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Industry Update - Vietnam Auto Sales Down
The total sales of 16 members of the Vietnam Automobile Manufacturers' Association (VAMA) were 11,494 units in May, down by 1,777 units compared to the previous month.
This was the first time the sales of cars decreased in the last one year. However, the signs of the downturn began last month when sales increased by 180 units only in April compared to March.
According to VAMA, Vinamotor saw the most dramatic decrease in sales as its sold units were 1,932, a decrease of 1,588 units over the previous month. The sharp decrease has dropped Vinamotor to the second position in sales, giving up the first position to Toyota Motor Vietnam.
In May 2008, Toyota sold 2,332 units, up by 67 units over the previous month, the smallest increase the manufacturer has seen in its operation history in Vietnam.
Despite the slight decrease over the previous month, GM-Daewoo and Honda still maintained high sales with 1,355 and 626 units sold, respectively. The Spark model was launched onto the market in late May, which means that GM-Daewoo only began accepting orders at that time, and the manufacturer will be able to deliver the first Sparks in late June or early July.
Ford Vietnam witnessed a sharp decrease in sales in May compared to April. Only 482 units were sold in May, down by 227 units over the previous month. The sharp decrease has been attributed to the slide in sales of Ford's popular Everest 4x2, which saw the decrease of 177 units over April with only 139 units sold.
Meanwhile, other manufacturers, including Mercedes Benz, Mekong and Vinastar, had sales volumes rising slightly in May over the previous month.
The sales decreases of the 16 VAMA members have been attributed to the recent increases of the import tax on complete built units (CBU) and tax on car part imports.
Meanwhile, the tentative plan by the Ministry of Finance to raise vehicle registration fees to 10-15%, up by 5-13%, together with its plan to raise the luxury tax, has also been keeping customers away.
Vietnam Real Estate Market Update
In Nha Be District, a rural area of Ho Chi Minh City, land prices have gone through the roof as of January of 2008. For a piece of land of 1,000 square meters which was worth some $US 30,000 in early 2006, may now worth 10 times as much. The real estate and infrastructure developments in recent years in South Saigon might have pushed land pricing in the vicinities. The increases in land prices have been noticed in these districts: 2, 7, Nha Be and Binh Chanh.
Investor speculations, population growth and an influx of foreign investments have been recognized as key factors contributing to the increase in Vietnam real estate. Other causes that propel property prices include demand-supply issue, government regulations, the opening of Thu Thiem Bridge in early 2008, and the down turn in Vietnam stock market. The VNINDEX (Ho Chi Minh Stock Index) has dropped some 30% since March 2007.
Experts predicts that both residential and office rentals are to rise considerably in 2008. Vietnam major cities, Ho Chi Minh City (Saigon), and Ha Noi, are now among the most expensive real estate markets in the world.
Vietnam economy is among the most robust economies in the world with estimated GDP growth rate of above 8% in 2007 and this rate is expected to continue in 2008.
2007 Update - Vietnam Advertising Industry
After two decades of development, since Vietnam's doi-moi policy was implemented in 1986, Vietnam's advertising companies are still far from gaining a significant share of industry revenue estimated about $US 1 billion.
Among the main reasons are shortage of skilled work force, experience, financial capability, and management. According to industry experts, Vietnam has not formulated a clear long-term strategy to compete with foreign advertising companies.
Despite the attractive salary offers, between $US 500-1,000 per month, domestic companies are having problems recruiting competent workers since universities and colleges have not produced up-to-date and capable advertising graduates.
There are more than 1,000 domestic advertising companies that hold about 15% of market share, while the other 30 major foreign advertising firms hold some 80% of Vietnam advertising market. Many multi-national corporations such as Coca-Cola and Unilever are using highly regarded international advertising companies. Among the successful firms are: US-based J. Water Thompson and Ogilvy & Mather.
Figures released by the government sated that some 80 percent of revenue was in television and newspaper advertisements, and about 10 percent from billboards. Vietnam has some 60 broadcast stations, and more than 600 newspapers in Vietnam. Among the most popular stations are: Viet Nam Television (VTV) and Ho Chi Minh City Television (HTV).
According to Vietnam's Ministry of Culture and Information, under WTO commitments, foreign-invested advertising firms will be permitted to establish branches in Vietnam by the end of this year. From 2009, foreign firms will be allowed to form wholly foreign-invested entities, and the existing limit of 49 percent of chartered capital they are permitted to contribute to ventures will be removed.
More on Vietnam Advertising.
An Update on Vietnam Labor Regulations
Vietnam, with a current population of more than 85 million, has an estimated labor force of 45 million (was 38 million in 1998). About 2/3 of the population is under the age of 30. Vietnam has sent some 500,000 workers to work overseas. Working conditions for Vietnam workers are gradually improving.
The minimum age for full-time employment is 18. Vietnam labor law has special provisions for workers between 15 and 18 years of age. Many children have reportedly worked in violation of this law. The law established working hours at eight hours per day with a mandatory 24-hour rest period per week.
The state-controlled VGCL (the Vietnam General Confederation of Labor) is the sole labor organization, and all workers automatically become members. Vietnamese workers were not free to choose or form independent labor unions.
The government prohibited strikes at organizations that serve the public or are important to the national economy or defense, and the Prime Minister decides what organizations come under that definition. Most strikes occur against foreign-invested businesses.
The labor law requires the government to set minimum wages. Effective in 2006, the minimum wages per month at foreign-invested companies have been increases: $US 55 in HMC City and Hanoi, $US 50 other major cities, and $US 45 other areas. The rate was set at $US 30 for foreign-invested joint ventures in 2002.
In 2002, Vietnam agriculture sector (including forestry and fishing) employed nearly 2/3 of the labor force, and 1/3 in industry, construction and service sectors.
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