VIETNAM BUSINESS NEWS FEBRUARY 10/2023

RoK firms show interest in Vietnam’s medical equipment market hinh anh 1

COEX, a leading exhibition organiser and venue of the Republic of Korea (RoK), and the Vietnam Advertisement and Fair Exhibition JSC (VIETFAIR) will co-organise the Mekong Medical & Healthcare Expo 2023 in the southern province of Binh Duong in June.

This year’s edition will be the first to be held in Vietnam and feature 250 booths by 150 domestic and foreign firms, COEX said.

It is expected to help Korean businesses penetrate the health sector of Vietnam and other countries in the region.

COEX CEO Lee Dong-gi stressed that the Vietnamese health sector has posted an annual growth rate of 13.1% over the past five years, with more than 90% of medical equipment and supplies imported.

The country’s total health expenditure accounts for about 6.5% of its GDP, the highest in the Association of Southeast Asian Nations (ASEAN), he said, calling Vietnam a promising market for Korean medical equipment firms.

The organisers will prepare diverse solutions to help Korean companies expand its global network and explore new markets in ASEAN through the exhibition, he said.

Vietravel Airlines launches HCM City-Bangkok route

A flight of Vietravel Airlines departing from Tan Son Nhat International Airport in Ho Chi Minh City landed at Suvarnabhumi Airport in Bangkok at noon on February 9, marking the airline’s first commercial route linking the two major cities of Vietnam and Thailand.

According to the latest report by Fitch Solutions, Vietnam’s international tourism market will thrive in the 2023-2026 period, reaching 13.2 billion USD in 2026 with 22 million foreign visitors.

Thailand is one of the major tourism markets of Vietnam. The launch of the HCM City-Bangkok route is expected to attract more international and domestic tourists in the peak tourism season in summer.

With on-time performance (OTP) reaching 93.2% throughout 2022, Vietravel Airlines was among the top five airlines to receive Skytrax World’s Best Leisure Airlines Awards. It was also presented with the Asia’s Leading New Airline Award at the World Travel Awards.

Tickets for flights on the route are now available at all official sale channels of the airline with a promotion price from 18,000 VND (0.76 USD), excluding taxes and fees. Initially, Vietravel Airlines will operate one round-trip flight per day on the route, which will be increased in the time to come, using A321 craft.

Webinar held to help Vietnamese firms increase presence in India

The Trade Office of Vietnam in India held a webinar on February 8 to update Vietnamese businesses about regulations and procedures for opening branches in the South Asian country.

Vietnamese Trade Counsellor in India Bui Trung Thuong noted bilateral trade reached 15 billion USD in 2022, turning India into the eight biggest trading partner of Vietnam. However, there remains much potential and room for both sides to develop trade links. Their markets are large and export structures are highly complementary to each other.

Nguyen Phuc Nam, Deputy Director of the Asia – Africa Market Department at the Vietnamese Ministry of Industry and Trade, said that Vietnam views India as an important market with a population of about 1.4 billion.

To improve trade and investment ties with Indian firms and further seize opportunities in the Indian market, the opening of branches and representative offices in India is one of the directions Vietnamese businesses should consider in the current context, he went on.

Nam added the MoIT and the Trade Office are always ready to assist enterprises in seeking cooperation and tackling difficulties facing them in India.

Manan Agarwal, Director of KrayMan Consultants LLP, said Vietnam’s direct investment in India is still modest, 28.55 million USD.

Meanwhile, India holds many conditions for foreign investments such as an abundant source of land and a young workforce speaking English fluently. Its Government has also issued many foreign investment attraction policies, especially for priority fields such as batteries, consumer electronics, auto spare parts, pharmaceuticals, and telecoms product manufacturing.

Vietnamese businesses can be present directly in India via representative offices, offices of projects, branches, and affiliates, or indirectly via investment cooperation, mergers and acquisitions, technical support contracts, and franchising, Agarwal noted.

At the event, a leader of India’s HDFC Bank also detailed the regulations and procedures for setting up branches, representative offices, and offices of projects in his country.

Large room for Vietnam to boost exports to Europe, America

Vietnam’s exports to the European and American markets will continue to benefit from free trade agreements (FTAs) that Vietnam signed with partners in the regions, said Ta Hoang Linh, Director of the Europe-American Market Department under the Ministry of Industry and Trade. 

Linh said that the new-generation FTAs, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-Chile FTA, the EU-Vietnam Free Trade Agreement (EVFTA), the Vietnam-Eurasian Economic Union FTA (VN-EAEU FTA), and the UK-Vietnam Free Trade Agreement (UKFTA), will continue to have positive impacts on Vietnam’s trade, investment and export activities.

European and American countries have enhanced the search for alternative goods supply sources and alternative investment locations, and Vietnam may be an option, Linh said. 

The move towards producing green and environmentally-friendly products will create a competitive advantage for Vietnam’s export goods in the future when the demand for products of this kind in Europe and America is increasing, he noted.

Vietnam will receive more and more support from developed countries in energy transition and changing production towards a circular economy and sustainable development in both production and consumption, Linh stressed.

To further promote exports, the official said the MoIT needs to keep a close watch on the market’s developments, and propose cooperation frameworks and measures to expand export markets. 

Lao province’s leader appreciates Vietnamese investors

Vietnamese businesses have been always good and effective investors in Laos that have generated stable jobs and offered vocational training for the host country’s people, according to Somboun Heuangvongxa, Vice Governor of Champasak province.

Currently, Vietnam is the second biggest investor in the province, after Thailand, with 45 projects worth 357 million USD.

Along with the full and on-time contribution to the budgets of the province and Laos, Vietnamese enterprises have helped Champasak in infrastructure development, including building roads, medical stations, hospitals and schools, the official said, adding they have also provided support for the locality during difficult times such as disasters, floods, and the COVID-19 pandemic.

Vietnamese investors are the best performers in social welfare work, recognised not only by all-level inspection agencies, but also senior leaders of Laos, he added.

Vietnamese fruits promoted at Berlin exhibition

Vietnamese fruits have been introduced at the Fruit Logistica, the world largest fruit and vegetable exhibition in the world, that is underway in Berlin from February 8-10.

The Vietnamese booth at the exhibition, jointly organised by the Ministry of Industry and Trade (MoIT) Trade Promotion Agency, the Vietnam Trade Office in Berlin and the Vietnam Fruit Association (Vinafruit), attracted a large number of visitors right in the first day of the event. This is the third year that Vietnam has joined the exhibition.

On February 8, a trade exchange was held between the Vietnamese enterprises with members of Germany’s Federal Association of Medium-Sized Enterprises (BVMW), German firms and Vietnamese companies in Germany, the Netherlands and Spain.

Highlighting the increasing competitiveness of Vietnamese products’ competitiveness, Vietnamese Ambassador to Germany Vu Quang Minh said he hopes the firms will optimise preferential tax rates from free trade agreements to boost exports of fruits and vegetables in the promising German market.

He pledged that the Vietnamese Embassy and the Vietnam Trade Office will give best support to Vietnamese firms in connecting with their peers in Germany to strengthen exports to Germany and the EU in general, thus optimising the EU-Vietnam Free Trade Agreement (EVFTA).

Vietnamese goods rush into Canada thanks to CPTPP

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which took effect in early 2019, has enabled several types of Vietnamese goods to rush into Canada.

CPTPP is a new-generation free trade agreement (FTA) comprising 11 member states, including Vietnam and Canada. It is also the first FTA to help Vietnam navigate the American continent.

Despite the COVID-19 pandemic in 2021, Vietnam’s exports to Canada surged by 20.8% annually to 5.3 billion USD, up 75% prior to CPTPP validity. Last year, the figure surpassed 6.3 billion USD, up 19.8% year-on-year.

According to the General Department of Vietnam Customs, apparel was Vietnam’s biggest currency earner from Canada last year with a total turnover of 1.3 billion USD, up 40.3% annually and equivalent to 20.7% of Vietnam’s total exports to the country.

It was the result of 0% tariff on all Vietnamese apparel committed by Canada after three years of CPTPP implementation, said head of the Ministry of Industry and Trade’s Department of European-American Markets Bui Tuan Hoan.

Footwear came second with a record revenue of 604.6 million USD, up 64.3%; and computers, electronic products and spare parts 521.3 million USD, up 27.7%.

Several types of goods recorded high export revenues such as handbag-suitcase-headwear up 115.2%, plastics up 224.5% and fisheries 39.3%.

According to the CPTPP’s commitments, Canada eliminated import duties for 95% of tariff lines and 78% of Vietnam’s exports to the country. All Vietnamese aquatic and wooden products have had their import tariffs removed since 2019.

Taxes on specific goods will continue falling in line with the roadmap, making it easier for firms that meet origin requirements to enjoy incentives.

Bac Giang’s train station to offer int’l freight transportation services

Kep train station in the northern province of Bac Giang will offer international freight transportation services from February 20, as it meets all necessary conditions, according to the Vietnam Railways Corporation (VNR).

Specifically, the station will organise a fleet of trains running from Kep to Dong Dang station in the border province of Lang Son and then to China’s Pingxiang station.

The Kep station’s load and unload capacity is from 80 to 100 carriages or containers per day. Freight includes electronics and industrial products, construction materials, industrial wood and raw ore.

A bonded warehouse is expected to be built at the station to serve the import and export activities of enterprises in Bac Giang and Bac Ninh provinces and neighbouring localities. It specialises in receiving refrigerated containers transported from the South which will then be exported to China.

Currently, VNR is managing international freight terminals, namely Lao Cai, Yen Vien, Hai Phong, Dong Dang, Giap Bat and Song Than.

Vietnam attends Tehran International Tourism Exhibition

The Vietnamese Embassy in Iran is displaying a number of the nation’s specialties at the 16th Tehran International Tourism Exhibition.

On display at the event are a range of handicraft products, traditional cuisine, photos of Vietnamese landscapes, and information on tours.

Iran’s Minister of Cultural Heritage, Handicrafts, and Tourism Ezzatollah Zarghami visited the Vietnamese pavilion at the function to sample of the delicious traditional food on offer. He also expressed his hope at the prospect of being able to visit the country in the near future.

On the sidelines of the exhibition, Vietnamese Ambassador to Iran Luong Quoc Huy also attended several meetings with representatives from numerous business associations to discuss opportunities in which to promote tourism co-operation.

Investors urged to restructure investment portfolio amid challenging environment
     
Although significant challenges remain for the economic and investment environment in Viet Nam, there are still opportunities for investors to increase profits through investment channels if they know how to restructure their portfolio, experts have said.

Economist Nguyen Tri Hieu told a roundtable that looking back at 2022, from the beginning of the year, the economy recovered with growth and strong lending by banks. But, by the end of the year, the economy has shown signs of slowing down due to very strong impacts from both external and internal factors.

He said that this was shown in financial markets such as the stock market losing more than 30 per cent of its value; frozen corporate bond and real estate markets; the gold market fluctuating very strongly and banks raising interest rates to attract capital because deposits were low compared to credit growth.

The State Bank of Viet Nam also had to expand the credit room many times for banks. By the end of last year, the credit ceiling was increased to 15.5 and 16 per cent.

Meanwhile, Thai Viet Dung, Director of Exness Viet Nam, said 2023 could be a tumultuous year for investors as the conflict between Ukraine and Russia continues to worsen, and the COVID-19 pandemic has not completely disappeared. In addition, inflation is high, countries are tightening monetary policies, and there are mass layoffs at large global technology companies.

Talking about new investments in the difficult context, Hieu said in the five markets of securities, real estate, banks, foreign exchange and gold, the stock market will see little sign of recovery and will not be able to return to the 1,500-point mark as in 2022. However, the situation may improve more positively by the end of 2023.

The foreign exchange market still has an “unpredictable factor” when the US Federal Reserve (FED) continues to make moves to increase interest rates. The bank deposit market shows signs of increasing when banks were racing to increase deposit interest rates.

As for the gold market, as inflation has not been controlled, it will push the price of gold up. The market therefore will undergo development in 2023. However, currently, the gold price in Viet Nam is still higher than the world price. Investors still need to be careful when participating in this market.

From the above analysis, experts believe that investors still have the opportunity to increase profits if they choose the right investment channel. In particular, with the stock market, although it has not been able to return to the 1,500-point mark of 2022, with the 1,000-point mark in 2023, the Vietnamese stock market is receiving great attention from foreign investors.

However, in order to control risks, experts recommended that investors should restructure their portfolio of stocks, and choose good stocks with strong fundementals. In particular, they need to be disciplined and cut losses when necessary.

Many billion-dollar investment funds intend to pour money into the Vietnamese stock market, said Quan Duc Hoang, chairman of A+ Fund.

A study by BIDV Securities Company analysing over $50 billion owned by foreign investors on the Vietnamese stock market showed that more than half of foreign ownership is owned by strategic investors. This group usually holds stocks for the long term.

Foreign investors also expect Viet Nam’s market to be upgraded to an emerging market. According to JPMorgan’s CEO in the Asia-Pacific region, if it is upgraded to emerging market status, the market will receive approximately US$5 billion from ETFs. Therefore, the fact that the market is in a period of low valuation is a very good opportunity to invest and hold.

Mekong Delta works on two major traffic infrastructure projects

The Mekong Delta will be carrying out two major traffic infrastructure projects this year, thus improving connectivity in the region.
Can Tho City will soon approve the feasibility study for a Chau Doc-Can Tho-Soc Trang expressway section that will pass through the city. Work on the section can begin at the end of June.

The Can Tho section, which will pass through Vinh Thanh, Co Do and Thoi Lan districts, will have a total length of over 37 kilometers and cost VND9,845 billion.

In the first phase, the expressway will have four lanes for vehicles with a maximum speed of 80kph. There will be 30 bridges, 43 sewers, 28 kilometers of collector roads, four intersections, one rest stop and two underpasses for local residents along the route.

Can Tho on February 7 worked with the relevant authorities on the implementation of the project.

Meanwhile, work on two remaining packages of the Rach Mieu 2 Bridge across the Tien River in the Mekong Delta will start in the first quarter this year.

Rach Mieu 2 Bridge will connect Tien Giang and Ben Tre provinces and have six components, of which XL04, XL05 and XL06 have been executed since August 2022. Work on the XL01 component will commence this February upon land handover.

The remaining two components, XL02 and XL03, are in the process of selecting contractors, and will commence construction in the first quarter of this year.

The 20.5-meter-wide Rach Mieu 2 Bridge will have four lanes for motor vehicles and two lanes for non-motorized vehicles.

January sees no corporate bonds issued

The corporate bond market remained bleak last month, with no single bond issued, according to the Vietnam Bond Market Association (VBMA).

Data from the VBMA showed corporate bond sales plunged to zero in the first month of the new year. The bond issues which businesses announced in January were actually conducted in the previous month.

The total value of these issues topped VND13.9 trillion, with about 97% of it raised by banks.

Corporate bonds worth over VND285.1 trillion are expected to fall due this year.

Enterprises redeemed corporate bonds worth over VND8 trillion, up 56% over the same period in 2022.

Last year, securities market fraud dampened investor confidence, making it greatly difficult for debt-ridden companies to sell bonds.

The Ministry of Finance will submit a draft decree amending Decree 65/2020 on corporate bond trading via private placement this week, said Deputy Finance Minister Nguyen Duc Chi.

The decree aims to improve transparency in the market, protect investors’ interests, and accelerate the market’s recovery.

Investors advised to be more cautious in international transactions

Setting a target of financial freedom in middle age, many young people are rushing to earn as much as possible, and thus might fall into cunning investment traps easily.

It is not hard these days to pinpoint trading advertisements in popular social networks in Vietnam like Zalo, Facebook, TikTok, Telegram. These ads link interested people, mostly the young, to chat groups where advice pieces are given along with promises of huge profits in a short time for anyone. Chat group leaders and consultants do not reveal their personal information, and are actually brokers that offer a lucrative profit two, five, or even ten times as much as the investment amounts.

Being a novice in the financial field and lured by pampering words, young investors cannot differentiate between professional projects and foxy traps when they are introduced to international-scaled trading floors, many of which follow the multi-level marketing model.

CEO Le Cam Tien of Focus International Co. shared that thanks to advanced technologies, it is easier for domestic investors to access the Forex market. However, the Vietnamese Government has yet licensed any individuals or organizations, companies to launch an intermediary trading floor in the country. Therefore, all ads saying a floor is ‘authorized to operate in Vietnam’ is a fake, and investors take all responsibilities for their own investments.

Financial experts explain the tricks of scammers. First, these criminals give consultation for beginner investors to make investment orders. Those first amounts usually bring back attractive profits, which encourages the investors to pour more money into the game. The latter orders, normally in larger volumes with a higher service fee, end up in a loss.

The scammers then advise their victims to move to a new trading floor in hope of winning the lost money. This process is in fact just like gambling, where all lost money enters the account of scammers, also the owners of those trading floors. When earning enough from the cunning tricks, these criminals announced a trading floor crash and disappear with the scammed money.

Some trading floors are even designed with the ability to access the account of investors without permission so that floor administrators can make an order, change the account balance, delay the execution of an order, expand the selling-buying price gap, and use up all money in an account.

HoREA asks SBV to help struggling real estate sector

The HCMC Real Estate Association (HoREA) has asked the State Bank of Vietnam (SBV) to allow credit restructuring to help real estate firms out of the financial crunch.
The association wrote to the SBV, the central bank of the nation, just ahead of a meeting today, February 8, between the SBV and real estate firms on measures for supporting the struggling real estate sector.

In its letter, HoREA said 2023 would be a momentous year for the sector, as many real estate firms might exit the market if difficult access to credit and negative cash flows persist.

Last year, real estate liquidity problems forced enterprises to change business plans, downsize and put off investment activities, projects and initial public offering plans.

Nearly 1,200 property companies declared insolvency in 2022, up 38.7% against the year-ago period, showed data from the General Statistics Office.

Paperwork is the biggest hindrance to the sector, followed by corporate bonds that are falling due, HoREA said.

It proposed the central bank make it easier for homebuyers to gain credit to facilitate the recovery of the sector as discounts of 45-50% offered by real estate firms could not be enough to attract homebuyers back.

Ample room remains for Vietnam-Singapore cooperation in digital economy: expert
 
Vietnam and Singapore hold substantial potential for cooperation in digital economy, science-technology and green economy, Dr. Pham Duc Minh from the Agency for Science, Technology and Research under the Singaporean Government has said.

In an interview granted to the Vietnam News Agency on the occasion of the official visit to Singapore by Prime Minister Pham Minh Chinh from February 8-10, Minh said Singapore, the pioneer in Southeast Asia as well as Asia-Pacific in this regard, wants to expand cooperation with other countries in the region in the fields.

Given limitations in the domestic market, Singaporean firms and others based in the country are in need of such cooperation, the expert explained.

For Vietnam, he added, digital economy, science-technology and green economy have been facilitated in terms of policy, finance and infrastructure.

According to Minh, PM Chinh’s visit aims to celebrate the 50th anniversary of the bilateral diplomatic ties and the 10th anniversary of the strategic partnership between the two countries, and looks towards stronger collaboration in these spheres.

The cooperation would help Vietnamese businesses access cutting-edge technologies as well as the Singaporean market, he said, adding that Singapore would be a gateway for them to expand their reach in the region.

The expert stressed that Singapore was one of the first investors in Vietnam, and it remains a leading investor in the country. He also suggested the two sides apply lessons drawn from their previous cooperation models to collaboration in digital economy and science-technology, with suitable adjustments.

Vietnamese fruits hold lion’s share in Australian market

Vietnamese fresh fruits under code HS 081090, including tamarind, jackfruit, lychee, plum, passion fruit and starfruit, have earned a lion’s share in the Australian market.

According to the International Trade Centre (ITC), in the first 11 months of 2022, Australia imported 8.2 million USD worth of fruits under HS 081090 code, up 3.1% against the same period in 2021. 

Of the figures, products from Vietnam accounted for 4.4 million USD, an increase of 22.3% year-on-year.

Vietnam was also the sole country providing fresh lychee to Australia.

During 2017-2021, Australia’s imports of fruits coded HS 08109 enjoyed an annual average growth of 11.6%, averaging 7.7 million USD a year. The value for 2021 was 8.8 million USD.

Vietravel Airlines wants to increase capital nearly sixfold

Vietravel Airlines has proposed the Government considering a roadmap to increase its investment capital from VND1,300 billion to VND7,642 billion by 2025.

After more than two years of operation, Vietravel Airlines has three Airbus A321 aircraft, with a total investment capital of VND1,300 billion.

The carrier plans to add over VND6,900 billion to its current investment capital, taking the total to VND7,642 billion by 2025. The figure is expected to reach VND8,252 billion in 2030.

Shareholders of Vietravel Airlines will contribute an additional VND700 billion to raise the company’s contributed capital to VND2,000 billion. The company will mobilize funds from stock investors and other sources for the balance.

According to Vietravel Airlines chairman Nguyen Quoc Ky, the capital increase aims to meet the development strategy of the airline, mainly expanding its fleet.

For a newly-established airline, aircraft fleet expansion is a prerequisite to survive and grow. He added that the firm could only earn profit when it possesses sufficient aircraft to meet travel demand.

The airline has made no profit over the past two years due to the impact of the Covid-19 pandemic and the small fleet size.

Petrolimex to disinvest in PG Bank

Vietnam National Petroleum Group (Petrolimex) just approved the resolution of the Board of Directors on a plan to disinvest in Petrolimex Group Commercial Joint Stock Bank (PG Bank).

According to the plan, the company will disinvest its capital in the form of a public auction through the Ho Chi Minh Stock Exchange (HoSE). Petrolimex currently holds 120 million shares, equivalent to 40% of PG Bank’s shares.

The starting price for the disinvestment will take the highest price of the following two prices: the price determined by the organisation with the valuation function according to the asset method (21,300 VND or 0.91 USD per share) or the average reference price of 30 consecutive trading sessions of PGB shares on the UpCOM exchange before the approval date of the divestment plan.

At the temporary price of 21,300 VND, the size of the disinvestment is at least over 2.5 trillion VND.

PG Bank is one of the banks with the lowest charter capital in the system and has remained unchanged for many years at 3 trillion VND. In 2022, the bank also didn’t plan to increase its charter capital, marking its 12th consecutive year of unchanging charter capital. It had paid dividends for ten straight years by last year.

Previously, PG Bank planned to merge with VietinBank but the deal failed in 2018. After that, HDBank had a merger agreement with PG Bank, but the plan was also cancelled in 2021.

Binh Duong to develop 18,000 social homes in 2023

The southern province of Binh Duong has approved a housing development plan for 2023, setting a target of building 18,000 social homes for workers this year, the local media reported.

The province aims to continue improving its housing quality and serve the housing demand of residents, especially low-income earners, with an additional 740,000 square meters of resettlement and social homes this year.

Regarding social housing projects, the local authority set a goal of developing an additional 600,000 square meters, equivalent to some 18,000 units.

Binh Duong encourages businesses to get involved in social housing projects for low-income workers at industrial parks and offers incentives on land, taxes and finances.

The province developed around 2.47 million square meters of commercial homes in 2022, reaching the target.

However, the total area of new resettlement and social homes last year stood at merely 112,500 square meters, far below the target of 680,000 square meters.

Currently, the housing demand in the province remains high, especially in districts and cities with large numbers of workers such as Thuan An, Di An, Tan Uyen and Ben Cat.

VN’s Tourism Industry to bounce back in 2023: HSBC
     
Despite slowing trade, there are still pockets of resilience in Viet Nam’s economy. Tourism will be a key one in 2023, HSBC said in a report.

In its Vietnam at a glance report on tourism to the partial rescue released early this week it said Viet Nam’s domestic tourism had been roaring, but international tourism, which historically accounted for 60 per cent of tourism receipts, saw a tepid recovery. That said, there were good reasons to expect a more meaningful recovery, in particular after China’s reopening, a 50-80 per cent return of Chinese tourists could be achievable.

Following Viet Nam’s re-opening last March, its domestic tourism had been roaring, with Viet Nam easily surpassing its 2022 target of 60m and recording over 100m tourists. Meanwhile, Viet Nam welcomed 3.6m international tourists in 2022, mainly driven by travellers from South Korea (26 per cent) and the US (9 per cent).

However, the rebound of international tourism was only partial, with tourist arrivals reaching 3.6 million, only 20 per cent of 2019’s level. This highlights notable room for the services sector to continue to flourish amid a global slowdown of trade in goods demand, according to the report. For 2023, the government is targeting 102m domestic tourists and 8m international visitors, with tourism receipts expected to rise more than 30 per cent, albeit still lower than 2019 levels. Recall that total tourism receipts were as high as 10 per cent of GDP in 2019.

The good news is that mainland China, the largest visitor base for Viet Nam prior to the pandemic , has also recently begun its re-opening process, adding further tailwinds to Viet Nam’s burgeoning tourism sector. While the recovery process may be gradual, the impact on tourism Viet Nam’s economy will be sizeable on many metrics. For instance, Chinese tourists have on average historically spent more and stayed longer than most Asian peers, though lagging behind European and American peers. Given the proportion of Chinese tourists (30 per cent share), Viet Nam will likely be another main regional beneficiary, just after Thailand, to receive a boost from the return of Chinese tourists. If flight constraints can be solved and visa entry requirements can be eased further, we believe a 50-80 per cent return of Chinese tourists (3 million to 4.5 million) from pre-pandemic level could be achievable.

In addition to China’s re-opening, what other possible boosts are there? For one, expansion into new markets will be an area of focus, with various initiatives such as tourism roadshows being conducted to make headway into emerging markets like India, a country with a rising presence in Viet Nam’s international tourism.

Just last September, VietJet commenced operating flight routes between Viet Nam’s resort island Phu Quoc and India’s New Delhi and Mumbai. Other routes have also been launched connecting the two countries’ major cities. Indeed, easier travel has also planted the seeds to deeper tourism connections: Indian tourists accounted for 4 per cent of Viet Nam’s total tourists in 2022, from just 1 per cent in 2019 (Chart 4).

Another way to facilitate tourism is not just by improving its traditional infrastructure, but also diversifying tourism products. Sports tourism, a subset of tourism included in the tourism industry vision from the Vietnam National Administration of Tourism (VNAT), could also help attract high-spending travellers. For example, Ha Noi has been aiming to become a leading destination for golf tourism. Granted, the relatively nascent market means that there is significant room to improve in terms of the package tour arrangements and coordination among service providers. This, however, provides a good opportunity, with expectations that the number of golf courses in Viet Nam likely to double to 200 by 2025. Alongside other subareas identified such as medical and agricultural tourism, related development projects will be key in supporting the world’s interest to travel to Viet Nam.

General tourism facility developments are also encouraging. In particular, the supply of high-end accommodations continues to grow, with the number of 4-5 star accommodations rising 12 per cent per annum on average pre-pandemic, according to VNAT. Post-pandemic, a number of global chains have been looking to actively expand their portfolios in Viet Nam, reflecting the country’s attractiveness in areas beyond manufacturing. For example, La Festa Phu Quoc, Curio Collection by Hilton is expected to open in mid-2023, and Marriott International is also expecting to add up to 9,000 rooms to its current capacity of 3,300 rooms. With government ambitions and various development projects in play, the structural outlook for international tourism in Viet Nam remains positive, according to the report. 

Ho Chi Minh City among top markets for data centre development

With many of the largest markets in the APAC region boasting particularly high land costs, only Ho Chi Minh City ranks within the top 10 for the land price category for data centres.
The remaining top 10 markets in the category are: Columbus, Santiago, Johannesburg, Atlanta, Nashville, Phoenix, Austin, Denver, and Chicago, according to a report released by Cushman & Wakefield Vietnam on February 2.

The annual report, now in its fourth year, ranks major data centre markets around the world according to 13 weighted categories including market size, connectivity, power cost and environmental risk to determine the top overall markets in each category.

According to the latest Q4 2022 Ho Chi Minh City marketbeat report, the average rental price reached $159 per sq.m per lease cycle, up 3 per cent on the quarter and 10 per cent on-year.

Vietnam may be a frontier data centre market, but it has numerous fundamentals that would suggest great potential for development. The country currently has 70 per cent internet penetration, with an estimated 29 million people yet to get online. Over 48 per cent of Vietnam’s capacity is located in the capital of Ho Chi Minh. Currently, only a few multinationals are locally requiring high-level capacity.

The common approach for international operators is to partner with the local telecommunication operators. There is a sizable lack of existing infrastructure relative to the population of the market and demand for internet services. This represents a major opportunity at both the content provision and infrastructure establishment level.

South of Ho Chi Minh is preferred as a hub for data centres, especially for cloud services platform providers, due to latency issues and securing of manpower. Increasing land prices, limited land availability (especially for hyperscale) and limited current or future power supply in Ho Chi Minh directly are pushing new data centre developments to Binh Duong or Dong Nai provinces.

Spike in value of real estate inventory for Q4/2022

The latest report from the Ministry of Construction (MoC) shows that by the end of Q4 2022, the total value of inventory held by the major property developers showed a 20 per cent jump on-year.

The figures, concerning the housing and property market, covered the total value of inventory held by developers Novaland, Vinhomes, DIC, Dat Xanh Group, Khang Dien, Phat Dat, and Nam Long, which touched $11.7 billion.

Sitting atop the list was Novaland, whose inventory value had risen sharply from $3.77 billion in late 2020 to $5.84 billion by late 2022.

This comes as Novaland increased their exposure to the development of mega resorts, such as Aqua City, NovaWorld Phan Thiet, and NovaWorld Ho Tram on a scale approximating several thousand hectares

As much as 91 per cent of Novaland’s inventory value, equal to $5.32 billion, comes from its available land and projects in the development pipeline. The remainder stems from properties that have finalised construction and are waiting to be handed over to purchasers.

Vinhomes were reportedly holding $2.86 billion worth of inventory by Q4 last year, up 131 per cent compared to the previous year. The company’s inventory mostly lies in its for-sale properties that are in the development pipeline, including Vinhomes Grand Park, Vinhomes Smart City, and several Vinhomes Ocean Park developments.

Meanwhile, the valuation of Khang Dien’s inventory rose nearly 60 per cent on-year to $231 million, of which $54 million comes from half-complete developments such as the Khang Phuc project, and $46.8 million comes from the Binh Trung Dong project.

Other developers, like DIC Corporation and Dat Xanh Group, are sitting on portfolios valued at $257.5 million and $619 million, respectively.

The MoC report also indicates that inventory is currently concentrated in high-end condominiums and resort properties. The report commented that last year saw a limited supply of units belonging to new housing projects, as transactions had mainly centred around existing inventories.

Numerous stocks facing exit from exchange

Following a prosperous 2021, about 15 per cent of all businesses on stock exchanges have reported losses after a difficult year in 2022.

Following the third year of losses, the SII share of Saigon Water Infrastructure JSC has just received a notice from the Ho Chi Minh City Stock Exchange (HSX) on the risk of delisting its shares. If the audited financial statements confirm the losses as announced in the company’s financial statements, SII will leave HSX.

Despite benefiting from an increase in the price of domestic water in early 2022, SII’s full-year net revenue only rose by nearly 11 per cent compared to the previous year, which was not sufficient to offset the growth in business costs.

Nguyen Van Thanh, general director of SII, said that interest expenses and the depreciation of fixed assets were still high, although they have decreased significantly on-year. The plan to divest capital from enterprises has not been carried out yet, so it cannot contribute additional income to the company. The business recorded a consolidated net loss of more than $3.74 million in 2022. By the end of last year, undistributed after-tax profit on the consolidated financial statements decreased to $2.56 million and the parent company reported an accumulated loss of nearly $1.26 million.

Hoi An Tourist Service JSC has also continuously suffered losses over the last three years. Its net loss in 2022 was more than $826,000, following losses of $913,000 in 2021 and $1.08 million in 2020.

By the end of 2022, accumulated losses had risen to $2.8 million, eroding more than 80 per cent of the company’s modest charter capital of $3.5 million.

Along with these businesses, the stock of Vietnam Airlines was also removed from the exchange when the airline entered the third year of loss-making business. MCG Energy & Real Estate, Kim Vi Stainless Steel Commercial Producing, Hoang Ha, and Erection Mechanical are all facing the same situation.

In 2022, the proportion of businesses on the stock exchanges reporting losses reached more than 15 per cent, slightly higher than the figure in 2021. If post-audit reports for 2022 confirm the expected losses, numerous stocks will be removed and become ineligible for margin lending.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes

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