VietNamNet
Bridge – The frozen real estate market
have forced real estate firms to jump into other business fields, where they
hope they can earn money to survive and wait for the market to warm up.
The
shareholders’ meeting of Thai Binh Duong Real Estate and Infrastructure Development
Company (PPI) has approved the plan of the board of management to make
investments in some new business fields.
The
name of the enterprise shows that it has two main business fields –
infrastructure development and real estate trade. However, in the time to come,
the name PPI would be also heard in the forestry, agriculture and seafood
sectors as well.
Explaining
the decision on starting business in new fields, the board of directors of the
company said the company is facing too many difficulties with its core business
field.
While
real estate projects always need huge capital, commercial banks have tightened
lending. Meanwhile, finished products have been selling very slowly. The
company also should expect too much from the infrastructure development sector,
since the government has cut down the public investment.
Therefore,
trying new business proves to be the only solution for the company now. Pham
Duc Tan, President of PPI has revealed that PPI would collect cassava, the
product which is being used by China as animal feed. The company would only
sign contracts when it is sure than the cost prices are lower than the sale
prices.
PPI
also considers trading rubber latex and seafood products. Tan said he can see
great opportunities in the two fields, since the hydrological and soil
conditions in Vietnam are very favorable for the business development. Even if
PPI does not carry out production, it, as a real estate developer, has great
opportunities to develop farming areas.
Tan
believes that it can lease land for a long term of 50 years in some areas which
it would turn into aquatic farming ponds with the cost of 200 million dong per
hectare. If PPI re-leases the ponds, it would be able to recover the investment
capital within three years.
A new trend for real estate developers
PPI is
not in the only real estate firm which is considering jumping into other
business fields. The difficulties in the real estate market have forced them to
try everything they can to survive.
The
noteworthy thing is that many real estate firms, which plan to diversify their
business, consider doing business in the forestry, agriculture and seafood
sectors.
The
Phat Dat Real Estate Development Company, for example, decided in late April to
add some new business fields into its business licenses, including the
afforestation and poultry husbandry.
Meanwhile,
NTB, a construction, investment and transportation work company, decided to
pump 500 billion dong into Binh An Seafood Company to produce and trade seafood
products. Especially, the sum of 500 billion dong proves to be beyond NTB’s
capability if considering the company’s Q1 financial report.
Analysts
have said that it is quite normal for enterprises to shift to other business
fields when they meet difficulties with their core business fields. However,
they have warned that risks are always latent for the investors who lack experiences.
In
related news, the government in early May released the Resolution No. 13,
reducing the land leasing fee by 50 percent in 2012 for the economic
institutions in the trade, service sectors.
Meanwhile,
the investors who meet financial difficulties would be able to delay the land
leasing fee payment for 12 months at maximum.
Source:
VnExpress
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