Subscribers are not amused for it was the second massive hike in 3G fees this year by Vinaphone, MobiFone, and Viettel, who together control 95 per cent of the market.— Photo viettel

Thien Ly

Last week the country's three biggest mobile operators hiked average 3G tariffs by 20 per cent and prices of unlimited packages by 40 per cent.

Subscribers are not amused for it was the second massive hike in 3G fees this year by Vinaphone, MobiFone, and Viettel, who together control 95 per cent of the market.

The operators justified their decision by saying that telecom firms are prohibited from offering services at lower than cost and that they have to make up the losses suffered from low prices in the beginning.

They said 3G prices in Viet Nam are still only a 10th of Chinese tariffs and a 40th of that in Europe.

Viettel said the new rates are close to cost.

VinaPhone said it plans to use the higher revenues to improve its network.

MobiFone said it needs the money since the number of 3G users is substantially and the network needs to be expanded.

Whatever their claims, 3G service providers have managed to make great profits over the last few years.

Viettel, for instance, achieved a turnover of VND141.42 trillion (US$6.7 billion) in 2012, a 21 per cent rise from the previous year, and profits estimated at VND22-23 trillion ($1.04-1.09 billion).

Critics said a 40 per cent increase was too steep, especially for students who need to use the internet a lot for their studies.

The companies may claim tariffs in Viet Nam are the lowest in the world, but the country's average income is also much lower than that of many others.

Worryingly, there are signs of alleged collusion between the three dominant companies, which have increased tariffs by the same amount at the same time.

But since they account for almost the entire market, 3G users have no choice but to continue using the services and shell out more.

Authorities are duty-bound to investigate if the companies have formed a cartel.

As if to rub salt into consumers' wounds, mobile operators periodically ratchet up prices but do little to improve quality.

A survey by market research firm Nielsen and Vietnam Post newspaper in Ha Noi, Da Nang, and HCM City last year found that despite the strong growth in 3G demand, customer satisfaction was down to 64 from 71 per cent in 2011.

Banks set to cut rates

Many banks plan to cut lending interest rates by 1 per cent soon, hoping this will help them achieve their credit growth target.

Their plan is based on the hope that the business environment will see positive changes, enabling them to increase lending.

It is feasible since they have plenty of liquidity now.

In recent months, interest rates have dropped sharply to 7-11 per cent for short-term loans and 11-13 per cent for medium- and long-term loans, but failed to spur lending growth, putting banks in danger of failing to achieve their targets.

Many are looking to slash the rates further, even to below deposit interest rates, through preferential lending packages.

Among of them are HDBank, BIDV, Vietinbank, Vietcombank, Agribank, MHB, DongABank, Sacombank, NamABank, KienlongBank, Military Bank, ABBank, and ACB, who have signed up for a VND3 trillion central bank credit programme at 8-9 per cent interest.

Under the agreement, the lenders will provide credit to 57 companies and two household businesses to help them rejuvenate their business.

For most of the businesses the peak season has just begun.

Besides cutting interest rates, the banks have also tweaked lending conditions, making them more flexible to enable companies to get cheap loans.

They have also resorted to measures such as delaying default deadlines to reduce pressure on borrowers and sell bad debts among themselves – and now to the Asset Management Company — to pump more money into the economy.

A survey done by the central bank's Monetary Forecast and Statistics Department found that banks' deposits and loans are likely to increase by 10-20 per cent by year-end.

Meanwhile, interest rates on the inter-bank market have also been declining, and inflation and exchange rates are stable.

Property transparency

The revised Law on Housing and Real Estate Business, for which the Government is soliciting public opinion, is expected to help better control the property market.

In 2009 the Government brought in a regulation requiring all real-estate transactions to be carried out through transaction floors to make the market more transparent.

While the number of transaction floors quickly multiplied, their effectiveness has not been as expected.

According to the Ministry of Construction, by March the country had 1,012 property transaction floors, including 469 in Ha Noi and 397 in HCM City.

In 2012, around 8,000 transactions were done through them.

Among the weaknesses of the system are the shortage of information, lack of a national data system, poor professional skills of employees at trading floors.

As a result, they have been unable to make accurate or consistent forecasts about the market.

The transaction floors' main task is to offer advice on prices and relevant legal procedures to enable people to buy properties at market rates, but most of them now act merely as intermediaries between sellers and buyers to get commissions.

Official agencies lack comprehensive data about residential housing projects, total office space available for rent, or commercial space, not to speak about real estate prices.

The revised law will not force organisations and individuals to carry out transactions at the real-estate floors, only encourage them in the interest of transparency.

This means that organisations and individuals can also turn to their lawyers for help when they want to buy real estate or invest in property projects.

This will mean the survival of the fittest for the transaction floors, with only the most professional and efficient thriving.

The amended law also requires property developers to report on their progress and real-estate transaction floors to report on transactions. Failure to do so will be penalised.

Business start-ups

The service sector has seen the largest number of businesses being incorporated in HCM City in the first half of the year.

In the period, 11,900 firms were established, 76.4 per cent of them in the service sector. Those providing food- and drink-related services account for the largest number.

Companies in manufacturing and construction made up another 23.2 per cent of the start-ups.

There were in all 477 private business, 1,200 joint-stock companies, and 10,100 limited liability companies with a combined registered capital of VND55.2 trillion ($2.62 billion).

Many entrepreneurs choose the service industry to improve their situation after struggling for long with difficulties, even bankruptcy, since the sector requires less investment than most other sectors.

Besides, many companies hit hard by the economic downturn and with little resources left have also shifted to the service industry.

Figures from the municipal Department of Planning and Investment show that 8,300 firms suspended operation in the period and over 1,110 closed down. — VNS