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wadhwanifoundation · 4 years

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In a jobless growth economy, unemployment remains stubbornly high even as the economy grows as the relatively large number of people may have lost their jobs or new members entering the work force are much higher than the jobs available. In India, the latter seems to be the case, thereby obstructing the benefits of growth from reaching the masses.

While analyzing the paradox of India’s jobless growth, I categorized the reasons and possible solutions into a ten-point action plan:

Formalize Labour Arrangements: Decline in jobs due to a reduction in contract workers (nearly 70k were retrenched in the first half of FY 2016, compared to 161,000 additions in the first half of FY 2015). Contractualisation is a universal phenomenon and the solution is to simply end the informal nature of employment. Better pay, job security, safe work environments and social security benefits will only help workers bring out their best. In fact, companies making high-specification products realise that contract labour can lead to batch rejections

Increase Business Sentiment through strong reform measures: Employment in export units, reeling under shrunken global demand has seen a sharp decline. In the automobile sector, only a handful of jobs have been added. Large manufacturers are trimming operations; Nokia, has shut down its handset factory in Chennai rendering 8,000 workers jobless, and for Microsoft, the new owner of the Nokia, making smartphones in China and Vietnam was cheaper. Following on the heels of Goldman Sachs and Nomura, JP Morgan Asset Management also exited its onshore India-based mutual funds business. Cement major Lafarge is another case in point. The focus should be on kick-starting the investment cycle, incentivize job creation by giving infrastructure a push, finding a way to lower interest rates and improving ‘ease of doing business’.

Improve the Labour-absorption in Indian Economy: The economy is generating fewer jobs per unit of GDP — more work is now being done with fewer employees due to significant improvements in automation, robotics and productivity. Therefore, more focus on labour-intensive sectors will generate employment. While sectors like financial services, e-commerce and financial technology seem obvious as ones to focus upon, the significance of new economy enterprises should not be underestimated. These could be in education, healthcare, e-commerce and hospitality. Green sectors such as solar energy and wind will be the ones to watch out for in the long run.

Policy push to accelerate the five labour market transitions: Transitioning from farm to non-farm, rural to urban, subsistence self-employment to decent wage employment, informal to formal, and school to work will enhance productivity norms.

Schemes to promote the growth of MSMEs: Arresting the lacklustre global demand and weak exports coupled with the need to diversify the exports basket are dire needs of MSME sector. Enhancing the employment potential of MSMEs is critical as the sector contributes to nearly 40% to India’s manufacturing output, employing around 14-crore.

Skilling for an industry-ready, job-ready workforce: Given India’s demographic dividend, it acquires special significance. With 54% of our population below 25 years of age, we are sitting on a massive workforce. Unfortunately, many of them are unemployable with their skills not matching the emerging industry requirements. While curriculum has largely remained static, its application has become increasingly dynamic. The major gaps in skills are in industries such as the auto industry, building and construction, textiles and retail. Aside from this, there is a skills shortage for jobs ranging from welders to masons and from electricians to nurses. Today, industries require market driven skills to meet their business needs of higher productivity, lower costs and higher efficiencies. Hence, it is imperative that apart from beefing up their in-house training facilities, industries tie-up with educational and training institutes, and refurbish the curriculum, content and teaching cum training methodologies.

The manufacturing sector needs a boost: While the service sector contributes 58% to India’s GDP, the manufacturing sector’s contribution is 24%. India’s late policy resurgence of manufacturing is the main reason why the country lags China. The sector’s unique role in triggering structural change has remained unattended while focusing on less employment providing, less tradeable and less technology oriented service sector. India not likely to emulate a situation like China’s where 34 per cent of its labour force is involved in manufacturing. However, even if we can increase this to 20%, up from the current 11%, it would account for another 100 million jobs!

Producing Periodic and reliable data on employment: Regular estimation of job numbers and various indicators related to it has long guided policy creation in some of the other successful economies. Employment generation must be the soul of Indian policy creation, and to do that, it is imperative to know the statistics on the same periodically. The last time India carried out a focused and comprehensive estimation of the employment situation nationwide was in 2012 through the 68th round of NSSO. Needless to say, these figures are no longer used for gauging policy exigencies in the country.

Promoting and tracking the entrepreneurial sector: Many of the jobs in the economy are created by the Flipkarts, Myntras and Snapdeals of the world, and these jobs are not picked up by the numbers. Startups can be an engine of job-creation. According to NASSCOM, 3–4 IT start-ups are born every day in India. In calendar 2015, 1200 startups were launched in the tech space alone, a 40 per cent rise from 2014. India has the third highest number of start-ups in the world at 4200, behind the US and Britain, but ahead of China and Israel. A focus on this sector could lead to new employment opportunities.

The dignity of Labour: This remains an exotic concept in India. Shuffling papers is seen as more dignified as compared to holding a torque wrench and rolling up of sleeves on the shop-floor. The faster this mindset changes, the better it is for India.

UNDP’s “Asia-Pacific Human Development Report 2016” report has warned that India is likely to face a critical shortage of jobs in the coming 35 years. There are two ways to look at this — as a massive wave of unemployment that will leave India floundering or as an unprecedented resource for wealth creation that will outpace much of the world if equipped with the right skills.

About Wadhwani Foundation: Wadhwani Foundation was founded in 2000 by Dr. Romesh Wadhwani, with the primary mission of accelerating #job creation in India and other emerging economies through large-scale initiatives in entrepreneurship, small business growth, #innovation, and #skilling. The Wadhwani Foundation operates in 20 countries, including India, South East Asia (Indonesia, Malaysia, the Philippines), East Africa (Kenya, Uganda, Rwanda), Southern Africa (South Africa, Botswana, Namibia), West Africa (Nigeria, Ghana), Egypt, and Latin America (Mexico, Brazil, Peru, Chile). The Wadhwani Foundation works in partnership with governments, foundations, corporations, and educational institutes.

To know more about Wadhwani Foundation and its Initiatives: https://www.wfglobal.org Click here to subscribe WF YouTube channel: https://www.youtube.com/channel/UC8J1yxr4VDX5KbkACBhMMQA

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bigyack-com · 5 years

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India plans to offer incentives to 324 companies including Tesla and Glaxo: Report - business news

India is planning to offer 324 companies including Tesla Inc. and GlaxoSmithKline Plc incentives to set up factories in the South Asian nation in a bid to capitalize from the trade war between China and the US, according to a document seen by Bloomberg.The government proposes to provide the manufacturers land to set up a factory along with power, water and road access, according to draft of the document prepared by the Department for Promotion of Industry and Internal Trade and Invest India. Other companies that officials will reach out to include Eli Lilly & Co., South Korea’s Hanwha Chemical Corp., and Taiwan’s Hon Hai Precision Industry Co.While the trade war has benefited countries such as Vietnam and Malaysia, rigid land acquisition rules and labor laws have prompted investors to largely ignore India when looking for alternatives to China. The latest proposal may reduce red tape, and set the nation, which expanded at the slowest pace in six years last quarter, on a path to double its gross domestic product to $5 trillion by 2025 -- a goal set Prime Minister Narendra Modi.“While in the initial leg of relocation we have seen companies moving to Vietnam, I don’t think it is too late for India to start making an effort,” said Sonal Varma, chief economist for India and Asia-ex Japan at Nomura Holdings Inc. in Singapore. “India offers a unique advantage of being a huge domestic market too, so it is definitely an opportunity for the government to attract investment.”Under the plan, the government will create a land bank for ready-to-move-in industrial clusters, offer investment and location-based incentives and rationalize anti-dumping duties. The proposal includes incentives for plug-in and hybrid vehicles, fuel efficiency and carbon taxation. For the electronics and telecom sector, flexible employment, manufacturing-related incentives linked to investments and value addition have been sought.The country has made progress, rising 37 spots since 2017 in the World Bank’s ranking for ease of doing business, but it still comes in at 63rd, trailing not only China, but also Rwanda and Kosovo. At present, investors keen on setting up a factory need to acquire land on their own which, in some cases, involves a time consuming process of negotiating with small plot owners to part with their holding.The Prime Minister’s Office is considering the proposal and a decision is expected soon. An email sent to the spokeswoman at the commerce and industry ministry wasn’t immediately answered.Asia’s third-largest economy expanded 5% in the June quarter, with slew of data pointing to weaker economic activity.Getting investment inflows and boosting exports is therefore high on economic agenda of the government. It has already slashed corporate tax rate, making it competitive with rest of Asia, and has relaxed foreign investment rules to attract fund inflows in the country. Source link Read the full article

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lollipoplollipopoh · 6 years

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🇰🇵 🇰🇷 Intra-Korean talks: What peace means for markets | Counting the Cost (Feature) by Al Jazeera English A historic summit between the leaders of North and South Korea has raised the prospect of a formal peace treaty by the end of this year. After decades of military standoff between the two sides, their leaders made a declaration of peace and promised a nuclear-free Korean Peninsula. Such a possibility would spell big investment opportunities on the peninsula, according to Jim McCafferty, head of Asia Equity Research at Nomura Securities. "I think the priorities of North Korea may be changing and may be shifting towards economic development and for that reason, engagement with neighbouring countries makes a great deal of sense." The sanctions on North Korea are "beginning to bite", explains McCafferty. "North Korea historically had depended on subsidies from Russia and China, and those subsidies were largely withdrawn back in the early 1990s. Since then, North Korea has had to engage in some form of communication with western countries to try to get some form of subsidies. The sanctions have been in place now for over a year and they're hitting quite hard, so that's the reason perhaps they're engaging with other countries." A reunification opportunity, which excites the market, "is really a very, very small probability," says McCafferty, and adds: "What we do see as a more likely scenario that North Korea becomes subsidised or helped by western countries, not just South Korea." If a denuclearisation option is achieved, "there might be some economic benefits that other countries can provide and with that provision, the South Korean companies, Japanese companies, Chinese companies could be involved in some reconstruction of North Korea, which as a country has not kept up with others in the region and is quite backward in terms of simple GDP (gross domestic product) per head mechanics." He says that in terms of the size of the economy, at one point in the 1970s, North Korea's GDP per head was at a parity with South Korea, but "that's just no longer the case. North Korea has an opportunity - with 25 million people. That population could be engaged as a labour force and involved in areas like textiles and getting opportunities which are currently in place with ASEAN countries, such as Vietnam or Myanmar." "So, potentially there is opportunity for South Korean capital to merge with relatively inexpensive North Korean labour and combine certain areas of real-cost manufacturing - that's where perhaps opportunity is." More from Counting the Cost on: YouTube - https://ift.tt/2mY0tCE Website - https://ift.tt/2m6SeXD - Subscribe to our channel: https://ift.tt/291RaQr - Follow us on Twitter: https://twitter.com/AJEnglish - Find us on Facebook: https://ift.tt/1iHo6G4 - Check our website: https://ift.tt/2lOp4tL

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brajeshupadhyay · 4 years

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COVID-19 crisis puts China's monopoly of global supply chains in focus, but presumptions of India benefitting are misguided, here's why

Among the many fundamental changes in human life that the pandemic is likely to trigger, none might be more consequential than altering the way the world does business.

COVID-19 has thrown light on a global blind spot. The world has suddenly woken up to the reality that a hegemonic China has become the irreplaceable fulcrum of a globalised economy and is using that leverage to develop untrammeled power.

Taking advantage of the established, consensual economic wisdom of a post-Cold War world order that prioritised hyper-globalisation over national boundaries, China built its industrial might over three steady decades by offering a substantial pool of low-cost, efficient labour and wielding authoritarian control over the human resources.

How China monopolised supply chains As multinational companies remained fixated on keeping production costs low, and western governments allowed massive outsourcing of manufacturing and industrial capabilities in exchange for financial gains, China exploited the opportunity to monopolise global supply chains.

Until the virus raided us, the world overlooked the dangers of putting all eggs in the Chinese basket. As China sharpened its manufacturing prowess and became ‘world’s factory’, it simultaneously developed a complex mesh of internal supply chains and interoperability that made relocation even more difficult, and consequently the world became even more deeply reliant on China-dominated global supply chains.

How deep go China’s tentacles? A study by a business intelligence company shows 51,000 companies sourced direct suppliers from Wuhan alone, while “five million companies have one or more tier-two suppliers in the region,” according to Brink.

The article quoted another survey highlighting how manufacturers around the world are at the mercy of China. Around 57 percent of companies “are experiencing longer lead times for tier-1 China-sourced components”, a list that includes US tech giant Apple which, despite shifting some production to India and Vietnam, remains critically dependent on China.

China’s role as the preeminent supplier of goods and components across nearly all industrial sectors — technology, automotive, electronics, pharmaceutical, equipment or consumer goods — makes a rerouting of global supply chains almost impossible.

It is a measure of the disruption caused by the pandemic that such a possibility is being increasingly discussed now. As the virus ravages its way through the world (latest figures put global toll at 248,245) there is a sudden urgency to diversify and relocate manufacturing and supply chains out of China.

Pushback against China

This pushback is the result of two distinct impulses: geopolitical and geo-economic. COVID-19 has reinforced the reality that China, at best, is an irresponsible power and a malevolent actor at worst that falsifies and suppresses data, spreads misinformation, lies and indulges in predatory mercantilism to achieve its geopolitical objectives.

Some of this behaviour was already known. The virus has inadvertently translated that malevolent Chinese behavior into real consequences. Governments around the world — from the US, Germany, Australia to India — are in no mood any more to overlook China’s role in spreading and abetting the pandemic that has killed over two hundred thousand people already and destroyed economies.

Many are seeking accountability from China and holding it responsible for irresponsible domestic and international behaviour led by a feral anti-China sentiment in public sphere.

In the geo-economic arena, many companies are rushing to repatriate some of their production from China to avoid getting caught again in a situation that the pandemic caused where entire global supply chain collapsed due to over-reliance on one source.

This disruption threatens to transform the way the world does business, and it has brought some unexpected opportunities for many nations that seek to benefit from the shifting of production lines away from China. Some of the shift that may happen out of China could also be a corrective measure since China had a disproportionate share of global manufacturing pie. In this respect, the pandemic may have accelerated the trend.

A second chance for India?

Quite naturally, as the country with the world’s second-largest population, a large pool of skilled, semi-skilled workforce, a young demography and a humongous domestic market, India ranks among the top of these (mostly southeast Asian) nations that are keen to seize the supply-chain opportunities. The pandemic may have devastated global economy and brought economic powerhouses to a standstill, but it has simultaneously opened up larger-horizon prospects for nations like India that now has a second chance, having missed the bus on manufacturing and export-led growth altogether.

A lot of hopeful talk is suddenly floating around in Indian media that foreign companies are lining up to tap India as the alternative manufacturing hub, and India is well-poised to capture the tectonic shift.

This exuberance is unsupported by facts. Past developments do not inspire confidence.

A study by Japanese financial group Nomura found that between April 2018 and August 2019, 56 companies relocated supply chain and manufacturing out of China. Of these, 26 went to Vietnam, 11 chose Taiwan, eight settled in Thailand and only three came to India.

Centre’s aggressive bid

Make no mistake, India is aggressively pushing for a share of the manufacturing pie. If there was reason enough for India to boost its stillborn ‘Make In India’ initiative, that impulse has now got an added urgency thanks to the prolonged lockdown that has broken the back of Indian economy. India desperately needs foreign direct investment that may boost labor-intensive manufacturing and create jobs to kickstart its economy.

In a blog post, Narendra Modi has asked Indians to “rise to that occasion and seize this opportunity” since India has “the right blend of the physical and the virtual” and “can emerge as the global nerve centre of complex modern multinational supply chains in the post COVID-19 world.”

The prime minister has taken the lead in holding discussions with chief ministers and Cabinet members to persuade foreign investors to shift their production lines and promote local investments. States have been encouraged to capitalize on manpower skill and improved infrastructure. Media reports indicate Modi has asked chief ministers to develop a “comprehensive plan”.

It was discussed that a scheme should be developed to promote more plug and play infrastructure in the existing industrial lands/plots/estates in the country and provide necessary financing support @EconomicTimes

— deepshikhas (@deepshikhasET) April 30, 2020

Various strategies to bring investments into India in a fast-track mode and to promote Indian domestic sectors were discussed. Detailed discussions were held on guiding states to evolve their strategies & be more proactive in attracting investments @EconomicTimes — deepshikhas (@deepshikhasET) April 30, 2020

The meeting with Cabinet members that was reportedly attended by Union finance minister Nirmala Sitharaman, home minister Amit Shah and minister for commerce and industry Piyush Goyal, among others, discussed a “scheme to promote more plug and play infrastructure in the existing industrial plot, estates in the country and provide necessary financing support”. Plans were drawn to handhold investors, look into their issues and issue faster regulatory clearances.

Dangerous delusions

We are being told that coronavirus will trigger “manufacturing exodus from China” due to “rising labour costs, shortages of workforce, a trade war with the United States, the rise of manufacturing hubs in southeast Asia and now a pandemic that originated on its mainland.”

This argument claims that India’s huge domestic market will tip the scales in its favour compared to more nimble-footed southeast Asian rivals.

Some articles claim about a thousand companies “are currently engaged in discussion at various levels such as investment promotion cell, Central government departments and state governments” and they are apparently attracted by India’s “vast domestic market, cheap manpower, resilience of its economy and a strong democracy” while “regulatory hassles, compliance burdens and policy flip-flop” are the downsides.

There also have been reports that US state department is encouraging its businesses to shift production lines out of China to India, and US business captains have apparently been advised by the Donald Trump administration to propose to Indian government to offer incentives in this regard.

Not just media, we also witness a reflection of this narrative in government circles where ministers are making a spate of hopeful statements. Union minister Ravi Shankar Prasad was quoted as saying recently that “distrust against China could work to India’s advantage” and anger against China could lead to a boom in electronics sector for India.

Prasad’s Cabinet colleague Nitin Gadkari thinks “it’s time to convert ‘hatred’ for China into India’s economic opportunity.” These are dangerous delusions.

India has some advantages in its huge domestic market, low-cost, abundant labour, high share of working population and a government (at least verbally) ready to invite foreign investors through policy tweaks and infrastructure upgradation but these advantages are offset by realities, mindsets and political compulsions that cannot be changed overnight.

India’s structural shortcomings

Let’s start with a bit of statistic. For all the talk about India being a more lucrative destination for investors willing to hedge against overdependence on China, the production cost difference, according to some estimates, between India and South East Asian countries is about 10 to 12 percent.

True, some of the interest shown by the global manufacturers is genuine. For instance, Wuhan, the origin of the virus, is considered the nerve centre for automotive sector. The pandemic has caused some multinationals to focus on India for auto components and electronics. Pankaj Munjal, chairman and managing director of auto parts maker Hero Motors Co., told Livmint that he has received several enquiries from companies who have operations in China.

However, any such shifting of production line involves a huge amount of money in initial setup costs. The pandemic has dealt such a body blow to global economy that many companies are not in a position to spend the amount of cash needed to tinker with existing supply chains.

Let us assume that a company manages to raise the cash needed to invest in new operations. Let us also assume that India manages to offer competitive facilities in terms of infrastructure, connectivity, transport and other logistics. However, companies still have a challenge in finding skilled manpower, invest in training regimes and count on policy support, tax breaks, availability of land and slashing of red-tape bottlenecks.

This is where India falls frequently short. India’s proclamations on foreign investment do not match its actions on ground. Lack of land reforms, uncompetitive labour laws, restrictive trade regime and a predatory tax policy scare away most potential investors.

According to an OECD index on FDI restrictiveness covering 68 countries, India possesses the eighth most restrictive FDI regime. As an Economic Times report pointed out, a Property Rights Alliance trade barrier index calculated for 86 countries ranks India as having the most restrictive trade regime bar none.

Writing in The Times of India, David M Sloan, a member of a Washington-based global advisory consultancy, pointed out that unless India is ready to adjust its policies, carry out over overdue labour market and land acquisition reforms and ends “tax terrorism”, along with appointing a PM’s emissary who will listen to investors’ woes and hardsell India’s USPs to leverage the COVID--induced crisis, India might as well forget displacing China.

Placement as a potential market

Manufacturers choose destinations for production line based also on which end of the market they are targeting. While Thailand and Malaysia compete for higher-end sectors “their ages price them out of labour-intensive work such as stitching shirts and sneakers that is more likely to go to Bangladesh, Myanmar or Cambodia,” as per a Reuters report. Vietnam is going for both ends of the market, while Taiwan has given Taiwanese firms located in China huge breaks on tax, land, water and electricity.

As discussed, rerouting of supply lines involves huge upfront costs. This is one of the reasons why Japan has designated $2.2 billion of its stimulus package to help firms shift production out of China. Sadly, for all its trumpeting inviting foreign investment, India has announced no sector-specific incentives, targeted tax breaks or given a promise to carry out much-needed reforms that could be politically controversial.

Further, we have seen no definite policy measures to exploit India’s advantage of a long coastline along eastern shores that is strategically placed to connect with Asia-Pacific markets, allowing for optimised supply chains and minimum transportation costs.

Chinese resilience

Finally, any talk of India benefitting from the disruption caused by the pandemic overlooks the resilience of Chinese supply chains and China’s centrality in global economy. Instead of a clean relocation, most manufacturers are looking at a ‘China plus one’ strategy where companies diversify while maintaining their presence in China.

The ‘China-plus-one’ strategy requires the new location to be proximate to China, and that is a big reason why Vietnam — whose cities such as Hai Phong are just 865 km away from China’s manufacturing hub of Shenzhen — has emerged as a top destination.

“By situating manufacturing centers close to traditional hubs in China, manufacturers are able to reduce costs with limited interruption or delays to existing supply chains,” an article in China Briefing pointed out.

There’s more. Though COVID-19 originated in China, the country managed to overcome the pandemic and restart its economy even as the world struggles with the virus — reinforcing the very reasons that attracted global businesses to China in the first place.

India is eyeing higher end of the manufacturing chain since it already has a domestic supply line on production of mobile phones, but these aspirations confront the reality of the efficiency of Chinese system.

For instance, Katy Huberty, head of equity research for North America Technology Hardware at Morgan Stanley was quoted as saying: “Technology vendors are encouraged by the pace at which China’s production has ramped up post the COVID-19 shock, and this has reinforced their belief in locating the production of their high-volume products in China. This provides reassurance that China will remain a large base for manufacturing in these products.”

German newspaper DW reported that more than “70% of companies surveyed by the American Chamber of Commerce in China (AmCham China) in March said they had no plans yet to relocate production and supply chain operations or sourcing outside of China due to COVID-19.”

While China’s centrality in global supply chain has caused huge amount of losses and bottlenecks, while its actions in abetting the spread of the pandemic has angered nations, the factors that drove its centrality in global value chains remain intact, and India will have to go a long way before it can dream of weaning that away.

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velmaemyers88 · 5 years

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Vietnam Is Getting US Orders From China—But It’s No Trade War Winner

There’s a common saying within the C-suite that a trade war has no winners. But recent reports suggest maybe one victor is emerging from the U.S.-China trade spat: Vietnam.

According to data from Japanese investmentbank Nomura, Vietnam is the largest recipient of product orders diverted from thefeuding nations, as importers attempt to avoid trade war tariffs. The value oforders divertedto Vietnam in the first quarter of the year was equivalent to 7.9% of theSoutheast Asian nation’s GDP. Meanwhile the second largest recipient, Taiwan,only took on additional orders equal to 2.1% of GDP.

President Donald Trump sees that shift as evidence the trade war is working. On Monday morning after Beijing revealed China’s slowest quarterly economic growth in 27 years—rising just 6.2% over the second quarter last year, when the trade war began—Trump tweeted out, “The United States tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving.”

In fact, manufacturers have been emigrating from—or, more often, expanding beyond—China for years. The trade war has added some impetus to that movement, but not every industry can afford to be so flexible.

Stanley Chao, managing partner of All In Consulting, which advises small- and medium-sized enterprises on how to do business with China, says there are a lot of smaller, specialized manufacturers that are stuck in China because nowhere else has an adequate supplier ecosystem.

“They’re waiting for bigger players to make a move so that they can piggyback off of the larger companies into new markets,” Chao says. “That’s exactly what they did in the past. They piggybacked into China.” Despite media reports, Chao adds, bigger companies aren’t rushing to leave China. It can take years to develop new supply chains and, ultimately, China will continue to be a valuable market.

Why Vietnam?

For those that can expand, however, Vietnam is an attractive destination. Wages are low, education is relatively high, and Hanoi has struck Free Trade Agreements with most major economies, as both a sovereign state and as a member of ASEAN. The EU ratified a free trade agreement with the Southeast Asian nation just last month, which will see duties removed on 99% of Vietnamese imports over the next seven years.

At home, the government has invested heavily in promoting high tech manufacturing, opening three multi-billion-dollar science parks across Vietnam’s major cities—Danang, Hanoi and Ho Chi Minh—and is opening three new Special Economic Zones at port towns, to add to the 18 SEZs it already has. It should be noted, however, that the new trio of SEZs have seen stiff opposition from protestors who worry about Chinese industries snapping up land on Vietnamese soil.

“The pace of Chinese investment has definitelyaccelerated in recent months, to the point where there are buses of Chineseinvestors literally running around industrial parks and pointing at plots ofland saying, ‘I want this, I want that,’” says Alberto Vettoretti, managingpartner of Asia-focused consultancy Dezan Shire & Associates.

According to the consultancy, China rose from seventh to fifth place among Vietnam’s leading foreign direct investment contributors in 2018, pumping $2.4 billion into the economy. In the five months through May, China’s rank increased to fourth place; it would be a clear winner if its ranking incorporated investment from Hong Kong, which has injected over $5 billion of capital into Vietnam so far this year.

Entering the Sinosphere

The surge in Chinese investment has pros and cons for Hanoi. Some investors are bringing legitimate business, hiring opportunities and advanced tech. Others, however, are simply speculating on the real estate market as Vietnamese factory space reaches a premium. Worse yet, a number of buyers are opening tariff-dodging assembly plants where Chinese components are repackaged and exported to the U.S. in an illegal practice known as ‘transhipping.’

Vietnam’s customs agency vowed to crackdown on transhipment after finding “scores” of such cases in June, but the violation had already caught the attention of the “Tariff Man” himself.

“A lot of companies are moving to Vietnam, but Vietnam takes advantage of us even worse than China. So there’s a very interesting situation going on there,” Trump said in an interview with Fox Business on June 26. Trump went on to declare that Vietnam was the “single worst abuser of everybody.”

The U.S. commerce department slapped a 400% levy on Vietnamese steel imports at the beginning off this month, since it suspects the material has origins in other countries. Whether the U.S. will ratchet up more pressure on Vietnam is unclear. “No one has a crystal ball,” Vettoretti says. For now, the best thing or Vietnam to do is take advantage of its moment in the spotlight and put some of that increased investment to good use.

More must-read stories from Fortune:

—A Brexit architect sees opportunities in resignation of U.K.’s Trump-bashing ambassador

—Fashion retailers sidestepping Trump’s trade war with China

—Ford’s new plan for Europe: Fewer jobs, more SUVs

—The U.S. threatened France with China-style tariffs. The French didn’t blink

—Listen to our new audio briefing, Fortune 500 Daily

Catch up with Data Sheet, Fortune‘s daily digest on the business of tech.

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altaica1 · 5 years

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Vietnamese private equity : A beginner ’s guide

As Vietnamese PE activity skyrockets, PEI outlines the country's key players, hottest sectors and expected returns.

Vietnamese private equity is having a moment.

PE firms completed 38 deals in Vietnam last year, a 41 percent increase from 2017 and a peak for this decade, according to the Global M&A Review 2018 from business information publisher Bureau Van Dijk. Spending more than tripled to $1.6 billion, second only to Singapore at $7 billion and on a par with Indonesia at $1.7 billion in South-East Asia.

There are a number of factors driving this growth, including a government push to privatise state-owned enterprises, improved corporate governance and a greater number of large companies suitable for private equity investment, Huong Trinh, a Vietnam-based director at advisory firm BDA Partners, told Private Equity International.

Here’s a brief introduction to the country's private equity market:

Who?

Vietnamese private equity boasts only a handful of domestic players. These accounted for just 36 percent of the country’s private equity deals in 2018, according to Grant Thornton’s Private Equity in Vietnam report in May.

Ho Chi Minh-based Mekong Capital is among the oldest and has raised four growth equity vehicles since 2001, the most recent being its $112 million 2015-vintage Mekong Enterprise Fund III. The firm is expected to return to market in H2 2019 with a successor to MEF III, which was 97 percent invested as of early July.

Notable players also include fellow minority investor Vietnam Investments Group, whose $252 million 2015-vintage Fund III is the largest corporate private equity vehicle ever raised by a Vietnam-headquartered firm, and PENM Partners, a Danish private equity firm that invests solely in Vietnam’s mid-market.

Vietnam is on the radar of pan-Asian funds. Warburg Pincus, which owns five Vietnamese companies, completed the country’s largest ever private equity deal last year, investing over $370 million in Techcombank. The firm provided $100 million in a Series C funding round for mobile payments company Momo in January.

London’s CVC Capital Partners, New York’s KKR and Tokyo’s Advantage Partners have also invested in Vietnam through pan-Asian funds within the past five years. Four of the country’s 10 largest private equity deals this decade have occurred in the past two years, according to S&P Global Market Intelligence.

“Over the past five years we’ve seen many more auctions,” Trinh said. “It’s easy to see a single asset with 10 or more interested players.”

What and where?

Investors are most bullish on growth equity, with 75 percent expecting the strategy to grow in 2019, followed by venture capital at 69 percent and buyouts at 67 percent, per Grant Thornton. The report attributed the demand for growth equity to a large number of fast-growing profitable companies with a need for capital. However, it does not specify whether the increase refers to the number of deals or volume of capital raised.

Start-up investments accounted for 71 percent of all Vietnamese transactions last year, up 56 percent from 2017.

Technology is among Vietnam’s hottest sectors, accounting for 40 percent of all private equity transactions in 2018. Investors identified fintech as the most attractive sector over the next 12 months due to government plans to build a cashless society by 2020, with education and renewable energy the next most appealing.

Vietnam’s economy also received an 8 percent boost from Q1 2018 to the first quarter of this year following a shift in production from China due to the US-Sino trade war, according to Japanese investment bank Nomura.

Foreign direct investment reached a four-year high of $16.74 billion in the first five months of the year, 72 percent of which targeted manufacturing and processing, Vietnam’s Foreign Investment Agency said.

The trend could be short-lived after US president Donald Trump hinted at potential future tariffs on Vietnam in late June.

Why?

Investing in a frontier market is not for the faint-hearted and return expectations reflect the additional risk. Almost two-thirds (65 percent) of private equity investors require a 20 percent to 30 percent net internal rate of return on exit from Vietnam, compared with 11.5 percent for Asia-Pacific markets as a whole, per Grant Thornton.

Vietnam delivers: 69 percent of respondents said their private equity portfolios could meet expectations over the next 12 months relative to their benchmarks, while a further 29 percent believed they could exceed expectations.

Mekong’s $50 million Mekong Enterprise Fund II has delivered a 4.6x net return multiple and 22.7 percent, according to its website. The firm's $3.5 million investment in the now-listed MobileWorld in 2007 delivered a 61.1 percent gross IRR and 57x return multiple over a 10.5-year holding period, during which it gradually sold blocks of shares.

Listing is an appealing exit route. Vietnam overtook Singapore as South-East Asia’s top-grossing market for IPOs last year, creating $2.5 billion of proceeds over five listings, according to EY.

“The ideal exit is a full trade sale to a strategic buyer, but [...] it’s very easy to list in Vietnam,” Mekong founder Chris Freund told PEI.

PEI Media Ltd

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lydiamarshall92 · 8 years

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Southeast Asian entrepreneurs to gain insights into New Zealand food and beverage

Top Southeast Asian food and beverage business leaders and entrepreneurs will speak at this month’s New Zealand Food Summit as part of a programme run by the Asia New Zealand Foundation.

The group will also speak at events in Wellington and Auckland, connect with innovative New Zealand food companies, meet with government agencies, and travel to the Waikato and Bay of Plenty to visit high tech agricultural facilities and specialist dairy company Tatua. Their New Zealand visit takes place from March 22 to 29.

ASEAN Young Business Leaders Initiative project manager Adam McConnochie says the Asia New Zealand Foundation is pleased to be giving Kiwi business leaders the chance to better understand consumer behaviour in Southeast Asia.

“New Zealand has a long history of selling food products to Southeast Asia, but less experience with consumer branded products. What better way for exporters to achieve success than by engaging with people who have a local perspective on what consumers respond to.

“The entrepreneurs we’re bringing to New Zealand are very impressive. They’ve created scalable companies in their own countries and broken into large overseas markets. I’m confident that New Zealand businesses can learn a lot from what they’ve achieved.

“It’s also a fantastic opportunity for these Southeast Asian business leaders to learn about opportunities, best practice and innovation in New Zealand, a country they may not otherwise have visited.

“But mostly, this trip is about building strong networks. As New Zealand’s trade ties to Southeast Asia continue to grow, participants will act as an important resource for New Zealanders doing business in the region, and provide valuable insights into ASEAN markets.”

The participants are:

Ms Ade Permata Surya, Indonesia: founder and owner of Hearty Foodie, a snack company that aims to show food in Indonesia can be healthy and tasty.

Mr Alan Goh, Singapore: global sales lead of Oddle, an online ordering system for restaurants that aims to provide a holistic end-to-end solution for merchants, with a presence in Singapore, Malaysia, Indonesia, Hong Kong and Taiwan.

Mr Bui Quang Minh, Vietnam: founder and CEO of Beta Corp, a company focussed on cinema and restaurant concepts in Vietnam. Bui also founded and later sold Vietnam’s first donut chain, Doco Donuts.

Mr Fuadi Pitsuwan, Thailand: co-founder and CSO at Beanspire, an ethical coffee exporter. Beanspire was the first Thai coffee sold by US company Whole Foods and is their best-selling premium coffee.

Ms Hang Do, Vietnam: vice-president of business development at Seedcom, an investment firm focused on retail, logistics, agriculture and food and beverage.

Mr Luong Ngoc Duc, Vietnam: founder and chair of Roselle, Vietnam’s largest supplier of hibiscus products. Roselle is focused on the premium market and exports to Japan.

Ms Talita Setyadi, Indonesia: founder and managing director of Beau, a bakery brand specialising in European artisan bread and pastries with an Indonesian twist and using local ingredients where possible. Educated in New Zealand as a jazz musician, Talita studied at the Le Cordon Bleu cooking school in Paris.

While in New Zealand, they group will connect with innovative New Zealand food and beverage companies, such as Ripe Coffee, CHIA, Wellington Chocolate Factory, Fix and Fogg and Spring Sheep. Those companies have already made connections with Southeast Asian counterparts through the ASEAN Young Leaders Initiative.

“We’ve seen great results from past visits from Southeast Asia with strong ongoing business relationships developing – such as health food company NutriNest using New Zealand Manuka honey for their products in Vietnam,” Adam McConnochie says.

The group will also engage with members of the Foundation’s Leadership Network, a global professional network at the forefront of developing and maintaining strong links between New Zealand and Asia. Its members include Sachie Nomura, the owner of Australasia’s largest Asian cooking school, Sachie’s Kitchen, and others working in a range of sectors.

The seven entrepreneurs are visiting New Zealand through the ASEAN Young Business Leaders Initiative, managed by the Asia New Zealand Foundation for the New Zealand Government. ASEAN is a grouping of 10 Southeast Asian nations with a combined population of more than 620 million. New Zealand has a free trade agreement in place with ASEAN through the ASEAN-Australia-New Zealand FTA (AANZFTA).

About the Asia New Zealand Foundation

The Asia New Zealand Foundation is a non-partisan, non-profit organisation with a range of programmes designed to equip New Zealanders with first-hand experience of Asia and to forge valuable links to the region. Founded in 1994, the Foundation works in five main areas – business, arts and culture, education, media and research. It also runs a Leadership Network and takes a lead role in track II (informal diplomacy) bilateral and multilateral dialogues in the Asia-Pacific region. For more information: www.asianz.org.nz

About ASEAN Young Business Leaders Initiative

Since 2012, the ASEAN Young Business Leaders Initiative has brought more than 60 dynamic entrepreneurs and business leaders from Southeast Asia to New Zealand, building business connections and facilitating trade links. The initiative has also enabled New Zealand entrepreneurs to participate in sector-specific programmes in Southeast Asia, including a food and beverage tour to Indonesia, an agricultural visit to the Philippines and a tech visit to Thailand. The Foundation will be taking a group of food and beverage entrepreneurs to Malaysia in May.

For more information/interviews please contact:

Rebecca Inoue-Palmer Media Centre Manager, Asia New Zealand Foundation +64 4 470 8701 [email protected] www.asianz.org.nz

The post Southeast Asian entrepreneurs to gain insights into New Zealand food and beverage appeared first on NZ Entrepreneur Magazine.

Read the original here: Southeast Asian entrepreneurs to gain insights into New Zealand food and beverage

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brajeshupadhyay · 4 years

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Among the many fundamental changes in human life that the pandemic is likely to trigger, none might be more consequential than altering the way the world does business. COVID-19 has thrown light on a global blind spot. The world has suddenly woken up to the reality that a hegemonic China has become the irreplaceable fulcrum of a globalised economy and is using that leverage to develop untrammeled power. Taking advantage of the established, consensual economic wisdom of a post-Cold War world order that prioritised hyper-globalisation over national boundaries, China built its industrial might over three steady decades by offering a substantial pool of low-cost, efficient labour and wielding authoritarian control over the human resources. How China monopolised supply chains As multinational companies remained fixated on keeping production costs low, and western governments allowed massive outsourcing of manufacturing and industrial capabilities in exchange for financial gains, China exploited the opportunity to monopolise global supply chains. Until the virus raided us, the world overlooked the dangers of putting all eggs in the Chinese basket. As China sharpened its manufacturing prowess and became ‘world’s factory’, it simultaneously developed a complex mesh of internal supply chains and interoperability that made relocation even more difficult, and consequently the world became even more deeply reliant on China-dominated global supply chains. How deep go China’s tentacles? A study by a business intelligence company shows 51,000 companies sourced direct suppliers from Wuhan alone, while “five million companies have one or more tier-two suppliers in the region,” according to Brink. The article quoted another survey highlighting how manufacturers around the world are at the mercy of China. Around 57 percent of companies “are experiencing longer lead times for tier-1 China-sourced components”, a list that includes US tech giant Apple which, despite shifting some production to India and Vietnam, remains critically dependent on China. China’s role as the preeminent supplier of goods and components across nearly all industrial sectors — technology, automotive, electronics, pharmaceutical, equipment or consumer goods — makes a rerouting of global supply chains almost impossible. It is a measure of the disruption caused by the pandemic that such a possibility is being increasingly discussed now. As the virus ravages its way through the world (latest figures put global toll at 248,245) there is a sudden urgency to diversify and relocate manufacturing and supply chains out of China. Pushback against China This pushback is the result of two distinct impulses: geopolitical and geo-economic. COVID-19 has reinforced the reality that China, at best, is an irresponsible power and a malevolent actor at worst that falsifies and suppresses data, spreads misinformation, lies and indulges in predatory mercantilism to achieve its geopolitical objectives. Some of this behaviour was already known. The virus has inadvertently translated that malevolent Chinese behavior into real consequences. Governments around the world — from the US, Germany, Australia to India — are in no mood any more to overlook China’s role in spreading and abetting the pandemic that has killed over two hundred thousand people already and destroyed economies. Many are seeking accountability from China and holding it responsible for irresponsible domestic and international behaviour led by a feral anti-China sentiment in public sphere. In the geo-economic arena, many companies are rushing to repatriate some of their production from China to avoid getting caught again in a situation that the pandemic caused where entire global supply chain collapsed due to over-reliance on one source. This disruption threatens to transform the way the world does business, and it has brought some unexpected opportunities for many nations that seek to benefit from the shifting of production lines away from China. Some of the shift that may happen out of China could also be a corrective measure since China had a disproportionate share of global manufacturing pie. In this respect, the pandemic may have accelerated the trend. A second chance for India? Quite naturally, as the country with the world’s second-largest population, a large pool of skilled, semi-skilled workforce, a young demography and a humongous domestic market, India ranks among the top of these (mostly southeast Asian) nations that are keen to seize the supply-chain opportunities. The pandemic may have devastated global economy and brought economic powerhouses to a standstill, but it has simultaneously opened up larger-horizon prospects for nations like India that now has a second chance, having missed the bus on manufacturing and export-led growth altogether. A lot of hopeful talk is suddenly floating around in Indian media that foreign companies are lining up to tap India as the alternative manufacturing hub, and India is well-poised to capture the tectonic shift. This exuberance is unsupported by facts. Past developments do not inspire confidence. A study by Japanese financial group Nomura found that between April 2018 and August 2019, 56 companies relocated supply chain and manufacturing out of China. Of these, 26 went to Vietnam, 11 chose Taiwan, eight settled in Thailand and only three came to India. Centre’s aggressive bid Make no mistake, India is aggressively pushing for a share of the manufacturing pie. If there was reason enough for India to boost its stillborn ‘Make In India’ initiative, that impulse has now got an added urgency thanks to the prolonged lockdown that has broken the back of Indian economy. India desperately needs foreign direct investment that may boost labor-intensive manufacturing and create jobs to kickstart its economy. In a blog post, Narendra Modi has asked Indians to “rise to that occasion and seize this opportunity” since India has “the right blend of the physical and the virtual” and “can emerge as the global nerve centre of complex modern multinational supply chains in the post COVID-19 world.” The prime minister has taken the lead in holding discussions with chief ministers and Cabinet members to persuade foreign investors to shift their production lines and promote local investments. States have been encouraged to capitalize on manpower skill and improved infrastructure. Media reports indicate Modi has asked chief ministers to develop a “comprehensive plan”. It was discussed that a scheme should be developed to promote more plug and play infrastructure in the existing industrial lands/plots/estates in the country and provide necessary financing support @EconomicTimes — deepshikhas (@deepshikhasET) April 30, 2020 Various strategies to bring investments into India in a fast-track mode and to promote Indian domestic sectors were discussed. Detailed discussions were held on guiding states to evolve their strategies & be more proactive in attracting investments @EconomicTimes — deepshikhas (@deepshikhasET) April 30, 2020 The meeting with Cabinet members that was reportedly attended by Union finance minister Nirmala Sitharaman, home minister Amit Shah and minister for commerce and industry Piyush Goyal, among others, discussed a “scheme to promote more plug and play infrastructure in the existing industrial plot, estates in the country and provide necessary financing support”. Plans were drawn to handhold investors, look into their issues and issue faster regulatory clearances. Dangerous delusions We are being told that coronavirus will trigger “manufacturing exodus from China” due to “rising labour costs, shortages of workforce, a trade war with the United States, the rise of manufacturing hubs in southeast Asia and now a pandemic that originated on its mainland.” This argument claims that India’s huge domestic market will tip the scales in its favour compared to more nimble-footed southeast Asian rivals. Some articles claim about a thousand companies “are currently engaged in discussion at various levels such as investment promotion cell, Central government departments and state governments” and they are apparently attracted by India’s “vast domestic market, cheap manpower, resilience of its economy and a strong democracy” while “regulatory hassles, compliance burdens and policy flip-flop” are the downsides. There also have been reports that US state department is encouraging its businesses to shift production lines out of China to India, and US business captains have apparently been advised by the Donald Trump administration to propose to Indian government to offer incentives in this regard. Not just media, we also witness a reflection of this narrative in government circles where ministers are making a spate of hopeful statements. Union minister Ravi Shankar Prasad was quoted as saying recently that “distrust against China could work to India’s advantage” and anger against China could lead to a boom in electronics sector for India. Prasad’s Cabinet colleague Nitin Gadkari thinks “it’s time to convert ‘hatred’ for China into India’s economic opportunity.” These are dangerous delusions. India has some advantages in its huge domestic market, low-cost, abundant labour, high share of working population and a government (at least verbally) ready to invite foreign investors through policy tweaks and infrastructure upgradation but these advantages are offset by realities, mindsets and political compulsions that cannot be changed overnight. India’s structural shortcomings Let’s start with a bit of statistic. For all the talk about India being a more lucrative destination for investors willing to hedge against overdependence on China, the production cost difference, according to some estimates, between India and South East Asian countries is about 10 to 12 percent. True, some of the interest shown by the global manufacturers is genuine. For instance, Wuhan, the origin of the virus, is considered the nerve centre for automotive sector. The pandemic has caused some multinationals to focus on India for auto components and electronics. Pankaj Munjal, chairman and managing director of auto parts maker Hero Motors Co., told Livmint that he has received several enquiries from companies who have operations in China. However, any such shifting of production line involves a huge amount of money in initial setup costs. The pandemic has dealt such a body blow to global economy that many companies are not in a position to spend the amount of cash needed to tinker with existing supply chains. Let us assume that a company manages to raise the cash needed to invest in new operations. Let us also assume that India manages to offer competitive facilities in terms of infrastructure, connectivity, transport and other logistics. However, companies still have a challenge in finding skilled manpower, invest in training regimes and count on policy support, tax breaks, availability of land and slashing of red-tape bottlenecks. This is where India falls frequently short. India’s proclamations on foreign investment do not match its actions on ground. Lack of land reforms, uncompetitive labour laws, restrictive trade regime and a predatory tax policy scare away most potential investors. According to an OECD index on FDI restrictiveness covering 68 countries, India possesses the eighth most restrictive FDI regime. As an Economic Times report pointed out, a Property Rights Alliance trade barrier index calculated for 86 countries ranks India as having the most restrictive trade regime bar none. Writing in The Times of India, David M Sloan, a member of a Washington-based global advisory consultancy, pointed out that unless India is ready to adjust its policies, carry out over overdue labour market and land acquisition reforms and ends “tax terrorism”, along with appointing a PM’s emissary who will listen to investors’ woes and hardsell India’s USPs to leverage the COVID--induced crisis, India might as well forget displacing China. Placement as a potential market Manufacturers choose destinations for production line based also on which end of the market they are targeting. While Thailand and Malaysia compete for higher-end sectors “their ages price them out of labour-intensive work such as stitching shirts and sneakers that is more likely to go to Bangladesh, Myanmar or Cambodia,” as per a Reuters report. Vietnam is going for both ends of the market, while Taiwan has given Taiwanese firms located in China huge breaks on tax, land, water and electricity. As discussed, rerouting of supply lines involves huge upfront costs. This is one of the reasons why Japan has designated $2.2 billion of its stimulus package to help firms shift production out of China. Sadly, for all its trumpeting inviting foreign investment, India has announced no sector-specific incentives, targeted tax breaks or given a promise to carry out much-needed reforms that could be politically controversial. Further, we have seen no definite policy measures to exploit India’s advantage of a long coastline along eastern shores that is strategically placed to connect with Asia-Pacific markets, allowing for optimised supply chains and minimum transportation costs. Chinese resilience Finally, any talk of India benefitting from the disruption caused by the pandemic overlooks the resilience of Chinese supply chains and China’s centrality in global economy. Instead of a clean relocation, most manufacturers are looking at a ‘China plus one’ strategy where companies diversify while maintaining their presence in China. The ‘China-plus-one’ strategy requires the new location to be proximate to China, and that is a big reason why Vietnam — whose cities such as Hai Phong are just 865 km away from China’s manufacturing hub of Shenzhen — has emerged as a top destination. “By situating manufacturing centers close to traditional hubs in China, manufacturers are able to reduce costs with limited interruption or delays to existing supply chains,” an article in China Briefing pointed out. There’s more. Though COVID-19 originated in China, the country managed to overcome the pandemic and restart its economy even as the world struggles with the virus — reinforcing the very reasons that attracted global businesses to China in the first place. India is eyeing higher end of the manufacturing chain since it already has a domestic supply line on production of mobile phones, but these aspirations confront the reality of the efficiency of Chinese system. For instance, Katy Huberty, head of equity research for North America Technology Hardware at Morgan Stanley was quoted as saying: “Technology vendors are encouraged by the pace at which China’s production has ramped up post the COVID-19 shock, and this has reinforced their belief in locating the production of their high-volume products in China. This provides reassurance that China will remain a large base for manufacturing in these products.” German newspaper DW reported that more than “70% of companies surveyed by the American Chamber of Commerce in China (AmCham China) in March said they had no plans yet to relocate production and supply chain operations or sourcing outside of China due to COVID-19.” While China’s centrality in global supply chain has caused huge amount of losses and bottlenecks, while its actions in abetting the spread of the pandemic has angered nations, the factors that drove its centrality in global value chains remain intact, and India will have to go a long way before it can dream of weaning that away.

http://sansaartimes.blogspot.com/2020/05/covid-19-crisis-puts-chinas-monopoly-of.html

#SEO #Local SEO training #daily news paper #daily news india #daily news newspaper #technology news a

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altaica1 · 6 years

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Vietnamese local property market sees Asian foreign investment rising

The property market in Vietnam saw strong foreign investment activity in the first quarter of 2018, according to a report recently released by property consulting and service firm Savills Vietnam. Notably, the hospitality and resort sectors received heavy investment thanks to the rapidly rising number of tourists.

The local economy posted its strongest first-quarter growth in 10 years as the first quarter of this year witnessed a year-on-year increase of 7.38% and continues to draw interest from investors. Besides this, HCMC is outstanding on investors’ lists, gaining the top position for investment and development prospects in the Asia Pacific region.

Savills’ representative office in HCMC recorded strong demand and high occupancy in quarter one of 2018. However, there were few investment transactions in this sector because of the shortfall of available properties for sale.

Japanese investors were seen steadily pouring capital into the local market in the previous quarter. For instance, the acquisition by Nomura Real Estate of a 24% ownership interest in Sun Wah Tower, a grade A office building in HCMC’s District 1, is one notable transaction. Sun Wah Tower boasts the ideal location and mainly serves well-known foreign corporations around the world. Its owner, Sun Wah Group, has always pledged to invest in the local property market, so it astonished the investor community when it sold part of its shares.

Given rising international tourist arrivals and growing demand for products and services in Vietnam, investors also sought to acquire potential sites and properties in the hospitality sector. Japanese firm Mikazuki Hotel Group announced plans to finance a project in Danang City with US$100 million to develop a five-star complex on nearly 11.5 hectares, comprising a hotel, waterpark, theme park and food court fronting a beach in Danang.

The local real estate market is still attractive to investors targeting mixed-use projects with residential components in major cities. In March, CapitaLand acquired a 0.9-hectare site in a prime location in Hanoi’s Tay Ho District. This latest acquisition will expand CapitaLand’s portfolio to 12 residential areas, one integrated area and 21 serviced apartment areas across six cities in Vietnam.

Keppel Land, a Singaporean property company, acquired the remaining 10% stake in Jencity Limited, which has plans to build a project named “Saigon Sports City” for some US$11.4 million. The project, covering an area of 64 hectares, will comprise 4,300 premium houses with comprehensive facilities for sports, entertainment, shopping and dining.

Investments and merger and acquisition activities are mainly conducted by Asian investors, said Su Ngoc Khuong, Savills Vietnam investment director. In reality, there are plenty of factors shaping the difference between targets and investment methods among these foreign investors, he added.

Singapore, South Korea, Japan, Hong Kong, Malaysia and China are securing the top positions in investing in all segments of the local property market. Their investment lists have reportedly expanded by forming partnerships with local firms.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, the property sector ranked second in terms of obtaining foreign capital in the five-month period of this year, with the total investment amounting to US$1.07 billion, accounting for 10.8% of the total registered investment capital. (The Sai Gon Times Daily – June 28)

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