ICHAM - Newsletter N.3/2016 - EN

N3/2016

DECEMBER

www.icham.org

ICHAM Christmas Party (P.14-15) Presentation of TUTTOFOOD 2017 (P.5)

Italian technology for Vietnam’s garment and textile industry (P.3&4) Vietnam Considers Ban on Foreign Bank Accounts (P.20&21)

IN THIS ISSUE News

Market Info

3

19

Furniture market in Italy

20

Vietnam Considers Ban on Foreign Bank Accounts

21

Vietnam’s Tax Outlook in 2016 and Beyond

Italian technology for Vietnam’s garment and textile industry

5

Presentation of TUTTOFOOD 2017

6

International Fair of Da Nang

6

Fiera Milano meeting with trade fair partners

7

Vietnam - EU free trade agreement: Opportunities and challenges

8

Vietnam, export opportunities

9

Meeting with the Department of Italian Linguistics and Literature

10 Workshop Circular Economy: A new approach boosting business competitiveness and reducing waste 11 Talent Management Vietnam 2016 12 Vietnam CEO Forum 2016 13 Vietnam Food Expo 2016 14 ICHAM Christmas Party

3

ITALIAN TECHNOLOGY FOR VIETNAM’S GARMENT AND TEXTILE INDUSTRY

I

CHAM, in collaboration with HUBA

that

Vietnamese

(HCMC Union of Business Association),

increase

in

companies

production

need

capacity

an and

“ITALIAN

competitiveness in order to meet foreign

VIETNAM’S

markets’ demand. Mechanical engineering

GARMENT AND TEXTILE INDUSTRY”,

is one of the strong points of the Italian

which took place on September 13 in the

production, in particular with regard to the

Nikko Hotel in Ho Chi Minh City. Third of a

garment and textile industry.

seminar series launched in 2015 that aim

Busi Giovanni srl, Tonello srl and

at the presentation of Italian technology to

Morgan

Vietnamese

manufacturers

organized

the

TECHNOLOGY

focused

on

seminar FOR

companies, the

latest

the

meeting

Tecnica in

spa,

three

leading

the

textile

sector,

technologic

presented their solutions in terms of sock

innovations offered by the Italian firms

knitting machines, garment finishing and

attending it.

cutting room to experienced operators

In light of the new free-trade agreements,

such as Vietnam Textile and Apparel

namely TPP and EVFTA, ICHAM recognized

Association, HCM City Knitting, Embroidery

4 and

Textile

Association

as

well

as

enterprises in the textile and garment industry.

After ICHAM’s Chairman Michele D’Ercole, Italian

Vice

Consul-General

in

HCMC

Roberto Cajati and HUBA’s Chairman Huynh Van Minh welcomed the guests, the Italian

companies

began

presentations.

Busi

representative

introduced

single-cylinder high-quality

their

Giovanni’s their

machines, employed sock

production,

in

while

Tonello’s spokesperson highlighted the sustainability of their garment finishing technologies, especially their washing and dyeing machines. Finally, Morgan Tecnica, which offers a wide range of cutting room equipment,

presented

its

tools

and

software intended for automatization and maximization

of

the

manufacturing

process.

The seminar gave to both Italian and Vietnamese companies in the sector the chance to share and exchange know-how, as well as to strengthen business relations allowing

the

Vietnamese

companies

involved to become familiar with new production technologies, which would most likely increase their products’ quality and therefore their competitiveness.

5

PRESENTATION OF

T

UTTOFOOD is an international show dedicated to the Food & Beverage industry organized by Fiera Milano (the Milan trade fair company). The event, which is entirely targeted at B2B, is addressed to businesses aiming at both the Italian and export markets. The show offers significant business opportunities to national and international buyers, thanks to its wide exhibition area, which in 2015 covered 180.000 m2, and to its over 78.000 visitors (30% of which foreigners) meeting with 2.838 exhibitors.

On September 29, Samantha Raimondi from the International Network of Fiera Milano presented TUTTOFOOD in HCMC in collaboration with ICHAM, which will join Vietnamese companies willing to visit the fair and facilitate them in logistic, technical and business terms.

The show will take place in Milan from the 8th to the 11th of May 2017, and will be

divided in 15 different areas (3 more than the previous edition) according to food categories.

What is more, Vietnamâ€&#x;s producers will be able to enjoy a dedicated pavilion.

During the meeting in Ho Chi Minh City, the speaker pointed out that Italy is a significant export market for Vietnamâ€&#x;s F&B (mainly in regard to coffee, tea, seafood as well as fresh fruit and vegetable): Italy-Vietnam trade relations have been consistently growing in the last years, accounting for 10,4% of total EU-Vietnam trade in 2015, and thanks to the new EU-Vietnam Free Trade Agreement (EVFTA) this trend is likely to continue.

The companies attending the seminar showed a great interest in TUTTOFOOD, asking many questions in order to evaluate in details the prospect of their participation to the event, where they would have the chance to exhibit and introduce their products to both the Italian and the international market.

6

Italian interest for a very dynamic area, economically speaking, that currently offers great prospects for growth and development. There was a chance to meet local companies and explain to them opportunities of Italian market and companies.

International Fair of Da Nang The Consulate General of Ho Chi Minh City together with ICHAM has set up a booth at the International Fair of Da Nang, EastWest Economic Corridor – EWEC – International Trade and Tourism Fair, which took place from July 28th to August 2nd 2016. The objective was to confirm the

Fiera Milano meeting with trade fair partners Fiera Milano SpA is a trade fair and exhibition organiser headquartered in Milan, Italy. It is the most important trade fair organiser in Italy and one of the largest in the world.

O

n September 21st, Fiera Milano together with many trade fair partners had an annual meeting to discuss promoting initiatives for its trade fairs and exhibitions. At the meeting, ICHAM was represented by its Executive Director – Mr. Pham Hoang Hai.

In recent years, ICHAM has become a trusted partner of Fiera Milano in Vietnam getting involved in promoting many trade fairs such as TUTTOFOOD (food & beverage), HOST (HoReCa equipment), HOMI (furniture & lifestyle), Sì Sposaitalia (wedding & bridal) and Bit (travelling).

7

VIETNAM - EU FREE TRADE AGREEMENT: OPPORTUNITIES AND CHALLENGES

V

IETRADE organized on the 5th of August a seminar on FREE TRADE ARGREEMENT VIETNAM – EU, OPPORTUNITIES AND CHALLENGES. In addition to representatives from the Ministry of Industry and Trade, the Delegation of the European Union to Vietnam and the Deputy Consul General of Italy, among the speakers at Grand Saigon Hotel was also Michele D’Ercole, Chairman of the Italian Chamber of Commerce in Vietnam.

The conference was arranged ahead of the enactment of the EU-Vietnam Free Trade Agreements (EVFTA) in 2018, in order to explore business options for both areas as well as strengthen mutual understanding.

In particular, speakers discussed opportunities for exports from Vietnam: it

currently has a surplus in its trade with the EU, though it is not developing evenly across all sectors because of European strict regulations on health and environment, which are especially slowing down food exports.

Therefore, ICHAM’s Chairman Michele D’Ercole pointed out the significance of quality for products destined for the European market and that such quality can be achieved with the employment of advanced machines and technologies, suitable for European requirements.

In this context, it has been stressed that Italy could make use of its leading role as high technologies manufacturer and lead Vietnam towards improving production standards.

8

This article was originally published on “Gazzetta di Parma” on September 23rd. It concerns the conference “Investire in Vietnam”, in which ICHAM’s Executive Director, Pham Hoang Hai, took part as a speaker.

THE COUNTRY HAS A GROWTH RATE EQUAL TO 6.8% AND THE GOVERNMENT SUPPORTS BUSINESS Food and beverage is growing. Foodexpo 2016 in November Antonella Del Gesso With a GDP growth of 6.8% in 2015, a market with 94 million people and a growing purchasing power, Vietnam represents the ideal platform to expand Italian businesses towards South-East Asia, both as a final destination and a strategic starting point for the whole area. The main market sectors involved in the Italian exports are general and specialized machines, leather, chemicals – pharmaceutical, textile – garment. Quality food and beverage is on the

rise, opening the door for Made in Italy products.

An interesting opportunity will arise on November. “From 16th to 19th the International Fair Foodexpo will be held in Ho Chi Minh City. This event is considered the most important among the Vietnamese agricultural fairs. This year Italy will be the guest of honour.” That is what Stefano Girasole, chief of the economic department at “Unione Parmense degli Industriali”, reports during a meeting organized by the association in partnership with Banca Popolare di Lodi and Gruppo Banco Popolare.

“Furthermore, the positive conditions, thanks in particular to the increase of industrial and manufacturing production, require advanced

9 machine and know how, to lead an economy based especially on agriculture towards agro-industry. This is why machines for the whole production chain are required: from the cultivation of the land (the main supplier now is Israel), to processing and conservation of products”, explains Pham Hoang Hai, ICHAM‟s Executive Director.

A country with a high potential, even in terms of foreign direct investments, seen how the government is giving its support: incentives, reduced income tax for foreign companies, no import fees on specific products.

Stefano Carrozzi, Manager at Banco Popolare‟s Representative Office in Hong Kong, office that offers legal, fiscal and informative support to its clients in Asia, informs that: “During the last 20 years, Vietnam experienced a gradual opening of its economic system, with a growing integration with international trade. The country entered the World Trade Organization (WTO) in 2007 and signed a free trade agreement with EU in 2015; this agreement will bring to gradual elimination of 99% of import duties”.

Meeting with the Department of Italian Linguistics and Literature Established in 2008, the Department of Italian Linguistics & Literature (DILL, University of Social Sciences & Humanities) welcomed its very first class of students in the Bachelor program in 2012 and is gradually becoming a prestigious training center for Italian language in Southern Vietnam.

Eight years after its establishment, the DILL organized on 29th October 2016 a meeting for a close consultation for the undergraduate program in Italian

Linguistics and Literature so as to take appropriate steps to improve it.

At the meeting, lecturers, representatives of Undergraduate Affairs Office and of employers have discussed together the training program, making considerations on the contents of the course. Also, the employers have commented on the quality of students trained at DILL. Ms Vu Tuyet Thanh and Ms Rossella Bizzarri were two representatives of ICHAM at the meeting.

10

Workshop Circular Economy: A new approach boosting business competitiveness and reducing waste

O

n the 27th of July 2016 was held a Workshop about Circular Economy at the Melia Hanoi Hotel.

The Circular Economy is a recent concept which is an economic system that is capable to regenerate itself, without producing waste and pollution. The main aim of this model is to decouple economic growth and development from the consumption of finite resources.

Therefore, important features of this approach are using renewable energy resources and keeping products, component and materials at their highest utility and value, at all times.

In the first part of the morning the first speaker, Prof. Huynh Trung Hai, professor and General Director of the department of Science and Technology at Hanoi University, explained which is the current status of waste recycle in

Vietnam and what are the challenges and the opportunities that the country will face in the future. While, the second speaker, Mr. Sebastian Egerton-Read, Content-Coordinator of the Ellen MacArthur Foundation, explained what is the actual meaning of Circular Economy and why it has become a particularly important issue for companies in the context of international economic integration. In the second part of the event, the US multinational Dow Chemical Company and the vietnamese company Green Environment Technology Jsc. brought two examples of companies which have adopted this kind of model with success by recycling and using recycled products. In the end it was possible to discuss the issue with all the participants.

11

I

n the last years, fast economic growth and development in South East Asia attracted significant investments by foreign multinationals and favoured the birth and expansion of many local organisations.

However, the local workforce cannot always live up to such growth, and high skilled resources often end up looking for job opportunities abroad.

speaker and winner of the first edition of The Apprentice Asia, opened the event on the morning of the 13th, and focused on Millenials, their potential, behaviour and expectations over working life.

HR Media organised, in association with the Italian Chamber of Commerce in Vietnam (ICHAM) among others, two-day conferences and workshops focused on talent management’s new challenges. Talent Management Vietnam 2016 hosted more than 300 HR specialists and business leaders in Le Meridien Saigon Hotel on October 13 and 14 in order to analyse trends in Nguyen Duc Huy, PepsiCo’s general manager, talked about his experience and Vietnamese human resources and talent management. companies’ necessity to find a clear path within The 9 speakers, HR managers and experts, the organisation for the individual development exposed their point of view and experience in of their employees, to make it easier for the terms of development and integration of new management to select future leaders and foster workers, growth and conservation of current managerial culture without having to hire personnel and high-skilled attraction external figures. employees.

Sirilak Meksang and Mila Pascual, HR The presentations of Rakesh Dayal, from Nielsen specialists, pointed out once again the need for Vietnam, and Jonathan Allen Yabut, motivational local leaders, as at the moment the two main resources are expatriates and returnees, and for young talents to be guided by mentors and tutors that can develop their skills and coach them through a global approach.

The increase in foreign investments, merges and acquisitions, consequences of the busy growth in the region, was the centre of Nguyen Ngoc Anh Tuan (Marico South East Asia) and Vo Kim Thoa (Lee Hecht Harrison Vietnam)’s

12 presentations, which focused on the challenges of HR during a transformation periods within the organisation.

Finally Prakash Balakrishnan from TH group, and Bonnie Milne from RMIT University analysed the employment of motivational strategies and training in order to retain ‘talents’.

Vietnam CEO Forum 2016

T

he Chairman of the Italian Chamber of Commerce in Vietnam Michele D’Ercole joined the event organized by Young Businesspeople Association - Ho Chi Minh City, “Vietnam Ceo Forum 2016 – CEO 3.0: Linking Viet Strengths - Time to Walk the Talk” on September 30 in White Place Convention Centre.

The seminar is one of the most successful event dedicated to the business and political

The audience engaged in workshops on the 14th of October, putting into practice what has been discussed the previous day with practical guidelines and strategies aimed at attracting and keeping talents. The annual summit has now become one of the main events for regional business leaders and HR professionals that want to make ‘talent management’ their best feature.

community, as well as to economists and media in HCMC, and it has now reached its 5th anniversary.

After opening remarks by Mr. Dinh La Thang – Secretary of Ho Chi Minh City Party Committee, this edition, the dialogue focused on linkages between different businesses and institutions: during the first session, local policy makers discussed the government’s role in the development and conservation of connections, and on how to overcome potential barriers; the second part of the event focused on Vietnamese enterprises’ ability to enter the international market, while linking in a more modern and multidimensional way; finally, the day concluded with a gala dinner.

Developed in collaboration with Leading Business Club, 2030 Businessmen Club and High Quality Vietnamese Products Business Association, VIETNAM CEO FORUM gave ICHAM the chance to meet and dialogue with other business and international associations, local and international companies representatives as well as experts on commercial interests in Vietnam.

13

Vietnam Food Expo 2016

F

rom 16 to 19 November 2016 the Saigon Exhibition and Convention Center in Ho Chi Minh City hosted the second edition of Food Expo, the biggest international exhibition in Vietnam for the food industry, organised by Vietrade.

The show involved all major producers of fruit and vegetable, drinks, tea and coffee as well as food technology, filling 500 booths with more than 300 firms, both Vietnamese and international, coming from over 15 countries.

thoughts on Italy-Vietnam collaboration in the food industry.

Italy‟s excellence in the sector is due not only to its superior local products, but also to its technologic know-how and innovation. This is why it is important for Vietnamese firms that want to be competitive at a global level to find a benchmark in Italy, both in terms of production an in terms of quality and safety.

This year‟s country of Honour was Italy, whose presence has been managed by ITA and financed by the Ministry of Economic Development, in collaboration with the Italian Embassy in Hanoi and the General Consulate in HCMC. 26 Italian companies, 12 of which specialised in wine, exhibited their products.

The opening ceremony, where the Ambassador of Italy in Hanoi Cecilia Piccioni made her welcome speech, was followed by a Vietrade seminar on promotion of investments in the food-processing industry. Among the speakers was ICHAM‟s president Michele D‟Ercole, who shared his

The following day was marked by the Vietnam International Food Industry Conference 2016 by Vietrade, while on Friday 18 November two scientific seminars organised by the General Consulate of Italy in HCMC focused on food quality and safety. The General Consul of Italy in HCMC Carlotta Colli opened the dialogue with welcome remarks. Among the speakers was also Giuseppe Ruocco, Director General for Food Hygiene, Food Safety and Nutrition of the Italian Ministry of Health, as well as many university professors, both from Italy and Vietnam, and representatives from some of the most important firms in the sector.

14

J

ust like every year, this December The Italian Chamber of Commerce in Vietnam organized two Christmas parties for our members in HCMC and Hanoi as a special thank-you for their continued support.

In Ho Chi Minh City, ICHAM welcomed its members and friends in the elegant Pool House at Park Hyatt Saigon Hotel on December 1st. The party was opened by welcome remarks by Carlotta Colli, General Consul of Italy in HCMC, in which she mentioned this year’s successes in Italian-Vietnamese relations, followed by ICHAM President’s greetings, who presented the Chamber’s activities in 2016 and thanked all members and friends for their contribution to the strengthening of trade relations between the two countries. The more than 60 guests enjoyed Italian specialities in the rich and tasteful buffet, and lucky draws with beautiful gifts.

Further to Christmas Party in Ho Chi Minh City, in collaboration with the Embassy of Italy in Hanoi, ICHAM organized a Christmas celebration for members and friends on 9th December at Casa Italia. On this occasion, we had the honor to welcome Mrs. Cecilia Piccioni, the Italian Ambassador to Vietnam, together with the Italian community in Hanoi.

Guests were entertained with many interesting activities while networking and enjoying Italian food. Finally came the most exciting part when the guests had opportunities to win valuable prizes from ICHAM sponsors.

ICHAM would like to send our sincere thanks to all sponsors for their precious contribution to the success of the event: BES, Daloc, Ducati Vietnam, Etihad Airways, Gelato Italia, La Hostaria, Le Meridien, Liquid Gold, Mediterraneo, NAMO Artisanal Pizzeria, Park Hyatt, Piaggio, Redwood, Sensùs, The Loop, WMC and Xuan An Style.

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16 JUN 2017

Eurosphere 2017: The European Art of Living Exhibition Ho Chi Minh City

MARKET INFO

19

FURNITURE MARKET IN ITALY

T

he furniture market in Italy and Europe has been marked by a significant decrease in demand in 2007-2009.

Since then, less and less negatives values have been recorded, but Italian producers kept on concentrating on exports, especially in Asia, where consumption grows consistently.

In the next years a 3% growth in the sector is expected, in accordance with the potential increase in property sales transactions and restorations. As a matter of fact, the Italian government allowed certain kind of restorations to enjoy a „furniture bonus‟, with up to 50% deductions in furniture purchase by 31 December 2016. In addition, under-35 couples buying their first house are also entitled to a bonus. Improved credit conditions as well as long overdue renovation needs will contribute to a domestic demand recovery in 2017 and 2018.

For these reasons, an 8% growth is expected in imports, which in 2015 accounted for 22% of the market. Within the sector, Vietnam is the 5th largest exporter in the world and represented 17% of Italian imports from Asia in 2014, totalling $16.3M. The most important exhibition of the sector in Italy, and in the rest of the world, is Milan Furniture fair, organised every year by Fiera Milano during Milan Design Week, and accompanied by Fuorisalone, a linked show with events all around Milan.

In the last years, the fall in demand in the furniture market was followed by a variation in consumption‟s characteristics: consumers became more price conscious and cautious with regard to their savings; thus, what formerly was a choice between two pieces of furniture or on which room

to decorate, became a choice on furniture purchase per se.

This is why demand deals mostly with curtains, home textile and sitting furniture, which are highly exchangeable, and why Ikea is the leader, holding 11% of the market.

However, Italian consumers remain interested in design and perceive that the main issue in Vietnamese production is the limited final products variety and low design ability.

Despite 65% of imports coming from other European countries, China is the main Asian actor in Italy, accounting for 25% of total imports.

Chinese products that enter the Italian market are lamps, which represent half of furniture imports, seats (24,16%) and other types of furniture. Low price and huge online market is the competitive advantage for Chinese items. When consumers approach an importer, this generally deals with high quality „ethnic furnishing‟.

Anyway, although consumption patterns are changing, it can be sais that the vast majority of Italian consumers still prefers purchasing from well-known national and European brands, especially adult consumers, while the young would rather value sustainability, hence buying eco-friendly products.

20

Vietnam Considers Ban on Foreign Bank Accounts By: Dezan Shira & Associates

V

ietnam‟s state bank (SBV) has published a draft circular which looks set to limit the ability of foreign nationals to open and deposit within Vietnamese bank accounts. With significant interest rate differentials on the side of investors, as well as a healthy appetite for capital on the part of many governing officials, the announcement has naturally been met with mixed reactions.

Understanding Banking Limitations

Under the draft circular, it is stated that “depositors of Vietnamese and foreign currencies” would be open to Vietnamese citizens. While not explicitly banning foreigners, the specific nature of the regulation does bring into question the prevailing state of affairs with regard to banking within the country. Currently, given the proper documentation – usually a passport and valid visa – foreign nationals are permitted to open and operate vietnamese bank accounts. However, in recent years, the operation of these accounts has

21 seen increased regulation. As per a decree released in 2014, foreign accounts have been restricted to denomination in Vietnamese Dong. It is feared that the omission of foreign nationals under the latest draft Circular would effectively end the ability of foreign nationals to deposit within the country all together.

Assessing Impacts on Investment For those investing and working within Vietnam, the relatively high interest rates currently available to investors, coupled with the Dongâ€&#x;s stability in recent years, makes holding money within the country an investment of its own. Interest rates currently stand at 6.5 percent on the national level, and thus foreign nationals holding assets within Vietnamese bank accounts are likely to reap the benefit of rate differential between Vietnam and their home market. The chart below outlines the extent of the advantages available for various markets.

In the event that a ban on foreign deposits is imposed, many investors currently taking advantage of this opportunity would be forced to turn elsewhere to house liquid assets. While the extent of foreign holdings in the Vietnamese banking system is opaque, resulting outflows of capital could certainly put downward pressure on the VND, temporarily opening opportunities for FDI. Impacts on Investment From both a personal and corporate perspective, the future of the draft Circular should be watched closely. It is likely that additional guidance on aspects of the ban will become clear in the coming months as officials flesh out their intentions and outline plans for implementation. For more information on aspects of the ban or in depth analysis on banking within Vietnam, contact vietnam@dezshira.com or visit us online at www.dezshira.com

Vietnam’s Tax Outlook in 2016 and Beyond

F

By: Kurt Nguyen

aced with conflicting pressure to upgrade infrasture and boost investment, the Vietnamese government finds itself in a precarious financial position in 2016. The TPP and EVFTA are still a way out, and there is little doubt that adjustment of taxes or spending will likely occur before investment inflows bolster government coffers. From an investment standpoint, the way in which the interim is handled is set to have substantial ramifications for taxation throughout the country and set a precedent regarding future revenue generation.

The State of Vietnamese Finance At the core of pressure facing Vietnam is mounting government debt. Despite marginal increases in tax revenue seen in recent months, sovereign debt, which has doubled between 2010 and 2014, is becoming a serious concern.

The governmentâ€&#x;s need for revenue is higher than ever as debt has climbed to 63.3 percent of GDP as of the end of 2015, and is expected to reach 64.5 percent during 2016. In addition to placing a significant burden on authorities in terms of payments and credit constraints,

22 ballooning government spending is dangerously close to reaching the 65 percent debt ceiling imposed by the National Assembly.

unpopular. Besides improving the efficiency of its spending, the government is looking to a number of alternatives to increase tax revenue in the medium term. These include focus on Already high on the minds of governing economic health and contributions of large officials, a number of recent events have corporations, including tax contributions. further curtailed the ability of Vietnam to While there is a general recognition among service its obligations and to make purchases authorities that tax incentives as well as from abroad. Most recently, Brexit has caused FTA-imposed tariff reductions have reduced the appreciation of the US$ and Yen, placing Vietnam‟s tax base, the tool of choice for additional pressure on the government‟s rectifying shortfalls is agreed to be foreign denominated debts, 60 percent of enforcement of existing laws. By improving which are denominated in US$ or Yen. The the efficiency of tax collection, going after tax appreciation of global safe haven currencies is evasion, and resolving outstanding tax a small factor, however, in comparison to obligations, it is projected that Vietnam could falling crude oil prices, which have played a increase the state revenue by up to 7.5 percent. significant role in diminishing national foreign Despite the ability of tax hikes to act as a exchange revenue. As of 2013, prior to recent quick fix, the general consensus of analysts so commodity price declines, oil accounted for far suggests a government realization that this nearly 15 percent of government revenue. course of action would be harmful to investor While this has declined, government debt has increased as there has been little to replace shortfalls other than deficit spending.

The most immediate solution to the government‟s growing debts would be to curtail spending.

However, as mentioned above, this is largely tied to infrastructure – a key component in improving Vietnam‟s position as an investment destination – and provision of services to Vietnamese citizens – whose rollback would be considered notoriously

23 confidence. This is also in line with the World In the near term, auditing MNCs have been Bank and HSBC‟s recommended medium slow to start due to insufficient quantity and term solution for the growing public debt. quality of tax personnel, who are intimidated by the MNC‟s large and capable legal teams.

Corporate Income Tax Hence, it is likely that the effects of these As part of its ongoing effort to combat tax polices will be felt more by locals, though evasion, the General Department of Tax has large MNC‟s may see enforcement ramp up set higher goals for tax auditing, resulting in sooner or later. higher frequency of audits and investigations in Hanoi and HCMC. While this has created Personal Income Tax increased compliance for many companies, PIT for salaried workers isn‟t directly affected only in Hanoi did it increase the tax revenue. by the increased tax enforcement as it‟s A contributing factor to the failure of audits to collected from the employers. However, PIT directly improve revenue generation is thought for private contractors such as Uber drivers to be the announcement of audits in the first remains a contentious issue. For tax place. According to collection trends and authorities, the loose relationship between litigation data released by the HCMC‟s employers and contractors make tracking them The possibility of department of tax, scrutiny on domestic SMEs down very difficult. could be responsible for the increased criminal prosecution of such contractors has compliance, as auditing-related revenue has been mentioned but there has been little fallen in the first six months of 2016 while movement at present. Enforcement still remains an issue for non-salaried workers; out overall tax revenue has increased. of 20 million with a tax ID, only 1 million While domestic SMEs have been the target of actually paid their taxes. investigations in the recent past, calls have also been growing for tax authorities to focus Some effort has been made to incentivize on more visible and lucrative targets such as participation in the tax system by lowering the MNC‟s. Many critics point out that SMEs are tax burden. For employees in high-tech overburdened by the tax auditing system, sectors, such as IT and high-tech agriculture, which provides an additional layer of they are eligible to receive a 50 percent compliance over what is already an intensive reduction in PIT. For NGO experts, PIT is now tax filing process. Vietnam‟s tax compliance waived on their NGO salary. times are currently Asia-Pacific‟s 2nd longest Emerging Tax Issues time to file according to the World Bank; this While increasing enforcement of existing taxes is not including the post-filing procedure of remains a well understood avenue for tax auditing and investigation, which could be officials to take as they attempt to increase lengthened due to the government‟s renewed revenue, emerging industries and areas of effort. taxation should also be closely monitored.

24 Even more so than conventional taxation, the manner in which emerging industries are taxed is likely to be of great importance in terms of how Vietnam is viewed as an investment destination for these industries.

related entities outside or within Vietnam, this has the potential to increase costs substantially.

By the same token, the adoption of more stringent regulation stands to increase tax collections on the part of Vietnam.

The Digital Economy

In a clear example of increasing enforcement, Vietnam‟s tax authority has been going after Thailand‟s Central Group and their acquisition of the Big C Vietnam chain from France‟s Groupe Casino. It has been almost 3 months since the US$ 1.05 billion transaction was finalized, yet no paper work has been filed and no tax has been paid, which is an estimated US$ 161.4 million, to be paid 10 days after the transaction. Meanwhile, Groupe Casino simply changed the stores‟ legal representatives, presumptively to Central Group‟s personnel.

In the long term, it is likely that new legislation will be drafted to fix the legal loopholes and address challenges that exist within Vietnam‟s emerging digital economy.

However, authorities are still largely playing things by ear so as to not spook investors.

Already, we have seen Vietnam‟s first step towards regulating the cyberspace in the enactment of Article 292 of Criminal Code, which requires all e-commerce and online businesses to register and operate under a government license.

The Department of Tax has been looking at However, the Ministry of Justice has promised existing laws to find the legal basis for to consult other departments to tweak the extracting the tax, as changing legal Article in question after concerns from the representatives is legal. Adding to the list of start-up community has sprung up. In fact, Da long-time tax-evading MNCs such as Nang, again the pioneer, has promised Coca-Cola, Uber, and Formosa, Big C VN start-ups a favorable ecosystem despite Article case is just another push for GoV towards 292. Similarly, the first attempt to tax Uber in revision of tax laws. In fact, according to Mr. its 3 years of operations has been scrapped Dang Ngoc Minh, Deputy of the Department after getting criticism of its not being of Tax, the Department has been working with comprehensive enough; Uber is now still international experts to identify current BEPS operating in a legal limbo as the Department of (base erosion and profit shifting) risks since 2015. Now, the Department is coordinating Tax looks into alternatives. with the Ministry of Finance to research Transfer pricing current regulations and create a comprehensive In recent months, the Vietnamese government BEPS action plan. has indicated that it will be stepping up efforts to regulate transfer pricing within the country.

For companies with substantial dealing with

NEW TOLES (Test of Legal English Skills) Test Center Opens in Vietnam Global Education Academy, with offices in Hanoi and HCMC, has just opened the very first new TOLES approved test centers in Hanoi and HCMC. GEA is the only certified examination center approved by TOLES in the U.K. for all of Vietnam http:// www.toleslegal.com/find-examination-centre/vietnam/ and has also recently announced the official test dates for the TOLES test www.toleslegal.com

TEST DATES FOR THE OFFICIAL TOLES TEST November 23, 2016 January 26, 2017 March 23, 2017 June 22, 2017 August 24, 2017 November 23, 2017

The GEA TOLES programme consists of a simple structured course of legal English training materials supported by three levels of professional certified exams. The exam levels are progressive steps towards earning at TOLES certificate that focuses on legal English proficiency in practical skills that is valid for a lifetime with no expiry date, unlike the IELTS, and TOEIC certificates. TOLES legal English training materials and exams have been developed following the proven advice of members of the International Division of the Law Society of England and Wales. “We at Global English Academy believe that attainment of the TOLES Certificate is an investment that will add real value to the learner that lasts a lifetime”, as was stated by the spokesperson of Global Education Academy.

The proven results of having a TOLES certificate on a legal resume are amazing. A TOLES certificate on a CV will prove to a recruiter that the job applicant has achieved the standard of legal English proficiency required by employers such as international commercial law firms, in-house legal teams in private companies and top-class translators. “ We all know that the requirements of professional legal practitioners is to avoid the very unprofessional, “Google Translate and copy and paste approach”, to drafting legal contracts, but rather on developing real practical legal contract drafting skills, first-class negotiating skills and a strong sense of commercial awareness of legal contracts and their ramifications. We at GEA specialize in giving law students, lawyers, legal translators and corporate officers responsible for legal contracts, the opportunity to improve their legal English soft skills, rather than focusing on academic knowledge. We strive for efficacy in order to achieve positive and profitable results with the aim to avoid costly mistakes for the company”, stated Thomas G. Giglione, the founder and lead trainer for the TOLES test.

“I firmly believe that because of the recent introduction of the TOLES test to Vietnam, that it will help raise the professional development of the legal community. It is for that reason that GEA is offering a FREE mock TOLES trial tests to the legal community beginning this month.

The FREE 90- minute mock TOLES tests will be held in Hanoi and Saigon on the following dates; Monday August 29th 6:00 PM-8:00 PM th

Monday September 5 6:00-8:00 PM

Hanoi HCMC

Hence, according to the GEA test date announcement, the first test is only 3 months away, which means that anyone who is striving to develop his or her legal careers would have to start preparing now, in order to succeed in this test. And as G.E.A is the first and only institute that offers the TOLES Test in Vietnam, the demand for taking the test is expected to be very high, because hundreds of local Vietnamese will attempt this test in hopes of passing it in order to discover better career opportunities in the legal profession.

About: Thomas G. Giglione Thomas is the founder of Global Education Academy and the lead trainer for the TOLES courses. He is also a lecturer at Hanoi Law University (HLU) at the Faculty of International Trade & Business Law, teaching a course of Advanced Legal English and also teaches commercial negotiation and conflict resolution at the Judicial Academy for the Ministry of Justice.

Thomas is also a Canadian partner and commercial mediator at ATS Law Firm www.atslegal.vn

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10% discount on each bill at Beirut Restaurant

Add: 74/13d Hai Ba Trung, District 1, HCMC & 37 Xuan Dieu, Tay Ho District, Hanoi Contact person: Lara Rehani Email: info@beirut.vn Tel: 08 3822 2188 (HCMC) - 04 3765 8888 (Hanoi) Mobile: +84978718585 Website: www.beirut.com.vn Discount validity: Until further notice

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SPECIAL OFFER FOR EUROPEAN COMPANIES IN VIETNAM Showcase European success stories in Vietnam at Eurosphere 2017

EuroSphere is an innovative exhibition dedicated to bring the European Art of Living to the Vietnamese and South East Asia market. The exhibition will occur on the 16 – 17 June 2017 at the GEM Center in Ho Chi Minh city, Viet Nam.

The exhibition hosts a wide range of sectors in: Gourmet Food, Wine & Spirits, Fashion, Fashion Accessories, Jewelry, Horology, Perfumery, Cosmetics, Furniture, Interior Design, Automotive which present the elegance, the sophistication and the harmonious living of European culture. The concept of EuroSphere creates a lively flow of interactions among the exhibiting companies and visitors.

Want to become an exhibitor?

We are in our selection process for about 100/120 European companies for this first-of-its-kind in the Southeast Asia region. The exhibition is reserving exclusive rights for a limited number of existing European businesses already established in Viet Nam, as the European success stories in the market, to take part in Eurosphere.

Register by 31st December 2016 to benefit from: 

Exclusive mention and highlight as the European success stories in Viet Nam in all communication materials and at the exhibition to reach 3,500 visitors



10% discount for payment made before the end of the year.

For more information please visit http://eurosphere.com.vn/ Organizer: EVBN

Contact: Mrs Rebecca Bauden Email: rebecca.bauden@evbn.org eurosphere@evbn.org Tel: +84 8 3823 9515