In Vietnam’s major cities, a once-booming property market has come crashing down. Hundreds of abandoned construction sites are the most obvious signs of a sickly economy.
A senior Vietnamese Communist Party official, speaking in the ornate drawing room of a French colonial building, compared the country’s economic problems to the market crash 15 years ago that flattened many economies in Asia.
“I can say this is the same as the crisis in Thailand in 1997,” said Hua Ngoc Thuan, the vice chairman of the People’s Committee of Ho Chi Minh City, the city’s top executive body. “Property investors pushed the prices so high. They bought for speculation — not for use.”
Le Dang Doanh, a prominent economist and a former top official at a government research organization, said he was worried about the timing of the country’s problems, coming just as the global economy is bogged down by debt and Europe grapples with the existential dilemma of the euro.
“The problem in Vietnam is a very, very toxic cocktail from the European debt crisis, the stagnation in the U.S. economy plus a very critical situation in the domestic economy,” Mr. Doanh said. “It’s a very dangerous mixture.”
As in the United States, Vietnam’s return to economic health rides in part on the revival of the real estate market.
There is so much excess supply of office space in Ho Chi Minh City that rents in the most desirable neighborhoods are half the level of three years ago, said Nguyen Duy Lam, the director of Pacific Real, a construction and real estate company.
In the hopes of drawing more foreign buyers, officials in Ho Chi Minh City have submitted a formal proposal to the central government to open up the property market to overseas Vietnamese, according to Mr. Thuan, the Communist Party official.
“Everyone wants to sell, but they can’t, even if they lower the price,” Mr. Lam said in an interview on the roof of a hotel in Ho Chi Minh City. “There are no customers.”
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In Vietnam, Growing Fears of an Economic Meltdown, New York Times, Aug 22, 2012