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Vietnam Business Review

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Vol 49, December 23rd 2015

BUSINESS REVIEW VIETNAM

MOIT predicts new wave of investment in logistics sector

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INSIDE THIS ISSUE

Highlights

How will the stock market perform in 2016?

Vietnam opens e-market for agro-forestry-fishery products

Five giant companies weighed down with foreign debt

Suntory helps improve water awareness of over 1,600 primary school students

Economy

Vietnamese economy on the rise according to S&P report

Garment exports to US near $10b

Banks & Finance

Dong stable after FED rate hike

Blue chips suffer from US fears

Investment

Vietnam to up FDI in 2016

Investors leave e-commerce quitely

Techcom starts first real estate investment trust in VIetnam

Enterprises

Japanese pearl farmer to raise pearl in Phu Quoc

French retailer Casino Group to sell Big C chain in Vietnam to cut debt

Locals link to Samsung chain

Market & Prices

HCMC to promote sales of E5 bio-fuel

Hired Santa Claus services make big money in Hanoi

Legal Updates

Decree issued to facilitate foreign investors' operation in Vietnam

Provisions on compulsory insurance in the construction domain



1

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ECONOMY

Vietnamese economy on the

rise according to S&P report

VNS - Viet Nam's economy has

started to thrive, while most Asian

economies are slowing down and

moving towards consumer-led

growth, announced

Standard&Poor's (S&P).

According to S&P, four years ago,

the Vietnamese economy was

struggling with non-performing

loans as the Government focused

on feeding credit to its State-

owned enterprises.

However, since then, the country

has attracted sufficient foreign

direct investment (FDI) to drive

strong export growth despite

sluggish demand and falling global

prices.

Electronics exports have been

growing at almost 33% per year for

three years, making up 18-29% of

the total exports. Meanwhile,

garments and textiles have stayed

at some 20% of all exports.

Overall, the FDI doubled from 2012

to 2014, compared with the

previous three years. Japan and

the Republic of Korea each

contributed some 22%; Singapore,

16%; mainland China and Hong

Kong, 13%.

Australia's own trade with Viet Nam

soared 35% in 2014 to A$8 billion

(US$5.7 billion).

The size of the workforce in Viet

Nam, which has a population of 91

million, is an important element,

S&P said, attributing the

productivity to the provision of new

cutting-edge equipment.

The World Bank estimated that Viet

Nam's working-age population will

keep growing into 2030, whereas

China's is starting to decline.

According to the Singapore-based

business analysis agency IMA Asia,

Viet Nam is set to gain more from

the Trans-Pacific Partnership (TPP)

agreement than any of the other

11 members through lower import

tariffs on its branded exports.

Viet Nam is likely to grow 6.2% and

6.4% in 2015 and 2016, respectively,

IMA Asia said.

Garment exports to US near

$10b

VNS - Total exports of textiles and

garments from Viet Nam to the US

gained a year-on-year increase of

11.7% to US$9.88 billion from

January to November 2015.

According to the Viet Nam Textile

and Apparel Association (Vitas),

during the 11 months, the export

value to other major export markets

of Viet Nam's textile and garment

was also optimistic with $3.09 billion

to the EU, $2.53 billion to Japan and

$1.98 billion to South Korea.

Viet Nam's textile and garment

exports to the US are expected to

gain much higher when the Trans

Pacific Partnership (TPP) takes

effect.

Luong Hoang Thai, head of the

Ministry of Industry and Trade's

Multilateral Trade Policy

Department and the deputy head

of Viet Nam's negotiator delegation

at the TPP deal, said the tax value

that Vietnamese textile, garment,

leather and footwear exporters

currently have to pay for the US, is

higher than that of other TPP

member countries, reported

business news website cafef.vn.

The local enterprises must pay a

total tax value of $1.17 billion for

exporting textile and garment

products to the US market and of

$300 million for exporting footwear

products.




2


BANKS & FINANCE

Dong stable after FED rate hike

VNN - The domestic foreign

exchange market on Thursday, Dec

17, remained relatively stable after

the United States (US) Federal

Reserve raised its benchmark

interest rate by a quarter of a%age

point.

The Federal Reserve rate was

between 0.25% and 0.50% for the

first time in nearly a decade.

Though still listing the selling rate at

the cap of VND22,547 regulated by

the central bank, domestic

commercial banks yesterday still

kept a gap between the selling

and buying rates, quoting the

buying rate between VND22,460

and VND22,517, the same as the

past few days.

According to industry insiders, the

gap between the selling and

buying rates shows a relative

balance in dollar supply and

demand in the local forex market.

In the inter-bank market, the rate

was also unchanged at VND21,890

on Thursday.

Deputy Governor of the central

bank Nguyen Thi Hong yesterday

said that the commercial banks still

timely met dollar demands of local

enterprises and people.

Hong said that the rising forex

market in the recent past was

mainly due to the market sentiment.

She said that the Fed rates had

already been reflected in the

exchange rates in the financial

market since late 2014 and early

2015.

Hong said that there was no

change in the dollar supply and

demand in the recent past as the

country still had a trade surplus

while FDI and remittance inward

flows to Viet Nam still continuously

rose.

It is estimated that the country's

total balance of payment this year

would see a surplus thanks to an

estimated FDI disbursement of

US$14.5 billion and remittance of

between $13 billion and $14 billion.

Hong also forecast that the FDI

would not flow out of Viet Nam

after the Fed's decision as foreign

investors still trust Viet Nam thanks to

the Government's efforts in macro-

economic stability and economic

restructuring, as well as the

country's cheap labour costs.

Hong affirmed that the central

bank would continuously keep a

watch on the forex market and

would take necessary measures to

stabilise the market if necessary.

Besides the market sentiment,

financial expert Vu Dinh Anh also

attributed the rise in the forex

market in the past to an increasing

dollar demand by the year-end.

Anh said that the State Bank of Viet

Nam has taken an initiative early as

the Fed rise had also been taken

into account in domestic scenarios

for inter-bank exchange rates and

trading bands of the rates, which

had been adjusted over the last

few months.

After devaluing the dong by 1%

early this year, the central bank in

August continuously devalued the

dong by another 1% and widened

the trading band for the reference

rate to 3%.

According to the central bank, the

room for the dong exchange rate

fluctuation has been adequate for

flexible adaptation to any

disadvantages that may happen in

the global market, not only during

the rest of 2015 but also during the

first few months of 2016.




3


BANKS & FINANCE

The central bank also affirmed that

it would sell dollars to commercial

banks if necessary to stabilise the

forex market.

Annual interest rate on dollar

deposits cut to 0%

Starting today, the maximum

interest rate paid to individuals

depositing US dollars in local banks

will be zero% per year, the central

bank announced.

Organisations, excluding credit

institutions or branches of foreign

banks, will also not receive interest

for dollar accounts.

Prior to the change, the maximum

interest rate for individuals was

0.25% per annum. This notice was

confirmed in Decision No.2589/QD-

NHNN released last night. The

central bank said the decision was

made to continue implementing

concerted measures to increase

the value of the dong and curb the

dollarisation of the economy. This

decision takes effect today,

December 18.

Blue chips suffer from US fears

VIR - Vietnamese shares were

mixed yesterday on the two local

exchanges, while foreign investors

sold assets in blue chips fearing

lower profits after the US Federal

Reserve's rate hike last week.

The benchmark VN Index on the

HCM Stock Exchange inched down

0.2% to close at 566.90 points while

the HNX Index on the Ha Noi Stock

Exchange rose 0.6% to end at 78.72

points.

Investors kept selling stocks assets

after the US central bank made a

rate hike last week, which would

strengthen the US dollar against the

Vietnamese dong, and require Viet

Nam's central bank to further

depreciate its currency to keep the

economy attractive to foreign

investors.

The official exchange rate

yesterday was VND22,547 per dollar

for local commercial banks while

the unofficial market rate was

VND22,750 per dollar.

Foreign investors yesterday sold

assets in the biggest stocks,

including dairy producer Vinamilk,

energy firm PetroVietnam Gas

Corporation, food and beverage

producer Masan Group, and the

Bank for Investment and

Development of Viet Nam (BIDV).

At the end of yesterday, Vinamilk

(VNM) lost 2.3%, PetroVietnam Gas

Corporation (GAS) fell 2.4%, Masan

Group (MSN) dropped sharply 4.2%

and BIDV (BID) was down 2.8%.

Other big stocks that contributed to

the market decline included Hoa

Phat Group Joint Stock Company

(HPG), Saigon Securities

Incorporation (SSI) and FPT

Corporation (FPT), which were

down 1.3%, 2.2% and 0.8%,

respectively.

On the other side, the market was

lifted by real-estate stocks, whose

index rose 2.3% as they were able

to attract investors' attention.

The two biggest property

developers Vingroup JSC (VIC) and

FLC Group (FLC) jumped 3.8%, Kinh

Bac City Development Holding

Corporation (KBC) surged 4.9% and

Tan Tao Investment Industrial JSC

(ITA) gained 1.8%.

Two of the biggest stocks, Bao Viet

Holdings (BVH) and Vietcombank

(VCB), also helped the market from

dropping further. BVH gained 3%

and VCB rose 3.2%.

The two local bourses traded more

than 168 million shares worth

VND2.5 trillion (US$111.5 million), a

decrease of 15.5% from last week's

daily trading value.




4


INVESTMENT

Vietnam to up FDI in 2016

VOV - Vietnam is expected to

attract more foreign investment

next year and in the future due to

the opportunities and advantages

resulting from free trade

agreements (FTAs), according to

experts.

Vo Tri Thanh, deputy head of the

Central Institute of Economic

Management (CIEM), said of the

FTAs, the Trans Pacific Partnership

(TPP) deal and FTA between

Vietnam and EU would open great

opportunities for Vietnam to attract

additional foreign investment, esp

FDI capital.

If foreign investors come to Vietnam

to participate in production and

business, they could approach

large markets that are member

countries of the FTAs, Thanh said.

These member countries include

the US, Japan, Australia and

Canada, under the TPP, and EU

countries operating under the FTA.

The two large trade agreements

include commitments related to

Viet Nam's policies and regulations

on foreign enterprises, competition,

e-commerce, public procurement,

labour, environment and

intellectual property rights.

Therefore, Thanh said when

implementing the commitments,

Vietnam would promote socio-

economic reforms for all sides, he

said. This would increase the

confidence of investors, based

upon Vietnam's improved

investment environment.

Thanh added that in the past three

years, many large companies of

the US, Japan and the EU had

come to Vietnam to study markets

and the investment environment,

reported the Dien Dan Doanh

Nghiep newspaper. Some of these

companies had invested billions of

US dollars into the local textile and

garment industry to take

advantage of the TPP.

Now, the US had become one of

the top ten largest foreign investors

in Vietnam, he said, and the US

expects to be the largest foreign

investor in the nation in the future.

According to the General Statistics

Office, disbursement of FDI in

Vietnam reached an estimated

US$13.2 billion from the beginning

of 2015 through November 20, up

17.9% against 2014.

There were many large projects

during this period, said Nguyen Mai,

chairman of the Vietnam

Association of Foreign Invested

Enterprises. They included the $1.5b

LG factory in Haiphong, Samsung's

factories in Bac Ninh and Thai

Nguyen provinces, and Microsoft's

factory in Bac Ninh.

They also involved the Nghi Son

Petrochemical Refinery project,

with an investment of US$9.5 billion,

a $9.9b Formosa steel complex in

Ha Tinh and a $1.4b Samsung

factory in HCMC.

Investors from large countries had

planned to invest in Vietnam, such

as Japan, the Republic of Korea,

Germany and the US, Mai noted.

According to a Japan External

Trade Organisation (JETRO) survey,

80% of Japanese companies

surveyed have planned to study

investment activities in Vietnam,

while 70% of Japanese companies

operating in Vietnam hope to

expand their investments in the

country, he said.

Meanwhile, there were positive

feedbacks from foreign investors of

other associations, such as

Amcham and Eurocham.

Mai said that next year, many

multinational groups have

scheduled to move their

production and businesses from

other regional countries to Viet

Nam, to take advantage of the

FTAs.

Therefore, the Government should

guide authorities of provinces and

cities to choose suitable foreign

investors and technologies to

protect the environment and save

energy, he noted.




5


INVESTMENT

Investors leave e-commerce

quitely

VNN - Many investors have entered

the e-commerce market with

strong determination and powerful

financial capability, but then later

have left quietly.

E-commerce is a profitable business

field in investors’ eyes. Since e-

commerce is a new business field,

investors believe the market is still

large enough for all. They have

rushed to set up business in recent

years, because they think ‘early

birds can catch worms’. And they

have succeeded in calling for

investments for their businesses.

Lazada.vn has called for $249

million from international investment

funds, including Singaporean

Temasek. Zalora.vn received an

investment item worth $112 million

from Access Industries. Meanwhile,

Sumitomo and CyberAgent

Ventures from Japan both injected

money into Tiki.vn.

A report of the Ministry of Industry

and Trade’s E-Commerce Agency

showed that the revenue from B2C

(business to customer) e-commerce

in 2014 reached $2.97 billion.

The information about the good

performance by e-commerce

businesses has encouraged more

investors to pour capital into e-

commerce.

Even Vingroup, established as a

real estate developer, has also

jumped on the bandwagon, after

deciding to invest VND735 billion in

VinE-com and launching

Adayroi.com after many months of

preparation.

The Gioi Di Dong, Nguyen Kim and

Co-op Mart, well known as

traditional retailers, have also set up

their online business divisions.

Training courses on e-commerce

and online marketing have been

provided.

However, the e-commerce market,

though large and attractive, is not

a good place for all.

In July 2014, VinaGame decided to

sell 123mua.vn to FPT Group. More

recently, Beyeu.com, which

received capital from IDG Ventures

Vietnam, also left the market.

Its managers left a message on its

website: “Thuong mai dien tu can

rat nhieu tien. Nhieu cong ty quyet

dinh khong dot tien nua. Chuc may

man cho nhung nguoi dang tiep

tuc co gang” (It will take a lot of

money to do e-commerce. Many

firms have decided not to waste

more money. Good luck to those

who continue making the effort.)

Thoi Bao Kinh Te Sai Gon quoted a

source as saying that a big name in

the e-commerce sector may “say

goodbye” after three years of

operation in Vietnam.

Investors can enjoy advantages as

e-commerce businesses can

display products on websites, and

do not have to spend money on

retail premises or pay rent for offices

in central business districts.

Many investors have entered the e-commerce market with strong determination

and powerful financial capability, but then later have left quietly. The revenue

from B2C (business to customer) e-commerce in 2014 reached $2.97 billion

(MOIT's report).




6


INVESTMENT

However, Beyeu.com has every

reason to warn that e-commerce

will “eat” investors’ big money. If e-

commerce businesses leave the

market, they will become

“penniless”. Unlike manufacturing

enterprises, which can liquidate

production workshops, machines

and equipment for money, e-

commerce businesses will retain

nothing after giving up the game.

Techcom starts first real estate

investment trust in VIetnam

VNN - Fund management

company Techcom Capital is

offering units in its Techcom

Vietnam Real Estate Investment

Trust, the country's first public REIT.

With a charter capital of VND50

billion (US$2.2 million), the company,

a wholly owned subsidiary of

Techcombank, expects to sell five

million units of VND10,000.

The fund's custodian and

administrator is the State-owned

Bank for Investment and

Development of Vietnam.

Investors can register to buy a

minimum of 100 units until March 9

next year with Techcom Securities,

the REIT's exclusive distributor.

TCREIT focuses primarily on cash

flow-generating properties such as

office buildings, shopping malls,

hotels, and resorts. TCREIT is

expected to be listed on the Hanoi

Stock Exchange next year.

Viet Nam's real estate market

outlook remains highly positive as a

result of strong domestic and

foreign demand for

accommodation and property

assets.

However, the high initial investment

and low liquidity dissuade retail and

institutional investors from

participating in large projects with

stable cash flows.

TCREIT enables the securitisation of

real estate projects into fund

certificates that give investors

partial ownership.

Furthermore, since it is expected to

list, TCREIT will have high liquidity.

Techcom Capital plans to use the

majority of the profits from

investments to pay dividends,

creating a stable income stream for

investors.

Nguyen Xuan Minh, chairman of

TCREIT, said: "TCREIT, along with the

Techcom Equity Fund (TCEF) and

Techcom Bond Fund (TCBF), will be

another diversified investment

choice, especially for individual

investors, in Viet Nam.

"Individual investors in Vietnam

have mainly been investing in

residential projects such as

apartments or land. Now, they

have a chance to take part in

owning office buildings, shopping

malls and hotels - projects that

generate regular and stable

income with high liquidity."




7


ENTERPRISES

Japanese pearl farmer to raise

pearl in Phu Quoc

VOV - Tomokazu Tanabe, a 57-

year-old pearl farmer from Shima

said he plans to revitalize the pearl

farming industry by expanding his

business overseas through the

introduction of pearl farming to VN.

He said Ago Bay in Shima, Mie

Prefecture, is a leading place in JP

where pearls can be cultured.

However, the number of pearl

farmers has declined in recent

years due to an aging workforce.

Tanabe is the third-generation

owner of Tanabe Pearl Farm Co.

Ltd., located in Daiocho. He has

been working to improve farming

technology ever since he inherited

the family business at the age of 21.

Talks to expand his business to

Vietnam began in earnest this

summer, when he was approached

by the Ministry of Planning and

Investment of Vietnam via the

international division of Tsu-based

Hyakugo Bank.

They informed him that “investors

are looking for Japanese pearl

farmers” to work in Phu Quoc, a

Vietnamese island off the coast of

Cambodia in the Gulf of Thailand,

an area that supports the

cultivation of pearls.

According to the Japan External

Trade Organization, there is an

increase in demand for pearls

among Vietnamese consumers

thanks to VN’s recent economic

growth. Pearl farming is not well-

established in Vietnam, however,

with most cheap pearls on the

market coming instead from China.

JP farmers are particularly rare.

Hyakugo Bank approached

Tanabe, who was their client,

asking him to inspect Phu Quoc for

its potential. Tanabe discovered on

his visit a river running to the sea

that contained the minerals

essential to the growth of cultured

pearls. It was mostly untouched.

“This location is perfect for farming

pearls,” Tanabe said. As he walked

around island, idea of expansion

began to take root in his mind.

Tanabe plans to begin operating in

Vietnam in 2016 — a decision

largely influenced by the situation

in his home country. Tanabe plans

to bring young Vietnamese farmers

to Japan so he can train them.

After working in his farm in Japan,

they will be sent back to Vietnam

to help run the farm there.

French retailer Casino Group

to sell Big C chain in Vietnam

to cut debt

TNN - French mass retailer Casino

Group has announced plans to sell

its operations in Vietnam, including

the large supermarket chain Big C,

in an attempt cut debt and focus

on core markets.

In a statement Tuesday, Casino

Group announced it plans to

improve its financial structure in

2016 by selling real estate and

dispose of non-core assets. The

deleveraging is expected to

decrease the company’s debt by

about €2 billion ($2.17b).




8


ENTERPRISES

As owner of 32 outlets of the

popular Big C supermarket chain

across the country, Casino Group is

one of the top retailers in Vietnam.

A sale of its Vietnam business could

raise €750 million ($814m), Bruno

Monteyne, an analyst at Sanford C.

Bernstein, told Bloomberg news.

The company also has plans to set

up real estate investment trusts in

Thailand and Colombia, which

Monteyne estimates could net €550

million and €200 million, respectively.

In the statement, Casino Group

said it will continue to focus on its

key markets in France, Latin

America and Asia.

A representative of Big C Vietnam

said it has not yet been informed of

any takeover.

Locals link to Samsung chain

Samsung has raised the production

processes at local firms to meet

global standards

VIR - Local businesses are enjoying

bigger opportunities to join the

global production and supply chain

via collaboration with South Korea’s

electronic giant Samsung Group.

Nguyen Van Hung, director of

HCMC-based An Phu Viet Trading &

Production Plastics Limited, was

confident about the prospect of

becoming a supplier for Samsung.

“We aim to become a first-tier

supplier to Samsung in the near

future through the delivery of

assorted battery chargers for

Samsung smartphones,” Hung said.

Three months ago, An Phu Viet and

other local firms joined a seminar

on the development of Vietnam’s

supporting industries

which Samsung organised to seek

local suppliers.

An Phu Viet and three other local

firms - Thang Long Packaging

Production Export-Import, Viet Hung

Packaging, and Chien Thang

Industrial were selected by

Samsung as beneficiaries of this

group’s supporting systems.

Samsung sent four experts from

South Korea to Vietnam to support

the firms in their production and

supply upgrading process. Three

months later, Samsung Vietnam

industrial complex’s chief executive

officer Han Myong-sup visited the

firms to check the final results.

Prior to his visit, Myong-sup said that

“this is the first time that Samsung

has sent experts to a foreign market

to support the perfection

of businesses’ production process.

This shows how important the

Vietnamese market is to Samsung.”

Following the completed support

plan for these businesses, Samsung

will reach out to more local firms in

In fact, of the four companies

receiving Samsung’s support, Viet

Hung and Thang Long are now

already acting as first-tier suppliers

for Samsung.

After becoming Samsung’s supplier,

Thang Long has reported

exceptional growth with a nearly

four-fold increase in the firm’s

revenue; from $3.41m in 2009, to

$12m last year, and an expected

figure of $13m for this year.

Meanwhile, Viet Hung, which has

been supplying cardboard boxes,

plastics, and paper packaging to

Samsung since April 2009, saw its

revenue increase exponentially

from $13m in 2010, to $42m last year,

and a projected level of $65m this

year. In addition to expanding its

existing workshops in the northern

province of Hung Yen, this April,

Viet Hung built another packaging

production plant in HCMC.

Meanwhile, following its promotion

as a supplier to Samsung, An Phu

Viet hopes to swell the firm’s

revenue several-fold from its current

level of $2m.




9


MARKET & PRICE

HCMC to promote sales of E5

bio-fuel

The sales of E5 fuel accounted for

only 4.2% of monthly total petrol sales

in HCM City

VNS - Ethanol gasoline E5(A92-RON

petrol containing 5% ethanol) will

be sold at all filling stations in HCM

City beginning on December 31,

according to the city's Department

of Industry and Trade.

Speaking at a meeting to review

the sale of E5 in the last 12 months,

Le Ngoc Dao, the department's

deputy director, said the city had

nine fuel wholesalers with six

general agents and 518 retail petrol

stations.

The city is among seven localities,

including Ha Noi, Hai Phong, Da

Nang, Can Tho, and the provinces

of Ba Ria-Vung Tau and Quang

Ngai, that are implementing the

pilot supply of E5 fuel by the

Government.

In November last year, 58 petrol

stations began selling E5 and the

number rose to 262 by the end of

the month, or 50.57% of total petrol

stations in the city.

"Despite efforts made by the city

government and enterprises, sales

of E5 fuel remain low, accounting

for only 4.2% of the total petrol sales

in the city," she said.

The city's monthly petrol sales

reached 130,100 cubic metres on

average, of which A95-RON and

A92-RON accounted for 33.3% and

62.5%, she said.

Consumers' consumption habits,

few differences in price, and low

profits of distributors contributed to

the low sales of bio-fuel, she said.

Duong Van Trinh, representative of

Petrolimex, one of the city's major

fuel wholesalers, said the average

E5 sales via his company's

distribution system had increased

significantly thanks to an increase in

the number of petrol stations selling

the fuel. But the volume of E5 sold

accounted for only 7% of its total

petrol sales.

Consumers were still more familiar

with the use of traditional A92-RON

gasoline, he said, adding that they

did not understand E5's benefits.

Even though the price for a litre of

E5 was VND500 lower than that of

A92, sales remained sluggish.

Communication work should be

enhanced to raise public

awareness of the benefits of E5,

delegates at the meeting said.

Trinh suggested that the

Government support fuel trading

firms in shifting to trading the bio-

fuel since they had to spend a lot

on building E5 mixing facilities, he

said.

Dao said the department in

collaboration with other agencies

would raise awareness among

people about the benefits of the

bio-fuel.

In addition, all fuel stations in the

city must hang two banners about

the benefits of E5 starting from

December 24, she said.

The city had encouraged general

agents and retail stations to supply

E5 on schedule, she said, adding

that all stations were required to

have at least one pump for E5 and

to gradually reduce the supply of

A92 fuel.

She suggested that the

Government create a preferential

policy for bio-fuel production and

distribution firms as well as cut the

price of E5 to stimulate distribution

and consumption.

Retailers slash fuel prices

Retail prices of petrol were slashed

at 3pm on December 18, following

orders from the ministries of industry

and trade and finance.




10


MARKET & PRICE

This is the 11th reduction in the

petrol price and is expected to be

the final adjustment this year.

The orders said the prices of Ron 92

petrol and E5 biofuel would be

reduced by VND391 per litre to

touch their ceiling prices of

VND16,405 (US$0.7) and VND15,910

per litre, respectively.

Meanwhile, the prices of 0,05S

diesel, kerosene and 3,5S mazut

have been decreased by

VND1,246 per litre, VND1,136 per

litre and VND942 per kg to touch

their ceiling prices of VND11,984,

VND11,065 and VND8,162,

respectively.

The two ministries said from

December 3 to 17, a period during

which the authorities calculated

the global base price for fuel

dealers, the price of Ron 92 was at

US$53.29 a barrel, down more than

$1.7, compared with the previous

cycle. Meanwhile, the prices of

kerosene and mazut were

respectively reduced by $7.3 and

more than $10 per barrel.

The petrol price was increased six

times this year.

Hired Santa Claus services

make big money in Hanoi

DTI - Hanoians are increasingly

turning to renting pretend Santas

during the festive period.

Imitation Father Christmases charge

VND60-100,000 per gift delivered to

one address.

Nguyen Thanh Tam in Ha Dong

District, Hanoi, said that she had

prepared gifts for her children and

booked a fake Father Christmas to

surprise them. She also shared the

service with her neighbour to save

costs.

"In previous years, I used to put

Christmas presents at the bottom of

my children’s bed, but this year, I

decided to hire a fake Santa Claus

who will come to my house to give

the gifts to them. The fees are quite

cheap at just VND100,000," Tam

said.

According to Huyen Anh, a

Christmas service provider, the

maximum fees are often on

Christmas Day itself at around

VND150,000, while in the run-up to

Christmas the price is just

VND70,000-80,000. These fees are

applied to the maxim distance of

5km and customers have to pay

more for longer routes.

Anh said before presenting gifts for

children, the fake Santa Claus will

firstly greet children and give them

some advice to try to become

good children.

Some companies also provide the

service to send imitation Santa

Claus to play with a group of

children. This service VND300,000

and VND400,000 for 30 children at

one place.

Around one month before

Christmas, companies often have

to recruit part-time staff members

who are mostly young people.

These part-time Santa Clauses are

offered roughly 15-20% of the value

of each order.

Many young Vietnamese who do

not want to spend Christmas alone

can book an escort for the holiday

by posting their profile on internet

forums or websites.

The information includes

introduction, requirements and pay

for the people who accept the

proposal. Some even add their

photos to the advertisement,

hoping to get more rapid feedback.

Most of them mention that they feel

lonely and don’t want to stay at

home alone at Christmas.

These ‘escort’ services cost from

VND200,000 during the day and

VND250,000 at night on Christmas

Eve, December 24.




11


LEGAL UPDATES

Decree issued to facilitate

foreign investors' operation in

Vietnam

VGP - Decree No. 118/2015/NĐ-CP

defines some articles of the Law on

Investment, which facilitate

investment procedures in forms of

capital and stakes contribution for

foreign investors.

Foreign investors who buy shares in

or contribute capital to economic

organizations won't have to deal

with procedures involved in

investment certification.

Foreign investors will themselves

have to register with the planning

and investment departments in

localities where the economic

organizations are headquartered,

in the following cases:

- The economic institutions engage

in business areas that are

accompanied by certain

conditions for foreign investment, as

stipulated by the authorities.

- Stake acquisition or capital

contribution increases the share of

foreign investors in the economic

institutions from below 51% to 51%

or more; or above 51%.

After receiving foreign investors'

registration documents, the

planning and investment

departments will notify them

whether they are qualified for their

investments or not, within 15 days.

Foreign investors who are set to

establish companies in VN will also

be able to get investment

certificates for their projects within

15 days.

Investment requirements for foreign

investors

The Ministry of Planning and

Investment will host and cooperate

with other ministries to check and

collect sectors, industries and

investment conditions for foreign

investors based on international

laws, ordinances, decrees and

conventions on investment.

Investment requirements for foreign

investors include contents about

investment sectors and industries,

investment conditions and service

sectors for foreign investors.

Provisions on compulsory

insurance in the construction

domain

VLO - Decree No. 119/2015/ND-

CP dated November 13th, 2015 of

Gov't on providing for compulsory

insurance for construction

investment activities.

Under Article 4 of this Decree,

project owners and contractors

must buy compulsory insurance in

the following cases:

- Project owners must buy insurance

for construction works with regard

to construction projects or project

items which have certain impacts

on public safety (as stipulated by

Appendix II of the Government’s

Decree No. 46/2015/ND-CP), have

significant environmental impacts

that belong to the list of projects

subject to environmental impact

assessment (under Appendix II and

III of Decree No. 18/2015/ND-CP) or

have particular technical

specifications.

- Consultancy service contractors

must buy professional liability

insurance for provision of

construction consultancy service

with respect to work of construction

surveying & design for construction

projects ranked II or higher

- Engineering construction

contractors must buy insurance

policies for employees working at

construction sites.

Insurance premiums paid for

compulsory insurance for

construction investment activities

are determined based on payment

capacity of insurance enterprises

and must be consistent with the

guidance on insurance conditions,

scope of insurance coverage and

sum assured provided by the

Ministry of Finance (Article 11).

This Decree takes effect from

February 10th, 2016.


http://www.vietlawonline.com/vbpl/73148/building-construction/the-provisions-on-compulsory-insurance-in-the-construction-domain.vlo

http://www.vietlawonline.com/vbpl/73148/building-construction/the-provisions-on-compulsory-insurance-in-the-construction-domain.vlo

http://www.vietlawonline.com/vbpl/66037/environment/new-provisions-on-environmental-impact-assessment-.vlo



12


HIGHLIGHTS

How will the stock market

perform in 2016?

VNN - Experts believe that the most

important factor that may have a

negative impact on the stock

market is the exchange rate

fluctuation.

After the crude oil price in the world

market dropped to $40 per barrel

following OPEC’s meeting in early

December, securities investors have

predicted a gloomy future for oil &

gas shares, including GAS of the

Gas Corporation.

To date, GAS remains among the

shares with the highest

capitalization value in the market

which has influences on the VN

Index. With the closing price at

VND40,300 per share on December

4, its capitalization value has

dropped to $3.39 billion, just equal

to 1/3 of that in July 2014, when the

GAS market price climbed to

VND120,000 per share.

The shares of the companies in the

energy sector are believed to top

the list of factors which have

negative impact on the stock

market in 2016.

Another factor is the predicted bad

performance of maritime transport.

The ship chartering and freight

business has been decreasing,

while analysts think the BDI (Baltic

Dry Index) may break the 500 point

threshold in the near future.

In such circumstances, investors

have every reason to think the IPO

(initial public offering) to be made

by Vinalines would not go smoothly.

Unlike other business fields, where

the sales will go up when the prices

go down, in the stock market,

investors will go away when the

prices fall. Meanwhile, the prices of

shipping firms have dropped

dramatically to just several

thousand dong per share and

shipping firms all have reported

losses.

The third factor is that the tough

days of farm and seafood produce

companies still are not over with big

problems in rubber, catfish and

shrimp exports due to the

devaluation of hard foreign

currencies against the US dollar and

due to the anti-dumping tax.

Hoang Anh Gia Lai, a powerful

conglomerate in Vietnam, has seen

its share price at the lowest level

since it began listing on the bourse.

Foreign investors now rush to sell

Hoang Anh Gia Lai shares because

the prices of rubber, one of the

main business fields of Hoang Anh

Gia Lai, have dropped dramatically.

Meanwhile, the shares of Hung

Vuong and Minh Phu Seafood

Companies also face the investors’

indifference due to higher inventory

levels and high costs for bank loans.

Analysts pointed out that the

exchange rate fluctuation would

also have big impact on the stock

market. The dong/dollar exchange

rate adjustments, if they are made,

would force foreign investors to

reconsider their investment plan.

By December 4, the VN Index has

increased by 8.5%, but the dong

was devalued by 5%.

Vietnam opens e-market for

agro-forestry-fishery products

VNA - The first e-market for

Vietnam’s agricultural, forestry, and

fishery products called AGROMART

was launched in Hanoi on

December 22 by the Agricultural

Trade Promotion Centre under the

Ministry of Agriculture and Rural

Development.

Via the site www.agromart.com.vn,

AGROMART helps consumers select

safer and certified products with




13


HIGHLIGHTS

clear origin, said Nguyen Nhu Tiep,

Director of the Agro-Forestry-

Fisheries Quality Assurance

Department (NAFIQAD).

It serves as a bridge for domestic

and foreign enterprises to

exchange technologies and

services in the agricultural field

while marketing their products to

customers, said Dao Van Ho,

Director of the Agricultural Trade

Promotion Centre

Thanks to the e-market, managers

can build development strategies

and make market forecasts while

businesses can grasp consumers’

tastes and market information, he

added.

More than 3,000 produces from

1,000 participating members are

expected to join AGROMART,

which is linked with well-known e-

markets inside and outside the

country in order to help enterprises

quickly access this potential

business method and thus increase

their competitiveness in the

integration context.

A cooperation agreement

between the centre and the

agriculture and rural developments

of provinces and cities, and

associations was inked at the

launch ceremony.

Five giant companies weighed

down with foreign debt

VNN - Most of the foreign debt

incurred by state-owned general

corporations are in their core

business fields, and as such they

have to look for capital to run

projects.

1.The fact that Electricity of

Vietnam (EVN) tops the list of the

five biggest debtors with the

holding company owing VND162

trillion to its creditors is not a surprise,

because of the high investment

rate of several billions of dollars for

every project.

A report of the Ministry of Finance

shows that in 2014 Vietnam signed

41 ODA (official development

assistance) agreements with total

loans of $4.7 billion. Of this amount,

$1.85 billion, or 31.6 percent, would

be allocated to the Ministry of

Industry and Trade which will most

only fund power projects.

The Vinh Tan 4 thermal power plant

alone will need huge investment

capital of $1.6 billion, of which

more than $1 billion would be loans

from South Korean KEXIM, KSURE

Banks and Japanese JBIC.

In 2014, EVN also borrowed $108

million from BNP Paribas, while the

National Power Transmission

Corporation, a subsidiary of EVN,

borrowed $245 million from Citibank

under a credit agreement

guaranteed by the government.

2. Vietnam Airlines holdings owe

VND27.347 trillion to foreign

creditors. Of this, $1.2 billion (VND27

trillion) will be used to buy aircraft.

The two loans from HSBC France

alone have exceeded $110 million.

Most recently, the government has

acted as a guarantor for Vietnam

Airlines’ borrowing of $600 million

which will be spent to buy four

Boeing 787-9s.

3. PetroVietnam holdings of foreign

debt have reached VND20.305

trillion. Like other state-owned

conglomerates, PetroVietnam

needs money to run costly oil and

gas projects. The loans it got in 2014

were from JBIC, NEXI, KEXIM and

HSBC, worth $85 million to $600

million.

The Vung Ang 1 thermopower




14


HIGHLIGHTS

project developed by the oil group

with cost of $1.6 billion was

completed last September. Seventy

percent of the capital was from

loans.

PetroVietnam is developing Thai

Binh 2 thermopower project, under

which the equipment procurement

package alone costs $795 million.

4. VEC, the expressway

development corporation, has

foreign debt worth VND18.525

trillion.

A VEC report shows that it has

mobilized VND54 trillion in capital to

arrange 43 percent of the total

investment capital for five big

projects. The funds were raised from

construction work bonds and

commercial loans from domestic

and foreign institutions.

One of AEC’s biggest problems is its

high ratio of debt on capital. The

corporation has proposed the

government increase its chartered

capital from VND1 trillion to

VND22.1 trillion.

5. The Airports Corporation of

Vietnam (ACV) has reported

foreign debt of VND12.138 trillion.

The debt includes loans from a

Japanese financial institution. A Q3

financial report showed that its

ODA debts alone had reached 78

billion yen, or $600 million.

Suntory helps improve water

awareness of over 1,600

primary school students

VIR - More than 1,600 primary

school students in Thanh Oai and

My Duc Districts of Ha Noi are now

more aware about conserving

water thanks to an education

programme.

Funded by Suntory Holdings Limited

(SHD) Japan and deployed by

Suntory PepsiCo Vietnam Beverage

(SPVB), Live and Learn and local

authorities since March 2015, the

"Mizuiku – I love clean water"

programme focussed its activities

on educating children on the role

of water on the planet and raising

their awareness on the importance

of water resources and water

hygiene in daily life.

In 2015, the programme has

efficiently organised 60 classes on

the subject of water with the

participation of over 1,600 pupils in

120 indoor and outdoor lessons. The

programme also offered pupils a

wide range of practical outdoor

activities like festivals of clean water

protector, study tours, writing and

drawing contests, and school

newspapers.

The programme also helped to

upgrade school infrastructures,

including the donation of four

water purification systems, building

or upgrading six rest rooms based

on an environment-friendly model.

Mizuiku is a natural water education

programme that has been

successfully implemented in Japan

since 2004.


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