Indian Businesses Consider Vietnam as a New Investment Destination

On the occasion of the 45th anniversary of Vietnam – India diplomatic relations and 10 years of strategic cooperation between the two countries, Mr P. Harish, Ambassador of India to Vietnam said that the two countries’ cooperation is very nice, many Indian businesses are considering Vietnam as a new investment destination in the region and choose to set up business in Vietnam.

India and Vietnam relationship have been developing very strongly since the two countries established diplomatic relations in 1972. The two countries advanced their relationship into strategic partnership in 2007 and then became comprehensive strategy in September 2016, when the Prime Minister of India visited Vietnam. This cooperation framework includes security, defense, economic and cultural cooperation, high-level delegation exchanges and people-to-people exchanges.

In terms of trade, bilateral trade has increased tenfold, from 1.15 billion USD in fiscal year 2006 – 2007, to 10.1 billion USD in fiscal year 2016 – 2017 (according to Indian data). The two countries’ leaders have set a bilateral trade target of 15 billion USD by 2020. India is among the top 10 trading partners of Vietnam and Vietnam is India’s fifth largest trading partner in ASEAN region.

Regarding investment, Vietnam currently has 136 Indian projects, with a total registered capital of about 1.28 billion USD, including capital from India through third countries, mainly focusing on areas as oil and gas, renewable energy, minerals, agricultural product processing, information technology and automotive components. The latest project of India in Vietnam is the instant coffee processing project of Tata Coffee Company in Binh Duong province, with a total registered capital of 63 million USD.

In order to achieve this goal, Vietnam and India need to work more closely in strengthening the exchange of business delegations and encouraging investment in one another, to promote trade.

In addition, Vietnam and India are expected to strengthen connectivity in aviation and sea line. Expected this year, Vietjet will open direct flights to India. Furthermore, linkage in the banking and finance sectors is also accelerating. Also, India has also strengthened its projects in Vietnam in the areas of human resource development, IT capacity building, English language teaching and science and technology.

With such a multidisciplinary approach, we can realize a comprehensive strategic partnership between the two countries and explore the potentials of two nations.

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Open for Private Investment in Vietnam Railways

Vietnam Railway is privately invested

The revised Railway Law has just been passed by the National Assembly will create attraction for investors to set up company in Vietnam to invest in infrastructure and railway projects.

The revised Railway Law has just been passed by the National Assembly and is expected to come into force on July 1st 2018 with many preferential mechanisms that will create attraction for investors to invest in infrastructure and railway projects.

Up to now, Lotte E&C (Korea) is the most zealous foreign investor in the Yen Vien – Lao Cai Railway Upgrading Project and the project to build railway connecting Lao Cai – Ha Khau in the form of PPP. Previously, in mid-February 2017, a preliminary study including investment plan, capital size and project repayment capacity was submitted by the Korean investor to the Ministry of Transport. In addition to the proposal to apply the form of build – lease – transfer (BLT), Lotte also wants to receive some incentives during the implementation of the project.

It is known that with the type of BLT contract, Lotte will invest capital to build infrastructure. Upon completion, the investor is entitled to provide services on the basis of operating that facility in a determined period of 20 years. The competent state agency shall hire the service and pay to the investor, when expired, the investor shall return the facility to the competent State authority for management and use.

Moreover, the Railway Law (amended) has added a number of provisions, which are considered to be the great drive for the railway sector. Specifically, the rail transport business is defined as the industry that is entitled to investment incentives; Organizations and individuals engaged in railway activities shall be entitled to incentives and supports such as free land use fees for land area for infrastructure construction, the highest incentives level for enterprise income tax rate, enjoy the most preferential credit policy; applying the pricing mechanism for the mode of leasing or transferring the right to exploit railway infrastructure.

These regulations will create breakthroughs in investment resources, attracting businesses to concentrate resources on railway development, in fact many countries have similar policies.

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JLL: Vietnam Tourism and Hotel Industry Is Growing

Vietnam tourism industry has achieved steady growth in recent years. Furthermore, Vietnam has become an attractive tourist destination for foreign visitors.

According to a report of JLL (Jones Lang LaSalle), Vietnam resort real estate has become one of the most mentioned markets in Asia Pacific and in the future, the potential for development is still very wide open.

In 2015, Vietnam has seen a strong increase in the number of foreign tourists when it exceeds the goal of 10 million international visitors by 2020. According to Vietnam National Administration of Tourism, in 2017 Vietnam is expected to increase by 15% the number of international tourist arrivals to 11.5 million and tourism industry ‘s revenue will reach 20 billion USD.

In order to facilitate growth, the Government of Vietnam has recently exempted visas for travelers from many countries. As a result, the number of international tourists has increased steadily. The target for international visitors travelling to Vietnam in 2020 has been revised up to 20 million tourists with 30 billion USD in revenue and generated 3.5 million jobs in the tourism sector, increased sharply compared with the initial target of 10 million visitors.

According to JLL, the impressive growth in the number of tourists travelling to Vietnam will promote important strategies and increase investment in tourism product development to take advantage of existing strengths in the domestic tourism industry, as well as the development of new areas. As infrastructure investment continues to grow and private funds participating in the transportation and hotel sectors, Vietnam may open new destinations beyond its usual destinations such as Ho Chi Minh City, Hanoi and Da Nang/Hoi An.

Along with the “boom” in the number of tourists travelling to Vietnam, tourism products are also increasingly diversified, the resort real estate products associated with golf course are opened, the Government also loosen the regulates on the activities of prize-winning entertainment complex. In addition, the type of ecotourism, culinary tourism, spiritual tourism is also expanded more diverse.

According to JLL, the strong growth of the tourism industry and the number of visitors are shown most clearly in the resort real estate supply, especially condotel. Accordingly, in the period 2017 – 2018, Da Nang will welcome about 2,500 hotel rooms come into operation, the number in Nha Trang is 2,200 and Phu Quoc is about 2,000.

Assessing the potential of the resort tourism industry, according to JLL, Vietnam’s increasing tourist arrivals and a growing economy make the hotel and resort market attractive to many investors in the region. To sum up, Vietnam resort real estate has become one of the most mentioned markets in Asia Pacific. In the near future, international hotel operators are increasingly interested in resorts, while real estate developers continue to seek investment opportunities.

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