VIETNAM BUSINESS REVIEW | FINANCE 1

Hot news of the week

Vol 01, 03rd January 2018

What’s in it today?

FINANCE

Vietnamese interest in Bitcoin in top 5 among global trading

floors

Investors shrug as Vietnam tries new rules to stoke IPO interest

HDBank to debut shares on Jan. 5

RETAIL

Retail sales grow 10.9% this year

South Korea’s GS retail picks HCM City for first overseas

convenience store

Local fast goods sales overtake imported ones

STARTUP

Business formations soar

Fitness studio platform WeFit raises $155k funding led by ESP

Capital

Co-working spaces becoming more popular in Vietnam

ECOMMERCE

Vietnam's e-commerce market grows 35% annually

Amazon eyes Vietnam expansion, setting the stage for battle

with Alibaba

Investors pour millions of dollars into Vietnamese e-commerce

INVESTMENT

Japan returns as top investor in Vietnam

Total investment equivalent to 33.3% of GDP

Mitsubishi invests in HCMC’s green property

LOGISTICS

Online logistics booking system launched

E-commerce takes off with e-logistics

VIETNAM BUSINESS REVIEW | FINANCE 1

FINANCE

Vietnamese interest in Bitcoin in top 5 among global trading floors

Bitcoin has become a focal point globally with prices skyrocketing. On large bitcoin trading floors such as

Bittrex, poloniex.com, wex.nz, the number of accesses from Vietnam is in the top 5.

Vietnamese laws don’t recognize bitcoin as a currency or a kind of commodity. However, this has not

prevented people from paying attention to the crypto currency which has seen prices soaring in recent

days. More and more people are trading bitcoin and investing in bitcoin.

Investors shrug as Vietnam tries new rules to stoke IPO interest

Vietnam has a backlog of state-owned enterprises queued up for initial public offerings in the final few

days of the year and in the first month of 2018 -- despite not much investor interest.

Feeling a sense of urgency, Hanoi issued a new decree on IPOs of state-owned enterprises in November

to take effect from January 2018. The changes include the introduction of a book-building process,

easing restrictions on strategic partnerships, and tightening valuation procedures to avoid wrongdoing.

The new regulations on book-building, underwriting and private placement require the prime minister's

approval.

The new regulations will provide more transparency, greater equality among investors, and better

protection. It will also force enterprises to more fully disclose information to investors.

HDBank to debut shares on Jan. 5

HDBank, formally known as Ho Chi Minh City Development Joint Stock Commercial Bank, will debut on

Vietnam’s main stock exchange on January 5, a listing document showed on Thursday, after it raised

$300 million in an initial public offering last week. The bank has been granted approval to list over 980

million shares on the Ho Chi Minh Stock Exchange at a reference price of 33,000 dong ($1.45) a share,

giving the bank a price tag of $1.43 billion.

VIETNAM BUSINESS REVIEW | E-COMMERCE 2

E-COMMERCE

Vietnam's e-commerce market grows 35% annually

Vietnam's e-commerce market is growing 35 percent per year, 2.5 times faster than Japan, a

Vietnamese official said.

Vietnam's e-commerce retail sales growth in the 2016-2020 period is estimated at 20 percent per

annum and the country's total retail e-commerce sales will reach 10 billion U.S. dollars by 2020, Vietnam

News Agency on Monday quoted Lai Viet Anh, deputy director of Vietnam E-commerce and Information

Technology Agency under the Ministry of Industry and Trade, as saying.

Amazon eyes Vietnam expansion, setting the stage for battle with Alibaba

Online retail giant Amazon Group has its eye on Vietnam for the company’s next expansion in Southeast

Asia as it looks to go head to head with Lazada, which Alibaba owns a controlling stake.

Amazon also faces competition from China’s other ecommerce giant JD.com, which invested in Vietnam

e-commerce platform Tiki last month.

Investors pour millions of dollars into Vietnamese e-commerce

The Vietnamese e-commerce

segment has become more

vibrant due to increasing

investments in the past few

years. The rate of internet and

smartphone usage is increasing,

especially in big cities. Vietnam

will become one of the hottest

e-commerce markets over the

world.

According to Nielsen, the annual

growth speed of the e-

commerce market is 22% and is

expected to hit $10 billion by 2022 from the current $4 billion. The Vietnamese e-commerce market

shows great potential for development and receives great attention from new investors.

According to MK News of Korea, STIC Investment Inc. will pour approximately $10 million into Tiki.vn.

STIC is an international venture capital firm, incorporated in 1999, with investments in over 360

companies. The firm has grown into a private equity firm handling over $4.2 billion.

VIETNAM BUSINESS REVIEW | START-UP 3

START-UP

Business formations soar

As many as 126,860 companies were established in Vietnam in the whole 2017 with a combined

registered capital of 1,296 trillion dong ($57.1 billion), up 15.2% in number and 45.4% in value from a

year earlier, according to the Ministry of Planning and Investment.

Fitness studio platform WeFit raises $155k funding led by ESP Capital

Fitness platform WeFit.vn, which helps connect workout enthusiasts with fitness studios across Vietnam,

has raised $155,000 in a new investment round led by homegrown venture capital firm ESP Capital.

Additional financing was provided by Vietnam Innovative Startups Accelerator (VIISA), which invests in

seed stage investment in global startups, and angel investor Nhan Nguyen.

The one-year-old startup gives users an option to choose out of 500 medium and high-class fitness

studios across Vietnam that they can join from anywhere and at any time.

Co-working spaces becoming more popular in Vietnam

The growth rate of co-working space has

been 53% globally over the last 05 years,

while in Vietnam, co-working space supply

has been growing 58% per year.

Co-working spaces have grown along with the

‘startup spirit’. More young entrepreneurs

began considering using co-working spaces

after Barack Obama or Sundar Pichai met

Vietnamese youth at co-working spaces when

visiting Vietnam.

According to CBRE, 17 co-working space service providers by the end of the first half of the year with

14,500 square meters of working areas in 22 places. These include small spaces with the area of 200-300

square meters, and big ones, more than 1,000 hectares.

91% of co-working space users in Vietnam belong to Gen Y, or people aged below 35.

VIETNAM BUSINESS REVIEW | RETAIL 4

RETAIL

Retail sales grow 10.9% this year

Retail sales revenue in Vietnam hit 2,937.3 trillion dong ($129.4 billion) in 2017, representing an

increase of 10.9% year-on-year and higher a growth rate of 10.1% in 2016, according to the General

Statistics Office.

South Korea’s GS retail picks HCM City for first overseas convenience store

South Korea’s GS Retail, which runs the GS25 convenience store chain, has said it will open its first

overseas outlet Ho Chi Minh City, Vietnam’s largest city, next month, the Korea Herald reported.

With the first branch opening in mid-January, GS Retail plans to launch a total of four convenience

stores in the city in the month.

Local fast goods sales overtake imported ones

The sale of domestically produced goods in the Fast Moving Consumer Goods (FMCG) sector such as

milk and dairy products, instant noodles and “refresher” drinks is growing faster than those produced by

foreign manufacturers.

In 2016, sales by local players in Vietnam grew 7% in value, compared to 5% two years ago, and

contributed 42% to total FMCG sales in the country. At the same time, the growth of sales by

multinational companies was stagnant with an increase of only 2% in value.

Domestic businesses are increasingly gaining dominance in the FMCG market. The preference among

Vietnamese for local brands was strongest in the dairy (milk/butter/cheese/yogurt) and biscuits/snacks

categories, where up to 48% and 44% of consumers, respectively, said they prefer to buy local brands.

Rural areas continue to be the biggest potential market for FMCG manufacturers. Data indicates that

while urban areas gained 4.7%in FMCG growth in the third quarter of the year compared with the same

period last year, sales in rural areas grew 7.6% during this period, mainly led by 7.4% in volume growth,

and contributed 54% to total FMCG sales.

VIETNAM BUSINESS REVIEW | LOGISTICS 5

LOGISTICS

Online logistics booking system launched

iFreight, a startup in the logistics sector, on December 26 introduced its online logistics booking system

in Vietnam on the website at https://ifreight.net.

Compared to traditional logistics services, the iFreight system will help import-export enterprises save

significant time and cost for logistics activities, Sang said. A survey of iFreight on its customers shows

that iFreight’s online logistics booking system helps save 20% of costs

iFreight has cooperated with more than 40 large logistics service providers, so enterprises can make

price comparisons and bookings within 2 minutes, manage orders and receive text messages on the

cargo transport process. In addition, customers will be provided with consulting services when facing

problems if any. As a result, enterprises may reduce risks, save resources and overcome shortcomings of

traditional logistics services.

E-commerce takes off with e-logistics

Logistics is expected to be a game changer for the Vietnamese e-commerce market in 2018 as new

entrants are coming in and existing operators are expanding to improve their delivery services.

According to Kantar Worldpanel, the percentage of e-commerce shoppers grew from 5.4% to 8.8% of

the four largest cities’ urban population, in the last year alone. In light of this trend, many foreign

logistics providers and e-commerce operators cannot afford to miss the opportunity to provide e-

logistics to meet the increasingly sophisticated demand.

DHL eCommerce made a splash by rolling out its domestic delivery network in Vietnam in July 2017.

Local players such as Giaohangnhanh, Vietnam Post, or LeL continue to increase investments in existing

infrastructures, technologies, and fleet assets.

As e-commerce is growing at a robust pace, logistics providers have to come up with new business

models to deal with a soaring number of frequent, small-size orders. They have to invest in technology

and infrastructure to counter the numerous challenges from traffic congestion to failed deliveries, as

well as the higher logistical costs in rural areas.

VIETNAM BUSINESS REVIEW | INVESTMENT 6

INVESTMENT

Japan returns as top investor in Vietnam

Japan became Vietnam's biggest foreign direct investor in 2017, reclaiming the crown from South Korea

after a three-year gap with total investment of $35.8 billion, up 44.4% YoY. Noteable projects are

Marubeni’s $2.79b coal power plan in Nghi Son, Thanh Hoa province; Sumitomo’s $2.58b coal plant in

Khanh Hoa and Mitsui Oil’s $1.27b gas

pipeline project in Kien Giang.

Financial investment is also rising.

Sekisui Chemical acquired a 15% stake

in state-owned Tien Phong Plastic this

October as Vietnam moves to reform

state enterprises.

Besides, infrastructure exports are

creating a new wave of investments by the Japanese, just as Vietnam is working to lure more private-

sector money into infrastructure development amid mounting public debt.

Total investment equivalent to 33.3% of GDP

Up to 1,667.4 trillion dong ($73.45 billion) has been invested in the Vietnamese economy in 2017, rising

12.1% from 2016 and equivalent to 33.3% of the country’s GDP. Of the sum, 23.8% came from the

foreign-invested sector and 35.7% from the state-run sector, according to government data.

Mitsubishi invests in HCMC’s green property

The Diamond Lotus Riverside Complex in

District 8, Ho Chi Minh City will be built in

accordance with green construction

standards with 30 million USD in investment

from the Japanese Mitsubishi Group.

The investment will be made through Phuc

Khang Corporation after the two sides inked a

strategic cooperation agreement to branch

out green housing projects in the city.

According to reports from the municipal People’s Committee, the real estate sector attracted the largest

foreign direct investment amount with 984.4 million USD during January-November 2017, tripling the

figure the same period of previous year.

VIETNAM BUSINESS REVIEW | INVESTMENT 1

For more information, please contact us:

SEIKO IDEAS - 12th Anniversary

Research & Consulting Division

Our services Market Research

Business Matching

Investment Consulting

Translation - Interpretation

Training (Language & Soft skills)

Our clients Thinktanks, Universities

Japanese & Vietnamese Government Organizations

Manufacturers, Retail companies

Advertisement agencies, Mass media

Address Floor 5th

– A Chau Building

No.24 Linh Lang Str., Ba Dinh Dist., Hanoi,

Vietnam

Telephone +84-24-6275-5246 ; +84-24-6273-6989

Fax +84-24-6273-6988

URL www.seiko-ideas.com

PIC Tram Nguyen (Ms.)

Mobile +84-91-4994-830

Email tram.nguyen@seiko-ideas.com``

*You are receiving this because you subscribed to our weekly business newsletter or you gave us your address via namecard.