Slow reforms dog property firms

“If these measures  come online soon, the real estate market will get warmer definitely,” said Nguyen The Diep, president of Reenco Song Hong Investment Joint Stock Company.

Nguyen Quoc Hiep, chairman of Global Petroleum Investment Corporation, said though the resolution was approved two months ago, many of its measures such as tax-breaks, tax reductions and credit packages still existed only on paper.

Hiep added that before the Lunar New Year, many real estate firms expected the resolution’s measures would be deployed immediately so that the stockpile of real estate projects would be solved and the property market would have opportunities to recover in 2013.

“However, 2013’s first quarter is about to end, there are yet any signs of credit packages to support real estate developers,” Hiep said. “So I think that the market will not change a lot this year.”

According to Hiep, these delayed measures added to market uncertainty.

Nguyen Hong Thai, general director of Hai Phat Investment Joint Stock Company, said that the resolution’s measures were conceived in a timely manner. However, Thai said, the delay of implementation has made real estate developers become more pessimistic as they judged that they were unlikely to enjoy the resolution’s preferential treatments in 2013’s first quarter, even the second quarter.   

According to the Resolution 02/NQ-CP dated January 7, 2013, small enterprises will enjoy six months of tax-break for corporate income tax (CIT) in the first quarter and three months of CIT tax-breaks in the second and third quarters, this year. Moreover, these enterprises will enjoy tax-break during six months for value-added tax that should be paid in 2013’s first three months.

Small enterprise are defined as those with  less than 200 labourers and having a turnover less than $960,000 at current exchange rate, a year.

Apart from tax policies, the government ordered banks to push up process of restructuring in order to resolve non-performing loans and boost the demand of property market. According to the resolution, state-owned commercial banks have to provide at least 3 per cent of total credit to homebuyers to buy social housing. CIT imposed on social housing developers will be reduced to 10 per cent to encourage more developers to build social housing. Accordingly, in 2013’s first quarter, the State Bank will cooperate with the Ministry of Construction to set up borrowing mechanisms.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate, said that the real estate enterprises should seek other solutions to recover instead of only waiting for the government  measures to be carried out.

Duc said that now besides the resolution, Dat Lanh and some enterprises in the southern provinces also expected other resolution of social housing which would be published in coming time.

Specifically, according to the draft resolution of social housing, developers can build social housing and   commercial housing with a unit from 25 square metres. Duc added that the resolution of social housing would help a lot of real estate firms  overcome this difficult time.