Residents' purchasing power tends to rise slightly and is reflected in a month-on-month increase of 0.6 per cent of the total retail sales value of goods and services, according to the General Statistics Office (GSO).
In the first five months of this year, the total value reached VND952.16 trillion (US$45.34 billion), up 20.8 per cent from the same period last year.
Of which, the increase mainly stemmed from the higher turnover of industrial goods, a VND732.66 trillion ($34.88 billion), a year-on-year rise of 19.5 per cent, as it accounted for 77 per cent out of the total retail sales value of goods and services.
Next, the revenue from hotels and restaurants rose 18.6 per cent to VND108.12 trillion ($5.14 billion). Value from other services hit VND101.91 trillion ($4.85 billion), representing a high growth at 34.2 per cent.
Vu Manh Ha, an economist from the GSO, attributed the increase of the total retail sales value of goods and services to the fact that the consumer price index (CPI) had been curbed to maintain a slow growth at 0.05 per cent in April and 0.18 per cent in May.
This helped raise the goods consumption by 3.5 per cent in May. Of which, sugarcane consumption increased strongly by 44 per cent; processing vegetables and fruits up 36.1 per cent; milk and butter up 23.6 per cent; bricks up 20.8 per cent; motor vehicles up 34.6 per cent.
Thus, this has assisted in maintaining a decreased rate at 29.4 per cent of the manufacturing goods inventories in May in comparison with the strong reduction at 32.1 per cent in April and 34 per cent in March.
"The rising rate of the total retail sales value of goods and services is still low, only equal to a half of the increasing of past time and thus we hope that the State will issue policies and methods to ignite consumption," he said.
Short-term interbank market to be targeted
The number of interbank transactions that have taken place over the short term, such as overnight and one week, rose sharply after the State Bank of Viet Nam (SBV) cut its deposit interest rate by 1 per cent to 11 per cent per year.
According to the central bank's report on banking operations, announced on May 31, the total trading value in the interbank market through overnight-term transactions on May 28 reached VND16.201 trillion (US$778.14 million) from VND11trillion ($528.33 million) from previous days.
The interbank interest rate for these kinds of transactions fell to 4.09 per cent per annum from 4.8 per cent or 4.9 per cent per annum.
Meanwhile, turnover from one-week transactions was VND7.218 trillion, with the interest rate cut from 2.4 per cent or 3 per cent per annum to 1.92 per cent.
During the past week, the banks began to pay more attention to interbank loans with long terms, such as 12 months, even though they carried a high interest rate.
In particular, on May 28, when the deposit interest rate was cut to 11 per cent, the interest rate on interbank transactions with a term of 12 months still stood at 13.12 per cent. Even so, the banks borrowed VND792 billion.
In face of the central bank's continuous cuts in deposit interest rates, many people have deposited their savings at banks with long-term conditions, in hopes of enjoying high interest rates for a long time.
Nghiem Xuan Thanh, general director of Vietinbank, said that termed deposits in dong at his bank increased by 1.8 per cent per year compared with the figure late last year, and up by 41 per cent, as compared with the same period last year.
Long-term deposits at Vietcombank also were up by 30 per cent and will continue to rise in the near future, according to deputy general director Nguyen Van Tuan.
Eximbank and ACB were also facing a similar situation. A branch deputy director of ACB said that since mid-March, many people had transferred their short-term deposits, such as one week and two weeks, into long-term ones to keep their interest rate at high levels, in anticipation of the central bank's further cut of the deposit interest-rate cap.
Nguyen Van Dung, deputy director of the SBV's HCM City branch, also confirmed the trend, saying that the number of people's savings deposits at local banks was increasing as well as the number of long-term deposits.
Tax cut on agricultural products
Agricultural products from Cambodia would enjoy zero per cent import tax, pursuant to Circular No 82/2012/TT-BTC signed recently by Deputy Minister of Finance Vu Thi Mai.
The products included cashew nuts, bananas, pineapples, coffee and rice, among others.
The circular is effective from February 17, 2012 to December 31, 2013.
Hai Phong sees 17 per cent export
The northern port city of Hai Phong fetched US$210 million from exports in May, bringing its total export turnover in the first five months to over $960 million, up 17 per cent year-on-year, according to the municipal Department of Industry and Trade.
The export items recording significant growth included seafood, agricultural products, food, plastics, garments and footwear.
Ha Noi to grant land use rights to organisations
The Ha Noi People's Committee has called on relevant agencies to grant land-use right and house ownership to organisations operating across the city starting from yesterday.
Accordingly, the committee will measure out land plots next month and receive applications. The municipal Natural Resources and Environment Department in collaboration with the departments of Finance, Planning and Investment will draw up specific plans to promote progress.
Over half of property trading floors closed
More than half of 500 real estate transaction floors in the capital ceased operations, according to the city's Construction Department.
Statistics also showed that in the first quarter of this year, there were 37 transactions related to apartments and 27 for houses and villas. It said the number of transactions through the floors have been modest.
Property supermarket debuts in Ha Noi
CEN Real Estate Group has inaugurated a property project supermarket with an aim to provide new access to customers.
Real estate projects introduced at the supermarket would be sold at listed prices. Buyers would not have to pay middle fees for buying a property. They would also be given advice by estate specialists.
Splendora project enters Phase 2 of construction
An Khanh JVC yesterday started construction on Phase 2 of Splendora New City in Ha Noi's Hoai Duc District.
The phase, covering an area of 75.8ha, includes apartment buildings and 900 villas. It has reserved 15ha for building parks with artificial lakes, trees, entertainment and offices. Phase 1 covered an area of 50ha and started construction in 2008. The total project area will be 264ha, to become operational by 2020.
City tightens golf course building requirements
The municipal People's Committee has required departments and relevant agencies to strengthen supervision on developing golf courses in the city.
It asked units not to use farming land or rich soil to build courses and villas. It also asked departments and districts to take drastic measures in withdrawing business licences when discovering violations.
Fixture-maker Kohler sponsors Top 10 Awards
Kohler, a global leader in kitchen and bath design and technology, will be one of the co-sponsors of the prestigious architecture and construction awards BCI Asia 2012 (BCI Asia Top 10 Awards) for the third consecutive year.
The awards reward outstanding and innovative construction projects. Viet Nam is well represented at the event with over 200 of the leading architects, interior designers, experts and key players in design, construction and real estate set to attend. Categories include the FuturArc Prize and the FuturArc Green Leadership award, which focus on Green projects, the Top 10 Award (Developers) 2012, and the Top 10 Award (Architects) 2012.
Exchange introduces experimental order form
The HCM City Stock Exchange will put a market order form in use for an experimental period of three months, beginning July 2, to offer traders with one more order-placing tool.
This kind of order will be for automatic matching sessions only, according to an announcement from the stock exchange.
The market orders are used to purchase securities at the lowest price or to sell at the highest one.
Asia Commercial Bank offers new online service
Listed bank ACB began offering its ACB Online-Mobile service on Tuesday, making deals more comfortable for customers.
Customers can use their mobile phones and tablet computers to connect to the internet either by wifi, GPRS or 3G to get information about their accounts or interest rates and to transfer money to accounts in or outside the bank. They can also pay phone charges, open termed deposit accounts and acquire loans.
Company raises nearly $7.6 million from bonds
Construction materials distributor Tasco (HUT) announced it had raised VND159.5 billion (nearly US$7.6 million) from selling 159,510 convertible bonds, accounting for 63.8 per cent of the total bonds issued in the first phase.
The bond yield was 20 per cent per year, with a conversion price of VND11,475 per share that will be adjusted in accordance with the bonds' anti-dilution provisions.
Individual domestic investors accounted for about 64.2 per cent of investors who purchased the bonds.
Tasco planned to issue the bonds in two phases, totalling VND350 billion ($16.6 million), with the first phase worth VND250 billion ($11.9 million). Proceeds from the sale of bonds will be invested in the company's new project and added to its working capital.
Bond principal and interest are expected to be paid by cash and revenues from ongoing real estate projects.
Seafood exports net $2b in 5 months
Seafood exports in the first five months of the year reached US$2.3 billion, an increase of 9.8 per cent over the same period last year, according to the Ministry of Agriculture and Rural Development. In May alone, seafood exports fetched US$500 million.
Shrimp had taken first place in export value among Viet Nam's key seafood export products, the ministry said, noting that surges in shrimp export value were recorded in the key markets of Japan and the US.
Shrimp exports to Asia have developed strongly in recent years. Japan is the leading importer of Vietnamese shrimp, accounting for 26 per cent of the nation's total shrimp export value.
Viet Nam Association of Seafood Producers and Exporter (VASEP) vice chairwoman Nguyen Thi Thu Sac said that demand for shrimp in the EU had fallen in the wake of the eurozone debt crisis and in the face of increasingly strict food hygiene and safety requirements.
Dak Lak Province sees investment increase in coffee-processing plants
Domestic and foreign investors are pouring more money into powdered coffee and instant coffee processing plants in Central Highland Dak Lak Province.
Since the beginning of this year, Dak Lak coffee businesses have processed more than 12,850 tonnes of powdered coffee and instant coffee, an increase of 55.9 per cent compared to the same period last year.
For example, An Thai Coffee Ltd Co has expanded its instant-coffee processing factory from a capacity of 1,000 tonnes to 2,500 tonnes per year.
Ngon Coffee Ltd Co, a 100 per cent foreign capital company, has invested in building an instant coffee factory with a capacity of 10,000 tonnes per year.
These two factories are nearly 80 per cent complete, and are expected to be put into operation by the end of the year.
Currently, the province has 10 large-scale coffee-processing companies.
To increase the value of coffee products, the province has offered many preferential policies to encourage investors from various economic sectors to develop coffee-processing facilities.
By the end of the year, powered coffee and instant coffee output is expected to account for 14-15 per cent of total green coffee produced, according to the province.
Ha Noi builds property price index
The Ha Noi Construction Department has faced many challenges in building and developing the price and volume indices of the Ha Noi property market under the Ministry of Construction's Circular 20, the department's representative said at the conference on building the indices in Ha Noi on Thursday.
According to Circular 20, the ministry proposed a trial on building price and volume indices for the real estate markets of four large cities of Ha Noi, Da Nang, HCM City and Can Tho.
The indices would be an important statistics tools to keep watch on the property market and would help the State management offices, property investors and traders have reasonable development policies and strategies on the property market. Ha Noi was the first city to develop the indices.
Tran Hop Dung, head of the department's economic management division, said around 80 per cent of real estate transactions in the Ha Noi property market had not been implemented via property trading floors so the information collected from the trading floors did not reflect the general development of the Ha Noi property market.
Areas of Ha Noi had not had synchronous plans, nor technical and social infrastructures, Dung said. Ha Noi is a special city because it includes urban, mountainous and rural areas.
Therefore the Ha Noi Construction Department must choose the areas that have synchronous infrastructure to build the property price index for the market.
Dung said the municipal construction department proposed to build the volume and price indices for segment of apartments and independent houses on the property market of six districts of Dong Da, Cau Giay, Thanh Xuan, Ha Dong, Hoai Duc and Tu Liem by 2013.
Now almost all property transactions in Ha Noi were focused in the six districts, Dung said. Moreover, those districts had synchronous technical and social infrastructures.
Ngo Huong Giang, head of the research division of CB Richard Ellis Viet Nam Ltd Company, a foreign consulting property firm in Viet Nam, said only 20 per cent of property transactions had been implemented via property trading floors, so a collection of information from the remaining at 80 per cent of property transactions was a big challenge for companies valuing property products.
Additionally, business information from the trading floors must be accurate and have mechanisms for checking the information, she said.
Fears of slowed growth weigh on shares
The VN-Index closed on Friday at 428.80 points, a decline of 1.5 per cent compared to the previous week. The average value of trades on the HCM City Stock Exchange topped VND898 billion (US$42.7 million) per session , a decline of 25.2 per cent, on an average daily volume of 56.8 million shares.
The VN30 Index, tracking the exchange's leading shares by capitalisation and liquidity, retreated 1.7 per cent to 505.65 points.
On the Ha Noi Stock Exchange, the HNX-Index dropped by 1.64 per cent from the previous Friday's close to 74.36 points. The value of trades averaged over VND399 billion ($19 million) per session, a drop of 27 per cent from the previous week, as demand for stocks declined across the board and sellers lost patience, selling at low prices to cut their losses.
Clouds continued to gather on the economic horizon, casting a pall over investor moods. The nation's credit growth this year could shrink to around 13 per cent, a report by HSBC predicted last week, while the World Bank's country director for Viet Nam, Victoria Kwakwa, has forecast that economic growth could slow to about 5.5-5.7 per cent.
The Purchasing Managers Index, tracking the Vietnamese industrial sector, fell to 48.3 points in May from 49.5 points in April, its lowest level in three months. The index reflects the health of the manufacturing sector, and the decline could suggest adverse impacts on growth. Inventories also remained high.
However, investors could take solace in the Government's determination to curb inflation and cut borrowing costs. The deposit interest rate ceiling has been reduced to 11, with a further decrease in the cards. Gas prices were also reduced last Friday.
"The control of inflation and interest rates is on track," said Maritime Bank Securities Co analyst Tran Quoc Hoan. The current problem was to stimulate consumption and tackle the difficulties of businesses, he said.
State Bank of Viet Nam deputy governor Le Minh Hung said that the reduction in the deposit rate ceiling was just a short-term measure, but he confirmed that the central bank's flexible operations had brought about some positive results such as a surplus in the current account balance and balance of payments, a stable interbank exchange rate, and increasing trust in the dong.
The market this week would likely tread water, with low trading volumes, Hoan predicted. Liquidity was still weak, showing that money was being withdrawn from the market.
"The appropriate strategy is in-depth investment, and there is an opportunity for medium- and long-term investors to find good fundamental stocks with reasonable prices," he said.
Industry index hits three-month low
The HSBC Viet Nam Manufacturing Purchasing Managers Index (PMI) dropped to 48.3 per cent in May from April's 49.5, its lowest level in three months.
The latest reading was one index point lower than the average (49.3) since the survey began in April 2011.
This points to a moderate deterioration of overall business conditions, and extends the current period of decline to two months, according to the bank's monthly report.
The PMI is a composite index based on five of the individual indexes of new orders, output, employment, suppliers' delivery times and stock of items purchased.
It is based on data compiled from monthly replies to questionnaires sent to purchasing executives at about 400 manufacturing companies in Viet Nam.
Data in May indicated a sharper decline in output levels than in the previous month, which survey respondents linked to less favourable economic conditions and an associated reduction in new business intakes.
Manufacturers reported a moderate decline in new order volumes during May, which represented the first decrease for three months.
The trend in new export business was more resilient than for overall new work, with stronger demand from China helping offset weaker spending among clients in Japan and Europe.
The latest survey, however, still pointed to a marginal overall drop in new export work, which was the first reduction since January.
Manufacturers in Viet Nam indicated that a marginal rate of net jobs growth was maintained in May, which extended the current period of employment growth to three months.
Survey respondents mostly attributed this to longer-term expansion plans at their units.
Higher staffing levels in turn contributed to a moderate decline in work-in-hand (but not yet completed).
Lower backlogs have now been recorded in seven of the past eight months, reflecting increased operating capacity and, in some cases, relatively subdued new order inflows.
Lower production volumes and a return to new business contraction led to tighter inventory policies in May.
Latest data highlighted falls in both input stocks and post-production inventories, although in each case the rates of decline were only marginal.
Meanwhile, purchasing activity declined for the second month running and at the sharpest pace since February.
In line with lower input buying, manufacturers indicated shorter delivery times from suppliers for the 13th successive month.
Input price inflation, meanwhile, remained robust in May, which stretched the current period of rising cost burden to four months.
The latest increase in input prices, however, was the slowest seen over this period.
Companies that reported a rise in their cost burdens generally attributed it to increased oil-related prices.
Nonetheless, output charges in the manufacturing sector fell in May for the first time since January, with firms mostly linking price-discounting to strong competition for new work.
Commenting on the Viet Nam Manufacturing PMI survey, Trinh Nguyen, Asia Economist at HSBC, said: "The decline in manufacturing activities in May reflects the continued weakening conditions of domestic demand in Viet Nam. Credit contracted in the first quarter, reflecting Viet Nam's tough operating conditions."
"Businesses are either unable to access loans due to high interest rates or lack the collateral to get credit. With inflation easing to single digits, as reflected in the slowing of input costs, the SBV cut policy rates by 1 per cent on May 28 to support businesses," she said.
Ocean Group may buy PVX real estate holdings
Ocean Group (OGC) has offered to buy the entire real estate holdings of PetroVietnam Construction Corporation (PVX) in a deal estimated to be worth about VND600 billion (US$28.6 million), according to PVX CEO Trinh Xuan Thanh.
"They have sent us an offer and we have also submitted the proposal to [PVX parent company] PetroVietnam for consideration," Thanh told newspaper Dau tu Chung khoan (Securities Investment).
According to the latest PVX disclosures, PVX has 15 subsidiary companies and 13 affiliated companies operating in the fields of industrial and civil construction and real estate investment. However, the company has been planning to divest from the real estate sector in 2013.
According to estimates of market insiders based on the share values, PVX share holdings in other companies, including PetroVietnam Capital Infrastructure Investment (PTL), PetroVietnam Premier Recreation (PVR), PetroVietnam Power Land (PVL) and PetroVietnam Dong Do (PFL), are worth over VND1 trillion ($47.6 million).
However, Government regulations currently forbid State-owned companies from selling State capital at below par value, and Thanh affirmed that PVX would not carry out the deal if the divestment brought in losses.
If so, why only VND600 billion for the whole deal?
Ocean Group CEO Ha Van Tham also confirmed to Dau tu Chung khoan that the group planned to pay VND600 billion to acquire PVX's interests in property projects, but he did not provide more information.
Market insiders have raised concerns over the financial capacity of Ocean Group, which, by the end of March, reported cash holdings of just VND96 billion ($4.6 million) and total liabilities of nearly VND5 trillion ($238 million), of which VND2.25 trillion ($107 million) is short-term debt.
However, earlier last year, OGC was able to raise VND700 billion ($33.3 million) through an issue of three-year bonds, and the group continues to plan to increase its charter capital this year from VND3 trillion ($143 million) to VND5 trillion ($238 million).
OGC aims to promote its mergers and acquisation (M&A) efforts, focusing on the real estate, food processing, hospitality and tourism sectors. In 2011, Ocean Hospitality and Service Co (OCH), a member of the Ocean Group, initiated the scheme by purchasing major stakes in many hotels around the country.
The deal has raised market concerns about behind-the-scene interests on both sides of the proposed deal. However, PVX closed last Friday unchanged at VND9,700, while OGC closed 0.8 per cent off to VND12,200 per share.
State may cap interest at 9%
The State Bank of Viet Nam is considering reducing the ceiling interest rate for dong term deposits – of a year and under – to 9 per cent from the current 11 per cent within the next few months in a bid to boost credit growth.
Bank officials said at a meeting of the 14 largest commercial banks late last week the adjustment, if implemented, might be the final one for deposit rates this year.
Lending interest rates for short-term loans could be cut to 12-13 per cent per year compared to 14-15 per cent now.
The officials said the nation's total lending had declined 0.2 per cent since December 31 last year so an adjustment was needed to assure credit growth in accordance with the Government's targets.
The central bank also planned to establish a debt trading company to clean up commercial banks' bad debt situation and this company was expected to buy a debt value of about VND100 trillion (US$4.81 billion) from banks. It would pump the money back into the economy after making banks' balances healthy, they said.
The SBV would continue to prioritise lending to agriculture and rural development, while asking lending institutions to adjust lending rates already fixed in existing contracts and loosen lending conditions to ease pressure on clients. The bank would possibly petition the Government to establish a fund to finance people on average incomes to buy homes, which would help stimulate the residential real estate market and benefit social welfare.
Eximbank general director Truong Van Phuoc told Thoi bao Ngan hang (Banking Times) he expected the measures mentioned by the SBV to gradually encourage banks to lend to enterprises.
He said the central bank was making monetary policies more relevant to market developments while commercial banks were joining hands to "share difficulties" with companies.
Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) quoted a director of a commercial bank branch as saying it was important that banks and enterprises recover confidence, the lack of which was an obstacle to activities between them.
As long as confidence was curbed, market players would continue to be immovable, the director said.
Last Monday, the SBV trimmed the ceiling rate for dong deposits with terms of one month or more from 12 per cent to 11 per cent a year, and the ceiling lending rate from 15 per cent to 14 per cent per year for several prioritised sectors, to encourage production and business activities.
It noted the decline in loan interest rates was slow and, together with rising credit risks, was still a significant challenge to businesses in the face of falling purchasing power and increasing inventories.
Cash needed to energise power projects
There is a mountain to climb to get power projects up and running to meet growing demand.
In light of Decision 1208/2011/QD-TTg ratifying power sector planning for 2011-2020, around 70 large and 40 small power sources and more than 300 200kV and 500kV power network projects must be up and running during 2011-2015 at a annual cost of $5 billion.
After nearly a year of implementing planning, many projects listed in Decision 1208 did not come online in 2011 with up to 3,116 megawatts (MW) put into use in 2011, about 1,000MW lower than Decision 1208’s projection.
During 2006-2010 just 10,081MW was plugged into the national power grid, tantamount to 69.1 per cent of the 14,581MW targeted in Decision 110/2007/QD-TTg ratifying the sixth power planning for 2006-2010 period.
Specifically, power network projects met just 50 per cent of projections.
To speed up power projects, the government approved specific mechanisms stipulated in Document 797/CP-CN, Document 400/CP-CN and Decision 1195/2005/QD-TTg, said Ministry of Industry and Trade Energy Department chief Pham Manh Thang.
Thang said putting these mechanisms into practice had triggered a number of problems.
For instance, project developers got the right for tender appointment and investment cost appraising which have resulted in escalating investment costs of projects. This, in turn, has driven up electricity price.
“Some PetroVietnam and Vinacomin power projects used specific mechanisms which saw spiraling investment costs. Tackling these consequences has taken much time and energy,” Thang noted.
Electricity of Vietnam (EVN) deputy director Duong Quang Thanh said such mechanisms should only be applied to projects using 30 per cent of budget capital and must undergo a bidding process to save time.
Private equity projects should be exempt as they have advantages in capital sources and construction time.
To address capital distress, EVN and National Power Transmission Corporation proposed independent project investors inject capital into developing power lines to connect their stations to the national power system. However, a mechanism to add this cost to EVN’s buying price is not in place.
Electricity Regulatory Authority of Vietnam head Dang Huy Cuong asserted the need to check projects on an annual basis to detect reasons for the delays.
“Contractors and poor capacity investors should be blacklisted to deter them from engaging in further projects,” Cuong said.
Electric rates to be competitive
Viet Nam is preparing for the official launch of the competitive power generation market on July 1 after postponing it several times, the Government website reported.
All preparations had been finalised, the Government said.
The market would operate under the model of a cost-based pool in which power producers had the right to offer power prices based on the market.
All electricity output would be sold to a single wholesale enterprise.
The competitive power generation market would ensure competition in power manufacture and pricing for the benefit of both enterprises and consumers while attracting more investments into the power generation.
Power plants with capacities of more than 30MW, excluding wind power and geothermal plants, would be allowed to join the competitive power generation market.
Viet Nam was scheduled to run a competitive power generation market until the end of 2014 then turn to a competitive power wholesale market by 2015.
Meanwhile, Deputy Prime Minister Hoang Trung Hai said speeding up power transmission projects would be the electricity industry's priority this year.
Under the power master plan, eight power plants are scheduled to be operational next year but the construction of transmission line systems for some plants has been slower than expected.
They include the 500kV lines and 200kV lines to transmit electricity from Vung Ang, Duyen Hai, Vinh Tan, Dak Drinh, Song Bung 4, Song Bung 2 power plants.
The plan's steering committee said the slow construction of transmission lines was caused by lack of capital and slow site clearance.
Hai said the transmission lines must be ready when power plants came on line next year, particularly lines to Ha Noi and HCM City where there was a rapid increase in power demand.
He ordered banks to speed up the allocation of money while setting up a bond issue to raise capital for power projects.
In addition, the Ministry of Industry and Trade would consider the electricity price adjustment to attract more investment into electricity from private and foreign sectors.
Problems related to relocating residents along the route must also be handled, Hai said.
Developers battle market stagnation
Property developers are still facing tough times as every effort made to stimulate the stagnant property market seems to have had little effect over the year.
To sell their property products, real estate companies have had to offer many promotions.
Phuc Khang Real Estate has sought ways to sell its eco-villas by opening a showroom in Big C Supermarket to draw customers, but with few results.
In a similar move, CEN Real Estate Group, one of a largest property transaction companies in Ha Noi, opened its 2,000sq.m project supermarket last week to offer customers as many choices as possible, said Pham Thanh Hung, company deputy director.
Nguyen Van Kha, CEO of Tu Liem Housing Development, said sales at supermarkets or entertainment centres were common in Thailand, but new to Vietnamese customers who were used to buying from transaction floors.
According to Nguyen Van Duc, deputy director of Dat Lanh Real Estate, despite sluggish sales, property developers who wanted to survive must study and seek new sales methods to attract new customers.
Duc added there were two methods to approach customer, mostly favoured by property transaction companies in HCM City. They could select a distribution channel to sell their products or they could conduct shocking promotions offering big discount to buyers.
Hoang Anh Gia Lai selected the second method by selling products at 50 per cent discounts.
Nguyen Huu Cuong, chairman of the Ha Noi Real Estate Club, said land developers who wanted to sell their products faced danger. He explained that if they offered products at high prices, buyers would not accept. If they offered their products at low prices, they may suffer losses.
Vu Cuong Quyet, director general of Dat Xanh, said property developers were still waiting for further interest rate cuts that would help boost sluggish sales on the stagnant property market.
Nguyen Van Kha of Tu Liem Housing acknowledged that over the year, the domestic property market received great support from the Government. However, it did not yet have any effect on the market. For instance, a VND29-trillion (US$1.39-billion) finance package aimed to reschedule tax for businesses had little impact.
Kha said businesses were allowed to borrow money from banks thanks to central bank policy to loosen tightened credit loans. However, with the high ceiling of lending interest rates at between 14-15 per cent, property developers could go bankrupt if their products remained unsold.
Bui Minh Chinh, general director of Petroland, said if the ceiling of lending interest rates went down to between 12-13 per cent, property developers would still not want to borrow capital from banks. He attributed this to sluggish sales.
Pham Thanh Hung of CEN said land developers could now borrow capital to invest in construction projects. However, they could not find customers and they were rather afraid of investing in new housing projects.
Nguyen Viet Do, deputy general director of Song Da Thang Long, said: "If we want to see the stagnant market bounce back, the Government needs to limit granting construction licences for new housing projects and revoke those from sluggish projects. It also needs to continue outlining policies to stimulate housing demand by further cutting lending interest rates and offering more loans for property developers."
Companies worry about stimulus deal
A stimulus package that HCM City authorities created last year to offer preferential loans has not been effective because of the length of time for approval of applications, according to reports from local businesses.
Huynh Van Hai, director of the Bao Long Foodstuff Company, was quoted by Sai Gon Giai Phong (Liberated Sai Gon) newspaper as saying that he could not get a loan from the stimulus package after waiting for a year.
Hai said that he needed VND2 billion (US$96,000) out of VND6 billion ($288,000) to make "energy food" from chicken, based on his research of 10 years.
He said the stimulus-package loan required that he offer a warranty from the company's bank or property as collateral.
"If I had enough property value for a deposit, I could get a normal loan from a commercial bank. Then I wouldn't have to wait a whole year to get a loan from the city's stimulus package," he said.
Hai suggested that the city adjust the stimulus-package loan requirements.
Huynh Van Minh, chairman of the HCM City Business Association, said very few businesses in the association could access the stimulus-package loans because of the eligibility requirements.
Pham Ngoc Hung, the association's deputy chairman, said the stimulus had not been popular among the business community over the last 12 months. It was created last year in May.
Hung said local authorities authorised the HCM City Finance Investment Company to do the initial processing of loan applications, which has hindered access to businesses.
"Initial application processing must be done by the company, and then the application is transferred to relevant agencies for the next consideration. It has taken a long time and businesses have lost their investment opportunities," he said.
The association recommended that city authorities revise the requirements as well as the methods of application processing.
It also suggested adding more capital to the stimulus programme as the demand was much larger than the total amount originally offered.
The city People's Committee created the stimulus package of VND8 trillion ($384 million) to assist local businesses in their production.
Firm benefits from Intel interest
Intel Capital, Intel Corporation's global investment and M&A organisation, has announced it will invest US$17 million in two Southeast Asian companies.
The investments go to the Ha Noi-based Viet Nam Communications Corporation (VC Corp), an internet infrastructure and services company and Singapore-based Reebonz.com, one of the largest private sales e-commerce groups in Asia for luxury goods.
"The investments support the continued development of engaging local online experiences to help drive technology adoption and increased high speed broadband usage across Southeast Asia," the company said in a press release.
"Reebonz and VC Corp are examples of companies that are successful in getting Southeast Asians online because they provide engaging experiences tailored towards the needs and cultural preferences of consumers in the region," the release quoted Arvind Sodhani, president of Intel Capital and executive vice-president for Intel, as saying.
Gadgets showcase for Euro 2012
Many electronics stores in HCM City have launched promotions, especially for television sets, ahead of the 2012 European Football Championships.
Nguyen Kim, one of the largest, is offering discounts of 5-20 per cent on many "super thin" TVs, and gifts like disk players, ovens and electric irons for buying LCD (liquid crystal display) TVs.
It is also offering a 45-day, refund trial of two Samsung LED models for people not living in Ha Noi or HCM City.
Five customers taking part in a programme to predict the winner of Euro 2012 and the score in the final stand will win a BMW X1 sDrive car.
Other electronics supermarkets like Cho Lon, Phan Khang and Dienmay.com are offering discounts of at least 10 per cent on TVs and other products for Euro 2012.
Cho Lon has announced a 15 per cent discount for customers using Vietinbank cards to buy a Samsung LED or LCD TV of 40 inches and larger.
It has also slashed the prices many other electronic products by up to 50 per cent.
Thien Hoa Electronics and Furniture Shopping Centre is offering free lease of LCD TVs to people in HCM City and Binh Duong Province during Euro 2012.
Customers' deposits – equal to the value of the TV they want to lease – will be refunded when they return it.
The number of customers had shot up in recent days, Bui Tan Cuong, marketing director of Thien Hoa, said, adding that sales of TVs, especially of the LED and LCD varieties, went up by 30 per cent last month compared to May 2011.
Dinh Anh Huan, general director of Dienmay.com supermarkets, said sales were up by more than 30 per cent.
Euro 2012 will be co-hosted by Poland and Ukraine from June 8 to July 1.
Property market ‘in the spotlight'
A rally in the stock market, downward inflationary pressure and three interest rate cuts over a period of three months have all helped generate some much-needed good news for the economy, but there is still very little activity in the property market, according to an industry insider.
The past three years have knocked the confidence out of the property market, with many companies and individuals involved with the real estate market losing considerable sums of money.
When people lose confidence, they look for alternative safe havens to invest, and for most Vietnamese, gold, bank deposits and equities have proved more attractive than property, according to Stephen Wyatt, country manager of the property service firm Knight Frank Viet Nam.
However, there is some light at the end of the tunnel, with tighter legislation on gold trading, a downward trend on bank deposit rates and profit-taking from the stock market causing the momentum to shift.
The spotlight is once again beginning to shine on real estate.
"We are seeing many of the more experienced developers, investors and buyers that have been sitting on the sidelines in the past 12 months deciding that this is the time to dip their toe back in the real-estate waters," he noted.
"With further interest rate cuts predicted throughout the course of 2012, confidence is slowly beginning to come back to the market, and provided the global economy doesn't give us any further nasty shocks for the remainder of the year, and inflation remains stable, we firmly believe the real estate market will start to recover."
Ultimately, the real estate market needs cheaper money available to buyers and developers.
Wyatt said a steady decline in interest rates to take place over the next 12-18 months would bring some certainty and stability back to the market.
"We are still receiving strong interest from foreign investors that see there is a window of opportunity; however, the obstacles and hurdles remain the same," he said.
"In order for Viet Nam not to lose out on this much-needed investment to other countries, there remains a strong need for much tighter regulation throughout the whole real estate industry with a strong and effective legal framework, with more professionalism and transparency," he added. "With further control and tighter legislation, there is no question Viet Nam will benefit from more and more foreign investment."
So where is the opportunity? Due to a very stagnant property market, development within the country declined dramatically over the past two to three years. While it may be difficult to envisage at this stage, as soon as the market starts to improve, existing stock in most sectors, especially office and residential, will be soaked up pretty quickly, according to Wyatt.
This would lead to increased prices and rentals and a shortage of stock. So within 24-36 months, the market is expected to be in a very different position.
Meanwhile, during a meeting organised by the HCM City Real Estate Association on Wednesday, deputy head of the Ministry of Finance's Price and Market Research Institute Vu Dinh Anh said that high interest rates and unreasonable property prices remained challenges for a breakthrough in the market.
According to Anh, apartment prices in HCM City have come down significantly; however, in several cases, they are still out of reach for end-users, and will negatively affect market liquidity.
Property developers' difficulties in gaining banking loans to continue their projects have proved to be an obstacle for market growth.
Speaking at another event organised by the Viet Nam Real Estate Association, Nguyen Manh Ha, head of the Ministry of Construction's Housing and Real Estate Management Agency, said the market did not have small-sized apartments to suit low – and average-income earners.
Regulations stipulate that commercial apartments cannot be smaller than 45sq.m. In case of those for people of low income, they cannot be less than 30sq.m.
Ha said the minimum apartment space in New Zealand was 30sq.m. It is 25sq.m. in Thailand and 15sq.m for a two-resident unit in Hong Kong.
Le Xuan Nghia, vice chairman of the National Financial Supervisory Commission, believes that over the next four or five months the property market would begin to see a recovery, thanks to efforts from the Government to support businesses, including tax reductions and abolition of the fines on overdue loans.
He, however, said that the key knot to be unravelled was the bad-debt problem, which had made banks unwilling to provide additional loans to businesses.
He praised the decision taken in Sweden years ago, when its central bank set up a debt-trading company to help private companies meet requirements for new loans.