Académique Documents
Professionnel Documents
Culture Documents
q4 2015
MONETARY INDICATORS........................................................................................................................ 5
EXTERNAL INDICATORS......................................................................................................................... 6
LEGAL UPDATES..................................................................................................................................... 9
INVESTMENT HIGHLIGHTS - NEWS COVERAGE................................................................... 10-12
LIST OF FIGURES
LIST OF TABLES
EXECUTIVE SUMMARY
It is forecasted by HSBC that Vietnams exports will grow by an average 10.1% annually
from 2015 to 2030. FDI inflows have been very strong in recent years, helping Vietnam
diversify its export base and gradually move into higher value sectors, most notably
Information and Communication Technology (ICT) equipment. The sizable, young,
growing and increasingly skilled workforce continues to attract manufacturers of low
cost items and Vietnam is becoming increasing integrated into global trade. The Free
Trade Agreements with Korea, EU and Trans-Pacific Partnership agreement (TPP)
should provide impetus towards reform, most notably liberalizing some key protected
sectors such as retail, banking, agriculture, etc. The government enacted Decree 60/
ND-CP 1 July 2015 to remove the 49% cap on foreign ownership in many sectors (though
some key ones such as banking are still excluded).
The trade balance has been in surplus. Risks remain quite high though, particularly while
the outlook for global markets and trade is fragile. In particular, strong domestic demand
may create inflation pressures, putting pressure on the interest rate.
Vietnams strong points:
Positive economic prospects in terms of growth, despite the global economic crisis;
A young, low cost, rapidly growing and an increasing technologically qualified
workforce;
Social and political stability;
A firm commitment to liberalize the economy and to introduce reforms based on the
free market.
Vietnams weak points:
Weak financial and institutional structures. Although being undergoing reforms,
the financial sector is neither well regulated nor independent of the government;
and unequal allocation of resources between State-Owned Enterprises (SOEs) and
private sectors.
The lack of guarantees for property rights;
Transparency issues
Foreign investment is subject to an array of unclear regulations, which cannot be legally
guaranteed. The judiciary is subject to political influence, and commercial cases often take
years to be resolved. Despite this, the promotion of foreign investment is a large part of
the countrys developmental strategy. Therefore, the government is continually improving
its judicial system, creating more incentives and taxation policies for foreign investors
and trying to respect its commitments with regard to the international community.
Page 3
Retail Sales
2500
7
2000
6
5
1500
4
1000
3
2
500
1
0
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015 2016 F.
20
15
%
CPI
USD/capita
GDP
10
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F
Proportion
2,245,502
76.2%
337,767
11.5%
Travelling service
27,780
0.9%
335,093
11.4%
Retail sales
Other services
Source: GSO | Colliers International Research
Page 4
10
18,000
9
16,000
8
7
14,000
12,000
5
4
10,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
2011
2012
2013
2014
Aug-14
Dec-13
0
3Q
2015
16
14
12
10
Dec-15
Apr-15
Aug-15
Dec-14
Apr-14
Apr-13
Aug-13
Dec-12
Apr-12
Aug-12
Dec-11
Apr-11
Aug-11
Dec-10
Apr-10
Aug-10
Dec-09
Apr-09
Aug-09
Dec-08
Aug-07
20,000
11
Apr-08
Statistics from the SBV shows that at the end of Q3-2015, the
banking system has increased credit to real estate industry 14.5%
more than Q4-2014. Overall, as of 18/12/2015, credit growth of
the whole banking system reached 17.02% y-o-y. This number is
higher than credit growth rate of 14%-15% in the period 2012-2014
but much lower than 37% of 2009, when property prices reached
its peak. Outstanding debts relating to real estate account for about
VND 360,000 billion an increase of 80% compared to the amount
of VND 197,000 in 2012. According to estimation from Vietnam
Banks Association, about 70% of capital investments in real estate
are backed by bank credit and 65 % of collateral is in the form of
property.
22,000
Aug-08
Credit Growth
24,000
12
% per annum
Vietnams trade deficit occurring for the first time in three years
and a high government fiscal deficit in 2015 are going to pile more
pressure on Vietnam Dong in 2016.
In addition, the nations exchange rate is affected by two external
factors in 2016. Firstly, Feds policy of keeping USD stronger would
reduce the demand of holding local currency in Vietnam; secondly,
Chinas slow economic growth could lead the Peoples Central
Bank of China to devalue the Yuan further. This, in turn, may lead
the State Bank of Vietnam (SBV) to change the rate USD/VND to
prevent further trade deficit from China.
Exchange Rate
13
trillion USD
Exchange Rate
Interst Rate
14
VND/USD
Dec-07
Interest Rate
Page 5
20
billion USD
FDI
15
10
0
2005
2007
2008
2009
2010
2011
2012
2013
2014
2015
Exports - Imports
Exports
Imports
180
160
140
120
billion USD
100
80
60
40
20
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Page 6
Stock Market
400
300
200
100
0
2005
International arrivals
2008
2009
2010
2011
2012
2013
2014
2015
4.5
4
3.5
3
%
2.5
2
1.5
1
0.5
0
2009
2010
2011
2012
2013
2014
2015
Average
9,000
8,000
thousand arrivals
2007
Bad Debts
SBV announced that banking systems bad debt has been lowered to
below 2.9%. Yet, this result somehow contributed by the transfer of
bad debts to a state-owned Vietnam Asset Management Company
(VAMC) as well as the increase of bank credit supply.
2006
500
7,000
6,000
5,000
4,000
3,000
2,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Page 7
2013
2014
2015
5.2
5.4
6.0
6.5
9.1
6.6
4.1
0.63
2,324.4
2,618
2,945.2
3,242.9
10.5
7.1
5.8
6.2
20,828
20,933
21,148
22.517
16.3
22.35
21.92
22.76
114.5
132.1
150.2
162.4
113.8
131.3
147.8
165.6
413
504
545
579
6.85
7.57
7.96
7.94
2016 F
Q1 2016 F
Source: General Statistics Office, World Bank, Asian Development Bank, Colliers International Research
Page 8
LNTs practices are focused on assisting their client with their most complex legal matters in the following areas: Banking &
Finance, Corporate, Dispute Resolution, Intellectual Property and Real Estate & Infrastructure. LNT regularly partner with Colliers
to ensure Best in Class Real Estate Advisory Services. Mr. Thai Binh Tran heads LNT & Partners Real Estate & Infrastructure
Practice Group, and brings with him more than 15 years of legal experience. Mr. Tran has advised Collierss clients on a wide
variety of matters covering all aspects of the real estate industry, including project implementation, land use rights and property
ownership-related matters, property acquisition transactions and taxation matters, and real estate project development procedures.
The major updates focus on the guidance provided in Decree
76/2015/ND-CP (Decree 76) issued in September and Decree
99/2015/ND-CP (Decree 99) in October that provide specific
guidelines for the implementation of Law on Real Estate Business
(LOREB) and Law on Residential Housing (LORH).
Simplified Procedures for Doing Real Estate Business
According to Decree 76, individuals who are engaged in real estate
business at small scale are not required to set up entities for the
business. Small scale is defined as doing business with properties
owned by such individuals, or developed by such individuals with
the total investment capital less than VND 20 billion (equivalent to
US$ 870,000).
With regard to the establishment of a real estate business, a legal
capital (minimum paid-up capital) of VND 20billion is required,
however, a financial statement or bank acknowledgement certifying
sufficient fund for the legal capital is no longer required as before.
As such, the procedures for registration of the real estate business
therefore are simplified and take less time than before.
Sample Contracts for Real Estate Business Activities
Decree 76 also provides sample contracts for real estate transactions
such as: sale, lease of existing and under-construction properties;
transfer, lease of land use rights; partly or wholly transfer of real
estate development projects. Of note, it is not required that the
parties have to follow exactly the sample contracts as it did before,
but the transaction documents have to contain main terms as the
sample contracts do.
Further guidance for housing ownership by foreign individual
Decree 99 clarifies eligible foreign buyers are those who have
their valid passport affixed with an entry stamp by the immigration
authority of Vietnam.
Foreign individuals may purchase either directly from developers or
from other foreign individual or entity who owns residential housing
in Vietnam. In later case, the ownership duration is the remaining
term specified in the issued ownership certificate. However, if the
foreign housing owner sells the residential housing to a Vietnamese,
the Vietnamese will hold the indefinite ownership term over the
property.
The foreign owners have to dispose the housing properties before
the expiry of the ownership duration, otherwise the properties may
belong to the State of Vietnam. However, there is also a possibility
for foreign owners to extend the ownership duration by submitting
the request to relevant authorities for consideration.
Disclaimer: The legal update is prepared by LNT & Partners and should not be taken as an advice to a specific matter. Should a reader
have any query or need further clarification, please feel free to contact Mr. Binh Tran, Partner of LNT, at binh.tran@lntpartners.com.
Page 9
Solid investment
Vietnam Economic Times, 12 October 2015
When two long-awaited pieces of legislation the Law on Housing
and the Law on Real Estate Business came into effect on July 1,
industry insiders expected their significant impacts on marking an
important step towards opening up Vietnams real estate market to
overseas investment. The new law is believed to provide motivation
to developers to kick off construction of second home products
around the country. Although the second home market is still
in the very early stages of development, the market in Vietnam
can compete directly with those in the region such as Phuket and
Bali, given their competitive price and better quality. Meanwhile,
new launches of villa and condominiums in Phu Quoc and Da
Nang are expected to attract foreign buyers in the short term.
Page 10
Page 11
Back In Favor
Vietnam Economic Times, 12 December 2015
Since mid-2014 Vietnams residential market has been recovered,
starting with the affordable segment. Many projects entering the
market in 2015 have achieved high absorption rates. There is a
strong growth in both demand and supply in the apartment sector.
However, infrastructure is regarded as a major obstacle for Vietnam
taking advantage of the opport unities from the TPP.
The key drivers of Vietnams property market in 2015 have been
economic recovery, controlled inflation and interest rates, rapidly
improving infrastructure, the stimulus package to fund affordable
housing and a more supportive legal framework. Foreign direct
investment (FDI) in real estate has increased strongly since the
beginning of this year. According to the Foreign Investment Agency
(FIA) under the Ministry of Planning and Investment (MPI) Vietnams
property market attracted $1.81 billion in FDI to 19 new projects in
the first nine months and seven existing projects increased their
registered capital.
Key Resource
Vietnam Economic Times, 12 December 2015
The upswing in FDI commitments and disbursements has buoyed
economic growth and underlined Vietnam as a solid investment
destination. As at the end of October, foreign companies generated
USD95 billion in export revenue this year, an increase of 14.3
percent year
on
year and accounting for two
thirds of Vietnams
total export revenue. Foreign companies also recorded a trade
surplus of USD12.9 billion, contributing to bridging the trade
deficit. Foreign companies registered to invest $20.22 billion in
Vietnam in the first eleven months of this year, up 16.7 per cent
compared with the same period last year. One thing highlighting
the success of FDI in Vietnam this year is the continual relocation
of investments by multinational companies to the country.
Samsung Electronics or Jabil Circuit are good examples for this
trend. The wave of investment from multinational companies
has encouraged others that previously left Vietnam to return.
Page 12
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