DOING BUSINESS IN VIETNAM 2021

The World Bank’s ranking assessment ranks the LPI of each country into 4 groups, corresponding to the level of per capita income, with which we see a correlation. Germany ranks first in LPI performance among high- income countries; China topped the upper middle income group; Vietnam also ranks first in the group of low- middle-income countries. Vietnam jumps three Spots in Global Index of Emerging Logistics Markets Vietnam jumps three spots to eight in the 2021 Emergig Markets Logistics Index released by leadig logistics company Agility Logistics index 22021 8.86 8 7.33 The Emerging Markets Logistics 6 6.30 6.29 6.15 5.95 5.91 5.67 5.67 5.61 Index ranks 50 economies based on factors that make them 4 attractive to logistics service providers, freight forwarders, 2 shippings lines, air carriers, and distributors. * The United Arab Emirates RANK 1 2 3 4 56 7 89 10 Source: Agility Rank change 0 0 +1 -1 0 0 +1 +3 -2 0 China India Indonesia UAE* Malaysia Saudi Mexico Vietnam Qatar Turkey Arabia The World Bank’s report in 2018 also ranked Vietnam’s LPI at 39 out of 160 countries participating in the study, up 25 places compared to 2016 and ranked third among ASEAN countries. Vietnam LPI Index 2018 Timeliness LPI Customs Infrastructure 5 4 3 2 1 Tracking & tracing Logistics competence International shipments DATA TABLE Toggle Rank and Score for Subindicators Country Year LPI LPI Customs Infrastructure International Logistics Traking Timeliness Vietnam 2018 Rank Score & tracing 3.67 shipments competence 39 t 3.45 2.95 3.01 3.16 3.40 3.27 49

The fact that Vietnam signed the Kyoto Convention With the score of 3.45 for the fifth variable on the Simplification and Harmonization of Customs that makes up LPI, tracking & tracing, we can Procedures and many other FTAs such as CPTPP and associate with the fact that, the digitalization and EVFTA proved that Vietnam has constantly been e-commerce practices become an obvious trend, looking for ways to facilitate international trade. together with newly effective FDIs, such as EVFTA, Efficiency of the clearance process by border control VUFTA and RCEPT, enabling increased flow of agencies (Customs) was scored 2.95. exports imports, so tracking & tracing metrics must be upgraded in the immediate future. With regards to infrastructure, without strong infrastructure, it becomes very difficult to move The final metric of LPI is Timeliness, Vietnam score goods from point A to point B. Without the was recorded at 3.67. The restraining forces for movement of goods, there is no trade occurring the timeliness score were the prevalence of the and no trade growth overall. With the score being coronavirus outbreak that disrupt the supply chains, 3.01, Vietnam has more room for improvement the lack of coordination efforts in streamlining the in this sector, but when the policy as well as the line inspection practices. The driving forces are the infrastructure projects are in place, this landscape digital transformation of grass root businesses as comes alive. well as the acceleration of e-commerce. International shipments show little improvement The government’s target is to raise the country’s LPI with score being 3.16, and this score can be improved ranking by five to 10 places by 2025. To meet this by opening up the shipping market in Vietnam target, it plans to upgrade infrastructure, improve through recently signed FTAs such as EVFTA, VUFTA. the distribution capacity, promote the competence and quality of logistics services, maximize the In terms of logistics competence, the score stood ability to track and trace consignments, reduce at 3.40. When the domestic logistics market performance times and costs, and enhance the becomes more liberalized, the competitive pressure efficiency of customs clearance. accompanies as well as the M&A occuring require logistics competence to be upgraded. 3. Investment in infrastructure Since infrastructure is a key index to assess the attractiveness of the local market in general and the logistics market in particular, the Vietnamese government is also conscious of the importance and significance of infrastructure reflected partly by the high ratio of investment in infrastructure to GDP as compared with regional countries. Infrastructure investment need, 2016-2040 Infrastructure quality Percent of GDP 1 - 7 best Road Overall n Vietnam n Asia Rail n Vietnam 5 Airports Electricity 4 Road n Asia supply 3 Ports 2 Telecoms n Low and lower 1 middle income 0 Electricity Ports Railroad Water 0.0% 0.0% 1.0% 1.5% 2.0% 2.5% 3.0% Air transport Source: Oxford Economics Source: The Global Competiveness index historical Dataset @ 2005-2015 World Economic Forum 50 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

Vietnam Among Asian Biggest spenders on Infrastructure Vietnam, one of the world’s fastest growing economies, is promoting infrastructure to attract more foreign investment, with a view of becoming a new “Asian tiger”. Vietnam’s infrastructure investment / GDP is the highest in South East Asia China 6.8 GDP PLAN TO 2020 Vietnam 5.7 Invest 5.4 India Indonesia 2.65 480 11 power plants with a Myanmar 2.5 total capacity of 13.200 Singapore 2.3 billion USD Philippines 2.2 megawatts (MW) Malaysia 1.8 1.65 1.380 km Thailand of expressway Other projects Environment, health, education and etc. Source: Asian Development Bank (ADB) AVIATION: LONG THANH INTERNATIONAL AIRPORT 1. Scale, capacity: 100 millionn passengers/year, 5 million tons of cargo/year l Phase 1: Invest in 01 runway and 01 passenger terminal with a capacity of 25 million passengers/year and 1.2 million tons of cargo/year l Phase 2: Investt in one more runway and one more passenger terminal, increasing the capacity to 50 million passengers/year and 1.5 million tons of cargo/year l Phase 3: Complete items 2. Total investment US$5.4bn for Phase 1 with funding from enterprises, state budget and ODA 3. Implementation status Finished the architecture, currently bidding for FS consultants 4. Expectation Investment direction approved byy the National In 2019 - 2020: bidding to selects investors Assembly in Decree No. 94/2015/QH13 dated 25/6/2015 for PPP components and start the technical design by state budget. 2021: start investment 51

4. The development status of Vietnam’s According to the Vietnam Logistics Business logistics industry – the insider view Association (VLA), the growth rate of the logistics industry in Vietnam in recent years has reached 14 - Government regulatory policies toward facilitating a 16%, with a scale of 40 - 42 billion USD/year. conducive environment for logistics industry Decision No. 221/QD-TTg dated February 22, 2021 of There are about 3,000 local logistics companies the Prime Minister amending and supplementing and more than 30 transnational logistics provider Decision No. 200/QD-TTg dated February 14, 2017 operating in Vietnam market with big names such approving the plan to improve competitiveness and as DHL, FedEx, Maersk Logistics, APL Logistics, developing Vietnam’s logistics services by 2025, set CJ Logistics, KMTC Logistics...Vietnam’s logistics the target: “By 2025, the contribution of logistics market is equivalent to 21-25% of GDP and foreign services to GDP will reach 5% - 6%, the growth rate logistics make up 80% of the market share of logistics services will reach 15% - 20%. , the rate of outsourcing logistics services reaches 50%-60%, According to research firm Orbis Research, in logistics costs decrease to equivalent to 16% - 20% essence, most logistics service providers in Vietnam of GDP, ranking according to the world LPI index are still small and medium-sized enterprises, reaching 50th or higher. providing low value-added logistics services, 90% have registered capital under 10 billion VND, only about 5% have capital in the range of 10 - 20 billion VND, the rest have more than 20 billion VND. TOP 10 freight forwarding, warehousing, express and transportation companies in Vietnam 2019 Forwarding, warehousing and express Cargo transportation companies companies l PV Trans Corp l Viettel Post JSC l Vinalines l Gemadept Corp l Pacific Petroleum Transportation JSC l Vietnam Post (VNPost) l Petrolimex Tanker Corp l Saigon Newport on member limited liabillity Corp. l Vietnam Tanker JSC (VITACO) l DHL (Vietnam) l International Gas Product Shipping JSC l Indo Trans logistics Corp. (ITL) l Tan Cang Waterway Transport JSC l Transimex JSC l Southern Waterborne Transport Corp. l Expeditors Vietnam Ltd l Vietnam Petroleum Transporrt JSC (VIPCO) l South Logistics JSC (Sotrans) l Traco Transport JSC Corporation No. 1 l Hop Nhat International JSC Source: Report by Vietnam Report, published on December 2019 52 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch



5. Impacts of FTAs on logistics 5.1. Market access commitment development & Market access DECREE ON PROVISION OF Logistics Industry Opening Up to Foreign LOGISTICS SERVICES Players: Following Vietnam’s 2007 World Trade Organization (WTO) accession, foreign investors (No.163/2017/ND/CP) were allowed to set up joint-venture logistics companies. Since 2012, it has been permissible According Article 4. Conditions to be satisfied by a for wholly foreign-owned enterprises (WFOEs) foreign investor in provision of logistics services to provide international maritime transport are stipulated as follows: A foreign investor in and courier services. In line with its WTO the country or territory that is a World Trade commitment schedule, Vietnam’s logistics Organization member may provide logistics services sector further opened up from January 2014. under the following conditions: As of that date, WFOEs have been allowed to provide container station and depot services, a) For cargo transport services classified as sea storage and warehouse services, as well as transport services (except for inland transport): freight transport agency services. – The foreign investor may establish companies operating ships flying the Vietnamese flag or The implementation of the Vietnam-EU Free contribute capital, purchase shares or stakes in Trade Agreement (EVFTA) will promote import another enterprise, provided the holding of the and export activities, bringing direct benefits foreign investor in such company does not exceed to Vietnam’s logistics service industry. 49%. Total number of foreign seafarers working on the ship flying the Vietnamese flag (or registered Statistics from the Import-Export Department in Vietnam) under the ownership of these (Ministry of Industry and Trade) show that the companies in Vietnam shall not exceed 1/3 of the EU is Vietnam’s second largest export market. ship’s personnel. Captain or first mate must be a Therefore, according to trade experts, the Vietnamese citizen. implementation of EVFTA has the opportunity to increase the size of the import-export – The foreign sea transport company may establish market, leading to a great demand for logistics an enterprise or contribute capital, purchase shares activities. Vietnam’s export turnover to the EU or stakes in another enterprise. will increase by about 20% in 2020, 42.7% in 2025 and 44.37% in 2030. b) For container handling services classified as auxiliary services for sea transport (some areas 54 Vietnam Chamber of Commerce and Industry may be used exclusively for provision of services Ho Chi Minh City Branch or procedures for issuance of licenses may be completed in these areas), the foreign investor may establish an enterprise or contribute capital, purchase shares or stakes in another enterprise, provided the holding of the foreign investor in such company does not exceed 50%. The foreign investor may establish a commercial presence in Vietnam under a business cooperation agreement.

c) For container handling services classified as g) For cargo transport services classified as auxiliary services for multimodal transport, except road transport services, the foreign investor may for services provided at airports, the foreign provide such services under a business cooperation investor may establish an enterprise or contribute agreement or establish an enterprise or contribute capital or purchase shares or stakes in another capital or purchase shares or stakes in another enterprise, provided the holding of the foreign enterprise, provided the holding of the foreign 5in.3ve. sMtoarrkinetsuacchcecsosmipnaen-ycdoomesmneortceexsceecetdo5r0%. investor in such company does not exceed 51%. All drivers of the enterprise must be Vietnamese d) For customs clearance services classified as citizens. auxiliary services for sea transport, the foreign investor may establish an enterprise or contribute h) For air carriage services provided in capital or purchase shares or stakes in another contravention of regulations of the law on aviation. enterprise which is invested in by a domestic investor. The foreign investor may establish a i) For technical inspection and analysis services: commercial presence in Vietnam under a business - Regarding the services provided to exercise cooperation agreement. authority of the Government, they may be provided by an enterprise which is invested in by a domestic - For other services including bill of lading investor after three years or by an enterprise in inspection, cargo brokerage, cargo inspection, which foreign investment is not limited after five sampling and weighing services; goods receipt years from the date on which the private service and acceptance services; preparation of transport provider is allowed to provide such services. documents, the foreign investor may establish an - It is not allowed to provide vehicle inspection enterprise or contribute capital or purchase shares services and issue certificates to such vehicles. or stakes in another enterprise which is invested in - The provision of technical analysis and inspection by a domestic investor. is limited in the areas determined by the competent authority for national defense and security reasons. e) For cargo transport services classified as inland waterway transport services or cargo transport In case the foreign investor is regulated by services classified as rail transport services, the international treaties containing different foreign investor may establish an enterprise or regulations on conditions for provision of logistics contribute capital or purchase shares or stakes in services, the foreign investor may select to apply another enterprise, provided the holding of the investment conditions specified in one of such foreign investor in such company does not exceed treaties. 49%. 55

5.2. Market access for EU logistics providers Transport services: Under the EVFTA Agreement, for cargo consolidation services and empty container redistribution services, right after the Agreement comes into force, Vietnam allows sea transport service providers from EU to perform these services on the Quy Nhon - Cai Mep route; after 5 years, Vietnam will allow the service of redistributing empty containers on all routes. With dredging services, Vietnam allows EU enterprises to set up joint ventures up to 51% to provide services in Vietnam. For ground services at the airport, Vietnam commits that after 5 years from the time Vietnam opens the door to the private sector, Vietnam will allow EU businesses to establish joint ventures with Vietnamese partners, in which foreign capital. no more than 49%, to bid for the provision of this service. Three years later, the foreign capital limit will be 51%. These are higher commitments of the EVFTA Agreement than the CPTPP Agreement. 5.3. Market access in e-commerce sector E-commerce is an industry with conditional market access for foreign investors On March 26, 2021, the Government issued Decree No. 31/2021/ND-CP detailing and guiding the implementation of a number of articles of the Investment Law. Section 2 Chapter II of the above Decree has regulations on the list of industries and trades with restricted market access for foreign investors, subjects of application and conditions for market access for foreign investors. List of industries and occupationns with limited market access (Appendix 1) l 25 industries and trades have have not yet been able to access the market for foreign investors. l 59 industries with conditional market access for foreign investors (including e-commerce activities). Subjects of application of the list of industries and trades with market access for foreign investors (Clause 1, Article 16) l Foreign investors as prescribed in Clause 19, Article 3 of the Law on Investment; l An economic organization specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment, when investing in the establishment of other economic organizations, making capital contribution, buying shares or buying contributed capital of such business organizations other economic; investment in the form of BCC contract. Conditions for market access for foreign investors (Clause 2, Article 15) l Ratio of ownership of charter capital of foreign investors in economic organizations; l Investment form; l Scope of investment activities; l Investor’s capacity; partners participating in investment activities; l Other conditions as prescribed in laws and resolution of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties towhichh the Socialist Republic of Vietnam is a signatory. 56 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

OFFICIAL DISTRIBUTORS Beyond Boundaries www.umwvietnam.com UMW Equipment Systems (Vietnam) Co., Ltd Tran Viet Hung (South Vietnam) Branch Address Contact No.: +84 913 555 978 [email protected] NGHE AN QUANG NGAI BAC NINH BINH DUONG Head Office: 12A, Doc Lap Avenue, Vietnam-Singapore Industrial Park, Nguyen Thi Thuy Hang Binh Hoa Ward, Thuan An City, Binh Duong Province, Vietnam (North Vietnam) Contact No.: +84 949 403 399 Tel: +84-274 3743 500 / 333 Fax: +84-274 3743 888 [email protected] Sales Office: 17B, Street 4, Vietnam - Singapore Industrial Park, Duong Dinh Chien (Mekong Delta) Binh Hoa Ward, Thuan An City, Binh Duong Province, Vietnam Contact No.: +84 908 667 782 [email protected] Tel: +84-274 3991 668 Fax: +84-274 3991 800 Tran Ngoc Thanh Lot B1-3, Dai Dong- Hoan Son Industrial Park, Hoan Son Commune, (Central) Contact No.: +84 908 468 882 Tien Du District, Bac Ninh Province, Vietnam [email protected] Tel: +84-222 3848 899 Fax: +84-222 3848 898 [email protected] No.1, Street 6A, Vietnam-Singapore Industrial Park, Tinh Phong Commune, Son Tinh District, Quang Ngai Province, Vietnam Tel: +84-255 3900 188 Fax: +84-255 3900 189 No 2B, Street 1, VSIP Nghe An Industrial Park, Hung Tay Commune, Hung Nguyen District, Nghe An Province, Vietnam Tel: +84-238 3206 696 / 3206 990 Fax: + 84-238 3206 689 Representative Office at Hai Phong, Da Nang, Binh Dinh, Dong Nai, Can Tho, Long An

6. Foreign Direct Investment (FDI) in the Samsung SDS, for example, has joined a venture logistics sector with Aviation Logistics Service (ALS) to deliver logistics services at Noi Bai International Airport According to statistics on foreign direct investment as it forecast an annual logistics growth of 15-20 projects in the field of transportation and percent in Vietnam. Japanese shipping lines are warehousing licensed, the cumulative number of also interested in developing deep-water container valid projects as of May 20, 2020 was 856 with ports in Vietnam, both investment and operation. a total registered capital of 5,137 billion USD, accounting for 2.67% of the total number of projects Among them, MOL Logistics has invested in and 1.36% of the total capital of projects in all Vietnam’s two largest deep-water ports Cai Mep sectors. Thi Vai and Lach Huyen. Deutsche Post DHL has recently also announced its participation in the Foreign investment has transformed Vietnam’s B2C shipping market in Vietnam with the DHL logistics industries in recent years. e-commerce agency. Foreign logistics firms have Multinational corporations have been stepping also boosted the acquisition of local firms to up investment to expand their logistics business enter the market rapidly as Vietnam deepens its in Vietnam as the fertile market is expected to integration into regional and world economies. continue delivering two-digit growth in the coming time. Well-known brand names include DHL Supply New York-based private equity firm Warburg Chain, Maersk Logistics, APL Logistics, Nippon Pincus formed a US$200 million joint venture with Express, Samsung SDS, Expeditors, Panalpina, Becamex IDC to enter the Vietnamese logistics Agility, DHL, Global Forwarding and DGF. market while Korea’s Tae Kwang Industrial Co also acquired a controlling stake in Gemadept Shipping to gain a share of Vietnam’s market. Foreign direct investment in Vietnam (per sector) Number Total registered of projects investment capital Accumulation of projects affected through May 20th, 2020 14,789 (Millions USD) No. Sector 903 135 220,303.87 1 Manufactuuring and processing industry 2 Real estate 58,321.98 3 Production and distribution of electricity, gas, water, 27,535.78 air-conditioner 4 Construction 1,730 13,918.38 5 Accommodation and food services 880 12,022.26 6 Wholesale and retail; car, motorbike and motorcyce 8,213.40 4,899 maintenance 7 Transport and warehousing 856 5,137.41 8 Extraction 108 4,896.95 9 Education and training 552 4,393.49 10 Information and communication 2,250 3,910.01 11 Agriculture, forestry and fisheries 503 3,579.05 12 Others 4,420 14,359.4 32,025 376,591.98 Total Source: Foreign Investment Agency, 2020 58 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

Photo: Doan Manh 8. E-logistics 7. Market development trends & When a customer becomes a buyer in an online Government’s conducive regulatory transaction, the enterprise also begins the policies e-logistics process. Order processing and fulfillment, delivery, payment, exchange and recovery of To promote the development of the logistics sector unsatisfactory goods, etc. are the basic contents of in Vietnam, the Government issued Decision No. logistics in this environment. 200/QD-TTg dated February 14, 2017 approving the Action Plan to improve competitiveness and In brick-and-mortar retail, the retailer’s market develop Vietnamese logistics services towards 2025. radius (R) is a determining factor in customer Accordingly, by 2025, the contribution of logistics characteristics and service delivery efforts, but in services to GDP will reach 5-6%, the growth rate business-to-consumer (B2C) retail, the market is of logistics services will reach 15% - 20%, the expanded limitlessly. A customer in Vietnam can proportion of outsourcing logistics services will order a phone or a perfume bottle in the US through reach 50%-60%, logistics costs decreased to the product’s website, the order information will be equivalent to 16%-20% of GDP, ranked by the world transmitted and accepted at an almost instantly. LPI index reaching 50 or more. However, goods cannot be immediately available like an electronic purchase agreement but still need Goals to 2025 to cross thousands of kilometers of geographical distance to reach the customer. All activities that 8-10% 8-10% 8-10% 8-10% support the movement of goods from the point of supply to the point of consumption through Contribution Service Service Logistics costs electronic purchase and sale transactions are called to GDP growth rate e-logistics activities. outsourcing compared to 8.1. E-commerce pulls logistics development ratio GDP The fast expansion of Vietnam e-commerce has set high demand for e-logistics development, with expected CAGR at 42% in 2018 – 2022 “Last-mile logistics is the last stretch of a (B2C) parcel, from the order penetration point (i.e., fulfillment center) to the final consignee’s preferred destination point (e.g., home or cluster/collection point), for the reception of goods” (Lim, Xin, & Srai 2015). Last mile logistics are important for e-commerce business because it interacts directly with the end customers. Investing strategically in last mile logistics has been the pivotal factor for e-commerce players to surpass the competition. However, e-commerce logistics, especially last-mile delivery companies in Vietnam are still at early- stage of development; thus haven’t met with online retailers’ requirement for timely, reliable and cost- efficient delivery when dealing with a large number of orders at a time. LPI rank reaches 50th and above Source: VLA 59

The current boom in Vietnam Estimated size of E-commerce and E-logistics market e-commerce therefore has (EUR million) created very high demand and pressure for logistics services 4,500 - - 25% and at the same time triggered 4,000 - - 20% promise in the e-logistics sector. 3,500 - - 15% According to Ken Research 2018, 3,000 - - 10% Vietnam e-commerce retail 2,500 - - 5% logistics market was valued at 2,000 - -0 EUR90 million (US$103 million) 1,500 - in 2018, and was forecast to 1,000 - 2022F reach an average growth of 42% per year till 2022. 500 - 0- 2018E 2019F 2020F 2021F n E-Logistics n E-Commerce n % E-logistics / E-commerce Source: Statista, Ken Rsearch, Ipsos Business Consulting analysis, Rong Viet Securities The Mapping of E-commerce in Vietnam Merchant Monthly Web AppStore PlayStore Youtube Instagram Facebook Visits Rank Rank Shopee a1 a1 217.000 148.930 15.434.770 Sen Do 24,569,900 128.000 15.600 2.866.740 The Gioi Di Dong a2 a2 635.000 2.120 3.412.430 Tiki 30,929,800 368.000 129.300 2.877.880 Lazada Vietnam a9 a5 154.000 74.130 28.689.270 29,307,200 a3 a3 27,114,500 a4 a4 24,364,700 Source: Iprice, updated October 20, 2019 8.2. Major Players of E-commerce Logistics in According to the national master plan of Vietnam & E-commerce context e-commerce development in 2021-2025, by 2025, up to 55 per cent of the population will participate in On 15/05, the Vietnamese Prime Minister online shopping, with the average value of online announced the National development plan for purchases of goods and services reaching US$600 Vietnam e-commerce during the period 2021- per person annually. 2025. This plan acts as a guideline for future advancement and isto be closely linked with In Hanoi and HCM City, e-commerce activities grew strategies and policies on proactively participating strongly and accounted for 70 per cent of the total in Industry 4.0. According to an e-commerce number of e-commerce transactions in the country. development plan approved by the Vietnamese government last year, the sector’s revenues should According to Amazon Vietnam, Vietnamese sellers reach 35 billion USD by 2025 and account for 10 exceeded $1 million in sales on Amazon last year, a percent of the total retail sales of goods and three-fold increase from 2019. services. The government also targets 55 percent of the population shopping online by 2025. 60 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

According to a logistics report in 2017 by the Also, as the need for convenient and express Ministry of Industry and Trade, Vietnam had delivery is prominent for e-commerce customers, approximately a total of 50 enterprises providing especially in urban areas, there exists huge e-logistics services. opportunity for logistics start-ups who can bring in technology solutions to improve quality service Among those, traditional postal service providers and optimize the operating system. In the past few such as VN Post, EMS and Viettel Post have years, many e-commerce delivery start-ups have responded to the market by offering solutions for entered the market, some have obtained significant online retailers; their advantage of already having a financial support from investors. Outstanding nationwide post office network and high operational names are Giao Hang Nhanh (GHN); Giao Hang Tiet capacity allows them to play a strong role in rural Kiem (GHTK) and NinjaVan, which are currently areas. the main delivery partners of the key e-commerce platforms in Vietnam. The following table There have been important foreign players entering represents some key active ones. the Vietnamese e-commerce market recently. In 2017, aeoneshop.com (Japan) and lotte.vn (South A report by the Vietnam e-Commerce and Digital Korea) got into the market. Amazon also joined the Economy Agency (iDEA) under the Ministry of scene in 2018 to export goods for SMEs in Vietnam. Industry and Trade showed that with 53 per cent of the population participating in online shopping, Some e-commerce giants in Vietnam including Tiki, the e-commerce market in Vietnam grew 18 per Lazada and Grab, have their own logistics sector: cent, reaching $11.8 billion last year, accounting warehousing, packing, and shipping. However, most for 5.5 per cent of total retail sales of consumer e-commerce companies in Vietnam such as Shopee goods and services nationwide. Experts predicted and Sendo are still not able to do the logistics on e-commerce would continue to thrive this year and their own and they opt for the third-party logistics create a new impetus for economic growth, at the (3PLs). This creates a great opportunities and same time, there would also be an opportunity markets for e-commerce logistics. Grab and Uber for Vietnamese businesses to build new business are both big players that have gained immense strategies and approaches to modern distribution profits in Vietnam for closing the gaps in the channels, helping to expand markets and recover Vietnamese logistic networks. Grab even went from the pandemic. Amid digital transformation and through a rebranding by expanding their services the development of the online shopping market, to include GrabExpress, a delivery service for iDEA has implemented the Online Vietnamese Store documents, parcels and gifts. programme on three major e-commerce floors in Vietnam, including Tiki, Sendo and Voso. Delivery Size & Capacity E-commerce platform GHN partners Giaohangnhanh Over 200 post offices; Over 7,000 employees; Lazada 800 service points Over 36,000 SMEs Shopee GHTK 63 provinces coverage customers nationwide; Sendo Giaohangtietkiem 150,000 orders per day Tiki 63 provinces coverage Shopee Ninja Van 99% districts & communes 1,000 employees Vatgia.com nationwide; Over 1,000 customers 20 center points 8,000+ drivers Lazada 500+ branches Tiki 1,000 employees Sendo 63 provinces coverage 8,000 customers 5 warehouses Over 1 million orders per Source: B&Company month 61

Online shopping’s slice of total retail 8.3. Trends of mergers and acquisitions in in Southeast Asia 2020 Vietnam’s logistics industry Indonesia 19.9 With the effects of the Covid-19 epidemic as well 15.6 as fierce competition in the market, many logistics Singapore enterprises in Vietnam have carried out mergers and acquisitions (M&A) to optimize costs, improve Brunei 9.2 productivity, and improve productivity. competition 8 in the market. A number of important M&A deals Thailand 7.3 were recorded in 2019 and 2020. 5.9 Malaysia According to experts, Vietnam’s M&A logistics enterprises will continue to flourish in the coming Philippines years for the following reasons: Firstly, competitive pressure. In the context of Vietnam 3.1 integration, Vietnam’s logistics enterprises are facing heavy competitive pressure. In accordance Laos 0.5 with the commitment to join the World Trade Organization (WTO), from January 1, 2014, Vietnam Cambodia 0.2 officially opened its logistics sector completely. This meant foreign enterprises were allowed to establish Myanmar 0.1 companies with 100% capital to provide logistics services in Vietnam. In this context, many domestic 0 2.5 5 7.5 10 12.5 15 17.5 20 enterprises planned M&A to improve their position in the face of fierce competitive pressure. percent Secondly, the development trend of the digital Source: Euromonitor International economy is associated with e-commerce. According to economic experts, the birth of e-commerce The programme has created a new playground for enterprises such as Amazon and Alibaba has manufacturing enterprises to develop distribution changed the face of the logistics industry systems with digital transformation solutions significantly. With the trend of developing the and apply e-commerce and digital technologies in digital economy associated with the increasing connecting the domestic market. Dang Hoang Hai, demand for e-commerce, the requirements of director of iDEA, said the agency would implement customers become stringent every day, the delivery the GoOnline programme to accompany businesses must take place faster, be more flexible, more in the e-commerce application process. transparent and with lower prices. Profit targets as well as business models are also challenges The programme has the companionship of for logistics enterprises, requiring businesses in telecommunications, technology and e-commerce this industry to constantly improve and change. systems in the country, targeting manufacturers, To solve these problems, it is necessary to invest businesses and individuals nationwide who want in science and technology, improve management to access and apply e-commerce. Promoting methods, train and improve the quality of human e-commerce in parallel with perfecting the resources. For these activities, Vietnamese logistics electronic payment system and improving the enterprises, when resources are limited, need quality of shipping activities would create a to seek cooperation with large and experienced very exciting and potential shopping and trading enterprises. environment. Thirdly, the need for cooperation brings mutual development. In terms of M&A activities of logistics enterprises, foreign enterprises will quickly take advantage of the existing network, the same source 62 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

of customers and domestic operating experience. The logistics market in Vietnam is increasingly This helps them reduce the cost of entering the “hot” with million-dollar M&A deals, in which, market significantly compared to starting from with strong financial and technological potentials, scratch. “foreign” names are dominating with a series of strategies to increase market share. Currently, in Although international enterprises have many the field of Logistics, there have been many big advantages over local companies like abundant deals taking place. Recently, Sumitomo Group, capital, high technology, skilled staff and wide together with logistics company Suzuyo and a range of services around the world, market Japanese public-private fund, spent about 4 billion understanding, long year experience and wide yen ($37 million) to buy 10% of capital at Gemadept relationship are local enterprises’ strengths. Many Joint Stock Company. Thus, Gemadept is valued international logistic groups sub-contract local at 370 million USD. Logistics is identified as a key companies for services such as freight forwarding, field of Gemadept. In 2018, Gemadept sold part of warehousing, loading and unloading, seaports, its ownership in 2 subsidiaries in this field to CJ customs declaration.... For many companies, M&A Logistics (Korea) and earned about $125 million. transaction is a way to bring both sides’ advantages Previously, in mid-2017, Korea’s Tae Kwang Industry together. Group offered to buy a 51% stake in Gemadept, with a bid of up to 444 million USD. Currently, Vietnam advocates promoting capital mobilization from the private sector for Following the deal, Mirae Financial Group and infrastructure investment through the transfer of Naver (headquartered in Seoul, Korea) bought two the right to operate some infrastructure (logistics logistics centers in Yen Phong Industrial Park for 53 facilities, airports, seaports...), attracting many billion Won ($47.01 million) through their 50:50 joint investors. Investment is expected to be in the venture Mirae Asset - Naver Asia Growth Fund. Of billions of dollars. In fact, the recent past has this total amount, 30 billion Won was funded by the witnessed many big mergers and acquisitions joint venture and the rest was provided by Shinhan (M&A) such as: Gemadept transferring capital to CJ Vietnam investment unit through refinancing and Logistics and Samsung SDS cooperating with Minh tenant deposits. Phuong Logistics. Some important M&A deals in Vietnam logistics in 2019 - 2020 No. Acquisitor Nationality Targeted company Percentage of Year Area Ownership / Value 2020 1 Transimex Corp. (TMS) Vinatrans Danang More than 50% 2020 2 Transimex Corp. (TMS) Vietnam Transportatio and Trading Increased to 41% 2020 Vietnam services JSC (TJC) 2019 3 Indotrans Corp. (ITL) South Logistics JSC (Sotrans) Nearly 97% 2019 4 Vietnam Maritime Corp. Vietnam Joint venture with Suzue Vietnam (Japan) 4 billion yen 2019 (VIMC) Gemadept Logistics (USD 37 mil) 2019 5 Sumitomo Corp. Japan - equa to 10% USD 42,6% mil (via its subsidiary, SSJ Asia Indotrans Corporation Consultig Vietnam) 6 Symphony International Korea 2 logistics center at Yen Phong Won 53 billion Holdings 7 Mirae Fiinancial Group industrial park, Bac Ninh (USD 47,01 mil) and Naver 63

Mapletree Logistics Trust Company spent 725.1 IncreDaescereofasiplnagncnianpigtaalnidntsetenseirtiyng8.4. Upgrading business models, forming billion VND (equivalent to 31.5 million USD) new linkage models such as dry warehouses, to acquire warehouses belonging to Unilever ecological chains International Co., Ltd. Upon completion of the acquisition, the properties were leased back to According to the research results of the Vietnam Unilever Vietnam for 10 years with an annual Association of Logistics Service Enterprises, there increase in rent. The properties have a total area of are about 4,000 enterprises operating in domestic about 65,000m2. and international freight transport, of which 54% are based in the Ho Chi Minh City area and over 30 In 2019, there were many M&A deals worth millions multinational logistics companies. Notably, 90% of dollars, including Symphony International of domestic logistics enterprises have a revenue of Holdings (Singapore) purchase of Indo Tran Shipping less than 10 billion VND/year. and Forwarding Joint Stock Company (ITL Corp) from Singapore Post for 42.6 million USD and SSJ 5PL Consulting spent nearly 40 million USD to buy 10% of total outstanding voting shares in Gemadept. e-Business Notable M&A deals in 2019-2020 were Sumitomo 4PL Corporation through its subsidiary SSJ Consulting Vietnam (Japan) spent $ 37 million to own 10% Supply chain Mgt. of capital in Gemadept Logistics; Symphony International Holdings (Asia) spent $42.6 million 3PL to own Indo Trans forwarding and shipping joint stock company and Mirae Financial Group and Forwarding / Contract logistics Naver (Korea) spent 47.01 million USD to own two logistics centers in Yen Phong industrial park (Bac 2PL Ninh)... Asset-based 1PL Producerr Currently, there are 5 levels of classification for logistic enterprises: 1PL (First Party Logistics) are production and business enterprises that perform logistics services themselves; 2PL (Second Party Logistics) are logistics enterprise providing basic, individual, and non-integrated logistics services; 3PL (Third Party Logistics) are enterprises integrating logistics services through long-term contracts; 4PL (Fourth Party Logistics) is the integration of services and supply chain management, and 5PL (Fifth Party Logistics) are enterprises that digitize logistics service chain management. Cat Lai - Tan Cang Port 64 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

Currently, the 2PL level accounts for the largest countries are gradually implementing e-Logistics, proportion of logistics companies in Ho Chi green logistics... and applying cloud computing Minh City, including forwarding companies, technology, Block chain technology... This industry transportation, customs declaration agents, etc. has also started to apply artificial intelligence, These enterprises mostly focus on international robots, to perform a number of services, such as transportation and declaration, customs, import packing and unloading goods from containers, and export procedures, freight forwarding and loading and unloading goods in warehouses, yards... domestic transportation. At the 3PL level, there are etc enterprises such as Gemadept, Transimex, Saigon Newport and Minh Phuong... providing warehouse According to the Vietnam Logistics Business and services, inventory management, labeling and Services Association (VLA), the growth rate of the marking... logistics industry in Vietnam in recent years has reached about 14% - 16%, with a scale of about At the 4PL level, the market share is mainly held by 40-42 billion USD/year. With the recent explosion foreign companies with supply chain management of information technology, e-commerce and services and raw material purchasing. As for the 5PL e-Logistics have contributed to the development of level, almost no logistics companies in Ho Chi Minh the logistics industry. City have reached this level. In addition, services such as raw material Data from VLA shows that currently, domestic procurement, insurance brokerage, product recall logistics enterprises are providing from 2 to 17 and quality control are rarely provided (only 8-10%). different services, mainly forwarding, warehousing, The reason lies in the limited ability to satisfy transportation, express delivery and customs enterprises’ requests. Complex and intensive declaration services, in which, the number of logistics services require a connection network, enterprises applying technology accounts for 50% infrastructure resources, technical processing and - 60%, depending on enterprises’ size and nature of capable human resources. the services. Thus, most logistics enterprises currently only do There have been a number of large enterprises that a single service. The number of enterprises doing have successfully applied technology solutions to integrated services in the form of 3PL and 4PL bring efficiency to logistics services, significantly companies is still very limited. According to the Ho reducing related costs. For example, electronic port Chi Minh City Department of Industry and Trade, (ePort) and electronic delivery order (eDO) at Saigon more than 90% of local logistics enterprises are Newport and the application of a total solution in small and medium-sized, so it is difficult to invest logistics services at T&M Forwarding Company... in upgrading their innovation based business However, Vietnam’s e-Logistics industry is still model strong innovation. Therefore, the ability to being assessed as not developing commensurate compete with foreign logistics enterprises is much with its potential. The main reason is that at limited. Besides, logistics is a chain of services present, logistics enterprises in Vietnam are mostly closely linked between production, transportation small and medium-sized, so investment capital is and distribution. If only stopping at 2PL level, it is limited, and IT-intensive human resources are weak difficult to link well to switch to providing a full and lacking. The e-logistics industry is evolving. service chain (3PL, 4PL). Therefore, it is easy to be Under competitive pressure and with the fast-paced dominated by 3PL and 4PL enterprises. advent of new technologies, opportunities are presenting themselves for parties involved in the The e-Logistics or electronic logistics industry is e-logistics industry to improve their own efficiency considered 5PL logistics, i.e. logistics combined and performance through digital transformation, with e-commerce. In Vietnam today, this industry M&A or e-logistics ecosystem formation. is quite new E-Logistics has its own characteristics with small orders, large numbers of orders, many types of orders and fast deliveryschedules, requiring high accuracy. In this area, technology plays an extremely important role. Currently, developed 65

GROUNDBREAKING CEREMONY OF VINH PHUC ICD LOGISTICS CENTER WORTH 200 MILLION USD IN DECEMBER 2020 On November 14, within the framework of the 37th ASEAN Summit, under the witness of Vietnamese Prime Minister Nguyen Xuan Phuc and Singaporean Prime Minister Lee Hsien Loong, the ASEAN Smart Logistics Network was kicked off with the first project being Vinh Phuc ICD Logistics Center. This is a project with a total investment of nearly 200 million USD, implemented by a consortium of Vietnam’s T&T Group and Singapore’s YCH Group in Huong Canh town and Son Loi commune, Binh Xuyen district, Vinh Phuc province. According to Mr. Do Quang Hien, the Vinh Phuc ICD Logistics Center project has four main pillars: connectivity, sustainability, speed, and scalability; towards 5 goals: building sustainable infrastructure, smooth logistics with an international-class center, reducing costs for businesses, increasing the competitiveness of the supply chain and training human resources. The project has an integrated design between the ICD inland port and the multimodal high-tech logistics center. Covering an area of more than 83 hectares, the project has a smart operation center of Super Port, which will help to quickly and easily transport goods by road and rail, as well as deliver goods to seaports and airport in the minimum amount of time. The project will promote trade in Vietnam, ASEAN, China and other international markets. At the same time, here will open training centers with the training program of human resources in the logistics high-tech logistics industry 4.0. Source: Anh Minh 66 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

VIETTEL POST OPENS THE MOST MODERN AUTOMATED LOGISTICS CENTER IN VIETNAM On January 24, Viettel Post opened the Southern This automatic sorting and picking conveyor Logistics Center in District 12, Ho Chi Minh belt will help Viettel Post completely change City. Ho Chi Minh. This is considered the the old way of doing things allowing automatic most modern automated Logistics Center in sorting and picking up to each district. Goods Vietnam. The Southern Logistics Center marks after being sorted and picked through this a new development step of Viettel Post in the Logistics center will be connected to the transition from a Post and Delivery Corporation customer without having to perform a second to becoming a Logistics Corporation, towards sorting. becoming the No. one in Vietnam by 2025 based on high-tech. In addition, the security control and monitoring at the Southern Logistics center has applied Located in a prime location of District 12, AI technology to monitor the unique 1-in-1 out Southern Logistics Center is equipped with operation flow, identifying people and vehicles many of today’s most modern technologies entering; automatic warning of smoke and fire in operation and monitoring with two main in the warehouse... centers: a distribution center and a fulfillment center. Applying modern technology, autonomously designed to suit the Vietnamese market, The Fulfillment Center provides a full range of Viettel Post’s Southern Logistics Center is a services including warehouse receiving, storage, complete logistics infrastructure that helps order processing, labeling, dispatch, separation the circulation of goods flow to achieve both & sortation, and shipping by applying AGV speed and accuracy, reducing the whole time robot, automatic parcel dispatch & storage, to connect parcels to 6 hours, the error rate in sorting, and coordinating randomly based on sorting is almost zero, optimizing 91% of human route optimization. Order fulfilment service resources and providing an automatic order will provide a comprehensive solution for fulfillment solution for customers. customers, especially e-commerce customers. Logistic tasks will be automatically performed Source: Minh Ngoc by Viettel Post. At the newly launched sorting center, the automatic sorting conveyor system has a capacity of 42,000 parcels/hour. This is the only system in Vietnam that integrates and automatically splits up small goods and goods weighing up to 50kg on the same sorting scenario, thanks technology and the innovation of Viettel Post. 67

Transport Services Passenger transportation SECTORS AND WTO EVFTA SUB-SECTORS Companies operating a fleet under the Companies operating a fleet under the 96. Maritime Transport national flag national flag Services: Passenger 96.5. Form of investment: Joint venture. transportation 96.1. Form of investment: Joint venture. (CPC 7211); and Freight 96.6. Foreign ownership limit: 70%. transportation 96.2. Foreign ownership limit: 49%. (CPC 7212) 96.7. Same as 96.3 and 96.4. 96.3. Foreign seafarers may be permitted to work in ships under national flag of Viet Nam (or registered in Viet Nam) owned by joint-venture in Viet Nam but not exceeding 1/3 of total employees of the ships. The Master or first chief executive must be Vietnamese citizen. 96.4. Cabotage is excluded. Other forms of commercial presence for the Other forms of commercial presence for the supply of international maritime transport supply of international maritime transport services services 96.8. Form of investment: Joint venture or share 96.12. Form of investment and Foreign ownership acquisition. limit: No limitation. 96.9. Foreign ownership limit: 49%. 96.13. Same as 96.10 and 96.11. 96.10. Scope of operation are limited to the following activities: 96.10.1. Marketing and sales maritime transport services through direct contact with customers, from quotation to invoicing; 96.10.2. Acting on behalf of the cargo owners; 96.10.3. Provision of required business information; 96.10.4. Preparation of documentation concerning transport documents including customs documents, or other documents related to the origin and character of the goods transported; 96.10.5. Provision of maritime transport services including cabotage services by Vietnamese flagged vessels for the supply of integrated transport services; 96.10.6. Acting on behalf of the company, organising the call of the ship or taking over cargoes when required; and 96.10.7. Negotiate and sign contracts for road, rail, inland waterways transportation related to cargoes transported by the company. 96.11. Other forms of commercial presence for the supply of international maritime transport services means the ability for foreign shipping companies to undertake locally activities which are related to the cargoes carried by them and necessary for the supply of the integrated transport service to their customers, within which the international maritime transport constitutes a substantial elements and is supplied by the concerned foreign shipping company. 97. Maintenance 97.1. No commitments. 97.2. Form of investment: joint venture. and repair of vessels 97.3. Foreign ownership limit: 70% (CPC 8868*) 98. Maritime cabotage 98.1. No commitments. 98.2. No commitments. services 99. Internal waterway 99.1. No commitments. 99.2. No commitments. transport: cabotage services rental of vessels with crew (CPC 7223) 68 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

SECTORS AND WTO EVFTA SUB-SECTORS 100.1. No commitments. 100.2. No commitments. 100. Space transport 101. Pipeline transport 101.1. No commitments. 101.2. No commitments. 102. Rail transport 102.1. No commitments. 102.2. No commitments. (cabotage services, infrastructure business services) 103. Road cabotage 103.1. No commitments. 103.2. No commitments. services 104. Pushing and towing 104.1. No commitments. 104.2. No commitments. services 105. Maritime auxiliary 105.1. Form of investment: Joint venture. 105.4. Same as 105.1 - 105.3. services: Container handling services 105.2. Foreign ownership limit: 50%. (CPC 7411) 105.3. Public utility concession or licensing procedures may apply in case of occupation of the public domain. 106. Maritime auxiliary 106.1. Form of investment: Joint venture. 106.4. Same as 106.1 - 106.3. services: Customs Clearance Services 106.2. Foreign ownership limit: less than 100%. 106.3. “Customs clearance services” (alternatively “customs house brokers” services) means activities consisting in carrying out on behalf of another party customs formalities concerning imports, export or through transport of cargoes, whether this service is the main activity of the service provider or a usual complement of its main activity. 107. Maritime auxiliary 107.1. No commitments. 107.2. Form of investment: joint venture. services: Maritime agency services3 107.3. Foreign ownership limit: 49%. (CPC 748*) 107.4. Scope of commitment: Maritime agency services or ship agency is a service which the ship agent is authorised to undertake, in the name of the shipowner or the ship operator, to perform services connected with the ship’s operations at the port including arrangement of the ship’ entry and departure; concluding contracts of carriage, marine insurance contracts, contracts for cargo handling, charter parties, and recruitment agreements; issuing and signing bills of lading or similar documents; supplying stores, bunkers and provisions to the ship; submitting ship’s sea protests; communicating with the ship owner or the ship operator; arranging relevant services for ship crew; receiving and paying all amounts incident to the ship’s operation; handling claims arising from contracts of carriage and or marine accidents, and supplying other services in connection with the ship as required. 108. Maritime auxiliary 108.1. Form of investment and Foreign ownership: 108.3. Same as 108.1 and 108.2. services: Container No limitation. Station and Depot Services 108.2. “Container station and depot services” means activities consisting in storing containers, whether in port areas or inland, with a view to their stuffing/stripping, repairing and making them available for shipments. 69

Transport Services Passenger transportation SECTORS AND WTO EVFTA SUB-SECTORS 109.1. No commitment. 109.2. Form of investment: joint venture. 109. Maritime auxiliary 109.3. Foreign ownership limit: 51%. services: Maintenance and repair of vessels (CPC 8868*) 110. Internal Waterways 110.1. Form of investment: Joint venture. [110.3. No commitment.] Transport: Passenger 110.2. Foreign ownership limit: 49%. transport (CPC 7221); and Freight transport (CPC 7222) 111. Sales and marketing 111.1. Airlines are permitted to provide service 111.2. Same as 111.1. air products services in Viet Nam through their ticketing offices or agents in Viet Nam. 112. Computer 112.1. The foreign service supplier must use 112.2. Same as 112.1 reservation services public telecommunication network under the management of Viet Nam telecommunication authority. 113. Maintenance 113.1. No limitation. 113.2. No limitation. and repair of aircraft (CPC 8868**) 114. Ground-handling 114.1. No commitment. 114.2. Unbound. Five year after Viet Nam allows services, excluding private suppliers access to an airport or terminal, aircraft servicing and foreign service suppliers are permitted to provide cleaning, surface services to such airport or terminal only through transport, airport the establishment of joint ventures with management and air Vietnamese partners, with foreign equity not service navigation exceeding 49%. Three years thereon, this capital limitation shall be 51%. 114.3. Categories of activities depend on the size of the airport. The number of service suppliers in each airport can be limited, due to available-space constraints. 114.4. For greater certainty, Viet Nam reserves the rights to consider the authorization and/ or licensing of the above-mentioned joint-venture(s) based on the following considerations, among others: (i) the next socio-economic benefits that the Union investor(s) can generate, including but not limited to their long-term commitments, capacity building and technology transfer for Viet Nam’s economy; (ii) their financial capability and relevant experience; and (iii) possible impact of Viet Nam national security and defense... 115. In-flight meal 115.1. No commitment. 115.2. Form of investment: Joint-venture with serving services Vietnamese partners. 115.3. Foreign ownership limit: 49% 116. Rail Transport 116.1. No commitment. 116.2. No commitment. Services - Passenger transportation (CPC 7111) 117. Rail Transport 117.1. Form of investment: Joint venture 117.3. Same as 117.1 - 117.2. Services - Freight or share acquisition. transportation (CPC 7112) 117.2. Foreign ownership limit: 49%. 118. Road Transport 118.1. Form of investment: Joint venture or BCC. 118.4. Same as 118.1 - 118.3. Services - Passenger transportation 118.2. Foreign ownership limit: 49%. Subject to the (CPC 7121+7122); and needs of the market, 51% for freight transport Freight transportation services. (CPC 7123) 118.3. 100% of joint-venture’s drivers shall be Vietnamese citizen. 70 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

SECTORS AND WTO EVFTA SUB-SECTORS 119.3. Same as 119.1 - 119.2. 119.1. Form of investment: Joint venture. 119. Container handling 119.2. Foreign ownership limit: 50%. services, except services provided at airports (part of CPC 7411) 120. Storage and 120.1. No limitation 120.2. No limitation warehouse services (CPC 742) 121. Packaging services 121.1. No commitment. 121.2. Form of investment: Joint venture. (CPC 876) 121.3. Foreign ownership limit: 70%. 121.4. Under EVFTA, this service is categorized under other section (see 36). 122. Freight transport 122.1. Form of investment and Foreign ownership 122.3. Same as 122.1 and 122.2. agency services limit: No limitation. (CPC 748) 122.2. Freight transport agency services include freight forwarding services. These services mean the activities consisting of organizing and monitoring shipment operations on behalf of shippers, through the acquisition of transport and related services, preparation of documentation and provision of business information. 123. Other Services 123.1. Form of investment: Joint venture. 123.4. Same as 123.1 - 123.3. Auxiliary to all Modes of Transport 123.2. Foreign ownership limit: less than 100%. (part of CPC 749) 123.3. This includes the following activities: bill auditing; freight brokerage services; freight inspection, weighing and sampling services; freight receiving and acceptance services; transportation document preparation services. These services are provided on behalf of cargo owners. 124. Air-transport 124.1. No commitments except for those discussed 124.2. No commitments except for those discussed related services at 111 - 115. at 111 - 115. 125. Maritime cargo 125.1. No commitment. 125.2. Form of investment: Joint-venture with handling services Vietnamese partners. (CPC 741) 125.3. Foreign ownership limit: 49% 126. Dredging services 126.1. No commitment. 126.2. Form of investment: Joint venture with Vietnamese partners. 126.3. Foreign ownership limit: 49%. Five years from the date of entry into force of EVFTA, this capital limitation shall be 51%. 127. Involving own 127.1. Foreign-invested enterprises shall be 127.2. No commitment for land ownership, or leased property permitted by competent authorities of Viet Nam acquisition of land use rights, land lease, usage of (CPC 821) to lease the land to carry out their investment land, land planning, term of land use, rights and projects. The land leasing period shall correspond obligations of land users. to the time of operation of those enterprises and shall be stipulated in their 127.3. Natural resources found in land belong to the State of Viet Nam. Cultural heritage, whose owner investment licenses and shall be extended cannot be identified, found in land belong to the whenever the time of operation of those State of Viet Nam. enterprises is extended by competent authorities. 127.4. No commitment for measures relating to the purchase, selling, ownership and leasing of residential real estates by foreigners. 128. On a free or 128.1. Same as 127.1. 128.2. Same as 127.2 - 127.4. contract basis 71

CHAPTER I CHAPTER II CHAPTER III CHAPTER IV CHAPTER V Graphic: Nguyen Quang Tu

HO CHI MINH CITY - A land that birds will come to build their nest

1. HO CHI MINH CITY IN A NUTSHELL Ho Chi Minh City is to Vietnam what New York City 1.2. Location and Population is to the United States and Shanghai is to China: the epicenter of cultural and economic dynamism. Ho Chi Minh City is situated along the Saigon River, Ho Chi Minh City is a cosmopolitan city and at the north of the Mekong River delta and is about 80km same time has its own identity. On a state visit to from the East Sea. Ha Noi, Vietnam’s capital, president Obama also took valuable time to make a stop in Ho Chi Minh Ho Chi Minh City (HCMC) is the most populous City for dialogue with a start-up entrepreneurship. city in Viet Nam. According to the results of the Numerous multinational corporations like Intel and 2019 population and housing census, the total Samsung have decided to establish manufacturing population of Ho Chi Minh City on April 1, 2019 was bases here. After a successful tenure at this 8,993 million people. proving ground of institutional and economic reform, city leaders have been promoted to the After the merger under Resolution No. 1111/2020 of highest leadership positions in the country. For the National Assembly Standing Committee on the instance, Mr. Vo Van Kiet the prime minister and Mr. arrangement of administrative units at district and Nguyen Minh Triet, the President of State used to commune levels, issued, effective from January 1, be the leaders of the city. 2021, Ho Chi Minh City, with a total area of more than 2,095 km2, was divided into 22 administrative THE HISTORY OF FORMATION units, covering 1 city, 16 inner districts and 5 outer districts: Thu Duc City, was a merger of three IN 1698, LORD NGUYEN SENT districts: 2, 9, and Thu Duc. MARSHAL NGUYEN HUU CANH Inner Districts: 1, 3, 4, 5, 6, 7, 8, 10, 11, 12, Binh Tan, INTO THE STRATEGIC LAND OF Binh Thanh, Go Vap, Phu Nhuan, Tan Binh, Tan Phu. THE SOUTH, GIVING BIRTH TO Outer Districts: Binh Chanh, Can Gio, Cu Chi, Hoc THE CITY OF SAIGON. ON JUNE Mon, Nha Be. 5, 1911, FROM NHA RONG WHARF, THE YOUNG NGUYEN TAT THANH Ho Chi Minh City is within a 2-hour flight from any WENT OUT TO FIND A WAY TO major cities in Southeast Asia and serves as an SAVE THE COUNTRY. ON JULY ideal hub for commercial and passenger traffic. 2ND, 1976 AFTER THE COUNTRY HCMC’s strategic location along the Saigon River WAS REUNIFIED, SAIGON WAS makes it an ideal hub for commercial and passenger RENAMED “HO CHI MINH CITY”. traffic. Saigon Port is the largest port in HCMC and WITH MORE THAN 300 YEARS has the highest container traffic of any port in the OF ESTABLISHMENT AND country. Each year, approximately 12 million tons of DEVELOPMENT, THE CITY HAS goods pass through Saigon Port. MANY ANCIENT ARCHITECTURAL WORKS, MANY MONUMENTS AND A RICH COLLECTION OF MUSEUMS. 74 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

2. WHAT MAKES HO CHI MINH CITY UNIQUE? When it comes to the positioning of Ho Chi Minh City, words such as pioneering, locomotive and growth pole are often used. 2.1. The city of Pioneers Considered as the leading bird in the formation of a system of export processing Ho Chi Minh city is home to the first export zones and industrial zones in Vietnam, processing zone, the first stock exchange and the cumulatively by the end of 2020, there first software pack of the country. have been 170 FDI licensed investment projects, out of 220 operating in Tan Thuan About 1-2 hours by plane export processing zone, which come from 23 countries and territories with the Distance about investment capital of FDI enterprises up 1,500 - 2,000 km to 1.6 billion USD. Export turnover in 2020 reached 2.022 billion USD and create jobs INTERNATIONAL COORDINATES for 65,000 workers. Famous FDI enterprises operating here include Furukawa Regional Location of international coordinates of HCMC Automotive Parts, Nidec Tossok, Renesas Design, Juki, Mitex, CMC group, FPT group, 2.1.1. The first export-processing zone Pepperl + Fuchs Co... With a view to finding a new investment attraction model, after consulting and Since the pilot model of operation of this drawing on international experiences, the first export processing zone was launched, People’s Committee of Ho Chi Minh City Ho Chi Minh City now has a total of 3 through Tan Thuan Industrial Development export processing zones and 20 industrial Company Limited (IPC) decided to parks. established the first export processing zone in Vietnam in 1991 under Decision No. On a national scale, the country now has 394/CT. of the Chairman of the Council of 392 industrial parks established in 61/63 Ministers. provinces and cities directly under the Central Government with a total area of 119.9 thousand ha; 26 border-gate economic zones were established in 21 provinces and centrally run cities with land borders with a total area of about 766 thousand hectares and 18 coastal economic zones were established in 17 provinces and cities directly under the Central Government. (Source: Deputy Minister Tran Duy Dong attended the conference to implement investment and construction plans for industrial parks in 2021, Hai Duong province). 75

2.1.2. The first Stock Exchange (HOSE) 2.1.3. The first Software Park (QTSC) The Ho Chi Minh City Stock Exchange, also known Established on March 16, 2001, Quang Trung as HOSE was established in 2001 as Vietnam’s Software City (QTSC) was designed according first stock exchange. After 21 years of operation, to the software city model on a total area of 43 HOSE has 38 listed companies with billion dollars hectares. QTSC has attracted 27 investors and 146 capitalization. At the close of trade on July 20, IT enterprises, including 1 enterprise with over 2021, there were 3 enterprises listed on HoSE that 2,000 people and 5 enterprises with over 1,000 entered the “club” with a capitalization of over 10 people. There are large domestic and foreign billion USD, including Vietcombank (VCB), Vinhomes brands operating such as KDDI, SPS, TMA, Hitachi (VHM) and Vingroup (VIC). Notably, in more than Vantara Vietnam, Concentrix, LARION, DIGI-TEXX, two decades of operation, more than 68% of MISA, VinaData... The total number of people enterprises on HoSE have increased their charter participating in studying and working regularly is capital after being listed on the stock exchange, about approx. 21,266. The IT businesses at QTSC contributing to improving financial capacity, have also developed 650 products, services and facilitating development and expanding production solutions in a variety of fields, providing them to more than 20 countries worldwide. After more than As of the end of June 2021, HOSE had 488 securities 20 years of operation, QTSC has been evaluated by codes traded, including stocks, fund certificates, the Ministry of Information and Communications covered warrants and listed bonds. The total volume as the largest and most successful concentrated of listed shares reached more than 103.8 billion IT zone in Vietnam today and has been studied by shares. The listed market capitalization reached many localities. nearly VND 5.3 million billion, an increase of nearly 6.2% compared to the previous month and In 2017, according to the assessment of consulting an increase of nearly 30% compared to the end of group KPMG, when evaluating 8 technology parks 2020, reaching nearly 84% of GDP in 2020 (GDP at with the same scale as QTSC in Asia, QTSC stood current prices). from the others assessed with the following attributes: outstanding incentives, variety of investors from different industries, sustainable business development in the local area and strong growth. Office building of HOSE - Ho Chi Minh City Quang Trung software park Stock Exchange 76 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

SHTP - Saigon High-tech Park 2.1.4. The Saigon Hi-Tech Park (SHTP) SHTP’s activities, “In the first 6 months of 2021, - Saigon Silicon City SHTP’s production value was estimated at USD 11.237 billion, up 50.8% over the same period and Located at the Northeastern gateway of Ho Chi reaching 44.9% of the plan, export value is USD Minh City, Ho Chi Minh City Hi-Tech Park (SHTP) 10,459 billion, up 50.6% and import value reached was established on October 24, 2002 and is one US$9.274 billion, up 55.1% over the same period. Up of the three National Hi-Tech Parks established to now, it is estimated that the production value by the Government. After more than 17 years of of high-tech products of SHTP is 96,655 billion establishment and development, SHTP has become USD, the export value is 90.879 billion USD and the a reliable destination for high-tech investment import value is 82,060 billion USD” . in Ho Chi Minh City as well as Vietnam, focusing on 04 spearheads including: (i) Microelectronics At a business meeting in early 2021, the SHTP - Information technology - Telecommunications; Management Board set the goal of becoming a (ii) Precision mechanics – Automation; (iii) major contributor to the city’s export turnover. Biotechnology applied to pharmaceuticals and the Specifically to strive to reach about USD 30 billion environment; (iv)New Energy - New Materials - in export value by 2025, in which domestic value Nanotechnology. added to reach more than 35%... Particularly in 2021, SHTP strove to bring the production value of high- Investment statistics by country and territory show tech products to 25 billion USD; domestic value- that SHTP is an ideal destination for many high- added reached 25%. These are challenging goals tech projects and corporations in the world, such in the current context, requiring great efforts from as: Intel Corporation with total investment of (1.04 many sides. billion USD); Nidec Corporation (Japan - 296 million USD); Samsung Group (Korea - 2 billion USD), Nipro Export processing zone & Industrial parks Group (Japan - 300 million USD). About 60% of At present, Ho Chi Minh City is home to 3 export- foreign projects invested in SHTP are concentrated processing zones and 14 operating industrial parks on the field of high-tech manufacturing, research in operation with the total area of 2,509 hectare and development (R&D). and tenant occupancy rate of 68.4% (last measured in 2018). As of the end of 2017, there were 564 In 2020, the production value reached nearly 21 foreign investment projects operating domestically billion USD, up more than 23% over the same period with the total registered capital reaching 5.68 of the previous year billion USD. According to Mrs. Le Bich Loan, Deputy Head of According to the chairman of the People’s SHTP Management Board, cumulatively up to Committee of Ho Chi Minh City Nguyen Thanh now, SHTP has 164 projects and valid investment Phong, HCMC is the country’s pioneer in issuing registration certificates with a total investment the digital transformation program to promote capital equivalent to $8.4 billion. Although the the development of the digital economy, digital Covid-19 epidemic caused certain difficulties in government and digital society. 77

2.2. The cosmopolitan city Notre Dame Cathedral More than three hundred years have elapsed When Entrepreneurs or international experts since the footprints of the original pioneers come here to look for business opportunities to break fresh southern ground were first and to invest they often intend to stay here for recorded, up to now,. The city serves as a a long time, so you can find Japanese or Korean melting pot to fuse wave after wave of people speaking elementary and middle schools, and there from all parts of the country who continue is a whole chain of schools from kindergarten to migrating here, picking up the baton of elementary to high school taught in English. To pioneering spirit of the previous generations ensure future development, there are international to discover the opportunities in this land as universities such as RMIT and the Vietnam-Germany well as to test their mettle. University established here. In the stream of time, along with the process The Royal Melbourne Institute of Technology (RMIT) of opening up the economy and international - Ho Chi Minh City integration, this city has accommodated new waves of global citizens. These international This city has truly become a cosmopolitan city and entrepreneurs, engineers, and lecturers not the processes of acculturation, purification and only bring factories, workshops, and training absorption of new things are still going on. schools here, they also carry with them their subcultures of their homeland to enrich the In fact, this city has long been a cosmopolitan city, city. In addition to Kentucky and McDonald’s as evidenced by the streets named after honorary fast-food restaurants or Starbucks coffee international citizens to honor their contributions shops that can be found in any major city in to the existence and development of this country the world, here, the quintessential Chinese, like Calmette, Yersin, Alexandre de Rhodes and Cantonese, French, Italian, Thai, Japanese, Pasteur. These honorable citizens like Calmette and Korean, and Thailand cuisines... also converge Yersin were the first people who helped to establish in this city to be able to satisfy most diverse the Pasteur Institute in Saigon. And Yersin also culinary tastes. founded the Pasteur Institute in Nha Trang town, introduced the rubber trees and acclimatized the In addition to the Chinatown, which is mainly concentrated in District 5 with its typical Chinese architecture, if we have time to go deeper into each area and each district of the city, we can see lively backpacker street (Bui Vien street), Japanese street (corner of Le Thanh Ton street), Korean village with typical miniature cultural spaces. This is the place where east and west fuse together. Here you can see the Notre Dame Cathedral soaring in the cities downtown, with its architectural works imbued with classical French style or Buddhist pagoda roofs glimpsed here and there, or the international hospitals and the oriental medicine clinics both coexisting. 7878 VietVHniaoemtCnhaCimhMaiCnmhhbaCemirtyboBefrrCaonofcmChmomermceeracnedaInndduInsdtruystry Ho Chi Minh City Branch

cinchona tree, which enabled Indochina to meet its quinine needs during the Second World War. He also explored the Lam Vien Plateau, where he recommended that a town, the future Da Lat town, be built. And Alexandre de Rhodes, is the man who completed a transcription of the Vietnamese language into Roman script that was later adopted by modern Vietnamese as their official writing system, Quoc-ngu (“national language”). To qualify as a cosmopolitan as well as metropolitan city in the 4.0 revolution, many developments still need to be made to provide complete infrastructural modernity and convenience. Ho Chi Minh City’s first two metro lines are undergoing construction and Long Thanh International airport will commence construction in the near future. Over the years, more internationally accredited universities (Vietnam-German University and RMIT) and hospitals (Vietnam-France hospital) have also been established here. Essentially, these changes mark Ho Chi Minh City’s progression towards a developed smart-city platform with improved quality of life. The cosmopolitan city character is an essential attribute of Ho Chi Minh City, so what are the key values the city aspires to? The slogan of the city “Civilization, Modernity, Gratitude” as well as the image “vibrant” that the city’s authorities project to attract the tourists implies what is valued by the city. At the 25th session of the summarizing meeting of the term IX 2016-2021 of Ho Chi Minh City People’s Council on April 22nd of 2021, Chairman of the Ho Chi Minh City People’s Committee Nguyen Thanh Phong shared that Ho Chi Minh City’s vision is to become an economic and financial center of Asia by 2045, with gross domestic product per capita (GRDP) of about 37,000 USD and to become an attractive destination.. 79

2.3. The vibrant City A section of the anti-flooding project Compared to the ancient capital Hanoi with A major anti-flooding project worth approximately thousands of years of civilization, this city still VND10 trillion (US$430 million) in Ho Chi Minh City remains a young city. In the course of time of is expected to be complete by the end of 2021. exploration and construction, this city, Saigon – the The BT (build-transfer) project is expected to former name, was once named “the pearl of the far proactively handle tide-related floods and lessen east”. climate change consequences in a vulnerable 570-square-kilometer urban section of the city The city has constantly been reenergized through center and along the Saigon river which is the waves of newcomers full of vigor and vitality. inhabited by around 6.5 million people. The project That’s why the city always stays vibrant. In fact, includes six major tidal gates, seven kilometers of the city’s tourism image is portrayed by the motto embankment along a section of the Saigon River, “Vibrant Ho Chi Minh City” (source: report of the 68 small drainage networks, and pumping stations People’s Committee 2020) with a capacity of 12-24 cubic meters of water per second. Jones Lang LaSalle’s (JLL) City Momentum Index 2020 has named Ho Chi Minh City as one of the (ii) Addressing the infrastructure deficit world’s most dynamic cities and ranks third out of Rapid urbanization and strong economic growth are 130 major established and emerging business hubs putting huge pressure on existing infrastructure. worldwide. Many of the Top 20 cities are failing to keep pace with the growing demands for high-quality According to JLL, the City Momentum Index looks transport and utilities, and consequently they at 20 indicators including recent percentage have become among the world’s most congested changes in city GDP, population, air passengers cities. Many cities in the Index are addressing their and corporate headquarters presence; projected infrastructure deficits, with some further advanced percentage changes in GDP, population and retail than others: sales; and recent levels of and changes in foreign direct investment, as a proportion of a city’s As mentioned by JLL “Both Ho Chi Minh City economy. and Hanoi are also responding to congestion by investing heavily in new metro networks, following According to JLL: “Exports to the U.S. have soared the Chinese cities’ approach of creating large, as Vietnam’s economy profits from the China-U.S. commuter-intensive public transport systems. trade dispute, which is forcing some companies A second international airport is also being to shift their supply chains. Ho Chi Minh City and constructed for Ho Chi Minh City”. Hanoi are set to have among the highest economic growth globally over the next several years. This Ho Chi Minh City’s metro line 1 between Ben Thanh strong economic momentum is also being reflected and Suoi Tien is under construction. in healthy office market dynamics”. Key issues with which all cities have to deal with include: (i) Building resilience to climate change Several of the cities in the Index Top 20, including Ho Chi Minh City, Manila, Shanghai and Mumbai, are particularly susceptible to rising sea levels. Climate change is also leading to an increase in the frequency and severity of extreme weather events such as heatwaves, flooding and drought, with which many fast-growing cities are ill-equipped to deal. Poor urban planning and unchecked real estate construction are compounding the problems, making cities more vulnerable to weather extremes. 80 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

Ho Chi Minh City’s metro line 1 between Ben Thanh (iii) Finding smart solutions and Suoi Tien is under construction. To meet the challenges of growth and improve the lives of their citizens, cities are turning to Ho Chi Minh City’s first metro line: being built at ‘smart city’ solutions, propelled by technology a cost of VND43.7 trillion ($1.89 billion), it will have such as sensors and loT connected devices 14 stations, three underground and 11 surface, some as well as the ever-increasing capability to elevated and is expected to be completed early capture and analyse large volumes of data. 2022. Many cities in the Index Top 20 are still only at the beginning of their journey to becoming Long Thanh International airport project: Located ‘smart’, and limited scalability and a lack of 40km to the east of Ho Chi Minh City, Long Thanh resources are common challenges. In Vietnam, airport is expected to relieve overloading at Tan Ho Chi Minh City and Hanoi are pushing smart- Son Nhat international airport in the southern city initiatives in order to promote sustainable metropolis, now the country’s largest airport. development. These initiatives have attracted According to the ACV (the Airports Corporation of foreign investors such as Sumitomo, Lotte Vietnam), the Long Thanh International Airport is Group and ABB Group (Source: JLL report) being built in three phases over three decades. In the first phase, one runway with a length of 4,000m, City’s goal toward smart city: According to the taxiways, an apron, and a passenger terminal with objectives laid down by the city authorities, other auxiliary works sprawling 373,000sq.m will be the city is developing a program to implement built to serve 25 million passengers and 1.2 million the project to build Ho Chi Minh City into a tons of cargo each year. smart city by 2025. The city has completed and announced the results of phase 1 of the four The airport, which is expected to cost 336.63 pillars of the project, which are: (1) Shared trillion VND (14.5 billion USD), is designed to have Data Warehouse and Open Data Ecosystem; four runways, four passenger terminals and other (2) Smart city operating center; (3) Center for auxiliary facilities to ensure a capacity of 100 Socio-Economic Simulation and Forecasting; million passengers and 5 million tons of cargo a (4) Information Security Center. In addition, year by 2040. to this application of modern technological solutions in the fields of traffic, health, education, flood control and the environment with some initial results has provided a number of benefits to people. The Thu Thiem Eco-Smart City project located in the historic Thu Thiem Ward is one of the most important developments of the smart city drive. The private-public partnership, funded with $1.9 billion USD from South Korea’s Lotte Group, brings together smart planning and advanced IT infrastructure to build a modern, high-tech area with various convenient services such as banking, shopping, and entertainment. (Source: HCMC People’s Committee Report 2020). 81

(iv) Creating more balanced development 2020 affirms that the city has sufficient intrinsic Poor urban planning and unchecked strength. construction have led to haphazard and uneven development in many of the Top 20 Ho Chi Minh City continues to maintain its position cities. Several are now looking to rebalance as the economic locomotive of the country, GRDP their spatial inequalities through ambitious in the period 2016-2019 increased by 7.72% on plans to build new districts and create average,contributing over 22.2% of the national mechanisms to refocus development. economy. Ho Chi Minh City is seeking to develop a new Per capital income of Ho Chi Minh City urban center on the Thu Thiem peninsula compared to the whole country (District 2) - which has drawn comparisons to Pudong in Shanghai - in order to reduce n HCMC n National average pressure on the city center and preserve historical buildings from demolition and 5.757 6.129 6.417 6.328 redevelopment. To boost infrastructure works and improve accessibility to Thu Thiem, the 5.413 city has implemented a Build Transfer (BT) programme in which developers obtain land in USD/person/year 3.521 exchange for building infrastructure. 2.215 2.389 2.590 2.800 2016 2017 2018 2019 2020 Source: The Political Report at the 11th Party Congress of Ho Chi Minh City, term 2021 - 2025 2.4. Growth pole Investment capital structure and enterprise’s contribution by business sector to HCMC’s GRDP 2.4.1. The scale and the positioning of the city n Investment capital structure by sector in HCMC’s GRDP The economic scale of Ho Chi Minh City in 2020 n Contribution of businesses in each sector to HCMC’s growth reached USD 58.3 billion, although the GRDP growth rate last year was affected by the Covid19-epidemic State enterprises 16.7 27 slowed down, increasing by only 1.39%. 14.2 FDI Ho Chi Minh City is also Vietnam’s largest industrial 18 and service center, accounting for 15% of the Non-state country industry and 33% of its service sector... enterprises 69.1 In particular, the basic elements of science - 55 technology, innovation and creativity has made an important contribution to improving the growth 0% 10% 20% 30% 40% 50% 60% 70% 80% quality of the city; in which, the contribution of total factor productivity (TFP) continuously Source: HCMC People’s Commitee increased, more than 2.6 times; GRDP per capita is more than 2.4 times the national average, reaching The contribution of total factor productivity (TFP) 6,328 USD/year by the end of 2020. to GRDP has continuously increased over the years; average labor productivity was 2.6 times According to the leader of the People’s Committee higher than the national average; investment of Ho Chi Minh City, despite being severely affected efficiency has been improved. GRDP per capita has by the Covid-19 epidemic, in 2020, Ho Chi Minh continuously increased over the years and was 2.4 City still contributed more than 25% of the state’s times higher than that of the whole country. Ho budget revenue. The fact that HCMC’s domestic Chi Minh City is the largest contributor to the state revenue increased from 61.1% in 2016 to 71.4% in budget, accounting for 27% of the total in 2019. 82 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

2.4.2. Key macroeconomic performance (i) Gross Regional Domestic Product (GRDP) Average growth of gross domestic Contribution to the national economy product in the City (GRDP) Period 2015 - 2020 Period Growth (average %/year) Share in GDP of the Contribution 1976 - 1985 2.7 whole country (%) to the budget (%) 1986 - 2010 10.2 2011 - 2015 9.6 ~ 23 ~ 27 2015 - 2020 8.3 0 2 4 6 8 10 12 Source: HCMC People’s Committee The gross regional domestic product (GRDP) of Ho Chi Minh City in 2020 reached 58.3 billion USD and the growth rate reached 1.39%. Economic structure of Ho Chi Minh City GRDP structure of Ho Chi Minh City in 2020 in the first 6 months of 2021 n Agriculture, forestry 1% Industry, and fisheries 13% Construction n Industry, construction n Service 22.20% n Product tax 24% Agriculture, forestry and fisheries 22.20% Source: Ho Chi Minh City 62% Trade %7.89 %7.89 Statistical Office in Services %7.89 Industry, 63.59% Construction 22.20% + The agricultural, forestry and fishery sector The city’s industrial production has also had an increased by 2.06%; the industry and construction average growth rate of 5.51% over the past 5 years, sector increased by 0.43%; the trade and service ranking first in the country, currently accounting for sector increased by 2.17%. 17.93% of GRDP. As a dynamic city, it has attracted many private investors.In the past 5 years, the total + Industry and construction: industry increased by social investment capital on average accounted 0.47%; construction industry increased by 0.26%, for 33.5% of GRDP, exceeding the plan by 30%. The structure has shifted in the direction of reducing + The trade and service sector had an increase of the proportion of the state sector, now only 2.17%. 16.7% and increasing the proportion of non-state investment, now 69.1%. The proportion of FDI sector (source: Ho Chi Minh City Statistical Office) remaining stable at 14.2%. 83

Investment capital structure and The strong investment of private capital also shows enterprise’s contribuiton by business that the contribution of non-state enterprises to sectorto HCM’s GRDP the city’s GRDP growth is the highest, up to 55%, making it an important contribution to economic n Investment capital structure by sector in HCMC’s GRDP restructuring, creating jobs for the labors. n Contribution of businesses in each sector to HCMC’s growth The foreign business sector (FDI) also continuously State increased investment with an average growth rate enterprises of nearly 8.6% per year. During the 2016 - 2020 period, total capital including newly registered, FDI adjusted and paid in capital for share purchase was Non-state 29.2 billion USD, contributing 18% of the city’s GRDP. enterprises  (ii) Consumer price index (CPI): 0% 10% 20% 30% 40% 50% 60% 70% 80% The average CPI in 2020 was 2.78% (source: Ho Chi Minh City Statistical Office). Source: HCMC People’s Committee (iii) Export - import turnover IN THE CITY, THERE ARE With import - export turnover accounting for CURRENTLY 9,958 VALID FOREIGN 145% of GRDP, the city’s economy has a large INVESTMENT PROJECTS, trade openness. Export scale accounted for 15% WITH A TOTAL INVESTMENT of the whole country. In the period 2016 - 2020, CAPITAL INCLUDING NEW AND growth rate of export turnover of goods was INCREASED CAPITAL OF ABOUT 8.94%, of which, the total export value during 48.19 BILLION USD. that period of the hi-tech park was 63.6 billion USD. The transportation and warehousing industry also strongly contributed to the GRDP growth, accounting for 9.8% of it. + Export: The total export turnover of enterprises in 2020 was 43.8 billion USD, up 3.1% over the same period of the previous year (up 10.7% in the same period). + Import: Import turnover of goods in 2020 was 50.87 billion USD, down 1.1% over the same period (increasing by 9.2% in the same period). In the first 6 months of 2021, the export turnover of goods from border-crossing cities reached 21,912.3 million USD, up 5.1% over the same period last year; exports excluding crude oil alone reached 21,137.8 million USD, up 5.8% over the same period last year. China remained as the largest export market of HCMC with export turnover in 2020 reaching 10,522.6 million USD, up 23.7% compared to 2019, accounting for 26.2% of total exports. However, trade deficit with China still reached 5,921.9 million USD. 84 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

Export turnover and export growth rate Status of granting foreign investment licenses. in key markets in 2020 China The U.S Japan Hong Kong EU 5 localities attracting the most FDI in 2020 10.52 6.70 25.9 5.05 Billion USD 5 3.26 -0.6 4 2.81 3 23.7 -0.2 2 Bac Lieu Ha Noi Ba Ria Binh Duong 1 -16.0 0 n Export value (billion USD) HCMC n Export growth rate (%) - Vung Tau Source: Ho Chi Minh City Statistical Office Source: Foreign Investment Agency Secondly, exports to the US market reached USD 6,701.5 million, down 0.2% compared to 2019, accounting for 16.7% of the export share and a trade surplus of 4,111.2 million USD. Thirdly, exports to the Hong Kong market reached 3,262.5 million USD, up 25.9% compared to 2019, accounting for 8.1 % of export proportion and trade surplus reached 1,917.5 million USD. The export value of Hochiminh City to European markets (EVFTA) in 2020 reached 5,052.4 million USD, down 0.6% compared to 2019 and accounting for 12.6% of total export turnover. Import and export of goods 6 months of 2021 IMPORT & EXPORT OF HCMC’ ENTERPRISES THROUGH THE PORT OF HCMC IMPORT 24,877 EXPORT 20,344 Million USD Million USD 21.3% 5.6% Main market Main market 9.438 1.938 1.924 9.438 9.438 9.438 Source: Department of Statistics 85

(iv) FDI Inflow: In Hochiminh City, there are currently 9,958 valid foreign investment projects, with the total In 2020, Ho Chi Minh City attracted 4.36 billion USD investment capital of about 48.19 billion USD. of FDI capital (down 47.49% over the same period of In 2020, there were over 150 projects in HCMC 2019): proposed to cease operation, with a total value of 321.88 million USD. + Newly registered capital: 950 projects was granted investment certificates with total registered 2.4.3. Region integration capital of 637.68 million USD (a reduction of 28.3% in project quantity and 65.37% in capital amount With the leading role, Ho Chi Minh City promotes compared to the same period of the previous year) regional linkage activities. An important highlight in the period 2016 - 2020, the city and the provinces + By sector: Wholesale and retail, repair of in the region implemented linkages in goods supply automobiles, motorcycles and motorbikes received and demand, transport development, tourism, the most investment capital, accounting for environmental protection, disease control, human (36.57%); followed by the manufacturing and resource training and human resources to serve the processing industry (14.79%); Real estate business socio-economic development of the region. In 2019, (14.43%); Transportation and warehousing (13.7%); the city and Tay Ninh province signed a cooperation Professional, scientific and technological activities agreement to implement the City - Moc Bai highway (12.18%). project (Tay Ninh). HCMC and 13 provinces and cities in the Mekong Delta signed a cooperation + By counterpart: Singapore was the largest program to develop tourism in the period of 2020 investor, accounting for (26.59%) of total - 2025, gradually turning tourism into a spearhead investment; followed by Japan (17.7%); Korea economic sector. (10.33%); British Virgin Islands (8.66%); Germany (5.28%). + There were 250 projects registered to adjust their investment capital with an additional investment of 540.87 million USD. Attracting foreign investment 1,43 From January 1, 2021 to June 20, 2021 Million USD Capital contribution, shares purchase 29.25% 1,040 Capital adjustment projects 75 Capital adjustment Real estate Transport Trading 262 686,5 projects tum 126 million USD 52.2 million USD 51.1 million USD projects Million USD 475,3 264,4 Million USD Some sectors having a high proportion Million USD Manufacturing Professional activities, 273.6 million USD science and technology 273.6 million USD 86 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

3. LOOKING FORWARD 3.1. Development orientation 3.3. Vision & goals General planning of Ho Chi Minh City to 2040, vision Mr. Nguyen Thanh Phong (ex-chairman of People’s to 2060. Committee) said that the Resolution of the 11th City Party Congress for the 2020-2025 term identified According to the content of Decision No. 2716/ three specific milestones according to the central QD-TTg dated December 22, 2017 of the Prime vision to 2045. Minister approving the adjustment of construction planning in HCMC area, Ho Chi Minh City should By 2025, Ho Chi Minh City must become a focus on “prioritizing the development of high- smart and innovative city and be able to tech industries (CNC), clean industries and provide modern industrial services. The city will supporting industries”, limiting and not developing maintain its role as an economic locomotive and industries that are labor intensive, or use outdated growth engine of the Southern Key Economic technology. Also management policies are needed Zone. . Quality of life should be high with for businesses to actively move, and at the same expected GRDP per capita of about 8,500 USD. time attract and replace other industries to suit the nature of Ho Chi Minh City and the southern key By 2030, Ho Chi Minh City must be a modern economic region. industrial and service city. Besides, HCMC at this time must be a cultural city, a leader in digital According to the urban planning of Ho Chi Minh economy and digital society. It is estimated that City, by 2030 the total urban area of the city the per capita income of HCMC people in 2030 will expand to 30,404 km2, the population is will reach 13,000 USD. Ho Chi Minh City must forecasted to be about 24-25 million people and become the economic, financial, scientific and the urbanization rate will reach 70-75%. The master technological center of Southeast Asia. plan aims to develop HCMC into a dynamic and sustainable developing city. By 2045, Ho Chi Minh City will be positioned as an economic and financial center of Asia, with 3.2. Fine-tuning sustainable development and high quality of life. The average income per capita is estimated General planning of Ho Chi Minh City to 2040, vision at 37,000 USD, which is an attractive global to 2060 . location. On behalf of the Prime Minister, Deputy Prime Minister Le Van Thanh signed Decision 1528/QD-TTg approving the task of adjusting the Ho Chi Minh City Master Plan to 2040, with a vision to 2060. The objective is to adjust the city master plan in line with the development orientation of the whole HCMC region, towards developing the city into an international trade center of the country and the region; center of culture, creative knowledge, scientific research and technology transfer, regional high-tech industry; tourism, finance - trade and international logistics services. 87

The Resolution of the 11th Ho Chi Minh City Party HO CHI MINH CITY Congress for the 2020 - 2025 term defined three POSSESSES MANY specific milestones for the development of the city, in line with the vision toward 2045 laid down by the ADVANTAGES TO FORM AND central government’s level to 2045, namely. DEVELOP INTO A REGIONAL By 2025: The city will become a smart, service and industrial city with modern orientation, maintaining AND INTERNATIONAL its role as the economic locomotive and growth FINANCIAL CENTER IN THE engine of the Southern Key Economic Zone and the whole country, at the forefront of innovation and NEAR FUTURE. FIR.ST OF working towards a good quality of life, under the ALL, IN RECENT YEARS, THE motto of civilization, modernity & gratitude. GRDP per capita would be reaching 8,500 USD. CITY HAS ALWAYS BEEN By 2030: To be a modern industrial, service & THE “HEADQUARTERS”, cultural city, serving as a leading light in the digital THE MAIN DRIVING FORCE economy and digital society, GRDP per capita OF VIETNAM’S ECONOMY, would be about 13,000 USD, and becoming center CONTRIBUTING ABOUT 23% of Southeas Asia in terms of an economy, finance, OF GDP AND ABOUT 27% OF trade, science-technology and culture. THE NATIONAL BUDGET. Vision to 2045: To become an economic and financial center of Asia, with sustainable development, and a high quality of life, GRDP per capita would be about 37,000 USD, and to serve as a global attractive destination. 88 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

Ho Chi Minh City is positioned to become the economic and financial center of Asia by 2045 The 11th Party Congress of Ho Chi Minh City, for the 2020-2025 term, has set out 26 development targets in five areas. Expected average annual growth rate of GRDP is about 8%; digital economy to contribute about 25% by 2025, 40% by 2030 in GRDP; the average growth rate of social labor productivity to be 7%/year; number of citizen satisfied with public services to be increased (over 95%). Among many development goals and tasks, turning the city into a regional and international financial center is considered one of the key goals of Ho Chi Minh City in the near future. This task has been included in the city’s 10-year socio-economic development strategy for 2021- 2030. Last March, the People’s Committee of Ho Chi Minh City sent a written request to the Prime Minister for approval. for the city to develop the project of a regional and international financial center in the city. Ho Chi Minh City possesses many advantages to form and develop into a regional and international financial center in the near future. First of all, in recent years, the city has always been the “headquarters”, the main driving force of Vietnam’s economy, contributing about 23% of GDP and about 27% of the national budget. Secondly, the city attracts an average of over 33% of the country’s total foreign direct investment projects. The concentration of financial institutions is the highest compared to other localities, the total credit capital mobilized in the city accounts for an average of 24% of the total mobilized capital of the country; total outstanding loans also accounted for 28% of total outstanding loans of the whole economy. The city is also the birthplace of Vietnam’s first stock market, the total capitalization value at the Ho Chi Minh City Stock Exchange accounted for more than 77% of the total market capitalization and 51.27% of GDP nationwide in 2020… Towards the goal of a regional and international financial center, the city is oriented to become a national financial center in the short term. In the medium term, the city will reach to become a regional financial center, providing financial services to neighboring countries and then expanding to ASEAN and Asian countries. In the long term, the city targets to be the destination of leading financial institutions and economic organizations of both the region and the world. Prof. Dr. Su Dinh Thanh, Rector of Ho Chi Minh City University of Economics, said that in order to become a regional and international financial center, the city’s financial system needs to be developed synchronously. Accordingly, focusing on developing the system of financial, currency, bond and stock markets; development of asset management technology; development of financial services; strengthening the global network of financial technology; perfecting the supervision system and financial regulations... 89

10 REASONS TO INVEST IN HO CHI MINH CITY 01 02 THE TRADE & INVESTMENT STRATEGIC CAPITAL OF VIETNAM LOCATION As mentioned above, Ho Chi Minh city serves Within a 4 - 5-hour flight time to most Asian as a growth pole, the growth locomotive as key markets, it is at the heart of the key well as the largest contributor to GDP, budget Southern economic region and is the junction and export revenue of the country point in the Southern Economic Corridor linking Ho Chi Minh City with Phnom Penh (Cambodia), Bangkok (Thailand) and Dawei (Myanmar). Map: Southern key economic zone 90 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

03 04 MODERN INFRASTRUCTURE HIGH-STANDARD AMENITIES The nation’s largest international airport and Good availability of international universities seaport are located here. In the area of Ho (RMIT, Vietnam - German universities...), Chi Minh City, there are 17 industrial zones international hospitals Vietnam-France including 3 EPZs, 13 IZs and 1 hi-tech zone in international hospital), international schools, operation. The nation’s leading international supermarkets, and office buildings. airports and seaports are located here and Long Thanh international airport as the Ho Chi Minh City has the largest road system regional scale is under construction. The among urban areas in Vietnam with a total large pool of universities, colleges as well length of over 4,000 km. as vocational training schools, including (Source: Tienphong News) international universities such as RMIT and Vietnam-German universities are a source of providing qualified human resources and that is the reason why international corporations like Intel, SAMSUNG amongst others. have decided to set up their manufacturing bases here. Cat Lai port located by the Dong Nai river is 06 one of the key ports of Ho Chi Minh City’s port system. This is now the largest and most DYNAMIC ENTREPRENEURSHIP modern container port in Vietnam and is listed among 25 leading ports in the world. StartupBlink - The Global Innovation and (source: Tienphong news). Entrepreneurship Research Center - has released the Startup Ecosystem Ranking 05 for 2021 for 1,000 cities and 100 countries worldwide. Accordingly, Vietnam continues to COSMOPOLITAN & VIBRANT CITY maintain 59th position. This organization ranks - Business & investment friendly startup ecosystems in countries based on the environment following criteria: number of startups and start-up support organizations; the quality of In the capacity of a cosmopolitan & vibrant these startups and organizations and business city, Ho Chi Minh city is a focal point where environment. waves of talent and investment gravitates and The report of StartupBlink also shows that where international sub-cultures form and Hanoi and Ho Chi Minh City have increased grow together with local identity. their ranking compared to 2020, Ho Chi Minh City jumping 46 places to 179th position; with Hanoi rising 5 places to 191 and this has put both cities in the top 200 global startup cities. 91

07 08 CONCENTRATED STOCK OF TOPS THE LIST IN FDI HUMAN RESOURCE & LABOR ATTRACTING LOCALITIES FORCES Figures and trend speak for themselves. Ho Chi Minh City has the largest number of According to the Foreign Investment Agency universities, colleges, vocational schools (Ministry of Planning and Investment), in 2020, in Vietnam. There are over 60 universities, Ho Chi Minh City has attracted $4.36 billion FDI nearly 50 colleges and 35 vocational colleges capital. and training schools located here. One of the principal reasons for big corporations such as 5 localities attracting the most FDI in 2020 Samsung or Intel to establish their base in Ho Chi Minh City can be attributed to a wide and 5 skilled labor force. 4 3 Billion USD 2 1 0 Bac Lieu Ha Noi Ba Ria Binh Duong HCMC - Vung Tau Source: Foreign Investment Agency 09 10 HIGHEST PURCHASING POWER ADVANTAGE OF THE COUNTRY OF THE HUB Ho Chi Minh City ranks top in comparison Although facing sharp decline of tourist other domestic areas in terms of highest arrivals due to the pandemic, the total number population income per capita reaching 6.328 of tourists visiting Ho Chi Minh City in 2020 USD in 2020. reached 17,182 million, of which international visitors reached 1.303 million. Per capita income of Ho Chi Minh City compared to the whole country USD/person/year n Ho Chi Minh City n National average 5.757 6.129 6.417 6.328 5.413 3.521 2.215 2.389 2.590 2.800 2016 2017 2018 2019 2020 92 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

APPENDIX a. List of key projects and programs in HCM City Service sphere Projects, programs Responsible agencies 1. Finance l Setting up HCM City Financial Center Department of Finance l Setting up HCM City Finance Investment Corporation 2. Trade l Identifying key export products, developing Service of Trade distribution, retail and e-commerce networks - Forming the International Trade Center in Thu Thiem Peninsula - Building the Goods Transaction Center 3. Transport, logistics l Hiep Phuoc Port New Town Department of Communication and and forwarding l Moving inner-city ports to outlying areas Public Works, Hepza 4. Telecoms and l Completing Quang Trung Software City project Department of Post information - Encouraging development of new e-towns and Telematics technology - Developing e-transaction services 5. Real estate l Thu Thiem New Urban Town Department l Saigon South New Urban Town of Natural Resources l Stepping up construction of residential areas and Environment l Housing program 6. Consulting, l IT business incubator Departments of science- l Upgrading HCM City Scientific and Technological Construction, technology, Department of Science research and Information Center into a regional center and Technology application l Building key laboratories l Setting up venture investment funds to encourage application of technical studies l Building Economic Information Center 7. Tourism l Promoting the city’s tourism in and out Vietnam Economic Institute, l Linking with cities and provinces for tourism Department of Tourism development 8. Healthcare l Building one hi-tech treatment area in downtown Department of Health area and four at the city’s gateways - Building a 100-ha, US$85-million medical training center, hospital in Cu Chi District - Setting up a pharmaceutical holding company - Building a hi-tech diagnosis center in Saigon South - Building a traditional medicine center 9. Education l Zoning land for the International University The city’s Council of and training l Training technical workers Universities Source: The HCM City People’s Committee 93

APPENDIX b. Twenty large-scale projects calling for investment in Ho Chi Minh City No Name of project Sector Investment form Investment 1 Constructing elevated Road No.5 Transport Capital BOT, BOT S4.439 combined with BT billion (BOT priority) 2 Constructing the north-western radial road Transport BT (mainly S227 million (from Long An dike to Vinh Loc Industrial exploiting land) Zone) 3 Constructing Tam Tan road Transport ppp (BT contract) S278 mlllion 4 Constructing Metro Line No.2 (Ben Thanh - Transport ppp (BOT, BOT S833 million combined with Thu Thiem section and Tham Luong - Tay Ninh BT) Station - Tay Bac Cu Chi urban area section) 5 Constructing Metro Line No.4 (Thanh Xuan - Transport ppp (BOT, BOT $3.532 Hiep Phuong urban area) combined with billion BT) 6 Constructing Tram Line No.1 Transport n.a. $568 million Intrastructure 7 Constructing bus passenger terminal at Cho Intrastructure n.a. $50 million Lon Bus station Intrastructure n.a. $205 million 8 South Saigon wastewater treatment plant Infrastructure (Basin No.4) Agriculture n.a. $232 million Trade-services 9 Dredging, improving the environment, ODA, ppp $855 million building intrastructure, and exploiting land along Xuyen Tam canal ppp $55 million 10 Water environment improvement project Auction of land $745 million in the City, Phase 3 use rights 11 Investment in the city’s fisheries centre in Can Gio district 12 The complex located at 621 Phan Van Chi, Ward 7, District 6 94 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch

13 Implementing gentrification, building high- Urban FDI and other $648 million rise condominiums in the remaining area of gentrification invest ment Ward 11, District 8 forms 14 Implementing gentrification, building Urban FDI and other $274 million residential houses, high-rise condominiums in gentrification investment forms the investment area near Y-shaped bridge of Ward 8, District 8 15 Relocation of a school located in District Education FDI and other $137 mlllion 8 to create land for developing apartment buildings. investment forms 16 Constructing hospitals in the medical cluster Healthcare ppp $428 million of Tan Kien commune of Binh Chanh district 17 Constructing high-quality examination and Healthcare ppp $50 million treatment area in Zone 2 of Nguyen Tri Phuong hospital 18 Planning the construction of Rach Chiec Culture, sports FDI and other $922 million National Sports Complex investment forms 19 Constructing an amusement and public Tourism, BOT, BCC, and $17 million Service area (Zone I - Cultural activities area entertainment other investment of Historical Park - Ethnic Culture) forms 20 Constructing an adventure park and peace Tourism, BOT, BCC, and $20 million square (Zone IV - Cul tural activities area of entertainment other investment Historical Park - Ethnic Culture) forms 2022 Contact us: 0909 110 192 - Ms. Van Anh I 0963 010 900 - Mr. Lợi 95

CHAPTER I CHAPTER II CHAPTER III CHAPTER IV CHAPTER V

BUSINESS guide

1. INTRODUCTION TO NEW INVESTMENT LAW AND LAW ON ENTERPRISE 2020 (NEGATIVE LIST) Vietnam’s regulatory framework has been constantly revised to incorporate more favorable regulations for businesses to invest and operate in Vietnam. The Law on Investment 2020 (LOI) and Law on Enterprise (LOE) 2020, taking effect from 1 January 2021, have been playing a significant role in promoting and attracting foreign investment by reducing administrative procedures and providing additional investment incentives compared to its precedents. The laws and its guidance documents aim at fulfilling Vietnam’s commitments under international agreements to liberalize the business and investment activities in Vietnam, especially inbound foreign investment. Aside from certain economic sectors and industries as summarized in the table below, foreign investors could comfortably do business in Vietnam by setting up company(ies) or acquiring existing businesses in various areas. The LOI and LOE clearly specify the economic sectors that are conditional, prohibited or not open to both domestic and foreign investors. Prohibited sectors to both domestic 227 conditional sectors to both domestic and foreign investors and foreign investors (specific certificate/ license is required) l Trade in narcotics; l Trade in hazardous chemicals and minerals l Financial and professional services, exploitation l Trade in endangered flora and fauna and trading for energy and minerals, certain types l Prostitution of educations, ports operation, railroads and l Human trafficking, trade in human tissue airports, construction, medical services, trading and land surveying services, real estate service, and and body parts, human fetuses environmental services. l Human cloning l Trade in firecrackers l Debt collection services Sectors not allowed for market access Sectors subject to capital contribution conditions to foreign investors for market access to foreign investors l Press activities and information gathering l Advertising l Overseas contracted employment agency l Travel agencies and tour operation l Services incidental to agriculture, hunting and services l Public opinion polling forestry l Temporary import for re-export business l Film production, distribution and screening l Trading goods and services on the list of goods l Services incidental to mining and and services on which monopoly is held by manufacturing Vietnamese government in the commercial l Telecom services sector l Entertainment services l Other businesses. l Electronics games l Transport services l Production and distribution of cultural products l Insurance, banking, securities brokerage l Printing services l E-commerce business l Other businesses 98 Vietnam Chamber of Commerce and Industry Ho Chi Minh City Branch