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Vietnam Business Review

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Vol 21, June 14th 2017

BUSINESS REVIEW VIETNAM

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7-Eleven’s official debut of the first store in Vietnam in 15th June



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INSIDE THIS ISSUE

HIGHLIGHTS

Japan Coast Guard vessel visits Da Nang

7-Eleven to open 1st store in Vietnam

HCM City says no to new garment-textile industrial parks

ECONOMY

Vietnam to be among world’s largest rice producers: FAO

Vietnam launches first specialties e-commerce platform

Vietnam’s steel industry expected to grow 12-15%

BANKING & FINANCE

Female securities investors make impressive million-dollar deals

Interest rates rising, banks stablising

INVESTMENT

Vietnamese real estate market continues showing irresistible appeal to

foreign investors

Law on foreign trade management approved

ENTERPRISES

FLC Group plans to lease 07 planes from Airbus for new carrier

Vietnam Conglomerate Plans $1 Billion Solar Parks Project

HCM City launches free start-up space

MARKET & PRICES

Rice labeled with foreign names sells better than domestic brands

Vietnamese ice cream brands fight for bigger market share

Vietnam ranks 6th in global retail development index

LEGAL UPDATES

New decree on car imports sends conflicting message

Vietnam is committed to enforcing robust IP legal standards: gov’t



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ECONOMY

Vietnam to be among world’s largest rice producers: FAO

VNA - Vietnam is expected to be the world’s fifth largest rice producer in 2017, according to the Crop

Prospects and Food Situation report released by the UN’s Food and Agriculture Organisation (FAO).

The FAO forecast that the biggest rice producer this year will be China with 142.3 million tonnes, followed by

India with 110.4 million tonnes, Indonesia and Bangladesh.

The report said global rice output is likely to increase by 0.7 percent to 502.3 million tonnes thanks to

production facilitation policies in Asia and yield recovery in South America and Australia.

After two years of decrease, global rice exports are predicted to expand by 5 percent in 2017 to 44.2

million tonnes compared with 43.6 million tonnes in the previous year, with India expected to remain the

largest rice exporter.

The organisation said global rice prices have been stabilised since early 2017 due to increasing demand

and currency reforms in India and Thailand.

Vietnam launches first specialties e-commerce platform

The site user interface design

VNA - The Vietnam Post Corporation (VNPOST), on June 13, debuted the website

https://www.badasa.com.vn, an online trading platform for Vietnamese specialties.

The site offers about 20,000 agro-forestry-fishery products, herbal food, beverage and handicrafts and

others from 5,000 suppliers. All listed goods have clear origins and quality certificates issued by competent

authorities.

http://www.seiko-ideas.com/

https://www.badasa.com.vn/



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The platform sells commodities directly to customers from suppliers. The VNPOST only cooperates with

reputable partners who have obtained business licences and food safety certificates.

Prices of goods and delivery services are posted publicly, while payment for the shipment is collected at

the time of delivery.

At the launching ceremony, Deputy Minister of Information and Communications Nguyen Minh Hong asked

the VNPOST to pay attention to technical infrastructure and working mechanism for safe and legal

transactions.

VNPOST General Director Pham Anh Tuan said his company wants to form links with suppliers of specialties

across regions.

Through the site, VNPOST hopes to contribute to promoting the “Vietnamese people give priority to using

Vietnamese goods” campaign, Tuan added.

Vietnam’s steel industry expected to grow 12-15 percent

VNA - The steel industry is predicted to grow by 12-15 percent in the next five years, heard a workshop titled

“Steel sector dialogue: Prospects 2017-2020” in Ho Chi Minh City on June 12.

According to the Vietnam Steel Association (VSA), in 2017, cast iron output is forecast to increase 80

percent to reach 4.5 million tonnes, while steel billets will jump 47.2 percent (11.5 million tonnes), finished

steel products up 12 percent (20 million tonnes), cold rolled coils up 13 percent and steel pipes up 15

percent.

Vietinbank Securities JSC General Director Khong Phan Duc said that the Vietnamese steel industry’s scale

is not large, but the sector has competitive advantages, especially in production costs.

In addition, the domestic demand for steel remains huge thanks to infrastructure projects and rapid

urbanisation in rural areas, he stated.

To help the industry thrive, VSA Vice Chairman Nguyen Van Sua suggested domestic manufacturers

improve their technologies and production lines.

Sharing this view, General Director of the Nam Kim Steel Joint Stock Company Pham Manh Hung proposed

diversifying products and optimising production scales to reduce production costs and increase price

competitiveness.

Last year, the steel sector grew by 18.1 percent. It turned out 17.5 million tonnes of products, up 16.8

percent from 2015.

In 2016, the sector exported 2.4 billion USD worth of goods, but posted total import costs of 9.1 billion USD.




4


BANKING & FINANCE

Female securities investors make impressive million-dollar deals

VNN - Many transactions worth millions of dollars

have been made recently, stirring up the stock

market. The common characteristic of the deals

was that they were made by female investors.

According to the Hanoi Stock Exchange (HNX),

on May 29, three big individual shareholders of

the Hai Ha Confectionary (HHC) sold 8.3 million

HHC shares, or 51 percent of the company’s

stake.

Nguyen Thi Thu Trang and Le Bich Thuc each

sold 3 million shares at an average price of

VND51,000 per share. Meanwhile, Nguyen Van Bac, a male investor, sold 2.3 million shares

All the shares were bought by shareholders from Nguyen Thi Duyen in April at VND44,000 per share.

Just within two months, the two female investors made a profit of VND20 billion for each, or nearly $1 million.

While Trang and Thuc stirred up the public with the profit they made within a short time, Nguyen Thi Duyen

once caused a tumult when purchasing 8.3 million HHC shares from Vinataba at VND48,500 per share and

selling to Trang and Thuc at VND44,000 per share, incurring the loss of VND40 billion.

At the HCMC Stock Exchange (HOSE), two female investors – Lai Thi Hoang Yen and Lai Thi Huong Giang –

have registered to sell tens of thousands of Quoc Cuong Gia Lai (QCG) shares. As the share price has

soared from VND5,000 to VND22,000 in the last month, the two investors are expected to pocket billions of

dong.

Lai Thi Hoang Yen is known as a young and mysterious billionaire. The

woman born in 1986 reportedly lent hundreds of billions of dong to

Quoc Cuong Gia Lai without requiring interest and mortgaged assets

for the loan.

By the end of 2016, Quoc Cuong Gia Lai, owned by Nguyen Quoc

Cuong, dubbed as ‘Cuong dollar’, famous in Vietnam as the ex-

husband of Ho Ngoc Ha, a singer, had borrowed VND131 billion from

Yen.

By the end of January 2017, Bac Phuoc Kien Company where Lai Thi Hoang Yen is the director, transferred

VND810 billion to Quoc Cuong Gia Lai as a capital contribution.

Lai Thi Hoang Yen and Lai Thi Huong Giang are the two daughters of Lai The Ha, a member of the board of

directors of Quoc Cuong Gia Lai.

Many transactions worth millions of

dollars have been made recently,

stirring up the stock market. The

common characteristic of the deals

was that they were made by

female investors.




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Ha has been cooperating with Quoc Cuong Gia Lai president Nguyen Thi Nhu Loan since the group’s

establishment day and he now holds 600,000 Quoc Cuong Gia Lai shares.

Not only owning Bac Phuoc Kien, Yen is also the director of a series of other companies, which also operate

in the real estate sector.

Nguyen Ngoc Huyen My is also a famous name in the stock market. The 8X businesswoman is one of the

richest U40 stock millionaires.

Interest rates rising, banks stablising

VNS - A number of commercial banks

have been increasing promotional rates

for long-term deposits by 0.1 to 0.2 per

cent per annum, along with issuing

additional certificates of deposit, in an

attempt to safely restructure their

reserves, said Vuong Duy Lam of the

National Institute for Vietnam Finance

under the Ministry of Finance.

The Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) increased annual deposit rates for 15 to

36 month terms by 0.1 to 0.2 per cent to around 6.9 to 7 per cent starting June 7.

The Vietnam Export Import Commercial Joint Stock Bank (Eximbank) also announced a slight increase of 0.1

to 0.2 per cent per annum for a number of deposit terms.

The bank now offers a maximum eight per cent rate per year for 24-month and 36-month deposits, and 7.5

per cent for 13-month deposits.

Bac A Bank has increased slightly the deposit rates for six to 36 months by 0.1 to 0.15 per cent per year,

making its highest rate 7.75 per cent.

Deposit rates at the National Citizen Bank have also increased by 0.6 per cent annually to 7.3 per cent.

In accordance with the State Bank of Vietnam (SBV)’s Circular 06/2016, commercial banks are set to lower

their ratio of short-term funds used for medium and long-term loans from 60 per cent last year to 50 per cent

this year.

This will not adversely effect the national financial system as the banking system’s abundant liquidity

coupled with open market operations (OMO) should barely put pressure on interest rates, Lam added.

According to the SBV, credit institutions have reported stable deposit and lending rates for first five months

this year.

At present, annual lending interest averages 6 to 9 per cent for short-term loans and 9 to 11 per cent for

medium and long-term loans, while short-term lending rates for premium customers clock in at 4 to 5 per

cent per annum.




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INVESTMENT

Vietnamese real estate market continues showing irresistible appeal to foreign investors

VIR - The Vietnamese real estate market continues to attract capital from regional foreign investors, mostly

through mergers and acquisitions.

Stephen Wyatt, country head for Jones Lang LaSalle Vietnam, said that in 2017 M&A in real estate may

increase very sharply and reach record levels. As the company observed, billions of dollars are just waiting

to be poured into the market in most segments, with a focus on apartments, offices, hotels, and industrial

real estate.

Since the beginning of the year, there have been several big M&As in the field. In March, Singaporean

company Keppel Land bought the entire stake (16%) of Southern Waterborne Transport Corporation

(Sowatco) in Saigon Centre for VND845.9 billion ($37.3m) through subsidiary Krystal Investments Pte., Ltd.

Also in the same month, Hong Kong Land from Hong Kong became the strategic partner of HCMC

Infrastructure Investment Joint Stock Company (CII) in developing residential housing in Thu Thiem New

Urban Area.

Japanese investors are also increasing involvement in Vietnam. Last September, Kajima, one of the four

biggest contractors in Japan, set up a 50:50 joint venture with Indochina Capital to invest $1b in 10 years. At

first the joint venture is going to focus on residential units, hotels, and resorts in Hanoi, Ho Chi Minh City, and

Danang. Keisuke Koshijima, senior executive officer and general manager of the overseas division at Kajima

Corporation, called Vietnam Kojima’s key market in the region.

Besides the residential and commercial segments, industrial real estate also attracted heavy interest from

foreign investors. CFLD Vietnam Real Estate Development Co., Ltd. (CFLD Vietnam), a subsidiary of China

Fortune Land Development Co. (CFLD), said it plans to build dozens of industrial cities mostly in Southeast

Asia, where Vietnam is an important destination.


http://www.vir.com.vn/keppel-land-increases-stake-in-saigon-centre.html



https://www.google.com/url?q=http://www.vir.com.vn/japanese-acquisitions-intensify-in-real-estate-sector.html&sa=U&ved=0ahUKEwjxxKuxz7rUAhUEsJQKHbrvAYAQFggIMAE&client=internal-uds-cse&usg=AFQjCNELTLj7-jfjDRTu1fnU_wyy8RW0tA



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In January last year the company worked with the Dong Nai People’s Committee to find investment

opportunities. In September, CFLD Vietnam signed a memorandum of understanding with Tin Nghia

Corporation to build a New Industry City (NIC) in Ong Keo Industry Park, which is located in Dong Nai, east

of Ho Chi Minh City.

In April 2017, the company spent $65 million through subsidiaries CFLD Investment 27 Pte., Ltd. and CFLD

Investment 28 Pte., Ltd. to buy over 70 per cent of Dai Phuoc Lotus, also in Dong Nai, from VinaLand Limited

and VinaCapital’s Vietnam Opportunity Fund.

Masataka Sam Yoshida, senior executive for Vietnam at Tokyo-based M&A consultancy company Recof,

said that Japanese investors are now more interested in the Vietnamese real estate market and are more

willing to accept associated risks. Many experts said that the newfound propensity to take risks is due to the

optimistic macroeconomic outlook of the country. Also, political stability and the stable currency are further

incentives.

Meanwhile, the profitability of commercial projects is higher in Vietnam than in other countries. For

example, office space rental in Vietnam can return a profit of 8-10 per cent a year, while the figure is 4-6

per cent in Singapore.

Duong Thuy Dung, CBRE Vietnam’s head of market research, said that the most popular way for foreign

investors to join the Vietnamese real estate market is through setting up joint ventures with domestic

companies to take advantage of their land reserves and connections in the field.

They will contribute to the joint venture with their financial capabilities and experience gained in more

developed markets. Another method is to set up a 100 per cent foreign-owned subsidiary then buy a

project or stake in a Vietnamese real estate developer. Observers say that M&A is the way to increase

liquidity for the market as well as save costs and time for investors.

Law on foreign trade management approved

VIR - The National Assembly (NA) on June 12 ratified the law on foreign trade management with 88% of

deputies giving approval.

The law consists of eight chapters with 113 articles, stipulating measures on foreign trade management, the

development of foreign trade activities and applying measures on foreign trade management.

It defines that the State monitors foreign trade in line with Viet Nam’s laws and international conventions

Viet Nam has joined.

It is necessary to ensure transparency, publicity, equality and simplification of administrative procedures,

guarantee the legal rights and benefits of the State and businessmen at all economic sectors and promote

domestic production and exports in accordance with controlling imports.

The Law stipulates issues related to the State management on foreign trade, prohibitions on foreign trade,

measures to prevent exports and imports, exports and imports quotas and conditions, goods transits,

technical and quarantine measures and commercial prevention measures.

The Law will take effect since January 1, 2018.




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ENTERPRISES

FLC Group plans to lease 07 planes from Airbus for new carrier

Reuters - Vietnam property company, FLC Group, which

aims to start a new airline that could take to the skies for

the first time early next year, is working with Airbus to lease

about seven aircraft by 2018, the company's chairman

said on Saturday.

FLC's board decided in May to set up the new airline,

called Bamboo Airways.

The new carrier will have a fleet of "about seven" aircraft

by 2018, and its first flight could take place in early 2018,

said Trinh Van Quyet, chairman of FLC Group.

"By 2018, it will be about seven...and the number would be increasing in the year after. We are now working

with Airbus," Quyet told Reuters in an interview on the sidelines of a company road show in Singapore,

adding they would be on lease.

"That carrier will serve our resorts in nine provinces in Vietnam. We will connect with international flights and

we will carry them to our resorts," he said.

Vietnam now has four airlines -- Vietnam Airlines, Vietjet Aviation, Jetstar Pacific Airlines and Vietnam Air

Services Co.

FLC said in March it won provincial approval for a study to invest $2 billion in an entertainment complex in

northern Quang Ninh province that could include resorts, hotels, a casino and golf course, among other

services.

FLC plans to invest about $2.1 billion on the project, Quyet said. The provincial government has already

suggested a location for the resort, which includes a casino, he added.

"We are working on the master plan now, and we are clearing the land," Quyet said, adding that it

covered 1,700 hectares (4,200 acres).

FLC is part of a growing number of foreign and domestic investors betting on Vietnam's decision to allow

citizens entry to its casinos, a lucrative market locked for years in a nation of passionate, yet clandestine

gamblers on cards and soccer.

From mid-March, Vietnamese have been allowed to gamble in approved casinos and under certain

conditions in a three-year pilot project announced in January. The government will review whether to retain

the policy after three years.

There are fewer than 10 casinos in the country, all barred to Vietnamese. The change could make Vietnam

an attractive destination for big gaming companies such as Las Vegas Sands, Genting Bhd, Nagacorp and

Penn National Gaming, which have expressed interest.




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Vietnam Conglomerate Plans $1 Billion Solar Parks Project

Bloomberg - Vietnam’s TTC Group, a sugar,

energy, real estate and tourism conglomerate,

is planning to spend as much as $1 billion on an

ambitious plan to build one of the country’s

largest portfolio of solar projects in an effort to

capitalize on the nation’s growing power needs.

“Solar energy is very hot right now as the

recent pricing set by the government is

reasonable, development costs are much

cheaper and coal-fired power plants have

caused so many concerns," Chief Executive

Officer Thai Van Chuyen said in an interview at the company’s headquarters. “Vietnam always needs more

power every year for its expanding economy."

The Ho Chi Minh City-based company is looking for new investors for 10 to 20 solar parks it expects to have

in operation by 2018, Chuyen said. The company, which will fund 30 percent of the project, is in talks with

banks and financial institutions for the remainder of the funds needed for the parks, which would account

for total capacity of as much as 1,000 megawatts, he said.

TTC’s interest in solar marks an expansion into clean energy in a country that relies on hydropower for most

of its renewable capacity. Vietnam is also facing a power gap. The country will need to invest $74 billion in

coal, gas, wind, solar and hydro power plants through 2025 as power demand doubles, Bloomberg New

Energy Finance wrote in a report in March.

Power Gap

To address the power gap, Vietnam’s government has vowed to boost the country’s installed power

capacity by 14 percent annually between 2015 and 2030.

TTC Group’s Gia Lai Electricity JSC unit will oversee the development of 800 megawatts of the solar projects,

Chuyen said. Related, the subsidiary is seeking mergers and acquisitions in hydropower and wind power in

an effort to lead the nation’s green energy sector by 2020, said Chuyen, who’s also chairman of the unit.

Gia Lai Electricity, in which International Finance Corp. and Armstrong Asset Management hold a

combined stake of 36 percent, plans to remove the 49 percent ceiling from its foreign ownership limit,

Chuyen said, without elaborating on the timing.

Gia Lai Electricity also plans to acquire a 51 percent stake in a 40-megawatt wind power project in a

central-region province this year, according to the group’s CEO.

The unit, whose shares are traded on the Hanoi Stock Exchange’s Unlisted Public Market, expects to list

shares on the Ho Chi Minh City Stock Exchange in 2020 and looks to raise registered capital nearly sixfold to

more than 4.1 trillion dong ($181 million) through 2020.


https://www.bloomberg.com/news/terminal/OMQYTY6S972D



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HCM City launches free start-up space

VNA - The HCM City Centre for Enterprises Support and Development is offering start-ups free space to run

their companies.

Start-up Space, located at 156 Nam Ky Khoi Nghia in District 1, has 800sq.m divided into two areas.

Start-up individuals and businesses will be provided with free enterprise management software, internet

connection, air conditioners, desks and chairs attached to a bar counter serving coffee, light meals and

space to receive partners.

The centre also has a team to offer consultancy, guidance and support with administrative procedures.

Periodically, it will invite trainers and speakers to brush up the start-up executives’ management skills and

keep them abreast of policies.

Seminars related to start-up activities and programmes to connect the companies with banks will also be

organised.

The establishment of the place follows Decision No. 1339/QD-UBND in March by the city’s administration on

establishing a start-up eco-system.

With its location in the city centre, the place offers convenience of transport and connectivity with other

start-ups.




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MARKET & PRICES

Rice labeled with foreign names sells better than domestic brands

VOV - Vietnamese choose foreign rice not because

the latter is better, but because Vietnamese

enterprises don’t know how to build their brands,

experts say.

According to VIBIZ, the market research and

analysis website owned by Global Yoilo JSC, 64% of

rice in the domestic market is Vietnamese but is

labeled as foreign rice so that sellers can make

higher profits.

Meanwhile, 53% of consumers say they like foreign

rice grown in Thailand, Cambodia and Japan.

A report of the company said of the 67 rice products in the domestic market, only 21 products are given

Vietnamese names.

Nguyen Van Nam, a renowned economist, and former head of the Trade Research Institute, said the report

does not surprise him.

However, he believes that the problem is not the low quality of Vietnam’s products, but the branding

strategy followed by Vietnamese enterprises.

“Vietnam has many new tasty rice varieties which have high quality, but they are little known,” he said.

“Vietnamese know ‘Tam thom’ and ‘Dien Bien rice’, but they don’t know there are many new varieties

which are in no way inferior to them,” he said.

Nam said naming rice varieties with foreign names will arouse consumers’ curiosity.

An analyst said Vietnam’s rice doesn’t have fame in the domestic market because of bad marketing and

branding, not because of low quality.

Since Vietnam’s rice products still don’t have strong brands, they have to ‘take a detour’ to approach

Vietnamese consumers.

“Vietnamese prefer foreign rice because they hear Thai and Japanese farmers grow rice with high

technologies,” he explained. “They have no information about how rice is grown in Vietnam.”

“Therefore, merchants give foreign names to Vietnam’s rice to sell more products,” he said, adding that

Vietnam only imports rice from Cambodia and Thailand in small quantities.

Tran Duy Quy, former head of the Institute of Agricultural Genetics of Vietnam, confirmed that Vietnam has

been importing rice from Cambodia and Thailand, but in small quantities. As for the so called ‘Japanese

rice’, this is Vietnam’s rice labeled as Japanese rice.

“There are many Vietnamese rice varieties which are tastier than the Japanese varieties,” he said.

Japanese rice is more expensive than Vietnamese, priced at VND200,000 per kilo.


http://image.english.vov.vn/w490/uploaded/tmt2b47lhgly8uzveukg/2017_06_13/20170606091338_rice_XCYZ.jpg



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Vietnam has the best rice genetic resources in the world and its farmers grow rice with high technology and

follow strict production procedure, he said.

Vietnamese ice cream brands fight for bigger market share

VNN - The ice cream and frozen dessert market is a

lucrative market with value of VND2.620 trillion in 2016,

an increase of 13 percent over 2015.

“The leaflets advertising Twin Cows, a new ice cream

product, appeared in my apartment block some days

ago. At first, I thought this was a foreign ice cream

brand, because the design was very good and the

images colourful. But later, I found it was a 100 percent

Vietnamese brand – Vinamilk,” she said.

Khanh named nearly 10 other ice cream brands which

she said ‘are very popular in Vietnam’. Her favorite brand is Häagen-Dazs, but she doesn’t buy it regularly

because it is too expensive.

“Each Häagen-Dazs 100ml is sold at VND68,000. So my salary is not enough,” she said.

Vietnamese spending on ice cream remains modest, VND35,000 per head per annum, while the figures are

VND122,000 in Malaysia and VND391,000 in Singapore. This means that investors still have big opportunities

to develop the market.

This is why most of the world’s best known ice cream brands are

present in Vietnam, from BUDS, Häagen-Dazs, Baskin - Robbins, to

Snowee, Swensens, Fanny and Monte Rosa.

The rapid and strong penetration of foreign brands has divided the

market into two market segments. The high-end segment is the

playing field for foreign brands which sell their products at no less

than VND50,000-70,000 a 100 ml jar.

Thuy Thuong, an office worker, a fan of Snowee, said her family eats ice cream every weekend. “Snowee’s

ice cream is very tasty, but it is too expensive,” she said. “We have to pay VND400,000 each time, too much

for dessert.”

Meanwhile, South Korean and Thai brands mostly target lower income and mid-end market segment. The

products are available at supermarkets and convenience stores for VND12,000-20,000.

Fresh ice cream can be found mostly at fast food shops of Lotteria, KFC and McDonald’s. An analyst said at

the shops, the revenue is even higher than that from main food items.

However, despite the presence of many foreign brands, the ice cream market is still controlled by

Vietnamese brands.

The ice cream and frozen dessert

market is a lucrative market with

value of VND2.620 trillion in 2016, an

increase of 13 percent over 2015.

Khanh, an ‘ice cream fan’, who lives in district 7, HCMC,

said she buys ice cream daily.




13


Vietnam ranks 6th in global retail development index

VNA - The global management consulting firm A.T. Kearney said he reason why Vietnam is in the Top 6 is

that its investment laws are open and promote its attraction among foreign retailers.

The government has permitted foreign retailers to own 100 per cent of capital in the country’s retail sector

and has adopted priority policies to attract them.

This is reflected in a 12.5 per cent increase in foreign investment in 2016. The recent free trade agreement

signed with the EU is expected to push investment even higher.

Retail sales have also increased significantly in recent times, reaching $118 billion in 2016, up 10.2 per cent

against 2015.

According to forecasts to 2020, modern retail channels will increase up to 45 per cent, the country will have

about 1,200-1,300 supermarkets, the number of trade centers will also increase to over 300, and

convenience stores will number in the thousands.




14


LEGAL UPDATES

New decree on car imports sends conflicting message

VIR - In contrast to the usual

encouragement of industrial localisation

and job creation for Vietnamese citizens in

developing the manufacturing industry and

supporting industries, the draft decree on

conditions for auto manufacturing,

assembling, importing, and maintenance

and warranty business recently uploaded

on the website of the Ministry of Industry

and Trade (MoIT) to gather public opnion, is

“loosening” restrictions on the import of

completely-built units (CBUs).

The general public and industry insiders

were taken by surprise by the regulations on the import of CBUs outlined in the draft decree on conditions

for auto manufacturing, assembling, importing, and maintenance and warranty business (“the draft”)

developed by MoIT and the Ministry of Transportation (MoT) in coordination with other related agencies

and offices.

Overly lax conditions

Article 5 of the draft stipulates that “enterprises engaged in the automotive manufacturing, assembling,

and importing business must be responsible for the recalling and disposition of defective vehicles.”

However, Article 21 removes the right of importers to demand accountability from manufacturers over the

recall of defective units. Specifically, the draft only requests that importers “file written commitment with

MoIT in fulfilling their responsibilities in the warranty, maintenance, recall, and recollection of imported cars.”

Meanwhile, according to the website of Vietnam Register, the recall must be executed by the

manufacturers, both domestic and foreign, through their authorised agencies. No commercial importers

are allowed to initiate recalling efforts.

On this matter, Tran Ba Duong, Chairman of Truong Hai Auto Corporation (THACO), said it is unprecedented

for a trading company that is not a representative of any manufacturer to initiate product recall due to

defects, since such companies merely act as the intermediary in the recall.

Studies of the global automotive industry also point to the practice where government or governmental

agencies directly request the manufacturers to issue recalls. Toyota Japan has even been fined for $16.4

million for failure to disclose information with the intention to delay a recall.




15


In 2016, THACO, an assembly and distribution partner to Mazda, reported a Check Engine Light defect on

the Mazda 3 model. It was only after Mazda, for multiple times, delegated experts to review, assess, and

collect information on the reported defect that they decided on a recall in Vietnam.

“Without permission from the manufacturer, THACO cannot initiate a recall even if we want to, due to

technical and safety issues,” said Duong.

Commenting on the Draft loosening up the requirements on warranty, maintenance, and recall for

imported CBUs, Le Ngoc Duc, CEO of Hyundai Thanh Cong Corporation, echoed the sentiment, saying

there is no way a distributor can start a recall without the manufacturer’s consent.

“The National Assembly classified the automotive industry as one subject to conditions prescribed by the

laws due to concerns over assuring the safety of users and road participants. The essential factor is to

protect consumers’ rights. There needs to be coherent policies on automotive warranty, maintenance, and

recall so that the vehicles satisfy technical requirements before taking to the roads, as well as ensure the

safety of people and the society,” remarked Duc.

Lacking in fairness

The Vietnam Automobile Manufacturers’ Association (VAMA) proposed three categories of documents

that automotive trading companies must obtain. They are: (1) authorisation by the manufacturer for import,

distribution as well as the provision of warranty and maintenance services, and recall; (2) technical support

agreement; (3) authorised parts and components provision agreement.

“The draft stipulates that car importers must be responsible for the provision of warranty and maintenance

services as well as the recall of products. However, these activities must be carried out in accordance with

the manufacturer’s permission and instructions and importers are not allowed to act on their own will. The

aforementioned documents are to protect consumers’ rights and assure safety for the vehicles through

providing technically appropriate maintenance, replacement with brand-guaranteed components and

parts, as well as product recall upon the manufacturer’s request,” said Toru Kinoshita, chairman of VAMA.

According to a suggestion by Hyundai-Thanh Cong, there needs to be requirements for the importers to

attain Certificates of Quality (CQ) provided by the manufacturers in order to assure the quality of the

vehicles circulating on the market. This is also to avoid cases where cars produced experimentally, not

meeting quality standards, are imported into Vietnam and circulated on the market, while consumers often

lack access to adequate information to demand their rights.

“Domestically manufactured vehicles are required to attain CQ for 100 per cent domestically assembled

vehicles. Therefore, CBUs must also satisfy this requirement to ensure fairness,” said Duc.

Only the manufacturer possesses precise knowledge of the systematic errors incurring in the design and

production process. The diagnosis of defects related to the details, parts, and components as well as how

to fix them can only be carried out by the manufacturer, with their adequate tools, equipment, and

technical knowledge.

Notably, in a recent assessment of the automotive industry, MoIT remarked that MoT’s current regulations

regarding quality control for imported cars have yet to hold manufacturers accountable for the protection




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of consumer’ rights and the environment in activities such as warranty, maintenance, recall due to defects,

and collection of disposed products. The regulations on quality control of imported cars are currently not as

strict and comprehensive as those imposed on domestically manufactured and assembled vehicles.

Therefore, despite the opinion that additional requirements for importers in terms of documents would be

taxing and limiting the freedom to do business, it is evident that no manufacturer could entrust its reputation

and quality to a profit-driven distributor.

Unrestricted automotive imports until the end of 2017

Another point considered “odd” in the draft is permitting unauthorised importers of passenger cars of nine

seats or below until the end of 2017.

Circular No.20/2011/TT-BCT of MoIT on additional procedures to import passenger cars of nine seats or

below, which requires authorisation from manufacturers, has been effective since May 12, 2011. However,

MoIT is repeatedly pushing back the deadline to stop the operation of unauthorised importers.

In June 2014, MoIT issued Public Letter No.4582/BCT/XNK allowing unauthorised importers until May 28, 2015.

The reason was that a reported number of 2,000 vehicles, valued at $17.75 million, had been imported

before the issuance of Circular 20. In mid-2017, MoIT again prolonged the process until the end of 2017.

According to experts, the extension given to these unauthorised importers causes confusion and is

perceived unfair amongst compliant industry players.

These “liberating” regulations for CBU imports are introduced against the backdrop that the Vietnamese

government wants to attract investments from renowned international car manufacturers and to increase

production capacity in Vietnam in order to prevent the economy from sinking further into trade deficit.

Vietnam is committed to enforcing robust IP legal standards: gov’t

VNN – Le Ngoc Lam, deputy director of the National Office of Intellectual Property of Viet Nam, speaks to

Hai quan (Customs) newspaper about challenges Viet Nam faces in turning law into reality.

What lessons have been learned in the last 10 years since the Law on Intellectual Property came into force?

The intellectual property rights’ awareness of many organisations, individuals and enterprises has improved

considerably among domestic markets.

Over the last 10 years, the number of Vietnamese enterprises that registered their products with the

National Office of Intellectual Property of Viet Nam (NOIP) increased by 50 per cent.

Each year, roughly 10-15 per cent more Vietnamese and foreign enterprises in the country apply for

trademarks or patents. In other words, now most Vietnamese enterprises fully recognise the benefits of

trademarks for their products.

Another point I want to mention is the increasing awareness of the importance of protecting or honouring

traditional products by many craft villagers. This is a demonstration that intellectual property (IP) has played

an important role in protecting and maintaining brand names for local products.

But the downside is the considerable lack of awareness of intellectual property rights among the general

public. As a consequence, either intentionally or unintentionally, many enterprises have violated IP rights. In




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some few cases, the enterprises have forgotten to apply IP protection to their products, leading to their

product names being used by others.

What are the limitations in the implementation of IP law in Viet Nam?

Many things must be improved, particularly work performed by assigned management agencies. At

present there are many legal agencies involved in the settlement of IP rights disputes. As a result, when

enterprises have problems they don’t know where to go for help.

In addition, psychologically speaking, many enterprises don’t want to take their cases to court and just

want help from their nearest administrative office. As a result, administrative settlement has not achieved

significant results. But, the positive aspect is the service fees are low and dispute settlement is quicker than

in a court.

Though the IP Law has been in force for 10 years, NOIP procedures in appraising new products’ trademarks

have been slow, not up to enterprises’ expectations. The main cause of this is their poor facilities,

particularly their IT infrastructure. This is food for thought for the NOIP and its representative offices to

improve their efficiency.

Meanwhile, the Government acknowledged the important role played by the NOIP and has granted a

special mechanism for IP activities to help them catch up with international standards.

How should we revise the Law on Intellectual Property to overcome these limitations?

Viet Nam is a signatory to the Trans Pacific Partnership Agreement and many other international free trade

agreements. All these have forced the country to invest to facilitate the these agreements, particularly

legal reforms.

Under our current law, encroachment IP rights are only punished by administrative fines, but now the

sanctions must include criminal punishments. This is one of the commitments that Viet Nam has agreed to

undertake as a signatory to the international trade agreements.

In addition, we have to improve the building capacity of all State management agencies, particularly the

IP implementation agencies to ensure the Law on Intellectual Property is strictly implemented.

Last but not least, we have to launch campaigns to raise the general public and the enterprises’ awareness

of the IP Law.




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HIGHLIGHTS

Japan Coast Guard vessel visits Da Nang

VNA - The Japan Coast Guard ship ECHIGO docked

at Tien Sa port on June 13 for a seven-day visit to Da

Nang city.

This is the fourth time a ship of the Japan Coast

Guard has visited the central city. The 105.4-metre-

long, 14.6-metre-wide ship ECHIGO is captained by

Colonel Toyota Chikara.

The ship’s crew of 85 officers and sailors are

scheduled to pay courtesy visits to the High

Command of the Vietnam Coast Guard, and the

municipal People’s Committee.

They will also visit the Maritime Search and Rescue

Coordination Centre Region II and several landscapes in Da Nang, Hoi An, and Hue.

During their seven-day stay, the Japanese coast guard force will join a drill at sea with the Vietnamese

coast guard force.

The visit of ship ECHIGO continues affirming the fruitful cooperation between the two nations’ coast guard

forces to ensure maritime security and safety in the region.

It also provides a good opportunity for the two forces to exchange experience in law enforcement at sea

and strengthen their cooperation and mutual understanding.

Both the Vietnam Coast Guard and the Japan Coast Guard are members of the Regional Cooperation

Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP), and the Heads of

Asian Coast Guard Agencies Meeting (HACGAM).

7-Eleven to open 1st store in Vietnam

(Jiji Press) — Vietnam’s first Seven-Eleven convenience store will open in Ho Chi Minh City, the largest city in

the country, on June 15, Seven System Vietnam JSC said Wednesday.

The entry of Seven-Eleven, Japan’s leading convenience store chain operator, is expected to intensify

industry competition in Vietnam, where FamilyMart Co., a unit of FamilyMart Uny Holdings Co., and Ministop

Co. already operate outlets.

Japanese retailers have shown interest in Vietnam, which has a population of over 90 million with an

average age of less than 30. Personal consumption is expected to increase in the country, reflecting

income growth in line with economic expansion and changing lifestyles.

The Japan Coast Guard ship ECHIGO docked at Tien Sa port




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In 2015, Japanese retail giant Seven & i Holdings Co., the parent of Seven-Eleven Japan Co., announced

plans to launch Seven-Eleven stores in Vietnam. With the aim of opening 100 local outlets in three years, the

group plans to dispatch employees from Japan to teach know-how.

According to Seven System Vietnam, which operates Seven-Eleven outlets in the Southeast Asian country,

the first outlet will be housed in a building in central Ho Chi Minh City, close to areas where many Japanese

residents live.

HCM City says no to new garment-textile industrial parks

VNS - The HCM City People’s Committee has asked the Ministry of Planning and Investment not to set up

larger garment-textile industrial parks in the city.

The committee said the city’s existing industrial parks can accommodate all garment and textile firms and

that large garment-textile industrial parks were no longer needed.

The city said that it was planning a centre for fashion design, garment-textile materials and accessories.

The city has 23 industrial parks and export processing zones, 17 of which operate in multiple sectors.

Most garment and textile firms are located in Tan Thuan and Linh Trung export processing zones, and Tan

Thoi Hiep, Tan Binh, Tan Tao, Tay Bac Cu Chi and Dong Nam industrial parks.

Small-size textile and dyeing firms are based in Le Minh Xuan and Hiep Phuoc industrial parks.




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