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6May/14Off

Foreigners earn big money from Vietnamese functional food market

Last update 11:40 | 05/05/2014

VietNamNet Bridge – Amway is building its second factory in Vietnam, NuSkin has got $15 million in revenue after one year of operation in Vietnam, while Unicity has got 22,000 members in its distribution network.

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With 1,800 Vietnamese and foreign manufacturers and distributors, 10,000 product items, the Vietnamese functional food market is booming.

Herbalife reported global turnover of $4.8 billion for 2013, an increase of 18 percent over the year before, of which the sales to the Vietnamese market accounted for a significant proportion.

When Unicity Vietnam made it first presence before the public, Asia Pacific President of Unicity Group Christopher Kim emphasized that, though the Vietnamese market has become very competitive, with hundreds of operational businesses and thousands of product items available, he is still optimistic about the group’s business performance in the future.

The success Unicity Vietnam has achieved over the last year has been described by one senior executive as “beyond our expectations”.

Mai Ngoc Lan from Unicity Vietnam revealed that the company is considering setting up a factory in Vietnam which would make products for export to regional countries.

Amway’s second factory in Vietnam, which is now under the construction, is expected to become operational in early 2015. The three production lines at the $25 million factory will churn out 24,000 products a year, worth $200 million.

According to Amway Vietnam’s CEO Doug Devos, the company has been growing stably over the last six years, since it set foot in Vietnam in 2008.

In 2013, Amway Vietnam earned $90 million in revenue, up by 14 percent over 2012.

The reports of market survey firms all have indicated that Vietnam is a lucrative market for functional food manufacturers. Vietnamese, with improved income levels, now have increasingly high demand for the functional food that help reduce weight, offer nutritional supplements, support cardiovascular health and improve beauty.

Euromoniter, a market survey firm, believes that the Vietnamese functional food market will grow steadily by 20 percent annually in the coming years.

Meanwhile, according to the Vietnam Supplement Food Association, 56 people out of every 100 in Hanoi and 48 out of 100 people in HCM City use functional food.

Melisa Tantoco-Quijano, NuSkin Asia Pacific’s President, noted that Vietnam is one of the manufacturer’s best newly emerging markets. “We can see high demand for anti-aging products here,” she said.

Encouraged by the high growth rate of 30 percent per annum, NuSkin plans to attain 33 percent growth in 2014, while it is moving ahead with plans to “conquer” the Da Nang market in the central region.

Doug Devos from Amway Vietnam believes that functional food manufacturers have a brighter future in Vietnam. With the ASEAN free trade agreement (FTA) which takes effects from 2015, the enterprises which sell functional food directly will benefit from the tariff cuts of 0-5 percent.

By that time, functional food manufacturers would have a vast market of 600 million consumers.

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1May/14Off

Vietnam earns $7.7bn from cellphone exports in first 4 months

Updated :     04/30/2014 11:33 GMT + 7

 

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Vietnamese workers handle equipment at a Samsung Electronics Vietnam plant in the northern province of Bac Ninh.
Tuoi Tre
Vietnam earned nearly US$8 billion from exports of mobile phones and spare parts in the first four months of this year, according to the latest figures recently released by the General Statistics Office of Vietnam (GSO).    The country raked in $12.2 billion in total export revenue in April alone, seeing an increase of 23.2 percent ($2.3 billion) compared to the same period last year, Dau Tu (Investment) newspaper reported last week, quoting GSO figures.In the first four months of this year, Vietnam’s exports earned around $45.7 billion, up 16.9 percent ($6.6 billion) year on year. The FDI sector gained $30.4 billion in export revenue, a year-on-year increase of 17.2 percent ($4.5 billion).

The GSO statistics also show that assembled products were the main revenue generator in the January-April period. Accordingly, exports of mobile phones and spare parts earned $7.7 billion, up 29.2 percent ($1.7 billion); garment and textile shipments hit $5.9 billion, a 20 percent rise; and footwear topped $2.9 billion, surging by 21.9 percent ($511.2 million).

Vietnam saw strong mobile phone export revenues thanks to Samsung’s two manufacturing plants located in the northern province of Bac Ninh and Thai Nguyen, Dau Tu said.

The country's traditional exports also posted high earnings in the same period as seafood collected some $2.2 billion, up 32 percent; coffee earned $1.6 billion, an increase of 29.5 percent; and wood and wooden products generated $1.9 billion, a 22.4 percent expansion.

Vietnam’s imports reached $12.6 billion in April and $45.1 billion in the first four months of this year, up 13.7 percent over the same period last year. The FDI sector contributed $26.3 billion, up 18.2 percent compared to same period last year.

Vietnam ran a $400 million trade deficit in April and thus posted a trade surplus of $683 million in the first four months.

Last year mobile phones surpassed textiles to become the export commodity to earn the most for Vietnam, for which Samsung Electronics Vietnam was largely responsible.

In 2013, Vietnam exported as much as $21.5 billion worth of mobile phones and spare parts, while the export value of textiles, traditionally the export staple of the country, topped $17.8 billion, according to data from the Ministry of Industry and Trade.

According to Tran Duy Dong, deputy chief of the Agency for Economic Management under the Ministry of Planning and Investment, Vietnam has emerged as the main manufacturing destination for Korean smartphone maker Samsung when it accounts for 70 percent of the modern handsets sold globally.

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1May/14Off

Vietnam’s foreign exchange reserves hit record $35 billion

Last update 19:00 | 30/04/2014

VietNamNet Bridge - According to the Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh, this is the highest level ever. Binh also pledged that interest rates will not exceed 1% from now until year’s end.

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This information was released by Binh during a dialogue between Prime Minister Nguyen Tan Dung and the business community on Monday.

According to the head of the banking sector, Vietnam’s foreign exchange reserves are now at their highest level, at over $35 billion. "The figure not only highlights the stability of the Vietnam dong but also strengthens the position of Vietnam in the international arena," Binh said.

This is the first time a representative of the State Bank has made public the country’s foreign currency reserve. Earlier, Binh said that in the first quarter alone, the central bank purchased $7.7 billion.

At the end of October last year, in an update report, ANZ estimated the foreign exchange reserves of Vietnam at about $32 billion. At that time, the State Bank had not published specific numbers, but ANZ was able to make an estimate based on the government's report at the 6th session of the 13rd National Assembly. Prime Minister Nguyen Tan Dung had stated that the country’s foreign exchange reserves had rapidly increased, to a level sufficient for about 12 weeks of imports.

Earlier this year, Governor Binh unveiled that interest rates would remain stable and, if adjusted, would not exceed 2%. However, talking to businesses on Monday, Binh reduced the ceiling to no higher than 1%.

In the dialogue with businesses, Governor Binh also answered questions related to interest rates for small and medium-sized enterprises (SMEs). He said that, at present, 60% of banking capital is being pumped into SMEs. "As such, any difficulties in the activities of SMEs directly affect the outcomes of the business of credit institutions," he said.

At a press conference last week, the State Bank said 16% of the total debt balance of the economy is suffering from the weight of 13-15% interest rates. Governor Binh said the majority of these debts are loans for consumption, and real estate.

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1May/14Off

99.9% of Vietnamese enterprises are super small

Last update 18:00 | 01/05/2014

VietNamNet Bridge – Of the more than 500,000 operating enterprises in Vietnam, up to 95-96% are small and super-small ones. If household-scaled businesses are added to the statistics, the percentage of small, super-small and micro-enterprises may account for 99.9%.

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VCCI Chair Vu Tien Loc.

 

 

Speaking at the dialogue between Prime Minister Nguyen Tan Dung and the business community on Monday in Hanoi, President of the Vietnam Chamber of Commerce and Industry (VCCI), Mr. Vu Tien Loc, said that of over 500,000 enterprises currently operating in Vietnam, 3,000 are state-owned enterprises, nearly 8,000 are enterprises with foreign investment and the remaining majority (97-98%) are private firms.

According to Loc, despite nearly 30 years of innovation with booming business opportunities, particularly in the areas of natural resource development, real estate, securities and banking, Vietnam has not yet had a generation of big companies and big brands that can compete with international rivals.

Vietnam also lacks mid-sized businesses, ones which are able to access new technology and become partners of transnational corporations and engage in the global value chain.

Loc added that of more than 500,000 operating businesses, large enterprises account for only about 2% and the ratio is similar for midsize enterprises. The remaining 95-96% of firms are small and super-small enterprises. Micro-enterprises (with less than 10 employees) account for 66-67%. If household-sized businesses are taken into account, the percentage of micro-enterprises may account for 99.9%, Loc said.

Given the problems that the business community is facing, VCCI gathered and submitted a report to the Prime Minister with over 300 specific recommendations. Among the petitions, the business community asked the government to continue innovating the legal system on business to guarantee property rights, business freedom and equal competition of businesses.

S. Tung

 

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29Apr/14Off

PM directs to improve investment, business environment

Last update 13:42 | 29/04/2014

 

VietNamNet Bridge – The Government will create favorable conditions for the business community to increase productivity, competitiveness, quality and competitiveness and make contribution to the nation’s socio-economic development.

 

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PM Nguyen Tan Dung -- Photo: VGP

 

PM Nguyen Tan Dung made the statement on April 28 at his conference with businesses in 2014.

The PM applauded efforts, achievements and contributions of the business community to the nation’s socio-economic development over the past time.

The nation has fulfilled goals set in the five-year-plan in the phase from 2011-2015 such as stabilizing the macro-economy, controlling inflation, guaranteeing social security, improving people’s lives, ensuring national defense and raising Viet Nam’s status in the world.

PM Dung also pointed out difficulties and shortcomings facing these businesses such as the number of enterprises is still low in comparison to the population and 97-98% of businesses are Small and Medium-sized Enterprises (SMEs).

The PM suggested ministries, agencies and localities work with the business community to further improve the investment and business environment.

The Government has paid due attention to completing the market economy regulations, setting up mechanisms and policies and implement administrative reforms for these businesses to develop, stressed the PM.

The PM instructed the banking sector to help enterprises get access to credits. He asked the Governor of the State Bank of Viet Nam to develop the capital market and create a close connection between banks and businesses.

The leader required these enterprises to raise their competitiveness, increase labor productivity, apply technology into production and enhance business management competence.

Besides, businesses are suggested to coordinate with functional agencies in preventing and controlling counterfeits and low-quality products as well as expand domestic and foreign markets, establish business culture and strictly follow the State’s regulations and rules.

Source: VGP

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29Apr/14Off

Hesitancy may spoil McDonald’s future in Vietnam

Last update 16:15 | 28/04/2014

 

VietNamNet Bridge – The US fast food giant McDonald’s may not gain market share as quickly as planned, due to its late arrival in Vietnam vis-à-vis its rivals, experts say.

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The biggest rivals of McDonald’s are Lotteria, KFC and Jollibee, all of which have had a presence in Vietnam for a long time, and now command 80 percent of the fast food market segment.

Lotteria is taking the lead in demonstrating that the invasion of the Double Arches is nothing to fear. The chain is opening a series of shops on the most crowded streets of HCM City – Nguyen Du and Ly Chinh Thang.

The fast food chain and KFC are now moving ahead with their business expansion plans by marching on towards other developed cities, including Phan Thiet.

The Asian Jollibee, encouraged by its success in the struggle with McDonald’s in the Filipino market, is staying calm, continuing its plan to open a new shop in District 3, targeting children.

A branding expert, when asked about the future of McDonald’s in Vietnam, noted that this depends on the number of shops McDonald’s plans to set up in the coming years.

If it plans to have 10-20 shops throughout the country, it will surely succeed. However, it would be impractical for it to open hundreds of shops.

In principle, once a fast food chain decides open many shops, it had better be sure it can bring the average prices of it products down to a level that fits the average Vietnamese income. That is because the company is forcing itself to target the majority of fast food customers rather than a small demographic with high incomes.

In other words, McDonald’s will succeed only if its products are positioned as valuable products.

McDonald’s has revealed that it will open its second shop in Vietnam on April 30, also in HCM City.

The first challenge for McDonald’s when opening the second shop, according to the above said branding expert, is that the customers in HCM City will have two shops to go to. In the worst scenario, customers would flock to one shop, leaving the other more deserted than usual.

That scenario is very likely to happen. Observers have noted that most of the customers going to the first McDonald’s shop are those who drive motorbikes, i.e., customers with medium incomes and young customers under the age of 25.

Moreover, the most outstanding feature of the customers under 25 is their modest income and fickle tastes. They lack the two most important characteristics that McDonald’s needs – high income and loyalty.

Tamnhin.net has quoted a foreign newspaper as commenting that McDonald’s McPork, priced at $3.10, is proving to be too expensive in light of the modest average Vietnamese income of $150 and the average food price in Vietnam.

McDonald’s has been trying to attract an upscale segment with its drive-thru service, which targets high income earners who come to the shop in their cars. However, a businessman noted that fast food is not the kind of thing that he and his colleagues, mostly middle-aged, like.

In newly emerging markets, the nouveau riche tend prefer using those services or products which can display their high status in society. iPhone is an example. Meanwhile, young upscale diners eat at McDonald’s but may not think of returning, because wolfing down a Big Mac just doesn’t bring the same “intangible value” as wandering down a street with iPhone in hand.

GDVN

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29Apr/14Off

Banks’ bad debts estimated at $14.6 billion

Last update 09:14 | 28/04/2014

VietNamNet Bridge – At the April press conference of the State Bank of Vietnam (SBV) on Friday, the non-performing loans of the banking sector by the end of February were announced at VND122 trillion ($5.8 billion), accounting for 3.86 percent of the total debt balance.

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However, Mr. Dao Quang Tinh, SBV’s vice chief supervisory inspector, said the bad debts would be up to nearly VND308 trillion ($14.66 billion), accounting for 9.71 percent of the total debt balance, if restructured bad debts were included.

Earlier, the National Financial Supervisory Commission said that the bad debt of the banking system is approximately 9 percent, instead of the 15 percent as reported by Moody's.

The central bank also said that deposit growth is currently five times higher than credit growth. By the end of March, loans for the [real] estate business grew 3.95 percent, compared to 1.09 percent of the first 3 months of the year.

Regarding a VND30 trillion package to aid low-income earners in buying homes, the State Bank said that so far credit agreements worth VND3.29 trillion had been signed, of which VND1.89 trillion has been disbursed.

Na Son

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25Apr/14Off

Industrial sector sees 5.4% jump in production

April, 25 2014 09:25:00

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The national industrial production during Jan-April 2014 saw a 5.4 per cent year-on-year increase. — Photo cafef.vn

 

HA NOI (VNS) — The national industrial production during Jan-April 2014 saw a 5.4 per cent year-on-year increase, a positive sign of production recovery at enterprises, noted the General Statistics Office (GSO).

The office claimed that the index of industrial production (IIP) in April surged 6 per cent against the corresponding period last year, according to the Thoi bao Kinh te Viet Nam (Vietnam Economic Times).

Of the total reported rise, the growth rate of industrial production was 0.4 per cent for the mining industry, 7.5 per cent for the processing and manufacturing industry, 10.6 per cent for electric production and distribution, and 3.3 per cent for water supply and wastewater treatment.

During the period, the industrial production rose 7.4 per cent for the processing and manufacturing industry, 9.6 per cent for electric production and distribution, and 5.4 per cent for water supply and wastewater treatment.

Also, in the initial four months, many products registered a growth rate in production, such as television up 32.9 per cent, footwear up 31.1 per cent, rolled steel up 22.4 per cent, auto up 16.7 per cent, and processed seafood products up 13.7 per cent.

However, some other products registered a decline in production, such as raw steel down 11 per cent, motorbike down 7.4 per cent, coal down 5.8 per cent, and textile down 3.1 per cent.

The office also reported that the consumption index of the local industry for the first quarter rose 5.5 per cent in comparison to the same period last year.

The production sectors having high consumption were electric equipment production with a growth rate at 21.8 per cent, leather and related products (up 19.8 per cent), products made from prefabricated metal (up 13 per cent), and vehicles (up 1.28 per cent).

The inventory index of the processing and manufacturing industry at April 1 posted a month-on-month increase of 13.9 per cent and a year-on-year surge of 13.1 per cent.

Other sectors reporting higher inventory than the same period last year were electronics, computers, tobacco products, medicines, pharmaceutical products and materials, leather, and paper. — VNS

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25Apr/14Off

CPI data shows minor bump in April prices

April, 25 2014 09:06:00
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It said that the prices of food, which accounts for 40 per cent of the goods basket used to calculate the CPI, declined by 0.26 per cent. — Photo 24h

 

HA NOI (VNS)— The country's consumer price index (CPI) in April inched up 0.08 per cent against the previous month thanks to the abundant sources of supply amid low demand.

Deputy Director of the General Statistics Office's (GSO) CPI Department Do Thi Ngoc said that the slight rise of the CPI this month was in line with the country's price-changing rule for the past 17 years, when the CPI often inched up or down in April only.

However, the office noted that compared with December last year, the index rose 0.88 per cent, the lowest rise for the past 13 years. Except for an acceleration of 9.64 per cent in 2011, the CPI in the 2002-13 period averaged between 2.5 per cent and 5.4 per cent.

The marginal rise in April was because the prices of many necessities fell or rose slightly, the office said.

It said that the prices of food, which accounts for 40 per cent of the goods basket used to calculate the CPI, declined by 0.26 per cent.

The prices of housing and construction materials, including rent, electricity, water, fuel and construction materials, also slid by 0.56 per cent, while the prices of both postal services and telecommunication baskets eased by 0.14 per cent, the data showed.

Many other goods and services also reported a marginal rise in April, such as education which was up 0.06 per cent; medicine and health care which went up by 0.04 per cent; and culture, entertainment, and tourism which rose by 0.02 per cent.

During the month, the prices of traffic services reported the highest hike of 0.33 per cent. The garment, footwear and hat sector followed with a rise of 0.26 per cent in prices.

Not included in the CPI components, the gold prices in April dropped by 1.04 per cent, month on month, while the US dollar prices edged down by 0.06 per cent, month on month.

In urban areas, this month's CPI edged up by 0.06 per cent, month on month, while in rural areas, it was a rise of 0.11 per cent. — VNS

 

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25Apr/14Off

Bank M&As encouraged by SBV, discouraged by experts

Last update 10:00 | 25/04/2014

VietNamNet Bridge – While the State Bank of Vietnam believes that the merger of small and weak banks into larger and stronger ones will help speed up the bank restructuring process, experts don’t think this is a perfect solution.

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Local newspapers have quoted an official of the State Bank as saying that, instead of buying weak banks’ shares to recover them, the watchdog agency now tends to encourage small banks to merge into big ones. The official said the new solution can help speed up the banking system restructuring process because it allows for savings on costs and time.

As the central bank has “turned on the green light”, commercial banks have been trying to find suitable matches. PG Bank plans to merge into VietinBank, and Southern Bank into Sacombank, while Maritime Bank is considering taking over Mekong Bank. Vietcombank, one of the largest Vietnamese banks, is also considering taking on a small bank, but the name of the bank remains a secret.

Meanwhile, economists, remaining skeptical about the effects of the merger and acquisition (M&A) agreements on the bank restructuring process, have commented that the M&A deals look more like rescue missions than sound business deals.

What they mean is that, in the deals, big banks are serving more as the rescue team in charge keeping the small banks afloat, while not receiving any benefits in return.

Regarding the Southern Bank–Sacombank M&A deal, an analyst said there is no need for Sacombank to “take on” Southern Bank, a small and weak bank with a non-performing ratio of over 4 percent, the majority of which are irrecoverable.

The analyst thinks that the central bank wants to see banks merge into each other to cut down on the number of weak banks and reduce the degree of circular ownership, a big problem of the banking system. If so, the liquidity problems and bad debt settlement would be sped up.

If everything goes smoothly, the number of Vietnamese banks will be halved by 2015, from 45 to 20.

However, the analyst commented that the lowering of the number of banks is not enough to restructure and strengthen banks.

Yun Hang Jin, from Korea Investment & Securities, noted that after an M&A, the bad debt of the new bank would be worse, as it would now equal the total bad debts of the two banks. Therefore, one cannot say that an M&A would help improve the “health” of the banks or help them escape from liquidity problems.

Dau Tu newspaper has quoted Dr Nguyen Duc Thanh, Director of VEPR, an economics research center, as saying that the takeover of the state owned banks over small banks may weaken the competitiveness of the whole banking system.

Thanh explained that if the big banks have more power, they will have greater influence in the policy making process, which would allow them to control the market.

He noted that the State Bank has been trying to save weak banks by encouraging M&A deals instead of bringing the weak banks to bankruptcy, because bankruptcies of banks may lead to immeasurable consequences to the financial market and society.

Compiled by K. Chi

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