the use of foreign currencies in real estate transactions in the
locality.
Nguyen Hoang Minh, deputy director of the branch, said the SBV's move
was aimed not only to ensure the serious implementation of Vietnamese
laws but also to protect real estate buyers from losses caused by forex
fluctuations.
The branch has already prepared a list of
real estate companies eligible for inspection to be carried out without
any advance notification.
This week, inspections will focus on real-estate companies allegedly using the US dollar in their business.
The SBV hopes to check two or three real estate companies a week.
Real estate owners will be penalised at a level heavier than current fines if any violation is discovered, according to Minh.
According to Vietnam's current laws, all transactions and payments in
the country must not be implemented in foreign currencies, except those
that are carried out with credit organisations, and payment forms that
require intermediaries.
However, the use of foreign
currencies including the US dollars was still very popular in big
cities, especially in real estate transactions, Minh said.
Most transactions related to high-grade properties include villas or
luxurious apartments now using foreign currencies, particularly the
greenback, according to Bui Tien Thang, deputy director of the Sai Gon
Commercial Real Estate Joint Stock Company (Sacomreal).
There were many reasons that made real estate owners prefer the
greenback to the domestic currency (Vietnamese dong), Thang said.
Most foreign investors want to be paid in US dollars because such a payment form is familiar to them.
In addition, their partners often use the US dollar as they have to contribute their capital to the projects.
As a result, the price of finished real estate products has to be
established in the US dollar, which facilitates payments among the
involved sides.
Thang, however, said that a main reason
that the greenback was used in real estate payments was that project
owners would not have to suffer losses as the Vietnamese dong will
likely be devalued.
Many individual investors, most of
them rent their houses, have also wanted to fix their rental charges in
US dollar, but they then received dong. With this method, they expected
to keep their capital intact, he said.
The current penalty
of 30 million VND maximum applied to violators is too low, which
allowed investors to continue using foreign currencies.
An
official of the HCM City Real Estate Association also admitted that the
association suggested that real estate companies should not use the
foreign currency in establishing product prices. However, the latter
insisted on their option of the US dollar in payments.
Over the past years, authorised agencies have checked and penalised only
consumer goods traders who used the foreign currency in their
transactions./.
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