 ($9.40), up 92.3 per cent from the launch.

Divesting the state’s ownership in Sabeco has drawn in investors by the droves, especially foreigners. To date, several foreign breweries have admitted to eyeing Sabeco since it was earmarked for equitisation, such as San Miguel, Heineken, SABMiller, Thai Beverage Public Company Limited (Thai Beverage), Japanese Asahi Group Holdings Ltd., and Kirin Holdings Co.

Sabeco is the largest brewer in Vietnam. The firm currently owns 24 manufacturing plants with a total designed capacity of 1.8 billion litres per year, 20 of which are in operation, while the remaining four are expected to come into operation in the near future.

Mixed-use development boom in Vietnam’s cities

During the last 10 months, Vietnam continued to see strong interest from developers for large-scale, mixed-use projects with residential components in major cities.

In mid-November, Singapore-based CapitaLand announced that it paid $38 million to acquire a new residential project located in Ho Chi Minh City’s District 4. This acquisition is CapitaLand’s 11th project in Vietnam so far.

According to Chen Lian Pang, CEO of CapitaLand Vietnam, 2017 has so far been a record year in terms of growth for CapitaLand in Vietnam, with home sales in the year’s first nine months surpassing those of fiscal year 2016 by close to 50 per cent.

“Beyond the residential market, we have made strategic inroads and expanded our footprint in the country with prime assets in gateway cities,” Chen said.

In September, VinaLand Limited – the real estate investment arm of Vietnam-based asset manager VinaCapital – transferred its stake in VinaSquare, a mixed-use 3.1-hectare development site in Ho Chi Min City’s District 5, to Tri Duc Real Estate for $41.2 million.

In addition, its 182ha My Gia, one of the largest township projects in the central city of Nha Trang, was also unloaded by VinaLand for over $11 million.

In August, Anpha Holdings, a Vietnamese real estate development firm, acquired nearly 100 per cent of Nova Galaxy, a subsidiary of the listed developer Novaland.

In Hanoi, Growing Sun Investment acquired the 4.2ha Diamond Rice Flower complex project from the listed company Kinh Bac City Group.

In a similar move, FLC Group won a bid for the land-use rights of the 6.4ha DM1 land plot, located in South Tu Liem district, for nearly $38 million. They plan to build townhouses, villas, and apartments on the parcel.

According to a recent report released by Savills Vietnam, the Vietnamese property market is trending upward, across all sectors, with a particularly positive outlook for the office-space sector.

With strengthening demand on the back of healthy foreign direct investment and robust GDP growth, Savills Vietnam expects to see extremely low vacancy rates across all office grades, with average rental growth exceeding 8 per cent per annum in the next three years.

Vikram Kohli, executive director of Business Operations and Strategy at CBRE Southeast Asia, said that the real estate market in Vietnam will remain a destination for foreign investment – especially from APEC members – in the coming time.

“For developed countries like Japan, South Korea, and Singapore, the profits from real estate projects are not as attractive as they are in emerging countries. Therefore, investors in more developed countries are willing to diversify their portfolios in emerging markets like Vietnam,” Kohli said, adding that the Vietnamese government has recently enacted a policy to encourage foreign investors to join the local market through mergers and acquisitions (M&As).

However, in order to make the M&A market in real estate more attractive to foreigners, there needs to be more product diversity to provide foreign investors with more choice. 

Furthermore, increased transparency and legal protection for contracts are also needed to properly develop the M&A real estate market, which has seen increased participation from foreign developers in Japan, South Korea, and Singapore. 

These buyers are interested in large-scale mixed-use developments comprised of apartments, serviced apartments, retail, and office space in Hanoi and Ho Chi Minh City.

Major expos to promote Vietnamese supporting industries

Vietnam Hardware & Hand Tools 2017 will take place on December 6-9 in Ho Chi Minh City and is expected to drive the Vietnamese supporting industries forward.

According to Do Phuoc Tong, chairman of the Ho Chi Minh City Association of Mechanical and Electrical Enterprises, the on-going expansion of multinational corporations in the manufacturing sector has facilitated the development of the domestic supporting industries in recent years. A growing number of local firms have seized the chance to join global supply chain networks.

“Vietnam has given priority to investment in the supporting industry with a view to developing the manufacturing sector and contributing to the country’s industrialisation and modernisation process. Thus, the expo will be a practical and efficient playground for local and foreign enterprises to explore new opportunities in the hardware and hand tools industry,” he said.

This year, the exhibition will welcome 250 enterprises from 20 different countries and territories. It will cover an area of 5,000 square metres at Saigon Exhibition & Convention Centre (SECC). The four-day event is expected to attract 6,000 visitors.

Vietnam Hardware & Hand Tools 2017 focuses on four main sectors, including tools and DIY, building hardware, fasteners and security solutions, locks and fittings. The expo will be an effective commercial connection programme to bridge the gap between sellers and buyers as well as give buyers a chance to approach new technology and products.

Along with Vietnam Hardware & Hand Tools 2017, another mega exhibition known as Vietnam Expo 2017 will be hosted at SECC from December 6 to 9. The expo is a major trade promotion channel between Vietnam and other countries in the world.

With the participation of 750 companies from 16 countries and territories, Vietnam Expo 2017 will showcase a plethora of products, including electronics, electrics, tech devices, and equipment and accessories. Manufacturing machines, construction materials, tools and hand tools, interior and outdoor decorations, food, beverages, and cosmetics will be on ample display.

The expo also features a series of conferences and programmes, such the Vietnamese-Chinese mechanical engineering exchange programme, a seminar on economic, trade and investment co-operation in China’s three provinces of Beijing, Tianjin, and Hebei, as well as a workshop on opportunities and challenges for Vietnam’s supporting industries in the context of Industrial Revolution 4.0.

Italian businesses seeking partnerships

The Italian Business Mission to Vietnam 2017 will bring more than 70 Italian firms and 150 delegates representing world-leading Italian brands and businesses to meet with Vietnamese counterparts to seek business opportunities and strengthen ties between the two countries.

Led by Mr. Ivan Scalfarotto, Deputy Minister of Economic Development, the Italian Business Mission 2017 is organized by the Italian Trade Commission (ITC), the Italian Confederation of Industries (Confidustria), and the Italian Banks’ Association (ABI). Events will be held in Hanoi on November 27 and 28 and in Ho Chi Minh City on November 29.

Economic cooperation is a central pillar in Italy-Vietnam ties. Bilateral trade has achieved significant outcomes and increased ten-fold over the last decade, reaching over $4.6 billion in 2016 and making Italy Vietnam’s third-largest business partner in Europe.

Bilateral trade and cooperation are still growing steadily as officials from both countries have been actively focusing on fostering trade and investment relations to provide better access to the market in each country.

“Vietnam is an important market with the key traditional and developing sectors of footwear, textiles, building materials, and foodstuff, and is now escalating to more sustainable industries such as renewable energy and smart infrastructure,” said Mr. Paolo Lemma, Italian Trade Commissioner in Vietnam.

“Italian companies consider Vietnam a perfect gateway to accessing ASEAN markets. They are also increasingly interested in Vietnam as an emerging market in the region, with promising potential for investment and trade.”

This year’s Business Mission includes roundtables on the following three focus sectors: infrastructure and transportation, power generation and renewable energy, and machinery and technology. A major highlight of the Mission is the Vietnam-Italy Business Forum on November 28, where all delegates will have the chance to hear keynote speeches from Mr. Scalfarotto and presentations by representatives from Vietnam’s Ministry of Industry and Trade as well as the Vietnam Chamber of Commerce and Industry (VCCI).

Vietnamese companies who are already doing business with Italian counterparts or seeking new ones are encouraged to register for the event, particularly the two business-to-business (B2B) meetings in Hanoi and Ho Chi Minh City.

The last Italian Business Mission to Vietnam took place in 2014, which successfully established more than 1,000 B2B meetings.

Retail industry aims at 15.5 percent GDP by 2025

The Ministry of Industry and Trade has issued a commerce development strategy by 2025, setting up the target that retail field will contribute to 15.5 percent of the country’s Gross Domestic Product by 2025.

The retail trade revenue will reach VND419 trillion (US$18.44 billion) by 2020 and VND700 trillion ($31 billion) by 2025.

According to the strategy, total retail sale of goods and services will post the annual growth rate of 13 percent to approximate VND5.8 trillion by 2020, jumping to 14 percent to hit VND11 trillion in the phase of 2021-2025.

The country now has 8,660 traditional markets where goods volume accounts for 35-40 percent.

Modern retail channel has strongly developed with the establishment of supermarket chains and convenient stores. The network of supermarkets and trade centers last year hiked 2.1 times compared to 2006, present in 62 out of 63 provinces and cites in the country.

Vietnam beer hits Israel supermarket shelves

Saigon beer has been recommended to customers at the first Asia food fair in Tel Aviv, Israel by Israel’s leading sales and distribution company for global consumer brands, cosmetics and food, the Rakuto Diplomat International.

The fair held in mid-November aims to promote food and drink from India, Thailand, Japan, Tibet (China), the Republic of Korea, and Vietnam.

President and CEO of Diplomat, Roni Bornstein said he was impressed by the showcased Vietnamese products. The company decided to import Saigon beer into Israel because of its best quality and beautiful design.

Diplomat had spent two years persuading Israel management agencies to allow the import of Saigon beer. Currently all labels of Saigon beer are printed in Hebrew language according to Koser standards, said Mr Bornstein.

He revealed that the first batch of Saigon beer imported into the country had been sold out at the fair.

Vietnamese Ambassador to Israel Cao Hoang Quoc Hai said to help Saigon beer enter the market, the embassy was actively accelerating the completion of import procedures and product promotion.

The fair provided a good chance for Vietnam to advertise its beverage industry in Israel and help local businesses and customers access Vietnamese famous food and drink, said ambassador Hai.

Vietnam attends Sirha trade fair in Istanbul

Sixteen Vietnamese businesses have showcased their agricultural products like rice, cinnamon, cashew nuts, pepper and coffee at the Sirha trade fair in Istanbul, Turkey.

At the opening ceremony on November 16, Vietnamese Ambassador Pham Anh Tuan spoke highly of domestic businesses’ efforts to help Vietnam farm products enter Turkey. He encouraged them to strengthen connectivity to boost exports to the potential market. 

vietnam attends sirha trade fair in istanbul hinh 1 During the fair on November 16-17, Vietnamese businesses joined a Business-to-Business (B2B) forum co-organized by the Vietnam Trade Office and the Foreign Economic Relations Board of Turkey (DEIK). Some of them succeeded in signing trade deals at the event. 

vietnam attends sirha trade fair in istanbul hinh 2 Ambassador Pham Anh Tuan held a working session with DEIK president Nail Opak, who affirmed that DEIK will serve as a bridge to further foster economic cooperation between the two countries.

Mr Tuan expressed his hope that DEIK and the embassy continue to regularly exchange information to further promote their roles in supporting businesses of both sides.

Sembcorp increases stake in VSIPPL

Sembcorp Industries’ wholly-owned subsidiary Sembcorp Development has entered into a sale and purchase agreement that will increase its interest in Vietnam Singapore Industrial Park Pte., Ltd. from 92.9 to 96.6 per cent.

According to the firm’s press release, the share acquisition in Vietnam Singapore Industrial Park Pte., Ltd. (VSIPPL) from a minority shareholder is expected to be completed by the end of November 2017. The total purchase consideration of $6.9 million was calculated based on the net asset value of VSIPPL as of September 30, 2017.

VSIPPL represents the Singaporean consortium which holds a 51 per cent stake in Vietnam Singapore Industrial Park Joint Venture Co., the developer of Vietnam Singapore Industrial Park projects in Vietnam.

The acquisition will be funded internally and is not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp Industries for the financial year ending on December 31, 2017

Since 1996, Sembcorp has been a partner to the Vietnamese government to create integrated townships and industrial parks in the country that are complete work-live-play environments. There are seven VSIPs in Vietnam’s southern, northern, and central regions.

These projects uniquely integrate industrial, commercial, and residential solutions localised to suit the demands of Vietnam’s rapid urbanisation and industrialisation.

Fibre segment to beat $3-billion export target

Bypassing the concerns that the application of anti-dumping tariffs in some export markets might cast a negative impact on export performance, the fibre sector is solid on its way to beat the 2017 export value of $3.1 billion.

According to preliminary figures from the Vietnam Textile and Apparel Association (Vitas), Vietnam raked in $2.8 billion from fibre exports in the first ten months of this year, a 23 per cent jump on-year.

As the fibre sector is encountering anti-dumping tariffs in some major export markets like Turkey, India, and Brazil, this outcome proves encouraging.

According to Vitas chairman Vu Duc Giang, after Turkey imposed anti-dumping tariffs on several types of export fibre, such as draw textured yarn (DTY) and synthetic fibre in 2016, local export firms have been successful in finding alternative markets, which was the factor behind the more than 20 per cent jump in the fibre sector’s ten-month export value.

Soi The Ky JSC (STK), a major player in the local fibre industry, is one of the businesses whose export operations were affected by Turkey’s tax imposition, as the company had exported DTY there.

Via effective market expansion activities, in the first nine months of this year the company reaped VND1.45 trillion ($66 million) in total export value, a big jump compared to the VND972 billion ($44 million) it posted in 2016’s similar period.

The company’s net revenue rose by VND206 billion ($9.3 million) in 2017’s third quarter alone, up 67 per cent on-year.

According to an STK source, the company’s soaring revenue came on the back of effective sales promotion activities, particularly successes in finding new markets and customers.

With such upbeat results, STK is confident in reaching the full-year revenue and after-tax profit targets of VND1.9 trillion ($87 million) and VND87 billion ($3.9 million) by the end of the year.

The Vietnamese fibre sector has carved itself a place in the global fibre map and is well positioned to compete with big foreign rivals like India, China, Turkey, and Middle Eastern countries on equal footing.

The export prospects of local businesses in the rest of the year and next year are forecast to be bright.

According to Nguyen Minh Dao, head of the Fibre Business Department of Vinatex Nam Dinh Spinning Factory, a member of state textile and garment conglomerate Vinatex, with a monthly export value averaging at $1.1 million, they are confident in reaching 2017’s export target of $15 million.

For a plant which only commenced operations a little over a year ago, not having unsold stock and counting stable export value is deemed as fair business results.  

Why to enter Vietnamese fruit processing market now

The Vietnamese fruit industry has been steadily growing in recent years, however, there remains much place for development by applying new technology in production to enhance added value for processed products, grow the share of sustainable profit, and meet domestic and international demand.

According to data from the Ministry of Agriculture and Rural Development (MARD) released at the seminar on Vietnam’s fruit processing market and technology on November 21, 2017 in Hanoi, with growth across various segments, Vietnamese fruit production and export value has been continuously growing in recent years: from several hundred million dollars per year to over $1.07 billion in 2013 and reaching $2.458 billion in 2016, the first time exceeding rice exports ($2 billion), and for the first time accounting for more than 80 per cent of total export value.

In the first ten months of 2017, the export value of fruits reached $2.48 billion, an increase of 47.3 per cent over the same period in 2016. Major fruit export products include dragon fruit (about $900 million in 2016), banana, rambutan, longan, litchi, mango, mangosteen, and durian.

Major fruit and vegetable import markets continued to grow in value: from 13 markets importing over $1 million in 2004 to 10 markets over $20 million in 2016. Aside from China, which is the largest market (accounting for 70.8 per cent of total fruit exports), growing volumes have been exported to high-demand markets, such as the US, Korea, Japan, the Netherlands, Malaysia, Taiwan, Thailand, Singapore, and Australia.

However, with the global import value of vegetables and fruits being in excess of $200 billion per year since 2011, Vietnam’s export value is less than 1 per cent of the world market.

In additional, the main exports of Vietnam are fresh fruit, which has lower value and many technical barriers to trade, such as phytosanitary requirements, quick expiration dates, and short fruit life because of limited technology.

“Fruit production and processing in Vietnam is also facing difficulties and challenges due to the small scale of producers and the decentralised production taking place all over the country with little to no linkeages. The quality and productivity of fruit is low, the application of technical equipment is not synchronised, lost harvest is large, the processing technology is not updated, and a far smaller volume of processed food products are exported than fresh fruits. The high cost of transportation (by air) and no brand in the market lead to low added value and low competitiveness of Vietnamese fruit products,” asserted Nguyen Nhu Cuong, deputy director general of the Department of Crop Production at MARD, at the seminar on Vietnam’s fruit processing market and technology on November 21, 2017 in Hanoi.

It is necessary to continue promoting the application of science and technology to fruit production in order to increase productivity, yield, and improve quality, which would ensure food safety and reduce postharvest losses. Additionally the development of preservation and deep-processing technology for fruit products would increase production value as well as expand markets, raising export volume and value on traditional and new markets alike.

There are two pieces of high-technology for fruit processing to help enterprises in Vietnam to develop fruit processing lines and access higher added-value market segments. Bertuzzi’s technology helps to increase product quality and output efficiency through the use of specialised machinery and equipment that are suitable for any type of fruit. Hiperbaric applied high pressure processing (HPP) helps to keep the whole nutritive value as well as the taste of pure fruit juice and increase the expiry date of products.

“Vietnam grows the most diversified types of fruit that I know, especially tropical fruits, so we provide you the solutions to optimise the added value for processed fruits products, increase productivity, and expand the export markets of processed food products,” said Hans-Juergen Wichmann, general director of the Business Unit Machinery at Rieckermann Vietnam.

Rieckermann was established in 1892, is a reliable partner for industrial production and processes, as a full-service solution provider along with the whole value chain of industrial production and processes. It offers complete engineering design, from concept to the last detail, supplies single machines, process lines, integrated systems and technical services.

“According to the 2020 target, the total area of orchards in the country will be 910,000 hectares, with a total output of over 9.5 million tonnes of fruit. Through this, the fruit and vegetable export turnover will increase by an average of 20 per cent per year, striving to achieve the export value of over $4.5 billion in 2020, of which fruit will account for more than 80 per cent,” noted Nguyen Quang Huy from the Department of Crop Production at MARD. 

SCIC to divest from powerful companies next month

Next month, State Capital Investment Corporation (SCIC) will divest the state’s stake in a number of large-scale companies, including FPT, Bao Minh Corporation, and Domesco JSC.

The total state capital value in these firms is VND1.645 trillion ($74.77 million). As planned, detailed information about the divestment will be announced in December.

According to Le Long, manager of SCIC’s Strategy and Planning Department, SCIC has so far divested from 975 companies with proceeds of VND27.47 trillion ($1.24 billion), equivalent to three or four times the book value.

During 2017-2020, SCIC plans to divest from 132 companies with expected proceeds of over VND13.5 trillion ($613.6 million). They include the two giants: Vinamilk with 39 per cent and Vietnam Construction Import-Export JSC with 58 per cent.

For 2017, SCIC plans to divest from 115 companies. It has divested over 30 firms and will divest the rest by the end of 2017.

DHL eCommerce launches ServicePoints

DHL eCommerce, a division of the world’s leading logistics company, the Deutsche Post DHL Group, has launched a nationwide network of ServicePoints, enhancing its already successful and rapidly growing domestic delivery network, which was launched in July. The new service offers considerably more choice and convenience for e-tailers and consumers.  

The ServicePoint network allows Vietnam’s e-tailers to easily process domestic parcels at convenient and easy to reach locations and deliver to their online customers the very next day in Ho Chi Minh City, Hanoi, and Tier 1 cities, and between two to seven days in the rest of Vietnam. While the majority of shoppers still receive door-to-door deliveries, they can now choose to pick up their orders from the very same and easily reached retail locations.

“Vietnam’s e-commerce sector is expected to grow seven times its current size and the number of parcels each day is expected to grow 26 per cent by 2020,” said Mr. Thomas Harris, Managing Director of DHL eCommerce. “Since we launched in July, we have seen fantastic growth, which tells us that our customers love our service, and we will continue to launch new services and solutions that exceed our customers’ expectations and ensure we continue to ‘deliver the smile in the last mile’.”

DHL eCommerce has already launched more than 100 ServicePoints and will continue to rapidly expand to more than 1,000 in the coming months.

E-tailers can register with DHL eCommerce and simply deposit shipments at the nearest ServicePoint and have their shipments processed in less than a minute without any paperwork. ServicePoint operators manage the processing and handover of all parcels with a single mobile app, while their shoppers will receive shipment confirmation via SMS and email. Shipment track-and-trace, cash on delivery, and shipment insurance services are also available.

“Vietnam has more than 600,000 SMEs, comprising 97.5 per cent of the country’s total number of companies and contributing more than 40 per cent of GDP,” Mr. Thomas added. “These enterprises need a convenient and effective solution to quickly deliver their products to their customers. Beyond high quality and reliable delivery, we want to offer greater convenience and choice for sellers to help them grow their e-commerce business.”

Expanding the ServicePoint network is a strategic move by DHL eCommerce after its major investment in launching the Domestic Delivery network in Vietnam this year. The investment also includes a fleet of vans, bikes, and electric motorcycles, in line with the Deutsche Post DHL Group’s recent announcement to reduce its logistics-related emissions to zero by 2050.

Conditions in place to develop innovative startup ecosystem

Vietnam is considered to have significant potential for the development of an innovative startup ecosystem, a forum on startup ecosystems held recently by the Vietnam Chamber of Commerce and Industry heard.

The components for eco-innovation in the country are in place and are actively supporting innovative projects and enterprises in the country.

There are now about 21 institutions, seven business promotion organizations, and 22 domestic and foreign investment funds that are key components of a startup ecosystem.

Mr. Tran Van Tung, Deputy Minister of Science and Technology, told the forum that in Vietnam’s startup eco-system there are sufficient components for development, with good quality startups, venture capital funds, and individuals and organizations that support startups or provide certain services.

For many reasons, however, the ecosystem has not been able to bring its potential into full play, mainly due to the fact that startup supporters are active but lack cohesion.

Over the last two years, many specific policies have supported young people wishing to do business, small and medium-sized enterprises (SMEs), startups, innovative businesses, and businesses with growth potential. Decision No. 844 from the Prime Minister approved the scheme on “Supporting the National Innovation System to 2025”.

Ms. Thach Le Anh, Project Manager at Silicon Valley Vietnam, reviewed some of the traditional channels that companies can take advantage of in calling for capital: family and relatives, banks, venture capital funds, the stock exchange, State funds, and non-government organizations.

“Despite these capital mobilization channels, startups are often only able to mobilize capital from angel investors, venture capital funds, and initial investment funds,” she told the gathering. “The amount of fund management is very small and often not enough to scale up the fund management team.”

Mr. Dam Quang Thang, General Director of the Agricare Vietnam Co. and Chairman of the Hanoi Agricultural Chemicals Association – Entrepreneurship Advisor, said the best solution now is to exploit the huge resources of SMEs.

According to Mr. Thang, SMEs have quite a lot of experience from their successes and failures – the experience that starting a business is easy. In addition, they can also advise and help with product development, have good financial resources, and stable businesses.

“At the same time, SMEs are applying technology that is a good example for startups in regards to innovation,” he said.

Digital technology changing accountancy

Digital technology is transforming businesses and economies across the globe and increasingly affecting the accountancy profession, technical sessions organized by the Institute of Chartered Accountants in England and Wales (ICAEW) in Hanoi and Ho Chi Minh City heard.

Mr. David Lyford-Smith, ICAEW’s IT Faculty Technical Manager, emphasized that it is imperative for members of the profession to equip themselves with the necessary skills to deliver higher-value services or risk becoming marginalized by automation and artificial intelligence.

During the technical sessions, he shared the findings of recent research by ICAEW on how current digital technology trends are changing the accounting profession in terms of emerging business opportunities and challenges and also outlined its approach to helping industry professionals stay on top of the game.

Today, digital technology powered by the exponential growth of computing power opens up a whole new world of opportunities. This allows for unprecedented innovations in financial services, resulting in a higher level of operational efficiency and access to entirely new markets. A good example of the technology that is changing today’s global business landscape is “blockchain”, a system of universal entry book-keeping where a transaction or a single input of data can be easily viewed by or shared with many parties on the same network in a systematic and secure manner.

“If a marketplace or system is running on a blockchain, the nature of security assurance that is needed will change,” said Mr. Lyford-Smith. “You don’t need assurance that your asset exists or that your records agree with others’, because that’s certain in a blockchain environment. So instead the focus of assurance turns to the ties between the blockchain record and the physical world, and more generally to the economic reality of the transaction that is seen in the blockchain. For example, a blockchain might give you certainty over the timing and amount of a purchase of some goods, but it can’t assure you of the condition of those goods.”

Another example is the change taking place in the relationship between individuals and taxpayers and national tax authorities and the role of professional advisers, including accountants. A recent study by the ICAEW on the digitization of tax systems in seven countries shows that with greater automation and analytical capacity and based on connected database infrastructure, tax authorities can provide basic tax information based on self-contained data, and then send this to individuals and taxpayers for confirmation.

Electronic tax in Vietnam began to be deployed from 2009 and many agencies and businesses had turned to electronic declarations by 2015. “Electronic tax declarations have been implemented in Vietnam’s 63 cities and provinces,” said Mr. Phan Vu Hoang, Deputy General Director of Tax Consultancy at Deloitte Vietnam. “This new form of tax return brings clarity and reduces paperwork, helping taxpayers save a lot of time. The implementation of electronic tax in Vietnam has seen solid development.”

However, along with new opportunities comes the growing fear that the traditional approach to financial reporting and routine accounting tasks are steadily being taken away by automation and artificial intelligence, and members of the profession are not adapting to the new technological trends quickly enough to take advantage of new platforms and risk becoming marginalized.

According to Ms. Trang Dang, Head of ICAEW Vietnam, technology capabilities need to be applied into the specific business context in a way that provides value. As the pace of change in technology is typically faster than change in human behavior, even where capabilities exist, altering the way accountants perform their daily tasks can be a long process.

“To provide greater leadership in the exploitation of data, accountants may well need stronger technical skills around data and a greater understanding of statistics to challenge the method, assumptions, and output of predictive models,” Ms. Trang added.

Can Tho to host Int’l Agriculture Fair 2017

The festival aims to support agricultural development in the Mekong Delta region through the research and application of science and technology advances in production and building trademarks to increase competitiveness.

Major activities of the event include introducing farm produces, meetings of scientists and enterprises to deal with current issues in researching and applying science and technology in agricultural production to increase productivity and quality.

An exhibition on agricultural products  will be held with the participation of about 200 enterprises, along with a conference on science-technology application in agricultural development.

Domestic businesses and those from the Republic of Korea, Japan, India, the UK, China, Taiwan, Germany, the U.S. and others will showcase their products on 330 stands with a focus on machines, equipment, agricultural mechanics and materials, plant varieties, processed agricultural products and models for safe and clean agriculture.

In addition, diverse activities will be held during the fair to facilitate farming in the Mekong Delta region. They include a production agriculture seminar, a consultation workshop on agricultural equipment and products, a training workshop on farming techniques, art exchanges, trade promotion and introduction of agriculture start-up projects in Can Tho.

The event is part of the national trade promotion program 2017.  

Shipping lines required to use digital signatures for customs declarations

Shipping lines, cargo agents and freight forwarders will have to use digital signatures from January 1, 2018 when they make customs declarations through the single national portal.

According to Document No.7392 issued by the General Department of Vietnam Customs, shipping lines, cargo agents and freight forwarders are required to register and authenticate their digital signatures no later than December 15, 2017.

According to the customs, the use of digital signatures on customs declaration forms will simplify customs procedures and thus help businesses save time and money.

Palm-leaf design sought for Long Thanh airport

Airports Corporation of Vietnam (ACV) has proposed the Ministry of Transport select the palm-leaf design for the Long Thanh International Airport project, citing the consulting firm’s experience and the low suggested cost.

When a decision is made, ACV will proceed to the design stage for the passenger terminal, the local news site VnExpress reports.

According to ACV, the three proposed designs come with the shapes of lotus, bamboo and palm leaf. They all appear to be feasible and can be used for the feasibility study for the terminal.

The cost of the feasibility study as previously estimated by ACV and examined by the Institute of Construction Economics is US$4.52 million.

In the preliminary round, the lotus-shaped design prepared by Heerim Architects & Planners was favored by a board of professionals, but the cost was suggested at around US$6.5 million, 1.44 times higher than estimated.

Meanwhile, the bamboo-shaped design of the Japan Airport Consultants-Adp Ingenierie-Shigeru Ban Architects consortium and the palm-leaf design of the CPG Consultant-Azusa Sekkei-Pae consortium come with lower consulting costs, US$3.88 million and US$3.64 million respectively, equivalent to 86% and 80% of ACV’s estimates.

Heerim then proposed US$3.61 million.

ACV has told the consulting firms to reconsider their costs. The adjusted costs of the three firms are now US$3.4 million, US$3.61 million and US$2.99 million respectively.

The Long Thanh International Airport project is expected to get off the ground in 2019. Of the three investment phases, the first phase will cost around US$8 billion.

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