Vietnam Market Snapshot Dec 2019

1. 1. Vietnam Economic Overview
MARKET SNAPSHOT
Nov 2019
consultancy
1Our Professionals Your Success
What Vietnam needs to do to improve the GDP per capita from $2600 to
$10.000 in 2035
AttheForum“VietnamReformandDevelopment(VRDF)2019withthesubject
of “Vietnam: Prosperity aspiration-priority and action “, Prime Minister Nguyen
Xuan Phuc emphasized: In eight months in 2019, the domestic socioeconomic
continues showing the positive trend, the business investment’s environment
continues to be improved, the country competitiveness is growing.
Accordingly, Vietnam’s GDP growth in 2019 is surely to achieve a target
from 6.6 to 6.8% as Congress’s proposal. Viet Nam is working hard to catch
up with development to integrate into the world economy and to select the
successful model of international, continues the effort, strong aspirations to
rise to sustainable development.
According to the Minister of Planning and Investment (KHDT) Nguyen Chi
Dung, the Global Innovation Index (GII) of Vietnam in 2019 has increased 3
ranks compared to 2018, ranked 42/129 countries; Ranked first among the
26 middle-low income and 3rd- countries in ASEAN (after Singapore and
Malaysia).
The Minister of Planning and Investment’s data also showed that by the
end of 2018, our GDP was over US $250 billion, in the group of the 45 largest
GDP-scale economies, with a GDP per capita of about 2,600 USD. Vietnam is
aiming at an income of about 10,000USD/person by 2035 and to achieve this
goal, requires appropriate government support policies.
Director of the World Bank (WB) in Vietnam - Mr. Ousmane Dione-said that
there are two key factors that determine the success of Vietnam. Which is
important is the quality of growth. Firstly, in order to increase productivity,
Vietnam has to improve on all sides of quality, from efficient of resources,

2. improving the quality of human resources, increasing
investment efficiency in infrastructure. Secondly, is
to further improve the business environment. The
continued strong institutional reform along with
solving the concerns in public service provision will be
the key to dealing with the problem.
According to Dr. Vu Tien Loc - Chairman of VCCI,
improving the quality of labour resources and
creating satisfactory and sustainable employment
is the most important requirement throughout the
improvement of labour productivity in Vietnam.
Vu Tien Loc also said that the quality of human
resources in Vietnam is an important challenge when
Vietnam has only 8% of university-level labour. Up
to 80-85% of enterprises complained because of the
difficult recruitment of labour with administrative
skills and technical workmanship. “According to the
World Economic Forum, Vietnam is in the group of
economies not ready for the digital economy, but the
quality of human resources is a barrier”. Therefore, the
national educational policy should be promoted, the
public-private partnership and the role of private in
the training sector need to play a key role. In terms
of training content, it is necessary to promote the
method of education of dual vocational training
“with the school” and shorten the training time of
undergraduate majors, for example, just 2 years, to
catch up with the change trend of technology and
respond quickly to the human source supply with
high-quality, focus on STEAM priority programs such
as science, Arts, engineering, arts and mathematics
“-Dr. Vu Tien emphasized.
Three Recommendations will promote growth
According to the MPI, to reach an average income of
10,000USD in 2035, which tied with 3 focuses: Vietnam
economic prosperity goes along with environmental
sustainability; social equality and social integration;
to enhance the ability and accountability of the state,
the government has set out 6 reforms, including:
• The economic and private sector development;
• Building national innovation ability;
• Improving economic efficiency of urban and
territorial development;
• To develop environmental sustainability and to
strengthen climate change adaptation;
• To ensure the equality and promote social
integration;
• Modern institutional and state efficiency.
To promote investment and promote growth, Mr.
SebastianEckardt-chiefeconomistexpertattheWorld
Bank in Vietnam (WB) -gave 3 recommendations for
Vietnam: firstly, need to improve the efficiency of
financial intermediate. Viet Nam needs to improve
the quality and stability, reduce the vulnerability of
the bank to protect the economy through improved
legal, monitoring, debt processing...;
Develop capital market to create more long-
term capital for business organization. Secondly,
environmental reform business, which must promote
and improve the quality of State enterprise reform
through the equitization, fair competition... Finally,
it is necessary to promote innovation, which should
effectively enforce intellectual property rights.
Source: laodong.vn
Market Snapshot | Nov 2019
2

3. In the first 10 months of 2019, the total new registered capital, adjusted
and contributed capital of the investors was $29.11 billion, up 4.3% over
the same period in 2018. The capital disbursement of the foreign direct
investment project estimated at $16.21 billion, up 7.4% over the same
period in 2018.
Accumulatedon20/10/2019,thecountryhas30,136effectiveprojectswith
the total registered capital of 358.53 billion USD. Capital disbursement
of foreign direct investment projects is estimated approximately 208
billion USD, equal to 58% of the effective registered capital.
In the first 10 months of 2019, there were 107 countries and territories
having projects investment in Vietnam. Hong Kong leads with total
investment capital of 6,45 billion USD (of which, 3.85 billion buy shares
in Vietnam Beverage CO., LTD. In Hanoi, accounting for 59.7% of total
investment capital of Hong Kong); South Korea ranks second with
total investment of $5.52 billion, accounting for 19% of total investment
in Vietnam; Singapore ranked No. 3 with total registered investment
capital of 4.21 billion USD, accounting for 14.5% of total investment
capital; Next is China and Japan. Besides, investing from China, Hong
Kong tends to rise compared to the same period as a result of the
impact of the trade war.
In the first 10 months of 2019, the FDI has invested in 60 cities and
provinces, of which Hanoi is attracting the most capital with the total
registered capital of USD 6.61 billion, accounting for 22.7% of total
investment capital. Ho Chi Minh City ranks 2nd with a total registered
capital of USD 4.96 billion, accounting for 17% of total investment
capital; Next is Binh Duong, Dong Nai and BAC Ninh . . .
(Source: GSO)
FDI
Real Estate Market Trend 2020 Forecast
The trend of investing in the suburb is leading the real estate market
in the year 2019. The neighbouring lands of Ho Chi Minh City Such as
Dong Nai, Long An, Binh Duong or potential markets such as Binh
Thuan, Ba Ria-Vung Tau, Cam Ranh... become a destination for many
real estate businesses.
Ho Chi Minh Real Estate Market is in Frozen Period
From the beginning of 2019, the real estate market in Ho Chi Minh
City has the slowdown signs. Figures from HCM City construction
Department in the period 2017-2019 for housing and the real estate
market shows the amount of project investment approved and the
construction permit is declining.
Specifically, in the year 2017, the city approved the investment policy of
three projects, recognized 44 project investors, approved 83 projects
investment and licensed construction of 69 condominium projects,
low-rise housing project.
2. Local Real Estates Market News
Market Snapshot | Nov 2019
3

4. In 2018, the city approved the investment policy of
eight projects, recognized the 19 projects investment
and licensed construction of 53 condominium
projects, low-rise housing projects.
However, in the first nine months of the year 2019, the
city only had a housing project investment approved,
a decrease of about 83%; No housing project is
recognized by the investor; There are 12 projects
approved for investment, a decrease of approximately
72% and only 24 projects are licensed for construction,
down by about 38%, over the same period in 2018.
At the same time, the number of housing project
completion were not much, only 17 projects with 111ha
and 12,453 units. There are 10,085 apartments, only
36% of number of the projects, by about 79% of the
land use area, by about 47% of the number of houses
and only by about 49% of the total construction floor
area of compared to 2018.
Mr. Le Hoang Chau, chairman of the HCMC Real Estate
Association (HoREA), said that the biggest difficulty of
the real estate market in the past time is that many
projects could not launch because they are on the list
of forced review of the Ho Chi Minh City.
The lively suburban areas
Contrary to the darkness of the Ho Chi Minh real estate
market. The other provinces’s real estate market such
as Dong Nai, Binh Duong, Long An or the potential
lands for coastal resort real estate such as Ba Ria-Vung
Tau, Binh Thuan, Cam Ranh are very bright with a lot
of projects launched.
According to many real estate companies, investing
in the coastal market with lots of land fund, the
price is relatively low. The provincial administration
also creates many conditions to attract investment.
Therefore, the procedures for permission to deploy a
project is also shortened and easier. Especially in these
markets, there are many important infrastructure
projects that will be launched.
In recent years, Dong Nai is the market adjacent
to Ho Chi Minh City, attracting many real estate
projects. This province is also the place, having a lot of
important infrastructure projects such as Long Thanh
International Airport, which has invested more than
111,000 billion dong (Phase 1) will be started in 2021;
The construction of the Cat Lai, Bridge project valued
at 7,200 billion dong, which connect Ho Chi Minh City
with Nhon Trach was assigned to Dong Nai province
as a developer.
The big development in Dong Nai is Novaland with
the Aqua City Project with the scale of Phase one
more than 300ha, Hung Thinh with Bien Hoa New
City project, CFLD Group with Swan Park, Swan Bay
projects...
Ba Ria – Vung Tau with the advantage of the coastline
has become the famous tourist area with many
projects in Long Hai, Ho Tram, Vung Tau, which is
recommended by real estate agents.
Most recently, the VN Holdings Group proposed to
build a Southwest ecological urban project with an
investment of USD 7 billion in Ba Ria City; The joint
venture of Van Phu – Invest and VCI investment Joint
stock company proposed the airport project with a
capital of USD 1 billion.
Prior to that, many other big developers such as FLC,
Novaland, Hai Phat Invest, also proposed many urban
projects in Ba Ria – Vung Tau.
In2019,BinhThuanisconsideredthehottestrealestate
market. This busy local not only own many famous
beautiful beaches, but also by many big infrastructure
projects in trillions capital that are deploying. The two
remarkable projects are the Phan Thiet airport with
10,000 billion Dong investment Capital and express
highway Giau Day - Phan Thiet worth 15,000 billion
VND, which will be start quarter III of 2020.
To take the advantage of the trillions VND of
infrastructureprojects,manybigrealestatedevelopers
are spreading into Binh Thuan with many projects
such as: Novaland Group with Novaworld Corporation
Phan Thiet and NovaHills project, The Nam Group with
high-class Thanh Long Bay resorts at Ke Ga - Hon Lan,
Hung Loc Phat Company with Project Summerland
Mui Ne... FLC Group is also searching for land funds for
investment in Binh Thuan.
Besides, 2019 is also marked by the explosion of the
new potential areas such as Can Tho, Binh Phuoc,
Quang Binh etc.
(Source: cafeland.vn)
Market Snapshot | Nov 2019
4

5. The M&A situation is strongly active
through by some articles as well
as websites page. However, our
company–TMSconsultancygathered
data related to M&A activities from
imaa.com. It shows that the number
of transaction and value started to
decline in 2017 because of the global
and regional economic impaction.
But we believe that M&A activities
in Vietnam will significantly increase
next time because Vietnamese
businesses need financial support
as well as technology or professional
management from investors or
foreign funds. Thank to Vietnamese
businesses can compete with
countries in Southeast Asia (ASEAN)
or Asia (ASIA), as well as raise the level
compared to other countries in the
world with the integration of global
economy (WTO). The typical number
of transaction and values in M&A
activities are summarized by our TMS
Consultancy Company as follows:
Currently, Binh Thuan is one of the
provinces attracting many investors
to develop resort projects by the
favourable coastline lasts about 190
km and the cool weather.
With information Project Thanh Long
Bay total area of 90ha, consists of 12
main subdivisions is planned such
as the commercial, townhouses, sea
complex, 5-star resort, Rung Duong
Resort, Wellness Spa & Resort, Thanh
Long Lagoona, Thanh Long Avenue,
food zone, Sea Sports Center, Pearl
Bridge, International Marina Port.
From the date 1/10/2019, Nam
Group and DKRA Vietnam signed a
cooperation in the marketing and
distribution of the Thanh Long Bay.
This is also the first large-scale project
for entertainment and sports in Binh
Thuan Province, suggesting that the
Binh Thuan Province is a good place
for attracting investors.
Market Snapshot | Nov 2019
5
3. Mergers and Acquisitions

6. Beverage Business
With the current situation, the market of beverage business is very exciting especially
coffee. Many famous brands in Vietnam are the Highlands, Cong, Milano, Trung
Nguyen . . . has franchised and create many opportunities for coffee shops and
potential new investors.
The coffee franchise is one of the fastest methods to help brands expand their
coverage without investing too much time, effort, and the cost of franchising the top
coffee brands in Vietnam such as Highland, Cong, Milano . . . How much? To know the
franchise costs from the famous coffee brands mentioned above, according to the
source from www.cafef.vn announced on 20/09/2019 as follows:
Thus, it is revealed that the franchise rate at each coffee brand is different and depends
on the requirements of each brand, ranging from 0-250 million VND.
Market Snapshot | Nov 2019
6
• Trung Nguyen coffee: Monthly
franchise fee 7%, monthly
management fee 5% of the
estimated initial cost: 3.5-5 billion
VND;
• Cong coffee: Franchise costs: Varies
by region, area. Monthly franchise
charges are calculated per % of the
total monthly revenue.
• Electronic coffee: Franchise cost: 0
VND, estimated initial capital cost:
65 million VND, 120 million VND, 175
million VND;
• Milan coffee: Initial investment cost:
90-100 million VND;
• Coffee Star Vina: The cost of
franchising 160 million VND (5 years)
with 5% profit per month, initial
investment cost: An estimated 1.1
billion VND;
• Napoli coffee: The cost of
franchising 70 million VND in 3
years, the initial investment cost is
500 million VND;
• Coffee EFFOC: The cost of
franchising 240 million VND (once),
the initial investment cost of 500-
1,500 million VND.
Aftertherestructuringperiod,itwastime
for the State bank to let go of the weak
banks to investors, especially foreign
investors, to be able to participate in the
acquisition and accelerating the process
of bank restructuring. The merging of
the small and medium-sized banks
tends to rise in the future.
According to the source from the
website “www.tinnhanhchungkhoan.
vn” published on 14/10/2019, as defined
in Circular No. 11/2019/TT-NHNN, since
1/10/2019, based on the situation, the
level of risk in the operation of the
credit institutions, the Governor of the
State Bank or the director of the State
Bank branch reviewed, decided to
put this credit institution into special
control in the special supervision or
comprehensive control. Circular No.
11/2019/TT-NHNN clearly state the cases
in which credit institutions will be
placed in special control when there
is a risk of no ability to pay, shortages
of high liquidity at 20% or more at the
time of calculating the ability to pay,
resulting in non-retention of the ability
to pay according to the laws of credit
institutions, Guidance of the State Bank
for a period of 3 consecutive months.
This circular also helps investors and
businesses with a more cautious, more
surely of the banks ahead of the deposit
or loan transactions that support to
their business. One of the effective
approaches to solving these difficulties
is the merger.
Banking Sector

7. Therehavebeenmanybanksovercomingdifficulties,
revival and operating well as Vpbank (2002),
Maritime Ball (2001, now MSB), even as Incombank,
the predecessor of Vietinbank, which have been in
bankruptcy technically, is now one of the 4 largest
banks in the country. Besides, from the website
“www.tinnhanhchungkhoan.vn “announced on
18/10/2019, despite of the limited ownership, the
tighter control over the shareholders… but the
Vietnamese banks have never been less attractive to
foreign investors.
Therefore, the operation M&A banking sector
continues to be dynamic forecast in the coming
time. Because the capital standard in Basel II will
be applied from 2020.
Market Snapshot | Nov 2019
7
The process of self-agreement between the investor
and the land owner is prescribed in article 4 Circular
No. 33/2017/TT-BTNMT as follows:
The investor sends the document to the resource
and environment department, where there is the
land acquisition to let the developer renting.
Land acquisition, compensation, support and
resettlement are carried out as regulations on land
acquisition for the defense and security purposes;
socioeconomic development of the national and
public interest.
The developer is responsible for the cost of
compensation, support, resettlement under the
compensation, support and resettlement scheme
has been approved by the government and is
refunded by the state budget by deducted from the
land lease payment. The amount to be deducted
does not exceed the land lease payable.
In the cases, owing a land in the project that
qualify for a certificate of land use right, housing
ownership and other property associated with the
land as prescribed but not certified, the provincial
People’s Committee notify the land user for the
implementation of a certification procedure to
apply for the land use right certificate, ownership
of housing and other property attached to the
land before the sale of assets attached to the land,
transfer, lease, capital contribution by land use right
with the developer.
To hand over the land to the developer who lease
the area of state land acquisition in accordance with
clause 4, 5 and 6, article 16 of Decree No. 43/2014/ND-
CP not through the auction form of land use rights.
Theimplementationoflanduseforprojectinvestment
is through by property purchase attached to the
land, receiving transfers, hiring of land use rights,
receiving a capital contribution by land use rights
that have different limited land use, which has a
long stable period of land area. The the period of
land use right will be the same as the period of the
project investment, which is specified in clause 3,
article 126 of the Land Law; Where the investment
procedure is not carried out in accordance with the
investment legislation, the period of land use of the
People’s Committee has the authority to hand over
the land, lease decisions but should not exceed 50
years. In case of the transfer of the land use right,
which the entire area of land has a long-term use,
the period of the land use right will be determined
to be long-term use.
3. LEGAL UPDATES
Compensation and Clearance
Policies:

8. As the orientation given from the
beginning of the year, the State bank
performs the tightening of the short-
term capital for long term loan from
banks under a 3-year roadmap.
TheStateBankhasrecentlyissuedcircular
22/2019/TT-NHNN regulation of the limits,
the rate of safety in the operation of the
Bank, foreign bank branch.
Notably, the state bank continues to
tighten with the real estate loan with
the decreases the maximum ratio
percentage of short-term capital used for
medium to long term loan.
Specifically, from 1/1/2020-30/9/2020 the
rate is 40%; 1/10/2020-30/9/2020 is 37%;
1/10/2021-30/9/2022 is 34% and since
1/10/2022 will drop to 30%.
Market Snapshot | Nov 2019
8
For more information:
LE QUOC HUNG
General Director
+84 906 787 134
hung.le@tms-investment.com
GENNIE PHAM
Market Research Director
+84 976 917 368
gennie.pham@tms-investment.com
consultancy
Suite 6.04, Nam Viet Building 09 Phan Ke
Binh, Da Kao Ward, District 1, HCMC
+84 906 787 134
info@tms-investment.com
www.tmsconsultancy.com.vn
TMS Consultancy
In particular, besides the reducing the proportion of short-term
loans for medium to long-term loan, the State bank also increases
the risk coefficient when trading real estate from 150% to 200%.
The clause of bank receivable must be fully assured by the housing
(including future housing completion), land use right, construction
works tied to the borrower’s land use right and meets one of the
following conditions will have a risk factor of 50%.
For other amounts of bank receivable, such as for the individual
that the total amount of the loan agreement/loan level of the credit
contract with the client is 4 billion VND or more (after deducting the
client’s debt, which already applied the customer’s risk coefficient
50%) The risk factor is 120%, effective from 1/1/2020 to Expiration
date 31/12/2020 and then will rise to 150% since 1/1/2021.
Also, according to circular above, the maximum outstanding loan
rate compared to the total deposit is 85% for banks, foreign bank
branches.
Besides, banks, branches of foreign banks that have not met the
capital safety ratio according to circular 41 must send the document
to the State Bank before the day 1/1/2020 stating the reasons for
continuing to implement the safety ratio of capital and solutions,
the roadmap to ensure compliance with circular 41 since 1/1/2023.
This circular 22 will officially take effect from 1/1/2020.
(Source: vneconomy.vn)
Vietnam State Bank is tightening
real estate credit, applied from
2020