50.6% of FDI Enterprises Will Expand Operation in Next Two Years

According to the PCI-FDI 2016 survey, confidence in the business prospects of FDI enterprises operating in Vietnam is maintained.

Specifically, investors are more optimistic than the period 2012 – 2013, but not as high as in 2010. This is the responses from 1,550 FDI enterprises, coming from 46 different countries and territories operating in 14 provinces and cities of Vietnam, where concentrating the largest number of FDI enterprises, according to the General Statistics Office of Vietnam.

The reason persuading FDI enterprises to expand their investment in Vietnam is that legal changes have created a friendlier legal environment for foreign direct investors. In particular, FDI enterprises assessed that the cost of entering the market and corruption have decreased. This also means that investors who want to enter Vietnam market in the next two years will have a much friendlier environment than before.

This year, PCI-FDI has found interesting new, that is the emergence of nearly 6% of enterprises registered to operate as domestic enterprises.

The number of foreign investors operating in the form of domestic enterprises has increased over time. The reason is that the Investment Law of 2014 stipulates that FDI capital projects in which foreign investors or FDI enterprises holding less than 51% of charter capital will not need to apply for Investment Certificate.

In addition, more than 89% of FDI enterprises participating in the PCI survey are 100% foreign investment enterprises, increased from 87% in 2015. The type of joint ventures only accounted for 7%.

Similar to the results of PCI-FDI survey in previous years, FDI enterprises operating in Vietnam are mostly small-scale and export oriented enterprises, operating in sectors with relatively low marginal interest rates. They often provide goods or services to larger producers or multinational corporations, so they are mostly at the lowest position in the product value chain.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Advisory

• Market Entry

• Tax Advice

• Legal Advice

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We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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AGRICULTURE IN VIETNAM

Among many economic sectors in Vietnam, agriculture has always been a traditional and long-standing industry.

Vietnam now has 10.3 million hectares of arable land, majority of which is used for export. The exported agricultural products in Vietnam accounts for about 20% of Vietnam’s total export value. According to data from the General Statistics Office, the total export turnover of the whole sector in 2014 was around 30.86 billion USD, increased 11.2% compared to 2013. The sector’s trade surplus is estimated at $ 9.5 billion which increased 7.7% compared to 2013. Most of the exported products increased compared to 2013, such as: seafood products reached 7.92 billion US dollars; total value of wood and wood products was 6.54 billion; Coffee reached $ 3.6 billion; vegetables reached 1.47 billion USD; Pepper’s value was $ 1.2 billion; cashew nuts reached $ 2 billion.

Foreign investors today are looking for opportunities in Vietnam. When the Economic Partnership Agreement Trans-Pacific Strategic (TTP) was signed, there have been more exporting opportunities for Vietnam agricultural products. According to a study in 2014 of the United States Department of Agriculture, Vietnam should make use of “potential commercial development of agriculture” due to the implementation of the TPP agreement. Coffee and rubber has “received enough” benefits from the last trade agreements, TPP would probably be not much beneficial to these groups. However, rice, cassava, pepper, processed foods, and honey will have more opportunity to export, while meat, dairy, and fruits are likely to suffer from the greater competitiveness since US will increase to export these products to Vietnam.

The equitization of large state-owned enterprises in Vietnam from the Decree 37 of 2014 have had huge influence in the agricultural sector. The government planned to withdraw 3.2 trillion VND (150.6 million dollars) from 167 enterprises of the Ministry of Agriculture & Rural Development (MARD). In 2014, the Government has executed equitization 776.2 billion (36.5 million dollars) from 28 member enterprises of Vietnam Rubber Group (VRG), and 54 billion (2, 5 million dollars) from the Southern Food Corporation, reaching 17% of targeted equitization. Also in 2014, the Ministry of Agriculture and Rural Development has also executed equitizationof Agriculturaland Rural Development Corporation, National Fisheries Vietnam, Vietnam Tea Corporation, Agricultural products and Fruit Corporation, Vietnam National Forestry Corporation, Southern Food Corporation, and Vietnam National vegetablesCorporation.

Ministry of Agricultural and Rural Development maintains the level of investment of 3.6 trillion VND (167.6 million dollars) in 13 corporations and companies as well as continue equitisationof Forestry Corporation, General AgriculturalCorporation, 3 units of the Vietnam Rubber Corporation, 7 units of the General Southern Food Corporation, and 5 units of the Vietnam coffee Corporation. This will be a good opportunity for investors to select opportunities for themselves in the future.

In addition to these opportunities, Agricultural industryhas been facing some challenges which include uncompetitive technology, poor infrastructure, poor labor skills, and low quality of exported products; also the environmental challenges such as climate change, the rise of sea levels, deforestation and soil erosion. According to the world Wide Fund for Nature (WWF), Vietnam had lost 43% of forest cover from 1973 to 2009.

However, the Government of Vietnam has been taking steps to improve agricultural industry seriously, seeking methods to protect environment and increasing investment in infrastructure, including roads and irrigation system. Vietnam’s government has been working with other governments, especially Japan and South Korea, to encourage the exchange of technology to help Vietnam’s export become more competitive. The government has also increased investment in agricultural science at the University and industrial leaders. More than 10,800 scientists have been working in the agricultural sector, with over 1 trillion VND (46.9 million dollars) annually is spent on scientific research and technology transfer through MARD. This amount accounts for more than 1/3 of the total state budget for scientific research and technology transfer.

It can be seen, there has been a huge opportunity for growth and investment in Vietnam’s agriculture. However the remaining restrictions are also very challenging, requiring the innovation of enterprises in the industry from technology to management, which put Vietnam agriculture sector become more potential for investment in the future.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation. 

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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