Vietnam:

Henig:  Việt Nam remains good business partner of Hong Kong: official

January, 20/2023 - 12:10

Việt Nam is always a very good business partner of Hong Kong (China), and the two sides have maintained effective trade and investment ties over the past years, according to Hong Kong’s Secretary for Commerce and Economic Development Algernon Yau.

Hong Kong’s Secretary for Commerce and Economic Development Algernon Yau. (fifth, right) and representatives from Việt Nam and Hong Kong attend the Vietnam and Hong Kong - Guangdong - Macao (China) partnership business forum. Photo courtesy of the Hong Kong Commerce and Economic Development Bureau

HONG KONG – Việt Nam is always a very good business partner of Hong Kong (China), and the two sides have maintained effective trade and investment ties over the past years, according to Hong Kong’s Secretary for Commerce and Economic Development Algernon Yau.

Trade between Việt Nam and Hong Kong grew 11.8 per cent each year during the 2017-2021 period. In 2021 alone, the value reached 220 billion HKD (US$28.1 billion), up 19 per cent year-on-year.

Hong Kong is the fifth largest trade partner of Việt Nam, while Việt Nam is the seventh largest trade partner of Hong Kong, and the second biggest among the ASEAN countries, only after Singapore. The two-way trade in the first half of 2022 stood at 125 billion HKD, a year-on-year rise of 21 per cent.

Algernon told the Vietnam News Agency that his recent visit to Việt Nam for a workshop on business cooperation between Việt Nam and the Guangdong-Hong Kong-Macao Greater Bay Area of China was a very “eventful and fruitful journey”.

While in Việt Nam, he met the Vietnamese Minister of Planning and Investment, the Minister of Science and Technology and the Deputy Minister of Industry and Trade to seek measures to boost the bilateral cooperation in the time ahead.

Algernon and his entourage of more than 60 representatives from Hong Kong enterprises had effective working sessions with the Hong Kong China Chamber of Commerce and the Vietnam Chamber of Commerce and Industry, he said.

He emphasised that Hong Kong businesses are very interested in investment in Việt Nam and Vietnamese firms also expressed their interest in investment in Hong Kong.

During his stay in Việt Nam, Algernon also visited an industrial park in the northern province of Hưng Yên and had a “good discussion” with local authorities about cooperation opportunities.

Algernon said he saw substantial opportunities for trade and investment cooperation between the two sides in the time ahead.

Việt Nam is a member of the Regional Comprehensive Economic Partnership (RCEP) and the Hong Kong Special Administrative Region Government has applied for  accession into the RCEP since early 2022, he said, explaining that the membership would help to further facilitate the trade between Hong Kong and the RCEP countries.

According to him, Hong Kong serves as a platform to get into the Guangdong-Hong Kong-Macao Greater Bay Area and getting accession into the RCEP will facilitate the members to use Hong Kong as a platform to do business, both in Hong Kong and in the Greater Bay Area as well.

Highlighting Hong Kong’s advantages, Algernon said they would help Việt Nam and other RECEP countries do business in the region.

VNS   LINK

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Henig:  Central bank seeks to contain inflation at 4.5 per cent

January, 20/2023 - 11:28

The central bank has said it will keep monetary policy flexible to ensure inflation does not exceed 4.5 per cent this year and monetary and foreign exchange markets remain steady.

HCM CITY — The central bank has said it will keep monetary policy flexible to ensure inflation does not exceed 4.5 per cent this year and monetary and foreign exchange markets remain steady.

The credit growth quota for the year is 14-15 per cent, the State Bank of Vietnam (SBV) said in a directive, adding that its aim is to ensure liquidity for all lenders.

It requires them to keep their bad debt ratio to below 3 per cent and ensure management and transparency in operations.

Banks should promote non-cash payments and digital transformation to improve the quality of their products and services and prevent money laundering, it said.

Under the directive, the Bank for Social Policies will further reduce interest rates to support businesses in priority sectors.

Cross-ownership in banks

The directive requires the banking sector to continue with the restructuring of weak credit institutions.

The SBV said it would also improve the legal framework for handling bad debts and preventing cross-ownership in banks, explaining it is vital to prevent cross-ownership and governance abuse by major shareholders to manipulate them.

Analysts have repeatedly warned that cross-ownership between real estate firms and banks could cause the latter to give the former priority in lending.

This could pose risks to the financial system and the entire economy, they have warned.

The SBV has since October last year placed the HCM City-based Saigon Commercial Bank under special control due to its multiple problems related to cross-ownership and abuses by major shareholders.

— VNS   LINK

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Henig:  Foreign investment flow into Việt Nam to reach $36-38 billion in 2023

January, 20/2023 - 11:25

Disbursement of foreign investment this year is expected to hit $22-23 billion, Deputy Director of the FIA Đỗ Văn Sử told baodautu. 

HÀ NỘI — Foreign investment inflows into Việt Nam will likely reach US$36-38 billion in 2023, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment. 

Disbursement of foreign investment this year is expected to hit $22-23 billion, Deputy Director of the FIA Đỗ Văn Sử told baodautu. 

The opening of China's economy might affect Việt Nam's foreign investment attraction, Sử said, adding that China remained the leading investment destination in the region, so when they opened up, capital would flow into this market while that to Việt Nam and other economies in the region would be limited. 

On the contrary, the investment capital movement of South Korea, Japan, and Taiwan from mainland China would be accelerated. This shift would be accelerated until 2025, and Việt Nam would be a preferred investment destination for investors, Sử told the online newspaper.

Currently, South Korea, Japan and Taiwan (China) are Việt Nam's major sources of foreign investment and they have constantly increased their investments in Southeast Asian countries. 

According to the FIA, essential factors for FDI to continue to prosper in 2023 included economic growth results in 2022, endless efforts of authorities in improving the business investment environment, creating trust with investors and effectively exploiting the advantages of free trade agreements.

Người lao động (Labourer) newspaper cited Minister of Planning and Investment Nguyễn Chí Dũng as saying that Việt Nam had adopted a selective approach to attracting foreign investment inflows which would  contribute to the country's implementation of the sustainable development strategy.

Priority would be given to projects using new and green technologies, with high added value, modern corporate governance, high spillover effects, ensuring technology transfer and being integrated with global supply and production chains, Dũng said. 

To lure more foreign investment, Dũng emphasised the importance of developing innovation and financial centres at the regional and international levels, creating a driving force for socio-economic development in the coming period. 

He added that stabilising the macro-economy, improving infrastructure and the quality of human resources would be also needed. 

Economic expert Lê Đăng Doanh told the Labourer that Việt Nam needed to have a comprehensive assessment of the trend of shifting foreign investment inflows soon so that the country could have more appropriate and effective policies to attract this capital flow.

Accelerating administrative reforms, improving the investment environment, and ensuring policy stability would make foreign investors feel secure when they pour capital into Việt Nam.

Good news

Since the beginning of this year, Việt Nam saw good news in foreign investment attraction as nearly $900 million in foreign direct investment (FDI) has been registered in the northern province of Bắc Giang. 

On January 7, China’s Yadea Group said it would invest $100 million in a factory to manufacture and assemble electric motorcycles with an expected capacity of about two million vehicles per year in the province's Tân Hưng Industrial Park. 

Covering an area of 23.2ha, the project will be implemented in the second quarter of 2023. 

Earlier on January 2, Bắc Giang Province granted an investment certificate to Singapore’s Ingrasys Pte Ltd, the Fulian precision technology factory project investor signed an MoU with Chinese investor Hainan Longi Green Energy Technology Co Ltd on a project to produce solar panels.

Both projects will be conducted from the first quarter of 2023, with combined registered capital of about $761 million.

A bright spot in 2022

Last year, foreign investment in Việt Nam remained a bright spot on Việt Nam's economic picture, despite experiencing a year-on-year decrease in value, thanks to its disbursement reaching a five-year high.

Data from the Ministry of Planning and Investment showed as of December 20, there were 2,036 newly-registered foreign direct investment (FDI) projects worth $12.45 billion, up 17.1 per cent year-on-year in the number of projects, but down 18.4 per cent in value.

In addition, 1,107 projects had their capital adjusted, with a total amount of $10.12 billion, up 12.4 per cent and 12.2 per cent year-on-year, respectively.

Capital contributions and share purchases (foreign indirect investment or FII) were worth $5.15 billion, down 25.2 per cent. This figure made total foreign investment in the country in 2022 top $27.7 billion. 

Meanwhile, FDI disbursement in 2022 hit nearly $22.4 billion, up 13.5 per cent year-on-year, making it the highest amount in the past five years, the General Statistics Office (GSO) reported.

Accumulated to December 20, 2022, the whole country was home to 36,278 valid projects with a total registered capital of approximately $438.7 billion. The accumulated realised capital of foreign investment projects topped $274 billion, equalling 62.5 per cent of the total valid registered investment capital.

Foreign investors poured funds into 19 out of 21 sectors in the national economic classification system, of which the processing and manufacturing industry maintained its lead in terms of attracting FDI with a total investment of over $16.8 billion, accounting for 60.6 per cent of the country’s total capital.

Among 108 nations and territories pouring capital into Việt Nam this year, Singapore ranked first with $6.46 billion. It was followed by South Korea ($4.88 billion), and Japan ($4.78 billion). 

The foreign investors invested in 54 provinces and cities nationwide in 2022. HCM City came first with more than $3.94 billion, Bình Dương ranked second with a total investment capital of over $3.14 billion. Quảng Ninh ranked third with a total registered investment capital of $2.37 billion. 

— VNS   LINK

Henig:  Positive 2023 securities market forecasts

06:00 | 20/01/2023

(VEN) - Vietnam’s securities market experienced strong volatility in 2022, stemming from investor caution in the face of global economic and political uncertainties.

Sharp fall in share prices

With stocks plummeting throughout 2022, most investor accounts registered a negative balance.

As of mid-December 2022, the VN-Index was trading at a price to earnings ratio P/E of 10.91 times, almost near the lowest level in a decade (10.34 times) on November 5, 2012. This valuation is also close to the valuation that VN-Index recorded during the first wave of COVID-19 on March 31, 2020.

The State Securities Commission (SSC) attributes the sharp decline both to domestic and international developments. Government economic support measures after the COVID-19 pandemic generated high inflation in many parts of the world, prompting rapid tightening of monetary policies. Domestically, cash flows on the securities market were affected by interest rate changes. After the Fed's continuous interest rate adjustments, the State Bank of Vietnam also increased the operating interest rate twice to cope with inflation and reduce external impacts.

In addition, deposit interest rates at commercial banks also increased, attracting cash flows back to the banking system and reducing the attractiveness of short-term securities investments.

The government’s crackdown on real estate enterprises suspected of violations in issuing corporate bonds also increased investor caution and affected securities market cash flow.

Basis for optimism in 2023

The breakthrough recovery of the VN-Index from its 900-point low to over 1,000 points during the final month of 2022 was mainly supported by foreign capital inflows. In November 2022, foreign investors net bought VND16 trillion on Vietnam’s securities market. The recent massive disbursement of foreign funds also matched foreign investors’ evaluation of Vietnam's securities market outlooks in 2023.

According to Craig Martin, Chair of Dynam Capital that manages Vietnam Holding Limited (VNH), the market recovered strongly at the end of November and is currently witnessing steady growth, pushing up prices of large-caps and luring back more local investors.

Tran Thang Long, analysis director of BIDV Securities Company (BSC) has reported that the BSC successfully issued shares to Hana Securities from the Republic of Korea for investment in long-term development opportunities of the Vietnamese securities market.

Tough government measures, including strengthened inspections and handlings of violations, are also expected to improve the stability, sustainability and transparency of the Vietnamese securities market.

The management agencies will also review the Law on Securities and guiding documents to resolve inadequacies and obstacles, thereby restoring investors’ confidence in the market.

According to J.P. Morgan data for the Asia-Pacific region, if Vietnam is upgraded to an emerging market, about US$5 billion from Exchange Traded Funds will pour into the country.

Thanh Thanh  LINK

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Henig:  Việt Nam retail real estate market expects growth in 2023

January, 20/2023 - 11:36

The retail space market has the opportunity to grow strongly in 2023 with the forecast of the recovery of the retail industry, especially with new investment of foreign brands in Việt Nam.

HÀ NỘI The retail space market has the opportunity to grow strongly in 2023 with the forecast of the recovery of the retail industry, especially with new investment of foreign brands in Việt Nam.

Many retail brands are looking at Việt Nam because the economy is strong, and they see the potential. Brands are diverse and range from luxury to mid-market brands, said Nick Bradstreet, head of Asia Pacific Retail, Savills. For example, Lotte is completing a new project, and it is expected to welcome international brands.

"The challenge Việt Nam is facing is that there are not enough shopping centres being built to meet the demand from international retailers," he said.

Việt Nam’s economy is growing quickly, which creates an attractive retail outlook. By 2025, Việt Nam will be the third largest economy in Southeast Asia, following Indonesia and Thailand. The country is vibrant and increasingly wealthy, and there is a dynamic population of young people.

Retailers want well-designed and managed properties with a dynamic tenant mix. They also want landlords to advertise and promote the spaces to draw in traffic, Bradstreet said. Central Group from Thailand is looking to invest more money in Việt Nam, and this is likely to attract international retailers because they trust the products. It might be harder for local developers and landlords because they are unknown on the international scene. Relationships are essential to attracting international retailers.

Besides, large cities such as Hà Nội, Đà Nẵng and HCM City, “tourist hubs, like Hội An, present opportunities, especially for pop-up stores during the high season. All the ingredients are there for Hội An, it just needs a well-planned and well-designed shopping centre,” Bradstreet said.

According to Bradstreet, everybody likes a well-managed shopping centre. Shopping centres deliver experiences. A prime example is Siam Paragon in Bangkok. It’s got all the big brands, people go and spend time with their friends, and parking and public transport are convenient. Shopping centres like this are popular in mainland China, Hong Kong, Thailand, and Việt Nam is no exception.

New suburban shopping centres and Lotte’s new project will be successful because people will be happy to go. The difficulty is that there are not enough shopping centres. Usually, there are shopping malls where all the luxury brands can be together or where fast fashion brands like Zara and H&M be grouped, but in Hà Nội, this is still very difficult to achieve.

“In the past, wealthy customers in Việt Nam travelled to Paris, Dubai, or Singapore and bought goods overseas. Before COVID, Vietnamese shoppers were spending overseas," he said.

However, with the lockdowns and restrictions over the last few years, they spent in Việt Nam and sales increased dramatically. Even today, luxury sales are extremely strong even though people are beginning to travel,” he said.

“The luxury market is interesting because there is a VIP business model. If someone shops at Louis Vuitton or Christian Dior, they will get to know them and will give them VIP treatment with dinners or gifts. So even if shoppers go overseas to buy a bag, they will still get a store from their local store when something new comes in. The relationship between customers and retailers has become stronger.”

E-commerce is now a vital sales avenue, and retailers have physical and online stores. However, physical stores deliver the experiential side of retail and can demonstrate the strength of a brand, its products, and its people. This plays an important role in how people feel about a brand and loyalty comes from that. Savills has seen people return to stores post-COVID, and physical spaces are important, Bradstreet said.

Luxury brands don’t rely too much on e-commerce because luxury retail is about service. When customers go to stores like Prada or Louis Vuitton, they walk out feeling good and often share this experience with their friends. However, when it comes to brands like Zara or H&M, getting delivery at home is okay because there isn’t the same level of aspiration or exclusivity.

In 2022, the retail market in general and townhouses in particular already recovered with a better occupancy rate, but the recovery has not reached the level of the pre-COVID-19 period, according to Savills.

The rental price of retail space also recorded an increase against the COVID-19 period. Of course, the recovery is still not as the performance before the pandemic due to the impacts of the economic situation at present and the landlords' psychology of comparison in the price at present against that in the pre-pandemic, said Hoàng Diệu Trang, Senior Leasing Manager for Savills Vietnam in Hanoi Branch.

Therefore, to further develop the market of townhouses for rent in 2023, there needs to be cooperation between customers and landlords in adjusting rent expectations.

In addition, the advantages of Việt Nam, such as a large and young population, and the young people's higher shopping needs than previous generations, will play a big role in attracting retail brands to the market, leading to the development of townhouse-retail in the future.

However, the retail real estate market in Việt Nam has high competitiveness, so retailers must constantly innovate to survive.

For the occupancy rate, the market still needs to continue adjusting to increase this rate in the near future.

Meanwhile, homeowners need to be aware of strict requirements on retail space from the brands. Brands need retail space with good quality in building and technical conditions.

Therefore, besides the good location of retail space, the landlord needs to provide more professional services and have more investment in the quality of the space to attract big brands.

In fact, if the townhouse space does not meet the desired brand criteria, they will prioritise Grade A retail space, which has special locations, reputable investors and properly-invested retail space.

Besides that, it cannot ignore the adverse effects of global macroeconomic conditions on consumption. Moreover, tourism has not really boomed, which also affects consumption, so it is necessary to have policies to support enterprises and Vietnamese brands to develop in many industries, thereby encouraging domestic consumption.

VNS  LINK