Vietnam Airlines marks new step in Russian market

The first flight using Boeing 787-9 Dreamliner aircraft of national flag carrier Vietnam Airlines arrived at Domodedovo airport in Moscow, Russia, on March 27 (local time).

Speaking at the welcome ceremony, Chief Representative of Vietnam Airlines in Russia Le Thanh Dung said the airline is striving to meet demand of passengers in Russia, adding that the airlines will operate new routes linking Vietnam and Russia in the future.

Meanwhile, Vietnamese Ambassador to Russia Ngo Duc Manh congratulated Vietnam Airlines on using Boeing 787-9 Dreamliner for the Hanoi-Moscow air route, contributing to the enhancement of the partnership between Vietnam and Russia, especially in tourism and people-to-people exchanges.

Boeing 787-9 Dreamliner can carry up to 311 passengers and saves 20 percent of fuel compared to previous generations of aircraft.

Vietnam Airlines was recognised as a 4-star airline for two consecutive years in 2016 and 2017 by the international air transport rating organisation Skytrax.

It targets a 13 percent increase in revenue and an 8.3 percent rise in the number of passengers in 2018. 

Apart from Asia, the airline is also seeking to expand their markets in Europe.

Vietnamese tech startups

Vietnamese startups in new technology will be a key driver in luring in foreign capital within the next decade, said Maybank Kim Eng Group in March 27's conference in Singapore.

As new and disruptive technology drives change and enables the ASEAN marketplace, Maybank Kim Eng Group believes that Vietnam’s tech startups will attract big-name investors from the region, mostly from within the ASEAN and China.

“New technology in Vietnam, similar to ASEAN markets, is still in the early stages of development. The next decade will be the period of exponential growth for tech companies, propelling the boom of related industries such as logistics,” said John Chong, CEO of Maybank Kim Eng Group, during the Invest ASEAN 2018 conference in Singapore on March 27.

According to the group, investors are excited about this growth potential and they are now shifting to the ASEAN from China and India.

Chong told VIR that overseas investors pay strong attention to the region, particularly Vietnam, despite rising protectionist policies from developed markets such as the US.

"From what we have seen, investors are driven by the fast growth rates of ASEAN countries, which average 5 to 6 per cent per year, the young population, and high penetration of Internet connection," he said.

The capital for these deals mostly came from China and the ASEAN. Recent examples in Vietnam include JD.com’s investment in e-commerce firm Tiki in January and Central Group’s buyout of Zalora Vietnam in 2016.

Statistics from Maybank Kim Eng show that funding to ASEAN tech startups has surged in the last two years. In the first eight months of 2017, disclosed equity funding for the startups was around $6.5 billion, double the $3.1 billion of 2016 despite the lower number of deals.

Major deals in the region are Alibaba’s $4-billion investment into Lazada; Tencent, Temasek, and Google pouring $1.2 billion into Indonesian ride-hailing app Go-jek or JD.com putting $500 million into Thai fintech startup Tokopedia.

“This is a very exciting time for the ASEAN as the young population is energetic and is becoming increasingly tech-savvy. We are studying at least twelve Vietnamese startups in fintech, consumer finance, and e-commerce to decide which one to invest in,” said Justin Hall, partner at Golden Gates Ventures. Golden Gates currently has three investments in Vietnam: Appota, Lozi.vn, and Wifi Chua.

Google and Temasek estimate that the Internet economy in the ASEAN will reach $200 billion in 2025, a six-fold growth every year. In particular, the e-commerce sector will take up at least $5 billion, presenting fresh opportunities for investors and startups.

Invest ASEAN is an annual conference held by Maybank Kim Eng Group in Singapore since 2013. This year, the event attracted 900 delegates from 132 funds around the globe, with the total amount of $16.3 trillion of assets under management. About 57 leading corporates from the region also joined to meet with investors, including five firms from Vietnam.

Major topics at this year’s event include artificial intelligence, venture capital, and global macroeconomics updates.

Wood industry sees promise of growth in CPTPP

Once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) comes into effect, tariffs on Vietnamese wood exports to signatories of the CPTPP will be cut down to zero, bringing many advantages for the wood sector, according to the Vietnam Timber and Forest Product Association (VIFORES).

Addressing a conference on wood exports on March 27 in Hanoi, Nguyen Ton Quyen, vice chairman of VIFORES, said Vietnam’s wood exports to the US amount to approximately US$3 billion annually.

Meanwhile, CPTPP members such as Japan are also major importers of Vietnamese wood products. Some of the members have strong wood industries, like Canada with its annual output of 600 million cubic metres, said Mr Quyen.

The CPTPP will help to facilitate the purchase of machinery, equipment, and technologies from developed countries such as Japan when tariffs are lower, which will enable Vietnam to become more competitive.

Mr Quyen also pointed out challenges facing Vietnamese businesses such as intellectual property, saying that there is a limited knowledge base among Vietnamese businesses and management agencies regarding intellectual property.

Despite exports of US$8 billion, the value of products designed in Vietnam makes up a small proportion of that, as domestic businesses manufacture products according to foreign partners’ designs that are protected by copyright, Mr Quyen said.

He added that this is quite a complicated issue because domestic businesses find it difficult to build brand names and establish their own intellectual property.

Mr Quyen emphasized that the enforcement of the CPTPP will relate to many partners including wood businesses, forest planting households, and wood commerce, transport, traders and processors.

However, Vietnamese businesses’ knowledge of these issues remains imprecise. Businesses must make greater efforts to develop the supply of wood.

Last year, forestry exports reached nearly US$8 billion, including US$ 7.7 billion from wood and timber products. The wood industry is striving to reach a target of US$9 billion this year.

Next decade to see stronger capital flows to Vietnamese tech startups

Vietnamese startups in new technology will be a key driver in luring in foreign capital within the next decade, said Maybank Kim Eng Group in today's conference in Singapore.

As new and disruptive technology drives change and enables the ASEAN marketplace, Maybank Kim Eng Group believes that Vietnam’s tech startups will attract big-name investors from the region, mostly from within the ASEAN and China.

“New technology in Vietnam, similar to ASEAN markets, is still in the early stages of development. The next decade will be the period of exponential growth for tech companies, propelling the boom of related industries such as logistics,” said John Chong, CEO of Maybank Kim Eng Group, during the Invest ASEAN 2018 conference in Singapore today.

According to the group, investors are excited about this growth potential and they are now shifting to the ASEAN from China and India.

Chong told VIR that overseas investors pay strong attention to the region, particularly Vietnam, despite rising protectionist policies from developed markets such as the US.

"From what we have seen, investors are driven by the fast growth rates of ASEAN countries, which average 5 to 6 per cent per year, the young population, and high penetration of Internet connection," he said.

The capital for these deals mostly came from China and the ASEAN. Recent examples in Vietnam include JD.com’s investment in e-commerce firm Tiki in January and Central Group’s buyout of Zalora Vietnam in 2016.

This is a very exciting time for the ASEAN as the young population is energetic and is becoming increasingly tech-savvy. We are studying at least twelve Vietnamese startups in fintech, consumer finance, and e-commerce to decide which one to invest in.

Statistics from Maybank Kim Eng show that funding to ASEAN tech startups has surged in the last two years. In the first eight months of 2017, disclosed equity funding for the startups was around $6.5 billion, double the $3.1 billion of 2016 despite the lower number of deals.

Major deals in the region are Alibaba’s $4-billion investment into Lazada; Tencent, Temasek, and Google pouring $1.2 billion into Indonesian ride-hailing app Go-jek or JD.com putting $500 million into Thai fintech startup Tokopedia.

“This is a very exciting time for the ASEAN as the young population is energetic and is becoming increasingly tech-savvy. We are studying at least twelve Vietnamese startups in fintech, consumer finance, and e-commerce to decide which one to invest in,” said Justin Hall, partner at Golden Gates Ventures. Golden Gates currently has three investments in Vietnam: Appota, Lozi.vn, and Wifi Chua.

Google and Temasek estimate that the Internet economy in the ASEAN will reach $200 billion in 2025, a six-fold growth every year. In particular, the e-commerce sector will take up at least $5 billion, presenting fresh opportunities for investors and startups.

Invest ASEAN is an annual conference held by Maybank Kim Eng Group in Singapore since 2013. This year, the event attracted 900 delegates from 132 funds around the globe, with the total amount of $16.3 trillion of assets under management. About 57 leading corporates from the region also joined to meet with investors, including five firms from Vietnam.

Major topics at this year’s event include artificial intelligence, venture capital, and global macroeconomics updates.

Shop & Store Vietnam to popularise franchising in Vietnam

Shop & Store Vietnam 2018 was officially kicked off today to deliver enriched content and business opportunities in retail and franchise.

Vietnam is considered a fertile land to develop the retail market, Kantar Worldpanel’s study has revealed incredible growth in Vietnam, with the market share of mini-stores growing by 32 per cent from 2015 to 2016, while online shopping grew by a remarkable 61 per cent.

At the same time, Vietnam ranked 9th among the top 12 markets identified by the members of the International Franchise Association as the markets most valuable for international expansion. Additionally, Vietnam was profiled in the Top Markets Report.

Suttisak Wilanan, deputy managing director of Reed Tradex, pointed out that Vietnam has all the necessary elements to rise, such as a large consumer base, rapidly rising incomes, and a generation of educated, young, and growing professional population. This offers great prospects for national and international brands to expand on the retail and franchising industry in the next five years.

Shop & Store Vietnam 2018, organised by Reed Tradex, is taking place at the Saigon Exhibition and Convention Centre (SECC) on March 28-30. With the presentation of 70 brands from 18 countries and regions, and three international group pavilions from Thailand, Singapore, and Japan, Shop & Store Vietnam 2018 provides a unique platform for business development with three comprehensive profiles: retail, franchise, and shop fitting.

Among the exhibitors there are franchise brands like Miniso and Tupperware, as well as master franchises like Redsun ITI introducing King BBQ, Hotpot Story, and Khao Lao; Somy with Blackball; Vy Ha with Chabayom; and Global Notes presenting SIC, Renmi, and Nishio, among others.

Beside large players who provide retail solutions like Happy Move, Senior Soft, Can Innovation, Paneles, and Suzhou Hongyua, Shop & Store Vietnam also introduces new technologies to apply in retail business, such as retail devices and digital signage solutions from Samsung or Hologram technology presented by Worldline or an e-commerce platform for retail from Haravan.

It is inevitable that more and more Vietnamese businesses are now exploring new business opportunities via franchising. Nevertheless, there are a number of risks that a franchisor should investigate carefully before engaging or expanding in business in Vietnam.

At its first edition, Shop & Store Vietnam focuses on developing content that helps entrepreneurs prepare to the most effective business strategy in Vietnam, as well as reach out to the world with the “Retail & Franchise Conference in Vietnam” in corporation with Retail & Franchise Asia, and “Legal Aspects in Franchising” in corporation with VF Franchise 

Japanese investors out of top three largest foreign investors during January-March

In the first quarter of this year, the three largest foreign investors in Vietnam have been South Korea with $1.84 billion in registered investment capital, Hong Kong with $689 million, and Singapore with $649 million. Japanese investors were crowded out from the top.   

The investment capital of the three largest foreign investors made up 51.45 per cent of the total foreign direct investment (FDI) capital inflow in Vietnam.

According to the statistics of the Foreign Investment Agency (FIA) of the Ministry of Planning and Investment (MPI), in the first three months of this year, Vietnam attracted $5.8 billion in foreign investment capital, reaching 75.2 per cent of last year's figure. This included $3.91 billion of FDI and $1.89 billion in M&A deals.

Notably, as of March 20, 618 newly-registered projects received investment certificates with the total investment capital of $2.12 billion, 72.7 per cent of last year's figure, while 199 existing projects received added capital of $1.79 billion, 45.4 per cent. Meanwhile, 1,285 M&A deals were signed with a total investment capital of $1.89 billion.

In the first quarter of this year, foreign investors invested in 17 industries nationwide. The processing and manufacturing industry still maintains the top position with a total of $3.44 billion, equaling 59.4 per cent of the total FDI inflow into the country. The runners-up are the wholesale and retail industry with $531 million and the real estate industry with $486 million.

Besides, Vietnam’s cities and provinces saw decreasing FDI capital inflows as well changes in the ranking of provinces and cities receiving the largest FDI volume.

Notably, foreign investors poured capital into 49 cities and provinces across the country. Ho Chi Minh City ranked first with $1.7 billion, making up 29.3 per cent of the total FDI inflow, while Haiphong overcame Nam Dinh to become the destination receiving the second largest FDI volume with $925 million, equaling 16 per cent of the total. Binh Duong remained third with $565 million.

List of outstanding FDI projects in the first quarter:

100 per cent Hong Kong invested Regina Miracle International Vietnam Co., Ltd. added $260 million to its existing sport clothes and shoes manufacturing factory in Haiphong.

The $150-million Hanbaram wind-power project in Ninh Thuan province and the $80-million garment project funded by Ramatex Nam Dinh in Nam Dinh province

A project producing motor vehicle spare parts in Hai Duong province of Kefico Vietnam Company added $120 million to its investment project.

A solar panel factory of Vina Cell Technology Company added $100 million to its investment project in Bac Giang province.

Mekong Agritech Accelerator selects 2018 finalists

Mekong Agritech Accelerator (MATCh) has announced that 23 startups have been invited to join its 2018 program, including 13 from Vietnam, Cambodia, Laos, and Myanmar and ten international startups proposing agri-tech solutions for these markets.

MATCh’s competitive application process sought to identify agricultural technologies and new business models with the potential to reshape agriculture towards sustainable and inclusive growth in the Greater Mekong Sub-Region (GMS). Applications were received from 127 startups. A panel of agriculture and food industry experts as well as investors evaluated the applications and selected the finalists.

When asked about the MATCh participants, Mr. Dominic Mellor from the Asian Development Bank (ADB), who heads up the Mekong Business Initiative (MBI), said: “We are extremely impressed with the innovations from the MATCh participants. MBI and our partners will work with the selected innovators and entrepreneurs on transforming the agricultural industry in the Mekong Region into a leading supplier of safe and nutritious food for all.”

Finalists will learn, share, and grow their businesses and technology with mentors, industry experts, and investors. They will attend a boot camp to improve and refine their business models and build their networks. They will also join the 2018 GMS Leaders Summit in Hanoi on March 30 and 31 and showcase their solutions and technologies, and will also be part of the Future Food Asia Awards on May 23 in Singapore.

“Through a number of MATCh applicants, we found that the GMS region has embraced technology quite fast and has tweaked it to make it more applicable to markets and customers,” said Ms. Isabelle Decitre, Founder and CEO of ID Capital, the company operating Future Food Asia - the first platform of its kind to accelerate agri-tech and food-tech innovations in the Asia-Pacific region. “Global solutions providers are more mature, and helping them develop in the GMS region will further accelerate the adoption of technology by providing role models local entrepreneurs can relate to.”

MATCh is the first accelerator for agri-tech startups in Cambodia, Laos, Myanmar, and Vietnam. It is funded by the Australian Government and the ADB and is co-organized by MBI, Future Food Asia, and the GMS Core Agriculture Support Program (CASP).

 “MATCh was launched on the sidelines of the Second GMS Agriculture Ministers’ Meeting in September 2017 in Siem Reap, Cambodia,” said Pavit Ramachandran, Principal Environment Specialist at ADB. “The meeting endorsed the GMS strategy for promoting safe and environmentally-friendly agriculture value chains and action plans for 2018-2022. MATCh is an important initiative as entrepreneurship and technology are key to enhancing the competitiveness of small producers and inclusiveness and sustainability of the supply chain.”

eFounders Initiative for Asian entrepreneurs kicks off

The United Nations Conference on Trade and Development (UNCTAD) and the Alibaba Business School enrolled the first class of 37 Asian entrepreneurs for the eFounders Initiative at an opening ceremony on March 26 at the Alibaba campus in Hangzhou, China.

The eleven-day course is part of a commitment by Jack Ma, Alibaba Group’s founder and Executive Chairman and UNCTAD Special Adviser, to empower 1,000 entrepreneurs from developing countries over five years.

The launch of the first program for Asian entrepreneurs comes after the success of the inaugural class for 24 African participants last November.

Following a rigorous selection process, the final candidates from Cambodia, Indonesia, Malaysia, Pakistan, the Philippines, Thailand and Vietnam will embark on an eleven-day intensive course providing first-hand exposure to e-commerce innovations from China and around the world and will become eFounders Fellows.

Eventually these young entrepreneurs will become catalysts in their home country and spur digital transformation in their economies.

“We want to reach out to youth and include them in the work we do for inclusive and sustainable economic growth,” said Arlette Verploegh, Coordinator for the eFounders Initiative at UNCTAD. “The initiative is about bridging the digital divide for young entrepreneurs and unlocking their potential. It is part of a set of smart partnerships UNCTAD is creating to reach the sustainable development goals.”

All participants are founders of their respective startups, in e-commerce, big data, logistics, fintech, payments, and tourism.

“We are excited to extend this fellowship to entrepreneurs from Asia for the very first time as part of our commitment to empowering digital champions and communities around the world,” said Brian A. Wong, Vice President of Alibaba Group, who heads the Global Initiatives program.

“Our goal is to inspire entrepreneurs to serve as pioneers in building a more inclusive development model that is not just good for their business but also good for society, by creating platforms that all can participate in and benefit from.”

Under the auspices of the 2030 Agenda for Sustainable Development, the initiative is aligned with the wider call to action to ensure that no one is left behind in the digital economy and to help bridge the digital divide faced by businesses in emerging markets.

Jointly organized by UNCTAD and the Alibaba Business School, the eFounders Initiative also supports Alibaba’s mission to help small businesses succeed in their home markets and beyond. It was first announced in 2017 by Jack Ma in his capacity as the UNCTAD Special Adviser for Young Entrepreneurs and Small Business when he, together with Dr. Mukhisa Kituyi, Secretary-General of UNCTAD, visited Africa.

Participants in the eFounders Initiative will learn first-hand the transformative impact e-commerce and technology have on society in China and participate in lectures and discussions with local practitioners and executives to identify the lessons that can be applied to their own markets. Topics covered will include e-commerce, payment, logistics, big data and tourism from the Alibaba Group and other successful companies in the e-commerce value chain, with sessions touching on digital finance, smart logistics, and rural e-commerce development, among others.

Upon graduation, participants will officially become Fellows of the eFounders Initiative and make formal commitments on how they will apply the learning from this program. As part of the wider eFounders Initiative community of promising young entrepreneurs around the world, UNCTAD and the Alibaba Group will also continue to advise on and provide support for the creation of e-commerce ecosystems with other stakeholders.

The first class of eFounders Fellows - 24 entrepreneurs from Africa - completed the program in November 2017 after a similar two-week intensive workshop in Hangzhou.

To continue the impact of the initiative, UNCTAD and Alibaba have already completed a full round of follow-up meetings with the fellows, each of whom are actively applying what they learned in their own enterprises as well as sharing insights with their home communities. They are working towards achieving their commitments and will continue to check in with UNCTAD and Alibaba every three months.

Vietnam’s first-quarter GDP growth projected to hit ten-year high

The Vietnamese economy is forecast to expand by more than 7% in the January-March period, which will be the best first-quarter performance in the last ten years.

The estimate was announced by the Ministry of Planning and Investment (MPI) at a meeting on macroeconomic management chaired by Deputy Prime Minister Vuong Dinh Hue on March 27.

MPI Deputy Minister Le Quang Manh said that the strong growth was mainly driven by the manufacturing sector.

Agriculture has continued to grow thanks to favourable weather conditions and the ongoing restructuring efforts, while services were buoyant on the back of growing private consumption as a result of macroeconomic stability, Manh added.

Vietnam’s level of inflation has also been kept in check, averaging 2.82% in the first three months of the year.

Exports in the January-March period were estimated to surge by 23% to US$33.62 billion, outstripping imports by nearly US$1.1 billion.

The MPI deputy minister estimated that total growth for the year could reach 6.8%, higher than the set target of 6.7%, if the current momentum is sustained.

Deputy PM Hue said that although Vietnam’s outlook was bright in the early months of the year, there is no place for complacency, and urged all concerned parties to promote the drivers of growth and keep a close eye on developments in the domestic and global economy.

The official economic data for Vietnam is scheduled to be announced by the General Statistics Office on March 29.

Vietnam facilitates new ways for trade promotion to boost agricultural exports

Vietnam is seeking fundamental changes for its trade promotion in both thinking and implementing methods, in the aim of increasing the presence of its agricultural products on international markets. Instead of organising conferences or exhibitions, many localities have brought delegations directly to the fields to discuss business with farmers.

“Paper trading” is probably no longer suitable in the current business context, especially in the trading of agricultural products. Therefore, in 2017, the Department of Domestic Market (Ministry of Industry and Trade) updated some stages of the trade promotion process, bringing delegations of foreign traders to the raw material sites of mangoes, dragon fruit, and pineapples so they can witness the production process and directly discuss business with farmers. Specialists from the ministry or from the local Departments of Trade and Industry only play as facilitators.

Deputy Head of the department, Hoang Anh Tuan, said that this visual method helps to reduce costs from organising meetings and raises efficiency thanks to the direct discussion of supply - demand between the sellers and the buyers.

For example, in the past, dragon fruit farmers in Binh Thuan often had headaches because of their unstable output. However, in recent years, thanks to improvements in marketing, local dragon fruit has been traded at a stable rate and at a higher price. Director of the Department of Industry and Trade of Binh Thuan province Do Minh Kinh said that the province has more than 27,000 ha of dragon fruit, with output reaching about 600,000 tonnes per year. The amount of local dragon fruit for domestic consumption is 15%, while 85% is exported to 16 markets, of which 70% are in Asia.

Binh Thuan is concentrating on dragon fruit exports via official channels for a more transparent, safe, and sustainable market. The Binh Thuan Industry and Trade Department has invited foreign traders to farms to enjoy the flavours of local dragon fruit cultivated in the new way, while discussing business directly with farmers.

Similarly, in 2017, the Department of Industry and Trade of Ho Chi Minh City implemented a range of solutions to connect the city's businesses with other localities through bringing the city’s products to other provinces and enabling local businesses to connect and expand the market for consumption. At present, there are 75 investment projects between the city and other localities with a total investment of more than VND27.4 trillion, including farming and food processing projects and building factories and farms. Of this, the linkage providing capital for farmers to run bio-farm produce reaches VND2.5 trillion per year.

Deputy Head of the Ho Chi Minh City Department of Industry and Trade, Nguyen Phuong Dong, said that his department has organised field trips to introduce traders to producers and farmers in the fields. In such face-to-face meetings, the business cooperation procedure has been quicker and easier with reduced complications from third parties, and reduced risks in the commodity production chain. Moreover, it also helps improve product quality, reduce production costs, and increase products’ value and competitiveness.

According to statistics from the General Department of Vietnam Customs, the export turnovers of fruits and vegetables reached US$383.7 million in January, up 18.3% over the previous month and up 63.6% over the same period in 2017. Vietnam's exports of fruits and vegetables to major markets increased sharply. In addition to the main market of China, in January 2018, Vietnam also exported fruit and vegetables to other big markets, such as the US, Japan, Thailand, the Republic of Korea, and Malaysia. Notably, export turnover of this agricultural product to Japan reached US$10.6 million, up slightly from last month and up 77.5% over the same period of 2017.

Statistics from the International Trade Center’s Trade Map showed that in 2017, the import value of vegetables and fruits in Japan reached US$9.5 billion, up 2% over 2016. To date, Vietnam has exported red dragon fruit, mango, lychee, and shiso leaves to the Japanese market. However, Japan is a market with strict requirements on the standards and quality of goods, as well as food hygiene and safety. The import value of vegetables and fruits from Vietnam only accounts for a very small proportion of Japan’s import demand, reaching US$132.5 million in 2017, up 5.2% compared to 2016.

Experts suggested that to increase exports of fruits and vegetables to Japan, Vietnamese exporters must meet the strict requirements on plant quarantine and food hygiene, or during the production process, enterprises must have their raw material areas inspected and recognised by the Plant Protection Department with plant protection codes and meet the food hygiene and safety requirements.

Commercial Counsellor of the Vietnamese Embassy in Japan Ta Duc Minh said that the Japanese market highly values agricultural products from Vietnam. The first batch of chicken exported to Japan in 2017 proves that Vietnamese agricultural products have passed the test to gain access to this fastidious market. Along with that, there is even greater potential in Vietnam’s bananas and mangoes. However, export prices of these products are still high, making it difficult to compete with Thai products as the products are easy to damage and transportation costs are quite high.

Ensuring Vietnamese agricultural products stand firm and gain a foothold in selective markets is not an easy task. The Vietnam Institute for Economic and Policy Research recommended that the core factor is to increase the quality of products and trade promotion activities, providing regularly updated information on demand and the standards of imported products for each market.

In addition, Vietnam is heading towards sustainable agricultural exports, which requires a restructuring of the agricultural sector. Exporters should adjust towards focusing on quality rather than quantity. This task requires the right strategy on the material source. Previous raw material areas that help earn stable exports to middle and high-end markets need to be continuously invested in to improve the quality of their products. It also needs a roadmap from the business community in an effort to reduce unnecessary costs. On the part of the State, there should be more practical support in reducing the quantity and increasing the quality of agricultural products.

Vietnam attracts nearly US$5.8 billion FDI in first quarter

The total foreign direct investment (FDI) registered in Vietnam in the first quarter of 2018 reached approximately US$5.8 billion, equivalent to 75.2% of the same period last year, the Foreign Investment Agency (FIA), under the Ministry of Planning and Investment, has announced.

From the beginning of the year to March 20, 2018, FDI disbursement in the first quarter of the year reached roughly US$3.88 billion, representing a surge of 7.2% against the previous year.

Of the total, US$2.12 billion came from 618 newly licensed projects, while the remainder was contributed by 199 currently-operating projects that raised their capital by more than US$1.79 billion in total.

In the first quarter of this year, foreign enterprises have invested in 18 sectors, among which, the manufacturing and processing industries continued to be the top sector, receiving FDI of US$3.44 billion, comprising 59.4% of the total registered FDI.

From January to March, 76 countries and territories worldwide were making active investments in Vietnam. The Republic of Korea was the leading investor, with US$1.84 billion, 31.6% of the FDI pledged to the country. Hong Kong (China) was runner-up, with US$689 million, while Singapore followed with US$649 million.

Ho Chi Minh City was the top recipient of registered FDI capital at US$1.7 billion, equal to 29.3% of the total newly-registered capital, followed by Hai Phong with US$925 million (16%), and Binh Duong with US$565 million (9.7%).

Vietnam has 23 newly licensed investment projects abroad, with a total capital of US$123.6 million and added US$25.88 million to 5 operating projects in the first quarter of the year.

Affordable apartments in HCMC in short supply

A large number of apartment projects in HCMC are available on the market but small-sized and affordable units are in short supply, according to a Lao Dong newspaper report.

The newspaper said a majority of housing projects put up for sale in HCMC between December 2017 and February 2018 fall into the mid-range category. Each unit costs over VND1.5 billion (US$65,750), excluding valued-added tax and other costs.

Though prices are quoted in their advertisements at VND1 billion per unit, actual prices are much higher. VND1 billion is enough to buy units that are unattractive and small.

Developers of affordable housing such as Hoang Quan Consulting Trading Service Real Estate Corporation, National Housing Organization JSC, and Le Thanh Real Estate Service and Construction Company have not put any new apartments up for sale since mid-2017.

Major property investors such as Him Lam Land, Novaland, Hung Thinh, Vingroup and Nam Long are selling their homes at over VND1.5 billion each.

The market is overwhelmed with apartments costing more than VND2 billion each, particularly those belonging to projects like Masteri An Phu developed by Thao Dien Investment JSC, Ascent Lakeside by Tien Phat Real Estate Investment Corporation and Gem Riverside by Dat Xanh Group.

Market watchers said the HCMC property market is short of budget housing projects due to surges in building material prices and land scarcity. Local property developers have had no way but to push up home prices.

The city government has banned construction of homes below 40 square meters each, said Tran Quoc Viet, general director of Cat Tuong Group, a local real estate firm.

Low-income people can find small homes more affordable, he noted.

Le Hoang Chau, chairman of the HCMC Real Estate Association, said the municipal government has capped the minimum area of commercial homes at 45 square meters each.

To make more low-cost homes available on the market, the association has proposed the city government give property investors the green light to build smaller units as long as the number of such homes does not exceed one-fourth of all units in a single project.

Chau said if infrastructure in outlying districts is adequate, residential blocks with a certain percentage of small units should be developed there.

The city is home to around three million migrants, accounting for 23% of the city’s population. The majority of them are low-income earners and have great residential demand, he added.

According to him, the local government should set up mechanisms to lure property firms into developing budget homes.

The association has proposed the National Assembly, the Government, and the State Bank of Vietnam allocate VND1-2 trillion (US$43.8-87.6 million) from the State budget to beneficiaries of social apartments through bank loans with an annual interest rate of 4.8% until 2020.

He said these State agencies should also come up with mechanisms to implement preferential credit policy for social housing investors in line with the Housing Law in the long run to reduce prices of these homes.

HCMC tax office works with court over Uber lawsuit

The HCMC Tax Department on March 26 showed up at the HCMC People’s Court providing documents related to a lawsuit filed by Uber B.V.

Nguyen Nam Binh, deputy director of the HCMC Tax Department, told the Daily on March 26 that the department presented relevant documents to the court as requested. No specific schedule for the next steps has been made, he added.

According to him, the department will have to go through each and every step of the legal process.

As reported earlier, the department was sued by Uber for a decision to collect back taxes in the period between the firm’s launch in Vietnam and August 24, 2016, when the Ministry of Finance released Dispatch 11828 providing tax policy guidance for ride-hailing services in the country.

According to Uber, it is not responsible for paying value added tax and personal income tax on behalf of drivers. The tax department cannot collect taxes that were due before the ministry’s guidance came out and the firm would just pay taxes after the guidance was issued, argued Uber.

Binh said the firm has the right to sue or complain. However, the tax department adheres to the guidance of the ministry concerning Uber’s tax obligations.

According to Binh, it is unreasonable that Uber refuses to pay taxes from the time of its debut on the local market as businesses are obliged to pay taxes.

The back taxes the tax department requested Uber to pay amount to VND66.6 billion, including VND26.3 billion in value added tax, VND14.6 billion in personal income tax paid on behalf of drivers, VND10.5 billion in corporate income tax for foreign contractors, VND4.9 billion in late payment fines and VND10.3 billion for false declarations.

This is the second time Uber has sued the tax department over the tax collection requests. The firm last December initiated the first suit, which was then dropped by the HCMC People’s Court as Uber B.V. has no legal status in Vietnam.

Binh said management agencies should work out a new approach to deal with complex cross-border business models like Uber.

LOGIVAN secures Singaporean investment

The Singapore-based Insignia Ventures Partners, founded by former Sequoia Capital venture partner Yinglan Tan, has invested $600,000 in the Vietnamese freight-with-trucker connecting platform LOGIVAN.

Linh Pham, Founder of LOGIVAN, said the fresh capital will enable it to expand to Ho Chi Minh City and other major economic hubs in Vietnam, serving companies that have high transportation needs.

After noting that 70 per cent of trucks in Vietnam return from their destination empty due to a fragmented logistics market, Linh Pham founded LOGIVAN as a connecting platform for trucks, becoming the first company in Vietnam working to “Uberize” the trucking industry with technology.

LOGIVAN offers a central platform that tracks the location of freight and trucks, enabling it to optimize truck routes and reduce their empty load return rates. To book a truck, customers access LOGIVAN online and indicate how many trucks they require and what type of cargo they need delivered.

Linh Pham, a former Goldman Sachs technology analyst and Cambridge University graduate, earlier founded Snappetite, a platform for deals, before launching LOGIVAN. According to World Bank rankings, Vietnam is 64th out of 160 countries in the world in logistics development and fourth in ASEAN after Singapore, Malaysia and Thailand.

Vietnam’s logistics costs remain high, equivalent to over 20 per cent of GDP, compared to 9-14 per cent in developed countries, according to the Vietnam Logistics Association.

Insignia Ventures Partners is a venture capital firm specializing in startup investments. It closed its maiden fund at $120 million in February. The milestone came less than a year after Tan left Sequoia’s office in Singapore and also marks the largest ever maiden vehicle by a venture capital firm in the region.

The LOGIVAN app connects thousands of reliable trucks to meet all needs anytime, anywhere at competitive prices.

Vietjet receives new A321 aircraft with special logo

Vietjet received its newest A321 aircraft on Wednesday, featuring the official logo for the 45th anniversary of diplomatic relations between Việt Nam and France.

The handover took place in the presence of Nguyễn Phú Trọng, General Secretary of the Communist Party of Việt Nam, who made an official State visit to France, and leaders from the two countries.

The logo features the image of a Vietnamese woman wearing a nón lá (palm-leaf conical hat) and a red áo dài (traditional silk dress) holding hands with a French woman wearing a beret and a blue-white plaid dress.

Vietjet’s Managing Director Lưu Đức Khánh said the aircraft acknowledges Vietjet’s continual efforts to introduce a vivid image of an innovative and integrated Việt Nam to the international community.

“Standing high from profoundly comprehensive collaborations among Vietjet and French partners, we will contribute more to the development of economic-cultural-trade cooperation between the two countries,” he said.

The newly added A321 aircraft is the 43th of a total 121 aircraft that Vietjet ordered from Airbus.

The new addition to Vietjet’s expanding fleet will allow the airline to pursue its strategy to improve its services and to expand operations to farther destinations in South Korea, Japan, India and Australia as well as other destinations in the Asia-Pacific region, the airline said in a statement.

Earlier on Tuesday, Vietjet also signed a comprehensive agreement with Safran-CFM on supplying 321 engines to power the airline’s 148 aircraft as well as on fleet management services, training, R&D programmes and technical management.

Safran-CFM will also help the airline develop regional-level support maintenance capabilities.

The airline also inked a finance agreement with GECAS France on purchasing and leasing six A321 Neo aircraft.