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Tag: Vietnam

  • Thousands of jobs at risk over spat between Vietnam coal corporation and power group

    Thousands of jobs at risk over spat between Vietnam coal corporation and power group

    Imported coal is currently cheaper than what’s available on the domestic market, so which industry should the government support? Thousands of workers at Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin) could lose their jobs if the state-run power monopoly Electricity of Vietnam (EVN) slashes coal purchases this year.

    Vinacomin’s stockpile stands high at 9.3 million tons, largely due to reduced purchases by EVN, Vinacomin officials said at a meeting with government representatives on Monday.

    In May, EVN  reduced its planned purchases from Vinacomin by 2 million tons to 17.92 million tons, saying imported coal was cheaper.

    Vietnam is running out of hydropower sources so it plans to focus on developing coal-fired thermal power. The proportion of thermal power will rise to 49 percent by 2020 and 55 percent by 2025, said EVN

    According to Do Hoang Anh Tuan, deputy minister of finance, domestically produced coal currently costs more than imported coal, making it hard to compete. For example, a certain type of imported coal dust costs around VND 1.5-1.6 million ($66-71) per ton, while the same type produced by Vinacomin costs around VND 2 million each ton.

    “The price of domestic coal should be competitive; at least the same or lower than imported coal, but we still need to ensure international market commitments are met,” said Tuan.

    While insisting EVN should continue to buy its coal this year, Vinacomin officials warned that if EVN cancels the order for 2 million tons, some 4,000 workers could lose their jobs and a coal mine could be closed.

    Government Office Minister Mai Tien Dung came to Vinacomin’s defense, saying that while abiding by market rules, “we should ensure domestic production and protect established corporations like Vinacomin, otherwise 4,000 workers could be out of a job.”

    The government also asked Vinacomin to reduce its production costs and price to ensure they are competitive with imported coal.

    For its part, the Ministry of Industry and Trade has been asked to look at long-term measures to protect domestic coal, while Vinacomin should work with local authorities to fight illegal coal exploitation and smuggling.

    To end the meeting, Dung called on Vinacomin to reach its VND 110 trillion revenue and VND 2 trillion profit targets in 2017.

    According to a report by Vinacomin, the corporation produced some 19.87 million tons of raw coal in the first six months this year, accounting for 55.2 percent of the annual target.

  • Vietnam launches new agency to ‘rescue’ farm products

    Vietnam launches new agency to ‘rescue’ farm products

    Farmers are growing more food than the population can eat due to a breakdown in communication. Vietnam’s Ministry of Agriculture and Rural Development (MARD) launched a new department on Wednesday aiming to “rescue” the country’s farm products.

    Despite its agricultural strengths, Vietnam simply isn’t consuming its own agro-products. Weak connections between farmers and traders and an inability to forecast the market have led to overproduction, leaving farmers and producers on the brink of bankruptcy.

    Local people have even been asked to step in and buy up excess supplies of bananas, watermelons and pork since the beginning of the year.

    The department will offer market forecasts and monitor the consumption of domestic farm products, then coordinate with relevant agencies to balance supply and demand as well as work with the trade ministry to control imports and exports, said MARD on its website.

    According to MARD chief Nguyen Xuan Cuong, Vietnam has managed to shift from a hungry country to a major food exporter in the past 30 years.

    Last year, Vietnam raked in $32 billion from agro-forestry-fishery exports. Of that figure, 10 items enjoyed export revenue of over $1 billion.

    However, the Southeast Asian country is facing three main challenges. Firstly, Vietnam has over 10 million farming households whose productivity remains lower than that of the region and the world. Secondly, Vietnam is among the world’s top five nations hardest hit by climate change, especially in agriculture. Thirdly, in the age of integration, the country faces fierce competition from overseas.

    To address these challenges, Cuong said the sector needs to restructure and focus more on processing and marketing.

    “Currently, processing and marketing remain weak in Vietnam as production and marketing are not linked, which results in the overproduction of many agricultural products,” said Cuong.

    The new department is expected to work closely with ministries, associations and businesses to connect production and marketing with the aim of tapping the world’s 7 billion population and the 92 million people in the domestic market, Cuong said.

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  • Saigon cab firm lodges formal complaint after losing out to Uber, Grab

    Saigon cab firm lodges formal complaint after losing out to Uber, Grab

    The plight of traditional taxis has received little sympathy from members of the public, who say they are fed up with unreliable services.

    Vietnam’s second biggest taxi firm Vinasun said it lost over 4,200 drivers in the first quarter of 2017 while more than 300 of its cabs have been left in the yard due to harsh competition from ride-hailing firms Uber and Grab.

    In a document sent to the government, Vinasun said more than 21,100  cars have been granted licenses to work for Uber and Grab in Ho Chi Minh City, not to mention over 1,800 cars from other cities and provinces.

    The figure matches data from the city’s transport department, which says the number of so-called technology taxis in the city had reached 22,000 at the end of the April, far beyond the authorities’ expectations.

    As Uber and Grab are not registered to run passenger transport services, they do not have to follow the strict regulations that traditional taxi firms do and pay less taxes, according to Vinasun.

    Due to loose management, Uber and Grab have been able to offer a string of promotions to lure customers, it claimed, calling the competition “unhealthy” and “unfair”.

    Vinasun asked the government to treat Uber and Grab like traditional taxi firms, limit the number of cars they operate and charge them corporate income tax.

    In response to Vinasun, the Ministry of Transport said the government welcomes all transport firms that use hi-tech applications to support their businesses.

    Uber and Grab are not taxi firms but transport firms that ink contracts with their passengers that are electronic instead of on paper, it said.

    Yet late last week, the ministry instructed localities to stop licensing new ride-hailing services in a bid to control app-based taxis.

    With the number of technology taxis threatening to spiral out of control, Nguyen Hong Truong, deputy transport minister, said his ministry will tighten management of ride-hailing firms.

    U.S.-based Uber and Malaysia-based Grab entered Vietnam in 2014. Since then, collecting tax from the two firms has proved a headache for local authorities.

    As currently regulated, Uber has to pay 3 percent VAT while Grab has to pay 5 percent. Traditional taxi firms have to pay 10 percent VAT and 20 percent corporate income tax.

    In April, Mai Linh, another major taxi firm in Vietnam, also complained that they were losing business to Uber and Grab.

    Mai Linh said its net profit plunged nearly 70 percent last year to VND43 billion

    Ho Huy, chairman of the company, said Uber and Grab were the main reasons 2016 was such a difficult year for Mai Linh and other traditional taxi firms.

    But so far, the plight of traditional taxis has received little sympathy from the public. Many people are fed up with poor and unreliable services provided by traditional taxi firms, such as drivers refusing to take short trips or failing to show up for a booking, while ride-hailing firms are clean and their fares are transparent.

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  • Industry 4.0 paving the way for Vietnam’s startups

    Industry 4.0 paving the way for Vietnam’s startups

    FPT Corporation Chairman Truong Gia Binh and Asanzo Vietnam CEO Pham Van Tam share their outlook on the Industry 4.0 trend. Industry 4.0, short for emerging technologies like cloud, artificial intelligence and machine learning, is considered the fourth industrial revolution, and is rapidly changing the world.

    Vietnam had missed three industrial revolutions before so it’s high time for the country to catch up with this global trend, said Truong Gia Binh, Chairman of technology giant FPT Corporation. “Don’t grow old before you get rich.”

    Industry 4.0 will pave the way for businesses in Vietnam, including the startup community, given the country’s young demographic and high internet penetration rate, Binh commented. The revolution will also create more jobs.

    Unlike the last three industrial revolutions, Industry 4.0 focuses on automation and data exchange in manufacturing technologies. Small startups with limited capital can still be very competitive, he added.

    “Opportunities and risks go hand in hand, but with government support for the startup community, they should begin to change their minds and the way they run their businesses, depending on their needs and financial capabilities,” Tam said.However, launching a new enterprise also means taking a risk, Pham Van Tam, CEO of Asanzo Vietnam, warned.

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  • Vietjet and Safran sign SFCO2 agreement

    Vietjet and Safran sign SFCO2 agreement

    Yesterday, at the Paris Airshow 2017 held in Paris – France, Vietjet signed with Safran the SFCO2 agreement for fuel efficiency solution. The SFCO2 service contract spans five years, starting in 2017, and covers the entire fleet of the Ho Chi Minh City-based airline. It will help Vietjet improve its operational efficiency by reducing fuel consumption and CO2 emissions. The agreement provides for operational recommendations, along with a special SFCO2 web application that enables the airline to track its progress and potential savings.

    The SFCO2 solution combines the expertise of Safran Aircraft Engines, one of the world’s leading aero-engine manufacturers, with the long-standing experience of Safran Electronics and Defense in flight data analysis.

    “As an important element of Vietjet fuel efficiency program, Safran’s SFCO2 service will enable us to meet our fuel consumption efficiency objectives, so that we can better our economic and environmental friendly performance,” said Dinh Viet Phuong, Vietjet Vice President.

    “We are proud of winning this contract to support Vietjet’s day-to-day performance and dynamic growth over the next five years. Our selection by Vietjet confirms the effectiveness of our SFCO2® service and provides further recognition of our global expertise in fuel efficiency solutions,” said François Planaud, Safran Vice President of Services & MRO.

    Applying advanced technology and environment friendly solution in daily operation is one of the top priorities of Vietjet. By analyzing both operational and maintenance aspects, Safran’s SFCO2® service develops procedures and recommendations to address airlines’ need for greater fuel efficiency which can reduce Vietjet fuel consumption up to 5%. Accordingly, the fuel expense saved yearly is expected to reach tens of millions of US dollars.

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  • Facebook retailers in Hanoi told to pay tax

    Facebook retailers in Hanoi told to pay tax

    Tax collectors have reached out to more than 13,400 businesses, following a similar move by their peers in Ho Chi Minh City.

    The Hanoi Department of Taxation has sent text messages to 13,422 Facebook accounts that use the social media network as a retail platform.

    The retailers have been urged to go to the department’s website to register their businesses and declare tax, Vien Viet Hung, the department’s deputy director, said.

    So far nearly 2,000 of them have registered and been granted a tax code.

    The move came soon after the tax authority in Ho Chi Minh City took similar action.

    Le Thi Thu Huong, a municipal tax official, said Ho Chi Minh City has a record of 13,500 retailers on Facebook and that the law only requires those with an annual revenue of VND100 million or $4,400 to declare tax.

    Tax officials will also need to figure out how to determine their taxable income, Huong said, noting that cash transactions are difficult to track.

    But both officials and experts have admitted that it would be extremely difficult to collect tax from Facebook retailers.

    Nguyen Thi Cuc, who chairs the Vietnam Tax Consultants’ Association, told VnExpress that Vietnam’s tax policy for online businesses is incomplete and that it’s a challenge when most transactions are still in cash.

    Vietnam is also struggling to monitor the business activities of transnational corporations like Facebook and Google, she added.

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  • Mobile users cringe at new photo ID requirements in Vietnam

    Mobile users cringe at new photo ID requirements in Vietnam

    Many subscribers say they have already provided copies of their ID cards, so why is the new regulation necessary? Mobile subscribers in Vietnam are objecting to a government regulation which requires them to provide a portrait photo of themselves when they register with a provider to clarify their personal information in an effort to get rid of spam messages.

    Under the amended telecommunications law, existing subscribers will have until next April to furnish network providers with photos.

    After the deadline, networks will be fined if they are caught offering services to users who provide false information.

    MobiFone and VinaPhone, two of the biggest mobile service providers in Vietnam, have already started taking photos of new subscribers. Viettel, the country’s largest provider, said it will start taking photos of new users from next month.

    A VinaPhone representative told that the company has faced strong opposition from customers, with many refusing to provide a photo.

    A MobileFone staff member in Hanoi also said that customers simply don’t want to sit down for a photo.

    Registering new customers is already a headache, and obtaining photos from existing users will be a much bigger problem.

    VinaPhone said it is planning to offer incentives to current customers who provide the company with photos, while Viettel said it is still working on a solution to deal with existing customers.

    Last week, Duong, the owner of a mobile subscription service run by MobiFone in Hanoi, received a text from the company asking her for a photo.

    Duong said she was surprised as she has been using MobiFone for nearly 20 years and has already provided the company with her personal information.

    “I have already submitted a copy of my ID with a photo on it but the staff at MobiFone said the photo isn’t clear enough and they need a new one,” she said.

    When she learned that operators will bar outgoing calls after 15 days and disconnect after 30 days if subscribers refuse to submit their photos, Duong’s first reaction was that it could be a breach of contract. She was also concerned about the security of her personal information.

    Many people echo Duong’s opinion.

    Others simply said the whole idea is a waste of time, and questioned whether mobile operators will be able to protect their personal information.

    The regulation, which is aimed at eliminating spam messages, states that telecom companies will be fined VND30 million ($1.320) to VND50 million for leaking customers’ personal information, and VND50-70 million for trading that information, according to the Ministry of Information and Communications.

    Nguyen Chien, vice chairman of the Vietnam Bar Association, said the regulation risking breaking contracts signed by existing subscribers if they are cut off for not providing a photo.

    This requirement should only be applied for new subscribers and existing subscribers who have not provided enough personal information, he suggested.

    Official data show millions of spam messages are sent in Vietnam every day. Most of them come from prepaid phone accounts that are unregistered or registered with false information.

    The messages are not only annoying but dangerous as they can be used by criminals and terrorists, according to the ministry.

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  • Vietnam drops criminal charge threat against unregistered online businesses

    Vietnam drops criminal charge threat against unregistered online businesses

    Successful business owners would have faced up to two years in jail if they failed to register under the previously flawed law. Vietnam’s lawmakers have officially removed a controversial clause from the Penal Code that would have allowed criminal proceedings to be taken against unregistered online businesses with possible jail sentences.

    The legislative National Assembly passed the revised Penal Code on Tuesday and agreed to remove Article 292.

    Under the article, companies that provide online services without being properly registered would be fined as usual, just like most business offenses. However, businesses that generate a profit of VND50 million ($2,200) or revenue of VND500 million would have faced criminal charges and a potential two-year jail term.

    The article was enshrined in the 2015 Penal Code, which itself was scheduled to come into effect last year but was postponed due to multiple errors and loopholes. Article 292 was one of the most controversial parts of the code.

    Last October, the government agreed that the rule should be scrapped after it met with strong opposition, including a petition with 6,000 signatures from the local startup community.

    The Vietnam Chamber of Commerce and Industry also asked legislators to scrap the article, warning that the rule would have negative impacts on the economy and inhibit the modern era of online services and startups.

    Vietnamese authorities have been trying to gain stronger control over online businesses. Hanoi and Ho Chi Minh City have both launched tax collection campaigns targeting retailers on Facebook, the country’s most popular social network.

    Hanoi’s tax department this week called on 13,422 retailers that use the Facebook platform to register and pay taxes. The move follows a similar push by Ho Chi Minh City that covered around 13,500 retailers.

  • Transport Ministry denies Uber and Grab pilots ended

    Transport Ministry denies Uber and Grab pilots ended

    At the carrier’s annual shareholder meeting on Tuesday, it was said that the 191 million shares with a par value of VND10,000 (44 US cents) per share could be sold in the fourth quarter or at any other time that the management board decides.

    Current shareholders will have the right to buy the shares at a rate of 15.5 per cent, meaning that an investor will be able to one additional share for every 15.5 shares he owns at the moment.

    Among the additional shares are 164.73 million shares sold to State shareholders and 16.77 million shares issued to the firm’s Japanese strategic investor ANA Holding Inc. Other shareholders will be able to purchase 9.7 million shares.

    The share issuance is expected to raise VND1.91 trillion (nearly $85 million), which would help the aviation group cover a part of the cost of purchasing new planes and making payments for its suppliers.

    In 2017, Vietnam Airlines plans to spend VND2.1 trillion – 72 per cent of this year’s spending budget – purchasing 10 A350-900WB planes and eight Boeing 787-9 planes.

    This year’s business plan also includes VND87.9 trillion in combined revenue, an annual increase of 22.7 per cent.

    However, the combined post-tax profit of VND1.33 trillion marks a 35 per cent drop from 2016.

    The targeted post-tax profit is lower based on worries about higher fuel costs and rising global oil prices as well as rising amortisation costs generated by the purchase of new planes.

    Last year’s post-tax profit was a record high for Vietnam Airlines, supported by oil prices that hit a historical 12-year bottom in mid-January 2016. Crude prices have rebounded about 47.5 per cent since then. This year’s business plan is developed based on a $64 per barrel oil price scenario.

    The company also attributed the decline in annual post-tax profit to slow growth of market purchasing power, which is forecast at 9.5 per cent for 2017.

    The slow rise in market purchasing power means Vietnam Airlines will have to face a decline in its Revenue per Available Seat Kilometre (RASK) – a term of unit cost used in the aviation industry.

    The RASK figure in 2017 is forecast at 5 per cent lower than 2016 and 22 per cent lower than 2015.

    Meanwhile, competition is heating up n the international markets as low-cost carriers enhance their presence in Viet Nam and in the Northeast and Southeast Asian regions, traditional markets for Vietnam Airlines.

    In addition, the Noi Bai and Tan Son Nhat international airports, the biggest in Viet Nam, will undergo repairs and maintenance at the year end. This will reduce business activities in those two airports by 30 per cent and force aviation firms to cut the number of flights to and from those airports by at least 15 per cent during the day.

    Share price concerns

    Vietnam Airlines also plans to switch listing its shares from the Unlisted Public Company Market (UPCoM) to either the HCM Stock Exchange or the Ha Noi Stock Exchange.

    Shares of the company, under code HVN, debuted on UPCoM at VND39,200 per share on January 3. Its share price has lost nearly one-third of its value to close Tuesday at VND26,825.

    In comparison, the share price of low-cost carrier Vietjet has risen by 18 per cent to end Tuesday at VND126,500 per share. Vietjet shares debuted on the stock market at the end of February.

    Such decline of share price has raised some concerns among the firm’s shareholders about the company’s strength and competence.

    According to the firm’s chief accountant, Tran Thanh Hien, the share price is quite stable and reflects Vietnam Airlines as an aviation company that meets international standards and practices.

    Hien said that the movement of share prices depends on various factors, including business performance, business strategy, market conditions and liquidity.

    For some firms, the amount of floating shares is quite small, showing that the company’s stock structure is dense and making share prices low, according to Hien.

    Compared to the low-cost carrier Vietjet, Vietnam Airlines focuses on the high-class segment with provision of high-quality products and services, said general director Duong Tri Thanh.

    Low-cost carriers have developed strongly in recent years and account for 60 per cent of the domestic market. This sector is expected to grow 20-30 per cent per year in the coming years.

    Vietnam Airlines would, therefore, push harder its operation in international markets, he said.

    For the domestic market, Vietnam Airlines would concentrate its business on the low-cost segment in co-operation with Jetstar Pacific. The two firms would try to keep their market shares at least 30 per cent, Thanh said.

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  • Vietnamese banks look to tap into big data

    Vietnamese banks look to tap into big data

    To successfully deploy big data in the banking sector, there must be a comprehensive strategy using professional teams who have deep understanding of both finance and technology, said Nguyen Kim Anh, Deputy Governor of State Bank of Vietnam.

    At a conference on Thursday in Ha Noi, Anh said that digital data was becoming a new resource and big data was playing an important role in the banking and finance sectors.

    The conference, titled “Big data for banking and financial industry,” was organised by the Banking Academy of Vietnam.

    At the workshop, participants focused on big data technology from a variety of perspectives. They discussed the latest technology and ways for banks and financial institutions to optimise the application of big data into information systems.

    Through the discussion, experts shared hopes that they could identify the opportunities and challenges of big data to improve the productivity, quality and efficiency of financial and banking operations.

    The fourth industrial revolution is taking place across the globe and having a strong impact on all aspects of socio-economic life, according to the experts. It promises to create more opportunities and an impetus for the country development of each nation or organisation.

    The fourth industrial revolution with Internet of Things, automation and artificial intelligence has brought digital data to the centre of the business world.

    Digital data had become a very important resource from which businesses can generate revenue and provide new application ecosystems, services and digital products, said Anh.

    “Therefore, digital data will grow and become an important industry in the fourth industrial revolution,” he added.

    At the workshop, the deputy governor also said that the specificity of banking is creating a huge amount of data from structured data such as transaction histories and customer records to unstructured data such as customer activities on Internet and mobile banking application.

    “Applying big data to exploit the data will bring significant competitive advantages and efficiency for the banking and finance sectors,” he added.

    In addition, Pham Anh Tuan, director of Vietcombank’s tech modernisation department, said that data in the banking system and those collected from the outside include many types. These include structured data, semi-structured data, and unstructured data.

    “The current banking data is unstructured, which meets all big data standards in volume, movement and diversity,” Tuan emphasised.

    The representative of Vietcombank also said that when banks as well as financial institutions identify data with great value, they must consider data assets of the bank. “In other words, data must be treated like any bank assets, which have to be taken care of and ensured on asset security.”

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  • Vietjet Air takes first step to list shares in New York

    Vietjet Air takes first step to list shares in New York

    Dinh Trong Thinh, an economist, said that listing shares on foreign stock markets is the goal of many enterprises because joining transparent financial markets will help them become global companies.

    However, Vietnamese enterprises will have to satisfy strict requirements. To be eligible to list shares on NYSE, for example, a business must have at least 5,000 shares, 2.5 million public shares, and $100 million of gross pre-tax profits made in the last three years.

    The high listing fee and the required financial sources to maintain presence on foreign bourses are also a big barrier.

    At SGX, for example, the lowest listing fee is 50,000 SGD and the highest is 200,000 SGD. The listing application fee is 20,000 SGD. Enterprises also have to pay a fee of 25,000 SGD to 100,000 SGD every year.

    Hoang Anh Gia Lai had to cancel the plan to list its shares at SGX because it was time- consuming and costly, and it was not sure about the efficiency.

    “These will still be challenges for Vietjet for the immediate time and future,” Thinh said.

    He said that it would be risky for Vietjet and any other Vietnamese businesses to list shares on foreign bourses if they still cannot satisfy requirements according to international standards.

    If they are weak at corporate governance, production and business capability, they will not be recognized in the international market, even if they can enter foreign bourses.

    “It is more important to consider how long they can stay on the bourse,” he said.

    “Vietjet needs to think if it is powerful enough and its shares are prestigious enough to interest international investors. It is not a simple matter,” he said.

    Tran Dinh Ba from the Vietnam Economics Science Association believes that with strong determination and potential, Vietjet will succeed.

    Vietjet Air is now second to Vietnam Airlines, the nation’s flag air carrer, in domestic market share, but the gap is small, just 1 percent (Vietjet Air 41 percent and Vietnam Airlines 42 percent).

    In the stock market, Vietjet Air’s share price is 4.2 times higher than Vietnam Airlines, while its capitalization value has exceeded VND1.448 trillion.

    VietJet Air CEO Nguyen Thi Phuong Thao,  is one of two Vietnamese representatives in Forbes 2017 billionaires list. The other is Vingroup chairman Pham Nhat Vuong.

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  • Bibica power balance coming to an end?

    Bibica power balance coming to an end?

    In June, Bibica announced that it has received PAN Food’s offer to purchase 7.27 per cent of its outstanding shares in the market, an equivalent of 1,121,670 shares, at the price of VND112,800 ($5) apiece.

    It means that PAN Food will have to spend about VND127 billion ($5.6 million) on the deal. If the transaction succeeds, PAN Foods’ stake in Bibica will rise to 51 per cent, turning Bibica into a subsidiary.

    However, currently, Lotte has two representatives in Bibica’s board of directors, while PAN Food has only one, Nguyen Khac Hai.

    Even if PAN Food can successfully hold 51 per cent stake in Bibica, it cannot add another representative to the board of directors immediately, as they will have to wait until a Lotte representative or an independent member end their term. Otherwise, in accordance with the Law on Enterprises, PAN Food should hold 65 per cent of Bibica’s stakes to call a shareholders’ meeting and call for the election of a new member.

    Previously, Truong Phu Chien, vice chairman cum general director of Bibica, registered to sell his 0.72 per cent stake in the company on May 19, 2017.

    Bibica’s leader, who has devoted 30 years of his life to Bibica, said that he wanted to transfer his entire shareholding due to personal financial reasons.

    However, investors do not completely give credence to this reason, as Chien used to say that stake sale was the best way to eliminate conflicts between the two biggest shareholders.

    At the same time as Chien, Vo Ngoc Thanh, another shareholder, also registered to sell a part of his stake in Bibica. From May 23 to June 11, 2017, 2.66 per cent of Bibica’s stakes have been offered for sale.

    From 2013, there have been conflicts between Bibica’s two biggest shareholders, PAN Food and Lotte, which was exacerbated by their similarly large holdings that prevented either of them from making the final decisions in the company.

    Purchasing this 7.27 per cent would give PAN Food an advantage over the other majority shareholder. Also, Chien’s wish for Bibica to have one biggest shareholder will come true.

    A shareholder in Bibica since 2007 by acquiring a 38 per cent stake, now Lotte holds 44.03 per cent as the biggest shareholder.

    Lotte is one of the most famous confectionery manufacturers, offering vital support to Bibica’s research and development department. Moreover, thanks to Lotte, Bibica’s products are now exported to five countries, all part of Lotte’s system of 16 foreign markets.

    Meanwhile, Saigon Securities Inc. (ticker SSI on HOSE) has been holding a 9 per cent stake in Bibica since the middle of 2009.

    As Nguyen Duy Hung fills the position of chairman at SSI and The PAN Group, this acquisition raised PAN Food’s stake in Bibica to 43.73 per cent.

    PAN Food offers Bibica both financial support (on account of SSI) and support in the agriculture and food sectors.

    Bibica scheduled electing additional member to its board of directors at its May 26, 2017 annual shareholders’ meeting, but the plan fell through and the board remained unchanged.

    Nevertheless, the two board members’ decision to sell is expected to alter the balance between the two biggest shareholders.

    Hung is expected to play a major role in this. In the past, when asked whether he wanted to increase ownership in Bibica and gain control, Hung said that even if he wanted to, not enough shares are available on the market.

    “When mentioning me or SSI, people may think that my investment in Bibica is a financial investment instead of a strategic one. If Kinh Do Vietnam Joint Stock Company (now Mondelez Kinh Do Joint Stock Company) had not sold 80 per cent of its stake in the confectionery sector to Mondelez International (an American multinational confectionery, food, and beverage company), we would not have invested in Bibica. We finally decided to invest in this company because in the next five years, we do not want to see our ancestors’ altars covered by foreign confectionery,” Hung told VIR at a recent meeting in Ho Chi Minh City.

    Ambition of becoming a leading confectionery company

    Chien agreed with Hung about Bibica’s development target, saying that the 2.66 per cent stake will be transferred to a new owner based on Bibica’ benefits, such as its brand and product development, instead of personal benefits.

    This is an important thing as Bibica is deploying its key products.

    One of its main products is chocolate pie. Upon mention of this type of confectionery, Vietnamese people may think of ChocoPie, a product of Orion Group, which generated $174.5 million of revenue in 2016 in Vietnam, or Lotte Pie.

    However, in April 2017, Bibica introduced Mini Pie Orienko, which was adjusted to better suit the Vietnamese taste, so that this product can compete with other foreign brands.

    Talking with VIR, Phan Van Thien, deputy general director of Bibica, said that this will be one of Bibica’s main products.

    The company targets to win 20 per cent of market share away from its competitors with this product.

    Previously, Bibica already introduced this product, geared towards the high-income segment, but failed.

    Thus, Orienko is now repositioned as a product for the middle-income segment at the price of VND30,000 ($1.32) per 264 gram box.

    “We employ high-technology for product preservation without using preservatives. The product’s quality is as good as foreign pies, while its price is 30-40 per cent lower. I believe that in the short term we will gain market share, and in the long term our products will replace foreign brands,” Thien said.

    With the capacity of 20 tonnes per day, this chocolate pie product is expected to induce VND200 billion ($8.8 million) of revenue, which will account for 13-14 per cent of Bibica’s total revenue in 2017.

    Currently, Bibica holds 30 per cent of the candy sector and 25 per cent of the pie/cake/cookies sectors.

    At present, Bibica is taking advantage of agricultural products, such as coffee and coconut, or manufacturing products with functions similar to supplementary food, such as candies for sore throat.

    Bibica develops its products based on the advantages of domestic agricultural products.

    Other candy brands for the high-income segment will be produced in June 2017 to reach the target of 50 per cent annual growth rate.

    Chien said that Bibica will develop its products in the domestic market and considers this its main market.

    Bibica’s products were exported to 15 countries, but they contributed only 7 per cent to the company’s total consolidated revenue.

    It is forecasted that the confectionery market in Vietnam will have a growth rate of 8.5-9 per cent per year, with more competition coming, as duties and tariffs in the ASEAN will be eliminated gradually.

    Regarding technology, most companies in the industry across the ASEAN stand on the same technological level (except for Korea and Japan). This requires every manufacturer to focus on quality to win market share.

    Bibica targets to become a leading confectionery company in Vietnam by 2021, with a revenue of VND2.618 trillion ($115.2 million), an equivalent of 20 per cent annual growth rate. This is a challenge to Bibica’s board of directors and supervisors.

    Bibica has announced expanding its manufacturing at Eastern Bibica Co., Ltd. and Northern Bibica Co., Ltd. In particular, in 2017, Bibica expects to spend about VND217 billion ($9.5 million) on investment (in 2016 the amount was $800,800).

    Targets include Bibica Bien Hoa factory (about $2.8 million), the biscuit production line in the Eastern factory ($5.6 million), upgrading the bread production line in the Hanoi factory ($316,800), upgrading the cookie production line ($264,000), and upgrading the fire protection system of Bibica Bien Hoa factory ($132,000).

    Additionally, Bibica is developing an online store with the aim of developing its distribution channels in Ho Chi Minh City and Hanoi, so that the two cities will contribute 30 per cent of Bibica’s total sales.

    At present, Bibica has more than 2000 products in over 500 big and small supermarkets, with 120 exclusive distributors and retail outlets in Vietnam.

    To reach these targets, it is vital for Bibica that its big shareholders get on with each other and put a stop to conflicts.

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  • Zara looking to zip up fashion market with new store in Hanoi

    Zara looking to zip up fashion market with new store in Hanoi

    Fashion lovers will have yet another reason to go shopping with the brand’s first store opening in the Vietnamese capital. High street retailer Zara has announced plans to open its first store in Hanoi in October.

    The world’s leading clothing and accessories retailer has selected the Vincom complex on Ba Trieu Street for the location of its first store in Vietnam’s capital.

    Zara opened its first store in Vietnam in Ho Chi Minh City’s Vincom Dong Khoi commercial center back in September 2016.

    The source also said Zara has spent months preparing for the launch of its Hanoi store.

    Established in Spain in 1975, Zara now has 2,213 stores strategically located in leading cities across 93 countries. The brand is popular thanks to its diversified products and reasonable prices.

    Zara is following in the footsteps of Sweden’s H&M, which has also confirmed the opening of its first store in Ho Chi Minh City’s Vincom Dong Khoi center.

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  • Vietnam’s annual inflation expected at 2.6%

    Vietnam’s annual inflation expected at 2.6%

    Inflation this year is forecast at 2.6 per cent amid fluctuations in prices on world markets and adjustments in the cost of public services, according to the latest report from the government watchdog, the National Financial Supervisory Commission (NFSC).

    While average inflation during the first five months of this year hit 4.47 per cent, the NSFC believes it will fall towards the end of the year due to stability in food and restaurant prices.

    Figures from the General Statistics Office show a 0.53 per cent decline in the CPI in May against April, primarily due to sharp falls in food prices. May’s CPI rose 3.19 per cent year-on-year.

    Forex

    The NSFC also pointed out that exchange rates will be vulnerable against high foreign currency demand due to the rising trade deficit, where Vietnam may see its trade balance change from a surplus in 2016 to a deficit of about 3.5 per cent of total exports this year.

    Its calculations show that if the VND/USD exchange rate rises 1 per cent, inflation will increase by 0.17 per cent. The US Federal Reserve raising short-term interest rates in small adjustments has yet to put pressure on the exchange rate, however.

    It’s very likely, though, that “the VND will be under pressure by the US Fed’s roadmap of raising interest rates in the long run, along with unpredictable changes in the prices of the Chinese Yuan and Japanese Yen,” the NFSC said, adding that efforts are required to ease pressure on exchange rates and drastic measures needed to tackle bad debt.

    Earlier, BMI Research, a Fitch Group company, predicted that further Chinese Yuan weaknesses could prompt a slight devaluation of the VND in 2017 by the SBV to preserve export competitiveness.

    By end-May, the VND was down more than 1 per cent against the USD this year, according to State Bank of Vietnam (SBV) figures.

    Interest rates

    Vietnam is now more eager than ever to tackle the scale of bad debts in its banking sector, especially with the amount sold to the Vietnam Asset Management Company making up 10.08 per cent of total outstanding loans by end-2016.

    The government issued Decree No.61/2017 on May 16 on the verification of the initial price of bad debts and the formation of a council for bad debt auctions. A draft law on support for credit institution restructuring and bad debt settlement is also being finalized, and a decree on the settlement of credit institutions’ bad debt may be approved as soon as June 20.

    But while the NSFC report noted that measures to settle bad debts will help reduce interest rates, SBV Deputy Governor Ms. Nguyen Thi Hong made it clear in a meeting last week that lowering interest rates will remain a challenge for the central bank in 2017.

    “Some commercial banks have increased interest rates on certificates of deposit and VND deposits already, mainly for terms of over 12 months,” she said, adding that by the end of last month, the central rate was up 1 per cent from the same period last year.

    In a related note, the NFSC’s calculations show that the country’s ratio of credit-to-GDP has continuously increased since the last quarter of 2015, reaching 11 per cent in the first quarter of this year. This is the second highest level in the 2009-17 period, after the 13 per cent recorded in the first quarter of 2011.

    At end-May, credit had risen 5.7 per cent compared to the same period last year.

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  • Vietnam Airlines targets nearly $4 bln in revenue for 2017

    Vietnam Airlines targets nearly $4 bln in revenue for 2017

    A high salary bill and increased competition dragged on the carrier’s income last year. Vietnam’s national flag carrier Vietnam Airlines (VNA) has set a revenue target of VND87.9 trillion (nearly $4 billion) for 2017, up 22.7 percent from last year.

    A report to be submitted at VNA’s annual shareholder meeting on June 20 shows that 2016 was a difficult year for the carrier due to increased competition from budget airlines on international and domestic routes.

    In 2016, VNA’s revenue hit VND71.6 trillion, eight percent below its target. That was partly due to a salary bill for 6,199 workers that cost VND2.7 trillion.

    Pilots’ salaries rose 4.7 percent on average to VND115.3 million per month, while flight attendants enjoyed a rise of 10.9 percent from last year to VND25.5 million.

    According to the airline, the Vietnamese economy remains unpredictable due to foreign currency and fuel price fluctuations, as well as fiercer competition.

    At the upcoming meeting, VNA will ask shareholders to for approval to issue 191 million new shares to existing stakeholders at a starting price of VND10,000 in order to increase its charter capital.

    If the proposal is adopted, the shares will be issued in the fourth quarter of this year, bringing the airline’s charter capital to VND14.2 trillion.

    The money will be used to buy more Boeing Dreamliners and Airbus A350s.

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