BUSINESS IN BRIEF 26/3

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VietnamNet English - 30 month(s) ago 3 readings

HoREA suggests developing small-sized apartments



The HCMC Real Estate Association (HoREA) has suggested developing residential areas with small-sized apartments from 20 to 70 square meters for singles and small families to meet the current demand for housing.

As the country is still developing, building small-sized apartments in accordance with the urban planning of each locality is the most appropriate and necessary solution in the current period, said HoREA chairman Le Hoang Chau at a seminar on solutions to unfreeze the property market held in HCMC on Tuesday.

The Binh Duong-based Becamex IDC has recently kicked off a project to construct 3,000 apartments of 30 square meters each, worth VND90 million per unit, which is considered a breakthrough to realize the dream of low-income people to own a home.

Chau said this model should be deployed on a national scale.

He stressed the realty market has experienced tough times since 2008, causing many problems to project developers, investors as well as consumers. Most property firms have to struggle with capital shortages, difficult access to bank loans, and sky-high lending rates of 24-25%.

Property trading remains dull, leading to a slump in the market liquidity, which is associated with the liquidity of the banking system. Relevant industries like cement, steel, and interior furnishing items are also dragged down.

To cope with the general difficulties, property enterprises must come up with solutions such as restructuring business and investment, postponing projects, offering discounts along with various promotion programs to stimulate consumer demand.

The market has yet to prosper since the deposit rate ceiling was lowered by one percentage point last week, or the HCMC government said it was considering buying unsold mid-end apartments for resettlement purposes.

Therefore, the outlook of the realty market is still dreary in 2012, with the biggest challenge being to improve sales and market liquidity, handle the unsold units and regain consumer confidence.

HoREA suggested there should be a specific schedule to pull down lending rates to 11-12% per year. In addition, the Government should adopt policy to offer consumers preferential interest rates for their first house purchase.

The association also proposed removing the land use fee slapped on property projects and imposing a tax rate of 10-15% instead.

Prices to edge up on higher fuel costs

Goods producers and suppliers have announced to adjust up their prices following the 10% fuel retail price increases, but the planned hikes are limited given the current dampened consumer demand.

Representatives of several supermarket chains confirmed to the Daily about the forthcoming price rises of some items. There is a 5% increase in prices of cosmetic products, processed food and beverages at Citimart.

Similarly, Nguyen Thi Anh Hong, managing director of Maximark supermarket chain, reported 5-7% price increases of some items due to the fuel price hikes and rising material costs.

The higher fuel prices are sending production and transport costs soaring, according to Huynh Huu Tuan, manager of Citimart Chu Van An.

However, retailers insist the price increases will not apply across the board. “At present, there are a handful of suppliers who propose a price hike,” Hong of Maximark said.

“They (suppliers) told us they were unwilling to increase prices for fear that sales would fall. As of now, prices must be revised up but they are making huge efforts to retain the current levels to maintain sales amid a gloomy economic outlook,” she added.

With proposals for a upward price adjustment from suppliers, retailers said they could negotiate to extend the term of the newly-announced list price or propose promotion programs in an attempt to keep consumers happy.

Name change for the tallest building in Vietnam

The name of the tallest building in the country, PVN Tower, will be changed after the investor, Vietnam Oil and Gas Group (PVN), pulled out of the project.

A source from PetrolVietnam Construction JSC (PVC) told local website VnExpress that it is now the major investor of the huge project, and that it will be built without funding from the State or PVN. The source said the name of the tower may be changed since the capital from PVC only accounts for 15-20% of the total.

"PVC will mobilise the capital from private investors. The company has already started negotiations with potential partners." the source said. "The project is scheduled to be operational in 2012, however the date may be pushed back because of the decline in the real estate market. We expect to fully recover investment within 15 to 20 years."

In 2010, PVC planned to build a 102-story skyscraper, the highest building in Vietnam, with an estimated cost of USD1.2 billion. The project was funded by PVC, PVN, Ocean Bank under Ocean Group and the real estate developer SSG Group. However, the building's planned height was cut down to 79 floors in March 2011. The decision allowed PVC to reduce the costs to USD600 million. In January 2012, PVN withdrew from the project, in accordance with the Prime Ministers instructions on withdrawing from non-core businesses.

To stay in line with the Prime Minister's directive, PVN can only invest funds for its office located in the building. He also ordered PVN to co-operate with municipal authorities in Hanoi to deal with the completed sections of the building in terms of planning and investment funds.

Farming project sees rice crops overcome low level soil salinity

An agricultural project has successfully grown rice on land where soil salinity was previously thought to be too high for cultivation of rice paddies.

Under the project in the southernmost province of Ca Mau, farmers combine rice cultivation with shrimp farming on land where soil salinity is nearby freshwater areas.

According to the Ca Mau Rural Development and Agriculture Department, the project has proved to be a success after many years of trials. Nearly 2,000 farmers have successfully harvested rice in areas previously thought to be unable to support rice crops.

Under the model, farmers can reap four tonnes of rice per hectare while also harvesting 500 kg of shrimp per hectare. This has doubled farmer's income to VND100 million per hectare.

Earlier, shrimp farming was limited to areas with high salinity while rice paddies were limited to fresh water areas. Local farmers had struggled to effectively use land, totalling some 100,000 hectares in the districts of Thoi Binh, Cai Nuoc, Phu Tan, Tran Van Thoi and U Minh where soil salinity was thought to be too high for cultivation of most crops.

The combined production model has opened up many new opportunities for thousands of farmers. The province currently has about 20,000 hectares of cultivation land under the combined rice and shrimp farming production model.

Hanoi starts building Nhat Tan - Cau Giay road

The Hanoi People’s Committee and the World Bank on Thursday hosted a ground-breaking ceremony for belt road 2 linking Nhat Tan bridge and Cau Giay junction.

As part of the Hanoi urban transport development project, the work is expected to shorten travel time from the downtown area to western and northwestern areas of the city.

Once completed, the belt road will be 58-64 meters wide, including two lanes on each side. With a total investment of US$304.7 million, the city’s urban transport development project was loaned over $155 million by the WB and given $9.8 million aid by the Global Environmental Facility.

The project will also help build an express bus system and a residential resettlement area. Deputy Chairman of the Hanoi People’s Committee Nguyen Van Khoi said the work will contribute to improving transport infrastructure for municipal socio-economic development.

Farmers forced to sell paddies at dirt cheap prices

Despite the rising rice export prices, and the government plan to stockpile 1 million tons of rice that was implemented over the last week, many farmers still have to pile up paddies in their houses since buyers, if there are any, always demand dirt cheap prices for the grains.

“My house is now filled with paddies, but I cannot manage to sell even a single seed,” lamented Pham Van Minh, a farmer in the Mekong Delta province of Tien Giang’s Tan Phuoc District.

Minh said several traders have come to browse the paddies, bargained, and quickly left.

“How can I clear the debts with the fertilizer and insecticide suppliers?”

Similarly, Le Phuong Quyen, another local farmer, has also been desperately seeking buyers for his 30 tons of grains over the last week.

“The traders deposited VND1.5 million (US$72) for the harvest, then completely disappeared,” said Quyen.

“They told me that they were willing to lose the deposit, and asked me to seek another buyer.”

However, Quyen still could not make any sales, even though the price is only VND4,200 a kilogram.

A bit luckier than Quyen was his neighbor, Le Van Rong, who managed to sell around 9.6 tons of paddies after a desperate week of searching for traders, at the throwaway price of VND4,200 a kg.

“The traders are extremely hateful,” said Quyen.

“They acted as if they do not need us, examined the grains for ages, and ended up complaining that they are of low quality.”

For his part, Huynh Thanh Nam, a trader who is looking for grains in Tan Phuoc District, said traders have hesitated to buy from farmers, since their next customers -- rice exporters -- only purchase low quantities at unchanged prices.

“No traders want to have large paddy stockpiles for fears that the exporters will unexpectedly cut buying prices,” he explained.

“We do not buy much from farmers, to minimize the losses just in case.”

“Rice exporters have been allocated stockpile quotas and are hurriedly buying paddies,” confirmed Pham Van Bay, deputy chairman of the Vietnam Food Association (VFA).

Bay said the exporters have purchased more than 120,000 tons of rice, which is 12.03 percent of the plan.

“It is such a speedy progress,” said Bay.

However, the director of a Long An-based agricultural firm said the progress seems quick on the surface, but it is in fact not that speedy.

“There are as many as 90 companies taking part in the stockpile plan, far greater than in previous years,” he elaborated.

“Should rice exporters continue buying from farmers at this pace, they will not ease the latter’s pressure to empty their piles of paddies.”

He said the more exporters procrastinate in buying farmers’ grains, the harder the pressure will become, and domestic paddy rice cannot shoot up.

“That is why paddy prices only rise by VND200 a kg, while the rice export price this week soared by $15 a ton against last week, and by $50 compared to the lowest rate recorded early this year,” the director said.

Meanwhile, Tran Duc Tung, former specialist of the Planning Department under the Ministry of Agriculture and Rural Development, criticized the stockpile plan for only benefiting rice exporters.

In his view, an official from the Cultivation Agency said the plan is not to be blamed, but the VFA’s non-transparent management is at fault.

“VFA has kept most of the information regarding export contracts confidential, so farmers do not know how to determine their paddy prices,” he said.

“Meanwhile, since rice exporters know the exporting prices, they will demand to buy from farmers at a price that is as low as possible.”

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