Today, inflation based on whole sale prices is hovering around 11.5 per cent; actually inflation sustained by consumers is even higher. The rupee is falling, the oil bill is bloating, the Sensex is down 40 per cent from its 2007 highs, foreign investors have taken out $ 6 billion or more, corporate profits is expected to halve to 10 per cent, the GDP growth could slow down to 7 per cent.

"India has gone from hero to zero in six months," says Andrew Holland of Merrill Lynch in the latest issue of Businessweek.

Experts say instead of "reining in profligate expenditures, liberalising its financial markets, increasing agricultural productivity, and improving infrastructure, the environment, and energy use", the Manmohan Singh government has been caught in its own vortex, waving off farmers' loans, hiking bureaucrats' salaries, handing out fertiliser subsidies.

Questions: Is the 'India Story' over? Or are the "fundamentals" of the Indian economy still very strong? Is the UPA government singularly responsible or has it been the victim of a global meltdown? How long will it take for the good times to roll again? Or, are the reports of the death of the "India Story" exaggerated?

Also read: CHURUMURI POLL: Has the 'dream team' been exposed?

Many want to liquidate their land and incomplete projects by selling them to bigger developers or private equity players even at lower valuations. What’s forcing them to take this step is a stagnant market, with property rates undergoing major correction in some cities. Around 15 deals in real estate sector have fallen through in the past two months with investors developing a cold feet, said industry officials.

Consider a few cases. A mid-sized builder at Chembur in Mumbai has put its 14-floor commercial property in central Mumbai on the block. The developer wants to raise around Rs 150 crore which would help him complete his upcoming project.

A Hyderabad-based real estate group has started advertising to attract high networth investors to generate Rs 50 crore against bulk purchase of its housing project in the city.

A small developer in Mumbai, pushed to a corner on account of mounting payables for construction material, is now offering its project at Juhu-Versova in Mumbai at about 35% discount to the current market price. In Delhi, some developers have approached property consultant to sell their income generating commercial properties to finance some of the unfinished projects.

Real estate funds and established developers admit that they are working on various proposals. “Even in the normal circumstances we used to get offers from mid-sized developers to buy out their projects. But now, the numbers have increased considerably,” said Hiraandani Developers chairman Niranjan Hiranandani.

The Bangalore-based developer Nitesh Estates said that it has received similar proposals, mainly from markets like Pune, Nagpur and Bangalore. “Every second day we are getting a proposal either to pick up equity in the project or to buy out fully. We have not concluded any such deal so far,” said Nitesh Estates chairman Nitesh Shetty. Industry observers said that the commercial property market, stagnant for the past few months, is showing signs of crack, especially in suburban Mumbai and many tier-II & III cities. The volume of commercial property sales has dropped by 30% in the past two months in the wake of rising interest rates.

“Developers, specially small developers, are under pressure now. Fund flow into this sector has begun to dry up. Selling incomplete projects to big developers or private equity firms is an option explored by many such developers,” said a senior official with KnightFrank India, a property consultant. Thanks to tigher fund raising norms and a weak stock market many developers are knocking the ddors of private equity investors who are driving hard bargains on valuation and. Even on a reduced valuation, PE firms are putting various clauses to safeguard their money.

In last May, the finance ministry had said that all foreign funds raised by Indian companies through partially convertible, non-convertible and optionally convertible preference shares, would be treated as debt and would be subject to guidelines applicable for external commercial borrowings (ECBs).

This had made it tough for developers to access foreign funds, since ECBs are allowed only in large real estate projects and the conditions are far more stringent than FDI. “The developers are ready for a compromise on valuations. The risk adjusted returns have gone up by 20-25% during the past few months,”said Starwood Capital India head Balaji Rao.

The venture will undertake development of a gated residential community together with support, retail and recreational facilities on 55 acres within Mahindra Lifespaces’ special economic zone at Mahindra World City, New Chennai.

The joint venture entity, Mahindra Residential Development, will be 51 per cent owned by the Mahindra group and balance 49 per cent by an ARCH Capital controlled investment vehicle.

The residential development will offer an exclusive community of around 750 residential units with sprawling green spaces and large community Interaction zones.

Mahindra World City is India’s first integrated business city developed by the Mahindra Group and Tamil Nadu Industrial Development Corporation. Spread over 1,500 acres in the outskirts of Chennai near Chengiepet, Mahindra World City has three sector-specific SEZs for information technology, auto ancillaries, and apparel & fashion accessories. Mahindra World City is expected to have a working population of 1,00,000 people by 2015 with current employment at close to 10,000 persons.

“The Mahindra Group has demonstrated the vision and the ability to build a world class SEZ in Mahindra world city. This will now be ably supported with flying infrastructure built to international standards. Our partnership with Ayala, Philippines leading real estate developer, heralds the beginning of a relationship that will combine the marketing and property development skills of Mahindra Lifespaces with the project management and execution expertise of Ayala,” said Arun Nanda, Executive Director Mahindra & Mahindra.

ARCH Capital Asian is managed by ARCH Capital Management Company, an affiliate of Ayala Land of the Philippines.

Tuần qua thị trường chứng khoán Trung Quốc lại tuột giá mất 60% từ đỉnh cao vào tháng 10 năm ngoái; nội sáu tháng thì mất 50% trị giá. Khi thế giới thấy ra sự bất trắc của kinh tế Trung Quốc, một số dư luận cho là đầu tư trực tiếp từ nước ngoài sẽ rút khỏi Hoa Lục để chảy vào xứ khác, như Việt Nam.

Những chuyển động từ Trung Quốc

Việt Long: Thưa ông, câu hỏi đầu tiên là giới đầu tư có thật rút khỏi Trung Quốc không?Nếu đúng vậy thì tại sao? Phải chăng thế giới bắt đầu thấy Trung Quốc tuột đỉnh như ông phân tích trong chương trình tuần trước?

Nguyễn Xuân Nghĩa: Thưa chưa hẳn vậy. Chúng ta cần thận trọng khi nói về nguyên nhân của các chuyển động lớn vì còn cái duyên, theo kiểu ta hay nói trên diễn đàn này, là thời điểm khi nào xảy ra, vì sao...

Đầu tiên, khi nói đến đầu tư trực tiếp của nước ngoài vào Trung Quốc, ta nên phân biệt ba loại. Thứ nhất từ Tây phương thì số lượng không thay đổi nhiều sau khi xứ này gia nhập Tổ chức Thương mại Thế giới WTO. Thứ hai là nguồn đầu tư từ các lân bang Đông Á, thì quả là có tăng và nay bắt đầu giảm. Thứ ba là nguồn tài sản từ các doanh nghiệp Trung Quốc được lập ra ở bên ngoài để tìm mối lợi về thuế vụ và đầu tư ngược vào trong. Khoản tiền ấy cũng giảm và là mặt thật của nạn tẩu tán tài sản mà diễn đàn này cũng đã phân tích từ năm ngoái.

Theo bộ Thương mại Trung Quốc, trong bốn tháng đầu năm 2008, đầu tư nước ngoài được thực hiện đã lên tới 35 tỷ đô la, tăng 60% so với cùng kỳ năm ngoái. Nhưng thực tế thì số dự án đầu tư được chấp thuận đã giảm 23% so với cùng kỳ năm ngoái. Tức là chiều hướng rút chạy mới chỉ manh nha, nhưng có thể gia tăng trong thời gian tới.

Việt Long: Nhưng vì sao lại có hiện tượng rút vốn đó?

Bây giờ, khi Việt Nam cần đầu tư quốc tế thì ép công nhân khiến họ phải đình công biểu tình, nhưng sau này cũng sẽ lại áp dụng bài bản Trung Quốc để dùng công đoàn ép doanh nghiệp. Nhìn về dài, rời Hoa Lục mà vào Việt Nam thì cũng như bước vào một tỉnh lạc hậu của Trung Quốc với cùng luật chơi.

Nguyễn Xuân Nghĩa: Tùy theo xuất xứ mà ta có thể tìm ra nhiều nguyên nhân khác nhau. Thứ nhất là tư bản nội địa là các đại gia có chức có quyền đã hết tin vào kỳ vọng sinh lời tại Hoa Lục. Thứ hai, đầu tư Đông Á và Tây phương cũng bắt đầu hoài nghi thị trường này vì nhiều lý do.

Lý do đầu tiên là bất ổn chính trị trong nội bộ khiến lãnh đạo Trung Quốc bắt đầu có ý đổ lỗi cho tư bản và doanh nghiệp nước ngoài về khó khăn xã hội bên trong. Một thí dụ điển hình là họ dùng luật lệ lao động và công đoàn quốc doanh để gây sức ép với doanh nghiệp ngoại quốc. Lý do thứ nhì là vì mức sống có cải thiện tại các tỉnh duyên hải, lương bổng tăng làm lợi thế nhân công rẻ mất dần giá trị, trong khi ấy những đòi hỏi của công nhân về điều kiện lao động an toàn và lành mạnh hơn đã gây nhiều tranh chấp hơn trước.

Ngần ấy yếu tố tác động trước hết vào các cơ sở đầu tư hay thu mua nhỏ lẻ. Mai này có thể chi phối cả các công ty lớn, như Wal-Mart hay Home Depot, khi đó nạn tháo chạy ào ạt sẽ xảy ra. Cũng cần nói ngay là một số vấn đề Trung Quốc đã gặp thì hiện cũng có tại Việt Nam, chưa kể tâm lý khủng hoảng đang tràn lan thị trường Việt Nam. Vì vậy, câu trả lời ngắn gọn là mình đừng nên đặt quá nhiều kỳ vọng vào nguồn tiền từ Trung Quốc sẽ chảy vào nước ta.

Cơ hội cho Việt Nam?

Việt Long: Xin đi qua phần hai: ông có nói đến nhân và duyên hoặc những chuyển động xa hay gần là tùy thời điểm. Trong một giả thuyết lạc quan thì nếu vượt qua được sóng gió hiện tại, liệu Việt Nam có thể là nơi thu hút khối lượng đầu tư đang rút khỏi Trung Quốc không?

Nguyễn Xuân Nghĩa: Tôi thiển nghĩ là có, mà không nhiều, nhưng lại là nguy cơ lâu dài nếu lãnh đạo Hà Nội ước mơ điều ấy khi thấy nhập siêu tiếp tục tăng, trong sáu tháng đầu năm đã lên tới gần 17 tỷ đô la.

Lý do thứ nhất là vì lạc quan với viễn ảnh hội nhập WTO, năm ngoái đầu tư trực tiếp từ nước ngoài vào Việt Nam có tăng gấp đôi so với năm kia. Rồi số cam kết trong sáu tháng đầu năm nay đã lên tới gần 32 tỷ, hơn cả năm 2007 tới 10 tỷ. Nhưng, tiến độ thực hiện các dự án thì vẫn chậm như cũ nên Việt Nam mới chỉ sử dụng được chừng một phần ba, là cỡ bảy tỷ đô la số cam kết năm ngoái. Tức là thiên hạ hồ hởi gom tiền mà Việt Nam vẫn chậm lụt. Vì vậy, nếu đầu tư nước ngoài mà có rút khỏi Trung Quốc và tràn vào Việt Nam thì chưa chắc xứ này đã kịp nuốt trôi, và nếu không trôi thì sẽ ộc qua ngả khác thành lạm phát.

Việt Long: Khi ông nói "thứ nhất" thì nghĩa là còn có nhiều yếu tố khác cũng đáng kể phải không?

Nguyễn Xuân Nghĩa: Thứ hai là Việt Nam nuôi hy vọng thay thế Trung Quốc vì lương bổng rẻ, chứ nhiều xứ nghèo hơn cũng có thể nuôi hy vọng đó. Nếu Bangladesh với dân số 150 triệu cũng xếp hàng chờ đợi thì lợi thế lương bổng rẻ của Việt Nam có thể tiêu hao, cho nên xin đừng vội lạc quan!

Thứ ba, xã hội và môi trường đầu tư Việt Nam không khác gì Trung Quốc với ngần ấy tệ nạn tham nhũng hay ách tắc vì luật lệ rườm rà. Cả hai đều có thói chung là đề cao tinh thần dân tộc, sai khiến báo chí và sử dụng công đoàn quốc doanh làm võ khí bắt ép đầu tư. Bây giờ, khi Việt Nam cần đầu tư quốc tế thì ép công nhân khiến họ phải đình công biểu tình, nhưng sau này cũng sẽ lại áp dụng bài bản Trung Quốc để dùng công đoàn ép doanh nghiệp. Nhìn về dài, rời Hoa Lục mà vào Việt Nam thì cũng như bước vào một tỉnh lạc hậu của Trung Quốc với cùng luật chơi là không có nghiệp đoàn tự do hay công đoàn độc lập. Mà yếu tố ấy vẫn chưa là căn bản.

Việt Long: Sau khi nêu ra ba bốn yếu tố bi quan, ông còn nói rằng đấy chưa là vấn đề cơ bản! Chẳng lẽ còn nhiều lý do kém lạc quan hơn hay sao?

Giải pháp lâu dài - mà vì lâu dài nên phải khởi sự ngay - là chú trọng tới phẩm hơn lượng. Cụ thể là nâng cao tay nghề của nhân công và trình độ chuyên môn của kỹ sư Việt Nam, là ưu tiên đầu tư vào giáo dục và đào tạo, hơn là vắt lương thợ để kiếm lời.

Nguyễn Xuân Nghĩa: Tôi thật không thích xối nước vào đám rước nhưng mình vẫn phải nói ra vài ba điều kém vui. Nhật Bản là chủ nợ và chủ đầu tư đáng kể tại Đông Á nên từ năm ngoái đã nghiên cứu kỹ việc chuyển dịch đầu tư vào Việt Nam là điều mà diễn đàn này đã nói tới với nhiều hy vọng. Gần đây, cơ quan khuếch trương ngoại thương Nhật, mà thế giới quen gọi tắt là JETRO, vửa công bố kết quả khảo sát ý kiến doanh nhân của họ về triển vọng làm ăn tại Việt Nam.

JETRO báo cáo là năm 2006, tỷ lệ ủng hộ việc làm ăn tại Việt Nam lên tới cao điểm là 75,4%. Qua năm 2007, khi Việt Nam ăn mừng việc gia nhập WTO, tỷ lệ đó chỉ còn là 41,7%! Mà đấy là kết quả khảo sát ý kiến doanh gia Nhật trước khi khủng hoảng hoành hành tại Việt Nam và lý do chính khiến họ bớt tin tưởng là vì ách tắc hành chính quá lớn và rất bất nhất tùy tiện của Việt Nam, theo ý kiến của họ thì còn khó lường hơn Trung Quốc! Mà nhìn trong trường kỳ thì đấy vẫn chưa phải là chuyện đáng ngại nhất.

Hỏi: Ông nêu ra rất nhiều yếu tố cản trở mà vẫn kết luận là chưa đáng ngại nhất! Nếu vậy, còn lý do gì khác khiến Việt Nam không nên "hồ hởi sảng" như ông thường nói?

Nguyễn Xuân Nghĩa: Lý do đáng ngại nhất là khả năng hấp thụ tư bản để sinh lời, yếu tố chính là giới đầu tư ngoại quốc nghĩ khác với lãnh đạo Việt Nam.

Nói về tính toán kinh doanh, nếu muốn vào Việt Nam lập hậu cứ chế biến và tái xuất khẩu ra ngoài thì làm sao nhà đầu tư có thể sinh lời nhiều trên một khu vực có hạ tầng cơ sở vật chất thô thiển, hạ tầng luật lệ nhiêu khê như vậy? Diễn giải cho dễ hiểu hơn thì đầu tư ngoại quốc vào Việt Nam đã quá nhiều nên sớm bão hoà. Cho nên chưa chắc là các đại gia về phân phối hay chế biến như Wal-Mart hay Procter &Gamble sẽ rời Trung Quốc để dồn dập đổ bộ vào Việt Nam. Đây rõ ràng là chuyện lượng kém phẩm.

Các giải pháp cần có

Việt Long: Chúng ta đang đi vào đoạn kết. Nếu triển vọng tiếp nhận đầu tư của Việt Nam thật ra lại thiếu sáng láng như vậy thì, thưa ông, đâu là giải pháp cho Việt Nam?

Nguyễn Xuân Nghĩa: Trước mắt, chúng ta đừng rót nước đường cho nhau uống mà nên hiểu tâm lý của giới đầu tư. Tất cả tùy vào năng suất: cùng một đồng đầu tư vào một người trên một mét vuông, nơi nào sinh lợi cao nhất thì họ tìm đến. Dựa vào lợi thế nhân công rẻ và ép lương thợ thuyền để chiêu dụ đầu tư vào ngành ráp chế thì Việt Nam thi hành một chính sách bất công và không bền vì các xứ nghèo hơn cũng sẽ làm như vậy. Chung cuộc thì vẫn không có "sản phẩm của Việt Nam" mà chỉ có sản phẩm "chế tạo tại Việt Nam", mai này sẽ ráp chế tại nơi có lương rẻ hơn.

Giải pháp lâu dài - mà vì lâu dài nên phải khởi sự ngay - là chú trọng tới phẩm hơn lượng. Cụ thể là nâng cao tay nghề của nhân công và trình độ chuyên môn của kỹ sư Việt Nam, là ưu tiên đầu tư vào giáo dục và đào tạo, hơn là vắt lương thợ để kiếm lời.

Việt Long: Rõ ràng là ông đang trình bày một cách nhìn khác về đầu tư.

Nguyễn Xuân Nghĩa:  Thưa đúng thế, một cách nhìn và cách sống khác. Hãy nhớ tới hai trung tâm thu hút đầu tư rất lớn trên diện tích rất nhỏ với dân số cực thấp như Hong Kong hay Singapore. Sàigon đã mất vị trí xứng đáng của mình cho Singapore và nay lệ thuộc vào giới đầu tư quốc tế có trụ sở tại đấy, trên một lợi thế đau buồn là nhân công của ta rẻ hơn của họ! Nhân công của ta làm thợ, của họ làm thầy, và họ làm chủ, chỉ chia lời cho lãnh đạo là xong. Mức lời giảm là họ bỏ đi nơi khác.

Nếu nhìn lại cho rõ, ta nên thấy môi trường kinh doanh tự do trong sạch với nguồn nhân lực có kiến thức và năng suất cao khiến hai nơi đó tiếp nhận đầu tư và trở thành trung tâm kinh doanh và dịch vụ mà ai cũng muốn bảo vệ để kiếm lời. Người dân hai nơi đó cũng không là lao nô hay mại bản cho thiên hạ tùy ý sai xử hay hành hạ. Vì vậy, Việt Nam cần thoát khỏi ảo ảnh đầu tư ngoại quốc và nhất là đừng quên nội lực đích thực là trí não và tay nghề của người dân.

Công nhân Việt Nam tại nhiều nơi, từ Bắc chí Nam vẫn tiếp tục đình công để đòi hỏi công ty giải quyết vấn đề lương bổng thấp, cải thiện điều kiện làm việc, cũng như phản đối cách cư xử của giới chủ nhân. RFA file photo.

Nói về sức hấp thụ, thì Trung Quốc nhận được cỡ 84 tỷ đẩu tư nước ngoài cho một dân số một tỷ ba, gấp 15 lần Việt Nam trên một diện tích rộng gấp 33 lần. Cùng lúc đó, Việt Nam nhận được 23 tỷ cho dân số 85 triệu trên mảnh đất nhỏ hơn Hoa Lục. Về địa dư và dân số, trung bình một người Việt nhận được đầu tư nước ngoài là 270 đồng, gấp bốn người Hoa trên diện tích bằng 3% diện tích Trung Quốc. Một lối so sánh khác thì đầu tư trực tiếp vào Trung Quốc ở quãng 3% tổng sản lượng nội địa GDP, chưa bằng một phần ba tỷ lệ của Việt Nam. Đây là chưa nói tới đầu tư nước ngoài vào thị trường chứng phiếu Việt Nam, cũng lên tới gần 9% GDP và đã thổi lên lạm phát và đầu cơ vì hối suất quá rẻ của Việt Nam.  Mật độ rất cao của Việt Nam là ảo giác nguy hại vì tư bản trút vào quá nhiều mà không hấp thụ nổi để đưa vào sản xuất thì sẽ chảy qua đầu cơ.

Môi trường đầu tư Việt Nam đã đủ sức thu hút và giữ chân các công ty nước ngoài? AFP PHOTO

Lý do thứ ba thuộc về thời điểm là hàng loạt vấn đề mới. Từ đầu năm 2006, Trung Quốc có nâng tỷ giá Nhân dân tệ và xiết chặt luật lệ đầu tư hầu tránh nạn đầu cơ tài chánh của luồng tiền nóng dư dôi đã khai thác việc đồng bạc lên giá. Kế đó, Trung Quốc cũng giảm đặc miễn thuế vụ cho loại dự án ít giá trị gia tăng. Sau cùng, nạn nguyên nhiên vật liệu lên giá khiến sản xuất có thể bị gián đoạn vì thiếu điện và mai này sẽ còn tốn kém hơn vì hết trợ giá xăng dầu.

But is it what we really require? The RBI seems to have a notion that the current crisis is demand pull inflation where too much money chases too few goods. Rather the case right now is that of Cost-Pull inflation wherein the companies have to increase cost of commodities as a result of increased input costs like hike in oil prices, raw materials, basic metals and increased tax rates and import duties. This is very similar to what we have been observing off-late where the prices of inputs which go into manufacturing of these commodities have grown over the time. While the appreciating rupee saved us from the wrath last year, this fiscal the rupee has depreciated as well.

The policy of the RBI is going to lead to stagflation (high unemployment and economic slowdown).

1.   The current food crisis led to government completely banning export of major food commodities and completely decreasing the tariffs on imports. This would surely hurt the revenues of the govt. and also the overall economic growth to some extent.

2.   Moreover the RBI on increasing the rates has resulted in greater difficulty for the corporate sector to get loans from the govt. in terms of debts, moreover the markets are difficult to get the cash flowing to these corporations due to the increased alienation of the market by the investors due to inflation (as seen by the continued downward trend of the markets). This will only lead to companies shunning economic expansion and further slowing down the economic growth of the country.

3.   The increased interest rates are going to hit the general public by and large. Due to increase in the repo rates by the central bank (RBI), the banks are going to increase the primary lending rates which will be generally ranging from loans for homes, automobiles and even study loans. The consumers taking loans at this time should take a loan on floating rates so that when this inflation is finally tame and the rates are finally decreased they still don't keep paying the same as they will be now. Moreover consumers already facing the music due to increased rates and EMI's should try to increase the duration of payment in years to bring down the EMI.

4.   The biggest sector that is going to be hit by this interest rates hike is the Real Estate sector which is so susceptible to the market interest rates. As the customers are going to stay away from taking loans and buying the property the sector will generally slowdown. Moreover the big corporations are just going to wait before rolling out any expansion plans, so cutting down on infrastructure and further slowing down this sector. However because this is going to drive property prices slightly lower in most markets, it is not going to be a particularly bad idea to buy properties right now, probably on floating rates.

5.   Another sector which is particularly going to suffer is Automobile sector. Already the input costs like steel have gone up, the oil prices have gone up keeping consumers away from the roads and now the increased rates will surely slow down the sales, and most of the CEO's won't be able to achieve their targets.

6.   However as the lending rates will go up, so will the rates at which banks borrow from individuals and companies. So the particular debt-free cash rich companies are going to gain. Moreover this is generally going to make the market less attractive. Moreover as Markets are meant to give you better returns than the banks especially in terms of maintain the purchasing power of your money over the years. Moreover more and more people are leaving the markets; FII's as well who are anticipating a general economic slowdown. However this should be seen as the best time to jump-in the stock market.

7.   Moreover the cap on FDI will generally keep away the investors from investing in the country due to a nominal appreciation only, so the cap must be increased. We observed that FDI cap in Real Estate in India has gone up leading to a lot of infrastructral investment and economic activity.

8.   At the same time the depreciation of the rupee has to be controlled in the wake of increased international oil process. This will further help in taming the inflation. Some export oriented sectors will be affected but then the present situation demands a more balanced approach.

As the lending rates increase and the liquidity crunch prevails, will generally tend to economic slowdown. However the RBI and the govt. must try to find out better ways to balance the rising inflation and economic growth of the country.

“The investors have seen that the real estate potential in India is huge. The returns are quite attractive. In fact, we see the trend picking up even further this year as the prices are getting more attractive for investors,” Ramesh Sanka, Chief Financial Officer at DLF said.

Late last year, DLF Ltd had sold 49 per cent stake in eight residential project SPVs to private equity investors for a total consideration of Rs 1,675 crore.

A Merrill Lynch & Co entity had bought 49 per cent equity in seven residential projects in Chennai, Bangalore, Kochi and Indore for Rs 1,481 crore. The company — headed by K P Singh — has also diluted 49 per cent stake, in another middle-income housing project in Panchkula, Haryana, to Brahma Investments for Rs 194 crore.

According to data released by the Government on Tuesday, the real estate sector, thrown open in 2004-05, saw the FDI picking up significantly between FY05 and FY08; it was Rs 171 crore in 2005-06 surging to Rs 2,121 crore in 2006-07.

“Over the last three years, there has been a build-up in investor interest. We saw the impact of that interest and euphoria for FY07 and FY08 as new townships and projects were announced. Depending on the asset class within real estate sector, the average rate of return stood at 25-35 per cent for India, against a global average of single digit return,” Sanjay Verma, Executive Managing Director, South Asia, of Cushman & Wakefield said.

“However, at the beginning of the current year we have seen some asset bubble deflation. With prices moving southwards, choppiness in the stock markets, pressure on interest rates and global issues, while deals will still happen, pricing will be the question,” Verma added.

The Royal Garden Villas and Resort in Bangalore is a master-planned gated community with exclusive amenities, including a chateau winery, opulent club house, world-class spa and pool. Besides these, the property also boasts a five-star hotel, Vijay Amritraj Tennis & Fitness Center, internationally renowned shops, restaurants , an equestrian center and supermarkets.

Also included in the plans is a movie theatre, which is slated for phases 2 and 3. “We see the integrated township format as a key driver of future housing supply and as a catalyst for the much needed infrastructure investments in India. The Indian government has spelt out key incentive policies to provide an impetus towards easing the flow of private investments and Royal Garden City is one of the first to have been conceptualised and planned to meet this objective,” says Manoj.

Under this initiative, RIRIC plans to develop firstclass resort communities and modern satellite cities in India, with the first project coming up near the new Bangalore airport. The project is touted to be one of Asia’s largest new city developments and is expected to become a model for such projects. The company has also planned similar projects in Mumbai, Delhi and Kolkata.

The first phase of the 6,000-acre development in Bangalore is conceived to be built on 3,000 acres and will include 13.59 million square meters of built-up space. Further to these developments , RIRIC has partnered with one of the worlds largest hotel chain’s to build budget style hotel rooms throughout India at an estimated investment of US $ 5 billion. The firm also has plans to announce exclusive rights in India with one of the world’s largest realty marketing groups by June.

The Royal Garden Villas & Resort, Bangalore, RIRIC’s inaugural project, lies on approximately 400 acres of prime land situated between downtown Bangalore and the new Bangalore International Airport. The project will offer residential apartments from bungalows to townhouses and the ones modelled after luxurious western subdivisions. Manoj says, “We will offer affordable homes from $ 80,000 to $ 300,000, as well as high-end villas that are in the half million dollar range.”

Through ingenious landscaping and architectural designs, Royal Garden Villas & Resort has been endowed with the look, feel, grace and sense of community enjoyed in Tuscany, but also offers amenities that could never even be imagined in rural Italy. Tuscany Square, in the heart of the Royal Garden Villas, is not just elegant but a standing testimony to refined living. In the charming piazza, with its feeling of a friendly neighborhood, residents, along with their children and guests, can sample fine cuisine or casual fare, the best of local and imported goods, or simply relax by the fountain and plan the rest of the day.

According to the provincial Planning and Investment Department deputy director Nguyen Luc Hoa, Dong Nai also attracted 7 trillion VND in domestic investment capital, a seven-fold increase over the same period last year. The province’s gross domestic product (GDP) grew by 15.3 percent over the same period last year to reach 12.7 trillion VND, or 43.7 percent of the yearly target.

The construction and industry sector rose by 15.8 percent while the service sector increased by 17 percent and the agro-forestry and fisheries sector, up 5 percent.

The property will consist of around 180 rooms, a coffee shop and a speciality restaurant. It will also house Chuan Spa, the group’s spa brand. The group will also focus on developing an extensive conferencing facility to cater to the meetings, incentives, conferences and exhibitions (MICE) segment.

Besides this property, LHI also plans to expand its presence in the Indian market. “We’re in discussions with several real estate developers in India, and are considering locations in key cities like Mumbai, Ahmedabad, Delhi, Chennai, Kolkata, Goa and Bengaluru,” says Helmut Knipp, Senior Vice President - Development, Langham Hotels International

Economic slowdown in both the developing and the developed countries, the rising inflation rates touching a high of 11.05% in past 13 years due to rising oil prices which touched a new high of $140 per barrel which is double compared to $70 per barrel in August 2007 are the main reasons for the failure to achieve
the target of $35 billion in current fiscal.

The above main two reasons along with other reasons like huge volatality in the stock market, low infrastructure investments, failure on governments side to strike a deal between U.S regarding Nuclear deal will result in the failure to achieve target by $7-8 billion as predicted by CEO's of leading companies,
in a meet organised by Associated Chambers of Commerce and Industry of India(Assocham).

Finance Minister P. Chidambaram has proposed a request to oil producing countries to increase production which will stabilize the oil price in Internaional Market. He advocated a new mechanism "Price band mechanism" according to which there is high end and also a low end between which the prices are bound to
fluctuate so that both the producers and the consumers will not be affected too much by price rise.

According to Sajjan Jindal the Assocham President the domestic industry profitability would come down by 15-20% due to insurmountable inflation rate.In the previous fiscal the FDI inflows were estimated to be $25 billion as against the expected flow of $30 billion.   

Relatório reservado nº3405 24/06/2008: The rumor-mill has it that the MSCI Emerging Market Index will promote some of its markets out of the "emerging" category, lending greater weight to Brazil, among others.

Disclosure: MSCI Barra's EWZ exchange-traded fund is the only variable-rate security I own. I bought a fairly piddling amount at $19 on a whim at the suggestion of Omar the Art Director, a former co-worker, and saw it go as high as $102.

I have not seen the latest prospectus for the thing yet -- our snail mail from New York arrives via clipper ship, rounding Tierra del Fuego. I remember thinking that the portofolio contained enough heterodox debt paper that I could not really make heads or tails of how it was supposed to track the iBovespa index. But then again, I majored in poetry.

Dentro do próprio Morgan Stanley no Brasil, já se dá como certa uma mudança no MSCI Emerging Market – índice criado pelo banco e que serve de balizador para seus investimentos em países emergentes. Nos próximos dois meses, Coréia do Sul, Taiwan e Israel, que representam 26% do MSCI, seriam promovidos a "mercados desenvolvidos". Com isso, a expectativa é que o Brasil aumente sua participação no índice, o que geraria um maior fluxo de recursos para o país.

Inside Morgan Stanley Brazil, it is given as a sure thing that the MSCI Emerging Markets Index, created by the bank and used as a trial balloon for its investments in emerging economies, will soon see changes.

In the next two months, South Korea, Taiwan, and Israel, which together represent 26% of the index, will be upgraded to "developed markets," and with that, expectations are that Brazil will weigh more heavily in the composition of the index, which should lead to an increased flow of foreign investment.

Omar the Art Director sold his EWZ at $35, by the way. Scuttlebutt in the Yahoo Finance forums said that was all the thing was really good for in the near term.

Which just goes to show you: You should not be taking investing advice from Quark jockeys like Omar or translation nerds like me. I, for one, claim absolutely no knowledge of the subject, though local friends bitten by the day-trading big think I am just being modest.

I am not.

SHOULD THE WORLD BE CONCERNED ABOUT RUSSIA AND INDIA?

Shapiro discusses why Russia and India will not be able to match the United States or China in relative successfulness. He points out India is ranked 118th in the world for literacy.

Additionally, the Indian economy is still greatly underdeveloped. 60% of Indian labor is based in agriculture, and 20% is centered in extremely small, often one-person-businesses due to a regulatory culture with restrictive land policies and subsidies to miniature businesses that impedes business consolidation (101).

In comparison, a little less than 1% of the US's economy is based in highly productive agriculture, and 43% of China's workers serve in agricultural fields, all according to the CIA's World Factbook. 

In 2004, partially due to restrictive government policies, India received only $5.3 billion (2.3%) of the world's FDI that was sent to developing countries; China received $60.6 billion (over 20%) (162). While this indicates India has potential to grow; the changes in regulatory environment need to come much quicker to encourage such growth.

India's Democratic society is far less likely to sanction the painful changes than China's semi-autocratic government permitted to increase efficiency and development. China ended many state pensions, reduced health benefits, and evicted thousands from their homes. Shapiro does not believe India has the political will to carry through similar needed reforms.

Shapiro does not discuss, but it bears mentioning that India also faces a military challenge. With unrest and instability increasing in Pakistan, the chances for an armed confrontation over Jammu-Kashmir and other disputed regions may increase.

Muslim-led terrorist attacks, such as a 2006 train bombing by extremists that killed over 170, have been significant in recent years (See the Jamestown Foundation's Terrorism Monitor and the CFR report on Indian terrorism for more information; an Indian think tank discusses terrorist violence in India  and points out that the number of yearly deaths have declined from 2002 to 2006, but still over "2,765 people died in terrorism-related violence in India during year 2006." [Important to note: some violence involved other groups such as the Naxalites])

Shapiro also avoids in-depth discussion of possible China/India and China/United States confrontation in the near future. China and India have been working hard to resolve border disputes, but all disputed land is not yet resolved. Additionally, both have interests in Southeast Asia, and their expanding navies could come into a conflict over operational spaces. A naval confrontation over bottlenecks such as the Strait of Malacca, however, will not be likely until both countries develop their militaries to become true regional powers- something that will elude China until the mid to late 2010s, and which India may not achieve until the 2020s.

RUSSIA

Shapiro argues Russia's demographic decline (its aging and population decrease) will contribute to a drop in productivity that will be exacerbated by a murky legal environment that could discourage foreign investment and development. Considering how Russia is currently benefitting from $135 a barrel oil, it is becoming much more flush with cash.

But extra cash does not necessarily equate to extra power. Mexico, Saudi Arabia, Nigeria, and other Middle Eastern states have squandered huge oil windfalls in the past without managing to pull their countries out of poverty and into fully sustainable modern economies.

Shapiro's analysis of Russia could have benefitted from an indepth discussion of the effect that increasing linkages between China and Russia might have in spurring Moscow to faster development.

China/Russia trade was $50 billion in 2007, and Russia is China's 8th largest trade partner. Chinese FDI in Russia is estimated at only $3 billion in 2006, "less than 5% of total FDI stock in Russia," according to a report in the China and Eurasia Forum Quarterly. However, that amount of Chinese FDI sent abroad still accounts for the 6th highest Chinese foreign FDI received by any country in 2006 (excluding tax havens).

Russia may have the largest FDI ODI (Outward Directed Investments) of the BRIC (Brazil, Russia, India, and China) countries-- valued at $50 billion+ in 2007, but its FDI has yet to have a large positive effect on foreign countries. Russia's largest investment targets are located in Cyprus (receiving 37.5%), Luxembourg (26.7%), and the United States (6.7%). Of Russia's allies in the CIS (Commonwealth of Independent States), Armenia and Belarus receive the most investment according to Deutsche Bank, but it would be difficult to argue that either of those countries has become an economic success due to Russian development.

A later analysis will examine the Russian/China energy trade, but the data for Russia/China business and resource trade, according to Deutsche Bank and a China-Eurasia Forum Quarterly report by Libor Krkoska and Yevgenia Korniyenko, indicates Russia's culture of bureaucratic inertia will disrupt development. Also, Russia's corrupt business practices have gotten worse, according to Freedom House, which might stunt further development. 

Russia has a long way to go before it can become a viable partner for China, and historical tensions between the countries might yet preclude strong agreement and alliances in the next five to ten years.

RECIPE FOR SUCCESS?

Shapiro lauds slashing corporate tax rates [as was done to good effect in Sweden and Ireland] (33) and convincing workers that "their interest lies in accepting fewer benefits and less economic security from their governments" (32), since "the American and Chinese approaches can sustain themselves over the next generation, while Japan and Europe's systems cannot" (34).

Shapiro points out that from 1990 to 2006 "the global market share of European manufacturers shrank from 18.5% to just over 14%, while the global market held by American companies rose from 21 to 23%" (183). He cites that the key to growth-- he gives Ireland as an example [especially due to its IT and Pharmaceutical industry successes] (201)-- is to "open its economy to foreign competition and investment."

"In 2006, Europe's major countries accounted for just 10% of world GDP, less than 1/2 of what America produced that year" (176).

Shapiro spends the rest of the book discussing challenges in health care, energy, and the environment, lamenting a possible doomsday-scenario of economic collapse in China coming on $150 a barrel oil. We'll see how that plays out. China's Oil Price Freeze discussed some of the tensions threatening to emerge in response to China's insistence on keeping energy prices stuck at November 2007 levels, and Consequences of China's Oil Price Hike discussed tensions that might emerge now that China has raised some energy prices.

CONCLUSION

Futurecast offers little new specific for China-watchers and makes a few slightly dubious surface-assertions in regards to Chinese strengths and weaknesses, but that has to be expected from a broad overview. The book is easy to read, and doesn't make any glaring errors.

If one is reading for a broad and ambitious look at future geopolitics two to ten years down the line, this book is a good read. I would recommend it to a person who is generally interested in China, or anyone who wants to feel happy about the United States' place in the world community since this book does an excellent job of Pro-America cheerleading. 

http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=7933596&story_id=11565600

Foreign direct investment

Follow the money

Jun 16th 2008
From Economist.com

China gets most foreign direct investment among developing countries, but its share is falling

DEVELOPING countries are attracting more foreign investment than ever before. Since 2000, FDI inflows have rocketed from $165.5 billion to an estimated $470.8 billion in 2007 says the World Bank. China draws the most, attracting $84 billion of investment last year. But this represented 18% of the total compared with 30% five years before. By contrast, Brazil and Turkey have seen their share increase. Investment has poured into Russia, mainly because of its energy boom, even despite increasing regulatory hurdles to foreign investors. Mexico is the fourth-biggest destination country, receiving $23.2 billion in FDI—the same as it gets in remittances.

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http://www.economist.com/markets/rankings/displaystory.cfm?story_id=9723875

Foreign direct investment inflows

Rivulets and riptides

Sep 13th 2007

The United States and the developed European Union are the main recipients of foreign direct investment

The Business Recorder reports today that Mr. Wang Gian Zhuo, the President of China Mobile has announced that his company's plans in Pakistan will be augmented by a further $800 Million investment to develop infrastructure and lay the ground work for more advanced service provision. And as a demonstration of their commitment to Pakistan, China Telecom has also announced that they will be launching several initatives for socio-economic uplift, including the distribution of free text books to deserving children in the country. Great idea and something that will go a long way in building goodwill for China Telecom and its products!

Here's more from the BR:

China Mobile to invest further $800 million in Pakistan
BEIJING (June 20 2008): China Mobile, the world's largest telecommunication organisation will make further investment amounting to $800 million in Pakistan. The President of China Mobile, Wang Gian Zhuo said during a meeting with Pakistan Foreign Secretary, Salman Bashir in Beijing on Thursday.

China Mobile has already made an investment of $800 million in Pakistan. Wang said that besides making further $800 million investment, he would also pursue many internationally acclaimed telecommunication organisations like Sony-Erricson to take part in the development of telecommunication sector in Pakistan.

Further, he said that Pakistan has great deal of opportunities for foreign investors as it offers equal level playing fields for both foreign and domestic investors. The President of China Mobile said that he had recently held very fruitful meeting with the Pakistani leadership and was impressed about the incentives Pakistan offers to the foreign investors, particularly for the Chinese. Zhuo informed the Foreign Secretary that China Mobile would also contribute in the socio-economic uplift of the people of Pakistan.

In this connection, he pointed out that his organisation would provide free textbooks to the young students so that they could carry out their studies in a smooth way. The Foreign Secretary thanked Zhou said that his country would provide all possible assistance to the Chinese investors in Pakistan.

According to sources, Lehman is negotiating with Unitech for a similar stake in two projects of 1 million sq ft each in the Santacruz project. This would mean an investment of $350 million. These two deals are likely to materialise in the next 3-4 months.

Besides, Lehman and Unitech may strike another deal to develop a 1 million sq ft office space in Worli. Sources say this deal may be closed sooner, as the negotiations in this case have reached a fairly advanced stage. Indications are that Lehman is willing to invest nearly $175 million in the project. Unitech holds 50% equity in the Worli project.

Unitech on Monday said Lehman has agreed to invest approximately $175 million (Rs 740 crore) to acquire a 50% stake in the initial phase of the Santacruz project on the Western Expressway of Mumbai.

Unitech shares, which are down close to 60% this year, gained 5.6% on BSE to close at Rs 197.80 on Monday following the announcement of the deal and a broader surge in the market. The benchmark BSE Sensex gained 1.36%.

As per the agreement, Lehman gets 50% equity in the SPV, which will develop just 1 million sq ft of the entire project of 18 million sq ft of office space in Santacruz. The Western Expressway JV - an equal partnership between Unitech and a local Mumbai developer - owns the entire project. The JV has thereby offloaded its 50% stake in the SPV in favour of Lehman. The deal has valued the entire Santacruz project at Rs 26,640 crore.

Lehman’s current and proposed investments in real estate projects are being seen as a major boost to the Gurgaon-based developer. The global credit crisis, RBI’s policy towards lending to real estate and falling realty stocks have together forced Indian realty firms on the backfoot.

India’s leading developers DLF and Unitech have postponed their office trust share sale in Singapore, even as borrowings from banks have substantially gone up. Smaller developers are facing a bigger crunch in the absence of bank credit and are forced to borrow at an exorbitant rates from non banking finance companies and HNIs.

In the given scenario, private equity has emerged as the only viable option. But industry sources say that even PE players are using the changed circumstances to their advantage, forcing developers to settle for lower valuation of land, the prime asset for developers.

2007 was seen as a successful year for FDI attraction with 20.3 billion USD, but that number has been left far behind and Vietnam is now striving to disburse FDI capital inflow of 1 billion USD per month.

“Nankang of Vietnam”

The Thu Thiem Software Park project capitalized with 1.25 billion USD by Saigon Tel, a member of Saigon Investment Group (SGI) and TA Associates International, Pte Ltd Co from Singapore, a member of Teco Group in Taiwan will be licensed by Ho Chi Minh’s People Committee. On a site of nearly 16 hectares along the east – west avenue of the Thu Thiem new urban area, the project will be built into a software processing city for export to design chips and train human resources in the hi-tech field, with an expected turnover of more than 6 billion USD per annum.

Apart from the initial 1.25 billion USD, the project is expected to attract an additional 2.95 billion USD from foreign and domestic investors.

“Our partner, Teco Group is managing the Nankang software center with total capital of 3.5 billion USD, earning annual turnover of 10 billion USD. Nankang is considered one of the three largest software projects in the world. Nankang’s successful experience and Teco’s reputation will help attract investment into the Thu Thiem Software Park,” said Mr. Dang Thanh Tam, President of SGI Group.

More “cautious” investors

Six months will draw more than 23 billion USD of FDI

Mr. Thang forecast FDI in the first six months will exceed 23 billion USD, the highest rate ever. He also said that about five large projects, including the Nghi Son Oil Refinery Plant worth 6 billion USD, will be licensed from now to the end of this month. Furthermore, FDI capital in technology is soaring.

This week, 14 US companies in many fields led by an assistant to the US trade minister will visit Vietnam to seek business and investment opportunities. This is the third big business group from the US coming to Vietnam since early this year.

“Small and medium-sized companies following big companies showed that US investors hail Vietnam’s business environment. Small companies are usually cautious and afraid of risk, thus the trip to Vietnam proved their confidence in the market,” said an expert from US Commercial Affairs.

Coming back from the Europe, Mr. Dang Thanh Tam said, “Many economic groups in Europe are keen on investing in Vietnam. A 30 – billion USD investment fund in Norway is famous for its conservative mindset but has paid much attention to Vietnam.”

According to Mr. Phan Huu Thang, Head of the Foreign Investment Department under the Ministry of Planning and Investment (MPI), FDI from North Africa, Europe and Japan all show positive signs in the near future.

Efforts to satisfy investors

Although FDI continued to pump into Vietnam, a recent survey by the Japan External Trade Organization (Jetro) revealed Japanese enterprises have become less satisfied with the investment environment in Vietnam. With the approval rate dropping from 75.4 percent in 2006 to 41.7 percent last year, the country has fallen from first to fifth place among six ASEAN countries having Japanese investors. The reason was said to be Vietnam’s under-developed infrastructure and difficulties in purchasing locally-made materials and spare parts.

Moreover, after being improved significantly, administrative formalities in the South showed problems. Investors complained that the waiting time for investment license approval by the Ho Chi Minh Planning and Investment Department is longer than that in Hanoi.

Mr. Thang noted, “We listened to the concerns of investors and are coordinating with local authorities to resolve the issue. We will try to deal with the problem after surveys on project progress in cities and provinces nationwide are revealed. This year, speeding up the disbursement of FDI projects is our top priority.”