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BUSINESS IN BRIEF 23/7   2010-07-23 - VietNamNet/VNA

New decree aims to control shady realty practices



new decree more strictly regulates how developers of housing projects can raise capital and is expected to shine a light on fraudulent practices.


Undercapitalised and less-than-reputable developers have long exploited the practice of selling unfishished units to buyers to cash out of and walk away from projects, leaving the home buyer holding the bag.


The Law on Housing, passed in 2005, tried to end this practice by stipulating that real estate developers must complete construction on the foundations of housing projects before accepting deposits from buyers, explained Deputy Minister of Construction Nguyen Tran Nam .


Some developers, however, have tried to get around even this restriction by selling interests in housing developments to secondary investors. These companies, in turn, have continued to practice of selling unfinished properties to potential home buyers.


The practices had caused losses to consumers and negatively affected the market, said Le Hong Son, an official from the Ministry of Justice.


"Clearer and stricter regulations on the issue will be able to weed out businesses with a shortage of financial capacity," added Nam .


The new Government Decree No 71/2010/ND-CP therefore limits the ability of real estate developers to sell interests in uncompleted projects to secondary investors and, in turn, restricts such investors from selling housing units still under construction to home buyers


The decree, by boosting transparency and options for real estate developers to raise capital for projects, might even assist some developers to make progess on some projects stagnant for years, said Viglacera Land deputy director Nguyen Tri Dung.


For instance, the new decree also promotes the use of real estate trading floors to raise capital for projects already under construction.


Developers are limited in the decree to raising no more than 20 percent of the total project budget from secondary investors – unless they are raising the capital via a trading floor. The decree waives the 20-per-cent limit but requires developers to report on these investments to their municipal construction departments.


Century Real Estate Joint Stock Co deputy director Pham Thanh Hung said this provision would help promote real estate transactions by capital contribution through trading floors.


"The decree has untied the hands of investors by recognising the legality of capital contributions beyond a certain percentage made through trading floors," Hung said.


It also brought investment contracts out in the open, when many had previously been illegal or underhand, he said.


"The decree allows investors to allocate up to 20 percent of the total housing units in a project based on capital contribution contracts," said Nam . "In other words, they can’t sell units to organisations or individuals beyond trading floors."


The decree also stipulates that developers cannot transfer land-use rights in new urban areas if they do not build homes on the land.


"This requires investors to ensure project progress," Nam said.


"Real estate developers will have to jump into a game with new rules. The most beneficiaries would be people with real demands to buy a house," said Nguyen Van Long, director of the Hong Phu Estate Trading Floor.


Former Deputy Minister of Natural Resources and Environment Dang Hung Vo predicted the market would see some stagnancy in the short term due to the stricter regulations but would be more transparent and stable in the long term.


It would take a couple of years for developers to get used to the new business conditions, Vo said.


"When that period is over, the market will be more stable, with higher property values," he said.


Dung Quat ports handle 1 million tonnes of cargo


Deep water seaports at the Dung Quat economic zone in the central province of Quang Ngai have so far this year handled nearly 1 million tonnes of cargo ships.


Of the total, 500 tonnes, including heavy industrial equipment, interior furniture, are exports to Arabian countries, Japan , the US and Denmark .


Dung Quat ports are capable of receiving 20,000-30,000 DWT ships that transports goods to serve the production of factories at the Dung Quat economic zone and the Chu Lai open economic zone in Quang Nam province.


From now till the end of the year, the ports are expected to handle 650,000-700,000 tonnes of cargo, increasing the total amount of goods via the ports to a record 1.6-1.7 million tonnes in 2010.


Vietnam, Laos, Cambodia boost energy cooperation


The signing of an agreement on energy cooperation topped the agenda of the VietnamLaos – Cambodia Energy Ministers’ Meeting that took place on July 22 in the highlands city of Da Lat, Lam Dong province.


Vietnamese Minister of Industry and Trade Vu Huy Hoang, Cambodian Minister of Industry, Mines and Energy Suy Sen and Lao Minister of Energy and Mines Soulivong Daravong along with energy senior officials attended the event.


The agreement was set up after the meeting reviewed the cooperation in energy between the three countries and drew up a cooperative programme in the future.


It focused on important issues regarding energy such as further enhancing cooperation in projects that connect the power networks of the three countries, especially the 230 Kv and 500 Kv projects; exploring the hydroelectric potential of the Mekong river in line with protecting the environment and ecosystem; as well as developing human resources in the power industry.


The agreement is seen as an important foundation for the three countries to continue their cooperation in energy with the target of sustainable, stable and clean development.


According to the Vietnamese Ministry of Industry and Trade, the cooperation between the three countries achieved good results recently with a large number of Vietnam’s hydroelectric projects being carried out in Laos and Cambodia, helping improve people’s quality of life.


Int’l sound, light exhibition opens in HCM City


An international exhibition showcasing professional sound, light, audiovisual, broadcast, systems integration and entertainment technologies called “PALME Vietnam 2010” opened in Ho Chi Minh City on July 22.


Co-organised by the IIR Exhibitions Pte. Ltd and Vietnam International Trade Fair and Advertising Company (Vinexad), the three-day exhibition has drawn the participation of more than 200 companies from 20 countries and territories, including the US, the UK, Italy, Spain, Germany, China, Taiwan, France and Singapore.


The first-ever exhibition in Vietnam promises to bring the latest technologies and equipment in the field of audio, sound, lighting and connection systems to visitors, especially those in Southeast Asia.


The exhibition provides a good chance for companies operating in the industry to share experiences and seek business opportunities.


Speaking at the opening ceremony, Deputy Minister of Culture, Sports and Tourism Tran Chien Thang said that PALME Vietnam 2010 is being held at a right time as Vietnam is considered one of the countries with the fastest growing communication and entertainment industries in the world.


With a population of over 86 million people, Vietnam is a potential market for the development of new technologies, he said, adding that the country is now ready to acquire products and services of the communication and entertainment industry.


The Vietnamese communication and entertainment industry’s revenues are expected to exceed 2.3 billion USD in 2013.


NEC helps build data management system for Hanoi


Japan’s NEC electronic firm has signed a contract worth 260 million JPY (3 million USD) with Hanoi to help the Southeast Asian city build and manage a database of its residents.


NEC is also expected to sign another contract worth 20 billion JPY with Vietnam for a planned project that will include the management of data about Vietnamese citizens during the next five years. At present, Vietnamese cities and provinces mostly manage their population data by hard documents.


Since 2005, Vietnam has exerted efforts to build a modern information system to digitalise the database on its people.


Other Japanese electronics firms like Hitachi and Fujitsu also have plans to win contracts to build information systems overseas.

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