Set-up Representative Office in Vietnam

A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam.

Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Representative Office is not allowed to directly conduct profit making activities in Vietnam (i.e: the execution of contracts, direct payment or receipt of funds, sale or purchase of goods, or provision of services), but the representative Office is permitted to

• To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;
• To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;
• To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;
• To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

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Coastal Shipping in Vietnam

1.Coastal shipping competition

According Maritime Bureau, in 2015, although business activities of coastal shipping enterprise still had some difficulty, the total output reached 118.7 million tons, increasing 9.5% compared to 2014.

A Deputy Director of Vietnam Maritime Bureau, Mr Bui Thien Thu said that domestic shipping had taken charge of 100% of the domestic demand of coastal shipping. The domestic container ships has increased to 39 ships, a total increase of freight load is 200% from 2013 to 2015. The coastal shipping routes has transported 6.1 million tons of cargo including coal, slag, stone, rock, metal, fertilizers, cement, ore, fuel oil …

In 2015, output of goods in Vietnam’s seaport system continues an impressive growth, estimated at 427.3 million tons, rising 14.6%, in which the container reached 12 million TEUs, rising 15.5% compared to 2014.

According to Deputy Director of Bureau Bui Thien Thu, cargo volumes through Vietnam’s seaport system in 2015 in accordance with the approved plan in Decision No. 1037 of the Prime Minister in 2014 was 410 million tons. Thus, the volume outperformed 4.1% in 2015 compared with the initial plan.

However, the goods have been misallocated between different domestic seaports. To resolve this situation, there is a need to improve connectivity transport infrastructure and supporting services to relocate goods in different seaports, while speeding up the relocation of the port on the Saigon River and Ba Son shipyard.

During the year, Vietnam Maritime Bureau has completed the review and adjustment of detailed planning of port group 1, 2, 3, 4 and 6, thus managing the system more effectively. The Ministry of Transportation approved this plan.

By 2016, the total output of goods through the port system is estimated to reach 470 million tons (increasing 10% compared to 2015), in which each container is expected to reach 13.3 million, increasing 11% TEUs.

2.Vietnam Government published policy on Coastal Shipping, particular container services

In late May 3/2013, the Ministry of Transport has issued Document No. 128 / TB – BGTVT decision to terminate the operation of foreign fleets in terms of container shipping service in domestic routes, consisting of 20 units with a total tonnage of 500,000 DWT.

The foreign ship owners are not able to disapprove this decision since prioritising domestic fleets is compatible with the Law of the customs, as well as commitments to the world Trade Organization (WTO) on the protection of the members.

From 2013 to 2015, the fleets of Vietnam were given good opportunity to win back market share in terms of the domestic container shipping, which used to belong to the foreign shipping companies (with an estimated value of 1,000 billion / year). There are various container shipping companies gaining loyal leads which ground stable roots for domestic fleets.

Also Vietnam Maritime Bureau in collaboration with Ministry of Transport, Vinalines, Vietnam Ship Owners Association and Vietnamese ship owners operating on domestic routes ensure the limitation of congestion at seaport.

Average freight rates of Vietnamese fleet are offering customer around 5.2 million / 20-foot container for the north – south journey. This price is equivalent to the unit price of the foreign shipping company in 2012.

There have been more Vietnamese fleet being able to operate on domestic routes such as Hai Phong and Cai Lan to HCMC, Ba Ria – Vung Tau and vice again.

3.Vietnam regulations establishing who can and who cannot provide coastal shipping services, particular containers.

To ensure sufficient capacity to meet the demand for domestic container market, in addition to 30 domestic container shipping companies, Vietnam Maritime Bureau has also allowed 8 foreign fleets owned by Vietnamese enterprises to operate on domestic routes.

The biggest difficulty for domestic container shipping companies is that market has not completely recovered. Currently the container shipping companies from the South to the North reach approximately 80% of capacity, while the reverse route only reaches 50% capacity.

In long term, this policy has enabled the Vietnamese fleet to gradually recover from difficult period when all the domestic container shipping belonged to foreign companies.

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Potentials of Vietnam Logistic Industry

When Vietnam joins the TPP, Vietnam logistics industry has many opportunities to develop and engage more deeply into the world’s logistics centers…

According to the report of World Bank, the forecasted growth rate between 2015 and 2020 is 12%/year and import export turnover reached 623 billion USD in 2020, Vietnam is a promising destination for investors.

According to the statistics from the Vietnam Logistics Business Association (VLA), Vietnam’s logistics costs accounted for about 25% of GDP per year, much higher than countries such as the US, China or Thailand.

In the coming time when TPP agreement takes effect with many tariffs equal 0%, the export-import operations in Vietnam will promise to develop strongly. This is considered a great opportunity for the logistics industry to “boom”.

As an important link of the economy, the logistics activities help the goods to reach consumers and ensure the materials for the production process.

Despite facing strong competition from foreign rivals, many experts still appreciate the future prospects of the domestic logistics enterprises, especially in the context of free trade agreements (FTAs, TPP) boosted FDI inflows pouring into Vietnam industries.

On the other hand, the increasingly improved infrastructure in Vietnam will strengthen connectivity between logistics facilities and production areas; planning and supporting from the State, along with customs procedures are gradually improving in a positive direction.

In the recent two years, a series of key infrastructure projects have been started and completed as Long Thanh – Dau Giay  highway, Noi Bai – Lao Cai highway, Ha Noi – Hai Phong highway, Ben Luc – Long Thanh highway Highway 51 connecting industrial park with the ports and Soai Rap channel dredging works (in Hiep Phuoc port) and Thi Vai – Cai Mep channel…

In addition, the Government and the Ministry of Transport have launched a number of policies to guide, support and stimulate the sustainable development of the domestic logistics industry such as: policy to control road loading, preferential policies for Vietnam ships on domestic routes, the draft to establish port authorities to develop ports and port services, Decision No. 1037/QD-TTg on the port development plan till 2020…

Moreover, according to the General Department of Vietnam Customs, Vietnam is also actively developing and implementing the ASEAN Single Window mechanism. The implementation of this process will benefit the business community, including logistics businesses such as reducing the time taken for administrative procedures and also cost reduction.

However, in order to develop logistics industry, the State should build and complete the legal framework, standardized service processes, upgrading infrastructure and human resources for the field of logistics.

Government should also take measures to guide and promote logistics companies to link together, formed the company with strong capabilities, able to compete with foreign companies.

With the above subjective and objective elements, Vietnam’s logistics industry still have great potential to develop and first of all, they will have conditions to advance to move towards to same level with foreign logistics businesses in the region.

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Oil & Gas regulatory in Vietnam

Vietnam oil and gas industry has a great potential as it plays a vital role in Vietnam’s industrial development.

According to a report by the Vietnam Ministry of Industry and Trade, oil production in Vietnam in April 2015 reached 1.5 million tons, up 7.2% from the last year’s figure. Gas production reached 0.9 billion cubic meters (+1.8%), and production of liquefied petroleum gas (LPG)—60.3 thousand tons (+2.9%). During the same period of time, Vietnam produced 6.1 million tons of oil (+8.9%) and 3.5 billion cubic meters of natural gas (+1.6%). In contrast, the amount of liquefied petroleum gas produced fell by 12.2%, down to 241.3 thousand tons. The country produced 12.5% more petroleum products, some of which saw greater production rates than the average for the industry. Over the 4 months of 2015, the country produced 2.26 million tons of petroleum products, the source reported. According to the Vietnam Ministry of Industry and Trade, the overall performance of the oil and gas industry is in line with the targets set out for the sector.

Opportunity for oil and gas equipment, service and distribution enterprise to set-up business and invest in Vietnam has been predicted positive.

Vietnam’s expanding offshore exploration and production have created steadily growing market for offshore oil and gas equipment and service. In general, suppliers of oil and gas equipment and service are quite competitive in the upstream and midstream sub-sectors where advanced technologies and reliability are strict requirements. Offshore enterprise will find significant opportunity for exporting their equipment and services in Vietnam with many offshore oil and gas exploration and production projects, as well as several gas pipeline projects. The number of projects is likely to increase substantially over the next few years as PetroVietnam awards new oil and gas blocks to foreign oil and gas companies.

A quick overview of Vietnam oil and gas industry

Vietnam’s oil and gas industry is currently the country’s biggest foreign currency earner and a major procurer of imported technology. Since the first export shipmentin April 1987, crude oil has earned over US$17 billion for Vietnam. The oil and gas industry contributes US$1 billion to Vietnam’s State budget every year. The rapid expansion of Vietnam’s economy has fueled a surging demand for energy, which is projected to grow at the rate of over 10% annually. To meet this need, the Government of Vietnam is encouraging investment from both local and foreign sources in offshore oil and gas exploration and production.

Oil in Vietnam

Vietnam is ranked third in the Southeast Asian region and 31st in the world in terms of crude oil and gas output. Among the 50 field structures with proven oil and gas reserves, 20 commercial fields have been developed. Vietnam has 600 million barrels of proven oil reserves. Bach Ho (White Tiger), RangDong (Dawn), Hang Ngoc, Dai Hung (Big Bear), and Su Tu Den (Ruby) are the largest oil producing fields in the country. Crude oil production averaged average volume of 500,000 barrels per day.

Vietnam is a small exporter on the world oil market, currently supplying about 0.6% of global demand. The United States is named as the biggest importer of Vietnam’s crude oil, accounting for 27.9% of the country’s export volume, followed by Singapore with 27%, Japan 22.2%, China 18%, the Netherlands 2.8% and Malaysia with 2%.

Gas in Vietnam

Vietnam has proven gas reserves of 6.8 trillion cubic feet. Besides crude oil, Vietnam also produces associated and natural gas from several fields. Vietnam’s natural gas production and consumption have been rising rapidly since the late 1990s, with further increases expected as additional fields come on stream. Natural gas iscurrently produced entirely for domestic consumption. The Cuu Long basin offshore from the Mekong Delta in southern Vietnam, a source of associated gas from oil production, is the largest Vietnamese natural gas production area. Only two fields in Vietnam have been developed specifically for their natural gas potential: Tien Hai, with a potential output of 1.76 million cubic feet per day, and LanTay/ Lan Do in the Nam Con Son Basin, which began producing over 5 million cubic feet per day in 2002. In the Nam Con Son Basin, a $565 million, 230-mile pipeline has been completed connecting the Lan Tay and Lan Do fields to the mainland at Vung Tau. The Nam Con Son project consists of five sub sea wells linked to aproduction platform and a pipeline leading to an onshore treatment plant. Gas is piped to three generating plants at the Phu My industrial complex, where electricity is provided primarily to areas surrounding Ho Chi Minh City. Output from Nam Con Son has reached 88 billion cubic feet. The project currently supplies the Phu My 1, My 3, Phu My 2.1 power plants and the extended Phu My 2.1 plant. Phu My 2.2will soon begin using output from the field. A consortium headed by KNOC of Korea, signed a 23-year contract with PetroVietnam in 2002 to install facilities to pump and supply 130 million cubic feet per day of natural gas to Vietnam. The natural gas, located in the Rong Doi and Rong Doi Tay fields on Block 11-2 of the Nam Con Son Basin, is sold to PetroVietnam,which then resells most of the volume to Electricity of Vietnam (EVN). Production at the fields began in 2005. In 2004, KNOC and PetroVietnam signed agreements to further exploit natural gas in both Blocks 11 and 12. Construction of an additional pipeline to bring ashore natural gas from block 11 began in 2005, and is scheduled for completion in 2006.The Su Tu Den and Rang Dong oil fields, both of which have considerable reserves ofassociated natural gas, are located near the 62-mile pipeline from the Bach Ho field.An estimated 60 million cubic fee per day of gas from the fields is earmarked forconsumption in power plants in southern Vietnam.Both TotalFinaElf and ChevronTexaco have found natural gas in exploratory drillingin the Malay basin. Additionally, Talisman Energy has found natural gas at the CaiNuoc field in block 46. The discovery is close to block PM-3-CAA, which straddles the maritime border with Malaysia, and is expected to contain up to 100 billion cubic feet of recoverable gas reserves.

A contract was awarded to Mc Dermott International in March 2006 for construction of a 200-mile pipeline, which will transport natural gas from the PM3-CAA block to Ca Mau province in southern Vietnam. It is scheduled for completion in 2007.

Oil Refineries in Vietnam

Although it is a significant oil producer, Vietnam remains reliant on imports of petroleum products due to a lack of refining capacity. Most of Vietnam’s crude oil is exported to refiners in the United States, Japan, Singapore, and South Korea. Vietnam is contemplating development of two oil refineries: the Dung Quat refinery with a planned capacity of 6.5 million tons per year and an estimated total investment of $1.5 billion, and the Nghi Son refinery with estimated capacity of 7 million tons and $3 billion in investment. According to many industry experts, the decisions to build these two facilities were based largely on political considerations, raising questions regarding their commercial viability. Nevertheless, after several years of delays in financing, the construction of the $1.5 billion Dung Quat Refinery, located in Quang Ngai province, finally began in November 2005. More than $1 billion has been invested. Vietnam’s distribution infrastructure is discontinuous, with the north and south of the country functioning to some extent as separate markets. Completion of the Dung Quat Refinery, located in the center of Vietnam, led to greater interaction between the regions. A second refinery project, with investment of $3 billion, is located at Nghi Son, north of Hanoi in the Thanh Hoa province. In August 2004, Mitsubishi Corporation agreed to participate in building Nghi Son for completion in 2010. Vietnam has also contracted a feasibility study for a third oil refinery, to be located at Vung Ro in the southern province of Phu Yen, close to both currently producing oil fields and the major markets in southern Vietnam. The Vietnamese government hopes to complete the refinery within 12 years. PetroVietnam is proceeding slowly with the development of the third refinery in light of the other two projects discussed above.

Oil and Gas Players in Vietnam

Vietnam Oil and Gas Group (also known as PetroVietnam or PV), the national oil and gas monopoly that is monitored by Vietnam’s Ministry of Industry on behalf of the Vietnamese government, is empowered to make decisions on strategies, plans and policies for the development of the industry, including cooperation with foreign entities, signing petroleum contracts as well as implementing, monitoring, inspecting and supervising petroleum activities.PV has supplied up to 70 percent of services for the domestic oil and gas industry andis also a business partner with foreign companies in the oil and gas sector. Any oiland gas exploration and production activities by foreign entities in Vietnam aresubject to cooperation with PV.Vietnam’s largest oil producer is Vietsovpetro (VSP), a joint venture (JV) betweenPetroVietnam and Zarubezhneft of Russia. VSP operates Vietnam’s largest oil field,Bach Ho. Other foreign partners include Conoco Phillips, BP, Petronas, and Talisman Energy.

Vietnam’s storage and transportation division, Petrolimex,recently completed a new oil storage facility in the central Khanh Hoa province. The depot is largest in the country, with a total storage capacity of 3.68 million barrels.To date, exploration rights for only 25-30% of the country’s continental shelf with hydrocarbon potential have been awarded. Forty-nine foreign oil and gas companies with exploration contracts operate under Product Sharing Contracts (PSC), Joint Operating Companies (JOC) and Business Co-operation Contracts (BCC), with total registered investment capital of more than $7 billion. The remaining offshore areas, generally with water depths of 200 meters or more, are unexplored and open for new bidding.

Oil and Gas Products and Services in Vietnam

Vietnam’s expanding offshore exploration and production has created a steadily growing market for offshore oil and gas equipment and services, which is estimated at $1.2 billion in 2006. American equipment and services have captured about 15% ofthe market and this share is expected to expand over the next few years. In the local market, American companies are well known as world leaders for advanced technologies, quality, and experience in the offshore oil and gas sector. These U.S.firms are currently the most successful in the oil and gas sector in Vietnam. In general, U.S. suppliers of oil and gas equipment and services are quite competitive in the upstream and midstream sub-sectors where advanced technologies and reliability are strict requirements. Sales opportunities are promising in the following areas:

• 3-D Seismic Survey Equipment

• Blowout Preventers

• Buildings

• Chemicals

• Computer and Wireless Technologies

• Corrosion and Abrasion Control

• Cranes, Hoists, and Winches

• Deep-Sea Drilling Services

• Enhanced Recovery Equipment Services

• Fishing Tools

• Instruments and Control Systems

• Logging and Formation Evaluation

• Marine Equipment and Services

• Offshore Engineering & Design Services

• Offshore Platforms (Fixed and Floating)

• Offshore technology licensing

• Perforating and Testing Services

• Pollution, Oil Spill Control, and Environmental Technologies

• Power Supply, Engines, and Turbines

• Process Equipment

• Production Equipment and Services

• Project management services

• Pumps and Compressors

• Ropes, Wire Ropes, and Chains

• Rubber Products

• Software Engineering Services & Equipment

• Tools• Tubes and Piping

• Valves and Actuators

• Wellhead Assemblies

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Banking Sector in Viet Nam

1. Overview

Vietnam’s banking sector has shown significant improvement which results from stable inflation and interested rate, favorable environment for foreign direct investment and a shift from deficit to surplus of the country’s current account. This sector plays a crucial role in Vietnam’s economic development in recent years.

2.Banking system

There are two tiers in banking sector in Vietnam. The first one is State Bank of Vietnam (SBV) which is responsible for monetary policy and supervision/regulation of the banking system in Vietnam. The second one consists of commercial banks, financial companies, credit co-operatives, people’s credit funds, and insurance companies. The main activity driving banking system is commercial bank which includes 5 state-owned commercial banks, 33 joint stock commercial banks, 5 joint venture commercial banks and 5 wholly-owned foreign owned bank.

State owned commercial banks (SOCB) account for more than 40% of market share. The largest bank in terms of total assets, network and still 100% state owned share is Agribank. And four other SOCB areVietcom bank, Viettin Bank, BIDV and MHB.

Joint stock commercial banks (JSCB) have small capital/deposit base and more diversified shareholding structured compared to state owned commercial banks. There are currently 33 JSCB, which the leading ones are SaiGon Joint Stock Commercial Bank (SCB), Military Joint Stock Commercial Bank (MBB), Vietnam Export Import Commercial Joint Stock Bank (EIB), Asia Commercial Bank (ACB) and SaiGonThuong Tin Commercial Joint Stock Bank (STB)

Also SBV had granted 5 licences to permit HSBC, Standard Charter Bank, ANZ Bank, Shinhan Bank and Hong Leong Bank to establish as wholly-owned foreign banks

3.Potential opportunities for foreign investment

There are solid evidences to prove that Vietnam’s banking sector has such a huge potential for foreign investment

• Government effort of reforming banking system

SBV suggested that merge and acquisition of loss making and incompetent bank would be necessary to improve efficiency within the industry. For example, in 2015, SBV forced merge of loss making Vietnam Construction Bank to Vietcom bank with purchasing share price for 0 VND. By forcing merge and acquisition of incompetent banks, SBV has increased exploitation of economies of scale and the reduced burden on regulators

• Trade agreements facilitate foreign ownership and investment

Have taken part in variety of trade agreement such as Trans Pacific Strategic Economic Partnership (TTP),  Association of Southeast Asian Nations (ASEAN) and Free Trade Agreement with different countries, Vietnam has made restructuring move to standardize banking system which will be compatible and accessible to other countries. Vietnam is required to have bilateral arrangement which eliminate the challenges of foreign establishment of banking services.

The government also encourages foreign investors to hold shares for five year period and partnering with the local bank to enhance management, capacity or new development. With the 30% limit of oversea ownership to domestic banks, the strategic foreign investors are allowed to acquire up to 15% of share in a bank, and up to 20% with Prime Ministerial approval. HSBC has also invested in a leading local bank, possessing a 20% stake in the Vietnam Technological and Commercial Joint Stock Bank—Techcombank. It is also the sole foreign strategic partner of the BaoViet Finance-Insurance Group, Vietnam’s largest insurance company. In a vote of confidence in the insurer, HSBC increased its stake to 18% in October 2009.

• Vietnam- a destination of foreign investment in South East Asian market

There is a huge untapped market in Vietnam. According to SBV, only 20% of more than 90 million citizens in Vietnam hold bank accounts and 3% of the population have credit cards. With 87% of the population under the age of 54, there is a great opportunity for retail banking activity development in Vietnam.

Also it is agreed that SME and rural areas have had challenges to access bank investment and loan. The data of Asian Development Bank shows that “lack the capacity to assess the risk of investment into SMEs and find bankable projects” and lack of knowledge about loan and lending systems for rural citizens are the main reasons leading to currentunder-banked circumstances.

The stable economic with GDP growth of around 6% to 7%; low wage costs; a large population with a high savings rate and lack of innovative approach to the market are advantages for foreign investors to accelerate financial and industrial development in Vietnam market.

Please click here to learn more about ANT Consulting or contact our lawyers and consultants in Vietnam for advice via email ant@antconsult.vn or call our office at +84 28 730 86 529

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Highlights in Real Estate Investment in Vietnam

Vietnam is attracting interest of investors in both domestic and foreign market. Overall, investor confidence was returning to the Vietnam real estate market. Both buyers and sellers have enhanced activity in recent months.

The real estate market of Vietnam has overcome the recession period within 4 or 5 years ago but in the last 12 months, the market has recovered and noted positive signs as well as confidence in the market in general.

Law on housing and real estate business Law takes effect in July 2015 and has acted quickly and positively on the real estate market in Vietnam. The changes in the Law on housing have significantly eased the regulations on home ownership for foreigners, although there are still some limitations.

“Hot spots” of FDI inflows

According to a recent report of Jones Lang LaSalle Vietnam (JLL), a series of free trade agreements such as TPP, EU and ASEAN will further promote the medium and long term development. Interest rates and inflation rate have declined significantly and became more stable in the past two years, helping the investment activity to occur more positive in both Ho Chi Minh City and Hanoi. With some domestic and foreign investors such as CapitaLand and Keppel Land, they have spurred the construction activities thanks to the growing revenue in the last 12 months.

Accordingly, the amount of disbursed FDI in the period from January to September of 2015 rose by 8.4% compared to the same period last year, reaching 9.7 billion USD. This is the strongest growth since the late 1980s, contrary to the slowdown of the Chinese economy. The amount of registered capital of new investors also rose even more sharply with 11 billion USD, focused primarily on the manufacturing industry, in which the energy and electronics industries are the sectors with the highest registered capital investment in the year, followed by the real estate sector.

According to the Ministry of Planning and Investment, FDI investment in the industrial park in Vietnam accounted for 67% of total FDI in Vietnam with 11 billion USD and accounting for 59% of the total 1,400 projects in the first 9 months of 2015. A notable transaction is the event that Amata Corporation acquired the land worth 279 million USD in Long Thanh (Dong Nai) for the purpose of building residential and industrial areas valued of 500 million USD.

According to JLL, the residential real estate prices in Vietnam maintained an average rate with 2 bedroom apartments, 70 m2, 10 – 15 minutes to reach the central area of Ho Chi Minh City, which are sold at the price of 1,600 – 2,000 USD/m2, equivalent to 112,000 – 140,000 USD/apartment. When compared with the big cities in the region, the price is believed to increase significantly.

Who dominated the real estate market of Vietnam?

JLL’s report showed that domestic investors are boosting investment activity in the real estate market of Vietnam. The largest real estate investors in Vietnam are Vingroup and Novaland Group.

Vingroup is Vietnam’s largest real estate development and management with market capitalization of about 3.4 billion USD. Vingroup’s investment portfolio includes 45 real estate projects spread across many sectors of the real estate market, including Vinhomes luxury apartments and villas; Vincom Center and Vincom Mega Mall; Vincom Office; 5 star Vinpearl resort; Vinpearl Luxury resort….

Novaland Group has participated in the real estate market in 2007 with the first project is Sunrise City with investment capital of 500 million USD located on Nguyen Huu Tho road, district 7. The real estate business of Novaland focused on the apartment complex segment from mid to high classes and the segment of house land with 25 projects that are being implemented throughout the downtown districts.

Vietnam is becoming an attractive place for foreign investment in the medium term than many other countries in Southeast Asia. Data from Real Capital Analytics (RCA) recorded that there are more attention from a number of private investment funds that are allocated foreign capital into Vietnam in an attempt to increase their market presence in Vietnam.

In the 2^nd quarter of 2015, a joint venture of Warburg Pincus – a US investment fund, has invested 100 million USD into Vincom Retail, the Vietnam’s largest trade center ownership and management in Vietnam. Also in this quarter, Gaw Capital Partners has received the transfer of 4 real estate projects under various segments from Indochina Land with a total value of 106 million USD. Gamuda Land has also receive the transfer of 40% shares (equivalent to 64.1 million USD) in the Celadon City project, a modern urban area with initial investment by a joint venture between Sacomreal, Thanh Thanh Cong (TTC) and An Phu Gia.

The current real estate profit margin is high

JLL’s analysis shows that investors are now enjoying 6 – 7% profitability rate for residential real estate and 9 – 11% for commercial real estate, depending on location, completion time, quality of the project and the signing time of the tenants.

According to General Director of JLL Vietnam, real estate investment in emerging markets has always been seen as risky investments but with higher potential profits. Investors are willing to engage in joint venture projects in these markets, where they will combine with local investors who wish to have capital supporting – in order to have a foothold in the market before and also experience the exponential growth in the future when the economy of these market growing fast.

Moreover, the emerging markets such as Vietnam will have the potential growth factors, including population growth and high urbanization rate. Investors and project developers can take advantage of these factors.

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