Vietnam - Real estate firms want recovery plan

Real estate firms based in HCM City want the municipal administration to ensure that annual interest rates on loans taken by them are immediately reduced to between 14 and 16 per cent and later to between 11 and 12 percent per annum.

The reduced borrowing rates are part of 12 measures suggested by the HCM City Real Estate Association (HoREA) in a plan that has been submitted to the municipal People's Committee and the Department of Construction for approval.

The measures are expected to help real estate developers deal at least partly with their current difficulties, survive and develop at a time of prolonged economic turndown.

The association proposes that local developers should not only be able to access loans at reasonable interest rates, but also have their loans rescheduled and restructured.

It suggests the Government, the Ministry of Finance and the General Taxation Department should reduce corporate income tax to 18 and 20 per cent per year from the current 25 per cent, and to defer payment of the tax to the end of 2013.

The plan also calls for the Finance Ministry and the tax office to make immediate adjustments to current regulations on the collection of land use fees, including Decrees 69 and 120.

The decrees require real estate developers to compensate for land at market prices and pay land use fees on top of it. This makes property prices very high and puts it beyond the financial capacity of many people, the association has said.

The association also proposed the Ministry of Construction soon submit to the Government a scheme to set up a housing fund using contributions from State employees.

Other proposals made by the association target current regulations believed to be barriers for the development of local real estate enterprises in particular and the local real estate market in general.

According to HoREA, most of real estate enterprises are facing many difficulties including a lack of capital, inability to access bank loans, high lending interest rate (24 or 25 per cent per annum), large inventory and a stagnant market. It said the situation had impacted other industries including banks, cement, steel and indoor decoration.

VNA

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