“A closer look into Vietnamese economy for Belgian friends” | VIETNAM TRADE OFFICE IN BRUSSELS 1
TABLE OF CONTENT
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VIETNAM NATURAL RECOURCES AND TRADE
OLIVER MASSMANN
Ambassador extraordinary and plenipotentiary of the Socialist Republic of Vietnam to the Kingdom of Belgium
VIETNAM: OPENING DOOR TO THE WORLD
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AN INTERVIEW WITH MR. LUONG HOANG THAI
Director General of Department for Multilateral Trade Policy - Ministry of Industry and Trade of the Socialist Republic of Vietnam
07 WHY VIETNAM IS THE MOST ATTRACTIVE INVESTMENT DESTINATION IN ASEAN? CERTAIN MARKET ANALYSES
FOREWORD BY MR. VUONG THUA PHONG
TABLE OF CONTENT
VIETNAM BUSINESS GUIDE 2016
A WIDE VARIETY OF NICHES
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33
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THE RISE OF PRIVATE SECTORS
General Director - Duane Morris Vietnam LLC
13 VIETNAM KEY ECONOMIC REGION MAP
THE LEADING BUSINESS IN VIETNAM ECONOMY
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18 2
INDUSTRY, ICT, HEALTHEARE, TOURISM
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WHAT YOU SHOULD KNOW TO INVEST AND TRADE
USEFUL CONTACT
VISA
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FOREWORD BY MR. VUONG THUA PHONG Ambassador extraordinary and plenipotentiary of the Socialist Republic of Vietnam to the Kingdom of Belgium
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The diplomatic relations and multifaceted cooperation between Belgium and Vietnam have been developing for 43 years, since the relationship was established in 1973. A close relationship in politic, economic, cultural, social and educational fields has become the solid foundation which helps to develop the relationship between Vietnam and Belgium during these years. Trade and investment cooperation between Belgium and Vietnam has been increasing in recent years. For trade, total import and export in 2015 reached nearly USD 2.3 billion, in the first 6 months bilateral trade has hit USD 1.2 billion. Belgium is an important market in EU to Vietnamese exported goods. Most of Vietnam’s imported goods into Belgium are the favorable exported one such as footwear, garment and marine products. Belgium is also a potential imported market for Vietnamese construction stones, wood products, rubber and coffee. For investment, as of the end of Jun 2016, Belgium has 70 valid projects in Vietnam with the total amount of registered fund is USD 724 million. Remarkably, there are some big projects such as developing seaport with cargo volume of 400.000 tons at Dinh Vu Industrial Zone, which is also a
transportation node for petrochemical in the North of Vietnam; establishing bonded warehouse for agricultural products at Binh Duong. Belgium and Vietnam has a supportive relationship with strengths and needs that bring mutual benefits to both parties. Vietnam is a young and proactive market with population of more than 90 million. Vietnamese’s consumer need has been growing and people are interested in products that are originated from Europe in general and from Belgium in particular. This is a potential chance for Belgian entrepreneur to advertise and enter Vietnam market. Both countries have much room to develop trade investment in potential area namely food industry, food technology, high technology, medical equipment, waste management and wastewater treatment, environmental industry. In order to boost economic cooperation, two nations have established the Vietnam Belgium Joint Committee on Economic Cooperation since 2009, and after three meeting, it has become an effective forum to support policy makers of both sides to identify and implement measures that help to enhance trade and finance cooperation and bring mutual benefits. The EU-Vietnam free
trade agreement (EVFTA) has just finished negotiating process in December 2015; all application will be completed in 2018. This is a rare chance to foster cooperation in investment, trade, public expenditure, services, environment between Vietnam and EU’s member countries. By signing EVFTA this will be a nudge for growth and sustainable development. Expectantly, EVFTA will increase Vietnam’s export to the EU from 30-40% and EU’s export to Vietnam will surge from 20-15%.I strongly believe that this agreement brings golden chance for both Belgium and Vietnam.Belgium Vietnam relation is at a new stage aiming to a higher and more effective expansion that meet both countries’ requirement. I think that this is a chance for entrepreneurs from two nations to continue nurturing a reliable partnership between Belgium and Vietnam through many remarkable projects. As a link in establishing relationship and collaboration, Vietnamese Embassy will fulfill the duty of being main contact point and factors that support both countries’ entrepreneurs to seize more cooperated chances
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In a full economic ascent, Vietnam opts for the all-round opening in Asia and Europe. Belgian companies must seize the benefits of the free trade agreement between European Union and Vietnam. Negotiations on the European Union - Vietnam free trade agreement (EVFTA) were completed in 2nd December 2015. Tariff barriers are lifted for 99% of imports as exports. According to Mr Bruno Angelet, Ambassador - Head of European Delegation to Vietnam, this agreement which aims to facilitate trade between Vietnam and the European Union (EU), will benefit of course for Belgian companies. Nevertheless, it is especially the entry into force of the Asian Economic Community; Vietnam becomes the centre of a market of over 630 million, and finally the Trans-Pacific Partnership (TPP), which aims to create the largest free trade area in the world (40% of the global economy). Vietnam, as one of 12 countries involved negotiations, should provide significant benefits. Therefore, Vietnam is regarded as a regional hub with preferential access to important consumer markets in this part of the world (Japan, Korea, Australia, Canada and United States). In addition, Vietnam’s political stability and competitive cost of its workforce also play an important role for its attractiveness, says Bruno Angelet. The attractiveness is enhanced by good economic results; according to the Vietnamese Government, in 2015, growth of gross domestic product (GDP) could exceed the target of 6.2% to 6.5%. Up to now, Vietnam has
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participated in eight free trade agreements, which are the ASEAN Trade in Goods Agreement (ATIGA), ASEANChina Free Trade Area (ACFTA), ASEAN - India Free Trade Area (AIFTA), ASEAN, Australia and New Zealand Free Trade Area (AANZFTA), ASEAN Korea Trade in Goods Agreement (AKFTA), ASEAN- Japan Free Trade Agreement (AJFTA), VietnamJapan Economic Partnership Agreement (VJEPA) and the ASEAN- China Free Trade Agreement (VCFTA). Regarding the EU-Vietnam Free Trade Agreement (EVFTA), it covers regulations on the origin of goods, customs and trade facilities, food safety and control of animal epidemics, technical barriers, marketing services, investment and trade defence, competitiveness, enterprises and government procurement, intellectual property and geographical indications, sustainable development, cooperation and development expertise and legal issues. Vietnam pledged to reduce taxes to zero from nine to ten years for cars and two-wheelers, except two-wheel cylinder more than 50 cm-. The elimination of tariffs will be applied over a seven-year-period. Vietnam has also agreed to lift its tariffs
on wine, spirits, beer, pork and chicken, within a maximum period of ten years. However, it will maintain restrictions for certain key products, including crude oil and coal. Other content on product marketing has been approved by Vietnam and EU, such as customs procedures, control of animal epidemics, trade defence, while creating a legal framework to promote exports and imports companies. In terms of investment, Vietnam will open the door for European operations in a series of activities, ranging from professional and financial services in telecommunications, transport and distribution. Regarding procurement, Vietnam and the European Union reached a consensus and respect Government Procurement Agreement (GPA)
Vietnam has also agreed to lift its tariffs on wine, spirits, beer, pork and chicken, within a maximum period of ten years. However, it will maintain restrictions for certain key products, including crude oil and coal.
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rules of the WTO. In case of online auctions and the creation of cyber information, portal serving the auction, the Vietnamese authorities are, however, permitted to extend to trade of goods and specific domestic services. In an announcement for negotiation conclusion of EVFTA, 2nd December 2015 in Brussels, Mr. Mauro Petriccione - EU Chief Negotiator, said that the EVFTA enable European companies to transform their latest technologies to Vietnam, while extending their offer for management to small and medium sized Vietnamese companies. The EVFTA will also improve the professional competence of Vietnamese workforce and create more jobs for the country. Looking to the expected provisions of the agreement, Vietnam has initiated to reform administrative procedures in order to attract investors. The government of Virtnam issued a Circular in August 2015 on strengthening management, tax and customs to improve investment and business environment. Up to now, the General Department of Customs of Vietnam amended at least 72 administrative procedures out of 239. The work has been continued to remove more than 80 additional formalities by the end of 2016. New Customs Declaration solutions have been uploaded to reduce working time. It is, in this case, to help importers and exporters. Thus, information on policies and laws are updated on the media and online information portal of the General Department of Customs. The system VNACCS / VCIS (Automated Cargo and Port Consolidated System) has been integrated to avoid any break in the procedures and functioning of customs. Customs declaration forms are processed automatically in seconds. According to the report of the Foreign Investment Agency (FIA) under the Ministry of Industry and Trade, in 2014, Vietnam has attracted 1,588 investment projects with foreign capital of USD 15.64 billion, increased 9.6% compared to the previous year. Meanwhile, according to the FIA in 2014, in a few years Vietnam has become a top destination for foreign direct investment (FDI). A total amount of commitments up to $12.4 billion had been achieved in 2014. FDI is essential for Vietnamese economy. Estimated, the foreign-funded enterprises contribute up to approximately 40% to the Vietnamese industrial production, 61% of exports, 35% of the budget revenue and 20% to employment (in total 1.5 million jobs have been created in 2013). To support the installation of foreign companies, a new legal framework was introduced in 2005 with the Investment Act that put an end to discrimination between foreign and domestic investors; and between private and public sector.
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OLIVER MASSMANN
General Director - Duane Morris Vietnam LLC
WHY VIETNAM IS THE MOST ATTRACTIVE INVESTMENT DESTINATION IN ASEAN? CERTAIN MARKET ANALYSES The Vietnamese Government has made great attempts to develop itself by opening its economy to international trade and investments. Vietnam has concluded the Trans-Pacific Partnership (“TPP”) and the EUVietnam Free Trade Agreement (“EVFTA”). Meanwhile, the ASEAN Economic Community (“AEC”), which Vietnam became a full member in 1995, has been established since the end of 2015.
Vietnam has also made progress over 3 continuous years to reach 56th position in 2015 on the Global Competitiveness Index list, a jump of 12 positions compared to 2014. It is noteworthy that Vietnam is more competitive than 6 European Union countries on this list. Even more notably, 4 out of these 6 countries, namely Slovenia, Cyprus, Slovakia and Greece, are considered as advanced global economies, and have the GDP per capita of at least USD17,700, eight times more than Vietnam.
Vietnam is the most investment worthy place in ASEAN - which is not an exaggeration about Vietnam’s current investment environment as well as its potentiality but is in fact based on valid and practical grounds, where improved economic diversification, international integration, reformed investment legislation and good economic policy must be counted.
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Economic recovery and stable development Vietnam’s economy in 2015 bounced back and exceeded expectations with the GDP growth rate reaching an estimated 6.7%- the highest rate in five years. The number, released by the General Statistics Office of Vietnam on 26 December 2015, also surpassed the Government’s target GDP growth rate of 6.2%. The average GDP per capita also rose by US$57 from last year, reaching about US$2,109 per person. Inflation in 2015, on the other hand, stayed far below the red line of 5% issued by the National Assembly. It merely reached 0.6%, marking it as the lowest inflation rate in a decade. These important macroeconomic indices have proved the Government’s success to a certain extent in recovering and maintaining stable development of the economy. Government’s sound economic policy and positive results Together with macroeconomic stability and controlled inflation, the Government of Vietnam is fiercely improving the business and investment environment and making great attempts to achieve key economic indicators of top regional countries until 2016. Resolution No. 19/NQCP/2015 of the Government dated 12 March 2015 has set out the Government’s strong commitments and positive changes to improve the business environment and strengthen the economy’s ability to compete in 2015 and 2016 by pushing for reforms to reduce timeconsuming and burdensome administrative procedures; enhancing governmental offices’ transparency and accountability; and adopting international standards. By end of 2015, the total time for tax compliance by tax payers is reduced by 420 hours, meeting the target set by Resolution No. 19 and bringing Vietnam closer to ASEAN 6’s
average tax compliance of 122 hours. In particular, tax payers no longer have to queue to submit tax declaration dossiers. Vietnam’s regional and international integration
TPP The TPP is agreed to be “a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges”. The TPP was already concluded on 06 October 2015. The TPP would expand market access in goods and services among its signatories. The market access issues include liberalization of trade barriers protecting dairy, sugar, and rice; tariffs and origin rules affecting textiles, clothing, and footwear; and services trade reforms, especially financial services, insurance, and labor services. Vietnam would be the largest beneficiary of this trade pact, resulting from its strong trade ties with the United States, high level of protection against its main exports (i.e., apparel and footwear), and its highly competitive positions in industries such as manufacturing where China is gradually losing its competitive advantage. Statistics shows that by participating in the
TPP Market Snapshot GDP: US$28,136.0 billion (2012) GDP per capita: US$35,488 (2012) Population: 792.8 million (2012) TPP % of world GDP: 39.0% (2012) TPP % of world population: 11.3% (2012) TPP % of world trade: 25.8% (2012)
TPP, Vietnam’s GDP would add an additional increase of 13.6% to the baseline scenario. TTP will help Vietnam make good use of international cooperation opportunities, balance relationships with key markets, approach larger markets including the U.S, Japan, Canada, boost import-export, reduce import deficit, and attract foreign investment. In addition, TTP will also help Vietnam’s economy allocate its resources more effectively, enabling active supports to the processes of restructuring, innovation and improving regulations, and improve administrative reforms.
The AEC is made up of Brunei Darussalam, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (ASEAN). With a population of more than 600 million and a nominal GDP of about $2.31 trillion, ASEAN is a strong economic community in Asia and also a driver of global growth. The AEC encompass the following characteristics: (i) a single market and production base, (ii) a highly competitive economic region, (iii) a region of equitable economic development, and (iv) a region fully integrated into the global economy. The free flow of investment will offer enhanced investment protection to all ASEAN investors and their investments in other ASEAN member countries, including the settlement mechanism of an investor state dispute based on a nondiscrimination principle when investing in other ASEAN countries. Those principles play a very important role in providing investor confidence when making crossborder investment.
AEC Market Snapshot GDP: US$2311.3 billion (2012) GDP per capita: US$3748.4 (2012) Population: 620 million, 60% under the age of 35 AEC % of world GDP: ~3.3% AEC % of world population: 9% AEC’s merchandise exports: US$1.2 trillion - ~54% of total ASEAN GDP and 7% of global exports
Higher income will help Vietnam to invest more and grow more 10
AEC
EVFTA
On 02 December 2015, the Minister of Industry and Trade of Vietnam, H.E. Vu Huy Hoang and the European Commissioner for Trade, H.E. Cecilia Malmstrom signed the EVFTA. Both parties will finalize the ratification process as soon as possible for the EVFTA to take effect from the beginning of 2018. The EVFTA is considered one of the most comprehensive and ambitious trade and investment agreements. It is the second agreement in the ASEAN region after Singapore and it will intensify the bilateral relations between Vietnam and the EU. Nearly all customs duties over 99% of the tariffs will be eliminated. The small remaining number is mainly due to the transition period. Vietnam will liberalize 65% of import duties on EU exports to Vietnam at entry into force and the remaining duties will be eliminated due to the next ten years; EU duties will be eliminated over a seven year period. The market will be opened for most of EU food products, i.e. wine, spirits and frozen pork meat will be liberalized after seven years and dairy products after a maximum of five years. The EU will eliminate duties for some sensitive products in the textile and footwear sector. The EU has offered access to Vietnamese exports via tariff rate quotas (TRQs), because some sensitive agricultural products will not be fully liberalized. Furthermore, the agreement will contain an annex with provisions to address non-tariff barriers in the automotive sector. Vietnamese exports of textile, clothing and footwear to the EU are expected to more than double in 2020 as a result of the EVFTA.
The EVFTA will help to increase quality of investment flows from EU, accelerate the process of sharing expertise and transfer of green technology and the creation of more employment activities. The real wages of skilled laborers may increase by up to 12% while real salary of common workers may rise by 13%. The macro economy will be stable and inflation rate is controlled. Vietnam’s business activities will be booming in the next few years once the EVFTA officially comes into force and Government’s policies as well as institutional reforms start showing their positive effects. Vietnam’s GDP is expected to increase by 0.5% annually; increase in exports is 4-6% per year. If this trend continues until 2020, Vietnam’s exports to EU will increase by USD 16 billion. Until 2025, the EVFTA is estimated to generate an additional 7-8% of GDP above the trend growth rate. Other FTAs that Vietnam has just concluded are Vietnam - Korea FTA and Vietnam Eurasian Economic Union. These FTAs open the doors for Vietnam to export its textiles, leather, wood furniture, and agricultural products, etc. These FTAs are driving foreign investors to increase the investment capital and expand their businesses in Vietnam. The FTAs are expected to create a second investment wave in Vietnam after the first wave when Vietnam acceded to the WTO in 2007.
If ASEAN were one economy, it would be the 7th largest in the world - 4th largest by 2050 if growth trends continue 11
Second investment wave in Vietnam It is no longer in theory. Vietnam is actually benefitting the most from growing wages in China, with more and more manufacturers shifting their production to Vietnam. Foreign investors of a number of hightech investment projects in Vietnam have decided to increase the investment capital and expand their production activities to timely grab the opportunities that FTAs create when they come into effect.
New investment legislation At the same time, the Government is really aware of the importance of institutional reforms in improving the business climate. It is becoming more important when the new trade pacts are coming into effect very soon and institutional reforms are among conditions of these agreements. New laws considered the most liberal and investor-friendly in the region, such as the new Enterprise Law, Investment Law and a decree on Public Private Partnership, have been adopted. Barriers to business and investment are removed to pave the way for an open, transparent and fullof-opportunity environment for foreign investors. The 2014 Investment Law makes a great attempt to reduce the number of prohibited business activities and conditional business activities. More importantly, the 2014 Investment Law for the first time includes provisions regulating M&A activities. Accordingly, starting from 01 July 2015, foreign investors will not need to undergo lengthy investment certificate procedures when buying stakes in Vietnamese target companies. The change will hopefully end years of uncertainty and frustration faced by foreign investors eyeing Vietnam market entry or expansion via M&A.
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Meanwhile, the 2014 Enterprise Law grants certain flexibilities for investors to manage their entities in Vietnam by allowing multiple legal representatives and carry out all types of business activities provided that they are not prohibited by law. Relaxed foreign ownership in public listed companies In an attempt to ease burdens on investors, on 26 June 2015, the Government issued Decree No. 60/2015/NDCP to provide more flexibility in foreign ownership ratio in public listed companies, up to 100% in certain cases. Decree 60 also allows foreign investors to make unlimited investment in Government bonds, bonds guaranteed by the Government, bonds of the provincial authority or enterprises. Foreign investors may also invest in securities investment fund certificates, shares of securities investment companies, non-voting shares of public listed companies, derivative securities, and depository receipts without any limit.
on their projects now to position themselves as early as possible before the coming into effect of the trade pacts. Vietnam is a country of changes and currently offering increasing opportunities for foreign businesses. The underlying strength of the economy is reflected in, among others, controlled macroeconomic indicators, strong productivity gains and extensive integration into regional and global economy. It is now exactly time for foreign investors to start their business plans and grasp the upcoming clear opportunities.
OPENNING SECTORS
INDUSTRY, ICT, healthcare, tourism
Emerging country like Vietnam has a number of opportunities related to its modernization needs, physical and industrial infrastructure. Mechanism, construction, ICT, healthcare, are really concerned. Meanwhile tourism is in search for professionalism. “When I arrived in late 1993, it was under US embargo, there was almost no available consumer products, the used cars were only old Belgian models of the 60s, it was day one of the opening and then everything went very fast“ recalled Jacques Rostaing, President of JR France Group (bags, luxury goods) and foreign trade advisor of France since 2001.
“In terms of growth”, Vietnam has overtaken China this year. While some countries in the region are slowing down, Vietnam is booming, “explained Jacques Rostaing before adds to it “still much to do in all areas while many companies Belgian have qualities to hit on the spot. “ Beside the aircraft and luxury areas of excellence in Belgium, many sectors open windows for opportunity, especially in industry, health, ICT and tourism.
INDUSTRY: THE CONSTRUCTION OF METRO GIVES THE OPPORTUNITY FOR MECHANIC COMPANIES
Conclusion: Why investment in Vietnam now? yyVietnam ties in first place with Singapore in terms of market access, thus it provides highest possible protection for investment yyVietnam has the fastest growing middle class with a very good demographic situation: about 90 Million people of which about 50 percent are less than 30 years old. yyExpectations of Vietnam parties might get unreasonable, the same as after Vietnam acceded to the WTO in 2007 and no projects could be done. yyMarket opening in certain sectors, for example, media, and there could be more competing companies from the AEC with better market access to Vietnam. Thus, it is vital that investors start working
Metro Ho Chi Minh City in construction
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Generally, industry in Vietnam grew 9.6% for the first half 2015. It is really potential for foreign companies as the mechanical industry imports almost all of its capital equipment and the lack of knowledge encourage the government to look for foreign solutions. The rapid growth of industrial production in the coming years will reinforce Vietnam’s economy.
In infrastructure, many Belgian architects firms and construction companies already presented. “In this specific sector, although there were two or three rough years, last year we recovered” noted Guillaume Crouzet, CEO of the Chamber of Commerce and Industry France in Vietnam. It is true that after a few years of relative stagnation, the construction sector has rebounded.
Vietnam would offer even more opportunities that may be emancipated from its Chinese neighbour and strives to develop its exports to Western markets. “So there is a potential market for equipment, tools of production, protection and control, not to mention the engineering and consulting needed to help these factories to reach European standard production, “explained Aymeric Pons, Associate Executive Director of Erai Asia.
In 2014, its growth rate was 7.6% while the number of recorded real estate transactions (14,000) for the first six months of 2015 increased by 2.5 times compared to the same period last year.
Thus, about water treatment in the beverage industries, Olivier Tognetti, Asean responsible for specialized SMEs ICE says that this competitive market requires patience, but it is very promising as rising purchasing power in consumption of soft
“The crisis of the construction for the last five years was purely financial reason: it was a banking crisis. Vietnam has to clean up its banking system. Today the situation has improved and the sector may start with a good foundation, “said Jean-Jacques Richard who is in charge of the foundations of the department within the Fayat construction group.
drinks and bottled waters. Furthermore, companies will come to raise their standards and new markets will open for high-tech products for large volumes,” he continued.
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This is a real trend due to rapid urbanization of the country, the emergence of new urban and industrial areas on the edge of large cities and the strong growth of middle class.
“We realized that major infrastructure projects were emerging in Vietnam, especially in the transport sector with the construction of subways in Hanoi and Ho Chi Minh City,” he continued. In Hanoi, 8 subway lines are planned, of which 4 are in active preparation phase. Meanwhile in Saigon, 7 metro lines, tram and monorail must be built
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A BOOMING ICT The Vietnamese authorities put the ICT to priority areas. It must be said that Vietnam is a young country (more than half of 90 million people are under 30 years) that keen on new technologies. The Prime Minister has launched a motivated program to make Vietnam a great player in the information and communications technology (ICT) in 2020. The sector that is experiencing annual growth of 20% uninterruptedly since early 2000s, bringing their contribution to gross domestic product (GDP) of up to 7%. All market in this sector are growing: outsourcing, IT security, network management, publishing and selling software, remote computer support.
AN URGE TO HEALTHCARE MARKET In Vietnam, the process is a little slow, because you sometimes go through clipped and intermediate paths. We must gain their trust and convince them that our product is effective but we are confident because Asia has huge potential, “said Michael Blot from IT-Development, which sells equipment to telephone companies since last September in the Vietnamese market software management. Note that e-applications and e-commerce activities are growing and the movement is not going to stop in a country where an estimated 70 to 80% of the 20 million Vietnamese households will be equipped with a computer in 2020.
“We also see Belgium companies that do not have or do not wish to have the IT department delegate these support functions to Belgian partners presented in Vietnam,” noted Vincent Huynh, Office of the Director of Business Belgium in Ho Chi Minh City, that “back office outsourcing and business process proposed here may include IT support, technical support, outsourcing, hosting servers or websites but also accounting, finance...” all that is company’s strategy to focus on added value as the strongest business development or research.
There are opportunities in hospitals construction, sale of equipment and medicines, although it obviously remains competitive and innovative. Several areas are affected by this favourable growth: laboratories, chemistry,
biotechnology, medicine, pharmaceuticals and food processing. Thus, there are opportunities for Belgian companies. In 2014, Vietnamese pharmaceutical market sizes
Endoscopy surgery in Vietnam
were estimated at around $ 3.8 billion and for the coming years are on an annual doubledigit growth to reach 6.3 billion in 2017. Over 50% drug needs are imported, representing approximately 70% of market value. The market for medical technology accounted for $ 945 million in 2014, with growth estimated at 18% per year over the period until 2017. 86% of the needs are imported. Local production is limited due to lowtech materials (syringes, gloves, beds and other consumables) so large foreign groups began to establish production sites in the country. It is noted that accessing to this market requires going through an importer / distributor which owns a significant medical network for promoting and presenting your expertise.
TOURISM: IN SEARCH FOR PROFESSIONALISM In 2013, the Vietnamese government has selected tourism as one of the spearheads of the economy in coming years. It has been committed to be a promotional, modern and professional program. The target is to the year 2020 Vietnam attracts 22 million foreign visitors and 58 million Vietnamese tourists, for a total revenue of about $ 10 billion. In order to achieve it, the country must improve its infrastructure and the quality of the existing offer, giving openings to foreign companies including travel agencies and hotel groups.
B Phone - smartphone made in Vietnam
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In addition, major hotel groups are increasingly attracted by Vietnam. To date, there are approximately 13 500 hotels, 53 categories of 5 stars and 127 of 4 stars. To cope with the growing demand of the industry, the hotel offer could reach 8 000 new hotels, including 35 to 40% of 3 to 5 stars, 2020. “The Accor group, which has for now 28 institutions in Vietnam, thought to double its capacity in the next decade, which will involve consultation real opportunities for subcontractors, with beds needs, sofas, fragrances , and other decorative products , “said Aymeric Pons, CEO of associates Erai Asia. And the development of tourism - hospitality sector, coupled with the increase in the purchasing power could also make the market for food products, whether in the production, importation or distribution. 17
REGULATION
WHAT YOU SHOULD KNOW TO INVEST AND TRADE Accelerating its integration into international markets, Vietnam has a relatively complex legal and administrative environment and chang ing business. The firm’s lawyers Indochina Legal (corresponding CMS Bureau Francis Lefebvre for Vietnam) will deliver most of what you need to know for a first approach.
Brussels, 2 December 2015,The European Union and Vietnam finalized talks for a free trade agreement
I _ BACKGROUND 1- The integration of Vietnam to international markets As an opened market economy since the early ninety years (US embargo was applied until 1994), Vietnam has been very active in order to integrate into the global economy and continues this movement through many multilateral or bilateral conventions, in particular. Major multilateral conventions: The World Trade Organization (WTO), the New York Convention on the Recognition; Paris Union (International Union for the Protection of Industrial Property) and the Madrid Agreement (concerning the International Registration of Marks). Free Trade Agreements (Free Trade Agreements or FTAs): Member of ASEAN (Association of South East Asian Nations) and participating in the ASEAN Free Trade Area (AFTA) in 1995, Vietnam participates in the ASEAN economic community (AEC) which will be, as of the end of 2015, a strong economic community of more than 600 million people in which the movement of goods, services, investment, capital and professionals will (gradually) liberalized. As a member of ASEAN, Vietnam is also a party to trade agreements that bind this block with China, respectively, Japan, Korea, Australia / New Zealand and India and participate in the Regional Comprehensive Economic Partnership (RCEP) or 18
ASEAN +6, has called together all ASEAN members with the same six countries in a wide area of free trade. Clean, Vietnam has undertaken to participate in an impressive series of FTAs on a bilateral or multilateral basis. They include agreements already in force with Japan (VJFTA) and Chile, and recently those signs (being Ratifications) with Korea (VKFTA) and the Eurasian Economic Union constituted around Russia (VEEUFTA) or those in under negotiation with the Association European Free trade (EFTA) and Israel. Especially, Vietnam has just concluded in the fall of 2015 (expected ratifications for 2016/2017) major FTAs with one hand, the Union European (VEUFTA) and on the other hand, 11 countries bordering the Pacific Ocean (including the United States, Canada, Australia, Japan, etc.), as part of the agreement said Trans Pacific Partnership (TPP). In total, these various FTAs will involve 15 members of the G20 and should have the effect of promoting Vietnam as space open to international trade and preferred to locate a manufacturing or investment in the agricultural and tertiary sectors (IT, for example) to export to major consumer markets (EU, US, Japan, etc.). See the summary table below cons. Tax Treaties: July 31, 2015, Vietnam left a total of 73 tax agreements bilateral, 62 in force with France, Belgium, Switzerland, Canada, the Netherlands, Singapore, Korea, Japan, Hong Kong, etc. Since then, an agreement was signed with the United States on July 7, 2015 and is being ratified.
MAIN FTAs CONCLUDED BY VIETNAM OR NEGOTIATION IN PROGRESS TREATY
STATUS
AFTA (ASEAN Free Trade Area) ATIGA (ASEAN Trade in Good Agreement) AFAS (ASEAN Framework Agreement on Services
In effect
MERCHANDISE TRADE
ACCESS TO SERVICES / ACTIVITIES
Preferential rates of 0-5% with target of 0% to about 97 % of customs lines in 2015 (grace period extended to 2018 for the last four ASEAN members, including Vietnam). Harmonization of technical regulations and standards for cosmetics and electrical and electronic materials.
Air transport, business services, construction, financial services, maritime transport, telecommunications, distribution, tourism, educational, environmental, recreational, cultural, sporting and health services.
AEC (ASEAN Economic Community)
Effective in December 2015
MERCHANDISE TRADE
ACCESS TO SERVICES / ACTIVITIES
Resumption of commitments under AFTA.
Mutual recognition of qualifications in the health sector, tourism, accounting, architecture and engineering.
CJPE
In negotiation
MERCHANDISE TRADE
ACCESS TO SERVICES / ACTIVITIES
Rights suppression target of 80 % of lines for a period of 10 years ( for India, commitments variables by state partners).
Mutual recognition of regulatory authorities and qualifications.
Vietnam - Korea FTA
Effective in December 2015
MERCHANDISE TRADE
ACCESS TO SERVICES / ACTIVITIES
Progressive reduction and elimination of duties on 95.4 % of lines for Korea and 89.2 % for Vietnam over a period of 15 years from the entry into force of the Treaty.
Additional openings with WTO commitments in the financial and telecommunications sector.
Vietnam -EU FTA
Concluded 2nd December 2015, expected entry into force in 2018
MERCHANDISE TRADE
ACCESS TO SERVICES / ACTIVITIES
Elimination of duties on 99 % of lines including: - 85.6 % for the EU and 65% for Vietnam for the entry into force - The remaining lines on a 7 year period for the EU and 10 years for Vietnam. Vietnam’s commitments to align its standards with international standards and promote equivalence concerning sanitary and phytosanitary measures. Acceptance of the European certificate of conformity for cars 5 years after the entry into force of the Treaty.
Improving access of European companies to service activities including business consulting, environmental, postal, banking services, insurance and shipping . Promotion and Protection of EU investment in terms of manufacturing including food production and building materials.
TPP
Signed, ratify in process
MERCHANDISE TRADE
ACCESS TO SERVICES / ACTIVITIES
Elimination and reduction of tariffs on almost all lines, especially for Vietnam 65.8 % at entry into force. Added requirement for proof of origin
Full access to the services market with the exception of certain sectors specified in the list of Vietnam reserves, whose publication is expected. 19
II _ INVESTMENT
2 _ Structural reforms Each step of integration in the international economy and tax (the policy of “Doi Moi” or “Renewal” of the 90s; the WTO accession year’s mid-2000, the free trade agreements recently concluded or under negotiation) is prepared and / or result in a strong legal reform initiated by Vietnam. The most remarkable elements of the current phase include:
1- The procedures applied to foreign investment in Vietnam The new Investment Law on 26 November 2014, entered into force on 1 July 2015 (“LI2014”): yy Continue harmonizing constitution and companies’ rules and their statutory amendment (procedure regime and license authority) regardless of domestic or foreign capital, had undertaken the Law on Investment 2005 yy Establish company’s principle that allows engaging in any activity except those prohibited or whose exercise is subject to satisfied certain qualification conditions.
yy Modernization of the legal and fiscal framework (recent investment laws and the Companies and Customs Act - see below, but the Labor Code, the laws on intellectual property, securities, land law, etc.). yy Investment liberalization for the benefit of foreign investors made Vietnam the most liberal countries for foreign investment in Southeast Asia after Singapore. Real estate investment has also been opened to foreign individuals and foreignowned companies as of July 1, 2015; the previous 49% limit on foreign investment in companies making public offerings - including listed companies - is being phased out or closed depending on the sector.
Commercial company’s establishment procedures: The procedure for license or investment certificate that was previously applicable to companies with foreign capital was relaxed and aligned with the applicable rules to domestic capital company through a twostep procedure: yy Investment Registration (required upon on the nature of business) yy Registration of the company yy Administrative processing times have been greatly shortened; specifically, according to adjusted rule, it will be 15 working days for the investment registration and 3 days for registration of the company. yy The most important projects still require approval prior principle, as the case of the People’s Committee of the project, the Prime Minister or the National Assembly. The evaluation includes a review of its compliance with investment conditions for foreign investors, project feasibility and possible compliance to the Vietnamese plan. This procedure may involve the consultation of various central or local governments.
yy Greater transparency on public procurement (amended Act on Public Procurement 2013) and increasing the fight against corruption (Law amended in 2012) yy Acceleration of the privatization program, termed equalization of state owned enterprises and the private sector participation in infrastructure projects (Decree of 14.02.2015 on investment in the form of “public-private partnership” or PPP). yy Reform of the legal proceedings and enforcement measures.
2- Form of business establishment Subject to sole proprietorship and partnership with shares, forms of business establishment by foreign investors may be the followings. The public limited company (PLC): yy Minimum of 3 shareholders. yy Shares divided social capital (which may be listed on a stock exchange) whose release must be made within three months of the constitution. yy Free sale of shares except in certain cases provided by law, the statutes or the terms of a shareholder agreement yy Type of shares: ordinary or preference yy Possibility to issue all types of securities (bonds, hybrid transferable values, etc.) yy Administration: Meeting of Shareholders, Board of Directors, Supervisory Board (for companies with more than 11 individual shareholders or the shareholder corporation owns more than 50% of the shares of the company) and General Management. yy The limited liability company (LLC) yy Between 2 and 50 Associates yy share capital divided into contributions Associates (not shares) to release within 3 months after the incorporation yy Incapable of issuing bonds or other securities yy Disposal of capital: preemptive right of Shareholders to exercise within 30 days of the transfer offer yy Administration: Board of Partners, the Supervisory Board (for companies with more than 11 partners), Directorate General yy Single-member limited liability yy Identical to LLC Nature, subjects to comprise with only one member.
3- Representative Office The representative office may become the decisive factor for a commercial establishment to prepare (market research and feasibility studies for an investment project). It usually has an object linking to explore Vietnamese market (commercial information, research partners and monitoring contracts’ performance, including the sourcing of Vietnamese products). The representative offices have no right to run commercial activities (including billing services). It can only be delegated by its headquarter. Legal form The representative office is the direct emanation of a foreign company and has no cooperate capacity against the Vietnamese laws. This means that all of its activities are the responsibility of its head quarter. The representative office will undertake all necessary work for its proper operation, including renting premises, opening of bank accounts, recruiting staff, importing of any equipment required for its operation. Constitution Only transparent foreign companies of more than one year in operation are eligible to establish a representative office. The establishment of the representative office is subject to an license issued by the related local government (Public Service of Industry and Trade), in principle, within 15 working days from completing application. Tax system Since 2008, the representative office has to register it with the tax authorities to obtain a proper tax code whether corporate income tax exists or not. The representative office still has to report employment wages and personal income tax.
Vietnam’s aspirations for 2035 20
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III _ TAXATION 1-Cooperate tax and the investment incentive schemes According to Vietnamese tax law, especially corporate tax, applied to all cooperate (tax base and tax rates, reporting requirements; tax audit). Fiscal Policy - Corporate Governance: In general, the nominal tax rates under the corporate tax were significantly reduced in recent years to become regionally competitive. Various tax incentives in the form of total or partial exemption and/ or reduction of tax rates are also applicable. Effective taxation may nevertheless be significantly burdened by the certain nondeductibility expenses either due to legal reasons or lack of evidence concerning the charges or lack of connection to
the corporate. The taxpayer will then have to be very vigilant in keeping the books and records as well as in achieving the reporting requirements. Base and rate The corporate tax is calculated based on taxable income determined by Vietnam accounting rules, deductibility expenses related to its business activity may be removed if they are duly documented. The losses of a given year may be carried forward to subsequent years to a maximum of five years. The standard cooperate tax rate was reduced to 20% from 1 January 2016 (except for almost of the operating activities in the oil and gas industry at a rate of 32-50 % varying on the case by case basis; and those related to the export of scarce natural resources will be taxed between 40% and 50 %).
Incentive schemes Certain investments are eligible to the tax incentive policy subject to geographic and/or sectorial criteria consideration. The below table will present rates and other incentives. 2- Taxation of foreign providers Under Vietnamese law, foreign providers (which include the work of contractors, consultants and even the suppliers of goods subject to an obligation of delivery in Vietnam and / or related services) are subjected to a withholding tax, including a flat tax on profits and VAT. Great vigilance must be paid by the suppliers of goods and services in order to avoid unexpected charges, taking advantage of Belgium - Vietnam agreement on avoiding double taxation.
THE REDUCED RATE OF TAXATION AND OTHER INCENTIVES TO FOREIGN INVESTORS MEASURES (Effective on January 1, 2016 ) Standing 10%. Exemption of 4 years from the first profitable year, followed by 5 or 9 years halved rates (as appropriate)
10% for 15 years Exemption of 4 years from the first profitable year, followed by nine years at the rate reduced by half
Companies operating in the sectors of education and training, health, culture, sport and the environment. Companies operating in the food industry and breeding area in difficult socioeconomic situation. Newly established companies in area socioeconomic situation particularly difficult (according to the list adopted by the government), economic zone or high-tech zone. Newly established companies in the fields of high technology, scientific research; of Environmental Protection; development of particularly important national infrastructure as well as software production. Newly established companies in the production sector incurring significant investments (between 273 to USD 546 million, as appropriate). Newly established companies in the manufacturing sector of industrial products (according list and conditions set by the government).
Prohibited sectors
and activities subject to qualification requirement Reversing the previous principle, under the Law on Investments 2014, the companies are entitled to freely exercise all activities, (i) excluding those under the prohibited areas and (ii) in respect of certain sectors subject to comply with conditions of qualification and registration accordingly. Only 6 sectors have been identified as prohibited. A total of 267 industries covered 16 sectors in the families have been identified as required qualification. The list of these sectors cannot be modified on approval of the National Assembly.
IV _ SALE / EXPORT: 1- Key points on distribution contracts and franchising General policy: The regulation on distribution or agent contracts is relatively open but not totally for the principle activities. The franchise awards going for its part, by prior registration of the franchise model. Legislation: Commercial Law of 14 June 2005 and its implementing Decree No.31, amended by Decree No. 120 dated December 16, 2012 (franchise) and No. 187 dated November 20, 2013 (distribution). Franchisor Qualifications: The franchisor must operate at least one year and justify the disposal of its franchise model; its ability to train the franchisee; and its rights to the elements of industrial or intellectual property of the franchise.
15% Permanent
Companies operating in the food industry and livestock off areas in difficult socio-economic situation or areas undergoing socio- economic situation particularly difficult.
Rate of 17 % for 10 years
Newly established companies in area difficult socio-economic situation (according list adopted by the Government).
Procedure: Foreign franchisors are subject to registration with the Ministry of Industry and Trade (MoIT).
Newly established companies in the manufacture of high quality steel sector; the production of energy-saving products; Manufacturing of machinery and equipment for agriculture, forestry, fish farming; manufacture of irrigation equipment; production of animal feed, poultry and aquatic resources; the exercise of traditional trades or professions.
Contract: Franchisor must provide a description document of the franchise and the model contract of franchise at least
Exemption 2 years followed by 4 years at the rate reduced by half
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Determining the applicable conditions to these sectors respectively (conditions which may vary according to domestic or foreign capital controlling company) cannot for its part, noted that the law, order, a government decree or an international treaty, excluding the right of subordinate administrative authorities to introduce new conditions. These conditions, the number was reduced from 6475-3175 include graduation requirements, minimum legal capital requirement, etc. The https://dangkykinhdoanh.gov.vn/en-gb/ home.aspx government site lists all applicable conditions sector by sector.
15 days prior to the execution of franchise agreement; the duration of the franchise is not legally restricted. 2 - Key information on Vietnam Customs Task and the structure: Vietnam Customs, which comes under the Ministry of Finance, is responsible for: Inspecting and supervising goods and vehicles entering the country; tackling smuggling and illegal cross-border trafficking in goods; implementing laws on taxation applied to imported and exported goods; releasing statistics on imported and exported goods in conformity with the Customs Law and other corresponding laws; proposing policies and administrative
measures for customs applicable to import, export, exit, entry and transit operation and tax policies applicable to imported and exported goods. Vietnam Customs is structured at three levels: 1/ The General Department of Customs; 2/ Customs Departments in provinces; 3/ Sub-departments of Customs, Customs control team and equivalent units. (Further information on Vietnam Customs: http://www.customs.gov.vn/ Lists/EnglishIntro/Default. aspx?language=en-US and http://customsnews.vn/ customs)
Cat Lai Port 23
Hai Phong Port Legal regulations related to Customs and import/export of goods: yy Law No. 54/2014/QH13 dated June 23, 2014 stipulates the state management of customs with regard to goods permitted to be imported, exported or transited, and vehicle of domestic and foreign entities which are on exit or entry or in transit within the customs territory; and organization and operation of the customs service. yy The key principles of customs formalities, inspection and supervision stipulated in the Law are: a) Goods and vehicles must be undergo customs formalities, subject to customs inspection and supervision; travel on approved routes and pass through border checkpoints or other places on schedule, as prescribed in regulations and laws. b) Customs inspection and supervision shall apply risk management techniques in order to ensure effectiveness and efficiency of state management of customs and facilitate import, export, exit, and entry and transit operation.
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c) Goods may enjoy customs clearance and vehicle may be permitted to exit or enter after going through customs formalities. d) Customs formalities shall be carried out in a transparent, quick and convenient manner and in accordance to the law. yy To collect customs duties and fees, Vietnam Customs has implemented several Laws. For example: The Law on Tax administration No. 78/2005/QH11 dated November 29, 2006. The Law on the amendments to the Law on Tax administration No. 21/2012/QH13 dated November 20, 2012. And the Law on Export and Import Tax No. 107/2016/QH13 dated April 6, 2016 etc. yy Under Laws, there are a number of Decrees and Circulars providing guidance on law implementations and on specific issues. For example: Decree No. 08/2015/NĐ-CP dated January 21, 2015 by the Government providing guidance on the implementation of the Law on Customs in terms of customs procedures and
customs inspection, supervision and control; Circular 38/2015/TT-BTC dated March 25, 2015 by Ministry of Finance providing guidance on customs procedures, customs supervision and inspection, export tax, import tax, and tax administration applied to exported and imported goods; Circular 39/2015/TT-BTC dated March 25, 2015 by Ministry of Finance providing guidance on Customs value of imported goods and exported goods; (Further information on legal documents related to Customs: http://www.customs.gov. vn/Lists/EnglishDocuments/ Default.aspx?language=en-US http://customsnews.vn/ regulations For searching tariff rates: http://www.customs.gov. vn/SitePages/Tariff-Search. aspx?language=en-US For other legal documents on different topics: http://haiquanbinhduong. gov.vn/EN/Default. aspx?p=vanban&id=2)
International co-operation: On January 7, 1993, Vietnam Customs became a member of the World Customs Organization, an independent, intergovernmental body of 180 customs administrations across the globe. Since then, it has actively participated in many important International Conventions thus helped it to build up a customs procedure system in line with international standards and practices. For example, the Tariff Nomenclature has conformed to the International Convention on Harmonization System, the customs procedures have followed the guidance of the Revised Kyoto Convention, the Customs Valuation is determined based on the WTO Valuation Agreement. Recently, Vietnam became the 54th WTO member country to ratify the Trade Facilitation Agreement which covers 98% of Customs measures. This shows that Vietnamese Government is strongly supportive for the WTO Trade Facilitation Agreement which is expected to boost prosperity by reducing administrative burden and transaction costs for business. (Further information on WCO International standards: http://www.wcoomd.org/en/ topics.aspx)
IT Infrastructure Vietnam Customs has also strongly committed to the reform and modernization process in order to accelerate the pace of customs clearance, thereby facilitating trade and improving competitiveness. In 2012, Vietnam Customs introduced the new Automatic Cargo Clearance and Intelligent Database System (VNACCS/VCIS). Currently, the system is implemented by all sub-branches of Customs departments and providing services for 63,000 (99.5%) import/ export companies throughout the country. The VNACCS/VCIS application has constituted a motive for the customs to step up the application of information technology to various relevant fields such as electronic tax payment (E-payment), electronic manifest (E- Manifest), electronic invoice (E- Invoice) and electronic permit (E-C/O and E-Permit). At present the declaration reception, handling and reply only takes 1- 3 seconds. For the green cargo channel (exempted from paper examinations and physical inspection) the customs clearance time is recorded at only 1- 3 seconds. (Further updates on VNACCS/ VCIS: http://customs.gov.vn/Lists/ EnglishNews/ViewDetails. ID=457&Category=News%20 and%20Events&language=en-US)
THE PRACTICES AND TERMS OF PAYMENT INCOTERM Get notoriety information on the clients There are quite a number of local and foreign business information services. The Belgian and European business information providers could be helpful. Means of payment Recommended The confirmed irrevocable documentary
In December 2015, the Vietnam National Single Window (NSW) was developed, and Vietnam became the 5th member state to join the ASEAN Single Window. Vietnam NSW is defined by law as “permission for customs declarants to send information and electronic documents for following customs formalities and formalities of regulatory bodies related to imported and exported goods through an integrated communication system. Regulatory bodies shall decide goods that are permitted to be imported, exported and transited; customs authorities shall make decisions about granting customs clearance and releasing goods on the integrated communication system”. All 10 ASEAN member states are expected to have integrated the ASEAN Single Window by the end 2016, marking a major milestone in ASEAN’s process of regional economic integration, community building and consolidation. (Further updates on Vietnam NSW and ASW: http://customsnews.vn/ barriers-in-implementing-thenational-single-window-550. html and http://asw.asean.org/events/ item/vietnam-officially-joinsasean-single-window-customssystem?category_id=127)
credit is the most used payment mean following by documentary credits and other international means. Payment Terms Usual payment terms 30-60 days are common; 90, 120 or even 150 days in some areas. Risk of payment delays The delays may occur. The new commercial law called “Commercial Act 2005” came into force on 1 January 2006. Section 306 gives the beneficiary right to claim interest for late payments.
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An interview with
“Our offer is particularly well suited to the needs of SMEs wishing to do business in Vietnam and Indochina” CAN YOU PRESENT THE COMPANY? As the national flag carrier of Vietnam, headquartered in Hanoi, Vietnam Airlines operates 92 routes to 20 domestic and 29 international destinations with average 400 daily flights. The Airlines is operating the young fleet of 87 modern aircraft mainly including new and modern aircraft such as Boeing 787 Dreamliner, Airbus A350-900 XWB, Airbus A330, Airbus A321 and Boeing 777. Vietnam Airlines became official member of SkyTeam Alliance on June 10th, 2010 and also the first representative of the alliance in South East Asia region. www. vietnamairlines.com Recently, Vietnam Airlines has experienced a strong growth in its business, mainly due to
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the economic dynamism of the Vietnamese sandwich and the growing insertion thereof in global trade flows. The company is engaged in a development dynamic, based on extension and renovation of the fleet, the creation of a new logo, the renewal of the cabin crew uniform and improving our services edge. In June 2015, we received the first of fourteen A350. In 2020, we will have a fleet of 150 of the same aircraft. London, July 12th 2016 National flag carrier Vietnam Airlines has been certified as a 4-Star Airline by the international air transport rating organization SKYTRAX - ranking it alongside some of the world’s most reputable airlines, including Air France, British Airways, Emirates, Japan Airlines, Korean Air and Lufthansa...
HOW TO POSITION YOURSELF TRAFFIC FRANCE - VIETNAM? Vietnam Airlines has been presented in France since 1994 and offers from CDG Terminal 2E of up to 14 and direct flights weekly non-stop to Hanoi and Ho Chi Minh City. These links are operated by A350 since October 2015. Moreover, thanks to agreements signed with SNCF, we implemented TGV AIR solutions that allow passengers from 19 provincial cities to rally Roissy station with a single ticket (TGV + plane). Our business is growing continuously for several years. The clientele consists of both individuals attracted by the tourist attractions of Vietnam, and businessman, because of the growth of the economy and the dynamism of bilateral trade.
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HOW TO STAND OUT COMPETITION?
The company is primarily distinguished by the fact of having a very dense domestic network through 22 destinations within Vietnam: the traveler can then travel to the main cities (Hue, Da Nang, Nha Trang, etc.). Furthermore, we also serve Cambodia (Phnom Penh and Siem Reap), Laos (Luang Prabang and Vientiane) and Myanmar (Yangon), and also supply of Trans Indochina flights across the four countries. We are the specialist company in Vietnam and Indochina. All these destinations are accessible at preferential rates for the passengers of Vietnam Airlines when flights are booked simultaneously Paris- Vietnam. This is a particularly attractive solution for French companies, in particular SMEs, wishing to optimize their business travel budgets. From Hanoi and Ho Chi Minh City, we also offer numerous flights to other Asian countries, including
Japan, Korea, the Philippines and Australia. It is a fact little known in France: Hanoi and Ho Chi Minh City have emerged as two new hubs in Asia, based on the increasing number of destinations served.
AND IN SERVICES?
Our concern is to meet the needs of passengers at its best. Vietnam Airlines offers the choice between three classes: Business, Premium Economy and Economy. To give an example, the wifi and the ability to send SMS are available in each of these three categories. In Business, passengers have access to sockets PC / USB, business lounges and the SkyPriority device (recording, etc.). But the real “plus” is our philosophy in terms of service onboard. Vietnam Airlines offers in all three classes, a quality offer that reflects the exceptional nature of the culture, know-how and Vietnamese hospitality. In our minds, this is going beyond the mere transport of passenger: we
want the stay in Indochina starts from the time the passenger enters the cab. The service contains all the Vietnamese DNA elements of the company: the uniforms of flight attendants based on the traditional costume Screening of Vietnamese, Asian food proposed through the symbol of the lotus, floral emblem Vietnam and the choice of colors.
WHAT ABOUT THE FREIGHT? Cargo plays a very important role. This activity provides additional revenue streams of high value and contributes to the development of foreign trade (imports and exports) of Vietnam. From France, we deliver spare parts in particular; from Vietnam, the flows mainly concern the textile and electronics. With our fleet and the high number of frequencies, we offer significant capacity interested SMEs directly. The company has set up a dedicated freight department.
On the 2nd of September 1945, President Ho Chi Minh proclaimed the independence and this day was marked as the birth to the Democratic Republic of Vietnam. 70 years later, Vietnam is one of the most dynamic Asian economies.
In 1986, a new economic policy was established, which was called “Doi Moi”, in order to replace the centralized economic system with a market economy. In 1995, Vietnam joined ASEAN (Association of Southeast Asian Nations) which was considered the first step in integrating into the global economy. During the 90s, foreign investors flock to Vietnam. On the 11th of January 2007, Vietnam became a full member of the World Trade Organization (WTO).
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GDP per capita increased tenfold From 1986 to 2010, Vietnam recorded an average economic growth of 5.3% per year, the second best performance in Asia after China. More than that, the country showed its stability to international crisis (such as Asia crisis in 1998 and global crisis in 2008). GDP per capita was almost tenfold for the last thirty years since it went from USD 239 in 1985 to USD 2,052 in 2014. Poverty has declined significantly.
During the 2000s, Vietnam joined the group of CIVET (Colombia, Indonesia, Vietnam, Indonesia, and Thailand) which brings together the most promising emerging economies after the BRICs. All the experts came to an agreement in further growth. In 2015, GDP grew by 6.5%, expected + 6.4% in 2016 and 6% in 2017 (IMF). The optimistic view of experts is based on the following strategies by the Vietnamese authorities: infrastructure
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development, training system improvement, structural reforms, economic diversification, export development and further integration into the world economy. This strategy has been conducted with rigor and determination; therefore, it surely brings assurance to foreign investors that Vietnam is a predictable country. This positive vision has also built on the country's potential. Vietnam owns many natural resources (agriculture, mining, oil, etc.) and especially skilled labor and workers. Experts from the World Bank, who visit Vietnam, have been impressed by the dynamic of Vietnamese entrepreneurs and a strong private sector. The new trade agreements The Vietnamese authorities expect an acceleration of integration into the global economy through free trade agreements. Entering new markets promotes not only exports but also investments. 2015 is a historic turning point for cooperation within the ASEAN with the birth of the ASEAN Community based on the three pillars of politics
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and security, economy. This establishment greatly boosts investment activities of Vietnamese enterprises in Asian countries and vice versa. On 12th December 2015, the EU and Vietnam concluded a free trade agreement. This provides that almost all tariffs on goods traded between the two economies (more than 99% of tariffs line) shall be taken either immediately or after a period to zero with the maximum time frame of seven years. However, the text goes well beyond trade in goods since it includes chapters on key areas of foreign companies’ interest: services, public procurement, intellectual property, competitiveness, etc. "This agreement creates a new model, more modern and comprehensive for free trade agreements between the EU and developing countries. It also sets a good standard of commercial relationship between the EU and South East Asia in general, said Cecilia Malmstrom, Commissioner for Trade.
Moreover, previously on 5th October, the principle agreement of Trans-Pacific Partnership (TPP) was signed by twelve countries, including Australia, Canada, the United States, Japan, Australia and Vietnam. This is the most important free trade agreement negotiated to date. The area should represent two thirds of the global middle class by 2030 and half of gross domestic product (GDP) by 2050. Being part of such an integrated economic area is an exceptional opportunity for Vietnam. Economists expected an acceleration of growth in exports, which was 17% on average during the period 2010-2014. In the first nine months of 2015, this number increased by 9.6% ($ 120 billion). Vietnam expects USD 300 billion in exports in 2020. "This will be feasible if Vietnam benefits both its business opportunities and market strategy while focusing on accelerating economic restructuring" said the Minister of Industry and Trade Tran Tuan Anh. An absurd scenario looking back to 1945 and shows the exceptional development in this country.
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A WIDE VARIETY OF NICHES
An interview with
Niche markets and business opportunities are plentiful in Vietnam. The desire to position itself as a goods and services production oriented platform in the TPP will open new opportunities to foreign companies.
Director General of Department for Multilateral Trade Policy Ministry of Industry and Trade of the Socialist Republic of Vietnam
What is your assessment of the free trade agreement between Viet Nam and the European union? After three years of negotiation, on 4 August 2015the European Union and Vietnam reached a tentative agreement for free trade. This is a full free trade agreement, high quality and brings mutually benefits for the European Union and Vietnam. Both parties gave every effort to conclude the negotiation in 2nd December 2015. The Agreement covers provisions on the following topics: trade in goods, rules of origin, customs and foreign trade facilitation, sanitary and phytosanitary measures and technical barriers to trade, trade in services, investment, trade remedies, competition, public companies, public procurement, intellectual property, sustainable development, cooperation and creation of legal and institutional capacity issues. For some areas the agreement will convey following key benefits: Both parties will benefit once the agreement takes effect. For EU, the machinery, equipment, automobiles, alcoholic beverages, and certain
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agricultural products are few to name. For Vietnam, the textile, footwear, aquatic products and certain others will be benefited. The Agreement removes 99% of all tariff lines. For machinery, equipment or pharmaceutical products, most tariffs will be brought to 0% on the entry into force. On beer, tariffs will be eliminated over a period of ten years. Beef will no longer be applied tariffs in three years; milk and dairy products will also be exempt from tariffs for a period of five years. The automobile and its equipment face no tariffs in period of ten and seven years. The services market of Vietnam will be opened to European investors, including Belgian investors in the areas of professional services, environment, communication, organization of fairs, exhibitions, food processing and beverage etc. The free trade agreement between the EU and Vietnam will allow companies of both parties to participate in public procurement by tending with transparent procedures. Viet Nam intensely engages in intellectual property protection, sustainable development (labor issues and external trade environment) and protection to the geographical indication of 169 products from the EU, including many Belgian geographical indications
What do you think about the impact of investment flows? The free trade agreement will contribute to an open friendly business and investment environment. With its considerable commitments on opening market, the free trade agreement also includes equal treatment regulations for domestic and foreign investors, transparency regulations, procedures simplification etc. With advantages in the areas of banking, insurance, construction, specialized services, pharmaceuticals, aviation etc. I am convinced that Belgian companies, including those who are currently in Viet Nam will benefit from these commitments to increase their investment in Viet Nam. Belgian investors, with their capability and potential, will consider Viet Nam as a platform to connect trade and investment activities in the ASEAN region. Furthermore, the free trade agreement includes mechanisms for resolving disputes between the State and the investors, which will bring transparency and solve shortcomings of the current mechanism.
Agriculture continues to occupy an important place in the Vietnamese economy as this sector represents 18% of GDP according to World Bank statistics, and 47% of total employment. It is also a significant contributor to total exports (25%) with products such as coffee, rice, seafood, etc. The Vietnamese authorities prioritize on modernizing sectors. The main challenge remains that of processing. The increase in living standards, mainly in the cities, generates continuous growth in demand for quality processed food products. Buoyant demand leads to significant and increasing imports, including grain and meat (beef and poultry). Vietnam’s strategy is to promote the development of local supply. The presence of foreign companies, investors and technological providers is welcome by partnerships with Vietnamese companies.
Infrastructure: changing swiftly
The business opportunities are also important in the field of infrastructure: transport (airports, ports, rail, etc.); energy (electricity, oil, etc.); water and sanitation; waste; etc. In terms of water and sanitation for example, the quality of services is quite below international standards. The number of people who can access to piped water is currently 80% and the country
has set the target to increase this number to 100% in 2020 and treat 80% of wastewater. The government decided to promote private enterprise through public-private partnerships (PPP). Several projects have been launched since 2013 (water, transport, energy and health). Urban development is a strategic priority to Vietnam. Currently, 33% of the population resides in cities, but it is growing rapidly (3 % per year) so that this ratio may reach 60% by 2050. Congestion and pollution are paid much attention by many Vietnamese cities. Urban transport projects are prioritized. Hanoi city has approved a plan that provides network of five subway lines. Meanwhile the first subway line in Ho Chi Minh City, which stated constructing in 2007, will be operated in 2020.
Industry: ambitious projects
Vietnam has the legitimate ambition to become a great industrial country. However, the country suffers from the weakness of its fabric suppliers, which explains the high volume imports of machinery, capital goods and industrial products. The idea is to develop local production in substitution for goods purchased abroad, with a view to become an industrial production oriented platform in Southeast Asia, especially in the context of the Trans-Pacific
Partnership (TPP), which opens a wide world space for local producers. Textile, mechanical, agricultural machinery and agricultural plastics are among the growth sectors. In 2014, the government announced a plan of developing production capacity in the segments of the textile and clothing: the objective is to ensure that production increases by 13 % per year between 2013 and 2030. The authorities prioritize on information and communications technology (ICT) sector, which recorded a growth of 20% per year since the early 2000s as Asian companies (Korea, Taiwan, etc.) invested heavily in this sector which has become main export industry significantly (mobile phones, for example). The existence of this industrial base and a network of successful companies, the development of telecommunications, the Internet and the availability of a skilled workforce (engineers, etc.) constitute foundation for further development. Similarly, the Vietnamese would “integrate� more activities dedicated to the value chains and increase the local value added. Vietnam has great ambitions to be a basic business location, especially in the software and computer services. The priority seems quite playable by international experts.
CONSUMER GOODS: A HIGH POTENTIAL GROWTH
With a population of 91 million inhabitants in 2014 and continuously growth in purchasing power , Vietnam is a promising market for most consumer goods (food , pharmaceutical products, cosmetics , automobiles, etc.), and even luxury items. The demands also cover services, including health and tourism. Then this trend should continue over the coming years as 60% of the population is under thirty. Asian chains of distribution are very interested in Vietnam. In June 2014, Auchan has signed a partnership agreement with TC Group to develop supermarket business. A first store was in the S- Mart brand. A second one is under construction.
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THE RISE OF PRIVATE SECTORS The private sector has become the impetus of growth for Vietnamese economy and the government is constantly improving its business environment. Recent trade agreements help to trigger the development of private sector.
Since Vietnam introduced its Doi Moi reform policy in 1986, the private sector development is one of the strategic priorities of the Vietnamese authorities. There are currently 500,000 private enterprises, employing nearly 51% of the national workforce and creating about 1.2 million jobs per year. They contribute to over 40% of Vietnam’s GDP. The private sector development is a relatively new phenomenon in an economy that operated as a public and centralized model for decades. Efforts are made continuously to reform the legal regulatory and private sector‘s tax tariff. In March 2014, the government passed a resolution to improve the business environment and simplify administrative procedures. Other measures have been taken in 2015. Since it was implemented, significant progress has been achieved. For example the company establishment procedures have been reduced from 31 to 6 days with 5 administrative steps instead of 10. The waiting time for tax declaration and social contribution by businesses has been reduced by more than half, from 870 to 400 hours "The central and local levels Vietnamese authorities have recognized the urge to improve business environment and determined to do it," said
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Nguyen Dinh Cung, Director of the National Institute of Economic Research and Management.Vu Tien Loc, chairman of the Chamber of Commerce and Industry of Vietnam (VCCI) has a similarly positive assessment: "Institutional reform starts to take effect. In early 2015, the government enacted many important features to improve the business environment and raise national competitiveness."
Improvement in world rankings
The fruitful result of these efforts has already shown in several recent international reports. The latest edition of Doing Business World Bank, published in October 2015, Vietnam is ranked 90 out of 189 studied economies, moved up three places compared to the previous year. There are progress in business regulation, the protection to the business ownership, business creation procedures, electricity connection, property registration, credit application, tax procedure, and small investor protection. The Vietnam business environment has been improved in 2015, with more favorable conditions for entrepreneurship (119th place against 125 in 2014): criteria required access to credit (28 against 36) and tax settlement (168th against 172nd).
The progress is shown clearer in the latest report of the World Economic Forum (WEF), made public on 30 September 2015 in Geneva. Vietnam jumped 12 places and occupied the 56th place worldwide in terms of competitiveness. According to the World Index 2015 Innovation (GII), also published in 2015 by the World Intellectual Property Organization (WIPO), the country stepped up 19 places compared to 2014 and is now at 52nd out of 141 countries.
A key issue
The national and international experts emphasized that Vietnam still faces long road ahead, which is fully aware by the authorities. Another major challenge is the structure of the business fabric. Indeed, large companies represent only 2% of the total number of enterprises, medium companies 2% and small and micro enterprises accounted for 96. Vietnamese authorities intend to continue reforming and supporting the private sector, especially SMEs. The private sector is now considered the "pillar" for future economic growth and improvement on living conditions for the population. The increasing integration of Vietnam into the world economy through various trade agreements should act as a strong incentive.
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THE LEADING BUSINESS IN VIETNAM ECONOMY Company Garment 10 Joint stock Company
Dien Quang Lamp Joint Stock Company
Head office Hanoi
Ho Chi Minh City
Activity
Website
Operated since 1946, the company has 16 factories and employs 9000 employees. Supplier of Zara, Seidensticker, Tommy Hilfiger, Arrow, Celio, etc.
www.garco10. com.vn
Be supplier of products, services and solutions for the electrical industry.
www.dienquang. com
Hanoi
The Petrovienam Oil and Gas Group concentrates in actively and synchronously implementing hydrocarbon activities in all economic sectors as well as multi-business to be a strong economic group in Vietnam and a leading Petroleum Group in the region.
www.pvn.vn
An Giang Fisheries Import & Export Joint Stock Company
Long Xuyen
Provide seafood products to Asia, Europe and America (North and South)
www.agisfish.com. vn
Thai Nguyen Iron and Steel Company
Thai Nguyen
Established in 1959, Thai Nguyen Iron and Steel joint stock Corporation (TISCO), the cradle of the metallurgical industry of Vietnam is the first an unique metallurgical zone in Vietnam with an integrated production line from exploiting iron ore to making cast iron, steel billet and rolling steel.
www.tisco.com.vn
Vietnam Oil and Gas Group
Vietnam Dairy Company (Vinamilk)
Hanoi
INAMILK is a LEADING nutrition group in Vietnam reaching more than 31 countries and generating over USD 1,5 billion/year in revenue
www.vinamilk. com.vn
The Corporation for Financing and Promoting Technology (FPT)
Hanoi
Established on September 13, 1988, with IT and Telecommunications as its core business sectors, FPT has provided services to 63 provinces and cities in Vietnam and has constantly expanded globally to a current presence in 19 countries.
www.fpt.com.vn
Saigon Beer Alcohol and Beverage Corporation
Ho Chi Minh city
Sabeco is Vietnam's leading beer producer. It is owned and under the authority of Vietnam's Ministry of Trade and Industry. In 2011, Sabeco produced 1.2 billion liters of beer, 51.4% of the national market.
www.sabeco. com.vn
PROCEDURES OF REQUIRING THE VISA FOR FOREIGNERS WHO COME TO WORK WITH COMPANIES IN VIET NAM, FOR FOREIGN INVESTORS OR FOREIGNERS WHO COME TO WORK IN VIET NAM 1/ Visa’s symbols and visa’s duration:
2/ Conditions for issuing visa
3/ Procedures of inviting, sponsoring
According to the Law No.47/2014/QH13 on entry, exit, transit and residence of foreigners in Viet Nam, there are 20 types of visa. Each type has to be appropriate with particular applicant and entrance purpose. There are 3 types of visa which is related to working, investment and business: - Visa DT: issued to foreign investors and foreign lawyers operating in Viet Nam, is valid up to 5 years. - Visa DN: is issued to working partners of the Vietnamese businesses, is valid up to 12 months. - Visa LĐ: Issued to worker, is not longer than 2 years. Note: there could be multiple entry visas but their purpose must stay the same. (For instance, an expatriate entering Vietnam with a tourist visa DL cannot convert his visa to a working visa LD). Passport validity must be at least 1 month longer than the applied visa validity
The primary requirement to grant a visa: - Validity passport or laissezpasser. - Invitation or sponsorship from an organization or individual in Viet Nam. - Non-suspension from entry. - Sufficient proof of entry purposes must be submitted when applying for visa in the following cases: + Any foreigner who comes to make investment must have papers proving the investment in Vietnam in accordance with the Law on Investment. + Any foreigner who works as a lawyer in Vietnam must have a practice license in accordance with the Law of Lawyers; + Any foreigner who comes to work in Vietnam must have work permits in accordance with the Labor Code.
Foreigners must follow the procedures at the immigration authority via the inviting entities. The inviting entity shall directly submit the application for the visa at the immigration authority. - Within 05 working days from the receipt of the application for the visa, the immigration authority shall consider granting it, send a response to the inviting entity, and notify the overseas visaissuing authority of Viet Nam. - The foreigners come and follow the procedures for receiving the visa at to the Embassies and Missions of Viet Nam abroad.
4/ Temporary residence permit: The immigration unit shall issue temporary residence permits to foreigners by appending a seal in their passports or separate visas with the following time limits: The duration of the certificate of temporary residence is the same as the duration of the visa. For the visa DT or LD, the duration of the temporary residence permit shall not exceed 12 months, and the issuance of a temporary residence card shall be considered.
Source : Vietnam Trade Promotion Agency (Vietrade) Noi Bai Airport 36
Tan Son Nhat Airport 37
USEFUL CONTACT Embassy of Socialist Repuplic of Vietnam to the Kingdom of Belgium Boulevard Général Jacques 1, 1050 IXELLES, BRUXELLES Tel: 02. 379 27 37; Fax: 02. 374 93 76 Email : vnemb.brussels@skynet. be
Vietnam Trade Office in Brussels Avenue Commandant Lothaire 40, 1040 ETTERBEEK Tel. 02.343 62 95 Fax :02.347 03 35 Email : be@moit.gov.vn
Embassy and Consulate of Belgium in Vietnam http://vietnam.diplomatie. belgium.be/en Embassy: Hanoi Towers - 9th fl. 49 Hai Bà Trưng, Hanoi Tel: (+84)4 3934 6179 Fax: (+84)4 3934 6183 Consulate: No 105, Duong Van An Street, KP 5, Ward An Phu, District 2 Ho Chi Minh City Tel: (+84)8 6281 8001 Fax: (+84)8 6281 8010
Delegation of the Europen Union to Vietnam http://eeas.europa.eu/ delegations/vietnam/index_ en.htm 24th floor, West wing, Lotte Center, 54 Lieu Giai street, Ba Dinh district, Hanoi Tel: +844 3941 0099 Fax: +84 4 39461701I
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Immigration Department 40 Tran Phu Street, Ba Dinh District, Hanoi Tel: (+84)4 3799 3125 Fax : (+84)4 3823 6928/ 3799 3105 6 Alexander De Rhodes Street, District 1 Ho Chi Minh City Tel: (+84)8 3822 4224/3825 1436
Ministry of Industry and Trade http://www.moit.gov.vn 54 Hai Ba Trung Street, Hanoi Tel: (+84)4 3220 2222 Fax: (+84)4 3220 2525
256 Tran Phu Street, Da Nang Tel: (+84)511 356 2538 Fax: (+84)511 382 2930 10 Dinh Tien Hoang Street, Hai Phong Tel: (+84)31 384 2894 Fax: (+84)31 384 2243 44 Nguyen Thi Minh Khai Street, Khanh Hoa Tel: (+84)58 352 1571 747 Ba Trieu Street, Truong Thi, Nghe An Tel: (+84)38 375 4640 155 Nguyen Thai Hoc Street, Vung Tau Tel: (+84)64 357 0266 Fax: (+84)64 385 9651
45 Tran Cao Van Street, District 3, Ho Chi Minh City Tel: (+84)8 3829 4631 Fax: (+84)8 3824 3273
General Department of Customs
Ministry of Foreign Affairs
http://www.customs.gov.vn
http://www.mofa.gov.vn
Duong Dinh Nghe Street, Cau Giay District Hanoi Tel: (+84)4 3944 0833
1 Ton That Dam Street, Ba Dinh District, Hanoi Tel: (+84)4 3199 2000/3199 3000 Fax: (+84)4 3823 1872
2 Ham Nghi Street, District 1, Ho Chi Minh City Tel: (+84)8 3829 1422
Vietnam Chamber of Commerce and Industry http://www.vcci.com.vn 9 Dao Duy Anh Street, Dong Da District, Hanoi Tel: (+84)4 3574 2022 Fax: (+84)4 3574 2020/3574 2017 171 Vo Thi Sau Street, District 3, Ho Chi Minh City Tel: (+84)8 3932 5143/3932 5171 Fax: (+84)8 3932 5143/3932 5281
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