HIGHLIGHTS IN REAL ESTATE INVESTMENT IN VIETNAM

Vietnam is attracting interest of investors in both domestic and foreign market. Overall, investor confidence was returning to the Vietnam real estate market. Both buyers and sellers have enhanced activity in recent months.

The real estate market of Vietnam has overcome the recession period within 4 or 5 years ago but in the last 12 months, the market has recovered and noted positive signs as well as confidence in the market in general.

Law on housing and real estate business Law takes effect in July 2015 and has acted quickly and positively on the real estate market in Vietnam. The changes in the Law on housing have significantly eased the regulations on home ownership for foreigners, although there are still some limitations.

 “Hot spots” of FDI inflows

According to a recent report of Jones Lang LaSalle Vietnam (JLL), a series of free trade agreements such as TPP, EU and ASEAN will further promote the medium and long term development. Interest rates and inflation rate have declined significantly and became more stable in the past two years, helping the investment activity to occur more positive in both Ho Chi Minh City and Hanoi. With some domestic and foreign investors such as CapitaLand and Keppel Land, they have spurred the construction activities thanks to the growing revenue in the last 12 months.

Accordingly, the amount of disbursed FDI in the period from January to September of 2015 rose by 8.4% compared to the same period last year, reaching 9.7 billion USD. This is the strongest growth since the late 1980s, contrary to the slowdown of the Chinese economy. The amount of registered capital of new investors also rose even more sharply with 11 billion USD, focused primarily on the manufacturing industry, in which the energy and electronics industries are the sectors with the highest registered capital investment in the year, followed by the real estate sector.

According to the Ministry of Planning and Investment, FDI investment in the industrial park in Vietnam accounted for 67% of total FDI in Vietnam with 11 billion USD and accounting for 59% of the total 1,400 projects in the first 9 months of 2015. A notable transaction is the event that Amata Corporation acquired the land worth 279 million USD in Long Thanh (Dong Nai) for the purpose of building residential and industrial areas valued of 500 million USD.

According to JLL, the residential real estate prices in Vietnam maintained an average rate with 2 bedroom apartments, 70 m2, 10 – 15 minutes to reach the central area of Ho Chi Minh City, which are sold at the price of 1,600 – 2,000 USD/m2, equivalent to 112,000 – 140,000 USD/apartment. When compared with the big cities in the region, the price is believed to increase significantly.

Who dominated the real estate market of Vietnam?

JLL’s report showed that domestic investors are boosting investment activity in the real estate market of Vietnam. The largest real estate investors in Vietnam are Vingroup and Novaland Group.

Vingroup is Vietnam’s largest real estate development and management with market capitalization of about 3.4 billion USD. Vingroup’s investment portfolio includes 45 real estate projects spread across many sectors of the real estate market, including Vinhomes luxury apartments and villas; Vincom Center and Vincom Mega Mall; Vincom Office; 5 star Vinpearl resort; Vinpearl Luxury resort….

Novaland Group has participated in the real estate market in 2007 with the first project is Sunrise City with investment capital of 500 million USD located on Nguyen Huu Tho road, district 7. The real estatebusiness of Novaland focused on the apartment complex segment from mid to high classes and the segment of house land with 25 projects that are being implemented throughout the downtown districts.

Vietnam is becoming an attractive place for foreign investment in the medium term than many other countries in Southeast Asia. Data from Real Capital Analytics (RCA) recorded that there are more attention from a number of private investment funds that are allocated foreign capital into Vietnam in an attempt to increase their market presence in Vietnam.

In the 2^nd quarter of 2015, a joint venture of Warburg Pincus – a US investment fund, has invested 100 million USD into Vincom Retail, the Vietnam’s largest trade center ownership and management in Vietnam. Also in this quarter, Gaw Capital Partners has received the transfer of 4 real estate projects under various segments from Indochina Land with a total value of 106 million USD. Gamuda Land has also receive the transfer of 40% shares (equivalent to 64.1 million USD) in the Celadon City project, a modern urban area with initial investment by a joint venture between Sacomreal, Thanh Thanh Cong (TTC) and An Phu Gia.

The current real estate profit margin is high

JLL’s analysis shows that investors are now enjoying 6 – 7% profitability rate for residential real estate and 9 – 11% for commercial real estate, depending on location, completion time, quality of the project and the signing time of the tenants.

According to General Director of JLL Vietnam, real estate investment in emerging markets has always been seen as risky investments but with higher potential profits. Investors are willing to engage in joint venture projects in these markets, where they will combine with local investors who wish to have capital supporting – in order to have a foothold in the market before and also experience the exponential growth in the future when the economy of these market growing fast.

Moreover, the emerging markets such as Vietnam will have the potential growth factors, including population growth and high urbanization rate. Investors and project developers can take advantage of these factors.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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JAPANESE GIANT PETROLEUM CORPORATION ENTER VIETNAM MARKET

 There is a trend that foreign corporations entering Vietnam market as they see the potentials of this rising economy.

Japan’s Idemitsu Kosan Group has received an investment license to open a joint venture with a unit of Kuwait to build a petrol distribution system in Vietnam.

This corporation will contribute 50% capital to Idemitsu Petroleum Q8 Co., Ltd, along with Kuwait Petroleum International (KPI) to set up station system to retail gasoline in Vietnam.

The investment registration license has been granted by the Vietnam Government and the business registration procedures are being conducted. If completed, this would be the first time when Vietnam petroleum distribution market has the participation of an enterprise with 100% foreign capital.

Currently, the two partners in the joint venture of Idemitsu Petroleum Q8 are all shareholders in Nghi Son Petrochemical Complex and Vietnam Oil and Gas Corporation (each party hold 35% of the capital).

Nghi Son Petrochemical is expected to trial operating in 2016 and commercial operating in 2017. Thus, through the establishment of a separate company on the distribution of petroleum products, Idemitsu and KPI will complete the production and distribution chain in Vietnam, ensuring the supply as well as output for the product.

Apart from the investment in joint venture distribution and petrochemical company, Idemitsu Kosan is also engaged in a series of beginning stage projects of the petroleum industry, such as investment in the mining lots (Lot 09-3, Lot 05.1). Moreover, this Japanese giant also said that they are ready to consider contributing funds when PV Oil carries out equitisation.

Idemitsu Kosan is one of the leading oil and gas group in Japan, with history of over 75 years of formation and development. The group’s market capitalization has now reached 108.6 billion Yen (almost 1 billion USD) with net sales in 2014 reached 4,630 billion Yen (about 42 billion USD). By the end of the first quarter of 2015, the corporation has nearly 9,000 employees.

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Vietnamese Restaurant Chain Attract Foreign Funds

The start-up project with the restaurant chain named “Kafe Group” of Chi Anh Dao, a female chef and businesswoman born in 1984 has just get the attention by receiving an investment amount of 5.5 million USD (over 120 billion VND) from Cassia Investments – an investment fund from Hong Kong (China).

Previously at the end of 2014, the chain of 100 restaurants named “Mon Hue” (Hue Dishes) of Huy Vietnam Food Processing Co., Ltd is invested by Franklin Templeton fund, a fund managed by billionaire Mark Mobius with 11 million USD investment capitals.

According to the owner of “Mon Hue” restaurant, this food chain also receives investment capitals from 4 other investors from Singapore, Hong Kong (China)… Currently, this chain includes 3 brands: Mon Hue, Rice Express and Mr. Hung Noodles.

Before KAfe Group and Huy Vietnam, Golden Gate – including such brands as Kichi Kichi, Sumo BBQ, Ashima, Vuvuzela… receive the investment flow with 2.6 million USD from Mekong Capital Fund in 2009. Next, Standard Chartered Private Equity Fund from Standard Chartered Bank has spent 35 million USD to repurchase these shares.

Besides buying shares of Vietnam companies, the culinary market has continuously welcome many foreign brands opening restaurant in Vietnam such as Tokyo Deli, Coca Suki, Sakura, Oshima…

According to experts, investing in culinary market is the trend of modern business model. In particular, food chains seem to be less affected by the economic downturn as they meet the indispensable needs of life. Therefore, this sector is always attractive to funds.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

·         Market Entry

·         Tax Advice

·         Legal Advice

·         Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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NESTLÉ SET UP THE 6TH FACTORY IN VIETNAM

This is the 6^th plant of Nestlé in Vietnam and the 2^nd factory located in Hung Yen. The project has investment capital of 70 million USD, which is expected to come into operation in 2017.

Nestlé Vietnam Company has just started construction of a new factory in Thang Long II Industrial Park in Hung Yen. As reported by the company, the new plant with capital investment of 70 million USD was built on an area of 10 hectares and expected to go into operation in 2017, creating jobs for hundreds of local workers.

In 3 years, Nestlé has continually set up new plants and expand existing plants. The investment activities are continued to expand expressedthe firm belief in the rapid development of Vietnam’s economy. At the same time, assessing that Vietnam is having many advantages in attracting investment with a young and dynamic population, growing consumer markets and favorable business environment.

Nestlé Group specializes in manufacturing and supplying nutrition and health products. Founded in 1866 and headquartered in Vevey, Switzerland, till now, the group has developed 447 plants in 86 countries with 339,000 employees, owns more than 2,000 brands with 10,000 products.

Estimating that every day, there are about 1 billion of Nestlé products are sold worldwide. Nestlé operates in Southeast Asia since the early years of the last century, the first sales offices located in Saigon in 1912. In 1995, Nestlé Vietnam was born. So far the total investment capital of Nestlé in Vietnam reached over 520 million USD, employs approximately 2,000 employees and operates 5 plants.

Earlier, in 1992, Nestlé joint ventured with Long An Trading Company to founded La Vie Co., Ltd. In 2001, the company continues to build La Vie mineral water plant in Nhu Quynh town, Van Lam district, Hung Yen with registered capital of more than 10.3 million USD.

As noted by the Deputy Minister of Industry and Trade, Nestlé Vietnam is one of the 100% foreign investments that have invested very soon in Vietnam. Since going into operation so far, the company has maintained a fairly annual growth rate, especially in 2015, the growth rate of the company reached approximately 15%.

According to the Swiss Ambassador in Vietnam, Switzerland is in the list of 20 largest investors in the world. In Vietnam, investment projects of Swiss firms are growing significantly. The Swiss company has been operating in Vietnam for many years, contributing more than 2 billion USD of investment capital in Vietnam, bringing the Swiss became the 4^th largest investor in Vietnam, surpassing Germany.

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HOW TO MANAGE RISK?

Depending on the size and characteristics of the enterprise that they may establish a risk management department consists of experienced professionals, or at least they should use the risk management services of professional consulting and law firms with extensive experiences in this field. The risk managementde partments have to perform many tasks but should focus on three main functions: risk identification, risk analysis and risk response.

First, we need to identify the risks. It is the process of gathering information, data and analysis of factors that may impact negatively on the achievement of goals, including the inside and outside, macro and micro factors. We can use analysis tools such as brainstorming, interviewing, root-cause analysis, checklist, SWOT analysis… along with other tools that are used in the strategic planning process. Enterprises need to create and regularly update the information and data system to serve for the analysis.

The next process is risk analysis, in which we need to analyze to assess risk that has been identified at the main aspects: the root causes of risk, risk probability and condition to occur, scope and displaced persons entitled to, impact of the risks, factors that change the level of impact…

Finally is the process of responding to risks. More specifically, it is the process of choosing the way to respond to risk, which may include measures to: (i) risk aversion (abandon risky activities); (ii) risk prevention (eliminate the root causes of risk); (iii) reduce the likelihood of risk; (iv) eliminate the negative impacts; (v) reduce the negative impact; (vi) risk sharing; (vii) risk transferring (buy insurance, use derivative instruments); (viii) take risks and preparing resources to overcome the consequences.

Principles

Risk management must ensure the main principles: (1) create value (cost of risk management has to lower than benefit that it brings); (2) is an integral part of the business activities; (3) attached to the decision making (all important decisions have to consider risk management); (4) to be systematic and follow a throughout process (5) are regularly evaluated and improved.

It can be said, at the present, only the financial institutions and the banks are interested in risk managementactivities (although not enough) while most other companies have not focused on this activity. Towards the sustainable development, enterprises cannot just “take risks” in the passive and desperate ways, they should be towards to manage risk in proactively and wisely ways.

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JAPANESE ENTERPRISES WANT TO LEAVE CHINA TO ENTER VIETNAM

The labor costs in China rose steadily, along with the territorial dispute between Beijing and Tokyo are the two factors that the Japanese business community wants to move their production to Vietnam instead of China.

Mitsui OSK Lines, the largest shipping company in Japan has decided to invest 1.2 billion USD in the project to build international container port in Hai Phong. The decision is given 3 years since the Japanese businesses gradually increase investment in Southeast Asia due to the rising labor costs in China and the territorial dispute between Beijing and Tokyo causes many complex issues to incur.

The International Container Terminal Project in Hai Phong is implemented by the Tan Cang Saigon Company, partner Molnykit (Japan) and Hai Phong International Container Port, in the form of public-private partnership (PPP) and under the guidelines the Government of Vietnam and Japan.

According to  the Financial Times, the terminal will start operation in 2018 and double the port’s current capacity to serve the needs of the growing electronics manufacturer industrial zones near Hanoi.

Currently, the situation that many Japanese companies close their factories in southern China and moved manufacturing operations to areas with cheaper labor costs in Vietnam.

Since the protests against Japan exploded in major cities of China in 2012, investing activities of Japanese companies in Southeast Asia surged. The foreign direct investment from Japan to ASEAN reached more than 20 billion USD in 2015, according to Government data, and exceeded total foreign direct investment in China, Hong Kong.

Results from an annual large-scale survey of Japan External Trade Organization showed that the proportion of Japanese companies want to expand production in China fell below 40% since 1998.

According to another report from Mizuho Research Institute, after surveying the opinions of more than 1,000 Japanese manufacturers, it is showed that Vietnam was the top destination among 12 countries participating in TPP Agreement for companies who want to increase their investment.

Vietnam is also one of the countries in which Japanese firms considered ideal to build the factory if they move production out of China’s territory.

Many reports estimate the total domestic product of the ASEAN countries will increase from the current rate of 2.6 trillion USD to 5.8 trillion USD in 2025. The rising labor costs in China are changing the conception of the Japanese business community on the role of ASEAN in the global supply chain. Vietnam is really an emerging heaven of electronic products. This fact will completely change the macroeconomic outlook of Vietnam.

In addition to the prospect to become the center of merchandise exports to Europe and the United States, Vietnam can also directly supply goods to the ASEAN markets in the context of mass population is about to reach 700 million people.

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Places to Retire in Vietnam

According to several reports published in magazines and newspapers, Vietnam is one of the best places to retire not only in Asia but in the world! Vietnam, along with Thailand and Malaysia is often counted as the most amazing place to spend the retirement years in. The criteria which is used to select the best places to retire include the reasonable cost of living, opportunities for growth and available physical and social activities etc.

Reasons for Retiring in Vietnam

The fact that a person can lead a comfortable life for $500 per month in this country makes it an affordable place to retire. In this price, you can get a nice house, decent food and enough entertainment. Another factor that adds to the suitability of Vietnam as a retiring destination is its climate. The climate of Vietnam is such that you do not need to add layers to your clothing.

One can suffice in a tee and shorts all year round. The hotter temperatures can be dealt with easily and there is no humidity in the air. The social life in this country is amazing and even for expats. If you want to find company, you will be able to do so very easily as the locals are friendly and helpful.

Best Places in Vietnam from the Retirement Points of View

The following is a list of the best places in Vietnam where one can retire comfortably:

Nha Trang

Kiplinger recently put Nha Trang at the 6^th position of the list of the best places to retire in Vietnam. Nha Trang is a beautiful city which offers a wonderful landscape, awesome climate and friendly locals. The fact that the cost of healthcare is low and there is a new and modern hospital opened up in this city recently makes it a good choice for many people looking to retire.

Additionally, the low food cost and a variety of food options like fresh fish, vegetables herbs and fruits adds to the suitability of Nha Trang as a retirement destination. Food here is cheap and therefore dining out too doesn’t cost heavily. Some other factors include cheap accommodation, cheap tours and beautiful beaches.

Hoi An

Hoi An is another beautiful place where one can retire and lead a peaceful and comfortable life. It has stunning architecture and a vibrant culture which attracts many people from across the world.

It is easy to live in Hoi An as it has a lovely climate all year round and consists of pristine beaches where you can enjoy the rest of your life at. The local people are friendly and the cost of living here is definitely under $1000. Moreover, Hoi An is a food paradise where sea food and vegetables are cheap and in abundance. Due to this reason, eating out doesn’t cost heavily and adds to its retirement possibilities for foreigners.

PhuQuoc

PhuQuoc is an island which lies in the very south of Vietnam and is an ideal destination to retire in Vietnam.

This place consists of wonderful beaches and one example of this is the Bao Sao. The cost of living at this island is quite affordable and this is one of the greatest reasons why one must consider this place of Vietnam as a retirement option. Seafood here is cheap and so is buying vegetables and fruits. So if you wish to retire at a place close to the beach and enjoy a relaxed lifestyle then PhuQuoc is surely a good choice.

Apart from these three places, there are several others in Vietnam which can be looked out for retirement. If you are not too tight on the budget then you can also consider the larger cities such as Hanoi, Ho Chi Minh City which are rich in terms of culture, entertaining places, restaurants, cinemas etc.

 Further information   

 Trade promotion in Vietnam

Fraud Management in Vietnam

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