Post on 26-Feb-2020
Classification: Confidential (C-3)
Vietnam Pitchbook
Prepared by TMB Analytics
Date: December 2016
-2-
2015 GDP size: 191.5 USD bil (Thai 395.3)
GDP growth: 6.7%(2015) 6.2%(2020F)
GDP per capita: 2,088 USD(2015) 2,889(2020F)
2015 Unemployment rate: 2.4%
Inflation: 0.6%(2015) 3.8%(2020F)
Export toVietnam
China 30%
S. Korea 17%
Thailand 5%
Main Exporters Major Thai Exports(excl gold)
Oil&Gas 14%
Vehicle 13%
Chemical 12%
20152015
18% 39% 44%
Agriculture
Industry
Services
Source: UN, MOC, BOI, IMF, CEIC, and TMB Analytics
General Info
Population
94.4 mil people(Thai 68.1)
Economy
GDP Component (2015)
48% 21% 31%
Labor Force (2015)54.9 mil people (58.2% of total population)
FDI (2010-15)
From..S. Korea 18%Japan 17%Thailand 1%In..Manufacture 67%Real Estate 13%Electricity/Gas 7%
Country Summary
Lower Middle
Used currency
Dong and USD
Income Status
(As of July 2016)
Size
331,210 sq km(Thai 513,000)
Capital
Hanoi (ฮานอย)
800
1,200
1,600
2,000
2,400
2,800
3,200
0
1
2
3
4
5
6
7
8
2010 2012 2014 2016E 2018F 2020F
GDP Growth (LHS)
GDP per Capita (RHS)
0
3
6
9
12
15
18
2010 2012 2014 2016E 2018F 2020F
-3-
Economy: Vietnam Macroeconomic Outlook
Strong Economic Growth
Sources: IMF and TMB Analytics
Stable Inflation Outlook
Inflation Rate
IMF’s forecast
IMF’s forecast
Strong economic growth GDP growth is expected to
stabilize at no less than 6%. This
leads to a continue rise in GDP
per capita, and increasing purchasing power.
Inflation rate dropped
continuously due to low fuel and
import prices. It is expected to
bounce back and average at 2.7%
from 2016 to 2020, indicating economic stability.
Risk of financial instability
occurs from rapid credit
expansion (19% yoy growth in
2015) and rising external debt
(43% of GDP in 2015). Therefore,
tightening of macroprudentialpolicy is necessary.
USD%
%
0
10
20
30
40
50
60
70
80
-8
-6
-4
-2
0
2
4
6
2010 2012 2014 2016E 2018F 2020F
-10.5
-6.5
-2.5
1.5
5.5
9.5
13.5
-5
-3
-1
1
3
5
7
2010 2012 2014 2016E 2018F 2020F
Economy: Vietnam Stability Conditions
Sources: IMF and TMB Analytics
Fiscal
Balance
(LHS)
Gross Public Debt
(RHS)
%GDP %GDP
CA Balance (RHS)
CA/GDP (LHS)
High FDI growth and BOV’s
attempt to make its currency
more flexible help offset its
current surplus narrowing from
increasing imports, as well as low
international reserve (approximately
at 1.9 months of imports). The
action could help reduce pressure on external risk.
Government fiscal deficit rose
sharply in 2010 and stayed
relatively high, expected to average
at 5.6% of GDP from 2016 to 2020.
Moreover, public debt continuously
increases, 60% of GDP in 2015,
resulting in higher risk of debt
distress. Thus, growth-friendly consolidation is needed.
IMF’s forecast
IMF’s forecast
Current Account Surplus Decreases
Worsening Fiscal Position
%USD bn
-4-
-5-
Ease of Doing Business in Vietnam
121
24
96
59
32
87
16793
69
125
78
42
37
6882
27109
56
51
23
Starting a Business
Dealing with Construction Permits
Getting Electricity
Registering Property
Getting Credit
Protecting Minority Investors
Paying Taxes
Trading across Borders
Enforcing Contracts
Resolving Insolvency
Vietnam Thailand
Solving Insolvency
Sources: World Bank and TMB Analytics
Starting a Business
9 steps or 24 days Dealing with
Construction Permit
10 steps or 166 days
Getting Electricity
5 steps or 46 days
Registering Property
5 steps or 57.5 days
Paying Taxes
31 payments or 540 hours
Enforcing Contracts
400 days and
cost 29% of claim
Getting CreditDTF score 70
Protecting Minority Investors
Trading Cross Border
170
139
131
82
78
46
23
Myanmar
Lao
Cambodia
Vietnam
China
Thailand
Malaysia
Vietnam Ranked 82nd (out of 190) in Ease of Doing BusinessRanking
!
Note: 1) East of doing business is base on 2016 version, released on Oct 2016, ( ) refers to Doing Business in previous year
(46)
(22)
(80)
(91)
(128)
(136)
(171)
!
Source: Ministry of Commerce, BOI, Index Mundi, OEC Atlas, CEIC and TMB Analytics
Thailand export to Vietnam landscape
Note: *Political uncertainty in the country caused depressed economy in 2012
1) Unless state otherwise, data in this slide is from 2015
2) In 2015, Thai export 214.1 USD bil, 8.9 USD bil (4.2%) went to Vietnam
Among CLMV, Vietnam is our number one exports destination, in value.
-6-
Energy, 14%
Vehicle, 13%
+
++
+
++
+
(Others 36%)
Thailand5%
165.6USD bil
Sector Outlook
2015
13%
2012-5%*
20137%
201410%
Currency Settlement(with Thailand)
Thai Export to Vietnam
8.9 USD bilMachinery,
7%
Elec Appl,
9%
Chemical,
12%
TotalEx Growth
• High economy growth and growing
domestic demand
• 2016-20 GDP average growth
= 6.2% (Thai 3.1 )
• Part of AEC Single Market
• Most good tariff reduce to 0%
China, 30% share
• Export to VN: 50 USD bil (+13% yoy)
• Major Exports: Tel pts, Metal, Textiles (fabric,
yarn)
S. Korea. 17% share
• Export to VN: 28 USD bil (+27 yoy)
• Major Exports: Circuit, Tel pts, Metals,
Textiles (fabric, yarn)
Japan, 8% share
• Export to VN: 14 USD bil (+7% yoy)
• Major Exports: Circuits, Metals, Plastic
products
Other major exporters to Vietnam
Air Conditioner
Commercial Vehicle
and Parts
Fuel: Diesel
Polymer Products
Industrial Machines
Despite Vietnam’s boom in telephone and electronics, we are
not currently supply (export) these products components. Thus, there is considerable untapped opportunity for Thailand
Key Products
Supportive Exports Environment
83% USD
15% THB
FDI landscape and opportunity for Thai Investors in Vietnam
Potential FDI Sectors for Thailand
• Supportive trade agreement
ASEAN 0-5% tariff rate (by 2018)
• High growth potential, excellent demographic and stable
politic
• Government’s progressive investment schemes
• 50+ Industrial Zones and Exports Processing Zones
countrywide (Amata is Thai-Vietnam joint development)
Supportive Investment Environment
67% 13% 7%
Mfg Real Estate Electricity/Gas
0%
2%
4%
6%
8%
0
5,000
10,000
15,000
20,000
25,000
2010 2011 2012 2013 2014 2015
With rapid pace of integration into global
commerce, Vietnam welcomed inflows,
along with continue improvement in
supportive infrastructure
18% 17% 14%
S. Korea Japan Singapore Thailand
By investment countries (2010-15 avg)
By sectors (2010-15 avg)
USDmn % of GDP
FDI inflow is consistently strong
Source: BOI, World Bank, CEIC and TMB Analytics
Agriproduct and Processed Foods
• Rich natural resources
• Growing domestic demand
• Lack of processing factory
Ho Chi Minh/Nearby
Mekong DeltaTextile
• Large global export market
• Government support, cheap
and abundant labor, good
infra (cluster like)
• Insufficient textile(cloth raw
mat) producers
Note: FDI in this presentation refers as net inflow in each periods
Danang/
Nearby
Construction/Con Mat
Vehicle/ Auto Pts
1%
-7-
Regulations & Benefits for Thai Exporter
Check any restriction on
good allowed to export to Vietnam
General goods: Allowed
Some goods are banned, while
some need government permit
(see appendix for list of
prohibited goods/ goods that
need permit)
Import Tax (Custom duties)
Declare at Custom on type, origin
and price of goods
Contact bank to facilitate
transaction
AEC Benefit
FTA with ASEAN member
through CEPT (AFTA) and
other
Asia Pacific countries
TPP prospect member
A member of WTO
RCEP (in progress)
Goods Delivery
Receive Export Order Payment
1
Production for export goods. Seek
bank advise if needed.
Trade amount exceeding
15 million VND must
be declare to the authority
Market’s
Comparative Advantages
2
3
Sources: BOI, CEIC and TMB Analytics
No Specific production
requirement
Goods must comply with
regulation safety, and
standards,
See appendix for tax exempt goods
AEC Benefit
Non exclusive List:
99% tariff exempted (no reduction/exempt on exclusive
list)
Import VAT
0% Mainly for goods imported for
re-export purpose
5% Essential goods/services
10% Others
(See appendix for full VAT rates
guide)
-8-
-9-
Preparation1 Setting Up Business2
Regulations and Process for Thai Investors
Investment Registration
Business Registration
• Register with Business
Registration Office (BRO) or
through www.business.gov.vn
(5 days)
• Register company stamp at
local police department (1 day)
• Register with DPI or Provincial
People’s Committee (5 days)
2.1
In non industrial zone
In industrial zone
• Register with Provincial
Industrial Zone Management
Authority/ Economic Zone
Management Authority (5 days)
Check Minimum investment
requirement
Determine investment and
business and legal entities (see
appendix for available entities)
• No minimum requirement
• No local partnership required
Company Account Opening
Tax Registration
Start business
• Open account with local
commercial bank. Minimum
deposit varied by each banks
policy (1 day)
• BRO will contact Department
General of Taxation to issue
company tax id for paying
(5 day)
• Corporate Income Tax = 20%
(as of Jan 16)
2.2
Obtain Certificate of Incorporation
• Submit evidence of bank
account to DICA to complete
registration process (4 days)
Sources: BOI, CEIC and TMB AnalyticsNote 1) Information is largely based on Vietnam new investment law introduced in Jul 2015
-10-
Benefits for Thai Investors
Industrial Zone
+ or
Note 1) ‘Investors’ refers to foreign investorsSources: Lao MPI/DPI and TMB Analytics
Non Industrial zone
Special Economic Zone
• Company Income Tax holiday/ relief
• Tax relief to 10% for period 10-15
years (20% thereafter)
• Land Lease
• Initially maximum of 50 years but can
be extended to 70 years for
government supported business
• Tax loss carry forward
• Deferred for up to 5 consecutives
years
• Duties relief/exempt for imports of raw mat/
cap good into the country
• Duties relief/Exempt for goods export out
• Land lease
• Government lease cost guarantee
• Flexible payment methods
• Lease cost relief/exempted (depend
on type of business)
• Tax loss carry forward
• Defer for up to 5 consecutives years Non Special Economic Zone
• Company Tax Holiday/ relief
• Exempt from 2-4 years and further
tax relief for 50% from 4-9 years after
• After this period, investors can
choose to pay
• 22% tax for 15 years or
• 20% tax for 10 years
• Company Tax Holiday/ relief
• Exempt from for the first 4 years and
further tax relief for 50% from 4-9
years after
• After this period, pay 10% for 15-30
years
-11-
Local currency Guide: Vietnam Dong
Source: Bloomberg, IMF, and TMB Analytics
Currency Description
FX Regime & Performances
Name
Regulator
Monetary Policy
Exchange
rate anchor
a managed floating that based
on a currency basket of
countries with trade, financing,
and investment relationships
with VietnamStabilized
arrangement
Dong (ด่องเวียดนาม)
State Bank of
Vietnam (SBV)
The currency is soft peg US
dollar within +/- 3% band. Year-
to-date, VND gains 0.94%
against USD, lower than peers
Spot Forward The limit on the bid-ask spread is the SBV trading band (±1%). The
forward is permitted up to 365 days
Control on Exports and Imports of
Export/Import: amounts in excess of 15
million VND are required to declare; On
exit from the country, individuals must
present a certificate for exports of cash
in dong issued by an authorized CI or
approval from the SBV
FX movement VND and THB against USD
30.50
31.50
32.50
33.50
34.50
35.50
36.50
37.50
20,500
21,000
21,500
22,000
22,500
23,000
Sep-14 Mar-15 Sep-15 Mar-16 Sep-16
USD/VND USD/THB
↑ VND weaker↓ VND stronger
↑ THB weaker
↓ THB stronger
(average price VND/THB is 637 VND per 1 THB)
VND=1158+302THBR^2 =0.89
THANK YOU
Disclaimer
This document is issued by TMB Analytics, a division of TMB Bank PCL. All analyses are based on information available to
the public. Although the information contained herein is believed to be gathered from reliable sources, TMB makes no
guarantee to its accuracy and completeness. TMB may have issued, and may in the future issue, other reports that are
inconsistent with, and reach different conclusions from, the information presented in this report. Opinions or predictions
expressed herein reflect the authors’ views, not that of TMB, as of date of the analysis and are subject to change without
notice. TMB shall not be responsible for the use of contents and its implication.
Appendix
FDI in Vietnam
• Available investment entity option
• Wholly Foreign-Owned Enterprise
• Joint Venture (JV)
• Business Co-operation Contract (BCC)
• Available business legal entities
• Household Business
• Private Enterprise
• Partnership
• Limited Liability Company
• Shareholding Company/ Joint Stock Company
• Certain highly-specialized and sensitive sub-sectors such as banking, telecommunication, transportation, agriculture and
audiovisual services still maintain foreign ownership restrictions.
• Investment incentives available to foreign investors under the Vietnamese law may include: • A lower rate of or
reduction of corporate income tax • Exemption from import duty on goods imported to form fixed assets, raw
materials, supplies and components for implementation of an investment project • Exemption from and reduction
of land rent, land use fees and land use tax For an investment project to be entitled to the above, it must be a new
and/or expanded investment project and satisfy one of the following conditions: • It must be an investment project
in a “preferential investment industry and trade” (including production of new materials, renewable resources,
garment or textile products); or
• • It must be located in one of the designated “preferential investment geographical areas”, which are • Areas with
difficult socio-economic conditions; and areas with especially difficult socio-economic conditions, and • Industrial
zones, export processing zones, high-tech zones and economic zones; or • It must have a scale of capital of VND
6,000 billion or more of which at least VND 6,000 billion is disbursed for a period of three years from the date of
issuance of the IRC or the date of the decision on the investment policy; or • It must be located in a rural area and
employ 500 employees or more; or • The project must be a high-tech enterprise, or a scientific or technological
enterprises
More FDI information in Vietnam at
คู่มอืการประกอบธุรกจิ สาธารณรฐัสงัคมนิยมเวยีดนามhttps://toi.boi.go.th/bpanel/upload/country_content_pdf/2013/0
7/_Investment%20Manual-Vietnam.pdf
Vietnam Briefinghttp://www.vietnam-briefing.com/news/
Mayer Brown’s 2016 Guide to Doing Business in Vietnam
https://www.mayerbrown.com/
Appendix
Export to Vietnam (1/2)
• Goods banned from import into the country include weapons, assorted firecrackers, certain types of second-hand consumer goods, prohibited
cultural products, right-hand-drive motor vehicles, refrigeration equipment using chlorofluorocarbons or CFCs, chemicals stipulated under
Annex III of the Rotterdam Convention, plant protection agents prohibited from use in Vietnam, products containing asbestos of the amphibole
group, and certain toxic chemicals.
• Certain goods require the trading company to obtain import and export permits from the government, these include:
Goods subject to export control in accordance with international treaties to which Vietnam is a contracting party
Goods exported within quotas set by foreign countries
Goods subject to import control in accordance with international treaties to which Vietnam is a contracting party
Explosive pre-substances and industrial explosives
Goods in the following cases shall not be liable for import tax or export tax:
Machinery & equipment, specialized means of transportation and construction materials (which cannot be produced in Vietnam)
comprising the fixed assets of certain projects; • Raw materials, spare parts, accessories, other supplies, samples, machinery and
equipment imported for the processing of goods for export and finished products imported for use in the processed goods; •
Companies manufacturing goods for export do not pay import duties on raw materials where the products are destined for export.
However, where the enterprise does not, or is not expected to, export the finished product within 275 days, the Customs Department
will charge temporary import duty on the raw materials. Penalties for late payment can apply. Where the enterprise then exports the
finished product, a refund will be provided in proportion to the raw materials contained in the exports. • Machinery, equipment,
specialized means of transportation, materials (which cannot be produced in Vietnam), health and office equipment imported for use in
oil and gas activities.
VAT guides: The standard rate is ten percent (10%). In addition, there are other rates of 5% and 0% and VAT exemption, as below:
0% : This rate applies to exported goods/services including goods/services sold to overseas/non-tariff areas and consumed outside
Vietnam/in the non-tariff areas, goods processed for export or in-country export (subject to conditions), goods sold to duty free shops,
certain exported services, construction and installation carried out for export processing enterprises, aviation, marine and international
transportation services.
5% : This rate applies generally to areas of the economy concerned with the provision of essential goods and services. These include:
clean water; teaching aids; books; unprocessed foodstuffs; medicine and medical equipment; various agricultural products and
services; technical/scientific services; rubber latex; sugar and its by-products; certain cultural, artistic, sport services/products and
social housing.
:
Appendix
VAT exemption: Under this treatment, no output VAT shall be charged and the input VAT shall be uncreditable, but considered as
deductible expenses for CIT purposes, comprising the following:
Certain agricultural products; Supply of fertilizer, feed for livestock, poultry, seafood and other animalsGoods/services provided by individuals having annual revenue of VND 100 million or below; Imported or leased drilling rigs, airplanes and
ships of a type which cannot be produced in Vietnam; Transfer of land use rights (subject to limitations); Financial derivatives
and credit services (including credit card issuance, finance leasing and factoring); sale of VAT able mortgaged assets by theborrower under the lender’s authorization in order to settle a guaranteed loan and provision of credit information. Various
securities activities including fund management;Foreign currency trading; Debt factoring; Certain insurance services (including
life insurance, health insurance, agricultural insurance and reinsurance); Medical services; Teaching and training; Printing and
publishing of newspapers, magazines and certain types of books; Passenger transport by public buses; Transfer of
technology, software and software services except exported software which is entitled to 0% rate; Gold imported in pieces
which have not been processed into jewellery; Exported unprocessed mineral products such as crude oil, rock, sand, rare soil,
rare stones, etc.; Imports of machinery, equipment and materials which cannot be produced in Vietnam for direct use in
science research and technology development activities; Equipment, machinery, spare parts, specialized means of transport
and necessary materials which cannot be produced in Vietnam for prospecting, exploration and development of oil and gas
fields; Goods imported in the following cases: international non-refundable aid, including from Official Development Aid,
foreign donations to government bodies and to individuals (subject to limitations).
Export to Vietnam (2/2)
More Exports information in Vietnam at
Vietnam Trade Promotion Agency
http://www.vietrade.gov.vn/en/
Taxation in Vietnam
http://www.vietnamadvisors.com/taxation-in-vietnam-value-added-
tax-vat/