The State Bank of Vietnam's branch in HCMC this week will inspect 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 VND30 million maximum applied to violators is too low, which allowed investors to continue using foreign currencies.
An official of the HCMC 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.
