Vietnam Industry and Trade News Bulletin for January 14, 2016

A. GENERAL ECONOMIC HIGHLIGHTS

1. Bloomberg: M&A Boom Expected in Vietnam in 2016 Bloomberg predicts that Mergers and Acquisitions (M&A) in Vietnam will set new records this year, driven by foreign investors’ interest in the fast-growing consumer sector . Recent regulatory changes, such as the Investment Law shortening licensing times to 15 days, and the opening of 18 sectors to foreign investment, are facilitating this trend . Notable deals include ANA Holdings (Japan) buying a $108 million stake in Vietnam Airlines . Consumer spending is forecast to grow 47% by 2019, making Vietnam highly attractive .

2. Thailand Fears Capital Flight to Vietnam due to TPP Thai industries are concerned that foreign investors will move capital to TPP member nations like Vietnam, Singapore, and Malaysia to enjoy preferential access to the US market . The Federation of Thai Industries (FTI) noted that LG Electronics has already moved TV production from Thailand to Vietnam to utilize low costs and prepare for TPP .

3. “Reform or Lag Behind”: Minister’s Warning Minister of Planning and Investment Bui Quang Vinh warned that without continued institutional reform, Vietnam faces the risk of lagging behind . He criticized the re-emergence of “sub-licenses” and the low quality of SOE equitization, noting that the state still holds 95% of value in equitized firms . He urged for genuine market mechanisms in land and labor .

4. Vinalines to Divest from Major Ports The Prime Minister has directed Vinalines to adjust its ownership ratios in seaports. Vinalines will hold a maximum of 20% charter capital in Hai Phong Port and Saigon Port, and must divest its entire stake in 9 other enterprises, including Da Nang, Cam Ranh, and Nghe Tinh ports .

5. Finance & Banking Sector: Highest Salaries in 2015 A survey by Navigos Search reveals that Finance and Banking was the highest-paying sector in Hanoi in 2015 . In HCMC, the healthcare sector led regarding salaries for mid-to-senior level personnel .

6. SME Access to Capital Remains Low Despite contributing nearly 40% to GDP, only 30% of Small and Medium Enterprises (SMEs) in Vietnam can access bank loans. The remaining 70% rely on personal funds or high-interest informal loans due to a lack of collateral .

7. AEC Labor Movement Not Easy Although the ASEAN Economic Community (AEC) allows the free movement of skilled labor in 8 professions, experts warn that technical barriers (such as language requirements and local priority regulations) make actual movement difficult .

B. INDUSTRY AND TRADE NEWS

I. OIL & GAS

• New Leadership: Mr. Nguyen Quoc Khanh, previously General Director, has been officially appointed as the Chairman of the Member Council of PetroVietnam (PVN) .
• Daily Petrol Price Adjustments Proposed: The Ministry of Industry and Trade (MoIT) is considering a mechanism to adjust petrol prices daily instead of the current 15-day cycle to better reflect global market movements and avoid price lags .

II. EXPORT – IMPORT

• DAP Fertilizer Tax Hike: VCCI and Vinachem have proposed increasing the import tax on DAP fertilizer from 3% to 6% to protect domestic production against cheap Chinese imports, which currently account for 90% of the market .
• Logistics Fees Burden: Exporters are burdened by dozens of unreasonable shipping fees and surcharges. For example, lifting fees, container cleaning fees, and “imbalance” fees. The Vietnam Pepper Association states that no other country imposes as many surcharges as Vietnam .
• Zero Tariff for Lao Goods: MoIT issued a circular granting a 0% import tax quota for 70,000 tons of rice and 3,000 tons of tobacco leaves originating from Laos .

III. DOMESTIC MARKET

• Fake Fertilizer Scandal: A major scandal involving the issuance of fake certificates for over 800 fertilizer products has exposed deep corruption (“envelopes”) in management . Authorities confirmed that fertilizer from Thuan Phong Company labeled “Made in USA” was fake . A nationwide inspection of fertilizer quality is underway .
• Steel Prices Drop: Retail steel prices have fallen below 10 million VND/ton (a decrease of 800,000 VND/ton since Dec 2015) due to low demand and plunging global raw material prices .
• Steel Import Risk: Vietnam risks becoming a consumption market for imported steel. In 2015, steel billet imports surged by 198% to 1.78 million tons .
• Gas Safety: The Vietnam Gas Association warns that 30% of gas cylinders in households are illegally refilled or fake, posing serious fire and explosion risks .
• Safe Food for Tet: HCMC has prepared nearly 300 sales points for safe food chains (“farm to table”) to serve the Lunar New Year .

IV. INTERNATIONAL INTEGRATION

• TPP Optimism: A survey shows that most of Vietnam’s top 500 enterprises are optimistic about TPP but urged the government to prioritize simplifying administrative procedures to enhance competitiveness .
• Auto Industry Pressure: As import taxes fall, domestic manufacturers face intense pressure. Toyota Vietnam stated that maintaining domestic production depends on government support policies, while FDI firms are increasingly switching to importing parts rather than buying locally .