Par Value: Vietnamese Investors Sink Savings Into Golf Memberships

Some Vietnamese government officials are teed off over golf.

Transport Minister Dinh La Thang recently banned his staff from playing the game because he said it encourages gambling and makes them late for work.

Other Vietnamese see golf rather differently:

As a way to hold on to their money after years of booms and busts.

With property prices sliding and the local stock market in free fall, some people here are investing in golf club memberships in a last-ditch bid to protect their savings from being ravaged by soaring inflation and a fading currency.

Prices for club memberships around Hanoi have risen from around $6,000 in 2004 to roughly $30,000 now, with some of the plushest, complete with swimming pools, villas and tennis courts, reaching $130,000.

That’s not as expensive as top clubs in Japan or Singapore, but it is still a large slice of change in a country where the average income is around $1,200 a year.

“Buying a membership is better than putting cash in the bank, better than putting it in the stock market, and better than putting it into gold,” said Do Dinh Thuy, a 48-year-old management consultant, amid the steady thwack of balls being driven out onto a local range here in Hanoi’s suburbs.

He recently bought a third membership, “and that one’s not for playing—it’s for investment.”

At first, wealthy Vietnamese hedged against a sliding currency by investing in stocks and, after that market crashed, property.

But now a speculative real estate bubble is popping, creating a fresh headache for the country’s new rich as they scramble to hold on to wealth.

Hence the new swing to golf.

Often clubs offer a set number of memberships when they open and people sign up to join largely on a first come, first served basis.

Later, they can sell their memberships for a profit, with the club usually getting a cut of the proceeds in the form of a so-called transfer fee.

What makes many Vietnamese think that golf club memberships are a one-way ticket to profit is their leaders’ disdain for the fairways—and especially Communist Party bosses’ moves to limit new courses.

The supply shock began two years ago.

Prime Minister Nguyen Tan Dung froze plans to build scores of new golf courses across the country.

Mr. Dung ruled that golf courses were gobbling up valuable farmland at a time when world food prices were spiking to record highs and many Vietnamese were struggling to find enough to eat.

New golf course applications were placed under vigorous scrutiny.

Many were turned down.

Throughout the years, golf has been in and out of fashion.

Nationalist leader Ho Chi Minh reviled the game as a bourgeois import.

In 1975, his followers plowed over the course whereVietnam’s last emperor, Bao Dai, used to play before he abdicated in 1945, and built a fruit farm.

After Vietnam began opening up its economy in the 1980s and 1990s, foreign developers reintroduced the game in a bid to lure visitors from countries such as South Korea and Taiwan, whose companies were beginning to plow funds intoVietnamas a cheap offshore production hub.

Many companies went so far as to consider a good supply of golf courses and cheap caddies wearingVietnam’s distinctive conical hats a precondition for coming to the country.

“It was simple: No golf, no investment,” said Sohn Juk Weon, a local manager at South Korea’s Posco Engineering & Construction Corp.

More recently, Vietnamese officials have taken to banning activities which they feel harm the national interest.

Over the past year, for instance, the government has banned lip-syncing to popular songs on television shows and ordered Internet service providers to shut off online videogames between the hours of 10 p.m. and 8 a.m.

And then there’s Mr. Thang, the transport chief who ordered underlings to quit the links if they want to keep their jobs.

Golf fans are fighting back with rare public pleas to respect human rights in what is still a closely controlled police state.

“It’s not against the law to play golf,” said Le Kien Thanh, vice chairman of the Vietnam Golf Association.

“Mr. Thang must respect the law.”

Mr. Thang didn’t respond to requests for comment.

While the government’s crackdown might be making some golf club members richer, joining a club is a riskier investment than many Vietnamese might realize.

The value of memberships in Japan crashed in the 1990s and has slumped elsewhere in Asia over the past decade as golf slowly lost some of its exclusive cachet.

And playing the sport doesn’t always require a pricey membership.

It is still possible to pay green fees to tee off at many Vietnamese clubs, and at least one bank has a deal whereby customers can deposit money and get free games at golf courses near the main cities, Hanoi and Ho Chi Minh City.

Golf market experts here believe the government’s abhorrence of the game makes club memberships as valuable as other things the authorities don’t much like, such as gold and U.S. dollars, and could spare Vietnamese investors the bogey which others have hit.

“Golf memberships are a rare item; it will stay that way,” predicted Truong Thanh Huyen, a 27-year-old trader.

She recently brokered the purchase of a membership in Nha Trang, southern Vietnam, for $19,000.

“Now the open market value is up to $25,000,” Ms. Huyen bragged, checking the latest prices on her iPhone.

Back at the Hanoi driving range, Mr. Thuy agreed.

“But you’ve got to get in fast,” he said.

“That’s one of the key principles of capitalism.”

 By James Hookway

Source: The Asian Wall Street Journal


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s