The electric vehicle (EV) manufacturing industry in Vietnam is gaining prominence as the world embraces a profound shift toward electric mobility. Vietnam stands at the forefront of this transformation, poised to play a pivotal role in the global EV landscape. In the following sections, we will examine the current state of EV manufacturing in Vietnam, explore its remarkable growth potential and the opportunities it presents, and delve into the challenges faced by the industry. Our aim is to provide valuable insights into the landscape of electric vehicle manufacturing in Vietnam, offering key takeaways for readers interested in this exciting industry.

The Current State of Electric Vehicle Manufacturing in Vietnam

Government-Led Transition to Green Mobility

In recent years, Vietnam has been on an accelerated journey toward the development of its electric vehicle (EV) manufacturing sector. The government's commitment to net-zero emissions by 2050 has catalyzed this transformation. Policies and guidelines have been established to encourage the growth of low- and zero-emission transport options, aligning Vietnam with the global trend of sustainable mobility.

Rising Consumer Embrace of Eco-Friendly Transport

Many experts posit that the Vietnamese population is progressively embracing eco-friendly vehicles. In the coming years, as transportation infrastructure and electric EV charging infrastructure become more prevalent, local consumers are expected to increasingly opt for EV. Vietnam's expanding middle class, predominantly residing in urban centers, aligns with the objectives of smart cities, making green vehicles an appealing choice for those looking to contribute to environmental preservation by reducing pollution.

Projections and Current Landscape of Electric Vehicle Manufacturing in Vietnam

The Vietnam Automobile Manufacturers Association (VAMA) projects a bright future for the nation's electric vehicle landscape. Their forecast anticipates Vietnam reaching one million electrified vehicles by 2028, with an ambitious goal of 3.5 million electric vehicles on the road by 2040.

Currently, local EV manufacturing is spearheaded by two automakers, TMT Motor and VinFast. VinFast, a subsidiary of Vingroup, has invested significantly in its Haiphong complex, boasting cutting-edge, highly automated production lines capable of manufacturing up to 250,000 units annually, with plans for expansion to 950,000 units per year by 2026. In February, TMT Motor joined forces with a General Motors and SAIC-Wuling joint venture to produce and distribute Wuling-brand electric vehicles in Vietnam.

Additionally, the Vietnamese market has attracted attention from prominent Chinese EV manufacturers like Chery, BYD, Nio, and Xpeng. These companies are exploring partnerships with domestic entities to establish local EV production facilities. These developments collectively showcase Vietnam's growing prominence in the global electric vehicle manufacturing landscape.

Growth Potential and Opportunities in the Vietnamese Electric Vehicle Manufacturing Industry

Unprecedented Growth in Vietnam's Automobile Market

The automobile market in Vietnam is experiencing remarkable growth, with approximately 22 cars for every 1000 people in the country. This surge in demand is underscored by statistics indicating that over 50 percent of Vietnamese individuals expressed a desire to acquire a new car in 2022. However, this rapid growth has not come without challenges, particularly concerning environmental sustainability. Transportation stands as the leading contributor to greenhouse gas emissions in Vietnam, accounting for a substantial 19.3 percent of annual emissions. Moreover, concerning air quality, Vietnam ranked 36th globally for air pollution, with PM2.5 fine dust levels exceeding WHO recommendations by 4.9 times. In response to these environmental concerns and growing health burdens, Vietnamese consumers are actively seeking eco-friendly transportation alternatives. 

Governmental Support and Tax Incentives for Electric Vehicles

In line with these environmental concerns, the Vietnamese government's Decision No. 950/QD-TTg, which approved the Scheme for the development of smart sustainable cities in Vietnam, emphasizes the significance of environmentally responsible solutions. Electric vehicles (EVs) are notably favored due to their alignment with technological and environmental standards.

To further support this growth, the Ministry of Finance introduced a tax incentive program for the automobile supporting industry in 2020. Enterprises involved in manufacturing, processing, and assembly of auto components and spare parts have enjoyed import tax exemptions on raw materials and supplies for production. This policy is set to continue until 2027, fostering a favorable environment for EV manufacturing.

Additionally, legislative amendments have significantly reduced taxes on electric cars. A notable change came in January 2022 when the 15th National Assembly approved Law No. 03/2022/QH15, reducing excise tax rates for electric cars to 1-3% (applied from March 1, 2022, to February 28, 2027) and 4-11% (applied from March 1, 2027).

Furthermore, Decree No. 10/2022/ND-CP, issued by the government, introduces a 0% registration fee for battery electric cars registered within three years of March 1, 2022. Over the subsequent two years, this fee will equal 50% of the fee applied to petrol and diesel cars with the same seating capacity. For vehicles undergoing re-registration, a 2% registration fee is applicable, irrespective of whether they are electric or internal combustion engine vehicles.

Challenges and Considerations in Electric Vehicle Manufacturing

Policy Initiatives and Subsidies for Electric Vehicle Adoption

The Vietnamese electric vehicle (EV) manufacturing industry, while promising, faces several key challenges. One of the most critical areas of concern is the relative modesty of government policies in comparison to those implemented by countries in Southeast Asia and worldwide. While Vietnam has initiated policies aimed at supporting EV adoption, experts emphasize that a more substantial and immediate impact can be achieved through robust subsidy policies. This approach includes subsidies for both manufacturers and buyers of electric vehicles. Successful implementation of such policies has been witnessed in countries like the United States, the European Union, and even in Southeast Asian nations like Thailand.

Investment and Infrastructure Barriers

A significant hurdle in Vietnam's electric vehicle development landscape is the scarcity of supporting policies related to credit, investment, and trade for businesses operating in this sector. Unlike some other countries, Vietnam has not yet introduced comprehensive measures to encourage and facilitate investments in EV manufacturing. Electric vehicle projects typically demand substantial and long-term capital resources, which presents challenges in securing financial support from banks and other financial institutions.

Infrastructure development, including charging stations and battery recycling facilities, also poses a considerable challenge for the Vietnamese EV industry. The expansion of these essential components is vital for widespread EV adoption. Furthermore, building a robust supply chain for EV components and batteries is crucial to ensuring a consistent and cost-effective production process.

Workforce Development and Sustainable Electric Vehicle Manufacturing

Workforce training is another area that demands attention. With the growing demand for skilled professionals in EV manufacturing, there is a need for tailored training programs and educational initiatives to equip the workforce with the necessary skills and knowledge.

Sustainable and eco-friendly manufacturing practices represent a fundamental consideration in the EV industry. As the world increasingly gravitates toward environmentally responsible production methods, it is imperative that Vietnam's EV manufacturers adhere to stringent sustainability standards. This includes minimizing the environmental impact of production processes and the materials used.

Regulatory frameworks and safety standards are pivotal in ensuring the quality and safety of electric vehicles. Clear and comprehensive regulations are required to guide manufacturers in meeting safety and quality benchmarks. Compliance with international standards will not only enhance the reputation of Vietnamese EVs but also facilitate export opportunities.

Final Thoughts

The landscape of electric vehicle manufacturing in Vietnam holds immense promise, driven by growing consumer interest, supportive policies, and a commitment to sustainability. As Vietnam aims to play a pivotal role in the global transition to electric mobility, it is crucial to recognize the challenges and opportunities inherent in this journey. To thrive in this evolving industry, businesses and investors require expert guidance and strategic partnerships. Viettonkin stands as a trusted ally, offering valuable insights and support to navigate the dynamic landscape of electric vehicle manufacturing in Vietnam. Reach out to Viettonkin today to embark on this exciting journey towards a sustainable and electrifying future.

The Pharma and Medicine Industry in Vietnam is undergoing a significant transformation, and one of the pivotal drivers of this evolution is the growing prevalence of mergers and acquisitions (M&A) activities. M&A has emerged as a crucial catalyst for the industry's expansion, restructuring, and adaptation to changing market dynamics. 

In this article, we delve into the M&A trends shaping Vietnam's Pharma and Medicine sector, explore the essential steps in the M&A process, and address key considerations and challenges faced by industry players. Join us on this journey as we unravel the intricacies of M&A in one of Vietnam's most critical sectors.

M&A Trends in Vietnam's Pharma and Medicine Industry

In Vietnam's ever-evolving Pharma and Medicine Industry, M&A continue to emerge as a driving force, and two compelling factors ensure that this trend remains the path to the future. Firstly, the relentless pace of technological innovation, combined with a surging demand for pharmaceuticals, compels pharmaceutical giants to keep pace with research and development before their patents run their course. Consequently, these bigger players in the industry are actively seeking opportunities to acquire smaller, nimble companies already poised to advance innovation. This strategic approach allows medical enterprises to harness existing capabilities swiftly and remain at the forefront of research and development.

Secondly, the evolving business landscape in Vietnam prompts investors to consider either establishing a pharmaceutical manufacturing plant or acquiring an existing facility from domestic enterprises. This strategic approach aligns with the World Trade Organization's commitments, allowing foreign investors to import drugs but restricting them from directly distributing to the Vietnamese market. As per Article 91.10 of Decree No. 54/2017/ND-CP, foreign investors must collaborate with local wholesalers for distribution. Therefore, many foreign investors opt to acquire domestic manufacturers, leveraging cost-effective production capabilities and tapping into established distribution networks through local partnerships.

The pharmaceutical sector in Vietnam has already witnessed a slew of noteworthy M&A deals, highlighting its attractiveness to foreign investors. Some of these include the Mekophar-Nipro Pharma (Japan) alliance, Imexpharm's collaboration with SK Group (Korea), and Pymepharco's partnership with STADA Service Holdings B.Vor (Germany). The appeal lies in Vietnam's competitive advantages, including an abundance of affordable labor and low production costs, which entice foreign firms to establish their production lines through licensing or share acquisitions within domestic enterprises. The products subsequently manufactured often find their way to global markets.

Furthermore, the Vietnamese government has set ambitious goals, aiming for the country to become a high-value pharmaceutical production center and to achieve US$1 billion in pharmaceutical exports by 2030. These aspirations underscore the nation's commitment to nurturing a thriving pharmaceutical industry, making it a favorable destination for M&A activities. As the Pharma and Medicine Industry continues to evolve, M&A trends hold the promise of shaping its future trajectory, offering both domestic and foreign players opportunities for growth and global relevance.

The M&A Process in the Pharma and Medicine Industry

In the dynamic landscape of Vietnam's Pharma and Medicine Industry, understanding the intricate process of mergers and acquisitions (M&A) is essential. The M&A journey unfolds in several key stages, each demanding meticulous attention.

Initial Considerations and Strategic Planning

The process typically begins with strategic contemplation. This phase involves identifying the motivations behind the M&A deal, such as expanding market presence, accessing new technologies, or consolidating operations. It is crucial to outline the goals and objectives to direct the ensuing steps effectively.

Due Diligence

Conducting thorough due diligence is a pivotal aspect. This phase entails the comprehensive examination of the target company, evaluating its financial, legal, operational, and regulatory aspects. Ensuring the target company aligns with the acquirer's strategic goals is paramount.

Negotiation and Valuation

Upon successful due diligence, negotiations commence. Parties delve into valuation discussions, agreeing on the price and terms of the deal. This phase can be intricate, with both parties striving to reach a mutually beneficial agreement.

Regulatory Compliance and Legal Aspects

Navigating the regulatory landscape and addressing legal aspects are vital. The Pharma and Medicine Industry operates under strict regulations, demanding adherence to guidelines set by the Ministry of Health, Ministry of Planning and Investment and other authorities. Compliance is a non-negotiable aspect, with legal teams playing a pivotal role.

Intellectual Property Considerations

Pharmaceutical companies rely heavily on intellectual property (IP), including patents and trademarks. The M&A process involves the transfer of these valuable assets, necessitating rigorous evaluation, transfer mechanisms, and IP protection strategies.

Post-Merger Integration

After the deal concludes, the integration phase begins. Successful integration is pivotal to achieving the merger's objectives. Combining workforces, operations, and cultures should be carried out meticulously to maximize synergies and streamline processes.

Key Considerations and Challenges before beginning the M&A Process

Mergers and acquisitions (M&A) in the Pharma and Medicine Industry are riddled with complexities that demand strategic forethought and comprehensive planning. Several critical considerations and challenges emerge as businesses embark on this journey.

• Valuation: Determining the fair value of the target company is a fundamental challenge. This process involves not only assessing the financials but also evaluating the intrinsic worth of intellectual property, pipelines, and regulatory approvals. Misjudging valuation can lead to overpayment or missed opportunities.
• Cultural Integration: Merging two companies often means blending diverse corporate cultures. The Pharma and Medicine Industry is highly regulated and fosters distinct work ethics. Managing the transition and ensuring a harmonious cultural integration is pivotal to post-M&A success.
• Technology Adoption: The integration of technological infrastructures is another substantial challenge. Modernizing processes, data sharing, and compliance systems can be intricate. Ensuring seamless technology adoption while maintaining data security and regulatory compliance is paramount.
• Implications on Research and Development: M&A deals may affect ongoing research and development projects. Maintaining innovation continuity and capitalizing on synergies to expedite product development is a considerable challenge.
• Impact on Drug Availability: M&A can disrupt the availability of crucial medications, especially if the transition process is not meticulously planned. Ensuring that patients' needs are consistently met is a significant ethical challenge.

Final Thoughts

The M&A landscape in Vietnam's Pharma and Medicine Industry presents a dynamic environment rich with both opportunities and challenges. We've delved into the evolving trends that underscore the industry's growth and transformation, providing insights into how these trends influence both local and international players. The M&A process, with its intricate stages and crucial considerations, can be a powerful tool for businesses aiming to thrive in this sector. However, it also poses intricate challenges, from valuation complexities to cultural integration issues. To navigate this landscape successfully, it's imperative to partner with experts who understand the intricacies of Vietnam's pharmaceutical and medicine industry. Viettonkin stands ready to be that strategic partner, offering unparalleled insights, guidance, and support for your M&A endeavors. Contact us today to explore the wealth of opportunities this industry has to offer.

In the realm of the airline industry, modern online retailing has emerged as the driving force behind a transformative digital customer experience. As travelers embark on their journeys, from booking flights to reaching cruising altitudes, the pivotal role of technology is redefining every step. Airlines are rapidly adopting innovative strategies to meet the growing expectations of modern travelers, streamlining processes, and offering personalized services. Join us in this exploration of the key trends and innovations reshaping the modern online retailing landscape within the aviation sector and revolutionizing the way passengers interact with airlines throughout their journey.

Digital Transformation in Booking and Pre-flight Experience

In the ever-evolving landscape of the modern airline industry, a profound digital transformation has taken root, revolutionizing the way passengers engage with airlines during the booking and pre-flight stages of their journeys. This shift has empowered airlines to offer passengers personalized booking experiences that cater to their individual preferences and needs, ultimately enhancing the overall digital customer experience.

One of the central strategies in this digital transformation is the use of digital platforms and online booking systems. Airlines are leveraging these platforms to provide passengers with seamless and highly personalized booking experiences. For instance, imagine booking a flight where the airline's website remembers your previous travel choices and offers you seat preferences, meal options, and even in-flight entertainment tailored to your previous selections. This level of personalization is becoming increasingly common, and it's all thanks to the data-driven capabilities of modern airline retailing.

Furthermore, airlines are employing dynamic pricing and bundling strategies to craft unique and enticing offers for individual passengers. Dynamic pricing involves adjusting ticket prices in real-time based on various factors like demand, time of booking, and historical data. This ensures that passengers get the most competitive fares while allowing airlines to optimize their revenue. Bundling and upselling, on the other hand, enable airlines to offer passengers a range of services and extras that align with their preferences. For example, a passenger booking a family vacation might receive bundled offers that include child-friendly services, extra baggage allowances, and in-flight entertainment packages.

Several airlines have emerged as pioneers in implementing these strategies effectively. Based on passenger profiles and previous travel behavior airlines now can suggest cabin class upgrades, recommend add-ons like Wi-Fi or lounge access, and even tailor meal options to dietary preferences. This not only enhances the digital booking process but also carries through to the in-flight experience.

AirAsia, a budget airline, has embraced dynamic pricing by implementing a "freemium" model. This means that passengers can choose between a basic fare with essential services and a premium package with added perks. The flexibility offered allows passengers to customize their journey to their liking, providing excellent value and personalization.

Streamlining the Check-in and Security Process

In today's fast-paced landscape of modern airline retailing, optimizing the check-in and security procedures stands as a top priority. Airlines are harnessing cutting-edge technologies and innovative methods to elevate the digital customer experience right from the moment travelers set foot in the airport.

The advent of New Distribution Capability (NDC) and ONE Order has brought about a monumental transformation in ticketing and baggage handling, simplifying operations and reducing intricacies. NDC empowers airlines to offer passengers personalized fare choices and services directly, enhancing their range of options and overall transparency. Conversely, ONE Order consolidates the various documents linked to air travel, such as tickets and boarding passes, into a unified digital dossier. Airlines like Lufthansa have enthusiastically embraced these advancements, streamlining booking, check-in, and baggage services for their patrons.

Mobile applications and self-service kiosks have emerged as true game-changers, providing passengers with a smooth and efficient check-in experience. Through mobile apps, travelers can remotely complete check-in procedures, acquire digital boarding passes, and receive real-time updates on flight status. At airports, self-service kiosks facilitate a seamless experience, enabling passengers to print boarding passes, select seats, and independently manage their luggage. This not only reduces wait times but also empowers passengers by granting them more control over their journey.

Furthermore, biometric recognition technologies have made significant strides in revolutionizing check-in and security processes. Airlines and airports alike are increasingly adopting biometric solutions to expedite passenger verification. For instance, facial recognition technology is now employed at check-in counters and security checkpoints for swift identity confirmation. This innovation not only bolsters security but also substantially reduces wait times, culminating in a more fluid airport experience.

Many airlines and airports around the globe have embraced biometric solutions with resounding success. Delta Air Lines, for instance, has introduced biometric boarding at airports such as Hartsfield-Jackson Atlanta International Airport. Travelers simply approach a camera, undergo a facial scan, and proceed to board the aircraft seamlessly, eliminating the need for physical boarding passes and identity checks.

Orlando International Airport has also made headlines by implementing facial recognition technology in collaboration with airlines like British Airways. Passengers traveling on select international routes can now relish an end-to-end biometric journey, from check-in to boarding, ensuring a swift and secure process.

The advantages of an optimized check-in and security process are manifold. Travelers save precious time, reducing stress and frustration. Additionally, the streamlined process bolsters passenger contentment, allowing them to focus more on the enjoyment of their journey rather than procedural obstacles.

Onboard Comfort and In-flight Services

In the dynamic landscape of modern airline retailing, the focus on enhancing onboard comfort and in-flight services is more prominent than ever. Airlines across the globe are leveraging cutting-edge digital innovations to transform the digital customer experience from the moment passengers step onto the aircraft until they reach their destination.

One noteworthy transformation can be seen in the realm of in-flight entertainment and connectivity. Airlines are going to great lengths to offer passengers personalized entertainment options. For instance, Qatar Airways provides its passengers with the Oryx One in-flight entertainment system, which boasts an extensive library of movies, TV shows, music, and games. Travelers can curate their entertainment playlists, ensuring they have an enjoyable and tailored in-flight experience. 

Moreover, Wi-Fi connectivity has become a staple on many airlines. American Airlines, for example, partners with Viasat to provide high-speed Wi-Fi on its flights. This connectivity not only allows passengers to stay connected but also facilitates inflight streaming and online work, further enhancing the travel experience.

In the realm of cabin conditions, the Internet of Things (IoT) is making a significant impact. Airline companies have adopted IoT sensors in its aircraft to monitor air quality. This real-time data helps the cabin crew make necessary adjustments to ensure passenger comfort. For instance, if the cabin becomes too dry, the system can automatically adjust the humidity levels, creating a more comfortable atmosphere.

Another exciting development is the digitization of onboard retail and dining. Airline carriers have embraced mobile apps for passengers to order food and beverages directly to their seats. By using the airline's app, passengers can browse menus, make selections, and complete payments with ease. This digital approach streamlines the service process, reducing wait times, and offering passengers greater control over their dining experience.

Preparing for Landing and Beyond

In the final leg of the passenger journey, airlines are leaving no stone unturned when it comes to leveraging technology for a seamless experience. As travelers prepare for landing and beyond, digital solutions play a pivotal role in ensuring their journeys conclude on a positive note.

One notable application of technology in this phase is the use of predictive analytics and Artificial Intelligence (AI) to prepare passengers for the landing process. Airlines are harnessing data and AI algorithms to provide passengers with real-time updates on weather conditions, expected turbulence, and estimated arrival times. Such proactive communication enhances passengers' preparedness and reduces anxiety.

Moreover, AI-driven chatbots and virtual assistants have become invaluable in addressing passenger queries and concerns during landing. Air France-KLM, for example, utilizes AI-powered chatbots to provide passengers with information on baggage retrieval, transportation options, and local services at their arrival airports. These chatbots offer real-time responses, ensuring passengers have access to relevant information at their fingertips.

Data analytics also come into play to predict and mitigate potential disruptions during the journey's final phases. Airlines use data analysis to identify potential issues with baggage handling and ensure a smoother transition for passengers from the aircraft to the baggage claim area. This data-driven approach minimizes wait times and enhances overall passenger satisfaction.

Furthermore, digital solutions extend to post-flight services. Airlines are using mobile apps and online platforms to offer passengers convenient options for ground transportation, accommodation, and local experiences. For instance, Cathay Pacific provides its passengers with access to a range of services through its mobile app, from booking airport transfers to exploring dining and shopping options at their destination.

Final Thoughts

In conclusion, the modern online retailing strategies explored in this article underscore the paramount importance of delivering an impeccable digital customer experience across the passenger journey. Airlines must continually evolve, leveraging technology to streamline processes, enhance personalization, and elevate passenger satisfaction. As the aviation industry embraces the digital age, the journey from booking to landing presents opportunities for innovation and optimization. To embark on this transformative journey and navigate the intricacies of modern online retailing, airlines- especially those in Vietnam, can rely on Viettonkin as a steadfast partner. We invite you to access the full version of our latest whitepaper "Unleashing Vietnam’s Potential: Accelerating Growth in the Aviation Industry through Digital Transformation" - a collaborative endeavor with IBS Software -  a leading SaaS solutions provider to the travel industry globally. Contact us today. Your passengers deserve nothing less than a seamless and convenient travel experience, and we are here to help you deliver just that.

The aviation industry in Vietnam is standing at a crucial crossroads, where digital transformation isn't just an option but an imperative for achieving sustained growth and competitiveness. This article delves into the digital landscape of the aviation industry, shedding light on its current state, the plethora of challenges and opportunities it presents, the legal framework, and incentives that fuel its evolution, all while emphasizing partnerships and strategic investments. As we embark on this journey through these sections, we aim to provide readers with a comprehensive understanding of how digital transformation is reshaping the Vietnam’s aviation industry.

The Digital Landscape in Vietnam’s Aviation

The digital landscape within the aviation industry in Vietnam is rapidly evolving, driven by a wave of technological innovation and the need for enhanced efficiency and customer experiences. Airlines, airports, and associated services are increasingly embracing digitalization to stay competitive in a globalized market.

The Civil Aviation Authority of Vietnam (CAAV) has recently unveiled an ambitious plan to pilot electronic identification accounts at level 2 (e-ID) with integrated passenger biometric authentication in 22 airports across the nation. This groundbreaking initiative, scheduled to run from June 1 to August 1, marks a significant step towards advancing digital transformation within the Vietnamese aviation sector. As affirmed by Mr. Dinh Viet Son, Deputy Director of CAAV, the initial stages of implementing biometric authentication and utilizing e-ID for flight check-in have displayed promising results. The potential for further development is undeniable, given that more than 37 million e-ID accounts have been issued, with nearly 17 million of them actively activated, according to statistics from the Ministry of Public Security.

Vietnamese airlines are also making substantial strides in their investments in digital transformation. They are diligently working to create service systems accessible through various devices, such as computers, phones, tablets, and airport check-in kiosks. This synchronous approach is geared toward enhancing passenger convenience and satisfaction. Airlines are keen on offering passengers a broader array of choices for accompanying services during the online ticket booking process. These services encompass additional checked baggage, meals, and in-flight entertainment options.

A noteworthy example of this digital progression occurred on August 1, 2023, when Da Nang International Airport joined forces with Korean Air to introduce a bilingual automatic check-in system (self check-in kiosk) for international flight passengers. Ten self-check-in kiosks were strategically placed within the international terminal, allowing passengers to efficiently complete check-in procedures themselves. A dedicated passenger assistant team was also deployed to assist travelers with the process. The touch screen interface provides clear and comprehensible instructions, facilitating a seamless experience for passengers.

Further elevating the passenger journey, five Vietnamese international airports - Da Nang, Noi Bai, Cam Ranh, Tan Son Nhat, and Phu Quoc - have recently inaugurated their automatic entry system, known as Autogate, starting from the beginning of August 2023. The Autogate area boasts a two-layer approach to expedite passenger clearance. In the first layer, passengers scan their passports and boarding passes. Upon successful scanning, the system proceeds with facial recognition and fingerprint scanning, obviating the need for customs officers to physically stamp passengers' passports. This cutting-edge technology streamlines the immigration process, resulting in a more efficient and secure entry procedure for travelers.

Challenges and Opportunities on the Digital Frontier

Challenges

As the Vietnamese aviation industry embarks on its digital transformation journey, it encounters several challenges that demand careful navigation. Firstly, there's the lack of expertise in handling advanced digital technologies among aviation professionals. Many may not be well-versed in the intricacies of IoT, AI, and data analytics, necessitating extensive training and upskilling initiatives to ensure a smooth transition.

Secondly, the continuous evolution of customer needs presents a formidable challenge. Passengers' expectations are ever-changing, demanding more personalized and seamless travel experiences. Meeting these evolving demands requires a dynamic approach to digitalization, with the ability to adapt swiftly to shifting customer preferences.

Internal resistance to change is another critical hurdle. Within aviation organizations, there may be resistance to depart from traditional practices and embrace innovative digital solutions. Overcoming this resistance necessitates effective change management strategies and the cultivation of a culture of innovation.

Additionally, budget constraints can impede progress in digital transformation. Investing in the necessary digital infrastructure, technologies, and cybersecurity measures demands substantial financial resources. Balancing these investments with other operational expenses can be a complex financial challenge for aviation stakeholders.

Opportunities

Amidst these challenges, the digital frontier in Vietnamese aviation also presents a plethora of opportunities for growth and advancement. Collaborative partnerships between airlines, airports, government entities, and technology providers can significantly mitigate expertise gaps and budget constraints. These alliances enable the pooling of resources and expertise to drive digital initiatives forward, fostering a collective spirit of innovation.

Furthermore, the digital transformation journey offers the potential to enhance passenger experiences, streamline operations, and create new revenue streams. Airlines and airports can seize the opportunity to provide more personalized and efficient services. Passengers can enjoy seamless and tailored travel experiences, from booking to disembarkation, through digital innovations. Moreover, operational efficiencies driven by digital solutions can lead to cost savings and improved revenue generation.

The adoption of emerging technologies like IoT, AI, and data analytics opens doors to data-driven insights, enabling aviation stakeholders to make informed decisions. Predictive analytics can optimize flight schedules, while AI-driven chatbots can enhance customer service. These advancements not only elevate passenger satisfaction but also contribute to the industry's overall competitiveness.

Legal Framework and Incentives for Digital Evolution

In the Vietnamese aviation sector, digital transformation has taken center stage as the top priority. This commitment to modernization is reinforced by Decision No. 2269/QĐ-BGTVT, the Ministry of Transport's digital transformation program. The decision outlines a comprehensive roadmap aimed at bolstering digital technology infrastructure to support flight management and enhance operational capabilities. A key objective is to fortify air traffic control systems, ensuring the utmost level of flight safety.

This regulatory initiative underpins the significance of digital transformation within the industry, setting a clear direction for the adoption of advanced technologies. It signals the government's commitment to creating an environment conducive to digital innovation, providing the aviation sector with the necessary regulatory framework to thrive.

Moreover, these regulatory changes are accompanied by a suite of incentives designed to incentivize airlines and aviation-related entities to embrace digital technologies. These incentives encompass a spectrum of benefits, ranging from financial support to tax incentives, all intended to facilitate and accelerate the digital evolution of the aviation sector.

Final Thoughts

The aviation industry in Vietnam is in the midst of a profound digital transformation. As we've explored, embracing this evolution is not just a choice but a necessity for investment in competitiveness and ensuring safe, efficient operations. From the burgeoning digital landscape to the challenges that lie ahead, the path to success in this digital age is clear.

At Viettonkin, we recognize the critical role of partnerships and innovation in this journey. As a strategic ally, we are dedicated to supporting stakeholders in the aviation industry as they navigate the complexities of digital transformation. Whether it's optimizing operations, enhancing passenger experiences, or complying with evolving regulations, our expertise is your advantage.

Our collaborative endeavor with IBS Software -  a leading SaaS solutions provider to the travel industry globally has brought to you the latest whitepaper "Unleashing Vietnam’s Potential: Accelerating Growth in the Aviation Industry through Digital Transformation", detailing the current state, challenges, and opportunities of digital transformation in this rapidly expanding market.

Access the full version of this whitepaper at: https://www2.ibsplc.com/whitepaper-unleashing-vietnams-potential-vn.html

Reach out to us. Together, we can harness the power of technology to elevate your operations, foster growth, and secure your place at the forefront of the evolving aviation landscape.

The Vietnamese aviation industry stands as a vital catalyst for economic growth and enhanced global connectivity. With resilience and determination, it has rebounded to near pre-pandemic levels, symbolizing its significance in Vietnam's development. As we gaze into the next decade, challenges loom, primarily in the form of a tight labor market and a shortage of skilled workers. However, these challenges present opportunities for innovation and growth. In this article, we delve into the current state of Vietnam’s aviation fleet, dissect the imminent challenges, and propose technology-driven solutions for a prosperous and sustainable future. Investors and stakeholders, fasten your seatbelts, as we navigate the headwinds and chart a course for success in this dynamic sector.

The Rebounding Aviation Industry

The Vietnamese aviation industry is poised for a remarkable resurgence, mirroring its pre-pandemic vigor. As of 2022, the domestic market had not only made a full recovery but expanded by an impressive 30% when compared to the passenger numbers of 2019's summer season. This remarkable rebound signifies a return to normalcy in domestic air travel, offering a glimpse into the sector's remarkable resilience.

In parallel, the international market, which faced a more extended recovery timeline, began its comeback in late 2022, attaining approximately 50% of the pre-pandemic levels. This gradual resurgence demonstrates the sector's adaptability and determination to regain its global connectivity.

The impact of the pandemic on the aviation fleet was profound. In early 2019, when the pandemic took its toll, domestic airlines were compelled to scale back their fleets significantly. At the height of the crisis, the total fleet was reduced to 225 aircraft. Out of these, 190 planes remained operational, while 12 underwent maintenance, and 23 remained grounded. The path to recovery would necessitate not just a return to these numbers but also an expansion to accommodate growing demand.

Looking ahead to 2023, the domestic market is forecasted to cater to approximately 45.5 million passengers, a testament to the strong resurgence in travel appetite. To meet this surging domestic demand alone, the industry would require 182 aircraft, highlighting the need for fleet expansion.

Moreover, the appetite for international travel is also on the rise. In 2023, Vietnamese airlines anticipate transporting around 13.6 million international passengers, necessitating the deployment of 57 aircraft for international routes.

Recognizing the need to meet the escalating demand, the Civil Aviation Administration of Vietnam (CAAV) proposed that five domestic airlines increase their fleet sizes to 234 aircraft. This move was a response to the growing demand witnessed during the Lunar New Year Holiday in late January 2023, indicating a resurgence in travel enthusiasm. The expansion aligns with the aviation industry's global resurgence, positioning Vietnam to be a key player in the world aviation recovery.

Challenges Ahead: Labor Market and Skilled Workforce Shortage

The state of Vietnamese aircraft fleet- on its path to recovery and expansion, is encountering a formidable challenge – a severe shortage of human resources. Multiple factors are converging to create this labor crunch, threatening to impede the aviation industry's sustained growth.

Tran Thi Thai Binh, the head of the Vietnam Aviation Academy's Air Transport Economics Department, emphasized the pressing demand for aviation professionals at major airports like Tan Son Nhat, Noi Bai, the soon-to-be-constructed Long Thanh airport, and within airline companies. Currently, the aviation sector employs around 44,000 individuals in roles spanning transportation, port, and flight operations. However, this workforce is insufficient to meet the burgeoning demands of the industry.

The outlook for human resource demand in the aviation industry remains robust, particularly from 2023 to 2030. Dr. Bui Song Thu, director of the Research Institute, highlighted critical areas facing personnel shortages, including airport supervision, ground operations management, aircraft engineering, aircraft maintenance, and pilots.

A report by the International Air Transport Association (IATA) underscores the urgency of addressing this challenge. The aviation workforce must expand rapidly to accommodate a projected two to four-fold increase in passengers over the next two decades.

Luong Thi Xuan, founder of Vietnam's first Aviation Exhibition and CEO of the Aviation Exhibition Joint Stock Company, emphasized that the workforce shortage extends beyond mere quantity – it encompasses issues of quality and expertise.

Efforts to bridge the skills gap are underway, with the Vietnam Aviation Academy planning to offer training in over 20 majors at both undergraduate and postgraduate levels. These programs cover a broad spectrum of activities, including technical practices, aviation operations, transportation economics, and aviation services. However, in the 2022-2023 academic year, the academy's admissions target of 2,635 students, including those majoring in flight operations and aviation engineering, falls significantly short of market demand.

In the realm of pilot training, Vietnam's existing capacity is limited, with the Viet Flight Training school producing fewer than 100 pilots annually. While some private aviation companies have initiated high-quality specialized training programs, they have not adequately met the soaring demand. The shortage of skilled aviation professionals poses a critical challenge for the industry, requiring innovative solutions to secure its future growth and prosperity.

Technology Solutions for Workforce Disruptions

In the face of a severe labor shortage for aviation fleet, Vietnam aviation industry’s leaders are turning to technology as a lifeline, recognizing its pivotal role in mitigating workforce disruptions and ensuring continued growth.

One pressing need is the development and implementation of innovative platforms and systems capable of predicting workforce scenarios and offering immediate solutions. By harnessing the power of predictive analytics, artificial intelligence (AI), and automation, the industry can proactively address labor gaps and enhance operational efficiency. These technologies can analyze historical data, market trends, and workforce patterns to anticipate future shortages and guide decision-makers in taking timely actions.

The advantages of embracing technology are multifaceted. Predictive analytics can help airlines and airports optimize staffing levels, reducing the impact of sudden disruptions. AI-driven systems can streamline recruitment processes, identifying suitable candidates more efficiently and expediting the onboarding of new hires. Automation, on the other hand, can be applied to various aspects of aviation operations, from aircraft maintenance to baggage handling, improving productivity and safety.

For instance, AI-powered chatbots and virtual assistants can aid human resources departments in managing inquiries and initial candidate screenings. Automated scheduling and rostering systems can optimize workforce allocation, matching available personnel with operational demands.

As Vietnam progresses on its digital transformation journey, the aviation industry can leverage the prevailing technological landscape to address its workforce challenges. Emerging technologies such as blockchain, the Internet of Things (IoT), and cloud computing can further enhance workforce management, enabling real-time tracking and data-driven decision-making.

One compelling example of technological integration comes from Vietnam Airlines, a pioneer in adopting advanced systems to enhance its flight operations and business performance. Vietnam Airlines has embraced the Salesforce B2B/B2C customer management system, fostering improved customer relationship management. The airline has also elevated its aircraft maintenance management with the AMOS MRO-IT system, ensuring efficient and reliable aircraft upkeep.

Moreover, Vietnam Airlines has invested in the enhancement of its commercial reporting, sales management, and data synchronization system. This strategic move bolsters the airline's ability to respond swiftly to changing market dynamics and customer needs.

Final Thoughts

The Vietnamese aviation industry is poised for remarkable growth, but it must grapple with significant challenges regarding its aircraft fleet, particularly in the labor market and workforce shortages. As the industry rebounds to near pre-pandemic levels, it faces the critical task of meeting the escalating demand for skilled professionals. However, with these challenges come tremendous opportunities for innovation and transformation.

By embracing cutting-edge technology solutions, such as predictive analytics, AI, and automation, Vietnam’s aviation fleet can proactively address workforce disruptions and bolster operational efficiency. The strategic integration of these technologies will be paramount in ensuring the industry's resilience and long-term sustainability.

At Viettonkin, we understand the evolving landscape of the Vietnamese aviation fleet and offer expert guidance and support to investors and stakeholders seeking to navigate these challenges. 

With a collaborative endeavor between IBS Software -  a leading SaaS solutions provider to the travel industry globally, and Viettonkin Consulting - a multi-disciplinary group of consulting firms promoting international business relationships in ASEAN, the latest whitepaper "Unleashing Vietnam’s Potential: Accelerating Growth in the Aviation Industry through Digital Transformation" details the current state, challenges, and opportunities of digital transformation in this rapidly expanding market.

Access the full version of this whitepaper at: https://www2.ibsplc.com/whitepaper-unleashing-vietnams-potential-vn.htmlReach out to us for strategic insights and assistance in exploring investment avenues in this thriving industry. Your journey to success in Vietnam's aviation sector begins with Viettonkin.

The air freight industry in Vietnam plays a pivotal role in the nation's economic landscape, serving as a vital lifeline for international trade and commerce. Its importance has become even more pronounced in the wake of the COVID-19 pandemic, where adaptability and resilience have been put to the test. In this article, we delve into the current trends, potential, and challenges of Vietnam's air freight sector, offering insights for those interested in investing in Vietnam. From post-pandemic recovery to the booming e-commerce market, we'll unravel the opportunities that await in this dynamic industry. Join us as we navigate the skies of the Vietnamese air freight landscape and discover the keys to successful investment in this critical sector.

Current Trends in the Vietnamese Air Freight Industry

The Vietnamese air freight industry bore the brunt of the COVID-19 pandemic, facing significant disruptions within the global logistics and air cargo domains. As international travel restrictions and lockdowns threw supply chains into disarray, the sector grappled with a substantial drop in air cargo demand. However, as the world initiates its journey towards recovery, Vietnam's air freight landscape has emerged as a beacon of adaptability and resilience.

At the pandemic's zenith, the industry grappled with a drastic reduction in passenger flights, traditionally pivotal for transporting a significant share of air cargo in their hold. This capacity scarcity translated into elevated air freight rates and supply chain bottlenecks, reverberating across global businesses.

While the pandemic wrought havoc on global air passenger travel, Vietnam's international air freight sector defied the odds, experiencing a remarkable surge of over 21.3 percent in 2021 compared to the preceding year. This surge underscores the industry's remarkable fortitude and capacity to pivot during turbulent times.

Vietnam's air freight sector demonstrated tenacity and adaptability, with air cargo volumes, both domestically and internationally, staging a steady recovery in tandem with the global economic resurgence. Moreover, situated strategically in Southeast Asia, Vietnam's geographical location has cemented its role as a pivotal logistics hub.

Furthermore, the industry's embrace of technological advancements has bolstered efficiency significantly. Innovations in cargo tracking, automation, and digitalization have paved the way for smoother operations and heightened supply chain visibility.

In the initial quarter of 2022, Vietnam's air freight industry sustained its upward trajectory. Domestic cargo volume hovered around 98,000 tons, while international cargo volume surged to approximately 292,000 tons, reflecting an impressive 21.1 percent uptick compared to the corresponding period in 2021.

Nevertheless, it's crucial to underscore that Vietnam has yet to establish a dedicated airline exclusively for cargo transport. Amid the pandemic's turbulence, Vietnam Airlines, the national carrier, demonstrated ingenuity by repurposing a dozen wide-body aircraft, accommodating cargo in passenger and belly compartments. This innovative approach even extended to removing seats from narrow-body aircraft to facilitate goods transportation, further highlighting the sector's resolute spirit and adaptability.

Development Potential and Opportunities

The Vietnamese air freight industry is poised for substantial growth and presents lucrative opportunities for investors. As the world transitions to a post-pandemic reality, this sector is undergoing transformative changes.

Growth in Airport Capacity

Vietnam's ambitions for the Air Freight industry are underpinned by substantial investment in airport infrastructure. By 2025, airports managed by the Airports Corporation of Vietnam (ACV) are projected to have a total designed capacity of 2.5 million tons of cargo annually. By 2030, these figures are expected to increase to 3.5 million tons of cargo yearly. The plan also encompasses 14 international airports and 17 domestic airports. Such extensive infrastructure development is vital for accommodating the rising demand for air cargo services. It's worth noting that substantial investment is required, estimated at $17.5 billion for airport infrastructure between 2021 and 2030.

Foreign Investment Opportunities and Incentives

Vietnam's commitment to fostering a conducive investment climate is evident in recent legislative changes. New investment laws and guiding decrees have been enacted to create a more favorable environment for foreign investors. This extends to the aviation sector, reducing barriers and enhancing opportunities for investors to participate in various aviation businesses. Several financial backers have already expressed interest in investing in Vietnamese airlines, including the national carriers.

Vietnam's participation in the ‘ASEAN Open Skies’ agreement, effective since 2015, has created a favorable environment for the growth of the air freight industry. This regional initiative eliminates fare control, capacity restrictions, and frequency limitations on flights within the ASEAN region. It positions Vietnam as a strategic player in regional air cargo operations.

In the current socio-economic recovery and development program, aviation enterprises in Vietnam can benefit from a 2 percent interest rate on loans from commercial banks and a 50 percent reduction in environmental protection tax for the 2022-2023 period. These incentives further enhance the business environment for the air freight sector.

Key Role in Export

Vietnam's burgeoning reputation as a 'China plus one' destination for manufacturing and exports has drawn substantial investments from global giants like Samsung, Nike, and Foxconn. The country's exports encompass a wide spectrum, including electronics, textiles, garments, and agricultural products. This emphasizes the pivotal role of air transport in Vietnam's exports.

ONE Record Initiative

The adoption of the ONE Record Initiative by the Cargo Services Conference signifies a significant step toward modernizing the air cargo industry. This initiative aims to replace various data standards used for transport documents with a single record for every shipment. This move toward standardization is expected to enhance transparency and efficiency within the industry, further positioning Vietnam's Air Freight sector for growth.

Challenges and Considerations for Investors

Investing in Vietnam's Air Freight industry holds tremendous promise, but it's vital for prospective investors to be aware of the challenges and considerations that accompany this opportunity.

Infrastructure Constraints

One of the foremost hurdles faced by the air freight sector in Vietnam pertains to infrastructure limitations. The existing infrastructure and logistics services have struggled to meet the surging demand, leading to elevated logistic costs. This deficiency becomes evident in the underinvestment in modern equipment and infrastructure, particularly outside of major international airports like Tan Son Nhat and Noi Bai. These airports boast high-capacity international warehouses and standardized equipment. In contrast, most other airports lack the automation and synchronization of warehouse infrastructure and transportation, which can hinder operational efficiency. Moreover, the underdeveloped road network disrupts the connection between localities and regional airports, extending transport times and impacting cargo quality. Despite these challenges, there are concerted efforts, such as those led by Airports Corporation Vietnam (ACV), to enhance infrastructure at airports like Cam Ranh, Da Nang, and Can Tho to meet the growing demand for goods transportation.

Human Resources Shortage

Another significant impediment is the shortage of well-trained human resources in the air freight industry. Currently, there is a deficit of approximately 2 million employees in the logistics sector, which includes air freight. Furthermore, there's a dearth of skilled labor, with 80.26 percent of the workforce receiving on-the-job training, while only 23.6 percent participate in formal training courses. This scarcity of qualified personnel can pose challenges in maintaining high operational standards and efficiency.

Regulatory and Investment Barriers

The aviation sector in Vietnam is subject to stringent regulations and faces significant business risks. These factors can deter both domestic and foreign private investments in the sector. One notable regulation pertains to the capital contribution rate for foreign investors in air transport enterprises, currently capped at 34 percent. This restriction can limit foreign investors' ability to realize long-term business goals. In comparison, neighboring countries like Thailand, Indonesia, Cambodia, and the Philippines permit higher foreign capital contribution rates, offering more attractive investment conditions.

Final Thoughts

The Vietnamese air freight industry stands as a beacon of opportunity in a post-pandemic world. With robust growth potential, strategic geographical advantages, and a burgeoning e-commerce sector, it offers investors a chance to be part of an industry poised for expansion. However, navigating this dynamic landscape requires strategic planning and due diligence. To unlock the full potential of this sector, we invite you to access the full version of Viettonkin’s latest whitepaper "Unleashing Vietnam’s Potential: Accelerating Growth in the Aviation Industry through Digital Transformation" - a collaborative endeavor with IBS Software -  a leading SaaS solutions provider to the travel industry globally.

Contact us today to explore the exciting prospects that await in Vietnam's air freight industry and embark on a journey of strategic investment and growth.

The Vietnamese airline industry is a vital driver of economic growth and connectivity in the region. As the world emerges from the challenges posed by the global pandemic, this dynamic sector is undergoing a remarkable transformation. In this article, we will delve into the latest trends shaping the airline industry in Vietnam, examining how it adapts to post-pandemic changes and explores new horizons. From the shift in passenger preferences to the pivotal role of technology and innovation, we will dissect the factors steering the industry towards a promising future. Furthermore, we will unravel the numerous investment opportunities this thriving sector has to offer, equipping investors and stakeholders with the insights needed to navigate these exciting prospects successfully. Join us on this journey as we explore the trends and opportunities propelling Vietnam's airline industry to new heights.

Emerging Trends in Vietnam’s Airline Industry

The Vietnamese airline industry is undergoing a significant transformation. One of the noteworthy trends is the increasing demand for domestic travel. According to a report from the Vietnam National Administration of Tourism (VNAT), domestic tourism has seen remarkable growth, with 101.3 million domestic travelers in 2022, a substantial increase compared to previous years. This surge in domestic travel is reshaping airline operations, with carriers such as VietJet and Bamboo Airways expanding their domestic flight offerings to cater to this rising demand.

Consumer preferences are evolving in response to changing travel dynamics. Research conducted by Visa shows that travelers are now seeking more personalized experiences. Airlines are addressing this trend by leveraging technology and data to tailor services. For instance, Vietnam Airlines introduced a personalized in-flight entertainment system that recommends movies and shows based on passengers' previous selections, enhancing the overall travel experience.

Innovations in technology are at the forefront of these changes. The Internet of Things (IoT) is being utilized to enhance aircraft maintenance and passenger experience. Airlines are deploying IoT sensors to monitor engine performance in real-time, improving maintenance efficiency and safety. Additionally, Radio Frequency Identification (RFID) technology is used for tracking baggage, reducing mishandled luggage incidents.

Online booking platforms and mobile apps have become indispensable tools for travelers. Airline companies empower passengers with the convenience of booking flights, completing online check-ins, and utilizing contactless boarding passes through the introduction of a user-friendly mobile app.These advancements in technology have not only simplified travel but also provided a more convenient and streamlined experience for passengers.

Artificial intelligence and data analytics are playing a pivotal role in optimizing airline operations. For example, Vietnam Airlines has implemented AI-powered chatbots to handle customer inquiries efficiently. These chatbots are trained to provide instant responses and assist passengers in various tasks, from booking tickets to changing flight details. Additionally, data analytics are used to analyze passenger preferences, enabling airlines to offer personalized promotions and services.

Sustainability is another facet of these trends. The aviation industry, including airlines operating in Vietnam, is actively exploring sustainable practices. For instance, Bamboo Airways is dedicated to mitigating carbon emissions and enhancing the overall customer experience through strategic collaborations with two well-established software solutions.

Investment Opportunities in the Vietnamese Airline Sector

The Vietnamese airline sector presents a range of promising investment opportunities for savvy investors.

One of the most promising segments is domestic and international routes. In 2022, the domestic market experienced a remarkable 30% expansion compared to 2019. As the domestic tourism market continues to expand, airlines are enhancing their route networks to meet the growing demand. The recovery of international travel is also evident, with Vietnam gradually reopening its borders. Investors can capitalize on this trend by exploring partnerships with airlines, investing in route development, or supporting airlines in expanding their fleets to cater to increased travel.

Cargo operations represent another lucrative avenue for investment. The rise of e-commerce and increased demand for express delivery services has led to a surge in air cargo transportation. In 2022, the aviation sector in Vietnam transported 1.25 million tons of cargo, reflecting the industry's critical role in facilitating trade. This presents opportunities for investors to engage in cargo-related ventures, from establishing cargo airlines to investing in logistics and warehousing facilities that support the efficient movement of goods.

Aviation technology is a frontier where substantial growth potential exists. Investors can tap into the development and deployment of innovative solutions that enhance the passenger experience, improve operational efficiency, and ensure safety. This includes investments in biometrics, IoT (Internet of Things), RFID (Radio Frequency Identification), and data analytics, which have the potential to transform the industry. For instance, airlines like Vietnam Airlines have actively applied new systems and technologies to improve flight operations and customer experiences, including customer management systems, aircraft maintenance management systems, and commercial reporting and sales management systems.

Sustainability is another prominent trend, with airlines increasingly adopting eco-friendly practices. For example, during the extended Hanoi to Frankfurt flight, Vietnam Airlines implemented eco-conscious initiatives, including distributing bags crafted from repurposed life jackets to passengers, offering sustainable meal options, and promoting the use of personal items over disposable ones provided during the journey.

Government Initiatives and Policies

Government initiatives and policies play a pivotal role in shaping the Vietnamese airline industry, fostering a conducive environment for growth, and attracting investment.

Firstly, the Vietnamese government has demonstrated a proactive approach in nurturing the aviation sector. Recent regulatory changes reflect its commitment to aligning with international standards and facilitating industry development. For example, the Civil Aviation Authority of Vietnam (CAAV) introduced measures to promote the use of modern aircraft and address environmental concerns. These changes not only enhance safety and efficiency but also signal the government's responsiveness to industry needs.

Incentives and support programs have been instrumental in stimulating investment and innovation. The government offers various incentives to attract investors and support the growth of airlines and aviation-related businesses. Tax incentives, reduced import duties on aircraft and equipment, and streamlined customs procedures are among the measures aimed at bolstering industry competitiveness and efficiency.

Infrastructure development is a top priority, with the government allocating substantial resources to improve airport facilities and expand capacity. Projects like the construction of Long Thanh International Airport and upgrades to existing airports enhance the country's connectivity and accommodate the growing demand for air travel. These infrastructure investments are pivotal for both domestic and international airlines, offering enhanced route options and operational efficiency.

The government's commitment to international cooperation and open skies agreements fosters an environment conducive to industry growth. Vietnam's participation in regional agreements, such as the ASEAN Open Skies, promotes liberalization, fare control elimination, and capacity and frequency restrictions removal on regional flights. This facilitates air travel and air cargo transportation, opening up new opportunities for airlines and investors.

Final Thoughts

The Vietnamese airline industry is poised for remarkable growth and presents enticing investment prospects. As discussed, emerging trends, coupled with government support and a commitment to international standards, offer a favorable climate for investors. To capitalize on these opportunities, it's vital to stay well-informed and adaptable in this dynamic sector. 

With a collaborative endeavor between IBS Software -  a leading SaaS solutions provider to the travel industry globally, and Viettonkin Consulting - a multi-disciplinary group of consulting firms promoting international business relationships in ASEAN, the latest whitepaper "Unleashing Vietnam’s Potential: Accelerating Growth in the Aviation Industry through Digital Transformation" details the current state, challenges, and opportunities of digital transformation in this rapidly expanding market.

Access the full version of this whitepaper at: https://www2.ibsplc.com/whitepaper-unleashing-vietnams-potential-vn.htmlFor tailored guidance and expert support in navigating the Vietnamese airline industry's potential, consider Viettonkin as your trusted partner. Reach out to us for strategic insights and assistance in exploring investment avenues in this thriving industry. Your journey to success in Vietnam's aviation sector begins with Viettonkin.

The global energy sector is currently experiencing significant changes, with the power grid being a critical component of this transition. Japan's approach to building a smart grid system is based on the Power Sector Reform initiated by the Ministry of Economy, Trade, and Industry (METI) following the 2011 earthquake in Eastern Japan. The reform aimed to establish a more stable electricity supply system, reduce costs, and make more rational choices for retail electricity providers.

The Japanese electricity sector is also undergoing significant changes due to low demand growth, increasing installed capacity of renewable energy sources (RES), and the development of the Reform. The integration of RES into the electricity grid is currently reducing energy prices in the wholesale electricity market, capacity factors of power plants, and their revenues due to marginal cost approaching zero. This has led to a decrease in predictability of cost recovery and a decline in investments in power plant construction by generation companies.

To encourage investment in electricity generation and ensure predictability and efficiency of reserves/capacity in the short and long term, a market mechanism for fair compensation of electricity sources has been established, segmented into kWh, kW, ΔkW, and environmental values. Negawatt trading (DR: Demand Response) is promoted from the perspective of ΔkW value, which is beneficial for diversifying energy sources and ensuring capacity/reserve security.

Japan's goal of 53 GW of PV capacity ensures approximately 33% of the peak demand, but there are critical issues such as fluctuating frequency, excess power generation, inadequate transmission capacity, and insufficient rotational inertia in the transmission network. To address these issues and increase the installation capacity of RES, various coping measures have been explored, including the efficient use of Battery Energy Storage Systems (BESS), electric vehicles (EVs), and Heat Pump Water Heaters (HPWH).

In recent years, Japan's electricity system has been repeatedly disrupted due to natural disasters such as earthquakes, typhoons, and heavy rainfall. To recover from large-scale natural disasters, it is necessary to establish an electricity system capable of recovering through technical measures, continuous operational support, and business management.

Japan's "3E + S" plan aims to achieve non-intermittent, smart, and flexible electricity systems with significant integration of renewable energy to meet the "3E + S" criteria.

Japan's smart grid implementation progress has been significant, with the Institute of Electrical Engineers of Japan (IEE) stating that a smart grid is an electricity system that integrates control technologies, information exchange, distributed computing, sensors, and transmission equipment to achieve sustainable efficiency, economically viable electricity supply, and safety through the integration of renewable energy sources (RES). To avoid PV curtailment, a feasible solution is to efficiently use controllable devices on the demand side to balance supply and demand.

Several national projects related to smart grids have received government support since 2010. Notable projects include the R&D Project for Optimal Control of the Next-Generation Distribution and Transmission Grid, which focused on demonstrating next-generation control of the transmission and distribution grid, emphasizing a new control method for demand-responsive devices to balance supply and demand. The project involved major utilities, large manufacturers, and universities in Japan over a span of six years.

The demonstration project on Nii-Jima Island, which has a renewable energy generation capacity of approximately 1,000 kW, has been conducting on-site testing of distribution and coordination Energy Management Systems (EMS) since 2014. The decentralized and coordinated EMS, including a regional central control system operated by the network operator and an integrated distributed energy source control system, work in conjunction with the current demand forecasting system and control system for diesel engine generators.

This project on Nii-Jima Island demonstrates advanced technologies to mitigate the variability of renewable energy sources and optimize their integration into the grid while ensuring a reliable and cost-effective power supply.

In conclusion, Japan's commitment to advancing smart grid technology and optimizing the integration of renewable energy sources into the grid has led to significant progress in the implementation of smart grids. By incorporating renewable energy sources into the grid, Japan can ensure a reliable and cost-effective power supply while mitigating the variability of renewable energy sources.

The Virtual Power Plant (VPP) is a system that manages supply-demand combinations through IoT integration, enabling customers to balance and control their devices. This integrated system functions like a power plant, providing balancing capabilities such as Replacement Reserve (RR) and RR for Feed-in Tariff (RR-FIT). If the VPP response rate is fast, it corresponds to Frequency Containment Reserve (FCR), Synchronized Frequency Containment Reserve (S-FRR), and Frequency Restoration Reserve (FRR).

Japan's power system has faced disruptions due to natural disasters and the massive integration of Renewable Energy Sources (RES) from an operational perspective. To ensure the resilience of the power system, Japan has been researching and developing concepts such as Virtual Power Plants (VPPs), Smart Grids, and Super Microgrids. A Super Microgrid is defined as a group of interconnected loads and Distributed Energy Resources (DERs) within clearly defined electrical boundaries, operating as a controllable entity.

In Japan, the fundamental concept of a Super Microgrid is similar to that in the United States, with the additional notion that it should not adversely affect the main grid's operations, such as frequency control under normal conditions. Super Microgrids have gained attention for their ability to maintain business continuity and enhance resilience during natural disasters, although they come with higher costs compared to conventional grids.

Some notable Super Microgrid projects in Japan include the Hachinohe City project, which includes biomass cogeneration, batteries, Photovoltaics (PV), small wind power generation, and loads from the Hachinohe City Hall and some schools. This project is connected to the Tohoku EPCO grid at two common connection points and has successfully islanded operation using actual loads during emergency states and economically interconnected operation with minimal CO2 emissions under normal conditions.

The Tohoku Fukushi University Super Microgrid project in Sendai City, also supported by NEDO, features six levels of power quality: Normal, High A, B1, B2, B3, and DC supplied on different circuits. The system also includes Molten Carbonate Fuel Cells (MCFC) and PV to provide backup power in addition to gas engine generators.

Despite some upgrades, the Super Microgrid continues to operate, providing electricity and heat to Tohoku Fukushi University for two days during a power outage in 2011.

Source: Khac Nam - Specialist of Energy Vietnam Magazine

Last week, Apple finalized the relocation of its 11 visual - audio device production factories to Vietnam, marking a significant shift in the company’s global supply chain strategy. This tech giant’s confidence in the Vietnamese manufacturing sector was discussed by Mr. Nguyen Thang Vuong - Europe-America Market Department, Ministry of Industry and Trade - during an online forum on Vietnam’s role in the global supply chain. 

Increasingly important position in the production supply chain

According to the list of Apple’s global suppliers released in 2022, 25 of its supplier firms are establishing factories in several provinces in Vietnam, including familiar names like LG Display, Samsung Electronics, Advanced Semiconductor Engineering Technology, Murata Manufacturing and so on. Statistics from Reuters reported a noticeable increasing trend in the presence of Vietnam as a prime location for Apple’s suppliers, from 2.2% in 2019 to 3.7% in 2021. This indicates that Vietnam is growing as a bright spot for this giant’s strategy for supply chain diversification. DigiTimes estimated that 20% of iPads and Apple Watches, 5% of MacBooks and 65% of AirPods will be produced in Vietnam by 2025.

In June 2023, Compal Electronics - an important iPad and Apple Watch manufacturing contractor - invested in the Lien Ha thai Industrial Park project, specializing in manufacturing, processing and assembling electronic components and electrical products. The project attracted 260 million USD of registered investment capital, with a projected revenue of 1.2 billion USD in 2029 and 6.8 billion USD in 2037.

In the meantime, Foxconn - among the largest contractors of Apple - is implementing its plan to allocate iPad and MacBook production to Vietnam, creating more than 60,000 jobs for the Vietnamese labor market, with an announced investment of 270 million USD. 

Increasing potential as a consumer market

Vietnam nowadays is not only an important manufacturer of MacBook and Airpods, but also a rising market that has received much attention from Apple. In May 2023, after the first online Apple store was opened in Vietnam, CEO Tim Cook tweeted on his personal account expressing his excitement about the news. The CEO also considered Vietnam one of the most developed markets for Apple products with double digit growth last July. Vietnamese Apple fans are now able to purchase Apple products directly from the official online store. Additionally, Vietnam is announced as the third ASEAN nation to support the use of Apple Pay. 

Quartz News commented that Apple is betting on emerging markets in Asia with young populations and digital savvy and Vietnam is among the most potential choices. This newspaper also provided data on the estimated annual growth rate of Vietnam’s digital economy (at 40%) and the digital economic value of the country in 2022 (reaching 23 billion USD). 

Final thoughts

The economy of Vietnam has witnessed significant growth in several sectors in the first half of 2023, and is expected to continue to progress even further in the remaining half, thanks to preferential policies for FDI attraction and new generation FTAs, and more. At the moment, Vietnam has risen as a global investment hub and an important manufacturer for many global supply chains, with open opportunities for businesses seeking to expand to new markets. Contact Viettonkin today if you are ready for your investment journey. Our team of experts will provide you with local intelligence and guide you through the process of investing into the dynamic market of Vietnam and other ASEAN countries.

Source: vietnamnet

In today's era, health technology (healthtech) has emerged as a powerful force, utilizing digital solutions to revolutionize healthcare delivery and accessibility. From telemedicine to wearable devices, health data analytics to artificial intelligence, healthtech encompasses an array of innovations that have the potential to reshape the healthcare industry. By enhancing efficiency, reducing costs, improving quality, and empowering patients, healthtech stands poised to usher in a new era of healthcare.

Global and regional healthtech landscape

The global healthtech market is on an upward trajectory, projected to grow at a compounded annual growth rate (CAGR) of 15.1% from 2020 to 2027, reaching an astounding $639.4 billion by 2027. This surge is driven by factors such as the COVID-19 pandemic, spurring demand for remote patient monitoring, telehealth, and mHealth solutions. Additionally, the rise in smart devices, wearable technology adoption, and breakthrough technologies like artificial intelligence and blockchain play pivotal roles.

The Asia-Pacific region is a frontrunner in the healthtech boom, boasting a CAGR of 16.3% from 2020 to 2027. With over half of the global population residing in this region, challenges such as aging demographics, chronic diseases, urbanization, pollution, and healthcare resource scarcity create fertile ground for healthtech startups and investors. In 2020, Asia-Pacific witnessed over 5,000 healthtech startups securing a staggering $8.5 billion in funding, according to Galen Growth.

Navigating Vietnam’s healthtech terrain

Vietnam, an emerging market in Southeast Asia, with a population nearing 100 million and a 4.41% GDP growth rate in the first 6 months of 2023, has made substantial strides in healthcare system enhancement. Achieving universal health coverage for over 90% of its citizens signifies progress. Yet, hurdles remain—low public health expenditure (just 4.68% of GDP in 2020), unequal healthcare access, affordability concerns, high out-of-pocket payments (nearly 40% of total health expenses in 2020), and escalating non-communicable diseases (constituting 81% of total deaths in 2019).

These challenges underscore the demand for healthtech solutions to elevate healthcare access, quality, efficiency, and affordability. Reports by Startupblink and HealthTech Alpha place Vietnam at the 31st spot globally for health innovation in 2020, up from 36th in 2019. Hanoi and Ho Chi Minh City also earn accolades as the 13th and 15th best cities for health innovation in the Asia-Pacific region. 

Notably, this year, Vietnam has seen the emergence of more than 187 vibrant healthtech startups. In an earlier part of the year, East Ventures, a prominent investment fund in Southeast Asia, made headlines by committing a substantial 2 million USD investment into Medigo, a telehealth platform operated by a Vietnamese startup. This investment round also saw the participation of Pavillon Capital and Touchtone Partner, further solidifying the growing interest in this dynamic sector.

Pioneering Healthtech Innovators in Vietnam

Several standout healthtech startups in Vietnam exemplify the country's promising trajectory:

The consecutive and successful fundraising rounds of healthtech firms in Vietnam underscore the immense potential within this sector, according to industry experts. Beyond the well-established players, the market has also witnessed the emergence of promising new brands like khoduoconline, YouMed, and MedPro.

Huong Trinh, CEO of BDA Partners, a leading advisory firm specializing in cross-border M&A, capital raising, and financial restructuring across Asia, highlighted how the healthtech industry has emerged as a new focal point for investment. This shift comes in response to the surging demand for online healthcare services, a trend that has gained significant momentum, particularly in the wake of the Covid-19 pandemic.

Unlocking Vietnam’s Healthtech Potential

Several underlying dynamics contribute to the burgeoning potential of Vietnam's healthtech market:

Large and Youthful Demographic

With over half of Vietnam's population under the age of 35, a burgeoning youth market yearns for healthtech solutions tailored to their preferences—seamless convenience, personalization, digital integration, and innovation. This presents an unparalleled opportunity for tech-driven healthcare solutions to resonate with the digital-native generation.

Rapid Urbanization

Surging urbanization, where more than 36% of the populace resides in cities, prompts a high demand for healthtech solutions addressing urban challenges like pollution, stress, lifestyle ailments, mobility, and connectivity. The urban landscape's unique healthcare demands open avenues for innovative digital interventions to enhance the quality of urban living.

Elevating Middle Class

Vietnam's middle class is rapidly expanding, with an estimate of 17 million middle class households in 2030. This surge fuels the need for healthtech solutions delivering enhanced healthcare quality, affordability, accessibility, preventive care, and wellness. The rising middle class seeks healthcare experiences that align with their improved socio-economic status.

Government Support

Backed by robust initiatives such as the National Digital Transformation Roadmap to 2025 and vision to 2030, including digital health transformation, the National Strategy on Industry 4.0, the Telemedicine Strategy for 2020-2025, "Doctor for Everyone" telehealth system, and the National Startup Program 2016-2025, the government paves the way for healthtech innovation and entrepreneurship by offering funding, infrastructure, regulations, incentives, and collaborations. This support creates an ecosystem conducive to health tech advancement.

Navigating Challenges in Vietnam's Healthtech Sphere

Alongside immense promise, Vietnam's healthtech landscape presents formidable challenges:

Data Privacy and Security Deficit

A frail legal framework and enforcement mechanism for data privacy and security raise concerns, jeopardizing trust for users and providers of healthtech solutions. Addressing this necessitates robust data privacy regulations, fortified security laws, and stringent compliance and monitoring systems. In 2020, Vietnam ranked 25th out of 194 countries in the Global Cybersecurity Index (GCI) underscores the urgency. Strengthening data protection is pivotal to fostering confidence in healthtech solutions.

Talent and Skills Scarcity

A dearth of skilled health tech professionals, encompassing technical expertise, business acumen, and innovation mindsets, poses a hurdle. Rectifying this entails strengthening the education and training ecosystem while refining strategies to attract, retain, and nurture healthtech talent. Fostering a skilled workforce is integral to driving innovation and sustaining the sector's growth.

Fragmented Healthcare Ecosystem

Vietnam's healthcare system, replete with diverse stakeholders—public and private providers, insurers, regulators, patients—demands concerted efforts to foster collaboration, streamline coordination, and establish common platforms and protocols for seamless healthtech integration across levels and sectors. Overcoming fragmentation is essential to realizing the full potential of healthtech solutions.

Navigating Regulatory Complexities

An intricate and evolving regulatory landscape for healthtech solutions introduces uncertainty and barriers. Clear definitions and classifications for various healthtech categories, the formulation of specific guidelines and quality standards, and harmonization with international best practices are critical imperatives to overcome regulatory hurdles. Streamlining regulations is pivotal to enhancing investor confidence and fostering innovation.

In Closing: Nurturing Healthtech Innovation in Vietnam

Healthtech's potential for innovation in Vietnam is undeniable. Yet, realizing this potential demands a profound understanding of market dynamics, as well as strategic approaches to overcome challenges. By embracing opportunities and forging tailored solutions, healthtech startups and investors can fuel Vietnam's healthcare revolution, steering it toward a brighter, technologically empowered future.

Are you ready to be a part of Vietnam's healthtech transformation? Whether you're an investor seeking promising ventures or a visionary entrepreneur ready to make a mark, the time is ripe to harness the power of healthtech. Together, let's drive progress, unlock opportunities, and shape a healthier tomorrow.