Business Beat
Convenience stores have failed to catch on in HCM City. In the past 12 months, An Nam Company and Massan Mart Group opened chains of them – the former, five 24-hour stores, and the latter, 25 Massan Marts. Now, An Nam has been forced to close down all of them, while Massan has closed down 20.They both discovered the hard way they cannot compete with the thousands of household-run stores in the city, where the concept of convenience is taken to the ultimate level. The owners are both manager and salesperson. They are open throughout the day and at a pinch, in the middle of the night. People in the neighbourhood can buy on credit and in the smallest possible units.
Massan owned up to the error of its ways when targeting customers, the rich buyers. They preferred supermarkets where choices were more numerous; the ones with the high disposable incomes spent their weekends shopping for the whole week. The price-sensitive customer on the other hand, shopped at household stores where prices are lower, and the owner-customer relationship more informal.
However, Massan has learnt its lesson. It is now consolidating the stores still profitable, mostly in residential areas, targeting people with modest incomes, in a bid to compete with the small stores.
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Viet Nam is set to get unemployment insurance from next year. According to preliminary information, the premium will be 3 per cent of the salary, half payable by the employee, and half by the employer. But with a likely shift of 1 per cent of the 5 per cent emergency fund – meant for injury or illness support – to the unemployment fund, workers will in effect pay 0.5 per cent of their wages to cover unemployment insurance fees.
Those who have paid the premium for 12 months and more before becoming unemployed, will get a maximum compensation for 24 months. The amount they’ll get each month will be equal to half their former salary. It is hoped that this is made compulsory for all those with labour contracts for 12 months or more in all sectors, including international organisations in Viet Nam.
However, many questions remain as to whether this kind of insurance is feasible in Viet Nam. on the employers’ part, they would probably resist having to pay the premiums, just like they did for social security. Employees, uncertain of getting any money back, will hesitate to take part, despite the low premium.
People fear insurance frauds will be rampant and besides, the real salaries that workers get now is not the salary companies register to pay. People, especially in the State-owned sector, can get as little as VND500,000 a month as formal salary while their take-home pay can reach VND2 million. The differences are listed as bonuses, meal support and other fringe benefits.0
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HCM City authorities and think-tanks are tying themselves into knots, dealing with the realty market.
A seminar held last week, Giving Birth to a Healthy Real Estate Market, tried to sift through available trends to enable policy-makers to make something of the mess. But when it defined ‘real estate speculators,’ it became apparent the city had no clue. Real estate speculators, the seminar enlightened, are people who buy and sell land and houses many times! A healthy market is one where transactions are possible freely and without unfair, artificial restrictions, for over a period of time, prices will find their own reasonable levels. Any action from the city’s new perspective of speculation, will only kill off the market instantly.
one reason for the unnatural price levels in fact, has been people buying land and waiting for prices to climb, in the expectation that the more they wait, the higher the rates will go. Thus, not only is nobody selling at reasonable levels, but this speculative fervour is carrying demand to unnatural levels while supply remains limited.
"It’s dumb not to rent a house for US$500 when it costs half a million to buy," said an overseas Vietnamese, who chose the former course.
Instead of trying to define speculation to impose restrictions, it will make more sense to slap taxes on sale of house and land to dampen that speculation. HCM City has lined up more than 1,000 housing projects that would need $19 billion to develop, an amount patently out of reach of the promoters. Thus, what they are really doing is securing licences and making a killing selling plots of land. The city should therefore organise land auctions to get the best deal for both the evicted people and its coffers. This will at least frighten away real estate companies that secure land and sit on them, waiting for prices to climb.
VNS
