A view of HCM Metropolis’s skyline seen from Thu Thiem Peninsula in Thu Duc metropolis of HCM Metropolis. (Picture: VNS/VNA)HCM Metropolis (VNS/VNA) – Drastic measures are wanted for Ho Chi
Minh Metropolis – the nation’s largest financial hub – to deal with a sequence of issues in a bid to
velocity up restoration, consultants have stated.
The true property market has confronted unprecedented issues with a
giant stock and a pointy drop in liquidity because the center of final yr,
stated Dr Nguyen Van Dinh, Vice Chairman of the Vietnam Actual Property Affiliation.
Residence costs within the metropolis plummeted by 40-50% year-on-year in
the final quarter of 2022, whereas gross sales declined by 30% year-on-year, in accordance
to property providers firm Cushman & Wakefield.
The market has seen an enormous imbalance between provide and demand for
years, with an oversupply within the high-end section however a scarcity of reasonably priced
housing merchandise, in response to Dinh.
Although actual property accounts for under 3.7% of the town’s GRDP, the
sector has natural relationships with many different fields and creates a big
variety of jobs.
As well as, the gradual disbursement of public spending stays a
downside, which has precipitated many key initiatives within the metropolis to be delayed for
years.
Town disbursed solely 4% of public funding within the first
quarter, out of a complete 55.2 trillion VND value of public funding set for
the yr.
Talking at a current assembly, Nguyen Van Nen, Secretary of the
municipal Occasion Committee, stated the town’s financial restoration would face
challenges with stagnant property and bond markets, and declining industrial
manufacturing for the remainder of 2023.
It has put doubtful whether or not the town will obtain its yearly
progress goal.
Town’s GRDP reached 360 trillion VND (15.4 billion USD) within the
first quarter, up 0.7% year-on-year, in response to a report by the town’s
Statistics Workplace.
Its progress was decrease than the nationwide common, rating 56th out
of all 63 cities and provinces throughout the nation, stated the report.
Its whole retail gross sales of products and providers elevated by solely 5%
year-on-year within the first quarter, whereas its exports reached greater than 10
billion USD, a drop of 17% year-by-year, the deepest decline in additional than two
many years.
Nguyen Phuoc Hung, Vice Chairman of the HCM Metropolis Union of Enterprise
Associations (HUBA), stated there was a gradual lower in exports in most
industries, together with clothes, agriculture, forestry, fishery and wooden
processing, and others.
Companies are dealing with an unprecedented yr in exports, he stated.
Garment exports fell 8%, and handicraft and woodwork exports
decreased by about 15%, he added.
He attributed the low exports to a scarcity of export orders from
main world markets, low money flows and an incapability to borrow from banks, he
added.
Stagnant credit score progress
Credit score progress in HCM Metropolis elevated by solely 0.3% within the first
quarter, in response to figures from the central financial institution.
Since final September, deposit rates of interest at banks have
constantly surged to as a lot as 12% per yr, pushing lending rates of interest
as much as 15-16% a yr.
Pham Quang Anh, Director of Dony Garment Firm, stated it was
difficult to entry loans for companies.
Whereas the central financial institution has constantly referred to as on credit score
establishments to chop lending charges to help companies, getting loans
disbursed has remained a burden for them, he stated.
Many companies, particularly SMEs, want funds to deal with money movement points
or to develop progress methods, he added.
A number of companies stated that they’ve been rejected by banks even
although they’ve collateral and a very good credit score rating.
Different companies stated they have been dealing with difficulties in buying new
loans, with banks solely agreeing to lend the quantity that they’ve repaid on
present loans.
Corporations with week finance contingency plans or with out
collateral are discovering it much more troublesome to get loans.
Many corporations have delayed their plans to develop and improve
their expertise due to the money scarcity.
Current HUBA surveys have discovered greater than 40% of companies in HCM Metropolis
stated they’re dealing with challenges as a result of shrinking market, 17.6% resulting from
greater uncooked materials costs, 11.2% resulting from human useful resource shortages and 17.6% due
to a scarcity of capital.
Suggestions
Regardless of its shortcomings, the bond market has room to develop resulting from
excessive capital demand from companies, consultants stated.
In addition they identified, nonetheless, that investor confidence wouldn’t
return until the Authorities addresses all the issues they face and safeguard
their rights.
Consultants advisable the federal government not let the bond market
self-regulate however as an alternative intervene to make it a sustainable channel for
capital mobilisation.
Nguyen Minh Cuong, ADB principal nation economist for Vietnam,
stated Vietnamese monetary markets would come underneath rising strain as bond
repayments due in 2023 are estimated at 10 billion USD, of which practically 43% are
from the true property sector.
He stated Vietnam may study from different governments to assist the
bond and actual property markets get well.
For instance, the Korean authorities has arrange a fund to purchase again
company bond value as much as 11 billion USD, he stated.
HUBA advisable the central financial institution proceed rescheduling medium-
and long-term loans, and produce down financial institution mortgage rates of interest to help
companies.
The Authorities must maintain the VAT charge at 8% for all sectors,
not just some as at current, till the tip of 2024, and guarantee tax refunds to
companies in a well timed method, it stated.
It must roll out insurance policies to advertise the event of the
bond and actual property markets, and velocity up public spending to allow
enterprises to keep up operations and create jobs.
Consultants additionally stated the central Authorities ought to assign larger
autonomy to HCM Metropolis so as to velocity up disbursement of public spending.
They stated it was essential to streamline administrative
procedures, particularly associated to the fee of land use charges, and changes
of land use rights and licences.
They’ve referred to as for actual property builders to diversify housing
merchandise, particularly by rising reasonably priced housing, and addressing the
mismatch between provide and demand.
Talking at a current assembly, PM Pham Minh Chinh stated the
Authorities would give attention to reforms of the bond, actual property and securities
markets.
The Authorities has already arrange three committees to hold out
reforms of liquidity and foreign money, the property market and company bonds.
Credit score might be given to precedence sectors reminiscent of consumption,
funding, exports, industrial property improvement, and social and employee
housing improvement.
HCM Metropolis early this yr lowered its progress goal for this yr
to 7.5-8% in contrast with 9% final yr.
Huynh Phuoc Nghia, a lecturer on the College of Economics of
HCM Metropolis, stated, nonetheless, the yearly progress goal is probably going be too excessive to
attain.
“Amid a world economic system fraught with advanced fluctuations and
instability, we can not anticipate the town’s economic system to get well in 2023,” he famous.
Consultants have warned the scenario could possibly be a lot worse with out
well timed and applicable intervention from the Authorities./.