Experts
assessed that the real estate market was making banks and the whole economy
become hostages who have to suffer consequence of lack of transparency and
speculation, the Vietnam Economic Forum reported, citing Dr Pham Chi Dung’s
writing.
Now, both the property market and the whole
market have to suffer consequences due to previous speculation. As a result,
the economy is going on flat instead of expected booming.
Super
profit thanks to speculation
One question was raised how is the period of
20 years meaningful for development? After the certain extent of development,
according to the law of economic moving, the economy will go down. So whether
is Vietnam like US who had a continuous 20-year GDP growth and then fell in the
period of compulsorily adjusting down economic targets.
Actually Vietnam’s GDP did not have a stable
growth pace as US, or overheat as China’s. Being as the developing Asian
country, maintaining GDP growth rate through years without coping with super
inflation was a big luck for Vietnam whose management level remained weak.
Operation efficiency of most markets in
Vietnam seemed to be “okay” in the last 15 years. “Okay” here means profits.
Concerning the efficiency criteria of developed economies, most markets in
Vietnam surpassed US and Europe in terms of profitability [due to a big gap
created by lack of transparency].
The surprising thing for foreigners was that
in a market like Vietnam with the lack of information and weakness of
management, people were able to earn money easily.
Indeed, the real estate market is seen as a
focus of lack of transparency in the Vietnamese economy. “Whispering business
culture” or similar things pulled the market down to the closer bottom among
the world list of 15 Asia-Pacific countries as well as among 56 nations
selected to be rated in terms of transparency of the real estate market.
Less transparent realty market created good
environment for speculators to earn super profits.
Loss
decade?
2008 was seen as the first phase of “loss
decade” of Vietnam’s realty market particularly. During the period of 2009 to
2010, Vietnam’s public debts exceeded 50% of GDP along with standstill in
production in many sections, massive bankruptcy of at least 10% of enterprise
number and unofficial unemployment on increase…
20 years might be enough for a growth period
and this time Vietnam’s real estate market is forced to suffer consequences
because less of transparency.
Earlier, Economist Le Dang Doanh said that
since 1991, the country has not seen the worst economic and social situation
like now. Otherwise, an economic recession is coming back to Vietnam, starting
from property market.
International Monetary Fund (IMF) raised an
alarm that US could fall in a loss decade like Japan facing the similar case in
1980s. In Vietnam, we should be more cautious as thinking of an expected “loss
decade”. If not, the loss decade will be effective for Vietnam case.
Economy facing consequences
An article quoted an expert that the
speculation of property market is pushing banks and the whole economy to become
hostages.
Apparently, after the stock market, the huge
volume of assets of property companies are risky as the dangerous lava hidden
in a volcano that could explode to cover the economy and people’s life.
In this period, the realty market has to pay
high prices for previously massive speculation because price floor is not
matched to people’s average income.
VietBiz24
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