Vietnam reports fastest increase in Global Competitiveness Index

Vietnam produced the fastest growth by gaining 3.5 scores and 10 places in the Global Competitiveness Report 2019 by the World Economic Forum (WEF).

Vietnam was placed 67th out of the 141 countries in the Global Competitiveness Report 2019, up 10 places compared to its 2018 ranking. This is the first time Vietnam has made it into the first half of the list.

According to Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), this result comes from the efforts of the government reforms of the policy and legal system.

“The institutional reforms are the most important. They are apparent in the signing of new free trade agreements, as well as the removal and simplification of 50 per cent of business conditions and administrative procedures. Besides, the government tried to implement the electronic government and digital economy, while simultaneously supporting the startup ecosystem and helping cities and provinces increase their respective competitiveness indices,” Loc said.

The Global Competitiveness Index (GCI) is based on 12 pillars: institutions, infrastructure, information and communication technology adoption, macroeconomic stability, health, skills, product market, labour market, financial system, market size, business dynamism, and innovation capacity.

Saadia Zahidi, head of Centre for the New Economy and Society of WEF, told Time Magazinethat the soar in Vietnam’s Global Competitiveness Index is the result of taking advantage of the US-China trade war to lure in a large volumes of foreign investment capital and then become one of the largest trading centres in the region.

By Ha Vy

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Vietnam reports fastest increase in Global Competitiveness Index

Why Vietnam ranks eighth among top 20 countries to invest in

Vietnam’s transformation efforts fetched it the eighth position among the top 20 best countries to invest in by US News & World Report. This is a remarkable improvement against the 23rd position last year, surpassing neighbours like Malaysia, Indonesia, and Singapore.

The country’s corruption

Transparency International, the global civil society organisation leading the fight against corruption, ranked Vietnam the 117th amongst 180 countries and territories in its latest 2018 Corruption Perceptions Index (CPI), dropping 10 places compared to 2017. It scored 33 points out of 100 in the 2018 CPI, down two points compared to 2017.

The CPI index ranks 180 countries and territories and countries by their perceived levels of public sector corruption, according to experts and businesspeople. The index scores include a scale of zero to 100, where zero is highly corrupt and 100 is very clean.

Among ASEAN nations, Singapore led the rankings at third, followed by Brunei and Malaysia at the 31st and 61st positions. Indonesia ranked 89th, while the Philippines and Thailand tied at the 99th position.

Myanmar and Laos were tied at 132nd, while Cambodia ranked the lowest at 161st.

A dynamic country

Vietnam’s shift from central planning to market economy transformed it from one of the poorest in the world into a lower middle-income country. Vietnam is now one of the most dynamic emerging countries in the East Asia region, according to the World Bank in Vietnam.

Over the past 30 years, Vietnam has had a remarkable development record. Economic and political reforms under doi moi, launched in 1986, have spurred rapid economic growth and development and transformed Vietnam from one of the world’s poorest nations to a lower-middle-income country.

Economic stability

The Asian Development Bank expects Vietnam to grow by 6.8 per cent in 2019 and 6.7 per cent in 2020.

“Economic growth will likely hold up well in the near term, supported by export-oriented manufacturing, foreign direct investment, and sustained domestic demand,” Eric Sidgwick, ADB country director for Vietnam, said Wednesday at the release of the bank’s Asian Development Outlook (ADO) 2019 report.

Growth will continue to be broad-based, underpinned by robust private consumption, the continued expansion of manufacturing, services, and agriculture, and greater market access for Vietnam’s exports through various free trade agreements, including the recently ratified Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the report says.

Inflation is expected to average 3.5 per cent in 2019 and 3.8 per cent in 2020.

Entrepreneurial Vietnam

A survey says 25.7 per cent of young Vietnamese want to work for themselves, with tech growth fuelling entrepreneurship.

The survey of young people in six ASEAN countries released Friday by the World Economic Forum ranks Vietnam third in entrepreneurial ambition.

It was behind Indonesia (35.5 per cent) and Thailand (31.9 per cent), said the survey, which polled 56,000 people aged 15-35 from Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam in July.

Vietnam is seeing an increasing interest from young people in establishing their own businesses. Local startups received a combined $889 million through 92 investment deals last year, according to Topica Founder Institute, a startup accelerator programme in Vietnam and Thailand.

This was three times the amount the community received in 2017 with the same number of deals, and six times that in 2016, it said.

Favourable tax environment

The country is creating favourable conditions for the investor to invest via a transparent tax environment.

Foreign investors considering the Vietnamese market are often drawn by its competitive costs. Vietnam’s low wages have traditionally provided cost savings, however, the country has also quietly developed one of the most competitive tax regimes in Southeast Asia. Vietnam’s tax incentives are a standout feature of the tax regime and are applied to a variety of industries and projects throughout the country.

The Vietnamese government continues to improve business conditions through reform and have included tax incentives in recent legislative updates – most notably Vietnam’s Law on Investment – to lower the cost of doing business within the country. Foreign investors, particularly those involved in slightly higher value-added production, should be able to use incentives to offset their temporary costs until regulatory reforms take hold, and to position themselves ahead of their competitors in the years ahead.

Becoming an innovation hub

Vietnam has jumped three ranks on the 2019 Global Innovation Index (GII) to place 42nd out of 129 economies around the world.

The latest ranking was announced by the World Intellectual Property Organisation (WIPO) in New Delhi, India on Wednesday.

With this jump, Vietnam has leapt 17 spots since 2016. This year’s result is also the highest-ranking Vietnam has ever achieved.

Switzerland, Sweden, the US, the Netherlands, and the UK remain at the top.

GII 2019 ranks economies based on 80 indicators, from traditional measurements like research and development investments and international patent and trademark applications to newer indicators including mobile phone app creation and high-tech exports.

Skilled labour force

Vietnam’s labour productivity has improved but is still low in comparison to other ASEAN members, according to a report by the Ministry of Planning and Investment.

The report shows that Vietnam’s labour productivity index reached VND102.2 million ($4,450) per labourer in 2018, nearly double that of 2011. In 2011-2018, the country’s labour productivity increased by an average of 4.88 per cent annually, with 2016-2018 witnessing an average increase of 5.77 per cent annually.

However, in comparison with other countries in the ASEAN, Vietnam’s labour productivity is still low. This means that Vietnam’s economy is facing a huge challenge to catch up with other countries. Adjusted to 2018 purchasing power parity (PPP), Vietnam’s labour productivity reached $11,142, only 7.3 per cent of Singapore, 19 per cent of Malaysia, 37 per cent of Thailand, 44.8 per cent of Indonesia, and 55.9 per cent of the Philippines.

Technological expertise

Vietnam has great potential for the development of information and communications technology, which is considered a key pillar in the development of a digital economy.

With all of these attractive facts, Vietnam attracted $26.16 billion in foreign direct investment in the first nine months of this year, up 3.1 per cent compared to the same period last year.

 

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Why Vietnam ranks eighth among top 20 countries to invest in

Vietnamese aviation market under double pressure

The Vietnamese aviation market grew slowly in the first half of 2019 with little increases in the number of passengers and flights, falling far short of the double-digit average growth in 2013-2018.

Since the end of 2018, the Vietnamese aviation market welcomed new players including Bamboo Airways which officially took off in January 2019, Vietravel Airlines, Vinpearl Air, or Thien Minh Airlines, which is right now dealing with the licensing procedures, making the Vietnamese sky more crowded.

However, the real growth of the aviation industry has been decelerating recently.

According to data from the Civil Aviation Authority of Vietnam, in the first half of 2019, the whole aviation industry had 153,559 flights, a slight increase of 2.4 per cent on-year. Of this, domestic airlines transferred 20.2 million domestic passengers (up 12.5 per cent) and 18.3 million international passengers (up 6.2 per cent).

However, these numbers mean the growth of the Vietnamese aviation market is slowing down, according to Phu Hung Security (PHS). The company also assumed that the country’s aviation market will continue slowing down due to the falling number of international passengers while the domestic passenger market is plateauing out. Along with that, the aviation facilities of the country lack synchronous development, keeping the industry from developing.

In addition, the giants in the aviation industry might have to share the market with latecomers.

According to the Vietnam National Administration of Tourism, the number of international passengers arriving to Vietnam in the first half of 2019 reached 8.4 million. The number of passengers travelling by airway recorded a slower increase of only 4.8 per cent. Meanwhile, the figures for the first half of last year were 27 per cent increase in international visitors to Vietnam and 22.2 per cent increase in passengers travelling by airway, while the figures were 29.1 per cent in 2017 and 26 per cent in 2016.

China and South Korea account for more than half of the total number of international passengers to Vietnam. The number of Chinese visitors decreased by 3 per cent, affecting the tourism industry and the aviation market.

Not only Vietnam, tourism across Southeast Asia took a hit from fewer Chinese passengers. The second-largest economy of the world being under pressure might impact the growth of the tourism industries in the Indochina region.

The number of Asian visitors to Vietnam reached 7.6 million, accounting for 77 per cent. Visitors from Europe made up 13 per cent, while 6 per cent hailed from the Americas, and 1 per cent from Australia.

Overloaded and rundown aviation facilities

Another issue is that the country’s aviation facilities are not at a level to match the growth of the industry. The two international airports, Noi Bai and Tan Son Nhat, have been receiving more passengers than their designed capacity in recent years. The number of visitors in 2018 passing through the two international airports was 38.5 and 26.1 million, much higher than their 28 and 25 million capacity.

This leaves the facilities in a serious state of degradation. Runways 25R/07L of Tan Son Nhat and 1B of Noi Bai both have cracks because they have to accommodate far more aircraft taking off and touching down than their designed capacity.

In the near future, the number of passengers will continue to increase – albeit at a slower pace – while the capacity of the two most important airports cannot. And the road infrastructure connecting to neighbouring airports remains problematic at best. Therefore, the closure of these runways for repair or upgrade would heavily affect the operations of air transport companies.

In addition, there are new players diving into aviation, further increasing pressure on infrastructure. According to experts, the number of aircraft might reach 380 in 2023-2025, almost twice as much as the current 197.

In the past, the aviation market maintained a growth of nearly 20 per cent per year. This impressive number also created favourable conditions for Vietjet to join the low-cost niche, breaking the monopoly of Vietnam Airlines.

However, the appearance of new aviation businesses has made the market narrower. According to experts, since beginning operations, Bamboo Airways has been eating into the profits of the two giants, seizing 4 per cent of the market with ambitions to reach 30 per cent.

By Tan Duong

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Vietnamese aviation market under double pressure

New drive in smart city development

A modern city with many public facilities and utilities serving people, suitable investment attraction, and effectively supporting the policy of relaxing Hanoi’s inner city are the targets of a smart city project in accordance with the development master plan of the Nhat Tan-Noi Bai area.

In the Fourth Industrial Revolution era, investing in smart cities is not only a trend but also a new drive for developing urban areas. Already many countries in the ASEAN bloc have announced ambitious plans. Besides the pioneering Singapore, Myanmar and the Philippines are also building high-tech green cities with unmanned vehicles, and robots. Elsewhere, Thailand has the goal of creating 100 smart cities by 2022.

In Hanoi this week, a smart city project will be officially implemented, marking the start of building an e-government in the capital city.

According to Nguyen Thi Nga, president of project investor BRG Group, when completed, the smart city will create a highlight for the space and architecture of the gateway to the capital, creating a driving force to develop urban areas in the north of the Red River, creating many jobs, and contributing to the socio-economic development of Hanoi.

Over the past five years, the demand for investment and construction of smart cities in Vietnam has appeared alongside plans from authorities of Hanoi, Ho Chi Minh City, and Danang, but until the new smart city project in Hanoi is licensed, people may not feel the effects or understand fully what a modern city can achieve.

It is hoped that the use of energy in smart cities in general will be optimised by integrating energy management systems in buildings and apartments with central energy management systems along with using renewable energy.

Throughout Hanoi, a smart public transportation system, including high-volume urban transport such as buses and subways, will be built to help reduce using personal vehicles and ensure quick and convenient transportation of residents. Especially, the smart city and the centre of the capital will be connected synchronously through Urban Railway No.2, which will originate from Tran Hung Dao street in the hub of the capital.

Smart city residents can be almost guaranteed safety thanks to a modern security management system. There aims to be advanced monitoring and warnings systems, along with flood controlling and rainwater reusing systems. Besides that, there will be a smart classroom system with lessons from foreign teachers via virtual classes.

Cashless payment methods will be applied to enhance the smart consumption experience of residents.

Currently, Hanoi has prioritised implementing information systems and professional data in big data centres, ensuring connection and sharing with national data facilities. So far, the capital has completed building data of eight million residences serving for management work of the city. In addition, Hanoi has also built the WAN net for the whole city, and applied one-door electric linking systems in different fields like public administration, education, and healthcare.

Nguyen Duc Chung, Chairman of Hanoi People’s Committee, said, “The Vietnamese government has been facilitating Hanoi to develop into a green, civilised, and friendly capital which is a smart urban area with management based on new technologies and smart infrastructure with the aim to serve people better and build an open and friendly community.”

At recent meetings, many experts emphasised the position and role of the northern Red River region, in which Dong Anh rural district will play the role in easing the urban population. Besides that, the city also advocates relocating hospitals, universities, and offices of ministries and agencies out of the city centre.

Nga of BRG Group emphasised that the group will pay attention to inherited and long-term values. Containing the essence for solving urban issues around the world, the smart city is expected to become the key to unlock new development drivers for the future, in Hanoi, Vietnam, and further afield.

Experience and know-how from Japan in developing smart cities will be applied in Hanoi’s smart city project. As a result, it is expected that the project will bring the city long-term economic and social values, addressing the current inadequacies in Hanoi such as overload, traffic congestion, and pollution.

With such convenience, a smart city can be a liveable urban area, contributing to the strong development of the region as a whole.

By Phong Lan

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New drive in smart city development

Vietnam’s insurance sector catches foreign attention

The Vietnamese insurance market is heating up with many high-value bancassurance deals and mergers and acquisitions (M&A) unveiled recently.

Roughly half a dozen big names, including Allianz, Nippon Life, MS&AD Insurance, Sun Life Financial and Manulife Financial Corp are vying to buy the Vietnamese and Singaporean businesses of Britain’s Aviva, Reuters cited people with knowledge of the matter as saying last week.

According to the sources, who declined to be named as the talks are confidential, the combined deal value for the businesses is estimated to be between US$2 billion and $2.5 billion. Talks were at an early stage and terms could change, they said.

In Việt Nam, Aviva started operating in the life insurance in 2011. It was formerly known as VietinBank Aviva – a joint venture between Aviva and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank).

As of April 2017, Aviva completed the acquisition of a 50 per cent stake in VietinBank and officially wholly owned the unit. It signed an exclusive 18-year agreement to distribute life insurance products through VietinBank’s network. Thus, if the transfer is successful, VietinBank will have a new partner.

Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) is also likely to announce an insurance distribution agreement with a foreign partner in the near future as it was reported that Hong Kong billionaire Richard Li’s FWD Group has surpassed many rivals, including Prudential, to co-operate with Vietcombank.

Vietcombank is expected to receive an initial payment of about $400 million from the deal and could get more based on the performance of the business. Previously, Bloomberg estimated that the total agreed value may reach $1 billion, the biggest bancassurance deal to date.

Meanwhile, it was reported that Bank for Investment & Development of Vietnam (BIDV) is also exploring selling its stake in a life insurance joint venture with MetLife Inc.

In early September, two life insurance firms with large market shares in Việt Nam, including Prudential and Manulife, also officially announced their new banking partners.

On September 9, Asia Commercial Joint Stock Bank (ACB) and Manulife held a signing ceremony for a co-operation agreement on the distribution of insurance products. Accordingly, during the initial rollout, ACB customers will have access to Manulife’s two key life insurance products – one unit-linked and the other a critical illness product called ‘Enhance’.

On the same day, Prudential Vietnam Assurance also signed a bancassurance agreement with Korea’s Shinhan Bank Vietnam Ltd to distribute its life insurance solutions. Shinhan is the seventh bank in Prudential’s bancassurance network.

Experts have so far remained upbeat about the Vietnamese insurance industry’s health in the coming years, forecasting that it would maintain an annual double digit growth rate. The insurance industry expects a growth rate of 20 per cent this year.

The fast-growing domestic insurance market should thrive thanks to rising living standards and a high gross domestic product (GDP) growth of more than 6 per cent annually over the next three years, experts said.

The growth potential is great as the country has one of the world’s lowest life insurance penetration levels at less than 1 per cent of GDP. The average insurance premium in Việt Nam stands at $30, much lower than the global average of $595 and Southeast Asia’s average of $74.

The Ministry of Finance’s Insurance Supervisory Authority reported that the country has 64 insurance companies, including 30 non-life insurers, 18 life insurers, two reinsurance companies and 14 insurance brokerage companies. VNS

 

Vietnam’s insurance sector catches foreign attention

Message from the Chair – September 2019

Our business and advocacy efforts have been in full swing this month!  We opened September with a successful National Conference and Networking weekend.  Our committees have also been very active with information sharing and advocacy, including significant efforts by AmCham’s HR committee on the revised Labor Code.  We were also privileged to welcome Consul General Marie Damour to Ho Chi Minh City at a special dinner event with our members and guests.

National Conference Recap

On September 6th & 7th, we had a record turn-out for the annual National Conference and Networking Weekend, hosted this year in HCMC.  We kicked off the weekend with a reception with U.S. Ambassador Kritenbrink, Consul General Damour, members of the U.S. Mission and AmCham members from both chapters HCMC and Hanoi at historic Salon Saigon.

Saturday morning provided a rare opportunity for a tour of the Consulate General grounds.  A networking lunch at East West Brewing Co. began the conference, and moved on to the InterContinental Saigon with a full afternoon of workshop and break-out sessions co-lead by key U.S. Mission officers and AmCham Board members in participation with many AmCham members. The AmCham HCMC and Hanoi boards finished the business of the day with the annual joint meeting.

The Weekend was capped off with AmCham’s Taste of America dinner Saturday evening at Grain Cooking Studio, where guests enjoyed American spirits, wines and beverages paired with a menu created and led by four U.S. chefs who shared their stories and dishes over live cooking demonstrations. The weekend would not have been possible without the time and contributions of the U.S. Mission Vietnam, AmCham boards and members, and our sponsors!  On behalf of the Board of Governors, thank you!

Information Sharing and Advocacy

Sharing knowledge and representation on issues are at the heart of what AmCham does for its members. The past month has been very active with events including:

AmCham’s HR committee has been very active on information sharing and advocacy on the revised Labor Code, as the National Assembly 8th Session will review this draft and vote in October-November 2019.  The committee participated on September 18th in a workshop held by the Central Institute for Economic Management. Many specialists from these fields attended to share their opinions and proposals for the Draft. There was also participation from industry and business associations, who raised practical problems stemming from changes to the Draft. Additional work is on-going and planned for the rest of this month and October leading up to the upcoming legislative session.

Board Elections—Call for Recommendations!

The Nominating Committee is seeking recommendations for candidates for the Board of Governors in HCMC.  Voting AmCham members may recommend themselves or another person.

There are 9 positions open on the Board for the next two-year term, Jan 2020 – Dec 2021.

See the attached link for who may recommend/be recommended, the process for recommending and formal nomination, and other important information.  Recommendations may be made through Friday, October, 18, 2019.

Upcoming Events

Am Cham Supplier Day 2019 in Ho Chi Minh City is set for October 16th, and is organized in partnership with the United States Agency for International Development (USAID). It aims to facilitate supplier-buyer relationships between Vietnamese and foreign firms and integrate small and medium-sized businesses into global supply chains. The all-day event is at the Adora Center in HCMC, and will feature workshops, exhibitors and opportunities to match suppliers with manufacturers, supply chains and logistics.

One of our biggest events of the year is our celebration dinner marking AmCham’s 25th year in Vietnam. Please join us as a sponsor and/or guest on Thursday, November 7th. The planning committee is underway to make this celebration special. Watch for updated information on the event and sponsorship packages.

Save the Dates! We are also busy planning other events including our popular Governors’ Ball on December 7th and the Annual General Meeting on December 10th.  Watch for announcements soon on those event details.

New Members 

We welcome the following new corporate and professional members to AmCham:

Corporate Members: Anh Duong Company, Apectrans JSC, Becamex Tokyu Company, Ceva Logistics Company Limited, Covestro (Vietnam) Company, Hong Ky Company, Hung Hau Agriculture Corporation, Long Thanh Plastic Company, Luong Nguyen Services Company – Genki Japan House, Mapletree Vietnam Management, Nu-Star Inc., Saigon Asset Management (SAM), Saigon Psychology, TCPVN Company Limited, Teibto LLC, Toptour Travel Company.

Senior Professional Member: Mr. Barry Clark

As we approach the final quarter of the year, we continue to encourage you to stay involved with AmCham. If you have yet to make connections or need help finding the right fit, let your Board members or the AmCham staff know how we can improve your experience. It is your AmCham!

Thank you!

With Best Regards,
Amanda Rasmussen
Chairwoman

NA deputies come out against increasing overtime cap

National Assembly (NA) Standing Committee members spoke out yesterday against a Government proposal to increase the national overtime cap for workers.

The revised Labour Code was the centre of discussions at the meeting in Hà Nội.

Nguyễn Thúy Anh, chairwoman of NA’s Committee for Social Affairs, said at the seventh session of the NA, the Government submitted a proposal on raising the overtime cap to 400 hours per year, up 100 hours compared with currently.

Most deputies at the NASC’s 37th session disagreed with the proposal, saying Viet Nam’s labour laws should conform with common trends in the world with the goals of boosting measures to improve productivity and ensure the health of workers, she said.

According to Anh, given the fact that technology was developing together with improving workers’ skills and products’ value, working hours should be reduced to guarantee health and safety for workers.

“Increasing the overtime cap with inspections and sanctions for (employers’) violations still inadequate will likely lead to the situation where enterprises take this advantage to exploit the labour force,” she said.

NA Secretary General Nguyễn Hạnh Phúc said overtime work related to labour productivity and was not based only on human strength but also on technological innovation.

“If the National Assembly does not agree to increase the maximum overtime, businesses have to consider renovating technology and put into use modern production lines,” he said.

“If the National Assembly agreed to expand the overtime cap, it would discourage enterprises from renovating technology.”

If working time wasn’t shortened, it should be retained as currently so labourers can rest and recover their health, Phúc said.

Nguyễn Thanh Hải, head of NA’s Ombudsman Committee, said she didn’t support the proposal, suggesting overtime should be reduced in the next five years.

“It is essential to pay attention to labourers’ living condition. Only when workers have good spirit and physical strength can we attain high productivity and effective production,” she said.

Hải also said employers would benefit more than employees if the overtime limit was increased.

NA chairwoman Nguyễn Thị Kim Ngân proposed submitting two options to the NA at its upcoming session this October.

The first option is to retain all current regulations. However, it would also require employers to restrict overtime to 40 hours per month instead of 30 hours and supplement regulations on organising overtime work from 200 to 300 hours.

The second option was the proposal submitted by the Government, aiming to expand the overtime cap from 300 hours to 400 hours per year for a number of trades and sectors. However, the Government was asked to consider NA deputies’ suggestions, preparing the list of those subjected to expansion of overtime cap as well as the detailed decree on implementation to submit to the NA.

Entry and exit

In the afternoon, the NA Standing Committee gave feedback on the draft revised Law on exit and entry of foreign nationals in Việt Nam.

The law contains clauses on institutionalising the e-visa scheme that is being piloted, among other issues.

The NA Standing Committee asked the drafting committee carefully consider each item to ensure feasibility and national security and sovereignty, review the current conditions for visa waiving in coastal economic zones, and the proposal to raise temporary residence duration of foreign investors from five to 10 years.

The committee also commented the signing of an agreement between the Vietnamese Government and the European Union on establishing a framework for Việt Nam’s participation in crisis management activities of the EU.

Yesterday was also the last working day of the NA Standing Committee’s 37th meeting, which had lasted 11 days.

Speaking at the closing ceremony, NA Chairwoman Nguyễn Thị Kim Ngân said this meeting by the NA Standing Committee had seen discussions on 13 draft law projects and other important items that would be tabled for review by NA deputies in the upcoming month-long eighth plenary session to be held in late October.

Members of the committee also opined on the preliminary report on the 5-year implementation of the Constitution, reports of the Government, the Supreme People’s Court, the Supreme People’s Procuracy on the settlement of complaints and denunciations in 2019, the State Audit’s report in 2019 and audit plan for 2020. — VNS

 

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NA deputies come out against increasing overtime cap

Homegrown challenger to Facebook

With the launch of the social network Lotus, Vietnam Communications Corporation is ­trying to reshape the domestic advertising market currently dominated by Facebook and Google, and to give more benefits to content creators.

Privately-owned Vietnam Communications Corporation (VCCorp), last week officially marketed Lotus, a VND1.2 ­trillion ($52.17 million) social network. The company’s bold move is aimed to attract more online advertising in Vietnam and take power back from the tech giants of Facebook and Google, putting it back in the hands of content creators.

Facebook and Google now hold about 60-70 per cent of the Vietnamese advertising market, according to the ­Ministry of Information and Communications (MIC). Lotus is one of five social networks that the MIC is intent on launching to slowly roll back Facebook and Google’s dominance of the Vietnamese social media sphere. The launch of the social network roughly coincides with that of Appnews, a news aggregator application developed by Yeah1, in a co-ordinated attempt to challenge the foreign giants on the front of content distribution.

True to this aim, Lotus is less like a social network in that users cannot add friends, but can instead follow creators. “Users can become fans of ­creators and share content they enjoy with their own fans,” Bui Linh Chi from VCCorp’s ­Public Affairs and Communications Department told VIR.

Aiming to better serve ­content creators, the latest “Made in Vietnam” social ­network supports various ­formats, including simple, ­classic media like texts, photos, and videos, and more complicated forms like photo stories, blogs, and magazines.

According to VCCorp chairman Nguyen The Tan, Lotus will give a lending hand not only to individual creatives but also local press agencies that create the lion’s share of content yet hold a minor share of the local advertising market.

“It is necessary to have a platform that only serves ­content creators, to help them approach more users and regain some of the advertising market,” he said. “With the launch of Lotus, we hope to strengthen the position of content creators and alleviate their dependence on overseas tech giants.”

This sentiment was echoed at the launch of Appnews ­Vietnam by chairman of Yeah1 Nguyen Anh Nhuong Tong, who said local press agencies have been cornered by tech ­giants like Facebook and Google who are “taking it all”. He was of the opinion that the best way to regain the market is to create an alliance of all press agencies in Vietnam – on a platform catered by a Vietnamese news aggregator. “Appnews will help every press agency to promote exclusive content to better approach users,” said Tong. “Users will have a far better experience with a great variety of content on a single system.”

So far, more than 50 news agencies have joined Appnews to offer up-to-date coverage of the freshest news with real-time notifications to users.

However, Lotus’ content-centric model has raised concerns as critics were quick to point out that all social networks focus on content and would not exist without it – what truly sets them apart is the difference in the type and format of the content they bring to users. Facebook, YouTube, TikTok, and Twitter revolve around content – it is unclear how Lotus’ approach will be different or whether “following a creator” is any different from just adding a friend or giving a “thumbs up”.

In addition, while Lotus is vocal about its attempt to carve out a niche by providing “positive content”, it is unclear what that actually means. Social networks are platforms to house content built by users and while Facebook and Google are often under fire for disseminating harmful content, they are also home to an abundance of intellectually and spiritually uplifting, educational content – and so are other social networks. So far, it is unclear how Lotus will supervise content to set itself apart from the fold.

Setting itself apart is key to success. Indeed, Vietnam’s previous attempts at breaking Facebook and Google’s stranglehold by launching its own social networks have failed once, and all simply for not bringing anything truly new to the table. The likes of Go.vn, Zing Me, Banbe.net, Tamtay.vn, or Yume.vn all received heavy funding at the onset just to fade into near-oblivion.

A more recent example, Biztime was heavily criticised by users in 2017 for failing to even come up with a theme and design different from Facebook’s. Tourism social network Hahalolo, launched in June, has already been slammed by the State Bank of Vietnam for running an unlicensed e-wallet business and does not seem to be able to truly take off. Gapo, launched in July, is filled with content reposted from Facebook and TikTok. Currently Gapo is being used by about two million people.

Lotus’ success rides on its ability to provide unique content in a fresh packaging – and much of this depends on specifications the developers have yet to unveil, such as their approach to content itself and the algorithms ensuring “positive content”.

Advertising in the palms of Facebook and Google

In 2018, global advertising revenue increased by 72 per cent on-year, half of which was generated by digital platforms. These platforms’ advertising revenue has rocketed from $17.2 billion in 2009 to a forecast $38.9 billion in 2019.

This goes completely against the grain at press and television channels. Specifically, the global press made $22.4 billion in 2009, but expects only $10.1 billion in 2019, while TV channels are looking at a $1 billion rise to $35 billion.

Meanwhile, as reported by German online portal for statistics Statista, Facebook and Google’s revenue in 2019’s second quarter alone exceeded $16.9 billion and $38.78 billion.

 

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Homegrown challenger to Facebook

State domestic revenue rises 14% to US$34.8 billion in eight months

The State budget’s domestic revenue in the first eight months of 2019 is estimated at VNĐ808.8 trillion (US$34.8 billion), according to the Ministry of Finance.

The figure is equal to 68.9 per cent of the full-year plan and up 13.9 per cent year on year.

The domestic revenue is made up of a variety of taxes and charges, and collected from different sources such as State-owned, FDI and private enterprises, agricultural land use, personal income and vehicle registration.

It is also estimated that domestic revenues collected by 55 of all 63 provinces and cities have beat the full-year target, which is set at 65 per cent. Of the figure, 46 provinces and cities recorded that their domestic revenues fulfilled 68 per cent of the year’s target.

Besides domestic revenue, State budget collection from exports rose 10.3 per cent year on year to VNĐ147.2 trillion in the first eight months, fulfilling 77.8 per cent of the full-year target. Tax deduction is estimated at VNĐ85.9 trillion, equal to 77.2 per cent of the year’s plan.

However, revenue from oil production and exports in January-August fell 6.8 per cent yearly to VNĐ38.78 trillion, which accounts for 87 per cent of the 2019 target.

As of the end of August, it was recorded that eight of 12 State budget revenue items had fulfilled at least 68.9 per cent of their full-year plans. The items with high State budget revenues were land and housing (88 per cent of the year’s target), lottery (83.9 per cent), and licensing of mining and water businesses (126.6 per cent).

State budget revenue in four of the 12 items was less than expected, which were State-owned enterprises, FDI companies and private firms with fulfilment rates of 62.1 per cent, 64.9 per cent and 66.2 per cent, respectively.

According to the Ministry of Finance, the general tax department pushed its agencies to improve tax collection, monitor local tax payers and administrate businesses over their tax payments.

In addition, the General Department of Customs worked closely with local authorities and other Government agencies to fight State budget losses, smuggling, trade fraud and fake goods. The customs office also modernised its administrative system to speed up the processing of customs procedures.

In the eight month period, total State spending was up 2.8 per cent yearly to VNĐ901.35 trillion, equal to 55.2 per cent of the year’s plan.

The figure included spending for investment and development (VNĐ161.27 trillion), interest payments (VNĐ76.76 trillion) and regular spending (nearly VNĐ645 trillion).

As of August 31, the State Treasury had settled VNĐ570.8 trillion worth of State regular spending, 54.7 per cent of the full-year target, and disbursed VNĐ153.8 trillion worth of procurement, 41.5 per cent of the plan.

In addition, total VNĐ152 trillion worth of Government bonds were raised in the first eight months with average maturity of 13.48 years and average per-annum yield rate of 4.89 per cent.

Total State budget collection in the first eight months reached nearly VNĐ1 quadrillion, up 12.4 per cent year on year and equal to 71 per cent of the year’s plan. — VNS

 

Source:
State domestic revenue rises 14% to US$34.8 billion in eight months

Gov’t sets deadlines for major projects

The Government has ordered ministries and sectors to keep up with the set deadlines of key transport and power projects in its resolution on September 13.

Regarding power projects, the Government asked the Ministry of Industry and Trade to put the first and the second turbines of the Song Hau 1 coal-fired power plant into operation in the second and third quarter of 2021, respectively.

Song Hau 1 is the first of the three power plants situated at the complex with total installed capacity of 5,200MW.

The Government also requested the ministry to ensure that the first and the second turbines of the Thai Binh 2 coal-fired power plant will come into operation by December 2020 and the first quarter of 2021.

The Thai Binh 2 plant, invested by PetroVietnam, has a capacity of 1,200MW and is expected to supply 7.2 billion kWh to the national grid once it comes into operation, playing an important role in ensuring national energy security.

Việt Nam is forecast to need 131 billion kWh of coal-fired power, or 49.3 per cent of the total power production as of 2020, according to the Revised Power Development Master Plan for 2011-20, with a vision to 2030.

Transport projects

The Government tasked the Minister of Transport with taking responsibility for the progress of highway construction projects along the eastern part of the North-South highway, including the progress of three projects funded by the State budget and the selection of competent contractors. The minister will have to make sure the projects are completed by 2021.

The Minister of Transport and Chairman of Tien Giang Province’s People’s Committee are asked to ensure the full completion and inauguration of the Trung Luonng-My Thuan expressway project by 2021.

For the Cat Linh-Ha Dong metro line in Hanoi, the Minister of Transport is assigned to report to the Prime Minister about issues related to its pilot operation before September 30, 2019.

Regarding the Long Thanh International Airport project, the Ministry of Planning and Investment is responsible for accelerating the verification of the feasibility report so that it could be submitted on time to the 14th National Assembly at its 8th working session scheduled to start in October this year.

In terms of the degraded runways and taxiways of Noi Bai and Tan Son Nhat international airports, the Minister of Transport has asked the Aviation Corporation of Vietnam to complete the repairs by the end of November this year and take responsibility for flight operation safety.

Regarding projects facing slow capital disbursement, the Government asked ministers and heads of ministerial-level agencies, as well as leaders of localities, to accelerate the disbursement of public investment capital in 2019 and take responsibility for any delays.

These individuals and organisations are also asked to stop or withdraw capital from projects with low disbursement capacity. — VNS

 

Source:
Gov’t sets deadlines for major projects