Danang Worth living, Worth investing

Danang Investment Promotion Agency

Le Canh Duong Director 098.3134.059

Central Viet Nam - 97,363.7 km2 land - 14 million people - 07 coastal provinces - 01 coastal city - 05 highland provinces

Central Viet Nam Key Economic Zone

- 27,884 km2 land

- 6.4 million people

2

A growing region for investments OVERVIEW OF CENTRAL VIETNAM

Danang

2nd Rank in VN Provincial Governance and Public Administration Performance Index (2012 & 2014)

7 out of 11 times to be the top of Viet Nam’s Provincial Competitiveness Index

The ASEAN City of Sustainable Environment

(2011)

Top 20 the cleanest city in the world in energy

conference of APEC 2012

Excellence in City transformation 2015

by the Financial Times and the International Finance Corporation

1st Rank in Readiness for ICT application and

development (2009 – 2015)

1st Rank in the list of ”Top 10 destinations on the rise for 2015” by TripAdvisor; “Asia leading festival and event destination” by World Travel Awards Asia 2016

Da Nang

AWARDS

3

1,285 km2

Area

1.02 mil

Population

(workforce of 0.74 mil)

70 km

Coastal line

US$ 1.7 bil

Total investment capital

for development

4

OVERVIEW

32,000 No. of new jobs

3.8% Urban unemployment rate

47% Percentage of trained labor

18,680 No. of non-state enterprises

59 No. of shopping centers, supermarkets

99 No. of hospitals and health clinics

25 No. of universities and colleges

12.7

9.88

13.81

9.1 8.1

9.28 9.8 9.04

8.2 6.79

8.44

5.03 5.4 5.98 6.5 6.21

1997 2000 2005 2012 2013 2014 2015 2016

Đà Nẵng Việt Nam

GDP Growth Rate (%)

420 460

950

2016 2294 2242

2487

2908 3171

361 402 639

1169

1540 1960 2028

2109 2240

1997 2000 2005 2010 2012 2013 2014 2015 2016

Đà Nẵng Việt Nam

GDP per capita (US$)

Key industries:

Tourism: 5,500,000 no. of arrivals

710 mil USD of revenue

(up 23.5%)

ICT: 254 mil USD of revenue

Non-state Enterprises: 18,680 (98% SMEs)

ECONOMIC GROWTH

5

GRDP (current price) US$3,504 mil

Exports

US$1,115 mil

Imports

US$1,300 mil

(2016 figures)

Top 5 investors (by capital) FDI by sector

(As of May, 2017)

14.0%

17.2%

19.6%

19.7%

Japan

USA

BVI

Korea

Singapore

10.6% 53.87%

32.47%

4.67%

2.59%

2.26%

1.90%

2.23%

Real estate

Processing/manufacturing

Education

Construction

Accommodation/food

Wholesale/retail

Others

526 projects

43 countries/territories

3.03 billion USD

48,119 jobs

INWARD FDI

6

372 branches, rep. offices of

FDI enterprises

7

WHY DA NANG

Strategic Location

Rapidly Developed Infrastructure

Competitive Business Cost

High-quality Workforce

Pro-business Environment

2.6 Quality of Life

8

STRATEGIC LOCATION

Copyright © 2017. All rights reserved. 8

Indian Ocean

Pacific Ocean

Danang

EWEC

Strategically located in global supply chain

Connect to Asia via sea and air

Via EWEC, connecting

to East Asia, SEA, Indian

Ocean

Connectto

Tokyo via

direct flight

Strategic Location for Sale/Distribution

Hub for distribution to

Central Vietnam

Easy access to North and

South Vietnam

9

INFRASTRUCTURE - TRANSPORT

Da Nang International Airport • Capacity: 12 mil passengers/year • Linked to 36 big cities in Asia; 24

direct routes • 390 monthly international flights • New terminal opened in May 2017

Tien Sa Port - 3rd biggest port in Viet Nam

Capacity: 07 million DWT, upgraded to 12 mil DWT (by 2018)

18–20 container ships/week; 70 cruises/year.

Lien Chieu Port – called for development

Capacity: 100,000DWT and 6,000-8,000TEU container ships

Da Nang

Road Infrastructure

Da Nang – Hue Highway: completed in 2018

Da Nang – Quang Ngai Highway (139 km): completed up to Tam Ky (Quang Nam)

INFRASTRUCTURE - TRANSPORT

10

IT Park No.2 (56 ha)

Hoa Khanh IZ

Lien Chieu IZ (59.781ha available)

Expanded Hoa Khanh IZ (33.52ha

available)

Hi-tech Park (1,129.76 ha)

Software Park No.1

Hoa Cam IZ (2.1 ha available)

Software Park No.2 (15 ha)

Seafood Processing IZ

Da Nang IZ

Under construction In operation 11

INDUSTRIAL INFRASTRUCTURE

IT Park (341 ha)

762 Warehouses and freight forwarding companies

53 Bank branches & 30 Insurance company branches

50 stations, connected to National North-South 500KV Power Grid

Current capacity: 205,000 m3/day

Increase to 396,300 m3/day by 2020

Ranked #1 in Availability for ICT application (Viet Nam ICT Index)

(2009-2016) Connected to Asia Pacific Gateway submarine cable and 10 GBs

International Marine Optical Fiber Cable Station (SEMEWE3) MAN Network (20 Gbps), data center (100TB), IT, R&D and training

centers

Citywide wireless broadband network (439 free access points)

INFRASTRUCTURE – AMENITY SERVICES

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13

Land use fee ($US/m2/year) of industrial park including infrastructure maintenance fee

IZ/City Danang Ho Chi Minh Hanoi

IZ 1 1.45 Lien Chieu IZ • 15 km from city

center • 42 US$/m2/29yrs (till

2046)

2.05 Amata IZ (Dong Nai) • 32km from HCM City • 90 US$/m2/44yrs

1.84 ~ 2.11 Pho Noi A IZ (Hung Yen) • 24 km from Ha Noi • 70-80 US$/m2/38yrs

IZ 2 1.27 Expanded Hoa Khanh IZ • 10 km from city

center • 47 US$/m2/37yrs (till

2054)

2.375 Long Hau IZ (Long An) • 40km from HCM City • 95 US$/m2/40yrs

1.61 ~ 1.81 Dai An IZ (Hai Duong) • 50 km from Ha Noi • 58-65 US$/m2/36yrs

IZ 3 1.07 Hoa Cam IZ • 8 km from city

center • 39.5 US$/m2/37yrs

(till 2054)

1.67 My Phuc IZ (Binh Duong) • 80 mins from HCM City • 65 US$/m2/39yrs

1.35 ~ 1.74 Don Van 2 IZ (Ha Nam) • 40km from Ha Noi • 42yr contract • 58~75 US$/m2/43yrs

Source: JETRO 2016

Competitive Business Cost

14

Competitive Business Cost

Danang Hi-tech Park Hoa Lac Hi-tech Park Ho Chi Minh Hi-tech Park

Land use fee

(manufac-turing)

0.23〜0.35 USD/m2/yr *depending on method of payment

0.8〜1.2 USD/m2/yr *depending on method of payment, location *including infra usage fee *exclude VAT

0.6〜1 USD/m2/yr (Phase 1) 0.8〜1.2 USD/m2/yr （Phase 2）

Infra usage fee

〜0.2 USD/m2/yr (4,200 VND/m2/yr) *No Management fee

0.25 USD/m2/yr *As infra management/admin processing fee

0.48USD/m2/yr *Include management fee

Land use fee in Hi-tech Park

Danang Ho Chi Minh Hanoi

Grade 1 Office 18 (Indochina riverside) 44~46 (Sunwah Tower) 35 (Lotte Centre, Sunred river)

Grade 2 11~18 (Danang software park tower)

17 (Star Building) 29 (PVI)

Grade 3 8~10 (Green Plaza) 16 (WASECO) 26 (Indochina Plaza)

Rental Office Rates Unit: USD/m2/month

15

Central VN Vietnam

Manufacturing

Worker 199 (2,924) 204 (4,025)

Engineer 324 (4,276) 416 (6,651)

Manager 589 (12,185) 901 (14,629)

Non-manfacturing

Staff 204 (4,025) 443 (6,839)

Manager 901 (14,629) 1030 (16,028)

Wages of Central and Vietnam as a whole (annual real burden)

Danang Ho Chi Minh

Hanoi

Worker 158 193 180

Engineer 225 348 346

Manager 480 736 870

General （Service）

227 469 390

Wage Comparison (Danang, Hanoi, HCM)

Danang Hanoi Ho Chi Minh

Apartment 1

650〜1,050 USD Vinh Trung Plaza

1,300〜2,000 USD Indochina Plaza

1,210〜1,540 USD Saigon Pearl

Apartment 2

900〜950 USD Danang Riverside Hotel

2,200〜2,700 USD Somerset Grand

3,288 USD Norkfolk Mansion

Apartment3

700〜1,800 USD Azura

3,250〜3,800 USD Lotte Center Hanoi

3,289〜4,143 USD Saigon Sky Garden

House rent for expatriate (Monthly)

Source: JETRO Database

Competitive Business Cost

743,820 (70% of population)

– Young, hardworking and energetic

– Stable (low turnover rate, almost no strike)

40,000 well-trained and skilled graduates annually from:

– 25 universities and colleges

– 19 professional secondary schools

– 59 vocational centers

Globally integrated

• Da Nang University provides training programs in cooperation with foreign university

• 03 international schools

– Pegasus (Singapore)

– APU (America)

– VNUK (British)

Workforce by qualification (2015)

16

HIGH QUALITY LABOUR FORCE

17

Business-friendly Environment

Danang Admin Center • Ranked top in Vietnam Provincial

Competitiveness Index (PCI) 7/11 times since 2006

5

5.5

6

6.5

7

7.5

2012 2013 2014 2015 2016

ダナン ハノイ ホーチミン

Trend of the administrative transparency index on PCI (past 5 yrs)

Investment environment risk

Central (N=25)

All (N=624)

North (N=295)

Undeveloped legal system · Unclear operation 42.1 48.4 51.2

Complexity of administrative procedures (such as licensing)

28.0 41.8 42.7

Investment environment risk in Vietnam

Source: JETRO 2016 Survey

Annual Dialogue with Jnese investors

DN HN HCM

18

Business-friendly Environment

IPA Danang provides supports to all foreign investors as one-stop shop for investment

Via Japan Desk, IPA Danang provides supports in Japanese for investors

Supports from Japan Desk, IPA Danang

Briefing Services

Introduction of vacant land/office

Arrangement of meetings with relevant government agencies

Translation services

Arrangement for site visit

Support in investment licensing

DPC

Investor

Danang Hi-tech Park or DPI

Related agencies

Quality of life

19

2.6

• Lifestyle and entertainment infrastructure development and environmental protection are progressing • International schools and international hospitals are also in operation • Compactness where airports, urban areas and beaches are connected within 15 minutes is also

advantageous • There is a Japanese community such as Danang Japan Business Association

Singapore Intl School Lotte Mart

3 world-class golf courses 70km coastline

Tanpopo Kindergarten VINMEC Hospital

Processing & Manufacturing

• Food processing

• Consumer goods

• Electronic products

• Spare-parts of vehicles

• Supporting industries

• Investment into Hi-tech Park

- ICT equipment & spareparts

- Software production

- Optoelectronics

- Precision mechanics

- Biotech-applied products

- New materials, new energy

- Environment technology

Services • Hotels, resorts, restaurants

• Recreation falicities

• Shopping malls, supermarkets

• Hospitals and schools of world standards

• Logistics services

• Banking and finance, insurance

• Tourism (MICE, ecotours, culture, adventure, recreation tourism)

• Environmental projects

Infrastructure • Industrial park, hi-tech park, IT park, EZ

• Seaport , airport

• Mass public transport (Monorail/tram/metro)

• Waste water and solid waste treatment

20

ENCOURAGED INVESTMENT SECTORS 3

Focused Sectors

21

High-tech Tourism

3

ICT

Admin 7.87 ha

Residential area

31.24 ha

R&D, training and business incubation

95.26ha

Technical infrastructure

area 7.17 ha

Production area 184.02 ha

Supporting industries 30.76 ha

Logistics and hi-tech services 28.15 ha

Green area, parks, and sport facilities

56.92 ha

Total area: 1,128 ha

Location: Hoa Lien District

22

HI-TECH PARK – PLANNING & CURRENT PROGESS

300 ha of land with sufficient

utilities available for rent

3

23

HI-TECH PARK – INFRASTRUCTURE

Under construction

Completed area

TRANSPORT

• Basically finishing the infrastructure construction in the 1st phase with 328 ha

• Central Road with cross-section width of 51m, grid roads in functional areas with cross-section width of 22.5m

Central Road

3

Projects in R&D, incubation and training

Projects in the list of encouraged hi-tech products and technologies

Projects in supporting industries

Off 100% Off 50% The first 2 years 3 years

Off 100% The first 2 years

Off 50% The first 2 years

2. Land rents (as per Decision 36/2013/QD-UBND)

~0.2 USD/m2/year

1. Infrastructure using fee

HI-TECH PARK – INCENTIVES

0.36 $US/m2/year

0.23 $US/m2/year

One off payment Annual payment

PRODUCTION PROJECT

0.45 $US/m2/year

0.31 $US/m2/year

Annual payment

SERVICE PROJECT

One off payment

24

3

Other projects

(Healthcare, cultural activities and other services related to residents' life in DHTP)

Exempt

11 years

Projects in the list of domains entitled to special investment preferences

(Hi-tech application, Hi-tech production, Hi-tech incubation, R&D…)

Exempt

15 years

Exempt

entire period

Projects in the list of domains entitled to investment preferences

(Construction of apartment complex for workers, investment and commercial operation of: Infrastructure of education and training institutions, logistics, bonded warehouse, tax suspension warehouse…)

HI-TECH PARK – INCENTIVES

3. Land rent special exemptions

25

3

81 108

152

351

434

534 580

2010 2011 2012 2013 2014 2015 2016

ICT Revenue (mil USD)

10.3 13.8

20.8 25

33

49.38

58

2010 2011 2012 2013 2014 2015 2016

Software Export Revenue (mil USD)

Y2016 Up by 10%

Y2016 Up by 17.5%

700 companies

3 OVERVIEW OF ICT INDUSTRY

26

DOMESTIC CUSTOMERS INTERNATIONAL CUSTOMERS

48%

18%

21%

13%

Private

Government

Social

Others

36%

36%

12%

16%

US

Japan

EU

Others

3 ICT MARKET ANALYSIS

27

28

ICT WORKFORCE

Sales and Marketing

5%

Admin 8%

Digital content

14%

Hardware 27%

Software 28%

Other services

18%

By Sector

20,000 Employees 23 Local training facilities

• Da Nang University of Technology • Duy Tan University • FPT Polytechnics (English and Japanese

Curriculum)

• College of Information and Technology • Training cooperation

― University of Technology & Portland State University

― Duy Tan University & Carnegie Mellon University training cooperation

― College of Information and Technology ― Viet Nam – Korea Friendship IT College

& Korean Education Institutions

• Training facilities for international programmers Aptech, NIIT

• University of Forgein Language Studies

University-College

84%

Postgrad 5%

Prof. Secondary School 9%

Untrained 2%

By qualification

3

ICT INFRASTRUCTURE

29

3

Corporate Income

Tax

0% 5% 10% First 04 years Next 09 years Next 02 years

15 years

Import Tax

0% for machinery, equipment and materials used in

software production that have not been produced in Vietnam yet

*** These incentives are subject to whether the ICT enterprise satisfies certain conditions about types of software products and production procedure *** Recently Vietnam Government has just announced in Resolution No. 49 a 50% personal income tax reduction for IT workers. This has not been put into law in the near future.

ICT – INCENTIVES FOR SOFTWARE COMPANIES

30

3

Infrastructure

• 20% off office rental in Da Nang Software Park

• 30% off website hosting fees

• 20% off server leasing fee, MAN leasing fees, data storage fees, data security service fees

• 20% off common infrastructure usage fees

Labor training

• Subsidy for 30% of initial training expense

• Subsidy for CMMI level 3 development

Sales & promotion

• Subsidy for 100% of registration costs of software copyright protection domestically

• Support in attending international expos

ICT – OTHER SUPPORTING POLICIES

31

3

82 297 370

630 955

1250

1660

232

807

1770

2660

3800

4600

5510

1997 2005 2010 2012 2014 2015 2016

International

Domestic

Total

Visitor Arrivals (‘000)

8000

2020

16.5% Tourism Revenue Growth Rate (2016)

16% Visitors Growth Rate (2016) Top Foreign

Markets

2006

$20.7 mil

2010

$52.1 mil

2016

$672 mil

Tourism revenue

FAST GROWING TOURISM INDUSTRY 3

32

14

11

48

575 hotels (2016)

21,648 hotel rooms (2016)

Copyright © 2017. All rights reserved.

Average Daily Rate (ADR): from $58.73/night for 4-star City hotels to $173.04/night for 5-star (2016)

Average Occupancy Rate at 63.3% for

5-star hotels and 50% for 4-star hotels

in Q1, 2016.

HIGH-QUALITY ACCOMMODATION SUPPLY

33

3

Position Years of experience

Malaysia Thailand Ho Chi Minh Da Nang

Average n/a n/a n/a 340

Junior Developer /Engineer

0 – 4 798 – 1026

551 – 1100

580 – 1270

400

Senior Developer /Engineer

5+ 1254 – 2394

1380 – 2480

1 400 – 2500

825

Project Manager

7 - 10 n/a n/a n/a 1370

Source: Self-surveyed data & Luxoft 2015

ICT WORKFORCE – LOW COST

Average Wage of an IT employee (Unit: US$)

34

3

18th Floor, Danang Administration Center

Tel: (84-236) 3886243 / 3886244

ipa@danang.gov.vn www.investdanang.gov.vn

Danang Investment Promotion Agency

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