BUSINESS IN BRIEF 1/5

Vietnam, RoK to boost agricultural cooperation

Korean agriculture, an extraordinarily efficient and good mix of traditional farming methods mixed with modern technology, was the topic of discussion at a meeting in Hanoi on April 29.

At the event, Deputy Prime Minister Vu Van Ninh told Chairman of the Coordinating Committee of Vietnam-RoK development partnership programme Jun Kwang Woo Vietnam is always receptive to agricultural investment and cooperation opportunities with the RoK, he said.

The Vietnamese Government always looks forward to exploring  new and novel cooperation ideas, creating favorable condition for both nations to boost their economies, he said.

The RoK has become one of the most important trade partners of Vietnam in terms of labour force exports, tourism, foreign investment and trade, he added.

Jun Kwang Woo said in turn that the RoK is more than willing to share experiences and strengthening cooperation in agriculture and rural development, particularly in new rural construction.

He also expressed his strong desire that Vietnam will provide the best possible conditions for Korean financial institutions to invest in Vietnam in the coming time.

Vietnam aims for strong agricultural growth

The decline in agriculture, mirrored by the rural exodus, as the nation moves to a more industrialised society is undermining the nation’s economy as a whole, as many parts of the country are left behind.

Although agriculture continues to play an important part in the national economy, official statistics reflect the sector’s growth has slowed in 2014, a little bit lower than the figure of 2.67% in 2013 and 2.68% in 2012 and 4% in 2011.

In context, the demand and prices for farm produce and commodities began to taper off sharply in 2013 compared to prior years and the trend is continuing in 2014.

As prime examples, in 2013 the price of rice, coffee and rubber commodities decreased by 18.7%, 26.6% and 11.7% respectively.

Prime Minister Nguyen Tan Dung attributes the slow growth of the agricultural sector to an overabundance of  small-scale family farms combined with an insufficient number of large scale production farms, lack of coordination within the sector to work for the common good, and low productivity and poor quality.

Given the backdrop of low demand, low prices and the context of fierce international competition, industry experts predict the growth of the agricultural sector to remain stagnant in line with a slow pace in the development of production methods and competitive edge of farm produce.

Nguyen Do Anh Tuan from the Institute of Policy and Strategy for Agriculture and Rural Development, said that shortcomings in infrastructure, service, and technical standards have significantly weakened the competitive capacity of the agricultural sector, leading to a trade shortfall in the sector dragging down the overall national trade surplus.

These shortcomings have directly led to the hesitancy of domestic and foreign businesses to invest in the agricultural sector, he said.

The World Bank (WB) in turn points to the lackluster labour productivity growth in the  agricultural sector, which is significantly lower than comparable figures from China and Cambodia, as a cause for alarm.

The productivity growth in the agricultural sector only increased from US$200 per capita per year to nearly US$400 per capita per year from 1985 to 2011, the World Bank reports, the lowest level in the ASEAN region.

Factually, Vietnam has devised a scheme of synchronized solutions aimed at improving the added value of farm produce by selecting produce for production based on added value and maximising profits by marketing  products made from unsellable and left over produce.

However, without huge investments from the business community, these solutions lack practicality and cannot help the agricultural sector develop effectively.

Richard F. Doner, from the Political Department of the Emory University emphasises  that upgrading the value chain is extremely  difficult as implementing new technology is much easier said than done, requiring not only huge investment of money but significant training and development of human resources.

Therefore, the government needs to concentrate on devising a more practical and proper mechanism to solve these difficulties, he said adding that the formulation of policies should be initiated in a highly coordinated manner by government agencies, research units, business associations, and public-private consulting companies.

Meanwhile, Tuan said that restructuring the agricultural sector should focus on renovating management by clearly delineating those fields and services which will be administered by the state, leaving the remainder to the private sector.

Additionally, there should be carefully thought out and crafted policies to facilitate the privatisation of the agriculture sector and the establishment of associations to coordinate activities of the sector, he concluded.

Last but not least, Ms Jayati Ghosh, an Economics Professor from Jawaharlal Nehru University in New Delhi, India underscores that a fundamental perquisite for the future development and prosperity of the Vietnamese agricultural sector is the establishment of a legal corridor and support policies for the private sector to get actively involved in production.

Private sector production is the key to agricultural success, and capitalizing on that, a stable farm produce value chain can be constructed, bringing a practical sustainable and stable production model  to agriculture, she concluded.

Economic forum develops practical solutions for 2014

Experts attending the Spring Economic Forum have examined the status of the economy and come up with a number of practical solutions for buoying up the economy which has already bottomed out and is on track to recover.

Participants at the April 28-29 forum in Quang Ninh province shared the view that the economy has weathered the storm and begun to see positive improvements.

The GDP growth rate increased in a quarterly basis; inflation was kept at a low level; Quarter 1 ended with a US$1 billion trade surplus; and the foreign currency market remained stable.

Industrial production began to pick up, with an increasing number of businesses resuming operation and new businesses registering for the first time. Thanks to low interest rates, more businesses are now accessible to bank loans to maintain production.

All the same, many experts were quick to caution that many challenges are still lying ahead. They cited low aggregate demand as a key factor that affects the health of the economy, especially private businesses.

Nguyen Van Giau, Chairman of the National Assembly Committee for Economic Affairs, pointed out that State employee incomes have stagnated and have not increased over the past two years, showing the aggregate demand of the society is rather low.

Experts at the forum also discussed market difficulties, including a lack of adequate policies for implementing a VND30,000 billion stimulate package for the real estate market and the thorny problem of not adequately dealing with non-performing loans.

They agreed that economic restructuring that began a year ago has not met expectations, especially for State-owned enterprises and big economic groups.

Although the public debt is within safe limit approved by the National Assembly, it still remains high. It is important for the State to balance budget to pay debts and ensure expenditure structure to promote economic development.

The State has issued a large amount of bonds, 80% of which have been bought by credit organisations, slowing down capital for production and trading.

The forum also dealt with many other social issues, including labour, employment, education reform, epidemics, and unemployment

Experts proposed that the government mobilise all resources to address pending issues, with a primary focus on economic restructuring, especially in agriculture.

They underlined the need to put FDI allocation under the microscope, giving priority to essential areas and products of higher added value.

Some experts proposed introducing a more flexible exchange rate policy to fuel economic growth, supporting businesses in accessing market, and evaluating the comprehensive impact of the new integration process, taking into account Vietnam-EU Free Trade Agreement negotiations, the establishment of the ASEAN community in 2015 and Trans-Pacific Partnership (TPP) agreement negotiations.

Many participants also agreed that institutional reform costs less but faces the most difficulty as it must be carried out in all fields and levels.

Meeting realizes Vietnam–Singapore connectivity agreement

Vietnam and Singapore have resolved problems arising from implementing their 2005 agreement on economic connectivity (VSAEC) at a ministerial meeting in Singapore on April 29.

At the meeting, co-chaired by Vietnamese Minister of Planning and Investment Bui Quang Vinh and Singaporean Minister for Trade and Industry Lim Hng Kiang, both sides reviewed their achievements in the six cooperation areas of finance, education and training, transportation, information and communication technology, investment, trade and services.

They also discussed new measures to expand economic cooperation in line with each country’s potential and strengths, including the development of Phu Quoc Island in Vietnam’s Kien Giang province.

Under VSAEC signed in 2005, Vietnam has pledged to work closely together with Singapore to undertake initiatives within the agreement and encourage Singaporean businesses to invest in Vietnam to boost mutually beneficial cooperation

The 11th ministerial meeting on economic connectivity will be held in Vietnam in April 2015.

Lang Son, Chinese localities strengthen cooperation

Businesses from Lang Son province are attending the 9th Exhibition on Cultural Products in Yiwu City, Zhejiang province, China from April 27-30.

They are displaying a wide variety of high quality Made in Vietnam products including office supplies, educational aids, souvenirs and a large assortment of traditional cultural products at the event.

They partook in a number of seminars and activities that helped increase their understanding of their Chinese counterparts, and get updated on new products and recent developments in the marketplace.

Yiwu is considered the world’s biggest retail market by the United Nations and the World Bank.

Yiwu International Trade Zone, which covers 5.5 million sq.m, has a special zone for 10 ASEAN countries, including Vietnam.

Vietnamese products, including handicrafts and food, are favoured by Chinese and international wholesalers.

During their stay, Chairman of the Lang Son City People’s Committee Bui Van Coi and Chairman of Yiwu City He Mei Hua signed a framework agreement to promote bilateral cooperation in agriculture, forestry and consumer goods manufacturing.

Attracting more Korean investment into Can Tho

The Mekong Delta city of Can Tho and the Korean Institute of Industrial Technology jointly held a conference on investment promotion in the city on April 29.

Speakers highlighted investment advantages in the City’s industrial zones and high-tech parks in addition to the Tan Loc and Con Son eco-tourism sites.

They specifically identified manufacturing, agriculture, and civil construction as key areas of ideal investment matching the strengths of both the city and the Korean business community.  

A Vietnam-RoK technology nursery project launched in late 2013 at Tra Noc Industrial Zone with total investment capital of US$21.13 million was touted as a prime example of the successes that Korean businesses have experienced.

Once completed, the project will help regional aquaculture, and agricultural and seafood processing businesses access advanced technologies to raise the quality and value of products.

With the project, Can Tho will have a research and development centre for agricultural and seafood processing and mechanical engineering to promote its agricultural advantages and potential.

Japan pulls out of Vietnamese shrimp market

Japanese investors are pulling out of the Vietnamese shrimp market due to excessively high levels of oxytetracycline (OTC), according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The decision was made due to the continuing detection of unacceptably high levels of OTC in shrimp shipments, despite prior warnings and the fact that it is public knowledge that virtually all Vietnamese shrimp exports are inspected for the antibiotic.

VASEP said that the Japanese importers are considering importing shrimp from India and Indonesia.

VASEP warns that unless local shrimp businesses strengthen self-regulation of OTC they will fail to penetrate the Japanese market.

Still tough to access home loan program

The Ministry of Construction has proposed adding more beneficiaries to the VND30-trillion low-interest home loan program initiated by the Government, but real estate enterprises still find lending requirements complex and attribute this to a slow pace of disbursement.

Deputy Minister of Construction Nguyen Tran Nam has suggested the Government allow households and individual customers of commercial budget housing projects to take out loans from the program. Moreover, the requirements for size and price per square meter should be scrapped and instead the cost of each home or lot apartment should be capped at VND1.05 billion.

The suggestion is not new, however, as some enterprises are doing what he proposed but homebuyers have to shoulder normal interest rates.

Le Ngoc Giau, general director of Tan Hung Investment Joint Stock Company, said homebuyers had signed up to buy many of over 600 apartment units launched by the firm recently. However, they have had to take out normal loans from banks rather than low-interest credit from the stimulus program.

As each condo is measured at 84 square meters, exceeding the 70-square-meter limit set by the VND30-trillion program, homebuyers cannot apply for loans at interest rates lower than commercial ones. Nonetheless, each unit is priced at less than VND1 billion, so the investor is ready to give homebuyers 14 square meters for free, meaning customers have to pay for 70 square meters only, Giau said.

Nguyen Van Duc, deputy director of the Dat Lanh Real Estate Company, told the Daily that that there should be just a single price requirement of below VND1.05 billion instead of the size and unit price requirements as currently applied.

However, Duc said, this should have been put in place last July or August.

The conditions applicable to the stimulus program, if relaxed, will help solve part of people’s housing demand.

The Government should have policies to encourage enterprises develop small units of 40-50 square meters each. HCMC is now coping with a limited supply of small-sized homes due to the rising population, Duc added.

Le Hoang Chau, chairman of the HCMC Real Estate Association, said the new suggestion was only suitable to housing products in HCMC, Hanoi or big cities. This will not work in other parts of the country.

For instance, residents in the Mekong Delta can buy a high-end apartment or even a villa for just VND1.05 billion. If one owns a villa, they are not considered low-income earners, so they are not eligible for the home loan program.

Nguyen Vinh Tran, general director of Nam Long Investment Joint Stock Company, said the requirements are still far from reality.

The firm’s Ehome4-Saigon North project in Binh Duong Province meets requirements of the stimulus program but it has found few customers. While the loans are only extended to Binh Duong residents, potential clients of the project are those from outlying districts in HCMC and migrant workers of industrial parks.

Therefore, Tran suggested the ministry lift the regulation on citizenship status to assist home investors.

Figures of the ministry showed participating banks in the VND30-trillion program had disbursed nearly VND1.7 trillion as of mid-April.

Vietnam’s oldest casino in the red

Haiphong’s Do Son casino saw profits for nearly a decade, but in 2008 started incurring consistent losses totalling VND169 billion ($8 million) by 2012.

The news was released at a recent meeting on reviewing the five-year implementation of the Resolution of the tenth Central Party Committee meeting on continuing to perfect a socialist-oriented market-based economy.

The report states that Do Son casino, licensed in 1992 as Vietnam’s pilot casino model, has slipped into hardship, as reported by vef.vn. The casino achieved profitability in 1998, which lasted until 2007.

But in 2008 it started seeing losses that amounted to $8 million as of 2012. The casino has paid an average of VND23.5 billion ($1.1 million) in taxes each year.

As of 2013, it employed 417 workers, 394 of whom were Vietnamese and the rest foreigners.

Despite its poor performance in recent years, the casino’s employees still enjoy quite a high rate of pay. Vietnamese managers earn an average of $800 per month while the foreign managers take down around $2,300.

Haiphong management authorities have said that since the casino was opened, it has helped drive tourist numbers.

Do Son beach and Cat Ba are Haiphong’s tourism centres and have seen hundreds of millions of dollars go toward making them tourist hubs of national significance.

According to a National Assembly Finance and Budget Commission report released in February, Ho Tram casino – a major gambling venue in the country in southern Ba Ria-Vung Tau province – reported revenues of $5.5 million with 35,877 visitors in just seven months operating. In that time, Ho Tram has already paid more than $2.8 million to the state budget.

The Ministry of Finance’s figures show that the now five trial casinos, based in Haiphong, Lao Cai, Danang and Quang Ninh, have posted total revenue of VND930 billion ($44 million).

SMEs struggling to borrow while banks sitting on huge cash piles

Banks are sitting on huge cash piles at the moment but gaining access to loans is no easy task for small and medium enterprises (SMEs), according to the 2030 Businessmen Club under the Saigon Times Club.

SMEs said at a seminar at the Saigon Times Group office in HCMC last week that they had found it extremely tough to ask banks for a loan though banks said they had ample cash to lend.

Nguyen Ngoc Ha, director of HD Bank’s Nguyen Trai branch, said many SMEs had failed to meet banks’ lending requirements. Banks often have a different approach to working with SMEs, he said, noting a good business plan and a good financial statement would not suffice.

Banks, he said, know enterprises always have at least two financial reports with one for lenders and one for the taxman. Some enterprises even have more than two reports, Ha said.

Before deciding on a loan, banks should look into the fields where the borrower is active and how the management of the borrowing firm behaves, he said.

Banks also look at the way the borrower manages their cash flows, deals with unforeseen circumstances, and uses their long-term and short-term capital, he added.

Ha Xuan Anh, chairman of Son Viet Garment JSC based in HCMC, said lender banks always asked his firm whether it had assets for collateral to take out loans.

Vung Ro refinery developer refuses land

The UK’s Technostar Management Limited – developer of the $3.18 billion oil refinery and petrochemical project in the central Phu Yen province last week refused the cleared land handed over by provincial authorities.

According to local newspaper Vnexpress, the investor said the land which the local authorities tried to turn over to them was not fully cleared.

They explained that many fisheries were still active on the site.

The chairman of the Phu Yen Provincial People’s Committee Pham Dinh Cu, confirmed the news, saying that the land to be handed over to the investor was around 134 hectares in the province’s Dong Hoa district.

“We [the province] have finished land clearance and compensation procedures and so far have paid VND100 billion ($4.76 million) for the first phase of the project. But there are still 15 households and around 20 shrimp ponds that have not yet been moved,” Cu said.

Cu confirmed that the investor had reason to refuse the land, as local authorities have been slow in dealing with the issue. Cu also blamed farmers for continuing to farm shrimp at the location, despite already receiving compensation.

“The province is committed to forcing them off the site and giving the land as agreed to the investor by the beginning of May,” he added.

He continued by saying that committee would support the investor in its plans to start the project by July.

Vung Ro refinery’s EPC contract was signed in October last year between the investor and Japan’s JGC Corporation. The plan states that by the end of June the committee would finalise disbursement of VND300 billion ($14.28 million) for compensation of another 404 hectares of land for the second phase of the refinery.

Vung Ro Petroleum’s original investment certificate had a planned output of four million tonnes of crude oil, but the investor revised this to eight million tonnes to enhance efficiency.

The complex is slated to start commercial operations by 2016 and will produce a wide range of products including gasoline, polypropylene, benzene, toluene, xylene and diesel. The products will be distributed domestically and exported.

With a total investment of $3.18 billion, Vung Ro would be the biggest FDI project thus far in Phu Yen. The investor claimed that once operational the refinery would contribute more than $110 million per year to the local budget and create more than 1,300 jobs.

Phenikaa builds $87 million compound quarzt slab factory in Hoa Lac

Vietnam’s A A Green Phenix Company (PHENIKAA) will build an $87 million plant for manufacturing quartz slabz made by bonding together quartz grits and powder with unsaturated  polyester resin, using vacuum-vibro press technology that is exclusive technology transferred from Italy’s Breton.

Located in Hanoi’s Hoa Lac Hi-tech Park, the project will include two phase. In the first phase, Phenikaa will invest $59 million for a production line with the total capacity of 600,000 square metres of high class stone a year. The second phase, planned for 2017-2018 period, will have the total investment cost of $28 million that will expand the total production capacity up one million square metres of high class a year.

Phenikaa announced that it signed a technology transfer contract with Italy’s Breton for applying the latest technology in the production line, manufacturing quartz slabs with 90 per cent made from pure natural quartz. The production line is designed with the optimised layout and process allowing making the superior products that no company in the country has ever applied before and that others may have much difficult in copying. The line will also help Phenikaa improve quality and capacity under the tough weather (tropical-high humidity) condition in Vietnam, .

According to the signed contract, the Vietnamese company has got the exclusivity in buying machine and transferring this exclusive technology from Breton company in Vietnam within six years from 2014. This means, no company in Vietnam can by production technology from Italy’s Breton, a well-know stone manufacturing technology provider in the world, from now to 2020.

With the optimised designed production line and, Phenikaa expects it would provide the best quality and luxury quartz products to Vietnamese and the world market. Right now, the first phase of the manufacturing facility is under the construction. The manufacturer expects to start its mass production in June 2015.

Vingroup announced incentives on office leasing

Vincom Office Company, an arm of Vingroup has announced its special lease programme named “Golden Opportunity 2014” to woo tenants for its office projects for lease.

Under this programme, from April 15 to July 15, new tenants will benefit from special incentives and preferential lease conditions when leasing an office space in the flagship developments of Vingroup being Royal City and Times City in Hanoi and the Vincom Center Dong Khoi in Ho Chi Minh City

During this three month period, new office tenants will be offered special lease incentives including VIP staff privileges at the building’s facilities and complementary services, with specific terms and conditions applying to each project.

Accordingly Vincom Office Company provides flexible office solutions, accommodates demand from 100m2 to 4,000 m2 on a single floor area, in addition to impressive ceiling heights, spacious floor layouts, efficient vertical transportation and amenities at international standards, combined with a smart underground parking system covering a total area of over three hundred thousand square meters.

These office components are all integrated within multi-purpose developments that provide banking, healthcare, modern residential living, shopping, leisure and dining outlets. This unique all-in-one offering, combined with prime locations ensures that Royal City, Times City and Vincom Center Dong Khoi are the most exciting working environments in their respective cities.

This incentive is applied for a range projects including the whole floor area of the second floor of Royal City, Times City; a part of R6 (Royal City); 5-storey building – Tower 1 (Times City) and office space at Vincom Center Dong Khoi, all are in prime locations.

Vincom Office Company is a member of Vingroup – a leading commercial property company that provides international standard office management and marketing; established in 2013. Vincom Office currently manages office space in three major developments: Royal City and Times City (Hanoi) and Vincom Center Dong Khoi (Ho Chi Minh City).

Lotte gets nod to build $2 billion Smart Complex

Lotte Consortium – a joint venture between Korea’s Lotte and Japanese investors – was recently granted in-principal approval to develop the company’s proposed Smart Complex.

The $2 billion complex is planned for 2A area in the Thu Thiem New Urban Area in Ho Chi Minh City’s district 2. Lotte has said it plans for the complex to be a landmark of the city and greater South East Asia.

According to Kim Min Geun, vice president, head of Overseas Mixed Used Development Division of Lotte Asset Development, Lotte Centre Hanoi and the Smart Complex are key in the company’s Vietnam development plans and Lotte aims to lead international development in the future with its expertise in mixed-used development.

The Thu Thiem New Urban Area is being developed by the Ho Chi Minh City People’s Committee to match up with Hong Kong’s International Finance Centre and Shanghai’s Pudong. City authorities have been pushing the urban area as a priority since 2002.

The Smart Complex is planned as a commercial and residential centre with multiple shopping complexes, hotels, serviced residences, offices and apartments.

Lotte Consortium plans to complete the master plan this year and carry out phased developments as infrastructure construction allows.

The complex will be pioneered in Vietnam with the aim of expanding the model to many other countries in the coming time.

This is Lotte’s second property development planned for Vietnam, following the now under-construction Lotte Centre Hanoi, slated to open later this year and which will be the second tallest building in Vietnam with 65-storeys.

Lotte Centre Hanoi, once open, will feature a 5-star hotel, offices, luxury serviced residences and an observation deck on the 65th floor, which it hopes will be one of the most visited attractions in Hanoi.

Rise in Vietnam’s real estate revenue

The property market has begun to show positive signs, with a recent increase in capital inflows.

Construction Minister Trinh Dinh Dung reported that by mid-April, the number of transactions in the real estate market in Hanoi doubled compared with last year’s final quarter.

Meanwhile, the State Bank of Vietnam (SBV) said that by the end of March, investment credit and real estate business increased by 3.95%, much higher than last years’ figure of 1.09%, for the first quarter.

Foreign capital inflows into Vietnam’s real estate are higher than other fields.

According to the Foreign Investment Agency, up until April 20, 2014, the property market ranked second in attracting FDI with additionally increased and newly-registered capital hitting US$392.3 million, accounting for 8.1% of total investment. In particular, an apartment project in HCM City’s Binh Thanh district has been licensed with investment capital totaling more than US$200 million.

Earlier, in the first quarter of the year, the real estate market also ranked second in attracting FDI with additionally increased and newly-registered capital reaching US$288.3 million, making up 8.6% of total investment.

Nha Trang Bay luxury resort project still faces delay

Nearly a year after getting its new investment certificate, the multi-million dollar Nha Trang Bay luxury resort project has yet to restart construction, though the new developer committed to starting operations within two years.

In May 2013, after a new investment certificate was signed for the VND1.2 trillion ($57 million) resort project, formerly named Rusalka and now named Champarama Resort and Spa, the developer – Focus Travel Nha Trang JSC – committed to opening the project two years later.

In actuality, the project was first suspended nine years ago in 2005, and still it faces the same problems it did then and has even added a few to the list.

One of the main reasons behind the delay was its conflict with Nha Trang Bay plans, currently in development by the Khanh Hoa province People’s Committee, said Vo Tan Thai, director of the province’s Department of Planning and Investment.

There have been different opinions on plans for the bay, particularly a great deal of opposition from the Ministry of Culture, Sports and Tourism, as well as scientists and architects, as several investment projects are not correlative with the Law on Cultural Heritage.

According to Thai, at present there is no word on as to when the project will restart construction.

“The planning issues have been resolved, but many procedures have yet to be completed. At present, the developer is still working on getting a building permit to restart the project,” he added.

Another pending issue is a debt from the old developer – investment and tourism development company Rus-Inves-Tur (RIT).

To take up the project, the new developer Focus Travel agreed to inherit all of the rights and responsibilities but also debts of their predecessor.

Some of the debts have been resolved, but one with the BMC Building Materials Co Ltd. under the Ministry of Industry and Trade remains outstanding.

The initial debt was for VND51.6 billion ($2.4 million), but BMC now lists it as VND275.5 billion ($13.1 million).

After the province granted the project it’s new investment certificate last year, BMC filed petitions requesting unsettled problems be resolved, particularly debt obligations, before handing the project to a new developer.

BMC’s complaints even reached the desk of the prime minister.

Last Thursday, Khanh Hoa People’s Committee hosted a meeting to settle these issues.

It is expected that the province will soon issue a document detailing resolutions.

The erstwhile Rusalka project received the investment certificate in 2000 and was set to set up a tourism complex spanning 43.5 hectares that cost some $15 million.

It was invested by RIT, chaired by Nguyen Duc Chi. In 2005 Chi was arrested under charge of “frauds and appropriation of others’ assets.” The project thus came to a halt, had its assets frozen and the licence revoked in 2006, and ended up being liquidated in mid-August 2011, under an order by the prime minister.

In April, 2010, however, the Supreme Court overturned the accusations against Chi, and all assets were returned to Chi. Six months later, the prime minister assigned Khanh Hoa’s authorities to establish new legal entity to continue the project to ensure the investor’s benefits and reduce financial damages.

RIT’s former chairman Chi then proposed to have Focus Travel Nha Trang take over the project, a request that was green-lighted by the coastal province’s authorities. Focus Travel Nha Trang was chaired by Nguyen Duc Tan, who is Chi’s brother.

Buying rental property trends in HCM City

Many in HCM City have turned to buying homes to rent in the context of a sharp fall of deposit interest rates and the frozen real estate and stock market.

A recent study by CBRE Vietnam indicated that the leasing out is an important factor in the decision to buy a home for Vietnamese people, particularly in HCM City, and this trend has become more popular in this city.

According to CBRE, the Vietnamese real estate market is facing a continued slump, which makes for an opportune time to buy houses with an intention to rent them out. Rental properties can bring investors a stable source of income, and when the property market recovers, they can sell the houses at a profit.

Truong An Duong, Savills Vietnam’s Associate Director of Advisory Residential Services, said that only around 4,000 apartments are rented foreigners in HCM City, while the number of foreigners in HCM City is quite high, creating a potential market for rental property owners.

The trend is not new, but has grown stronger in HCM City recently because of its low risk and high potential returns.

According to Mr. Truong Nam Duong, apartment projects in Binh Tan District, District No. 2 and Nam Sai Gon area have attracted the most customers.

The Phu My Hung urban area located, at Nam Sai Gon, is one of the most desirable apartment projects in HCM City among foreigners. A 70-square metre room there is leased for around USD800 per month.

Policies to revive property market

The state has offered credit packages for the local real estate market and will amend more regulations and policies to promote further recovery in the local market, noted experts.

During an online dialogue on the property market 2014: opportunities from policies held by the dddn.com.vn, the online Dien dan Doanh nghiep newspaper yesterday in Ha Noi, Phan Thanh Mai, the general director of the Bank of Construction, stated that the local property market has shown positive development over the past few months, including financial solutions from banks – VND30 trillion and VND50 trillion stimulus packages.

The VND30 trillion package, one of the government programmes, is aimed at providing credit for social housing projects. The package will help investors develop the social housing segment to meet the people’s demands and help to push down the prices of housing apartments, thereby creating conducive factors to remove stagnation in the local property market, Mai added.

Meanwhile, the VND50 trillion package, which was recently released, is a commercial credit package for contractors, investors, and building material producers in the property sector, he remarked.

Banks will manage credit to use the money for the right purposes. The state expects that with the introduction of the package, investors will have more investment capital and the prices of building material products will also drop. Thus, the prices of houses and apartments will have a chance to fall against the current prices.

The state expected that the package would provide needed capital for unfinished property projects, Mai reported.

The two credit packages were aimed to achieve different purposes and expected to boost the market, he added.

However, according to Nguyen Huu Cuong, the chairman of the Ha Noi Real Estate Club, experts and even members of the National Assembly are of the viewpoint that disbursement of the VND30 trillion package is slow.

The slow disbursement might not mean that is unsuccessful, Cuong pointed out.

The package for social apartment projects, including buyers and investors with low interest rates, was issued at the right time when the market had fallen into serious crisis, he claimed.

The slow disbursement of the package was partly due to slow reaction by the people and enterprises towards the package, while on the other hand, procedures on appraising and approving the projects had been carefully implemented, he noted.

The package, a financial tool by the Government, had positive effects on the securities market to push the VN Index from 397.6 points at the end of 2012 to 569.87 points on Tuesday and lured US$21.6 billion investment into the property sector, he emphasised.

This support from the Government helped the local property market to cover losses and aided the development of the apartment segment having a selling price of around VND20 million per square metre. The package had saved 61,000 enterprises having thousands of property projects to avoid closure and bankruptcy, he explained.

Therefore, the package is expected to prove its efficiency in the future, as the package is effective until 2020.

Additionally, according to Nguyen Manh Ha, the director of the House Management Department, under the Ministry of Construction, the ministry and related ministries and sectors will amend the laws on trading property, construction, and housing to deliver more houses for the people and encourage all the economic sectors to invest into property products for the people.

Those laws will help people of the low-income group to own apartments and help the property market to have transparent development.

Cuong remarked that the amendment of the laws would abolish the administrative barriers for site clearance, create transparency in the market, and increase the prices of property products.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

BUSINESS IN BRIEF 1/5