Real estate players explore new strategies

 

Real estate players will change both profile and tactics to better exploit the market, the services provider CB Richard Ellis has forecast.

 

"Funds will move from being just traders to become traders/developers/project managers, and marketers," managing director Marc Townsend said, citing the example of VinaCapital which has created its VinaLiving brand of houses and set up VinaProjects to manage its projects.

 

"They will also focus on developing their core, scalable, mixed-used projects, divesting off those outside this focus," he said.

 

Local developers would continue to dominate the market since foreign rivals would find better opportunities in their home.

 

In HCM City, developers were sitting on a large amount of residential units, primarily condominiums, with existing supply at the start of 2011 at around 80,000 units and a new supply of 40,000 set to come into the market.

 

"This new supply number is double compared to 2010. So, they will need to find new ways to set themselves apart from the competition to sell and lease their properties. Therefore, 2011 will see a triple of their marketing spend with increased advertising and marketing incentives."

 

They would be open to more flexible payment terms and using multiple marketing agents, set up their own in-house sales teams, and continue with below-the-radar mergers and acquisitions and collaborations with others to increase sales and find financing.

 

Buyer interest in landed properties would remain strong as people started to invest again in property.

 

Upgrades to roadways – especially the Thu Thiem Tunnel, to be opened in April – would mean competition for landed property in districts like 9 and Nha Be would be felt, with buyers preferring this option to high-end condominiums closer to the city centre.

 

Townsend also expects a further price fall this year following the 20 per cent slide in 2010, unless there are some significant changes.

 

Meanwhile, price decreases are also expected in the serviced apartment (more than 700 units will enter the market this year compared 220 in 2010) and office segments.

 

Viet Nam has been rated the fourth most preferred emerging market for real estate investment in 2011 by the Association for Foreign Investors in Real Estate.

 

After being unranked last year, it has taken over the position Mexico held last year behind Brazil, China, and India.

 

Mexico has slipped to fifth place.

 

In Ha Noi, CBRE said excellent macro-economic figures had resulted in positive effects on the capital's property market in the last quarter.

 

The company reported that the final quarter of 2010 had been the most active period for the condominium market for all of last year. New supply, the sales rate of many projects, and prices on the secondary market all witnessed good growth rates this quarter.

 

Asking prices in the secondary market witnessed steady growth, said Richard Leech, CBRE's excutive director. Highest price increases were seen at the low-end of the market (11 per cent) and ion the mid-end segment (9 per cent). Prices of high-end and luxury segment rose slightly, up 4.5 per cent on the previous quarter, mostly because of operational and newly handed-over projects.

 

People's wish to buy property before the end of the year and the fluctuations of gold price as well as in the VND/USD exchange rate were the main reasons for this price appreciation this quarter, Leech concluded.

 

VietinBank 2010 gross profit rises 26 pct

 

Vietnam's largest partly private lender, said on Monday its gross profit jumped 26 percent in 2010 to VND4.5 trillion (US$231 million).

 

VietinBank, or the Vietnam Joint Stock Commercial Bank for Industry and Trade, also said in a statement that its total assets at the end of 2010 came to VND367 trillion, a surge of 51 percent from a year before.

 

The Hanoi-based bank reported outstanding loans at the end of 2010 rose 43.5 percent from the previous year, and only 0.66 percent of loans were bad, well inside its annual target of capping bad debts at 2.5 percent of lending.

 

VietinBank did not give any values.

 

Its lending growth last year far exceeded the 27.65 percent posted by the banking sector as a whole. The central bank has projected growth would slow to 23 percent this year, a slowdown that would help it control inflation.

 

Shares in VietinBank lost 0.43 percent to close at VND23,100 ($1.18) on Monday.

 

VietinBank aimed to conclude talks to sell a 15 percent stake to Canada's Bank of Nova Scotia in the second quarter of 2011, a state-run newspaper quoted VietinBank Chairman Pham Huy Hung as saying in December.

 

VietinBank forecast its total assets would grow 20 percent this year, with loans expanding 25 percent. It aims to keep bad debt at less than 1 percent of loans, it said in the statement.

 

The lender also projected an increase in its registered capital this year to VND27 trillion or VND28 trillion from VND15.17 trillion at the end of last year.

 

Dong A Bank raises charter capital

 

The State Bank of Viet Nam has approved Dong A Commercial Bank (DongA Bank)'s bid to raise its charter capital from VND3.4 trillion (US$161.9 million) to VND4.5 trillion ($214.2 million). The move will boost the bank's finances and allow it to invest in technical infrastructure.

 

Big C opens 14th supermarket

 

Supermarket chain Big C on Thursday opened its 14th outlet in northern Nam Dinh Province.

 

The US$4 million shop, in the Thien Truong shopping centre, occupies 4,320 square metres and sells 40,000 items of merchandise, including food, electronics, household utensils, cosmetics to clothes.

 

Big C is striving to build ties with local manufacturers and producers. The new supermarket has so far signed contracts worth VND12 billion ($571,500) with local suppliers to provide food, vegetables, fruit cake, handicraft goods and textiles.

 

Viettel to produce smartcards in Ha Noi

 

Viettel Group will shortly be breaking ground on a smartcard production plant at Hoa Lac high-tech park in the capital, worth of VND270 billion (US$12.8 million). The plant, which will occupy an area of 3ha, will produce SIMs, smart cards and software.

 

Hai Phong builds new wharf facility

 

Hai Phong port has started construction on wharf No 7, which will have a cargo capacity of 20,000 tonnes a year.

 

The wharf makes up the second-phase of the Dinh Vu Port project in Hai Phong.

 

The second phase project worth VND300 billion (US$14.2 million) including the wharf and infrastructures construction, is expected to be completed in 2012.

 

Centre to support young entrepreneurs

 

The Viet Nam Youth Federation yesterday launched a Business Startup Support Centre in HCM City to help budding young entrepreneurs.

 

It would act as a link between them and successful companies around the country, enabling them to learn from captains of industry, Bui Ta Hoang Vu, the Federation's chairman, said.

 

It would provide facilities and human resources for their start-up companies, while its VND30 billion (US$1.5 million) fund would make loans available at low interest.

 

Vietinbank to pay 17% dividend

 

Vietinbank will pay a 17-per-cent dividend on 2010 profits in a payout to shareholders expected to exceed VND2 trillion (US$97.3 million).

 

The bank, the nation's largest partly-equitised lender, has yet to release profit figures for last year, but the announced dividend exceeds an earlier target set by the bank for a 15-per-cent dividend.

 

However, the Ha Noi-based bank's total assets have risen 50.5 per cent since the end of 2009 to VND376 trillion ($19.71 billion), while deposits rose 54.5 per cent to VND348 trillion ($16.58 billion) and outstanding loans increased by 43.5 per cent to VND234 trillion ($11.14 billion).

 

Bad debts as of the end of 2010 stood at just 0.66 per cent of outstanding loans, well below the 2.5-per-cent average for the entire banking system nationwide, as estimated by the State Bank of Viet Nam.

 

Brokers to provide online trading

 

The State Securities Commission has allowed Ha Noi and Hai Phong securities companies to provide online securities trading services. About 56 firms have so far received the commission's approval to provide online trading provision, which will help them avoid potential hacking attempts or conflicts with clients.

 

Bach Khoa Internet Security Company said that about 800 local websites were hacked in the first 10 months of 2010. The number of hacked websites totalled 1,037 in 2009 – double 2008's figure.

 

PetroVietnam Securities tops target

 

PetroVietnam Securities projected to make VND102 billion (US$4.9 million) in profit in 2011, said the company director Pham Quang Huy. The company have set their 2011 dividend at 10 per cent.

 

In 2010, the securities house earned a turnover of VND258 billion ($12.3 million), a 54 per cent increase over the annual target, of which brokering services accounted for VND28.3 billion. The company's pre-tax profit was VND85.7 billion, 21 per cent up on their planned target.

 

Seafood processor to list shares

 

Binh An Seafood Company has applied to the HCM City Stock Exchange to list 50 million shares. Binh An Seafood or Bianfishco, locating in Tra Noc Industrial Zone 2 in Can Tho City, has a charter capital of VND500 billion (US$23.8 million). It specialises in processing tra catfish for exports.

 

The seafood producer is estimated to earn an after-tax profit of VND90 billion ($4.3 million) and a turnover of VND1.5 trillion ($71.4 million). Habubank late last year agreed to buy 5 million shares or a 10 per cent stake in the company.

 

PVN Power Service debuts shares

 

PetroVietnam Power Services Company officially launched 15 million shares in Ha Noi Stock Exchange yesterday. The PPS-coded share closed at VND13,000 in the first day of listing, compared to the opening price of VND14,000, with 240,000 shares traded.

 

The company, specialising in providing maintenance and repair services for the power plants, has a total capital of VND150 billion ($7.1 million). In the first nine months of 2010, the company posted a revenue of VND461.4 billion ($22 million).

 

Personal tax deductions unreasonable

 

Deductions from taxable income are currently not satisfactory as they do not include personal costs like expenses in child rearing, marriage, education, and health care, according to an expert.

 

The current law is not counting costs incurred in earning an income, said Nguyen Thai Son, former head of the Ho Chi Minh City Tax Department’s personal income tax office.

 

He pointed out a doctor has had to incur tremendous costs for his own training, equipment, and others before he can make his high earnings.

 

But the doctor does not get any deductions for those, Son commented.

 

A personal income tax proper should be collected only after deductions for personal expenses related to child rearing, marriage, education, health care, business allowances, and so on, he asserted.

 

Tax authorities should lower tax rates, or increase deductions, and expand taxable income brackets.

 

This could result in a decline in tax revenues which could be offset by effectively monitoring high-income earners, he added. It could also ease pressure on low-income people.

 

Personal income tax is collected in developed countries based on how a person earns his/her income.

 

Son elaborated that such taxpayers get deductions for personal expenses and costs incurred in generating their income so even earners with the same take-home salaries may pay different taxes.

 

Vietnam is applying a progressive scheme while a fixed rate is imposed on proceeds from other sources like capital transfer, financial investment, and real estate transactions.

 

Asked if the personal deduction is reasonable, Son said it has been 5 years since the tax law was introduced so taxpayers would certainly face difficulties given currently rising prices.

 

He recommended adjusting the income law around the country’s minimum salaries.

 

Coffee export value declines 4% in 2010

 

The coffee industry last year experienced declines in both export volume and value, reported the Ministry of Agriculture and Rural Development.

 

The sector exported 1.1 million tonnes of coffee worth US$1.67 billion, a 5 per cent decline in volume and 4 per cent fall in value.

 

Global coffee prices hit record highs last year, when the bean sold for $2,000 per tonne, a 50 per cent increase against the previous year's figures. Domestic prices held steady at about VND37.4 million ($1,824) per tonne.

 

Local coffee exporters were facing a high risk from losses due to late payments from foreign clients and price fluctuations on the world market.

 

Viet Nam Coffee and Cocoa Association's general secretary Phan Huu De urged domestic firms to thoroughly research the financial capacities of foreign clients and to seek consultation from legal experts before signing deals.

 

The enterprises should focus on buying directly from coffee growers rather than via intermediaries to ensure a sustainable supply.

 

The association predicted that the export price would remain high at over $2,000 per tonne until the middle of this year, up 48 per cent compared to that of late last year.

 

Viet Nam is the largest robusta producer in the world with 500,000ha of plantations yielding 1 million tonnes of green coffee each year, and over $1.5 billion in export turnover.

 

Vietnamese coffee is sold in over 100 countries and territories, including large markets such as Spain, Japan, South Korea and the US as well as new markets like Africa and Eastern Europe. The coffee industry represents 2 per cent of the country's GDP.

 

However, the price of coffee had at times been lower than production costs and some farmers were operating at a loss. With such low revenue, many of them had been unable to reinvest in their plantations, the association chairman Luong Van Tu said.

 

Moreover, current coffee cultivation practices in Viet Nam were seen as unsustainable, leading to high production costs, soil degradation and lower yields.

 

The adverse weather and ageing coffee plants had also contributed to the low quality of Viet Nam‘s coffee. Severe competition from other countries was another challenge faced by the local industry.

 

To address these concerns, the association said it would provide market information and organise promotions for exporters. It has also asked the Government to support coffee growers by offering preferential loans for a period of six or nine months.

 

State Bank denies increased capital reserve ratio rumours after shares slide

 

Shares retreated yesterday on the two national exchanges, as rumours circulated that the State Bank of Viet Nam was considering imposing higher capital reserve ratios on commercial banks as a measure that would help curb inflation by reducing the supply of currency in circulation.

 

Both domestic and foreign investors were concerned about the rumours, said Au Viet Securities Co analyst Dang Lan Huong, and, following the impact on markets in the morning, the State Bank moved late yesterday to deny them.

 

However, faced with a possible further depreciation of the Vietnamese dong, a number of investors have shifted investment from securities into US dollars, causing the price of the greenback to increase in recent days on the black market, Huong said.

 

"Market developments have been dull throughout the week, defeating investor expectations of an exciting week and a return of new investment after the New Year," she added, predicting the market would likely continue to tread water for the time being.

 

Trading volumes improved slightly on the HCM City Stock Exchange yesterday, but the VN-Index slid in the final minutes of trading, closing at 481.86, slightly lower than the previous session's mark.

 

Blue chips continued to perform poorly. Out of the 10 leading shares by capitalisation, only insurer Bao Viet Holdings (BVH) and industrial conglomerate Hoa Phat Group (HPG) posted gains.

 

Bank shares, which registered losses, were still the most heavily-traded stocks on the southern bourse. Eximbank (EIB), the most-active share with over 1.8 million traded, declined by 1.3 per cent, while Sacombank (STB) closed unchanged on a volume of 1.15 million shares. Vietinbank (CTG) and Vietcombank (VCB) each fell by around 0.4 per cent.

 

On the Ha Noi Stock Exchange, the HNX-Index dropped by 1.26 per cent to close at 110.04. The volume of trades rose 35 per cent to 26.5 million shares, while the value of trades increased by 32 per cent to VND508.7 billion ($24.2 million).

 

Ha Noi Bank (HBB) reclaimed the position of the most active stock on the Ha Noi bourse, with over 2.4 million changing hands. HBB closed unchanged at VND11,100 (0.53) per share.

 

Foreign investors continued as net buyers on both exchanges yesterday, but on a reduced volume of 1.6 million shares worth a net of VND30.4 billion ($1.4 million).

 

Government bonds issue to be down 20% this year

 

The National Assembly Standing Committee approved the target of issuing VND45 trillion ($2.3 billion) worth Government bonds this year at a session last Friday.

 

The money raised from the issues will be earmarked for urgent transport, irrigation, healthcare, and educational projects, especially in poor and less-developed localities and flood-hit areas, and to projects that are likely to be completed in 2011 and 2012.

 

Half the amount will go to transportation projects, and VND12 trillion, or 27 percent, to irrigation works. Construction and upgrade of district hospitals and education projects will be allocated VND4 trillion each, while VND1.5 trillion will be set aside for resettling people whose land are taken over for the Son La Hydropower project.

 

Last year bond issues were worth VND43.7 trillion, or 78 percent of the targeted amount, Minister of Planning and Investment Vo Hong Phuc said.

 

Interest rates expected to drop in 2011 

 

Interest rates are expected to go down this year because they are presently too high and cannot rise any higher, an economist has said.

 

This year has seen skyrocketing interest rates due to the soaring inflation in 2010, with savings interest rates and lending interest rates being 14 percent per year and 17-18 percent per year respectively.

 

According to economists, the rates are already too high for enterprises; therefore, it is unlikely that interest rates will go any higher.

 

Enterprises and commercial banks have hoped that the State Bank of Vietnam will regulate interest rates in compliance with the Law on Credit Institutions, which took effect early this year.

 

Banks said that this will give them the flexibility in adjusting interest rates in accordance with foreign exchange rates and inflation.

 

Economists said the interest rates will drop by the end of the first quarter of 2011, because demand for production and business funds from various enterprises will decrease after the Tet holiday.

 

In addition, banks will be able to mobilize funds from residents more easily. This is because the inbound remittance will increase, and people will have more money in cash.

 

Therefore, banks might reduce their lending interest rates to 15-16 percent by the second quarter of 2011.

 

Some commercial banks said they cannot lower the interest rates yet, because the expenses for mobilizing funds are still very high.

 

However, they said they can offer lower rates to their regular client base.

 

The central bank said early this year that it will use the prime interest rate to curb high interest rates, but not as a monetary policy management tool. 

 

The bank will focus its management on refinance, open market operations (OMO) and rediscount rates.

 

The central bank said OMO rates will be flexible and be adjusted to market rates.

 

Deputy general director of a joint stock bank said that to lower interest rates and stabilize the monetary market in 2011, drastic solutions will have to be taken to contain inflation.

 

Economists said there should be a special mechanism concerning small commercial banks.

 

They said for the long run, interest rates for the dong should be floated in the government’s direction. However, in abnormal market conditions, the central bank must regulate market interest rates.

 

The central bank also said that it has targeted credit growth at 23 percent for 2011, two percent lower than last year, and loans will be prioritized for the production sector.

 

Banks plug cards, but consumers prefer cash

 

While banks have issued 28.5 million debit and credit cards in Vietnam, people continue to queue up in front of ATMs to draw cash.

 

Five years after plastic came to the country, people still cannot kick the cash habit, leaving around 50,000 merchants with unused card readers.

 

It has had other financial implications for banks since the cheapest ATM costs $15,000. It means that in the last five years they have spent more than $150 million on installing the ATMs, exclusive of the expenses on technologies and maintenance.

 

In 2005 there were 1800 ATMs in Vietnam, a figure that rose to 11,500 five years later. The numbers of merchants were 11,000 in 2005 and 50,000 in 2010, according to Euromonitor International, a global market surveyor.

 

Unlike in the past, card holders can use their cards at any ATM and member establishment after the three biggest card alliances entered into a tie-up.

 

Commercial banks are making great efforts to wean people away from cash and inculcate the habit of using cards. They allow payment of electricity, water, and other bills using cards.

 

A recent survey released by Nielsen found that only 1 percent of surveyed people used Internet banking, 23 percent use ATM cards, while only 1 percent use credit cards.

 

Almost 60 percent said they did not have the need for cards, while 31 percent said they did not understand the services.

 

Euromonitor said though young people now have the habit of putting money in banks, cash remains the most popular payment method.

 

Though statistics show there are 28.5 million cards in the country, analysts say the figure may also include unused cards.

 

The director of the card center at a bank said only 50 percent of card holders make regular transactions, while the rest only use them once every few months, mainly to withdraw money.

 

But at his bank, 80 percent are in activate use compared to 40-60 percent at most others.

 

Cards received a boost by a government regulation that required salaries for its workers to be paid via bank accounts.

 

But most public servants use their ATM cards just to withdraw their wages and little else.

 

Card numbers also put on a spurt when banks issue them with massive promotions.

 

Also stymieing the growth of cards is the reluctance on the part of both users and merchants.

 

Card holders do not want to use them because merchants often demand the 3 percent or whatever commission they have to pay the bank.

 

The merchants prefer cash to bank cards because of the commission and their difficulty in getting customers to pay it.

 

Richest women hold $1.2 bn

 

Pham Thu Huong, Vietnam’s richest Pham Nhat Vuong’s wife, has become the richest Vietnamese woman based on her stock holdings in 2010, according to a list released Tuesday by local news website VnExpress.net.

 

Huong tops the list of Vietnam’s 50 richest women with her stocks at Vincom Joint Stock Company and Vinpearl Joint Stock Company worth VND2,340 billion (US$120 million), around VND350 billion ($17.9 million) lower than last year’s richest woman.

 

Her assets, however, have been given a dramatic boost, almost double the value she had last year – VND1,313 billion ($67.3 million) – when she ranked 3rd on the list.

 

Her husband has recently been crowned the nation’s richest man with assets valued at VND15,776 billion (US$809 million) after consecutive years as runners-up.

 

The couple, though rich and powerful, only act as board members of the two companies and have made little public appearance except on rare occasions when Vuong turned up as chairman of the Business Association of Overseas Vietnamese.

 

Having VND2,047 billion ($105 million) in stock values, Dang Thi Hoang Yen, Tan Tao group chairwoman and the richest woman a year ago, ranks second following a VND650 billion ($33.3 million) slump despite a 90 percent share expansion.

 

Yen’s colleague Pham Thuy Hang, a board member of Vincom, finished the year 2010 at the third place. Hang’s stocks are valued at VND1,880 billion ($96.4 million), an approximate VND820 billion ($42 million) less than in 2009.

 

At number 4 is Nguyen Thi Nhu Loan, mother of Cuong “Dollar”, the notorious “player” a couple of years back, who chairs property developer Quoc Cuong Gia Lai. She has VND1,640 billion ($84.1 million).

 

Rounding up the top 5, Nguyen Hoang Yen, a board member of fast-moving consumer goods producer Masan Group, owns shares worth VND1,633 billion ($83.7 million). She ranked just 12th in 2009 with VND744 billion ($38.1 million) in stock value.

 

A downward movement on the 2010 stock exchange has knocked 18 women in 2009’s top 50 out of the 2010 list. Meanwhile, most of the remaining old faces suffered losses of stock values.

 

Vietnam’s 50 richest women are now holding VND23,800 billion ($1.22 billion) in total, a slight increase against the previous year.

 

PV