vietnam content bangkok bank in vietnam economy, fundamental and factor of vietnam economy...
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Vietnam
Content •Bangkok Bank in Vietnam
•Economy, Fundamental and factor of Vietnam Economy
•Investment Procedure & Geography
•Opportunities
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We care for you wherever you are …
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Bangkok Bank (Vietnam)
• Hanoi Branch–Unit 3, 3rd floor, International Centre– 17 Ngo Quyen, Hoan Kiem District– Hanoi, Vietnam– Tel: (84-4)3 936 5903 – 8
• Ho Chi Minh Branch–G/F Harbour View Tower – 35 Nguyen Hue Boulevard, District 1– HO Chi Minh City, Vietnam– Tel: (84-8)3 821 4396 - 8
•Before VN war, established 1961 to 1975: Saigon branch
•After VN war reopened since 1992 and we are the first foreign bank in Vietnam
•Investment consultant: Assist more than 100 FDI plants to set up in Vietnam
•Awarded Letter of Merit and flag of Merit by State Bank and Prime Minister for Outstanding Performance for year 2008-2011, consecutively
Vietnam Economic Indicator
Sources: Vietnam State Bank, Ministry of Industry and Trade, Ministry of Planning & Investment, General Statistics Office, Reuters, World Bank, IMF, ADB
2010 2011 2012 2013 (F) 2014 (F) 2015 (F)
GDP Growth (%) 6.78 5.89 5.03 5.2-5.5 6-7 6-7
Import growth (%) 20.1 24.7 7.1 14-16 12-15 12-15
Export Growth (%) 25.5 33.3 18.3 12-14 10-13 10-13
Balance of Trade (USD Billion) -12.4 -9.5 0.3 -2 -4 -8 -10 -8 -10
Unemployment Rate (%) 4.3 3.6 3.25 4 – 5 4 - 5 4 - 5
Inflation Rate (%) 11.75 18.13 6.81 7-9 8-10 8-10
Average Lending Interest Rate (%) 12-15 17-19 12-15 9-12 10-13 10-13
Average Exchange Rate (USD/VND)
19,500 21,036 20,850-20,950 21,000-22,000 21,500-22,500 22,500-23,500
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2009 2010 2011 2012 Sep - 13 2013 (F)
GDP 5.32% 6.78% 5.89% 5.03% 5.14% 5.2-5.5%
CPI 6.52% 11.75% 18.13% 6.81% 6.3% 7-9%
Vietnam Economic Indicator
Sources: GSO, Reuters, World Bank, IMF, ADB
VIETNAM CONSUMER PRICE INDEX
0%
3%
6%
9%
12%
15%
18%
21%
Y-2009 Y-2010 Y-2011 Y-2012 Sep-13
GDP GROWTH
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
Y-2009 Y-2010 Y-2011 Y-2012 Sep-13
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2009 2010 2011 2012 Sep – 2013 2013 (F)
Export US$56.6 bio US$71.63 bio US$96.3 bio US$114.6 bio US$96.5 bio US$129-130bio
Import US$68.8 bio US$84.0 bio US$105.8 bio US$113.8 bio US$96.6 bio US$132-133 bio
FDI (registered capital) US$21.5 bio US$18.6 bio US$14.7 bio US$13 bio US$15.0 bio > US$15 bio
FDI (Disbursement) US$10.0 bio US$11 bio US$11 bio US$10.46 bio US$8.6 bio US$10-11 bio
Vietnam Economic Indicator
Sources: GSO, MOIT, MPI, Reuters, World Bank, IMF, ADB
FOREIGN DIRECT INVESTMENT
0
5
10
15
20
25
Y-2009 Y-2010 Y-2011 Y-2012 Sep 13
Registration Disbursement
VIETNAM TRADE BALANCE
-40-20
020
4060
80100
120
Y-2009 Y-2010 Y-2011 Y-2012 Sep 13
Export Import Trade Balance
77
Year Depre.
2007 0.4%
2008 7.7%
2009 5.7%
2010 5.5%
2011 7.9%
2012 -1.86%
Jan-Sep, 2013 1.3%
Level Status
Fitch (Jan 2013) B+ (FC) B+ (LC)
Stable
S&P (Jun 2013) BB- (FC) BB- (LC)
Stable
Moody’s (Sep 2012) B2 (FC and LC bonds) B1 (FC Country ceiling) Ba2 (LC Country Ceiling) B3 (FC Bank deposit ceiling) Ba2 (LC Bank deposit ceiling)
Stable
Country’s RatingVND Depreciation (year-on-year)
Vietnam Economic Indicator
- Notes: FC: foreign currency; LC: local currencyNotes:- As of Aug 30, 2013, the USDVND official rate was increased by 1% from 20,828 to 21,036. But in terms of the inter-bank market level, VND has been depreciated against USD by around 1.3% in Jan-Sep 2013 .
- Sources: Reuters
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Strength and Weakness of Vietnam
• Strength- High political stability
- Plenty of young and low wage labors
- Abundant natural resources
- Overseas Vietnamese 4.5 million population (bringing more than USD9 billion inward remittance to the country)
• Weakness- Indistinct principle and regulation
- Obsolete infrastructure
- Fluctuation of Money Market and Exchange rate
- Shortage of skilled workers in Production hub area
- Lack of upstream industry
- Electricity shortage in dry season
Reasons of VND Devaluation• Lack of confident of local people in VND (sentimental factor)
• Black market• Gold
• Huge Trade Deficit (around USD11-12B/month) Solved
Reasons of high inflation• Pro-growth policy and inefficient investment (demand pull)• Lack of supporting industry rely on imported raw material(cost
push)
Things to watch• Vulnerable Banking Industry: Restructuring of Banking industry and
gold market• Return of inflation Further devaluation
Exchange rate
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Items 2009 2010 2011 2012 Sep - 2013 2013 (F)
USDVND official ceiling rates 18,479 19,500 21,036 21,036 21,246 21,400-21,600
USDVND Inter-bank market level
18,600-18,700 20,750 21,250 20,820-20,860 21,090-21,140 21,000-22,000
• Currency : Vietnam Dong (Oct 21, 2013)
- SBV Base Rate: VND21,036/USD
- Ceiling and Floor Rate: + or – 1% of official Rate: VND21,246/USD and VND20,826/USD
- Inter-bank level: VND21,080-21,120/ USD
- Free Market Rate: VND21,130-21,180/ USD
• FX is controlled strictly by SBV
• Declaration required for funds brought in/out of Vietnam in excess of US$ 5,000.- plus VND15 million
USDVND Foreign Exchange Rate (2012-2013)
20,500
20,580
20,660
20,740
20,820
20,900
20,980
21,060
21,140
21,220
21,300
-Aug12
-Sep12
-O ct12
-Nov12
-Dec12
-Jan13
-Feb13
-Mar13
-Apr13
-May13
-Jun13
-Jul13
-Aug13
-Sep13
SBV's official rate Ceiling rate Floor rateBank's rate Interbank level
Interest rate
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Items 2009 2010 2011 2012 Sep - 2013 2013 (F)
VND interest rates (3mth) 12.0% 12.0-14% 14.0-16.0% 7.0 – 11.0% 5.0-8.5% 6.0 – 9.0%
Interest rate (I.e. 3 mth as of Oct 21, 2013)
(% per annum) USD VND
Fixed deposit interest rate 0.25-1.25% 4.0-7.0%
Loan interest rate 2.5-5.0% 7.5-11.0%
Note: State Bank’s VND base rate = 9%
Source: Reuters
VNIBOR Fixing Rates (2012-2013)
VND INTEREST RATE 2012-2013
0.0
1.5
3.0
4.5
6.0
7.5
9.0
10.5
12.0
Sep-12
O ct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
O/N 1M 3M 6M
Banking Services • Deposits (USD, VND)
Current, Savings, Fixed
• Loans (USD, VND) Revolving Short-term Loan Long-term Loan Trade Finance Facility: L/C, S/G, T/R, Packing Loan, etc.
• Local and Foreign Fund Transfer (USD, VND, THB, EUR, etc.)
• Foreign Exchange
• International Trade Inward/Outward Bills for Collection: D/P, D/A Letter of Credit
Settlement system
• Cash settlement
• Bank Transfer
• Cheque (not widely used because don’t have cheque clearing house)
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Profit Repatriation
• Convenient and easy
• Profit repatriation is permitted after settlement of Corporate Income Tax and other obligations to the State, if any.
• Profit repatriation can be done once a year
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Procedure for investment in Vietnam
• Contact industrial park for the land, factory and apply for the investment license (take around 1 month long)
• After complete investment license, bring the license to security department at police office to apply for the legal company stamp (take around 2-3 weeks)
• After authorized the company stamp, open the capital account with the bank for transfer the fund (allow to have only one account only).
• Investor can start construction or operation after complete all the process above.
3 Purposes of Investment in Vietnam
• Enjoy cheap labor and reduce production cost• To capture 90M population market• To find source of raw material
Key success factors in investment in Vietnam
• Know well and respect local regulations• Manage well in human resource• Understand culture of Vietnamese consumer• Have “BBL” as your partner
Export - Import Markets & Products
Export Markets & Products
Sources: General Statistics Office
Import Markets & Products
Sources: General Statistics OfficeNotes: * the value by August 2013
Major FDI in Vietnam
FDI in Vietnam
20Sources: Ministry of Planning & Investment
FDI in Vietnam
21Sources: Ministry of Planning & Investment
FDI in Vietnam
22Sources: Ministry of Planning & Investment
FDI in Vietnam
23Sources: Ministry of Planning & Investment
FDI in Vietnam
24Sources: Ministry of Planning & Investment
FDI in Vietnam
25Sources: Ministry of Planning & Investment
Major area for investment
Successful Thai Investor in Vietnam
Matters should be aware of investment in Vietnam
• Should study principle and regulation completely
• VND devaluation may effect performance of the company (should add some margin to partially cover such risk)
• Strict foreign exchange control and tight USD currency liquidity
• Balance between USD and VND debt
• Labor quality should be closely monitored and well trained.
• Should study the market, demand structure and also consumer behavior for effectively do marketing and sales.
• Aware of pollution issue
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Opportunity• Bubble burst Asset price went down M&A(within 6 mths- 1
year)• Cheaper production cost with potential big market• Low PE and low market cap./GDP with long term growth
Fact of Investment in Vietnam • Joint Venture with local has low successful rate 100% owned is
best• First three years consecutive loss Big profit after 3 years• High risk always bring high return• Boss must be at the ground• Always relied on expat team
Investment’s General Information
• Salary- Minimum salary stipulated by government for both local and FDI enterprises: VND1.65 -
2.35 million or equivalent around USD 79-113 depend on defined area (effective from 1 Jan 2013). Salary offer to employee must be at least 7% higher than minimum salary.
- Salary for probationary employee is at least 70% of official salary
- Maximum 8 hours/day or 48 hours per week
• Overtime- Overtime maximum 4 hours per day and 200 hours per year.
- 150% normal 180% night time 200% weekly holiday and 300% public holiday or paid leave
• Labor Welfare (apply for year 2012-2013)- Company part: 17% for social insurance, 3% for health insurance, 1% for unemployment
insurance
- Employee’s part: 7% for social insurance, 1.5% for health insurance, 1% for unemployment insurance
• Labor Union- If the company has more than 10 persons, require to has union but not compulsory
Contact Industrial Park
• HCM:
1. Tan Tao IP.
- Contact person: Ms. Uyen, cell phone no.: 094 99 84 666
- up to 2050.
2. Hiep Phuoc IP.
- Contact person: Mr. Binh, cell phone no.: 0907 962 922
- up to 2048.
3. Tan Thuan EPZ: the rental land area was already full.
• Binh Duong:
1. VSIP 2 (Vietnam Singapore Industrial Park 2)
- Phone No.: 0650 3861868
- Contact person: Mr. Toan, cell phone no.: 093 88 68 788
- up to 2058.
2. My Phuoc IP:
- Phone No.: 0650 3811777 (MKT Dept.)
- up to 2057.
• Ba Ria- Vung Tau
1. My Xuan A Industrial Zone: as informed by subject, at the moment, the rental land area was already full and they only provide the service of factory rental to customer.
2. My Xuan A2 Industrial Zone:
- Phone No.: 064 3899164
3. My Xuan B1 Industrial Zone:
- Phone No.: 064 3838423
- Contact person: Ms. Trang, cell phone no.: 0945 209 714
- up to 2048.
4. Phu My 1: the rental land area was already full.
5. Phu My 2: the rental land area was already full.
6. Phu My 3:
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• Dong Nai:
1. Bien Hoa 1 & 2: the rental land area was already full.
2. Nhon Trach 1:
- Phone No.: 0612 215 360
- Contact person: Ms. Hoi, cell phone no.: 0984 098 066
- up to 2048.
3. Nhon Trach 2: the rental land area was already full
4. Long Thanh Industrial Zone:
- Phone No.: 061.3514494
- Contact person: Ms. Hoang, cell phone no.: 0983 325 520
- 45 years.
5. Amata IP:
- Phone No.: 061.3991007
- Contact person: Ms. Thao.
- up to 2044.
6. Bau Xeo IP:
- Phone No.: 061. 3924377 - 3924690
- Contact person: Ms. Nhu, cell phone no.: 0933 050 167
- 46 years.
7. Giang Dien IP:
- Contact person: Mr. Minh, cell phone no.: 0903 037 589
- 45 years.
8. Ho Nai IP:
- Phone No.: 061.3982039 (we cannot reach subject since no one picked up the phone).
- up to 2048 (reference price from website).
9. Xuan Loc IP:
- Phone No.: 0613 834 700
- Contact person: Ms. Nhu, cell phone no.: 0913 130 18
- up to 2056.
10. Ong Keo IP:
- Phone No.: 0612 215468
- Contact person: Ms. Trinh, cell phone no.: 0909 289 006
-up to 2058.
11. Song May IP: the rental land area was already full.
12. Thanh Phu IP: in construction.
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Contact Industrial Park
Thank you and see you in Vietnam