SEIKO IDEAS CORPORATION Vol 50

VIETNAM BUSINESS

REVIEW Vol 50 *Special Edition*

December 30th

2015

VIETNAM ECONOMY EXPANDS AT THE FASTEST PACE IN 05 YEARS IN THIS ISSUE

Vietnam's economy in 2015 grew at its fastest pace in 05 years, official figures

showed, shaking off regional economic worries with strong exports, record foreign investment and buoyant domestic consumption.

The communist nation recorded a GDP growth rate of 6.68% while the target was only 6.2%. In 2014, Vietnam's GDP growth rate was just under 6%, while that of 2013 was only 5.42%.

This is subject to be one of Southeast Asia's strongest showings for the year.

Many Asian economies have been rattled by troubles in China, where the world's second largest economy has suffered with its worst annual growth rate in a quarter of a century.

While regional neighbors like Thailand have suffered, Vietnam has proved resistant to the slowdown of its giant northern neighbor, partly through stake intervention.

The State Bank of Vietnam weakened the Dong 03 times this year to spur exports after China depreciated the Yuan,

dragging exchange rates lower across Asia.

Exports rose 8.1% in 2015 while imports climbed 12%. Much of the growth has been fueled by a flurry of international interest with disbursed foreign investment surging 17.4%.

Strong industrial growth also helped boost the economy as well as lower oil prices in the world market which has greatly reduced the cost of imported raw materials for Vietnam.

Vietnam released data showing an annual inflation rate of just 0.63% in 2015, the lowest in 14 years.

Vietnam is now party to the recently sealed TPP. In a report earlier this month, the World Bank said the TPP deal could add as much as 8% to Vietnam's GDP if it goes ahead.

But many analysts still said Vietnam's economic progress is vulnerable due to high public debts, inefficient operation of huge state-owned enterprises and rampant official corruption.

Spotlights on the Global Economy

in 2015

Page 2

Spotlights on the Vietnamese

Economy in 2015

Page 3

Vietnam's economy performs better than expected in 2015 by [Seiko Ideas]

VIETNAM BUSINESS REVIEW VOL 50 *SPECIAL EDITION* 2

TPP negotiations finished

After 05 years of negotiations, the trade agreement among 12 members of Pacific-Asia has been officially signed on 05 October. Regardedas the trade agreement of the century, TPP members cover 40% of global GDP and can contribute to global economy more $300b per year.

As scheduled, TPP can be signed in the first quarter of 2015 and officially take effect within 18 - 24 months after negotiations finished.

Vietnam is considered to be the country that gains the most benefits from TPP due to the lowest level of economy.

However, with high technical standards and intra-origin, the agreement also brings challenges for its members.

The Yuan officially in IMF basket

The Yuan has been included in the SDR basket from 01 October 2016, effectively anointing the yuan as a major reserve currency and represents recognition that the yuan's status is rising along with China's place in global finance.

Global financial crisis since the fire in China

Jun-2015: the main stock index of Shanghai Composite Index set a historic peak. But just a month later, the stock lost half of the country's accumulated points.

Aug-24: over 800 stocks hit the floor with the margin or 10% on Shanghai, leading the index to the lowest level since 2007. This was against Gov't efforts to spend up to $6,000b to prop up the market.

The impact of China's stock market also strongly affected other countries. European stocks lost the most since 2008 when the European Union nations lost 6% in Monday morning. About £91b was evaporated from stocks in the FTSE 100. US stocks continued the second consecutive day of dark global market as soon as the opening bell on the New York Exchange. Dow Jones index decreased more than 1,000 points, marking one of the deepest plunge on the US stock market for years.

Oil price tumbles to the lowest level in 7 years

Exactly as forecast, the price of crude oil hit the bottom in the last sessions of 2015 with

the price of $40 per barrel. OPEC's determination to keep the mining volume in order to maintain market dominance made the whole market suffer from oversupply and falling prices as a consequence.

Rather than creating significant motivations for the global economy, the fall in oil prices led many nations to "hurt" situations and stunned growth.

With the oil price shocks, the world economic growth fell 1.22% in Q4-2015 and decreased 0.68% in 2016.

Japan escaped from recession, China lowest growth in 6 years

Contrary to initial fears, the second largest economy in Asia is finally out of recession technically when growth rate is 1% compared to the same period last year. However, personal and organizational consumption, which used to contribute 60% GDP, rose only 0.4% in Q3 over previous quarters.

Regardless of positive technical figures, Japanese officials must continue to pursue the policy stimulus, adding $24b to planned budget. In addition, Gov't must endeavor to achieve the inflation target of 2% this year after a long period of deflation.

In contrast with the situation in Japan, China has the lowest increase in the growth rate in 06 years at 6.9%. If compared to the heyday of two-digit growth rate, China's growth rate fell in to a state of alarm.

Manufacturing output rose only 5.7%, lower than the original forecast of 6%. The level of fixed asset investment only 10.3% in the first 9 months.

Spotlights on the Global Economy in 2015 by [Seiko Ideas]

VIETNAM BUSINESS REVIEW VOL 50 *SPECIAL EDITION* 3

Viet Nam's initial public offering (IPO)

activity has been less than exciting in 2015

and that has been attributed to the lack of

blockbuster deals.

A wave of State-owned giants offered their

shares to the public in deals worth over VND1

trillion ($44.4m) each last year. These

included the national flag carrier Vietnam

Airlines, the Viet Nam National Textile and

Garment Group (Vinatex) and Ca Mau

Fertiliser, a subsidiary of energy giant

PetroVietnam.

2015 is drawing to a close soon, but so far,

only the IPO from the Airports Corporation

of Vietnam on December 10 collected

VND1.1 trillion ($49m). Several most-

anticipated share offerings have missed the

deadline this year.

The holdup in the equitisation of the mobile

network operator MobiFone has

disappointed investors.

As planned, MobiFone should have

announced its value assessment by the third

quarter and implemented the IPO in the last

quarter of this year. But to date, such

information has not been declared, except

the news that it has selected brokerage firm

Ban Viet Securities as a consultant for its

equitisation.

Last month, Minister of Information and

Communications Nguyen Bac Son asked the

company to submit reports on the

equitisation progress weekly to the

Corporate Management Department and

monthly to ministry officials for effective

implementation.

Son said a number of international

telecommunications firms from Australia,

France, Malaysia and Singapore have

expressed interest in a strategic partnership

with the company in the past months but

gave no further details.

According to the ministry, MobiFone

currently has a charter capital of VND15.3

trillion, or $680 million. In 2014, HCM City

Securities Company valued MobiFone at $3.4

billion, which may reach beyond $4 billion

after the IPO.

MobiFone Chairman Le Nam Tra said that in

the first 10 months of this year the

company's profit has nearly reached the

annual target while its turnover has grown by

7.8 per cent year-on-year. It planned to earn

VND36.4 trillion ($1.6b) in total revenue and

VND7.3 trillion ($324.4m) in profit in 2015.

Another State-owned enterprise, which

failed to launch its IPO this year, is the Viet

Nam National Shipping Lines, better known

as Vinalines.

In late 2014, CEO Vinalines Le Anh Son

confirmed that the shipping company would

implement the share offering to the public in

the first quarter of 2015. However, after two

delays in the second quarter and the third

quarter, it has not yet made it even as the

year draws to a close.

Son attributed the delay to the lengthy time

of settling the company's debts which still

stood at more than VND7 trillion ($311

million).

According to the equitisation scheme,

Vinalines has a charter capital of VND9.1

trillion ($404 million), of which the State will

retain 36 per cent of stakes, strategic

investors will hold 30 per cent and the other

33.75 per cent of shares will be sold to the

public.

Earlier this year, Viet Nam's budget carrier

VietJet Aviation Joint Stock Company also

announced its plan of launching the IPO

within this year in a deal which could reach

$800 million.

The IPO timing had been rescheduled from

October to the end of this year, but it might

break its promise again.

Vietjet has 30 Airbus A320S and A321S jets

on its fleet. In August, the airline's managing

director Luu Duc Khanh said the company

earned more than VND5.7 trillion ($253m) in

the first six months of this year, a 205 per

cent increase year-on-year.

According to Minister of Finance Dinh Tien

Dung, about 210 State-owned enterprises

will be equitised by the end of this year,

which is short of the target of 289.

PetroVietnam PetroVietnam Ca Mau Fertiliser Co Ltd

launched the initial public offering (IPO) on

November 12 with all of nearly 129 million

shares sold successfully, collecting VND1.58

trillion (US$70 million) which made it the

biggest IPO in 2014.

Vinatex Viet Nam National Textile and Garment

Group (Vinatex)

This IPO ranked second in value in 2014 took

place on September 22. Though only 90 per

cent of offered shares were sold successfully,

Vinatex still collected over VND1.2 trillion

($53 million).

Vietnam Airlines

Vietnam Airlines sold over 49 million shares

to the public on November 14, raising almost

VND1.1 trillion ($49 million). Two banks,

Vietcombank and Techcombank purchased

48.3 million shares, equivalent to nearly 99

per cent of the offered share number.

Vietnam's IPOs underwhelm this year by [Vietnamnews]

IPOS WITH VALUE OF OVER VND1 TRILLION

VIETNAM BUSINESS REVIEW VOL 50 *SPECIAL EDITION* 4

Commercial banks are planning to take over

finance companies to implement plans to

develop consumer credit.

The Military Bank’s (MB) buying of Song Da

Finance JSC (CDFC) has resulted in the

establishment of the MB Consumer Finance

Company Ltd, an MB subsidiary with

chartered capital of VND500 billion.

After the deal was approved by the MB

extraordinary shareholders’ meeting held on

October 6, 2015, MB has become the latest

commercial bank in the consumer finance

sector. MB jumped into the market segment

after realizing that the market has been

growing very rapidly in the last 10 years while

analysts predicted it would even see higher

growth rate - 20-30 percent until 2019.

Nguyen Minh Phong, a renowned economist,

said he can see the great development

potential of the consumer finance market

which is reflected in the establishment of a

lot of consumer credit divisions under banks

and the establishment of a series of finance

companies in recent months.

A lawyer noted that the consumer finance

boom could be attributed to

Document No 5342 dated in July 2014 which

requests credit institutions to increase

lending without required mortgaged assets.

Before the MB-SDFC deal wrapped up, the

market witnessed a series of other successful

transactions.

More recently, in July 2015, HD Bank and

Credit SaiSon launched HD SAISON Finance

into the market.

In 2013, HD Bank took over Viet Société

Générale and renamed it as HD Finance.

Later, in April 2015, with capital contribution

from Credit Saison, the strategic investor,

changed into HD SAISON Finance.

In June 2015, State Bank’s Governor released

a decision approving the deal of Maritime

Bank taking over Vinatex Finance and setting

up MSB Finance Company.

Just some days before that, the State Bank

also agreed on Techcombank’s deal of

buying the Vinachem Finance Company

(VCFC).

A series of similar deals were approved by

the State Bank in 2014, under which VP Bank

took over Vinacomin Finance Company

(CMF) to form up VBP FC with FE Credit

brand.

An analyst said he believes the competition

in the consumer credit market to finance

private purchases will be stiffer in the time to

come as more and more finance companies

have joined the market.

SHB is reportedly going to convene an

extraordinary shareholders’ meeting to

discuss the plan to admit Vinaconex Finance

Company (VVF), slated for October 24.

However, he commented that the market is

large enough for service providers as the

demand for consumer loans has been

increasing rapidly. “As Vietnamese income

has improved, they tend to spend more

money on cars, motorbikes and houses. And

that is why consumer finance is expanding,”

he said.

Commercial banks eye finance companies by [Infonet]

Credit growth expected near 20% next year

The State Bank of Viet Nam (SBV) yesterday

targeted credit growth between 18% and 20%

for next year, with possible adjustments

depending on the actual situation.

The central bank would ensure an active and

flexible monetary policy next year, in close co-

ordination with fiscal and other macro policies,

to meet the NA's targets of inflation at less

than 5%, and economic growth at roughly

6.7%.

In 2015, the central bank firstly targeted a

credit growth rate of 13%, but then adjusted it

between 15% and 18% to meet the rising

capital demands of the economy.

As lending rose 17.17% by December 21, the

central bank estimated the rate this year could

reach 18%, higher than that in the period

between 2011 and 2014.

Despite a deposit interest rate reduction of

roughly 0.2 to 0.5% per year this year, deposits

at banks still rose 13.59%, helping the banks

with good liquidity to supply the capital for the

economy.

VIETNAM BUSINESS REVIEW VOL 50 *SPECIAL EDITION* 5

International experts believe Vietnam and

Cambodia are highly desired destination

points for real estate investors. There are still

many attractive opportunities in emerging

markets, despite the economic slowdown

worldwide.

Why emerging markets, and not other

markets? Timo Schmidt from Savills

Vietnam, a real estate service provider, said

emerging markets can promise profitability

rates higher than developed markets, while

investment environments are relatively safe.

He went on to say that the growth in many

developed markets has been slowing down,

which means the expected profits may also

be lower. Meanwhile, in emerging markets

like Vietnam, the high economic growth rate

promises great opportunities for real estate

developers.

Is now the right time to pour money into real

estate projects in emerging markets? The

global economic uncertainties recently have

eroded investors’ confidence. However,

experts believe that Asia would serve as the

motive for the global growth and it would

still be the region with the highest growth

rate in the world.

Vietnam is one of good choices in Asia for

investors. It still can maintain the high

growth rate in the last year, according to

Stephen Wyatt from Jones Lang LaSalle

(JLL) Vietnam.

The Vietnamese stock market has grown by

12 percent in the last year, while the inflation

rate is curbed at a low level and the interest

rates stay stable at 8-9 percent. In general,

the investors’ optimism and confidence have

been improved.

What is the Vietnamese real estate market

like? Official reports all showed considerable

improvement in sales in recent months. The

market has warmed up after it bottomed out

in the fourth quarter of 2013.

Wyatt believes the current selling prices are

reasonable. A standard 70 sq meter

apartment with two bedrooms which is 10

minutes drive away from HCM City’s center,

sells for $1,600-2,000 per square meter. As

such, it is $112,000-140,000 for an

apartment.

If comparing prices in HCM City with other

cities in the region, there are attractive

investment deals.

The expert went on to say that investors can

expect a profit of 6-7 percent when investing

in houses and 9-11 percent when investing in

commercial real estate. However, the profits

would still depend on the locations, status of

apartments and buyers’ negotiations.

Thai Quang Trung, a senior executive of

Maybank Kim Eng Vietnam, a securities

company, predicted that the government of

Vietnam’s recent decision on allowing

foreigners to buy houses in Vietnam will

“provide one more stable source of capital

for the development of the real estate

market”.

Vietnam's retail sales of goods and services rose 9.5% this year, the largest increase since 2011, as low inflation and strong economic growth bolstered consumer confidence, data

from the General Statistics Office (GSO) revealed.

Sales were estimated at VND3,242 trillion ($148b). GSO attributed the significant rise in 2015 to the country's 0.63% CPI YOY rise, the lowest increase in the past 14 years. This means stable prices for several essential products and manufacturers and suppliers could sell their products without raising prices, which encouraged consumption.

Retail sales growth was also triggered by the increasing number of newly-opened supermarkets and convenience stores throughout the country, enhancing competition among product suppliers.

According to GSO, retail sales of goods, which account for 76% of the total sales, reached VND2,470 trillion ($112b), up 11% from last year.

Revenue in some sectors saw handsome increase. Food and foodstuffs saw an increased of 15%, household appliances rose 15%, garments and textiles up 13% and transport services are estimated to increase 10%.

Retail sa les of accomodation, restaurant and catering services reached VND372.2 trillion ($17b), accounting for 12% of the total revenue, posting a 5.2% YOY increase.

Nation's retail sales jump 9.5% this year by [VOV]

Confidence about VN's real estate market restored by [Investment Bridge]

VIETNAM BUSINESS REVIEW VOL 50 *SPECIAL EDITION* 6

BONUS INFO

FDI reaches $23b in 2015

FDI registered in Vietnam saw a YOY increase of 12.5% in 2015 to reach $22.76b.

Up to 2,013 projects with $15.58b in foreign investment were granted licences as of Dec-15, surging 26.8% in terms of projects, but plunging 0.4% in terms of capital over the same period last year. Meanwhile 814 existing projects were also allowed to increase their capital by $7.18b.

The manufacturing and processing sector attracted the lion's share of FDI at US$15.23 billion, accounting for about 67% of the nation's FDI. The production and distribution of electricity, gas, hot water and steam, and air conditioners ranked second with US$2.81 billion FDI or 12.4%, while real estate trading came third with US$2.39 billion or 10.5%.

Ho Chi Minh City beat 48 cities and provinces to become the most attractive destination for foreign investors. The city lured more than US$2.81 billion, comprising 18% of the total FDI registered in the country.

Vietnam absorbs $54.6b FDI from ASEAN nations

As many as 2,629 FDI projects worth $54.6b from 8 ASEAN member nations have operated in Vietnam as of June 2015.

The figures accounted for 14.2% of total FDI projects and 21.7% of total registered capital poured into the country, revealed the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

The mentioned ASEAN investors in the viewed period included Singapore, Malaysia, Thailand, Brunei, Indonesia, Philippines, Laos and Cambodia.

Most of capital from these nations has come to manufacturing-processing and real estate.

The real estate alone attracted 97 projects worth $16.6b, equal to 30.4% of total FDI investment.

Singapore was the leading investor in the field with 77 projects valuing $10b, followed by Malaysia with 16 projects worth $5.5b. The ASEAN nations’ real estate projects mostly centred in the developed hubs of Ho Chi Minh City and Hanoi. ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Diverse sources of foreign direct investment (FDI) are expected to help Vietnam create equilibrium in attracting FDI and ease reliance on certain sources.

South Korea is now the biggest foreign investor in Vietnam, according to Hoang Thi Chinh from the HCM City Economics University, As Korean businesses have been prospering in Vietnam, and Vietnam and Republic of Korea relations are now very good, they will surely expand investment.

Japanese investment in Vietnam, which now ranks the second in terms of scale, is also believed to increase sharply in the time to come, empowered by the good relations between the two countries and the Japanese appreciation about Vietnam as an investment site.

Meanwhile, the US can see long-term benefits in Vietnam, especially as Vietnam and the US are both members of the Trans Pacific Partnership Agreement (TPP).

Chinh noted that Vietnam will have great opportunities from South Korean, Japanese and US investments. There will be the investment projects, not in labor-intensive industries, but in fields which require high technologies and intelligence.

South Korean and Japanese investors may also pour money into agriculture, the sector which promises great potential but cannot be exploited well by Vietnamese businesses. Meanwhile, the US is likely to inject money into high-technology fields.

Agreeing with Chinh, chair of the HCM City Economics and Management Science Association Phuong Ngoc Thach, believes

that the presence of the world’s leading high-technology conglomerates from South Korea, Japan and the US like Microsoft, Intel and Samsung would help improve the quality of FDI flow to Vietnam.

However, Thach warned that while Vietnam expects benefits from FDI from the three big investors, it would face the high risk of being more heavily reliant on the investors.

Therefore, he believes that Vietnam should pay attention to diversifying FDI sources to minimize the reliance.

An analyst, when asked to comment how the Vietnam’s FDI panorama would change with the stronger presence of the three big investors in Vietnam, said many investors would create competition among them, which would help improve investment quality. The analyst went on to say that this would also help ease Vietnam’s reliance on China, which has territorial disputes with Vietnam.

“This will benefit Vietnam because this helps create an equilibrium situation in FDI attraction and helps Vietnam avoid reliance,” he said.

The analyst said that Vietnam should be cautious when receiving FDI from China as many Chinese invested projects had not brought the desired effects, while they caused social and environmental problems.

He also warned that Vietnamese businesses may be crushed by Korean, Japanese and American because of their low competitiveness.

Vietnam predicts 3 investment waves from South Korea, Japan and US by [Dat Viet]

VIETNAM BUSINESS REVIEW VOL 50 *SPECIAL EDITION* 7

Analysts say Vietnam’s economy is set to benefit from the 12 nation trade agreement called the Trans Pacific Partnership (TPP). With an appealing market for foreign investment and trade, and economic growth among the fastest in the Asia, the country is poised to become a competitor to China. Vietnam, as a middle income country, stands out from the TPP group that together account for 40% of global output.

“The question is how much benefit they can derive from — it’s not whether they can derive benefit. We have estimates which would show that cumulatively by 2030 it would add about 8% to VN’s GDP— from the participation in TPP,” said Sandeep Mahajan.

Among the key industries to gain from TPP membership include Vietnam’s textiles and garments as well as global supply chain operators, such as in telecommunications, able to take advantage of Vietnam’s close proximity to regional economic giant China.

But Vietnamese commentators hold fears for other economic sectors such as agriculture, seen as vulnerable from competition from major commodity exporters such as Australia. Analysts say the gains from the

TPP will add further momentum to a generally positive economic outlook.

Independent economic consultancy, Capital Economics, has called Vietnam one of emerging Asia’s “few bright spots” and where economic growth has accelerated to over six per cent in recent years.

New foreign investment into Vietnam has also played a key role, esp by producers

seeking an alternative to rising costs in neighboring China.

The Asian Development Bank (ADB) said that in 2014 FDI commitments rose to $15.6b with some $4.6b committed to existing foreign funded projects. The ADB is already forecasting Vietnam to report a better than six per cent growth rate in 2016, making it one of the leading economic performers in the Asia Pacific region.

The export revenue of agro-forestry-fishery products topped $27.5b in 2012, a YOY expansion of 2.72% in a year which the nation recorded a 5.03% growth rate, proving the strength of the agricultural sector in an economy that depends on agriculture like Vietnam.

Nguyen Duy Khien, head of the American Market Department under the Ministry of Industry and Trade, pointed out that many of Vietnam's agricultural exports already enjoy a zero percent tariff. In the US market, a party to TPP negotiations, Vietnamese coffee, seafood, fruit and vegetables have benefited from the zero tax rate. The proposed signing of TPP would create sustainable development for exports of

Vietnam’s agricultural products, he added.

Vietnam is among the 15 largest exporters of agricultural products to the US market. Vietnam’s agricultural products are widely accepted by US consumers for meeting local requirements on food safety. The US imports Vietnamese cashew nuts, coffee, shrimp, tra fish, pepper, rubber, and wood products. To ensure the continuation of this trade, food safety is an important initial criterion for Vietnam’s agricultural products that cannot be overlooked.

According to economist Pham Chi Lan, it is likely that Vietnam’s agricultural exports will increase sharply once tariffs are removed. She noted that since the signing of the Vietnam-US Bilateral Agreement and Vietnam’s accession to the World Trade Organisation, its export revenue to the US and Japan has soared dramatically. A case in point is the export of tra fish to the US. Its export value jumped from a few million dollars to billions after these agreements,

even with many tariffs imposed on the product.

However, she also warned that gains and losses are always intertwined.

According the Vietnam Chamber of Commerce and Industry, participating countries under the TPP will work together to mitigate all risks in agricultural production and develop a common basis for risk assessment.

For that reason, production costs will be greatly diminished, as currently most of Vietnam's agricultural export products must be certified, bearing the certificate of plant quarantine from the Plant Protection Department or the food safety certification.

Intense competition after joining the TPP will force Vietnam to make positive changes to its agricultural products to gain a stronger foothold in international market.

World Bank sees Vietnam as "Winner" from TPP by [VOA News]

TPP - a golden opportunity for Vietnamese agriculture

by [Nhan Dan Online]

VIETNAM BUSINESS REVIEW VOL 50 *SPECIAL EDITION* 8

LAWS TAKE EFFECT IN 2016

Law on Social Insurance (revised)

The revised Law on Social Insurance aims to improve social insurance regimes and policies and ensure quality in the payment of social insurance premiums and enjoyment of social insurance benefits.

It is noteworthy that employees may obtain information on their payment of social insurance premiums from employers every six months. Employees may request employers and social insurance agencies to provide information on payment of social insurance premiums and enjoyment of social benefits.

Law on Special Consumption Tax (revised)

The Law raises special consumption tax on cigarettes and cigars from the current 65% to 70% from January 1, 2016 and to 75% from January 1, 2019.

Tax rate for drinks with an alcoholic volume less than 20% shall be 30% from January 1, 2016 and increased to 35% since January 1, 2018.

For drinks with alcoholic volume of at least 20%, the tax rate shall be increased by 5% to 55% from January 1, 2016 and 65% from January 1, 2018.

Logistics must ensure conditions and product quality from factory to end-consumers. Future logistics must certainly increase visibility into the status of goods in real time (anytime, anywhere) by using big data and real-time tracking applications.

Julien Brun, General Manager of CEL Consulting, said the current logistics market is highly fragmented. Thousands of logistics services companies are now currently providing only a few simple logistics operations and cannot generate added value for logistics chains. A supply chain is made effective or ineffective depending on connections of different points and operations on strings, and also depends heavily on interface.

He cited that in ice cream chain in Vietnam, shipping companies only care about how to keep their vehicles refrigerated en route, cold storage companies only care about products inside their facilities, and none is responsible for keeping it cold when it is conveyed from cold storage facilities to vehicles or from vehicles to cold storage facilities. As a result, product quality is affected.

In major cities like HCM City, logistics challenges come from more and more products on the market, more and more points of sale and distribution agents in operation, smaller and smaller order values, and more and more vehicles of various scales in operation. Major challenges of current logistics operations are traffic congestions.

Two vital factors for good governance in any particular logistics are the storage of goods and the circulation of goods. Three top criteria in logistics management in general are rapid speed, guaranteed trust and low cost. Thus, to facilitate logistics development in Vietnam, it is necessary to develop core elements to succeed in both hardware and software. Core elements for hardware success are logistics infrastructure, including developing and consolidating port system capacity to receive bigger ships and handling and transporting equipment at ports. Other tasks include expanding the capacity of ports and enhancing the effectiveness of port operations.

Core elements for software success comprise clear and rapid clearance. Singapore is a leading port operator with a lot of effective operation and clearance processes for us to learn. In addition, exporters should also create added values for their products rather than sell raw materials or simply processed products as now. Then, logistics will add values to imports and exports.

In the coming time, logistics needs to ensure conditions and product quality from factory to end-consumers. Future logistics must certainly increase visibility into the status of goods in real time (anytime, anywhere) by using big data and real-time tracking applications. Packaging will also need innovative solutions to protect goods during the time of logistics operations.

Challenges for Vietnam logistics market in 2016 by [Vietnam Chamber of Commerce and Industry]

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