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Vietnam FDI Real Estate Report- Streamlining Efficiency Part 1

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By Keith Hilden, Squawk Advisors

Southeast Asia is a region that is encountering solid growth with little roadblocks in terms of political instability which has gripped northern Asian economies in recent months. This is manifesting in blanket risk considerations for new capital projects across the potentially imperiled region. One economy in particular is what some call the new China. I am of course talking about Vietnam. As per Xinhua, Vietnam is currently leading Southeast Asia this year in real GDP, with an expected GDP post of 6.8 percent for the year of 2017.

Despite fast paced growth, rapid privatization of state-owned enterprises, and swift reforms to investment laws under the pro-business and investment focused PM Nguyen Xuan Phuc, Vietnam’s economy continues to present a unique market situation with specific opportunities and challenges.

One such issue lies in Vietnam’s legal framework surrounding real estate. Legacy structures in the country’s regulations can at times present an investment bottleneck- for example, only US$1.15bn in FDI registered real estate investment capital mobilized in the first half of 2017 in Vietnam. This is not because of the lack of real estate opportunities- quite the contrary.

However, the current pathways for investment and development in Vietnam are time consuming- so much so to the point that the Vietnam government during recent meetings has definitively identified the need to streamline investment processes in order to facilitate greater investment flows into suitable projects in the country.

This revamping of the investment laws is being done in order to achieve targets of not only standalone real estate projects, but also of integrated townships such as from VSIP as well as entire new additions to Ho Chi Minh City. For example, the now-widely promoted flagship Thu Thiem Urban Area project, slated to replace Ho Chi Minh City’s District 1 as the new downtown area of the city, has a total investment target of roughly US$50 billion in total, which is approximately a whopping 25 percent of the country’s GDP (albeit to be registered and disbursed over a number of years in order to realize the scale of this critical national project).

Further coverage and details are available from our early investor alert back in 2015.  This is particularly crucial for the coming infrastructure investment boom, in which Vietnam’s infrastructure investments will exceed those of neighboring countries, while also requiring a heavy proportion of FDI investment into these projects. 

A surge in tourism has also been very supportive of Vietnam real estate projects, particularly ones that are poised to benefit from such a surge in tourism. During the first four months of 2017, tourism arrivals spiked over 30 percent from last year, making Vietnam Southeast Asia’s fastest growing tourism destination. Airlines, airports, and the government are all making preparations to increase this number further to expand Vietnam’s tourism potential to the fullest. And in Danang, the “Las Vegas” of Vietnam is starting development, with the flagship project Cocobay Danang leading the initiative to transform the city into the entertainment hub of the country.

Indebted consumer or public debt in a market typically does its part to take the sheen off an otherwise glossy market, and we certainly see this in developed OECD markets with high debt levels weighing down on future gains. However, in Vietnam’s case, the debt situation is quite sustainable and is not at levels that would trigger a slowdown in the capital markets or the real estate markets as a whole.

Vietnam’s household debt stands at just 20 percent GDP at the end of 2016, while regional peers such as Malaysia and Thailand have clocked in about 80 percent of GDP, which has acted as a brake pad for the growth of various sectors in the Thai and Malaysian economy respectively. While Vietnam as a whole was thrown a bit off-kilter from the US withdrawal of the TPP upon Donald Trump’s election, Vietnam has a whole gotten back on their feet and maintains the target of 6.8 percent GDP for 2017. This is a comparatively far better situation than not only Southeast Asian peers, but also from China grappling with its own debt issues.

With neighboring China’s fixed capital investment at nearly 90 percent of GDP, the search is on for unsaturated markets with plenty of room for growth such as Vietnam. Public debt to GDP as well as the investment component to GDP are currently at sustainable levels. We are currently seeing this search for Chinese investor yield abroad in the form of a higher proportion of total sales coming from China, as well as our observation of increased Korean investment in real estate projects in Vietnam in general. Furthermore, consensus agrees that Vietnam real estate is a safe bet for the foreseeable future. Jones Lang LaSalle forecasts 8 to 10 percent annual growth in residential values in the country’s major cities this year. This consensus indicates a solid trajectory for the 2017-2018 period and the foreseeable future. The nation, however, does have a debt banking issue, which is a double-edged sword that leads us to the next point, which in coordination with Dezan Shira we will release Part 2 shortly.


About
 Us

Squawkonomics is a crowdfunded frontier market investment research firm that handles investment into over 10 industrial areas in Cambodia and Vietnam, and provides a wide array of investment research reports concerning the Asia Pacific and Latin American investment opportunities. Squawkonomics also assists investors with our portfolio of private equity investments, laying out promising opportunities throughout the APAC and LATAM regions. For investors in need of finding their next investment destination in Southeast Asia, contact us for details.

Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEANChinaIndiaIndonesiaRussia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com

 

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dsa brochureDezan Shira & Associates Brochure 
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.

DSA_Doing Business in Vietnam 2017_cover_126x90pxAn Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.

VB_2016_12_en_Managing_Contracts_and_Severance_in_Vietnam_-_Cover (1)

Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.

Education in Vietnam: Opportunities and Challenges for Investment

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Vietnam’s New Solar Power Policy

By: Chau Pham & Trang Le 

Vietnam is currently one of the best destination for foreign investment in Southeast Asia. The country’s GDP is forecast to grow by 6.5 percent in 2017 and, among a variety of sectors, the demand for a high-quality education is reaching new heights, providing favorable opportunities for foreign investors to enter the market.  Data provided by the Ministry of Planning and Investment’s Foreign Investment Agency (FIA) for the first half of 2017 indicates that Vietnam attracted over US$701.69 million in FDI via 336 projects in the education and training sector.

However, in spite of opportunities, investment in education remains quite challenging as the government’s control over the sector remains high. Interested parties should therefore carefully study Vietnam’s complex regulatory environment when considering their options for market entry.

DZS RELATED: Pre-Investment Advisory Services from Dezan Shira & Associates

Drivers of opportunity in Vietnam’s education sector

The rise of the Vietnamese consumer

Underlying the demand for education in Vietnam is a rapidly emerging middle class. Reporting from Boston Consulting Group (BCG) in 2013 showed that Vietnam had the fastest growing middle class in Southeast Asia. The report projected the middle and affluent classes (MAC) in Vietnam to double in size between 2014 and 2020, from 12 million to 33 million. Accompanying MAC growth is a clear uptick in confidence from those within Vietnam’s current middle class. Survey data provided as part of the BCG report indicated that 90 percent of MAC respondents believe their living conditions are higher than that of their parents. On top of this, respondents in the report confidence that conditions will continue to improve for their children.

Demographic tailwinds

On top of growing incomes and confidence in the future, Vietnam’s demographics also stand to have a positive impact on the education market. As of 2017, nearly 60 percent of Vietnam’s population of nearly 90 million is under 35 years of age. With more disposable income than in years prior, young Vietnamese, with the support of their parents, are eager to obtain the skills and knowledge which meet the ever-increasing demands of the labor market.

Talent shortages

As investment in children’s education is given increased priority, the demand of sending children to an international learning environment for a higher quality of education is on the rise, making the market more attractive to step into. Vietnam is facing major skills gaps, and local qualifications in many fields are not well acknowledged. International qualifications are therefore seen as a valuable advantage, and in some fields, they are almost essential.

Government support initiatives

In addition to the rising demand of for international education providers, investors can also find new opportunities offered by the government, especially after the country’s participation in WTO. Education institutions registered to operate for less than 20 years are no longer obligated to build their own facilities and are allowed to rent suitable schools, buildings or workshop areas for at least 5 years. Investors are also allowed to expand their brand by opening other campuses in the same city or in other cities.

 

Related-Reading-Icon-Asean Link RELATED: Industry Spotlight: Vietnam’s Growing Appetite for Education

Challenges ahead

Education is an attractive sector for investment in Vietnam as the country is in need of international standard learning environment. However, there are some legal issues that enterprises should consider before entering the market.

Vietnam has only committed to liberalizing their education sector for foreign investment in select fields. As of 2017, the following fields are currently opened for foreign investment:

  • engineering
  • natural sciences
  • technology
  • business administration and business science
  • economics
  • accounting
  • international law
  • language training

Most of these fields are for higher education level. For general education, which includes elementary schools, secondary schools, high schools, and pre-schools, opportunities for foreign investment exist but Vietnam has not yet committed to fully opening the sector. As such, there are a number of limitations that should be noted by those considering investments in general education.

Enrollment limitations

The first of these restrictions deals with the composition of education provider’s classrooms. Institutions operated by foreign investors are required to provide these services to primarily foreign students, with only a small number of Vietnamese students able to enroll in this type of school. International schools for general education have to respect the following upper limits for Vietnamese enrollment:

  • 10percent for primary and secondary international school and
  • 20percent or less for international high school).

According to Decree 73/2012ND-CP, passed on 15th November 2012, only foreign children can enroll in an international pre-school. Vietnamese children under 5 years old are not allowed to enroll in any form of general education provided by foreign investors. This decree limits international schools from getting more potential clients from the local market even when the country is getting wealthier and the demand of Vietnamese students for international learning standard are very positive. Thus, it makes the investment less attractive.

Licensing

On top of enrollment restrictions, obtaining licenses is another difficult challenge. In order to operate in the education sector in Vietnam, foreign institutions have to follow specific procedures to obtain three types of licenses:

  • the investment registration certificates
  • the decision permitting the establishment of educational institutions
  • the license for educational activities

Note: Although the processes to obtain these documents are quite similar, they must be applied for independently and sequentially.

Staffing

Regarding the requirement of teaching staff’s qualifications, the Decree 73 stipulates that foreign teachers must have at least five years of experience to be allowed to teach twinning programs at Vietnamese institutions or at foreign-invested school, colleges and universities. For tertiary education institutions, 60percent of courses must be delivered by permanent teachers, and 80percent of teaching staff must hold postgraduate degrees. The percentage of lecturers holding a doctoral degree in foreign colleges and universities must be at least 25 percent and 35 percent respectively.

Additional investment considerations

While enrollment, licensing and staffing are currently the most pressing challenges for investors in education, there are a number of other aspects to the Vietnamese investment process that should be noted and explored to ensure that investments in Vietnam can be carried out in a seamless manner. These issues are wide ranging and non-exhaustively include areas of investment such as capital requirements, the inspection of facilities of foreign-invested institutions, and the lack of a legal framework to extend the operational terms of educational institutions.

It is finally worth noting that Vietnamese officials are very aware of both the importance of foreign capital in the education sector as well as the challenges faced by the foreign investment community. The most recent example of this can be seen in a workshop set up to seek comments for a draft decree on education replacing Decree No 73 which was organized in April of 2017. According to the Ministry of Education and Training (MOET), this draft decree shows many positive changes, which favor foreign investment in the education sector, including a better climate of doing business and the removal of the prescribed ratio of Vietnamese to foreign students.


About
 Us

Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEANChinaIndiaIndonesiaRussia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com

 

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dsa brochureDezan Shira & Associates Brochure 
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.

DSA_Doing Business in Vietnam 2017_cover_126x90pxAn Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.

VB_2016_12_en_Managing_Contracts_and_Severance_in_Vietnam_-_Cover (1)

Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.

 

Renewables in Vietnam: Current Opportunities and Future Outlook

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By: Dezan Shira & Associates
Editor: Koushan Das

Vietnam is one of the most efficient power market in Southeast Asia, driven by low-cost resources such as hydro and coal. The country has achieved almost 99 percent electrification with relatively low cost in comparison to neighboring countries, leading it to be a net energy exporter. With energy demand projected to increase by more than 10 percent annually in the next five years and required power capacity to double; the government is moving forward to develop the renewable energy sources to ensure energy security and addressing the growing power demand.

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Vietnam’s Payment Preferences: Four Trends to Watch

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By: Dezan Shira & Associates
Editor: Koushan Das

Vietnam is aiming to move towards a 90 percent cashless economy by 2020 by reducing cash transactions and increasing electronic payments. With 90 percent of current transactions conducted in cash and only 30 percent of citizens having a bank account, the government faces an uphill task to achieve its goals. Nonetheless, recent regulatory reforms and emergence of private players in the last few years have been encouraging towards creating a sustainable digital payments market. In this article, we will look at the current state of the cash based economy, rise of fintech solutions, government cashless policies, rising internet penetration, and what the government needs to do to ensure the transition.

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Vietnam’s Solar Power Policy: The Dawn of a New Age in Utilities Investment

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By: Chau Pham

Offering a low-cost production hub and a young workforce, Vietnam is quickly becoming the best alternative to China for investors across Asia. Attracting more and more investments every year, the demand for power in Vietnam is also rising rapidly. In order to encourage the development of solar power facilities, an alternative power source thought to help Vietnam reduce its reliance on coal-fired power and deal with environmental concerns, Decision No. 11/2017/QD-TTg (“Decision 11”) was signed on April 11, 2017 to support the development of solar power projects. It officially entered into force on June 1, 2017.

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E-commerce Logistics: Emerging Opportunities in Vietnam

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By: Trang Le

E-commerce in Vietnam is not a new concept as it was 5 years ago. The market has witnessed the entrance of many large players in recent years, with lotte.vn and aeoneshop.com  joining in early 2017 alone. Boasting a projected annual growth rate of 30 percent over the next five years, the e-commerce sector is expected to reach US$10 billion by the early 2020s. Yet, e-commerce extends beyond sales and slick web design.

The speeded of product delivery is increasingly important as is the quality for both customers and merchants. As the market continues to grow, it becomes increasingly clear that the long-term prospects of Vietnamese e-commerce lie in the development of a good logistics system to facilitate the sector. At present, the major challenge is that companies involved in e-commerce cannot handle logistics alone. As a result, outsourcing e-commerce logistics functions to third-party logistics providers (3PLs) is an increasingly important trend. 

DZS RELATED: Pre-Investment Advisory Services from Dezan Shira & Associates

Hub potential

According to the Vietnam Logistics Business Association (VLBA), logistics in Vietnam accounts for 20 to 25 percent of GDP with the sector projected to grow by roughly 12 percent per year in the near future. The high growth of the e-commerce industry offers more opportunities for logistics companies to tap into the market’s potential. In particular, express delivery and logistics services targeting e-commerce are fertile ground for investment.

In recent years, a number of notable companies have begun investing in logistics within Vietnam and help to showcase the success and opportunities which Vietnam can afford. DHL eCommerce – one of four divisions of Deutsche Post DHL Group, is currently raising its stakes in the e-commerce logistics battle. As of early January 2017, DHL eCommerce has successfully offered end-to-end domestic delivery service for e-commerce merchants in Thailand which pave the way for its ambitious plan to double its fleet and number of depots by 2017 to neighboring markets, including Vietnam.  

With the goal of becoming a leading company in the field of e-commerce logistics, Indo Tran Logistics and Transport JSC (ITL Corp) is a new entrant to the field of express delivery in Vietnam. with its brand SpeedLink. Since 2016, the office network of SpeedLink has been present in 50 provinces and cities across the country.

Giao Hang Nhanh, an e-commerce delivery and logistics business, has emerged in the country vibrant online stores. Giao Hang Nhanh currently serves over 800 online merchants, 20 of which are larger scale B2C e-commerce sites such as Tiki.vn, and Project Lana. Its aim is to enable a better e-commerce experience for both consumers and merchants through efficient logistics service.

Related-Reading-Icon-Asean Link RELATED: Leveraging Emergent Trends in Vietnamese E-Commerce

Giants join the battle

Lazada is the first e-commerce enterprise with its own delivery company called LEX. In its formation stage, LEX was built on a scale exclusively for Lazada. However, realizing the growing demand for e-commerce in the world and Vietnam, Lazada decided to split LEX into a separate company. Earlier this year, Lazada has also invested in three large warehouses in Ho Chi Minh City, Da Nang, and Hanoi with a total area of 22,000 square meters and a network of 34 distribution centers throughout the country. Even so, Lazada’s logistics network does face limitations. On a daily basis, LEX as well as Lazada must join forces with Giao Hang Nhanh, VNPost and Viettel Post to fulfill its orders.

“Uber for logistics” is another area that has already seen immense potential for profitability as a means of bridging existing gaps in Vietnamese logistics networks. Grab, the Uber rival in Southeast Asia, recently announced a rebranding alongside a few new services last year which included delivery service (GrabExpress). Known locally for its ability to set trends within the Vietnamese market, it is likely that this model of logistics will gain momentum in the years to come.

E-commerce logistics cost

Despite the influx of logistics providers, transport infrastructure and logistics facilities in Vietnam are still underdeveloped. As of 2017, Indian e-commerce retailers spent between 5 to 15 percent of their revenue on logistics while US logistics cost Amazon 11.7 percent of its revenue in 2015. The number in Vietnam is much higher, with some estimates pointing to 30 percent of revenues being used to cover logistics costs. According to a report from World Bank (WB), logistics costs in Vietnam are estimated to run at about 25 percent of annual GDP, significantly higher than 19 percent in Thailand and 8 percent in Singapore.

The main reason for this is Vietnamese logistics companies have weak capacity as well as a lack of modern information systems. Moreover, the legal framework and regulations covering the logistics sector remain difficult and complex. These issues become more pronounced as companies seek to gain footholds outside of Vietnam’s first-tier cities, such as Ho Chi Minh City, Hanoi, and Da Nang.

Sectoral Prospects

Despite facing major hurdles, many experts believe that there will be a positive future for logistics enterprises in Vietnam, especially since free trade agreements (FTA) have been negotiated and will promote foreign direct investment in Vietnam’s infrastructure and information system. On top trade,  recent legislation looks set to improve regulatory hurdles faced by the industry. Decision No. 200/QD-TTg on enhancing competitiveness and development of logistics services in Vietnam by 2025 has seen recent passage and focuses on creating favorable conditions for an effective logistics sector as well as increasing cooperation and outsourcing rate.

With the conditions for investment improving and regulatory reform ongoing, it is anticipated that capital expenditure from current investors will continue to rise in the years ahead and that new entrants will continue to consider the Vietnamese market for investment. The key to success for existing and prospective investors in e-commerce logistics will ultimately remain in maintaining a firm understanding of the challenges inherent in the Vietnamese market and finding the most cost-effective ways to provide solutions to these challenges.


About
 Us

Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEANChinaIndiaIndonesiaRussia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com

 

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dsa brochureDezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.

DSA_Doing Business in Vietnam 2017_cover_126x90pxAn Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.

 Managing Contracts and Severance in Vietnam 
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.

Vietnam’s Hospitality Industry: Understanding Current Trends and Challenges

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By: Chau Pham

Viet Nam is rising in its popularity as a tourist destination in South East Asia. In 2016, the number of international guests which visited the country reached over 10 million people, representing an increase of 26 percent. Home to diverse attractions and delicious food, Vietnam provides appeal for a wide range of travelers. As interest continues to mount, so too do opportunities for investors catering to the hospitality industry. The demand for leisure activities and accommodation, especially four to five-star hotels remains particularly high and government support programs are also increasingly playing an important role by providing incentives to investors.

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Vietnam’s Aquaculture Exports to Reach US$13 billion by 2020

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By: Koushan Das, Business Intelligence Associate at Dezan Shira & Associates

According to the Vietnam Sea Culture Association, exports of marine aquaculture produce are predicted to reach US$12-13 billion (VND 276-299 trillion) by 2020 and US$30-35 billion (VND 690-805 trillion) by 2030. To achieve their goals, the Ministry of Agriculture and Rural Development (MARD) has approved a project to increase competitiveness in seafood sector with financial support from the State Budget and foreign businesses, to restructure the sector towards improving its value added products.

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Planting the Seed: A Guide to Opportunities in Vietnamese Agriculture

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By: Loan Quach

Vietnam has progressed to become the world’s fifth largest exporter of agro-food commodities including aquatic products, rice, coffee, tea, cashews, black pepper, rubber, and cassava according to a World Bank report released in 2016. However, while increasing its stature as a global exporter, the quality of growth in the sector overall remains low. In order to improve it and, in turn, enhance the country’s economic competitive capacity, the Ministry of Agriculture plans to introduce incentives such as tax exemptions or land use fee cuts to attract private investments, especially from overseas investors. At the forefront of this drive are hi-tech agriculture and clean agriculture which will be the two focus fields targeted to start the modernization and diversification of Vietnam’s agriculture sector.

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Stuck in Traffic: Opportunities for Urban Infrastructure Development in Ho Chi Minh City

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By Mike Vinkenborg

As Ho Chi Minh City battles growing traffic congestion, municipal authorities are considering a range of measures to improve transportation in the bustling city of over eight million. The city is currently debating altering work hours to spread out traffic during peak hours and trimming sidewalks to create more space for vehicles, while also building several new overpasses. These are just a few of the many proposed measures to tackle the gridlock issue that is becoming increasingly problematic.

These are all short-term solutions that fail to tackle the root of the problem, however. Every day, an estimated of 1,000 new motorbikes and 180 new cars are registered in Ho Chi Minh City. In total, 8.5 million motorbikes and 627,000 cars are currently registered in the city, the latter indicating a 500 percent increase compared with the year 2000. And as Vietnam is set to cut tariffs on ASEAN car imports in 2019, thereby reducing car prices by 42 percent, these numbers are poised to increase even more in the future. As a result, cars on major roads didn’t exceed an average of eight kilometers per hour during afternoon rush hours as of 2010, and the situation has not improved since then.

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