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Tag: Vietnam

  • Keppel to sell 70 pct stake in Vietnam waterfront township

    Keppel to sell 70 pct stake in Vietnam waterfront township

    Singapore-based Keppel Corp will sell 70 percent stake in a waterfront township project to a Vietnamese investor for $100 million. The company said in a release Monday that, pending certain developments, it will sell its stake in the Dong Nai Waterfront City Company (DNWC) to Ho Chi Minh City-based Nam Long Investment Corp for VND2.31 trillion ($99.72 million).

    The DNWC is a company incorporated under Vietnam’s laws that has been granted the right to develop the Dong Nai Waterfront City township project.

    Keppel Land, Keppel’s real estate arm, is currently in the process of taking over complete control of DNWC from an unnamed joint venture partner through a demerger.

    Once the demerger is done, DNWC will become a wholly-owned subsidiary of Keppel with the rights to develop a 170-hectare plot of land.

    DNWC also holds a 28-hectare plot of land which is excluded from the proposed divestment.

    The 70 percent stake sale will depend on demerger going through.

    Dong Nai Waterfront City is a 170-hectare residential township project in Dong Nai Province, located 28 kilometers to the northeast of HCMC.

    It will have about 7,850 homes, including townhouses, villas and high-rise apartments with various commercial facilities.

    Keppel Corp said that the stake sale was in line with Keppel Land’s strategy to recycle assets for higher returns. The funds generated will be used to pursue other opportunities in Vietnam, it said.

    The Dong Nai Waterfront City will be Keppel Land’s second township project in Vietnam after the 64-hectare Saigon Sports City in HCMC’s District 2 which is under construction.

  • Vietnam fintech startup raises $1 million from foreign venture capitalists

    Vietnam fintech startup raises $1 million from foreign venture capitalists

    Vietnamese fintech firm Finhay has raised $1 million in seed funding from Singapore’s Insignia Ventures Partners and other foreign investors. “Finhay will use the $1 million investment to expand its user base 10-fold to 100,000,” said founder and director of Finhay Nghiem Xuan Huy. Finhay was established in 2017 with capital of $100,000 as a micro-investment platform targeted at millennials. It allows customers to invest as little as VND50,000 ($2.17) in mutual funds from Finhay’s investment portfolio.

    Huy said the business model is very popular abroad, citing examples such as U.S. micro-investing apps Acorns and Stash.

    The application automatically analyzes the user’s risk appetite and suggests appropriate investment options and provides information to help improve users’ personal financial management.

    It has over 13,000 users and over VND7 billion ($303,590) worth of pooled capital.

    Insignia Ventures Partners, a venture fund which has already invested in popular transport apps Go-Jek and Traveloka of Indonesia, hopes “…[Finhay] will gradually layer on more products and services to become the Amazon of financial services in Vietnam.”

    Finhay also received seed capital from funds in Hong Kong and the U.S.

  • Vinamilk to open plant in Myanmar, its 2nd in Southeast Asia

    Vinamilk to open plant in Myanmar, its 2nd in Southeast Asia

    Vietnam’s biggest dairy company plans to open a plant in Myanmar this year and is preparing to enter Indonesia and China. The Myanmar factory will be Vinamilk’s second in Southeast Asia after acquiring its first in Cambodia. It is in discussion for one joint venture in Indonesia. Myanmar is one of Vinamilk’s strategic markets to offset declining revenues in the Iraqi market, which once accounted for 60 percent of its exports. In 2017, Vinamilk reported falling exports for the first time in 20 years due to political tensions in the Middle East.

    In the latest year for which export figures are available, 2017, it shipped products worth VND7.4 trillion ($312 million), a 4.2 percent decline from the previous year.

    The company is also preparing to enter the Chinese market later this year. Chinese authorities are expected to sign a draft protocol in April this year allowing Vietnamese dairy products to be exported.

    Vinamilk is planning a change in export strategy.

    “The company will move from traditional exports to intensive cooperation with distribution partners in new key markets, and gradually build production facilities in potential markets such as Myanmar,” Vinamilk chief executive Mai Kieu Lien told shareholders in 2018.

    She added that the company has set aside $750 million for acquisitions, building new facilities and setting up cattle farms between 2017 and 2021.

    It now has 13 plants and 10 dairy farms in Vietnam, a plant each in the U.S., New Zealand and Cambodia and a subsidiary in Poland.

    In all, it has three wholly-owned foreign subsidiaries: Driftwood Dairy Holding Corporation in the U.S, Angkor Dairy Products Co., Ltd, in Cambodia, and Vinamilk Europe Spo’stkaz Ograniczona Odpowiedzialnoscia in Poland.

    It holds a 22.81 percent stake in a joint venture with Miraka Dairy in New Zealand and has a Thailand-based trading office.

    Last year the company paid $19.74 million to buy a 51 percent stake in Laotian company Lao–Jagro Development Xiengkhouang Co., Ltd, to set up a series of hi-tech beef and dairy farms based on Japanese technology.

    Vinamilk’s products are available in 46 countries and territories, including some demanding markets such as Japan, the U.S., Australia, New Zealand, and Canada.

    Last year the company reported profits before tax of VND11.52 trillion ($499.26 million), up 12.05 percent from the previous year, on revenues of VND52.63 trillion ($2.28 billion), down 2.93 percent.

  • Vietnam’s interest rate rises in the lead-up to biggest national holiday

    Vietnam’s interest rate rises in the lead-up to biggest national holiday

    Banks have hiked deposit interest rates by 0.1-0.5 percentage points as the country’s spending demand surges prior to Tet. Private lender Asia Commercial Bank last Friday introduced a new interest schedule with an increase of 0.2-0.3 percentage points in rates on most deposit terms. It also offers rates proportional to the amount of deposit. Techcombank, another of the larger private banks, since January 21, has hiked rates by 0.2-0.3 percentage points for terms of up to 12 months.

    Earlier, in mid-December most private banks had upped rates by 0.1-0.7 percentage points, while state-run banks increased them by up to 0.5 percentage points.

    However, there are also a few banks that choose to ‘go against the current’ by lowering deposit rates on same products. For instance, BIDV, Vietnam’s biggest lender by assets, has just lowered interest rates on its deposit rate schedule effective from January 22.

    BIDV’s 5-month savings is now 5.2 percent interest, down from its previously 5.5 percent which was its approved ceiling rate.

    Previously, at the end of December 2018, BIDV increased the 5-month term interest rate by 0.5 percentage points per year.

    On the same day, VPBank also reduced the interest rate on their 6-36 months terms by 0.1-0.5 percentage points.

    Specifically, the bank’s regular savings interest rate with 6-11-month terms is lowered by 0.2 percentage points, and is now 7 percent. The 12-month term interest rate is 7.05 percent; both 13 and 15 month terms are down 0.2 percentage points, and are now 7.2 and 7.4 percent respectively.

    However, VPBank still currently holds the highest single interest rate in the market of 8.6 percent for its 18-36 month fixed term savings.

    Experts believe that the negative adjustment of interest rates at some banks such as BIDV and VPBank may be for the purpose of restructuring to meet the banks’ individual capital needs, and does not yet accurately reflect the interest rate trend in the following months.

    In fact, the period before the Tet Lunar New Year holiday is when cash is still in high demand in the economy, as businesses need to withdraw money to pay bonuses and salaries, and people will withdraw cash to spend for Tet which will start from February 5.

    At the conference on tasks for the banking industry in 2019 on January 9, Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said that banks have recorded a decline in deposits.

    According to him, this is a phenomenon that banks need to keep their eyes on, to determine where the flow of capital has gone, to real estate or production, or another channel in order to make reasonable adjustments to their plans.

    Tu said the SBV had adamantly stuck to its policy to stabilize interest rates despite very high pressure to drive rates upwards in 2018. Many small banks had raised short-term deposit rates to attract capital and improve liquidity, resulting in the central bank having to pump more money into the market or use other measures to limit and keep interest rates stable for businesses.

    The deputy governor said the SBV had to balance between the conflicting interests of banks, savers and businesses to come up with an appropriate interest rate for the whole market.

    The SBV targets credit growth of 14 percent this year, the same as last year. As a result, he noted, commercial banks will have to make better quality loans this year to avoid bad debt.

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  • Excess car demand for Tet holiday drives prices up in Vietnam

    Excess car demand for Tet holiday drives prices up in Vietnam

    The surge in demand for cars before the Lunar New Year means customers have to wait or pay extra to get immediate delivery. With only weeks to go for the Lunar New Year Festival (Tet), which falls on February 5 this year, consumers are rushing to order automobiles leading to a shortage in the market. They either have to wait for a long time for delivery or, for quick delivery, opt for accessories which can cost an extra VND70-150 million ($3,013-6,458).

    For instance, Hyundai SUV Santa Fe requires an extra VND70-160 million ($3,013-6,887), which is 7-16.1 percent above the minimum listed price, while for the Toyota Fortuner it is VND100-150 million ($4,305-6,457). But most customers will have to wait until March for delivery if they signed the purchase agreement last November or later.

    The only way to get guaranteed delivery before Tet is to buy from someone who signed earlier, car dealers said, explaining that a dealership only gets around 20 units in each model per month but demand is two to three times that number.

    The shortage is because of difficulties in importing at the beginning of 2018 as a result of a new regulation tightening imports, Tran Thanh Binh, director of Thanh Binh Automobile Import Export Trading Service Co Ltd, said.

    The regulation stipulates that traders are only permitted to import if they can provide valid vehicle registration certificates issued by authorities from the countries of origin.

    Original quality control certificates for each vehicle and letters of authorization regarding recalls of defective vehicles from the manufacturers are also required, along with copies of quality assurance certificates provided by the countries of origin.

    “This made companies stop ordering from factories in Indonesia and Thailand. The second half of 2018, however, with these difficulties resolved, businesses have started to order again. But, since the factories also produce for many other markets, Vietnam was not able to order enough,” he explained.

    Vietnam imported 6,362 cars, including 4,264 personal cars, 1,820 trucks in the first 15 days of 2019, according to Vietnam Customs.

  • Vietnamese banks report plunge in profits

    Vietnamese banks report plunge in profits

    While profit across the banking sector grew by an estimated 40 percent last year, VietinBank, LienVietPostBank and SaigonBank have reported steep declines. The biggest surprise came from state-owned VietinBank, the country’s second biggest lender by assets, which reported a 25 percent fall in profits before tax to go out of the group of five most profitable banks in the country.

    Le Duc Tho, its chairman, said this was a result of having to restrict operations last quarter to begin restructuring.

    Asset growth, credit growth and capital mobilization grew by 6-10 percent, lower than targeted.

    LienVietPostBank reported a 30 percent decline in profit before tax as a result of losses related to securities investments and low marginal interest rates.

    It achieved losses of nearly VND5 billion ($215,140) from securities investments whereas in 2017 it had made a profit of VND380 billion ($16.35 million).

    SaigonBank’s profit before tax fell by more than 26 percent due to provisioning for bad debts. The bank had to increase provision for bad debts by 22 percent to an amount equivalent to 87 percent of its profit from business operations.

    Its bad debts doubled in the first half of 2018 to nearly VND900 billion ($38.72 million), but by the end of the year it brought the rate down from 6.48 percent during mid-year to 2.2 percent. It involved provisioning of VND287 billion ($12.35 million).

    HSBC Vietnam CEO Pham Hong Hai said from 2019 bad debts could reemerge as a problem for banks after the recent lending spurt and the instability of the global financial markets.

    As a result, banks’ profits would most likely see a downward trend this year, he warned.

    The State Bank of Vietnam targets credit growth of 14 percent this year, the same as last year, and keeping non-performing loans to below 2 percent.

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  • Vietnam’s largest brewery, foreign-owned, refuses to humor taxman

    Vietnam’s largest brewery, foreign-owned, refuses to humor taxman

    While Sabeco is still at loggerheads with the taxman over alleged back taxes of $135.73 million, it has not provisioned for it. Its 2018 accounts make no mention of the amount in dispute though the HCMC Tax Department has claimed it owes that in taxes and fines and even tried to seize the money from the company’s bank account. Vietnam’s largest brewer, Saigon Beer Alcohol Beverage Corporation (Sabeco), claims it has accurately declared and paid taxes based on guidance from the Ministry of Finance and tax authorities.

    A month ago the department said it would seize VND3.1 trillion ($135.73 million) from the brewery’s bank account for overdue special consumption tax payable between 2007 and 2015 and penalties for administrative violations. But there was reportedly no money in the account.

    Le Duy Minh, deputy head of the tax department, said the account has been temporarily blocked.

    “We have asked Sabeco to provide details of other bank accounts, but it has not fulfilled that request.”

    Sabeco general director Neo Gim Siong Bennett said in a statement on December 30 that Sabeco had not violated any tax regulations.

    Thus, the enforcement action by the tax department was a violation of Vietnamese laws since it was taken “without a valid administrative decision” and “contradicts the written guidance issued by the finance ministry, General Department of Taxation and the city department itself.”

    Speaking about the dispute, Prime Minister Nguyen Xuan Phuc earlier this month asked the tax authorities to desist from action and wait for related ministries and other agencies to come to a decision.

    Mai Tien Dung, Chairman of the Prime Minister’s Office said that government agencies are scrutinizing the case as it involves “foreign elements.”

    Sabeco’s revenues last year rose 5 percent to more than VND36 trillion ($1.56 billion) but higher expenses and falling profits at its joint venture and affiliate companies caused its profit after tax to fall by 11 percent to VND4.4 trillion ($191 million).

    In December 2017 Thai Beverage acquired a 53.59 percent stake in Sabeco from the Ministry of Industry and Trade for $4.84 billion through a local entity, Viet Beverage (VietBev).

    Sabeco now has a 42.8 percent of the beer market, according to the Ho Chi Minh City Securities Corporation. It produced nearly 1.85 billion liters of beer last year.

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  • Viettel sole Vietnamese brand in global 500 listing

    Viettel sole Vietnamese brand in global 500 listing

    Military-run telecom giant Viettel is the only Vietnamese firm in the list of 500 most valuable brands in the world. Valued at $4.32 billion, Viettel’s brand was ranked 478th on the list of 500 most valuable brands in the world for 2019, Brand Finance, a leading global brand valuation consultant, announced at the ongoing World Economic Forum in Davos, Switzerland.

    This is the first time a Vietnamese brand has been named in this list.

    Accordingly, Viettel’s brand value in 2019 has increased 35.8 percent year over 2018. The telecom giant’s high brand valuation was largely due to its presence and contribution in 10 foreign markets, suggesting the company was internationally competitive.

    2018 was a successful year for Viettel in  foreign telecommunication sectors, with service revenue growing by 20 percent, mobile subscribers base growing by 70 percent and net cash flow from international operations by $240 million, 3 percent higher compared to 2017.

    Brand Finance’s Global 500 list ranks the most valuable brands in the world covering all business fields including telecommunications, technology, automotive, oil and gas. Some big names in the list include Amazon, Apple, Google, Mercedes-Benz, Shell and Telstra.

    “Every year Brand Finance conducts an assessment of about 5,000 global brands across 40 different areas on various criteria such as revenue, brand strength, and financial health,” said David Haigh, CEO of Brand Finance.

    Out of a total 5,000 global businesses surveyed, there were 500 Southeast Asian businesses, of which only 8 brands made it to the Global 500 list. The listed brands were in three categories: telecommunications, oil and gas, banking.

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  • Viettel gets one-year 5G trial license

    Viettel gets one-year 5G trial license

    Vietnam’s largest telecommunications company Viettel has received a license to trial its 5G services. The trial is licensed for a period of one year until January 21 next year. Viettel is the first company in Vietnam to receive this license. The military-owned company is allowed to trial the sevices in Hanoi and HCMC at not more than 73 locations and without charging for the services.

    The company had earmarked $40 million for the development of its own 5G chipset, but was also considering using technology from Ericsson and Nokia, its president and CEO Le Dang Dung said.

    Viettel has around 60 million subscribers in Vietnam and over 30 million more in 10 other countries, predominantly in Asia and Africa.

    Speaking at a seminar on telecoms innovations at the end of 2018, Minister of Information and Communications Nguyen Manh Hung had expressed plans to introduce 5G by 2020, which would make Vietnam one of the first countries to deploy this technology.

    5G is the latest generation in of mobile Internet connectivity, and should offer much faster speeds and more reliable connections on smartphones and other devices compared to the current 3G and 4G technologies.

  • Vietnam’s startup potential lures international students, overseas Vietnamese

    Vietnam’s startup potential lures international students, overseas Vietnamese

    Founders of Wisepass, Base.vn and WeFit are educated overseas, drawn back to Vietnam by its startup potential. Lam Tran, 34, is a French overseas Vietnamese with over 10 years’ experience in marketing at Google Europe. He returned to Vietnam and founded Wisepass, a lifestyle app that connects users to a wide range of dining, leisure and entertainment services through paid membership packages.

    In 2018, Lam made WisePass available in Thailand and the Phillipines. “I believe to succeed businesses must lead their home market first, before thinking of expanding overseas,” said Lam.

    Having set up the business in HCMC and then expanded to Hanoi, Lam regularly flew to the capital city to attend events and promote his products. After selling 10 memberships in a day, Lam was able to show employees the direction and potential of WisePass.

    “Global expansion may sound intimidating, but after all, founders must start from the smallest things: talk to customers, selling products,” Lam said. There is no need to wait for big events, he added, “all you need to do is show up and market your product at appropriate places.”

    WisePass currently operates in three countries, with 300 partners and over 1,000 monthly active users.

    The founder of Base.vn, Pham Kim Hung, is well-known  in Vietnamese math circles. He won Gold and Silver medals at the International Mathematical Olympiad and is the author of a math textbook published in four languages. Graduating in computer science from Stanford University, Hung did not stay on to work in Silicon Valley but decided to return to Vietnam.

    In 2016, he launched Base.vn, a business management software under the Software-as-a-Service (SaaS) model, where software is leased under a subscription instead of installed. The app is built to unify corporate governance processes, from administration to human resources, task management, financial management to sales marketing.

    Base.vn currently serves over 500 enterprises, including many large organisations like VIB, VPBank, ACB, The Coffee House, McDonald’s and VinCommerce.

    Base.vn currently has the highest investment in all business-to-business startups in Vietnam.

    “After Indonesia, Singapore and Malaysia, we believe that Vietnam can become the next major technology powerhouse in the region,” Chandra Tjan, co-founder and partner of Indonesian fund Alpha JWC Venture said.

    In addition to Base.vn and WisePass, in the past few years, the Vietnamese startup community has received many other innovations: WeFit (fitness), Elsa (language learning), Logivan (van hiring), GotIt (gift delivery), and Uiza (video streaming). Most of these entrepreneurial efforts have been successful at carving their own niche in the Vietnamese startup ecosystem.

    Experts have said that with over 100 million people, Vietnam has great potential for socio-economic development, and with a rapidly growing middle class combined with quick adaption of digital developments, the ground is fertile for new ventures, especially startups.

    Apart from the economic potential, young people returning to Vietnam also have a sense of duty and obligation to their homeland, as also a realization that their efforts here can have greater positive impact on society as a whole, according to experts.

    Investment in Vietnamese startups rose to $889 million in 2018, three times that of 2017, according to a report recently released by Topica Founder Institute (TFI), a startup accelerator program in Vietnam and Thailand run by Hanoi-headquartered multinational educational technology company Topica.

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  • Northern Vietnam casino reports first profit in three years

    Northern Vietnam casino reports first profit in three years

    Royal Casino, the largest in the northern Quang Ninh Province, last year reported a profit for the first time in three years. Royal International Corporation, its operator, said revenues grew by 48 percent from the previous year to VND288 billion ($12.39 million), and profit after tax to VND17 billion ($731,263) in 2018. This is the company’s first profit since 2015.

    The owner of the company is Khai Tiep International Investment Limited, registered in the Cayman Islands.

    The casino accounted for VND178 billion ($7.66 million) with the rest coming from hotel, villas and hospitality-related services.

    The company’s management said in a financial report that the growth in the casino’s revenues was due to the sharp increase in the number of customers after an expressway connecting Quang Ninh’s Ha Long town  with northern Hai Phong City was built last September.

    Linking up with the Hanoi-Hai Phong expressway, it cuts the travel time from the capital to Ha Long by half to just 90 minutes.

    The company also saved VND16 billion ($688,192) last year in sales and management costs.

    At the end of last year the casino had 1,346 employees, 80 fewer than at the beginning of the year.

    On Saturday Corona Resort and Casino in the southern Phu Quoc Island became the first casino in Vietnam to allow Vietnamese to gamble.

    The government has allowed a three-year trial period.

    Vietnamese who gamble here must be over 21, earn a minimum of VND10 million ($430) a month and have no criminal record or objections from family.

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  • Singaporean ride-hailing startup TADA launches in Vietnam

    Singaporean ride-hailing startup TADA launches in Vietnam

    Singapore-based tech firm Mass Vehicle Ledger (MLV) launched its ride-hailing app TADA in Ho Chi Minh City Monday. HCMC is the third Southeast Asian market that the firm is entering after Singapore and Cambodia. Instead of billing commissions from drivers like other major players Grab and Go-Viet, the app aims to profit off advertising as well as fees from B2B (business to business) partners that participate in their ecosystem.

    This ecosystem will operate on blockchain technology to store records such as payments and vehicle maintenance, and will engage transport-related companies such as traditional taxis, insurance, repair services, and car dealers.

    Kay Woo, the South Korean founder of MLV, said that among its current partners are Lotte Rental, a rental company of cars and equipment belonging to South Korean conglomerate Lotte Group, local insurance provider PTI and local taxi firm Vinataxi.

    The app will also not offer promotions like its rivals.

    “They throw promotions everyday but this won’t last forever, and prices will eventually go up. We focus on stability, and without commission our prices will be lower.”

    The MLV founder revealed that over 2,000 drivers had signed up with the company. After HCMC, the firm plans to expand the app to Hanoi and Da Nang.

    TADA plans to get 25,000 drivers to register this year but has no plans to join the motorcycle segment in the near future.

    Currently, MVL is registered as a technology company in Vietnam. Operations manager Peter Nguyen explained that because it does not charge drivers, it is only a technological solution. However, the company is willing to comply with transport tax and regulatory guidelines should they apply, he said.

    TADA, which means “let’s ride” in South Korean, opened in Cambodia just last month, and in Singapore in July 2018.

    MVL Technology Co., Ltd, formerly known as MVL Foundation Pte. Ltd, was founded in March 2018 in Singapore by Kay Woo.

    It aims to connect different sectors in the car industry.

    TADA has over 25,000 registered drivers and made more than 970,000 trips in the last 6 months.

    Vietnam’s ride-hailing market has seen new entrants after Uber’s departure early this year, including Vietnamese firm FastGo, GoViet – a subsidiary of Indonesia’s Go-Jek, Aber, Be Group, and the latest, TADA.

    Grab, which counts Chinese ride-hailing firm Didi Chuxing and Japan’s SoftBank Group Corp among its backers, had 175,000 drivers and bikers in Vietnam as of last September and is the most prominent player in Vietnam after it pushed out Uber.

    Rival GoJek entered Vietnam last August, eyeing to grab a share of the fast-growing market. Vietnam has 95 million people, most of whom use smartphones.

    A number of local taxi companies in Vietnam have come together to compete against ride-hailing firms, Grab has been in a legal battle for more than a year with local taxi firm Vinasun Corp.

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  • More bubble tea shops open in Vietnam

    More bubble tea shops open in Vietnam

    More and more Vietnamese entrepreneurs are banking confidently on the popularity of bubble tea among the nation’s youth.It was past 10 in the night, but the bubble tea shop was packed. “I opened this milk tea shop just a few months ago, but people have been pouring in every day. My six employees struggle to serve all customers, especially in the weekend,” 33-year-old Nguyen Quang Dung said.

    Located in northern Bac Ninh Province in an industrial area with some 10,000 young workers, Dung’s milk tea shop sells 150-200 cups every day, and he himself has to join his waiters in serving a large crowd.

    “It’s busy, but investing in milk tea shop is one of my best decisions. I have no regrets,” said Dung, who works fulltime as a manager at a nearby power plant.

    Dung is among many Vietnamese entrepreneurs who have been investing in the bubble tea industry in recent years, lured by good profit and high demand among the young population.

    The number of bubble tea stores in Vietnam reached 2,000 last year, with a new store opening every four days, according to the Vietnam Association of Small and Medium Enterprises.

    Even though bubble tea entered Vietnam in 2000, the surge in the number of outlets has only happened in recent years, mostly through franchising.

    Vietnamese brand TocoToco opened its first bubble tea outlet in 2013 and now has almost 200 across the country. Taiwanese brand Ding Tea also has around 200 outlets, while local brand Bobapop has over 100.

    About 30 major bubble tea brands are operating in Vietnam. They are all seeking to compete for a slice of the $282 million dollar market, according to British research firm Euromonitor International.

    Hoang Thi Hien, owner of bubble tea chain Pozaa Tea with outlets in Hanoi, Ho Chi Minh City and other localities, said that the number of outlets increased last year.

    “Many investors want to partner with us. In 2017 we had only eight shops, but the number has increased to almost 60 by the end of last year,” she said.

    She is confident that this figure will rise to 200 this year.

    Generation Z demand

    Visiting a bubble tea shop is among the most popular leisure activities among generation Z, people born between 1996 and 2015, according to a survey by market research firm Nielsen.

    The survey of 210 Gen Z people in Hanoi and Ho Chi Minh City last October found 81 percent of respondents saying bubble tea shops were their favorite hangouts.

    Vo Van Quang, a branding strategy consultant and marketing mentor, said: “Most 15-year-old girls don’t drink coffee, but they’ll gladly pay for a cup of bubble tea. Teenagers are a large customer group for tea-based drinks, hence the high demand for bubble tea.”

    High demand and high profits are irresistible lures for entrepreneurs.

    Nguyen Phi Van, a branding expert and board chairwoman of consulting firm Retail & Franchise Asia, said that an investor can earn up to 40 percent in profit on each cup of bubble tea, which sells for VND25,000-60,000 ($1-2.6).

    Therefore, entrepreneurs are willing to make big investments of up to VND1 billion ($43,000) for one store, including furnishing and brand franchising fees.

    “It takes less than a year for an investor to recover his capital, that’s why this business has been attracting so many,” Van said.

    Tran Thi Thuy Nga opened a bubble tea shop last September in the central Quang Ngai Province with an investment of almost VND800 million ($34,430).Many bubble tea entrepreneurs have other full time jobs and are using their savings to make more money. They can create their own brand or partner with a well-known brand.

    Even though Nga’s store is located in a very small town, students have been coming in every day with their friends and family. Nga often has to ask for help from her family members to join her eight employees in serving customers.

    “I haven’t recovered my capital yet, but so far I’m very happy with the revenue and demand,” Nga said, without revealing specific figures.

    She did reveal plans to open another shop soon.

    Dung, the bubble tea investor in Bac Ninh, has revenues of VND180 million a month ($7,760), and his profit is around half the amount. Dung estimates that he will recover his investment of VND700 million ($30,146) in just six months.

    He is also planning to open a second bubble tea store four kilometers away from the first one, which has been operating for only four months.

    “I’m confident that both stores will do very well.”

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  • Vietnam liquor maker makes a loss, 4 years in a row

    Vietnam liquor maker makes a loss, 4 years in a row

    Nation’s leading liquor maker Halico has reported a loss of VND75 billion ($3.22 million) for 2018. With Vietnamese consumers moving towards foreign brands, the 120-year-old liquor maker, in which Vietnam’s second biggest brewery Habeco has 54.29 percent ownership and British multinational Diageo holds a 45.5 percent stake, Halico has reported losses for the fourth year in a row.

    It reported a loss of over VND20 billion ($859,780) in the fourth quarter of 2018, raising the total annual loss to VND75 billion ($3.22 million).

    In its annual statement for 2018, Halico’s board expressed doubts that the company can continue operating, with Vietnamese consumer tastes shifting to imported beer and foreign alcoholic products. It conceded that it has failed to capture younger consumer segments.

    In addition, Diageo has been unable to negotiate any substantial supply contracts with foreign partners, so the company has not been able to do well in exports.

    Furthermore, management costs have risen to over 60 percent of revenue. Despite a 30 percent rise in sales in 2018 (VND155 billion or $6.66 million), the difference was not able to compensate for expenses incurred.

    The Hanoi Liquor Joint Stock Company was originally a Hanoi winery, founded in 1898 and equitized in 2004 with initial charter capital of nearly VND50 billion ($2.15 million).

    In early 2011, Diageo Plc, a British multinational alcoholic beverages company, acquired an 18.67 percent stake in Halico for a total of VND800 billion ($34.4 million) from investment fund VinaCapital.

    Diageo is the world’s biggest liquor company, owning famous brands such as Johnnie Walker, Bailey and Smirnoff. It bought another 26.83 percent stake in 2012, hoping to cash in on the growing consumer market.

    Halico’s accumulated losses at the end of last year topped VND330 billion ($14.19 million), 1.6 times higher than its current charter capital at VND200 billion ($8.6 million).

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  • ​Vietnam to remain a fast growing Asian economy

    ​Vietnam to remain a fast growing Asian economy

    With a 2019 GDP growth of 6.9 percent, Vietnam will remain one of the fastest growing economies in Asia. “We remain positive on Vietnam’s medium-term growth on strong manufacturing activity as FDI inflows to electronics manufacturing remain strong,” says economist Chidu Narayanan of Standard Chartered Bank. According to a report recently issued by the bank, the country is likely to reach GDP growth of 6.9 percent this year.

    The manufacturing sector has expanded by double digits for most of the past four years and this pace is likely to continue in 2019, says the report.

    The bank expects manufacturing growth to remain strong this year, though mildly lower than in 2018. Strong FDI inflows to manufacturing will likely support robust manufacturing output, it says.

    Standard Chartered economists also forecast FDI disbursement to stay at $15 billion this year and FDI inflows to the manufacturing sector, particularly electronics manufacturing, to remain high in the medium term.

    FDI disbursement in Vietnam reached a record $19.1 billion in 2018, a year-on-year increase of 9.1 percent,  according to the Ministry of Planning and Investment.

    “Most macro-economic indicators improved in 2018, interest and foreign exchange rates were kept stable despite the Fed’s hike in interest rates and U.S.-China tension, and non-performing loans were well-managed below three percent,” says Nirukt Sapru, CEO Vietnam and ASEAN and South Asia Cluster Markets.

    “We believe that the Vietnamese economy will remain one of the fastest growing in Asia and likely the fastest-growing ASEAN economy in 2019.”

    The World Bank forecast that Vietnam’s GDP is likely to drop to 6.6 percent in 2019 and 6.5 percent in 2020. Meanwhile, the Asian Development Bank (ADB) estimates the country’s GDP for 2019 at 6.8 percent.

    Vietnam’s GDP growth of 7.08 percent in 2018 was the highest in a decade, according to the General Statistics Office.