A 500 trillion dong ($20.1 billion) package
is under consideration to be partially used to revive the Vietnamese real
estate sector, according to a recent conference.
It
includes a 120 trillion dong ($5.75 billion) public investment package and a
300 trillion dong ($14.41 billion) package of bank and official development
assistance loans, according to the conference held to explore the revival of
the real estate market held in Ho Chi Minh City by the Real Estate Association
of Vietnam and Lao Dong newspaper.
Vice
Minister of Construction Nguyen Tran Nam told the conference that the
government is stepping up public investment disbursements including the 12
trillion dong package, 3 trillion dong from government bonds, and 17 trillion
dong from other investment instruments.
As
planned in 2012, credit growth of about 15-16 percent is needed, but up to this
point the rate has been negative.
This
means that in the remaining 7 months, the rate has to increase by 2-3 percent
on average, or around 300 trillion dong in total, in addition to ODA funding,
and other investment channels.
"The
cash flow will certainly stimulate economic growth, having a positive impact on
many industries, including real estate," Nam said.
Nam
also said that the people's money will flow into real estate when interest
rates start cooling down, while the remaining investment channels have began
losing their appeal.
Banks
with surplus capital will offer more loans, creating a stepping stone to
support the real estate market. BIDV has launched a 4 trillion dong package of
real estate loans within 2 years. ACB and several other banks are also expected
to offer such packages.
Sharing
Nam’s view, Le Xuan Nghia, former deputy chairman of the National Financial
Supervision Commission (NFSC), believes that the disbursement will promote a
positive impact on the economy, including real estate.
The
overdose of anti-inflation policies has led to GDP decline, as the economy has
shown many signs of deflation with rising inventories.
Therefore,
promoting public investment expenditure in accordance with the approved plan of
2012 is necessary to restore the growth of the economy.
This could
gradually pull the real estate market back on track, though at a slower rate,
by the end of the year.
"I
have never seen so much attention paid to the real estate sector, as the
government is working on a program to find solutions to revive the industry.”
“The
government has begun to mark it as the platform for the whole economy, since if
it wobbles, the economy will likely face a certain death "Nghia said.
Vice
Minister of Construction Nguyen Tran Nam also told the conference that the
ministry will submit two proposals for the establishment of two housing funds
to the government next week.
They
include a fund subsidized by the state budget for the poor to buy houses, and a
fund for middle and higher income earners to save their own money to buy
houses.
Also,
the ministry has shifted the focus to rental housing development, with the
support of the state budget, as demand for the segment is huge.
Currently,
housing firms are not keen on the segment because no mechanism of state support
exists and there is no legal guarantee for persons with rental properties.
The
Ministry of Construction is also continuing to recommend that the purchase of
social housing be 100 percent free of value added tax (VAT), and a 5 percent
VAT slapped on commercial houses with area and pricing less than 90 m2 and 20
million dong per m2 with bank lending support.
Le
Hoang Chau, president of the Ho Chi Minh City Real Estate Association, said the
government needs to consider real estate as an important component of the
economy.
The
government should not let the real estate businesses stand aside while the
business groups enjoying preferential interest rates.
Resolution
No.13 should be amended so tax breaks will also be applied for the real estate
business.
The
most urgent need is to fix Decree No.69 on the collection of land use fees
worth 100 percent of the market price, he said.
According
to Mr. Chau, real estate inventory is very large, impacting industries such as
cement, iron, steel, building materials, and furniture. With more than 90
percent of real estate business suffering losses in 2012, the government should
take action as fast as possible, before it's too late," he said.
Worries on side effects raised
While
experts believe the government's cash flow, worth hundreds of trillions, pumped
into the market will revive real estate by the end of 2012, many businesses
fear the opposite.
The
housing market experienced three years of crisis, and many economic experts
said it cannot be saved in a such a hurried manner.
Dr.
Pham Do Chi, Deputy Director of VinaCapital Investment Fund, said that the
expectation that the real estate market will prosper again in the coming months
is too optimistic.
Real
estate markets in more developed countries, such as America and Japan, and even
the those on the same level of development, like Thailand, take decades to
recover from crisis, and having still not yet fully recovered.
"Old
lessons about the real estate of our countries do not need to be relearned
here. Measures to save the housing market need to be studied more
carefully," said Chi.
General
Director of Vietnam Trust Company, Nguyen Lam Son, said the funding should only
be channeled to home buyers, as too much support for businesses can lead to
market distortions.
This
expert said the government should develop new valuation mechanisms for a new
period as the housing market has declined so strongly, and building capacity
index of homebuyer credit, such as a policy to offer interest rate subsidies
for first-time home buyers.
"Corporate
tax incentives can only be viewed as temporary, while long term incentives for
new home buyers are the keys," he said.
Tuoi
Tre
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