Condotel legal framework imminent

Condotel developers and buyers will breathe easier later in the year when the legal framework for the new type of property in Vietnam is to be released.

At the discussions of the National Assembly held last week, Minister of Construction Pham Hong Ha said the standards and regulations on management and operation of condotels and officetels would be issued within 2019, to avoid any negative impacts on the new segment.

“Local authorities cannot manage thousands of condotels without a legal framework,” Ha claimed at last week’s meeting in Hanoi, adding: “We have worked with the Ministry of Natural Resources and Environment to review regulations on land use in order to consider giving ownership for this type of property, since it has not been included in any regulations so far.”

The Ministry of Construction (MoC) is now co-ordinating with the ministries of Culture, Sports and Tourism, as well as Natural Resources and Environment, along with local authorities to issue the regulations for this type of property. “This task must be done as soon as possible because there are signs of oversupply of condotels in the market recently,” Ha said.

Meanwhile, Nguyen Trong Ninh, head of the MoC’s Department of Housing Management and Real Estate Market, said as condotels have been listed in accommodation for tourism, then they must be regulated under the legal framework of the tourism sector, now under the Ministry of Culture, Sports and Tourism. Accordingly, condotel developers must be given licences by the Vietnam National Administration of Tourism.

Economist Nguyen Tri Hieu commented that the function of condotels is not yet clearly identified as for living or leasing. “If it is a product for lease, it must obey all taxation and land use regulations for business. In this case, a clear legal framework can help condotel developers take a mortgage at the bank for mobilising investment capital. If it is a housing product, it can be given a land use certificate so that owners’ rights can be protected,” Hieu said.

Meanwhile, Nguyen Tran Nam, chairman of the Vietnam Real Estate Association, emphasised that it was necessary to have a flexible plan for condotel development and investment.

“The fact is that thousands of condotels units are being constructed and any regulation would be a great impact to those, therefore the incoming regulations must be harmonised to benefit different sizes, and to benefit developers, buyers, policymakers, and local authorities,” Nam said. “The planning should be based on demand and must be designed to create demand.”

Some localities such as the central province of Binh Dinh reported that the province has experienced dramatic increases in tourism after a condotel project is developed and lessons can be learnt from this case.

Nguyen Toan Thang, director of the Ho Chi Minh City Department for Natural Resources and Environment, added that the legal framework for condotels will help developers and buyers to believe in the prospects of the condotels they have bought.

“A legal framework would facilitate the socio-economic development of any locality. Legal frameworks must be continuously updated to be suitable to the increasing demand of society,” Thang said.

According to the MoC, a condotel is a type of condominium and hotel unit not regulated in the current laws of Vietnam such as the laws on Land, Real Estate, Investment, and Housing.

The supply of condotels in the country has been strongly increasing, and now occupies 56 per cent of the total rooms for tourists, while hotel rooms occupy 44 per cent only.

Since 2014, many condotel projects have been built nationwide, especially in coastal localities such as Quang Ninh, Thanh Hoa, Danang, Quy Nhon, Nha Trang, and Phu Quoc Island. It is estimated that in 2020 there will be around 20,000 condotels units up for sale.


condotel legal framework imminent
Truong Anh Tu – Lawyer Truong Anh Tu Law Firm

First, the concept of a condotel must be fixed. Condotels are hotel rooms built under the design of a condominium unit and used for tourism leasing.

When this concept is fixed and recognised by policymakers and developers, its legal framework then can be built accordingly. There will not be any risk for the society, and the rights of buyers will also be protected when they put their condotels into business.

The problem arises when developers sell condotels to buyers to lease them into the tourism market, especially in ownership, residential management, urban planning, and the rights and obligations of the two sides in purchasing deals.

In fact, this is not a purchase of an asset, but a leasing in which one side is the condotel developer and the other side is the buyer, under an agreement which has operation duration not exceeding the time in which the developer leases from the government for building the projects.

Buyers need to have the right of long-term leasing or even the whole lifespan of the project, and buyers could be given that right through use of the land use right certificate because condotels are not a property for living in. Condotel buyers have the right to use their unit in vacation in a certain time only.

Condotel buyers have the right to use them according to their demand during the time that they own them, however when they put it into the leasing programme the condotel must be managed and operated by the developers. At the same time, buyers taking a holiday in their units must also register with the developers under the regulations of the hotel sector.

Some buyers think that they can own a condotel just like they would own a condominium unit. However, this is not true. There remain big gaps in the management, usage, and legal regulations between condotels and apartment units, mainly for the fact that condotels have not been given land use rights certificates so far.

Therefore, we need to issue related regulations to manage condotels under the format of a hotel room. In this case, a certificate is not necessary to be given to a condotel. Developers and buyers who want to re-lease them can sign contracts certified with the notary offices under a contract appraised by the competent authorities. In this case, the Ministry of Culture, Sports and Tourism should be assigned to draft the format for this contract.

In conclusion, regulations on condotels are for the government to control the construction, lease, re-lease, and operation of condotels like a hotel room. The difference is that special regulations should be made for thousands of rentals for holidays and re-lease during a contractible time with the developer. The duration for leasing and re-leasing must not exceed the duration of land use approved by the government for each project.

By Bich Ngoc


Vietnam Wind Power 2019: solutions to mobilise capital for projects

Issuing green bond insurance and implementing M&A deals are two popular solutions to mobilise investment capital for clean energy, including wind power projects.

This was shared by Ashish Sethia, head of APAC Analysis and Consulting, Bloomberg New Energy Finance at the workshop on “Accelerating Wind Project Financing in Vietnam”, which is part of the second Vietnam Wind Power Conference in Hanoi on June 11-12, 2019, organised by the Global Wind Energy Council in partnership with GIZ and the Danish and Irish embassies.

Vietnam is one of the most exciting wind power markets in Southeast Asia and has developed into a hotspot of development for both onshore and offshore wind.

Increasingly, wind acts as a catalyst for investment and growth in high-tech industries, as leading companies look to respond to demand from their consumers, ensure stable electricity prices, and produce goods and services using clean power.

In general, a wind power project needs a large investment volume. However, there are numerous risks that foreign investors have to face in power purchase agreements (PPA), making them difficult to mobilise capital to develop their projects.

“The breakthrough of wind power created an investment wave in this sector, including enterprises operating outside this sector. In addition, the provinces approved massive projects even as the connection to the national grid is lacking. These factors made banks reluctant to issue loans to investors whose lack of requisite experience makes their projects unfeasible,” said Hoang Phuong, investment banker from Techcombank Vietnam.

In the framework of the workshop, along with clarifying the current challenges of financing wind projects in Vietnam, experts explained risk profiles by different types of banks as well as their mitigation strategies.

Besides, in the framework of Vietnam Wind Power 2019, experts from the European Union, Ireland and Denmark shared the latest technology and industry experience with Vietnam to help the country fulfill its goals for a greener future.

By Kim Oanh.


Minister promises to support startups at Vietnam Venture Summit

Minister of Planning and Investment Nguyen Chi Dung has outlined three commitments to the investor community at the Vietnam Venture Summit today.

At the Vietnam Venture Summit, the Minister of Planning and Investment Nguyen Chi Dung made three commitments to the investor community. First, the ministry (MPI) will discuss and engage in dialogues with venture investors, collaborate with other ministries and agencies to develop solutions, and resolve difficulties to open up and enhance capital inflows into Vietnam’s innovation ecosystem.

Second, via the National Innovation Centre and initiatives for human resources development and business innovation, the MPI will support startup companies in accessing capital as well as open up opportunities for investors to connect to innovative projects.

Third, the government will do its utmost to assist the dynamically-growing innovative community via creating an innovation network. This will allow all participants to learn and improve themselves, as well as find financial sourcing to develop their technical ideas, especially professional ones.

At the opening of the summit, Minister Dung said that Vietnam’s economy has produced so many remarkable achievements after 30 years of ‘doi moi’, and has been recognised by the international community as a dynamic, integrated, and open economy of the Asia-Pacific region.

However, Vietnam also needs to reform, develop, and proactively restructure the economy in order to improve its productivity, quality, efficiency, and competitiveness. Recently, Vietnam has seen some important signals of innovation in economic growth. According to Topica Founder Institute’s report last year, the value of deals involving Vietnamese startups was $889 million, three times as much as in 2017 ($291 million).

Minister Dung confirmed that innovation is a major motivation and the key to fast and sustainable growth. “In order to realise the target, the government has been formulating and building policies to perfect its innovative eco-system and create the most favourable conditions for innovation,” the minister said, adding that the MPI has been assigned to build a national strategy on Industry 4.0, National Innovation Centre, and connect Vietnamese talents via the innovation network to strengthen the country’s innovation activities.

Therefore, the MPI has proposed three programmes for the development of the country’s innovation ecosystem, including developing high-quality human resources, supporting the innovative activities of businesses, and opening up capital resources for innovative activities.

“Today’s Vietnam Venture Summit is one of the first activities to improve access to investment capital,” Minister Dung said.

This is the first time that so many international and regional funds have gathered in Vietnam to discuss opportunities in this market as well as issue recommendations to the government. The summit aims to provide a platform to connect investors, startups, and the government, as well as raise the innovation ecosystem to a new height.

By Nguyen Huong

Minister promises to support startups at Vietnam Venture Summit

Vietnam Waste Solutions calls for stepping up green tree belt project

Vietnam Waste Solutions (VWS) is calling for stepping up the green tree belt project surrounding Da Phuoc Waste Treatment Complex in Ho Chi Minh City’s Binh Chanh district, which has been delayed for 10 years.

The information was stressed at the recent survey trip to the Da Phuoc complex by a delegation of the Economics and Budget Committee under the Ho Chi Minh City People’s Council. After the trip, the delegation had a meeting with relevant departments and agencies to discuss issues.

Speaking at the meeting, Trieu Do Hong Phuoc, head of the Economics and Budget Committee, said that the purpose of the trip is to monitor the progress of the green tree belt surrounding Da Phuoc Waste Treatment Complex, according to the approved plan. The delegation also talked about the letters of complaint related to public investment projects in Binh Chanh district.

Huynh Thi Lan Phuong, deputy general director of VWS, cited the contract signed between VWS and the city’s regulatory bodies on Da Phuoc Waste Treatment Complex. Accordingly, the city is in charge of planning, site clearance, compensation, and tree planting activities on a total area of over 300 hectares. Once implemented, the project will directly affect approximately 800 households living around the Da Phuoc complex.

To implement this project, the Binh Chanh district People’s Committee is responsible for conducting a survey on land ownership of relevant households. A decade ago, the total estimated cost for the green tree belt was VND1.069 trillion ($46.48 million), which was included in the city’s capital source for the medium term.

“However, the project has remained idle over the past decade. VWS has made several proposals to the municipal People’s Committee to allow the company to implement the project from its own capital under the build-transfer model. However, the project has been stagnant for many reasons. Meanwhile, compensation costs have surged to over VND2 trillion ($86.96 million) without a specific date for implementation,” she said.

According to VWS’s report, over the past three years, the 1.5km road section from National Road 50 to Da Phuoc Waste Treatment Complex has become dilapidated for reasons like the lack of management and funds for maintenance and cleaning activities. Meanwhile, over 500 trips of garbage trucks travel through the route a day to dump about 1,000 tonnes of garbage. At the peak season like the recent Lunar New Year, more than 2,000 tonnes of garbage were sent to the landfill, making the situation more serious.

“Due to the prolonged lack of maintenance, the road has become severely degraded, affecting the traffic flow of garbage vehicles. At an intersection leading to National Highway 50, garbage trucks have spread leachate all over the street, causing pollution and affecting people’s lives. VWS is in charge of the areas starting from the bridge leading to the landfill while Ho Chi Minh City Urban Environment Co., Ltd. is responsible for the outside area. However, local residents have filmed garbage trucks leaking leachate on the road and accused VWS for these violations,” she said.

Proposal to accelerate the development of the green tree belt

Pham Luong Bang, the representative of Binh Chanh district’s site clearance and compensation committee said that the construction of the green tree belt surrounding the Da Phuoc complex can affect 772 households. Binh Chanh district has made adjustments by raising the project’s investment capital to VND2.2 trillion ($95.65 million), more than double the initial capital of VND1.08 trillion ($46.13 million).

He added that in March 2019, the district submitted a plan to the municipal leaders to adjust investment capital and compensation payment for local residents. The biggest challenge is the resettlement of 772 households who are affected by the project.

Meanwhile, the representative of the municipal Department of Natural Resources and Environment (DNRE) said that the green tree belt bordering the Da Phuoc complex has been delayed for years due to slow site clearance.

Cao Thanh Binh, deputy head of the Economics and Budget Committee urged the relevant departments and agencies to complete documents for the project, especially estimates for maintenance costs. In addition, the relevant departments should clarify which units are in charge of road maintenance.

“The green tree belt bordering the Da Phuoc Waste Treatment Complex was greenlighted by the Ho Chi Minh City People’s Council in the investment period 2016-2019. The municipal council has prioritised allocating the capital of VND902 billion ($39.22 million) for the project. The amount reflects the importance the council attaches to the project. However, Binh Chanh district has made slow progress in site clearance activities,” he said.

Phuoc said that the municipal leaders have paid great attention to the project by prioritising capital allocation. However, the municipal council is deeply concerned about the slow progress of the project despite the capital allocation priority over the medium term.

“It will affect other projects which are in need of capital. Therefore, we call for more attention and better co-ordination among relevant departments and agencies to step up the project,” he said.

Who is responsible for the road?

Binh also requested the relevant departments to report on the degraded road leading to Da Phuoc Waste Treatment Complex.

The representative of the Ho Chi Minh city Management Board for Solid Waste Treatment Complexes (MBS) under the DNRE said that the municipal People’s Committee assigned MBS to manage the road three years ago. The board has hired Ho Chi Minh City Urban Environment to clean the road. However, the plan was not approved by the DNRE as MBS does not have competence over road maintenance and repair.

Meanwhile, the representative of the DNRE said that the department is responsible for infrastructure maintenance. However, the city did not assign the road to the department so it could not prepare an estimate for annual maintenance costs.

Similarly, the representative of the Department of Construction said that it is in charge of taking care of trees, lighting, and drainage infrastructure. However, the road was not assigned to it by the city, so it does not have the right to estimate annual maintenance costs either.

Commenting on these issues, Phuoc said that in the coming time, the provincial People’s Council will discuss the fate of this road. The Economics and Budget Committee will also send a report to the municipal standing People’s Council as well as assign MBS to make specific plans to resolve the issues.

The committee is committed to co-ordinating with other departments and agencies to solve the issues by the end of this year, including identifying the responsibilities of relevant units and preparing funding for road maintenance.

By B.Minh- Xuan Thai

Vietnam Waste Solutions calls for stepping up green tree belt project

US-China trade tensions fuel exchange and deposit rate

The escalating US-China trade tensions and China’s currency devaluation have cast adverse impacts on interest rates in the local banking system, with deposit rates approaching new highs.

Privately-held Ban Viet Bank is currently offering a ceiling deposit rate touching 8.6 per cent per annum, applicable to savings from 24 to 60-month terms.

Simultaneously, the bank has launched an online savings programme with 8.7 per cent annual interest for savings of the same terms.

Generally, the savings with terms over 36 months enjoy the highest interest rate at banks, except for Nam A Bank and ABBank which are also the lenders with the second- and third-highest interest rates, at 8.45 per cent and 8.3 per cent, after Ban Viet Bank. These rates are applied to savings with the term of only 13 months, but to enjoys such favorable rates, the savings must exceed VND500 billion ($21.7 million).

Eximbank’s ceiling rate is at 8 per cent per annum, while the ceiling rate of most other banks is pegged below 8 per cent.

For instance, it is capped at 7.8 per cent at VIB, 7.7 per cent at SCB, and 7.4-7.6 at MBBank and Maritime Bank. The remaining banks’ ceiling deposit rates hover around 7 per cent.

For savings with six-month, nine-month, 12-month, and 13-month terms, Ho Chi Minh City commercial lender HDBank offers an added interest rate of maximum 0.6 per cent per annum, with the ceiling mobilising rate reaching 7.7 per cent per annum.

Besides, to attract idle capital, a number of credit institutions launched certificates of deposit (CDs) with attractive interest rates.

Accordingly, small-cap private lender VietABank has just announced issuing CDs with a record interest rate. Retail customers buying 24-month CDs worth at least VND10 million ($430) will enjoy an interest rate of 8.38 per cent per annum which will reach 9.1 per cent per annum if they receive the interest sum at the end of the term.

Beforehand, some lenders have issued CDs with the interest rate of approximately 9 per cent per annum.

The long-term seven-year CDs with face value of at least VND1 million ($43) each issued by Ho Chi Minh City-based Sacombank enjoy 8.6 per cent interest rate per annum.

Other CDs issued by BIDV, SHB, or MSB earmarked to individual and corporate customers to raise medium and long-term capital sources report high interest rates reaching 8.9 per cent per annum maximally.

Most significantly, fledging VietCredit Finance Company has just issued the third trench of CDs with a total value amounting to VND1 trillion ($43 million) with a 12-month term and an interest rate of 10 per cent per annum applicable to investments over VND100 million ($4,300).

In light of the State Bank of Vietnam’s recent regulations, from the beginning of this year, the ratio of short-term capital banks are allowed to feed long and medium-term loans was reduced from 45 to 40 per cent.

Competing with other banks for deposits from 12-month terms upwards could help banks and financial firms replenish capital sources to serve firms’ long- and medium-term capital demand.

Besides, senior economist Le Xuan Nghia said that the escalating US-China trade tensions and China’s devaluation of the yuan had a detrimental impact on the Vietnamese dong–US dollar exchange rate and is putting pressure on banks’ interest rates.

Nguyen Hoang Minh, deputy director of the central bank’s Ho Chi Minh City branch, said that they had just sent documents asking city-based banks to keep the lending rate stable to serve firms, avoiding the lending rate to go up, similar to the interest rate trend.

By Van Linh

US-China trade tensions fuel exchange and deposit rate

Swine fever outbreak in China sends pork prices soaring, threatens shortages

China produces and consumes two-thirds of the world’s pork, but output is plunging as Beijing destroys herds and blocks shipments to stop African swine fever. Importers are filling the gap by buying pork as far away as Europe, boosting prices by up to 40% and causing shortages in other markets.

Read more

China Faces New “Long March” as Trade War Intensifies, Xi Jinping Says

President Xi Jinping  has called for the Chinese people to begin a modern “long march,” invoking a time of hardship from the country’s history as it braces for a protracted trade war with the United States, in an attempt to rally the nation as trade tensions with the United States escalate. China’s currency is weakening. It  has been an important barometer for progress in U.S.-Chinese trade talks, and right now it’s signaling that things aren’t going well Read more

Message From The Chair – May 2019

Dear AmCham Members,

April and early May have been a very busy time for AmCham and its members.  We have continued our efforts to forge relationships and partnerships within both the U.S. and Vietnam governments.  Our business programing and committee work have also remained robust.  I am pleased to report on a few of the highlights of the past month and look ahead to some upcoming events.

Our efforts to strengthen our connection with the U.S. government’s interest and development in Vietnam included welcoming the U.S. Congressional Staff Delegation on April 18, 2019. AmCham Board Members welcomed this delegation of 10 assistants to U.S. Senators and congressmen from the Democrat and Republican parties on their working visit to Vietnam.  AmCham shared with the delegation the opportunities and challenges in doing business here.

As for new partnerships in Vietnam, AmCham’s Food & Beverage committee entered into an important Memorandum of Understanding with the Vietnam Standards and Quality Institute, under STAMEQ, to build new Vietnam Quality Standards which focus on the food and beverage category.  The MOU was signed on May 10 in Hanoi during the U.S.-Vietnam Business Summit.  As part of that agreement, AmCham’s F&B committee will work with VSQI to support workshops and other ways to promote these standards.  One such joint workshop with STAMEQ, which took place April 24, prior to the formal MOU signing, was held on “Consultation on the Draft of Circular on Guidelines for good labels”.  I was honored to welcome over 160 participants to that event where 16 issues were addressed. Click for full speech here; For more about both events click HERE.

Of course, our business seminars and committees meeting opportunities also provided insight and value.  Some of those included:

  • On April 25th we welcomed Mr. Jimmy Thai, speaker and U.S. business leader originally from Vietnam, on the topic “How to win and lose contracts with America Companies.” The attendees heard several case studies with solutions for Vietnamese companies to in terms of culture and opportunities with American companies.
  • AmCham also saw the launch the newly-formed Agriculture committee, which met on May 13, with member interest to focus on two advocacy issues related to wheat importation into Vietnam from the U.S. and African Swine Fever (ASF) in Vietnam.
  • Several other AmCham committees have been very active on advocacy related to tax issues and the new draft Labor Amended Labor Code, for which an AmCham Position paper is set for release.

In addition to many business topics and events, AmCham members also had fun together.  On May 4th, over 130 members and their guests participated in the 2nd Annual AmCham’s Cinco De Mayo Fiesta. All had a great networking time and enjoyed fabulous Mexican food and drinks.

Upcoming Events

AmCham is excited to offer two unique opportunities in the next month to engage with U.S. and local HCMC officials.

The first is a dinner on June 6th for U.S. Ambassador Daniel J. Kritenbrink and Consul General Mary Tarnowka, who will be transitioning out of her role in July. Ambassador Kritenbrink will share insight on the economic climate and political relations, and will also recognize Mary Tarnowka on her accomplishments as Consul General during her tenure.  I encourage you to secure your place soon–tickets for the evening event (to be held at the Intercontinental Hotel, which also include a four-course meal, free-flow beverages and live music), are selling now; and with various sponsorship packages offered, there are several ways to gain additional benefits from the event. Click HERE for event information.

We are also pleased to offer an opportunity to participate in a half-day meeting with HCMC City Leaders in June (date to be informed).  We have gathered several issues from our committees on opportunities and challenges that AmCham companies are encountering in HCMC and plan to present those as part of renewed engagement with the City leadership. This meeting is open to AmCham members only.

We also look forward to celebrating on June 29th our U.S. Independence Day with AmCham members, families and friends. This will be the 25th year of AmCham’s 4th of July celebration and family picnic. All-in-one tickets are on sale now.

The next month will also continue with many AmCham committee and business seminars, and I invite you to regularly check with your Committee chairs and the AmCham website as new opportunities are added every week.  Click HERE to see our Calendar. Of specific note, Women in Leadership (another new committee) will host its planning meeting on May 28.  If you or a woman in your organization is interested in planning the mission, events and programming, please RSVP and join in shaping this important initiative. See Committees page HERE.

And as a reminder: Although committee participation and meetings are limited to AmCham members, please note that Company AmCham members can involve any employee of their organization to join in committees, as participation is not limited to the named Company representative members.

New Members and Thank You Premium Members

We are very excited to welcome our new and recently joined Corporate Members: Cimigo Sole Member LLC, Construction Joint Stock Company No. 1 (COFICO), Cuchi Shipping Co., LTD.; Hill Risk Consulting (Thailand) Ltd; Holiday Inn & Suites Saigon Airport; LMG (World Luxury Mattress Gallery Company Limited); Platinum Global Company Limited, Tiki Corporation.

AmCham very much appreciates Coca-Cola, Suntory PepsiCo, Intel, and Truong Phat for their continuous being our Premium Members.

Please watch in the coming weeks for an AmCham Survey as we seek to check-in with our members on the benefits and ways we can improve our Chamber.  I ask that you take the few minutes to give us this feedback.   But also know, the Board and Staff at AmCham are always ready to hear your comments, suggestions, and ideas to strengthen the Chamber. Please get involved and we hope to see you at our events soon!

With Best Regards,

Amanda Rasmussen

New Life for USMCA? both Democrats and Republicans work with USTR toward ratification before Aug

Key USTR officials negotiating the deal with Mexico and Canada are working both sides of the Capitol in an effort to ease concerns not only over the provisions of the pact but Trump’s ongoing tariff war with Mexico, Canada, Europe and China. Speaker Nancy Pelosi and her Democratic leadership team were upbeat about the U.S.-Mexico-Canada Agreement as they left a meeting with Robert Lighthizer, Trump’s top trade official, saying he finally seemed to take heed of their demands to modify the trade deal. Some Congressional leaders believe it could be ratified  before August. Read more

Vietnam smart city drive in full swing

As Vietnam’s cities and provinces are ramping up efforts with new action plans to realise the smart city dream, international tech giants are moving faster with new ambitious business plans. Bich Thuy reports.

After an hour-long motorbike ride to cover 10 kilometres from downtown Hanoi to the famous Hadong silk village, James, 35, from the US arrived in no mood for sightseeing, his exuberance having slowly bubbled away in the traffic jams.

“The streets were so crowded everywhere. Hundreds of motorbikes and cars are vying to get ahead, cutting each other off at every turn. I got stuck in several places and I wished I could use a mobile app to select the best route to avoid traffic jams like I do in other countries. Hanoi has many beautiful and interesting places, but the traffic problem lessens their attractiveness,” he said.

James is not the first traveller, or indeed local, to voice such complaints when visiting Hanoi – and the city is not deaf to these voices.

The problem may be solved in the near future thanks to the city’s recent moves to develop into a smart city. After this transformation, travellers and commuters in the city will be able to use mobile apps to select their routes in order to avoid traffic jams. Lamp posts on all streets will be installed with cameras, sending images to the monitoring centre which will automatically regulate traffic.

Moreover, there will be electronic tickets for bus commuters, as well as automatic tolling systems at all build-operate-transfer (BOT) stations and smart car parks.

New action plans

“Aligning with the prime minister’s recently-approved master plan for Vietnam’s smart and sustainable city development strategy in the 2018-2025 period, with a vision towards 2030, cities and provinces are actively developing their smart city schemes. Initially, they will apply digital technology in governance, with the e-government being an example, thus creating a platform to develop into a smart city,” Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), told VIR.

Just a few weeks ago, the central city of Danang announced its smart city development scheme, envisioning transforming itself into a smart city in three stages with the total cost of about VND2.1 trillion ($91.3 million).

The scheme identified 17 aspects of ICT application for the purpose under the six pillars of intelligent management, smart economy, smart traffic, intelligent environment, as well as smart life and smart citizens.

Danang followed similar moves by Hanoi and Ho Chi Minh City. In March 2019, Ho Chi Minh City became the first city in Vietnam to issue a resolution and a scheme on developing itself into a smart city in the 2017-2020 phase, with vision to 2025. Hanoi then followed shortly with Action Plan No.66/KH-UBND for the implementation of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), with smart city development being a focus.

Looking into the schemes, the cities all aim to apply technology solutions to launch e-government, smart traffic systems, smart power grids, smart water management systems, as well as supervise the environment and manage waste. The plans all align with Vietnam’s master plan for smart and sustainable city development under which Hanoi, Ho Chi Minh City, and Danang are all set to become central cities by the time the first pilot phase reaches completion in 2030.

Going beyond these three cities, the model will then be replicated in others, thus establishing an affiliate network of smart cities in the northern, central, and southern regions of Vietnam, as well as the Mekong Delta region. To realise this ambition, by 2025 Vietnam is set to implement the first phase of the pilot project on the development of smart cities. During this period, the legal framework will be completed for the pilot development plans, as well as for city management, lighting, transport, water supply and drainage, waste collection and treatment, power and the power grid, natural disaster warning system, and ICT infrastructure.

So far, several other localities, like the northern province of Bac Ninh and the southern province of Binh Duong have also built their own smart city development plans. Currently, more than 30 smart city models are being deployed by Vietnam Posts and Telecommunications Group and Viettel, in combination with the US’ Microsoft and IBM, and Japan’s Fujitsu.

Tech giants step up

In response to the concrete strategies and related legislation coming out, tech giants are stepping up their plans to capture opportunities. Last week, a largest-ever delegation of over 50 businesses from Sweden attended the Vietnam-Sweden Business Summit to seek business opportunities in the country, with innovative solutions for smart city development being a focus. Specifically, major fields for sustainable development and innovation, including manufacturing, solutions for consumers, healthcare, and education were under discussion.

Ericsson, ABB, Volvo Buses, Electrolux, and IKEA – all famous Swedish brands with long years of success in Vietnam – showed their ambitions with new plans to support the smart city initiatives of cities and provinces. Ericsson and its local partner Viettel announced 5G on a trial basis last week, with a plan to roll out this network on a large scale from 2020 onwards. It is now in strategic partnerships with mobile operators in the country to continue building out 4G networks. Ericsson’s ambitions are also evidenced by the mid-April announcement of the Internet of Things Innovation Hub in partnership with the Ministry of Science and Technology, and the Women in ICT Internship programme the corporation has forged with the Hanoi University of Science and Technology. ABB, a technology pioneer in electrification products, robotics and motion, industrial automation and power grids, is also pursuing many smart city projects in Hanoi, Ho Chi Minh City, and other cities. Recently, at the announcement of Danang’s smart city development scheme, ABB also signed a co-operation agreement with the city to lend its strength to future projects.

Similarly, Dutch investors are working on specific smart city plans for Binh Duong. In particular, Philips plans to install smart lighting equipment, while other companies, including FabMax and NXP, are planning to build front-end chip plants in Ho Chi Minh City and back-end chip plants in Binh Duong.

Companies from Japan, South Korea, the US, and EU countries are also joining the race. Germany’s Bosch Vietnam has invested $450,000 in a new centre to study new solutions towards building smart cities and Industry 4.0. “We plan to develop Ho Chi Minh City into one of our centres to supply the Internet of Things solutions for Bosch in the Southeast Asian region in the long term,” said Guru Mallikarjuna, managing director of Bosch Vietnam.

Industry insiders said that with the cities’ recent new moves, investors’ interest will further intensify as they can venture further into public services which no longer exclude private investors. Hanoi has recently announced that the city will reclassify public services to open up more opportunities for private investors to join in these services, thus mobilising financial sources to feed the plan.

“In addition, we plan to maximally outsource services related to software as well as infrastructure to technology businesses, from data centres and security services to channel and other services to raise resources and talent to serve our smart city development plan,” said Nguyen Duc Chung, Chairman of the Hanoi People’s Committee.

According to VCCI chairman Loc, to successfully develop a smart city, cities and provinces should look for reliable partners to ensure network security and project feasibility. Thus, they should strike up partnerships with countries which have strong expertise in the field, with Sweden, the US, Japan, Singapore and South Korea being the top suggestions.


Vietnam smart city drive in full swing