Builders struggle with increasing prices

Many property enterprises are struggling to survive the increase in building materials, electricity and gasoline prices combining with the government’s tight monetary policy to tame inflation.

Chairman Le Chi Hieu of HCMC-based construction firm Thuduc House said macroeconomic policies were making great impacts to the property market.

“It takes two years or more to finish a property project. Thus, construction firms need medium- and long-term loans. However, the tight monetary policy will raise interest rates, leaving builders struggling to borrow money from banks,” Hieu said.

Efforts to cope with the increasing price and high interest rates have seen most property firms reduce investment, slow down the construction progress and focus solely on projects with high return rates, he noticed.

Construction companies are now speeding up their projects that almost finish.

Sacomreal and Malaysia-based Gamuda Land Ltd. are rushing to finish the construction of internal infrastructures, parks and apartment buildings’ foundation of their new residential zone Ceradon.

The zone with the total investment of VND22 trillion (US$1.1 billion) and the area of 80 hectares in Ho Chi Minh City’s Tan Phu District, is expected to debut by May.

Chairman Dang Hong Anh of Sacomreal said that the project was affected by the increase in building material prices and interest rates.

Therefore, the firm was considering on either keeping the price of $1,000 per square meters unchanged or offering a higher price with more financial solutions for customers, Anh said.

He also expected the total investment of Sacomreal would reach VND2 trillion ($100 million) in spite of the challenges this year.

HCMC-based Binh Chanh Construction Investment JSC determined to keep its price unchanged in spite of the increasing material prices.

General director Nguyen Thuy Nhan said the firm would delay small projects until the end of the year to focus on potential ones. The firm would also corporate with lenders to offer “flexible payment time” to customers, Nhan said.

Experts said only big property firms with large capitalization looked set to weather the difficult times this year, while small companies were hit hard.

Construction of an apartment building of an enterprise identified as D.T. in Tan Phu District has been halted since they struggled to find customers. Many buyers, who paid in advance already, also found themselves struggle to pay more as they hardly borrowed from banks.

HCMC-based construction firm Tai Nguyen Ltd., builder of the Kenton apartment building in Nha Be District, announced to recruit salesmen with the big monthly salary of VND100 million as the sales of the building were pretty slow.

Electrical appliances stores beef up promotional packs

Electrical appliances stores released many promotional packs with big discount in the first two months of the year in an effort to capture more market shares, which are getting much smaller amid debuts of many new stores.

Many electrical appliances stores announced they reduced prices of many items in an effort to sell them out by April 30th. They will be replaced with the same items in new shipments, which will have higher prices due to a stronger US dollar.

The price reduction, however, was just a marketing trick to lure shoppers as the actual value of the items has never been revealed, experts said.

“There is a gap of selling prices of the same item at different stores,” said a director of a HCMC-based electrical appliances store, who wanted to be unnamed.

“For example, furniture and electrical appliances store Cho Lon in District 5 reduced the price of an Acer laptop with the model number of AS4733Z by 11 percent to VND7.99 million (US$399.5).

“Mobile phone distributor Vien Thong A offers the same item with the price of VND8.49 million ($425.5), and computer store Nguyen Kim Chinh Nhan sell at VND8.99 million.”

Almost all items offered at electrical appliances store in the city have two prices – listing price and promotional one – which is lower than the former.

Prices of electrical appliances also surge on the stronger dollar as most of them are imported from abroad.

A Hewlett Packard laptop modeled Pavilion dv3-2000 used to be sold at the price of around VND12.4 million ($620), but now it costs VND14.6 million. With the previous foreign exchange rate, the new price should have been VND13.6 million only.

Many stores announced big promotional packs on the Woman Day on March 3rd, cutting prices of many items. However, many customers complaint that it was not easy to buy items with special prices.

Electrical appliances store De Nhat Phan Khang announced they would offer 100 Nokia mobile phones modeled 1280, 100 Panka DVD players, 100 Blacker juicers modeled 280CN with the special price of VND83,000 for each on the Woman Day.

Only women customers, who are 18 years old or more and have birthday of March 3rd, will be allowed to buy one among those items with the special price.

Le Thi Thu of Binh Thanh District said she missed a discount program at electrical appliances store Tu Trinh in Go Vap District, which was announced just one day before she came to the store.

Shoppers also complaint most of the discount items was fragile and had no insurance. Others disclosed discount items were either error ones or second-handed. A juicer discounted 50 percent to VND243,000 ($12.15) works properly around two months.

An assistant manager of a big store in downtown disclosed no one could supervise the pricing at electrical appliances stores due to the volatile imported price.

Bank deposit interest rate to be checked

Nguyen Van Giau, Governor of the State Bank of Vietnam (SBV) asked all bank directors in provinces and cities to check applications for deposit interest rates at all credit institutions nationwide.

Some commercial banks have currently raised deposit interest rates from 14% to 17-18% per year, pushing interest rates soaring.

Mr. Giau said State Bank has issued a memo asking credit institutions and their branches nationwide to hold the interest rate on Vietnam dong deposits at 14%.

As per the memo, SBV branches in provinces and cities were asked to inspect and supervise credit institutions’ interest rates on dong deposits and take measures against violators.

Citigroup: Vietnam holds world’s highest potential – 3G concept

Citigroup economists have coined a new concept called 3G, or Global Growth Generators. Vietnam tops the 3G list, which is based on the weighted average of six growth drivers namely investment, demographic prospects, health, education, quality of institutions and policies, and trade openness.

Vietnam’s investment rate, expected high growth rate and large population are among factors making the country top of the 11 nations in the list, Citi economists Willem Buiter and Ebrahim Rahbari wrote in their report report dated Feb. 21.

Global financial services firm Citigroup identified the 11 countries which have the most promising growth prospects as, in alphabetical order, Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, the Philippines, Sri Lanka and Vietnam. The economists say the nations have highest growth potential in the 21st century.

The report added that the new concept offers hope for countries ignored by other more traditional lists that focus on emerging markets.

Vietnam scores 0.86 on the 3G index. China is second with 0.81, followed by India’s 0.71, Indonesia’s 0.70, Mongolia’s 0.63, the Philippines’ 0.60, Iraq’s 0.58, Bangladesh’s 0.39, Egypt’s 0.37, Sri Lanka’s 0.33, and Nigeria’s 0.25

“Vietnam’s expected growth rate of real per capita GDP between 2010 and 2050 is 6.4 percent, according to our projections,” the authors wrote. “This growth is expected to come from a very low base – Vietnam starts from the 55th position in our rankings in the real per capita GDP rankings with a 2010 figure of $3,108.”

Vietnam’s population is expected to increase from 89 million in 2010 to 112 million in 2050, according to the report. Its working age population is expected to grow until about 2035, when it is projected to be 17.4 percent larger than in 2010.

Citi said the Southeast Asian country’s investment rate, at 35 percent of GDP during the years 2006-2009, should be high enough to sustain significant growth.

Regarding Vietnam’s weaknesses, the report reads, “Its institutional quality is low and its macroeconomic policies, including its exchange rate management, have been erratic.”

Other weaknesses include sizable external imbalances and a rising level of public debt.

However, the report wrote, “In our view, many of the challenges can be overcome relatively easily. Feasible improvements in institutional quality and in the efficiency of the capital accumulation process should make our projected growth rates achievable.”

Notably, the authors wrote that China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050.

The two Citi economists added, “For poor countries with large young populations, growing fast should be easy: open up, create some form of market economy, invest in human and physical capital, don’t be unlucky and don’t blow it. Catch-up and convergence should do the rest.”

They said developing Asia and Africa will be the fastest growing regions, in their view, driven by population and income per capita growth, followed in terms of growth by the Middle East, Latin America, Central and Eastern Europe, the CIS, and finally the advanced nations of today.

Citi said it sees strong global growth until 2050, with an annual average of 4.6% until 2030 and 3.8% until 2050.

Dong deposit interest rates capped at 14 pct

The State Bank of Vietnam issued a circular on March 3 to set the interest rate cap at 14 percent per annum on dong deposits.

Under the regulation, credit organizations will offer interest rates for dong deposits held by individuals and organizations at no more than 14 percent per year, even on promotions.

People’s credit funds will be allowed to apply for interest rates as high as 14.5 percent.

Credit organizations will be expected to publicize their interest rates when they want to mobilize capital in Vietnamese dong at their transaction points, according to the central bank regulation.

Credit organizations are not allowed to offer promotions in cash, interest rates or under any form not in line with the law and the circular, to attract depositors.

According to the State Bank, the circular is aimed to use interest rate and other monetary tools effectively and flexibly, to curb inflation, stabilize the economy and ensure social welfare.

The circular will also be used as a legal basis for dealing with credit organizations that violate the central bank regulations on capped interest rates in dong deposits.

Cashew exports increase by 55.2% in February

Cashew exports last month rose strongly to 24,000 tonnes, worth a total US$166 million, the Ministry of Agriculture and Rural Development announced yesterday.

The volume was up 16 per cent and the value was up 55.2 per cent compared with February last year, the ministry said.

“The rise in value was attributed to the high price of cashews, more than $7,100 per tonne, the result of a year-on-year increase of 32.1 per cent,” the ministry said.

However, despite the figures the cashew industry is predicted to face challenges this year, including a shortage of raw cashews and high interests rates.

Viet Nam Cashew Association chairman Nguyen Thai Hoc said the shortage was forecast to be 300,000-450,000 tonnes.

Viet Nam is the world’s biggest cashew exporter. Its top customers are the US, China and Holland.

Timber export tops half a billion dollar

Vietnam’s wood and wooden products reached $200 million in export turnover in February, bringing total export in Jan-February to $548 million, said the Ministry of Agriculture and Rural Development.

This is a 17.6 percent year on year increase, the ministry said.

Vietnam’s biggest timber importers were the US, Japan, China and South Korea, all of which accounted for 63.7 percent of the total turnover.

Export to the South Korean market saw the greatest growth, almost tripling last year’s figure.

The US, however, was still the biggest importer with a total turnover of $118 million. EU trailed behind with $90 million. Japan and China came next with $49 million and $32 million respectively.

The Vietnam Timber and Forest Product Association (Viforest) targets a 30 percent or $4 billion in total export this year.

Qatar Airways to connect Vietnam, Canada

This will make Qatar Airways one of the very few foreign carriers to offer services between Vietnam and Canada.

The Qatar flag carrier will pick up passengers in Hanoi and Ho Chi Minh City and fly non-stop from Doha to Quebec’s capital city, Montreal on Wednesdays, Fridays and Sundays.

The new flights, using Boeing 777-200, target business and leisure travelers from the Middle East, Africa, South Asia and the Far East.

Qatar Airways now conducts 11 weekly flights between Doha and Vietnam, including four non-stop flights to HCMC.

There are also four weekly flights to Hanoi and three to HCMC via a stopover in Bangkok.

151 stated-owned companies to be audited

151 enterprises, including the likes of the Electricity of Vietnam Corporation (EVN), will be subjected to government audit, the State Audit Office has said.

At EVN, which has been running huge losses recently, the auditors will focus on input costs, said Vuong Dinh Hue city, the audit office’s director.

The Vietnam Shipbuilding Industry Corporation (Vinashin), which is going through restructuring, will also be audited.

Vuong Dinh Hue said last year’s audit showed state-run enterprises in general were not efficient. Even those that enjoyed profits didn’t really make the most of their available resources.

According to Hue, there were also numerous problems in the way government authorities handled tax collection and government bonds.

Hue said his office had requested a total VND460 billion (US$22 million) in fines for those entities found mismanaging government bonds.

Tax refund posed another aching problem. In many localities, tax authorities simply refunded taxes without inspecting.