Real estate companies in Vietnam on the verge of “dying”

HCM City Real Estate Association (HoREA) proposed to extend and recover debts, and lengthen the deadline of corporate income tax (CIT) payment till December 31, 2013.

Today [April 11], the association will work with the National Finance Supervision Committee to help realty companies deal with problems in terms of capital, tax, interest rates, land using rental, market liquidity.

Massive bankruptcy

Mr Le Hoang Chau, Chairman of HoREA told the reporters that real estate companies are facing a lot of difficulties, eve many of them are ailing and dying.

The property market is almost unmoved. The firms tried to save themselves with a number of solutions such as investment restructuring, delay, project progress extension. Especially, enterprises actively lowered apartment prices, and accepted break-even or small losses by financing customers in field of loan rates and various promotion programs, he added.

Despite big efforts, resources of real estate companies have gone down so most of firms were meeting multiple hardships and threats of bankruptcy. Many companies had to stop operation or become bankrupt. These hardships are shown in indicators of inventory, money flow, high loan interests. A survey on listed property firms on both securities exchanges indicated that the inventory volume written in their financial report was too huge. Several developers could not boost sales and pay any dividend for shareholders, so they had to record big losses.

A series of property brokering offices after 2012 Lunar New Year also had to be closed, liquidated or change service business to drinks and restaurant. “Property firms are ailing, some other sectors like cement, steel and cast iron, furniture, employees….are heavily affected as well”, he emphasized.

Need help

The meeting between the National Finance Supervision Committee and HoREA will discuss on credit source, reasons of the gloomy market, property management policies, credit tightening policies, oversupply, and high product prices compared with buyers’ affordability.

On this occasion, HoREA will continue proposing urgent actions of the government and the State Bank of Vietnam (SBV) in lowering lending rates for enterprises and offering a specific timetable to bring down loan rate to 11-12% per annum. Currently, property companies are hard to access credit source and suffer the loan rate of around 20% pa. If the situation is prolonged continuously, enterprises will cannot stand, according to Mr Chau.

In addition, the association plans to propose the government, Ministry of Finance and General Department of Taxation to cut Corporate Income Tax (CIT) from 25% to 18-20% and extend CIT payment to the next year.

Furthermore, HoREA will recommend amendments for Decree 69, Decree 120 on collecting land using rental to help property projects reduce input costs and product prices. - Source: Vietbiz24