There Are Plenty of Opportunities for Making Money

In the real estate market, the price is now the most important thing. Needless to say, the price is based on the agreement between the buyer and the seller. For a long time, the value of real estate in Vietnam has been pushed up many times higher than the real value. When the pressure inside the bubble is too high, it will explode or deflate slowly. But, whether it blows up or deflates, it must return to its reality. In my opinion, the time when the real estate price returns to the reality is not far. However, I now think that the real estate price will go down another 20 per cent - 30 per cent to reach true fundamentals (supply, demand, affordability of the buyer, general psychology). This is a sustainable bottom. However, because the property market is affected by "herd" factors, the buyer rushes to buy when the price goes up but no one wants to buy when the price plunges on expectations of further declines. In addition, many investors are trapped in the property market and many property assets confiscated by banks are being sold off. This will drive the price to go deeper. According to experiences concerning real estate bubble in other countries, after reaching the bottom, the price will go down another 30 per cent in value. As expected, the price will hit the bottom in the second quarter of 2013 and it will break through the bottom in the next two years.

 

This is simple because that price is not the actual one. In the world, the real estate price correlates to three main factors, namely demand, income and sentiment. Such factors as location and interest rate are also important.

 

In Vietnam, the demand in the midmarket segment is good because many people do not have homes.

 

Also, we should take into account the income of the buyer. The income of a family in Hanoi and Ho Chi Minh City, the two largest cities in Vietnam, is VND180 million a year. If they buy an apartment on a 20-year instalment basis with an interest rate of 10 per cent per annum, they may afford a 70-square metre apartment whose price is VND1 billion equal to 30 per cent of their income in 20 years. That is VND14 million per square metre. This is perhaps the real value of real estate.

 

Besides, we should not rule out the fact that the macroeconomic environment of Vietnam is showing many signs of “not very healthy”, leading to a weakening market sentiment. The people are also unsure of their future income. As a result, although the price has fallen a lot, the real estate remains unsellable.

 

In fact, I see that we are now abusing the term "restructuring" like economic restructuring, educational restructuring, mechanism restructuring, workforce restructuring, policy restructuring, bank restructuring, transportation restructuring, securities market restructuring and budgetary restructuring. However, the method - how to restructure and what to restructure - is of extreme importance but has received little attention. To be clear, I would like to take the government’s effort to restructure State-owned economic groups. Instead of restructuring, trimming operations and reducing them, Vietnam needs to accept the market mechanism, or in other words, withdraw preferential supports to let them operate as ordinary enterprises. I think, besides, it should not blame corporate bankruptcies on excessive noncore investments. The reason leading to the collapse should be seen from business aspect. When they do not use their own money to do business, they will not try their best to manage that money, let alone make it profitable. Another important reason is Vietnam set up so many State-owned enterprises but personal responsibility and accountability is too weak. And if these roots are not solved, "restructuring" will keep going on and on.

 

As known, the world has US$400 - 500 trillion “running around" each day. If a business has a good product, unique technology, effective marketing and sustainable governance, there is no excuse for its inability to catch tens of millions of US dollars from that treadmill. This means that Vietnamese enterprises as well as the rest of the world always have a lot of opportunities to make money. The matter is to find out a way to make money. It is clear that we are standing before a great opportunity to make money. The matter is to think out how to make it? ".

 

Maybe, I will tell new businesspeople that creativity and distinction are the first two factors to be noted. We must be patient enough to knock on 100 doors to expect 10 to open and one to let us come in for negotiations. The third factor is the approach and sale where competitive advantage is what a company cares most. This means that your products must be different. If they look like others on the market, no one will want to give you an opportunity to do business.

 

Another note is, for small and medium-sized enterprises (SMEs) - a majority in Vietnam, foreign direct investment (FDI) flow is always the expected destination. SMEs want to contribute part of capital to a big cake. In fact, this is impractical because FDI flow is usually channelled into large-scale projects. To seek capital, SMEs should turn to foreign indirect investment (FII) sources. This channel is left open in Vietnam but contains huge potential for development. Foreign listing is a good approach.