Post on 09-May-2018
transcript
SEIKO IDEAS CORPORATION
Vietnam Business Review
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Vol 16, May 10th 2017
BUSINESS REVIEW VIETNAM
Bright prospects for bank stocks in 2017
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INSIDE THIS ISSUE
HIGHLIGHTS
PM Shinzo Abe pledges full support for VN to host APEC Summit
GMO controversy: communication is key
ECONOMY
What does “airport overloading” mean for the economy?
China emerges as biggest importer of Vietnam tra fish
BANKING & FINANCE
Moody's: Capital shortfall remains key credit burden for Vietnam banks
Blue chips hit by low confidence
Right mix for consumer loans to flourish: experts
INVESTMENT
Vietnam's FDI disbursement shows signs of slowdown
Japan’s J-Power proposes building a power plant in Quang Ngai
Cargill VN inaugurates new aqua feed line
ENTERPRISES
Samsung: half of S8, S8 Plus smartphones made in Vietnam
Growth slows down, manufacturers try to find niche markets
Almost 700 firms lose export licences to US
MARKET & PRICES
Vietnam property market stable in April
Vietnam cuts size limit for apartments to reach low-income buyers
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ECONOMY
What does “airport overloading” mean for the economy?
VNN - Everyone complains that airports
are getting overloaded, but economists
and businesspeople say this is a good
sign that the national economy is
robust.
According to Savills, the number of
foreign travelers to Vietnam increased
by three times in the last decade and
witnessed 26 percent growth rate in
2016 compared with the year before.
Meanwhile, airport infrastructure development cannot catch up with the rapid development of the tourism
industry. In 2016, about 8.2 million foreign tourists traveled by air, accounting for 80 percent of total
travelers.
Many airports in large cities have been overloaded for a long time. The airport in HCMC, for example, has
to operate at 130 percent of capacity and Nha Trang Airport at 320 percent.
The Da Nang Airport now runs at 113 percent of capacity though it
was upgraded in 2011 to increase the capacity from 4.5 million
passengers to 6 million.
Tan Son Nhat Airport plans to increase the capacity from 25 million
to 28 million passengers a year. Da Nang Airport, which has the
capacity of 9 million passengers, now will be expanded to serve 4-6
million passengers more.
Meanwhile, Nha Trang City has been slow with the project on expanding Cam Ranh Airport. However, the
expansion project has become out of date: it was planned to receive 2.5 million passengers, while the
number of passengers in 2016 reached 4.8 million.
Under a government master development plan, $5.6 billion would be spent by 2020 to develop airport
infrastructure items.
Pham Ngoc Minh, CEO of Vietnam Airlines, the nation’s flag air carrier, has complained about the
overloading of airports, especially Noi Bai in Hanoi and Tan Son Nhat in HCMC, which seriously affects the
operation of air carriers.
At Noi Bai, the T1 Terminal, which has capacity of 6 million passengers a year, had to serve 9.5 million
passengers in 2010. Airlines complain they cannot provide more flights because of the overloaded
infrastructure.
The number of foreign travelers to
Vietnam increased by three times in
the last decade and witnessed 26
percent growth rate in 2016
compared with the year before.
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At Vinh Airport, there are only four stalls for passengers to check, while seven flights take off or land every
day. Since there is no ILS (instrument landing system), airports have to fly to Hanoi and land in Noi Bai Airport
in bad weather.
While people complain about the poor infrastructure, Nguyen Thi Phuong Thao, CEO of Vietjet Air, can see
the ‘positive sign’ in airport overloading.
“Many people express their concern that the overloading will affect tourism and aviation. While they seem
to have excessive worry, I think this is a good sign of economic development,” Thao said, adding that a
deserted country is not the sign of development.
Vietnam now has 22 commercial airports, while Singapore only has two.
China emerges as biggest importer of Vietnam tra fish
SGT - China overtook the U.S. as the largest importer of Vietnamese tra (pangasius) fish in the first quarter of
this year, according to the Vietnam Association of Seafood Exporters and Producers.
Workers process tra fish for export at a local enterprise. China overtook the U.S. as the largest importer of
Vietnamese tra (pangasius) fish in the first quarter of this year
The period saw tra fish exports to the Chinese market soaring a hefty 56.8% year-on-year to US$69.7 million,
accounting for 19% of the sector’s total export sales. Meanwhile, revenue from tra shipments to the U.S.
declined 24.3% to US$61 million, 16% of the total.
Even though many Vietnamese enterprises export tra fish to the U.S., only two seafood processors, Vinh
Hoan JSC and Bien Dong Seafood Co Ltd, enjoy low tariffs, according to the association’s general
secretary Truong Dinh Hoe.
Another reason, he said, is American customers might have consumed tra fish inventories in the period.
Besides, the rising domestic price of unprocessed tra fish, U.S. trade barriers and other factors were
attributable to the fall in tra shipments to America, he added.
Meanwhile, he said, the local companies which had difficulty finding their way to the U.S. market shifted to
exporting to the northern neighboring country. As a result, quarter one saw a steep rise in tra exports to
China.
He said local tra fish exporters should be careful with their dealings with Chinese traders, especially via
informal channels.
Meanwhile, tra exports to the European Union dropped a sharp 21.5% compared to the same period last
year at US$49.9 million, representing 13% of the total.
He ascribed the fall to a smear campaign against the quality of Vietnamese tra fish and the volatility
exchange rate between the euro and the U.S. dollar.
But shipments to Brazil rose a whopping 70% year-on-year at US$35.5 million, 10% of the total.
Export turnover of this sector in quarter one rose 1.6% against the same period of 2016 at US$371.3 million.
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BANKING & FINANCE
Moody's: Capital shortfall remains key credit burden for Vietnam banks
VNE - Moody’s Investors Service has said that
Vietnamese banks will face capital shortfalls over the
next 12-18 months and that such a situation
continues to represent a key credit burden for the
industry.
“The banks’ rapid loan growth rates will widen their
capital gap, according to our baseline scenario of
robust economic growth in Vietnam over the coming
12-18 months,” said Ms. Daphne Cheng, a Moody’s
analyst.
Moody’s also estimates that at end-2016, Vietnam’s
banking system had a total capital gap of $9.5 billion, representing 4.6 per cent of GDP.
It defines the gap as the amount of external capital needed for banks to replenish their Tier 1 ratios back to
8 per cent after they utilize their balance sheet reserves to absorb expected losses on impaired loans, and
at the same time take an up-front write off on all Vietnam Asset Management Company (VAMC) bonds,
which banks receive by swapping out their non-performing loans.
Moody’s predicts that that the system could see a capital shortfall ranging from $5.1 billion-$6.1 billion by
end-2017, representing 2.5-3 per cent of GDP.
In such a situation, and absent external capital injections, Moody’s-rated Vietnamese banks’ Tier 1 ratios
would fall to an asset-weighted average of 6.1 per cent by fiscal year ending December 31, 2017, from an
asset-weighted average of 7.8 per cent in fiscal year 2016.
“The banks’ capital generation capacity is weak, because of the system’s modest net interest margins, low
fee income contribution, and still-substantial provision charges,” Ms. Cheng added. “Under these
circumstances, it will take several years to replenish the system’s capital shortfall through internal capital
generation.”
Moody’s points out that the banks’ capitalization profiles have continued to deteriorate. For example, at
end-2016, Moody’s-rated banks reported an asset-weighted average Tier 1 ratio of 7.8 per cent - under
Basel I - from 8.5 per cent at end-2015 and 10.7 per cent at end-2013.
In a move to adopt new prudential regulations issued by the State Bank of Vietnam (SBV) to improve banks’
health, Vietnamese banks, whether large or medium-sized, have had plans to increase their charter capital
during 2016-2017, either via additional issues of bonds, shares, or certificates of deposits.
In May 2016, the SBV issued amendments to its 2014 circular regulating prudential ratios for credit
institutions. The new rules raised the risk index of receivable lending for real estate and securities from 150
per cent to 200 per cent; well below the 250 per cent that was originally proposed.
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A second, concurrent circular from 2016 issued regulations to taper down the maximum ratio of short-term
funds that can be used for medium- and long-term loans, from 60 per cent to 40 per cent, with the ratio cut
to 50 per cent from January 1, 2017, and to be cut by another 10 percentage points at the start of 2018.
An SBV circular in preparation for the adoption of Basel II standards by the banking system stated that
banks must have a capital adequacy ratio (CAR) of at least 8 per cent by 2020, added to an increase in
charter capital.
Moody’s projects that real GDP growth in Vietnam will average 6.4 per cent in 2017 and 2018, up from 6.2
per cent in 2016, with loan growth at 26 per cent in 2017 and 2018, in line with growth seen in 2016.
On April 15, Techcombank announced it would raise its charter capital by VND5 trillion ($220 million) to
VND13.88 trillion ($611 million) this year by selling more shares. Chairman Ho Hung Anh said the capital
increase is needed to improve its financial strength and competitiveness.
The Hanoi-based VP Bank has disclosed plans to issue nearly 329.4 million shares for VND1.4 trillion ($61.6
million) this year to increase its charter capital to VND14.06 trillion ($619 million). The money will be used to
ensure the bank’s business activities are well-funded and also help meet various ratio requirements, a
spokesman said.
Vietcombank and ACB, meanwhile, successfully issued ten-year bonds last December and raised VND2
trillion ($88 million) and VND3 trillion ($132 million), respectively. In February and March this year, Sacombank
and Nam A Bank issued certificates of deposits for seven years.
Blue chips hit by low confidence
VNA - Shares dropped on both local markets on May 8 as investors switched investments from large-cap
stocks to mid- and small-cap ones, putting blue chips into negative territory.
The benchmark VN Index on the HCM Stock Exchange inched down 0.16% to close at 718.86 points.
Vietnam’s key index has lost total 0.4% after the last two sessions.
The HNX Index on the Hanoi Stock Exchange fell 0.65% to end at 89.13 points, retreating from a gain of 0.2%
made on Friday.
Market trading liquidity improved from the previous session. More than 277 million shares were traded on
both local bourses, worth VND5.85 trillion (US$260.2 million).
Low investor confidence sent large-cap stocks down with two-thirds of the largest 30 companies by market
capitalisation falling.
Among the 10 largest listed firms, FLC Faros Construction (ROS) lost 0.9%, dairy producer Vinamilk (VNM) was
down 0.5%, and Vietcombank (VCB) decreased by 1%.
Other large-cap stocks that declined were Tien Phong Plastic (NTP), Asia Commercial Bank (ACB) and
Saigon-Hanoi Bank (SHB), which slid between 1.1% and 4.1%.
The two largest agriculture and farming companies, Hoang Anh Gia Lai (HAG) and its subsidiary Hoang Anh
Gia Lai Agriculture International (HNG) dipped 6.6% and 6.8%, respectively.
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The stocks of both companies were put on the designated list and the decision will come into effect on
May 12 as the two firms have reported a loss of 1.1 trillion VND for Hoang Anh Gia Lai and
The benchmark VN Index on the HCM Stock Exchange inched down 0.16% to close at 718.86 points.
Vietnam’s key index has lost total 0.4% after the last two sessions.
The HNX Index on the Hanoi Stock Exchange fell 0.65% to end at 89.13 points, retreating from a gain of 0.2%
made on Friday.
Market trading liquidity improved from the previous session. More than 277 million shares were traded on
both local bourses, worth VND5.85 trillion (US$260.2 million).
Low investor confidence sent large-cap stocks down with two-thirds of the largest 30 companies by market
capitalisation falling.
Among the 10 largest listed firms, FLC Faros Construction (ROS) lost 0.9%, dairy producer Vinamilk (VNM) was
down 0.5%, and Vietcombank (VCB) decreased by 1%.
Other large-cap stocks that declined were Tien Phong Plastic (NTP), Asia Commercial Bank (ACB) and
Saigon-Hanoi Bank (SHB), which slid between 1.1% and 4.1%.
The two largest agriculture and farming companies, Hoang Anh Gia Lai (HAG) and its subsidiary Hoang Anh
Gia Lai Agriculture International (HNG) dipped 6.6% and 6.8%, respectively.
The stocks of both companies were put on the designated list and the decision will come into effect on
May 12 as the two firms have reported a loss of VND1.1 trillion for Hoang Anh Gia Lai and VND984.8 billion
for its agriculture arm.
The energy sector finished down on Monday as global oil prices reversed to trade around the reference
price levels after remaining positive in the morning.
Brent crude inched up 0.1% to trade at US$49.15 a barrel, erasing the gains made in the earlier half of the
day as investors and analysts were kept waiting on hopes for a prolonged output cut agreement between
the Organisation of Petroleum Exporting Countries (OPEC) and other large exporters.
On the positive side, mid-cap and small-cap stocks, especially real estate firms’ shares, proved a safe
haven for short-term investors.
Shares of property developers became attractive to investors as they were ahead of companies that are
about to pay dividends in cash and bright prospects for the domestic real estate market.
The benchmark VN Index fell for a second day as it attempted to test the lower support levels, Saigon-
Hanoi Securities (SHS) said in its report.
However, the May 8 fall was not something that investors should worry about as strong demand and
purchases for low-valued stocks remained strong, SHS said.
The current conditions suggest that the VN Index would fall back to the range of 715 and 718 points before
recovering and approaching the challenging level of 720 points, the northern brokerage firm added VND
984.8 billion for its agriculture arm
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The energy sector finished down on Monday as global oil prices reversed to trade around the reference
price levels after remaining positive in the morning.
Brent crude inched up 0.1% to trade at US$49.15 a barrel, erasing the gains made in the earlier half of the
day as investors and analysts were kept waiting on hopes for a prolonged output cut agreement between
the Organisation of Petroleum Exporting Countries (OPEC) and other large exporters.
On the positive side, mid-cap and small-cap stocks, especially real estate firms’ shares, proved a safe
haven for short-term investors.
Shares of property developers became attractive to investors as they were ahead of companies that are
about to pay dividends in cash and bright prospects for the domestic real estate market.
The benchmark VN Index fell for a second day as it attempted to test the lower support levels, Saigon-
Hanoi Securities (SHS) said in its report.
However, the May 8 fall was not something that investors should worry about as strong demand and
purchases for low-valued stocks remained strong, SHS said.
The current conditions suggest that the VN Index would fall back to the range of 715 and 718 points before
recovering and approaching the challenging level of 720 points, the northern brokerage firm added.
Right mix for consumer loans to flourish: experts
VOV - Consumer lending has the potential for explosive
growth in Vietnam, but this can only happen with
significant improvements in consumer satisfaction with
credit institutions and loan conditions, experts say.
They say that tapping this growth potential will boost
national spending and economic growth.
“Within the decade, market demand for unsecured loans
has grown to adapt to the current financial scene in
Vietnam, with an increasing amount of retail lenders and personal borrowers,” Hoang Van Hai, Director of
the School of Business Administration (SBA), Vietnam National University of Economics and Business, said at
a recent conference.
He said the growth can be attributed to favourable legal and socio-economic conditions that have
fostered changes in income and spending habits.
At present, consumer loans in Vietnam range in value from VND1 million to VND60 million VND (US$44.6 to
US$2,680). The application process and repayment schedule are fairly simple, and the rate of interest is
reasonable at between 1.49% to 1.6% per month, with the occasional zero percent for smaller loans.
In 2016, consumer credit was mostly used for purchasing household goods and travel expenses, with a
focus on mobile devices, vehicles and personal computers under US$2,000. Sometimes, depending on the
borrower’s credit history, capital is given directly (instead of paying purchase invoices).
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Vietnamese consumers are reaching a spending over earnings ratio of 67%, and this is set to rise further as
the economy picks up.
Hai said that Vietnam will soon reach a purchasing market worth about US$15 billion per year, with 30
million people in the 20 to 59 age bracket.
This means more and more people in the middle income group are demanding capital to fund their
immediate spending, without the hassle going through bank loans for smaller purchases.
Underdeveloped sector
However, the central bank sees current retail lending as underdeveloped, given the modest number of
credit institutions giving out consumer loans as also the overall demand for such loans.
The central bank estimates that consumer loans account for just five to ten percent of total lending in the
country, as opposed to the average 40 to 50 percent in developed nations.
Can Van Luc, a senior advisor to the Chairman of the Joint Stock Commercial Bank for Investment and
Development of Vietnam (BIDV), said at an online conference in March that Vietnamese credit institutions
granting consumer loans have a mere US$1.78 billion in capital, about 0.7% of the credit sector’s total.
This is due to the fact that these institutions are not allowed to take deposits like commercial banks, having
to rely instead on bonds.
The lack of capital, coupled with the reluctance among a majority of consumers to borrow, has lead to
interest rates higher than the commercial banks’ average of 0.9 to 1.2% per month, said Luc.
However, consumer lending carries rich potential, especially among the population segment that does not
qualify for bank loans. This segment can access this capital instead of being beholden to black market
loans controlled by loan sharks.
While the central bank is positive about growth in this credit segment, there are still regulatory issues that
need to be resolved.
In 2016, the SBV and the Ministry of Industry and Trade, received a large number of complaints from
borrowers.
The Vietnam Competition Authority (VCA) released a report last year in which they detailed several major
problems faced by consumers buying common household and electronic items.
A chief complaint from borrowers was that cumulative calculation of interest rates made the loan
repayment untenable in just three to six months. They also said that the credit institutions did not show
“decent conduct” while trying to recover loans.
The VCA advised consumers to have a clear understanding of the loan contracts before signing and
reevaluate their own disposable income before taking out a loan, no matter how small.
Meanwhile, the SBV has simplified procedures and increased transparency for consumer loans through
Circulars 39 and 43 issued in 2016 and 2017 respectively.
At present, the SBV considers a loan to be a consumer loan if it is made in Vietnamese dong, the borrower
is an individual, not an institution, the purpose of the loan is to meet personal spending needs, and the total
amount borrowed does not exceed VND100 million (US$4,468).
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INVESTMENT
Vietnam's FDI disbursement shows signs of slowdown
VNN - USD4.8 billion, up 3.2% on-year, however, this is quite
low compared with 12% growth over the same period of
2016.
According to the Foreign Investment Agency under the
Ministry of Planning and Investment (MPI), FDI disbursement
reached a high record of USD15.8 billion in 2016, up 9%
from 2015.
In the first four months of 2016, FDI disbursement saw an on-
year rise of 12% and the on-year growth of the same period of 2015 was 7%.
Deputy Director of the Vietnam Institute of Economics Le Xuan Sang said the suspended Trans-Pacific
Partnership (TPP) has seriously affected Vietnam’s FDI attraction and disbursement.
Many foreign companies wanted to invest in Vietnam to take advantages of the agreement.
According to Professor Nguyen Mai, Chairman of the Vietnam Association of Foreign-Invested Enterprises,
the lower FDI disbursement was attributed to tighter environmental regulations in licensing foreign-invested
projects after environmental problems.
Meanwhile, several experts noted that the US Federal Reserve’s decision to raise interest rates in March this
year has also affected FDI disbursement in Vietnam as the USD debts of companies have increased,
causing their investment costs to be more expensive. As a result, they must be more careful in their
investments.
Le Quoc Anh from the National University of Economics said to attract more FDI and boost FDI
disbursement, Vietnam should consider offering more incentives for foreign investors and offer preferential
loans for companies which aim to export their products to the US.
“The government needs to have plans to support investment programmes of companies suspended due to
the TPP’s collapse. It is also important to boost the free trade agreement negotiations to lure more foreign
investors,” Anh added.
Japan’s J-Power proposes building a power plant in Quang Ngai
VOV - The Japanese Electric Power Development Co (J-Power) has submitted Quang Ngai provincial
leaders its plan to construct a 4,400MW thermal power plant at Dung Quat Economic Zone in the central
province.
JAHANA Takashi, J-Power representative, said after conducting a preliminary survey the company hopes
that Quang Ngai will allow it to carry out further surveys for a pre-feasibility study on building a coal-fired
power plant at Dung Quat EZ.
The project will be divided into two phases. In the 1st phase, a plant with a capacity of 2,400MW and using
ultra-super-critical generation technology will be built and and put into commercial operation in 2028. In
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the 2nd phase, another plant with a capacity of 2,000MW using IGCC technology will be constructed and
put into commercial operation in 2030.
Coal imported from Australia, Russia and Indonesia and domestic coal will be used for electricity
generation.
J-Power has committed to use state-of-art technologies to protect the environment and implement
measures to prevent air, water and noise pollution.
Dang Ngoc Dung, vice chairman of QuangNgai provincial People’s Committee, has asked the investor to
give specific suggestions concerning the use of land, total investment capital, the number of workers and
environment protection commitments.
Only after receiving all those information from J-Power, Quang Ngai will let it conduct surveys to make the
project’s pre-feasibility study, said Mr Dung.
Cargill VN inaugurates new aqua feed line
VOV - Cargill Vietnam has inaugurated and put
into operation its 10th aqua feed line in Vietnam,
which is also the second one in the north.
With a production capacity of of 3,000 metric
tons a month, the modern line focuses on high
quality extruded feed for tilapia and other local
fish species to meet the increasing demand for
floating fish feeds.
It will also help Cargill Vietnam further access
customers in Hanoi, Ha Nam, Thai Binh and the north-central region where farmers are rapidly switching
from extensive to intensive farming practices.
Cargill products also enable farmers to raise healthy fish, increase their output, and lower their production
costs while reducing impact on the environment
Vietnam is an important market of Cargill, said Chad Gauger, managing director of Cargill Aquaculture
Nutrition Asia South. The inauguration of the sixth plant in Vietnam demonstrates Cargill strong growth not
only in Vietnam, he added.
The first aqua feed line was set up at Cargill Bien Hoa Plant in 1998. Currently, Cargill Vietnam has more
than 2,000 staff working at 23 its units across the country.
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ENTERPRISES
Samsung: half of S8, S8 Plus smartphones made in Vietnam
VNN - A representative from Samsung Vietnam
said its factories in Vietnam provide 50 percent of
all the Galaxy S8/S8 Plus smartphones sold
internationally.
Samsung is now gathering all of its resources to
manufacture Galaxy S8.
Prestigious technology websites said that it will help
Samsung remain the world’s leading smartphone
manufacturing group after the Galaxy Note 7
debacle in 2016.
Samsung Vietnam said that the Galaxy Note 7 scandal last year only had an impact on the giant for a short
time. It also said that the scandal won’t have considerable influences on production and business, as well
as Samsung Vietnam’s export turnover in 2017.
The production and export of other models such as S7 Edge Galaxy A and tablets to other markets in 2016
still exists. The export of smartphones in 2016 increased by 10.3 percent compared with 2015.
Forty percent of total mobile devices of Samsung are made in Vietnam and are expected that Samsung
Vietnam would export $50 billion worth of products this year.
Learning the lesson from the catastrophic fire of Galaxy Note 7, Samsung has tightened the production
process of Galaxy S8 and S8 Plus.
When the device is manufactured in the production line, it will be put under a test run for 72 hours.
After that, the product will be re-checked before being packed and launched into the market. In addition,
Samsung will randomly select a number of finished products to test the water resistance, durability and the
operation stability capability.
Some smartphone production phases are being undertaken by robots. The automation level in camera
assembling at Samsung Vietnam has reached 30 percent, while the levels are 50 percent for main circuit
and 100 percent for the metal frame of the machine.
However, there are still the production phases in which robots cannot replace workers.
At Samsung Thai Nguyen, there are 62,000 workers. The factory, together with Samsung Bac Ninh, creates
many smartphones and tablets, from mid to high end, exported to 78 countries and territories all over the
world.
The number of Vietnamese enterprises joining Samsung’s supply chain has been increasing steadily year
after year.
To date, 200 Vietnamese enterprises have become the suppliers of Samsung, including 23 first-class
suppliers. The figure is expected to increase to 29 within this year.
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The support to Vietnamese enterprises to help them upgrade the production and product quality has been
given by Samsung since 2015.
Samsung’s factories in Vietnam have been scaled up unceasingly. Therefore, Samsung has been
continuously recruiting workers to satisfy the production expansion.
SEV Bac Ninh and SEVT in Thai Nguyen now employ 100,000 workers.
Samsung is also using 1,500 software engineers in Vietnam for software development.
Growth slows down, manufacturers try to find niche markets
VNN - As the motorbike market is going flat, manufacturers have to reform technologies and penetrate
niche markets to boost sales.
According to Yano Takeshik, chair of the Vietnam Association of Motorbike Manufacturers (VAMM),
Vietnam is now the fourth largest motorbike market in the world, after China, India and Indonesia, with 37
million motorbikes in circulation.
The figure is even higher than the target of 36 million motorbikes in circulation set by the Ministry of Transport
for 2020.
In 2016, Honda, Yamaha, SYM, Piaggio and Suzuki sold 3.1 million
products, an increase of 10 percent over 2015.
Lu Tien Fu, general director of SYM, commented that the sales in
2016 increased thanks to the price decreases, sale promotion
campaigns and attractive credit programs launched by banks.
Lu believes that Vietnam’s public means of transport will not develop well enough in the next three years,
so "motorbike manufacturers would still have opportunities" in the Vietnamese market.
However, this doesn’t mean that the ‘market’ would become larger.
Toshio Kuwahara, general director of Honda Vietnam, said Honda Vietnam would strive to maintain the
growth rate it gained in 2016 by developing models based on customer demands.
Honda Vietnam focuses on scooters and common motorbikes. Besides, it would also develop sports
motorcycles as this is now trendy in Vietnam, especially ones equipped with fuel energy engines which
reduce emissions.
Admitting that Suzuki’s market share in 2016 did not increase compared with 2015 and did not reach the 9.5
percent growth rate of the whole market, Ko Iwamotor, the representative of Suzuki, said Suzuki did not
have many new products to compete with its rivals.
In 2017, Suzuki plans to focus on scooters, the niche market share that it still can see opportunities for
growth. It would also gather strength on classic clutch and sports motorcycles to conquer the group of
young and middle-aged customers who like nostalgic beauty.
The representative said with more than 20 years of presence in Vietnam, Suzuki understands customers.
Young customers always want new models with new technologies. Therefore, Suzuki would change the
Vietnam is now the fourth largest
motorbike market in the world, after
China, India and Indonesia, with 37
million motorbikes in circulation.
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designs of some models including GSX-RR MotoGP, V-Trom and GSX-S 1000. It would also pay attention to
developing the distribution network, especially in rural areas.
Meanwhile, Yamaha Vietnam in 2017 would continue developing models with distinctive styles including
stylish ladies’ scooters, Race for speed enthusiasts and City Sport for sport lovers.
Piaggio Vietnam’s director Marco Noto La Diega said Piaggio would continue applying new technologies
to products in 2017. The manufacturer first utilized ABS (anti-lock brake system) for its models.
Almost 700 firms lose export licences to US
VNS — The American Food and Drug Administration (FDA) has cancelled the import licences of 679
Vietnamese food and beverage manufactureres that did not re-register with the agency as required, or did
so without following current procedures.
The Vietnam Trade Office (VTO) in the United States has reminded domestic export firms to check the
validity of their business codes before shipping food and beverage products for human and animal
consumption into the US.
According to recent FDA data, before this re-registration requirement, Vietnam had a total of 1,485
enterprises with valid business numbers provided by the FDA; however, this number had currently dropped
to 806.
Dao Tran Nhan, head of US-based VTO, said that under US law, all foreign firms exporting food and
beverages for people and animals into the US market must re-register every two years. This included
registering their manufacturing facilities and representatives in the United States so that they could be
issued with a new valid business code. This task needed to be completed before the shipment arrives in the
US.
Since 2017, the FDA has changed the method of verification for issuing new business codes and established
further regulations. For example, after being designated by the manufacturing facilities and registered with
the FDA, the firm’s representatives in the United States must send a letter or document to the FDA
confirming their authorisation to represent a Vietnamese manufacturing facility in the US.
If the FDA does not receive this letter or document, the re-registration is considered incomplete and the
business code will be cancelled.
Shipments by Vietnamese firms that are unaware that their FDA business codes have been revoked will be
refused entry to the port.
Further, companies proceeding with goods delivery without valid registration will be considered violating
the law and may be subject to criminal or other severe penalties under the United States’ Food, Drug and
Cosmetic Act.
Data provided by the General Department of Vietnam Customs reported that in 2016 the country’s export
turnover to the United States hit US$38.5 billion, growing 15 per cent compared with the previous year and
accounting for 22 per cent of the country’s total import-export turnover.
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MARKET & PRICES
Vietnam property market stable in April
VNS - The real estate market was stable in
April, as several developers of high- and
middle-end projects slightly lowered prices to
speed up sales, according to a new Ministry
of Construction report.
The real estate market was stable in April, as
several developers of high- and middle-end
projects slightly lowered prices to speed up
sales, according to a new Ministry of
Construction report.
The report shows that successful transactions were mainly middle-end projects nearing completion, with
good infrastructure.
In Ha Noi and HCM City, housing prices were stable, but several projects recorded mild price drops as
developers wanted to boot sales, the ministry said.
Ministry data estimate realty market inventories at nearly VND28.4 trillion (US$1.25 billion) as of April 20, a
drop of 8.55 per cent since the end of 2016. The inventory includes many lots far from downtown areas,
where infrastructure is underdeveloped.
According to Le Hoang Chau, president of HCM City Real Estate Association, the property market currently
shows no signs of a bubble. Chau noted that five factors are needed to form a bubble: an overheating
economy, loosened credit management, imbalance between demand and supply, rising speculation and
negligence of management agencies. “I see no risk of a bubble in the overall realty market, but there is an
intensifying heat on land,” Chau said.
Some areas in HCM City recorded price increases of 30-40 per cent, or even up to 100 per cent in land
prices since last year. Chau said development of infrastructure and announcements or rumors about mega
projects were pushing up prices of nearby land unreasonably in some areas, such as District 9, Nha Be, Binh
Chanh, Cu Chi in HCM City. "Attention should be paid to whopping rises in land prices,” Chau said, warning
buyers to be cautious about their investments.
Nguyen Hoang Minh, Deputy Director of the State Bank of Viet Nam’s HCM City branch, said credit policies
for the real estate sector were more cautious to prevent a bubble.
Experts also urged buyers of unfinished housing projects to study the projects’ legality carefully before
making decisions, especially certificates of eligibility for transactions and bank guarantees.
According to Pham Gia Hoa from HCM City Department of Natural Resources and Environment,
management agencies should announce which projects are eligible for transactions.
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Vietnam cuts size limit for apartments to reach low-income buyers
Vnexpress - The construction ministry has
approved a developer’s request to build
25-square-meter apartments.
Vietnam’s Ministry of Construction has
given the go-ahead for a real estate
developer to build apartments as small
as 25 square meters (270 square feet) to attract low-income earners.
The ministry’s Housing and Real Estate Market Management Department, in a letter issued late last month
to a domestic developer, said the firm would be allowed to build 25-square-meter apartments before the
ministry sets new national standards for apartment sizes.
Vietnam’s construction law from July 2015 abolished a previous requirement that set the minimum area for
an apartment at 45 square meters, but did not stipulate a new limit.
In December 2015, a government decree on developing houses for low-income earners came into force
and set the minimum area at 25 square meters. Decrees often requires guidance from related ministries
before they are implemented.
Construction businesses and provincial authorities have been seeking permission to build commercial
houses of 30-40 square meters to attract individuals, small families and low-income buyers, and the permit
has been granted given the huge demand, the construction ministry said.
Binh Duong Province, an industrial center neighboring Ho Chi Minh City, last year launched 5,000
apartments as part of its housing program for low-income people, and has started construction of another
10,000 units.
Vietnam currently has 2.2 million people working in industrial parks, but only 20 percent of them have their
own homes, according to the construction ministry.
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HIGHLIGHTS
PM Shinzo Abe pledges full support for VN to host APEC Summit
VGP - Japanese Prime Minister Shinzo Abe pledged
full support for Viet Nam to host the APEC economic
leaders’ meeting in Da Nang this November during
his reception for Vietnamese Deputy PM, FM Pham
Binh Minh in Tokyo on Monday.
PM Abe affirmed Viet Nam is an important partner of
Japan’s in the region, expressing his hope to work
with Vietnamese leaders to boost the two countries’
relations in the future.
He said Japan will give priority to supporting Viet
Nam’s economic development.
For his part, Deputy PM, FM Pham Binh Minh showed pleasure at the strong and practical advancement of
the Viet Nam-Japan strategic partnership in various areas based on high political trust.
He said the recent visits to Viet Nam by Japanese leaders, including those of Emperor Akihito and Empress
Michiko and PM Shinzo Abe in the first half of this year were of significant importance and created a new
impetus to the bilateral friendship and cooperation.
During his stay in Japan, Deputy PM, FM Minh and Japanese FM Fumio Kishida co-chaired the 9th meeting
of the Viet Nam-Japan Cooperation Committee.
He also had separate meetings with Speaker of the Japanese House of Representatives Tadamori Oshima
and President of the Japan International Cooperation Agency Shinichi Kitaoka.
GMO controversy: communication is key
VIR - Genetically-modified organisms (GMO), organisms whose genetic material has been modified in a
way that does not occur naturally—for example through the introduction of a gene from a different
organism—play an important part in helping meet the global demand for food. However, GMOs and food
made from them have yet to garner proper understanding from the public. Communication is decisive in
helping the public formulate an informed opinion regarding GMOs
Misunderstanding still aplenty
According to the World Health Organisation (WHO), GM foods currently available on the international
market have passed safety assessments and are not likely to present risks for human health. In addition, no
health effects have been shown as a result of consumption by the general population in the countries
where they have been approved.
For the past 30 years, numerous research projects have been carried out to determine primarily the safety
of GMOs for the environment and for animal and human health. None of these studies found scientific
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evidence associating GMOs with higher environmental or food and feed safety risks than conventional
plants and organisms.
However, the wide public remains concerned about the safety of GMOs and there is a large disconnect
between scientific and public opinion. In a 2015 Pew survey, 88 per cent of scientists surveyed reported
they felt GMOs were safe. This was higher than the 87 per cent who reported they believed in man-made
global warming. In that same 2015 Pew survey only 37 per cent of US adults agreed that GMOs are safe to
eat. That was a 51 per cent difference in opinion between scientists and the general public, the largest gap
in any issue covered in the survey.
In a survey in 2016, 39 per cent of the survey respondents reported that they felt GMOs were worse for
health than conventionally-grown produce, while 55 per cent felt that organic produce was better for
health.
In an article analysing the results posted on the website of Science-Based Medicine, a website dedicated
to scientifically evaluate medical treatments and products of interest to the public, Dr Steven Novella
pointed out that one strong predictor of the negativity surrounding GMOs is negative attitudes toward
scientists and a misunderstanding of the scientific consensus.
Of those surveyed, 53 per cent stated they felt that half or fewer of the scientists believed GMOs were safe,
and 35 per cent said they do not feel scientists understand the health effects of GM foods.
Only 35 per cent said they trusted scientists “a lot” to provide full and accurate information on GMOs, while
43 per cent claimed they trusted scientists “some” and 21 per cent “not too much/not at all.”
Also, 30 per cent of those surveyed said that scientists were influenced by industry concerns most of the
time, and another 50 per cent some of the time.
According to Dr. Novella, campaigns of misinformation about organic produce and GMOs “not only
confuse the public about the science and the nature of the current scientific consensus, but they also
weaken overall trust in science itself.”
Therefore, he called for more communication in order to narrow the gap in opinion between scientists and
the public and alleviate the distrust in science.
“On issues where there is a strong scientific consensus, we need to clearly and forcefully communicate that
consensus and the underlying science. We additionally need to expose the tactics and illogic of the anti-
science position,” he wrote.
Communication key to counter misinformation
There are three reasons why there needs to be better communication on GMOs, according to Anastasia
Bodnar.
In an article posted on the blog of Biology Fortified, an independent, educational tax-exempt non-profit
organisation that aims to enhance public discussion on biotechnology and other issues in food and
agriculture through science-based resources and outreach, Bodnar named one short-term, one medium-
term, and one long-term reason.
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In the short-term, the more communicators share
factual information, the more they can help
reduce unnecessary fears.
Marketers and activist groups are feeding the
public information about what is safe and
healthy, but not everyone has the time or
access to do all the research to verify these
claims. In the meantime, many families are
struggling to buy higher priced foods they may
not be able to afford because they have been
told how scary conventional food products are,
and many people choose a processed food
with fancy labels over actual fruits and vegetables.
In the medium-term, the more communicators can help families make purchasing decisions based on facts
instead of fear, their purchasing decisions may help grocery stores and restaurants to not fall prey to
marketers and activist groups.
Bodnar said it is worrying that thanks to food fears, many stores are catering for the demand for more
expensive labels and in some instances completely replaced “regular” products with “organic” and “non-
GMO” ones at a premium price. As food becomes more expensive and non-speciality store brand items
are disappearing, poor families will have to spend a greater percentage of their incomes on food.
In the long-term, food is a national security issue. People with enough food for themselves and their children
are far less likely to make war.
She reasoned that the anti-GMO sentiment can lead to policies and regulations that keep the necessary
technologies from being developed and then keep those technologies away from farmers. In addition, it
can affect both the export and domestic markets, so even when countries have policies that allow farmers
to grow GMOs, they would not have a market to sell their products.
“I hope that my small science communication efforts, in combination with many others, can mitigate
misinformation and help get needed technologies to farmers and needed food to families,” Bodnar said in
conclusion.
Meanwhile, according to Dr. Novella, scientists and like-minded people are just getting started on
correcting years of misinformation on GMOs.
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