VIETNAM BUSINESS REVIEW | FINANCE 1

VIETNAM

BUSINESS REVIEW

Highlight

Mobile payment in Vietnam: End of 2018 news roundup

Vol 48, December 12th 2018 What’s in it today?

FINANCE

Lower credit growth will be better for the real estate

market

Vietnam’s fintechs appear late but develop rapidly

RETAIL

HCMC a top 20 Asia Pacific office rental market

Sumitomo to open supermarket in Vietnam

STARTUP

Start-ups embrace logistics sector

Indonesia’s Alpha JWC makes maiden Vietnam

investment in Base.vn

ECOMMERCE

Potential new contender to challenge e-commerce

Mobile payment in Vietnam: End of 2018 news roundup

LOGISTICS

Start-ups embrace logistics sector

AirAsia’s Vietnam venture set to fly in August

INVESTMENT

Lotte re-groups after rocky 2018

Foreign partners want to “swallow breweries whole”

VIETNAM BUSINESS REVIEW | FINANCE 1

FINANCE

Lower credit growth will be better for the real estate market

Recently, full of real estate specialists like Tran Dinh Thien warn that the credit growth is already too

high, about 20%, which reminds people of

2008 credit bubble.

In a recent report, Bao Viet Securities (BVSC)

projected that the credit growth in the next

three to five years will be around 14% per

year, lower than the average 18.1% in the

2015-2017 period.

According to the report, this reduction will

be due to the decline in capital supply and demand. From the capital demand, Vietnam’s economic

growth will slow to 6.4 to 6.5%, thus this will have the effects on capital demand. The local companies

will need less capital for expanding production and business.

What is more, from BVSC predictions, when the dong interest rates get higher next year, about 0.25-

0.5%age points in 2019, the loan demands from borrowers will decline.

However, this change is good for some rural people who is in strong desire for owning house in big cities

like Hanoi and HCMC. Recently, full of real estate specialists like Tran Dinh Thien warn that the credit

growth is already too high, about 20%, which reminds people of 2008 credit bubble.

Many economists warn of too hot real estate credit growth will lead to sky-high real estate prices then

make the dream of owning house become distant to middle income and low income people.

Under the circumstances of lower credit growth, the money flow into the real estate will become less

then the prices become more normal. More people will have chances to own houses.

Last but not least, already Vietnam’s real estate market has the very high rates of empty house and

apartment blocks. When the prices become more in the reach of people, those vacant houses and

apartments will be much less than before.

Vietnam’s fintechs appear late but develop rapidly

Vietnam’s fintech market was valued at $4.4 million by the end of 2017, and the figure may reach $7.8b

by 2020, a study of Solidiance found.

The first fintech startups presented before the public in 2015. There are about 100 fintechs operating in

many fields, mostly in payment services. Solidiance predicted that the fintech market value may reach

$7.8b by 2020.

Most fintechs are young with less than five years of operation. Analysts say that when starting

operation, they have problems identifying problems to solve and ways to solve them.

VIETNAM BUSINESS REVIEW | FINANCE 2

Capital, market and policy are considered the ‘major pillars’ for fintechs to develop. There is still no legal

framework for fintechs’ operation.

Fintech management has not been mentioned in any legal document and there is no state agency

assigned to support fintechs.

Pham Trung Kien, vice president of Viettel Telecom, said that developing infrastructure is also a big

problem. It is costly to expand networks and install more ATMs. In Vietnam, three branches and 24

ATMs serve about 100,000 people each, while in other countries, 10 branches and 53 ATMs serve the

same number.

Many solutions have been suggested to generate favorable conditions for the development of fintech,

which is a growing trend.

Businesses have been advised to prepare financial resources or approach investment funds and

preferential loans.

Meanwhile, the government has been urged to give tax incentives and support to labor resources

development.

Experts have also mentioned cooperation among banks, institutions that provide financial services via

financial technology (fintech) and technology firms that provide financial products (techfin).

If developing separately, fintechs will find it difficult to gain customers’ confidence and therefore,

expand networks, while techfins will meet difficulties because of the lack of experience in the finance &

banking sector.

Commercial banks will also have problems because they cannot master high technologies which reduce

the operation costs.

In fact, Nghiem Thanh Son, deputy director of the State Bank’s Payment Department, the cooperation

among banks, fintechs and techfins has been done in reality.

With cooperation, fintech acts as banks’ extended arms that reach people who still don’t have bank

accounts or don’t access traditional bank services.

This will bring more utilities and experience to customers and help financial inclusion, thus contributing

to socio-economic development.

Kien from Viettel Telecom said that fintechs are startups, that launch new products. They evaluate

banking services from a customer perspective and provide good services to customers.

VIETNAM BUSINESS REVIEW | E-COMMERCE 3

E-COMMERCE

Potential new contender to challenge e-commerce

In tackling violations by e-commerce firms related to low-quality goods and fake discounts, the opening

of dedicated shopping websites is set to become an inevitable trend in order to avoid negative impacts

from conducting business on common e-commerce platforms and reducing dependence on them. Anh

Huong reports.

The week-long Online Friday 2018, a promotional

retail event highlighting authentic goods

concentrating on Friday December 7, generated a

total expected revenue of VND1.5 trillion ($65.2m).

The promotion was organised by the Ministry of

Industry and Trade (MoIT) to popularise the sales of

authentic items on e-commerce platforms.

According to the ministry, as many as 3,000 firms

joined this campaign with 5,000 discounted items, a

lot of them reducing prices to zero. The MoIT targeted 2 million orders to be transacted in this event.

Dang Hoang Hai, director general of the Ministry of Industry and Trade’s E-Commerce and Digital

Economy Department, said that this campaign focused on improving the quality of goods. One

hundred% discounted items are authenticated and clear of origin.

However, according to the MoIT, about 160 complaints were submitted on account of the last Online

Friday about the quality of goods and fake discounts. About 118 of the violating vendors were removed

from the event, while the year before that, authorities removed 6,000 offending items.

In fact, many global brands, including H&M, Zara, Adidas, and others, despite being present in Vietnam

for a long time now, stick to selling goods at offline physical stores and have not entered into co-

operation with any e-commerce giants.

Due to bad reputation of some e-commerce businesses for fake goods and discounts, big global brands

see the local e-commerce environment as unsafe. Along with fake and low-quality goods spreading on e-

commerce platforms, Tiki, Shopee, Lazada, and other e-commerce firms are believed to violate Decree

No.81/2018/ND-CP stipulating the specific circumstances as these firms are allowed to apply discounts

of over 50%, and under 50% during nonholidays.

Meanwhile, during the nonholidays like Single Day and Black Friday, these firms have applied the rate of

up to 91%. 

Furthermore, a number of e-commerce platforms commonly use fake discounts to make it seem like

they sharply reduced prices.

VIETNAM BUSINESS REVIEW | E-COMMERCE 4

Keeping track of the original prices on e-commerce platforms is a headache for local authorities. As a

result, the scandals and rampant violations have contributed to making global brands reluctant to open

official online stores on local e-commerce platforms.

Mobile payment in Vietnam: End of 2018 news roundup

Cashless payments are booming in Vietnam, more than doubling in value over the first three quarters of

2018. In particular, transactions over mobile apps and digital wallets rose by an impressive 126% and

161%, respectively, according to Department of Payments at the State Bank of Vietnam.

The first months of 2018 saw the number of users and the value of transactions conducted through

online and mobile channels, and e-wallets, skyrocket at many banks.

At Sacombank, the number of registrations for mobile banking reached 1.1 million accounts in October.

At VietinBank, the country’s second largest lender by assets, 1.5 million people used mobile banking and

engaged in transactions totaling $2.76b between January and June.

Besides banks, local startups too are tapping into the trend with key players now operating in the

Vietnam mobile payment market including Mobivi, NganLuong, OnePay, Payoo, Momo, 123Pay, Moca,

telco-run ViettelPay, VNG’s ZaloPay, and Ononpay. Overall, there are 27 licensed payment services and

20 of them operate e-wallets.

Grab expands mobile wallet business

Singapore-based tech company Grab recently partnered with Vietnamese payment startup Moca to

launch GrabPay by Moca, a mobile wallet integrated into Grab’s app in Vietnam, with which it aims to

provide reliable and affordable financial services for the masses. Grab also acquired a stake in the

startup.

The deal focuses on leveraging the strengths of both companies to push for mobile payments in

Vietnam: Grab chose Moca for their local knowhow and access to licenses, while Moca’s mobile

payment system will gain traction through its integration with Grab.

GrabPay is now setting its sights on Cambodia and Myanmar and signed a partnership with Philippine-

based conglomerate SM Investments Corp (SM) to expand its mobile wallet to the Philippines. It

also partnered with Thai lender Kasikornbank (KBank) to offer GrabPay and other financial services in

Thailand by early next year. KBank has committed to invest $50m in Grab’s ongoing fundraising found.

An alliance with United Overseas Bank Limited (UOB) was announced last month to have the bank’s

digital banking service integrated into its app.

Go-Jek launches in Hanoi

Grab’s Indonesian rival Go-Jek launched its ride-hailing services in Hanoi in September under the brand

Go-Viet. Go-Jek announced in May a US$500 million international expansion strategy starting with four

countries in Southeast Asia: Vietnam, Thailand, Singapore, and the Philippines.

VIETNAM BUSINESS REVIEW | E-COMMERCE 5

App-based on-demand service Go-Viet is driven by a Vietnamese founding team with Go-Jek providing

technology, expertise and investment. It currently offers two-wheel ride-hailing (Go-Bike) as well as

courier services (Go-Send) but plans to introduce additional services such as Go-Car, a four-wheel ride

service, Go-Food, for quick food delivery and Go-Pay, its e-money service.

Go-Viet grabbed a 35% share of the Vietnamese motorbike ride-hailing market in Ho Chi Minh City just

six weeks after launching in the city in August 2018.

QR code payments gain traction

QR code payments are becoming increasingly popular in Vietnam and is now implemented at 18 banks,

including state-owned banks such as BIDV, Vietcombank, VietinBank, and large joint stock banks such as

VP Bank, Maritime Bank, SCB and SHB, with 8 million users.

The QR feature on apps allows users to scan QR codes with a smartphone camera to quickly transfer

money, make payment for bills and shop.

Tran Tri Manh, CEO of payment services provider VNPAY, said that more than 20,000 merchants now

accept payments with VNPAY-QR with the number of users increasing by 30% a month.

Products and services accepting payments through QR codes are becoming more diverse with large

companies such as Vietnam Airlines, Vietjet Air and Jetstar all adopting the trend. Vietjet, which began

accepting VNPAY-QR on October 3, saw more than 50,000 air ticket bookings being paid with QR Pay as

of early November.

Digital wallet and online payment gateway NganLuong recently got into the QR code payments craze as

well, launching QR code payments capabilities in September and announcing co-operation with 15 local

banks. NganLuong has 1.3 million users who conducted a total of 15 million transactions for a total value

of $200m.

Mobile payments to reach $70,937M by 2025

According to a report published earlier this week by Allied Market Research, the Vietnam mobile

payment market is projected to reach at $70,937m by 2025, growing at a CAGR of 18.2% from 2018 to

2025. The market was valued at $16,054m in 2016.

The report notes changes in customer preference from cash to digital payments, surge in need for

immediate transactions in Vietnam, increased penetration of internet and smartphones, and growth of

the e-commerce industry as the major factors contributing to the growth of the market.

VIETNAM BUSINESS REVIEW | START-UP 6

START-UP

Start-ups embrace logistics sector

The logistics sector has been the bottleneck for Vietnam’s economic development, but offers plentiful

opportunities for local startup companies with the application of technologies.

Local companies are not aware of logistics activities and they have not met the requirement of

corporate governance and human resource management. Vietnam’s trade activities have improved

recently and the number of foreign partners doing business in Vietnam keeps increasing, thus raising

demand for high-quality logistics, he added.

Startup opportunities

Despite the limitations, the logistics sector offers a wide

range of opportunities for startup companies that can

operate in different sectors of the rising industry.

Startup companies have the latest technologies and

software to optimise their logistics procedures. Some of

them have developed programs that help customs agencies automate their procedures.

As a developing economy, Vietnam’s logistics sector has lured the attention of foreign companies,

however, local firms have their own advantages, Phạm Khánh Linh, CEO of Logivan, said.

Vietnamese startups are often small, so our sole advantages are being able to make mistakes, quickly

resolving issues and realising our new ideas.

Technologies – the solution

In logistics, operation management is key and technology helps smooth the operation procedures for

many logistics firms.

Long said technology helps companies simplify repetitive tasks, and in the case of logistics firms, they

are able to operate more efficiently.

Goods transportation requires the calculation of different variables such as the size, volume and weight

of the package, packaging method, the type of truck and hours of service, and those variables have a big

impact on the price of transport, Linh said.

But technological advancements cannot remove people from the work flow as people are still needed to

resolve unexpected issues on the trip, Linh added.

In the near future, Logivan will study the Internet of Things (IoT) to scan trucks and maximise the trucks’

loading capacity, and use artificial intelligence (AI) to solve customers’ problems, she said.

VIETNAM BUSINESS REVIEW | START-UP 7

Indonesia’s Alpha JWC makes maiden Vietnam investment in Base.vn

Indonesian venture capital firm Alpha JWC Ventures has co-led a $1.3m pre-Series A round for

Vietnamese enterprise SaaS platform Base.vn, marking its first investment in the country.

The other lead investor in the round is BEENEXT, a venture capital firm that makes seed to Series A

investments in startups from India, Southeast Asia, Japan and the US.

The round was also joined by 500 Startups and Vietnam Innovative Startup Accelerator (VIISA), the two

lead investors in the Vietnamese firm’s unspecified seed round raised in August this year.

“We imagine in the next five years, enterprises will operate and manage effectively using the best technology, and we want to bring that transformative future for everyone now,” says Base.vn co-founder and CEO Hung Pham.

Base.vn claims to be the first open platform

in Southeast Asia that helps enterprises

streamline management and operation

activities such as hiring, payroll, task

management, team collaboration, and

approval management. It has so far

developed over 20 applications covering two verticals, human resources and productivity. Its customers

include VIB Bank, VP Bank, McDonald’s, MK Group, The Coffee House, and VinCommerce.

Base.vn plans to use the fresh funding to hire more product development staff and kickstart its

expansion in rest of Southeast Asia in mid-2019.

“Selling for enterprises is challenging, and Base.vn with its outstanding products has managed to

become a market leader in SaaS sector in Vietnam. We believe Base can be the leading SaaS platform

in Southeast Asia and beyond,” said Alpha JWC co-founder and managing partner Chandra Tjan.

Indonesia-focused Alpha JWC typically invests in fintech and consumer sector startups. It recently

launched its $100-million second fund. Its portfolio companies include Uangteman, Kredivo, Carro and

Sale Stock.

“With our second fund, we want to make a bigger impact in the regional tech scene, while also

maintaining our influence in Indonesia. After Indonesia, Singapore, and Malaysia, we believe Vietnam

can be the next up and coming tech giant in the region,” Chandra said.

VIETNAM BUSINESS REVIEW | RETAIL 8

RETAIL

HCMC a top 20 Asia Pacific office rental market

With office rents rising constantly for several years, HCMC has moved into the top 20 Asia-Pacific office

rent markets. Grade-A office rents in Ho Chi Minh City have reached a five-year peak of $936 per square

meter a year, according to property service firm JLL. The HCMC market has come under the spotlight in

a premium office rent report for the Asia-Pacific region just released by the US-based global company.

The report said that HCMC, an emerging market, saw annual

gross premium office rents rising to $635 per square meter,

a year-on-year increase of nearly 7%, placing the city in the

list of top 20 office rent markets in the Asia-Pacific region.

It highlighted the case one unnamed building in the inner

city, where a record rent level of $936 per square meter a

year was registered, a peak unseen for many years.

JLL assumes that the HCMC office market is heating up with increasing investment inflow from many

multinational firms.

The US firm added that the total supply of office space in HCMC has increased to two million square

meters, a five-fold hike compared to Bangkok. The scarcity of premium office space in HCMC has

constantly pushed up rents.

Financial corporations are willing to pay for high-end office space in HCMC, while banking and financial

firms were keen on premium office space, topping the list of 72 key tenant categories.

Meanwhile, JLL said in the Global Premium Office Rent Tracker Q4 2018 that Ho Chi Minh City and

Manila, the two more affordable cities in Southeast Asia, are attracting significant corporate interest,

along with European cities like Amsterdam, Berlin and Warsaw.

The firm said that growth in occupation costs is likely to slow down in 2019 as new supply comes

through; however, while rental growth is expected to decelerate, there are very few major markets

where a downward correction is projected for 2019. In fact, the delivery of new premium buildings will

set fresh rental benchmarks in several markets, it predicts.

Total occupancy costs are calculated by combining the net effective rent with additional costs, including

service charges and taxes.

JLL’s Global Premium Office Rent Tracker 2018 compares occupancy costs for premium office buildings

across the world’s leading real estate markets. This fourth edition includes 72 office submarkets across

61 cities.

The report includes the key elements of occupancy costs – net effective rent, service charges and

government tax on rent – all standardized to enable true international comparisons.

VIETNAM BUSINESS REVIEW | RETAIL 9

Sumitomo to open supermarket in Vietnam

Trading house targets middle class with Japanese-style retail.

Sumitomo Corp. will open its first Vietnamese supermarket this month, using its modern Japanese-style

retail expertise to draw increasingly well-off middle-class consumers in a country still dominated by

traditional markets.

Fujimart Vietnam Retail, a joint venture between

the Japanese trading house and local retail and

real estate conglomerate BRG Group, will launch

one store in Hanoi by year-end. Two more are

expected to open there in 2019.

Sumitomo has invested the equivalent of millions

of dollars in the venture. While BRG controls the

company, Sumitomo selects the president, and it

has sent personnel from Japanese supermarket

unit Summit as well.

The stores will use Summit's point-of-sale system and a loyalty program to analyze customers' shopping

habits and stock products more efficiently. Following the Japanese model, prepared foods will be made

in-store, and temperature control will keep food fresh.

A Summit supermarket in Tokyo. Parent company Sumitomo plans to bring the Japanese-style retail experience to Vietnam.

VIETNAM BUSINESS REVIEW | LOGISTICS 10

LOGISTICS

Start-ups embrace logistics sector

The logistics sector has been the bottleneck for Vietnam’s economic development, but offers plentiful

opportunities for local startup companies with the application of technologies.

In a report on the Vietnamese logistics market released by the business data and information provider

StoxPlus, the%age of logistics cost over the nation’s total GDP is 20.8%, much higher than the world’s

average rate of 10-11%.

Also in the report, the number of vehicles in Vietnam increases by 10% each year while the development

of transport infrastructure and facilities grows by just 3-4% per year. The area of land used for

transportation rises only 1%, while the total area for parking lots meets just a small part of demand.

According to Chief Executive Officer of Abivin JSC, Phạm Nam Long, inappropriate urban planning and

underdeveloped transportation infrastructure are among the reasons causing the logistics sector to be

the bottleneck of the Vietnamese economy.

Local companies are not aware of logistics activities and they have not met the requirement of

corporate governance and human resource management, Long said.

Vietnam’s trade activities have improved recently and the number of foreign partners doing business in

Vietnam keeps increasing, thus raising demand for high-quality logistics, he added.

Startup opportunities

Despite the limitations, the logistics sector offers a wide range of opportunities for startup companies

that can operate in different sectors of the rising industry.

Startup companies have the latest technologies and software to optimise their logistics procedures.

Some of them have developed programmes that help customs agencies automate their procedures.

As a developing economy, Vietnam’s logistics sector has lured the attention of foreign companies,

however, local firms have their own advantages, Phạm Khánh Linh, CEO of Logivan Technologies Pte,

said.

Vietnamese startups are often small, so “our sole advantages are being able to make mistakes, quickly

resolving issues and realising our new ideas,” Long said.

Technologies – the solution

In logistics, operation management is key and technology helps smooth the operation procedures for

many logistics firms. Technology helps companies simplify repetitive tasks, and in the case of logistics

firms, they are able to operate more efficiently.

VIETNAM BUSINESS REVIEW | LOGISTICS 11

Goods transportation requires the calculation of different variables such as the size, volume and weight

of the package, packaging method, the type of truck and hours of service, and those variables have a big

impact on the price of transport, Linh said.

But technological advancements cannot remove people from the work flow as people are still needed to

resolve unexpected issues on the trip, Linh added.

In the near future, Logivan will study the Internet of Things (IoT) to scan trucks and maximise the trucks’

loading capacity and use artificial intelligence (AI) to solve customers’ problems, she said.

AirAsia’s Vietnam venture set to fly in August

Vietnam will become the newest market for AirAsia, the largest low-cost carrier in Southeast Asia, which

has affiliates in India, Indonesia, Malaysia, the Philippines, and Thailand. Prime Minister Nguyen Xuan

Phuc had expressed support for the airline, which has yet to be named.

The airline plans to deploy five or six Airbus SE A320 and A321 aircraft

on domestic and regional routes, and expand the fleet to 30 within

three years, he added.

Last week Thien Minh Group signed a memorandum of understanding

with AirAsia for setting up the new airline with a capital of VND1

trillion ($44m).

AirAsia will hold a 30% stake in it, and Thien Minh, 70%.

The new airline would be a direct competitor to Vietnam’s budget carriers Vietjet Aviation and Jetstar

Pacific, according to industry insiders.

Vietnam Airlines is currently the biggest airline in terms of passengers carried.

Bamboo Airways, owned by private corporation FLC, last month received a license and expects to make

its maiden flight on December 29. It is allowed to operate 10 aircraft on domestic and international

routes.

There are five carriers in Vietnam: Vietnam Airlines, Vietjet Air, Bamboo Airways, Jetstar Pacific and

VASCO. Vietnam Airlines owns VASCO and has a 70% stake in Jetstar Pacific.

Vietnam received 14.12 million foreigners in the first 11 months of the year, up 21.3 per cent year-on-

year, according to the General Statistics Office. Eighty% of foreign tourists arrive by air.

Vietnam’s aviation market has averaged 17.4%age growth in the past decade, far higher than the 7.9%

rate for the Asia-Pacific, according to the International Air Transport Association.

AirAsia almost struck a deal with Vietjet, but in 2010 the deal collapsed.

VIETNAM BUSINESS REVIEW | INVESTMENT 12

INVESTMENT

Lotte re-groups after rocky 2018

Nearly a year after the bribery scandal that involved Lotte Group chairman and took down the South

Korean president, the multinational giant is now gearing up its investment strategy in Vietnam by -

pushing ahead with two giant projects in Hanoi and HCMC.

During a visit to Vietnam last week, Lotte Group

chairman Shin Dong-bin, who remained in the post

despite the scandal, met with Vietnamese Prime

Minister Nguyen Xuan Phuc and outlined his plans to

speed up the process of developing Lotte Mall Hanoi

and its HCMC-based eco-smart complex. This visit

focused on advancing ventures which have slowed in

pace over the last 12 months, with Lotte Group

committing to apply environmental friendly

technologies to all projects.

Lotte Group plans to start construction of the $600m and 7.3 ha Lotte Mall Hanoi before year-end, and

open in 2021 with facilities such as offices, hotels, and commercial sites. It is also in the final preparation

stages to kick off a $2b eco-smart city in HCMC. This will be a large-scale development project featuring

shopping malls, hotels, offices, and apartments located at Thu Thiem New Urban Area, destined as a

new economic hub of the city. This project is scheduled to begin at the end of 2019 and put into

operation in 2022.

According to Dong-bin, Lotte Group’s prospects in Vietnam are vast, esp in the hospitality sector, and

the group is expected to increase investment in the field in the near future.

Lotte Group currently boasts two large-scale hospitality assets in Vietnam, Lotte Centre Hanoi and Lotte

Legend Hotel Saigon. Both produce high profits. This package also reserves funds for investment in

large-scale infrastructure development of e-commerce in the retail sector in the context that traditional

retail has shown a downturn. Lotte Group is also paying attention to the startup entrepreneurs of

Vietnam and plans to set up a fund for the market as soon as it is feasible.

Foreign partners want to “swallow breweries whole”

The participation of foreign investors in Vietnam’s insurance sector will boost the market while

enriching domestic insurers with experience and governance.

More than 90% of the beer market share is now in the hands of the ‘big four’ – Sabeco, Habeco,

Heineken and Carlsberg.

VIETNAM BUSINESS REVIEW | INVESTMENT 13

The Thais are holding a controlling stake in Sabeco, and the foreign partner of Habeco is also seeking the

same level of control.

Many Vietnamese enterprises have tried to

squeeze into the market, but have not

succeeded.

Vinamilk, the nation’s leading dairy producer,

tried to jump into the beer market, but had to

give up and sold both the brewery and Zorok

beer brand. Tan Hiep Phat Group had to

abandon Laser.

Meanwhile, Masan has made big investment

in Su Tu Trang (White Lion) but has not gained success.

Foreign investors also harbor ambitious plans of acquiring the whole market “cake”.

After spending $5b to become the biggest shareholder in Sabeco, the Thai billionaire has removed the

limitation on the foreign ownership ratio. Foreign investors now can hold up to 100% of shares in the

brewery.

The move is believed to pave the way for Thaibev to acquire all of Sabeco, which Thai businesses usually

do after buying Vietnamese businesses. The key positions at Sabeco were replaced after Thai investors

took over the brewery. Two Thais, Koh Poh Tiong and Neo Gim Siong, are now holding the posts of chair

of management board and CEO, respectively.

At Habeco, after acquiring more than 17% of shares in 2008, Carlsberg has repeatedly expressed its

willingness to increase its ownership ratio.

Local newspapers commented that the foreign partner has received a commitment to raise its

ownership ratio to 30%, but this is not its final goal. What it wants is 51% of Habeco shares or more,

which would allow it to control the brewery.

Cees't Hart, CEO of Carlsberg Group, at a recent meeting with PM Nguyen Xuan Phuc, repeated the

group’s wish to make a bigger investment in Habeco after becoming a strategic shareholder in 2008.

Carlsberg is now holding 17.34% of Habeco shares, while the Ministry of Industry and Trade has 81.79%.

Carlsberg had some working sessions with the ministry and agencies to speed up the raising of

Carlsberg’s ownership ratio in Habeco. However, the deal has not been completed because of various

problems. Besides beer, Carlsberg also does business in alcohol and food, business fields where the

allowed foreign ownership ratio is up to 49%.

In 2017, Sabeco had VND34.4 trillion worth of sales, with 87% from beer sales, while the net profit was

VND4.95 trillion. Habeco had VND9.8 trillion in revenue in 2017 and net profit of VND660 billion.

Increasing beer consumption (Unit: billion litre)

VIETNAM BUSINESS REVIEW | INVESTMENT 14

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