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Tag: Vietnam

  • Hanoi plans to put taxi-style roof signs on Uber, Grab cars

    Hanoi plans to put taxi-style roof signs on Uber, Grab cars

    Officials in the city are tightening rules on transport services. Popular ride-hailing services Uber and Grab may soon be asked to put signs on their cars as officials in Hanoi are tightening rules on transport companies.

    Officials said some private cars offering transport services are operating without signs or badges.

    Grab, a Malaysia-based company, is the only foreign-run transport service allowed to operate in five cities across Vietnam using registered private vehicles between 2016 and 2018.

    Uber, however, has been singled out for providing ride-hailing services without permission.

    The company has recently had its application to operate on a trial basis rejected for a second time in Vietnam, according to local transport authorities.

    It applied for a license after local regulators outlawed Uber’s smartphone app-based services in November 2015, due mainly to its failure to establish an independent legal entity in Vietnam.

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  • Korean multiplex chain leads booming movie market in Vietnam

    Korean multiplex chain leads booming movie market in Vietnam

    CJ-CGV has quickly emerged as the dominant cinema chain with more than half of the market share. South Korean multiplex chain CJ-CGV, which currently has 38 cinemas and 247 screens in Vietnam, managed to triple its net profit last year to VND93.4 trillion ($4 million).

    The chain has aggressively expanded in Vietnam since 2011 when it spent $73.6 million to acquire an 80-percent stake in Megastar, one of the biggest local operators at the time.

    After the acquisition, CGV maintained an impressive growth rate with revenue hitting VND870 billion in 2012 and VND1.1 trillion in 2013, equivalent to year-on-year increases of 45 percent and 27 percent. The operator also reported substantial growth in net profit, generating on average VND120 billion per year; three times higher than the best achieved by Megastar.

    In the next two years, despite steady revenue growth, CGV recorded a significant decline in net profit due mainly to massive investments in new cinemas and foreign exchange fluctuations.

    Its 2014 revenue only matched 2013, and net profit tumbled by 40 percent to VND70 billion. In 2015, while revenue soared by 60 percent to VND1.76 trillion, net profit slumped by 55 percent to VND31.5 billion.

    CGV has established itself as the leading distributor in the country. It has won exclusive distribution rights to handle movie releases for giant film studios like Universal, Paramount, Disney and Warner Bros, and also topped the distribution rate for local movies.

  • Vietnam vows to cut down the time for customs clearance

    Vietnam vows to cut down the time for customs clearance

    According to the World Bank, Viet Nam’s commercial transactions across borders index, a measurement of time and cost in import and export activities, has fallen for two consecutive years (2014-2015) due to inadequate management.

    A study conducted by the Viet Nam Chamber of Commerce and Industry and the General Department of Viet Nam Customs showed that the total time for customs clearance takes about 28 per cent of the time while the other 72 per cent is spent on other procedures and management including specialised checks on imports and exports.

    These are indications that specialised management for imports and exports has prolonged the time for customs clearance and increased costs for enterprises.

    In your opinion, what are the main causes then?

    The first thing I should mention is cumbersome legal documents on customs checks. In addition, many goods have no data provided on them for commercial transactions across borders index.

    Coupled with that is that most specialised checks are done by hand or the application of modern information technology to dossiers classification or information exchange between Vietnamese government agencies.

    What is the key reason for increasing the time for customs clearance for specialised checks in our country four times slower than that of other country?

    Before 2016, in our country about 30-35 per cent of goods had to go through specialised checks at customs while in other countries, the rate was just from 5-8 per cent. That is one of the reasons why Resolution 19/2016 has laid emphasis on improving the business environment and national competitive capacity.

    The government’s resolution sets specific targets for each year. For example by the end of last year (2016) only 15 per cent of specialised goods should have been checked and eight per cent by 2020.

    To achieve these targets, it is imperative for the customs sector to make a change in their management methods and in their specialised checks. To achieve these targets, the customs office must practice risk assessments and common international customs clearance procedures, including using IT in information sharing between concerned agencies and the customs office.

    To shorten the customs clearance time, many countries perform customs checking in factories. Can we do that in Viet Nam?

    Checking goods right at factories is common in many countries now.

    With this method, instead of checking the goods at the border gate, representatives of the importing countries go to exporting countries and check the goods in the factories. After finishing their checks on the goods quality, pattern, production chains and more, if they meet required standards, the goods will be certified to go through customs procedures.

    Of course, some international practice and norms will be applied, including risk assessment. However, for imported goods coming from countries with higher standards than ours like the US, EU, Japan or South Korea they will enjoy special treatment when they go through customs. Vice versa, for countries that have often encroached upon our laws, they will be subject to tight checks.

    The PM has set a target that by 2020, all import and export goods must not take more than five days to go through customs clearance. Is this feasible?

    If Government Resolution 19/2017 is implemented, by late 2017 customs clearance will take on average 160 hours. So to achieve the target set by the PM by 2020 for five days (120 hours) customs clearance will be a big challenge.

    To achieve this target, all concerned ministries and sectors have to review and revise 362 legal documents, of which 87 of them have to change in the next few months. Of course, the task is demanding. But we’ll try to do our best to meet the target.

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  • What do Vietnamese people love to buy online?

    What do Vietnamese people love to buy online?

    In contrast, fast-moving consumer goods including cosmetics, food and other household products have been slower to gain in popularity among internet shoppers. For these, Vietnamese people still prefer to go to stores and seek advice from shop assistants.

    With Vietnam becoming more “connected” and nearly half of the population with easy access to the internet, Vietnamese purchasing habits are changing.

    “The online retail ecosystem is fast evolving. The whole retail experience is changing. Today’s shoppers are incorporating digital touch points along the entire path to purchase,” said Roberto Butragueño, associate director at Nielsen Vietnam.

    According to the survey, customer loyalty is varied. More than half of respondents who had purchased travel services or books/music/stationery online admitted they would buy those more often online than in store. Event tickets, which attract only one-fourth of online customer, have become the favorite destination for second time purchasing.

    However, once an online shopper does not necessarily mean always an online shopper. The story is different for fashion, electronics and cosmetics.

    The survey’s findings are based on more than 200 respondents with online access in Vietnam. Survey responses are based on claimed behavior, rather than actual metered data.

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  • Made-in-China truck sales lose ground in Vietnam

    Made-in-China truck sales lose ground in Vietnam

    Made-in-China trucks which had once dominated the Vietnamese market are facing the slow sales since early 2016. According to the General Department of Customs, import of made-in-China trucks into Vietnam reached a record high of 26,700 units in 2015 worth a total USD1 billion compared to 13,700 units worth USD530 million in 2014.

    However, since early 2016, the sales of Chinese trucks have considerably fallen in Vietnam. The General Department of Customs reported that only 10,900 Chinese trucks had been imported into Vietnam in 2016 and this figure reached just 94 units in January of 2017 compared to 1,700 units in January 2015.

    Explaining about the surge in Chinese trucks imported during the 2014-2015 period, owner of an auto-agent in Hung Yen Province, said that it was low prices which attracted customers. Meanwhile, Vietnamese auto agents could owe payments for buying Chinese trucks for between 6 months and one year.

    In early 2014, the Ministry of Transport issued a regulation to tighten control over overloaded vehicles also helped to fuelled the import of large-sized Chinese trucks.

    Earlier, trucks were allowed to transport larger quantities, 2-3 times over their load capacity. But they will be fined heavily if they carried that much now with the new policy. So as to carry the same amount of goods as before, local transport firms had to increase the number of trucks.

    The slow sales of Chinese trucks in Vietnam are also attributed to the stronger competition from rivals. More trucks produced by South Korea’s Hyundai, Japan’s Hino, Russia’s Kamaz and German’s Shacman are all being sold in Vietnam with more affordable prices.

    Many showrooms of made-in-China trucks have been set up along National Highway 5A, however, over the past year, they have sold only a few units.

    Representatives of a showroom in Hai Duong Province said despite low prices, the company sales of Chinese trucks have been on the sharp fall, which is partially due to quality which is not good as those made by South Korean, Japanese or European firms.

    After being imported into Vietnam, many Chinese trucks have their bodies extended for the higher loading capacity, which is aimed to meet the Ministry of Transport’s regulations and this also seriously affects the trucks’ life-span.

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  • Transport Ministry rejects Uber Vietnam proposal

    Transport Ministry rejects Uber Vietnam proposal

    The Transport Ministry has declined to approve a Uber Vietnam request to pilot an IT upgrade for its services, citing, among other things, a lack of authorisation and validation from its parent firm. In an indication of regulatory obstacles that stand in the way of companies using ridesharing apps that people can use to hire transportation in major cities around the world, the ministry said Uber Vietnam had not met several conditions for regularising its operations in the country.

    A similar application by Uber’s rival, GrabCar, has been approved.

    An official document sent to the company by the ministry said the authorisation given to Uber Vietnam by Holland-based Uber International Holding BV (Uber BV), which provides the smartphone application for Uber services, was insufficient.

    It said Uber Vietnam was presenting itself as the developer and applicant of the test launch with Uber BV having no legally binding responsibility in project implementation.

    Furthermore, the registered fields of operation in Uber Vietnam’s initial business certification are “managerial activities” and “market research”, that has no relation to any action authorised by Uber BV.

    If Uber Vietnam is developer of the IT component and wants to apply it, it has to add this activity to its list of registered operations, according to the Ministry.

    Also, as the party directly responsible for signing and implementing the project, Uber Vietnam should work with other commercial transportation units and provide these and their direct clients (drivers) with the necessary contracts.

    The ministry also said that under the nation’s e-commerce laws, the Uber mobile application has the same function as an electronic exchange. Therefore, the company needs to register its services with the Ministry of Industry and Trade.

    Regarding Uber Vietnam’s use of electronic contracts and data instead of traditional paper contracts, the ministry demanded more details and analysis on the content and process before approving the project.

    In particular, the pilot project must clarify Uber’s rights and responsibilities as a supplier of technological applications and transportation services. This includes the authorisation given by Uber BV to Uber Vietnam, as also the resolution of any legal issues that arise during the latter’s operations.

    The ministry’s communiqué said it could not approve Uber Vietnam’s request before the company satisfies all the conditions mentioned therein. It said this was required so that the company would not continue working with vehicle owners and other transportation units in contravention of regulations.

    The project under which Uber has sought approval is officially titled “Application of information technology in supporting the management and connection of commercial passenger transportation by contract.”

    The project’s stated aim is to enhance State management of information technology-based passenger transportation, and create preconditions for future science and technology application projects in the transportation sector.

    Uber entered Vietnam in June 2014 as a foreign company operating in the country without resident offices. The company has undergone previous scrutiny by the Government on matters of tax avoidance and its legality in the country.

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  • Bus-assembly line fire inflicts $11m loss

    Bus-assembly line fire inflicts $11m loss

    A fire that broke out at two sites of a bus assembly plant early this month destroyed spare parts and components worth VND250 billion (US$11 million). A bus is assembled at its plant by the Truong Hai Automobile joint stock company (Thaco) in Quang Nam Province. Production was resumed nine days after a fire broke out at the plant on February 2.

    The assessment was revealed by Chairman of the Truong Hai Automobile Joint Stock company (Thaco), Tran Ba Duong, at a press conference on Sunday in central Quang Nam Province, where the plant is located.

    He said initial investigations point to the fire being caused by short-circuits.

    The fire broke out on February 2 after working hours at around 6pm at the Chu Lai-Truong Hai Auto Manufacture and Assembly Complex and blazed for around three hours.

    Components and accessories stored in the 5,400sq.m assembly workshop were burnt, Duong said.

    He said over 1,000 workers in the complex and firemen from Quang Nam, Quang Ngai, Da Nang, soldiers and staff of the Chu Lai Airport joined hands to stamp out the fire and remove components out the workshop.

    The plant resumed operations on Sunday after an initial investigation and recovery, he added.

    “The fire was out of reach of the plant’s automatic extinguishing system. It took four hours to mobilise a large fire-fighting force and extinguish the blaze,” Duong said.

    ‘Our fault’

    “It’s our fault that we collected components and accessories to service big orders while a new production line was under construction,” he said.

    Duong said Thaco had an insurance deal with the HCM City-based Bank of Investment and Development Bank (BIC) and Da Nang-based PVI for a total of VND638 billion ($28.2 million).

    He said BIC had asked an independent unit, Viet Nam International Adjuster (VIA) to assess the damage.

    The accident is still under investigation and final results will be announced after the probe is completed, he said.

    Also present at the conference was Dinh Van Thu, Chairman of the provincial People’s Committee. He said the fire was a lesson in fire prevention not only for Thaco, but other companies in the province’s industrial zones.

    Thu said Prime Minister Nguyen Xuan Phuc had asked the province to speed up the investigation and help the business resume production soon.

    The Thaco chief said the fire had delayed delivery of buses by three days to seven days.

    Thaco has invested US$400 million in constructing the Chu Lai-Truong Hai Industrial Complex, which has a logistics centre, car production factories, a vocational training college, a seaport, storage facilities and shipping services.

    Last year, Thaco earned total revenues of VND65 trillion ($2.8 billion), a 40 per cent growth, contributing VND18 trillion ($796 million) to the State budget.

    The nation’s biggest automaker plans to build three more plants with the total annual capacity of 215,000 trucks, vans, commercial cars, and achieve a localisation ratio of 16 per to 46 per cent.

    It currently manufactures and distributes Korea’s Kia model, Japan’s Mazda and France’s Peugeot. It has exported its cars to Laos, Cambodia, Myanmar and Columbia.

    Thaco plans to earn revenues of VND71 trillion ($3.1 billion) this year, equivalent to two per cent of the country’s Gross Domestic Product.

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  • Carlsberg may not be Habeco’s only option

    Carlsberg may not be Habeco’s only option

    Carlsberg will bid for the State-controlled Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco) in March or April, but the Vietnamese Government may have more than one option to choose from when it comes to buyers.

    The government is seeking to equitize Habeco, the country’s second-largest brewer, by selling its 82 per cent stake. Carlsberg, which already owns 17 per cent of the company, holds priority purchase rights for a 60 per cent stake.

    In October, the government said it would announce the results of negotiations on its priority purchase rights with Carlsberg by the end of that month. It is not clear why the process has been drawn out.

    “We have not been able to make a bid,” the Danish brewer’s CEO, Mr. Cees ‘t Hart, told Reuters, adding that he expects to submit a bid in March or April. There was also uncertainty over whether the Vietnamese Government will abide by Carlsberg’s first right of refusal, he said.

    So what might have actually gone wrong in the negotiation between Carlsberg and the Ministry of Industry and Trade over additional Habeco’s shares?

    A price disagreement almost certainly exists. The government announced in August it wants to sell its 82 per cent stake for $404 million, or about VND48,000 ($2.11) a share, which according to CEO of Carlsberg Vietnam, Mr. Tayfun Uner, is a reasonable valuation, or VND50,000 ($2.2) per share; the same price it paid in the 2008 IPO.

    The government is now keen to take the market price as a reference for the deal. After switching from the Unlisted Public Company Market (UPCoM) to the Ho Chi Minh Stock Exchange (HoSE) on January 19, shares in Habeco rose 15 per cent in their first day of trading to VND147,000 ($6.51) from a starting price of VND127,600 ($5.63), valuing the Vietnamese brewer at $1.5 billion.

    But a 21.1 per cent year-on-year decline in Habeco 2016 net profit to VND740.1 billion ($32.7 million) saw its share price head down. After the February 9 trading session, its shares closed at VND114,000 ($5.03). While price is driven by market demand and supply, the surge in the company’s share price did not accurately reflect the underlying value of the business and is mainly due to speculative buying on very thin volumes, Mr. Uner said.

    Another reason why negotiations could fall apart is that the Vietnamese Government may have more than just one potential buyer. “We have first right of refusal, but if they neglect that for any reason, and we do not have any signal that they will, then we may not be able to buy it,” Mr. Hart said.

    While the partnership agreement signed in 2008 is still legally binding, some of the terms are no longer appropriate under current law. According to a lawyer with knowledge of the agreement, the selection of a single foreign strategic investor for the majority of the stake may be in conflict with regulations in the Competition Law and the Trade Law or the criteria for State divestment from joint stock companies.

    Still, the government has no choice but to sell Habeco as soon as possible. “Letting incapable people continue on the brewer’s management board will eventually destroy the brand and the company, while a fast sale does not necessarily mean Habeco will be let go at a cheap price,” Mr. Nguyen Hoang Hai, Vice Chairman of the Vietnam Association of Financial Investors (VAFI), told VET by phone on February 9.

    With a young, beer-loving population, Vietnam is among Asia’s largest consumer of beer, putting it on the radar of international brewers. The country’s beer market grew at an average compound annual rate of 7 per cent from 1999 to 2015 and touched 4 billion liters in 2016. Growth is anticipated at around 4 per cent to 2021, data from researchers Canadean, quoted by investment bank Liberum, showed.

    Kirin Holdings, Asahi Group Holdings, Thai Beverage, Heineken, and Anheuser Busch Inbev SA are among some 20 investors that have expressed interest in the sale.

    Habeco’s share price soared when a limited number of shares were listed in October, as investors raced to snap them up before the planned sale. The brewer has a market share of about 20 per cent in Vietnam.

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  • Hanoi plans to impose taxi badges on Uber and Grab cars

    Hanoi plans to impose taxi badges on Uber and Grab cars

    The competition between traditional taxis and app-based taxis like Uber and Grab has continued unabated.

    Conventional taxi companies have said they had to meet numerous requirements and pay various taxes and fees which Uber and Grab taxis aren’t required to and that this was unfair.

    In Document 399, the Hanoi’s Department of Transportation said they had gathered opinions from the public and related agencies about the regulations over the operation of vehicles in the city.

    They proposed that all cars for hire with less than nine seats, including Uber and Grab taxi, must have the required badges and follow all regulations that are currently applied to taxis.

    The department said they hoped to get more views before stopping to receive opinions from February 20 to report to the city people’s committee.

    The Ministry of Transport has declined to approve a proposal from Uber Vietnam Company to pilot an IT upgrade for its services because of a lack of authorisation and validation from its parent firm.

    The ministry said it had inspected and dealt with various cars using the Uber app.

    According to the ministry, Uber is registered as the developer so it is not authorised to work as a taxi company.

    The ministry has asked Uber Vietnam to stop working with car owners and the ‘illegal’ operation in Vietnam until it completes all required procedures.

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  • Vietjet to launch Danang-Seoul route and offer promotion for Valentine’s Day

    Vietjet to launch Danang-Seoul route and offer promotion for Valentine’s Day

    Vietjet is to open its new international route from the central Vietnamese city of Danang to Seoul (Korea) in a bid to meet the increasing travel demand of tourists, businessmen and individuals between the two tourism-attraction cities. The new route will take off on May 31, 2017 with the flight time per leg of 4 hours 30 minutes. 

    The Danang-Seoul route will be operated on a daily basis. The flight from Danang departs at 23:45 (local time) and arrives in Seoul at 6:00 (local time). The return flight takes off at 7:00 (local time) and lands at 9:40 in Danang.

    In celebration of the new route and on the occasion of Valentine’s Day, the airline will run a three-day promotion offering 500,000 air tickets priced from only HK$8 from February 14 to 16, 2017 at www.vietjetair.com. The promotion applies for all international routes from Ho Chi Minh City, Hanoi, Hai Phong and Danang to Seoul, Busan (Korea), Hong Kong, Kaohsiung, Taipei, Taichung, Tainan (Taiwan), Singapore, Bangkok (Thailand), Kuala Lumpur (Malaysia), Yangon (Myanmar) and Siem Reap (Cambodia) from March 1, 2017 to December 12, 2017 (excluding national holidays). As for the Danang-Seoul route, the promotion is available from May 31, 2017 to December 31, 2017.

    Following the international routes from Seoul to Ho Chi Minh City, Hanoi and Hai Phong, Danang is Vietnam’s 4th destination to be connected with Korea’s famous capital of Seoul, marking the 5th route to be operated by Vietjet between Vietnam and Korea. Vietjet also plans to expand its international network in 2017, looking to boost the regional trade and integration.

    Danang, a port city, is Vietnam’s third largest city and is the main commercial and tourism centre of central Vietnam. The city is well known for its clean environment, beautiful beaches, and good public services. It is often referred to as the most livable city in Vietnam and is one of the fastest growing cities in Vietnam. 

    Seoul is ranked as one of the world’s top favorite cities including New York and Tokyo to name a few. Despite its modernization, the Korean capital is still famous for is typical Korean culture, convenient transportation system, extremely rich food culture together with developed entertainment and shopping industry, making it also one of the world’s top favorite cities.

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  • Max’s Group taking Yellow Cab Pizza to Vietnam

    Max’s Group taking Yellow Cab Pizza to Vietnam

    Filipino casual-dining company Max’s Group is taking its pizza chain Yellow Cab Pizza to Vietnam.

    Max’s Group says it has signed a development agreement with Blue Star Food in Ho Chi Minh City to roll out at least 12 Yellow Cab Pizza stores in Vietnam within five years, says president/CEO Robert Trota.

    The timing and locations of the Vietnam restaurants have not been revealed, but the plan will raise Yellow Cab’s international network to 165 outlets.

    Blue Star Food CEO Nguyen Thanh Nam says Vietnam’s young and affluent population has been targeted by significant developments in the F&B industry.
    “A lot of Western and casual-dining restaurants are flourishing in Vietnam,” he says, including McDonald’s and Starbucks.

    Blue Star Food oversees 45 ice-cream parlours for US brand Baskin Robbins.
    Western food represents 7 per cent of dining-out visits in Vietnam, according a survey by UK market research company Decision Lab.

  • Is ‘50 Shades’ still too sexy for Vietnamese moviegoers?

    Is ‘50 Shades’ still too sexy for Vietnamese moviegoers?

    The erotic series once again faced a release hiccup in Vietnam, where censors are known for being tough with steamy scenes.

    “50 Shades Darker” and “John Wick: Chapter 2” could not have their premiere in Vietnam on Friday morning as planned as censors did not give their blessings.

    It is not immediately clear why the much-anticipated sequels were hold up, but “50 Shades” may be too sexy and “John Wick” too violent.

    Vietnam adopted a new film rating system in January, allowing censors for the first time to completely block out anyone under 18 from films rated “C18.”

    Nguyen Hoang Hai from CGV, the biggest cinema chain in Vietnam, said it did not receive permission to start showing “50 Shades Darker” on Friday morning. Screenings for the press were reportedly canceled earlier this week.

    Hai also said that the version intended for the Vietnamese market already “had several sex scenes cut” and that local theaters were also expecting an adult-only “C18” rating.

    CGV’s website began to list showtimes for both films again in late Friday afternoon.

    The first “50 Shades” film did not have so much luck either two years ago, when censors unexpectedly canceled all planned screenings. Then a so-called “Asian version” managed to hit theaters but moviegoers complained that there were no sex scenes left.

    Moviegoers were expecting less censorship when the authorities announced a new rating system with a series of age-based classifications C13, C16 and C18, besides P for general viewers.

    Before that, local cinemas adopted only two ratings – G for general viewers and NC16 for those above 16.

    But an industry insider told anonymously that new system apparently does not really change how a film is reviewed and edited. Officials from the Cinema Department still recommend precuts before officially assigning their ratings, the source said.

    Sex generally remains a controversial subject in movie and arts in Vietnam. In 2015, officials proposed banning all sex scenes that lasted over five seconds in local films and full-frontal female nudity. The proposal was not discussed after that due to strong opposition from filmmakers.

  • Vietnam to digitize medical records for all citizens

    Vietnam to digitize medical records for all citizens

    The electronic system can be shared by healthcare providers across the countries to save time and money. The Vietnamese government has announced a plan to spend VND5 trillion ($220 million) on an ambitious project to create a nationwide system of electronic medical records.

    Under the plan, the government will still issue paper-based records to patients first but these will gradually be replaced by a digital system, built and run by the welfare agency Vietnam Social Security.

    The system, which will store personal medical records for all citizens, can be shared by health care providers to save time and money.

    Vietnam, like many other developing countries, is dealing with the double burden of infectious and non-infectious diseases, said Luong Ngoc Khue, a senior health official, adding that among non-communicable diseases, cancer has emerged as an alarming problem.

    Online personal health records can make it more efficient for doctors to make early diagnosis as well as easily monitor symptoms.

    The Vietnamese government has also announced a plan to issue electronic healthcare cards to all citizens to certify their rights to medical services anywhere, according to the government’s online news portal. With the new system, electronic healthcare registries in all 63 cities and provinces will be synced.

    Vietnam Social Security is in charge of developing a plan to sync health, social security and unemployment insurance into one single card.

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  • Dak Lak to shift coffee strategy

    Dak Lak to shift coffee strategy

    The Central Highlands province of Dak Lak plans to increase the proportion of processed coffee such as instant coffee and powdered coffee from less than 10 per cent to 15 per cent in total coffee output by 2020 and up to 30 per cent by 2030.

    Pham Ngoc Nghi, chairman of the province’s People’s Committee, said the province’s policies were being adjusted to attract more domestic and foreign enterprises to invest in coffee processing.

    He said that most locally based processing companies were private firms whose market access and product advertising capacity were modest.

    Dak Lak, which has the largest coffee area and output in Viet Nam, has more than 200,000ha and an annual coffee bean output of 450,000 tonnes.

    However, the province only has 145 coffee processing facilities with a total capacity of 32,100 tonnes, accounting for 5.55 per cent of the province’s total coffee bean output.

    To achieve the targets, the province has created a more favourable investment environment for both domestic and foreign enterprises, particularly those specialising in roasting and grinding, to invest in processing factories.

    The province has also helped coffee enterprises improve their corporate governance, promoted the use of advanced post-harvest and processing techniques and expanded market access for local companies.

    Coffee farmers, producers and businesses are being encouraged to produce beans that can be certified by the coffee global certification programme (UTZ), the fair-trade labelling organisation (FLO), Rainforest Alliance (RFA) and 4C (Common Code for the Coffee Community).

    The province, which has helped organisations, enterprises and co-operatives build brands, has offered assistance to companies to acquire rights to the geographical indication for processed coffee products.

    Last year, Dak Lak produced 28,000 tonnes of processed coffee, including 23,000 tonnes of powdered coffee and 5,000 tonnes of instant coffee.

    It exported 4,520 tonnes of instant coffee worth nearly US$ 27 million, accounting for 7.5 per cent of the province’s coffee export revenue.

    In the 2016-17 coffee season, Dak Lak estimates it will export 230,000 tonnes of coffee to 75 countries and territories.

    Export potential

    Viet Nam’s processed coffee exports are predicted to increase in the coming years due to more investment from domestic and foreign enterprises, according to experts.

    Many coffee companies, including Trung Nguyen, Me Trang and Vinacafe, for instance, are expanding the scale of their production.

    In addition, Viet Nam’s free trade agreements with the EU, Europe-Asian Economic Union and the Republic of Korea will create opportunities to boost Viet Nam’s processed coffee exports.

    Under free trade agreements, exports of Viet Nam’s processed coffee are taxed at only 0-5 per cent compared to 15 -20 per cent in the past.

    The country’s coffee industry is raising the value of coffee beans by speeding up the processing of powdered and instant coffee and other products.

    Processed coffee products from Viet Nam are sold in many international markets.

    The G7 instant coffee of Trung Nguyen, for example, has passed the requirements of Walmart Stores, Inc and is now sold at Walmart stores in many countries such as Chile, Brazil, Mexico and China.

    Luong Van Tu, chairman of the Viet Nam Coffee and Cocoa Association, said China was one of the most important markets for Viet Nam’s processed coffee.

    Coffee consumption in China is rising rapidly, particularly among younger consumers exposed to Western coffee drinking habits, he said.

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  • Vietnam convenience stores enjoy boom

    Vietnam convenience stores enjoy boom

    Convenience stores and minimarts have become increasingly popular in the country, with more than one third of households shopping there regularly, according to some analysts’ estimates. If they reduce their prices further, they would have even more opportunities to grow, they said.

    Le Viet Nga, deputy head of the Ministry of Industry and Trade’s domestic market department, said convenience stores have got a good reception from the market, and now make up the fastest growing retail segment with double-digit growth.

    “This is a modern trading channel, selling goods with clear origins and having good management. Convenience stores offer good opportunities for small and medium-sized enterprises and farmers to bring their products into the market.”

    According to the ministry, investors are also favouring convenience stores since their return on investment is much higher than traditional supermarkets or hypermarkets and investment is lower.

    Besides, getting licences for convenience stores and minimarts is much easier than for supermarkets since opening retail outlets of less than 500sq.m is not subject to the economic needs test (ENT), it said.

    Traditional retail channels still account for 72 per cent of the market but this is forecast to reduce to 60 per cent by 2020, it said.

    In China there is one convenience store for every 21,000 people, while the figure is 1,800 in South Korea and 69,000 in Viet Nam, meaning there is immense potential for the segment to grow in Viet Nam, it said.

    The steady increase in incomes and changes in consumer behaviour are other big factors, it added.

    Intense competition

    The number of convenience stores more than doubled in 2012-14 to 348. The number of minimarts went up from 863 to 1,452.

    In 2015 and 2016 convenience stores continued with their impressive performance, with local and foreign players like Saigon Co.op, Satra, Vingroup, B’s mart, Shop&Go and Circle K beefing up their presence as shoppers eyed convenience while a robust economy increased their spending power.

    For instance, Saigon Co.op, which owns Co.opmart, Co.opXtra and Co.op Food, last year launched Co.op Smile, a new retail model.

    Saigon Co.op general director Nguyen Thanh Nhan said plans are in the works to increase the number of Co.op Smile stores to 200-300 by the end of this year from just 20 outlets last year.

    Satra, which has a joint venture with Heineken in Viet Nam, also plans to expand its retail system, with a focus on developing its convenience store chain Satrafoods to create a distribution channel for its subsidiaries like meat producer Vissan and Vietnamese producers in general.

    This year it will open 55 Satrafoods stores, including 10 in the Mekong Delta city of Can Tho alone, raising the total number to 172.

    According to the ministry, foreign enterprises have a 70 per cent market share of convenience stores, 17 per cent of malls and supermarkets, 15 per cent of minimarts and 50 per cent of the online shopping channel.

    According to insiders, the biggest disadvantage for convenience stores and minimarts is their higher prices compared to supermarkets, traditional markets, and grocery stores.

    To improve their competitiveness, they must reduce prices and sell quality local products, they said.

    Vu Vinh Phu, chairman of the Ha Noi Supermarkets Association, said domestic producers and distributors should develop closer links to cut intermediary costs.

    According to the Global Retail Development Index (GRDI) from consulting firm A.T. Kearney, Viet Nam has been in the top 30 most attractive retail markets since 2008.

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