Dr. Dang Dzung HungViet Company

Transcription

1 Vietnam fundamentals for further growth Dr. Dang Dzung HungViet Company

2 Agenda

3 Country at a gland Logistic routes in regional context SME development in stages Entrepreneurial behavior FDI engine of growth FII and capital market Trade development beyond WTO

4 Test of recession 2008 Red tape and challenges Business case: Hanoi expansion Fundamentals for further growth Investment potential Supply chain improvement Contact for networking

5 Vietnam 20 years of change Socio political stability helps keeping steady pace of economic growth, moving the country out of poverty Total economic openness: foreign trade represents 160% of GDP WTO has made some first impact: sharply increase FDI and widening trade deficit New legislations introduced, paving way for full economic integration ti Corruption constrained private investment and hampered external aide

6 Vietnam 20 years of change The Government aims to have 500, enterprises by 2010 from currently 320,000 GDP growth will bearound 6.5% p.a., high inflation and sizeable trade deficit are of concern Investment, t engine for growth, projected around 40% GDP, of which private sector must contribute more than half Foreign reserve has been marginally strengthened, thanks to overseas Vietnamese transfers, FDI and ODA

7 Logistic routes

8 Logistic routes w/in ASEAN Route 1: BKK-KL-Sin Route 2: BKK-HN Route 3: South China- Hanoi-DaNang-HCM Route 4: BKK-Yangon Route 5: BKK- PhnomPenh-HCM Route 6: Sin-Jakarta Route 7: BKK-Manila

9 Lack of logistic infras Supply and price distortion ti due to poor logistics Michael Porter: being one of the leading exporters of apparel, leather shoes and wooden products, Vietnam can target to become one of the world's design centers with the available advantage of low cost. Why does not Vietnam plan to become one of the world's logistics centre supplying essential goods to the world?

10 Future Infrastructures To be built: Highways Railways Power Plants Ports Airports Logistic hubs

11 Entrepreneurship

12 Business sectors vs. stages Stages now State Struggling Joint venture Contracting Privatization Reforming Capitalization Pi Private Beginning i Renovating Transforming State spin off Self taught entrepreneurs Western educated Distribution Sub contracts Technology acquisition Foreign Venturous China+1 Multinationals In absence of an industrial policy Education, training, i health-care near crisis i Demand driven by market chaos: labor liberalized

13 Vietnam Demographics Indicators GDP (USD Billion) GDP growth (%) Income per capita FDI (USD Billion) Export (USD Billion) Import (USD Billion)

14 Trade The more Vietnam s economy exposes to globalization, the higher deficit China is the largest partner, nearly US$20bill; huge deficit US is the fastest growing partner at $13bill, but surplus Apparel almost reached $9bill, of which $5bill to the US Export: TCF, fishery, wood, rice, crude Imports: Capital goods, luxury goods, education, health care

15 Investment

16 Foreign Direct Investment IZ, EPZ infrastructures Agriculture Forestry Construction ti New Urban Development Light Industry 6T/2008 Hotel Tourism Pt Petroleum Office Apartment Heavy Industry 0.0% 10.0% 20.0% 30.0% 40.0%

17 Stock market immature

18 Industrial Zones

19 Investment Procedure into an Industrial Zone

20 Procedures for cooperation Red tapes Selecting a partner/site Market analysis in VN and home Enterprise or JV formulation Licensing and implementation Ad i i t ti f i l d Administrative reform: single door Legal: common laws on enterprise, investment Consultancy services availability Business Association/Chamber

21 Hanoi expanding west ward

22 New urban spaces and population Hòa Lạc B.An Khánh QuốcOai HT-HN National Hoa Lạc Dong Truc Quoc Oai Bac An Hatay Park Ngoc Liep Khanh Hanoi border 8,350ha 2,300ha 920ha 670ha 2080ha 590,000 30,000 55,000 70, ,000

23 Skyline in Hanoi s New CBD

24 Population Hoa Lac Quoc Oai An Khanh Comparison between Hanoi and Hatay Hanoi Hatay

25 Schematic view of new towns Vinh Phuc Airport SonTay To Halong Ethnic Cultural Pak Historic tourist zone To BacNinh Bavi National Park Admin Center National University Residential zones Hoalac Hitech Park Industrial zones Dong Truc Ngoc Liep Quoc Oai North An Khanh AnKhanh MyDinh Hanoi To HCM National Road Highway 1A - HCM

26 Hanoi Eastern corridor New Highway N.18 Highway west HN Highway N.38 New Highway N.5

27 Key Northern IZ Honda Toyota Sumitomo ThangLong NoiBai IZ YenPhong QueVo 24ha for Tech School and Logistics PhucDien PhoNoi A HHIP Saidong B THIP

28 Key investors Northern Campell Airport Samsung Toyota Honda Canon Foxconn Brother Seaport Radius 30km Future Airport Seaport

29 Highway 5B Hanoi to Eastern Port

30 Linkages with China Two Economic Corridors, O ne Belt Within the ASEAN China Cooperation China (KunMinh) China International port (Hai Phong, Quang Ninh) To Central and South

31 Economy in recession

32 2008 earlier test over crisis High inflation Tightened monetary policy: Credit crunch Stock market and real estates: sharp down turn Financial service sector vulnerability Business down scaling as anticipating export decline Trade deficit and high FDI flow increase g pressure on USD/VND rate

33 Capital sources and macro instability BOOM Incoming Capital Real estate bubble Real rate and inflation rise Wealth effect Credit expansion Trade deficit and increased interest rate Bad debt, [Capital out flow] demand down, public debt up BUST

34 Engine for development

35 Vietnamese business mindset Resilience over recession Irrational economics Informal learning: trial and error Respect of ruler: avoid red tape, political nimble Passive investment: hesitant to go offshore Loose association Gambling

36 Traffic jam Each year, Vietnamese registers some 15-20,000 cars and 500, new motor bikes

37 Retail

38 Education and training

39 Fundamentals

40 Asia s 2 nd youngest pop. 57% Vietnamese are below 25 years of age

41 Happiest nation in Asia

42 Smallest urban population

43 Comparative labor costs

44 Investment environment Competitive manufacturing labor and booming FDI Average cost of 200 manufacturing labor in 150 Vietnam is significantly lower than in China Average wages per month, China excl social Thailand security (US$) Vietnam Breaking records: commitment of US$ 20.3 bill in 2007 and US$ 60 bill in 2008 (US$12 bill disbursed ) Top 5 investing countries: 5 Taiwan (US$19.51billion), Malaysia, J 0 apan, Singapore, South Korea Source: Economist Intelligence Unit 20 Registered Capital Disbursed Capital Source: General Statistics Office of Vietnam Slide 44

45 Technology Savvy

46 Inflation: New York 2006 level 100 Vietnam is 38% cheaper than New York but inflation will change the way people consume in the future

47 Why rural becomes more and more important?

48 Sector ownership

49 Vietnamese consumerism Population shifts will impact both spending power and consumer needs Competition will increase steadily, creating more consumer sophistication Wealth polarization will create clearer consumer segments Major retailers welcome: Metro, Casino, Parkson, Lotte 1Jan2009 retail fully opened

50 consumerism Distribution will become easier, with growth of the modern trade Media fragmentation will reduce effect of advertizing Attitude will become more demanding and self centered, the me generation Youth culture needs to be embraced, while hl managing expectations to ensure stability

51 Areas for investment Agriculture: cattle, horticulture, plantation Logistics: warehouse, transports Retail: Modern trade Media: TV, mobile 3G Health care Education Training Innovative electronic manufacture Boutique hotels

52 Supply chain improvement Cattle husbandry and processing for export Farm Farm Farm Far m Abattoir Packaging Inland cold transport Logistics Ware house Customs Air Cargo VET certificate

53 Business linkage Member Recruitment & Retention Trade Promotion Social Responsibilities Education & Training Info & News Services Trade&Biz Coaching Trade Promotion Member Recruitment & Retention Education & Training Social Responsibilities

54 DR. DANG DZUNG, PRESIDENT & CEO CELL: +84 (0) HUNGVIET COMPANY 99 BUI THI XUAN, HAI BA TRUNG, HANOI TEL: FAX: