Nearly all sinking developer's staff get unpaid leave

Explaining the decision, HDTC chairman and CEO Dinh Chi Minh claimed the company’s finances have run out and there’s no cash inflows to pay company employees and leaders. The company employs around 1,000 laborers.

In a bid not to fold the company, its board of directors unanimously decided to "streamline the workforce," keeping only key personnel on board for the time being.

"Therefore, our company would like to announce to [most] employees presently working for HDTC and any of its subsidiaries that they are put on temporary unpaid leave while waiting for business to resume," said the CEO.

HDTC is a property developer with 35 years of experience in the industry.

According to documents from its annual 2023 shareholder meeting, the company took in VND8.3 billion in gross annual revenue this year, which amounted to VND96 billion in profit after taxes.

However, the firm had paid more than VND8.3 billion in salaries to its board of directors and supervisors the previous year.

HDTC had set a 2023 target of VND1 trillion in revenue, VND200 billion in profit and a 7% dividend payout ratio. But the company failed to achieve any of those goals.

The firm is now more-than cash-strapped: it owed VND755 billion in tax debt by August and was then named on the Ho Chi Minh City Tax Department’s list of firms in serious tax debt.

By October, the Customs Sub-department of Investment, which manages investment cases for the Ho Chi Minh City Customs Department, put HDTC on a one-year ban, meaning the company’s goods were thus prohibited from clearing customs due to its tax debt, which by then topped VND100 billion.

HDTC’s move to put nearly all its employees on temporary unpaid leave is in line with recent trends in the struggling real estate industry.

Other major property developers, namely Dat Xanh Corporation, Phat Dat Corporation, and Novaland Group, have all recently implemented mass layoffs.

Data from the General Statistics Office of Vietnam shows that by October, 1,067 firms nationwide had dissolved this year, a 9.5% year-on-year increase. Over the same period, only 3,850 new firms were established, a 50.2% drop from the same period last year.

Many property developers ceased all new projects, stopped issuing new stocks, and cut at least 50% of their workforce.

Real estate market experts have speculated that towards the end of 2023 and the beginning of 2024 more firms will leave the industry being unable to weather current market storms.