Tourism property investors complain of risks

Update: August, 02/2014 - 09:19
Hotels and resorts along My Khe Beach in Da Nang. Experts have urged the Goverment to develop measures to revive tourism properties. — VNA/VNS Photo Trong Duc

HCM CITY (VNS)— The Government should take measures to reduce the difficulties and risks involved in investing in tourism properties so that the sector can revive, experts have told a conference.

"It is too risky to invest in tourism properties in Viet Nam," Than Thanh Vu, founder and deputy chairman of the Viet Nam Tourism Property Association (VnTPA), told the VnTPA Congress II in HCM City late last week.

The VnTPA said while exact figures were not available on investment in tourism property in recent years, members constantly complained about the situation the industry was in.

"It currently takes more than 167 months from conception to finish construction of a 300-room four- or five-star resort," he said.

"It requires going to at least 12 local government agencies for approval, decisions, reviews, checks, and processing.

"[It] is also regulated by at least seven laws – Land Law, Law on Real Estate Business, Housing Law, Enterprise Law, Construction Law, Labour Law, and Civil Law – besides thousands of other regulations.

"Development can get stuck at any time, at any step, for any reason."

The process can become faster if there is availability of unencumbered land, 1/2,000 and 1/500 master plans, and strong support from the Government, authorities, and agencies, according to Vu.

He also enumerated a long list of investment risks in the sector – changes in market trends, economic situation, inputs and outputs, inappropriate product design, and competition.

The Government could help reduce certain risks like changes in exchange rates and economic policies, availability of human resources, visa restrictions, poor transport and infrastructure, ownership restrictions, inconsistent and overlapping master plan, lack of transparency, cumbersome procedures, land price issues, inconsistent and confusing interpretation of laws, and restrictions on access to credit and high interest rates, he said.

Authorities should find "fair and acceptable solutions for land price issues and land resettlement issues" based on practical business issues, he said.

"Relaxing tourism property ownership restrictions can help attract more investment to the sector."

Suitable policies and stimulus packages were needed from the Government to help the industry recover from the downturn, he said.

Besides, by simplifying the visa process, promoting Viet Nam's tourism world-wide, and establishing close links between developers, travel companies, airlines, authorities could make the tourism sector, and thus the tourism property sector, robust, he added.

Kenneth Atkinson, executive chairman of Grant Thornton Viet Nam and deputy chairman of the Viet Nam Tourism Advisory Board, said investors in the tourism property sector usually had problems with the legal process, ownership, inconsistent interpretation and application of regulations by various local authorities, land pricing, and infrastructure.

The tourism industry faced visa, human resources, and destination marketing issues, he said.

The country welcomed 4.29 million international visitors in the first half of the year, 21.1 per cent up year-on-year, though the East Sea issue had a negative impact on the hospitality and tourism sectors, he said.

"There were cancellations at three-, four-, and five-star hotels with a total of 14,945 nights being cancelled through to July based on 18 hotels surveyed."

But Viet Nam had enough attractions to get as many tourists as Thailand and was expected to exceed Thailand in the number of arrivals within 20 years, he said.

However, only 5 per cent of foreign tourists returned to Viet Nam for travel purposes.

Policy breaks awaited

Bui Ngoc Suong, chairman of VnTPA, said due to the global economic crisis, several of his association members closed down, several went bankrupt, and only a few continued to operate effectively.

Though the government had come out with many policies aimed at improving the situation for the industry, there had been no "breakthrough" policy, he said.

"There are also barriers preventing policies [from benefiting] enterprises."

Despite difficulties, the association held 100 events both at home and overseas to help establish links between domestic and international investors, laying the foundation for the development of tourism property industry, he added.

VnTPA was established in 2009 by Phan Huu Thang, former director of the Ministry of Planning and Investment's Foreign Investment Agency, and Than Thanh Vu, chairman of Phuquocland. It now has 1,591 members. — VNS