By Anette Jönsson, FinanceAsia | 29 March 2012

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By Hien Vo | 23 March 2012

In order to highlight the top 50 Best Countries for Business Ranking, Bloomberg Rankings appraised 160 markets on a scale of zero to 100 percent based on a weighted average index of six factors. These factors included degree of economic integration (weighting of 10%), cost of setting up a business (20%), cost of labor and material (20%), cost of moving goods (20%), less tangible costs (20%) (including corruption perception index, international property rights index, inflation, taxes and accounting adaptability) and readiness of the local consumer base (10%).

Vietnam ranked 46 in the list, together with two other Southeast Asian countries which are Singapore, ranking 9 and Malaysia, ranking 32. This is remarkable achievement considering Vietnam’s rank is higher than most of the BRIC countries, with one exception of China. On average, Vietnam’s index is at 36.2% thanks to high appraisal on degree of economic integration (64.5%), cost of labor and material (45.7%) and cost of moving goods (38.9%).

Top five of Bloomberg Rankings list are Hong Kong (49.0%), Netherlands (48.3%), United States (46.9%), United Kingdom (45.7%) and Australia (45.6%).

Vietnam is making headway against Asia’s fastest inflationas prices rise the least in 11 months, an easing that may boost confidence in its economic policy making as the nation struggles to spur foreign investment.

Consumer prices climbed 16.44 percent in February from a year earlier, the General Statistics Office said in Hanoi today. Pledged foreign direct investment in Vietnam fell 54.5 percent to $1.23 billion in the first two months of 2012 from a year earlier, the Foreign Investment Agency of the Ministry of Planning and Investment said separately.

Easing inflation provides scope for the central bank to cut interest rates, after it signaled last month that it may lower borrowing costs to “more suitable” levels. The government rolled out the so-called Resolution 11 strategy to tame prices, restrain credit growth and stabilize the currency a year ago, constraining its ability to loosen policy even as Europe’s debt crisis hurt Asian economies.

“It shows that Vietnamhas been quite effective in tightening policy not just through interest-rate movements but also by administrative measures,” said Trinh D Nguyen, a Hong Kong-based economist at HSBC Holdings Plc. “We expect the State Bankof Vietnam to lower rates by the end of this quarter or the beginning of the second quarter. Inflation will probably go down to single digits by year end.”

The Ho Chi Minh City Stock Exchange’s VN Index (VNINDEX) rose as much as 1.3 percent before closing little changed today. It’s climbed 20 percent this year, the best performance in Asia, while the Vietnamese dong has gained about 1 percent against the U.S. dollar.

Fastest Inflation

The nation still has the fastest inflation among 17 Asia- Pacific economies tracked by Bloomberg, and consumer prices rose 1.37 percent this monthfrom January.

The central bank last cut the repurchase rate in July and the refinancing ratein 2009, even as policy makers from Indonesiato the Philippines have reduced borrowing costs to shield growth. While cooling price pressures may provide scope for the central bank to cut interest rates, oil costs pose a threat that may delay monetary easing, according to Standard Chartered Plc.

“The immediate threat to the inflation outlook is still moderate, but one new factor that has come in recently is higher oil prices,” said Tai Hui, the Singapore-based head of Southeast Asian economics at Standard Chartered. He expects Vietnam to cut rates in the first quarter, with a possible delay to the second quarter should price pressures remain elevated.

By Marco Breu, Richard Dobbs | 23 February 2012

It’s clear that much has changed in Southeast Asia since the Vietnam War. Over the past 25 years, Vietnam has transformed itself. In 2007, Vietnam became a full-fledged member of the global economic community through its membership in the World Trade Organization. It has become a magnet for foreign investment and is evolving rapidly from an agricultural economy to one focused on higher-value manufacturing and services. But if Vietnam wants to sustain its remarkable growth, it will need to boost labor productivity in the industrial and service sectors in the years ahead.

Here are 10 takeaways from the McKinsey Global Institute report “Sustaining Vietnam’s Growth: The Productivity Challenge” that might surprise you.

1. Vietnam has grown more rapidly than any other Asian economy except China.

Vietnam, a country once ravaged by war, has been one of Asia’s economic success stories over the past quarter-century. Ever since the Communist Party introduced reforms known as “Doi Moi” (“Renovation”) in 1986, the country has reduced barriers to trade and capital flows and opened the economy more widely to private business. During this period, the economy has expanded faster than any other Asian economy except China’s, posting annual per capita GDP growth of 5.3 percent. This growth has continued in the face of the 1990s Asian financial crisis and the recent global economic downturn (the economy grew 7 percent per year from 2005 to 2010) — a more robust record than many other Asian economies can boast.

2. Vietnam is moving out of the paddy fields.

Vietnam’s economy no longer revolves around agriculture. In fact, agriculture’s contribution to the country’s GDP has been cut in half from 40 to 20 percent in just 15 years, in a much more rapid shift than we have observed in other Asian economies. A comparable transformation took 29 years in China and 41 years in India.

Over the past 10 years, agriculture’s share of national employment has dropped by 13 percentage points, while the share of workers employed in industry has risen by 9.6 points and in services by 3.4 points. This shift of workers from agriculture to industry and services has made a powerful contribution to Vietnam’s economic expansion because of the large differences in productivity between these sectors. As a result, agriculture’s share of GDP has fallen by 6.7 percentage points while industry’s share has risen by 7.2 percentage points over the past 10 years.

3. But Vietnam is a leading global exporter of pepper, cashews, rice, and coffee.

Vietnam is the world’s leading exporter of pepper, shipping 116,000 tons of the spice in 2010, and has led the world in exports of cashews for four years in a row. The country is also the world’s second-biggest exporter of rice after Thailand and second only to Brazil in exports of coffee, which have nearly tripled in just four years. Vietnam ranks fifth in the world in the production of tea and sixth in exports of seafood such as catfish, cuttlefish, shrimp, and tuna.

4. Vietnam is not “China+1.”

Rising labor costs in China have already spurred some factory owners to shift production to Vietnam, which has an abundance of low-wage labor. The trend has fueled talk among many CEOs about Vietnam becoming Asia’s next big platform for manufacturing exports — a smaller version of China, or China+1.

But Vietnam is very different from China in two respects. First, Vietnam’s economy is driven more by personal consumption than China’s is. Consumption by households accounts for 65 percent of Vietnam’s GDP — an unusually high share in Asia. In China, by contrast, consumption accounts for just 36 percent of GDP.

Second, while China’s rapid economic growth has been fueled by manufacturing exports and extraordinarily high levels of capital investment, Vietnam’s economy is much more balanced between manufacturing and services, which each accounting for approximately 40 percent of GDP. Vietnam’s growth has been broad-based, with competitive niches across the economy. Over the past five years, output in the industry (including construction, manufacturing, mining, and utilities) and service sectors has grown at comparable annual rates of about 8 percent.

5. Vietnam is a magnet for foreign investment.

Vietnam is on most lists of attractive emerging markets for foreign investors. Surveys by Britain’s trade and investment department and the Economist Intelligence Unit have consistently ranked Vietnam the most attractive emerging-market destination for foreign direct investment (FDI) after the BRIC quartet of Brazil, Russia, India, and China. Registered FDI flows into Vietnam increased from $3.2 billion in 2003 to $71.7 billion in 2008 before falling during the global recession to $21.5 billion in 2009.

Here, again, Vietnam diverges from China. Nearly 60 percent of FDI in China has been poured into labor-intensive manufacturing, compared with only 20 percent in Vietnam. In the latter case, much of the remaining investment has found its way to mining, quarrying, and oil and gas extraction (40 percent) and real estate (15 to 20 percent), reflecting rapid growth in Vietnam’s tourism industry. The number of foreign tourists coming to Vietnam has risen by one-third since 2005.

6. Vietnam has more advanced road infrastructure than the Philippines or Thailand.

Vietnam has begun to make significant investments in infrastructure. Many visitors to Vietnam still view the country’s roads as pretty basic. But, for its stage of economic development, Vietnam has been adding road infrastructure at quite a rate. Its road density reached 0.78 kilometers per square kilometer in 2009, which is higher than the road density in the Philippines or Thailand, both economies that are further on in their development than Vietnam is. That same year, electricity networks covered more than 96 percent of the country. New container ports such as those in Dung Quat and Cai Mep and airports such as those in Da Nang in central Vietnam and Can Tho in the Mekong Delta region have improved connections with the rest of the world.

7. Vietnam’s young generation is going online.

Vietnam’s population is young, well-educated, and increasingly online. Mobile subscriptions in Vietnam grew nearly 70 percent per year between 2000 and 2010 compared with less than 10 percent per year in the United States in the same decade. By the end of 2010, Vietnam had 170 million telephone subscribers, of which 154 million had mobile subscriptions.

At 31 percent, Internet penetration in Vietnam is much lower than in other Asian states such as Malaysia (55 percent) and Taiwan (72 percent). But this is changing rapidly. Broadband subscriptions in Vietnam increased from 0.5 million in 2006 to around 3.8 million in 2010, the same year that 3G subscriptions hit 7.7 million. Once the telecom infrastructure catches up, mobile and Internet use is likely to explode. Already, 94 percent of Vietnam’s Internet users access news online. More than 40 percent of users access the web every day.

8. Vietnam is becoming a top location for outsourced and offshore services.

Vietnam already employs more than 100,000 people in the outsourcing and offshore services sector, which today generates annual revenues of more than $1.5 billion. Several prominent multinational corporations have established operations in Vietnam, including Hewlett-Packard, IBM, and Panasonic. In fact, the country has the potential to become one of the top 10 locations in the world in this sector, due to its relatively large pool of young college graduates (universities send 257,000 young men and women into the workforce each year) and relatively low wages. A software programmer in Vietnam can be employed for less than 60 percent of what it costs to hire one in China, while data-processing and voice-processing agents in Vietnam cost 50 percent less to employ than their counterparts in China.

Outsourcing and offshore services in Vietnam could produce annual revenues of between $6 billion and $8 billion a year, much of it export-oriented — as long as there is sufficient demand and Vietnam ensures that it can satisfy that demand. This sector could become an engine of job creation in urban areas, employing an additional 600,000 to 700,000 people by 2020 and contributing 3 to 5 percent to Vietnam’s GDP growth.

9. Vietnamese banks are lending at a faster rate than their Chinese, Indian, or ASEAN counterparts.

Total outstanding bank loans in Vietnam have increased by 33 percent per year over the past decade — a stronger growth rate than those recorded in China, India, or any Association of Southeast Asian Nations (ASEAN) country. By the end of 2010, the value of outstanding loans had reached an estimated 120 percent of GDP, compared with only 22 percent in 2000. Although this may be evidence of new dynamism in the Vietnamese economy, oiled by an expanding banking system, the worry is that an associated rise in non-performing loans could trigger significant economic distress in Vietnam (as it has elsewhere) and force the government to intervene in the financial sector to protect depositors, the banking system, and, ultimately, taxpayers.

10. Vietnam’s demographic dividend is waning.

Between 2005 and 2010, an expanding pool of young workers and a rapid shift away from agriculture generated two-thirds of Vietnam’s growth. The other one-third came from enhanced productivity. But now the first two drivers of growth are weakening. Official statistics predict that growth in the labor force will decline to around 0.6 percent a year over the next decade, compared with annual growth of 2.8 percent from 2000 to 2010. And it seems very unlikely that the transition from farm to factory can continue at anything like the speed we have seen in the recent past.

Productivity improvements will therefore need to pick up the slack if Vietnam is to maintain its historical growth rate. More precisely, labor productivity growth in the service and manufacturing sectors will need to accelerate by more than 50 percent from 4.1 percent annually to 6.4 percent if the economy is to meet the government’s target of 7 to 8 percent annual growth by 2020. Should that productivity boost not materialize, Vietnam’s growth would likely decline to between 4.5 and 5 percent annually. At that pace, Vietnam’s GDP in 2020 would be 30 percent lower than it would have been had the economy continued to grow by 7 percent each year.

Vietnam has many intrinsic strengths — a young labor force, abundant natural resources, and political stability. If it acts decisively to head off short-term risks and pursues a productivity-led growth agenda, it can enter a second wave of growth and prosperity.

Vietnam has been ranked seventh out of the 10 countries seen as having the best prospects for long-term growth, announced HSBC on the business and financial news website CNBC.com.

In HSBC’s report “The World in 2050” which forecasts how the economic landscape will change over the next 40 years, HSBC projected the country’s annual growth at 5.2 percent with its GDP rising to US$451 billion by 2050.

According to HSBC, as the world’s second-largest exporter of rice, agricultural exports has always made a major part in Vietnam’s economy. However this is rapidly changing as the government moves to liberalise and diversify the economy.

While state-owned enterprises contribute 40 percent of the country’s GDP, overseas investment has been increasing sharply since the country became part of the World Trade Organisation in 2007.

Vietnam’s low-cost manufacturing base has attracted a wave of foreign investors, particularly in the retail clothing and technology sectors, as an cheaper alternative to China.

Intel, the first international technology company to make a major investment in the country six years ago, has helped to raise Vietnam’s profile as an investment destination. A long list of companies including Samsung, Canon and Foxconn have followed, investing millions of dollars into developing manufacturing operations in the country.

Analysts say this is helping to lay the foundations for Vietnam to become Asia’s next big electronics manufacturing hub, said HSBC in its report.

Keppel Land has signed a conditional agreement with Takashimaya Singapore Ltd (“Takashimaya”), a subsidiary of Takashimaya Co., Ltd (“Takashimaya Co.”), to pre-commit approximately 15,000 sm of retail space across five floors of Saigon Centre Phase 2.

With Takashimaya coming onboard as anchor tenant, about 30 per cent of the total retail area is pre-leased ahead of the development’s expected completion in 2015.

This agreement comes shortly after the groundbreaking of the integrated mixed-use development in November last year. It marks Takashimaya’s foray into the lucrative Vietnamese retail market and is part of its strategy to further expand into Asia.

Wong, Group CEO of Keppel Land, said, “We are pleased that Takashimaya has selected Saigon Centre as its choice location for its first retail mall in Vietnam. This further establishes Saigon Centre as the place to be and preferred address for quality tenants. An established and quality brand in the industry, Takashimaya will complement and enhance the overall retail offerings at Saigon Centre and HCMC as a whole.

“The strong pre-commitment secured almost three years ahead of completion is significant and reaffirms our positive sentiments on the Vietnamese retail market. Given our extensive experience in Vietnam, coupled with Takashimaya’s retail expertise and skills, Saigon Centre is well-poised to become the shopping destination in HCMC.”

Yoko Yasuda, Managing Director of Takashimaya Singapore, said, “With 18 years of retail experience in Singapore and its network of supply source, we are confident of contributing to a new shopping lifestyle in HCMC. The Vietnamese retail market is entering an exciting phase of growth with an increasing middle income class and Takashimaya is looking forward to participate in this emerging market. This being Takashimaya’s first department store in Vietnam, we wanted a strategic location and renowned partner – we found both in Saigon Centre and Keppel Land.”

At the same time, Toshin Development Co., Ltd (“Toshin Development”), the real estate subsidiary of Takashimaya Co., has entered into a share-purchase agreement with Keppel Land to hold 22.7 per cent stake in Saigon Centre Phase 2. Keppel Land will also jointly establish a 50:50 retail management company with Toshin Development Singapore Pte Ltd, the Singapore subsidiary under Toshin Development, to provide retail management services for Keppel Land’s projects in Vietnam. Toshin’s expertise and skills in retail mall development will ensure that we continue to adopt best-in-class approach that will ensure operational excellence at Saigon Centre.

Located along Le Loi Boulevard in the heart of HCMC’s CBD, Phase 1 of the award-winning Saigon Centre was completed in 1996 and has established itself as the preferred shopping destination and a business address for diplomatic corps, multi-national companies as well as banking and financial institutions.

Currently under construction, Phase 2 of Saigon Centre is designed by internationally renowned architect, NBBJ based in New York. When fully completed in 2015, it will stand tall at 45 storeys with seven levels of retail and dining spaces spread across 50,000 sm; 40,000 sm of premium Grade A office space, and over 200 units of luxury serviced apartments.

The proposed joint establishment of the retail management company is not expected to have any material impact on the earnings per share or net tangible assets per share of the Company for the current financial year.

Vietnam’s dong advanced to its strongest level in a month after the central bank said inflation would slow.

By Bloomberg News | 18 January 2012

Government bonds were steady. Consumer prices will rise less than 12 percent at worst and about 8.5 percent in a “good” scenario, central bank Governor Nguyen Van Binh said on Jan. 12. Inflation in the $104 billion economy was 18.1 percent in December. The dong will depreciate 2 percent to 3 percent this year, Binh said. That would be the least since 2007, according to data compiled by Bloomberg.

“After the central bank governor said they would devalue the dong by no more than 3 percent this year, demand for the dollar has dropped as people may think keeping the foreign currency won’t generate high returns,” said Cao Tan Phat, a Ho Chi Minh City-based analyst at ACB Securities Inc.

The dong gained 0.3 percent to 20,935 per dollar as of 3:29 p.m. in Hanoi, according to data compiled by Bloomberg. That was its strongest level since Dec. 16. The central bank set the currency’s reference rate unchanged at 20,828, its website showed. The dong declined 7.4 percent last year as policy makers devalued the currency by about 7 percent in February to help narrow the gap between the official and black-market rates.

The yield on the government’s five-year bonds was unchanged at 12.46 percent, according to daily fixings from banks compiled by Bloomberg.

The event was staged successfully at the Novotel Clarke Quay, Singapore from 13 & 16 September 2011. Hospitality Investment World Asia 2011 hosted a total number of 192 participants, of which a total number of 138 participants, from 15 countries all over the world attended Economy Hotels World Asia 2011.

Over the course of four days, Economy Hotels World Asia 2011 participants gained first hand updates and knowledge on the performance of the sector, financing options and current investment opportunities in Asia. The convention is a major industry event of its kind to showcase the top companies, personalities and strategies that comprise the Asian
economy hotels market place.

Overall, the delegates’ feedback was very positive, with most commending on the calibre of the speakers, the high level of content presented and discussed and the outstanding networking opportunities offered.

FACTS & FIGURES – Economy Hotels World Asia 2011
The conference has grown in size, stature, quality and reputation for 2011. The seniorlevel investment forum generated a record number of 138 attendees from 15 countries:

• 49% of participants from Singapore
• 14% of participants from North Asia
• 30% of participants from South East Asia
• 3% of delegates from USA, Europe and Middle East
• 39% of participants were hotel operators and owners
• 87% senior management participants
• 90 companies represented
• 8 sponsors

“The attendees comprised a high calibre mix of regional hospitality professionals, investors and developers which made for a great industry event.” said Ronald Howe, Co-founder & Managing Director, Dynasty Artisan Partners, Singapore.