VietNam Business

Monday, December 6, 2010

Vietnam gains most from S.Korea free trade pact: officials

Vietnam gains most from S.Korea free trade pact: officials Vietnam has benefited more than other Southeast Asian countries who have signed free trade agreements with South Korea, say Korean trade officials.

Dug Gyou Bok, deputy director of Korea Trade-Investment Promotion Agency (Kotra)’s Asia and Oceania Team, said Vietnam has used the agreement to boost exports and lure more foreign direct investment from Korea.

Bok said Vietnam’s exports increased 32.5 percent in the first seven months of 2010 while average export growth in ASEAN members was about 24 percent during the same period. The country’s exports to South Korea grew 16.3 percent in 2009, he added.

The agreement between Korea and ASEAN members took effect for goods in 2007 and services and investment last year. ASEAN, as the Association of Southeast Asian Nations is often known, comprises ten countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Korea eliminated 70 percent tariffs in 2007 and completed its committed tariff reductions early this year for the ten members, while Vietnam aims to complete its commitments by reducing tariffs from the current 7 to 20 percent to between 5 and zero percent by 2018. This reduction will be effected on half of tariff lines by 2015.

Bok said the multilateral agreement has brought opportunities for Vietnam to export more telephone set parts and wood chips, products that have also brought in investments from Korea.

Kotra said Vietnam’s export to Korea in the sectors grew respectively by 98.6 and 600 percent from January to July this year while that of traditional goods like seafood, shoes and agricultural products increased stably.

Korean electronic giant Samsung has exported US$1 billion worth of products so far from its $670 million mobile phone factory that it opened last September in the northern province of Bac Ninh.

However, the two-way trade was in favor of Korea, according to Kotra. South Korean exports to Vietnam increased 35.2 percent to $5.12 billion in the first seven months of this year, more than three times higher than its imports from the country during the same period.

Yon-Jip Jung, deputy general director for Free Trade Agreement Policy under the South Korean Ministry of Foreign Affairs and Trade, said Vietnam was one of the Korea’s best partners in the Southeast Asian bloc, and it wanted to further boost bilateral trade and investment ties.

Jung said the ministry planned to promote the agreement to boost trade and investment in both countries and would explore respective advantages as the countries completed negotiations on a bilateral free trade agreement.

Both sides will focus on goods that bring more benefits in bilateral than multilateral pact of which many members have different interests and goals.

Vietnam gains most from S.Korea free trade pact: officials

Bok said the multilateral agreement has brought opportunities for Vietnam to export more telephone set parts and wood chips, products that have also brought in investments from Korea.

Korean electronic giant Samsung has exported US$1 billion worth of products so far from its $670 million mobile phone factory that it opened last September in the northern province of Bac Ninh.

Both sides will focus on goods that bring more benefits in bilateral than multilateral pact of which many members have different interests and goals.

Second-home buyers have more choices now: report

Second-home buyers have more choices now: report Vietnam’s second home market is still in its infancy, but it is attracting significant interest from savvy investors, consulting firm CB Richard Ellis said in a report released on Tuesday.

“The past number of years have seen significant activity in the second home market in terms of construction and interest coming from international resort operators looking to enter the market,” Marc Townsend, managing director of CB Richard Ellis Vietnam, said in the report.

“The perception of owning a second home or city retreat is still a new phenomenon here in Vietnam, but it is slowly starting to take off,” Townsend said.

He said there is a “bigger mix of project offerings to buyers” with a greater choice in terms of location. The second home market seems to be expanding from traditional locations in and around Da Nang to new spots including resort towns like Nha Trang, Vung Tau and Phan Thiet.

“There is no doubt that Vietnam’s second home market has infinite possibilities,” said Townsend, “however developers must learn from their neighbors in Thailand to ensure success.”

According to CBRE, Thailand’s second home market is “well established and in its adolescent stages.” The price of Thai villas and condos can be up to double that of Vietnamese ones. In terms of buyers, only 18 percent of second home sales come from local buyers in Thailand compared to Vietnam’s 85 percent, the company said.

Vietnam ranked prime global destination for third year running

Vietnam ranked prime global destination for third year running Vietnam has once again been selected as the number one investment destination, outside of Brazil, Russia, India and China (BRIC), according to a report published by the UK Trade & Investment and Economist Intelligence Unit.

This is the third consecutive year that Vietnam has enjoyed the designation from the British agency.

The ‘Great Expectations: Doing business in emerging markets’ report offers new insights from international investors about which markets they see as being the global growth engines of the future.

The report is based on a survey of more than 520 global executives from every sector. All respondents are already doing business in emerging markets or plan to do so in the next two years.

The UK Business Secretary Vince Cable said: “The balance of global economic power is shifting toward emerging markets and this is recognized in UK Trade & Investment’s report. UK firms are using their expertise to help promote growth and prosperity in these markets.”

The report’s authors found that the top three markets for investment, in the next two years, are China, Vietnam, and India.

Emerging markets are viewed as sources of new consumer demand. Seventy-six percent of investors see emerging markets as a source of new business growth.

By 2030, 93 percent of the world’s middle class will live in what we now consider “emerging markets,” the report said.

Companies are now shifting their priorities toward a range of other developing countries outside their well-established operations in the BRIC countries.

For many firms, emerging markets are increasingly familiar places. Nearly half of the respondents reported having operations in one or more emerging markets over the course of the last decade and two thirds said they had been working in the areas for six or more years.

Institutional knowledge of these countries is far higher than it was at the turn of the century, the report found.

More executives than ever believe that the potential rewards far outstrip the risks within both the BRIC countries and other emerging markets. Fifty-two percent expect growth prospects in their once-risky emerging market businesses to be "significantly better" over the next two years.

Local companies in emerging markets are sought after for partnerships and alliances. Despite a greater ease with the risks of new places, the need to tap into local knowledge and contacts quickly remains strong, the report found.

Emerging markets are not just for big business. One in three small- and medium-sized enterprises polled by the authors planned to expand into a new emerging market in the next two years through joint ventures or partnerships with local companies.