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Marc Djandji

Marc Djandji

Marc Djandji (CFA) is a contributor of Vietnam Insider, covering enterprise and financial market. He co-founded ASEAN Strategy Group, an independent boutique investment bank focusing on corporate finance advisory for small to mid-market companies in Southeast Asia. If you want to share your story, publish a press release or just want to ask something, contact Vietnam Insider via editor@vietnaminsider.vn. Follow us on Facebook | Twitter

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Enterprise

Insider’s view: Vietnam’s furniture sector continues to stay strong

by Marc Djandji

Vietnam’s furniture industry is one of the most dynamic operating in the world. It is currently the second-largest exporter of furniture in the Asia-Pacific region, and fifth in the world, behind China, Germany, Italy, and Poland.

As a result of the US-China trade war which has spurred supply chains relocating away from China. The movement out of China into Vietnam was already underway before the current tariff crisis but it has accelerated greatly over the past two years. Today, Vietnam’s wooden furniture exports to the U.S. increased 18.6% CAGR in the 12 months to July 31 versus calendar 2016.

Vietnam’s furniture industry is very diverse, ranging from high-end custom made wood furniture to small boutique shops. Companies like IKEA, Ashley Furniture, West Elm, and more manufacture furniture in Vietnam.

The country has around 1,500 furniture exporters, with around 450 of them being FDI (foreign direct investment) companies, accounting for over 45% of furniture exports. Some of the major players currently dominate the market. However, with technological advancement and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and by tapping new markets.

Words by Marc Djandji, CFA. Investment professional accompanying clients in their expansion journey into ASEAN and Canada. Follow Marc on his LinkedIn here.

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Enterprise

Regulations on loan registration in the case of business mergers in Vietnam

by Marc Djandji

If there is any change to contents relating to loans referred to in the confirmation of foreign loan registration given by the State Bank, the borrower shall be responsible for making registration for changes of his foreign loan with the State Bank.

So, the question is what are the regulations on loan registration in the case of business mergers?

Here is the answer from VGP:

Under Point 1, Article 15, Circular 03/2016/TT-HHNN on several instructions on foreign exchange administration in respect of enterprise’s foreign borrowing and foreign debt payment of enterprises.

Relate: M&A consulting in Vietnam

1. Unless otherwise provided for by paragraph 2 and 3 of this Article, if there is any change to contents relating to loans referred to in the confirmation of foreign loan registration given by the State Bank (according to the form given in Annex No.02 hereto), the borrower shall be responsible for making registration for changes of his foreign loan with the State Bank under the provisions of this Circular.

2. If the plan for fund withdrawal, debt repayment and actual fee remittance is changed within a permitted duration of 10 (ten) days as against the one previously approved by the State Bank, the borrower shall be responsible for notifying in writing the account service provider to carry out fund withdrawal and debt repayment according to the changed plan; By doing so, registration for changes of such loan with the State Bank shall not be required.

3. The borrower shall only notify in writing the State Bank and shall not apply for registration of changes of loans in respect of the following contents:

a) Change of the borrower’s address in the city or province where the borrower’s head office is located;

b) Change of the creditor, related information about creditors in respect of a syndicated loan that designate the representative for creditors, except when a creditor is also the representative for creditors in respect of a syndicated loan, and any change of creditors that may entail changes to the roles of the representative for creditors;

c) Change of the commercial transaction name of the account service provider.

4. Within a maximum period of 30 (thirty) days from the date of change or receipt of notification of change made to contents referred to in paragraph 3 of this Article, the borrower shall send notification by post or directly to the authority in charge of confirmation of registration of loans according to authority covered by Article 18 hereof.

To be advised more details, you may need the support from a legal services company, GBS, a business law firm in Vietnam can be a good choice.

By VGP
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FinanceTrending

Fitch Ratings keep Vietnam’s sovereign rating at ‘BB’ with a positive outlook

by Marc Djandji

Fitch Ratings affirms Vietnam’s sovereign rating at ‘BB’ with positive outlook saying the delayed payment on a Vietnamese government-guaranteed loan in September was paid in full within the month and Fitch understands the administrative problems that gave rise to this delay are being addressed.

“Therefore, the delayed payment does not have an immediate impact on the rating,” the rating agency noted in a report released on Thursday.

Fitch’s latest rating has helped soothe concerns caused by last month’s statement made by Moody’s Investors Service.
Moody’s on October 9 placed the Ba3 local and foreign currency issuer and senior unsecured ratings of the Vietnamese Government under review for downgrade as it became aware of delayed payments on an obligation by the Government.
According to Moody’s, while the information available so far points to no or minimal losses for creditors, co-ordination gaps within the administration that the delayed payments may reflect point to creditworthiness that may no longer be consistent with a Ba3 rating.

Moody’s expects to complete the review within three months. During the period, Moody’s will assess the practices and systems the Government has or is instituting, to ensure reliable, timely, and smooth payments.

Moody’s would maintain and confirm Vietnam’s Ba3 rating if the rating review were to conclude there is evidence of clear and effective steps being taken that offer very high confidence all debt obligations will be honoured in a smooth and timely manner.

In the latest rating on Vietnam, Fitch said the country’s economic expansion had been driven by strong foreign investment and steady export growth.

Exports as a share of Vietnamese GDP rose from 2011-18. Vietnam’s current account surpluses helped build external buffers and its external liquidity ratio was well above the ‘BB’ category median, although funding costs would rise over time as Vietnam moves from concessional to market funding.

GDP growth remained strong in the first nine months of 2019 at 7 per cent year-on-year and a similar annual growth rate in the last quarter would keep Vietnam as one of the fastest-growing economies in APAC and in the ‘BB’ rating category globally.

Vietnam appears to be benefiting from production shifts resulting from US-China trade tensions, although large-scale relocation of manufacturing to Vietnam will take time, and the country’s high degree of trade openness means it may feel effects from the trade war, according to Fitch.

The revision of Fitch’s outlook on Vietnam to ‘Positive’ in May reflected improving economic management, current account surpluses, falling government debt, high growth and stable inflation.

By VNS

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Finance

Vietnam finance and banking industry embracing digital transformation

by Marc Djandji

Vietnamese banks and financial institutes must be ready for a digital transformation.

Policymakers and experts said at a workshop organized in ‘s capital of Hanoi yesterday.

Digital technologies have had a strong impact on the country’s economy and nowhere that impact has been more strongly felt like in the banking and finance sector. Technologies helped improve business models and processes as well as created new products and services to serve the need of customers.

Take mobile payments, for example. According to a PwC survey this year, Vietnam was among the countries with the fastest growth rate in mobile payments. The number of users had seen a sharp increase to 61 per cent from just 37 per cent the year before.

Vietnam was among the countries with the fastest growth rate in mobile payments

In the first eight months of 2019, total value of mobile payments in Vietnam increased by 150 per cent as the number of mobile transactions doubled from the same period last year, according to a report by the State Bank of Vietnam (SBV).
A report by Google in April showed the size of Vietnam’s digital economy could reach US$12 billion by the end of 2019 and $43 billion by 2025. Vietnam and Indonesia are the fastest-growing digital economies in ASEAN, with over 40 per cent annual growth.

The SBV projected the digital economy would account for up to 20 per cent of the country’s GDP in 2025. Technologies, especially digital technologies, would be an important driver for economic growth and increased productivity to help develop the nation.

“The digital transformation is inevitable and Vietnam’s banking and finance sector is well-prepared to embrace it,” said Nguyen Kim Anh, the SBV’s Deputy Governor, at the workshop.

Deputy Governor of the State Bank of Vietnam Nguyen Kim Anh speaks at a workshop discussing the digital transformation of Vietnam’s banking and finance sector in Hanoi. — VNA/VNS Photo

Anh said the sector was among the country’s leaders in adopting new technologies and innovations, and in reworking its regulatory and legal framework to make use of their advantages.

Dr Sebastian Paust, First Counsellor, Head of Development Cooperation at the German Embassy in Hà Nội, discussed Germany’s development cooperation strategy in supporting digital transformation. He said Germany would continue its support for the Vietnamese banking and finance system for the implementation of digital transformation programs.
“Digitalization in the context of Industry 4.0 and rapid changes in technologies has great potential to help achieve the objectives of green economic growth and sustainable development,” said Dr Michael Krakowski, Director and Chief Technical Advisor of the Macroeconomic Reforms/ Green Growth Program.

The workshop was a part of the Macroeconomic Reforms/Green Growth Program implemented by GIZ Vietnam, and was co-organized by SBV and GIZ Vietnam, which operate on behalf of the German Federal Ministry of Economic Cooperation and Development (BMZ).

By VNS
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EnterpriseTrending

In the face of economic uncertainty, Vietnam remains active in attracting foreign investors

by Marc Djandji

Despite the slowdown in global deal-making due to ongoing worldwide economic uncertainty, Vietnam remains active in M&A in 2020.

The firm’s fifth annual Global Transactions Forecast, jointly released with Oxford Economics, projects that mergers and acquisitions (M&A) will decline globally from 2.8 trillion USD in 2019 to 2.1 trillion USD in 2020. The forecast also predicts a downward trend in IPO proceeds from an estimated 152 billion USD in 2019 to 116 billion USD, a 23 percent drop.

Related: Investment Consulting in Vietnam

For Vietnam, the forecast expects GDP growth may ease over the next 18 months, due to export growth trends declining amid lower Chinese import demand and increased global protectionism. Currently, Vietnam’s average annual GDP growth of 6.2 percent is higher than the global average of 2.8 percent.

According to Sophie Dao, Partner at Global Business Service (GBS) – an investment consulting firm, attracting foreign direct investment (FDI) has always been a key part of Vietnam’s external economic affairs. Vietnam already has many comparative advantages and a strong investment climate, but the country is working smart to become even more appealing to foreign investors by vigorously renovating the business and investment climate, and by recognizing that the FDI sector is an integral part of the economy – essential to restructuring the economy and raising national competitiveness.

Baker McKenzie expects cross-border acquisitions to dominate M&A deals in the coming years, as the country’s solid social economic fundamentals continue to attract overseas investors. “Vietnam remains active in M&A right now, due to positive market factors and confidence that help create business opportunities, as well as multilateral agreements that continue to prompt regulatory reform,” said Seck Yee Chung, who heads Baker McKenzie’s M&A practice in Vietnam.

Vietnam, Thailand and Indonesia were identified in the report as Asian countries that saw strong inbound activity in 2019. This year’s largest cross-border signed inbound deal in the country was the Republic of Korea’s chips-to-energy conglomerate SK Group’s 1 billion USD investment in Vingroup –Vietnam’s largest firm.

This was followed shortly by RoK-headquartered Hana Bank’s purchase of a 15 percent stake in the Bank for Investment and Development of Vietnam (BIDV) worth 850 million USD. The RoK is the largest source of foreign direct investment in Vietnam, as the latter has become a production base for major Korean multinationals such as Samsung and LG.

Despite continued interest from investors, Vietnam may experience a decline in M&A, as total transactions will dip from 2.6 billion USD in 2019 to 1.7 billion USD in 2020, a 35 percent decrease. In IPOs, the report did not post any estimates for 2019-2020.

Looking ahead, the report predicts that activity will pick up again post-2020, as Vietnam remains an attractive market./.

- By VNA/ GBS
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FinanceLife

Vietnam ranked among largest remittance beneficiaries in 2019

by Marc Djandji

Vietnam is forecast to rank ninth among the largest remittance beneficiaries in 2019 with an inflow of nearly 16.7 billion U.S. dollars, according to the World Bank’s latest data.

Remittance to Vietnam has kept rising for the past two decades, from more than $1.3 billion in 2000 to $16 billion last year (except the year of 2009 due to adverse impacts of the global financial crisis), which is showing that remittances continue to be an important income source for the country, local daily VnEconomy cited the bank’s data updated in October as reporting on Wednesday.

India is expected to top the 2019 ranking with over 82.2 billion U.S. dollars, or 2.8 percent of its GDP, followed by China with nearly 70.3 billion U.S. dollars, or 0.5 percent of its GDP.

Total remittance flows to low and middle income countries are projected to reach 551 billion U.S. dollars this year, 574 billion U.S. dollars in 2020 and 597 billion U.S. dollars by 2021, the World Bank said in its report.

According to a report on Vietnam News, the growth of Vietnam’s remittance flows slowed to 4.7 per cent in 2019 compared to a robust 8.6 per cent in 2018, the brief noted, adding that cyclical factors affecting the growth of remittance flows include economic growth in source countries, oil price and variations in exchange rates.

The slowdown in the growth of remittances this year is sharp in all regions except the Latin America and the Caribbean, and the Sub-Saharan Africa. Remittances would increase moderately in South Asia (5.3 percent) and East Asia and Pacific (3.8 percent), read the report.

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Finance

Vietnamese banks report higher profits

by Marc Djandji

Vietnamese banks are reporting better profit for the third quarter this year, with Vietcombank leading the way despite the predicted slowdown in credit growth.

In the first nine months, Vietcombank announced profit before tax of US$741.1 million, up 51.9 per cent compared to the same period of 2018, 85.4 per cent of the year’s plan.

With consolidated profit before tax of $757.9 million, up 50.6 per cent over the same period, Vietcombank is expected to get higher profit than its goal of $861.8 million.

As another state-owned bank, Agribank announced its first eight months’ profit before tax of $380 million, fulfilling 80.2 per cent of the year’s plan, setting the bank up for the possibility of exceeding its profit goal.

Among private banks, Sacombank reported profit before tax of $107.2 million, up 89.5 per cent compared to the same period of 2018, reaching 94 per cent of its year’s plan.

By September 30 this year, Sacombank’s total assets hit $19.39 billion, up 10.9 per cent from the beginning of this year. Sacombank’s sources of income continued to grow steadily, of which service revenue grew 21.1 per cent, currency exchange revenue grew 35 per cent and revenue from other activities 176.2 per cent.

Sacombank’s bad debt ratio fell from 2.11 per cent to 1.96 per cent. Currently, Sacombank must spend on its restructuring project approved by the State Bank, thus its shareholders expect to receive no dividends in this period, despite large profits.

Tien Phong Bank (TPBank) reported profit before tax of $103.4 million in the first nine months, up 50 per cent from its same term last year, reaching more than 75 per cent of the year’s plan. The bank’s mobilization also exceeded $5.94 billion up 22 per cent from last same term.

In the same period, MBB reported $305.1 million, an increase of 28.5 per cent. By September 30 this year, Military Commercial Joint Stock Bank MBB’s total assets reached $16.6 billion, up 9.37 per cent from the beginning of this year.

Though not yet officially announced, VPBank and Techcombank expect high profits in the first three quarters too.

A recent survey from the State bank of Viet Nam showed that as of September 26, credit growth was recorded at 8.64 per cent and capital mobilization rose by 9.03 per cent against figures seen in early 2019.

The report also found the demand for loans would continue to rise, higher than the demand for payments, cards and deposit accounts.

Some 68-73 per cent of credit institutions expect the demand for banking services to surge for the rest of the year.

Notably, the survey showed the resolution of non-performing loans (NPL) at banks had shown positive signs, with 27.6 per cent of banks reporting their NPL ratio declined in Q3 and 28.9 per cent expected a drop in Q4. The rates are higher than 27.4 per cent and 26.9 per cent in the previous survey conducted in June.

The survey also indicated many banks saw a reduction in credit risk in the third quarter.

By VNA

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FinanceTrending

Moody’s puts 17 banks of Vietnam under review for downgrade

by Marc Djandji

Moody’s Investors Service has placed some of the ratings of 17 Vietnamese banks on review for downgrade.

Of the 17, Moody’s has also placed on review for downgrade the Baseline Credit Assessments (BCAs) and Adjusted BCAs of four banks, and the long-term Counterparty Risk Assessments (CR Assessments) of nine.

The rating actions on the 17 banks follow Moody’s placement of Vietnam’s Ba3 sovereign rating under review for downgrade on 9 October 2019. For more information on the sovereign credit rating action, please refer to the Government of Vietnam issuer page on www.moodys.com.

The review of the banks’ ratings is driven purely by the sovereign rating action, and does not reflect a weakening of the banks’ standalone financial profiles.

The 17 affected banks are

  1. An Binh Commercial JS Bank (ABB)
  2. Asia Commercial Bank (ACB)
  3. Ho Chi Minh City Development JSC Bank (HDBank)
  4. JSC Bank for Foreign Trade of Vietnam (Vietcombank)
  5. JSC Bank for Investment and Development of Vietnam (BIDV)
  6. Lien Viet Post JS Commercial Bank (Lien Viet)
  7. Military Commercial JS Bank (Military Bank)
  8. Nam A Commercial JS Bank (Nam A Bank)
  9. Orient Commercial JS Bank (OCB)
  10. Saigon – Hanoi Commercial JS Bank (SHB)
  11. Tien Phong Commercial JS Bank (TPBank)
  12. Vietnam Bank for Agriculture & Rural Development (Agribank)
  13. Vietnam International Bank (VIB)
  14. Vietnam JSC Bank for Industry and Trade (VietinBank)
  15. Vietnam Maritime Commercial JS Bank (MSB)
  16. Vietnam Prosperity JS Commercial Bank (VP Bank), and
  17. Vietnam Technological and Commercial JS Bank (Techcombank).

The ratings, assessments and outlook of Saigon Thuong Tin Commercial Joint-Stock Bank (Sacombank, Caa1 stable, caa2) are unaffected by today’s action.

Moody’s could downgrade some ratings and assessments of the 17 banks if Moody’s downgrades Vietnam’s sovereign rating.
The agency will unlikely upgrade the ratings of the 17 banks, because their ratings are on review for downgrade.

Nevertheless, Moody’s will confirm the banks’ ratings with a stable outlook, if Moody’s confirms Vietnam’s sovereign rating at Ba3 with a stable outlook.

Moody’s on Wednesday said the key driver behind its decision to place Vietnam’s rating under review for downgrade is institutional weaknesses, as revealed by delayed payments on an obligation by the government. The review could last three months.

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Trending

South Korean investors buy more property in Vietnam

by Marc Djandji

The developer of a property project confirmed that, there are 690 condotels and 90 villas in the resort. However, a real estate brokerage firm has ordered 300 products. Of these, 250 condotels will be sold to buyers from South Korea.

The project is located on a ‘5-star boulevard’ with a series of high-end resorts spreading from My Khe to Cua Dai of Da Nang city. Each condotel is sold at VND2 billion.

The investor has committed the annual profit of 8 percent in the first two years and 9 percent for the third and subsequent years, if the project can get occupancy rate of 70 percent and higher.

The general director of a company distributing the project said the company has a high number of clients via its office in South Korea.

“250 is not the last number. However, as clients have had good feedback about the products, I believe the sale will be very satisfactory,” he said.

The director went on to say that South Koreans like products because it is located in an advantageous position with beautiful beaches and is a high-end project. The room rate in the area is about $1,500 per night.

“Chinese travelers use products of different classes, but most of them prefer the resorts at reasonable fees. South Koreans stay in high-end resorts,” he explained.

Along the Da Nang coastline, in the districts of Son Tra and Ngu Hanh Son, restaurants and hotels run by South Koreans have mushroomed in number.

A real estate broker who has been in the sea city for two years, said there are a lot of South Koreans buying houses in Da Nang under Vietnamese names to settle down in the city. “A South Korean community is taking shape. The real estate transactions here are just like the way they appeared in Phu My Hung, airport area and Tan Binh IZ in HCMC,” he commented.

Meanwhile, in early July 2017, the developer of a project in district 2 in HCMC stated that hundreds of South Korean buyers had registered to buy products of the projects.

Under current laws, developers can sell no more than 25-30 percent of total products in one project to foreigners.

According to Sophie Dao, Partner of GBS, investment capital flows from Japan, Singapore, South Korea and Hong Kong are currently the most active sources in Vietnam property market, there are price increases in the market, mainly at large-scale projects invested by reputable investors. Vietnam macroeconomic figures have become more optimistic, like 5-year-fast GDP growth rate, 10-year-low inflation rate, housing interest rates cut, etc.

“Korean clients and enterprises are playing an increasingly significant role in Vietnam property market. According to Ministry of Planning & Investment, in the first half 2019 Korea was the second largest foreign direct investors in Vietnam with 2.73 billion USD inflow, accounting for 14.8% of total registered FDI”, said Sophie Dao.

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Enterprise

Best tips for doing business in Vietnam

by Marc Djandji

With Vietnam’s economy expanding at an impressive rate, navigating its unique business culture is vital for potential investors hoping to enter this burgeoning market.

The Vietnamese are incredibly open and optimistic about foreign investment and the opportunities brought by increasing integration in international markets. They are also usually very keen to share their proud culture, tradition and history with foreigners in order to protect their local customs and heritage in a rapidly developing and outward-looking society.

Therefore, even the slightest acknowledgement of Vietnamese culture can earn foreigners a lot of esteem. With all this in mind, Julie Giguere, Managing Director of Asian Absolute listed out some tips for doing business in Vietnam.

Related: Company Registration in Vietnam

Greetings

The Vietnamese language has an interesting set of pronouns. There is no direct translation for ‘I’, ‘you’, ‘he’ or ‘she’ in Vietnamese, because the words used to address people are decided by generation as well as gender. For instance, someone younger than you will be addressed as ‘em’, while a friend the same age is ‘ban’, yet a male your grandfather’s age is ‘ong’. Dozens of pronouns are necessary to help fully articulate the strict generational hierarchy of Vietnam.

The elder generations’ struggles and sacrifices on the road to freedom and independence are highly respected by Millennials. Most teenagers would agree that their parents know what’s best when it comes to big decisions about their future.

Experience, wisdom and pragmatism take precedence over youthful idealism. Therefore, it’s always best to offer a two-handed handshake to the oldest people in the room first, and the youngest last.

When pitching an idea, try to have an experienced colleague focus on the practical real-world solutions you’ve already established, rather than losing your audience in speculative, ideological or conceptual discussions.

Eating

Generation also plays a key role when eating. Usually, meals are a family occasion, so paying individually is a baffling practice for most Vietnamese. If you invite a group of people to eat with you, it’s your responsibility to settle the bill, with the oldest male traditionally reaching for his wallet.

Vietnamese people love to eat and are very proud of their traditional cuisine. They will be overjoyed to hear foreigners hum while eating and saying the word ‘delicious’. Rice products, noodles, fresh vegetables and hot-pots form the backbone of the Vietnamese diet, along with every kind of meat imaginable. Tropical fruits like guava or green mango, served with salt, are a common snack during meetings,

It’s also worth bearing in mind that lunch is a meal reserved for family. Between 11:30am and 2pm, schools close and workers go home so that families can enjoy lunch together. As Vietnamese working hours can stretch from 7am-9pm in tropical weather, Vietnamese people also like to take a nap around midday. It’s not wise to suggest a call or meeting that might disturb this institution, so a business dinner is a much better idea than a working lunch.

Making conversation

When sitting down to eat, you might be surprised by some of the questions you are asked. It is uncommon for people to ask “How are you?” as there is no direct translation in Vietnamese (the closest being: “Do you have strength?”)

Vietnamese people may ask “How old are you?” – usually considered a faux-pas. But don’t be offended – this is just to gauge how they should address you as part of the generational hierarchy. In fact, trimming years off your true age may prove detrimental.

More common opening questions in Vietnamese include “Where are you from?”, “How many people in your family?” and “Are you married yet?” The family unit is still very strong in Vietnam, and sharing pictures of loved ones enjoying free time together will be very endearing, portraying a person of wholesome character.

Image is important in Vietnam, especially when doing business. You must be professional, but it also helps to illustrate that you are a charitable person and dedicated family member.

Being honest

When sharing photos, try not to be taken aback by common Vietnamese compliments like “Your daughter is so beautiful” or “Your family are so rich”. Due to their mother tongue’s simple grammar and logical vocabulary, people in Vietnam generally call things as they see them and prefer to communicate in a very clear and simple manner. This can lead Vietnamese people to sometimes come across to Westerners as quite abrupt, especially if they ask frank questions like “How much do you earn?”

However, some in business might find this refreshing, as cutting to the chase and displaying results can be much more effective than drowning people in euphemisms and jargon.

Negotiating

Don’t be afraid to articulate your position clearly, because you’re going to be negotiating. Like most Asian countries, Vietnamese businesses tend to favor tailored, flexible deals over standardized, fixed arrangements.

The figure you are quoted first is usually just your trading partner’s target; their ideal result of the negotiations. Your response should then be your minimum amount, which then sets the range in which negotiations can take place.

Vietnam’s exponential growth has created an optimistic economy, but one that is also increasingly competitive. Businesses are eager for foreign investment to gain the advantage. It is therefore important to understand the context in which you are negotiating and offer the right sweeteners to any deal. For example, long-term sustainable partnerships with flexible terms are seen as favorable to rigid contracts with short-term gains.

Image is also paramount, and doing business with large organizations in developed countries is a big indicator of success and prestige to Vietnamese consumers. Any deal involving publicity, marketing and media opportunities boasting international relationships would be very desirable.

It’s also crucial to remember that Vietnam only joined the global marketplace three months before Jeff Bezos founded Amazon. Free markets are still somewhat of a new phenomenon. Vietnamese businesses are keen to learn the secrets of successful, sustainable growth from large multinational firms. Offering cutting-edge software, online technology or simply secrets to international success in your industry will likely sweeten any deal.

By Asian Absolute
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Enterprise

Vietnam to allow foreign invested firms listing on the stock market

by Marc Djandji

Vietnam is striving to improve its stock market’s status and implementing measures to attract portfolio investment, and allowing FDI firms to list would help the country achieve this goal.

Experts have urged competent authorities to rapidly make a clear legal mechanism to convert foreign-owned firms into public companies, enabling them to list on the Vietnamese stock exchange. The Hanoi Times reported.

Some FDI firms have said that they want to list on the local stock market, but there has been so far no specific guidance for the activity. The regulatory delay hurts the firms’ chances of raising capital in the country, while also negatively affecting the budding image of Vietnam’s market as an open and welcoming destination for foreign investors.

It was believed if the government changes the legal framework to allow FDI firms to list their shares, many foreign investors will join the local stock market.

Experts believed that it is good news for Vietnam as foreign investors have been choosing Vietnam not only to set up production bases, but also to list their shares. It will help Vietnam promote itself as both the listing and investing destinations for foreign companies.

According to Layer Tran Minh Hai, it will be a good signal if the government allows FDI enterprises to be converted into public companies and listing shares on the stock market.

The move will show that FDI firms operating in Vietnam are treated equally as domestic ones and the country eases them to bring capital into and out of the local market, Hai said.

Vietnam is striving to improve its stock market’s status and implementing measures to attract portfolio investment, and allowing FDI firms to list would help the country achieve this goal.

The country’s stock exchange too will become more attractive to investors if foreign companies can list on them, growing in size and offering more products.

It would create a virtuous cycle by attracting more direct and portfolio investment flows from abroad, experts said.

Better supervision

According to experts, paving the way for FDI firms to list their shares on the local stock market also helps strengthen supervision over the firms. State management agencies will then find it easier to monitor activities related to acquisitions by foreign companies, generally improving transparency overall.

Besides, experts said, at that time, listed foreign firms will be overseen more closely. In addition to authorities, investors and shareholders will also keep a close watch on them.

However, as some FDI firms only list their stocks to divest from Vietnam more easily if they need to, experts suggested the State Securities Commission (SSC) issue some more detailed rules on whether the founders of FDI firms can divest from their companies, as this is related to the matter of capital outflow from Vietnam.

It is also necessary to have clear legal regulations and ensure foreign firms are properly audited before they are allowed to list to reduce the risk for both the investing public and the market.

The chairman of the Vietnam International Arbitration Center (VIAC), said that in order to pave the way for FDI enterprises to go to the Vietnamese stock exchanges, competent authorities need to carefully review international commitments that Vietnam must enforce to ensure the foreign ownership limits.

It is important to have close and feasible monitoring regulations for listed FDI firms, especially those related to transparency of financial statements and annual reports, Huynh suggested.

According to SSC, it is working with relevant ministries and agencies to finalize specific legal regulations on guiding FDI firms in listing on the Vietnamese stock market before submitting it to the Ministry of Finance and the government for approval.

Huge contribution to the country’s economy

The economy grew at 6.7 per cent in the second quarter. The foreign-invested sector is considered a key player in helping Vietnam achieve such growth rates through its exports.

In the first eight months of this year, foreign-owned firms’ exports including crude oil were worth US$118 billion, up 5 per cent from the same period last year and accounting for 69 per cent of the country’s total exports.

Foreign firms’ imports during the period were worth $96.15 billion, up 4.8 per cent and accounting for 57.7 per cent of all imports.

In light of their huge contribution to the country’s economy, this is why experts call for a clear legal mechanism to convert foreign-owned firms into public companies, enabling them to list on the Vietnamese stock exchange.

Reported by Anh Hong
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EnterpriseTech

Vietnam’s SaaS startup, KiotViet wants to digitalize Vietnam-based SMEs’ Inventory

by Marc Djandji

Vietnam’s SaaS startup, KiotViet has raised US$6 million in a Series A funding round from Jungle Ventures and Traveloka

Vietnam’s Citigo Software-owned software-as-a-service (SaaS) company, KiotViet has raised US$6 million in a Series A funding round from venture capital firm Jungle Ventures, and an online travel aggregator Traveloka. The startup, which provides companies with cloud-based store management software, plans to utilize the funds towards expanding its offering across Vietnam, especially for small and medium-sized businesses. Dipen Pradhan reports on theEntrepreneur.

“KiotViet will open offices in all provinces and cities in Vietnam to serve customers in remote areas who have low technology knowledge and accessibility,” deputy general director of Citigo, Tri Cao, said in an email correspondence.

According to Cao, KiotViet will also utilize the proceeds towards improving the leadership capacity of the management team and recruit talents, along with improving product and service qualities.

Launched in 2014, KiotViet provides micro-businesses and SMEs such as fashion retailers, restaurant, grocery, furniture, drugstore, mini supermarket, with a simplified suite of management software solutions to help them manage its inventory, sales, cash flow, marketing and management solutions. It claims that the service is currently being used by more than 70,000 SMEs spread across 63 Vietnamese provinces.

According to Entrepreneur, citing recent studies on SME market of Vietnam , Cao said that Vietnam’s SME sector comprises up of 95 per cent of all enterprises, contributing around 40 per cent to GDP, and employs around half of the total workforce. “However, SMEs continue to face hurdles towards digitalizing their operations. Our aim is to provide such companies with innovative and intuitive digital solutions to help them digitalize, increase efficiency, and tap into new opportunities,” Cao added.

The startup drives its monetization by collecting a monthly fee from the SMEs, starting from VND 160,000 (USD$ 7); and 240,000 VND from private enterprises. Although the company did not reveal its revenue details, it claims to have experienced a growth rate of 250 per cent year-over-year. It currently employs 850 people, and expects to take the headcount to 1,200 by the year end. The company says it is looking to recruit high quality programmers from top-notch local and international universities of technology.

Investors Say

To the question if Kiotviet is getting any other form of support from investors, Cao said that Jungle and Traveloka have connected the startup with many partners to forge new collaboration opportunities.

“With even the traditional retail sector adopting more digital transactions, we see that KiotViet’s products and services will be a definite game changer. The company is therefore well-positioned to help Vietnam’s smaller merchants close their digital gaps and enable more sustainable growth in the years ahead,” company’s statement cited Jungle Ventures’ principal, Grace Yun Xia, as saying.

As part of the deal, the AVP of Traveloka investment will be joining KiotViet as board of directors, the company said.

Market

The April 2019 report by ResearchAndMarkets indicates that Vietnam’s cloud service market is poised to grow to $291 million by 2024, up from $165 million in 2018, at a CAGR of over 10 per cent year-on-year. The same report suggests the growth will be primarily led by SaaS companies and SMEs, due to flexibility in adoption, cost-efficient, and easy to set up that does not require installing any hardware or software.

While the country is already packed with multi-national companies providing cloud-based service such as IBM, AWS, Salesforce, many startups like KiotViet are also catering to the industry. There are homegrown companies such as Sapo, which is a sales management software that helps SMEs to optimize its online as well as offline inventory. Similarly, there are Haravan and others.

According to ResearchAndMarkets, northern Vietnam is the leading region in the Vietnamese cloud service market owing to the presence of large corporates and private organizations, government and defense institutions coupled with the growing number of SMEs in the region.

This article was first posted onEntrepreneur
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EnterpriseTravel

Vietravel’s shares will be listed on UPCoM

by Marc Djandji

Hanoi Stock Exchange has approved the registration of trading shares of the Vietnam Travel and Marketing Transport Joint-stock Company (Vietravel).

Vietravel will trade more than 12.6 million shares on the Unlisted Public Company Market (UPCoM), with par value of VND10,000 (43 US cents) per share.

In addition, Vietravel also transferred registration and depository data from unlisted mass market to UPCoM market on Vietnam Securities Depository system from August 7, 2019.

Vietravel currently operates domestic and international travel tours, labour export, vocational training classes, trade promotion and events.

The company is also implementing an online business growth project and carrying out charter flights for the business period in the last six months of 2019.

In the first half of this year, Vietravel’s net revenue is estimated at nearly VND3.98 trillion, a year-on-year increase of 6 per cent. The company’s pre-tax profit reached around VND30 billion, up 26 per cent compared to the same period last year and achieving 44 per cent of the year’s plan.

In 2019, the firm targets revenue of more than VND8.61 trillion and after-tax profit of VNĐ60.8 billion.

- VNS
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Finance

Vietnamese banks stocks push shares up

by Marc Djandji

Vietnamese shares increased on Friday morning on the rally of bank stocks.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange gained 0.72 per cent to close at 983.12 points. Vietnam News Agency reports.

The index dropped 0.66 per cent to close at 976.05 points on Thursday.

More than 83.5 million shares were traded on the southern bourse, worth VND1.8 trillion (US$77 million).

According to Vietnam News, banking stocks were the main supporters of the indexes today. Vietcombank (VCB) played a leading role when increasing 2.6 per cent to VNĐ78,400 per share. EIB rose 2.3 per cent to VNĐ17,700 per share. Asian Commercial Bank (ACB) rose by 1.6 per cent to VNĐ31,300 per share. Vietinbank (CTG) increased 1.6 per cent to VNĐ22,000 per share.

A series of other large-caps stocks such as Saigon Securities Incorporation (SSI), Vinhomes (VHM), Vingroup (VIC), Vietjet Air (VJC) and Vinamilk (VNM) also rallied and helped the market flourish.

On the other side, some pillars went against the general market trend. Hòa Phát Group (HPG) dropped by 1.9 per cent to only VNĐ20,550 per share and matched 2.9 million shares, of which, foreign investors sold over 1 million shares. Bao Viet Holdings (BVH) fell 1.5 per cent to VND84,500 per share.

The large-cap VN30-Index was up 0.85 per cent to 878.19 points.

Twenty-two of the 30 largest stocks by market capitalisation ended the morning session on a positive note.

On the Ha Noi Stock Exchange, the HNX-Index climbed 0.37 per cent to end at 107.13 points on Friday morning.

The northern market index had inched up 0.15 per cent to end at 106.74 points on Thursday.

More than 20 million shares were exchanged on the northern bourse, worth VND340 billion.

- VNA
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