Vietnam Market Watch: Prospects for Big Steel, New SEZs, and Open Bidding for a State Beer Manufacturer

Steel industry to continue on its growth trajectory

The Vietnam Steel Association (VSA) announced that the steel industry is projected to grow at a rate of 10-12 percent in 2017. The association stated that steel consumption depends on the country’s GDP; with a GDP growth rate of 6.2 percent this year and the operation of 10 steel projects next year the industry is likely to further expand. However, the local industry faces competition from Chinese steel imports, which are cheaper. The industry also faces strict technical standards for exporting steel. To counter Chinese imports, the VSA has asked the government to impose anti-dumping measures.

The VSA has sent amendments to Vietnam’s Ministry of Industry and Trade (MoIT), which has made a draft plan of the steel sector until 2025 and extendable to 2035. The VSA has proposed a slew of measures, including less government intervention in the industry. The issuance of investment certificates, it said, should also be done with the relevant ministries rather than just the MoIT. In addition, it noted that the draft is not complete as it does not have a development plan for hot rolled and high quality steel, as these are 100 percent imported. Reports say that Vietnam will need to spend approximately US$15 billion a year to import steel.

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Government plans new coastal SEZs

Vietnam has approved the construction of three new special economic zones (SEZs). These zones will be built in the coastal areas of Van Don (Quang Ninh), Van Phong (Khanh Hoa), and Phu Quoc Island (Kien Giang). The government will use the zones to pilot new economic policies before applying them nationwide for developing the maritime economy. The government intends the coastal SEZs to be superior than traditional SEZs, which are limited to offering tax and lease incentives, but have thus far failed to attract foreign investors.

The government will also need to come up with a law on SEZs so that they can compete with other zones around the world. Vietnam earlier had created the Vung Tau – Con Dao SEZ in 1971 but made it redundant in 1991. Vietnam currently has no SEZs, but has 15 coastal economic zones and 28 border gate economic zones.

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Government invites bidders for stake in state-run beer company

Vietnam’s government has invited interested global banks as it looks to sell a stake in the country’s largest state run beer company; sources say the stake is valued at around US$1.8 billion. The sale of the company, Saigon Beer Alcohol Beverage Corp (Sabeco) is expected to start in April. The government wants to open its economy by relaxing strict ownership limits and selling its stakes in state-run companies. While such moves are welcome, many analysts have suggested that the government has often backtracked on similar commitments. The sale of Sabeco, of which the government owns 90 percent, has been delayed several times in the last few years. Investors say that government officials have little experience and fear selling assets too cheaply.

Sources say that the government could sell up to 40 percent of its stake in Sabeco. Shares of Sabeco just started trading last week; the beer company has a market capitalization of US$4.6 billion. Sabeco sells several brands, including 333 and Saigon beer, and controls over 40 percent of Vietnam’s beer market. The government is also looking to sell its nearly 82 percent stake in another beer company, Hanoi Beer Alcohol Beverage Joint Stock Corp (Habeco); the company is the country’s third largest brewery. If the sales of the two companies go ahead, it will renew investor confidence and bode well for foreign investors.

Annual Audit and Compliance in Vietnam 2016
In this issue of Vietnam Briefing, we address pressing changes to audit procedures in 2016, and provide guidance on how to ensure that compliance tasks are completed in an efficient and effective manner. We highlight the continued convergence of VAS with IFRS, discuss the emergence of e-filing, and provide step-by-step instructions on audit and compliance procedures for Foreign Owned Enterprises (FOEs) as well as Representative Offices (ROs).

Navigating the Vietnam Supply Chain
In this edition of Vietnam Briefing, we discuss the advantages of the Vietnamese market over its regional competition and highlight where and how to implement successful investment projects. We examine tariff reduction schedules within the ACFTA and TPP, highlight considerations with regard to rules of origin, and outline the benefits of investing in Vietnam’s growing economic zones. Finally, we provide expert insight into the issues surrounding the creation of 100 percent Foreign Owned Enterprise in Vietnam.

Tax, Accounting and Audit in Vietnam 2016 (2nd Edition)
This edition of Tax, Accounting, and Audit in Vietnam, updated for 2016, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate Vietnam’s complex tax and accounting landscape in order to effectively manage and strategically plan their Vietnam operations.

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