Singapore retailer’s market raid

Growing numbers of foreign retailers are shopping around for Vietnamese customers

The retailer has filed an application for a wholly foreign-owned investment licence to establish and operate a number of supermarkets and small stores, with initial investment capital of $5 million.
Vietnam remains cautious about permitting overseas operators to enter the retail market due to fears that domestic companies are not strong enough to compete, and that foreigners will end up dominating the market.
However, Metro Cash & Carry of Holland, Bourbon Groupe of France and Parkson Corporation of Malaysia have managed to penetrate the country’s growing market.
The Singaporean retailer said in its application that its supermarkets and stores would mainly purchase and distribute Vietnamese-made products.
Giant South Asia Investments seeks to sell all sorts of consumer products, including food and non-food products, and has also asked to be allowed to sublease stores to local companies for goods distribution.
The Singaporean company claimed it wanted to set up and operate a purchasing centre to buy locally made products for export, as well as provide supermarket management services to third companies in Vietnam.
The retailer requested a 20 per cent corporate income tax rate during its first 10 years of operations.
Giant South Asia Investment’s application is indicative of growing interest from foreign operators in Vietnam’s retail industry, which is surging on the back of improving living conditions. However, local retailers are yet to capitalise on the growth due to a lack of finances and experience.
Saigon Coopmart is the largest retailer in the country, with 13 supermarkets in the south. However, its share of the market has been dented by Metro Cash & Carry and Bourbon Groupe, which have opened a total of eight supermarkets in Vietnam.
Metro is building one store each in Hanoi and Haiphong, while Bourbon Groupe has plans to further expand its retail outlet network in Vietnam.
Parkson received an investment licence late last year and plans to open its first centre in Ho Chi Minh City next month. The Malaysian retailer already successfully operates 40 outlets in China and aims to set up eight supermarkets in Vietnam.
Market observers say economic growth of around 7 per cent during the last few years is boosting consumption in Vietnam and igniting interest from foreign retailers.
The retail industry in Vietnam grew by 18 per cent last year to reach around $24 billion. This figure is expected to rise if the economy sustains a 7.5 per cent growth over the next three years, as predicted by the Asian Development Bank.