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Prices, red tape deter Viet kieu home buyers
Many Viet Kieu (Overseas Vietnamese) cannot realise their dream of buying houses and apartments in their homeland due to high prices and complicated house-purchasing procedures.
According to the Committee of Overseas Vietnamese in HCM City, between 2006 and early 2010, about 140 Overseas Vietnamese bought houses in Viet Nam, 100 of which were in HCM City and last year, only ten Overseas Vietnamese made purchases. This is a very small number compared with more than four million Overseas Vietnamese currently living around the world.
When the policy to allow more Overseas Vietnamese to buy houses at home was issued a few years ago, real estate companies launched a number of housing projects, aiming to provide luxury apartments to these new potential buyers. But the local property market remains stagnant, and housing developers have had to drop their prices by 40 to 50 per cent to attract buyers.
Nguyen Tran Ly, a Vietnamese Australian, was staggered at the price of US$300,000 set for a 150 sq.m apartment in District 7. She said the price of the apartment was much higher compared to a similar house in Australia, where infrastructure and living conditions are much more developed.
Although property prices have dropped since 2007, the cost of land and houses in HCM City are still much higher than prices in Australia, Canada, France and the US.
Nguyen Thi Lan, a Vietnamese American, was quoted by Tin Tuc newspaper as saying that high land and house prices have stopped her from realising her dream of repatriation to her homeland.
"With $200,000, I can afford a villa in the US. But in HCM City, I can only afford an apartment," said Lan.
"Without timely intervention, the current sky-high prices of houses and land are big challenges for Overseas Vietnamese who have plans to re-settle in their homeland."
Global economic turmoil has resulted in lower Overseas Vietnamese remittances and affected their plans to buy houses at home in 2009. Remittances dropped to $6,238 million last year, down by 12.8 per cent compared with 2008. In HCM City, remittances fell to $3.2 billion from the $5 billion of the previous year.
Procedural barriers remain problematic for Viet Kieu who wish to own a house in Viet Nam. The legal document on Overseas Vietnamese house purchase became effective on July 1 of last year, but relevant authorities are still awaiting a detailed directive from the Government.
Luong Bach Van, Chairwoman of the liaison association of Overseas Vietnamese in HCM City, said the most complicated formality is identifying the Vietnamese origin of Overseas Vietnamese. It takes at least three months for localities to certify the origin of Overseas Vietnamese who still possess their former birth certificate or family-registration.
Addressing a meeting with Overseas Vietnamese in Ha Noi on January 31, Nguyen Manh Ha, Head of the Construction Ministry's House and Property Market Management Department, said the ministry was revising procedures so that Overseas Vietnamese who had resided in Viet Nam for three months could buy houses.
The ministry has also asked the Government to allow two categories of Overseas Vietnamese to buy more than one house. Ha said they are Overseas Vietnamese whose spouses are living in Viet Nam and those who have special skills needed by the State of Viet Nam.
Rising interest rates
Local businesses, especially small enterprises, are complaining about high lending rates, which have soared to as much as 18 per cent per year.
The vice chairman of HCM City Handicrafts and Wood Industry Association, Tran Quoc Manh, was quoted by Sai Gon Giai Phong (Liberated Sai Gon) newspaper as saying that the wood processing industry had entered its peak business period and the industry was receiving numerous orders. To fill these orders, companies relied mainly on bank loans.
"However, the problem is that the sector currently makes a profit of around 10 per cent so how can they afford loans at negotiable interest rates of as much as 18 per cent per year?" he asked.
Meanwhile, businesses were facing increased production costs as the price of packaging, paint and materials has surged by 15-20 per cent, said Manh.
Many enterprises said their sales this year had initially been predicted to climb by 5-7 per cent, but now, there might be no growth at all for some due to increased input costs.
Due to rising input expenses, which are now much higher than in late 2009, many enterprises are trying to lower production costs by renovating technology and equipment to reduce energy and increase efficiency, according to Cao Tien Vi, chairman of the HCM City Young Business People Association.
He said several businesses had also seen their investment plans come to a standstill, as they could not afford the high lending rates. "According to calculations by some experts, only when a company makes a profit of 25 percent per year can it survive such high interest rates."
Manh said negotiable interest rates were legal but requirements for businesses to access bank loans had yet to be loosened. As a result, many companies, especially smaller firms, had not been able to get loans since they had no assets to use as mortgages, so they agreed to borrow money at high interest.
Negotiable interest rates should be a maximum of 13-14 per cent per year, most businesses have suggested.
At this rate, companies can control production costs, make their businesses profitable, and maintain the competitiveness of their products on the market.
The high interest rates have also recently undermined the competitiveness of the country's exports.
Myanmar trade links
Business communities from Myanmar and Viet Nam are pinning their hopes on the official visit to Myanmar by Vietnamese Prime Minister Nguyen Tan Dung in early April 2010. In addition to the promotion of diplomatic relations, Dung's visit is expected to help enhance economic and trade links between the two ASEAN countries.
On this occasion, a trade fair of Vietnamese goods will be opened in Yangon from April 3 to 6, showcasing the best products of 60 Vietnamese enterprises specialising in sectors such as textile and garments, footwear, cosmetics, pharmaceuticals, chemicals and processed food.
Many Vietnamese business people have travelled to Myanmar to seek opportunities. A delegation of Vietnamese ministries and businesses visited Myanmar from January 14 to 16 to survey investment opportunities. During a working session with the Myanmar Ministry of Economic Development and State Planning at the administrative capital of Nay Pyi Taw during the visit, Myanmar officials said they would create favourable conditions for Vietnamese businesses to invest in areas that benefit both sides. Two seminars were held in Nay Pyi Taw and Yangon to help boost Viet Nam's investment in Myanmar as well as bilateral trade co-operation.
To bolster trade links with Myanmar, the Asia-Pacific Department under the Ministry of Trade and Industry of Viet Nam organised the Viet Nam-Myanmar International Trade Fair in Yangon in November 2009. Contracts worth around $3 million were signed between Myanmar and Vietnamese companies at the fair.
Vietnamese business have found it relatively easy in Myanmar because the local market remains under-developed.
According to the department's figures, at present, up to 90 per cent of consumer goods sold in Myanmar are imported goods while its service sector remains under-developed due to the economic embargoes imposed by the EU and the US.
Foreign direct investment in the country has so far reached $15 billion while its agricultural, forestry and aqua-culture production represent over 50 per cent of Myanmar's GDP. In 2009, Myanmar exported $6.3 billion worth of goods and imported $3.8 billion.
Vietnamese goods have been exported to Myanmar for a few years, but these goods only hold small market shares. Vietnamese processed food has a 1.6 per cent market share, steel 1.4 per cent, materials and accessories for the textile and garment sector 1.3 per cent, and electric and electronic products 0.5 per cent.
Viet Nam is Myanmar's 16th largest export market. The country imports agro-forest, seafood products and electronic components from Myanmar while exporting steel, electronic items, pharmaceuticals, industrial goods, chemicals, computers and computer parts.
Investment activities between the two countries began in late 1988. According to Myanmar statistics, by the end of September 2009, Viet Nam had invested $23.4 million in Myanmar.
To further boost investment and business between the two ASEAN member countries, Viet Nam Airlines launched a direct service from Ha Noi to Yangon starting on March 2.
Le Hung Vong
vietnamnews
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