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New policy aims to revive real estate sector
The draft of a Ministry of Construction decree making it easier for Viet Kieu (overseas Vietnamese) to own homes in the country is a new source of optimism in the nation’s real estate sector.
Property traders hope the bill, now under Government review, can energise the embattled real estate market.
If approved, the decree would allow any Vietnamese citizen living abroad who retains Vietnamese nationality to buy an unlimited number of residences in Viet Nam.
Those who have not retained their Vietnamese citizenship would be allowed to own an unlimited number of houses if they are investors in the country, are married to a Vietnamese citizen living in the country, have made significant contributions to the country or are university graduates working in the country’s socioeconomic sector.
Overseas Vietnamese in the country for at least six months or with a visa-exemption certificate will be permitted to own a single residence in Viet Nam.
With these changes, the home-ownership rights of overseas Vietnamese will be not any different from those of local citizens. This would make nearly two thirds of the 3 million overseas Vietnamese eligible to buy homes in Viet Nam.
Over the past few years, many overseas Vietnamese have bought houses in the country under their relatives’ names. The new policy would allow them to buy property directly.
A wave of transferring house-ownership rights from locals to overseas Vietnamese is likely to follow the bill’s passing.
The domestic housing market’s dynamics could change thanks to financial sources being transferred from the US to Viet Nam as Vietnamese Americans cope with the troubled US economy by investing in the slightly less troubled Vietnamese economy.
However, many doubt much of a shake-up will happen because few overseas Vietnamese would be willing to buy homes when the ministry’s decree does not permit them to sell homes.
Moreover, the overseas Vietnamese in need of housing here have probably already bought them under different guises.
The Ministry of Construction maintains that the change is not intended to stimulate the real estate market, but rather to reduce the distinctions between Vietnamese citizens at home and abroad.
According to the National Committee for Overseas Vietnamese, about 100,000 overseas Vietnamese have the need and capability to buy homes in the country.
Thirsting for capital
Many local businesses are in dire need of capital, despite many banks’ reduction of interest rates and relaxed lending terms and policies.
A survey by the Business Development Institute under the Viet Nam Chamber of Commerce and Industry reveals that enterprises from all economic sectors are short of money for operations and mainly use banks as the key source of funds.
Of the 282 polled businesses, 85.6 per cent needed more capital for the rest of the year. Taking out loans is on the agenda of 90.2 per cent of the companies. Of those, 81.5 per cent were State-owned and 57.5 per cent were foreign-invested.
While 90.2 per cent of local private enterprises surveyed said they want to borrow money, the proportion of the surveyed state-owned enterprises is 81.5 per cent and that of foreign invested companies is 57.7 per cent.
Banks are the key channel to mobilise capital for 74.5 per cent of the companies, 14.9 per cent of which are eyeing investment funds. Only 4.26 per cent are relying on the stock market to mobilise capital.
In the first half of the year, demand for capital shot up, with as many as 79.2 per cent of companies borrowing money to start business.
However, few were satisfied with the size of the loans. Only 10.5 per cent of businesses had loans that met their demand, while 26.1 per cent had three quarters of their demand met, 33.5 per cent had half of their demand met, and 29.8 per cent had one quarter of their demand met.
This year’s lending rate being pushed up to a steep 21 per cent per year prevented many businesses from taking out loans.
Small and medium enterprises faced more difficulties in borrowing capital than bigger ones. Only 29.6 per cent of them had enough assets to use as collateral to access bank capital.
Empty industrial parks
Vacancies at 10,000ha of in-dustrial parks are costing the Cuu Long (Mekong) Delta Provinces trillions of dong.
The area now has more than 150 industrial parks and clusters (IPC) over a combined area of nearly 20,000 ha. However, only a few have investment projects in operation.
By the end of 2007, the Cuu Long (Mekong) Delta had 20 IPs with a total area of 3,645ha, of which 2,416ha, or 66.3 per cent, were constructed. However, only 810ha, or 33.5 per cent, were actually in use.
The Tran Quoc Toan IP in Cao Lanh City, Dong Thap Province typifies the trend. Built in 2002 over 140ha, 40 per cent of the area came with complete infrastructure facilities. To date, however, only one project has used the grounds, with the remaining land neglected.
IPs in An Giang, Ca Mau, Soc Trang, Bac Lieu and Hau Giang Provinces met similar fates.
According to the managing board of the delta’s IPCs, some VND4 billion is needed to create a single ha of IP. This means that some areas are losing VND10.9 trillion due to the 2,725ha of unoccupied IP. Factoring in losses from deserted industrial clusters would push losses even higher.
Provincial authorities have organised conferences to find tenants for the IPCs, but so far have only secured vague promises for future investment.
Experts blame the empty IPs on undeveloped transport systems and ports and weak export activities in the Mekong.
Many life-lines in the delta like national Highways 91, 80, 54, and 60 are either falling apart or being constructed at a snail’s pace.
Meanwhile, the delta’s two main waterways, the Tien and Hau rivers, cannot accommodate vessels over 5,000 tonnes.
VNS
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