To curb traffic problems, HCM City authorities have taken several measures, including suspending licences for projects to build apartment buildings in the city's downtown area. However, several other building projects, which were recently licensed as "serviced apartments" with house leasing contracts lasting up to 50 years, have continued to exert transportation pressure on the city's inner districts.

The city downtown area now has dozens of high-rise building projects, currently operational or under construction, offering space for business centres and serviced apartments as well.

The Kumho Asiana Plaza Complex, which is bordered by the Le Duan, Le Van Huu, Hai Ba Trung and Nguyen Du streets in District 1, comprises three high-rise buildings, including a luxury 300-room hotel, an office building and a building with 270 serviced apartments offering long-term leases.

Construction is underway on the Times Square Project at 22-36 Nguyen Hue Street. This property project, when completed, will include a commercial centre, restaurants, a hotel and 120 luxury apartments, both for sale and long-term lease.

Singapore's Keppel Land Group has broken ground for the second stage of the Sai Gon Centre Project at the Le Loi – Nam Ky Khoi Nghia junction. This is a 45-storey building which will offer 200 serviced apartments when construction is completed in 2015.

The Ben Thanh Twin Towers, under construction on a 8,600sq.m area surrounded by Calmette, Le Thi Hong Gam, Pho Duc Chinh and Pham Ngu Lao streets in District 1, is the biggest among the high-rise building projects. These two towers, which will be completed in 2015, will include some 600 serviced apartments.

According to Truong An Duong of Savills Viet Nam Co's market research and consulting division, districts 1 and 3 are at present housing 36 property projects providing some 2,000 serviced apartments; and in three years, 21 other projects with total of 4,400 serviced apartments will become operational in the downtown area.

Duong said the number of serviced apartments in downtown HCM City has been on the rise to meet demand from clients, adding that the over 60,000 foreigners currently working in Viet Nam want to buy long lease houses in the inner districts of big cities in the country.

A construction expert who declined to be named said the licences granted to property projects with serviced apartments have to some extent neutralised the policy to suspend granting licences for apartment projects, because the serviced apartments attract more residents to the downtown areas.

He said to curb traffic congestion, there must be policies to move part of the population in inner districts to the satelite cities, followed by relocating universities and colleges in outlying districts.

According to Nguyen Trong Hoa, head of the HCM City Institute for Research and Development, construction of high-rise buildings is an unavoidable step in the urbanisation process, and suspension of licences for highrise building is not a good solution to the traffic problems.

Hoa said construction plans should be drawn up for inner districts, licensing procedures must be made transparent and better transport infrastructure developed in downtown areas.

Luxury goods rampant

The Vietnamese Government has taken many steps to curb inflation and lower the trade deficit, but one industry that is still hindeing efforts to stage an economic recovery of sorts.

According to the figures from the National Customs Bureau, in the first 11 months of 2011, Viet Nam paid some US$1 billion to import some 32,000 under nine-seat cars, a year-on-year increase of 7.9 per cent.

In November alone, the country paid $327 million for imported handphones and components, bringing the import turnover of these goods to $2.3 billion in the first 11 months, up 74 per cent over last year.

The imports of luxury cars, handphones and other luxury imported goods including cosmetics, alcohol and beer and tobacco in the same period may exceed $4 billion.

The money put for these luxury items, mainly owned by rich people, is higher than the amount of money earned from the nearly 6 million tonnes of rice Viet Nam exported in the first 11 months of 2011.

This means the labour of dozens of millions of Vietnamese farmers has been exchanged for luxury cars and handphone affordable by a very small fraction of the country's population.

"It's difficult for the Government with its World Trade Organisation membership; a Vietnamese citizen can buy anything if he can afford it," said an expert who declined to be named.

The amount of money Viet Nam paid for luxury items might increase from last year's $10 billion to $14 billion in 2011, making it "a financial burden" on the country's economy, he added.

Challenging year ahead

The ongoing global economic turmoil will exert its own impact on domestic tourism in HCM City, while price hikes in domestic airfares and other services would make domestic tours in Viet Nam's less competitive.

The economic recession is likely to force European and American travellers to think twice before making overseas tours to long-haul destinations. HCM City authorities, therefore, have set a lower growth target of 8 per cent for international arrivals in 2012.

According to La Quoc Khanh, Deputy Director of the HCM City's Department of Culture, Sports and Tourism, the city attracted some 3.5 million international visitors in 2011, up 12.9 per cent over the previous year. With a growth rate of 8 per cent, the city is expected to welcome 3.78 million foreign tourists in 2012.

Meanwhile, the increase in domestic airfares of up to 20 per cent from December 15 onwards have made inbound tours less competitive, forcing many local travellers to choose overseas tours, especially to destinations in Southeast Asian countries.

The HCM City-based tour operator Vietravel's four-day package to Nha Trang and Da Lat is now priced at VND9 million (US$428) while its six-day trip to Bangkok and Pattaya in Thailand costs just VND6-7 million ($333).

A tour from Ha Noi to Phu Quoc Island or Da Lat is priced at about VND10 million ($475), while one can fly to a neighbouring country for VND2-6 million ($283).

The airfare hikes and high inflation would make it even more difficult to attract customers for domestic tours.

"In the current difficulties, not only businesses, but individual clients also tend to fasten their belts. Therefore, the more expensive the tours get, the more difficult it is to sell them," said Pham Ha, director of Luxury Travel.

VNS