There are six issues that VnMedia believes are the most outstanding points of the 2009 property market.

One “book” for the land and house

From December 10, 2009, the Government’s Decree No 88 on granting land and house ownership certificate took effect, under which, only a single certificate will be granted to certify the land use right and house ownership of people. Before the decree validity, people still had to get two separate certificates for land use rights and homeownership, which are called “pink” and “red” books.

The decree will help simplify procedures, be more convenient and will help government agencies in management work.

Apartments not allowed to used as offices

On November 19, the Ministry of Construction released a decision on prohibiting the use of apartments as offices.

According to the ministry, the use of apartments as offices violates current laws, while negatively affecting the life of families in the same apartment blocs. The decision has met with strong opposition from businesses, especially small ones, which say they do not have budgets to lease big offices.

Real estate developer organizes lucky draw

On November 4, thousands of hopeful visitors crowded the sales office of the Nam Cuong Real Estate Co. on November 2-3 to register for a “lucky draw.” The prizes are the right to buy an apartment at its original price.

For the first time, the option to purchase apartments was selected by a lucky draw and in a transparent way.

Personal income tax on real estate assignment deals

Since September 26, the personal income taxation on real estate assignment deals has been implemented under the Circular No 161 by the Ministry of Finance. Tax payers will either pay 25 percent on taxable income or two percent on sales.

Local media has reported that many investors have preferred to pay two percent on sales, which allows them to reduce taxes up to 50 percent.

Projects booming

Despite the economic downturn in 2008, the real estate market remains very attractive to investors, especially in Hanoi and HCM City.

Real estate investors launched a lot of big projects in 2009, including Nam An KHanh, Bac An Khanh, Ecopark and Diamon Park in Hanoi, and Blooming Park, The Vista, Riverside in HCM City.

Old flats selling like hot cakes

The year 2009 witnessed a “fever attack” on old flats in advantageous positions like Giang Vo, Thanh Cong and Thai Ha areas, with the prices increasing by 2-3 billion dong per apartment.

People rush to purchase the old flats because they hear that the city’s authorities will upgrade old flats or build new apartments and the owners of the old flats will have priority to purchase them.

Donors say it is time for Vietnam to implement a detailed strategy for infrastructure development instead of just making promises

At the Vietnam Business Forum (VBF) 2009, an annual event that took place before the donors’ meeting in Hanoi last week, Thomas Siebert, chairman of the American Chamber of Commerce (AmCham), suggested on behalf of the U.S. business community that Vietnam should improve its infrastructure.

According to him, the lack of high-quality infrastructure and logistical services is both a pressing concern and an impediment, especially to potential American investors. Indeed, this important issue has been brought up in every meeting between AmCham and the Vietnamese authorities since May 2006.

Siebert added that due to this problem, foreign projects in such sectors as export and industrial production are under threat. The participation of the private sector in financing, establishing and managing infrastructure is necessary, especially in power generation and deepwater port construction.

Various problems were mentioned at the forum, including inadequate infrastructure and the delay in constructing bridges, inter-provincial roads and overland infrastructure. The Japan Bank for International Cooperation (JBIC) provided Japanese enterprises’ assessment of Vietnam’s business environment. JBIC expressed five main concerns about Vietnam in 2009. Like in 2008, poor infrastructure was considered the most pressing problem in 2009. This year, 33.8% of the respondents considered this the greatest obstacle hampering their business, as compared with 43.1% in 2008. Noriyasu Yuge, representative of JBIC, said that 80% of Japanese companies considered roads as the first factor that needs improvement, followed by power supply (60%) and ports (40%).
In an interview with the Saigon Times, Simon Andrews, regional director of the International Finance Corporation (IFC), which joined forces with the World Bank and the Ministry of Planning and Investment to host VBF 2009, emphasized that Vietnam’s ranking (93/183) in the report on business environment in 2010, compiled by IFC and the World Bank, indicates the need for more action in this respect.

Meanwhile, Tony Foster, who oversees the VBF’s subcommittee on power and energy, highlighted the importance of public private partnerships (PPPs) in developing infrastructure in Vietnam. He said that inefficacious public projects such as those involving the HCM City-Long Thanh-Dau Giay Expressway, the expansion of National Highway 51 and the 68-km Bien Hoa-Vung Tau Expressway connecting big industrial parks in Dong Nai with Cai Mep-Thi Vai Port have spelled trouble for the development of private seaports. According to him, these problems mean that it may take up to four years to complete the construction of Lach Huyen Port and the related overland infrastructure.

Deputy Minister of Transport Nguyen Hong Truong estimated that Vietnam would need a staggering US$120 billion over the next 10 years to improve infrastructure nationwide. Foster proposed that the Government should encourage the private sector to participate in infrastructure development through public-private partnerships (PPP). However, he said this model will succeed only if the policy is clear, the market for PPP is competitive and reasonably priced, and the legal framework is well-developed, with the vague regulations currently governing build-operate-transfer projects phased out. Foster warned that without appropriate institutions, PPP would not thrive.
He told the Saigon Times that the Government should flesh out a detailed, coherent and long-term strategy for infrastructure development, instead of making vague promises.

The Ministry of Construction has issued a circular mandating new policies for villas in urban areas. The regulations aim to preserve villas with high architectural and historical value from being torn down or refurbished without approval.

According to the circular, villas will be classified into three separate groups. Those in Group I will have received recognition of their cultural and architectural significance by authorized agencies including provincial level People’s Committees.

Villas in Group II will have been recognized by authorities for their architectural value but not possess cultural significance.

All others will be considered Group III villas possessing a garden, private entrance and no more than three stories. In addition, the square footage may not exceed 50 percent of the total land area the villa is built on.

When renovating or repairing Group I, II villas, the structure may not be torn down completely unless it poses a safety risk. In such cases, the villa must be rebuilt with the original number of stories and at the same height. The integrity of the original structure must be maintained above all else.

In addition, the circular also forbids owners to tear down or repair villas themselves without asking authorities for permission. All work must be carried out by trained professionals.

The circular also makes clear that no poultry or cattle may be bred in villas in particular and urban areas in general, to protect the beauty and environment of neighborhoods.

In addition, businesses operating out of villas are prohibited from causing excessive noise and polluting the environment. Storing many flammable goods or explosives is likewise prohibited in urban areas.

The circular also forbids cutting down ancient trees in villa areas.

According to the circular, provincial level People’s Committees will bear responsibility for issuing regulations related to the management of villas. Anyone caught abusing their power to break rules will be penalized.

The Asian Development Bank (ADB) has approved a 630 million USD multitranche financing facility for Vietnam for further reforms of major State-owned enterprises (SOEs).

The financial assistance aims to make SOEs more efficient, profitable and transparent in a bid to spur economic growth and open up opportunities for the private sector, said the ADB in a press release available to Vietnam News Agency on Dec.14.

The assistance titled Vietnam SOE Reform and Corporate Governance Facilitation Programme demonstrates ADB’s support to the Government’s reform agenda through financial and technical assistance.

ADB’s new programme will also provide training and other assistance to Governmental institutions engaged in the SOE reform process, such as the Debt and Asset Trading Corporation.

Under this financial umbrella, ADB will provide 6 million USD from its ordinary capital resources (OCR) to strengthen the balance sheets of selected corporations through debt restructuring. As much as 30 million USD from its Asian Development Fund (ADF) is used to support operational and corporate governance improvement and institutional strengthening.

ADB’s funds make up almost 36 percent of the estimated 1.77 billion USD cost of SOE reforms until 2015. The remainder is expected to come from the Government’s contributions and internal resources of participating corporations and strategic investors.

In the first stage, ADB will provide13 million USD to support the transformation of the Song Da group.

The Ministry of Finance has been assigned to execute the programme that runs from December 2009 to December 2015.

The Asian Development Bank (ADB) has approved a 630 million USD multitranche financing facility for Vietnam for further reforms of major State-owned enterprises (SOEs).

The financial assistance aims to make SOEs more efficient, profitable and transparent in a bid to spur economic growth and open up opportunities for the private sector, said the ADB in a press release available to Vietnam News Agency on Dec.14.

The assistance titled Vietnam SOE Reform and Corporate Governance Facilitation Programme demonstrates ADB’s support to the Government’s reform agenda through financial and technical assistance.

ADB’s new programme will also provide training and other assistance to Governmental institutions engaged in the SOE reform process, such as the Debt and Asset Trading Corporation.

Under this financial umbrella, ADB will provide 6 million USD from its ordinary capital resources (OCR) to strengthen the balance sheets of selected corporations through debt restructuring. As much as 30 million USD from its Asian Development Fund (ADF) is used to support operational and corporate governance improvement and institutional strengthening.

ADB’s funds make up almost 36 percent of the estimated 1.77 billion USD cost of SOE reforms until 2015. The remainder is expected to come from the Government’s contributions and internal resources of participating corporations and strategic investors.

In the first stage, ADB will provide13 million USD to support the transformation of the Song Da group.

The Ministry of Finance has been assigned to execute the programme that runs from December 2009 to December 2015.

(vietnamplus)

The farther away from the downtown area, the lower the land valuation will be, the capital city administration has said.

Phi Thai Binh, deputy chairman of the People’s Committee, said land valuations would be adjusted closer to the real market value. Land value in some outlying districts will be lowered from a year ago, while it will go up in other parts of the city by up to 40 percent based on improved infrastructure facilities.

According to the Hanoi Department of Natural Resources and Environment, the market value of land in areas near the inner districts or with key traffic systems has surged 20 percent on average this year, and has even doubled in some places.

Land valuations set by local governments every year are mainly used for tax purposes. Property prices in real transactions are always higher than the official valuation.

Last week the government in Ho Chi Minh City said it would keep land valuations in most of the city unchanged next year as it wants to create stable conditions to attract investment.

Only 12 of 2,890 streets in the city will have their land valuations increased in 2010, the administration said, adding these are mostly near the East-West Highway project.

Dong Khoi, Nguyen Hue and Le Loi streets in the city center will remain at the top with the highest land valuation of VND81 million per square meter. Meanwhile, land in outlying Can Gio District will be valued at VND1.2 million per square meter, the lowest rate in the city.

This year land valuations have more than doubled from 2007. The increased values have led to higher land use taxes in Phu My Hung residential area in District 7, causing an ongoing dispute between the property developer and residents over who should pay the taxes.

If passed by the city legislature, the new annual land valuation system will take effect on January 1, 2010. The system will not be used to calculate land compensation for residents displaced by public projects. The real transfer value will be applied in such cases, city officials said.

Hanoi City government has submitted to the city’s People’s Council a land price frame in 2010, seeking to sharply increase prices of land at prime sites against current levels.

The capital city proposed a 20% to 21% increase for almost all inner land sites while land prices in Ha Dong District should be revised up by 10% to 40%. Land prices in Hoang Mai District should be up by 20% and locations with convenient traffic were suggested for a 40% increase, a higher-than-allowed rate.

If the price frame is passed, land at Hang Ngang and Hang Dao streets will be VND81 million per square meter. The lowest rate in the inner city will be VND1.8 million per square meter.

For outlying districts, land prices will range between VND750,000 and VND8.04 million per square meter. Districts with high economic growth

rate and fast urbanization such as Tu Liem and Gia Lam will have land prices at between VND1.2 million and VND21.6 million per square meter.

Explaining the price hikes, the local government said land use right transfer fees have surged strongly this year.

The State has also invested in technical infrastructure for favorable socioeconomic conditions in the locations, so the land prices should be raised to ensure budget income via land taxes.

A Ministry of Construction proposal could make it easier for real estate developers to mobilize capital but, some warn, it could also reduce transparency in Vietnam’s already opaque property markets.

A Ministry of Construction (MOC) proposal now out for public comment would allow real estate developers to sell twenty percent of the units they develop directly to investors, according to a report in Dan Tri online newspaper.  Presently all unit sales must be made through posting on ‘real estate trading floors,’ or exchanges.

MOC explains that the regulation, if approved, will create more favourable conditions for real estate developers seeking to mobilize capital for the projects. They can use the twenty percent share of a project’s units to compensate strategic partners or serve their business relationships.

However, experts say that the proposal would contravene the Government’s Decree 88 on granting certificates of land use rights and house ownership.  The decree  stipulates that all real estate products in projects built by development companies must be bought and sold on real estate trading floors. Decree 88 aims to ensure the transparency of the real estate market.

Matthew Kozira, a senior executive at VinaCapital, said that if the proposal is approved, investors will sell their units to insiders and the units will later be sold  to other people at much higher prices.

Vietnam has put a lot of time and effort into building a more transparent market, Kozira said.  In his view, the keys to market transparency are a clear legal basis for real estate transactions and the requirement that units be publically traded.

MOC has not made any official response to concerns raised about diminished transparency.  A ministry official said, however, that something must be done to  help enterprises to mobilize capital in the early stage of real estate projects. Real estate developers need much medium and long term capital, he explained, but the very strict provisions of current laws obstruct that.

For example, under current law, real estate investors can only mobilize capital for projects after they complete the construction of a buildings’ foundation, but that step alone alone accounts for nearly one third of a project’s total cost.

The requirement that all transactions must be carried out on real estate trading floors is also problematic, the official said.  “The effect of the current regulations is that real estate developers are forced to dodge the laws to mobilize capital.”

“Instead of forcing them to dodge the laws,” the official contended, “we should apply a flexible policy.  Done right, real estate developers will strictly respect the laws, while the real estate market will see transparency improve when eighty percent of transactions actually go through trading floors.”

Not surprisingly, the proposal by MOC has been applauded by nearly all real estate investors.  Developers are saying  that people should not expect to see a perfectly transparent real estate market overnight; in fact the market needs some more time to improve itself to become perfect.

The MOC proposal ought to be welcomed not just by individual investors but also by the investment managers of state companies and foreign funds, say developers.  They stress that as long as investment capital remains limited, no legal framework will be trouble-free and the trading floors will remain unprofessional.

VietNamNet/Dan Tri

Developing a sustainable city will require the implementation of many measures, including the development

of eco-parks, eco-resorts and eco-townships, according to a Construction Ministry official.

Speaking at the seminar held yesterday in HCM City, Ngo Trung Hai, head of the Ministry’s Institute for Urban and Rural Zoning, said the city must ensure the logical use of natural resources and minimise the negative impact on the environment.

All communities must participate in the effort, he said, adding that the city should maintain and preserve its historic cultural values as well.

Hai said damaged natural areas must be protected and restored, and nurseries and small botanical gardens should be developed throughout the city.

Huynh Tan Phong, deputy director of the Investment and Trade Promotion Centre, said investing in infrastructure and building a good transport system was required to build a sustainable city.

Phong said Viet Nam had been developing its transport system step by step. In HCM City, the Phu My Bridge linking districts 2, 7 and the Thu Thiem tunnel had improved traffic flow.

Phong also called for investment in infrastructure projects

for Thu Thiem New Urban Area, which will have a total area of 900ha and 200,000 residents and the 6,000ha Cu Chi Northwest New Township.

The seminar was organ-ised by the Ministry of Construction in collaboration

with Messe Muenchen International Asia Pte Ltd.

Meanwhile, talks on climate change and responses in Viet Nam were organised by the United Nations in Ha Noi yesterday.

“Climate change requires the scaling up of good development practices and ambitions,” said UNDP Senior Advisor Koos Neefjes.

According to the UN report, “Viet Nam and climate change: A report on policies for sustainable human development”, the potential effects include increased temperature that will put pressure on resources and communities.

Spatial planning

Neefijes highlighted the importance of spatial planning in rural and urban centres and an integrated master plan for climate change adaptation and low-carbon development.

Truong Manh Tien, director of the Ministry of Natural Resources and Environment’s Poverty Environment Project, said: “Different livelihoods in the same region can experience contrasting effects of climatic shock and stress. Consequently, there is a need to avoid a one-size-fits-all approach to adaptation, and design and implement flexible strategies.”

According to Nguyen Thanh Ha from OXFAM Hong Kong, failing to address climate change and social development is likely to increase social and economic inequality between men and women and among other sectors of society. Therefore, it was important to turn climate change actions into opportunities for the empowerment of women and the enhancement of gender equality.

Climate change action could become an opportunity to achieve sustainable human development goals, said Koo Neefijes.

The Vietnam Business Forum (VBF) 2009 took place in Hanoi on Tuesday ahead of today’s year-end Consultative Group (CG) Meeting for Vietnam. The Saigon Times Daily spoke with Simon Andrews, Regional Manager of International Finance Corporation (IFC) for Vietnam, Cambodia, Laos and Thailand, co-organizer of the VBF, about the highlights of the forum. Excerpts:The Saigon Times Daily: What is your perception of the current macroeconomic challenges that Vietnam is coping with?

- Simon Andrews: This is a very important time for Vietnam and great opportunities lie ahead for the country. Vietnam’s Government has been widely acknowledged by the business and investment communities for its decisive and effective economic stimulus measures which are yielding positive and stabilizing results. The global economy is showing signs of recovery and no doubt there will be some bumps ahead as we climb out of the recession, but East Asia is leading the way and I believe Vietnam is well-placed for growth and recovery.

What do you see as Vietnam’s main strengths and weaknesses going forward?

- The financial crisis and the ensuing economic slowdown have been a game-change for economies that have been dependent on export markets for growth. Export-led growth has been the driving force behind many Asian economies, but after 20 years, that source of growth is beginning to look vulnerable and the economies of East Asia will have to look to other sources of growth. Vietnam’s low cost and productive labor force give Vietnam continuing competitive advantage in exports, which is likely to persist for at least the medium term. Vietnam is also at the geographic center of the world’s most dynamic region.

While Vietnam’s prospects are good, there are some challenges that need to be addressed. First among them is Vietnam’s infrastructure bottleneck. VBF’s Business Sentiment Survey identified infrastructure as the leading concern for foreign investors looking at investment in Vietnam. There are many models for financing infrastructure, but what is clear is the role for the private sector in developing and financing infrastructure projects. To continue to bring the private sector into infrastructure requires policy clarity and regulatory certainty, as well as a coordinated approach to structuring infrastructure projects to ensure they meet the country’s needs and are well-integrated into Vietnam’s infrastructure platform.

How about the “red tape” problem that remains a deep concern among international and local enterprises?

- After infrastructure, administrative procedures remain a leading concern for business in Vietnam. For many companies, the complexity of administrative procedures and the sometimes uncoordinated and inconsistent implementation of laws and regulations between different authorities can present a serious hindrance to running a successful business. More comprehensive administrative reforms are critical. We strongly welcome and support the Government’s Administration Reform Project – Project 30, and we acknowledge the Prime Minister’s commitment to reduce Vietnam’s administrative burden through Project 30. IFC is working with Project 30’s Advisory Council and its Special Task Force to support reforms of administrative procedures. Within the framework of Project 30, we have also launched a project reviewing business licensing processes that we believe will reduce associated costs and time by 20%. We are confident of the success of Project 30 and that these reforms will streamline development, enhance the country’s reputation as a favorable place for doing business, and consequently raise the level of FDI.

What can IFC do to help the Government and business communities realize a healthy business environment?

- The VBF, which IFC co-chairs with the Ministry of Planning and Investment and the World Bank, has become an important vehicle for policy dialogue between the government and business community. Participation by the highest national authorities in VBF allows the business community to convey its views and concerns in an effective manner and discuss changes in a constructive framework. Regular meetings of VBF help define policy priorities for business development and encourage further investment in Vietnam. One of the most important contributions we can make is to put our money where our advice is and invest in Vietnam’s future. We are a long term investor and committed to our clients throughout business cycles. Last year as the global crisis hit full swing and investors began exiting emerging markets, we doubled our investments in Vietnam and provided much needed liquidity to Vietnam’s export sector. Looking forward, I hope we will be able to continue to play a unique role in providing long term capital and advice to Vietnam’s businesses and engage private sector resources to further develop Vietnam’s infrastructure.(Saigon Times)