Key Areas of Vietnam’s Real Estate Market Look Set for Growth in 2015
HCMC – After five years of relative stagnation, 2015 looks to be a strong year for Vietnam’s real estate market. The country’s government has undertaken a number of important legal and regulatory changes to improve the market situation and encourage foreign investment. Below we consider some of the key areas for investment in the real estate market for 2015.
Market Insight: Vietnam’s Wine Industry
By Fabio Zaca,
HANOI – As Vietnam’s consumer market continues to grow, more and more global products are pouring into the country. Among those products that have seen considerable growth in sales over the recent years, has been wine. Starting from a very low level, the Vietnamese wine market has exploded, with hotels, restaurants, and retailers now offering a wide variety of wines from around the world.
Currently, the local wine market features wines from such areas as France, Italy, Chile, USA, and Australia. The best-selling wines are reds with 65 percent of the market, followed by whites with 25 percent, and sparkling wines with 10 percent.
Vietnam Cashes in on Cashews
Vietnam has retained its title as the world’s top cashew exporter for the ninth year in a row, as the country’s cashew and cashew by-product export revenue in 2014 reached a record US$2.2 billion.
The Vietnam Cashew Association (Vinacas) reported a 17.4 percent annual increase in volume of cashew kernels exports, with 306,000 tonnes shipped in 2014. Revenue from exports of the nuts grew by 21.9 percent to over US$2 billion, and when taking into account cashew by-products, export revenue was close to US$2.2 billion. Cashew prices had risen 3.8 percent year-on-year.
The primary destinations for Vietnam’s cashew exports are the USA, which receives approximately 30 percent of Vietnam’s total exports, followed by Europe with 25 percent, and China with 20 percent. Vietnamese cashews are exported to over 50 countries.
State Bank of Vietnam Credit Package Aims to Support the Housing Market
HANOI – The Deputy Minister for Vietnam’s Construction Ministry, Nguyen Tran Nam, has announced a proposal for the State Bank of Vietnam (SBV) to support the commercial housing market through a VND50 trillion (US$2.3bn) credit package. The package would supply loans of seven percent interest per year for the first decade, followed by a potential extension for a five or ten year period, with an interest rate adjusted according to market rates.
Bank lending for real estate purchases rose to VND300 trillion (US$19.1bn) in 2014, beyond the previous 2008 high of VND280 trillion (US$13.3bn). Fifteen banks have been given permission to extend loans for social housing from an existing VND30tr (US$1.4bn) loan package announced in 2013.
Strong Competition from Foreign Companies in Vietnam’s Non-alcoholic Drinks Market
HCMC – The market share of foreign firms in Vietnam’s non-alcoholic drinks market held strong in 2014 with almost half the market belonging to these international companies. Statistics from the Vietnam Beverage Association show that the total value of the market increased by nine percent in 2014 to US$3.64 billion. There has been an average yearly growth rate of 13 percent from 2011-14 in the non-alcoholic beverage sector.
Growth was strong across a wide variety of non-alcoholic drinks in 2014 and this trend is expected to continue over the next four years with growth for the top products as follows: bottled green tea (17.8 percent), herbal tea (27.6 percent), tonic water (24.7 percent), carbonated soft drinks (11.8 percent), sport drinks (28.2 percent), and dairy milk (23 percent).
Vietnamese Seafood Exports Strong in 2014 but Difficult to Maintain in 2015
HCMC – Vietnamese seafood exports surged in 2014 with an export turnover of US$7.9 billion, the highest levels in three years. This exceeded the target of the Vietnam Association of Seafood Exporters and Producers (VASEP) by US$920 million and was an 18.4 percent increase on 2013. The main seafood exports from Vietnam, by value of exports, are frozen shrimp, pangasius catfish, tuna and other fish, mollusks and crustaceans.
The production and processing of seafood in Vietnam is generally done by domestic companies. The fish are checked for quality and frozen for export at processing factories. To meet export standards, the factories must be certified that they are in compliance with Hazard Analysis and Critical Control Points (HACCP) standards, which are provided by foreign companies and generally accepted as the standard requirements for exported goods.
Debate Continues Over Reducing Import Tariffs for Vietnam’s Automobile Industry
HANOI – As Vietnam’s auto market continues to see strong growth in sales, uncertainty remains around the policies that will be applied to the importation of foreign manufactured autos, as separate branches of the government support different policy packages.
Vietnam’s Ministry of Industry and Trade (MoIT) has announced support for the tax on imported automobiles remaining at 50 percent until then end of 2017, and has proposed a range of incentives to stimulate the country’s domestic auto industry. However, the Ministry of Finance is backing a continuation of the 50 percent rate in 2015, followed by a reduction to 40 percent in 2016, and 30 percent in 2017.
Vietnam Coffee Production to Decline in 2015
HCMC – Global coffee demand is expected to increase over the next year, however production in Vietnam, the world’s second largest producer of robusta beans, is forecast to decline due to factors such as inclement weather, aging trees, lack of moisture, and disease. Additionally, many Vietnamese farmers have been holding back their crops from the market as a way to further increase prices.
The combination of increasing demand and decrease in supply from Vietnam and other countries is expected to have a significant effect on the price of robusta beans. In its latest quarterly report, Volcafe, which is the coffee arm of commodity trader ED & F Man, stated that robusta production for the 2014-15 crop year will fall 4.5 percent to 66.3 million 60kg bags. Demand, however, is expected to increase 2.8 percent to 69.3 million 60kg bags. This means there should be a deficit of about 3 million 60kg bags that won’t be met by the market. This would be the largest shortfall since 2006.
Setting Up a Foreign-Owned Travel Business In Vietnam and China
HCMC – Tourism is big business throughout Asia. With its rising middle class, Chinese tourists are traveling throughout the region. Countries like Vietnam are seeing significant growth in their tourism industries. As a result, more and more companies are looking to set up operations in the region. In this article we look at the regulations around setting up a tourism company in Vietnam and China, and give you a brief snapshot into each countries’ tourism industry. There are a number of important differences between the regulations of the two countries and it is important to consult a professional before moving forward with your operations.
Vietnam Loosens Housing Laws for Foreign Investors
HANOI – The Vietnamese government has liberalized its Housing Laws related to property ownership by foreigners. Foreigners will now be allowed to lease or own a maximum of 30 percent of the apartments in a condominium building and up to 250 houses in a ward-level populated area, excluding those in the areas of defense security.
In addition, foreigners entering Vietnam with valid entry visas will be able to acquire a 50-year leasehold tenure. The amendments, which were approved with more than 77 percent of the votes during the last National Assembly, will take effect on July 1, 2015 and are predicted to give a boost to the nation’s burgeoning real estate market. Foreign investors looking to take advantage of this new market are cautioned to seek professional advice before investing into any project.
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