vietnam economy,Vietnam business news

With rapid economic growth in recent years and achievements in economic development and urbanisation, Vietnam and other countries around the world are facing many challenges in their development process, especially when it comes to the use of fossil energy resources, increased greenhouse gas emissions, and environmental pollution. 

According to statistics, energy consumption in the construction sector accounts for 36-37 per cent of total national energy consumption. With an average power consumption growth rate of 8-10 per cent per year, electricity used in the construction sector, together with its greenhouse gas (GHG) emissions, also increases significantly each year.

In order to minimise the negative effects of the development process and to contribute to the sustainable development of the country, the construction of buildings and cities in a green and smart way has become a common trend.

This trend is contributing to the implementation of the National Determined Contributions (NDC) and the Paris Agreement, according to which GHG emissions will be reduced by 8 per cent by 2030 compared to the business-as-usual scenario (BAU) with domestic resources. The above-mentioned contribution could be increased up to 25 per cent with international support.

The Ministry of Construction (MoC), with the support of the Global Environment Facility through the United Nations Development Programme, has been implementing the EECB project on improving energy efficiency in commercial and high-rise residential buildings in Vietnam in the 2016-2021 period.

The project reduces the intensity of GHG emissions from the construction sector in Vietnam by improving the use of energy from commercial and high-rise apartment buildings in some major cities.

In terms of policy, the MoC has issued the updated version of the National Technical Regulation on Energy Efficient Buildings, regulating the compulsory technical requirements when designing, constructing, or renovating high-rise buildings with a total floor area of 2,500 square metres and above.

For the regulation to come into reality, the EECB scheme is assisting in updating economic and technical norms for the design and construction of buildings, developing construction equipment and material database.

These results enable users to quickly access the latest information on energy efficiency, construction materials, and equipment. At the same time, the project helps promote interest from investors and design consultants in the integration of measures to minimise energy consumption in the building.

The EECB project is also co-ordinating research and proposals of mechanisms, policies, and regulations on economical and efficient use of energy in the contents of the amended Law on Construction from June.

This is a significant legal basis to implement activities to promote the development of energy-efficient buildings in Vietnam. The project is also assisting the MoC in studying and developing guidelines to implement the provisions of the law.

In 2019, the EECB initiative surveyed 165 operated buildings of various types, from offices over shopping centres to hotels in Hanoi, Danang, and Ho Chi Minh City to collect data of their energy consumption. The data is being used to develop Specific Energy Consumption (SEC) and energy benchmark for several types of high-rise buildings in Vietnam.

The data also helps owners to self-assess their energy efficiency and give out specific goals to save energy during the operation of the building. This is also the basic data used by researching agencies to set up and develop appropriate policies and solutions to encourage and manage the economical and efficient use of energy in buildings.

In order to support investors in applying energy-saving solutions in specific projects, the EECB project directly provides technical support for a number of operating projects, such as Sofitel Legend Metropole Hanoi and the Somerset Grand Chancelor Building, through the assessment of the current status of energy use and the implementation of solutions on building envelop, fixing and replacing building equipment for energy efficiency.

In addition, the EECB initiative provides technical assistance in the cource of designing, constructing, operating, and monitoring energy consumption for newly-built construction works such as the CONINCO building, and the high-rise residential and commericial building Y1 CapitaLand - Feliz en Vista.

The project’s results are also being summarised into lessons and shared widely for officials of the local departments of construction, the management boards of provincial construction investment projects, and design and construction companies through training workshops and courses held in localities across the nationwide.

To promote activities on economical and efficient use of energy in construction projects, the EECB project will continue to support the MoC and relevant agencies in developing legal documents, mechanisms, and national technical regulations and standards on energy efficiency, promoting green building, and implementing activities of efficient use of energy in construction and the assignments of MoC within the National Energy Efficiency Programme for the period of 2019 to 2030.

PHILUX Capital Advisors invests $200 million in Hoang Quan Group

PHILUX Capital Advisors, a wholly-owned subsidiary of PHI Group, has just announced that it would pour VND4.6 trillion ($200 million) into domestic Hoang Quan Group to co-invest in real estate projects.
 
This investment could include industrial zones, ports, and resorts that Hoang Quan Group currently manages or is developing. In addition, PHILUX Capital will also advise and assist Hoang Quan Group in a comprehensive restructuring effort to access international capital markets and list their securities on the US or other major foreign stock exchanges.

According to Truong Anh Tuan, chairman of Hoang Quan Group, the cooperation with PHILUX Capital Advisors enables the company to utilise international experience and strength in restructuring and mergers and acquisitions (M&A) activities in international financial and securities markets.

“We are restructuring as a 're-startup' to ensure we have the resources and conditions for our real estate development plans in Vietnam and international markets,” said Tuan.

Hoang Quan Group has a diverse portfolio of products including industrial parks, real estate, social housing, and affordable and commercial housing in prime locations in Ho Chi Minh City and other locations, with 22 social housing projects, providing the market with more than 7,000 products. A number of products and industrial park projects have attracted both domestic and foreign investors.

Established in 2004, PHILUX Capital Advisors is engaged in M&A, management consultancy, corporate finance, corporate restructuring, and advisory services.

The company’s management was instrumental in listing the first-ever Vietnamese companies on the US Nasdaq stock market (Cavico Corporation) and Frankfurt Stock Exchange (Philand Ranch Ltd.).

Currently, PHILUX Capital Advisors serves as the Investment Adviser to PHILUX Global Funds SCA, SICAV-RAIF, a Luxembourg bank fund with multiple sub-fund compartments for investment in real estate, agriculture, renewable energy, and healthcare as well as the proposed Chu Lai Multiple Commodities Center (CMCC) and the Asia Diamond Exchange (ADE) in the Chu Lai Open Economic Zone, in Quang Nam province. This will be the first rough diamond exchange in Asia, comparable with diamond exchanges in Antwerp and Dubai.

Banks act carefully amid uncertainties

As the global health crisis continues to inflict hardship on every sector, both international and domestic banks are becoming more risk averse in order to keep their businesses afloat, while trying to get rid of bad loans.

The domestic economy showed significant signs of recovery, spurring higher demand for loans and higher growth in credit of lenders. Banks are also reducing their lending rates despite impacts on profits from their bread-and-butter lending activities.

Notwithstanding, each lender has their own lending appetite. Tran Thang Long, head of research at BIDV Securities told VIR, “In our opinion, banks would change the risk appetite to become more risk averse, and they would focus on increasing non-interest income which is the main growth factor for banks in the near future.” Long also brought up examples of state-owned banks slashing their credit exposure to the market and focusing on providing loans to their existing customers.

However, some banks have taken advantage of this unprecedented crisis to expand market share and deepen their foothold. Some lenders might seek more risk such as VPBank and MSB with their credit growth of 12 per cent.

VietinBank, for example, vows to create favourable conditions to assist clients, but not by easing lending standards.

“The early economic recovery also boosts massive opportunities for Vietnam to welcome multinational relocations and become a global manufacturing hub,” a representative of VietinBank told VIR. “Thus, we would place our focus on providing credit for essential sectors. There is a significant untapped potential for VietinBank to further accelerate global relocation by offering top-notch services to lure more high-quality foreign funds.”

Trinh Bang Vu, head of the Retail Business Division at Shinhan Bank Vietnam, noted the South Korean lender would continue to specialise in offering preferential lending rates for customers in need of home loans, car loans, or consumer loans.

“We always think and act with customers in mind with integrity and trust. For instance, home lending rates offered by Shinhan Bank are now deemed to be the most competitive on the market, while those for personal loans are only 1.16 per cent per month,” said Vu.

Private lender ACB, on the other hand, has enjoyed a high loan yield since it has given particular attention on retail banking and individual lending services.

However, the race among diversified retail banking products and services for small- and medium-sized enterprises is heating up as more competition enters, possibly placing a lower profit ceiling.

Nevertheless, Techcombank seems to be more conservative in selecting its customers. Bank chairman Ho Hung Anh emphasised that Techcombank only focuses on groups with high incomes and good repayment ability. For instance, Sun Group and Vingroup made up for a total 70 per cent market share, thus, the bank has chosen them as major customers in the resort segment.

The impact of COVID-19 on the bank has not been significant since the creditor does not have many customers belonging to severely affected sectors like aviation, textiles, and tourism. The customers of such sectors are recovering, except for Vietnam Airlines, Hung Anh noted.

In case of Vietcombank, the state-owned lender expects to increase its proportion of fee income and broaden its deposit base to include more retail clients. Most importantly, the bank expects its fees to improve after signing an exclusive bancassurance agreement with insurer FWD Group, with upfront fees the highest paid to any bank in Vietnam.

Vietnam International Bank (VIB) is slated to achieve a higher-than-average loan growth in the upcoming time, since the bank credit growth is driven by car loans.

Besides that, the Vietnamese government has decided to cut 50 per cent of registration fees for locally-manufactured and assembled cars till the end of this year. The reduction is aimed to help local businesses recover production and trade as well as stimulating consumption of cars, thus also paving the way for VIB lending activities.

Military Bank (MB), meanwhile, would lay stress on Mcredit – its consumer finance subsidiary – as an important profit centre for the bank. MB also plans to upgrade infrastructure and operations to better align the subsidiary with the bank’s risk appetite.

Nguyen Thi Thanh Huyen, financial analyst at KB Securities, believed that most banks currently are being more conservative with their credit activities which can be seen in the lower targeted annual credit growth for 2020 as presented at its in annual shareholders’ meeting.

“For the remainder of 2020, we expect that banks would maintain a prudent mindset in their loan activities in order to monitor their asset quality to avoid any unexpected consequences in the future,” said Huyen. “However, in 2021, if Vietnam avoids another wave of COVID-19 and the situation eases globally, banks could return to pre-pandemic levels or slightly lean forward in risk-taking to compensate for a gloomy 2020 performance.”

Ho Chi Minh City proposes expanding lifespan of Saigon Centre IV and V

Ho Chi Minh City People’s Committee has submitted proposals to the prime minister to extend the operation time of the Saigon Centre IV and V projects until 2070 instead of 2043 due to the slow land delivery by city authorities.
 
At a meeting on the implementation of the public investment plan in 2020 and breaking through difficulties at delayed key foreign investment projects held on the afternoon July 20 in Ho Chi Minh City, chairman Nguyen Thanh Phong proposed the prime minister to expand the lifespan for Saigon Centre IV and V to 50 years from the day of land delivery.

“This proposal from the investors suits the regulation on the lifespan of projects under Article 43 of the Law on Investment,” Phong said.

Article 43 of the Law on Investment stipulates that for projects where land is granted and leased by the government but land delivery is slow, the time of delay must be excluded from o the lifespan of those projects.

“In reality, Keppel Land Watco and Real Estate Saigon Corporation – the investors of these projects – so far have not received cleared land while these projects will have to be returned to the government at the end of their 50-year lifespan. The slow land delivery since 1993 has had great impacts on the investors' business,” Phong said.

The Saigon Centre project was given an investment license in 1993 with the investment capital of $270 million by Keppel Land Watco Co., Ltd., a joint venture between Keppel Land (Singapore) and domestic partners. It has been transferred many times since then, with the latest investor being Real Estate Saigon Corporation.

In 1996, the Ministry of Planning and Investment issued a decision to divide this project into five sub-projects (Saigon Centre I to V). Respective investors were also established accordingly, from Keppel Land Watco-I to V.

In 2017, Keppel Land acquired an additional 16 per cent stake in Keppel Land Watco I to V from the Vietnamese partner Southern Waterborne Transport Corporation for VND845.9 billion ($37 million).

So far, Saigon Centre I, II, and III have finished construction and have been put into operation. However, Saigon Centre IV and V have not received land yet. These two projects are located on a total area of more than 8,500 square metres next to Saigon Centre I, II, and III, on an area which is currently occupied by the Ministry of Transport’s agencies.

Saigon Centre is located on a two-hectare prime site in the heart of the central business district in District 1, a short distance from two planned underground subway stations at Ben Thanh Market and the Opera House.

The first phase of the project was completed in 1996 and comprises of a 25-storey mixed-use development, including a three-storey retail podium, Grade A office space, and 89 luxury serviced apartments.

The Saigon Centre retail mall was opened on August 2016 with Takashimaya Department Store as its anchor tenant.

After that, another development comprising of 44,000sq.m of premium Grade A office space, 55,000sq.m retail area, and 195 luxury serviced apartments have been completed and put into operation at the end of 2017.

Serviced apartments remain strong after COVID-19

Plans of relocating manufacturing lines to Vietnam generate enough demand to meet the buoyant development of serviced apartments, even despite COVID-19 disruptions.  

"The serviced apartment segment is closely correlated with the flows of foreign investments and expats arriving to work for major international companies. The asset class has held up well and the long-term potential for Hanoi remains good, with many MNCs contemplating relocation to Vietnam," said Hoang Nguyet Minh, associate director of investment at Savills Vietnam.

According to the Hanoi market report of Savills, in the first half, total supply from 51 projects was down 2 per cent on-quarter to approximately 4,621 units. One Grade B and one Grade C project closed. Occupancy decreased by 4 percentage points on-quarter and 13 pptson-year, reached its lowest level of 70 per cent.

Grade A performance in the first half remained steady with 69 per cent of total units occupied. Long-term leases steadied the segment's performance with average rent easing slightly -1 per cent on-quarter to stay at $26 per square metre monthly.

Overall resilience showed with 50 out of 52 sites still in operation after lockdown eased with 22 per cent retaining around 90 per cent occupancy.

Multinationals shifting supply chains to Vietnam to escape US-China trade war-related tariffs are starting to accelerate. The northern industrial market, alongside accommodation providers, is anticipating a post-pandemic expat-driven wave of demand.

Hanoi gained $1,217 million of registered foreign direct investment (FDI) in the first half, equivalent to 25 per cent of the same period last year. Investor trust in Vietnam has been further amplified by effective pandemic containment alongside the recent EU-Vietnam Free Trade Agreement (EVFTA) ratification.

By June 2020, three industrial projects financed by investors from Japan, South Korea, and Hong Kong accounted for 53 per cent of total newly-registered FDI. Asian expats are expected to be a key tenant target for serviced apartments.

The government has reacted to the pandemic by issuing timely support for affected enterprises and employees. Resolution No.84/NQ-CP permitted expats to receive new or extend existing work permits. Additionally, organisations, households, and individuals received 15 per cent discounts on renting land directly from the government.

Law No.51/2019/QH14 allows expatriates to change the purpose of their visa without the need to leave and re-enter the country. Resolution No.79/NQ-CP regulating e-visa issuance for 80 countries for stays of up to 30 days regardless of purpose. Foreigners finding work in Vietnam or entering under an e-visa may change their visa status after securing a work permit. These changes are intended to reduce immigration procedures and costs while facilitating investment and tourism development.

Seven projects with approximately 770 units are expected to come online in 2020. With 73 per cent of this new supply, the secondary area will remain the most competitive in 2020. This area is also scheduled for 71 per cent of the total future supply. However, the other regions/districts Gia Lam, Dong Anh have started introducing large-scale projects. Post-pandemic, serviced apartments may see increased competition from hotels or rental platforms.

Thai energy firm Gulf acquires 100 per cent stakes of Dien Xanh Gia Lai

Gulf International Holding Pte – a unit under Gulf Energy Development Public Company – has just reached an agreement to acquire 100 per cent stakes in Dien Xanh Gia Lai Investment Energy JSC (DGI).
 
Gulf International Holding Pte – a unit under Gulf Energy Development Public Company – has just reached an agreement to acquire 100 per cent stakes in Dien Xanh Gia Lai Investment Energy JSC (DGI).

Specifically, the Bangkok-based corporation Gulf has inked a share purchase agreement with some Vietnamese entrepreneurs Nguyen Tran Thao Nhi, Tran Thi Thanh Mai, and Tran Thi Minh Trang for the wholly acquire.

Gulf International Holding Pte – a unit under Gulf Energy Development Public Company – has just reached an agreement to acquire 100 per cent stakes in Dien Xanh Gia Lai Investment Energy JSC
DGI is the developer and operator of two Onshore Wind Farm Projects – la Pech 1 and la Pech 2 – which have a contracted capacity of 50 megawatts each. The projects are located in Gia Lai Province in the central highland of Vietnam.

Both projects will generate and sell electricity to the state-owned company Vietnam Electricity (EVN) for 20 years.

Newwire Kaohoon reported that the Thai firm is expected to spend approximately $200 million on finishing the project.

Construction will begin in 2021 and the projects should start commercial operation by the fourth quarter of 2022.

According to AsiaTimes, Gulf also signals its plans to import LNG for its proposed power projects in Vietnam.

Last year, after its investment announcement in Vietnam, Gulf’s CEO Sarath Ratanavadi become the richest Thai shareholder with shares valued at around $3.78 billion, doubling in value over the previous year.

VIR also reported on Gulf redoubled efforts to develop power plants in Vietnam and Laos.

To date, Gulf has operated as a holding company with a portfolio of electricity, steam, chilled water generation and related businesses.

Ben Tre to solicit investment in hi-tech agriculture

The Cuu Long (Mekong) Delta province of Ben Tre will offer incentives to attract investments in hi-tech agriculture and in projects with high value-addition, according to its People’s Committee.

Nguyen Huu Lap, deputy chairman of the People’s Committee, said the province sought to become a hub for agricultural production and distribution associated with eco-tourism.

It would continue to improve its business climate and introduce incentives for investments in agriculture and rural development, he said.

Ben Tre has identified two key industries, seafood processing and coconut processing, and seven other priority areas: garment supporting industry; animal feed; chemicals; machinery, electronics, telecommunications, information technology, and software; livestock processing; and renewable energy.

It has the largest area under coconut in the country, ​​more than 73,000ha, and grows 626 million nuts a year.

Coconuts are a key source of raw materials not only for agriculture but also processing industries.

The province would amend policies to attract investment in infrastructure in industrial zones, and for start-ups to mobilise economic sectors to participate in industrial development, Lap said.

It would solicit investment in agricultural and seafood processing, especially and livestock shrimp, supporting industries and clean energy, he said.

It would continue to improve the investment environment and enhance dialogue with and meet businesses to resolve their difficulties, he said.

It would also continue to reform administrative procedures and update regulations related to production, he promised.

It would improve trade promotion and market forecast and step up support for businesses using e-commerce and seeking to expand, he added. 

Ben Tre to solicit investment in hi-tech agriculture

The Cuu Long (Mekong) Delta province of Ben Tre will offer incentives to attract investments in hi-tech agriculture and in projects with high value-addition, according to its People’s Committee.

Nguyen Huu Lap, deputy chairman of the People’s Committee, said the province sought to become a hub for agricultural production and distribution associated with eco-tourism.

It would continue to improve its business climate and introduce incentives for investments in agriculture and rural development, he said.

Ben Tre has identified two key industries, seafood processing and coconut processing, and seven other priority areas: garment supporting industry; animal feed; chemicals; machinery, electronics, telecommunications, information technology, and software; livestock processing; and renewable energy.

It has the largest area under coconut in the country, ​​more than 73,000ha, and grows 626 million nuts a year.

Coconuts are a key source of raw materials not only for agriculture but also processing industries.

The province would amend policies to attract investment in infrastructure in industrial zones, and for start-ups to mobilise economic sectors to participate in industrial development, Lap said.

 

It would solicit investment in agricultural and seafood processing, especially and livestock shrimp, supporting industries and clean energy, he said.

It would continue to improve the investment environment and enhance dialogue with and meet businesses to resolve their difficulties, he said.

It would also continue to reform administrative procedures and update regulations related to production, he promised.

It would improve trade promotion and market forecast and step up support for businesses using e-commerce and seeking to expand, he added. 

PVS sees revenue up 13% in Q2

PetroVietnam Technical Services Corporation (PVS) announced revenue of VND5.47 trillion in the second quarter of this year, up 13.4 per cent year-on-year.

Revenue from financial activities decreased by 23 per cent to VND70 billion.

Pre-tax profit increased by 66 per cent year-on-year to VND405 billion. Post-tax profit was up by 14 per cent year-on-year to reach VND248 billion.

In the first six months, PVS reported revenue of VND8.7 trillion, down by 2.3 per cent against last year. Post-tax profit was VND359 billion, down by 39 per cent. With these results, the company fulfilled 58 per cent of its revenue plan and 61.4 per cent of the profit plan for this year.

The biggest contributor to revenue and profit in the first half was mechanical engineering and construction, with VND4.17 trillion and VND233 billion, respectively.

Revenues and profits from supplying specialised vessels and processing and export of crude oil (FSO/FPSO) were VND1.9 trillion and VND53 billion, respectively.

By the end of the second quarter, PVS had receivables of VND6.9 trillion, up 50 per cent compared to the beginning of this year. 

PNJ’s profit and revenue plummet in Q2

Phu Nhuan Jewelry JSC (PNJ) recorded revenue and post-tax profit of VND2.7 trillion (US$116.8 million) and VND31.7 billion in the second quarter of this year, down 7 per cent and 81 per cent year-on-year, respectively.

According to PNJ, due to the COVID-19 outbreak, the company had to temporarily close 85 per cent of its stores in April.

Although jewellery sales recovered in the remaining two months of the quarter, PNJ’s revenue was still significantly affected.

In the first six months of this year, PNJ’s revenue hit VND7.75 trillion, equivalent to the first half of 2019. However, the increase in the cost of goods sold caused pre-tax profit to decrease by nearly 10 per cent.

Loan interest expenses doubled in the same period, resulting in a slump of 26 per cent in post-tax profit in the first half, reaching VND440 billion.

By the end of the second quarter, total assets of PNJ decreased by VND446 billion from the beginning of the year to VND8.2 trillion.

According to PNJ leaders, the company plans to open 31 more stores and invest in facilities and machinery for the factory No. 2–PNJP this year.

In the future, PNJ will focus on wholesale activities, competing with portable products on the market. The company has registered additional occupations to supplement e-commerce and instalment sales. 

Digital banking indispensable in globalisation era

 To catch up with the trend of globalisation, banks are racing to develop mobile applications and digital banking.

The Southeast Asian Finance, lnvestment and Cooper Trade Research Institute held a seminar on digital banking and technology revolution on Friday.

The process of implementing digital banking is posing some challenges to the banking industry.

Experts said that in executive management, when the banking sector transformed models of business, governance, administration, and service provision, it also required changes from thinking to action.

Phung Thanh Quang from the National Economics University said that Viet Nam chose 2020 as the year of digital transformation.

For years, banks had been at the forefront of using technology to support customers' diverse financial needs, said Quang.

The fields used by the bank include accounting, cybersecurity, security systems, risk management, customer service, lending, credit rating, asset management, sales and marketing.

Ngo Thanh Xuan from the National Economics University said that the development trend of digital banking needed transparency and information must be secured.

Dao Thi Huong from the Academy of Finance said that there had been some digital banks in Viet Nam such as VPBank’s Timo, but it has not developed well due to user habits.

Many people still preferred cash, especially in rural areas. Moreover, human resources is also a current concern of banks, said Huong. 

Ca Mau aims to become energy centre of Mekong Delta by 2030

The Mekong Delta province of Ca Mau has set a target of becoming an energy centre of the region by 2030.

The province seeks to raise total electricity generation capacity of local power plants of all kinds to 4,000MW by 2030, including 1,000MW of renewable power, and to 5,000MW by 2045.

It plans to invest in new gas-storage facilities, gas filling and supply stations, floating storages, gas recycling stations and gas pipelines. It would import and store about 7 million cubic metres of liquefied natural gas (LNG) per year from 2030 and 10 million cubic metres from 2045.

Investment in electricity generation, transmission and distribution infrastructure will also be required.

Programmes on efficient energy use and reduction of power losses will continue. The province targets saving at least 7 percent of total energy consumption each year by 2030, and 14 percent by 2045.

Investment priorities will be for wind, solar, gas and thermal power.

The province is calling for investment in gas and liquefied natural gas (LNG)-fired power plants, which will help meet electricity demand and supply of petroleum products in the province and neighbouring provinces.

It will also build Floating Storage and Regasification Units (FSRUs) systems to ensure the supply of imported LNG to power plants in the province and the region.

Experts have urged the province to speed up the construction of wind and solar power projects.

Ca Mau is developing specific policies to encourage investment in power plants that use urban waste, biomass and solid waste to generate electricity.

It is giving priority to production of renewable energy such as wind and solar power, and will invest in studying and evaluating the potential for development of new renewable sources.

Rooftop solar power projects, and projects combining aquaculture and solar power systems on water surface or in coastal areas are also being encouraged.

The province will offer support to help investors develop offshore wind power projects, which is in line with the province's tourism and marine economic development strategy.

Investment will also be sought for LNG projects with floating storage systems at sea, and power projects using rice straw, urban waste, biomass and solid waste.

The province is encouraging the private sector to take part in energy development, train high-quality human resources for the energy sector, reduce greenhouse gas emissions, and increase the use of clean and renewable energy.

The southernmost province of Ca Mau has a coastline of more than 250km./.

JCB, Shopee unveil Southeast Asia collaboration

E-commerce platform Shopee has announced a tie-up with JCB International Company Ltd (JCBI) that will offer online merchants and shoppers enhanced payment options.

HCM City - E-commerce platform Shopee has announced a tie-up with JCB International Company Ltd (JCBI) that will offer online merchants and shoppers enhanced payment options.

The partnership is launched in Indonesia, Thailand and Vietnam and will be followed by Singapore and the Philippines in the coming months.

JCB will offer year-round and seasonal discounts and an additional safe and secure payment method for shoppers; Shopee will also promote participating stores that support JCB.

Yoshiki Kaneko, president and chief operating officer, JCB International Company, Ltd said: “JCB is proud to be working with Shopee as we further commit to supporting our customers in the fast-growing Southeast Asia region. In particular, as consumer shopping habits shift to online and businesses digitise their activities, we want to be able to further cater to these evolving needs.

“Over the past 10 years Southeast Asia has been a growth market for JCB, and we are confident that together with Shopee we can provide high-quality payments services for businesses and consumers, and continue to grow together with the region.”

Terence Pang, chief operating officer of Shopee, said: “We are honoured to be a strategic business partner with JCB. As homegrown brands, both Shopee and JCB are deeply committed to supporting local Southeast Asian markets and businesses.

“We believe that JCB will bring added value to our eco-system and look forward to accelerating the digital economy in Southeast Asia together.”

In Vietnam, from now until March 31 next year Shopee users will be offered special promotions when paying with JCB cards such as a discount of 15 percent.

JCB started its overseas expansion in 1981 by building acceptance of travel destinations for Japanese card members. Since the early 2000s it has focused on expanding to Asian markets.

It has more than doubled its card members in Thailand, Vietnam, Indonesia, the Philippines, Myanmar, and Singapore between 2017 and 2019.

A joint report by Google, Temasek and Bain & Company, found that the Southeast Asia internet economy soared to 100 billion USD in 2019 after more than tripling in size over the previous four years.

By 2025 it is expected to grow to 300 billion USD.

Small apartments command market attention

A new regulation permitting the construction of small apartment units in commercial projects has sparked controversy among developers and policymakers when it came into effect on July 1.
 
In Circular No.21/2019/TT-BXD released in this April, the Ministry of Construction has given permission to developers to build at least 25 per centof the apartment units in their projects with the area of 25-45 square metres.

According to Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), this is a good solution to meet the increasing demand for housing and reduce the shortage of affordable units in the market.

Almost three million immigrants in Vietnam’s largest city are in need of small apartments. In addition, smaller units will also attract foreign buyers living in Vietnam, Chau said.

Small units costing between VND750 million and VND1 billion ($32,600-43,480) are a suitable housing option for this group who require small but high-quality units.

These small apartments will also solve the housing needs of people with more modest finances, limit the prevalence of temporary housing, and activate the market by generating good consumption and exciting deals.

Before the new regulation was issued, to answer the high demand for small units, Ecopark Group JSC had begun building small units at the Ecopark project in Hung Yen province, 15 kilometres from Hanoi.

Sky Oasis Ecopark is selling units from 30 to 100 square metres with prices ranging from VND890 million to VND6 billion ($38,700-260,870) each.

However, there are also negative opinions about these types of properties. Tran Ngoc Chinh, chairman of the Vietnam Urban Development Planning Association, commented that the high density of small apartment units in a project could impact the neighbouring infrastructure system.

Aidan Wee, co-founder and executive director of PropNex Realty Vietnam, told VIR that the supply of small housing units often leads to speculation.

“Speculators buy early and in bulk only to sub-sell the units for quick capital gains. The rampant exploitation of these speculative opportunities was made possible by the huge supply and demand imbalance. Homebuyers with real demand will have to pay a premium to such investors if they are unable to secure a unit from the developer,” Wee said.

A vicious cycle is created when developers are tempted by the profit margin investors make by reselling their units and look to pocket some of this margin by increasing the selling price of subsequent units. This has driven the market price of affordable housing almost even with mid-end products.

“As such, I personally think that the proposal – while it is a step in the right direction – will not be effective by itself. A more comprehensive framework must be developed by the Ministry of Construction to support mass-market housing along with the concept of subsidised public housing in Singapore. Further moves by the ministry could be to introduce policies to curb speculation in the affordable housing segment and also other incentives to encourage developers to build affordable housing,” he added.

Meanwhile, Pham Lam, CEO of DKRA Vietnam, said that in order to limit the negative impacts of small unit speculation, the government must plan clearly in which locations can developers add small units to their projects. Priority should be given to areas near industrial zones, universities, and large-scale factories.

The proportion of permitted units should range from 10 to 25 per cent which should be decided based on location and the project’s infrastructure system.

“In general, small apartments are a solution based on real housing demand. However, in order for this policy to be complete and yield practical benefits, it is necessary to have strict and coordinated regulations from the government, the state, developers, organisations, and related bodies,” Lam said. 

Vietnam, EU offer clearer insights into EVFTA implementation

Both Vietnam and the EU will launch a broad range of practical activities to effectively implement the European Union-Vietnam Free Trade Agreement (EVFTA) from August, with a forum on trade and industry co-operation with EU partners to be held by the Ministry of Industry and the European Chamber of Commerce in Vietnam on July 31 in Ho Chi Minh City.

Running with the theme of the EVFTA -opportunities for strategic co-operation towards sustainable development, the occasion is anticipated to draw the participation of representatives from various State management agencies, the EU delegation based in the nation, diplomats of EU member nations operating in the country, and experts from a large number of Vietnamese and European businesses. 

In addition, the forum will serve as a venue in which participants can freely exchange views on comprehensive and multi-dimensional information with regard to economic and trade co-operation prospects between both sides once the EVFTA comes into force.

Moreover, the forum will offer updates for Vietnamese businesses on market developments within the EU, along with regulations, policies, and particular trade practices, thereby making practical and timely forecasts and recommendations that can serve to stimulate trade and investment with EU member states.
Most notably, the forum will connect participants online and allow the various Vietnamese Trade Offices in Europe to directly interact and answer questions regarding market information and methods in which to approach and support local partners.

With the EVFTA set to take effect from August 1 amid unpredictable fluctuations in terms of economic, trade, and market trends, the trade deal is expected to open up plenty of strategic co-operation opportunities in an effort to promote trade and investment in both a practical and effective manner.

For local firms, the EU represents a large market that has plenty of room for growth, while import and export structure between both sides can be considered complementary rather than competitive.

Successful businesses operating within the EU market have the opportunity to expand co-operation with 27 member states as a way of solving the output problem of market expansion and diversification towards deeper involvement within the global value chain.

The recent past has seen plenty of Vietnamese businesses fail to fully grasp information about trade deals and market fluctuations, despite the EU being a potentially lucrative market, whilst seeking more opportunities for broader co-operation alongside EU partners.

The opening six months of the year saw Vietnamese exports the EU market suffer a decline of 8.8% to US$16.1 billion due to the impact of the novel coronavirus pandemic.

The markets that imported large volumes of local goods during the reviewed period include Germany at US$3.31 billion, down 0.2%, the Netherlands at US$3,178 billion, a fall of 1.8%, Italy at US$1,412 billion, a drop of 20.6%, France at US$1.5 billion, down 20%, Spain at US$963 million, a fall of 27.3%, and Sweden at US$556 million, a decline of 5.5%.

Moreover, there were many other markets within the EU that Vietnamese goods have yet to gain entry into, including Hungary, Poland, Bulgaria, Croatia, Luxembourg, Lithuania, the Czech Republic, and Romania.

Ministry of Planning and Investment reviews performance in H1

The Ministry of Planning and Investment (MPI) held a teleconference in Hanoi on July 28 to review its six-month performance and outline tasks for the remaining months of this year.

Speaking at the opening ceremony, Minister of Planning and Investment Nguyen Chi Dung said despite COVID-19, the Vietnamese economy still posted a positive growth with exports and social welfare ensured. However, challenges remain ahead, requiring strenuous efforts and flexible and suitable measures to achieve the highest growth this year.

Head of the MPI’s Department of National Economic Issues Do Thanh Trung attributed a 1.81 percent economic growth to the Government’s effective and sound leadership as well as efforts by ministries, agencies and localities.

The business climate as well as national competitiveness have been improved, he said, adding that the Government also requested speeding up the disbursement of public capital to ensure projects’ progress.

Between now and the year-end, the MPI will work closely with ministries, agencies and localities to closely grasp the socio-economic performance, thus offering timely consultancy to the Government.

It will also devise the 2021-2025 mid-term public investment plan and decrees guiding the enforcement of the Law on Investment, the Business Law and the Law on Public-Private Partnership. At the same time, it will also improve the efficiency of the drafting of bills, draw more foreign investment and build a national strategy on foreign investment cooperation for the 2021-2030 period, he said.

Concluding the event, Minister of Planning and Investment Nguyen Chi Dung asked units to realise the public investment plan, step up public capital disbursement and prepare for the 2021-2025 economic development plan.

The MPI will improve its professional efficiency and continue simplifying procedures in support of businesses, with the aim of achieving the highest results this year, he said.