Property buyers wait for prices to fall further

An urban area in HCM City’s District 2. Property prices in the city have declined 40 to 60 per cent from the peaks reached at the beginning of this year. — VNA/VNS Photo Van Khanh

HCM CITY — The HCM City real- estate market could not recover this year as buyers were waiting for prices to fall further and were unable to get loans to buy property, according to some experts.

Le Hoang Chau, chairman of the HCM City Real Estate Association, said prices had fallen by an average of 40-60 per cent, although losses of up to 70 per cent were not uncommon from the peaks at the beginning of this year.

He said the market remained frozen, with hardly any deals taking place. Even potential buyers said they were hoping for prices to fall further, he added.

Liquidate

Do Thi Loan, general secretary of the association, said many people were being forced to liquidate their properties to repay bank loans.

But apartment prices were unlikely to fall any further, she said.

The State Bank of Viet Nam Governor, Nguyen Van Giau, announced this month that banks could lend for real-estate development and many domestic and foreign banks had resumed lending to actual house buyers.

But they imposed stringent conditions and the loans were still extremely hard to obtain.

The Personal Income Tax Law, set to take effect next January, is also hurting the market. It requires property sellers to pay a tax of 25 per cent of the profit or 2 per cent of the sales price.

Nguyen Manh Ha, head of the Ministry of Cons-truction’s Housing Management Department, said there was still big demand for moderately priced houses. As a result, strong price declines had occurred, mainly in the new apartment and high-end housing segments. The prices of cheap and medium-priced property have remained unchanged or fallen just a little.

Ha also recommended that developers follow market trends and focus on building smaller apartments. —

Shops cut electronics prices as unsold inventories mount

HCM CITY — Many shops are discounting electronics goods, including LCD and Plasma TVs, because of large inventories that need to be sold by the beginning of the year.

Purchasing power has fallen by 40-50 per cent because of economic difficulties, according to a survey of managers of the electronic centres in HCM City.

Companies want to get rid of stock so they can launch new products to compete with imported goods expected to flood the market after January 1, when Viet Nam’s trade commitments under the World Trade Organisation, of which it is a member, require lower import tariffs on foreign electronics goods.

Many of the foreign products will be priced similarly to locally made products, with some of them 5-10 per cent lower, according to electronics importers.

Beginning last week, the price of LCD TVs dropped by 20-30 per cent, particularly that of 32-inch TVs that are now selling for VND6.5 million (US$387).

Lien An Thach, sales and marketing director of the Cho Lon Electronics Supermarket, said the price of Panasonic 32LE8 LCD was VND7.9 million ($470), down from VND8.9 million ($530).

Toshiba, Samsung and LG have also lowered the price of a 32 – inch LCD to VND7.9 million ($470), including Toshiba’s 32AV500, Samsung’s 32A330 and LG’s 32LG30.

A 40-inch Plasma TV formerly sold for VND16-17 million ($952-$1,012) but now can be purchased for VND11-12 million ($655-$714).

Other companies said they would cut prices on 32-inch LCD TVs to VND6 million ($357) each.

The price of electrical appliances, including refrigerators, air-conditioners and washing machine has fallen by 5-10 per cent compared to last month.

City electronics centres are offering 20-30 per cent discounts on electrical appliances, such as rice cookers, gas cookers, irons and saucepans . —

Coal prices will rise for industry

HA NOI — Viet Nam Coal and Mineral Industries (Vinacomin) Group will raise slag prices for three major producers of cement, paper and fertiliser effective immediately and be allowed to sell at market prices as of the second quarter of next year, under a plan approved by the Ministry of Finance on Tuesday.

Under Directive No13564/BTC-QLG, the price of slag will be allowed to climb to a level that allows coal producers to cover production costs.

The price of coal to be sold to fertiliser manufacturers will also be raised to levels equivalent to 81 per cent of production costs.

The price of coal sold to electricity producers, however, will remain capped, according to the directive, although the ministry has established a roadmap to govern both the coal-price and electricity-rate increases during next year.

To stabilise consumer prices of essential goods on the domestic market, the Government has instructed Vinacomin not to raise coal prices since early this year. Therefore, the prices for coal paid by Vinacomin’s major customers – the nation’s leading electricity, cement, paper and fertiliser companies – are currently equal to only 38-79 per cent of production costs, depending on the type of coal.

The prices paid by these four major producers are also equal to only 30-60 per cent of retail market prices, much lower than the export prices of coal.

Because Vinacomin currently sells coal to domestic consumers at prices lower than the production costs, it has to ramp up exports to offset domestic losses. Industry experts warn, however, that this threatens the nation’s energy security, as domestic coal supplies may not be sufficient to meet demands by 2012.

According to Vinacomin estimates, for the electricity industry alone, the country will need roughly 6.48 million tonnes of coal in 2008, 15.3 million tonnes in 2010, 32.5 million tonnes in 2012, 43.9 million tonnes in 2015 and 45.46 million tonnes in 2020.

The Ministry of Finance has agreed that, if Vinacomin does not raise coal prices soon, unbearable pressures will result in even more substantial increases during 2009. —

Coffee export prices take a dive

Farmers harvest coffee in Ia Sao New Economic Zone in Gia Lai Highland Province. The export price of coffee fell this year due to the impact of the global crisis. —VNA/VNS Photo Sy Huynh

HA NOI — The export price of coffee this week fell to between US$1,600-1,700 per tonne, a reduction of $1,000 per tonne compared with the beginning of the year, said the Viet Nam Coffee and Cocoa Association (VICOFA).

VICOFA consultant, Doan Trieu Nhan, said the decrease was not caused by an imbalance in supply and demand, but was due to the global financial crisis.

Coffee traders are finding it difficult to re-negotiate credit lines with commodities focused banks due to the global credit crunch.

In February, a tonne of coffee sold for $2,500, and the price remained stable until last month.

Coffee export volumes have also been falling as key importers Germany, Italy and the United States have bought less coffee in the last few months.

In August, coffee exports to the United States dropped 48 per cent, exports to Germany and Italy fell 23 and 22 per cent, respectively.

Coffee growers in the central highlands provinces of Dak Lak and Lam Dong are facing difficulty. At the beginning of the year, coffee growers earned around VND42,000 ($2.5) per kilogram of coffee. The price dove to VND26,000 ($1.5) per kilo on Tuesday. This means coffee growers will lose around VND14 million ($800) per tonne of coffee.

Dak Lak coffee growers are finding this a bitter pill to swallow as they expect the next harvest to be a bumper crop of about 400,000 tonnes, representing a loss of approximately VND6.4 trillion ($400 million).

The sector as a whole will lose around $1 billion assuming a countrywide harvest of 1.2 million tonnes.

Production costs are also on the increase, putting growers under further pressure. Fertiliser – accounting for around 60 per cent of production costs – in particular has become increasingly expensive.

Doan Trieu Nhan, however, said there was still some hope on the horizon. Brazil will set aside 12 million 60kg bags of the 51 million bags expected to be produced in the 2008-9 period, an increase of nearly 150 per cent from the 5 million bags stored last period, in an effort to stabilise prices by reducing supply. This would hopefully help coffee farmers worldwide, he said.

Global coffee production is estimated to be 131 million bags a year, while consumption is said to be 128 million bags per year. —

Petrol prices fall by another 500 VND per litre

Hanoi (VNA) – The Vietnam National Petroleum Corp. (Petrolimex) and the Military Petrol Company on October 17 reduced the retail prices of A92 and A95 petrol by 500 VND per litre and kerosene by 300 VND per litre to 16,000 VND and 15,200 VND respectively.

Petrolimex holds the largest market share (60 percent of the national market) among 11 domestic petrol and oil importers so its decision is expected to push small domestic petrol businesses to cut their prices in the near future.

However, consumers said that the decrease is not satisfactory given the current world oil price.

Specialist said that crude oil price in the New York market was 69.85 USD per barrel, a decrease by 52.5 percent from the peak in July. The price may continue to fall to below 50 USD per barrel, they added.-

Malaysia continues to lower petrol prices

Kuala Lumpur (VNA) – The price of various grades of petrol and diesel in Malaysia has been lowered further with the new prices taking effect from October 15, 2008, local media reported.

This is in line with the lower price of crude oil on world markets in recent weeks, Malaysian Prime Minister Abdullah Ahmad Badawi was quoted by Bernama news agency as saying.

According to the PM, the Malaysian government has agreed to reduce the pump price of premium grade petrol by 15 cents to 2.30 Ringgit (one USD = about 3.5 Ringgit) a litre, of regular petrol by 10 cents to 2.20 Ringgit and of diesel by 20 cents to 2.20 Ringgit a litre.

This is the third time the government has lowered petrol and diesel prices, with the previous adjustments occurring on August 23 and September 24. –

Indonesia, Thailand and Malaysia to act on rubber prices

Thailand, Indonesia and Malaysia – the world’s top three rubber producers – will meet in December to coordinate efforts to boost falling prices.

Officials at the three-nation talks would discuss issues related to stockpiling and supply of rubber into the market amid a looming global slowdown, Malaysian Plantations Minister Peter Chin was quoted by news reports as saying on the sidelines of an international rubber conference.

“We have yet to see the full impact of the global financial crisis, but Malaysia is not insulated from all these factors,” he said, adding that Malaysia will have talks with Indonesia and Thailand for proper stock management, supply management and export tonnage.

The three Southeast Asian countries produce some 80 percent of the world’s natural rubber output.-

Improvement in liquidity eases fall in share prices

HA NOI — Liquidity significantly improved yesterday, putting brakes on the downward trend of domestic share prices.

Ha Noi Securities Trading Centre’s HASTC-Index closed 1.75 points higher, or 1.37 per cent, to end at 129.28. Trading volume was 13.93 million shares, up 39 per cent over Wednesday’s figure, with a turnover of VND370.7 billion (US$22.47 million).

Some major stocks of the northern bourse rebounded, such as Asia Commercial Bank (ACB), Petroleum Technical Services Corp (PVS), PetroVietnam Insurance (PVI) and Vinaconex Corp (VCG), which contributed to the upward move.

HCM City Stock Exchange’s VN-Index closed at 397.68, with its fall narrowed to 3.65 points, or 0.91 per cent. The index had fallen on average 3-4 per cent per day over the past week.

Trading volume increased 43.34 per cent to reach nearly 21 million shares, with a total value of VND633.67 billion ($38.40 million).

Purchase volume improved in some blue chips, with the most active stocks, including Sacombank (STB) with orders for 2.85 million shares, Saigon Securities Inc (SSI) with 1.4 million and Viet Nam Tanker Joint Stock Co (VTO) with 1.33 million.

Cable and Telecom Materials (SAM) and Hoa Phat Group (HPG) were also active, with around 1 million shares changing hands each.

At psychologically important points, investors tended to accelerate their purchases with hopes of a market rebound, which created a good chance for sellers who wanted to cash in on profits or cut their losses. Liquidity improved, as a result, said SSI Deputy Director Nguyen Hong Nam.

The VN-Index neared an important mark of 400 points on Wednesday.

Experts said earlier this week that the market had dipped deeply following the global financial market recession, and the prices of big stocks were getting attractive for buyers.

Meanwhile, foreign investors’ net sales value yesterday more than doubled Wednesday’s figure to reach VND96.2 billion ($5.83 million), with 1.2 million shares bought and 3.87 million units sold.

Click&Phone Securities Co board chairman Dao Huu Thanh said improvement in the economy was boosting the local stock market. He cited rising foreign direct investment, as well as the easing of lending interest rates and consumer price indices.

“There’s a high possibility that companies’ business results will get better in the fourth quarter,” he said. “This will be a positive factor that could help the market rebound at the end of the year.”

“Domestic macro-level factors have stabilised, with high inflation – the most difficult puzzle – being dealt with well,” deputy director of Bao Viet Securities’ Analysis Department Tong Minh Tuan said. He predicted macro-level indices would further improve in the fourth quarter of this year.

“However, possible impacts from outside (from the global environment) still remain unknown.”

The US financial crisis will cause the US and the European Union, two key export markets of many Asian countries including Viet Nam, to experience very low growth in the fourth quarter and next year, said Tuan.

“With current international and domestic conditions, the VN-Index will continue to remain around 450 points, and it may reach 500 at the end of the year,” he said. —

Tax hikes to increase prices of lorries and buses

HA NOI — The price of buses and trucks are forecast to surge in the next few months in the wake of value added tax (VAT) hikes as of January 1, 2009, according to industry insiders.

Under the Law on Value Added Tax passed by the National Assembly in June, VAT on buses and trucks is slated to increase from the current 5 per cent to 10 per cent early next year.

Deputy director of the Xuan Kien Automobile Joint Stock Company (Vinaxuki), Bui Xuan Thanh, said as tax policies changed manufacturers would have to adjust prices accordingly.

Thanh estimated the price of trucks and buses will increase by at least VND4 million per unit, and up to VND50 million for more expensive models.

Thanh noted that the tax hike would only affect individuals as organisations are entitled to claim VAT tax rebates under current regulations.

According to industry insiders the upcoming tax hike will likely further dampen the automobile market, which has been stagnant recently due to tightening monetary policies

Insiders said purchases of commercial vehicles, including trucks and buses, had significantly reduced as businesses felt the pinch from strict credit controls. The Viet Nam Automobile Manufacturers Association (VAMA) reported that its 16 member companies had sold only 7,809 vehicles in August, a 7.7 per cent decrease over July figures and the lowest monthly sales so far this year.

General director of the Truong Hai Automobile Joint Stock Company, Tran Ba Duong, explained that a number of customers were interested in buying vehicles, but were worried about loan repayments due to the high interest rate of 21 per cent. Potential customers were also concerned about high petrol prices, he added.

VAMA said many manufacturers, burdened with rising material costs were considering raising vehicle prices but were apprehensive further price hikes would put off customers leading to even lower sales.

The price of a vehicle has surged more than 20 per cent due to price hikes in imported components, the US dollar gaining ground on the dong and high interest rates.

However, industry insiders said the truck and bus market was expected to heat up in the remaining months of the year as inflation was reined in and liquidity improved.

Freight and transport businesses also traditionally purchase more vehicles toward the end of the year.

To boost vehicle purchases some manufactures have been introducing promotional packages to entice customers. Vinaxuki said it had decided to offer free registration to customers, saving customers 2 per cent of the vehicle’s value. —

City to stabilise prices of essential goods

HCM CITY — The Department of Industry and Trade (DoIT) and several relevant departments and businesses of HCM City have unveiled a plan to stabilise the prices of essential commodities for the 2008-2010 period and set the policy groundwork for the 2010-2015 period.

The plan is designed to tackle the speculation-based rise of certain essential goods prices, all the while developing retail networks to offer customers the most reasonable prices, according to DoIT.

Under the new guidelines, the city will pick businesses specialising in the production and trade of essential goods to collaborate with the city in planning the production, processing and purchasing of such goods to meet consumer demands and stabilise prices.

Businesses participating in the city’s price stabilisation programme will be eligible for interest-free loans to buy goods for reserve or promote production of daily essentials.

The municipal programme focuses on essential goods including rice, sugar, cooking oil, cattle and poultry meat, processed foods, eggs, and preventative and curative medicines.

Moreover, the city will also co-operate with various departments and enterprises to guarantee the supply and stable prices of 11 commodities deemed essential by the Central Government: gasoline, cement, construction steel, liquified gases, fertiliser, pesticides, veterinary medicines, salt, milk, railway transport and animal feed.

DoIT officials say the project will contribute to Government efforts to curb inflation, and demonstrates the State’s role in taking care of residents’ lives.

The People’s Committee of the city will review the plan sometime this month. —