How are Vietnamese businesses performing in Laos, Cambodia, Myanmar?
Vietnamese conglomerates have been expanding business by stepping up investments in neighboring markets. However, the path has not been a bed of roses.
 |
Among 70 countries and territories in which Vietnamese have investments, Laos, Cambodia and Myanmar are the three biggest target markets. Laos is the biggest FDI recipient from Vietnam, having accepted $5 billion worth of registered investments.
In January 2017, Viettel received an investment license for setting up a telecom network in Myanmar – Mytel. BIDV in 2016 got a license to set up a branch in Myanmar – BIDV Yangon with charter capital of $85 million.
The dairy factory Vinamilk built in Cambodia became operational in 2016, while the Vietnam Rubber Group began processing rubber latex in 2015.
Hoang Anh Gia Lai Group is one of the biggest outward investors. In addition to a series of projects on agriculture production in Laos, in 2015 built the Attapeu international airport worth $36 million and HAGL Center worth $550 million in Myanmar.
In 2016, it kicked off the second phase of HAGL Center and joined forces with Melia Hotel to run a luxury hotel in the country.
FECON JSC, after winning the bid on expanding an international terminal in Myanmar in 2015, set up a joint venture to implement the project.
Also in 2015, Dong A Shipbuilding Industry JSC set up a shipbuilding joint venture in Myanmar and the national oil & gas corporation PetroVietnam completed the building of a exploration rig in Brunei.
Not easy to make money
Of 10 overseas markets Viettel has invested in so far, Laos and Cambodia were the first destinations, where it runs two telecom networks Unitel and Metfone, which became operational in 2008-2009.
In 2016, Phnompenh Post reported that Viettel was looking to sell a stake in its Metfone to raise capital for its other global projects after Viettel Global reported its lowest growth in earnings since 2012.
The newspaper quoted sources as reporting that it was not easy to find investors for Metfone because the business was not doing that well, while the Vietnamese group still wants to hold the majority of shares.
Metfone’s valuation was at $94 million by Brand Finance in April 2016.
Hoang Anh Gia Lai Group once hoped HAGL Myanmar Center would bring billions of dollars in profit.
However, challenges arose when Myanmar imposed a new policy which taxes real estate transactions commencing April 2016. The tax rate is 5 times higher than the one applied in late 2015 and much higher than the 2 percent tax rate in Vietnam.
Vinacomin contributed VND55.8 billion to a mining project in Cambodia, but the project was dissolved in 2016.
