Developers unhappy over new fees

An overview of a corner of Phu My Hung urban area. Enterprises investing in housing projects may have to pay twice – first when buying the land and second when paying use and clearance fees. — VNA/VNS Photo Kim Phuong

HA NOI — Real estate companies said planned land-use and compensation fees would eat into their profits and could even force them into liquidation.

Decree 69/CP, which becomes effective from the beginning of October, states that new land fees for real estate enterprises will be based on market prices. If the draft comes into effect unchanged, firms will be forced to pay the full market price, instead of 20 to 30 per cent as before.

Le Hoang Chau, president of the HCM City's Real Estate Association, said enterprises investing in housing projects would have to pay twice – first when buying the land from its owners and second when paying usage and clearance fees.

"This will cause land prices to soar as enterprises will have to increase the selling price of housing in order to offset their increased outlay," he said.

Lawyer Nguyen Thi Cam said the new regulation had several weakness that were detrimental to real estate firms.

She said the new decree should be modified because real estate companies would have to pay the same fees for land that had no infrastructure as that with infrastructure because market prices were based on developed land.

Nguyen Canh Ha, director of An Thien Ly Company, said his company acquired a housing project in Vinh City. He said his company had agreed to buy the land for VND4 million (US$ 210) per square metre, while selling it for VND4.5 million ($230) per square metre.

However, he said under the new regulation, his company would have to pay an additional fee of $230 per square metre for using the land. As a result, he said his firm had been forced to pull out.

Meanwhile, a representative from Binh Dan Company said his firm had invested in a 14,000-sq.m housing project in HCM City. According to the new regulation, his company would have to pay a land-use fee of around VND57 billion ($ 2.8 million), while the whole project itself was worth just VND60 billion ($3 million).

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, also said the new law would make it hard for companies to earn money.

He said that under the new regulation, for a 10,000-sq.m housing project, a business would have to sell out about VND51 billion ($2.6 million), which would include compensation to land owners of VND40 billion ($2.1 million), spending for public purposes such as parks of about VND8 billion ($430,000) and roads VND3 billion ($160,000). For the whole project, his company could expect to earn just VND600 million ($32,000), he said.

Le Ngoc Khoa, deputy director of the Department for Public Assets Management, said HCM City real estate firms would be hardest hit because companies typically paid very high compensation costs for agricultural land, which was however cheap in comparison to developed land. Under the new rules, they would have to pay far more to develop rural land.

Nguyen Quoc Chien, director of Pricing Division under the HCM City's Department of Finance, said relevant bodies would consider amending the new regulation if it was felt property developers were being unfairly treated. — VNS

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State enterprises to focus on major business fields

HA NOI — A directive has been issued that orders State-owned enterprises to focus on their core production and commercial objectives.

Directive 1568/CT-TTg, issued last Thursday by Prime Minister Nguyen Tan Dung, sets the agenda for State-owned economic groups and corporations to 2015.

It requires ministries, economic sectors and People's Committees that are responsible for State-owned corporations to deliver a comprehensive evaluation of their performance by December 31.

This includes management and investment in non-core business sectors.

Ministries, economic sectors and localities should reinforce their management, inspection and supervision of State-owned enterprises to identify and effectively solve problems during any restructuring, the directive says.

They will also have to review the work each year.

The directive makes the Finance Ministry responsible of checking, supervising and evaluating the effectiveness of production, business and the mobilisation and use of capital.

The ministry will also have to monitor outstanding loans.

Equities corporations must seek approval from State offices before seeking foreign loans or joining with joint-stock partners to establish other enterprises during the next five years.

The directive also instructs ministries, economic sectors and People's Committees to identify and report losing or poor performing State-owned enterprises to the Prime Minister by the end of the third quarter.

The Ministry of Labour, Invalids and Social Affairs and the relevant agencies must devise policies to attract excellent managers for the enterprises, the directive says. — VNS

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Capital's CPI rises slightly this month

Customers buy goods in Intimex supermarket in Ha Noi. Most groups of commodities in Ha Noi increased in price from 0.06-0.79 per cent, led by food and restaurant services, transport, garments and footwear. — VNA/VNS Photo Tran Viet

HA NOI — Ha Noi's consumer price index in August rose slightly by 0.15 per cent over July, the smallest increase in the last four months, the city's Statistics Office reported.

On aggregate, the index was up 8.09 per cent over the same period last year.

During the month, most groups of commodities saw a small increase in price, ranging from 0.06-0.79 per cent, led by food and restaurant services, transport, garments and footwear. In particular, housing, electricity, water and fuel enjoyed a small drop in price over the previous month, while post and telecoms servicess a was harper fall of 4.71 per cent.

This month, the price of gold increased by 1.01 per cent against last month. However, the US dollar rose 0.73 per cent over July.

The interbank exchange rate went from VND18,544 to VND18,932 per US dollar, effective August 18.

Prices of iron, steel and gas have increased, and many types of goods are expected to cost more in the near future, according to some producers and traders in HCM City.

Do Duy Thai, general director of Thep Viet Joint Stock Company, said the Viet Nam National Petroleum Corporation (Petrolimex) on August 9 increased the price of petrol by VND350-450 per litre, causing a production cost hike.

"With the increase of the US dollar interbank exchange rate, and the rise in price of imported steel, steel companies have raised steel prices by VND300,000 per tonne," he said.

Thai said these companies were still suffering a loss of VND700,000 per tonne.

"These companies had been afraid to let the steel prices climb because power consumption remains weak," Nguyen Tien Nghi, deputy chairman of the Viet Nam Steel Association (VSA), said.

"But a continuous rise in steel prices is inevitable," Nghi said.

Soon after the SBV decision, gas companies raised the price of gas by VND4,000-6,000 per 12-litre tank, although they usually announce price changes early in the month.

The gas prices are increasing largely due to the rise of the US dollar interbank exchange rate. These companies all buy domestic gas or imported gas with US dollars.

Le Phuc Dai, general director of the Vinagas Dai Viet Energy Joint-Stock Company, said both domestic and imported gas contracts were not signed with a fixed price, but with a floating exchange rate.

"The rise of exchange rates can directly affect the spending of gas companies," Dai said, adding that it would also affect the electricity market.

The prices of electric household products in HCM City have increased by 2 per cent, refrigerators and air conditioners by 3 per cent, and laptops by 7 per cent.

In early August, supermarkets in HCM City began raising prices on some products, including plastic household goods by 4 per cent, garments by 10 per cent, and food, canned food and candy by 5 per cent to 10 per cent.

Huynh Huu Tuan, manager of Citimart supermarket, said distributors had told him that they would raise the price soon because of the US dollar-Vietnamese dong exchange rate and petrol price.

Many products not influenced by the US dollar exchange include vegetables, fruit and fresh food. In cases where prices have risen, it has occurred because some companies are reflexively following the hikes imposed by other retail traders who raised prices after the SBV decision.

At wholesale agricultural markets in HCM City, vegetable prices have increased by VND500 – VND1,000 per kg, while the price at retail markets has increased by several thousand dong. — VNS

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Expo eyes quality of Mekong producers

TIEN GIANG — Forty-five companies are participating in a four-day fair in the Mekong Delta province of Tien Giang as part of a national programme to promote high-quality goods in the rural market.

The event is part of the Ministry of Industry and Trade's programme of bringing Vietnamese-made goods to rural areas.

The fair, held in Cai Lay and Go Cong Dong districts, is organised by the Viet Nam Business Studies and Assistance Centre (BSA) and the Tien Giang Province People's Committee.

The 45 companies, which produce high-quality products, are showcasing processed food, garment and textile products, household utensils and cosmetics.

Since the programme's first fair in the Cuu Long Cuu Long (Mekong) Delta province of An Giang last year, the BSA has organised 46 such fairs in 18 cities and provinces, with total participation of 132 companies.

The fairs have earned VND30 billion (US$1.5 million) in revenue and helped raise consumer awareness of Vietnamese-made products.

Under the programme, more than 60 companies have committed to regularly sell goods in rural areas at the fairs.

This year, Vissan, one of the companies in the programme, has participated in 15 fairs in several provinces, including Dong Thap, Ben Tre, Lam Dong, Vinh Long and Bac Lieu. It also reduced the prices of its processed foods by 10 per cent.

In addition, the Sai Gon Co-op supermarket chain is organising at least 20 trips to sell Vietnamese products in rural areas every month, according to its marketing department.

Sai Gon Co-op uses vans as mobile shops to sell essential goods, including fish sauce, cooking oil and monosodium glutamate.

Vu Kim Hanh, BSA director, said: "We plan to continue the programme of taking goods to rural areas, industrial parks and export processing zones."

Ever since the campaign was launched by the Government more than one year ago, 58 per cent of consumers have shown an interest in locally-made goods, compared to 23 per cent previously, according to a survey conducted by the TV Plus Company. — VNS

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Follow market, says expert

HCM CITY — Vietnamese enterprises needed to remain on top of the changes occurring in the EU market to ensure they can continue to export there, delegates told a meeting held in Dong Nai on Thursday.

Nguyen Canh Cuong, deputy head of the Ministry of Industry and Trade's European Market Department, said the EU was a huge market with a population of nearly 500 million.

It had been among Viet Nam's largest markets in the past but exporting to the EU was becoming difficult due to its changing safety – and environment-related policies, he said.

Consumers too were raising the bar for producers with regard to social and environmental responsibility, he added.

Le Van Dao, deputy chairman of the Viet Nam Textile and Garment Association, agreed, saying garment and textile exports were now required to meet higher quality, safety and environmental requirements.

Vietnamese companies had begun to invest in making products safe and environmentally friendly, he said.

Dong Phuong Knitwear Company, for instance, made fabric from bamboo fiber, and Dong Nai Garment Company produced aseptic clothes from carbon fiber, he said.

He called on garment firms to focus on improving design to become more competitive and to "export genuine Vietnamese products, not outsourced ones."

Le Ba Ngoc, deputy chairman of the Viet Nam Handicraft Exporters Association, said consumers in the EU were no longer fond of common decorative products and preferred unusual ones, and Vietnamese firms must understand this trend.

Due to the global economic crisis, two-way trade between Viet Nam and the EU plunged by almost a third to US$14.8 billion last year.

Viet Nam exports rubber, handicrafts, seafood, coffee, leather shoes, pepper and tea to the EU and imports machinery, steel, fertilisers and medicines. — VNS

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Industrial zones set for completion in 2020

VINH LONG — Prime Minister Nguyen Tan Dung has approved the Cuu Long (Mekong Delta) province of Vinh Long's proposal to establish three new industrial zones by 2020.

"The Binh Tan and Dong Binh zones will be constructed in 2011-15 while the An Dinh zone will be built in 2016-20," said Vu Ngoc Tung, deputy director of the provincial Industrial Zones' Management Board.

The management board announced that Binh Tan Industrial Zone was planned to be built in Binh Tan District's Thanh Loi Commune.

"It has an advantageous location because it is near to the highway," said Tung.

"This zone will partner Can Tho industrial zone, providing it with ample opportunity for development," he added.

When finished, the zone will be an ideal location for garments, fine arts, consumer goods, packing, pharmaceuticals, cosmetics, construction material, agricultural and aquaculture producers.

The VND1 trillion (US$52 million) Dong Binh Industrial Zone will be located in Binh Minh District, with a focus on hosting agriculture, aquaculture and food processors. It will also welcome companies specialising in packing and chemical industries. — VNS

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Highrise building ban casts pall over apartment market

HA NOI — Sales of older high-rise apartments remain sluggish in Ha Noi, with buyers shopping carefully to avoid possible losses in the face of an outstanding Government decision issued in 2007 to require all older apartment blocks in the capital city to be rebuilt.

Since then, the prices of older apartment units in four districts , including Hai Ba Trung, Dong Da, Ba Dinh and Cau Giay, have increased sharply, to an average of VND20-40 million (US$1,050-2,100) per square metre, according to Northern Green Land Real Estate and Services Company.

Older units on Nguyen Cong Tru Street, one of the city's hottest addresses, were averaging as high as VND60 million ($3,160) per square metre.

However, prices receded in the face of a Government decision last December to ban high-rise construction, a move which aimed to protect architectural values and social and technical infrastructure in a part of the city that is home to many historically and culturally significant buildings.

The ban temporarily halted 223 ongoing high-rise construction projects in the four central districts of Hoan Kiem, Hai Ba Trung, Ba Dinh and Dong Da.

While the ban was lifted in July this year, construction continues to be barred in the Ba Dinh political centre, Old Quarter and Ho Guom Lake, Old Citadel and Army areas.

And the lasting effect of the ban has been a chilling effect on the market for older units, with many real estate brokerages suffering the consquences.

BDS Real Estate Co director Le Xuan Truong was still advising clients and investors to be very careful when considering this market.

It would be difficult to see this market reviving since it was under a constant threat of new Government regulation, agreed Hoa Phat Land Co general director Pham Trung Ha. The city would continue to control closely older units while tightly regulating new construction, he said.

Once new construction commenced to replace more of the older buildings, more delays would occur as current owners and new builders negotiated compensation, Ha added.

"If the projects are located in licensed areas and the investors have pledged to implement the projects as scheduled, these projects could still be highly profitable market," said Ha. — VNS

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