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Real estate policies deter investors
Foreign and local investors say transparent policies and less cumbersome procedures are necessary to attract more investment into the real estate market.
Although the Vietnamese real estate market had obvious potential and is able to attract investors, it needed Government support to gather fresh momentum after sinking to a sluggish mode during the global recession and its aftermath, property investors said at the Viet Nam Investment Summit 2011 which concluded on Thursday in HCM City.
The meeting discussed the real estate sectors performance in recent months and explored partnership potentials and opportunities to invest in Viet Nam.
Global investors, financiers, developers, Government agencies and corporate entities are looking to gain access to highly profitable opportunities in other fields like infrastructure and private equity, the two-day meeting heard.
"The real estate market in Viet Nam is attractive for investors because the market fundamentals are very good," said Yip Hoong-mun, deputy chief executive officer of CapitaLand Viet Nam Holdings Pte Ltd.
Viet Nam is facing some challenges because of the current economic situation, marked by inflation and high interest rates, that makes things difficult for investors and developers.
Foreign investment in the property sector this year has been the lowest in the last five years. Investment in real estate was US$305 million, including $30 million in existing projects for the first half of the year.
The Singaporean investor urged the Vietnamese Government to "take necessary action to adjust a few points so investors will come in and the market can move up."
Viet Nam should implement necessary fiscal and monetary policies and encourage more foreign direct investment to restore investor confidence in the domestic market, Hoong-mun said.
First half FDI inflows into the country were $5.66 billion, just over half the amount pledged during the same period last year.
Increased transparency and simplified administrative procedures are necessary measures to make the real estate market in Viet Nam more attractive, Hoong-mun said.
He said it took foreign investors about four years to complete their investment process in Viet Nam, and "this is too long compared to other countries in the region, like Singapore, where it takes only a year and China, where it takes about two years."
Cumbersome procedures and difficulties in getting investment approval were discouraging foreign investors from coming to Viet Nam, said Nguyen Le Phuong Thao, director of real estate investment and development with Long An-based Dong Tam Company.
Thao said procedures should be clarified and processing time shortened.
"An investment period is normally 10-15 years and if it takes foreign investors about two to three years to get an investment certificate, then there's not much time left for them to do business and make profit," said Thao.
Nguyen Xuan Quang of Nam Long Investment Corporation, based in HCM City, agreed with Thao, saying the Government should have a ‘master conductor' able to oversee the real estate market and formulate a comprehensive macroeconomic policy that gets all the sectors involved to help the market develop properly.
Quang said that the three most pressing issues – land use rights, the investment certificate approval process and the investment planning process – should be dealt with properly. He also said the two to four years it took to approve an investment certificate was too long and unnecessary.
Several foreign investors at the meeting said they understood that the Vietnamese market was undergoing a transition, and that things might not be too clear.
Investors should be patient and take a long-term view of the market potential, they said.
From a long-term perspective, Viet Nam was an attractive market with rapidly increasing demand and a majority of the population comprising young people of working age, said Thao.
She said local small and medium enterprises were restructuring their organisations and making them transparent to attract foreign investor interest.
Local investors said the summit, held for the second time in HCM City, was a good opportunity for them to understand the investment trend among foreign investors.
Foreign investors, on the other hand, said the meeting was an opportunity to meet with Government officials and policy makers and appraise them of problems they face as well as also suggest solutions.
vietnamnet, VNS
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