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VietNamNews

$1.4b housing loan package faces hurdles

Update: June, 03/2013 - 10:24

by Thien Ly

On May 28 the Housing and Urban Development Cor-poration and Viet Nam BIC jointly broke ground for a social housing project in Ha Noi's Linh Dam new urban area.

It is the first of its kind to be developed with credit from the Government's VND30 trillion (US$1.42 billion) bank loan package to stimulate the property market and resolve lenders' bad debts.

Under the programme homebuyers and developers can borrow at 6 per cent interest for a period of up to 10 years.

The construction ministry estimates that by 2015 the country's urban areas will have 1.74 million people with less than 5 square metres of housing and another 1.7 million without housing.

The VND30-trillion package is expected to help buy around 40,000 social-housing apartments, propping up the low-cost housing segment and causing a spillover effect on other segments.

While it generally looks like a sound programme, there are some issues that need to be sorted out.

There is the question whether it is possible to address the financial needs of both people who want to buy housing and realty firms who want to develop projects.

According to a ministry circular, public officials and civil servants and workers with low incomes can borrow if they fulfill just one condition – they do not own a house or live in houses of less than five metres per person.

But things are not so straightforward at the implementation level.

Some banks have not started yet, saying that they are awaiting guidelines from head office.

Others have started lending but impose stiff conditions that not many low-income earners can meet.

Though the State Bank of Viet Nam has said the banks can lend with or without collateral, most banks are demanding it. But then how many people without a house are likely to have other assets to offer as collateral?

There is another paradox: people who want to borrow are also required to have salaries of less than VND9 million ($428.6). But if they do get less than this, what will they live on after paying a minimum of VND7 million towards the loan?

Some other demands also pose hurdles to borrowing – they must have a permanent residence book, make a 30 per cent down payment, and show how they plan to repay.

Property developers too are finding it difficult to borrow.

Around 30 per cent of the package is earmarked for developers who convert commercial housing projects into social housing.

Fifty developers with a total of 31,000 apartments have applied so far.

But many eligible developers who have worked with the banks have failed to get a reply from them.

The central bank and the lenders should spell out information about the programme so that the beneficiaries have no trouble borrowing.

To ensure that the money goes to eligible people, the central bank and the ministry should carefully oversee the banks' lending activities.

The loan tenor for homebuyers should be increased to 20 or 30 years from just 10.

VN film market surprise

Unlike other industries, where there is competition between foreign and domestic players, the cinema market has been taken over by the South Koreans.

Box office collections in Viet Nam increased from US$7 million in 2008 to US$43 million last year. Not surprisingly the Hollywood Reporter ranked the country among the 13 emerging markets with the fastest growth rates.

There is massive room for growth in a country with 92 million people – the 14th highest population in the world – but who go to the cinema only once a year compared to 10 times in South Korea.

The Koreans have grabbed the opportunity, gradually eliminating some venerable domestic names from the market.

CJ-CGV and Lotte Cinema have been leading the charge for them.

Last year CJ-CGV opened its eighth and ninth Megastar multiplexes, Viet Nam's top cinema chain, which it had acquired in 2011. CGV, which now has cinemas in Ha Noi, HCM City, Da Nang, Hai Phong, and Dong Nai has a screen count of 69.

Lotte Cinema, which entered Viet Nam in 2008 by acquiring Diamond Cinema Joint Venture Company, has opened eight cinemas in HCM City, Ha Noi, Dong Nai, Nha Trang and Da Nang with 33 screens.

CGV is said to generate revenues of US$20-23 million per year.

Both CGV and Lotte are set to continue with their expansion in the coming years.

Lotte plans to open four more multiplexes, three in HCM City, this year and have 30 theatres nationwide by 2020.

CGV hopes to have 200 screens by 2016.

In the face of this onslaught, many established Vietnamese cinemas, despite having been around for dozens of years, have had to vacate the high-end segment to the Koreans rivals and make do with the low-cost one.

The Korean-owned theatres have the most modern equipment and technology, and they sell tickets at VND50,000-200,000.

The Vietnamese cinemas generally continue to have outdated equipment and their tickets are priced at a modest VND20,000-30,000.

As a result the latter only account for 40 per cent share of box-office collections despite being numerically superior.

City ponders bus advertising

HCM City authorities are study-ing a proposal to allow advertising on the outside of buses as a means to reduce their subsidy spent on transport.

Now advertising is only allowed inside commuter buses on television.

According to the Department of Transport, subsidies for bus services added up to VND6.8 trillion (US$323.8 million) between 2002 and 2012.

The expenditure has been rising over the years, to VND1.4 trillion last year and an estimated VND1.47 trillion this year.

Yet buses only meet 10.6 per cent of the city's transport needs.

To reduce the burden on the city, official agencies have constantly been suggesting advertising on buses, but the administration feared that having hoardings outside buses would affect safety on roads and mar the landscape. There was also the apprehension that it would be hard to manage the content of the ads.

The city needs 3,100 buses on the roads by 2015.

It plans to add another 3,500 in 2016-20 to meet 16 per cent of transport demand by 2020. — VNS


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