trade and investment opportunities in vietnam

1

VIETNAM

2

GEOGRAPHY and PEOPLE

Population 89 million

13th most populous country in the world

54 ethnic groups

Young population - 54% under 28 years old

High literacy rate:94%

1.6 million new jobs required each year, equivalent to 5% annual growth

UK 13,190 km

that way

3

POLITICS

One party state - Communist Party of Vietnam

A culture where decisions made by consensus

A stable and safe environment

Growing international integration

Economic Reform (in 1986), introduction of private sector

(2000) and implementation of WTO commitments (VNs

accession to WTO in 2007)

4

THE UK & VIETNAM

40 years of diplomatic relations

Intensive high level interactions between UK and Vietnam

HMG one team (BE, BCG, DFID, BC)

On FDI, at end of 2012, UK is third largest EU investor (18th worldwide) in Vietnam: 163 projects with a registered value of around US$ 2.7 billion

Aim is to increase two way trade volume to US$ 4 billion and UK FDI in Vietnam to rise to US$3 billion by 2013

Relationship upgraded to Strategic Partnership in 2010

5

THE ECONOMY

One of the fastest growing economies in South East Asia over the last decade (average growth of around 7%).

2012 was a challenging year but GDP growth of 5.03% (target 6%).

Inflation: 6.8% in 2012

2013: Economy continues to recover. Monetary policy carefully loosened last year. Government GDP growth rate expected to be around 5.5% in 2013

Vietnam is one of UKTIs 20 High Growth Market

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How does Vietnam compare with its neighbours?

Ease of doing business 2013 (World Bank) Malaysia 12 / 185 Thailand 18 China 91 Vietnam 99 Indonesia 128 Cambodia 133 Philippines 138

Value of Exports US$ (CIA Fact book 2011) China 1 2,131 billion Thailand 21 245 Malaysia 23 213 Indonesia 26 209 Vietnam 39 97 Philippines 57 54 Cambodia 112 5

Nominal GDP US$ bill (World Bank 2011) China 2 / 184 7,298,147 Indonesia 16 846,450 Thailand 30 345,672 Malaysia 36 287,943 Philippines 44 224,771 Vietnam 57 124,000 Cambodia 120 12,890

Corruption Perception Malaysia 60 / 183 China 75 Thailand 80 Indonesia 106 Vietnam 112 Philippines 129 Control of Corruption (2010)

Malaysia 61% Thailand 47% China 33% Vietnam 33% Indonesia 27% Philippines 22% (Transparency International)

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FINANCIAL, PROFESSIONAL AND BUSINESS SERVIES SECTOR

VIETNAM S FINANCIAL AND PROFESSIONAL SERVICES

Economy heavily relies on banks (total banking assets

US$127 bil vs US$123 bil GDP) - banking reform underway

Issuer Default Rating (IDR) B+ by Fitch Ratings

Cash-based : only 20% of the population using banking

services; 7% are insured

Young capital market (since 1992) but total capitalisation

up to US$42 bil (35% GDP) - Dec 2011

SOE equitisation rebooted in 2012 - 93 SOEs to be

equitised.

OPPORTUNITIES

Ranked 8th in the Asia Pacific with busiest M&As - grew

30%/year in recent years

Professional brokers, lawyers and consultants to support

M&A and restructuring process

Establishment of wholly incorporation; or share holding in

local financial institutions

Consultancy, technology and infrastructure development

to support the equitisation and modernisation in the

banking sector specifically

HOW TO ACCESS TO THE MARKET

Build up a good relationship with local partners/

reputable organisations/ institutions

Working in partnership with local companies or

organisations

100% foreign investment

CHALLENGES

Bureaucracy can sometimes be frustrating

Unstable regulations and policies

Tough competition with local companies who are in more

favourable conditions

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RETAIL SECTOR

VIETNAM S RETAILS MARKET

Vietnams retail sales and services hit 111.36 bil USD in

2012, an increase of 15.72% year on year

Young population with increasing disposal incomes, which

are mostly brand and tech savvies

Traditional retail channels dominates the sector, which

distribute 78% of the total good flows.

Vietnams retail density is low i.e. 0.09 and 0.1 in HCMC

and Hanoi respectively, compared to 0.8 in Bangkok and

0.6 in Kuala Lumpur

OPPORTUNITIES

A high growth market for fast moving consumer goods

(FMCG)

70% of the population live in rural area and accounts for

only 47% FMCG value whilst modern trade contributes

22% of the FMCG value

Lucrative market for luxury goods. Vietnams import of

luxury goods in 2012 valued 10 bil USD, accounted for

11.3% of the countrys total imports.


Through UKTI Vietnam

Establishing good relationships with local partners (joint-

venture)

Franchising

M & A


CHALLENGES

Slow in infrastructure and distribution network

ENT (Economic Needs Test) barriers with ambiguous legal

framework

Shortage of skilled labour and professionals in the sector

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ADVANCED ENGINEERING SECTOR

VIETNAM MARKET

The role of advanced engineering and the machinery

industry is important as Vietnam is striving towards

modernization by 2020.

Machine, equipment, tools and instruments remain

Vietnams top major imported commodities. In 2012

Vietnams imports of machines, equipment etc. was US$

16.04 billion, an increase of 3.2% y-o-y accounting for 14%

of the countrys total import value.

OPPORTUNITIES

Machines and equipment have always been UKs top

export commodity to Vietnam.

In 2012, UKs export value of machinery to Vietnam

reached US$172.6 mil, accounted for 32% of Vietnams

total imports from the UK

Products have strong a credibility and provide good

experience to Vietnamese customers.

63% of Vietnams total export revenue comes from FDI

sector -> good pool of customers in addition to Vietnam

manufacturers.



Establishing good relationships with local partners

(trading companies, distributors, etc)

Joint-venture


CHALLENGES

Strong competition from other Asian countries such as

China, Japan, Taiwan, Singapore and S. Korea

Adaptation of UKs machinery into Vietnams

manufacturing sectors (assembling) is low

Prices of UKs machinery and equipment are higher than

other EU competitors such as Germany, Italy and France

10

URBAN PLANNING SECTOR

VIETNAM MARKET

Population of 88 mil, 13th populous in the world, 3rd in

South East Asia. Growth rate of 1% annually.

Young population (med age of 27.8)

70% of the population live in rural areas. Urbanisation

rate is 3%/ annum.

Working population of 62 mil, high demand for social

houses

One of the top 5 countries that are most vulnerable to

climate change

OPPORTUNITIES

Vietnams won the bid to organise Asian Games in 2019.

There are a lot of projects in place to anticipate the event

such as the athletes village to accommodate 11,000

people.

Long Thanh International Airport with the total

investment of US$10 bil

Dire need for sustainable urban development to tackle

climate change impacts and meeting the high demand of

social housing.



Establishing good relationships with local partners

(trading companies, distributors, etc)

Joint-venture


CHALLENGES

Land use and ownership

Land valuation and compensation

High property prices -> require big investment

Ambiguous and erratically regulations

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EDUCATION & TRAINING

SECTOR EDUCATION INVESTMENT

20% of Government budget;

11 projects during 2008-2015: US$1,270 million;

Schools will continue upgrade and plans to build at least

five international universities;

Growing demand for education expansion and higher

education;

The schools in Vietnam are established in different forms

depending on their ownership:

Public schools

People-founded schools

Private schools

OPPORTUNITIES

English Language Training Centres;

Higher Education/ Vocational Training/ Corporate

Training;

Supply of educational equipment;

Establishment of joint programmes;

International consultants;

Growing market for international studies.



organisation;

Build up a good relationship with local partners/

reputable organisations/ institutions;

100% foreign investment;

CHALLENGES

Mismatch in education systems between Vietnam and UK.

Vietnams system of education is highly decentralised and

depends on transfer and allocation of norms.

Lack of financial resources to upgrade training facilities

(premises, equipment/labs) in both tertiary and vocational

education.

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ENVIRONMENT SECTOR

VIETNAMS ENVIRONMENT SECTOR

Key environmental issues: the degradation of forest,

biodiversity, land, water and air.

Solid waste management a dominant issue that needs

urgent solution: Solid waste increased by 10% annually;

Landfill is the most popular disposable. method; 13-20% of

recovery for recycle/ reuse; Most of landfills in big cities

are nearly full.

Only 44% of 13,600 hospitals and medical

establishments have medical wastewater treatment

system.

OPPORTUNITIES

UK companies to offer consultancy and technologies for : Solid waste management Medical waste treatment (Vietnam got US$150 million from World Bank for medical waste water treatment in 3 years from May 2012) Renewable energy Air pollution Energy management and efficiency (World Bank funded US$70 million in Feb 2012 to support Vietnams climate and low carbon programme)




organisations

Contracting in World Bank/ADB funded projects

CHALLENGES

Vietnam still heavily reliant on ODA and Soft Loans to

fund projects .

The price for electricity generated from landfills or

renewable energy projects is low.

Fierce competition, especially with contractors whose

governments are major donors to Vietnam.

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ENERGY SECTOR

OVERVIEW OF THE POWER SECTOR

3rd largest oil producer in Southeast Asia, 31st in the word with 7 major basins , 4 billion barrels of oil reserves and 23 trillion cubic feet of gas reserves

Oil production: 300,600 barrels of oil per day

Gas production: 9,4 billion cum

Power consumption increased more than five-fold (2000-2012)

Vietnam will need approximately US$130bn to invest in the power sector in the next 20 years

OPPORTUNITIES FOR OIL & GAS

Supply of equipment and consultancy in: Seismic survey, Oil & Gas Exploitation Engineering and construction of production facilities, Drilling and production technologies, including drilling rigs (70-200m) Oil Spill Management and refineries. Gas ultilisation alternatives (polypropylene and polyethylene production) Training and education in all aspects of the industry. Health Safety & Environment Waste management


Supplying equipment and services: through local

distributors/agents

Investment:

Oil & Gas: partnering with PetroVietnam or local/foreign

oil & gas companies operating in Vietnam

Power: partnering with EVN or local/foreign power

companies operating in Vietnam

OPPORTUNITIES FOR POWER

Supply of equipment and Consultancy in: Power plants design Engineering and production facilities and refurbishment services: valve, pump, turbine, control instruments ..etc. Nuclear power development: Consultancy services, Equipment and Facilities ,Fuel Enrichment and Fabrication, Waste Management and Decommissioning, Operation and Maintenance.

183 new power plants invested and put into operation by

2025

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CONTACTS FOR ENQUIRIES

HANOI

Mr Piers Craven

Head of Trade & Investment

British Embassy Hanoi

4th Floor, Central Building

31 Hai Ba Trung, Hanoi

Vietnam

Tel: (84) (4) 3936 0500 ext. 2228

Fax: (84) (4) 3936 0561

Email: [email protected]

HO CHI MINH CITY

Mr Stephen Agnew

Head of Trade & Investment

British Consulate General HCMC

25 Le Duan Blvd,

District 1, Ho Chi Minh City

Vietnam

Tel: (84) (8) 3825 1380 ext 2206

Fax: (84) (8) 3822 1971

Email: [email protected]

For further information, please visit our websites at:

www.ukinvietnam.fco.gov.uk

www.ukti.gov.uk

End of Presentation Thank you

trade and investment opportunities in vietnam

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