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Money once poured into real estate now goes to fashion

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Real estate, in the eyes of investors, is the most profitable and least risky business field.

Money once poured into real estate now goes to fashion

Nguyen Manh Thang, director of an investment company in Hanoi, is well known for his education projects. However, he has now injected money into real estate.

Thang said as schools have been hit hard by Covid-19, he has had to shift to another business. Thang and a group of investors are developing a housing project in Thai Nguyen.

“Real estate is the most profitable sector and the risk is low,” he said.

A report released at a seminar held in late 2020 in Thanh Hoa showed that among the country’s more than 12,000 millionaires, 90 percent of them had invested in realty, and among the 100 richest people in the country with fortunes of more than $30 million each, investment in the real estate sector had reached 99.1 percent.

Analysts said investors fear that the inflation rate will escalate as countries pump more money to recover the economies in the post-Covid-19 period. In this condition, it would be wise to invest in real estate, which helps preserve capital and serves as shelter for the time being.

Do Tien Dung company has been making big profits from car sale, but he still decided to invest in real estate. In 2020, his business in HCM City invested in a seafront real estate project which now brings profit of 10 percent.

Dung will expand investment in the real estate sector because land has become cheaper because of Covid. He is busy surveying the land prices in some provinces to prepare for the next projects.

“You can only get rich if you invest in real estate” is the popular saying of investors. The recovery period of the real estate market in 2014-2019 was considered the golden time for investors to make money. The profit that surfing investors could earn was up to 150 percent.

The General Statistics Office (GSO) reported that in the first four months of 2021, the number of newly established businesses increased by 17.5 percent compared with the same period last year. Real estate was the sector with the highest number, with 2,727 businesses registered, an increase of 56.5 percent.

This year the shareholder meeting season witnessed a series of businesses announcing plans to jump into the real estate sector.

Thanh Cong Textile and Garment (TCM) is cooperating with a Vietnamese partner to speed up legal procedure compliance for the TC Tower project in Tan Phu District, HCMC.

A manager at TCM said the company expects to have revenue and profits from the real estate investment in 2-3 years.

Gilimex, a textile company, has also developed industrial real estate with IZ projects in Quang Ngai and Thua Thien-Hue. It wants to develop a land bank to develop a chain of hotels serving industrial zones (IZs) in key economic areas of Binh Duong, Dong Nai, Bac Ninh, Hai Phong and HCM City.

Most recently, Gelex, an electric equipment manufacturer, has made public its new strategy under which the company would divest from the logistics sector and head for industrial property.

Analysts said investors fear that the inflation rate will escalate as countries pump more money to recover the economies in the post-Covid-19 period. In this condition, it would be wise to invest in real estate, which helps preserve capital and serves as shelter for the time being.

Prior to that, Gelex announced a plan to develop hotels, commercial services and offices for lease in Hoan Kiem District, Hanoi.

Shareholders of Cholimex, which has advantages in import and export, have approved a plan to invest in industrial real estate. The company now has three projects in Vinh Loc IZ.

High risks

In principle, high profits are associated with high risks and stiff competition. A lot of investors have actually got ‘bogged down’ in the real estate market.

Mai Linh Group is an example. After conquering the taxi market, Mai Linh shifted to real estate, building a workshops and offices to serve transportation activities. But the projects failed. The group had to sell some projects to get money for debt payments.

President of Son Ha Group Le Vinh Son told the press that after he divested from real estate projects he had a ‘terrible’ lesson from the real estate investment.

After overcoming the dark period of his time, Son said: “I promised to shareholders that I won’t make investment in real estate for five years. The five-year period is going to end, but I believe that after five years, I will still decide not to invest in real estate.”

Thuan Thao, a well known transport firm in the south, is another failure.

In 2009-2013, Thuan Thao had the highest number of large real estate projects in Phu Yen, including the 5-star Cendeluxe, an entertainment and ecological center, Thuan Thao Land conference and exhibition center, Resort & Spa Golden Beach, and Sao Mai Theatre with the total investment capital of trillions of dong.

But the projects are burdening the company. In mid-2019, Cendeluxe Hotel and Thuan Thao Conference and Exhibition Center were put into auction by Viet Tin Company at the starting price of VND500 billion, but the auction failed.

In Hanoi, the gold inlaid Habico Tower has become the bitter end of Hai Binh JSC, which was established as a petroleum equipment trading company and then jumped into the real estate sector. The tower is now a deserted 9-story concrete block.

Sohovietnam’s President Phan Xuan Can said real estate is no longer a super-profitable business field, so investors need to be cautious when pouring money into it.

The competition in the market is getting fierce and in order to compete with other developers, businesses need to have long-term vision and strong financial capability, while their products need to have good living space and reasonable costs to satisfy customers’ requirements. 

Tu Giang

Source: https://vietnamnet.vn/en/feature/money-once-poured-into-real-estate-now-goes-to-fashion-747830.html

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Analysts praise VIB’s business strategies at meeting for Q2 business results

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Three VIB representatives joined the online event. — Photo courtesy of the bank

HÀ NỘI — The Vietnam International Bank (VIB) organised an online meeting with the participation of more than 180 representatives from large funds, securities companies, independent analysts and the press.

The online meeting discussed three main topics, including VIB’s strong business results in the first half of 2021, key business strategies that have helped VIB become the top retail bank in Việt Nam and digital banking – the future of retail business.

During the event, VIB representatives reported on the bank’s business results in the first half of 2021 while sharing the strategy of maintaining high and sustainable growth momentum that the bank has ensured for many years and its support for customers and the community amid complicated developments of the COVID-19 pandemic.

Since the pandemic hit Việt Nam, VIB has offered many reductions in lending interest rates for corporate and individual customers to help them overcome this difficult time.

The bank has restructured debt for more than 3,000 customers under the Circular 01 and 03 issued by the State Bank of Việt Nam, VIB Chief Financial Officer Hoàng Linh said at the event.

It has also slashed lending rates by between 0.5 and 2 per cent for nearly 10,000 clients affected by the pandemic, he said. 

Recently, VIB continued to reduce lending interest rates for individual and corporate customers with an average interest rate reduction of 1.5 per cent from July 15, focusing on customers severely impacted by the pandemic, Linh added.

Thanks to VIB’s timely and effective assistance, the outstanding balance of the restructured loans was paid in full and on time by most customers, helping the bank’s total loan balance decrease.

NIM expansion

Meanwhile, VIB has also continued to expand its Net Interest Margin (NIM) by promoting the development of the retail segment and optimising funding costs.

A report from the bank showed that the NIM trend in the last six quarters had improved significantly due to the reduction in Cost of fund (COF). VIB’s COF decreased from 5.4 per cent in the first quarter (Q1) of 2020 to 3.8 per cent in the second quarter (Q2) of 2021. Meanwhile, NIM increased from 3.9 per cent in Q1/2020 to 4.6 per cent in Q2/2021.

Linh said the bank has actively optimised the funding cost by promoting the growth of Current Account Savings account (CASA) while increasing low-cost funding sources on the international market.

Charts show VIB’s strong NII with sustainable and improving NIM. —  Photo courtesy of the bank

Recently, the bank signed a syndicated loan worth US$260 million over three years with the Asian Development Bank (ADB) and a number of international financial institutions.

“VIB is also implementing a plan to digitise all CASA and deposit products to further grow this capital source,” Linh said. 

As of June 30, VIB’s total assets reached over VNĐ277 trillion; its credit balance was over VNĐ185 trillion, 8.1 per cent higher than the beginning of the year, while deposits from customers increased over 12 per cent year-on-year.

VIB’s NPL ratio decreased to 1.3 per cent. With strict risk management, the bank has maintained its risk indicators and prudential ratio. Capital adequacy ratio (CAR) according to Basel II was recorded at 10.3 per cent, the loan-to-deposit ratio stood at 73.1 per cent.

Effective retail business strategy

With its effective retail business strategy, VIB’s outstanding retail balance experienced positive growth at 14.2 per cent in the first six months of this year, accounting for nearly 90 per cent of total outstanding credit balance amid the pandemic.

The retail portfolio has also helped VIB reduce concentration risks and better adapt in the current volatile market environment. It is also one of the banks that has the highest retail credit portfolio in the country. 

In her speech at the event, Trần Thu Hương, Head of Strategy and Head of Retail Banking, outlined mortgage loans such as real estate, automobiles, credit cards, and insurance as VIB’s market-leading business segments. 

After five years of transformation, VIB was among the Top 4 joint-stock commercial banks in terms of retail loan balance by the end of 2020 and this position may change in 2021, Hương said, adding that the retail segment accounted for 70 per cent of the bank’s pre-tax profit in 2020, from 21 per cent in 2016.

“VIB’s business strategies prioritise gradually receiving positive results from the automation and digitisation of sales and after-sales service in the retail segment,” Hương said. 

Also at the event, analysts questioned that as the leading bank in terms of auto loan market share for five consecutive years, whether VIB had difficulties in bad debt management and debt recovery, especially in the context of social distancing and the impact of the pandemic.

Hương said: “VIB is not only the leading bank in terms of sales but also the industry leader in risk management of the auto lending segment. VIB applies a strict risk appetite right from the product development stage and the customer’s debt repayment requirements, the loan to value (LTV) ratio is always below 80 per cent, closely evaluates collateral, and at the same time with selective lending: 90 per cent of auto loans are new car loans for consumers, concentrating on the top car brands in the market.”

“Thus, with a tight risk appetite from the upstream, after 18 months since COVID-19 pandemic started, the bad debt ratio of the retail segment in general and the auto segment in particular at VIB has almost remained unchanged,” Hương said. 

Talking about VIB’s outstanding areas of bancassurance and credit cards, Hương said VIB is currently ranked in the Top 1 and Top 2 for many consecutive years in the bancassurance business. Despite social distancing, VIB has maintained its top bancassurance sales in recent years, thanks to digital sales platforms and digital solutions that have been implemented by VIB in the last two years.

“The cake is huge for everyone to join in and do a good job. Việt Nam’s bancassurance premium to GDP ratio is less than 1 per cent, compared with an average of about 10 per cent of other countries in the region.”

Regarding the credit card business, Hương said the bank’s credit card opening and card spending rates reached the highest-ever level in the bank’s history as VIB is a pioneer in applying modern technologies to daily life. From the opening stage to usage, it is completely online, besides others outstanding features that VIB applies in Việt Nam.

After more than two years of strong implementation of the credit card business, the bank has successfully applied artificial intelligence (AI) and big data processing (Big Data), along with modern technologies such as e-KYC and e-Signature in the credit card approval process, setting a new record for processing and approval period until the card is used: only 15-30 minutes, equal to 1/500 of the average time in the market. As a result, VIB continues to be in the top position in terms of growth in the number of credit cards and spending on cards, ranked second in the whole market, according to a report by the Vietnam Card Association.

 “This confirms that our credit card development strategy is promoting our strengths in technology, unique product features, and the outstanding customer experience in the market,” Hương said.

Answering questions from some fund representatives on whether VIB would consider expanding its customer base through developing strategic partnerships with other companies, Hương said that VIB focuses on developing digital banking, with digital solutions to be able to reach a diverse set of customers instead of targeting a few specific customer groups.

In her speech, VIB’s representative also expressed optimism and confidence in the policies of the State Bank of Việt Nam and the Government in both protecting the community against the pandemic and facilitating economic activities. 

A VIB logo is seen at the bank’s head office in HCM City’s District 1. —  Photo courtesy of the bank

Pioneering in digital banking 

VIB has the leading technology platform in the market. The bank has pioneered the application of technologies such as Big Data, AI, and cloud computing in transactions to make the online payment experience of customers easier and more convenient.

Trần Nhất Minh, Deputy Chief Executive Officer and Chief Digital Officer, said VIB’s digital banking experienced an impressive registration growth of 130 per cent in 2020. Customers can easily open cards for payment, account opening, online savings, money transfer, and other banking services at home instead of going to a branch. 

VIB has also offered many 100 per cent digital products while cooperating with partners such as Ho Chi Minh City Securities Co (HSC) and VNDirect securities company to better support customers.

“The bank’s CASA ratio is currently at 13 per cent and there is much room for growth in the future, helping to maximise capital expenditure and expand NIM. These factors help VIB become one of the top banks in terms of online transactions which account for 91  of the total number of transactions,” Minh said. 

In the future, VIB representatives said the bank will continue the outstanding achievements of the 10-year transformation programme to maintain its leading positions in retail and technology in particular and at the same time exceed its challenging business goals in 2021. — 

Source: https://vietnamnews.vn/economy/1004260/analysts-praise-vibs-business-strategies-at-meeting-for-q2-business-results.html

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Businesses dig deep to make sure they come out on other side of pandemic intact

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A customer tries to book a quarantine hotel service on Traveloka app. Traveloka and many businesses in Việt Nam are making efforts to survive the forth wave of COVID-19 pandemic. — Photo

Thu Ngân

HCM CITY — Businesses in Việt Nam are making all efforts to survive the fourth wave of COVID-19 which is battering the country.

Giant food producer KIDO Group said in a recent press release it has adopted a number of solutions to adapt to the new situation and keep production going while also ensuring safety.

A spokesperson told Việt Nam News that to ensure uninterrupted production, the company has adopted the “3 on-site” model, which involves on-site production, dining and rest, for over a month.

It unfailingly complies with the provisions of the Government’s circular No 16 and 5K message, he said.

It is also preparing for life after the pandemic, he said.

“We are ready to bring new products and segments into the market immediately after COVID-19 is controlled.”

It plans to introduce the Vibev brand of products made in collaboration with Vinamilk.

Another plan is to introduce Chuk Chuk, a new food and beverage brand, opening 1,000 stores by 2025.

The company’s general director, Trần Lệ Nguyên, said the first market for Chuk Chuk would be HCM City, and stores would open in Hà Nội and some northern provinces by September if the pandemic is controlled by then, adding it would be present across the country by 2025.

Ride-hailing and delivery company Grab has rolled out a number of programmes to help customers buy foodstuffs.

To ensure the safety of its drivers and customers, it has tied up with the General Department of Vocational Education and Training to fully equip its drivers with the necessary skills and competencies.

They have also jointly built and standardised the training materials, and drawn up communication plans for raising awareness about vocational skills development for drivers.

Trương Anh Dũng, director general of the department, said: “The COVID-19 pandemic has had a great impact on the Vietnamese economy, and drivers cannot be immune to it. This partnership helps resolve long-term problems for technological drivers, equipping them with the necessary skills to sustain and improve not only their livelihoods but also the quality of life of themselves and their families.”

Grab also has a programme to support disadvantaged people in HCM City in co-operation with Golden Lotus Foundation. It provides free meals to people economically affected by the pandemic or living in locked-down areas.

To start with, around 11,500 meals would be provided, it said.

Tourism is one of the many sectors badly hit by the pandemic, and many businesses in it have been striving to overcome the challenges they face. 

For instance, before the semi-lockdown began weeks ago some hotels had begun to offer co-working space to provide customers with a safe working environment.

Now, with stricter social distancing regulations, they have changed their strategy and offer quarantine facilities, and this has received strong support from customers.

Recently a Southeast Asian travel and lifestyle superapp, Traveloka, announced that it is working with the HCM City Department of Tourism to help the city’s residents find and book hotels and transportation to enable quarantine. 

Demand for quarantine facilities has increased along with the developments of COVID-19 in HCM City, and its quarantine hotel and transportation online booking and payment solutions are expected to help curb the spread of the pandemic by limiting direct contact between people, Traveloka said. 

They have been available since the start of August. 

Lê Trương Hiền Hoà, director of the HCM City Tourism Promotion Centre, hailed the partnership, saying: “With support from Traveloka, HCM City is the first city in Việt Nam to digitise the quarantine hotel booking process … and will extend it to international arrivals in the near future. 

“It also helps hoteliers switch their business model to survive amidst the COVID-19 pandemic.”

With the aid of the app’s advanced technologies, customers can easily access complete information about room types, prices and transportation options in real-time, and pay for it via Traveloka. 

Traveloka said it is partnering with more than 80 hotels and selected transportation partners across HCM City, including private cars and shuttle buses. 

MVV Academy, a pioneer organisation for comprehensive, on-site and advanced resource development solutions in Việt Nam, decided to organise training programmes to make its staff sales consultants and brand ambassadors to introduce its products to the public. 

It also recently launched MVV Uni, an advanced training platform that offers working professionals an interactive and flexible experience to support their various learning needs, and acts as a one-stop-shop with courses in all essential business skill sets such as leadership, sales, marketing, management, soft skills, and digital transformation.

“The COVID epidemic has disrupted many human resource training activities at Vietnamese enterprises,” Bùi Đức Quân, CEO of MVV Academy told Việt Nam News.

“Taking advantage of the strength of technology, combined with experience in content building and understanding of learner experience through operating platforms such as TopClass and Everlearn, we quickly built a solution, MVV Uni, to offer enterprises training programmes for their employees during Covid.

“Our ambition is to build a university community on the cloud.” —

 

 

 

Source: https://vietnamnews.vn/economy/1003623/businesses-dig-deep-to-make-sure-they-come-out-on-other-side-of-pandemic-intact.html

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COVID-19 forces banks to accelerate digital transformation

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The COVID-19 pandemic not only creates challenges for banks, but also pushes them to foster digital transformation to survive, experts have said.

COVID-19 forces banks to accelerate digital transformation
A customer makes payment via a QR code. The COVID-19 pandemic pushes bank to foster digital transformation to survive. — Photo laodong.vn

A recent survey by the State Bank of Vietnam found that 95 per cent of credit institutions in Vietnam have either implemented digital transformation strategies or are in the process of formulating them.

It is expected that in the next three to five years digital-only banks will have revenue growth of at least 10 per cent, while regular lenders will have more than 60 per cent of customers using digital transaction channels.

State-owned banks seek to digitise their entire system, while smaller banks have identified certain areas to improve service quality and the customer experience.

Commenting on digital banking development in Vietnam at an online talkshow IDG TekTalk on Tuesday, Phan Viet Hai, director of information technology and also the digital banking centre at Viet Capital Bank, said digital banks must create a superior customer experience by changing the way services are provided using technology.

Nguyen Quang Minh, deputy CEO, partnerships, Timo Digital Bank, said, “In addition to offering perfect and up-to-date financial products and services, we also have to really understand the market, customers’ needs and expectations and more importantly, identify the problems and difficulties they are facing every day in each transaction.”

Pham Quang Minh, general director of Mambu Vietnam, said banking services have changed greatly in the past few years. In Asia, including Vietnam, rising customer expectations for online and mobile banking services are the driving force behind the digital transformation of financial service providers.

Nguyen Van Tuan, deputy general director of VCCorp & founder of Bizfly Digital Transformation, said currently banks are not only competing with each other but also with rapidly growing fintech companies, which have created “amazing” services and experiences through digital technology and transformation.

For succeeding at the digital transformation, the determination shown by a bank’s bosses plays an important role, he said.

“Technology contributes only around 30 per cent to the success with the remaining 70 per cent being owed to other factors like the mindset of businesses’ leaders and digital transformation,” he added.

According to experts, banks still face challenges in digital transformation related to regulations on electronic transactions, data sharing, network security, and an inadequate legal framework among others.

They said completing a comprehensive legal framework would provide a fillip to digital transformation.

The standardisation of technical infrastructure is also very important to facilitate interconnection and seamless integration between the banking industry and others to form a digital eco-system, they added.

Yeo Siang Tiong, cybersecurity company Kaspersky’s general manager for Southeast Asia, said: “Digital transformation, in any sector, always presents new challenges, but especially for banks and for financial services. To put it simply, revolutionising banks’ way of doing transactions means overhauling their legacy systems including people, processes and technologies.”

Humans remain the weakest link, especially those who lack proper awareness of the simplest risks like phishing and spam, while employees require new training and third-party services should be assessed comprehensively, he said.

“When it comes to security, the endpoint should be the foundation and banks should have known this by now. Financial services should be looking at an adaptive approach in security, which should be proactive rather than reactive – ready before an attack happens.” 

Online transaction increases

Due to social distancing restrictions amid the pandemic, online payment has become more convenient than cash, and, with just a smartphone and banking application, users can save, borrow money, pay for electricity, water, television, and internet bills, buy movie and airplane tickets, make hotel reservations, or even buy vegetables or meat online.

Pham Tien Dung, head of the State Bank of Vietnam’s payment department, said online transactions in the first four months of the year jumped by 66 per cent in terms of numbers and 31.2 per cent in value year-on-year, including 86.3 per cent and 123.1 per cent on mobile phones and 95.7 per cent and 181.5 per cent using QR codes.

Statistics from the National Payment Corporation of Vietnam, show that in the first five months its automatic clearing house processed over 800 million transactions worth over VND8 quadrillion ($347.7 billion), an increase of 113 per cent and 169 per cent.

A recent survey by Visa also revealed strong increases in the use of e-wallets, contactless payment via cards and smartphones and QR Code. The year-on-year growth rate of the total e-commerce transaction value in the first quarter of 2021 rose by 5.5 times compared to the fourth quarter of 2020.

Source: Vietnam News

Source: https://vietnamnet.vn/en/business/covid-19-forces-banks-to-accelerate-digital-transformation-763095.html

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