Foreign Investment in Hanoi Increased Strongly

Foreign investment is flowing into Hanoi

Foreign direct investment (FDI) into Hanoi is increasing in both quantity and quality. Foreign investors have gradually believed in the decision to set up business in Vietnam.

Unlike many other localities in the country with large FDI projects such as billion-dollar manufacturing complex, Hanoi is much quieter in attracting FDI. But the reality is different. According to the statistics from the Foreign Investment Agency (Ministry of Planning and Investment), up to the end of May 2017, Hanoi still ranked at the 4thplace among provinces attracting the most FDI with over 26.2 billion USD.

If we list the large-scale FDI projects registered in Vietnam since the beginning of 2017, Hanoi can contribute 3 projects, first is Aeon Mall Ha Dong with registered capital of 192.51 million USD. The next is Coca-Cola Vietnam’s 319.8 million USD capital increase project and 72 million USD Park City project.

Last year, a series of FDI projects poured into Hanoi. For example, the project to invest in the purchase and operation of technical system, equipment, technology, software and trading of lottery elective named “Vietlott” (210 million USD); Vietnamobile Company increased its capital (208 million USD); or Vietnam Public Bank project (134 million USD) …

Not to mention, Hanoi has attracted Samsung’s 300 million USD Center for Research and Development (R&D). This proves that the quality of FDI inflows into Hanoi has been improved.

According to information from the Hanoi Department of Planning and Investment, the city is working hard to improve the investment environment to attract more investment capital both at home and abroad. Many solutions have been mentioned, such as facilitating access to land, land use, land for investment and business; improve the efficiency of administration, administrative reform, improve the investment environment; promoting and enhancing the effectiveness of investment promotion activities…

Good news for Hanoi is that the Prime Minister has officially issued a separate Decree allowing the implementation of separate mechanism for the Hoa Lac Hi-Tech Park. For example, allowing investment projects in Hoa Lac Hi-Tech Park to enjoy the highest incentives in accordance with the law of Vietnam, allowing the application of the one-door mechanism, prioritizing the allocation of land funds to develop housing for employees… This is also an opportunity for Hanoi to attract investment in hi-tech sectors, attracting investment from multinational corporations – a priority orientation for FDI attraction identified by Hanoi for many years.

In addition, Hanoi also determines to encourage the development of supporting industries, biotechnology, using modern technology, friendly with the environment; projects in the field of information technology, agricultural development, food safety… And especially, large-scale infrastructure projects.

Without hesitation, Hanoi has frankly expressed the desire that Japanese investors will invest in urban railway projects, investment projects to build bridges spanning the Red River, ring routes, metro lines, underground parking lots, satellite urban areas…

Not only FDI capital, calling for investment in these projects also means that Hanoi also determined to promote investment in the form of public-private partnerships (PPP). In the first 6 months, Hanoi has attracted 24 PPP projects, with a total investment of 32.103 billion USD. A very promising shift, promising that in the coming time, there will be strong waves of investment poured into Hanoi.

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Wind Power: The Inevitable Trend of Sustainable Development

With the increasing demand for electricity, Vietnam is also gradually considering investing in renewable energy, including wind power as the key to addressing energy security, contributing to the realization of the country’s green development strategy.

Energy is one of essential human needs and an indispensable input of economic activity. As the living standards of the people are improving, the level of production of the economy is more modern, the demand for energy is also growing, and satisfying this demand is a real challenge for almost every country.

The race to exploit fossil fuels at all costs of human beings is reaching the limits of nature’s endurance, causing polluted living environments, climate change, causing unrest for the welfare of the community and become one of the global non-traditional security issues, threatening the survival of humanity.

Being aware of that, many countries around the world have been switching from fossil fuel to renewable energy for sustainable development. In many areas, power source from renewable energy projects is equivalent to those from fossil fuel projects, breaking the threshold that we believed to be impracticable.

Currently, in Europe, nearly 50% of new power development projects are wind power projects. In China – the most populous country, in March 2017, the Government shut down its last coal-fired power plant in Beijing to switch to renewable and gas electricity and.

According to the IEA latest report, globally, in 2016, investments in wind and solar power have doubled investments in fossil-fuel power. Furthermore, it is estimated that wind, solar and gas powers will completely replace coal power in the next 25 years.

In Vietnam, the development of the economy has made demand for electricity surge while supply capacity has not developed in time. The Ministry of Industry and Trade has forecasted that average electricity production growth rate of Vietnam in the period 2016 – 2020 is 10.7% per year and the period 2021 – 2025 is 8.6% per year.

Therefore, the Government of Vietnam considers the exploitation and utilization of renewable energy resources have special and strategic meaning in terms of socio-economic, national security and defense, energy security, sustainable development and minimizing environmental impact.

Most experts said that Vietnam has enormous potential for wind power. According to a study by the World Bank, Vietnam has the largest wind energy potential in the region, surpassing Laos, Cambodia and Thailand.

Accordingly, Vietnam’s wind reserve is estimated at 513,360 MW, more than 6 times the estimated total capacity of the electricity sector by 2020. The World Bank study also showed that 8.6% of Viet Nam’s land area is very potential, convenient for the installation of large wind turbines. The corresponding figure of Cambodia is 0.2%, Laos is 2.9% and Thailand is 0.2%.

Understanding the general trend of the world as well as encouraging investment incentives of the Government, about 50 wind power projects have been registered for investment in Vietnam and there are 4 projects with total capacity of 159.2 MW has gone into commercial operation.

Most recently, the Phuong Mai 3 Wind Power Project in Nhon Hoi Economic Zone (Quy Nhon – Binh Dinh), has a capacity of 21 MW – 28 MW, including 14 turbines with a total investment of 40 – 50 million USD are invested by HALCOM Company and its international partners. With an area of 140 hectares, the project is expected to supply about 72 million kWh of electricity per year and reduce emissions by 40,000 tons of CO2 per year. According to representatives of HALCOM, the project will be implemented in 2017 – 2018. Once completed, the estimated revenue can reach 150 billion VND per year.

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Vietnam – Russian Federation: Cooperation in The Spirit of Friendship

There are many opening opportunities, so that the Russian Federation enterprises can come to explore and set up business in Vietnam and vice versa.

Previously, there is almost a constant law, that is only Vietnam come to promote investment abroad, now the story seems to be different. Japan has organized an investment promotion conference in Vietnam. And just recently, on March 2017, during a visit to Vietnam of Mr Yuri Trutnhev – Deputy Prime Minister, Russian Presidential Representative in the Far Eastern Federation, also held the same investment promotion workshop. There have been calls for Vietnamese businesses to invest in Russia, with many investment incentives.

In fact, in the last few years, Vietnam’s investment in Russia has increased rapidly, from 100 million USD in 2008 to about 2.4 billion USD in the recent times, concentrating mainly on oil and gas, trade, agriculture… Vietnam’s large investment projects in Russia include Rusvietpetro, Gazpromviet Petroleum Joint Venture, TH TRUE Milk, Ha Hoi Trade Center in Moscow.

Contrary to the trend of capital inflows from Vietnam to Russia have increased dramatically in recent years, investment flow from Russia to Vietnam is slowing. In the first 5 months of 2017, Russian businesses only invested 7.2 million USD in Vietnam. To sum up, the accumulated investment capital from Russia to Vietnam is currently about 1 billion USD.

The figure is modest and substantial, focusing on traditional projects which is oil and gas cooperation. Besides the Vietsovpetro Joint Venture, the two countries have established such joint ventures as Rusvietpetro, Vietgazprom and Gazpromviet to expand oil and gas cooperation in Vietnam, Russia and third countries.

In April 2017, a meeting between two leaders of Russia and Vietnam’s leading oil and gas corporation that are Gazprom and PVN, took place in Moscow. In which, both sides have continued to discuss on the cooperation to exploit oil and gas in Vietnam, as well as oil and gas projects in Russia.

In fact, Gazprom has participated in the Hai Thach – Moc Tinh gas field project in Vietnam since 2003 and up to now, the total output of this mine has reached about 6.6 billion m3 of gas. In particular, in 2016, the output reached 2 billion m3.

In addition, the two sides also discussed the process of geological exploration in plots 112 and 129 – 132 on the continental shelf of Vietnam, also deployed the project of developing oil – gas – condensate – Nagumanovskoye field and gas field – condensate Severo – Purovskoye in Russia, at the same time discussed the prospect of joint venture cooperation in the field of electrification and transport vehicles using natural gas (NGV). Once these agreements become reality, Vietnam – Russia oil and gas cooperation will be more closely and effectively, opening great investment cooperation opportunities between the two sides.

Opportunities will be even greater when the free trade agreement between Vietnam and the Eurasian Economic Union (includes Russia, Belarus, Kazakhstan, Amenia and Kyrgyzstan) is effectively implemented. Implemented effectively. Although it is just a free trade agreement, the agreement will create a great opportunity for two sides to cooperate and take advantage of each other’s markets. This common market block has total GDP of 2,200 billion USD and 183 million people. Moreover, Vietnam and the Eurasian Economic Union have also set target of increasing two-way trade to 10 billion USD by 2020. This is an important basis for investment cooperation between Vietnam and the Russian Federation, as well as other intra-regional economy will be further boosted.

The visit to Belarus and the Russian Federation from June 26th to July 1st 2017 by Vietnam President Tran Dai Quang is expected to create opportunities for further economic and investment cooperation between Vietnam – Russian Federation and Vietnam – Belarus.

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ACWA Power and FECON Develop Renewable Energy Projects in Vietnam

On July 3rd, ACWA Power Energy Corporation from Saudi Arabia and FECON JSC have signed Memorandum of Understanding on cooperation to develop renewable energy projects in Vietnam.

According to the national electricity development plan and the renewable energy development strategy of Vietnam, the Vietnam Government prioritizes the mobilization of all resources to develop renewable energy, increasing the rate of electricity produced from renewable energy sources (excluding medium and large hydropower), account for 7% by 2020 and above 10% by 2030. In which, wind and solar power are areas of great concern. Along with the above strategy, many incentives and support mechanisms are being built and perfected to attract investors in this field.

Recognizing this potential, ACWA Power (Saudi Arabia) decided to choose Vietnam as the first and strategic country in Southeast Asia to invest in renewable energy projects. ACWA Power is a developer, investor, operator and co-owner of a portfolio of power plants in 12 countries in the Middle East, North Africa, South Africa and Southeast Asia. Particularly in the Middle East, ACWA Power is a developer of electricity and water in the top 2 of region.

ACWA Power’s portfolio is valued at over 30.5 billion USD, with a total generating capacity of 21.5 GW.

According to the Memorandum of Understanding, FECON and ACWA Power will jointly study and evaluate the opportunities and potential of renewable energy investment in Vietnam. Particularly wind and solar power projects in some provinces in the Southern of Vietnam such as Binh Thuan, Ninh Thuan… Then, the two sides will set up joint venture company to invest in specific projects.

Furthermore, according to CEO of ACWA Power, Vietnam is the perfect place for investors to invest and develop renewable energy projects in the coming time. The investment potential in Vietnam is huge due to the increasingly cheaper technology cost, with the advantage of resources, the local partner ‘s understanding and the advantages of modern technology and capital. The cooperation between the two sides will certainly go to success. ACWA Power’s CEO also expects the Government of Vietnam will to continue to support and license the projects of this Corporation when they expanding investment in Vietnam in the future.

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Situation on M&A Transactions in Vietnam

In 2017, if nothing breaks through, M&A value will not easily surpass the value in 2015 and 2016. This will require a boost from businesses and the Government to take advantage of opportunity from foreign capital flows.

In 2016, the value of worldwide M&A transaction reached 3.5 trillion USD, decreased by 27% compared with the previous year but still at a high level. This could be a sign of ending a period of global M&A growth. With such event as Brexit or the policies of US President Donald Trump, global M&A activities becomes unpredictable and there may be a shift in capital flows.

According to IMAA statistics, in Vietnam, after reaching its peak in 2015, which was a record level in the past 10 years, with an estimated M&A value of 5.2 billion USD by 2015, ending the year 2016 with a value of 5.1 billion USD. However, there are also many obstacles and there was a slowdown in the second half of 2016 when large and quality deals are announced.

The most exciting sector in 2016 is retail, consumer goods and real estate. Banking and finance seems to be quiet in the past year. Other sectors that also attracted attention are education and technology.

Foreign investors still play a significant role in M&A activities in Vietnam with huge deals. Japan is persistent in its strategic partnership with state-owned companies such as Vietnam Airlines, Petrolimex… Korea has entered the market with some industrial sectors, while Singapore is focusing on real estate projects.

In addition, the market continues to witness M&A moves and strategic investments by some private corporation when the State divests. The most typical in the past year was a divestment deal involving Vinamilk. Along with Vinamilk, a number of Vietnamese companies are still in the sights of investors such as Sabeco, Habeco and Mobifone.

The challenges for M&A growth in Vietnam are: The change in US policy, in particular the United States decided to withdraw from the TPP, obstacles from equitization in Vietnam, business quality and size of the economy. In order to achieve high M&A value like 2016, it requires the assertiveness of the State in the divestment of large corporations. At the same time, the market needs a new push & breakthrough factors.

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New Billion Dollars Thermal Power Project in Vietnam

Recently, Vietnam is really blooming with a lot of renewable energy projects as many foreign investors choose to set up business in Vietnam in this field.

The Nam Dinh 1 thermal power project, with a total investment capital of 2.2 billion USD, is the largest thermal power project in Nam Dinh so far. The project owner is Nam Dinh 1 Power Co., Ltd but headquartered in Singapore and is a joint venture of two foreign corporations which are Taekwang Power (Korea) and Acwa Power (Saudi Arabia).

Taekwang Power is expanding its portfolio in areas as real estate, petrochemicals; at the same time continuing to increase investment capital in Southeast Asia. In 2008, Taekwang Power established its subsidiary Taekwang Power Holdings to participate in the development of power plants in Vietnam.

Meanwhile, Acwa Power was established in 2004 as a joint venture between Abunayyan Trading Company and Abdulkadir Al Muhaidib & Sons Company together with MADA Group. Acwa Power is trading in power supply and desalination, and is the first private company to operate in this area after Saudi Arabia decided to strengthen its role in the private sector in 2002.

The total investment capital of the Nam Dinh Power Project includes: owner’s equity is 0.56 billion USD, accounting for 25% and loan is 1.68 billion USD, accounting for 75%. The commercial operation date is scheduled for December 2020 with a BOT contract term of 25 years.

The two companies in the joint venture of Acwa Power and Taekwang Power are large and experienced organizations in the field of power generation and supply. Taekwang Power with its subsidiary Taekwang Power Holdings specializes in the field of power supply. Meanwhile, Acwa Power owns a lot of domestic and international power generation and supply projects, especially 10 projects using renewable energy.

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Vietnam Is One of Fastest Tourism Growing Countries in The World

Dubbed as a smoke-free industry, Vietnam tourism industry is a potential sector and presently, Vietnam has become the top choice destination for foreign visitors.

The United Nations World Tourism Organization (UNWTO) has just announced the list of the top fastest tourism growing countries in the world. Notably, Vietnam ranks 7th in the list, with an increase of 24.6% in foreign visitors in 2016, just behind other 2 countries in the same continent which are Nepal (increases by 39.7%, ranks 2nd) and South Korea (increases by 30.3%, ranks 4th). Other Asian countries on the list include Japan at 8th and Indonesia at 20th. The Sierra Leone nation, which is located in West Africa, topped the list with an increase of 310% in 2016.

According to the General Statistics Office, international visitors coming to Vietnam in the first 6 months of 2017 were estimated at 6,206.3 thousand people, increases by 30.2% over the same period last year. In which arrivals by air reached 5,212 thousand people, increases by 33%; by road reached 823.5 thousand people, increases by 15.8%; by sea reached 170.8 thousand people, increases by 26%.

Of the international visitors to Vietnam in the first half of 2017, led by visitors from Asia with 4,572.7 thousand people, accounting for 73.7%. Followed by visitors from Europe with 979.3 thousand people, accounting for 15.8%.

To promote Vietnam tourism on the Internet, on July 9th, the Tourism Information Center, Vietnam National Administration of Tourism will officially launch new website “vietnamtourism.com” and special pages “Travel Destination” in English. This new interface is expected to contribute to improve the efficiency of Vietnam’s online travel advertising on the internet, creating novelty, modern features and interfaces, getting tourists centered to change the way to access and provide information to visitors.

Also for the purpose of serving tourists, on June 30th, Hanoi Transport Corporation (Hanoi Transerco) has tested a two-stage bus named City Tour.

With a value of about 7-9 billion VND, the bus is painted in bright red color for visitors to easily identify, the car equipped with 4G wifi system, many modern equipments, accessories to support up, down and lock the wheelchair in the cab for disabled clients. The 2nd floor has mobile roof to cover sun and rain.

The bus is designed for Vietnam tourism market to develop city tour product. It is expected that the first 10 buses will be put into use in July 2017. If the test run successful, Hanoi Transerco will order to produce this product domestically, scheduled to officially start operation in the next 2 months.

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State of Baden-Wuerttemberg (Germany) Opens Representative Office in Vietnam

The representative office of the State of Baden-Wuerttemberg (Federal Republic of Germany) in Vietnam has officially come into operation from July 2017 with the purpose of promoting trade and investment, paving the way for German businesses to set up business in Vietnam and vice versa.

This representative office is located at the Delegate of German Industry and Commerce in Vietnam. The office will provide information about the market, business and investment environment in Baden-Wuerttemberg to businesses in Vietnam. For businesses in the state of Baden-Wuerttemberg, the office will assist in finding partners and exploring the investment environment in Vietnam.

The State of Baden-Wuerttemberg is Germany’s third-largest state, one of Europe’s most important economic centers and also a major investment destination of this continent.

With its favorable geographic location, adjacent to France, Austria and Switzerland, the State of Baden-Wuerttemberg is the ideal gateway to the European market with nearly 500 million customers. In fact, The State of Baden-Wuerttemberg has always been a leader in exports and a major contributor to the significant growth of the German economy. The gross domestic product (GDP) of the state in 2015 is 460 billion euros, higher than the GDP of Belgium, Sweden or Austria. The global companies such as Daimler, Bosch, SAP, GFT Technologies and Posche all have their headquarters in this state.

Meanwhile, established in Vietnam since 1993, the Delegate of German Industry and Commerce in Vietnam, as a representative for Germany’s Ministry of Economy and Energy, always supports and promotes business cooperation and Investment between Germany and Vietnam.

In addition to information about the market, partners and investment locations, this office also co-operated with German businesses in Vietnam to implement projects on parallel vocational training, bringing supporting projects of the German Ministry of Economy to Vietnam in renewable energy and energy efficiency sectors, as well as supporting Vietnamese enterprises in accessing the German market via the trade fair channels.

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CPG Corp (Singapore) Invests in Hospital in Binh Dinh province

Recently, CPG Corporation from Singapore has expressed their aspiration to set up business in Vietnam.

In particular, CPG wishes to invest in the construction of a 150-bed high-class hospital; cooperation in training human resources to serve in the field of health, bringing Quy Nhon city to become a destination of health care tourism.

On July 7th, the General Director of CPG Corp (Singapore) in Vietnam has visited Binh Dinh province to find out investment opportunities. It is known that CPG Corp has 180 years of experience in such areas as development consulting, design and manage infrastructure of urban areas and industrial parks in Asia-Pacific region.

In Vietnam, CPG Corp has been involved in implementing more than 100 infrastructure development projects and participating in the design of many international airports, hospitals, hotels… in some localities.

In response to CPG ‘s aspirations, Binh Dinh province committed to creating the most favorable conditions for CPG to invest in implementing some projects in the coming time.

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Foreign Investors Implement Food Projects in Vietnam

Foreign investors who are licensed to invest in the food sector in Ho Chi Minh City are in the process of implementing the project, while other projects are interested by foreign partners. It shows the excitement of investors when deciding to set up business in Vietnam.

In particular, project of Nam Duong International Food Co., Ltd with registered capital of 25.6 million USD has completed the construction of the factory, installation of equipment and machinery. The project is licensed by the end of 2015, which is a joint venture between the Saigon Co-operative Alliance (Saigon Co.op) and Wilmar International Limited (Singapore), with the capital contribution of 49% and 51% respectively. The project aims to produce sauces and spices for domestic and export markets.

Wilmar’s investment in Vietnam and cooperation with Saigon Co.op is to utilize strengths from both sides to improve the competitiveness and coverage of Nam Duong brand as well as contribute significantly to the development of the sauce and spices industry.

Meanwhile, the project of CJ Cau Tre Foods Joint Stock Company, with investment capital of 53.3 million USD, which was licensed by the end of May 2017, is being expedited by investors to implement the procedures under regulations to prepare to start construction.

This is a food processing complex on an area of 7.1 ha, including food processing plant, research and development center, modern food safety center… The 1st phase of the factory has designed capacity of 12,000 tons of products per year, which will be consumed domestically and exported to markets such as Korea, Japan, USA, EU…

The project is invested by CJ Cheiljedang Corporation (Korea) through the ownership of 71.6% stake in Cau Tre Export Processing Joint Stock Company.

We can see that, in recent times, many foreign investors have approached the market by acquiring or holding controlling shares in local companies and it is forecasted that this trend will continue.

In terms of attracting investment in the coming time, Ho Chi Minh City has many incentive policies for projects in 4 key industries, which are food processing, chemicals – rubber, mechanical and electronic – information technology. The field of food processing has received a lot of attention from many foreign investors and the fact that many large-scale investment projects have been licensed.

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New Taste of Singaporean Investors

Recent projects of Singaporean investors have shown new features in the investment taste of Singapore enterprises when they decide to set up business in Vietnam.

In July 2017, United Overseas Bank (UOB – Singapore) was approved by the State Bank of Vietnam (SBV) in principle to set up a 100% foreign owned bank in Vietnam. The list of personnel proposed to be appointed as members of the Board of Members, the Board of Supervisors, the General Director of UOB has also been approved. After much waiting, UOB finally has a “passport” to operate in Vietnam as a bank with 100% foreign capital in Vietnam. What is left is just completing the dossiers and procedures for the SBV to make the final decision.

UOB is the first bank in Singapore setting up a subsidiary in Vietnam. This event seems to mark the “new taste” of Singaporean investors. Previously, Singapore’s investment capital is mainly focused on such projects as processing, manufacturing and real estate. Now, it seems that the cash flow is changing direction.

Not just banking project, latest information indicates that Singaporean investors have also begun to pay attention to the energy sector in Vietnam. Last year, UOB under UOB Venture Management Pte Ltd (UOB VM), along with ORIX Corporation (Japan) have invested 25 million USD in Bitexco Power JSC under Bitexco Group. The involvement of well-known global organizations like UOB and ORIX will make a significant contribution to Vietnam’s energy sector.

In addition, Sembcorp is also a Singaporean investor willing to invest billions of dollars for a power plant in Vietnam.

According to the information, at the end of July 2017, Sembcorp’s representative went to Quang Ngai to officially report to the leaders of this province that Sembcorp will have a Feasibility Study Report at the end of this year about the gas thermal power plant in Dung Quat Economic Zone.

Last year, The Blue Circle – Singapore’s wind power developer has received an investment certificate for a 40 MW project in Ninh Thuan province, with investment capital in the 1st phase of 60 million USD.

In fact, Singapore has always been a leading investor in Vietnam. According to data from the Foreign Investment Agency (Ministry of Planning and Investment), the accumulated capital so far invested by Singaporean enterprises is 41.6 billion USD, ranking 3rd in countries and territories investing in Vietnam. Many of Singapore’s projects have contributed significantly to Vietnam’s socio-economic development.

One of the noteworthy examples is Sembcorp joint venture with Becamex to develop a series of VSIP industrial parks and urban areas spanning across Vietnam, from Binh Duong, Bac Ninh, Hai Duong to Quang Ngai, Nghe An, Hai Phong… At the beginning of this year, VSIP decided to invest in a third industrial zone in Binh Duong, with a total registered capital of 284.75 million USD.

Not only VSIP, many other Singaporean investors have also succeeded in Vietnam and are continuing to boost investment. Last year, Mapletree Investment Pte Ltd decided to acquire Kumho Asiana Plaza Saigon in District 1, Ho Chi Minh City from Kumho Industrial Company Limited and Asiana Airlines Incorporated. After this deal, Mapletree’s assets in Vietnam amounted to more than 1 billion SGD.

Prior to Mapletree, Keppel Land has also acquired 40% of the Empire City project in District 2, Ho Chi Minh City, equivalent to 93.9 million USD. Not to mention, many other Singaporean enterprises have also invested much in Vietnam, such as Banyan Tree with Laguna Lang Co project, total capital of 875 million USD; or KinderWorld with a series of international schools in many provinces, cities and is continuing new investment plans…

Not stopping with the current results, Singaporean enterprises are still quietly looking for new investment opportunities in Vietnam. The fact that UOB opened a subsidiary in Vietnam is to serve the purpose of investing more and more in Vietnam of Singaporean enterprises.

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Indonesian Producer Wants to Invest in Vietnam

Vietnam has become a destination for Indonesian investors to set up business in Vietnam thanks to the ever-improving investment environment and the establishment of the ASEAN Economic Community (AEC).

At the Conference named “Vietnam – Indonesia: Strengthening trade cooperation in palm oil and paper industries” that was recently held in Hanoi, the Indonesian Ambassador in Vietnam said that many Indonesian businesses are exploring business and investment opportunities in Ha Noi, Ho Chi Minh City, Da Nang and many other places in Vietnam.

Accordingly, more Indonesian investors will come to Vietnam in the coming time because Vietnam is a promising place for Indonesian investors to open their production bases thanks to AEC tariff reductions.

According to the Indonesian embassy, the Indonesian 12 largest palm oil exporters and 14 largest paper exporters are planning to expand their export markets to Vietnam and expecting to enter into joint ventures with local businesses to directly produce products in Vietnam.

In addition to calling for investment and cooperation in the palm oil and paper sectors, Vietnam has recently welcomed many Indonesian investors coming to Vietnam seeking investment opportunities and doing business successfully in the areas of animal feed, building materials, real estate…

Meanwhile, Indonesia’s capital flowing into Vietnam through mergers and acquisitions has been rising steadily, such as PT Semen Gresik – Indonesia’s largest cement company, has spent 230 million USD buying 70% of the shares in Thang Long Cement Company from Geleximco.

Indonesia’s second largest M&A deal in Vietnam is Salim Group spent 37 million USD to purchase 49% shares in Hiep Thanh Group – a trading, processing, aquaculture and export group of two agriculture strategic products that are rice and seafood.

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Korea Invested 2.7 Billion USD in Binh Duong

Korean investors have set up business in Vietnam a lot in the recent years and this country is also the third largest foreign investor in Binh Duong province with 619 projects.

At the meeting between Binh Duong People’s Committee and Korean investors held on August 16th, according to reports of Department of Planning and Investment of Binh Duong province on the attraction of foreign direct investment (FDI) in the first six months of 2017, there was positive changes. The total FDI capital reached 1.726 billion USD, equal to 123% of the year plan and increase by 51% over the same period in 2016.

Specifically, there are 97 new projects with capital of 1.034 billion USD, 62 projects adjust and increase capital of 670 million USD. The sectors attracting a lot of investors are electricity, electronics, mechanics, pharmaceuticals, chemicals, trade and services…

Particularly for Korean investors, in six months of 2017, there are 16 new projects and 17 projects adjusted for capital increase. Overall, total investment reached 306 million USD. Accumulated until June 30th, Korea is the third largest foreign investor in Binh Duong (after Taiwan and Singapore) with 619 projects worth 2.694 billion USD.

With the efforts to improve the investment environment, Binh Duong is always attracted by investors, the number of foreign investors coming to the province to explore investment opportunities in the first half of 2017 continued to increase over previous years. FDI attraction results of Binh Duong is a good signal, affirming that the investment environment of the province is very attractive to foreign investors.

Binh Duong currently has 28 industrial parks with an area of 10,560 hectares and 11 industrial clusters with an area of over 802 hectares, occupancy rate reaches over 70%.

Binh Duong is still implementing some new industrial zones and expanding existing industrial parks such as Bau Bang Industrial Park (1,000 ha), Nam Tan Uyen (446 ha), approving new investment of An Lap industrial cluster (75 ha).

In the period 2016 – 2020, Binh Duong will develop up to 33 industrial parks with an area of nearly 15,000 ha.

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TATA Build Instant Coffee Factory in Vietnam

Vietnam has always been an attractive market for foreign enterprises to come and set up business in Vietnam and most recently, TATA Coffee Ltd – a subsidiary of TATA Group has become the first company in India building instant coffee factory in Vietnam.

TATA Coffee is a wholly-owned subsidiary of TATA Global Beverages (TATA Group) – Asia’s largest coffee company and one of the largest instant coffee exporters in India.

The ground-breaking ceremony of instant coffee factory in Vietnam marked the beginning of a coffee factory project with capacity of 5,000 tons of instant coffee per year of TATA Coffee Ltd in VSIP II Industrial Park (Binh Duong).

TATA Coffee Factory is set to start production in 2019, aiming to serve its global clients with a new mix of instant coffee.

According to CEO of TATA Coffee Ltd, TATA Group has a close relationship with Vietnam in various fields such as automobile, steel, trade, energy and watches. With this investment, the beverage industry will also become a major area of TATA’s participation in the investment here. Although TATA’s products have been exported to more than 40 countries around the world, instant coffee so far has only been produced in India.

Vietnam has marked TATA’s first breakthrough outside the Indian borders as a manufacturer, so this is TATA’s milestone on the journey to become a global company specializing in coffee. TATA Coffee will make every effort in coffee processing operations with a special focus on safe working conditions. The project will contribute positively to foreign exchange earnings and create more local jobs.

It is reported that Vietnam is currently the world’s largest producer of Robustas, which is conducive to providing a favorable raw material for the plant.

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Thailand: Long-term Investors in Vietnam Market

Thailand is one of the few investors involving in a lot of industries in Vietnam, they set up business in Vietnam for years and this trend has not shown signs of decline.

Thailand was one of the first foreign investors came to Vietnam in 1992. To date, Thai investors have committed to invest in Vietnam 468 projects with a total registered capital of 8 billion USD, ranked 10thamong countries and territories investing in Vietnam. Thai investors have poured capital into many sectors of Vietnam’s economy, from processing industry to agriculture, wholesale and retail…

After more than 25 years of presence in Vietnam, Thais have quietly acquired BigC, Metro, Nguyen Kim, Vinamilk, Prime… The chain of wholesale and retail stores of Thai people has spread throughout Vietnam. Not many foreign investors in Vietnam can do that.

With a large investment scale, it can be said that Thailand is the leading investment partner of Vietnam. Meanwhile, in ASEAN, Thailand is Vietnam’s largest trading partner, while Vietnam is Thailand’s second largest export partner, with total bilateral trade in 2016 reached 12.5 billion USD. Of which, Vietnam exports to Thailand reached 3.7 billion USD. In the first half of 2017, total two-way trade turnover reached nearly 7 billion USD, increase by over 22% over the same period last year. The two sides set a target to bring two-way trade turnover to 20 billion USD by 2020.

However, Vietnam and Thailand are also direct “competitors” in both competition to attract foreign investment and export goods. There are a lot of Thai exports that are similar to Vietnam’s exports, in which rice is one of the typical items.

In terms of investment attraction, Thailand has long been a leading investment destination in the region and Vietnam is competing directly with this market. In recent years, many Korean and Japanese investors, including LG, have decided to move production sites from Thailand to Vietnam. According to a report released by PwC, Vietnam has surpassed both Thailand and Malaysia in terms of new FDI inflows. Even PwC says that overtaking Thailand and Malaysia, Vietnam is at a “booming point” in the development process, thanks to a series of trade agreements being signed and an increasingly transparent and open business environment.

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Foreigners Rushing to Buy Real Estate in Vietnam

Hundreds of millions of dollars are waiting to pour into Vietnam real estate market in most segments. The real estate market attracts a lot of foreign investors, mainly through M&A activities.

According to the newly announced report from Savills Vietnam, in quarter 2 of 2017, housing development projects received strong attention. China Fortune Land Development Group has bought shares in VinaCapital’s Lotus Dai Phuoc project for 65.3 million USD. Dai Phuoc Lotus is a residential area project with a total area of 198.5 million hectares in Dong Nai province, bordering Ho Chi Minh City.

In addition, VinaCapital’s Times Square project (Hanoi) worth 41 million USD is also transferred to Elite Capital Resources Limited.

Japanese investors are also active in the market. Nishi Nippon and Hankyu cooperate with Nam Long to build a 26 hectares Mizuki Park residential project in Binh Chanh district, Ho Chi Minh City with total investment capital of 351 million USD.

In addition, Aeon Mall – the famous Japanese retailer has officially co-operated with BIM Group to develop the second shopping center of Aeon in Hanoi with an area of 16.7 ha, the estimated investment capital is 200 million USD.

In the field of industrial real estate, Hemaraj Land & Development (Thailand) and Cienco 4 (Vietnam) have officially confirmed the joint venture to establish 1 billion USD industrial park on 3,200 hectares of land in Nghe An province.

In recent years, the real estate market of Vietnam has witnessed the strategic moves of investors, including mergers – acquisitions and development – cooperation. Some typical deals include Gaw Capital’s acquisition of a series of high-value commercial properties from Indochina Land, Gamuda Land’s acquisition of stake of local investors in the Celadon City project.

At the same time, the M&A market happened on a large scale in all different segments, such as the joint venture between Chau Tai Phuc and Suncity Group into the large resort and casino project in Nam Hoi An with total investment of up to 4 billion USD or the deal that Lotte acquired Diamond Plaza.

The market is expected to continue to be active in 2017 with a series of acquisitions and mergers.

According to JLL Vietnam, in the first half of 2017, Vietnam has attracted about 19.2 billion USD of foreign investment capital, increase by 54.8% over the same period last year. This shows that Vietnam is still one of the potential markets for investment in Southeast Asia.

There are hundreds of millions of dollars waiting to be poured into the domestic market in most segments, including housing, offices, retail, hotels and industrial parks, according to JLL. Investors come from different countries like Japan, Korea, Singapore, and the growth of investor groups from China.

Joint ventures are becoming more popular among foreign investors – with strong financial strength and experiences, they will work with local corporations – investors who holding land in the market and also has close relationships with local authorities.

The hotel segment has always attracted the attention in the recent time with a lot of foreign capital poured into Vietnam. Forecasting this trend will continue to grow, while other markets such as industrial park and education are also growing constantly. The affordable housing market is seen as attracting much investment capital, largely due to the rise of the middle class.

Lastly, according to Savills Vietnam, M&A will continue to be the form that the vast majority of investors will use to enter the Vietnamese market in order to realize their goals.

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Startup in Ho Chi Minh City Will Be as Convenient as in Singapore

A series of specific commitments has been confirmed by HCMC’s Party Secretary Nguyen Thien Nhan to help startup environment in HCMC becoming as favorable as in Singapore.

The city is committed to preparing an industrial park reserved for newly startup and innovative businesses. Secondly, the procedure for setting up new business in HCMC will be as good as in Singapore. Third, in addition to private investment, the city will also, on a case-by-case basis, pilot public-private partnerships in support of innovative entrepreneurship.

In addition to the above 3 commitments, according to Mr Nguyen Thien Nhan, HCMC will have a general information page to reflect the creative start-up activities in the area. At the same time, he decided to meet face-to-face with the startup community twice a year to listen to their mind and remove difficulties in time.

In general, in the past year, HCMC has had very specific and significant results in comparison with other provinces in terms of start-up activities. According to director of the Department of Science and Technology of HCMC, this agency has set up 5 spaces to support innovative start-ups and links with 24 business incubators with a total floor area of over 22,000 square meters. Of which, 50% capital is from socialization.

In addition, The SpeedUp 2017 program has provided financial support tools from the budget for innovative startup projects through enterprise incubators. In the past 8 months, this program has received and processed 112 innovative startup project applications. The number of selected projects was 14/112 (12.5%), which is quite high compared to the current selection rate of many investment funds (VIISA reaches 5%, VSVA reaches 8%).

This year, the HCMC Department of Science and Technology has also set up 4 Steering Committee for Innovative Ecosystems for 4 key areas of the city, including mechanics, food processing, plastic – rubber – chemistry and information technology.

With a network of 145 consultants and innovative start-up advisors from many different disciplines, up to now, 938 start-up projects have been connected to help develop business ideas. There are 3,200 individuals and start-up groups connected to investors, experts and consultancy organizations. Moreover, over 300 startup products are promoted to the community.

However, a general assessment from the Department of Science and Technology of the City, most startups in Vietnam are newly invested at the seed stage with small scale and the possibility of breakthrough growth is not high. This is a matter of concern.

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Industrial Park Welcome the “Wave” of Investment from TPP

Trans-Pacific Partnership (TPP) between the 12 members, including Vietnam, has recently concluded negotiations after more than 5 years of hard working.

Before that, many enterprises with foreign direct investment (FDI) have come to establish factories and business in Vietnam to prepare for the economic benefits that TPP brings.

According to Long An Economic Zone Authority (LAEZA), up to September 30th, they have received 122 investment projects, increase by 14.02% compared to the same period in 2014.

In which there are 67 FDI projects with a total investment of over 395 million USD, increase by 2.37% over the same period in 2014. Enterprises mostly invest in such areas as apparel, footwear, textile, plastic… and factories located mainly in the industrial zone in Ben Luc, Duc Hoa, Can Giuoc.

Tan Tao Group (ITA), the investor of Tan Duc Industrial Park said that in September, Long An Provincial People’s Committee, the Ministry of Science and Technology and the Ministry of Natural Resources and Environment have approved Trillions Corporation (USA) to invest in Tan Duc industrial park phase 2 in Duc Hoa.

This project is a 30 hectares complex with an expected investment of 120 million USD, which is invested by the Trillions Group and their partners  like Cosmo, CHA Technologies, Starensier US, Mountian Star, Billion TW… to provide products for Adidas and Nike, as well as catching up with the opportunities from TPP in the future.

The business opportunities after Vietnam signed the free trade agreement (FTA) and the outlook from TPP has attracted waves of FDI as well as the shift of investment projects from China to Vietnam.

Earlier, in August, Long An Provincial People’s Committee has granted investment certificate for the spinning factory of Huafu Group (Hong Kong) with an area of 35 ha and a total investment of over 300 million USD.

The project has a planned capacity of pulling 30,000 tons mill per year, estimating to contribute more than 3,000 jobs for local workers.

Huafu is one of the largest economic conglomerate specialized in spinning with experience of more than 20 years of development in Hong Kong. Moreover, they are the world’s largest supplier of high-end color yarn for the textile industry of more 60 countries and regions, such as Europe, America, Japan, Korea and Southeast Asia.

Regarding FDI in the past 9 months, total FDI in industrial parks, economic zones throughout the country reached more than 8.7 billion USD, increase by 12% over the same period.

A recent study from Standard Chartered Bank showed that there is a shift of investment capital from China to ASEAN countries to take advantage of opportunities.

Approximately 44% of units involved in the study chose Vietnam because of large domestic market, 29% choose because of lower operating costs and 18% choose because of abundant labor.

As for the garment industry, when the TPP takes effect, this is the advantaged industry therefore large foreign companies have landed in Vietnam in recent years.

To welcome new waves of investment, many localities like Ho Chi Minh City and Long An have adjusted the investment policy or extended the area of the industrial park.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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Pho Noi Textile Industrial Zone (Under Pho Noi B Industrial Zone)

Geographic location:

Located near the intersection of Highway 5 and Highway 39, linking the major economic centers in the north, 28 km from Hanoi, 73km from Hai Phong, 90 km from Cai Lan Port, 40 km from Noi Bai International Airport, 15km from Lac Dao railway station (Ha Noi – Hai Phong), next to the Hung Yen custom clearance station and Thang Long urban zone.

Planned area:

120.8 hectares. In particular, phase 1: 25.17 hectares, phase 2: 95.6 hectares.

The sector attracting investment project:

Textile and other industries, particularly sectors that need industrial wastewater treatment are preferred.

Industrial zone technical infrastructure:

The industrial zone has been completed the construction of technical infrastructure for the first phase on an area of 25 hectares, including internal industrial zone road system, water supply and drainage systems, power supply, fire protection system, water supply plant with capacity of 8.500m3/day and night, and sewage treatment plant with capacity of 10,000 m3/day and night according to the European standards that have been completed and put into use. Phase 2 has completed the ground clearance the whole area under planning and started implementation of infrastructure construction in an area of approximately 30 hectares of industrial land.

Investment project attraction status:

By the end of the first quarter of 2016, the industrial zone has received 23 investment projects, including 10 domestic investment capital projects and 13 foreign investment capital projects with total registered capital of 1,000 billion VND and 109 million USD. The total subleasing area is 46 hectares, accounting for 49% of industrial land can be leased. A number of projects that have large-scale capital are: Kien Thinh Zhejiang Corporation, Carvico S.P.A Co., Ltd, Linea Aqua (Private) Limited.

Owner of Pho Noi Textile Industrial Park:

Pho Noi Textile Infrastructure Development Joint Stock Company

For more information, please contact ANT Consulting.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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