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SEIKO IDEAS CORPORATION Vietnam Business Review
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Vol 05, February 04th 2015
BUSINESS REVIEW VIETNAM
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Vietnam builds M&A momentum for banking sector
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INSIDE THIS ISSUE
Highlights
Vietnam, Japan lift industrial cooperation Vietnam shopping mall leases booths at zero fee for 50 years
Hanoi retail market retains lustre
Economy
Vietnamese manufacturing on the rise: HSBC
Vietnam becomes the second largest mobile exporter to Peru
Banks & Finance Major banks may ease lending rates
SBV to take over loss-making lender
SBV sets new rules to prevent big companies from dominating stock market
Investment Investors flock to Vietnam as e-commerce market expands Aeon invests in Vietnamese retailers: report
Enterprises
Vietnam's shrimp king courts foreign investors to expand
Toyota Vietnam CEO elected VAMA chair
Flappy Bird maker in "30 under 30" list
Market & Prices VN food consumption surge 5.1% every year: MoIT forecast
Cement consumption rises 30%
Legal Updates
New investment policies to take effects
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ECONOMY
Vietnamese manufacturing on
the rise: HSBC
VOV - Vietnamese manufacturing
continued to strengthen in January,
supported by a further growth in
new orders, according to HSBC's
Vietnam Manufacturing Purchasing
Managers' Index monthly report
released on February 2.
As a result, employment increased
at a solid pace that was the
sharpest since December 2013.
Meanwhile, input costs decreased
at the fastest pace in the survey's
history as a result of falling fuel
prices. This in turn led
manufacturing firms to reduce their
output prices sharply.
The headline seasonally adjusted
Purchasing Managers' Index (PMI) –
a composite indicator designed to
provide a single-figure snapshot of
operating conditions in the
manufacturing economy – pointed
to a further modest strengthening
of business conditions at
Vietnamese manufacturing firms,
posting 51.5 in January compared
to 52.7 in December.
Operating conditions have now
improved in each of the past 17
months. Both output and new
orders continued to rise at the start
of 2015, albeit at weaker rates than
seen in December. Improving client
demand had been behind the rise
in new work, in turn leading firms to
raise production. New export orders,
meanwhile, rose only slightly amid
some reports of weakening
demand in export markets.
A slowdown in growth of new
orders, as well as reported
productivity improvements, led to a
reduction in backlog of work in the
sector. The decline in outstanding
business was also reflective of a
solid rise in employment. Moreover,
the rate of job creation was the
sharpest in just over a year, and
one of the fastest in the history of
the series.
Falls in the global price of oil led a
number of respondents to report
reduced fuel costs in January.
Consequently, input prices
decreased at the sharpest pace in
the survey's history, surpassing the
previous record set in June 2012.
Vietnam becomes the second
largest mobile exporter to Peru
VNA - Vietnam was the second
largest mobile phone exporter to
Peru in 2014, according to the
Centre for Foreign Commerce.
The South American nation last year
spent $55m to import mobile
phones from Vietnam, an increase
of $50m against 2013. Vietnamese-
made products now account for
5% of Peru’s mobile phone market,
ahead of those from the Republic
of Korea (3%) and Taiwan (1%).
Last year, Peru imported 12.7 mln
mobile phones, up 31% in terms of
value &23% in terms of quantity.
Vietnamese telecom group Viettel
officially began its operation in Peru
in October 2014 with the launch of
its Bitel-branded mobile service. At
that time, Bitel was the only mobile
service provider offering 3G with a
network that reached 80% of Peru’s
population.
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BANKS & FINANCE
Major banks may ease lending
rates Reuter - Major banks in VN may
reduce their interest rates in
response to a central bank call,
while smaller lenders are still
hesitant to take similar moves.
Last week the State Bank of VN
asked banks to cut the interest
rates for medium & long-term loans
by 1.0-1.5%age point.
Banks are charging medium and
long-term loans in the Vietnamese
dong at between 9.0% & 11% per
annum now, while they pay 6.7-
7.3% per year for dong deposits,
according to the central bank.
SBV to take over loss-making
lender Reuter - Vietnam's central bank
(SBV) said on Monday it will acquire
all shares in a small, loss-making
unlisted commercial bank based in
the Mekong Delta.
The move by SBV is part of efforts to
help clean up VN's fragmented
banking sector, which is weighed
down with bad loans after a
decade of rapid expansion.
All shares in the Long An province-
based Vietnam Construction Bank
will be taken by SBV at no cost in
order to "develop business
operations more safely and more
effectively", SBV said in a statement
on its website. (http://sbv.gov.vn/)
The Vietnam Construction Bank had
"losses, bad debts and unstable
operation", it said in a December
2014 proposal calling on
shareholders to raise registered
capital. SBV said the plan had
failed to win support from investors
at a meeting last week.
Several mergers are expected this
year in VN's banking sector of 42
local lenders, which economists
consider overcrowded, with too
many small & undercapitalised
operators.
SBV sets new rules to prevent
big companies from
dominating stock market VNN - The stock market has been
stirred up with the news that credit
institutions’ loans to investors to
fund their stock investment must not
be higher than 5% of the institutions’
chartered capital.
Some analysts cited the current
regulation as saying that
commercial banks can provide
loans to securities investors if the
loans are not higher than 20% of
their chartered capital. Meanwhile,
under the new legal document to
be released in some days, the
proportion is 5% only.
However, Pham Huyen Anh, a
senior official at SBV, denied the
fact that credit limits for securities
investments will be cut.
The current regulation says that
banks can provide loans worth up
to 20% of their chartered capital to
fund securities trading deals.
The total chartered capital of
operating credit institutions in
Vietnam, including foreign bank
branches, is about VND435.5 trillion,
which means that banks can
provide loans worth up to VND20
trillion (5%) to fund stock
investments.
Stock market reactions
The VN Index fell just two days after
the news about the new regulation.
On Nov-19, the VN Index of the
HCMC bourse decreased by 1%,
while the HNX Index of the Hanoi
bourse dropped by 0.68%.
A report from BIDV Securities
Company says that once the new
regulation officially takes effect,
banks will have to urge customers
to pay debts in order to reduce the
lending index to below 5% of
chartered capital.
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INVESTMENT
Investors flock to Vietnam as
e-commerce market expands
SGT - Foreign-run online shops in the
past have been less popular than
Vietnamese-run ones, which
understand local customers, but
that trend is changing as more
retailers invest in Vietnam.
Last year, the German Rocket
Internet announced a huge
investment deal of $250m in
Lazada, and Rakuten, an online
retail group from Japan, is
reportedly considering the
possibility of cooperating with a
Vietnamese e-commerce firm.
Observers commented that now is
the right time for foreign investors to
gear up their investment plans in
VN. Most market reports have
predicted there would be an online
boom in the near future.
VN customers use online shopping
through smart mobile devices such
as smartphones and tablets.
A 2013 report of Epinion, a market
survey firm, showed that 50% of VN
internet users use online shopping.
Vietnam expects to have an online
Black Friday this year.
Flurry Analytics, a market survey firm,
has reported that Vietnam ranks
second in the world in terms of an
increase in the number of
smartphone users. This gives one
more reason for e-commerce firms
to open more online retail channels
through mobile apps.
Large traditional retailers in Vietnam
like FPT Shop, Nguyen Kim and The
Gioi Di Dong last year began to
increase their investments to
develop online retailing.
Payment problems
Though Vietnamese often surf on
the internet and place orders online,
making payments remains a
problem for online shopping.
Pham Tien Dung, chair of
Banknetvn, noted that troubles
occur more regularly with payment
from domestic cards than int'l credit
cards, causing consumers to
hesitate to buy goods online.
Nguyen Ngoc Dung, from VECOM,
noted that the problem does not lie
in technological solutions, but in
consumers’ habits.
Vietnamese want to see products
in person before buying. Therefore,
e-commerce firms now have to
accept payments after delivery of
goods to customers.
Aeon invests in Vietnamese
retailers: report
Thanh Nien News - Aeon has
announced its purchases of a 30%
stake in Fivimart & 49% in Citimart, 2
major retail chains in Vietnam.
Fivimart now operates 20 stores in
Hanoi, while Citimart runs 27 stores,
mainly in HCMC.
Speaking to local media the same
day, the Vietnamese retailers
confirmed the purchases, but
refused to reveal details.
Aeon opened its first shopping mall
here in January last year in HCMC,
and another one in the neighboring
province of Binh Duong.
It planned to open the third mall in
Hanoi this year.
Aeon considers Vietnam its second
most important market in Southeast
Asia after Malaysia. It has planned
to open 200 stores across the
country, and increase sales to
¥100b ($6.78b).
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ENTERPRISES
Vietnam's shrimp king courts
foreign investors to expand
Bloomberg - Minh Phu Seafood
Corp., which sells black tiger shrimp
to Costco Wholesale Corp. and
Wal-Mart Stores Inc., will seek to sell
half of itself to foreign strategic
investors to help fund overseas
expansion.
Vietnam’s largest seafood exporter
by value aims to complete the
stake sales this year after it gets
approval to delist from the HCMC
Stock Exchange this quarter, Chief
Executive Officer Le Van Quang
said in an interview. The company
forecasts net income will jump 55%
to 1.416 trillion dong ($66m) this
year, with sales reaching $1b,
mainly from exports, he said.
“We’re looking for strategic foreign
investors to help maximize our
advantages and potential as our
goal is to become a global shrimp
company by 2020,” Quang,
dubbed the “king of shrimp” by
local media, said in an interview
Jan. 24 in the Mekong delta
province of Hau Giang.
Vietnam is considering proposals to
raise the foreign-ownership limits of
listed companies. Vietnamese
companies are increasingly in need
of foreign strategic investors for
capital and expertise to expand
internationally.
Under current rules, foreign investors
can hold a maximum 49% of a
listed company’s stakes. A draft
measure proposes that foreign
investors be allowed to make
“unlimited” investments in non-
voting shares of public companies.
Foreign investors
“If we stay on the HCMC Stock
Exchange, we can’t raise enough
target capital,” said Quang, who
plans to raise the registered capital
20% to 840 bln dong.
Minh Phu dropped 0.9% to 109,000
dong a share in HCMC trading on
Wed, Jan. 28. Its share price rose
more than four-fold last year as the
company bought back shares,
giving it a market capitalization of
7.5 trillion dong now, according to
data compiled by Bloomberg.
A dozen foreign investors from the
U.S, Japan and Canada have
expressed interest in the stake sales,
Quang said at his office at
company subsidiary Minh Phu Hau
Giang Seafood Processing Joint-
Stock Company. Mitsui & Co. Ltd.
holds a 31% stake in the Mekong
delta-based subsidiary.
Minh Phu will choose one or two
partners this year, Quang said.
France-based Artemis’s Red River
Holding owns a 9.47% stake and
Vietnam Investment Fund holds
7.38%, said Quang. The company
failed to secure a partnership deal
with CP Group, Thailand’s largest
shrimp exporter, in 2012, he said.
Quang said he and his family want
to drop their stake holdings to no
less than 35% from 79% currently.
Vietnam seafood
Minh Phu’s sales and profit will grow
15% to 20% annually over the next
five years, Quang said. The
company has helped propel
Vietnam to become one of the
fastest-growing seafood exporters
in the world, with the national
industry’s shipments rising 18% to
$7.9b in 2014. Vietnam’s shrimp
exports climbed 25% to a record
$4.1b last year.
Shrimp prices hit a record last year
due to a lack of global supply
when diseases affected shrimp
from Thailand, said Dinh Duc Minh,
senior analyst at Saigon Securities
Inc.
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ENTERPRISES
“If Thailand resolves shrimp diseases
and the supply increases again, the
shrimp prices will drop,” Minh said.
“In that case, Minh Phu and other
shrimp companies in Vietnam can’t
earn profits as high as in 2014.”
The company’s exports to more
than 60 countries jumped 41% to
$730mi last year, Quang said. The
US is its largest market, comprising
more than 1/3 of last year’s exports,
followed by Japan and Europe.
Quang wants to find strategic
investors who can help the
company expand its production
and market overseas, he said. The
company is working with Edmond
de Rothschild Suisse SA to find
investors, he said.
Quang said his company plans to
build shrimp processing companies
and distribution units in India,
Indonesia and the Philippines in the
next five years. The company,
which runs a distribution unit in
California, plans to build a 40,000-
ton shrimp processing plant in Ca
Mau province this year and another
with the same capacity in Hau
Giang province in the next 3 years.
“My goal is to produce shrimp for
everyone’s meal,” said Quang,
“Shrimp isn’t food only for the rich
any more.”
Toyota Vietnam CEO elected
VAMA chair
The Chief Executive Officer (CEO)
of Toyota Vietnam has replaced
Ford Vietnam’s CEO to assume the
chairmanship of the Vietnam
Automobile Manufacturers
Association (VAMA) as of Jan-30,
according to VAMA.
Mr. Yoshihisa Maruta
Accordingly, Mr. Yoshihisa Maruta
will hold the position for the term
2015-2017, replacing Mr. Jesus
Metelo N. Arias Jr, who is now the
second vice chair of the
association.
Representing wholly-Vietnam
owned firms is Mr. Bui Kim Kha, a
representative of Truong Hai Auto
(THACO), who is the first vice
president.
This is the first time a Vietnamese
representative joining the
management board of VAMA.
According to the review report of
VAMA, 157,810 cars were sold in
2014, up 43% compared to 2013.
The members of VAMA sold 133,588
cars, up 38% compared to 2013.
Flappy Bird maker in "30 under
30" list
VNS - Forbes VN, the Vietnamese
edition of renowned American
business magazine Forbes, has
listed Nguyen Ha Dong, the Flappy
Bird game creator, among its top
"30 Under 30."
Forbes VN yesterday released its
first-ever list of 30 of VN's brightest
stars under the age of 30 in
different fields, including business,
communications, entertainment
and sports.
Nguyen Ha Dong and Nguyen Huu
Cat Thu, founder and CEO of
Mindstep, are among nine talented
Vietnamese in the technology and
e-commerce fields.
Meanwhile, Dinh Nhat Nam,
founder and marketing director of
Urban Station coffee, and Mai
Truong Giang, founder and CEO of
the Khuong Viet JSC, are among
the six achievers named in the
business field.
Actor and MC Tran Thanh and Le
Quang Liem, the world blitz chess
champion, are among the
achievers listed in the
entertainment and sports fields.
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MARKET & PRICE
VN food consumption surge
5.1% every year: MoIT forecast
VNS - Vietnam's food consumption
is expected to grow by 5.1%
annually to an estimated $29.5b by
2016, according to a Ministry of
Industry and Trade (MoIT) forecast.
The forecast also pegged food
consumption per capital growing
to VND5.8 million (about $276) by
2016, reflecting an increase of 4.3%.
The expected growth is a result of
consumers' increasing incomes and
the development of the retail
industry.
At present, VN consumers still focus
on the daily essential food demand.
However, the trend will change
when the income of urban
residents rises, which will allow them
to spend more on high-quality food
and beverages.
"In order to meet demand from
local consumers, the quality of local
food products need to be
controlled more closely," said Bui
Truong Thang, Deputy head of
MoIT's Light Industry Department.
However, most VN food processing
enterprises have weak competitive
capacity in the regional and global
market.
Cement consumption rises
30%
VNS - Cement consumption in VN
posted a 30% YOY rise in Jan 2015,
reaching 5.87 mln tons.
The latest figures from the
Department of Building Materials
under the Ministry of Construction
showed that local cement
consumption in the first month of
the year was higher than those in
the previous month and in the
same period last year.
Specifically, the consumption was
4.37 mln tons, which is 6% and 47%
higher than last December and
January, respectively.
Of the total, the VN Cement
Industry Corporation (VICEM) sold
1.41 mln tons of cement in local
markets, 46% higher than its sales in
the corresponding period last year.
The amount of cement exported
was estimated at 1.5 mln tons.
The department said that the selling
price of cement last month was
more stable than its price last year,
thanks to the balance in supply and
demand of cement production
and consumption.
Furthermore, the ministry predicted
that cement consumption this year
would reach 71 to 73 mln tons,
which would be a 4 to 7% rise from
that in 2014. Of this total, local
consumption is expected to be 52
to 53 mln tons and exports will
reach 21 to 22 mln tons.
Several private cement producers
have seen positive results in their
exports.
Chairman of the Vissai Cement
Group in northern Ninh Binh
province, Hoang Manh Truong,
affirmed that they had been active
in their production and
consumption activities, adding that
the company's cement exports
were equivalent to domestic
consumption.
Truong also remarked that the
group had signed an export
contract of 1.2 mln tons of clinker
with Bangladesh, which brought its
market count to 20 countries and
territories. These include Germany,
Mozambique, Congo, Indonesia,
China, Hong Kong, France,
Australia and the US.
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LEGAL UPDATES
New investment policies to
take effects
PLF - The Law on Investment 2014
(coming into effect on July 1st,
2015) shall contain significant
changes, in comparison with
existing provisions, specifically in
investment forms, new regulations
on Investment Registration
Certificate, and projects entitled for
investment incentives.
1. Forms of investment
Also, multiple investment methods
such as BOT, BTO, BT contracts,
investing in business developments,
and investing in merger and
acquisition, were abolished in the
Law on Investment 2014, a new
form of investment has been
supplemented, which involves
investing under a Public-Private
Partnership ("PPP") contract.
Accordingly, investors and project
management companies shall
enter into PPP contracts with
competent authorities in order to
execute investment projects to
implement new construction
investment projects, to improve,
upgrade, expand, manage, and
operate infrastructure works, or to
provide public services. In addition,
there are significant modifications
in the remaining investment
methods, specifically as follows:
Investment in the establishment of
economic organisation
Before establishing an economic
organisation, foreign investors are
required to have one investment
project, apply for an Investment
Registration Certificate ("IRC") and
must satisfy certain conditions on
ownership rates of charter capital
and other conditions prescribed in
international treaties, to which the
Socialist Republic of Viet Nam is a
signatory. Regarding ownership
rates of charter capital, in particular,
foreign investors are eligible for an
indefinite amount of charter capital
in economic organisations, except
for certain cases restricted by
provisions of law on securities and
equitisation and conversion of
state-owned companies, and
international treaties to which the
Socialist Republic of Viet Nam is a
contracting party.
Investment in the forms of capital
contribution, purchase of shares or
capital contributed into economic
organisations, and under BCC
contracts:
In comparison with the Law on
Investment in 2005, the Law on
Investment 2014 contains more
detailed regulations on investment
conditions and procedures, as well
as the primary contents of BCC
contracts.
2. Grant of IRC
In the Investment Law 2014, cases
in which IRC procedures are not
compulsory have been expanded,
including: investment projects of
domestic investors; investment
made by contributing capital,
purchasing shares or capital
contributions from economic
organisations; etc. In addition, any
investor wishing to obtain an IRC is
entitled to request competent
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LEGAL UPDATES
authorities to implement the
procedures.
Furthermore, the provision in Law on
Investment 2005 stating that
"Investment Registration Certificate
also acts as a Business Registration
Certificate" has also been
abolished from the Investment Law
2014. More importantly, investors
who were granted Investment
Licences or Investment Certificates
before July 1st 2015 are permitted
to continue executing their
investment project, in accordance
with the granted Investment
Licence or Investment Certificate
(which can be replaced with an
IRC by the investment registration
authorities, if requested by the
investors).
3. More projects eligible to enjoy
investment incentives
The following projects eligible for
investment incentives have been
supplemented into the Investment
Law 2014:
i. Several business sectors given
investment incentives are
concretised, such as: production of
clean and renewable energy,
production of products with at least
30 per cent value added and
energy-saving products, etc.;
whereas traditional business sectors
are removed from those investment
fields eligible for incentives;
ii. Investment projects in which the
scale of capital is at least VND6
trillion (US$280.3 million), or at least
VND6 trillion is disbursed within 3
years from the date of issuance of
the IRC or decision on investment
policies;
iii. Investment projects in rural areas
that employ 500 workers and more;
iv. High-tech companies, scientific
and technological companies, and
scientific and technological
organisations.
It is essential to note that the
projects mentioned in points iii and
iv above cannot enjoy investment
incentives for mineral extraction
activity; manufacture/sale of
goods/services subject to special
excise taxes, except for car
manufacturing.
4. Overseas investment
While Investment Law 2005 did not
contain regulations on the forms in
which domestic investors may
invest in foreign countries, the Law
on Investment 2014 has concretised
overseas investment forms, such as:
establishing an economic
organisation under the provisions of
law of the country receiving
investment; undertaking BCC
contracts overseas; or repurchasing
part or all of the charter capital of
the economic organisation
overseas; etc. Furthermore, the
competence to decide on policies
of investment abroad, as well as
the conditions and procedures to
grant IRC overseas, have also been
clearly regulated in the Investment
Law 2014.
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HIGHLIGHTS
Vietnam, Japan lift industrial
cooperation
VNS - The Deputy Prime Minister has
urged relevant ministries and
agencies to rapidly implement the
Viet Nam Industrialisation Strategy
(VIS), which is part of the Viet Nam-
Japan cooperation framework
through 2020.
Deputy PM Hoang Trung Hai has
given the directive to the following
ministries: Finance; Science and
Technology; Labour, Invalids, and
Social Affairs; Foreign Affairs;
Education and Training; Natural
Resources and Environment;
Construction; Industry and Trade;
Agriculture and Rural Development;
Planning and Investment; and
Transportation, as well as the State
Bank of Viet Nam.
They have been asked to carry out
their assigned tasks in a timely
fashion, including submitting reports
to the Deputy PM – who also heads
the Steering Committee for VIS – by
April this year.
Under the strategy approved by
the Prime Minister on July 1, 2013,
priority has to be given to
developing the electronics,
agricultural machinery, agricultural
and seafood processing, ship
building, environment and energy
saving, and automobile and spare
parts manufacturing sectors.
The development of these industries
is expected to nurture high value-
added products, boost
technological innovation and
productivity, and improve global
competitiveness of local firms.
The Ministry of Planning and
Investment was assigned to
supervise progress in the
implementation of the action plan
and conduct research on potential
products or areas for cooperation
with Japan.
Additionally, it will collaborate with
the Ministries of Foreign Affairs and
Finance to seek support from
foreign partners and enterprises for
the projects stipulated within the
plan.
Meanwhile, the Ministry of Industry
and Trade will work with the
Japanese Embassy to finalise an
action plan for the development of
the automobile and spare parts
manufacturing industry in March
2015.
Vietnam shopping mall leases
booths at zero fee for 50 years
Tuoi Tre News - A shopping center
where traders can rent a stall for
zero dong for half a century was
inaugurated in Hanoi on Saturday.
Hoa Binh Co. Ltd. said thousands of
booths at its five-story V+ shopping
mall in Hai Ba Trung District are now
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HIGHLIGHTS available for free with a 50-year
term.
Businesses have to pay only one
percent of profit to cover power,
water, and cleaning costs,
according to company chairman
and general director Nguyen Huu
Duong.
“As for those that have yet to make
a profit, we will exempt them from
such fees,” he added.
The total exempted leasing fee is
estimated at more than VND500
billion (US$23.3 million).
The first floor of the 25,000-square-
meter venue was filled with new
stalls on the opening day, most of
which are fashion stores.
As of the end of Saturday, many
booths managed to empty their
stocks thanks to the competitive
selling prices, according to Lao
Dong (Labor) newspaper.
V+ is only open to Vietnamese
businesses that sell locally
manufactured products. Foreign
firms or local businesses that sell
imported goods are not allowed to
open a stall there.
Duong told a press conference in
Hanoi on January 28 that he
wanted to set up a pure
Vietnamese shopping mall to
encourage the production, sale,
and consumption of Vietnamese
products.
A major supermarket chain in Hanoi
had asked to acquire a large area
at the shopping center for VND300
billion ($13.98m), but Duong turned
down the proposal, he said.
With a zero leasing fee, products on
sale at V+ will be 30-50% cheaper
than at other venues, he said.
Duong expressed his hope that
more V+ shopping centers will be
opened across Vietnam to support
more local businesses.
Hanoi retail market retains
lustre
VNA - The retail market in Hanoi is
still attractive for investors, even
though it has experienced business
impediments during the past, a
Hanoi Industry and Trade
Department official said.
Last year was continuously marked
by numerous fluctuations in the
modern retail market nationwide,
as well as in Hanoi, which
encountered many challenges in
business, said Tran Phuong Lan,
Director of the Department.
Some trading centres in the city
had to sell or temporarily stop their
operations, including the Thai Berli
Jucler Group buying Metro Vietnam,
and the operations at Parkson
Landmark 72 and Trang Tien Plaza
being stopped for restructuring of
retailers in the plaza, Lan stated.
The market share of the modern
retail model stooped to a new low,
she said, with the circulation of
good in the modern distribution
system accounting for 15 percent
of the market and other goods
distribution systems being traditional
markets and sale agents of
producers.
These trading centres faced
difficulties in business because
there was a growing supply of retail
spaces in the medium and high-
end segments, while almost all
retailers were small and medium-
sized enterprises, Lan explained.
SEIKO IDEAS CORPORATION Vietnam Business Review
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HIGHLIGHTS They have also found it difficult to
seek retail spaces that were
suitable for their financial ability. If
they leased spaces in trading
centres for a high rent, their goods
would also have to be priced
higher and would become difficult
to sell.
Meanwhile, low purchasing power
at present due to the economic
crisis also affected the consumption
of goods at these trading centres,
said Lan, adding that customers
could also buy goods via other
channels, such as online trading,
direct orders at home and through
sales agents abroad and did not
need to go shopping at trading
centres.
However, in general, trading
centres in Hanoi follow a high
development level, and have
garnered attention from many
foreign and home investors, such as
the South Korean Lotte Group, the
Japanese AEON Group, the Thai
Central Group and Vietnam's
Vingroup, according to Lan.
According to CBRE's report, Hanoi
was ranked 13th in the list of 19 hot
retail markets in the world and one
of the top ten cities in the world
that retailers planned to open their
retail system in 2014.
This is because the retail system in
Hanoi has been developed strongly
in scale and quality to meet
demand from the local people and
foreign visitors.
In 2015, approximately 397,000 sq.
m of retail space from 19 projects
enter the market. Of these, two
projects have been completed, but
their opening date is uncertain, and
nine projects are currently being
fitted out, according to Savills
Vietnam.
In 2016, five projects will come
online with an area of 356,000 sq. m.
Four projects are currently under
construction.
"The retail market is on its way to
improvement and seems to have
found the right direction. The new
trend is focused on developing
supermarket models, food and
beverage items and entertainment,
with the main purpose being
satisfying the clients' needs," said
Do Thu Hang, the Head of
Research and Consultancy, Savills
Hanoi.
According to CBRE Vietnam stable
economic factors in the future are
expected to boost sales and boost
buyers' confidence.
Rents are constantly dropping to
maintain occupancy, but at a
modest pace. The expansion of
retail space and the arrival of new
entrants are expected to drive the
retail market in 2015 due to
Vietnam's commitments to the
World Trade Organisation. But, the
Economic Needs Test (ENT) has
remained a barrier for foreign
retailers.
Projects have been restarted and
the production of future supplies
has sped up, following an
economic recovery, according to
the report.
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