Vietnam Market Watch: Aviation Growth, 7-Eleven’s entrance to Vietnam, and Strengthening Business Operations
Slurpees and Convenience: 7-Eleven to enter Vietnam’s Competitive Retail Market
The entrance of 7-Eleven stores in Vietnam is expected to create significant competition in the country’s retail market. Seven & I Holding Group’s US based subsidiary Seven Eleven Inc. signed a contract with IFB Vietnam, which also owns Pizza’s Hut’s Vietnam restaurant chain to open the first 7-Eleven store in Ho Chi Minh City in 2017. The firm plans to open 100 stores within three years.
This comes at a time when both foreign and domestic retailers are expanding operations. US’ 24-hour store Circle is also present Vietnam and presently has 113 outlets. Thailand based ThaiBerli Jucker Plc has invested $31.26 billion to set up 205 utility stores by 2018. Domestic Vingroup opened 30 VinMart+ stores and plans to open 1,000 more. The retail market saw sales of US $108.8 billion in 2015 with a general increase of 10.6 percent. Industry analysts say that retail sales are likely to reach US $109 billion by 2017.
Aviation Market Expected to See Strong Growth in 2016
Vietnam’s aviation market is expected to grow by 19 percent in 2016 equaling 45 million passengers. The domestic sector is forecast to increase by 23.4 percent. In addition, the competition between state-owned and national carrier Vietnam Airlines and private low-cost carrier Vietjet Air is expected to be more intense in the coming year. Centre for Aviation (CAPA) an aviation consultancy stated that Vietjet Air could overtake Vietnam Airlines by March. The aviation market has been growing by an average of 7-8 percent per year and is expected to continue in the next 20 years. Aviation contributes to US $6 billion to the country’s GDP and supports more than 230,000 jobs.
While strong growth has been projected, the International Air Transport Association (IATA) has also recommended the government to work with the air transport sector to improve infrastructure, passenger experience and cargo. Pursuant to this objective, the government has recently passed Decree No.102/2015/ND-CP on the management and operation of airports and airfields, which went into on 12 December and opens airports to limited private investment among other efficiency enhancing measures. In conjunction with increasing passangers, these reforms are expected to expand and develop the sector in the near to medium term.
Business Operations Resume on Economic Growth, Stability
Business revivals increased by 39 percent in 2016. The Ministry of Investment and Planning stated that 8,658 businesses resumed operations, up 39.5 percent from 2014. Industry analysts say that this has been due to macroeconomic stability, increase in export orders and more affordable bank loans. The number of business closures remained the same at 9,500. More than 94,700 businesses were incorporated, with 36 percent increase in registered capital with a value of US $26.75 billion according to the General Statistics Office. This has also been helped by the government’s efforts to simplify business registration regulations, allowing foreigners to own property and improving infrastructure to attract both local and foreign investors. Analysts however say that firms need more government support amid international integration. Nevertheless, FDI rose 12.5 percent to US $22.76 billion with strong inflows into manufacturing a key indicator, according to the Ministry of Planning and Investment.
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