EVN urged to cut costs, divest non-core investments

The Vietnam Electricity Group (EVN) should try to reduce its power production costs, rather than repeatedly raising prices, experts said following EVN’s price hike of 5 percent on Tuesday.

According to Nguyen Xuan Thanh, director of the Public Policy Program at the Ho Chi Minh City-based Fulbright Economics Teaching Program, EVN had incurred massive losses from the exchange rate difference because it had to purchase electricity in US dollars at a fixed price in long-term contracts, while selling it to customers at lower prices.

“For this reason, the price hike is quite reasonable,” Thanh said.

However, the 5-percet power price increase has ignited consumers’ uproars, who believe EVN’s poor management is the main cause for the high power prices they have to suffer.

Commenting on this, Thanh said the problem lies in EVN’s price adjustment mechanism, which is regulated by the Ministry of Finance and the Ministry of Industry and Trade.

Thanh said to calculate its electricity price, EVN submits its expenses in power production, including transmission, power loss, and distribution costs, to the two ministries.

The ministries will approve the expenses and allow EVN to add a fixed profit to the expenses to arrive at the final price. The fixed profit ensures EVN’s ability to cover expenses and earn profits in its operation.

While the fixed profit calculation is strictly managed, the ministries have failed to appropriately check the EVN’s reported expenses, Thanh said.

Thus, EVN feels at ease to report high expenses, which are most of the times accepted by the management authorities.

This loose mechanism has seriously undermined EVN’s motivation to optimize its production costs, since all the losses will be counted in the final price.

“If the government still maintains this price adjustment mechanism, it should set a limit on the expenses submitted,” Thanh said.

Regarding the power transmission losses, Thanh said that although EVN’s power loss rate is still lower than those in India or Indonesia, EVN can make it even lower.

“What matters is whether EVN is motivated to do so or not.”

Cao Tien Vi, chairman of Saigon Paper Co, said EVN had hiked power price due to the losses caused by its poor management and bad investment in non-core sectors.

The 5-percent hike only exacerbated the hardship of many businesses in this time of economic slowdown, Vi said, expressing concerns that power prices could soar further.

Vi called on the Ministry of Finance to inspect EVN’s price calculation as well as its investment effectiveness, as in the case of the fuel wholesalers.

“This is to give the public a clearer look on EVN’s power price adjustment, in order to see if the hikes are justifiable or not,” he said.

Meanwhile, Ta Van Huong, former head of the Energy Agency under the Ministry of Industry and Trade, said it was a huge mistake for EVN to sink investments in the telecom sector and create its affiliate EVN Telecom.

After seven years of operation, EVN telecom was stuck with low subscribers and poor revenues and became a debtor to many companies. It is set to be acquired by military-run Viettel Telecom next year.

Huong said EVN’s poor management was one of the main causes of its investment failures in the telecom industry.

He thus demanded that EVN divest from its non-core businesses to cut losses and save costs.

“EVN should consider its ability before starting any investment in non-core sectors,” he said.

Shares open the week in red

 

National stocks continued to dive despite surging market value in HCM City.

 

On the HCM Stock Exchange, the VN-Index lost another 1 per cent to close at 352.68 points with the number of decliners doubling that of advancers.

 

Trading jumped 81.5 per cent over yesterday's value, totalling VND723.8 billion (US$34.1 million) on a volume of 42.8 million shares.

 

Of the 10 leading shares by capitalisation, insurer Bao Viet Holdings (BVH), property developer Hoang Anh Gia Lai (HAG) and PetroVietnam Finance (PVF) bottomed out. Most other blue chips also retreated.

 

Meanwhile, three large banking stocks added 0.6-2.2 per cent, including Vietinbank (CTG), Eximbank (EIB) and Sacombank (STB).

 

STB was also the most active code on the southern bourse with more than 2.3 million shares changing hands.

 

The benchmark HNX-Index on the Ha Noi Stock Exchange slid 1.4 per cent to 57.17 points. Losers largely overwhelmed gainers by 185-58.

 

The value of trades, however, rose by 32 per cent to VND264.1 billion ($12.5 million), as trading volume reached 32.3 million shares.

 

With nearly 2.6 million shares changing hands, VNDirect Securities Co (VND) became the most heavily traded stock nationwide.

Vietnam needs to improve export performance

Vietnam’s export businesses have achieved good results this year but will have to improve their performance.

It’s likely that Vietnam will find it more and more difficult to penetrate potential markets such as the US, EU, Africa and West Asia.

Vietnam’s Ambassador to Belgium Pham Sanh Chau says the EU is a key market for Vietnam. However, it is not easy to enter due to the technical barriers against imports and the growing trend of protectionism.

Another cause for worry is the EU’s public debt crisis and its decreasing purchasing power, Mr Chau adds.   

Regarding the American market, Vietnam’s Commercial Counselor to the US Dao Tran Nhan mentions recent US lawsuits which have caused losses for both manufacturers and exporters.

He says the US is keen to adopt stricter legislation on food safety standards, he emphasized.          

Judging from the growing trend of protectionism, Ambassador Chau warns export businesses to take cautious steps to avoid risky operations and losses.  

According to Deputy Minister of Industry and Trade Nguyen Thanh Bien, Vietnam’s export turnover has kept rising over the years thanks to the timely guidance of the government and its representative offices in foreign countries.

To cope with rising challenges in 2012 and beyond, Vietnamese businesses should focus on maintaining traditional markets and finding new potential markets, Bien says.       

Nguyen Huu Thang, CEO of Hapro Corporation, agrees that they should work closely with trade counselors to foreign countries to promote goods and tighten trade ties.

Dang Hoang Hai, Head of the European Market Department, suggests that apart from commercial diplomacy to develop exports, Vietnamese businesses should improve the design and quality of goods and depend less on foreign input materials.

In particular, Vietnam should develop the system of direct supply to distribution agents in foreign markets, without relying on commercial intermediaries.

According to trade counselors, Vietnamese businesses should also develop good trademarks and build mutual trust among their partners.

Trade Counselor to South Africa Do Quang Lien calls on them to actively engage in trade promotions abroad.

Kiev-HCM City direct air route opens

The first Kiev-HCM City direct air route was launched on December 23, announced the AeroSvit – Ukrainian Airlines.  

Flights to Ho Chi Minh City will be operated on Wednesdays and Saturdays, and back to Kiev on Mondays and Fridays, using Boeing 767s.

The direct air route will cut travel time between the two cities to 10 hours.

The airlines will give a special offer for passengers flying from Vietnam to Ukraine and European cities with two-way ticket worth from US$590, including tax and other surcharges.   

AeroSvit is conducting flights to 70 foreign destinations in Europe, Asia, Africa and North America.

Trade Counsellors’ role hailed in HCM City

A senior trade official has praised overseas trade counsellors for their substantial contributions to helping businesses seek and expand markets in order to increase exports.

Addressing a conference in Ho Chi Minh City on December 22, Deputy Minister of Industry and Trade Nguyen Thanh Bien reported that Vietnam’s exports so far this year have hit US$96.3 billion, an increase of more than 33 percent compared to a year earlier.

The sharp increase is attributed to big contributions by trade counsellors overseas, who serve as gateways for businesses to penetrate more foreign markets, said Bien.

According to Bien, 2012 will be another difficult year for the national economy due to the negative impact of the global economic downturn. He asked the counsellors to work harder to support local businesses in establishing new partnerships overseas.

Trade counsellors and more than 400 businesses from 30 southern provinces and cities discussed measures to iron out snags facing exporters and to set up closer links between businesses, Government and Vietnamese representative offices overseas to expand markets and boost exports.

In addition, participants talked about local potential and demand for exports and solutions to overcome trade barriers, as well as improving performance in overseas markets.

US$187 million to build traffic control centre

Ho Chi Minh City plans to build a traffic control centre worth around US$187 million to ease traffic congestion in the city.

It has urged the Ministry of Planning and Investment to submit the project to the Prime Minister and ask him to list it among projects using French Government ODA in the 2012 fiscal year.

The project will develop the urban traffic infrastructure to the level of modern cities in developed countries and control traffic flow smoothly to avoid wasted time and to reduce environmental pollution.

It will also help raise public transport efficiency to meet the increasing demand for socio-economic development, complete infrastructure, raise local people education levels and contribute to building urban civilization.

The project will be implemented from 2012 to 2017.

Transport infrastructure hampers development
 
Poor infrastructure and financing was handicapping the development of sea and air ports in Viet Nam, South Korean experts told their Vietnamese counterparts at a workshop in Ha Noi yesterday.

The Koreans were sharing their experiences and expertise under a knowledge-sharing programme supported by the Korean Ministry of Strategy and Finance, and the Korean Development Institute (KDI).

The workshop was supported by the Development Strategy Institute (DSI) of the Vietnamese Ministry of Planning and Investment.

DSI vice president Hoang Ngoc Phong said Viet Nam and South Korea recently pledged to strengthen political and economic co-operation.

He said that South Korea had much experience in dealing with problems faced by developing countries.

He said that about 22 topics were studied at the workshop, of which four are being carried out.

"All of them are key issues for Viet Nam's economic development," Phong said.

Yeong Heok Lee, a professor at Korea Aerospace University, said the transport sector had been a major obstacle to Viet Nam's economic development since Doi moi (Renewal) policy was introduced in 1986. He said it still remained a problem.

Viet Nam had 21 million people pass through its airports last year and the rate has been growing at nearly 16 per cent a year – one of the highest growth rates in world air transport.

"Although Viet Nam has 22 airports, their inefficient airport operation and low infrastructure hinder commercial activity and constrain airport capacity," said Professor Lee.

During 2001-10, air freight increased 16.2 per cent a year, but this was still considered small, he said.

"This is because the value of Vietnamese commodities is not high enough to warrant high air fares, as the high-tech products are not main commodities in trade yet," he said.

While hailing the Government's policy towards privatising air transport, Lee urged the Vietnamese Government to support small carriers to operate effectively and hasten the equitisation of Viet Nam Airlines to make it more competitive.

As the number of air passengers in Viet Nam is forecast to increase to between 34 million and 36 million by 2015, Lee suggested the Government increase investment in airport projects.

Beom-Jung Kim, the director general of port and logistics research at the Korean Maritime Institute, said cargo handled at Vietnamese ports had grown rapidly from 49 million tonnes in 1997 to 196.6 million tonnes in 2008 and an estimated 254 million tonnes in 2010.

However, poor infrastructure, poor financing, weak governance and low connectivity (transportation at ports and between ports and industrial zones) put them at a disadvantage because of the extra logistics costs involved.

Kim said Viet Nam's master plan for developing ports through to 2020 was mainly geared towards throughput demands and port expansions, but it lacked financing methods and the construction of hinterland transport.

He encouraged the Vietnamese Government to take the lead in preventing overlapping or reckless port development and to make the best use of limited resources.

"Areas with large population and industries should take priority," Kim said.

In addition, it was essential to build railways and roads linking ports and industrial complexes in the hinterland.

"Lastly, private capital and foreign direct investment (FDI) need to carry out port development instead of government resources, which were probably insufficient."

US$143 million in loans signed for the An Khanh 1 Thermo-electricity Plant

The An Khanh Electricity Joint Stock Company inked a US$143 million loan deal yesterday for development of its An Khanh 1 Thermo-electricity Plant.

The deal was signed in Ha Noi with The Bank of China, the Import-Export Bank of China, China Construction Bank and the China Bank of Communications.

Construction of the $168 million project located in the northern Thai Nguyen Province's Dai Tu District started in January last year.

The first turbine of the planned 100MW-capacity-plant is expected to become operational by next September with the second to follow in the second quarter of 2013.

Once completed by the third quarter of 2013, the plant will be connected to the national power grid and generate 800 million KWh per year.

The company has already completed some of the support constructions with the China People Electricity and Gas Group signed as the engineering procurement and construction contractor for the project.

The province has also granted an investment licence for the company to develop the 300MW An Khanh Thermo-electricity Plant 2 in Pho Yen District.

Covering an area of 50 hectares, the project has a total investment of more than VND10 trillion.

Construction of the plant will begin next year with plans for connection to the national power grid by 2016.

The two new thermal power plants are expected to help meet the growing demand for electricity in the industrially active province.

The Cao Ngan Thermo-electricity Plant currently produces 100MW of power which falls short of forecasts which indicate that the province will need 600MW by 2015.

The An Khanh project should help ease the province's power shortage as it comes into operation.

Binh Duong defies trend with more housing projects

Southern Binh Duong Province's residential property market is continuing to buck the trend of falling prices that is clouding the horizon for the real estate sector elsewhere in Viet Nam.

The province hopes to further develop the property market in new residential zones in Binh Duong City.

Le Minh Tam, deputy director of Becamex TDC, the company in charge of developing infrastructure in the Binh Duong New City zone, said most of the infrastructure work was completed, including building of inner roads and IT systems.

Houses and apartments in the city have been up for sale, although no land plots would be on the market, said Tam, adding that the city would develop its social infrastructure, including education and health care services.

In the third quarter of this year five new apartment and residential land projects were launched in Binh Duong offering more than 1,400 units.

This made the number of units available in the southern province to around 24,400 across 71 projects, a study released early this month by property service provider Savills Viet Nam said.

Three-quarters of the projects are located in Ben Cat District, Di An town and Binh Duong New City, with Ben Cat alone accounting for 43 per cent.

The average asking price was US$1,100/sq.m for an apartment, $900 for villas and town houses, and $120 for land.

With its relatively cheaper prices compared to HCM City and Ha Noi, Binh Duong's residential segment attracts not only local buyers but also those from other cities and provinces, especially from the country's two largest cities.

Eighteen projects are expected to hit the market soon with more than 8,800 units across all segments.

Confab targets foreign investment
 
Investment promotion and regional economic co-operation need to be tweaked to attract reliable foreign investments and limit risky ones, experts said.

Speaking at a meeting titled Southern FDI on Tuesday, Do Nhat Hoang, head of the Foreign Investment Department, also pointed out the downsides: "Investment promotion should consider our limited land availability, lack of natural resources, shortage of power, and unprofessional human resources."

In the last 5 years FDI has played a significant part in economic development.

Many localities have managed to attract FDI — like the southern provinces of Dong Nai, Ba Ria – Vung Tau and central province of Da Nang - but also suffered troubles and losses as a result.

"Local authorities must carefully consider issuing licences to avoid investors from suing the Government," he said.

Investment pledges have shrunk from US$70 billion in 2008 to $15 billion this year, but disbursement, which was worth $11 billion three years ago, has remained stable at over $10 billion this year.

"In the coming years we will focus on the disbursed rather than registered amount," he added.

Many local authorities have already reviewed existing projects and cancelled the licences of around 20 that had a total investment of $500 million.

In 2011 –15 the southern region will focus on developing regional tourism and trade, water supply, wastewater treatment, and infrastructure for economic zones along the East Sea.

HCM City has attracted nearly 4,000 projects with aggregate capital of $30 billion of which $19 billion has been disbursed. This year it licensed 367 projects with an investment of $2.1 billion.

"We will focus on high-tech and value-added services, and increase regional investment," Pho Nam Phuong, director of the city-based International Trade Promotion Centre (ITPC) said.

The conference was organised by the ITPC and the ministry of Planning and Investment.

Demand for goods rises ahead of Tet
 
The amount of money traded for goods and services in Ha Noi until the Tet festival will increase by 20-25 per cent to around VND24 trillion (US$1.15 billion) per month, Ha Noi's Industry and Trade Department said.

Demand for essential items would increase during Christmas, New Year and the lunar New Year, according to director of the department Le Hong Thang, who spoke at a meeting on Tuesday with deputy chairman of the People's Committee of Ha Noi Nguyen Van Suu.

Monthly demand was expected to jump to 65,000 tonnes of rice, 12,000 tonnes of pork, 6,000 tonnes of poultry meat, 90,000 tonnes of fruit and vegetable and 1,500 tonnes of confectionery, Thang said.

Supply in the capital would meet 62 per cent of demand for meat with the remaining to be transported from other provinces and cities, he said.

The municipal authorities have provided loans totalling VND475 billion for certain enterprises in the city to purchase nine essential goods to stock in order to stabilise prices, he said. Selected businesses have doubled the amount of price-stability outlets seen last year to around 670.

So far this year these businesses have begun selling essential goods during periods of high demand including the lunar New Year, he said.

Mai Khue Anh, managing director of the Ha Noi Trading Corporation said their Hapro retail system would sell goods until 10pm on the last day of the lunar year and re-open the shops and supermarkets on the fourth day of the lunar New Year.

Deputy director of Fivimart Supermarket System Vu Thi Hau, said Fivimart had signed contracts with suppliers of fresh food to ensure enough supply to maintain competitive selling prices.

The Area 1 Petrol and Oil Company has stored 40,000 tonnes of petrol and oil to meet demand during the upcoming holiday occasions in Ha Noi and neighbouring provinces and cities.

Deputy minister of industry and trade Ho Thi Kim Thoa has insisted trading firms cooperate with suppliers and maintain levels of hygiene, food safety and stable prices.

The department would monitor the market and penalise any fraudulent trading in order to protect consumers, Thoa said, adding that businesses should increase information sharing during this periods to avoid turbulent shifts in demand and supply.

Paper imports to top 1.2 million tonnes

Viet Nam was forecast to import 1.23 million tonnes of paper next year, the Ministry of Industry and Trade said yesterday.

Local paper production was unable to meet consumption which was estimated at 2.9 million tonnes, equivalent to a year-on-year increase of 10 per cent.

Paper imported would include 585,000 tonnes of printing and writing paper, 70,000 tonnes of newsprint paper, 1.79 million tonnes of industrial packing paper and 83,100 tonnes of tissue.

Hi-Tech Park licenses projects

The Sai Gon Hi-Tech Park Authority has announced that it has granted investment licences for 58 foreign-invested projects with a total capital of US$2 billion.

Licences for 11 of the projects worth US$167.4 million were granted this year. Projects operating in the park this year exported goods to the value of US$756 million.

The authority recently granted an investment licence to a $2-million project invested by Singapore-based Rockwell Automation.

Buon Ma Thuot finishes airport work

The Buon Ma Thuot airport in the Tay Nguyen (Central Highlands) Province of Dak Lak completed its expansion and upgrading, the Ministry of Transport said.

The upgrade raised the capacity of the airport to 1 million visits a year, equivalent to an increase of 2.5 times. Upgrading included expanding the runway, flight management centre, control tower, passenger platform and security system.

At present, the airport has regular flights to Ha Noi, HCM City and Da Nang. It plans to launch air links with regional countries.

HAGL to build project in Myanmar

Hoang Anh Gia Lai JSC (HAGL) has planned to build a trade centre, hotel and apartment complex in Myanmar, one of many projects given the thumbs up during a working visit by Prime Minister Nguyen Tan Dung.

The US$300 million complex covers 8ha in Myanmar's Yangon province.

Meanwhile, VinaCapital Group and An Giang Plant Protection JSC with local Green Asia Co will join hands to build a $55 million agriculture service project in Yangon's East-Dagon District and ASV Pharma Corporation will co-operate with Myanmar Entrepreneur Investment Co in carrying out a pharmaceutical product project worth $20 million.

Military Bank among region's top firms

Military Bank has been ranked in the top 100 banks with Asia Pacific's Strongest Balance Sheet by financial magazine The Asian Banker.

The Asian Banker used several criteria to rank the banks, such as assets, scale, balance sheet growth, risk, quality and liquidity.

The Military Bank had a charter capital of VND7,300 billion (US$350.4 million) and its unincorporated pretax profit reached VND2,161 billion ($103.7 million) as at September 30.

Poor apartment sales affect construction firms

The low liquidity of the apartment market not only leaves a negative impact on project owners but on construction firms as well.

Le Viet Hai, board chairman of Hoa Binh Construction and Real Estate Corporation (HBC), said that business operations of property firms were encountering difficulties and some have lost solvency.

Besides, several office and commercial center projects have also seen low sales, resulting in financial problems to property firms and late payments to contractors.

Therefore, contractors execute slowly or even stop work while some property firms decide to delay their projects due to lack of capital.

In fact, in addition to loans from banks, property owners cannot pay building expenses if their apartments are not sold.

The tough property market has been expected but perhaps no one can expect that the market will be this sluggish, according to Nguyen Ba Duong, general director of Cotec Construction Joint Stock Company (Coteccons)

Spreading investments in too many property projects is one of the reasons for capital shortage, and even many large firms have also run into difficulties, said Duong.

However, the number of new projects this year is fewer than that of last year due to the tough market and tightened property loans.

Like HBC, Coteccons, one of the big contractors, is working on projects it signed last year and this year worth a total of around VND5 trillion, and thus the firm’s operation is not affected much. However, small contractors will have to face many challenges next year, Duong said.

He said the property market would remain in difficulties over the next six months. As a result, there will be many contractors having no projects or earning modest profits.

According to the Ministry of Construction, Vietnam has around 36,000 construction firms. Besides, the construction industry contributed 7% to the gross domestic product (GDP) last year and attracted around three million workers.
 
Trade ministry to tighten monitoring of offshore commodity trading

The Ministry of Industry and Trade is seen tightening the monitoring of transactions with international commodity exchanges in a bid to protect the interests of local traders.

The draft of a relevant circular prepared by the ministry makes clear traders would be required to submit reports on their transactions and use derivatives for safety reasons.

Banks and relevant agencies would have to provide traders with derivatives and risk insurance like hedging and options, and make quarterly and annual reports on trading activities.

“The draft circular is aimed at increasing liquidity for local commodity exchanges,” said a source from the legal affairs department of the ministry.

However, to do all these, there must a linkage between Vietnam’s commodity exchanges, banks and brokerages and those on global markets, said Dao Trung Kien, lecturer of the HCMC University of Economics.

Apart from the central bank regulations on foreign exchange management, there has been no other management mechanism for transactions with foreign commodity exchanges. “Due to the lack of a legal framework, trading with foreign commodity exchanges has been going unchecked while the value of those transactions is very high thanks to high liquidity,” said the source from the legal affairs department.

He said if transactions on foreign commodity exchanges failed, large amounts of foreign currency would drain out of the country.

Local exchanges are experiencing tough times with liquidity running low. Besides those exchanges, multiple brokerages supply services for local investors and speculators to join in commodity derivatives transactions on forwards markets all over the world.

At present, while domestic exchanges have yet to be allowed to open margin accounts at foreign trading floors, certain banks like Techcombank, BIDV and a subsidiary of Vietcombank serve as brokers between local enterprises and international exchanges and as clearance houses for domestic investors, said lecturer Kien.
 
Honda Vietnam says motorbike fire not due to quality

Honda Vietnam, speaking about a recent motorbike explosion in Bac Ninh Province and a number of motorcycle fires, said on Thursday quality was not the cause of these incidents.

Regarding the explosion in Bac Ninh that killed a pregnant woman and her four-year-old daughter, Koji Onishi, general director of Honda Vietnam, said in a statement that the firm had conducted tests but found no similar explosion.

Onishi said the company had never recorded such an accident in its history but added his company was willing to cooperate and present inspection results to the police if requested.

After checking the partially burnt motorbikes, the firm said the cause of explosion was not due to the product quality or specifications. However, it was unable to determine the cause by examining the completely burned-down bikes.

Honda Vietnam has recommended customers to strictly follow the user manuals and refer to information at the firm’s website to check conditions to ensure safety. In case of emergency, customers should Honda Vietnam on hotline 18005555 or 18008001.

Over 10 cases of motorbikes catching fire have been reported since early this year, mostly with those of Honda and SYM.
 
Motorcycle sales slump this holiday season  

Although it is mid December and a festive shopping season, motorcycle businesses are seeing a slump in sales even after offering discounts and promotions.  

Just a few months ago, customers who wanted to purchase a new motorbike had to register well in advance and wait a further six months to get their favorite bike.

These days it’s just the reverse with stores waiting in vain for customers to buy.

A store owner in Nguyen Tri Phuong Street in District 5 complained that never before has business been so depressed when only a few bikes have sold in a week.

Besides, customers have become so fussy that store salespeople have to entice them for a long time before they manage to sell even one bike.

Motorbike business has slumped even though dealers have downed prices. For instance, Honda’s new Vision scooter is priced at VND30 million (US$1,427) at stores in An Duong Vuong Street while the Honda company proposed a price of VND34 million. Similarly, white Honda PCX scooter is down to VND55 million, 3 million lower than Honda Company’s proposal.

According to experts, a depressed sale can be attributed to the current economic crisis, but motorbike manufacturers and agents have to keep up to overcome present challenges.

Of late, Honda motorbikes have seen a slow sales rate after several Honda scooters burst into flames while travelling on Hanoi streets, causing panic amongst customers.

Some people have sold their Honda scooters to second hand buyers on Hoang Van Thu – Nguyen Kiem crossroad in Phu Nhuan District.  

Le Van Binh, owner of Binh Minh store said, some people sold their scooters because they feared they may burst into flames, and others have switched to motorcycles to conserve fuel saying that scooters are big fuel guzzlers.

Hanoi tries to preempt real-estate bubble

Hanoi’s Department of Construction will carry out regular inspections over real estate brokerage houses with the aim of heightening their efficiency.  
 
The decision was made after it was discovered that less than 10 transactions per brokerage house were completed in the last few months.

Statistics from a total of 480 brokerage firms across the city showed that around 3,600 transactions were conducted in the first nine months of this year. When these number are compared with the number of brokerage houses, it equals less than 10 completed transactions each over a nine-month period.

The first half of the year was a bit more active than the third quarter; 2,700 transactions took place in the first half, but only about 900 in the third quarter.

Only adding to these problems are gloomy forecasts for the fourth quarter.

Nguyen Quoc Tuan, Deputy Director of the department, said, “The department will coordinate with people’s committees in districts and townships in order to carry out regular inspections of real estate trading floors in order to catch any misconduct while the transactions are taking place. Stricter penalties will also be applied.”

According to Tuan, the urban real estate market is still unstable because of speculation and  price manipulation. The result, he said, is a slowdown in the market in general.

In order to improve the situation, the department has proposed that the municipal government issue clear criteria for real estate-based lending. He added that a fund should be set up to ensure housing for low-income families.