Traditional markets get mall makeover

by Thuy Anh

There is an emerging trend of combining traditional or wet markets with modern shopping malls.

Property experts call it a rebirth of traditional markets in the form of modern and well-organised retail outlets with temperature and fresh air control, better fire safety, improved hygiene, and many other benefits.

Traditional markets that also include space for entertainment, like cinemas, are likely to attract customers.

"Without many other entertainment options [but with] a young, urbanised population, the mall will become the new town centre," Richard Leech, executive director of real estate services firm CBRE Vietnam, says.

These shopping centres are set to extend their working hours to serve the needs of cinema and other patrons, creating more opportunities for tenants to increase revenues.

But a successful model requires tight control over registered brands, quality, merchandising arrangement, and customer service, Leech says. All these would also help deal with "the biggest challenge – fake products."

He has another tip for developers – to have separate accesses to the market and shopping mall.

Several such developments are under way or planned, with Ha Noi taking the lead. The five-floor Hang Da Market in Hoan Kiem District will be the earliest one, expected to open in the fourth quarter with more than 9,000sq.m of floor space.

It will be followed by Mo Market in Hai Ba Trung District and Trung Hoa in Dong Da District.

HCM City has yet to announce any such project though there were attempts to renovate the city's symbol, Ben Thanh Market, and Nguyen Van Troi Market in District 3.

The organised retail sector in HCM City has almost 318,000sq.m of space in 24 department stores and shopping centres, which is expected to rise to more than one million square metres by 2013, much more than Ha Noi does.

Ha Noi has around 108,000sq.m, which is likely to rise to 589,000sq.m by 2013.

Unlucky 13

Recent efforts by the Government to push back maximum interest rates to 10 per cent for deposits and 12 per cent for loans to help boost the economy have not yielded results and commercial banks are blaming this on Circular 13 which will take effect in early October.

Under the circular, commercial banks are required to raise their capital adequacy ratio (CAR) to a minimum of 9 per cent from the current 8 percent, which is also the international norm.

The CAR reflects the capacity of a bank to meet time liabilities and manage credit and operational risks, and ensures that the bank has the capital to cushion potential losses, protecting depositors and creditors.

Circular 13 also requires banks not to use non-term deposits made by economic institutions, the State Treasury, social insurance fund, and other organisations to make commercial loans. These deposits stand at 15-20 per cent of their total deposits.

Another 20 per cent of deposits is required to be held in reserve against risk, meaning at least 35 per cent cannot be used by the banks.

The banks, being able to use only 65 per cent of their deposits for lending, find it difficult to lower lending interest rates.

After some lowering of deposit interest rates in early July, several banks have again increased them up to 11.2 per cent, besides also offering promotions, freebies, and lucky draws to depositors.

Banks want the implementation of the circular, issued on May 20, to be delayed to prepare themselves.

The HCM City Stock Exchange-listed Vietcombank has registered to sell another 5 million shares in Eximbank Vietnam, having earlier sold 5 million in July, between August 13 and October 10 in an effort to abide by the circular.

Its investment portfolio is said to be around VND4 trillion (US$210 million). But with the stock market locked in a gloomy downtrend, divestment is not easy, especially of shares in unlisted companies.

More foreign funds

Leading fund management firm VinaCapital is working to set up two new funds for investment in Viet Nam, one focused on property and the other on securities. According to its CEO, Don Lam, Viet Nam is still attracting foreign investors' interest.

Its managing director, Andy Ho, has recently returned from meetings with investors in the US and Japan, who expressed their confidence since their investments in this country through funds managed by VinaCapital yielded more returns than investments elsewhere.

The two funds are expected to draw US$150 million-250 million each.

The US-headquartered International Data Group, or IDG, plans to set up two venture-capital funds that will invest in the IT sector by 2012, according to its founder and chairman, Patrick J McGovern. They will have a combined corpus of $400 million.

The first fund, worth $150 million, will be set up next year targeting companies that have been in operation for just one or two years, have potential, but face funding issues.

The other will be set up in 2012 with $250 million to be invested in firms that are at least two years old and have recognisable products and brands.

This fund will later expand its scope to healthcare, education, and retail.

Meanwhile, Dragon Capital launched last month the first Asian regional fund that will also invest in Viet Nam's renewable energy, water, and waste-management sectors.

It has attracted commitments of US$45 million in the first phase of fund-raising and is expected to grow to $100m following a second phase next year.

Dominic Scriven, CEO of Dragon Capital, said the Clean Development Fund "will deliver solid financial returns and positive environmental and social impacts in a set of developing countries in the Mekong and Brahmaputra (major rivers in Central and South Asia) regions." — VNS