Real estate sees a rise of M&A deals

Source: VIR

The Vietnamese real estate market has seen large-scale investments over the year’s first four months, with a surge of substantial merger and acquisition deals and funding into projects. Figures from JLL Vietnam show that in April, outstanding examples of mergers and acquisitions in real estate were seen, as Vingroup acquired Vietnam International University from Malaysia Berjaya, while Alpha King acquired both the Ngan Binh complex and Xuan Mai Investment and Construction JSC from Hoan Cau Corporation for their Eco-Green Saigon project. Stephen Wyatt, country manager of JLL Vietnam, commented that Vietnam continues to attract significant interest from foreign investors in all sectors of the property market, and that the biggest challenge for the firm is finding quality opportunities. “We have seen from five to 10 foreign investors a week, and whilst the economy continues at this pace, we expect to see another bumper year for foreign investment in Vietnam in 2018,” said Wyatt. The country’s real estate sector attracted US$455 million between January and April, accounting for 12.8% of the country’s total foreign direct investment (FDI) capital during the period, according to the Ministry of Planning and Investment (MPI). Last week the Republic of Korea’s Daewon Thu Duc House became the latest in a wave of foreign-backed developers investing in the property market. Daewon Thu Duc House established a joint venture with the Vietnam Manufacturing and Export Processing Company to develop a US$115 million office complex and trading centre, along with high-rise apartment buildings, townhouses, a supermarket, and other facilities, in Hadong district of Hanoi. The joint venture has charter capital of US$23 million, of which Daewon Thu Duc House contributes 49%. Meanwhile, Singapore-based Frasers Property Ltd. (formerly known as Frasers Centrepoint Ltd.) recently announced that it was in the process of acquiring 75% of the issued share capital of Phu An Khang Real Estate JSC, equivalent to 24 million ordinary shares and US$18 million. According to a statement released by Frasers Property, Phu An Khang is now developing a mixed-use residential and commercial project on a plot in Ho Chi Minh City’s District 2. Frasers Property made its first foray into Vietnam in 1999 with the development of the 22-storey retail and office building Me Linh Point Tower in District 1, the central business district of Ho Chi Minh City. According to reports from MPI, investment in real estate was focused on the southern market, Commercial Real Estate Services reported. However, since early last year, foreign investors have been focusing their attention on Hanoi’s property market, with examples like Sumitomo Group’s deal on the northern side of the Red River. The General Statistics Office reported that Vietnam lured 883 new FDI projects registered at US$8.06 billion in this year’s first four months, down 23.9% on-year. However, FDI disbursement was estimated at US$5.1 billion during this period, up 6.3%. The Republic of Korea was the top foreign investor in Vietnam between January and April, followed by Japan.

 

Vietnam-US forum seeks boost to investment, trade ties

Source: Vietnamnews

There is a huge opportunity for Vietnam and the US to expand investment and trade ties in many sectors, a bilateral trade forum heard in HCM City on Friday. Deputy Minister of Industry and Trade Do Thang Hai said trade between the two countries has gone up from a modest US$220 million in 1994 (the year the US lifted its economic embargo against Vietnam) to $50.8 billion last year, with Vietnam enjoying a surplus. “The US has been the leading trade partner for Vietnam in the last 10 years.” The two economies are complementary rather than competing, he said. “Vietnam, a developing economy, has great demand for machinery, technology, aviation and telecom equipment, agricultural inputs, and others, while the US has demand for agricultural products, textiles, footwear and electronics equipment, in which Vietnam has competitive advantages.” Tim Liston, deputy principal officer of the US consulate general in HCM City, said: “We have already seen strong growth in bilateral trade, with the US becoming Vietnam’s largest export market.” Vietnam is a top 10 market for US food and agricultural products. “Vietnam has the fastest growing middle class in Asia. This means increased demand for the high quality US consumer products and services,” Liston said. He said there is opportunity to improve trade facilitation and expand trade in both goods and services. “I see opportunity to invest in cleaner energy solutions. I see opportunity to leverage (and in some cases leapfrog) technology to build smarter cities and create new start-ups. I see opportunity to develop educational partnerships that encourage innovation and foster entrepreneurship. “I see opportunity for greater bilateral investment. The US Mission is currently recruiting a delegation of Vietnamese firms to participate in the SelectUSA Investment Summit that will take place next month in Washington, DC. This summit will expose Vietnamese companies to investment opportunities in the United States.”

Challenges:  Though its exports to the US are growing rapidly, Vietnam mainly ships raw or sub-contracted products with low value addition, delegates said. Dinh Thi Huong Nga of the Handicraft and Wood Industry Association of HCM City said Vietnam earned $8 billion from export of wood and wood products last year, with the US accounting for 40 percent of this. “We mainly make products based on customers’ designs. If we invest more in design and exploit the high-end segment, exports to the US can jump many fold.” An AmCham representative said Vietnam is “very good in volume of export but not good at value of export.” She suggested that Vietnamese firms should think about export of “added value products, not jut export of raw materials at a time when trade protection is increasing globally.” According to Hai, the big challenge for Vietnamese exporters is the US’s imposition of strict import regulations. In addition to federal laws, each state has different rules and regulations, he said. Protectionism through new regulations and standards for quality, food safety, origin of products, especially for agro-forestry and fisheries products, is also increasing, he said. Chu Thang Trung, deputy director of the Ministry of Industry and Trade’s Trade Remedies Authority, said the number of anti-dumping and anti-subsidy lawsuits by the US has already doubled under the new Government there. “Not only products with high export volumes but even minor items face these lawsuits,” he said. Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers, said trade protection has tended to increase in recent years, making it difficult for seafood companies to export to the US. The US annually imports around 600,000 tonnes of shrimps, or 80-90 percent of its domestic demand, with imports from Vietnam just accounting for 10 percent of imports. “We can supply higher volumes, our product quality is not inferior to any other country’s, but due to anti-dumping issue we have to accept that modest export rate.” The policies are aimed at protecting its domestic market and ensuring consumers get products of good quality and meeting hygiene and food safety standards, he said. “We understand this and actively work to enhance the efficiency of hygiene and food safety management. But only our effort is not enough, the governments of the two countries need to have specific discussions on trade policies to further facilitate trade between Vietnam and the US.” Organised by the Ministry of Industry and Trade, the Vietnam-US Trade Forum attracted more than 300 delegates, including government officials, local leaders, and Vietnamese and US business executives.

 

Equity of PPP investors must make up 20% of total investment

Source: SGT

Investors involved in projects under the public-private partnership (PPP) must have equity accounting for at least 20% of total investment capital, according to a recently released decree of the Government. Decree 63/2018 issued early this month to replace Decree 15/2015 will come into force on June 19, 2018, with some radical revisions, one of which is an equity requirement of 20% instead of 15%. However, this rule only applies to projects worth less than VND1.5 trillion or roughly US$65 million. With projects whose total investments are over VND1.5 trillion, the ratio of equity cannot be lower than 20% of the VND1.5-trillion amount and is not smaller than 10% of the remaining amount. The involvement of the State in PPP projects includes capital contributed by the State, payments for investors, land, office space, infrastructure handed over to investors, business rights transferred to investors in case of build-transfer (BT) contracts, capital to assist construction of supporting works, compensation, site clearance and resettlement. Meanwhile, Decree 15/2015 limits State investments in PPP projects to State capital, government bonds, municipal bonds, official development assistance (ODA) capital, and concessional loans from international donors. According to the Ministry of Planning and Investment, the old decree restricts the participation of other legal public capital sources, which hence does not make it attractive to investors. Regarding project transfers, the new decree provides tighter conditions than the old one. In particular, Decree 15/2015 allows an investor to transfer partial or entire rights and obligations in a certain project to the lender or another investor, even when the project is being implemented or is already finished. Meanwhile, under Decree 63/2018, the investor can transfer partial or entire rights and duties in the project to the lender or another investor after construction work is done or when the project is in operation. Regarding investment incentives, investors are given preferential corporate income tax, and get land use fees exempted or reduced while implementing the project. In addition, legal assets of investors are not nationalized or seized with administrative measures. In case of asset seizure for security purposes, investors will get compensation.

Government decree cuts requirements for online businesses

Source: Vietnamnews

The Government has reduced the number of conditions and notification procedures required from online businesses in a bid to create a more favourable investment environment online. As many as 10 business conditions and 13 notification procedures have been removed from the list of requirements, according to the Ministry of Information and Communications. This was announced during a conference on Tuesday in Ha Noi on the promulgation of the Decree No 27/2018, which amends and supplements Decree 72/2013/ND-CP on the management, provision and use of Internet services and online information. Deputy Minister of Information and Communications Hoang Vinh Bao said the amended Decree 27 removed unreasonable conditions to eliminate the difficulties faced by businesses. Decree 27 abolished five conditions for the licensing of content of online video game scripts, three conditions for the operation of websites and social networking platforms, and two notification procedures for the amendment, supplementation, deadline extension and re-granting of licences for G1 video game services. The decree also eliminated 11 types of documents required to register the provision of online video games, and two documents for the creation of websites and social networking platforms. However, Decree 27 also added new regulations, such as the management of applications for the provision of integrated websites, social networking platforms, and online games in application stores. It also shortened the time required to grant licences for websites and social networking platforms from 15 to 10 working days. The new decree also provides stipulations and details for the suspension and revocation of licences for the establishment of websites and social networking platforms.

 

HCM City calls for investment in waterway, seaport projects

Source: VNA

According to the municipal Department of Transport, the city plans to organise a seminar on investment in waterway and seaport projects in June. At present, the city is drafting a planning scheme for seaport and waterways system until 2030, which is expected to be passed in the second quarter of 2018. A project to upgrade Sai Gon waterway from Binh Loi bridge to Ben Suc port will also be carried out under Build-Operate-Transfer (BOT) contract to develop the transportation of passengers and goods from Binh Duong province, and the city’s Cu Chi district to the city’s centre and Cai Mep-Thi Vai port in Ba Ria-Vung Tau province. In addition, HCM City is considering investing in public passenger transport routes by waterway from the city downtown to Districts 2, 7, 9 and 12, and Nha Be and Go Vap districts, after the two river bus services which were put into operation last year. At the Transport Department’s press conference on May 22, the department’s representative also informed participants of the progress of several transport projects. Construction on a bridge crossing Kim Cuong islet from Thanh My Loi residential area to Mai Chi Tho street will finish by the end of May. The first phase of the new eastern bus station project will be put into operation this year, while its second phase will be complete by 2025. For the new western bus station project, ground clearance compensation is being conducted.

 

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