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)

The Ministry of Natural Resources and Environment announced new regulations yesterday on land usage, land price determination, revoking of land use rights , compensation and support for resettlement. These regulations, stated in the Government’s Decree No 69/2009/ND-CP, will come into effect as of October 1 this year.

Under the decree, for the first time, provincial people’s committees will be allowed to set aside between 30-50 per cent of State collections from land usage and land leasing to establish land development funds.

These funds will be used to supply capital for projects such as building houses for resettlement, land clearance serving socio-economic development, giving compensation to displaced people and to organise vocational training courses.

Each farmer, from whom the State takes back 30 to 70 per cent of their land, will be given financial support equivalent to 30kg rice per month.

The duration of the support depends on whether they have to move to another place to live or not.

Household businesses or companies, who must stop operations because of losing land to the Government, will receive an amount of money equivalent to a maximum 30 per cent of their average after-tax income for the prior three years.

In some specific cases, households and individuals doing agricultural production will be given an amount of money equivalent to 1.5 – 5 times the price of the lot of land lost, and those of working age will be admitted to vocational training courses for free. (MONRE)

Small changes in new laws effective August 1 will make obtaining house and land titles a shorter and simpler process, according to an official.

Basically, the procedure will follow the same steps as before but with simpler paperwork, Phung Van Nghe, head of the Ministry of Natural Resources and Environment’s Land Management General Department, told Thanh Nien Thursday.

Nghe said that by merging certain parts of the process, the whole procedure would now take 50 days at most, instead of 55 days as before.

According to the amendments of both laws, residents will be granted one title for both their land and house.

Guidance for the implementation of the amended laws will come later in August, Nghe said, adding that it wouldn’t affect much as there’s little new about the procedures.

While waiting for the guidance, he said officials can still receive and review applications from residents.

He said the instructions would be issued together with the new title forms, which legitimate land and house owners could then receive right away.

Organizations, foreigners or overseas Vietnamese investing in land and houses would still submit their applications at provincial land registration offices. Vietnamese individuals must apply for titles at their district Department of Natural Resources and Environment or their commune People’s Committees.

An Nguyen

Vietnam should have stuck with the old land title system

Vietnam is going back 15 years by reverting to a single house and land ownership title.

It was good policy made in 1994 that we are reverting to… Mainly because it was simple, but what is sad is how much drama was caused after it was changed in 2006 – until the officials realized the need to go back.

The new policy is included in changes made to laws concerning infrastructure construction that will take effect today.

It is expected to benefit many people, especially those in Ho Chi Minh City, the country’s largest urban center.

Since October 2006, people have been required to have two different ownership titles, known as so do (red book) and giay hong (pink paper), respectively for their land and the building on that land.

The 2006 change in the law to the “two papers for two rights” practice created a major burden to real estate transactions and triggered many conflicts between residents.

Before the 2006 change there had been a single title decree since 1994 that had allowed people to use one paper to indicate the ownership of both their land and house.

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said the policy under the single title decree “had established a consistent real estate registration system.”

That policy was maintained for 12 years, but during that time there had been a troublesome change of the form of the documents from “pink paper” to “red book” in 2004. Little things like name and format change in Vietnam can be a real drama.

So now we are going back to the original system that was decreed in 1994 and people are going to have a new paperwork headache to make the transition.

In fact, both residents and the governments will face troubles as there will be debates concerning different kinds of titles corresponding to different points of time.

When visiting state offices to confirm their land or house use titles, many residents do not hesitate to show that they are sick of these changes to the title system.

Also, the existence of different kinds of titles muddies the real estate market picture and hinders transactions. (MONRE)

“Taxes should be imposed on transactions made by real estate enterprises and brokers”, says Nguyen Duc Kien, a permanent member of the National Assembly’s Economic Committee.

There has been a sharp rise of about 15 to 30% in land prices in Hanoi over the past few months. Nam Cuong Real Estate Company said that they have decided to increase the prices of land for villas and houses in Duong Noi residential project by 20%.

The price of apartments has also significantly surged, especially those in the centre with better infrastructure and living conditions. The growth has led to a spike in land prices in residential projects.

Nguyen Duc Kien, a permanent member of the National Assembly’s Economic Committee, granted VOVNews an interview on the problem.

What, in your opinion, are the reasons for the increase in land prices?

There are two reasons for the rise. Firstly, the government’s stimulus packagefor the real estate businesses has had positive effects on the market. Secondly, there is a growing demand.

Are there any other reasons?

Another secondary reason is the increase in the prices of petroleum, building materials and food. In fact, the state cannot control the demand for house ownership because the brokers have cornered the market. Many people want to invest in land and houses through brokers and real estate agencies to make profit. This can result in a rise in the price of land. In addition, some investors take advantage of the stimulus packages allocated to real estate enterprises to up their prices.

The government’s stimulus packages for real estate enterprises have shown positive results.However, there is still a contradiction between the price of land and houses and the government’s social security policy. What is your opinion about this?

That’s the truth. Real estate prices are still conflict with the government’s social security policy on low-income housing. So, we need to know if speculation or a rise in the price of construction materials is the reason.

How do you think the state should control speculation?

Taxes should be imposed on transactions made by real estate enterprises and brokers. Also, people who intend to buy land and houses through brokers should get to know their rights as well as the agencies’ responsibilities. For example, some customers, who do not fully understand the law, demand car parking only after buying houses. The Manor in Hanoi is a case in point.

Authorities can also better monitor the implementation of taxes and transaction procedures, as well as control land prices for house purchasing contracts. (VOV)

Vietnam’s property market is showing signs of recovery with quality investors now entering the market as opposed to speculators…

Improved lending conditions are one of the main reasons that people are beginning to put money back into property, according to Peter Ryder, Chief Executive Officer and founding partner of Indochina Capital.

‘People are beginning to spend and it isn’t speculative fervour. We’re seeing much more end users, true investor types buying into our properties which are a good sign of recovery in Vietnam,’ he explained.

Prices are also encouraging investors. Prime properties in Saigon and peripheral areas have dropped by up to 50 per cent.

The revived interest is also encouraging developers with stalled projects to start them again as well as launching new projects.

Work on one of the largest trade centres in the country is to begin next month. The £15 billion project in Hanoi will include retail, hypermarkets, a cinema and restaurants.

Three other key projects in have also been announced. The Babylon Residence in Thu Duc district of Ho Chi Minh City will provide 624 units including 34 four-storey detached houses with garden and 590 apartments.

The Morning Plaza in the city’s Binh Thanh district an 18-storey building with 203 high-class apartments. Sun View Apartment, also in Thu Duc district has two 15-storey blocks with 448 apartments.

Work on the £1 billion Starbay Resort on Phu Quoc Island is also scheduled to start soon and announcements on other delayed or stalled projects are in the pipeline. Phu Quoc Island, nearly an hour’s flying from HCMC, has a coastline of some 150 kilometers and is regarded as an important part of the future of property development in Vietnam.

In late 2005, the then Prime Minister Phan Van Khai approved an overall scheme to develop Phu Quoc Island into a tourist paradise able to attract 500,000 to 600,000 tourists in 2010 and two to three million guests a year by 2020.

Condo developers are also starting to sell apartments again. ‘The recent stock market rallies have given a lifeline to the dormant property market as winning stock investors have turned to real estate as a safe-haven as was seen in 2007,’ explained analyst Cho Li Wang.

(propertywire)

Concerned residents have delivered a petition to four Asian governments, calling for a halt to hydroelectricity projects along the Mekong River.

The “Save the Mekong” petition, containing 16,000 signatures from residents of the six nations the Mekong River flows through, was hand-delivered to Thailand’s Prime Minister Abhisit Vejjajiva in Bangkok on Thursday and sent to the leaders of Cambodia, Laos and Vietnam.

Most of the petitioners are from fishing and farming families who live along the Mekong and its tributaries, as well as monks, students, city-folk and even some of the region’s well-known celebrities.

Another 5,000 people around the world joined the “Save the Mekong” campaign by signing postcards and an online petition.

The petition, in seven languages, states that 16 existing and planned dams along the Mekong River will impede fish migration and upset the rivers’ ecosystem.

The petition calls on governments to seek more environmentally-friendly power sources.

The Mekong, the world’s 10^th longest river, provides food and an income for millions of people who live along the waterway and its tributaries.

It is estimated dams will reduce the commercial fishing catch from the river by 70 percent. The river is estimated to generate a total income of US$3 billion a year for those involved in the fishery industry.

For years, civil society groups in the Mekong region and around the world have been sounding the alarm about plans to build 11 hydro dams on the Lower Mekong River in Thailand and Laos.

The construction of dams in China along the Upper Mekong, known as Lancang, has already caused serious environmental problems, with fish stocks declining, riverbanks eroding and water levels fluctuating downstream in Myanmar, Thailand and Laos.

The “Save the Mekong” coalition and those who signed the petition also raised concerns about the environmental impacts of the Ban Koum and Pak Chom dams on the Thai-Laos border.

Experience around the world demonstrated there is no way to mitigate the damage to fisheries caused by such large dams, said Premrudee Daoroung, co-director of the Towards Ecological Recovery and Regional Alliance project, run by the Bangkok-based non-profit Foundation for Ecological Recovery.

Premrudee said the consequences of the dams were already being seen in northern Thailand and Laos, with reduced water flows and eroded river banks.(Tuoitre)

HANOI- Vietnamese policymakers should not be much concerned about mergers and acquisitions (M&A) which are just part of corporate life, legal experts said.

“The emergence of M&A has raised the question if it leads to take-over of local companies or monopoly,” said Pham Manh Dung, general director of the Department of Legislation under the Ministry of Planning and Investment (MPI).

Speaking at on Thursday’s M&A Vietnam 2009 conference, Dung assured local lawmakers that so far, M&A in Vietnam had been done for the sake of healthy growth. “The government should look at M&A as a normal sign of progress.”

In recent years, with the enactment of a body of laws to better govern enterprises and investments, M&A had gathered force here.

Most cases have taken place in the financial sector, which is still in its nascent stage of development and thus has enormous growth potential for investors.

Foreign financial companies have resorted to M&A of local ones as a way to enter the market which is yet to be fully open to them.

According to Pricewaterhouse-Coopers, the number of M&A cases jumped from 18 in 2005 with a total value of US$61 million to 93 cases in 2007, valued at over US$1.7 billion.

The economic crisis caused a decline in 2008, but the figures were still high with 38 cases worth US$346 million.
Major deals included Daiichi buying 100% of life insurance company Bao Minh CMG, AZN acquiring stakes of Sacombank and securities firm SSI, HSBC investing in Techcombank, and Dragon Capital in Vinamilk.

But critics say the legal framework has yet to address the complexities of these activities, and still poses many barriers to foreign investors.

“To put it bluntly, the biggest concern for foreign investors is that they aren’t allowed to buy as much as they want to,” said Dominic Scriven, managing director of Dragon Capital.

Under Vietnamese laws, foreigners cannot own more than 30 % of a Vietnamese bank, or 49 % of a non-bank public company. The laws do not set a limit on foreign ownership of non-public companies in most cases.

But Tran Anh Duc, head of law firm Vilaf Hong Duc, said that in practice, a transfer of 99% of non-public companies might be questioned by authorities, and a transfer of 100% of these companies was still subjected to complicated approval procedures.

Duc said onerous procedures were actually a great concern for foreign investors. M&A registration that was processed in weeks elsewhere could take months here in the country.

In a survey presented at the conference by Grant Thornton, cumbersome processes and red tape outdid the legal system as the number one hurdle to investments in Vietnam.

Lower on the list were infrastructure, corruption and currency controls. (SaiGon Times)

Wednesday, 10 June 2009

Foreign investors in Vietnam need residence certificate

Foreign property investors who will be able to buy real estate in Vietnam from August will need a temporary or permanent residence certificate, according to new details released by officials.

They will also need to have a valid passport and there is a list of other documents depending on the position of the investor. For example, professionals working in the country should have a work permit and those with special skills have training or education certificates.

Those making direct investments in Vietnam should have an investment license with their name that is valid for one year or more, or documentation showing they are members of the board of directors of the company operating in the country.

Those granted diplomatic immunity are excluded from the decree and foreigners married to a Vietnamese citizen should have the marriage certificate and passport/identity papers of the spouse in Vietnam.

The decree covering foreign real estate purchase also states that foreign enterprises working in Vietnam with an investment certificate valid for at least one year will also come under the new rules.

Eligible individuals and organizations have to submit applications to the provincial Department of Construction which will be forwarded to the People’s Committee for approval.

The maximum processing period for each application is 30 days, according to the decree, which also stipulates that a foreigner can only buy one house in Vietnam.

Meanwhile officials are also drawing up changes on planning for golf courses projects. There is concern about an explosion in applications. Some 144 golf course projects have been licensed and it is estimated that 76 are currently under construction.

‘Project licensing on the local level is spontaneous and neither transparent nor subject to critique from scientists and the public,’ said Dr Nguyen Hong Thuc from the Institute of Resettlement Studies. (PropertyWire)