According to CRI, at the end of 2018, over 2.10 million individual investors, including nearly 30,000 foreign individual investors, had a securities account in Vietnam. The number of individual investors was equivalent to about 2% of Vietnam’s population. Less than 5% of the securities accounts opened by individual investors were active. Although Vietnam’s securities market is dominated by individual investors, the number of institutional investors is also growing. At the end of 2018, there were 9,100 institutional investors in Vietnam. The number of foreign institutional investors reached 3,242, increasing by about 1% YOY. At present, the average daily turnover of stocks in Vietnam is less than USD 200 billion. The price limit for a normal trading day is 10%.

A-Share Listed Securities Companies – Profiles and Financial Data

According to CRI, low trading capacity and low liquidity (T+2) make Vietnam’s stock market less attractive to foreign investors to some extent. However, this situation is expected to change as the Vietnamese government is introducing measures to increase market liquidity and expand the stock market. On one hand, the government is reducing or withdrawing investment in state-controlled enterprises by advantage of capital market. More large enterprises are planning to go public， which is regarded as a good investment opportunity by all parties on the market. On the other hand, Vietnam is considering reform of its securities trading system. The plan is to achieve T+0 trading by the end of 2019 to improve stock liquidity.

Vietnam’s GDP is growing at an annual rate of more than 7%. Foreign investment is pouring into Vietnam, which will definitely promote the growth of Vietnam’s stock market.

According to CRI, the Vietnamese government has honored its WTO commitments and opened its securities market. The securities companies in Vietnam mainly engage in brokerage business with commission rate of about 0.15%. They can also engage in margin trading and securities lending, issue letters of guarantee (similar to the letters of guarantee by Chinese commercial banks) to grant loans to investors at annual interest rates of more than 10%. In addition, they provide investment bank services with a minimum commission of only USD 10,000. With passport, foreign investors can open accounts with local securities companies and banks. Lacking financial knowledge, Vietnamese people would rather invest in the real economy than invest in securities. As their income rises, more people will participate in the securities market.

Dominated by foreign investment, Vietnam’s fund management industry has a large scale. The amount of assets managed by the largest fund in Vietnam exceeds USD 1 billion. For example, Bill & Melinda Gates Foundation has dozens of funds in Vietnam, and the smallest one manages more than USD 10 million. Chinese financial companies such as Ping An Asset Management Co., Ltd. are also entering the Vietnamese market.

Thanks to loose regulation of foreign exchange, international funds continue to flood into Vietnam’s capital market where fund lows is unrestricted and personal capital gains are tax-free. With the introduction of favorable policies, foreign funds are flowing into Vietnam’s securities market.

According to CRI, on July 10, 2019, VNINDEX (HSX) closed at 973.65 points, up about 9% from the beginning of 2019; the turnover was about VND 3.87 trillion (USD 165 million).

CRI estimates that the dynamic price-to-earnings (P/E) ratio of stocks in Vietnam is lower than 15. The P/E ratios of consumable stocks and bank stocks are 20 or higher while the P/E ratios of real estate stocks and electricity stocks are low. In Vietnam, most listed companies like passing dividends, which leads to high dividend yields. Some companies have dividend yields of 50% or 60% and even see dividends exceed market value mainly because listed companies in Vietnam prefer cash dividends. Some listed companies in Vietnam may defraud investors by creative accounting. It is advised to avoid buying stocks with high risks.

For more information about Vietnam’s securities market, please call +86-21-6150 9726.

The post Vietnam Securities Market Has a Good Prospect first appeared on CRI Report.

According to CRI, consumption is a major contributor to Vietnam’s GDP. Household consumption is closely related to final consumption expenditure. Since 1995, final consumption expenditure has been accounting for more than 70% of Vietnam’s GDP, and household consumption has been accounting for nearly 90% of Vietnam’s final consumption expenditure. In recent years, the CAGR of consumption expenditure in Vietnam is 10%, which is higher than GDP growth rate. Consumption expenditure contributes a significant share of Vietnam’s economic growth.

Vietnam has a population of nearly 100 million. The mainstream of its population is people aged between 20 and 50 who have strong spending power. Different from Chinese people, Vietnamese people prefer consumption to savings. Statistics show that the savings rate in China is 60% while that in Vietnam is less than 30%. A young population means huge consumption potential.

According to CRI, Vietnam has a low savings rate and a narrow wealth gap. Its savings rate increased all the way from less than 5% in 1990 to 30% in 2000, began to decrease in 2001 and reached about 25% at the end of 2018. Overall, the savings rate in Vietnam is lower than that in China. The Gini coefficient in Vietnam stays between 0.4 and 0.45, which is lower than that in many other development countries. Because the Vietnamese government invests a lot in compulsory education and basic medical services and most Vietnamese people live in self-built houses, Vietnamese people needn’t pay much for education, medical services and housing, and the wealth gap in Vietnam is narrow. But as Vietnam’s economy grows rapidly, the wealth gap is becoming wider.

According to CRI, household consumption in Vietnam includes the consumption in retail trade, tourism, catering trade, e-commerce, education and training, etc. Traditional retail trade takes a leading position and the shares of tourism and catering trade are growing rapidly. Although retail trade accounts for a large proportion of household consumption in Vietnam. Its growth rate and share is decreasing in recent years. In contrast, tourism, accommodation and catering trade account for a small proportion but they are growing fast and their shares are increasing sharply as driven by the continuous flows of foreign tourists and investors. The number of foreign tourists to Vietnam was 5 million in 2010 and 15.50 million in 2018, representing a CAGR of 12%. In 2018, the number of Asian tourists to Vietnam reached 12,075,500, increasing by 23.70% YOY; the number of European tourists reached 2,037,900, increasing by 8.10% YOY. In 2018, the three largest sources of foreign tourists to Vietnam were China, South Korea and Japan. The number of Chinese tourists reached 4,966,500, increasing by 23.90% YOY; the number of South Korean tourists reached 3,485,400, increasing by 44.30% YOY; the number of Japanese tourists reached 826,700, increasing by 3.60% YOY.

Vietnam’s sales figures are closely related to per capita income. Improving spending power is the key to stimulating consumption in Vietnam. Consumption growth mainly depends on the ability and the willingness to consume. Per capita income is a key indicator of the ability to consume. A comparison shows that the growth rates of Vietnam’s GDP and total retail sales of consumer goods are highly correlated. In case of low income level, stronger spending power helps accelerate consumption growth. Therefore, the high correlation between Vietnam’s per capita GDP and sales figures from 1998 to 2018 indirectly reflects that the increase in disposable income has improved spending power and boosted household consumption. As Vietnam’s per capita GDP is still at a low level, it is expected that Vietnam’s total retail sales of consumer goods will grow significantly in the next 10 to 20 years.

According to CRI, in addition to the increasing personal income, the new driving forces for Vietnam’s consumer market also include:

• Expansion of e-commerce market

The market size of e-commerce in Vietnam in 2018 is estimated to be USD 9 billion to USD 12 billion by different institutions. CRI estimates that the market size was USD 10 billion, and it will grow at a CAGR of 25% to 30% from 2019 to 2023.

• Fast growth of mobile Internet and mobile payment

In Vietnam, especially in large cities, mobile payment has become popular among consumers because of convenience and safety. Vietnam has developed fast and inexpensive mobile Internet services. Over half of Vietnamese people have two or more mobile phones. In large cities of Vietnam, people spend an average of 3.5 hours per day online, second only to Singapore among the 10 ASEAN countries. Vietnamese people go online on their mobile phones to get information, do business and carry out other activities.

• Rapid development of high-end services

Many Vietnamese people are willing to invest in education and training. For example, many people attend classes to learn English, Japanese and financial knowledge and have their children take extracurricular foreign language courses and art courses. The development of high-end services can promote the growth of Vietnam’s consumer market.

If you are interested in investing in Vietnam’s retail trade and service industry, pleasecall +86-21-61509726 to contact CRI.

The post Vietnam’s Consumer Market Has Huge Growth Potential first appeared on CRI Report.

1. Preferential Policies on Taxes and Foreign Investment

(1) Advantages of Bonded Zones

The Vietnamese government has approved the establishment of several bonded zones. The products manufactured by enterprises established in these bonded zones are exempt from tariffs and value added tax. Enterprises established in the bonded zones are exempted from corporate income tax in the first profit-making years and enjoy reduction in corporate income tax in the following two years. There are also more preferential policies.

As Vietnam has signed free trade agreements with many countries. Products manufactured in Vietnam can enjoy preferential tariff treatment or even zero tariff treatment when they are exported to South Korea, the United States, other ASEAN countries, the European Union, etc. In contrast, Chinese exports do not enjoy such treatment.

(2) Tax Cuts by the Vietnamese Government

The Vietnamese government cuts individual and corporate income taxes from time to time to support the development of the real economy. For example, in October 2016, the Ministry of Finance of Vietnam submitted a draft tax reduction plan to the Vietnamese National Assembly, proposing to reduce the corporate income tax rate for small and medium-sized enterprises and start-ups from the previous 20% to 17% from 2017 to 2020. The tax cut policy eases corporate burdens and encourages the establishment of more enterprises. Under the policy, enterprises with an annual turnover of no more than VND 100 billion (about USD 4.30 million) can enjoy tax breaks.

(3) Economic Zones

The Vietnamese government has approved the establishment of many economic zones. Since 1986, the Vietnamese government has been developing management and operation mechanisms for economic zones. At the beginning of 2016, it approved the plan to establish three special economic zones and revealed that it will pilot key economic and administrative policies in special economic zones. Enterprises in economic zones and industrial parks enjoy multiple benefits such as the reduction and exemption of tariffs and corporate income tax and the preferential treatment in land rent and credit rationing, which lays a foundation for the development of manufacturing enterprises.

(4) Preferential Policies on Foreign Investment

In July 2006, Vietnam enacted the Law on Investment, announcing that it would carry out unified management of domestic investment and foreign investment and cancel the restrictions on foreign investors set in the Law of Foreign Investment in Vietnam, including requiring foreign investors to give priority to Vietnamese goods or services in procurement. In 2007, Vietnam joined the WTO. In July 2015, to adapt to the Trans-Pacific Partnership (TPP) agreement and other new rules on international trade and investment, Vietnam made major amendments to the Law on Investment. The revised Law on Investment further explained the definition of foreign investors, the procedures for setting up foreign-funded enterprises, etc., simplified government approval procedures and gave greater preferential margin to foreign investment.

2. Obvious Labor Cost Advantages

(1) Absolute Labor Cost Advantage

According to CRI’s market survey, the minimum wages in Vietnam vary from one region to another. By minimum wage, there are four regions in Vietnam. Region I includes economically developed Ho Chi Minh City, Hanoi, Hai Phong, etc. In 2019, the minimum monthly wage in region I was VND 4.18 million (about USD 179) while the minimum monthly wage in region IV was only VND 2.92 million (about USD 125). In China, manufacturing enterprises are basically unable to recruit workers according to minimum wages. In contrast, the minimum wages in Vietnam have practical significance. They are the basic wages of unskilled workers who have just entered the workplace. From 2014 to 2019, the minimum wage in region I only grew at a CAGR of about 9%. CRI estimates that the labor costs of manufacturing enterprises in China are twice to thrice as much as the labor costs of their counterparts in Vietnam.

(2) Labor Force with Better Education

In Vietnam, primary school education, junior high school education and senior high school education are free of charge. Primary school education and junior high school education are compulsory and there are basically no illiterates. Of Vietnam’s manufacturing labor force, 90% have senior high school degree. However, the proportion is less than 50% in China’s manufacturing sector. Vietnam implements a work hour system of six working days per week and eight work hours per working day. Vietnamese workers are ready to work overtime because of high overtime pay. But overhours are severely restricted in Vietnam.

Cambodia and other Southeast Asian countries have lower labor costs. However, most manufacturing workers there have only received primary school education or are even illiterate. They can hardly master basic work skills and work safety rules. Therefore, these countries have smaller comparative advantages than Vietnam. Compared with the Philippines, Thailand and other industrially developed countries in Southeast Asia, Vietnam has high-quality labor force and low labor costs. It is estimated that labor-intensive manufacturing enterprises will gradually shift to Vietnam from China and other East Asian countries in the next decade.

3. Advantages in Other Production Factors

(1) Energy Costs

Vietnam’s industrial electricity prices and industrial water prices are quite different in different regions, but overall, they are lower than those in China.

(2) Land and Factory Building Rents

Foreign enterprises can hardly obtain the ownership of Vietnam’s land, but they can rent land or factory buildings for a long time. Overall, the land and factory building rents in Vietnam are lower than those in China. In China, land ownership is completely controlled by the government and the transfer of land-use rights lacks transparency. Enterprises have to pay various direct and indirect expenses. However, the land in Vietnam is mainly controlled by local residents. Therefore, land-use rights can be obtained at lower prices.

(3) Vietnam is a long and narrow country where most regions are no more than 300 kilometers away from the coast. Therefore, manufacturing enterprises in Vietnam can easily import raw materials and export finished products by sea.

4. Conclusion

In general, the production costs of garments, packaging products, daily necessities, etc. in Vietnam are 10% to 30% lower than those in China, thanks to the great advantages in the aspects of land costs, tariffs, corporate income tax and labor costs. Currently, Vietnam has no complete industrial chains for textiles, daily necessities, machinery, electronics, etc. It relies on imported raw materials and auxiliary materials, For example, it heavily relies on the imports from China in terms of raw materials for textiles. CRI suggests that enterprises on the Chinese market should seize the opportunity to build factories in Vietnam as soon as possible.

For more information about the Vietnamese market, please contact us

The post Advantages of Vietnamese Manufacturing over Chinese Manufacturing first appeared on CRI Report.

Since Vietnam joined the WTO in 2008, the market size of retail trade has been growing rapidly. In recent years, it maintains an annual growth rate of more than 10%. It was USD 88 billion in 2010, increased to over USD 140 billion in 2018 and is expected to reach USD 180 billion in 2020.

According to the statistics from of the Domestic Markets Department of Vietnam’s Ministry of Industry and Trade, by the end of 2018, there were 8,660 marts, 800 supermarkets, 768 shopping centers and over 1 million family-run stores in Vietnam. However, modern retail trade accounted for only 25% and traditional retail trade accounted for 75%. The proportion of modern retail trade is expected to increase to 40% in 2020.

The high growth rate of Vietnam’s retail market has attracted a large number of foreign investors. Large retail groups such as Lotte, Central Group, Aeon, Circle K, Kmart, Auchan and Family Mart have entered and are expanding business and opening new stores in Vietnam. The signing of the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), the rapid growth of Vietnam’s economy and the Vietnamese government’s commitment to opening up the service sector and retail trade increase foreign investment in Vietnam’s retail trade.

CRI suggests that small and medium-sized foreign retail enterprises should investigate and assess Vietnam’s retail market to seek investment opportunities. In the next two decades, Vietnam’s GDP growth rate will maintain its global leading position and Vietnam’s retail market will grow faster than its GDP, which will make Vietnam one of the major retail markets in Asia. For investors, earlier entry into Vietnam’s retail market means lower investment costs and earlier enjoyment of the market dividends.

Feel free to contact us for further discussion.

The post Vietnam Retail Trade Size Will Reach USD 180 Billion till 2020 first appeared on CRI Report.

According to Vietnam’s Ministry of Industry and Trade, from January to May 2019, 21 commodities each achieved import value of above USD 1 billion, accounting for 80.30% of the total value of Vietnam’s imports. The import values of electronic components, mechanical equipment, fabrics, steel and plastics increased significantly as compared to the same period of 2018. It is noteworthy that China, the largest source of Vietnam’s fabric imports, accounted for 57.30% of the import value of fabrics in Vietnam. As one of the major exporters and manufacturers of garments and textiles in the world, in 2018, Vietnam exported garments and textiles worth USD 30.40 billion, up by 16.60%YOY; it imported fabrics worth USD 12.90 billion, up by 13.50% YOY.

To encourage the development of the textile industry, the Vietnam Textile and Apparel Association suggests (1) boosting domestic fabric production, (2) building industrial zones for textiles, dyeing and finishing and (3) promoting legislation transparency.

The association believes that only by taking the above measures can Vietnam’s textile and garment industries get rid of the reliance on imports, increase the added value of their exports and benefit from free trade agreements.

CRI suggests that manufacturers of textiles and garments in China should make an investigation trip to Vietnam and invest there as soon as possible to share the dividends from the fast expansion of the Vietnamese market and avoid international trade risks such as the Sino-U.S. trade war.

Feel free to contact us for investment in Vietnam

The post Vietnam Imports Textiles from China in Large Amount in 2019 first appeared on CRI Report.

Since Vietnam is a favorite place to resource for furniture among furniture importers in a number of countries, it won’t hurt to create your own furniture building company. It doesn’t actually matter in the event that you understand how to make home furniture or not; you can always outsource the creation facet of the business when you concentrate on advertising and advertising your business. Another strategy to use about any of it is to take the time out to figure out how to make and remodel home furniture.

No. 2  Garment and Textile Items: Garment and Textile producing is another lucrative business in Vietnam because Garments and Textiles are among items that Vietnam exports. You may also focus on making ready-to-wear clothing or start your personal clothing line. However, if you think that it would be too costly to begin your own textile and garment Production Company, you may become a cloth merchant or start an on-line clothing shop. All these businesses are profitable equally.

No. 3 Construction and Building Components: Another great business that you could begin in Vietnam is selling of building and building components. There are therefore many building components that you could sell like cement, roofing materials and house fitting materials. You could also take up a business in the structure support sector like painting solutions, plumbing, home decoration, house renovation, HVAC installation and repair among several others.

No. 4 Detergents and Cosmetics: Detergents are utilized by almost everyone for washing and house cleaning. There are therefore many brands of detergents but that doesn’t imply that you cannot develop something unique and various. There would continually be a demand for a thing that is unique, different from the standard and solves a problem.

For example, you can opt to concentrate on developing car washing detergents or detergents for baby clothing. Both of these niches would look for a ready-made marketplace because people are researching to clean their vehicles without ruining the paint and end, as being a large amount of new parents want for methods to protect their bundles of pleasure from the result of harsh chemical substances in detergents.

No. 5 Agricultural Items Processing: Any business in the meals industry would usually sell so long as the business enterprise owner employs the proper technique to promote and marketplace the business. Agricultural items processing entails sourcing for natural farm create that you can procedure for sale. For example, Tomato puree is manufactured out of tomatoes, Poker chips from natural potatoes and so forth and so forth. You can constantly find an agricultural item that you could process for product sales and export.

No. 6 Exportation: Vietnam exports a whole lot of items like rice which really is a world staple, coffee, Crude oil, shoes, rubber, seafood; electronics; there are simply so many points that you could sell to purchasers from various other countries. To get worldwide buyers, you can visit a website like Find quality Manufacturers, Suppliers, Exporters, Importers, Buyers, Wholesalers, Products and Trade Leads from our award-winning International Trade Site. Import & Export on alibaba.com and many other e-commerce websites; you will look for a lot of individuals looking to buy stuffs from Vietnam.

You can even consider learning to be a product sourcing consultant. What an item sourcing consultant does is usually to link customers and sellers together. For example, there are individuals who would like to purchase stuffs from Vietnam via internet and given that they have never gone to Vietnam, they might need someone they are able to trust who is the Vietnamese or resides in Vietnam to greatly help out.

You could also turn into a freight forwarder for individuals who want to buy stuffs from Vietnam. You may also merge importation and exportation collectively, meaning that you’ll export what to other countries and in addition import from too. Some products you can import consist of raw cotton, petroleum items, cement, fertilizer, electronics and motorcycles.

No. 7 Real Estate: Another rewarding business you can begin in Vietnam is definitely building/buying properties for resale. With the amount of expatriates and immigrants getting into Vietnam, real estate can be a business you won’t regret. You can purchase aged properties to renovate and resell; you can build workplace blocks for lease or small housing models for rent aswell.

However, real estate is certainly expensive business because you will need a lot of capital to purchase real estate. But it’s not really a totally hopeless scenario for the cash-strapped trader, as possible still partake in the true estate business by learning to be a property manager. Just what a property supervisor does is to keep up properties with respect to the owners and generate commission for his providers.

No. 8 Restaurant and Bar: Vietnamese love good meals and drinks. If you like to spend money on the entertainment industry, starting a restaurant and bar is a very lucrative niche in this industry. You might consider establishing a night golf club where people can relax and unwind after a difficult day’s job.

No. 9 Logistics: with haulage and logistics business, you can begin this business without capital by leasing a pickup truck from an organization which would enable you to spread your repayments over a long time period. You can even consider investing in an used truck which is usually cheaper and less expensive. Your clients will be producers, importers, wholesalers, construction businesses and also private individuals.

No. 10 Used Car Seller: Everyone loves a good, clean, completely new vehicle but unfortunately, not everyone can afford it. This is why a lot of individuals resort to buying used vehicles. Car or truck dealers make lots of money simply from assisting people sell their utilized automobiles or importing used vehicles from other countries on the market. You can also turn into a car or truck broker which is very different from a car or truck dealer. As a car or truck broker, you don’t want much cash; what you would be doing is definitely linking individuals who need used vehicles with people who have to sell their vehicles and make commission for it.

Contact us for details:

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The post 2018 Top 10 Business Foreigners Can Invest in Vietnam first appeared on CRI Report.

The export value of Vietnamese textile and garment industry is expected to reach USD 31 billion, up by 10.2% YOY, due to the breakthroughs of the industry in 2017.

However, according to CRI, garment raw materials and equipment still depend heavily on import for the industry chain is not perfect. But Vietnamese textile industry still has its own advantages such as government favorable policies, low labor costs, high education level, low prices of land and energy.

Although TPP did not come into effect in 2017, the new FTAs have been signed and are being negotiated in Vietnam, which will bring many benefits for Vietnamese textile and garment industry. For example,Free Trade Agreement between Vietnam and Economic Union of Asia-Europebrought an opportunity for the Vietnamese textile industry to enter Russian market at the end of 2016;Free Trade Agreement between Vietnam and South Koreapaved the way for importing raw materials in Vietnamese textile industry.

Reference:

Vietnam Garment Manufacturing Industry Overview, 2011-2020

In addition, the Vietnamese government and local governments provide a large number of preferential policies for the textile and garment industry. For example, corporate income tax rate of Vietnam is only 20%; foreign enterprises are entitled to duty deduction and exemption. In addition to preferential policies stipulated by the central government concerning foreign capitals, more preferential policies can also be offered in different regions and industrial parks in terms of land rent, taxes, charges, etc.

According to CRI, the population of Vietnam was expected to reach 100 million by the end of 2017, of which there were 60% of labor forces. In 2018, the minimum monthly wages of regions divided into four tiers in Vietnam are as follows: the first tier is 3.98 million dongs (USD 175); the second tier is 3.53 million dongs (USD 156); the third tier is 3.09 million dongs (USD 136); the forth tier is 2.76 million dongs (USD 126).

According to CRI’s investigation on different areas of Vietnam, compared with China — the leading exporter of garments, labor costs in Vietnamese textile industry are under half of that of China. Besides, prices of energy and land in Vietnam are low.

According to the field study of CRI, compared with low labor costs in other ASEAN countries, Vietnam has advantages of stable political situation, perfect infrastructural facilities, high   education level of labor forces, stable exchange rates, etc. Furthermore, there are obvious cost advantages in investing Vietnamese garment industry. It takes only USD 0.5-1 million or even less to invest in a small garment processing enterprise (with about 50-100 employees) in Vietnam. Therefore, it is suitable for transferring small and medium-sized enterprises to Vietnam due to low costs of investing plants.

It is convenient for Vietnam to enter the international market because of preferential import duties. It is unlikely that European Union and the U.S. will impose anti-dumping duties on Vietnamese textile and garment products in the future.

According to market research by CRI, some Chinese textile and garment enterprises invest in Vietnam in order to enter ASEAN markets in consideration of the globalization distribution of enterprises. Some enterprises claim that processing imported raw materials into finished garments to sell in Vietnamese market and even ASEAN markets can save some import duties for tariffs of raw material, which are lower than those of finished products. Meanwhile, it is convenient for exporting finished products to Japan, South Korea and the U.S.A.

According to CRI’s investigation, international famous garment brands such as ZARA, GAP and NIKE have taken Vietnam as their major OEM base. Some famous textile and garment brands of China such as Youngor Group Co., Ltd. has invested plants in Vietnam. Other garment enterprises also regard Vietnam as one of the targets for industrial transfer. Some famous garment brands are looking for suitable OEMs. CRI forecasts Vietnamese textile and garment industry will remain rapid development. The export value is expected to reach USD 45 billion by 2022, representing a CAGR of about 10% from 2018 to 2022.

The post Export Value of Vietnamese Textile and Garment Industry Exceeded USD 30 Billion , 2017 first appeared on CRI Report.

According to CRI’s information from the Vietnamese government, the new policy of automobile production and sales would be implemented in Vietnam from Jan. 1, 2018. The main contents include: (1) Imported cars from ASEAN are exempted from import duty, but more than 40% of auto parts should be manufactured in ASEAN. (2) The import tax of parts of passenger vehicles with less than9 seats is cut to zero, but assembly plants are in demand in Vietnam. Also, the assembly volume of passenger vehicles (with less than 9 seats and smaller than 2.5 liters of car emissions) shall exceed 8,000 in Vietnam. There shall be at least one car model with an assembly volume of more than 3,000 annually. (3) Raising the import tax of used cars is recommended. Used cars are divided into two types to be levied with import taxes in terms of car emissions–1 liter or less and bigger than 1 liter. On the one hand, the import tax of USD 10,000 is levied on vehicles with emissions of 1 liter or less, so import prices of used cars are doubled previous prices. On the other hand, for vehicles with car emissions of bigger than1 liter, the import tax increases from thousands of dollars to tens of thousands of dollars, according to different car emissions. (4) Exhaust emissions of vehicles sold in Vietnam shall meet the Euro IV standard. If not, such vehicles cannot go through inspection formalities. (5) Vehicles exceeding their useful lives will be recalled. Vehicle manufacturers are responsible to recall their vehicles. At the same time, they can enjoy favorable supporting policies, as well as cooperate with other agencies to recall vehicles exceeding service lives.

Related Report: Automobile Industry Forecast to 2021: Singapore,Thailand,Philippines,Malaysia,Indonesia,Vietnam,Myanmar,Brunei,Laos and Cambodia

The above policies can promote the development the automobile assembly industry in Vietnam to some extent, and have placed a ban on imported used cars. According to CRI’s analysis, the overall domestic automobile and parts manufacturing in Vietnam is weak. According to the market research from CRI, over 200 auto parts enterprises can only produce low-tech parts such as car seats and tires. On the whole, Vietnam lacks a complete industrial chain of automotive manufacturing. By the end of 2017, Vietnam had less than 20 auto assembly enterprises. The demand for automobiles in Vietnam is on the rise as its economy develops rapidly. From 2012 to 2016, the output volume of assembled automobiles in Vietnam was rising. In 2012, the output volume was only 87,000 and reached 246,000 in 2016, representing a CAGR of over 30% during 2012-2016. In addition, a large number of new and used cars are imported to Vietnam every year.

According to CRI, for leading Japanese auto makers such as Toyota Motor and Mazda Motor, which have set up large automobile plants in Thailand and other ASEAN countries, auto manufacturing costs in Vietnam are high than that in Thailand and other nations where the automobile industry chain is complete. It is likely that auto giants such as Toyota may shut down automobile assembly plants in Vietnam and export vehicles from Thailand and other countries to Vietnam instead, in 2018 or later. However, for those small and medium-size vehicle manufacturers which do not have assembly plants for whole vehicles in other ASEAN countries, such as some car brands in China and India, Vietnam has great market potentials. These small and medium-sized automobile enterprises can import main parts, and manufacture or purchase some other parts in ASEAN to assemble cars in Vietnam so as to reduce spending on tariffs and production costs and to hold some market shares due to the elimination of some import tariffs on auto parts.

According to the CRI’s analysis, the current annual income of Vietnamese households is less than USD 4,000. Even in the most developed Ho Chi Minh City, most families have annual income of less than USD 10,000.The vehicle reserve volume in Vietnam is less than 20 per one thousand people, much lower than the global average. Therefore, most residents choose motorcycles as their transportation methods, for they cannot afford vehicles of international brand with an average selling price of over USD 15,000. Before 2018, a large number of used cars were imported into Vietnam every year. They were cheap but not guaranteed. Due to the implementation of the new policy, legal importation will be hardly possible. According to the CRI, new vehicles at low cost are expected to be welcomed in the Vietnamese market. It is estimated that the automobile manufacturers from China, India and other countries will be able to provide cars priced between USD 5,000 and USD 10,000throughassembling cars in Vietnam. Obviously, these new vehicles will be the first choice for many Vietnamese families.

The post New Policy of Automobile Industry Would Be Implemented in Vietnam from Jan.1, 2018 first appeared on CRI Report.

According to CRI’s information from the Vietnamese government, the export volume of Vietnamese coffee was about 1.42 million tons in 2017. The export value reached USD 3.21 billion. Germany and the U.S. are the first two major export destinations of Vietnamese coffee. Many years ago, Major agricultural exports from Vietnam were rice, rubber, etc. In recent years, however, traditional products such as rice have been overshadowed by coffee with the rapid increase of coffee export.

Coffee planting industry in Vietnam started 150 years ago, with coffee trees introduced by French traders. The production volume was small in more than 100 years that followed. After the Vietnam War (1975), Vietnamese government decided to implant a large scale of coffee trees so as to increase income of farmers. Other crops are widely replaced by coffee since  coffee can generate more revenue than rice and fruits. ROBUSTA coffee and ARABICA coffee are most widely planted in Vietnam. Their tastes are general, but their production volumes are high. They are usually used as major raw materials of instant coffee.

Related Reports:

Research Report on Coffee Industry in Vietnam, 2017-2021

According to CRI, in recent years, the planting area of coffee has exceeded 600 thousand hectares every year, with less than 20% belonging to state-owned enterprises and more than 80% to farmers and private companies. The planting scale of coffee is usually small. The general scale of coffee planted by farmers is 2-5 hectares. The general scale of coffee planted by enterprises is 50-100 hectares. There are millions of people engaged in industries related to coffee, ranging from planting, processing, trade to cafes spreading over Vietnam.

The annual production volume cannot be guaranteed for annual growth due to climate impacts. In the long run, however, the production volume of coffee beans is growing. The output volume of coffee beans increased from less than 80,000 tons in 1990 to over 1.5 million tons in 2017. Coffee beans have become one of the most important agricultural exports in Vietnam.

Vietnam is also one of the global exporters of instant coffee. According to CRI, instant coffee produced in Vietnam such as Brand “G7”, of which the sales volume has increased more than 10 times  in recent 10 years, has become one of major competitors in Chinese market. Chinese market of instant coffee is occupied by two major international brands — Nestle and Maxwell House (Kraft Foods) –due to the lack of famous domestic instant coffee brands. But with Vietnamese brands entering Chinese market, they have become powerful competitors. According to CRI, instant coffee which is produced in Vietnam enters Chinese market through both legal channels and smuggling. The price of smuggled products with the exterior packaging printed with all Vietnamese characters is over 20% lower than that of imported products.

According to CRI, with the economic development and the growth of people’s income, coffee consumption in Vietnam is growing fast. Vietnamese residents prefer to drink coffee in coffee shops all over the streets.CRI analyzes that there are over 50,000 coffee shops in Ho Chi Minh City, the largest city in Vietnam with more than 10 million people. An individual only needs to spend approximate 20,000 VND (88 cents) on sitting down to drink a cup of coffee, while a cup of takeaway coffee minimally costs about 10,000 VND (44 cents).Even if in premium coffee shops in the city center, a cup of coffee is generally priced no more than 200,000 VND (USD 8.8).

According to CRI, Vietnamese coffee industry is still in the bottom of the global coffee industry chain. Given that Vietnam’s coffee bean brands, instant coffee brands and coffee shop brands are all low-end brands, international capital is required. It is estimated that middle and high-end coffee brands are in demand in Vietnam with rising income of Vietnamese residents. For foreign investors, they are entitled to low labor costs and tax preferences in Vietnam. In this case, it is more profitability to establish coffee processing factories for producing coffee powder or instant coffee in order for export or domestic consumption or to invest in coffee shop chains in comparison with importing coffee beans from Vietnam.

The post Export Value of Coffee from Vietnam Reached USD 3.21 Billion, 2017 first appeared on CRI Report.