Private Hospital Projects Attract Foreign Investment

After many domestic investors failed to invest in the construction of private hospital, from 2014 until now, especially in the first months of 2016, there were many foreign investors interested in this area.

Recently, a US delegation composed of more than 40 representatives from US leading hospitals, pharmaceutical companies, medical equipment companies, research institutions and medical training institutions came to offer Ho Chi Minh City (HCMC) leaders, as well as with the 175 Military Hospital to join hands and develop the private health sector under the health socialization policy of HCMC till 2020.

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Benefits of Setting up Business in Hanoi

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Benefits of Setting up Business in Ho Chi Minh City

Assistance in Setting up Business in Vietnam

M&A Services in Vietnam

According to the chairman and founder of the worldwide health service network company, they want to invest in Vietnam medical sector. If so, in addition to investment in infrastructure and equipment in the public – private cooperation model, investors also need to invest in manpower training and hospital management model to operate more efficiently.

According to the Director of the HCMC Health Department, the city is having a lot of large projects that need the cooperation of both domestic and foreign investors such as the Health Complex in Tan Kien, Binh Chanh District, with many projects such as the City Children’s Hospital, Hospital of Otolaryngology campus 2, Hematology and Blood Transfusion Hospital, Oncology Hospital, Pham Ngoc Thach University of Medical campus 2…

The Government of Vietnam is conducting the socialization schedule  in the medical field. In fact, the total health expenditures of 93 million people in Vietnam now accounts for 5.8% of GDP, the highest in ASEAN, which is said to become the magnet for investors in this market.

In 2016, many foreign investors such as Bumrungrad Hospital Corporation (Thailand) and Lippo Group (Indonesia) have expressed their intention to develop hospital chain in Vietnam. This is considered a good time to invest in Vietnam health sector.

In a recent meeting with leaders of Vietnam Government, Temasek Corporation (Singapore) said that in the coming time, this corporation wish to promote investment activities in Vietnam, in which they will mainly invest in health sector by building private hospitals.

Earlier, in January 2014, Shangrila Corporation of Malaysia has invested to build Thanh Do Hospital in Binh Tan district, HCMC. The hospital has 320 beds, 21 clinical and subclinical specialties such as obstetrics and gynecology, pediatrics, surgery, cardiology, otolaryngology, ophthalmology, urology, cancer, hepatobiliary, digestion… Until June 2015, the hospital has announced to change their name and logo into City International Hospital (CIH).

At the beginning of 2016, the investors in the health sector continues to surprise when VOF Investment Fund (managed by VinaCapital) announced to takeover 75% stake in Thai Hoa International Hospital in Dong Thap province. The amount of money that VOF invested here is about 10 million USD.

According VOF, in the coming time, the Fund will continue to seek investment opportunities in the healthcare sector, including investment opportunities in equitized public hospitals if they feel attractive enough.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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Pharmacy and Healthcare in Vietnam

1. Overview

There has been an optimistic trend in pharmacy and healthcare industry in Vietnam. This industry is irreplaceable as the education level and life expectancy of Vietnamese have been significantly improved. However, due to some challenges, pharmacy and health care industry desires for a change in legal framework, thus creating favourable conditions for development in the futures.

2. Vietnam – next growing pharmacy and healthcare market

• Overview of market potential

With the population of around 94 million, 44% monthly increasing income, 30% urbanisation rate with 3.4% growth rate per year, 6% GDP growth per year, the demand for better development of pharmacy and healthcare industry has been significantly increased.

Business Monitor International (BMI) in their report “Vietnam Pharmaceutical and Healthcare” revealed that annual total value of pharmacy market $3 billion with annual growth of 15.5% period 2014-2018. The same report also showed that the total healthcare spending reaches $13 billion in 2015 which account for 5.8% GDP- highest in ASEAN, is expected to grow to $24 billion in 2020s.

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Benefits of Setting up Business in Hanoi

Benefits of Setting up Business in Da Nang

Benefits of Setting up Business in Ho Chi Minh City

Assistance in Setting up Business in Vietnam

M&A Services in Vietnam

• Trade agreement influence Vietnam’s market

Vietnam has recently taken part in several trade agreement which allow foreign companies to easily enter Vietnam. Firstly, Vietnam has cut tariff on 47 tariff lines of pharmaceuticals. Also by encouraging foreign investment to enter Vietnam in various forms, among 171 pharmaceutical companies operating in Vietnam, 9% are foreign invested enterprise, 4% are joint ventures.

Secondly, in terms of healthcare sector, the data of Ministry of Health stated that there are 137 operational private hospitals, including six foreign invested hospitals, and about 30,000 consulting rooms. These six foreign invested hospitals have the initial investment capital of 94 million dollars. Vietnamese government had licensed to a lot of foreign invested projects in the healthcare sector which included a total investment capital of 1.16 billion dollars. In addition, the government has allowed the investors in healthcare sector to enjoy 10% corporate income tax for the whole life of the project, tax exemption for 4 years and lower land leasing fee for years.

• Pharmaceutical products heavily rely on import

Local pharmaceutical production was valued at nearly US$920 million which satisfy 48 % of the needs in Vietnam. Imported drugs account for the remaining 52 %. Vietnam imports pharmaceuticals mainly from France, India and Korea. The medicine lines from this countries is stable and price competitive. In terms of domestic companies, the three largest public pharmaceutical companies are DHG Pharmaceuticals JSC (DHG), Traphaco JSC (TRA) and Domesco Medical Import-Export JSC (DMC).

Around 90 of raw material input are imported from foreign countries, in which 57% are from China, 18% from India and other countries such as Austria, Spain, Germany, France, Italy, and Sweden …

• Vietnam’s consumer behaviour

Vietnamese consumer has a strong preference of foreign medicines. The statistics have revealed that in the doctor prescription, 18 -20% domestic medicines are used for the patients even though the imported medicines are more expensive than domestic ones. Vietnamese consumer has more confident in terms of quality of foreign products.

Only 20%-30% of Vietnamese consumers buy medicines with prescription. However, BMI expected that the usage percentage of medicine through prescription will increase to 74.6% in the next 5 years.

3. Challenges

• Poor regulation standards

Price management and intellectual property protection of the government have not been managed closely. Therefore, the price of products still increases every year and the counterfeit medicines is still floating in the market, around 0.1% in 2012 (Drug Administration of Vietnam)

Around 28% of pharmaceutical companies have the Global Manufacturing Practice (GMP) certification, which states the minimum requirements that a pharmaceutical manufacturer must meet in order to prove that their products are of high quality and do not pose any risk to consumers. Particularly, in 2013, there are 79 out of 105 foreign medicine manufacturing enterprises and 5 of 80 domestic manufacturing enterprises that qualify GMP due to the fact that most of the enterprise are small in terms of sizes and capital investment. This indicates that Ministry of Health needs to take more aggressive actions to encourage the companies to meet the standards.

• Specific patented medicines is weak

Even though there are plenty of investment projects in pharmaceutical and healthcare industry with support from government, producing patented medicines are still too expensive in terms of time and manpower. In fact, lack of medical qualification, infrastructure development and material sources are factors leading to underdeveloped circumstance in this sector.

• Lack of accessibility in healthcare industry

There has been 1090 public hospital and 175 private hospitals in Vietnam in 2014, is expected to increase to 1204 and 200 respectively. However, there are 25.1 hospital beds per 10,000 inhabitants and 7.9 doctors per 10,000 inhabitants, which are still a question mark that has not been handled.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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Vietnam – Russian Federation: Cooperation in The Spirit of Friendship

There are many opening opportunities, so that the Russian Federation enterprises can come to explore and set up business in Vietnam and vice versa.

Previously, there is almost a constant law, that is only Vietnam come to promote investment abroad, now the story seems to be different. Japan has organized an investment promotion conference in Vietnam. And just recently, on March 2017, during a visit to Vietnam of Mr Yuri Trutnhev – Deputy Prime Minister, Russian Presidential Representative in the Far Eastern Federation, also held the same investment promotion workshop. There have been calls for Vietnamese businesses to invest in Russia, with many investment incentives.

In fact, in the last few years, Vietnam’s investment in Russia has increased rapidly, from 100 million USD in 2008 to about 2.4 billion USD in the recent times, concentrating mainly on oil and gas, trade, agriculture… Vietnam’s large investment projects in Russia include Rusvietpetro, Gazpromviet Petroleum Joint Venture, TH TRUE Milk, Ha Hoi Trade Center in Moscow.

Contrary to the trend of capital inflows from Vietnam to Russia have increased dramatically in recent years, investment flow from Russia to Vietnam is slowing. In the first 5 months of 2017, Russian businesses only invested 7.2 million USD in Vietnam. To sum up, the accumulated investment capital from Russia to Vietnam is currently about 1 billion USD.

The figure is modest and substantial, focusing on traditional projects which is oil and gas cooperation. Besides the Vietsovpetro Joint Venture, the two countries have established such joint ventures as Rusvietpetro, Vietgazprom and Gazpromviet to expand oil and gas cooperation in Vietnam, Russia and third countries.

In April 2017, a meeting between two leaders of Russia and Vietnam’s leading oil and gas corporation that are Gazprom and PVN, took place in Moscow. In which, both sides have continued to discuss on the cooperation to exploit oil and gas in Vietnam, as well as oil and gas projects in Russia.

In fact, Gazprom has participated in the Hai Thach – Moc Tinh gas field project in Vietnam since 2003 and up to now, the total output of this mine has reached about 6.6 billion m3 of gas. In particular, in 2016, the output reached 2 billion m3.

In addition, the two sides also discussed the process of geological exploration in plots 112 and 129 – 132 on the continental shelf of Vietnam, also deployed the project of developing oil – gas – condensate – Nagumanovskoye field and gas field – condensate Severo – Purovskoye in Russia, at the same time discussed the prospect of joint venture cooperation in the field of electrification and transport vehicles using natural gas (NGV). Once these agreements become reality, Vietnam – Russia oil and gas cooperation will be more closely and effectively, opening great investment cooperation opportunities between the two sides.

Opportunities will be even greater when the free trade agreement between Vietnam and the Eurasian Economic Union (includes Russia, Belarus, Kazakhstan, Amenia and Kyrgyzstan) is effectively implemented. Implemented effectively. Although it is just a free trade agreement, the agreement will create a great opportunity for two sides to cooperate and take advantage of each other’s markets. This common market block has total GDP of 2,200 billion USD and 183 million people. Moreover, Vietnam and the Eurasian Economic Union have also set target of increasing two-way trade to 10 billion USD by 2020. This is an important basis for investment cooperation between Vietnam and the Russian Federation, as well as other intra-regional economy will be further boosted.

The visit to Belarus and the Russian Federation from June 26th to July 1st 2017 by Vietnam President Tran Dai Quang is expected to create opportunities for further economic and investment cooperation between Vietnam – Russian Federation and Vietnam – Belarus.

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ACWA Power and FECON Develop Renewable Energy Projects in Vietnam

On July 3rd, ACWA Power Energy Corporation from Saudi Arabia and FECON JSC have signed Memorandum of Understanding on cooperation to develop renewable energy projects in Vietnam.

According to the national electricity development plan and the renewable energy development strategy of Vietnam, the Vietnam Government prioritizes the mobilization of all resources to develop renewable energy, increasing the rate of electricity produced from renewable energy sources (excluding medium and large hydropower), account for 7% by 2020 and above 10% by 2030. In which, wind and solar power are areas of great concern. Along with the above strategy, many incentives and support mechanisms are being built and perfected to attract investors in this field.

Recognizing this potential, ACWA Power (Saudi Arabia) decided to choose Vietnam as the first and strategic country in Southeast Asia to invest in renewable energy projects. ACWA Power is a developer, investor, operator and co-owner of a portfolio of power plants in 12 countries in the Middle East, North Africa, South Africa and Southeast Asia. Particularly in the Middle East, ACWA Power is a developer of electricity and water in the top 2 of region.

ACWA Power’s portfolio is valued at over 30.5 billion USD, with a total generating capacity of 21.5 GW.

According to the Memorandum of Understanding, FECON and ACWA Power will jointly study and evaluate the opportunities and potential of renewable energy investment in Vietnam. Particularly wind and solar power projects in some provinces in the Southern of Vietnam such as Binh Thuan, Ninh Thuan… Then, the two sides will set up joint venture company to invest in specific projects.

Furthermore, according to CEO of ACWA Power, Vietnam is the perfect place for investors to invest and develop renewable energy projects in the coming time. The investment potential in Vietnam is huge due to the increasingly cheaper technology cost, with the advantage of resources, the local partner ‘s understanding and the advantages of modern technology and capital. The cooperation between the two sides will certainly go to success. ACWA Power’s CEO also expects the Government of Vietnam will to continue to support and license the projects of this Corporation when they expanding investment in Vietnam in the future.

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