VIETNAM BUSINESS REVIEW | FINANCE 1

VIETNAM

BUSINESS REVIEW

Highlight

“BW Industrial” – Vietnam’s largest for-rent industrial & logistics developer

Vol 18, May 16th 2018 What’s in it today?

FINANCE

Vietnam wins rating upgrade from Fitch

Crypto exchange Huobi plans to enter Vietnam’s

blockchain market

Banks eye consumer finance for bigger share

Fintechs, with technology and big data, jump into lending

market

RETAIL

Convenience stores in Vietnam quadruple in 6 years

Ringer Hut opening in Vietnam

Mumuso Vietnam accused of misleading customers

Jollibee Foods eyes Tim Ho Wan franchise

Vietnam could be Lotte Mart’s next target for

withdrawal after China

STARTUP

Vietnam Startup Wheel 6th launched for entrepreneurs

at all ages

Young startup founders dream of clean Vietnamese

veggie powders

ECOMMERCE

E-commerce giants struggle to find profit in Vietnamese

market

Da Nang launches e-commerce website

LOGISTICS

GrabFood delivery kicks off in Vietnam

Launching “BW Industrial”-VN largest for-rent

industrial & logistics developer

Project launch showcases potential of Vietnam’s trade

and logistics sectors

INVESTMENT

Overseas investment: Vietnam exploring new markets

Investors weary, wait for law on PPP

VIETNAM BUSINESS REVIEW | FINANCE 1

FINANCE

Vietnam wins rating upgrade from Fitch

Vietnam won a sovereign rating upgrade from Fitch Ratings on rising foreign-exchange reserves and

strong economic growth, putting the nation closer to investment grade. Bonds and stocks rose.

The rating on the nation’s long-term, foreign currency-denominated debt was raised one level to BB,

with a stable outlook, Fitch said in a statement on Tuesday. The upgrade puts Vietnam at the second-

highest speculative grade and on par with Costa Rica.

Here are other comments from Fitch:

Vietnam’s banking sector remains structurally weak and weighs heavily on the sovereign rating

Non-performing loans remain under-reported and true asset quality is likely to be weaker than

stated

A sustained rapid credit growth poses a risk to financial stability in the medium-term

Government guarantees for state-owned entities and potential banking sector recapitalization

costs continue to weigh on Vietnam’s public finances

Crypto exchange Huobi plans to enter Vietnam’s blockchain market

Huobi Pro, the world fourth largest crypto exchange, plans to foray into Vietnam’s blockchain market

and also explore investments and partnerships in Asia. The crypto exchange platform is planning to

support enterprises in the development of blockchain technology in Vietnam.

In China, the Huobi Group recently announced a partnership with the Tianya Community Network,

setting up a $1b fund to invest into startups using blockchain technology.

In Vietnam, Huobi Pro is actively seeking opportunities and building local team to expand its business in

the near future.

Founded in 2013, Huobi is currently the world’s fourth-largest crypto-exchange by trade volume,

according to data from CoinMarketCap, trading about $1.2b in the past 24 hours to press time.

Last year, Huobi Group and SBI Group (formerly Softbank Investment Group) reached a strategic

partnership agreement to jointly develop digital assets financial services in Asia. The digital assets

exchange is said to provide by both SBI Virtual Currencies and Huobi Japan in early this year. The move

will see Huobi renew its crypto currency trading business with the launch of two exchanges in Japan.

Banks eye consumer finance for bigger share

Several banks are keen to establish consumer finance arms to grab a bigger share of a market that is

expected to reach VND1,000 trillion ($4.38b) by 2020 and grow at 29% annually.

Orient Commercial Bank (OCB) plans to either establish a wholly-owned subsidiary with a charter capital

of VND500 billion ($22m) or acquire at least 70% in an existing finance company.

VIETNAM BUSINESS REVIEW | FINANCE 2

Asia Commercial Bank (ACB) too plans to set up a financial company with a charter capital of VND500

billion. ACB wanted to acquire PTFinance, but last February SeABank bought it for VND710 billion.

After closing deals to buy finance companies, several banks have quickly looked for foreign strategic

partners. For instance, Techcombank sold Techcombank Finance Company, which it had acquired in

2015, to the Republic of Korea’s Lotte Card for VND1.7 trillion.

Prudential has reached agreement to sell Prudential Vietnam Finance Company to Shinhan Card, a

subsidiary of the RoK’s Shinhan Financial Group, for nearly $151m. HDBank sold 49% of its stake in

HDFinance to Japan’s Credit Saison.

Among consumer finance companies owned by lenders and not yet sold to foreign firms is VPBank’s FE

Credit. Last year FE Credit accounted for 51% of the bank’s profit, the main reason why VPBank is in no

rush to sell it to foreign companies.

Maritime Bank has also remained silent about looking for a foreign partner since acquiring Vietnam

Textile and Garment Finance JSC in 2015.

Fintechs, with technology and big data, jump into lending market

Commercial banks are becoming digitalized, while fintechs, with great advantages in technology, have

joined the consumer lending market.

Vietnam is one of the countries with the highest consumption/GDP ratio in Asia. The total consumption

of Vietnamese individuals and households (2015) was $127.7b & the consumption/GDP ratio was 67%

while the figure was 65% in UK, 54% in Germany & 59% in Japan.

According to the National Finance Supervisory Council, outstanding consumer loans by the end of

November 2017 had increased by 59%, compared with the end of 2016, which was much higher than

the total credit growth rate of 15.3%.

The consumer credit growth in 2017 continued from two groups of suppliers – commercial banks and

finance companies. While the former focuses on lending with mortgaged assets, lending via credit cards

and overdrafting, the latter lends to fund cars, motorbikes and household appliances.

Finance companies have been stepping up lending in cash and most of the loans do not require

collateral. Some finance companies even do not require borrowers to prove their incomes and debt

payment capability.

Finance companies provide 12% of total consumer loans, while official consumer credit only serves 30%

of customers who have demand.

Small loans and high risks create a barrier which prevents borrowers and lenders from meeting.

However, fintechs, or mobile payments, could break the barrier. Fintechs are expected to be the biggest

rival of commercial banks and finance companies in the near future.

VIETNAM BUSINESS REVIEW | E-COMMERCE 3

E-COMMERCE

E-commerce giants struggle to find profit in Vietnamese market

Some companies have been forced to shut down due to prolonged losses. Multiple online retailers in

Vietnam have been struggling to gain profits for years due to high operational costs in a competitive

market.

Tiki.vn recently reported a VND322 billion ($14m) loss in two years. Lazada Group said that it has lost

$334m in 2015 the Southeast Asia market, including Vietnam. This lost is double what it posted in 2014.

Some local e-commerce companies like Lingo.vn, Deca.vn and Beyeu.com have also been forced to shut

down due to prolonged losses.

Challenges for online retailers

According to experts, e-commerce is an industry which requires a long time to recover capital and gain

profit, therefore these losses are understandable. Big brands in the field such as U.S.-based Amazon and

Alibaba has to go for 10 years before having profit.

Operating cost, esp logistics costs, is one of the main reasons for the losses. As large e-

commerce firms often require massive warehouses covering thousands of square meters and hundreds

of staff to work in them, logistics costs account for 60-70% of online retailers’ revenues.

This enormous cost can be seen from the case of Tiki and Lazada Vietnam, each has a storage of over

4,000 m2 (about 1 acres) with 300 staff in HCMC. It is estimated that the operating cost of one of these

storages is VND1 billion (about $44,000) a month. With 3 warehouses in operation, the 2 companies

spend about $2m a year.

Marketing also plays a part in the high costs of e-commerce companies in Vietnam. When

entering the market, Lazada Vietnam invested heavily in television and online advertising to attract

users and gain market share. This company used to spend up to $2m per month for advertising.

The popularity of shopping on social networks such as Facebook or Zalo is also creating

challenges for big online retailers. “There is an unbalanced competition between e-commerce giants

such as Lazada, Tiki and Shopee with social network sellers,” said Pham Thai Binh, head of retails at

property consultancy Savills HCMC.

As businesses on social networks don’t have to pay high costs of investment, item price range is lower

which in turn attracts the majority of Vietnamese people, Binh said. On the other hand, famous brands

have to invest a great deal in terms of staff, operating system and other relating costs, he added.

As Vietnamese has a habit of physically “touching” a product, they often surf the Internet for

prices without actually ordering from the online retailers. The lack of information and customer service

tools also plays apart in the problem.

VIETNAM BUSINESS REVIEW | E-COMMERCE 4

To compete in the market, retail giants in Vietnam are under pressure of price competition which leads

to a loss of profit. Under pressure from investors, many businesses sometimes accept to sell 10 or 20%

below market price, local media said.

Potential market

Despite those difficulties, experts believe that there is still great potential for e-commerce in Vietnam in

the future.

In a survey of about 1,000 participants conducted by CBRE Vietnam:

25% said that they will reduce the frequency of shopping at stores.

50% participants said they will shop online more in the future.

In the annual survey of Vietnam’s Business Studies and Assistance Center (BSA), the number of people

shopping online has tripled from 0.9% in last year to 2.7% this year. As young people start to participate

more in online shopping, e-commerce is a potential area for retailers to exploit, which will bring many

benefits to customers.

Da Nang launches e-commerce website

The central city officially launched the e-trade website– Danangtrade.com.vn/Danangtrade.gov.vn – in

connection with the local businesses community in the city on Wednesday.

The debut of the e-trade website will help

local businesses and residents boost

online commerce among local enterprises

and foreign partners.

Deputy director of the municipal industry

and trade department, Nguyen Ha Bac

said the e-trade wesbite will support local

businesses encorporate updated

technology into their structure, as well as

assist them in procuring material, finance,

logistics, consultancy, and human resources training from global partners. It will also boost online sales

promotion and makerting among small and medium-sized enterprises.

According to the Viet Nam e-Commerce Association (VECOM), the country currently has 53.86 million

internet users, projected to rise to 59.48 million in 2022 – 60 per cent of population.

A source from Nielsen, a leading global information & measurement company, said that 55 per cent of

Vietnamese consumers are connected to the internet, or had the means to shop online. It said that 35.8

million Vietnamese users are present on social networks, and they spend an average of 24.7 hours per

week online.

VIETNAM BUSINESS REVIEW | START-UP 5

START-UP

Vietnam Startup Wheel 6th launched for entrepreneurs at all ages

The sixth Vietnam Startup Wheel in 2018 was launched on May 15 nationwide for all individuals, groups

and startup business founders residing in Vietnam regardless of their age.

According to the organising board, contestants can submit their

startup ideas, products, services or technologies to the contest from

now to the end of May. The final and awards ceremony will be held

in August this year.

The annual contest has been the largest playground for Vietnam’s

startup community, while helping them conquer important targets

in their development strategy, introduce their products to investors

and commercialise their products.

The contest aims to connect the startup ecosystem in the country, nurture startups and encourage the

support of partners for young enterprises.

Founded by HCMC Business Startup Support Centre and Young Businesspeople Association under the

Vietnam Youth Federation of HCMC, Startup Wheel was first launched in 2013 and has become one of

the biggest events for the startup community.

Last year, the contest drew more than 30,000 participants with 767 ideas and projects.

Young startup founders dream of clean Vietnamese veggie powders

From everyday meals to a simple yet refreshing glass of pennywort juice, food sanitation has always

been a major issue in Vietnam. Now, young innovators are seeking ways to bring clean food to the

country’s kitchen tables.

At a vast pennywort farm in HCMC, two young entrepreneurs develop clean and safe veggie powders.

It took founders Nguyen Hong Bac and Nguyen Kong Tra 2 years of sweat and elbow grease to plan and

develop their specialized blend, but they believe their product will make waves in the local market.

Stepping into the unknown

Bac and Tra first met at an agricultural and farming workshop, where they decided to put their passion

for agriculture to the test by launching their company.

It was not long, however, until the two realized that they were in way over their heads.

Bac and Tra previously worked as a mechanic while Tra was an accounting and finance major. The

amount of agriculture experience between the two of them was sparse.

VIETNAM BUSINESS REVIEW | START-UP 6

To balance their inexperience, the two began seeking guidance at the Hi-Tech Business Incubator Center

in Cu Chi District, on the outskirts of HCMC, where they participated in invaluable workshops that would

introduce them to a world of agriculture.

It was at these workshops that Bac and Tra decided to give clean farming a shot.

Realizing his meager savings of VND120m ($5,274) was nowhere near enough to compete with

international matcha-refining giants from Japan, he instead opted to produce pennywort – a plant both

easy to cultivate and familiar to Vietnamese across the country.

In Vietnam, Chau Thanh District in the Mekong Delta province of Tien Giang is known as a main hub for

cultivating pennywort.

There, Bac was able to find suppliers and negotiate a deal, establishing himself as a reputable partner

with the local farmers. Meanwhile, Tra traveled back and forth between Tien Giang and HCMC, scouring

the local market for investment opportunities.

As the duo’s reputation grew, local pennywort farmers agreed to grow their crops without the aid of

chemicals. In exchange, Bac and Tra would guarantee year-round purchases without fear of stagnancy.

Powdered veggie, Vietnamese blend

The refining process is meticulous to the slightest detail. After the harvest, the pennywort is rinsed and

freeze-dried to exterminate any bacteria. The process typically lasts between 24 and 36 hours.

Afterwards, the pennywort is transferred to the grinding stage.

Nguyen Thi Dieu Hang, vice-director of the HCMC Business Startup Support Center, seems to think Bac

and Tra are onto something.

Bac confessed that the first few months after their product launched was a great thrill.

As their pennywort powder is unprecedented, they had no choice but to look to the reactions from the

masses to calculate their next move.

Quality control is their company’s top priority. They are constantly working with their partners to verify

there is no chemical involved in the growing process.

Running parallel with their pennywort powder, the two are also looking to expand their business with

four more blends from green tea leaves, Vietnamese perilla, fish mint, and Moringa Oleifera.

Their product comes in 100g packages, enough to make 50-200ml of pennywort juice if the infusion

ratio is 1:1.

Additionally, the powder can function as a beauty product if used as a face mask for cell recovery and

scar diluting purposes.

VIETNAM BUSINESS REVIEW | RETAIL 7

RETAIL

Convenience stores in Vietnam quadruple in 6 years

The number of convenience stores in Vietnam has quadrupled over the last six years, according to global

data analytics firm Nielsen released at a press conference on Thursday.

Convenience stores in Vietnam have become popular destinations for young consumers to shop and

hang out, as the stores provide them with an air-conditioned environment, well-organized shelves and

seating areas, high quality products and, in some stores, free Wi-Fi. It is also easier to get licenses for

stores under 500 square meters, which is why retailers have been expanding to gain market share.

“Thanks to the rapid increase in the number of stores,

modern trade has a much higher growth rate than

traditional trade in Vietnam,” said Nielsen’s executive

director Nguyen Anh Dung, as heard in the press

release.

The number of modern urban trade stores in Vietnam

increased by 10.7% on-year during Q1 2018,

compared to a decrease of 2.6% for traditional stores,

according to Nielsen’s Market Pulse report, which

looked at 31 fast-moving consumer goods categories

in Vietnam.

Dung also said that the number of stores which focus on beauty and health products has doubled over

the last two years in Vietnam.

As of the end of March, HCMC has over 1,800 convenience stores and small-scale supermarkets, an

increase of 5.1% compared to last year.

Vietnam is forecast to be the fastest-growing convenience store market in Asia by 2021 with a growth

rate of 37.4%, according to IGD, followed by the Philippines and Indonesia.

Ringer Hut opening in Vietnam

Japanese fast-food brand Ringer Hut will arrive in Vietnam in the next four months.

Vietnamese instant-noodle manufacturer AceCook has

signed a franchise agreement to run the chain in Vietnam.

Ringer Hut Vietnam will serve the original Japanese menu

including its Nagasaki Champon and Nagasaki Sara Udon.

Established in 1962, Ringer Hut has more than 750

restaurants, with Vietnam being its 15th market.

VIETNAM BUSINESS REVIEW | RETAIL 8

Mumuso Vietnam accused of misleading customers

Fashion and lifestyle goods retailer Mumuso Vietnam has been accused of selling Chinese goods as

Korean products.

The allegation surfaced on South Korean SBS News, which reported that the Shanghai-based company

has been duping customers into thinking it is a South Korean store chain selling South Korean goods. The

news channel also said Mumuso’s registered office in Seoul could not be found.

Legal representatives of Mumuso Vietnam say the company registered its brand under the protection of

the Korean Intellectual Property Office without any production activities there. It also has a branch in

Shanghai, redesignated as its headquarters.

Mumuso authorised its Shanghai office to take over its business activities, including production and

brand management.

Mumuso’s business in Vietnam is under a franchise contract.

He admits that no Mumuso merchandise has undergone quality inspections in Korea, but is imported

directly from China. “Our products meet standards and regulations set by the Drug Administration of

Vietnam and the Department for Food Safety and Hygiene under the Ministry of Health.”

Mumuso Vietnam has 27 outlets, mostly in Hanoi & HCMC. The stores sell a wide range of goods, from

cosmetics to household items, all labeled as “Mumuso – Korea”, with product information mainly

written in Korean and Chinese, and prices ranging from VND22,000 ($1). All come with a “Made in

China” tag.

The Mumuso retail concept is loosely based on that of another Chinese company Miniso, which has

drawn criticism for marketing its products as Japanese. Meanwhile, Mumuso Vietnam has announced it

intends to increase the number of its outlets in HCMC & Hanoi to 80.

Jollibee Foods eyes Tim Ho Wan franchise

Jollibee Foods Corp says it will invest S$45m (PHP1.74 billion/$33.5m) in a private equity fund to acquire

the master franchise of Tim Ho Wan in the Asia Pacific.

The Filipino fast-food giant says it will account for 45% of total committed investment in Titan Dining,

worth S$100m. Jollibee says Titan has a binding agreement to acquire 100% of the Asia-Pacific master

franchise holder of the Tim Ho Wan brand, Tim Ho Wan (THWPL) and its affiliate Dim Sum. The Chinese

dimsum restaurant chain has 45 locations in Australia, China, Hong Kong, Malaysia, Singapore, Taiwan,

Thailand, the Philippines and Vietnam.

As well as bringing “very healthy financial returns” to Jollibee, according to JFC chairman Tony Tan

Caktiong the deal will combine Tim Ho Wan’s Michelin-star barbecue pork buns with Jollibee’s stable of

Chinese restaurants: Chowking in the Philippines, and Hong Zhuang Yuan and Yonghe King in China. The

three Chinese restaurants accounted for 23% of systemwide sales last year, says Jollibee.

VIETNAM BUSINESS REVIEW | RETAIL 9

Vietnam could be Lotte Mart’s next target for withdrawal after China

Lotte Shopping Holdings Hong Kong Co. has just sold most of its outlets in China to local companies for

over $505m.

Selling 100% stakes of Chinese units to Liqun Group for $272.7m. Liqun is expected to buy 53

outlets, with the remainder likely to be shuttered.

Selling 21 Lotte Mart stores in Beijing to local distributor Wumei Holdings Inc. They include 10

discount stores and 11 supermarkets in Beijing at the total price of about $232.6m

Will Vietnam be the next target to cut ends for this group after ten years of consecutive losses?

Lotte Mart is withdrawing from China after 11

years of operations in the country. In 2007, Lotte

Mart entered the Chinese market by acquiring

eight Macro stores from a Dutch distributor.

However, in last February, the Chinese government

suspended 87 Lotte Mart stores in China.

Last year, Lotte M art's sales in China decreased by

76.9% to $0.24b and its operating loss doubled to

$0.25b. If losses from sales and wages are included,

Lotte Mart’s cumulative loss would exceed $1b in

this period.

Meanwhile, another Lotte Group subsidiary, Lotte Vietnam Shopping JSC operating the Lotte Mart

retailer chain in Vietnam, has also been reporting consecutive losses.

Lotte Vietnam Shopping was granted its investment certificate at the end of 2006, was put into

operation in 2007, and started to earn money in 2008 with the average revenue growth of around 50%

annually. Despite hundred-million-dollar annual revenues, the total losses of Lotte Vietnam Shopping

are around $100mafter a decade in Vietnam.

After withdrawing from China, what are Lotte Group’s designs for its Southeast Asian market? Will the

group also leave Vietnam after ten years of losses or pour at least part of the $505m gained from the

Chinese exit into Vietnam, where it only has 13 trade centres?

VIETNAM BUSINESS REVIEW | LOGISTICS 10

LOGISTICS

GrabFood delivery kicks off in Vietnam

Grab Vietnam is the first ride-hailing service in Southeast Asia to expand to GrabFood deliveries.

Starting today in HCMC, the service enables consumers to order

food from nearby restaurants that have signed up to the new

app. Merchant partners have an online storefront, and there is

no minimum order requirement. The app also features

promotions and recommendations.

The roll-out follows in such cities as Hanoi, Danang, Ha Long and

Nha Trang.

“Food delivery is a natural extension of our transport offerings,” says Grab Vietnam country head Jerry

Lim. “Each day,ms of people in Southeast Asia rely on ride-hailing services, while food-delivery services

save them time.”

Meanwhile, in Indonesia and Singapore, the company will also add UberEats, which runs until end of this

month, to its business.

GrabFood was launched in Jakarta in 2016, with Bangkok having a beta test last year. It is also currently

in beta phase within the Singapore CBD.

Launching “BW Industrial”-VN largest for-rent industrial & logistics developer

Warburg Pincus, leading global private equity firm focused on growth investing, and Becamex IDC Corp,

the largest industrial real estate developer in Vietnam, announced today the official launch of their joint

venture BW Industrial Development Joint Stock Company ("BW Industrial") in Vietnam. With over

2,000,000 m2 of projects under development and initial investment of over $200m, BW Industrial is the

largest 'for-rent' industrial and logistics developer in Vietnam.

BW Industrial was seeded with 8 projects across 5 cities in each of Vietnam's strategic industrial hubs in

the North and South, including Binh Duong, Dong Nai, Hai Phong, Hai Duong and Bac Ninh. The joint

venture combines unparalleled strengths and experience of its joint venture partners, and is committed

to build the leading national real estate platform and 'for-rent' industrial and logistics developer.

As Vietnamese enterprises steadily improve the technical expertise, there is tremendous opportunity for

firms like BW Industrial to develop and provide the much-needed industrial properties to support such

initiatives, said Mr C.K. Tong, CEO of BW Industrial. With a best-in-class management team, sizable land

holdings and a strong pipeline of future projects, BW Industrial aims to satisfy the rising demand for

modern logistics warehouses, build-to-suit and ready-built factories in addition to other industrial

related products across all key industrial zones, a catalyst in driving Vietnams economic growth.

According to statistics of the Ministry of Industry and Trade (MoIT), the processing and manufacturing

industry continues to be the dominant force in the industrial sector. In 2017, its exports rose by 22.4% to

VIETNAM BUSINESS REVIEW | LOGISTICS 11

$173.5b, accounting for more than 81% of the country's total export volume. Among this, export of

mobile phones and spare parts reached $45.1b, up 31.4% from the previous year and was the largest

contributor of exported goods. Export of computers and electronics was $25.9b, up 36.5% from 2016.

Mr. Nguyen Van Hung, Chairman of Becamex, commented, "BW Industrial's focus is to support the

sustainable development of Vietnam's industrial upgrade and become a critical player in the global

supply chain. With an objective of providing value added services to key sectors through our joint

venture platform, BW Industrial is committed to provide first-class, modern real estate solutions for

investors and industries such as auto, electronics, leather shoes, garments and textiles. "

BW Industrial's plan is to create the logistics and industrial platform of choice for leading MNCs, 3PLs

and e-commerce companies, according to Mr. Jeffrey Perlman, Managing Director and Head of

Southeast Asia of Warburg Pincus. "With a sizable population of nearly 100m people and an increasingly

diversified economy, manufacturing and domestic consumption have become the central areas of

growth for Vietnam. We feel that our timing is just right to tap into these growth opportunities with the

goal of taking Vietnam's industrial and logistics value chain to the next level," commented Mr. Perlman.

Project launch showcases potential of Vietnam’s trade and logistics sectors

The World Bank and the Ministry of Transport hosted a workshop on May 15 to launch the

implementation of the Vietnam Logistics Statistical System Project and highlight the importance of

strengthening the transport and logistics sectors to boost trade competitiveness.

Designed to establish a national system for collecting, processing and publishing transport and trade

logistics statistics on an annual basis, the project is part of the World Bank’s support to the Government

of Vietnam’s integrated program for trade facilitation and logistics development.

Despite substantial increases in public investment in infrastructure, trade-related infrastructure has not

maintained pace with the growth of exports. Weak infrastructure and transport links – especially weak

corridors connecting key value chains to main international gateways, as well as high transport costs,

poor quality of transport, and logistics services, are constraining trade potential.

Financed by the multi-donor Trust Fund for Statistical Capacity Building (TFSCB) managed by the World

Bank, the project also provides technical support for project implementation, through a partnership

between the World Bank, the International Transport Forum, the Organization for Economic

Cooperation and Development (OECD), and the Australia-World Bank Partnership Program.

Also marking the signing of the TFSCB grant agreement, the workshop showcased international practices

and key components of a good logistics statistical system and discussed the importance of reliable

transport and logistics data in Vietnam.

The data will be used for strategic planning purposes, and to formulate and monitor the implementation

of policies related to transport infrastructure as well as trade and logistics development. It will also help

logistics firms to access reliable data for their business development.

VIETNAM BUSINESS REVIEW | INVESTMENT 12

INVESTMENT

Overseas investment: Vietnam exploring new markets

Besides traditional markets like Laos, Cambodia, and Myanmar, Vietnamese companies have begun

searching for new markets for overseas investment.

Reportedly, Cuba has risen among the top three countries receiving Vietnamese investment.

In general, in the first 4 months of this year, Vietnamese companies invested a total of $153.6m

overseas. This sum included $129m in newly-registered capital and $24.64m in added capital. When

divided into individual markets, Laos takes first place with $80.12m, taking up 52.2% of the total. The

runner-ups are Cambodia and Cuba, with $25.9m and $19.9m, respectively.

The nearly $20m poured into Cuba is not a big figure, but it shows that VN companies are ready to

invest in a market halfway across the Earth. Projects in this new market are:

PetroVietnam Exploration Production Corporation (PVEP)’s oil and gas exploration project

The diaper manufacturing and the washing powder manufacturing projects by Thai Binh

Corporation in Mariel Special Zone.

A five-star hotel and offices project for lease invested by Hanel and a Cuban partner

Vico’s washing powder manufacturing project.

Viglacera is aiming for a joint venture in ceramic manufacturing

Hung Thang Co. is planning to manufacture bottled water.

Investors weary, wait for law on PPP

Many investors are complaining that they are in a dilemma because of the law on PPP investments. They

plan to make investments after the legal framework becomes clear. However, the law has yet to be

enacted.

According to MPI (Ministry of Planning and Investment), Vietnam needs $25b a year in the 2016-2020

period to develop infrastructure, a two-fold increase from 5 years ago. However, no BOT project has

been implemented in the last 2 years, simply because investors are still awaiting the law.

In fact, PPP is covered by many laws, including the Law on State Budget, the Law on Public Debt

Management, Investment Law, Public Investment Law, Enterprise Law, Construction Law and

others. Meanwhile, the laws focus on regulating public and private investment activities, but do not take

into account the special characteristics of PPP investment.

In 2015, the government issued Decree 15 on PPP investments and Decree 30 on implementation of the

Bidding Law. 8 legal documents were issued that clarified the provisions of the two decrees. However,

no project was implemented in accordance with the two decrees because few investors can satisfy the

requirements stipulated in Decree 15. In the latest news, MPI said at a workshop in March that the draft

PPP law would be submitted to the government by 2020. This means that the law would not be enacted

prior to the end of 2021.

VIETNAM BUSINESS REVIEW | INVESTMENT 13

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