Experts have pointed out that while the registered foreign direct investment (FDI) in the real estate sector is relatively high, the implemented capital remains modest, which means a high proportion of “virtual capital”.
The statistics released by the Ministry of Planning and Investment (MPI) show satisfactory figures about the foreign direct investment (FDI) in the real estate sector, with seven billion dollars worth of newly registered capital by the end of 2010. However, no one can say for sure that how much of the registered capital will be disbursed in reality.
In early 2007, when the former Ha Tay province was going to be merged into Hanoi, people had the chance to witness the splendid work-starting ceremony of the residential quarter project, with investing by South Korean Booyoung Vietnam. The project was expected to have six 30-storey buildings with 5000 high grade apartments in the Mo Lao new urban area.
However, the construction site quickly became deserted just after a short time, and is now a vast land area overgrown with weeds. According to the Mo Lao Urban Area’s Management Board, the project has experienced five investment license adjustments over the last five years.
The 4.3 hectares of “clean” land (The site clearance has been completed and the land is now ready for construction) which has been allocated to Boonyoung Company remains a deserted area, which is really a big waste.
Similarly, the 207 hectares of “golden land”, located at a very advantageous position, programmed for the new West Lake urban area, remains a deserted area, which is now temporarily used for the scrap material ground.
Licensed in early 2006, the project has not made any progress so far, even though the project’s investor has good financial capability. The problem is that to date; only 80.9 hectares of clean land has been obtained. The problems in the policies and the weak capability of government agencies have caused the project’s delay.
Besides this, a series of other real estate projects in Hanoi have not been implemented over the last many years and are facing a revoked license. These include huge projects like the one registered by Trang Tien Trade Company which has the registered capital of over 10 million dollars, and the one by Hacom joint venture, capitalized at 12 million dollars.
According to the Hanoi Planning and Investment Department, by 2011, the city has attracted 94 foreign invested projects in the real estate sector with the total registered capital of five billion dollars. However, the implemented capital remains modest at 2.4 billion dollars, or just a half of the registered capital.
“The registered capital is high, while the disbursed capital remains low. The virtual capital has been increasingly high,” said a financial expert. He has pointed out that the problem will cause many bad consequences. Especially, this affects the investment environment and causes the natural resources waste.
Officials from the Hanoi Planning and Investment Department have also pointed that it has discovered some cases, where investors register as foreign invested projects, but in fact, the projects use domestic capital sources.
In fact, the foreign investors, who registered the projects, only brought small amounts of capital to Vietnam, while they planned to seek capital from domestic sources for the projects’ development.
“It is very risky to use domestic sourced capital for the foreign invested projects’ development. In case the projects meet difficulties, this will cause bad consequences to the society,” an official from the Hanoi Planning and Investment Department said.
“It is necessary to set up reasonable regulations to punish the violations in the real estate investment, especially in the projects on commercial accommodations,” he added.
The Ministry of Construction has sent a dispatch to the Ministry of Planning and Investment, requesting to check real estate projects and consider the measures in dealing with the projects that have been slow in the implementation.
To date, many mammoth real estate projects have been given “death certificates”, including Bai Bien Rong eco-tourism center in Quang Nam, which had the registered capital of 4.15 billion dollars, The Aj Vietstar in Ba Ria-Vung Tau, Ben Got urban area in Phu Tho, and Nam Tuy Hoa Creation City in Phu Yen province.