More foreign bankers to set foot in Vietnam

VietNamNet Bridge - The ASEAN Economic Community (AEC), in which member countries will open up to 70 percent of their banks to foreign investors, is believed to pave the way for more and more bankers to seek business opportunities in Vietnam.

Dr. Can Van Luc from the Bank for Investment and Development of Vietnam (BIDV) believes that many new banks will join the Vietnamese market by the end of 2015 or early 2016.

Vietnam, a member of AEC, will have to accept foreign ownership ratio of up to 70 percent in Vietnamese banks, much higher than the ceiling foreign ownership ratio of 30 percent applied to bankers from other regions. 

The foreign ownership ratio will be a maximum of 49 percent in insurance and securities companies.

“This is why I strongly believe that more foreign banks will come to Vietnam in 2016,” Luc said.

The Vietnamese finance & banking market received one more foreign member when Public Bank Berhard (PBB) from Malaysia, a joint venture bank with BIDV, shifted to become a 100 percent foreign owned bank.

The PBB’s decision has raised the number of operational foreign banks in Vietnam to six. There are also 43 foreign bank branches and 49 foreign bank representative offices now operational in Vietnam.

Infornet quoted Ms. Nguyen Thuy Duong, Partner of Ernst & Young Vietnam (EY Vietnam) as saying that number of foreign banks in Vietnam will be increasing after AEC is established by the end of the year.

“Foreign bankers are eyeing the Vietnamese market and they are just awaiting the official admission tickets,” she said.

An analyst noted that South Korean and Indian banks are attempting to penetrate the Vietnamese market.

According to Luc, the 70 percent foreign ownership ratio principle will be valid as soon as AEC forms. However, with the ASEAN Minus X principle, some less developed economies would follow specific integration process, which means that Vietnam may not have to accept the maximum 70 percent foreign ownership immediately.

This means that Vietnam can open its banks step by step, by 40 percent, 50 percent or 60 percent, depending on the government’s negotiations.

In fact, many foreign bankers have been trying to “take a shortcut” to Vietnam by buying shares of Vietnamese operational banks. However, no successful deals have been reported recently. 

According to Luc, many negotiations failed because the involved parties could not reach agreements on business valuation. This is partially because Vietnam still lacks independent business valuation firms. 

Luc also said it was necessary to simplify administrative procedures, emphasizing that complicated procedures will discourage investors, who want to wrap up deals quickly to avoid missing opportunities.

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Pharma Sector's Struggle To Tighten Standards Paves Way For M&A Deals

India's smaller generic drugmakers, struggling to cope with a bruised reputation and tougher regulation in the United States, are under pressure to consider branching out to new, less-profitable markets or sell out to larger rivals.

Two years after its most high-profile regulatory setback to date in the United States - Ranbaxy's $500 million US fine for drug safety violations - India's $15 billion a year generic drug industry is still rebuilding its image in its biggest market.

Many of its top firms are facing sanctions at some of their factories, as the US Food and Drug Administration (FDA) tightens checks and its approvals process.

Combined with government-mandated price controls on drugs at home, that is piling pressure on smaller players.

"If they want to have a presence globally, they have to make investments. If they can't, then they'll have to focus on other markets or scale back their ambition outside of India, and that's probably what will happen," said Subhanu Saxena, CEO of Cipla, India's fourth-largest drugmaker by revenue.

Ashok Anand, president of Hikal Ltd, a Mumbai-based drugmaker with a market value of $167 million, said some peers were putting themselves on the block.

"If they cannot deal with the stricter regulations, they might just prefer to sell out," he said.

Pressure on US sales has been felt across the Indian industry, with all drugmakers hit by delays in FDA approvals as the US safety body overhauls its review process. Growth in US revenue for drugmakers slowed to 14 per cent in the year to March 2015, less than half what it was in the year to March 2012, according to brokerage Edelweiss.

But for larger players who want to plug gaps or, for the likes of Glenmark and Aurobindo who aim to grow in theUnited States, this pressure has lowered prices and could pave the way for attractive deals, bankers said.

"Now that some of the smaller companies are reeling under intensive regulatory scrutiny and want to cash out on their investments, valuations would be much more realistic," said the head of India M&A at a large European bank in Mumbai.

Spending Spree
Indian manufacturers say they have spent millions in high-end testing equipment, improved training and have hired larger teams in quality control since Ranbaxy was fined for manipulating clinical data.

Some consultants estimate spending on compliance has more than doubled to reach about 6 to 7 per cent of sales for the larger companies.

But while the number of US export bans issued to Indian companies fell to eight in 2014 from 21 in 2013, according to FDA data, the agency continues to find manufacturing violations at the plants of some of the biggest drugmakers in the country, an indication of the pervasiveness of the problem.

Sun Pharmaceutical Industries, Wockhardt, Dr Reddy's Laboratories and Cadila Healthcare have all faced FDA rebukes over the past year.

Smaller firms Ipca and Aarti Drugs faced FDA bans on their plants this year.

These failures - which executives blame on India's "quick fix" culture and consultants blame on a failure to prioritise compliance - have clouded short-term growth prospects and added to pressure on smaller players, pushing some to look elsewhere.

"They can choose to be in lesser-regulated markets, such as Latin America, where there is a lot of demand. But they will have to live with much thinner margins," said the finance director of a small Indian drugmaker, who did not want to be named. "It's survival of the fittest."

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Home | Laptops | Laptops News Ethernet Switch, Router Market in India Sees 20 Percent Growth: IDC

The ethernet switch and router market in India has seen a 20 percent year-on-year growth, the International Data Corporation (IDC) said on Monday.

Calendar year 2014 was one of the best years for the networking market (local area network and wireless local area network included) in India with over 20 percent growth year on year, it said in a report released here, adding that a similar pattern is expected in 2015 which will draw boost from government initiatives and organisations willing to invest in future technologies.

"Government initiatives and increasing adoption of third platform by the enterprises is pushing the need for smart network solutions that can sustain the growth of unstructured network traffic. Upcoming verticals like e-commerce, healthcare and hospitality along with traditional ones are expected to drive future investments," said Gaurav Sharma, research manager, enterprise computing,IDC India.

The ethernet switch market clocked end-revenue of $124 million (roughly Rs. 787 crores) during the first quarter of 2015, with a slight decrease quarter on quarter (-0.8 percent) but an impressive growth of 15.1 percent year on year.

The router market stood at a total of $69.4 million (roughly Rs. 441 crores), dipping 13.6 percent year on year and three percent quarter on the quarter.

According to IDC, organisations are increasingly taking interest in the third platform technologies to leverage its benefits in workforce optimisation, supply chain, customer experience and efficient resource utilisation.

It also said that the IP-based security-surveillance market is also likely to take a faster route giving vendors, small or big, an opportunity to grow.

Further, the small and medium businesses (SMBs) are likely to offer similar growth to the market and the verticals, like any other traditional segment to benefit from mobility and network optimisation solutions, it added.

According to the report, Cisco retained its dominance in the switch and router market, increasing its revenue quarter on quarter as well as year on year

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