Land prices will fall as the balance is regained

Chairman of Hoa Binh Corporation shares the secrets of firm’s success

(08-09-2007)

Hoa Binh Construction and Real Estate Corporation (Hoabinh Corporation) is one of the leading real estate and housing construction companies in the country. Viet Nam News talks with Le Viet Hai, Chairman and CEO of Hoabinh Corporation, on the sideline of the Asean 100 Leadership Forum 2007 in August.

Can you tell us about your corporation’s capital investment, capital which comes from profits made in the stock market, in the real estate sector? Can you also comment on the operation of your corporation ?

Currently, between 30 and 40 per cent of our investment capital comes from the shares we own in the stock market. The remainder of the investment capital comes from our business partners.

We are continuously updating and upgrading our main activity. Hoabinh Corp has invested in other related sectors such as building materials and services. This diversified expansion has enhanced the corporation’s effectiveness while simultaneously satisfying our clients’ demands.

We can offer the most benefits by exploiting resources and providing a balanced package service at a high standard.

Our superior quality standard has been demonstrated through a whole series of projects in the last few years of which Hoabinh Corp was the main contractor. Our corporation was involved in developing projects like the Manor II tower, Horizon tower and the International airport terminal complex.

The Hoa Binh tower, for example, cost approximately VND500 billion (US$31.2 million). The construction will proceed under the strict supervision of our Hoabinh Corp staff and foreign experts to ensure the highest quality for our customers.

As a businessman, what would you say Viet Nam should do as it strives to amend its legal system and policies to lure foreign investment into the country?

Both foreign and domestic investments are instrumental to ensure high effective results. As such, the State must create favourable conditions to enable domestic businesses to better carry out their projects. The main problems businesses are facing are difficulties in acquiring land.

In order to well implement a construction project, site clearance is key to the success of the project. If the clearance is improperly done, it will take a high toll on the investors who have spent millions of US dollars for proper clearance.

The best way to solve this problem would be for the State to organise auctions on available sites cleared by the state to make it easier for investors to join. The State could compensate displaced people to clear the site, and could regulate the land prices. The State is eligible to retrieve land because the land belongs to the state.

The State should also publicise the specific planning and architectural designs for the site. For instance, the general public should know what kind of projects the investors intend to develop on that land. State regulations should not be so severe.

By lessening the strictness of the regulations, the investors will have more room to realise their initiative. They will gain the ability to ensure a good outcome and the ability to adapt project as the infrastructure is developed. That’s really the most important thing that the State could change that would help spur the use of investment capital in an effective manner for the country’s economic development.

What is your assessment of domestic real estate and its attraction to foreign investors ?

As you know, many economists have said that the real estate industry will boom. As a result, the value of land will increase along with general economic growth.

As the saying goes, "population is increasing, but land is limited." The demand for land is higher than ever. Foreign investors are quite interested in the real estate sector.

The same goes for Vietnamese investors. I can think of many land projects with incentives offered to foreign investors. For example, a South Korean company was provided with land to build an urban area in South Saigon.

The tendency of foreign investors to flock to real estate investment is causing the price of desirable, well located land in Viet Nam to skyrocket above the price of land in other countries in the region. What do you think of this tendency?

It is a temporary state of imbalance. Land prices will fall as the balance is regained. — VNS