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Vietnam Business Review

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Vol 16, May 10th 2017

BUSINESS REVIEW VIETNAM

Bright prospects for bank stocks in 2017

www.seiko-ideas.com

http://english.vietnamnet.vn/fms/business/177899/bright-prospects-for-bank-stocks-in-2017.html



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INSIDE THIS ISSUE

HIGHLIGHTS

PM Shinzo Abe pledges full support for VN to host APEC Summit

GMO controversy: communication is key

ECONOMY

What does “airport overloading” mean for the economy?

China emerges as biggest importer of Vietnam tra fish

BANKING & FINANCE

Moody's: Capital shortfall remains key credit burden for Vietnam banks

Blue chips hit by low confidence

Right mix for consumer loans to flourish: experts

INVESTMENT

Vietnam's FDI disbursement shows signs of slowdown

Japan’s J-Power proposes building a power plant in Quang Ngai

Cargill VN inaugurates new aqua feed line

ENTERPRISES

Samsung: half of S8, S8 Plus smartphones made in Vietnam

Growth slows down, manufacturers try to find niche markets

Almost 700 firms lose export licences to US

MARKET & PRICES

Vietnam property market stable in April

Vietnam cuts size limit for apartments to reach low-income buyers



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ECONOMY

What does “airport overloading” mean for the economy?

VNN - Everyone complains that airports

are getting overloaded, but economists

and businesspeople say this is a good

sign that the national economy is

robust.

According to Savills, the number of

foreign travelers to Vietnam increased

by three times in the last decade and

witnessed 26 percent growth rate in

2016 compared with the year before.

Meanwhile, airport infrastructure development cannot catch up with the rapid development of the tourism

industry. In 2016, about 8.2 million foreign tourists traveled by air, accounting for 80 percent of total

travelers.

Many airports in large cities have been overloaded for a long time. The airport in HCMC, for example, has

to operate at 130 percent of capacity and Nha Trang Airport at 320 percent.

The Da Nang Airport now runs at 113 percent of capacity though it

was upgraded in 2011 to increase the capacity from 4.5 million

passengers to 6 million.

Tan Son Nhat Airport plans to increase the capacity from 25 million

to 28 million passengers a year. Da Nang Airport, which has the

capacity of 9 million passengers, now will be expanded to serve 4-6

million passengers more.

Meanwhile, Nha Trang City has been slow with the project on expanding Cam Ranh Airport. However, the

expansion project has become out of date: it was planned to receive 2.5 million passengers, while the

number of passengers in 2016 reached 4.8 million.

Under a government master development plan, $5.6 billion would be spent by 2020 to develop airport

infrastructure items.

Pham Ngoc Minh, CEO of Vietnam Airlines, the nation’s flag air carrier, has complained about the

overloading of airports, especially Noi Bai in Hanoi and Tan Son Nhat in HCMC, which seriously affects the

operation of air carriers.

At Noi Bai, the T1 Terminal, which has capacity of 6 million passengers a year, had to serve 9.5 million

passengers in 2010. Airlines complain they cannot provide more flights because of the overloaded

infrastructure.

The number of foreign travelers to

Vietnam increased by three times in

the last decade and witnessed 26

percent growth rate in 2016

compared with the year before.

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



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At Vinh Airport, there are only four stalls for passengers to check, while seven flights take off or land every

day. Since there is no ILS (instrument landing system), airports have to fly to Hanoi and land in Noi Bai Airport

in bad weather.

While people complain about the poor infrastructure, Nguyen Thi Phuong Thao, CEO of Vietjet Air, can see

the ‘positive sign’ in airport overloading.

“Many people express their concern that the overloading will affect tourism and aviation. While they seem

to have excessive worry, I think this is a good sign of economic development,” Thao said, adding that a

deserted country is not the sign of development.

Vietnam now has 22 commercial airports, while Singapore only has two.

China emerges as biggest importer of Vietnam tra fish

SGT - China overtook the U.S. as the largest importer of Vietnamese tra (pangasius) fish in the first quarter of

this year, according to the Vietnam Association of Seafood Exporters and Producers.

Workers process tra fish for export at a local enterprise. China overtook the U.S. as the largest importer of

Vietnamese tra (pangasius) fish in the first quarter of this year

The period saw tra fish exports to the Chinese market soaring a hefty 56.8% year-on-year to US$69.7 million,

accounting for 19% of the sector’s total export sales. Meanwhile, revenue from tra shipments to the U.S.

declined 24.3% to US$61 million, 16% of the total.

Even though many Vietnamese enterprises export tra fish to the U.S., only two seafood processors, Vinh

Hoan JSC and Bien Dong Seafood Co Ltd, enjoy low tariffs, according to the association’s general

secretary Truong Dinh Hoe.

Another reason, he said, is American customers might have consumed tra fish inventories in the period.

Besides, the rising domestic price of unprocessed tra fish, U.S. trade barriers and other factors were

attributable to the fall in tra shipments to America, he added.

Meanwhile, he said, the local companies which had difficulty finding their way to the U.S. market shifted to

exporting to the northern neighboring country. As a result, quarter one saw a steep rise in tra exports to

China.

He said local tra fish exporters should be careful with their dealings with Chinese traders, especially via

informal channels.

Meanwhile, tra exports to the European Union dropped a sharp 21.5% compared to the same period last

year at US$49.9 million, representing 13% of the total.

He ascribed the fall to a smear campaign against the quality of Vietnamese tra fish and the volatility

exchange rate between the euro and the U.S. dollar.

But shipments to Brazil rose a whopping 70% year-on-year at US$35.5 million, 10% of the total.

Export turnover of this sector in quarter one rose 1.6% against the same period of 2016 at US$371.3 million.




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BANKING & FINANCE

Moody's: Capital shortfall remains key credit burden for Vietnam banks

VNE - Moody’s Investors Service has said that

Vietnamese banks will face capital shortfalls over the

next 12-18 months and that such a situation

continues to represent a key credit burden for the

industry.

“The banks’ rapid loan growth rates will widen their

capital gap, according to our baseline scenario of

robust economic growth in Vietnam over the coming

12-18 months,” said Ms. Daphne Cheng, a Moody’s

analyst.

Moody’s also estimates that at end-2016, Vietnam’s

banking system had a total capital gap of $9.5 billion, representing 4.6 per cent of GDP.

It defines the gap as the amount of external capital needed for banks to replenish their Tier 1 ratios back to

8 per cent after they utilize their balance sheet reserves to absorb expected losses on impaired loans, and

at the same time take an up-front write off on all Vietnam Asset Management Company (VAMC) bonds,

which banks receive by swapping out their non-performing loans.

Moody’s predicts that that the system could see a capital shortfall ranging from $5.1 billion-$6.1 billion by

end-2017, representing 2.5-3 per cent of GDP.

In such a situation, and absent external capital injections, Moody’s-rated Vietnamese banks’ Tier 1 ratios

would fall to an asset-weighted average of 6.1 per cent by fiscal year ending December 31, 2017, from an

asset-weighted average of 7.8 per cent in fiscal year 2016.

“The banks’ capital generation capacity is weak, because of the system’s modest net interest margins, low

fee income contribution, and still-substantial provision charges,” Ms. Cheng added. “Under these

circumstances, it will take several years to replenish the system’s capital shortfall through internal capital

generation.”

Moody’s points out that the banks’ capitalization profiles have continued to deteriorate. For example, at

end-2016, Moody’s-rated banks reported an asset-weighted average Tier 1 ratio of 7.8 per cent - under

Basel I - from 8.5 per cent at end-2015 and 10.7 per cent at end-2013.

In a move to adopt new prudential regulations issued by the State Bank of Vietnam (SBV) to improve banks’

health, Vietnamese banks, whether large or medium-sized, have had plans to increase their charter capital

during 2016-2017, either via additional issues of bonds, shares, or certificates of deposits.

In May 2016, the SBV issued amendments to its 2014 circular regulating prudential ratios for credit

institutions. The new rules raised the risk index of receivable lending for real estate and securities from 150

per cent to 200 per cent; well below the 250 per cent that was originally proposed.




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A second, concurrent circular from 2016 issued regulations to taper down the maximum ratio of short-term

funds that can be used for medium- and long-term loans, from 60 per cent to 40 per cent, with the ratio cut

to 50 per cent from January 1, 2017, and to be cut by another 10 percentage points at the start of 2018.

An SBV circular in preparation for the adoption of Basel II standards by the banking system stated that

banks must have a capital adequacy ratio (CAR) of at least 8 per cent by 2020, added to an increase in

charter capital.

Moody’s projects that real GDP growth in Vietnam will average 6.4 per cent in 2017 and 2018, up from 6.2

per cent in 2016, with loan growth at 26 per cent in 2017 and 2018, in line with growth seen in 2016.

On April 15, Techcombank announced it would raise its charter capital by VND5 trillion ($220 million) to

VND13.88 trillion ($611 million) this year by selling more shares. Chairman Ho Hung Anh said the capital

increase is needed to improve its financial strength and competitiveness.

The Hanoi-based VP Bank has disclosed plans to issue nearly 329.4 million shares for VND1.4 trillion ($61.6

million) this year to increase its charter capital to VND14.06 trillion ($619 million). The money will be used to

ensure the bank’s business activities are well-funded and also help meet various ratio requirements, a

spokesman said.

Vietcombank and ACB, meanwhile, successfully issued ten-year bonds last December and raised VND2

trillion ($88 million) and VND3 trillion ($132 million), respectively. In February and March this year, Sacombank

and Nam A Bank issued certificates of deposits for seven years.

Blue chips hit by low confidence

VNA - Shares dropped on both local markets on May 8 as investors switched investments from large-cap

stocks to mid- and small-cap ones, putting blue chips into negative territory.

The benchmark VN Index on the HCM Stock Exchange inched down 0.16% to close at 718.86 points.

Vietnam’s key index has lost total 0.4% after the last two sessions.

The HNX Index on the Hanoi Stock Exchange fell 0.65% to end at 89.13 points, retreating from a gain of 0.2%

made on Friday.

Market trading liquidity improved from the previous session. More than 277 million shares were traded on

both local bourses, worth VND5.85 trillion (US$260.2 million).

Low investor confidence sent large-cap stocks down with two-thirds of the largest 30 companies by market

capitalisation falling.

Among the 10 largest listed firms, FLC Faros Construction (ROS) lost 0.9%, dairy producer Vinamilk (VNM) was

down 0.5%, and Vietcombank (VCB) decreased by 1%.

Other large-cap stocks that declined were Tien Phong Plastic (NTP), Asia Commercial Bank (ACB) and

Saigon-Hanoi Bank (SHB), which slid between 1.1% and 4.1%.

The two largest agriculture and farming companies, Hoang Anh Gia Lai (HAG) and its subsidiary Hoang Anh

Gia Lai Agriculture International (HNG) dipped 6.6% and 6.8%, respectively.




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The stocks of both companies were put on the designated list and the decision will come into effect on

May 12 as the two firms have reported a loss of 1.1 trillion VND for Hoang Anh Gia Lai and

The benchmark VN Index on the HCM Stock Exchange inched down 0.16% to close at 718.86 points.

Vietnam’s key index has lost total 0.4% after the last two sessions.

The HNX Index on the Hanoi Stock Exchange fell 0.65% to end at 89.13 points, retreating from a gain of 0.2%

made on Friday.

Market trading liquidity improved from the previous session. More than 277 million shares were traded on

both local bourses, worth VND5.85 trillion (US$260.2 million).

Low investor confidence sent large-cap stocks down with two-thirds of the largest 30 companies by market

capitalisation falling.

Among the 10 largest listed firms, FLC Faros Construction (ROS) lost 0.9%, dairy producer Vinamilk (VNM) was

down 0.5%, and Vietcombank (VCB) decreased by 1%.

Other large-cap stocks that declined were Tien Phong Plastic (NTP), Asia Commercial Bank (ACB) and

Saigon-Hanoi Bank (SHB), which slid between 1.1% and 4.1%.

The two largest agriculture and farming companies, Hoang Anh Gia Lai (HAG) and its subsidiary Hoang Anh

Gia Lai Agriculture International (HNG) dipped 6.6% and 6.8%, respectively.

The stocks of both companies were put on the designated list and the decision will come into effect on

May 12 as the two firms have reported a loss of VND1.1 trillion for Hoang Anh Gia Lai and VND984.8 billion

for its agriculture arm.

The energy sector finished down on Monday as global oil prices reversed to trade around the reference

price levels after remaining positive in the morning.

Brent crude inched up 0.1% to trade at US$49.15 a barrel, erasing the gains made in the earlier half of the

day as investors and analysts were kept waiting on hopes for a prolonged output cut agreement between

the Organisation of Petroleum Exporting Countries (OPEC) and other large exporters.

On the positive side, mid-cap and small-cap stocks, especially real estate firms’ shares, proved a safe

haven for short-term investors.

Shares of property developers became attractive to investors as they were ahead of companies that are

about to pay dividends in cash and bright prospects for the domestic real estate market.

The benchmark VN Index fell for a second day as it attempted to test the lower support levels, Saigon-

Hanoi Securities (SHS) said in its report.

However, the May 8 fall was not something that investors should worry about as strong demand and

purchases for low-valued stocks remained strong, SHS said.

The current conditions suggest that the VN Index would fall back to the range of 715 and 718 points before

recovering and approaching the challenging level of 720 points, the northern brokerage firm added VND

984.8 billion for its agriculture arm




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The energy sector finished down on Monday as global oil prices reversed to trade around the reference

price levels after remaining positive in the morning.

Brent crude inched up 0.1% to trade at US$49.15 a barrel, erasing the gains made in the earlier half of the

day as investors and analysts were kept waiting on hopes for a prolonged output cut agreement between

the Organisation of Petroleum Exporting Countries (OPEC) and other large exporters.

On the positive side, mid-cap and small-cap stocks, especially real estate firms’ shares, proved a safe

haven for short-term investors.

Shares of property developers became attractive to investors as they were ahead of companies that are

about to pay dividends in cash and bright prospects for the domestic real estate market.

The benchmark VN Index fell for a second day as it attempted to test the lower support levels, Saigon-

Hanoi Securities (SHS) said in its report.

However, the May 8 fall was not something that investors should worry about as strong demand and

purchases for low-valued stocks remained strong, SHS said.

The current conditions suggest that the VN Index would fall back to the range of 715 and 718 points before

recovering and approaching the challenging level of 720 points, the northern brokerage firm added.

Right mix for consumer loans to flourish: experts

VOV - Consumer lending has the potential for explosive

growth in Vietnam, but this can only happen with

significant improvements in consumer satisfaction with

credit institutions and loan conditions, experts say.

They say that tapping this growth potential will boost

national spending and economic growth.

“Within the decade, market demand for unsecured loans

has grown to adapt to the current financial scene in

Vietnam, with an increasing amount of retail lenders and personal borrowers,” Hoang Van Hai, Director of

the School of Business Administration (SBA), Vietnam National University of Economics and Business, said at

a recent conference.

He said the growth can be attributed to favourable legal and socio-economic conditions that have

fostered changes in income and spending habits.

At present, consumer loans in Vietnam range in value from VND1 million to VND60 million VND (US$44.6 to

US$2,680). The application process and repayment schedule are fairly simple, and the rate of interest is

reasonable at between 1.49% to 1.6% per month, with the occasional zero percent for smaller loans.

In 2016, consumer credit was mostly used for purchasing household goods and travel expenses, with a

focus on mobile devices, vehicles and personal computers under US$2,000. Sometimes, depending on the

borrower’s credit history, capital is given directly (instead of paying purchase invoices).


http://image.english.vov.vn/w490/uploaded/xboehyfbmha/2017_05_09/1302vaytieudung2_ZQVQ.jpg



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Vietnamese consumers are reaching a spending over earnings ratio of 67%, and this is set to rise further as

the economy picks up.

Hai said that Vietnam will soon reach a purchasing market worth about US$15 billion per year, with 30

million people in the 20 to 59 age bracket.

This means more and more people in the middle income group are demanding capital to fund their

immediate spending, without the hassle going through bank loans for smaller purchases.

Underdeveloped sector

However, the central bank sees current retail lending as underdeveloped, given the modest number of

credit institutions giving out consumer loans as also the overall demand for such loans.

The central bank estimates that consumer loans account for just five to ten percent of total lending in the

country, as opposed to the average 40 to 50 percent in developed nations.

Can Van Luc, a senior advisor to the Chairman of the Joint Stock Commercial Bank for Investment and

Development of Vietnam (BIDV), said at an online conference in March that Vietnamese credit institutions

granting consumer loans have a mere US$1.78 billion in capital, about 0.7% of the credit sector’s total.

This is due to the fact that these institutions are not allowed to take deposits like commercial banks, having

to rely instead on bonds.

The lack of capital, coupled with the reluctance among a majority of consumers to borrow, has lead to

interest rates higher than the commercial banks’ average of 0.9 to 1.2% per month, said Luc.

However, consumer lending carries rich potential, especially among the population segment that does not

qualify for bank loans. This segment can access this capital instead of being beholden to black market

loans controlled by loan sharks.

While the central bank is positive about growth in this credit segment, there are still regulatory issues that

need to be resolved.

In 2016, the SBV and the Ministry of Industry and Trade, received a large number of complaints from

borrowers.

The Vietnam Competition Authority (VCA) released a report last year in which they detailed several major

problems faced by consumers buying common household and electronic items.

A chief complaint from borrowers was that cumulative calculation of interest rates made the loan

repayment untenable in just three to six months. They also said that the credit institutions did not show

“decent conduct” while trying to recover loans.

The VCA advised consumers to have a clear understanding of the loan contracts before signing and

reevaluate their own disposable income before taking out a loan, no matter how small.

Meanwhile, the SBV has simplified procedures and increased transparency for consumer loans through

Circulars 39 and 43 issued in 2016 and 2017 respectively.

At present, the SBV considers a loan to be a consumer loan if it is made in Vietnamese dong, the borrower

is an individual, not an institution, the purpose of the loan is to meet personal spending needs, and the total

amount borrowed does not exceed VND100 million (US$4,468).




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INVESTMENT

Vietnam's FDI disbursement shows signs of slowdown

VNN - USD4.8 billion, up 3.2% on-year, however, this is quite

low compared with 12% growth over the same period of

2016.

According to the Foreign Investment Agency under the

Ministry of Planning and Investment (MPI), FDI disbursement

reached a high record of USD15.8 billion in 2016, up 9%

from 2015.

In the first four months of 2016, FDI disbursement saw an on-

year rise of 12% and the on-year growth of the same period of 2015 was 7%.

Deputy Director of the Vietnam Institute of Economics Le Xuan Sang said the suspended Trans-Pacific

Partnership (TPP) has seriously affected Vietnam’s FDI attraction and disbursement.

Many foreign companies wanted to invest in Vietnam to take advantages of the agreement.

According to Professor Nguyen Mai, Chairman of the Vietnam Association of Foreign-Invested Enterprises,

the lower FDI disbursement was attributed to tighter environmental regulations in licensing foreign-invested

projects after environmental problems.

Meanwhile, several experts noted that the US Federal Reserve’s decision to raise interest rates in March this

year has also affected FDI disbursement in Vietnam as the USD debts of companies have increased,

causing their investment costs to be more expensive. As a result, they must be more careful in their

investments.

Le Quoc Anh from the National University of Economics said to attract more FDI and boost FDI

disbursement, Vietnam should consider offering more incentives for foreign investors and offer preferential

loans for companies which aim to export their products to the US.

“The government needs to have plans to support investment programmes of companies suspended due to

the TPP’s collapse. It is also important to boost the free trade agreement negotiations to lure more foreign

investors,” Anh added.

Japan’s J-Power proposes building a power plant in Quang Ngai

VOV - The Japanese Electric Power Development Co (J-Power) has submitted Quang Ngai provincial

leaders its plan to construct a 4,400MW thermal power plant at Dung Quat Economic Zone in the central

province.

JAHANA Takashi, J-Power representative, said after conducting a preliminary survey the company hopes

that Quang Ngai will allow it to carry out further surveys for a pre-feasibility study on building a coal-fired

power plant at Dung Quat EZ.

The project will be divided into two phases. In the 1st phase, a plant with a capacity of 2,400MW and using

ultra-super-critical generation technology will be built and and put into commercial operation in 2028. In




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the 2nd phase, another plant with a capacity of 2,000MW using IGCC technology will be constructed and

put into commercial operation in 2030.

Coal imported from Australia, Russia and Indonesia and domestic coal will be used for electricity

generation.

J-Power has committed to use state-of-art technologies to protect the environment and implement

measures to prevent air, water and noise pollution.

Dang Ngoc Dung, vice chairman of QuangNgai provincial People’s Committee, has asked the investor to

give specific suggestions concerning the use of land, total investment capital, the number of workers and

environment protection commitments.

Only after receiving all those information from J-Power, Quang Ngai will let it conduct surveys to make the

project’s pre-feasibility study, said Mr Dung.

Cargill VN inaugurates new aqua feed line

VOV - Cargill Vietnam has inaugurated and put

into operation its 10th aqua feed line in Vietnam,

which is also the second one in the north.

With a production capacity of of 3,000 metric

tons a month, the modern line focuses on high

quality extruded feed for tilapia and other local

fish species to meet the increasing demand for

floating fish feeds.

It will also help Cargill Vietnam further access

customers in Hanoi, Ha Nam, Thai Binh and the north-central region where farmers are rapidly switching

from extensive to intensive farming practices.

Cargill products also enable farmers to raise healthy fish, increase their output, and lower their production

costs while reducing impact on the environment

Vietnam is an important market of Cargill, said Chad Gauger, managing director of Cargill Aquaculture

Nutrition Asia South. The inauguration of the sixth plant in Vietnam demonstrates Cargill strong growth not

only in Vietnam, he added.

The first aqua feed line was set up at Cargill Bien Hoa Plant in 1998. Currently, Cargill Vietnam has more

than 2,000 staff working at 23 its units across the country.


http://image.english.vov.vn/w490/uploaded/o6gej4c09fi/2017_05_04/Cargill_ESGR.jpg



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ENTERPRISES

Samsung: half of S8, S8 Plus smartphones made in Vietnam

VNN - A representative from Samsung Vietnam

said its factories in Vietnam provide 50 percent of

all the Galaxy S8/S8 Plus smartphones sold

internationally.

Samsung is now gathering all of its resources to

manufacture Galaxy S8.

Prestigious technology websites said that it will help

Samsung remain the world’s leading smartphone

manufacturing group after the Galaxy Note 7

debacle in 2016.

Samsung Vietnam said that the Galaxy Note 7 scandal last year only had an impact on the giant for a short

time. It also said that the scandal won’t have considerable influences on production and business, as well

as Samsung Vietnam’s export turnover in 2017.

The production and export of other models such as S7 Edge Galaxy A and tablets to other markets in 2016

still exists. The export of smartphones in 2016 increased by 10.3 percent compared with 2015.

Forty percent of total mobile devices of Samsung are made in Vietnam and are expected that Samsung

Vietnam would export $50 billion worth of products this year.

Learning the lesson from the catastrophic fire of Galaxy Note 7, Samsung has tightened the production

process of Galaxy S8 and S8 Plus.

When the device is manufactured in the production line, it will be put under a test run for 72 hours.

After that, the product will be re-checked before being packed and launched into the market. In addition,

Samsung will randomly select a number of finished products to test the water resistance, durability and the

operation stability capability.

Some smartphone production phases are being undertaken by robots. The automation level in camera

assembling at Samsung Vietnam has reached 30 percent, while the levels are 50 percent for main circuit

and 100 percent for the metal frame of the machine.

However, there are still the production phases in which robots cannot replace workers.

At Samsung Thai Nguyen, there are 62,000 workers. The factory, together with Samsung Bac Ninh, creates

many smartphones and tablets, from mid to high end, exported to 78 countries and territories all over the

world.

The number of Vietnamese enterprises joining Samsung’s supply chain has been increasing steadily year

after year.

To date, 200 Vietnamese enterprises have become the suppliers of Samsung, including 23 first-class

suppliers. The figure is expected to increase to 29 within this year.


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The support to Vietnamese enterprises to help them upgrade the production and product quality has been

given by Samsung since 2015.

Samsung’s factories in Vietnam have been scaled up unceasingly. Therefore, Samsung has been

continuously recruiting workers to satisfy the production expansion.

SEV Bac Ninh and SEVT in Thai Nguyen now employ 100,000 workers.

Samsung is also using 1,500 software engineers in Vietnam for software development.

Growth slows down, manufacturers try to find niche markets

VNN - As the motorbike market is going flat, manufacturers have to reform technologies and penetrate

niche markets to boost sales.

According to Yano Takeshik, chair of the Vietnam Association of Motorbike Manufacturers (VAMM),

Vietnam is now the fourth largest motorbike market in the world, after China, India and Indonesia, with 37

million motorbikes in circulation.

The figure is even higher than the target of 36 million motorbikes in circulation set by the Ministry of Transport

for 2020.

In 2016, Honda, Yamaha, SYM, Piaggio and Suzuki sold 3.1 million

products, an increase of 10 percent over 2015.

Lu Tien Fu, general director of SYM, commented that the sales in

2016 increased thanks to the price decreases, sale promotion

campaigns and attractive credit programs launched by banks.

Lu believes that Vietnam’s public means of transport will not develop well enough in the next three years,

so "motorbike manufacturers would still have opportunities" in the Vietnamese market.

However, this doesn’t mean that the ‘market’ would become larger.

Toshio Kuwahara, general director of Honda Vietnam, said Honda Vietnam would strive to maintain the

growth rate it gained in 2016 by developing models based on customer demands.

Honda Vietnam focuses on scooters and common motorbikes. Besides, it would also develop sports

motorcycles as this is now trendy in Vietnam, especially ones equipped with fuel energy engines which

reduce emissions.

Admitting that Suzuki’s market share in 2016 did not increase compared with 2015 and did not reach the 9.5

percent growth rate of the whole market, Ko Iwamotor, the representative of Suzuki, said Suzuki did not

have many new products to compete with its rivals.

In 2017, Suzuki plans to focus on scooters, the niche market share that it still can see opportunities for

growth. It would also gather strength on classic clutch and sports motorcycles to conquer the group of

young and middle-aged customers who like nostalgic beauty.

The representative said with more than 20 years of presence in Vietnam, Suzuki understands customers.

Young customers always want new models with new technologies. Therefore, Suzuki would change the

Vietnam is now the fourth largest

motorbike market in the world, after

China, India and Indonesia, with 37

million motorbikes in circulation.




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designs of some models including GSX-RR MotoGP, V-Trom and GSX-S 1000. It would also pay attention to

developing the distribution network, especially in rural areas.

Meanwhile, Yamaha Vietnam in 2017 would continue developing models with distinctive styles including

stylish ladies’ scooters, Race for speed enthusiasts and City Sport for sport lovers.

Piaggio Vietnam’s director Marco Noto La Diega said Piaggio would continue applying new technologies

to products in 2017. The manufacturer first utilized ABS (anti-lock brake system) for its models.

Almost 700 firms lose export licences to US

VNS — The American Food and Drug Administration (FDA) has cancelled the import licences of 679

Vietnamese food and beverage manufactureres that did not re-register with the agency as required, or did

so without following current procedures.

The Vietnam Trade Office (VTO) in the United States has reminded domestic export firms to check the

validity of their business codes before shipping food and beverage products for human and animal

consumption into the US.

According to recent FDA data, before this re-registration requirement, Vietnam had a total of 1,485

enterprises with valid business numbers provided by the FDA; however, this number had currently dropped

to 806.

Dao Tran Nhan, head of US-based VTO, said that under US law, all foreign firms exporting food and

beverages for people and animals into the US market must re-register every two years. This included

registering their manufacturing facilities and representatives in the United States so that they could be

issued with a new valid business code. This task needed to be completed before the shipment arrives in the

US.

Since 2017, the FDA has changed the method of verification for issuing new business codes and established

further regulations. For example, after being designated by the manufacturing facilities and registered with

the FDA, the firm’s representatives in the United States must send a letter or document to the FDA

confirming their authorisation to represent a Vietnamese manufacturing facility in the US.

If the FDA does not receive this letter or document, the re-registration is considered incomplete and the

business code will be cancelled.

Shipments by Vietnamese firms that are unaware that their FDA business codes have been revoked will be

refused entry to the port.

Further, companies proceeding with goods delivery without valid registration will be considered violating

the law and may be subject to criminal or other severe penalties under the United States’ Food, Drug and

Cosmetic Act.

Data provided by the General Department of Vietnam Customs reported that in 2016 the country’s export

turnover to the United States hit US$38.5 billion, growing 15 per cent compared with the previous year and

accounting for 22 per cent of the country’s total import-export turnover.




14


MARKET & PRICES

Vietnam property market stable in April

VNS - The real estate market was stable in

April, as several developers of high- and

middle-end projects slightly lowered prices to

speed up sales, according to a new Ministry

of Construction report.

The real estate market was stable in April, as

several developers of high- and middle-end

projects slightly lowered prices to speed up

sales, according to a new Ministry of

Construction report.

The report shows that successful transactions were mainly middle-end projects nearing completion, with

good infrastructure.

In Ha Noi and HCM City, housing prices were stable, but several projects recorded mild price drops as

developers wanted to boot sales, the ministry said.

Ministry data estimate realty market inventories at nearly VND28.4 trillion (US$1.25 billion) as of April 20, a

drop of 8.55 per cent since the end of 2016. The inventory includes many lots far from downtown areas,

where infrastructure is underdeveloped.

According to Le Hoang Chau, president of HCM City Real Estate Association, the property market currently

shows no signs of a bubble. Chau noted that five factors are needed to form a bubble: an overheating

economy, loosened credit management, imbalance between demand and supply, rising speculation and

negligence of management agencies. “I see no risk of a bubble in the overall realty market, but there is an

intensifying heat on land,” Chau said.

Some areas in HCM City recorded price increases of 30-40 per cent, or even up to 100 per cent in land

prices since last year. Chau said development of infrastructure and announcements or rumors about mega

projects were pushing up prices of nearby land unreasonably in some areas, such as District 9, Nha Be, Binh

Chanh, Cu Chi in HCM City. "Attention should be paid to whopping rises in land prices,” Chau said, warning

buyers to be cautious about their investments.

Nguyen Hoang Minh, Deputy Director of the State Bank of Viet Nam’s HCM City branch, said credit policies

for the real estate sector were more cautious to prevent a bubble.

Experts also urged buyers of unfinished housing projects to study the projects’ legality carefully before

making decisions, especially certificates of eligibility for transactions and bank guarantees.

According to Pham Gia Hoa from HCM City Department of Natural Resources and Environment,

management agencies should announce which projects are eligible for transactions.




15


Vietnam cuts size limit for apartments to reach low-income buyers

Vnexpress - The construction ministry has

approved a developer’s request to build

25-square-meter apartments.

Vietnam’s Ministry of Construction has

given the go-ahead for a real estate

developer to build apartments as small

as 25 square meters (270 square feet) to attract low-income earners.

The ministry’s Housing and Real Estate Market Management Department, in a letter issued late last month

to a domestic developer, said the firm would be allowed to build 25-square-meter apartments before the

ministry sets new national standards for apartment sizes.

Vietnam’s construction law from July 2015 abolished a previous requirement that set the minimum area for

an apartment at 45 square meters, but did not stipulate a new limit.

In December 2015, a government decree on developing houses for low-income earners came into force

and set the minimum area at 25 square meters. Decrees often requires guidance from related ministries

before they are implemented.

Construction businesses and provincial authorities have been seeking permission to build commercial

houses of 30-40 square meters to attract individuals, small families and low-income buyers, and the permit

has been granted given the huge demand, the construction ministry said.

Binh Duong Province, an industrial center neighboring Ho Chi Minh City, last year launched 5,000

apartments as part of its housing program for low-income people, and has started construction of another

10,000 units.

Vietnam currently has 2.2 million people working in industrial parks, but only 20 percent of them have their

own homes, according to the construction ministry.




16


HIGHLIGHTS

PM Shinzo Abe pledges full support for VN to host APEC Summit

VGP - Japanese Prime Minister Shinzo Abe pledged

full support for Viet Nam to host the APEC economic

leaders’ meeting in Da Nang this November during

his reception for Vietnamese Deputy PM, FM Pham

Binh Minh in Tokyo on Monday.

PM Abe affirmed Viet Nam is an important partner of

Japan’s in the region, expressing his hope to work

with Vietnamese leaders to boost the two countries’

relations in the future.

He said Japan will give priority to supporting Viet

Nam’s economic development.

For his part, Deputy PM, FM Pham Binh Minh showed pleasure at the strong and practical advancement of

the Viet Nam-Japan strategic partnership in various areas based on high political trust.

He said the recent visits to Viet Nam by Japanese leaders, including those of Emperor Akihito and Empress

Michiko and PM Shinzo Abe in the first half of this year were of significant importance and created a new

impetus to the bilateral friendship and cooperation.

During his stay in Japan, Deputy PM, FM Minh and Japanese FM Fumio Kishida co-chaired the 9th meeting

of the Viet Nam-Japan Cooperation Committee.

He also had separate meetings with Speaker of the Japanese House of Representatives Tadamori Oshima

and President of the Japan International Cooperation Agency Shinichi Kitaoka.

GMO controversy: communication is key

VIR - Genetically-modified organisms (GMO), organisms whose genetic material has been modified in a

way that does not occur naturally—for example through the introduction of a gene from a different

organism—play an important part in helping meet the global demand for food. However, GMOs and food

made from them have yet to garner proper understanding from the public. Communication is decisive in

helping the public formulate an informed opinion regarding GMOs

Misunderstanding still aplenty

According to the World Health Organisation (WHO), GM foods currently available on the international

market have passed safety assessments and are not likely to present risks for human health. In addition, no

health effects have been shown as a result of consumption by the general population in the countries

where they have been approved.

For the past 30 years, numerous research projects have been carried out to determine primarily the safety

of GMOs for the environment and for animal and human health. None of these studies found scientific




17


evidence associating GMOs with higher environmental or food and feed safety risks than conventional

plants and organisms.

However, the wide public remains concerned about the safety of GMOs and there is a large disconnect

between scientific and public opinion. In a 2015 Pew survey, 88 per cent of scientists surveyed reported

they felt GMOs were safe. This was higher than the 87 per cent who reported they believed in man-made

global warming. In that same 2015 Pew survey only 37 per cent of US adults agreed that GMOs are safe to

eat. That was a 51 per cent difference in opinion between scientists and the general public, the largest gap

in any issue covered in the survey.

In a survey in 2016, 39 per cent of the survey respondents reported that they felt GMOs were worse for

health than conventionally-grown produce, while 55 per cent felt that organic produce was better for

health.

In an article analysing the results posted on the website of Science-Based Medicine, a website dedicated

to scientifically evaluate medical treatments and products of interest to the public, Dr Steven Novella

pointed out that one strong predictor of the negativity surrounding GMOs is negative attitudes toward

scientists and a misunderstanding of the scientific consensus.

Of those surveyed, 53 per cent stated they felt that half or fewer of the scientists believed GMOs were safe,

and 35 per cent said they do not feel scientists understand the health effects of GM foods.

Only 35 per cent said they trusted scientists “a lot” to provide full and accurate information on GMOs, while

43 per cent claimed they trusted scientists “some” and 21 per cent “not too much/not at all.”

Also, 30 per cent of those surveyed said that scientists were influenced by industry concerns most of the

time, and another 50 per cent some of the time.

According to Dr. Novella, campaigns of misinformation about organic produce and GMOs “not only

confuse the public about the science and the nature of the current scientific consensus, but they also

weaken overall trust in science itself.”

Therefore, he called for more communication in order to narrow the gap in opinion between scientists and

the public and alleviate the distrust in science.

“On issues where there is a strong scientific consensus, we need to clearly and forcefully communicate that

consensus and the underlying science. We additionally need to expose the tactics and illogic of the anti-

science position,” he wrote.

Communication key to counter misinformation

There are three reasons why there needs to be better communication on GMOs, according to Anastasia

Bodnar.

In an article posted on the blog of Biology Fortified, an independent, educational tax-exempt non-profit

organisation that aims to enhance public discussion on biotechnology and other issues in food and

agriculture through science-based resources and outreach, Bodnar named one short-term, one medium-

term, and one long-term reason.




18


In the short-term, the more communicators share

factual information, the more they can help

reduce unnecessary fears.

Marketers and activist groups are feeding the

public information about what is safe and

healthy, but not everyone has the time or

access to do all the research to verify these

claims. In the meantime, many families are

struggling to buy higher priced foods they may

not be able to afford because they have been

told how scary conventional food products are,

and many people choose a processed food

with fancy labels over actual fruits and vegetables.

In the medium-term, the more communicators can help families make purchasing decisions based on facts

instead of fear, their purchasing decisions may help grocery stores and restaurants to not fall prey to

marketers and activist groups.

Bodnar said it is worrying that thanks to food fears, many stores are catering for the demand for more

expensive labels and in some instances completely replaced “regular” products with “organic” and “non-

GMO” ones at a premium price. As food becomes more expensive and non-speciality store brand items

are disappearing, poor families will have to spend a greater percentage of their incomes on food.

In the long-term, food is a national security issue. People with enough food for themselves and their children

are far less likely to make war.

She reasoned that the anti-GMO sentiment can lead to policies and regulations that keep the necessary

technologies from being developed and then keep those technologies away from farmers. In addition, it

can affect both the export and domestic markets, so even when countries have policies that allow farmers

to grow GMOs, they would not have a market to sell their products.

“I hope that my small science communication efforts, in combination with many others, can mitigate

misinformation and help get needed technologies to farmers and needed food to families,” Bodnar said in

conclusion.

Meanwhile, according to Dr. Novella, scientists and like-minded people are just getting started on

correcting years of misinformation on GMOs.




19


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