Vietnam Market Watch: Vietnamese Brewing, New Taxes for Uber, and Increasing Foreign Participation in Real Estate

Beer Industry Set to Grow and Expand to Other Asian Countries

The Vietnam Beer Alcohol Beverage Association (VBA) recently released a report stating that beer production in the country reached 3.4 billion liters in 2015, marking a 4.7 percent year on year increase in output.

With total local production capacity currently standing at 4.8 billion liters annually, the VBA projects production to grow exponentially in the coming years and has set a production target of 4-4.25 billion liters by 2020.

As production and sales continue to grow, the Vietnamese market offers great opportunities to local and foreign brewers. As part of a wider push to spur investment, the government announced plans for divestment from from a number of local beer companies in 2015. This announcement generated significant interest from domestic and foreign manufacturers alike, who want to invest in the beer industry.

Of particular interest to international brewers – such as SABMiller, Kirin Brewery, Asahi Breweries, and Asia Pacific Breweries – is Sabeco, Vietnam’s largest state-run brewer. With strong name recognition within the region, foreign investment would allow the company to fulfil growing Vietnamese demand and aggressively expand regionally into Thailand, Myanmar, Cambodia and Laos – collectively representing a prospective consumer base of around 250 million people.

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Uber Faces Tax Troubles in Ho Chi Minh City

Reports indicate that Uber – the technology based taxi aggregator service – might face tax troubles and possible fines for its operations Ho Chi Minh City, which currently includes around 4,000 cars registered within the city.

Officials from the municipal tax department indicate that the department plans to apply a tax on Uber and possibly levy fines for late tax declarations. At the same time, officials have indicate they are willing to help Uber navigate the tax landscape and will only pursue legal recourse if Uber fails to cooperate.

Currently, Uber refuses to declare or pay taxes for operating in the city. The Vietnamese corporation of Uber registers itself only as a marketing firm and subsequently only pays taxes for the marketing fees received from its parent company in Netherlands.

Should the imposition of taxes and enforcement of penalties come to pass, it would surely mark a watershed moment for the sector. Such market developments would likely force established start-ups, including as Uber, to rethink their strategies for the Vietnamese market.

 RELATED: Key Areas of Vietnam’s Real Estate Market Set for Growth

Foreign Buyers Step Up Investment in Housing Markets

Vietnam’s property market has seen an uptake in recent months, with increasing levels of foreign direct investment (FDI), bank loans, and incoming remittances.

Complimenting increases in local demand, around 1,000 expatriates have registered to buy houses – particularly luxury property – in Ho Chi Minh City (HCMC) between July 2015 and January 2016. These purchases constitute a significant rise compared to the 250 transactions concluded with foreign buyers between 2008 and July 2015.

The HCMC Real Estate Association (HoREA) indicates the drivers behind increasing foreign participation in real estate can be tied to improvements seen under Vietnam’s revised housing laws.

The new housing laws came into effect around July 2015 and have since spurred investment by making it foreign ownership and land-usage of property a lot easier. Local experts believe that this will ensure more stability in the real estate market and ease concerns that investors and especially foreigners may have about the house ownership.

Import and Export: A Guide to Trade in Vietnam
In this issue of Vietnam Briefing Magazine, we provide you with a clear understanding of the current business trends related to trade in Vietnam, as well as explaining how to set up your trading business in the country. We also attempt to give perspective on what will be Vietnam’s place in the Association of Southeast Asian Nations (ASEAN) in 2015, and look at some of the country’s key import and export regulations.

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 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, 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 need to be able to navigate the complex tax and accounting landscape in Vietnam.

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