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Tag: Vietnam

  • Hana Bank reveals Vietnam expansion plan

    Hana Bank reveals Vietnam expansion plan

    South Korean banks are setting themselves up to score big in Vietnam as foreign ownership limits would be loosened. South Korea’s second-largest lender by assets, KEB Hana Bank, is interested in buying a 17.65 percent stake in the Bank for Investment and Development of Vietnam (BIDV), a source said. BIDV is currently the second-largest state-owned lender in Vietnam by assets. 95.28 percent of its equity belongs to the country’s central bank, the State Bank of Vietnam (SBV).

    The SBV has “proposed to sell” the stake to KEB Hana for 30 billion won ($26.6 million), said the source, who requested anonymity.

    Last year, Shinhan Bank, a commercial banking unit under Seoul-based Shinhan Financial Group, acquired ANZ Vietnam’s retail unit, bringing along the Australian bank’s 95,000 credit card customers.

    Shinhan Bank has recently become the largest foreign bank in Vietnam with $3.3 billion in assets, surpassing HSBC.

    Vietnam presented a draft securities law in Hanoi earlier this month that would remove the current 49 percent foreign ownership cap in many sectors, allowing majority or even 100 percent ownership of a company.

    Although the limit for banks remains at 30 percent, government economic advisor Can Van Luc said at the draft presentation forum on November 7 that authorities would consider raising this limit for banks on a case-by-case basis, Reuters reported.

    Analysts say Vietnam’s growth potential and deregulation plans make it an attractive market for South Korean banks.

    “Vietnam is the most desirable market among emerging countries,” said Seo Young-soo, an analyst at Kiwoom Securities.

    “It has more advanced urbanization, and its market is more concentrated compared to Indonesia. Its government-driven economic development model is also familiar to South Korean banks, which have grown under the same strategy,” Seo said.

    Data from the Seoul-based regulator Financial Supervisory Service (FSS) show that total assets held by South Korean banks in Vietnam increased 18.9 percent last year to $5.7 billion.

    This ratio is higher than that of foreign lenders overall, whose combined total assets increased 12.9 percent to $42 billion during the same period, FSS said. South Korean lenders’ combined net profit in Vietnam also jumped 28.9 percent last year to $61 million.

    Vietnam has nine wholly-owned foreign banks, four state-owned banks and 31 domestic joint-stock banks.

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  • China could use Vietnam to avoid US tariffs: experts

    China could use Vietnam to avoid US tariffs: experts

    Experts said the U.S.-China trade war puts Vietnam at risk of fraud as capital moves into the country to avoid U.S. sanctions. Vietnamese products would face tough competition from China in both the domestic and overseas markets, Nguyen Thi Thu Trang, director of the Vietnam Chamber of Commerce and Industry’s (VCCI) WTO Center, said at a recent conference on the impact of the Sino-American trade spat.

    In the domestic market, China might seek to dump its goods on Vietnam to avoid Donald Trump’s tariffs. Cheaper Chinese goods competing with Vietnamese goods will not benefit Vietnam’s economy.

    In overseas market, China might borrow the “made in Vietnam” label to dodge U.S. tariffs.

    If this cannot be controlled, there could be grave consequences for Vietnamese firms since the U.S. might apply the same tariffs as they have done on China, according to industry insiders.

    Ho Duc Lam, chairman of the Vietnam Plastics Association, said his industry has been impacted by having to compete directly with Chinese companies as China might borrow the “made in Vietnam” label to dodge U.S. tariffs.

    Tran Dinh Thien, an economist and member of the Prime Minister’s Economic Advisory Group, noted that the trade war brings both opportunities and challenges for Vietnam, but it is up to local companies to identify the opportunities.

    He said the trade war has hit investors’ confidence causing them to pull out of emerging markets including Vietnam. The global supply chain is badly disrupted as a result, and the investment environment has become uncertain, he said.

    Lam argued that to protect domestic companies the government should consider import taxes if there are signs of a safeguard action.

    It should not issue licenses if there is no guarantee that more than two thirds of the production chain would be in Vietnam, and should promote free trade agreements with Europe and others to reduce Vietnam’s dependence on the U.S. and China, he added.

    Trang of the VCCI said since the trade war shows no signs of ending soon production enterprises should monitor the situation to respond nimbly to changes and should know where and how to take advantage of potential opportunities.

    It is known which goods face sanctions, so businesses should research about customers for those goods and offer them a better deal, she said.

    The U.S.-China trade war escalated in September with the U.S. levying an additional 10 percent tariff on about $200 billion worth of Chinese products. Washington is set to raise the tariffs to 25 percent in January if there is no agreement between the both sides.

    China retaliated with 5 and 10 percent tariffs on $60 billion worth of U.S. products.

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  • Online Black Friday runs lackluster campaign in Vietnam

    Online Black Friday runs lackluster campaign in Vietnam

    Online Black Friday retailers failed to enthuse customers with usual discounts, while brick and mortar stores saw heavy traffic. E-commerce giant Lazada combined its Black Friday and Cyber Monday into a four-day promotional event, offering discounts of up to 70 percent, mostly on cosmetics and fashion items.

    New items were discounted by 15 percent, and the strongest price reductions were offered on low-value items of unpopular brands.

    Other e-commerce services claimed to offer bigger discounts, of up to 91 percent on Tiki and 99 percent on Shopee, but these were restricted to a particular time frame after which the discounts passed on to other items.

    However, such “flash sales” are familiar to online shoppers as daily offerings made by most e-commerce services.

    Thus, retailers failed to enthuse customers with the discounts.

    Minh Tien, an office worker in Ho Chi Minh City’s District 1, said that he regularly checks flash sale items on these websites. “It’s the same method this time, and I’m in no rush as the event will last three to seven days.”

    Market observers said another reason that Black Friday online sales in Vietnam failed to catch fire was the Chinese Singles’ Day promotional event held earlier this month and the upcoming Online Friday hosted by the Vietnam E-commerce and Digital Economy Agency (iDEA), under the Ministry of Industry and Trade, on December 7.

    But in contrast to the online market, the shopping atmosphere was vibrant at brick-and-mortar stores. People started to queue up at large shopping centers in Hanoi and HCMC early Friday.

    A large fashion store on Ba Trieu street in Hanoi offered a discount on all items for five hours, attracting a large number of customers.

    In other stores, customers had to wait for up to two hours to buy household items. Office workers joined the shopping frenzy at lunch time, only to find out they were late because shops stopped letting new customers after 11 a.m.

    As of 10 p.m. Friday night, customers were still queuing up at major shopping malls in Hanoi.

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  • HCMC to not build high-rise apartment until 2020

    HCMC to not build high-rise apartment until 2020

    The Ho Chi Minh City administration has decided that no high-rise apartment projects in the dowtown will be approved until 2020. Instead, priority will be given to repair and renovation of old apartment buildings. According to the housing development plan for 2016-2020 with orientation until 2025, that was approved by the HCMC People’s Committee on November 19, the city will not approve construction of new high-rise apartments in inner city areas (District 1 and 3) until 2020.

    Projects already approved and under construction will continue as usual.

    The city will also prioritize projects repairing or renovating 50 percent of 474 old apartment complexes constructed before 1975.

    It will continue to relocate households living along canals; construct new or renovate old, degraded condominiums; upgrade existing residential areas; continue developing new urban centres, and prioritize the development of social housing.

    The city will also focus on completing unfinished projects in some uptown districts and refrain from approving new housing projects if there are no plans to build adequate technical and social infrastructure in the area.

    The focus on completing existing projects will also apply to outlying districts. Housing in rural communes will be prioritized and high-rise apartments will be focused along major transport corridors or where technical infrastructure can support new housing.

    In particular, Ho Chi Minh City will invest in and prioritise the development of social housing projects to meet the needs of eligible residents, and for those who are resettled by urban beatification projects.

    The plan aims to free up more land for social housing projects in the 2021-2025 period.

    It envisages raising total living space in the city by 40 million square meters and per capita housing area to 19.8 square meters by 2020.

    To implement the housing development plan, the city estimates a budget of over VND310 trillion ($13.27 billion), of which investment capital for commercial real estate will amount to VND82 trillion ($3.51 billion), residential housing VND210 trillion ($8.99 billion), and rest for social housing.

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  • ‘In startup world, being seen as crazy is normal’: Grab co-founder

    ‘In startup world, being seen as crazy is normal’: Grab co-founder

    Startup entrepreneurs need passion and should take risks and make sacrifices to succeed, says Tan Hooi Ling, co-founder of Grab. She said passion and commitment, not money making, should drive a startup, and that it was okay to be considered crazy. The co-founder of Grab was speaking at the closing ceremony of the 2018 Startup Vietnam contest in Ho Chi Minh City on November 15,

    She traced Grab’s journey to becoming one of the major ride-sharing services in the world. It all started seven years ago when she and co-founder Anthony Tan spoke about deploying a mobile call service. But no one could imagine what the application would be like and some even called the idea crazy.

    The skepticism and protestations did not dissuade the Grab team, which continued to plow ahead on its difficult journey.”When we shared our idea, they raised their eyebrows and asked, ‘What? What exactly do you want to do? How does this work?’”

    One of the big difficulties she and her colleagues faced frequently was finding partners and building a team with a vision and belief in the future of the startup.

    “At first, not many people understood our model, so we had to look around the world for engineers, scientists.”

    Grab is now present in 235 cities in eight Southeast Asian countries. Its application has been downloaded 125 million times, meaning every fourth smartphone user is a Grab user. Its annual revenue now tops a billion dollars.

    “It was the result of a grueling seven-year journey where we tried, failed, and stood up again so many times. This is an experience most startups would encounter.”

    A new idea could be considered crazy today, but make a tremendous impact on the world tomorrow; that is the key to innovation, Tan Hooi Ling said.

    She said another lesson to be learned from Grab is to know how to stop and ask questions whenever there is trouble or a stumble, instead of continuing with the same strategy.

    After each spill, the startup needs to calmly reflect on what has happened, why the failure, what is not going in the right direction, and how to change, she said.

    After drawing lessons, the entrepreneurs must pull themselves up and continue with their journey, she said. But that perseverance should be accompanied by a passion and the courage to take risks and sacrifice time, effort, money, and energy to realize the dream.

    “Do not start a business just because you want to make more money or you will lose a lot before seeing the light. Do it when and only when your heart races every day and when you think you have to achieve it completely and at any cost.”

    “If someone says you are crazy, let it go and move on. In startup world, being seen as crazy is normal.”

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  • Indian rice rates gain for third week; markets eye Philippine order

    Indian rice rates gain for third week; markets eye Philippine order

    Rice export prices rose for a third straight week in India while an Philippine order did little to infuse activity in Thailand and Vietnam. India’s 5 percent broken parboiled variety was quoted around $367-$375 per tonne this week, from $363-$371 the last week. The top exporter’s rupee currency rose to its highest level in more than two months, trimming exporters’ margins.

    “Paddy rice prices have jumped in Chhattisgarh and other neighbouring states and accordingly export prices are going up,” said an exporter based in Kakinada in the southern state of Andhra Pradesh.

    In July, the government raised prices paid to local farmers for common grade paddy rice by 13 percent from a year earlier to 1,750 rupees per 100 kg for the new season crop.

    Meanwhile, neighbouring Bangladesh will procure 600,000 tons of rice at 36 taka ($0.40) per kg from local farmers in the current harvesting season to boost reserves, a food ministry official said.

    In Vietnam, rates for 5 percent broken rice fell to about $410 a ton from $415-$420 last week.

    “Though prices are lower, trade remains very quiet as domestic supplies are empty. Prices will fall further in the coming weeks, closer to the levels offered by Thailand and India,” a trader based in Ho Chi Minh City said.

    “The Tan Long Group offered 118,000 tonnes in a Philippines import tender for 500,000 tons earlier this week, but the firm hasn’t been seen buying rice from the local market, and it’s not clear where its source will be.”

    The Philippines is on a rice-buying spree this year in a bid to tame prices that surged as stocks at government warehouses nearly ran out.

    Singapore-based commodity trader Olam International offered to supply the Philippines with 210,000 tons and Vietnam’s Tan Long Group Joint Stock Co offered 118,000 tons.

    Traders said the Vietnamese market will remain quiet until early next year when supplies of the winter-spring crop become available.

    Meanwhile in Thailand, benchmark 5 percent broken rice prices were quoted at $382-$395 per ton, free on board (FOB) Bangkok, narrowed from $380-$398 last week.

    Thailand will only supply part of the Philippines deal so there has been no immediate impact yet, but there is a chance that domestic price could rise later this week because of it, a Bangkok-based rice trader said.

  • Long Thanh Airport could host long haul or beyond-ASEAN flights

    Long Thanh Airport could host long haul or beyond-ASEAN flights

    Several options, including exclusive servicing of long-haul flights, have been proposed for the Long Thanh Airport planned in southern Vietnam. The Civil Aviation Authority of Vietnam (CAAV) has recommended two broad options for dividing traffic between the existing Tan Son Nhat International Airport in Ho Chi Minh City and the Long Thanh Airport that will built in the neighboring province of Dong Nai.

    The first option that it has suggested to the Transport Ministry is that Long Thanh will handle all international flights of more than 1,000 km, with the rest flying into Tan Son Nhat.

    For domestic flights, carriers can choose where they want to be based.

    The second option is to allocate all flights from outside Southeast Asia to Long Thanh.

    The allocation criteria can be reconsidered after five years of actual operation, the CAAV proposed.

    Carriers Jetstar Pacific and Vietjet have supported the second option.

    Vietnam Airlines wants to use Long Thanh for all international flights and certain domestic flights and Tan Son Nhat only for domestic flights.

    The preliminary feasibility report on the Long Thanh airport by a joint venture between firms from Japan, France and Vietnam had suggested that all budget carriers could fly into Tan Son Nhat, and all full-service airlines use Long Thanh.

    But CAAV executives said the law does not distinguish between full-service and low-cost airlines, making the suggestion impractical.

    In the communication it sent recently to the Transport Ministry, the CAAV suggested operating international and domestic flights from both airports, ensuring their equal and non-discriminatory use.

    An aviation specialist who did not want to be named pointed out that airlines would prefer to operate from Tan Son Nhat because of its high capacity and proximity to downtown Ho Chi Minh City.

    The ministry needs to allocate flights in such a way as to ensure both airports benefit equally and the load on Tan Son Nhat eases. The allocation of domestic flights to Tan Son Nhat and international flights to Long Thanh is not feasible since airlines fly the same aircraft on both international and domestic routes, meaning they would often have to fly empty between the two airports, the specialist noted.

    He said the distribution of routes should also depend on the growth of the aviation market.

    Situated 40 kilometers east of Ho Chi Minh City, the Long Thanh airport is expected to take up the overflow from the largest existing airport in the country, the Tan Son Nhat International Airport.

    The Tan Son Nhat International Airport now receives 32 million passengers a year, far beyond its designed capacity of 25 million.

    Long Thanh, to be built in three phases over three decades, was recently listed as one of the world’s 16 most exciting airport projects.

    The first phase is scheduled for completion in 2025 when it will be able to handle 25 million passengers a year. The next two phases will be built in 2030-2035 and 2040-2050.

    It will have a capacity of 100 million passengers and five million tons of cargo when completed.

    The Airports Corporation of Vietnam said airports had handled 87 million passengers in the first 10 months of this year, up 12 percent year-on-year.

    The number of international passengers rose by 23 percent and domestic passengers by 7 percent.

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  • Food firms hope to feast on snack sales in Vietnam

    Food firms hope to feast on snack sales in Vietnam

    Vietnamese companies are hoping to make big bucks selling popular foods like fried chicken and crispy pork skin. Nguyen Ngoc An, general director of Vietnam Livestock Industry Company (Vissan), sees great potential in the snacks market. He is not referring to potato chips, but to fresh food made with chicken and pork.

    “Deep-fried pork skin, seaweed dried chicken and pha lau (pork meat and offal braised in a spiced stock) are favorite dishes among young people,” he said.

    “Such snacks will be a good source of revenue for the company in the near future.”

    Already in the market, Saigon Food JSC has released more than 10 fresh snack products, including rice paper pancakes, corn fried shrimps, and tamarind fried balut eggs, which are selling very well.

    Le Thi Thanh Lam, deputy general director of Saigon Food, said that the company’s products are sold at 7-Eleven convenience stores in Ho Chi Minh City.

    “In the near future, we will be exploring new product lines that fit the tastes of consumers to expand the snacks segment,” she said.

    A leading producer of poultry eggs, Ba Huan JSC has also latched on to this trend, launching a group of snack products including spicy chicken legs, skewers, sausages, and omega 3 flan.

    Pham Thanh Hung, deputy general director of the company, said these snacks are new to the market, but sales are quite high. Most of the products are sold in supermarkets or convenience stores. Spicy chicken legs are most liked, he said.

    Vinh Dat Food JSC, which introduced fresh snacks into the market before any of the above companies, said that initially, processed egg products such as balut egg stew, preserved black eggs and braised eggs saw slow consumption.

    But by 2017, explosive growth of this segment forced the company to invest in more production facilities to meet demand. In the coming months, the company will develop more soft-boiled egg products and wholesale various types of braised eggs to restaurants.

    The latest survey carried out by market research firm Decision La shows that on average Vietnamese youth spends VND13 trillion ($556.53 million) on snacks every month.

    And according to statistics by London-based market research firm Euromonitor, by the end of 2016, Vietnam had about 149,000 food kiosks on the streets, including mobile vans or fixed in front of houses, which earn about VND46.9 trillion ($2.01 billion) per year.

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  • Vietnam ratifies Trans-Pacific Partnership

    Vietnam ratifies Trans-Pacific Partnership

    Solidifying its commitment to the Trans-Pacific Partnership that was redrafted and signed in March, Vietnam is the latest member nation to ratify the trade agreement. Vietnam’s lawmaking body approved the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on November 12, following Australia’s ratification on October 31.

    Other countries to have now ratified the deal include Japan, Canada, Mexico, Singapore and New Zealand, taking the member count to seven.

    Originally a 12-country trade deal, the CPTPP – also known as TPP-11 – had to be redesigned in March to facilitate 11 members, after US president Donald Trump pulled Washington out of the deal shortly after taking office in early 2017.

    At its first creation, the CPTPP represented some 30% of global trade, but without the US, that figure has dropped to 13%. Still, it is expected to reduce tariffs between the 11 participating nations that together add up to US$10 trillion.

    As for Vietnam, the deal comes at a time when the Southeast Asian nation looks to rid its dependency on its two major trading partners – the US and China, amid the recent tensions between the two.

    Some 25% of Vietnam’s total trade is with China, which is is in a tariff battle on all of its exports to the US.

    The new CPTPP gives Vietnam the chance to limit its reliance on China for things such as yarns and textiles for its garment industry, meaning it will source from member countries to receive tariff-free components.

    “This is an important political decision, affirming our country’s active role in international integration,” Nguyen Van Giau, head of the National Assembly’s external relations department said this week.

    Up close, the deal sees taxes on nearly 43% of Vietnam’s apparel exports to Canada removed immediately after the agreement takes effect, and 100 percent after four years, the government said.

    The garment sector is Vietnam’s second largest export-earner after smartphones, while footwear products and seafood will also benefit.

    The pact, which includes specific requirements on labour rights and conditions of work, is also expected to help Vietnam advance in labour reforms, the International Labour Organization said.

    Brunei, Chile, Malaysia and Peru are the four remaining members yet to ratify the pact.

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  • Vingroup to open casino in Pho Quoc Island

    Vingroup to open casino in Pho Quoc Island

    A Vingroup-invested firm has been allowed to include a casino in a hotel-amusement complex on Vietnam’s largest island Phu Quoc. The People’s Committee of Kien Giang Province announced that the Prime Minister has approved in principle the casino’s inclusion in a hotel-amusement being built on the southern province’s island. With the casino business, total investment in the complex will increase to VND50 trillion ($2.14 billion).

    The complex, which is under construction, is scheduled to start operating in 2021. Its main investor is the Phu Quoc Tourism Investment and Development Jsc, a company in which Vingroup, Vietnam’s largest private conglomerate, holds a 50 percent stake.

    The casino project is part of a pilot program that would allow Vietnamese citizens to gamble in casinos in the country for the first time.

    For decades, Vietnam has banned gambling as a social evil. Vietnamese were also prohibited from gambling in the few casinos that have been built in the country.

    Shifting its stance, the government has allowed citizens over 21 years old with a monthly income of at least VND10 million ($445) to gamble in local casinos from last March under a three-year pilot program. However, the casinos have to obtain approval from the government on a case-by-case basis to allow Vietnamese citizens to use their services.

    Vietnam’s average annual income was around $2,200 last year.

    There are fewer than 10 casinos in Vietnam, mostly smaller ones outside major cities. Their services are reserved exclusively for foreign passport holders.

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  • Vietnam leads Southeast Asia in digital economy development

    Vietnam leads Southeast Asia in digital economy development

    Vietnam’s internet economy is the largest relative to GDP in terms of gross merchandise volume in Southeast Asia this year. A study by Google and Temasek, a Singaporean holding company owned by the Government of Singapore, said gross merchandise volume (GMV) traded over the Internet in Vietnam was 4 percent of GDP. The study encompasses ride-hailing, e-commerce, online travel and online media.

    In second place was Singapore with 3.2 percent, according to the study which covered Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Indonesia’s digital economy had the fastest absolute growth and looks set to reach $100 billion in 2025.

    In the last few years online businesses have been booming in Vietnam, with last year the digital economy growing by more than 25 percent, a rate that can be sustained for the next two or three years, according to the Vietnam E-Commerce Association.

    It said online sales are set to hit $10 billion by 2020, accounting for 5 percent of total retail sales.

    A Financial Times report last April cited Bain, a U.S.-based global management consulting firm, as estimating that Southeast Asia had 200 million digital consumers, or people who bought goods or services online, out of an adult population of 405 million. Vietnam, with a population of 93.7 million, accounted for 35 million.

    Vietnam’s youthful population is among the keenest users of mobile devices in the region, while the country’s consumers spend more time online than most of their neighbors, several studies have found.

    Research firm Nikkei estimated Vietnamese spend nearly 25 hours online per week, on a par with or just behind Singapore and the Philippines.

    In the ride-hailing sector, many players are expanding investments. Vietnam recently saw new entrants such as local firm FastGo, GoViet, a subsidiary of Indonesia’s Go-Jek, and Aber.

    Current market leader Grab has expanded to offer GrabFood and GrabCar Business, the latter targeting the corporate sector.

    But experts say Vietnam and many other countries in the world face a slew of challenges in the digital economy such as upgrading the skills of the workforce and adapting to rapidly changing technologies.

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  • Vietnam’s new oil refineries to quadruple capacity by 2023

    Vietnam’s new oil refineries to quadruple capacity by 2023

    Vietnam’s total oil refining capacity will nearly quadruple by 2023 as two new refineries go on stream, market data provider Fitch Solutions reports. The Dung Quat refinery in the central province of Quang Ngai operated by the state-owned PetroVietnam’s subsidiary Binh Son Refinery Limited (BSR) remains the sole facility now, with a crude oil processing capacity of 148,000 barrels per day (b/d).

    Dung Quat will soon be joined by Nghi Son refinery in the central Thanh Hoa Province. Nghi Son is currently testing at full capacity and is scheduled to start commercial operations this month.

    The $9 billion Nghi Son project is owned by the Nghi Son Refinery and Petrochemical LLC (NSRP), a joint venture between PetroVietnam, Kuwait Petroleum, Japan’s Idemitsu Kosan and Mitsui Chemical. It will have a designed capacity of 200,000 b/d of crude oil.

    Meanwhile, the long-delayed construction of the Long Son refining and petrochemical complex in the southern province of Ba Ria-Vung Tau resumed in February this year, putting it on track to go on stream by the first half of 2023.

    Licensed in 2008 and initially slated to begin operations in 2014, Long Son hit a roadblock due to site clearance issues and disagreements over the development strategy between the project partners.

    This caused Qatar Petroleum to withdraw from the project in 2015. Thailand’s Siam Cement Group (SCG) increased its stake to 71 percent after it bought the 25 percent stake owned by Qatar Petroleum, while PetroVietnam held the remaining 29 percent.

    In May this year SCG agreed to acquire PetroVietnam’s 29 percent. The refinery is expected to cost $5-6 billion. Once completed it will be able to process 200,000 b/d of crude oil and produce 1.6 million tons of olefins annually.

    “The two new refineries would increase competition in the domestic fuel market, which could require refiners to upgrade, cut costs and move up the value chain to win market share,” Fitch Solutions said in a report released Monday.

    This also spells an end to Dung Quat’s status as the country’s sole refiner, which it has enjoyed since 2010.

    New oil refineries to quadruple Vietnam capacity 2023

    Competition from Nghi Son will be stiff as the government has granted a host of incentives to successfully commission its second standalone refinery, including tax concessions, tariff exemption on crude imports from primary feedstock provider Kuwait and an offtake guarantee from PetroVietnam for the first 15 years of operation.

    The Quang Ngai provincial government in early November sought the same incentives for the Dung Quat refinery to ensure “fair competition”.

    BSR is also planning to invest $1.8 billion over the next three years to expand Dung Quat’s capacity by 23,000 b/d and upgrade the quality of its fuels to Euro 5 from the current Euro 2.

    Fitch Solutions said the upgrade would enable Dung Quat to process higher-sulphur crudes, helping reduce its dependence on Vietnamese light, sweet crudes, mostly from the Bach Ho field, which is depleting and thus becoming more expensive.

    Besides the competition between themselves, the refineries also face significant pressure from imports, mostly from South Korea and Southeast Asian countries, which are of higher quality and priced competitively due to free trade agreements, the report noted.

    “Competition is likely to peak in 2024, when tariffs on fuel imports from ASEAN and South Korea are scheduled to be cut to zero. Concerns about mounting competition have also led both Dung Quat and Nghi Son to consider exports to countries like Laos, Cambodia and Indonesia.

    “Vietnam’s improving self-sufficiency in refined fuels would reduce its need for imports, reorienting trade flows from some of its major fuel suppliers to alternative markets.”

    While insufficient to entirely meet domestic demand, this nevertheless would weigh on the market positions of Singapore, Malaysia, South Korea, Thailand and China, which account for nearly 95 percent of Vietnam’s fuel imports, according to Fitch Solutions.

    Malaysia and Thailand have the highest exposure to Vietnam’s fuel market — 11 percent and 16 percent of imports.

    Major international fuel suppliers are also likely to find room for growth in the Vietnamese market increasingly hard to come by as their quality advantage over locally produced fuels dissipates with the ongoing upgrades, the firm added.

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  • Women can make or break Vietnam’s F&B industry

    Women can make or break Vietnam’s F&B industry

    With more women spending more on eating out, they have become linchpins of the F&B industry, a study indicates. A new survey by HCMC-based market research firm Decision Lab finds that female consumers can make or break the food and beverage industry of Vietnam.

    Average visits per capita by female consumers to the out of home food and beverage market has increased by 5 percent during last year, from 121 between the fourth quarter of 2016 and the third quarter last year to 128 between the fourth quarter last year and the third quarter this year.

    Women have also increased spending on almost all major food channels in Vietnam, namely full service restaurants (FSR), or sit down eateries where food is served directly to the customers’ table, and quick service restaurants (QSR), where table service is minimal and the typical fare is fast food, street food, convenience stores, canteens and bars.

    As a result, women’s contribution to the out of home market revenue has increased by a whopping 10 percent.

    Among the women themselves, the 15-34 year-old segment accounts for 82 percent of the visits in the out of home market, and more than half of those by white-collar workers. Students are also seen as the driving force of female visits at 25 percent.

    As such, Decision Lab points out that the growing influence of women on the foodservice market is real and the industry would be well advised to use female-friendly messages to increase the traffic.

    According to market research firm Vietnam Report (VR), Vietnamese spend more than a third of their income on food and beverages, topping education and utilities.

    VR said the food and drink market has become more exciting in recent years with the entry of technologies such as phone apps that allow users to find nearby restaurants and order deliveries.

    Food and beverages were two of the 10 most bought products online last year, it said, citing data from market research company Nielsen.

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  • Vietnam’s biggest airport start building in 2020

    Vietnam’s biggest airport start building in 2020

    Work on Vietnam’s biggest airport would start in 2020 and it will become operational in 2025, the Airports Corporation of Vietnam (ACV) says. ACV, which manages and operates civil airports in the country, also says that it will complete business appraisals and feasibility reports for submission to the National Assembly for approval in October 2019.

    Transport Minister Nguyen Van The had told legislators at a meeting late last month that the government was likely to approve land acquisition plans for the project this month, and release funds for it immediately after.

    Situated 40 kilometers east of Ho Chi Minh City, the Long Thanh International Airport is expected to take up overflow from the largest existing airport in the country, the Tan Son Nhat International Airport.

    Tan Son Nhat now receives 32 million passengers a year, far beyond its designed capacity of 25 million.

    The Long Thanh Airport, to be built in three phases over three decades, was recently listed by CNN Travel as one of the world’s 16 most exciting airport projects.

    The first phase is scheduled for completion in 2025 when it will be able to handle 25 million passengers annually. The next two phases will be built in 2030-2035 and from 2040-2050.

    The new airport would have an annual capacity of 100 million passengers and five million tons of cargo when completed.

    The first phase is estimated to cost VND114 trillion ($4.87 billion), and will be raised from public funds, a bond issue and private sources.

    Experts have warned that the cost of the airport could double every five years.

    ACV announced that in its 2019 plan, the company will spend more than VND10 trillion ($432.71 billion) on upgrading and expanding several airports, including Cat Bi in northern Hai Phong City, Vinh in central Nghe An Province, Phu Cat in southern Can Tho City, and Noi Bai in Hanoi.

    Most of these upgrades are expected to be completed by the third quarter of 2019.

    According to a recent announcement by ACV, by the end of October, the total amount of passengers going through airports this year was estimated at 87 million, by 12 percent over the same period in 2017.

    This year, the number of international passengers rose by 23 percent, while the figure for domestic customers increased by 7 percent.

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  • Unilever Vietnam owes over $25mln in back taxes: state audit

    Unilever Vietnam owes over $25mln in back taxes: state audit

    The state auditing agency says Unilever Vietnam should pay over $25 million in back taxes for the 2009- 2013 period. Speaking at a National Assembly session on the draft bill on Tax Administration, State Auditor General Ho Duc Phoc pointed to the Holland-backed personal care products maker Unilever Vietnam as an example of taxes overlooked by the authorities.

    Phoc submitted an audit report that says Unilever Vietnam had under-declared its tax dues. The company took the case to the Prime Minister and the National Assembly’s Budget and Finance Committee. After re-examination, the State Audit concluded that the company had under-declared its tax dues by VND584 billion ($25 million).

    The auditor general said the company had accepted this figure, but requested that it is not charged for late payment.

    “Whether the company is fined will be decided by the General Department of Taxation, not us,” Phoc said.

    However, tax department officials as well as Unilever Vietnam representatives said that the company had not accepted the above figure despite the parties having discussed the issue many times.

    “The determination of the amount of tax arrears arising from errors in calculating the preferential tax rate that applies to Unilever Vietnam for its expansion activities in 2009-2013 is not related to transfer pricing,” said a representative of the General Department of Taxation.

    Representatives of the HCMC Taxation Department also confirmed that the decision to collect this sum from Unilever Vietnam has been made, but has not been accepted by the company.

    Unilever Vietnam denies having under-declared any tax obligation. Tran Vu Hoai, the company’s vice president of Sustainable Development and Public Relations, said the outstanding tax issue in question is “due to the differences in the stipulations of the Investment Tax Law and the Corporate Income Tax Law for the period before 2014.”

    “Such differences in the stipulations of the relevant laws have led to different interpretations, causing difficulties for businesses and relevant agencies in the implementation of the laws,” Hoai said.

    The crux of this issue lies in the differences that existed in terms of investment incentives between “new projects” and “expanded investment projects” between 2009 and 2013.

    Then, “expanded investment projects” were only entitled to a three-year corporate income tax (CIT) exemption, and a 50 percent CIT reduction in the five following years. Meanwhile, “new projects” could enjoy a preferential CIT rate of 15 percent for 12 years, three-year tax exemption, and a 50 percent reduction over the next seven years.

    Tax men and companies are divided over the definition of “new project” and “expanded investment project” as they apply to tax incentives.

    Unilever Vietnam has petitioned the Government, the Ministry of Finance and State Audit to find a satisfactory solution in compliance with Vietnamese laws and international regulations.

    Unilever Vietnam is not the only company that’s faced this problem. Suntory Pepsico Vietnam Beverage, GE, Piaggio Vietnam and Yamaha Motors have reportedly fought similar battles.

    Hoai said the matter is being handled by the Ministry of Planning and Investment, in collaboration with the Ministry of Finance and other agencies.

    In September, Prime Minister Nguyen Xuan Phuc assigned the Ministry of Planning and Investment the task of coordinating and working with the Ministry of Finance to resolve such issues for enterprises, in the spirit of ensuring non-retroactivity of the law.