FINANCE. finance & business news. Reference exchange rate up by 6 VND

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1 finance & business news Reference exchange rate up by 6 VND 2 Overnight interest rates hit two-month high 2 ADB warns Vietnam of risks over monetary easing 2 Banks face liquidity risks 3 HCM City credit growth reaches 13.5pct in 9 months 4 Dissolution of responsibility for SBV regarding extension of banks' safety limit 4 US tightening anticipated minor impact on inward remittances 6 World Bank Group supports tackling NPLs 6 Banks are interested in selling insurance 7 Consumer lending potential in VN untapped: experts 8 StoxPlus organises event on VN consumer finance market 9 Singapore's United Overseas Bank licensed 10 Former Trust Bank officials prosecuted 10 Vietnam climbs global competitiveness ranking thanks to market size: report 11 FDI grows 34pct from last year 11 Binh Duong surpasses goal 12 Sustainable agriculture development in Asean integration 13 Vegetable, fruit exports hoped to hit record high 14 Aquatic exports hit 5.91 billion USD in nine months 14 EU tops the list of Vietnam coffee importers 14 Budget revenue from fuels down despite import surge 15 Vietnam spends billions of USD a year to import drugs 15 Vietnam spends heavily on fertiliser, pesticide imports 16 Proposed environmental tax hike on fuels rejected 17 Draft Law on Special Administrative-Economic Units discussed 17 Road maintenance fund alone fails to meet demand 18 Heavy incentives prerequisite to North-South Expressway 18 Mekong Delta needs VND153 trillion for climate change responses 19 Local firms dominate e-commerce in Vietnam 20 Oil and gas sector urged to adjust business strategy 20 Smartphone manufacturers gear up for mid-range segment 21 Industrial property continues to flourish 22 Vietnam has advantages for creative industries to develop: specialist 23 HCM City and Thanh Hoa take the lead in FDI attraction in first 9 months 24 HCM City becomes most attractive investment destination 25 Reference exchange rate up by 6 VND Intellasia No. 21, lane 173/63/17, Ngoc Ha Ward, Ba Dinh Dist, Hanoi All Rights Reserved Binh Duong vows open, transparent climate for investors 25 Dien Bien cooperates with Lao provinces to develop agriculture 27 Japanese firms seek partners in Dong Nai province 27 Vietnam-Australia trade ties thriving 27 Republic of Korea remains Vietnam's top investor 28 BIZ NEWS Business Briefs 27 September, Energy and banking-finance industries drive VN stocks down 29 VN Index & HNX-Index lose ground 29 Stocks on HCM City bourse continue falling but at slower pace 30 Vietnam Rubber Group approves equitisation plan 31 KB acquires Vietnamese securities firm for $33mil 31 Vincom Retail submits listing document to HOSE 31 SSI opens new transaction office 32 Vietnam's automobile sales falls despite attractive discounts 32 Mobile carriers complete preparations for mobile number portability 33 Hanoi real estate inventories continue to fall but more slowly 33 Taxi firms in Hanoi launch apps to compete with Uber and Grab 34 International tourist arrivals surge nearly 30pct in January- September 34 Dam projects threaten sustainable development in Mekong Delta 35 Vietnam's women entrepreneurs win Apec awards 35 Low-skilled Vietnamese labourers at risk of losing jobs to automation: report 36 FDI firms fret over social, health insurance for foreigners 37 Ha Tinh: Work begins on 2.1 trillion VND Phoenix wharfs 38 State capital divestment from Sabeco and Habeco discussed 38 Gia Lai gives nod to solar power plant 39 Irish firm shows off its power management solutions 39 Expat life boosts financial wellbeing 39 Vietnam Airlines, Jetstar Pacific sell tickets for Tet holidays 41 Vietnam Airlines reports sparkling nine-month business result 41 Vinalines escapes bankruptcy 42 Vingroup appoints foreign CEO for VinFast 43 Honeywell awards 20 scholarships to engineering students 44 HCM City hosts 1st International workshop on MEMS and Sensor technology firms attend Vietbuild exhibition in HCM City 45 28/SEP/2017 INTELLASIA VNA The State Bank of Vietnam (SBV) set its reference VND/USD exchange rate at 22,470 VND/USD on September 28, up by 6 VND from the previous day. With the current/- 3 percent VND/USD trading band, the ceiling exchange rate is 23,143 VND per USD and the floor rate is 21,797 VND per USD. The prices of USD at major commercial banks almost remained unchanged. Vietcombank kept its buying rate at 22,695 VND and selling rate at 22,765 VND, per USD, unchanged from the rates set on September 27. BIDV also offered 22,695 VND (buying) and 22,765 VND (selling), per USD, both down 5 Tel: Fax: Office@intellasia.com Websites:

2 VND from a day ago. Meanwhile, Techcombank set its buying rate at 22,680 VND per USD and selling rate at 22,775 VND per USD, unchanged from the previous day. Overnight interest rates hit two-month high 28/SEP/2017 INTELLASIA VNS Overnight interest rates in the inter-bank market hit a two-month high but liquidity of the banking system remained stable, a report from SSI Retail Research showed. According to the report, inter-bank rates last week increased for the past two consecutive weeks, pushing the overnight rate to hit two-month high of 0.9 per cent, up 14 basis points from the previous week. The one-week rate also inched up by six basis points to 1.05 per cent. In contrast, the rates for one-month and three-month loans last week inched down by 1 and 4 basis points, respectively. However, the liquidity of the banking system last week remained good as the central bank still issued bills worth of VND18.9 trillion (US$832.6 million) during the week to withdraw the money out of the system. As for the bond market, SSI Retail Research's report showed that the State Treasury last week held government bond auctions for four tenors of 5-year, 7-year, 10-year, and 15 years. The bond offer of all tenors was worth VND2.15 trillion. The bid for the bonds was continuously increased, reaching nearly VND7.39 trillion, up more than VND1 trillion against the previous auction. At the auctions, 5-year, 7-year and 10-year bonds worth nearly VND1.17 trillion were successfully issued. ADB warns Vietnam of risks over monetary easing 28/SEP/2017 INTELLASIA THE SAIGON TIMES The Asian Development Bank (ADB) has warned the stakes will be high for Vietnam if the government decides to stimulate growth by excessively loosening monetary and fiscal policies. The ADB said in the Asian Development Outlook 2017 Update that public debt has now reached its regulatory limit, equivalent to 65 percent of GDP, so any easing of budget discipline would derail fiscal consolidation and debt sustainability. Similarly, any continued loosening of monetary policy would compound the already serious problem of non-performing loans in the banking system. According to the update, inflation is projected to continue rising as seen in recent months, fueled by the recent interest rate cuts, buoyant domestic demand, and strong GDP growth. Planned increases in fees for public education and health care will exert additional pressure on inflation, as will a recently announced 6.5 percent increase in the minimum wages that will take effect in 2018, building on a 7.0 percent rise in This year, average inflation is now expected to reach 4.5%, rising further to 5.5 percent in 2018, in each case half a percentage point higher than forecast in April. The ADB forecast growth is likely to hold up fairly well in the second half of 2017, though a continued contraction in mining will be a drag on the economy. The update trims Vietnam's growth forecasts to 6.3 percent for 2017 and 6.5 percent in 2018, taking off 20 basis points of each forecast in ADO Economic growth in 2017 is now expected to come in at 6.3%, marginally lower than forecast in ADO Inflation is projected to be slightly higher than in April, and the current account surplus is likely to shrink faster than earlier expected. "Despite the drop in mining and oil output, Vietnam's economy continues to perform well, driven by its twin engines of export-orientated manufacturing and rising domestic consumption," said Eric Sidgwick, ADB country director for Vietnam. Progress on structural reform has continued but at a modest pace, according to the regional lender. Of 45 State-owned enterprises to be equitised in 2017, only 22 had begun selling equity by the end of August and only six had achieved their target for the year. Nevertheless, revenue generation from these sales remained broadly on track, allowing the government to collect $510 million in divestment receipts in the first half of the year, or 0.5 percent of GDP. The target for all of 2017 is 1%. Besides, progress in bank restructuring and the resolution of non-performing loans (NPLs) was limited. While NPLs were reported at 2.6 percent of all outstanding loans at the end of March 2017, total NPLs including reported NPLs, unresolved NPLs ware- Intellasia / 45

3 Banks face liquidity risks housed with the Vietnam Asset Management Company, and loans at risk of becoming NPLs were estimated at 10.1 percent of outstanding loans in the banking system. Moreover, despite government plans to further consolidate the banking sector, no single bank merger or acquisition was completed in the first half of this year. 28/SEP/2017 INTELLASIA BAO DAU TU The focus on short-term loans for medium and long-term investment due to lower short-term interest rates has caused both banks and borrowers to face risks when the State Bank tightens short-term capital for medium and long-term loans. The State Bank of Vietnam (SBV) plans to extend the deadline to reduce short-term capital ratio for medium and long-term loans to 40 percent till the beginning of 2019 instead of the beginning of 2018 as stipulated in the revised Circular No.36. Earlier, at the beginning of 2017, the State Bank issued Circular No.06 on amendment of Circular No.36, tightening short-term capital for medium and long-term loans from 60 percent to 50 percent applied from the beginning of 2017 and reducing to 40 percent at the beginning of the following year. In order to meet the roadmap on reducing short-term capital for medium and longterm loans from 60 percent to 50%, banks have stepped up increasing deposit rates and some banks, especially small banks, raised deposit rates to 8.2 percent per annum due to having used a large proportion of short-term capital for medium and long-term loans. Pham Hong Hai, CEO of HSBC Vietnam said it might be ok to use much short-term capital for medium and long-term loans one to two years ago, but with the current situation, using this method will be difficult to avoid risks. When banks use too much short-term capital for medium and long-term loans, shortterm capital liquidity will be cut when they encounter short-term credit growth ceiling of short-term capital for medium and long-term loans as prescribed or due to concerns about certain issues, the State Bank continues to tighten, forcing banks to recover short-term loans of businesses. Therefore, though the State Bank plans to extend the deadline for reduction of shortterm capital ratio for medium and long-term loans, as per the aforementioned leader, not only businesses but banks themselves should not use this method i.e. to use much short-term capital for medium and long-term loans in order to avoid losing liquidity. The characteristics of the mobilised capital at banks now are mostly short-term. Especially, since the deposit rate ceiling has gradually decreased, the majority of people choose short terms to deposit, so in terms of liquidity management of the financial market, that is worth paying attention to. However, in Vietnam's specific conditions, risks are only at certain level, and we still have all the tools to handle the difference between short-term mobilisation for medium and long-term loans. Facing difficult credit situation of businesses, banks mainly strengthen individual loans, especially in the real estate sector, with lending duration amounting to years. Meanwhile, the demand for loans of businesses still focus more on short-term loans. A CEO of a bank in HCM City said the fact that the bank's outstanding loans increased sharply in the first 10 months of the year was mainly thanks to the contribution from individual customers, households and mall traders. Of which, for individual land and home loans amounting to dozens of years, customers' demand increases, especially when the real estate market shows signs of warming. However, room for medium and long-term loans is running out, so they have to be adjusted gradually, while increasing long-term deposit rates, in order to restructure the resources, meeting the roadmap prescribed in the State Bank's Circular No.06 By looking at some banks, currently, medium and long-term loans account for more than 40 percent of the total outstanding loans because most lending to individuals is Intellasia / 45

4 HCM City credit growth reaches 13.5pct in 9 months medium and long term. Meanwhile, idle money still flows into banks but customers' choice is still mainly short terms. As per financial-economic experts, if we are not careful and take measures to control, then this situation will lead to consequences, and liquidity risk in the future is difficult to be avoided. Dr Vo Tri Thanh, deputy Head of the Central Institute for Economic Research and Management, said that Circular No.06 was not sufficient, but aimed at better standards and practices in accordance with international standards. One of the risks of banks is the liquidity problem when the mobilised capital is mainly short-term and must make up for medium and long term loans. Meanwhile, outstanding loans, especially for medium and long term loans are not easy to be recovered and potentially irrecoverable debt is increasing. 28/SEP/2017 INTELLASIA VNS Outstanding loans of commercial banks in HCM City in the first nine months of 2017 rose 13.5 per cent against December last year to more than VND1.67 quadrillion (US$73.57 billion), the city People's Committee report stated. Of the total, loans in dong accounted for 90.4 per cent, equal to more than VND1.5 quadrillion, up 13.2 per cent against December last year. Loans in foreign currencies made up VND160 billion, up 15.4 per cent. Non-performing loans accounted for 4 per cent of the city's total outstanding loans, down 0.04 percentage points against December last year. HCM City-based commercial banks during the period lent VND trillion to 37,920 customers in the government's five prioritised industries of agricultural production, export business, production of small and medium-sized enterprises (SMEs), supporting industry and high-tech production, of which loans to SMEs made up the highest proportion of 64.4 per cent, or VND98.44 trillion. The committee also reported that the banks mobilised VND1.94 quadrillion in the first nine months, up 9.2 per cent against December last year. Of the total capital, deposits in dong reached over VND1.7 quadrillion, accounting for 87.9 per cent and rising 9.6 per cent against December last year. Dissolution of responsibility for SBV regarding extension of banks' safety limit 28/SEP/2017 INTELLASIA VNECONOMY The State Bank of Vietnam (SBV) has finished collecting comments for the draft circular amending and supplementing some articles of Circular 36/2014/TT-NHNN on regulating limits and safety ratios in the operation of credit institutions (CIs). Launching the draft circular a quarter early compared to the time to apply relevant regulations has a signal value and great effect to the operation of the system. After the consultation, the official circular is expected to be issued soon. One of the key contents of the above draft is the extension of the roadmap to tighten the ratio of using short-term funds for medium and long-term lending. This ratio has a remarkable history. In late 2014, SBV issued Circular 36 which strongly loosened this ratio from 30 percent to 60%. The question is why one of the most important indicators which may significantly affect the system and the economy was suddenly relaxed. A part of the answer lies in the target to facilitate the capital injection to the economy, according to the aim to accelerate economic growth based on credit leverage. In particular, one of the sectors received positive impact was real estate where the demand for medium and long-term capital is concentrated. Along with this adjustment, the risk weight for real estate loans was also cut from 250 percent to 150%. About 90 percent of the assets secured for the loans are real estate. Since the sector was warming up, the asset quality, recovery prospect and bad debt settlement had more advantages. Another part of the answer is in the form of a hypothesis, which is also related to bad debts. The loosening of the ratio on short-term funds used for medium and long-term Intellasia / 45

5 lending was implemented in 2015 when the entire system drastically tried to pull bad debt ratio to 3 percent in order to complete the plan. At the same time, the mechanism for restructuring debts without having to change debt group under Decision 780 ended. The hypothesis is that this loosening mechanism partly reduced the pressure to classify the bad debts as short-term and instead they were restructured as medium and long-term in order to reduce the pressure without breaking the 30 percent limit set earlier. In addition, one of the main purposes was also to facilitate CIs to take advantages of short-term funds which have lower costs for lending on medium and long-term, contributing to reduce lending rates. The advantage for issuing this decision of loosening the ratio of using short-term funds for medium and long-term lending is that, after many years, the new interest rate curve was appropriately regulated, moving the structure of mobilisation fund on to long terms, which was more sustainable for the liquidity management. In early 2016, SBV returned to tight control on this ratio by lowering it from 60 percent to 40%. However, as has been the case, with the objective of limiting the pressure on interest rates and contributing to create motivation for the economic growth, the regulator has step by step loosened the roadmap to apply the limit (to 2019 as mentioned in the above draft circular). Dissolution of liability Like in the above hypothesis, the decision to extent the time in 2015 remains a notable question. However, SBV right after decided to narrow down the roadmap, because the ratio of using short-term funds for medium and long-term lending is always an important indicator of the system's operation safety. If this ratio is used without tight control (which is in fact seen through the huge amount of loans that has turned into bad debts), the liquidity risk will increase and the difference between term structure may become worse. If the liquidity risk occurs, it will negatively affect the entire economy. This is even one of the causes seen in the recent serious court cases. Thus, when this ratio continues to be loosened, will the responsibility be referred in the future? Firstly, the direction to tighten management remains the same, as the ratio of using short-term funds for medium and long-term lending will be reduced from 60 percent to 40 percent and only the time is extended. On the other hand, according to the statement of SBV, the agency has assessed the impact of this adjustment based on system monitoring and statistics, which is considered being an active move to prepare for the risks or challenges if any in the future. In the case if some certain risks are involved in the future, when referring to the current policy liability, there is a dissolution of responsibility for SBV the planner and issuer of the roadmap extension. One of the basis and requirements for launching the adjustment is to follow of government's direction. Specifically, at least two times since early 2017, in the announcements and resolutions, the government has requested SBV to adjust the ratio of using short-term funds for medium and long-term lending in the direction of supporting enterprises to access loans, contributing to stimulate credit and the economic growth, etc. Along with the above request, the government has also raised the issue of reasonably adjusting the required reserve ratio in order to have medium and long-term lending fund for specific sectors. However, this requirement has not seen any specific progression. US tightening anticipated minor impact on inward remittances 28/SEP/2017 INTELLASIA VIR US President Donald Trump's announcement of tightening control over money outflows from the US, gave rise to concerns over possible impacts on inward remittance flows to Vietnam. Financial expert Huynh Trung Minh scrutinises the issue. Intellasia / 45

6 What's your assessment of inward remittance flows to Vietnam in the latter months of this year? Official data is still not available at the moment. According to the State Bank of Vietnam's HCM City branch, the city received about $3 billion in these funds in the first eight months of the year, a 5 per cent jump on-year. This indicates that the volume of inward remittances continues on its growth momentum, albeit at a slower rate than previously. Therefore, I believe the US President's announcement will not be a large influence on money flows into Vietnam or will only have a psychological effect. More important is how the economy impacts the income of overseas Vietnamese living in other countries which will directly affect their money transfer to their relatives in Vietnam. Have inward remittance flows been slowing down? How about the real estate field, where it previously was particularly strong? In fact, remittances keep flowing into Vietnam for investment targets. However, beside this kind of money, growing outbound investment has also been recorded. In addition, investors may engage in internal transactions, making it difficult to provide accurate statistics. Inward remittance flows, particularly from the US, are predicted to decline in the upcoming time. In your view, why is this so? The is still responsible for the lion's share of inward money flows to HCM City, with about 60 per cent, while the EU accounts for 19 per cent. Besides, natural calamities have been wreaking havoc throughout the US in recent months, so it may prove hard for overseas Vietnamese living at these locations to send home money. Exchange rates are relatively stable and there is a zero per cent deposit rate on the USD. How do receivers usually use remittances, do they convert it into dong or keep it in foreign currencies? They mostly convert it into dong as the exchange rate has been kept stable in the past year and the deposit rate on USD is held at zero per cent, making it more beneficial to keep dong at this point of time. In fact, so far during the year, the exchange rate inched up more than 1 per cent, while short-term dong-denominated deposits fetch 6-7 per cent per year. Compared to the zero per cent on dollar deposits, keeping dong is more beneficial. World Bank Group supports tackling NPLs 28/SEP/2017 INTELLASIA VN ECONOMIC TIMES Conference held in Hanoi on September 26 to examine task of resolving bad debts. With support from the Swiss State Secretariat for Economic Affairs (SECO), the World Bank Group (WBG) together with the State Bank of Vietnam (SBV) took another important step towards resolving bad debts with an international workshop in Hanoi on September 26. One-hundred and fifty Vietnamese policy makers and international as well as domestic experts, including private sector representatives, gathered together to exchange experience in the recognition, management, and resolution of non-performing loans (NPLs). Recognised as one of the world's fastest-growing economies, Vietnam's banking system has moved to tackle NPLs over the last few years. The implementation of the "Restructuring the System of Credit Institutions for the Period" scheme issued under prime ministerial Decision No. 254 in 2012, including the formation of the Vietnam Asset Management Company (VAMC) in 2013 to acquire NPLs, and subsequent legal and regulatory amendments to bank restructuring, signal Vietnam's determination to tackle NPLs and stabilise the financial sector. VAMC CEO Doan Van Thang listed a number of approaches to NPL resolution the company had employed to some degree of success. Since its formation, VAMC has successfully purchased some 26,110 NPLs from 16,197 institutions using special bonds. Most notably, in 2017 it managed to repossess the Saigon One Tower in HCM City from a number of customers whose total outstanding debts had accumulated to Intellasia / 45

7 more than $311.8 million. While NPL resolution has seen positive progress, outstanding and potential NPL volumes in Vietnam remain high, presenting risks to the safety and efficiency of financial institutions. Moreover, the regulatory framework on the resolution of NPLs and secured collateral remains ineffective. "Banking sector reforms are fundamentally important for Vietnam to ensure the system's capacity to serve the economy," said Dr Jennifer Isern, WBG's Finance and Markets Practice manager for East Asia and the Pacific. "We are committed to working with Vietnam on solutions suitable with the country conditions, especially with regards to regulatory and supervisory frameworks, sound legal environments and judicial systems, and efficient NPL markets." In particular, the one-day workshop focused on the recently approved Resolution No. 42, which aims to improve the regulatory framework on NPLs and secured collateral resolution as well as develop the NPL market by addressing the issues of eligible debt buyers and land titles. Policy makers also learned about European, Indian and Malaysian experience in resolving NPLs and how such lessons, in relation to governance and risk management, could be replicated in Vietnam. Private sector perspectives on several SBV initiatives to diversify NPL disposal options through the development of markets for distressed assets, including sales of NPLs to investors, were also examined. "With experience in advising governments on resolving bad debts in emerging markets, we are working with stakeholders here in Vietnam on several different levels to address this issue," Dr Isern said. "The successful management of NPLs in Vietnam is essential, while remaining vigilant over NPL flows, strengthening lending practices, and financial sector oversight to prevent an accumulation of NPLs." Banks are interested in selling insurance 28/SEP/2017 INTELLASIA VNEXPRESS Bancassurance channel (selling insurance via banks) has been flourishing in Vietnam. A common route is that a major insurance company signs exclusive distribution agreement with a bank within a period of five years, and even years. Most recently, the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Manulife Canada have signed a 15-year exclusive insurance cooperation. As a result, the life insurance products of Manulife will be sold via the distribution channel of 300 branches and 1.4 million individual customer files of Techcombank. These two units are currently the two largest market-share holders on Bancassurance segment. Previously, many other long-term commitments were signed. In early September, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) signed a contract to exclusively distribute insurance products with Dai-ichi Life on a term of 20 years. Before cooperating with Dai-ichi Life, Sacombank once intended to establish an insurance joint venture but the plan was not carried out due to concerns about ineffectiveness. Similarly, the Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) in late August also signed an exclusive cross-selling insurance contract with Aviva. National Citizen Commercial Joint Stock Bank (NCB) also has an exclusive partner Previor; while both Maritime Commercial Joint Stock Bank and Vietnam International Commercial Joint Stock Bank (VIB) are cross-selling insurance products in an exclusive form for Prudential. In developed countries, Bancassurance is the main insurance distribution channel which accounts for 70 percent of the revenue of the insurance sector. Meanwhile, in Vietnam, customers mainly access insurance products via agents. Therefore, Paul Nguyen, general director of Manulife Vietnam said that this is the most potential market in the region. " In Indonesia and Thailand, the contribution of Bancassurance is all above 40%, while it was just 10 percent in Vietnam as of late 2016", Paul cited. With the fierce race to penetrate strongly in the banking network of insurance compa- Intellasia / 45

8 nies, the Vietnam's insurance market is expected to grow rapidly in the next few years. Talking to the press, general director of Techcombank Nguyen Le Quoc Anh confirmed that the exclusive contract with Manulife will help the bank record over 10 trillion dong of insurance premium revenue in the next five years. However, according to many experts, although Techcombank holds 30 percent of the insurance market share via Bancassurance channel, the above revenue target is still a very challenging number for the bank. By the end of 2016, the premium revenue of the bank only reached 510 billion dong. Exclusively cooperating with insurers has helped many banks significantly improve their profitability from services. Normally, when the contract is exclusive, banks enjoy a relatively stable commission on the numbers of years signed. Leader of a bank which is also offering Bancassurance said that the revenue from this type of commission may contribute percent of the total income from services of a bank. "After five years of exclusive cooperation, the revenue from commission may reach up to 30 percent and considerably contributes to the service segment", said the leader. Prudential, Previor and Dai-ichi Life are the three life insurers having the most cooperation contracts with banks. In fact, before signing exclusive contracts, almost every bank have experimented distribution agreements with multiple parties, in which a bank simultaneously sells products of several insurers. In addition to life insurance, based on the existing individual customer base, banks have also been strongly promoting non-life insurance marketing. Consumer lending potential in VN untapped: experts 28/SEP/2017 INTELLASIA VNS Researchers at Vietnam National University (VNU) on Wednesday presented results of a consumer lending survey showing that the majority of Vietnamese people have never used a consumer loan. Consumers' relative lack of loan access represents both a challenge and an opportunity, as previous studies around the world have shown that consumer lending is an important instrument to boost consumption and contribute to macro economic development, said Hoang Van Hai, Dean of the School of Business Administration under the University of Economics and Business, VNU University. With more than 90 million people, Vietnam is considered one of the countries with great potential for consumer finance. The question now is how to tap this potential. The VNU surveyed more than 2,000 consumers in 12 provinces to show that although the majority of people are hesitant to contact financial companies for consumer financial services, a growing number of young consumers are in dire need of it. Up to 29.8 per cent of survey participants expressed a high level of willingness to borrow from credit institutions for consumption should the need arise. However, 62.4 per cent of people who responded to the survey have never used consumer loans, due to lack of need and concerns over loan conditions. The rest of respondents said they were disinterested in consumption loans unless they faced dire need. According to Hai, Vietnam's consumer lending market in recent years has begun to grow gradually and surely, with more participation from service providers and demand for consumer loans has also increased significantly. However, the market for consumer loans in Vietnam is smaller than it could be. The limited number of credit and consumer lending organisations account for only 5 to 10 per cent of total national credit balance, compared to 40 to 50 per cent in developed countries. Nearly 100 per cent of participants in the survey are aware of commercial banks, and per cent are ready to borrow from them, while the same numbers for credit institutions are per cent and per cent, respectively. At the moment, white collar and blue collar workers are more likely to borrow from credit institutions than from commercial banks, while farmers are least likely to do the same. The VNU found that despite supposed service quality issues at consumer finance com- Intellasia / 45

9 panies, customers who have taken out loans from financial companies are relatively satisfied with their financial products, as well as with the borrowing procedures. Consumers' satisfaction with the cost of borrowing is relatively lower than their satisfaction with other factors, such as service quality. Meanwhile, underground credit markets still exist and attract a large number of people to participate. Based on customer assessments and in conjunction with the criteria for assessing credit institutions' service capabilities, several names shone as highly rated credit institutions, including HomeCredit, FE Credit and HD Saison. The research was presented at a seminar discussing the country's current consumption levels and recommendations for consumers, held by the VNU in Hanoi. The VNU's research also emphasizes the need to raise awareness among Vietnamese consumers about the use of consumer lending services and to give recommendations to credit institutions and their stakeholders. The seminar attracted the participation of delegates from commercial banks, finance companies, university lecturers, researchers and a number of individuals interested in the research topic. StoxPlus organises event on VN consumer finance market 28/SEP/2017 INTELLASIA VNS An international conference on consumer finance will be held on October 19 to address important themes and legal framework changes for the healthy and sustainable development of Vietnam's consumer finance market. This is the second event on the country's consumer finance market that is being held with the cooperation of StoxPlus, the State Bank of Vietnam and the Japanese Nikkei Incorporate. Some 200 participants -- market regulators, local and foreign banks, finance companies and investment funds, as well as e-payment and e-commerce players, investors and international organisations, are expected to take part in the event. Market participants, investors, researchers and regulators will come together to discuss existing issues and provide insights and reflections on market practices and international experiences, contributing to the development of the Vietnamese consumer finance sector. The event will take place at the Hilton Hanoi Opera in Hanoi and is organised by business information provider StoxPlus. Consumer finance is seen as one of the fastest growing sectors in Vietnam in the past few years, with the country's total loan book recorded at VND605 trillion for both banks and non-banks as of December 31, Total loan book by pure consumer finance players accounted for VND56.3 trillion. It is expected to increase sharply in 2017 and subsequent years, with an annual growth rate of 48 per cent in the period. Low penetration and significant unbanked population in Vietnam are reasons for the high potential of the local market, however, various challenges and policy developments have yet to be shared and discussed by all stakeholders for the sustainable and healthy development of the sector in the future. At the upcoming event, participants will have opportunities to discuss four topics, including management of the sector's growth for Vietnam from the risk management perspective, social impact of consumer/borrower's protection and how consumer finance companies can improve the underwriting process. The two other topics are how the government can develop a legal and policy framework to govern the consumer finance sector and support its healthy development, and how emerging models such as application of big data, fintech and peer-to-peer lending can be used in the context of Vietnam. Intellasia / 45

10 Singapore's United Overseas Bank licensed 28/SEP/2017 INTELLASIA VNS Deputy chief inspector of the State Bank of Vietnam Pham Huyen Anh on Tuesday granted business licence to the Singapore's United Overseas Bank Limited (UOB). Anh said that he expected the 100-per cent foreign owned bank in Vietnam would contribute significantly to the growth of Vietnam's banking industry and economy as well as boosting the cooperation ties between Vietnam and Singapore. The UOB is one of Asia's leading financial institutions with a network of 500 offices in 18 countries and territories. It already operates a branch in HCM City. So far, ANZ, Hong Leong, HSBC, ShinHan, Standard Chartered, CIMB, Public Bank Berhad and Woori Bank have opened wholly foreign-owned banks in Vietnam. According to experts, more foreign banks are expected to enter Vietnam's market which has major potential with a population of roughly 93 million. They recommended that Vietnamese banks must operate on a larger scale, with huge investments in technology and products through consolidations and mergers to create better and stronger banks that can compete with foreign banks. By 2020, in accordance with the commitment to the World Trade Organisation, Vietnam will have to completely open the doors of its banking sector. Former Trust Bank officials prosecuted 28/SEP/2017 INTELLASIA DTI NEWS The Ministry of Public Security announced on September 27 that they had prosecuted 14 former officials at the Dai Tin Commerce Joint Stock Bank (Trust Bank) for violating state economic management which caused serious consequences. Hua Thi Phan, a representative of Phu My Group's shareholders of Trust Bank, manipulated the bank to give her company significant benefits. In addition, Phuong Trang Group took a huge loan and then was slow to repay the debt. Phan caused nearly VND5trn (USD million) of damage. Phan is accused of abusing trust to carry out the fraudulent appropriation of assets instead of violating state economic management which caused serious consequences. 14 former officials at Trust Bank are going to be prosecuted for helping Phan. Four of the alleged accomplices who have been detained are former Trust Bank's deputy directors Ngo Kim Hue and Nguyen Doan Trang, Phu My Group's accountant Bui Thi Kim Loan, and the treasurer of Vietnam Construction Bank's Lam Giang branch in HCM City, Lam Hua Quynh Trinh. Trust Bank's head of asset valuation department Bui The Nghiep, Trust Bank's vice chair Nguyen Vinh Mau and other alleged accomplices had their houses searched. Trust Bank's former chair of the management board, Hoang Van Toan, and former general director Tran Son Nam were accused of causing hundreds of billions of VND in losses for giving illegal loans to various companies including Dai Hoang Phuong and Thinh Quoc companies. As of February 29, 2012, Trust Bank incurred over VND6.6trn (USD292m) in losses and VND2.9trn in negative equity. In 2012, Trust Bank was restructured and rebranded into Vietnam Construction Bank and Pham Cong Danh became chair of the bank's management board. The case was exposed in 2014 after Pham Cong Danh was accused of devising scams to steal from the bank, including setting up fraudulent companies and fake documents to take out huge loans. On September 9, 2016, Danh and 35 of his accomplices were prosecuted for violations involving loans worth more than VND9trn (USD402 million). HCM City police launched an investigation into Hua Thi Phan's violations. Danh said he had paid Phan VND3.6trn to buy Phu My Group shares and properties but he hadn't received anything. Intellasia / 45

11 Vietnam climbs global competitiveness ranking thanks to market size: report 28/SEP/2017 INTELLASIA VNEXPRESS 'Significant improvements' are still needed to institutional performance, higher education and business innovation. Vietnam has risen five places from last year in the latest competitiveness report released by the World Economic Forum (WEF) on Wednesday. The country's ranking of 55th out of 137 economies is its best in five years and puts it among the six economies with the best average growth rates in the past decade, together with large emerging economies such as Thailand, India and Nigeria. Vietnam's competitiveness is significantly driven by its market size, which ranks 31st of all economies, according to the annual report which measures national competitiveness based on a set of institutions, policies and factors that determine the level of productivity. It said Vietnam has maintained its export-driven growth successfully despite the withdrawal of the US from the Trans-Pacific Partnership trade deal earlier this year. However, Vietnam still needs to make "significant improvements" to institutional performance, higher education and business innovation. "Firms perceive that the lack of an educated workforce constitute a significant hurdle for doing business," the report said. An opinion poll conducted by the WEF found that access to financing, an inadequately educated workforce, corruption, poor work ethics and tax regulations are the five biggest "problematic factors" for doing business in Vietnam. This year, the country remains in the bottom five of the 17 East Asia-Pacific economies, narrowly surpassing the Philippines (56) and Cambodia, Laos and Mongolia. The report said these economies could all make large gains at a relatively low cost by improving their performance in infrastructure, health and education. Switzerland topped the ranking again this year, followed by the US and Singapore. Hong Kong and Japan also made it into the top 10, which is dominated by European economies. Poor and war-torn African countries prop up the list. FDI grows 34pct from last year 28/SEP/2017 INTELLASIA VNS Foreign direct investment (FDI) registered in Vietnam reached a record $25.48 billion in the first nine months of this year, up 34.3 per cent year-on-year. Of the sum, $14.56 billion came from 1,844 new projects, up 30.4 per cent year-on-year, according to the latest report from the Ministry of Planning and Investment's Foreign Investment Agency. Another $6.75 billion was added to 878 existing projects, 28.3 per cent higher than the same period last year. The remainder of the FDI, worth $4.16 billion, came from 3,742 deals made by foreign investors to contribute capital to businesses and to buy shares of Vietnamese businesses, jumping 64 per cent compared with last year's corresponding period. During the reviewed period, FDI disbursement also saw a positive yearly increase of 13.4 per cent to $12.5 billion, according to the data. Exports of foreign-invested enterprises (including crude oil) are estimated at $110.8 billion, up 21 per cent over last year, accounting for 72 per cent of the country's total export turnover. Excluding crude oil, this figure is $108.5 billion, up 21 per cent. Manufacturing and processing industries remained the top sector, receiving $12.64 billion, comprising 49.6 per cent of the total registered FDI. The electricity production and distribution sector ranked second with $5.34 billion, accounting for 21 per cent of the total FDI. The mining sector was in third place with $1.58 billion, totalling 6.2 per cent. From January to September, South Korea retained its position as the leading investor in Vietnam with $6.31 billion, and 24.7 per cent of the FDI pledged to the country. It was followed by Japan with $5.91 billion, or 23.2 per cent of the FDI, and Singapore Intellasia / 45

12 with $4.14 billion, or 16.2 per cent. Among 59 localities receiving FDI during the nine-month period, the southern economic hub of HCM City was at the top with $3.74 billion, accounting for 14.6 per cent of the country's total FDI. The central province of Thanh Hoa was the runner-up with $3.15 billion, or 12.4 per cent of the total FDI. Northern Bac Ninh Province came third with $3.14 billion, or 12.3 per cent. In a separate report, the southern province of Dong Nai said it had nearly achieved its FDI target set for the whole year. The province, which is listed among the country's top 10 leading localities in terms of attracting FDI, granted licences to 55 new foreign-invested projects and allowed 84 existing projects to add capital in the first nine months of this year with a total amount of $955.5 million, equivalent to 95.5 per cent of the annual target. According to the provincial Department of Planning and Investment, $339.4 million was poured into new projects and the remaining was added to operational projects. The province is currently home to 1,300 valid foreign-invested projects worth $26.27 billion by investors from 45 countries and territories. The leading investors are South Korea, Taiwan and Japan. Binh Duong surpasses goal 28/SEP/2017 INTELLASIA VNS The southern province of Binh Duong reported on Tuesday that it had attained 140 per cent of its annual target in foreign direct investment (FDI) during the first nine months of the year. In a meeting with investors, the provincial Department of Investment and Planning said total FDI in the first nine months of the year stood at nearly $1.97 billion, a jump of 27 per cent compared with the same period last year. During the period, the province attracted 148 new projects valued at a total of $1.165 billion. Another 87 projects added capital of $765 million, according to the department. About 90 per cent of the projects are in industrial zones. Binh Duong has a total of nearly 3,000 FDI projects, worth over $27.7 billion from 60 countries and territories. "The provincial investment environment has improved towards sustainable development. The advantageous fields in the province such as the electrical power industry, electronics, mechanics, pharmaceuticals, chemicals, and service and trading (and others) have attracted investors," said Nguyen Thanh Truc, director of the Department of Investment and Planning. "The number of foreign investors visiting Binh Duong to study the investment environment has increased significantly year-on-year," he said. In order to create a better investment climate, the province's leaders and authorities work regularly with investors to learn about their difficulties and help them solve problems. This is the second time that the province has met with investors this year. Yesterday, the leaders from the provincial People's Committee and departments met representatives of more than 60 companies operating in the province to answer all of their questions. The main topics discussed by the companies were social and medical insurance, taxes, natural disaster prevention and control of funds and overtime shift, as well as other issues. Along with regular meetings with investors, Binh Duong has continued its strong investment in infrastructure. Tran Thanh Liem, chair of the provincial People's Committee, said that ideas related to legal issues at the meeting would be collected and submitted to the government in order to help enterprises solve problems. Truc said that during the past years, Binh Duong had invested in infrastructure, especially the transport network, which facilitates connections with HCM City, the Me- Intellasia / 45

13 kong Delta, the Southeast region and southern Central Highlands. Many important transport routes have been invested and put into operation such as Binh Duong Boulevard and My Phuoc Tan Van, which connects industrial parks with seaports and airports. The industrial parks, new urban areas and services are highly developed to better serve investors. Currently, the province has 28 industrial parks with a total area of over 10,560 ha and 71 per cent of rental rate. It also has 11 industrial clusters with total 802 ha with a 55 per cent rental rate. The province has also approved a master plan for industrial park development. By 2020, there will be 34 industrial parks with total area of nearly 15,000ha. An industrialserviceurban complex has been established on an area of 4,000ha with a total of 400,000 residents. The complex has spurred development of new urban areas in neighbouring localities for the Bau Bang service and urban area. Binh Duong is located in the centre of the southern key economic zone, the most dynamic region of the country. It is a strategic traffic gateway between the Central Highlands region, central provinces and HCM City. FDI is an essential source for the province's socio-economic development and economic structure. Last year, FDI contributed over 49 per cent of total social investment, over 67 per cent industrial production value, and over 82 per cent of export turnover to the province. Sustainable agriculture development in Asean integration 28/SEP/2017 INTELLASIA VOV5 Improving the quality of agricultural products, ensuring farmers' interests, and sustainably developing agriculture in Asean topped the agenda of a just- concluded international conference in Hanoi. The event was jointly held by the Vietnam Peace and Development Foundation (VP- DF) and the German Rosa Luxemburg Stiftung. Global economic integration and Asean economic integration have brought benefits, opportunities, and challenges for Vietnam's agriculture and that of other Asean members. Conference participants discussed a number of issues related to the sustainable development of agriculture: the role of science and technology in the growth of commoditybased agriculture, relations between businesses and farmers, promoting Myanmar agricultural competitiveness during Asean integration, the impact of joining the Asean Economic Community on Vietnam's agriculture sector, farming modes, and green and environmentally-friendly agriculture. In Asean, Thailand is considered the leader in applying science and technology in the agriculture sector. The Thai Board of Investment has approved the granting of special promotional privileges for investment in projects related to modern agricultural production and services. Farmers are encouraged to upgrade their production methods and crop quality to achieve sought-after international quality standards, such as Good Agricultural Practice and ISO Food Safety Management Systems Certification. Under the new privilege structure, businesses that apply technology to help modernise production in the farming sector will be entitled to a corporate income tax exemption for five years. About 70 percent of Vietnam's population are farmers and agriculture remains an important sector, contributing 20 percent of the GDP. Le Quoc Doanh, deputy minister of Agriculture and Rural Development, said Vietnam has promulgated initiatives to address pending issues relating to sustainable agriculture development. Under the programmes, Vietnam will restructure its agriculture to obtain greater added values and sustainable development. Vietnam will also develop key products in combination with the application of science and technology to increase productivity, expand information systems, enhance market Intellasia / 45