Vietnam Market Watch: Vietnamese Brewing, New Taxes for Uber, and Increasing Foreign Participation in Real Estate
Beer Industry Set to Grow and Expand to Other Asian Countries
The Vietnam Beer Alcohol Beverage Association (VBA) recently released a report stating that beer production in the country reached 3.4 billion liters in 2015, marking a 4.7 percent year on year increase in output.
With total local production capacity currently standing at 4.8 billion liters annually, the VBA projects production to grow exponentially in the coming years and has set a production target of 4-4.25 billion liters by 2020.
As production and sales continue to grow, the Vietnamese market offers great opportunities to local and foreign brewers. As part of a wider push to spur investment, the government announced plans for divestment from from a number of local beer companies in 2015. This announcement generated significant interest from domestic and foreign manufacturers alike, who want to invest in the beer industry.
Of particular interest to international brewers – such as SABMiller, Kirin Brewery, Asahi Breweries, and Asia Pacific Breweries – is Sabeco, Vietnam’s largest state-run brewer. With strong name recognition within the region, foreign investment would allow the company to fulfil growing Vietnamese demand and aggressively expand regionally into Thailand, Myanmar, Cambodia and Laos – collectively representing a prospective consumer base of around 250 million people.
Uber Faces Tax Troubles in Ho Chi Minh City
Reports indicate that Uber – the technology based taxi aggregator service – might face tax troubles and possible fines for its operations Ho Chi Minh City, which currently includes around 4,000 cars registered within the city.
Officials from the municipal tax department indicate that the department plans to apply a tax on Uber and possibly levy fines for late tax declarations. At the same time, officials have indicate they are willing to help Uber navigate the tax landscape and will only pursue legal recourse if Uber fails to cooperate.
Currently, Uber refuses to declare or pay taxes for operating in the city. The Vietnamese corporation of Uber registers itself only as a marketing firm and subsequently only pays taxes for the marketing fees received from its parent company in Netherlands.
Should the imposition of taxes and enforcement of penalties come to pass, it would surely mark a watershed moment for the sector. Such market developments would likely force established start-ups, including as Uber, to rethink their strategies for the Vietnamese market.
Foreign Buyers Step Up Investment in Housing Markets
Vietnam’s property market has seen an uptake in recent months, with increasing levels of foreign direct investment (FDI), bank loans, and incoming remittances.
Complimenting increases in local demand, around 1,000 expatriates have registered to buy houses – particularly luxury property – in Ho Chi Minh City (HCMC) between July 2015 and January 2016. These purchases constitute a significant rise compared to the 250 transactions concluded with foreign buyers between 2008 and July 2015.
The HCMC Real Estate Association (HoREA) indicates the drivers behind increasing foreign participation in real estate can be tied to improvements seen under Vietnam’s revised housing laws.
The new housing laws came into effect around July 2015 and have since spurred investment by making it foreign ownership and land-usage of property a lot easier. Local experts believe that this will ensure more stability in the real estate market and ease concerns that investors and especially foreigners may have about the house ownership.
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