Classification: Confidential (C-3)

Vietnam Pitchbook

Prepared by TMB Analytics

Date: December 2016

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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)

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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/