From the above practical situation, combined with the research and study process at Chailease, I have chosen the topic "Improving the appraisal of machinery, equipment, and mean of trans
INTRODUCTION
The rationale of the research
As Vietnam's market economy continues to expand, the demand for buying, selling, and exchanging assets and equipment among businesses and individuals is on the rise Despite the challenges posed by the COVID-19 pandemic, businesses are resuming investments and production efforts Consequently, the significance of MET appraisal in price evaluation has become increasingly important.
As our country undergoes industrialization and modernization, there is a significant influx of machines, equipment, and transportation assets, which are extensively invested in, purchased, and imported The rapid advancement of science and technology has resulted in frequent changes to models, designs, technical standards, and functionalities of manufacturing equipment and tools (METs), sourced from various brands and countries, each with differing price points This dynamic landscape necessitates a diverse and substantial need for valuation, highlighting the importance of appraisers possessing the requisite knowledge, experience, and understanding in this field.
In light of my practical experiences and research at Chailease, I have selected the topic "Enhancing the Valuation of Machinery, Equipment, and Transportation Means at Chailease International Leasing Company." My goal is to deepen my understanding of valuation practices, specifically focusing on the appraisal of machinery, equipment, and transport assets This exploration aims to yield actionable recommendations and solutions to refine the appraisal methods used at Chailease.
Objective and research scope
As for the research objectives, the research aims to address the following aspects:
First, the research focuses on clarifying, systematizing and generalizing the scientific theoretical background of the appraisal of machinery, equipment and means of transport
Second, the research will clarify the reality of the valuation work at Chailease
Third, based on the research results, I will propose a number of measures to improve efficiency in the appraisal practice at the studied firm - Chailease
This thesis evaluates the machinery, equipment, and transportation methods utilized by Chailease over a three-year period, from 2020 to 2023.
Research methodology
Mainly collecting secondary data from two sources:
- Internal data: collected from internal data of Chailease such as asset information, credit guarantee processes
- External data: investment newspapers, books, textbooks, master's theses, graduation theses, online newspapers
- Statistical methods: synthesize, analyze, systematize, and generalize the contents of the theoretical and practical basis of the appraisal work at Chailease.
The structure of the thesis
Besides the in troduction chapter, this thesis is structured with other chapter:
GENERAL THEORY ON APPRAISAL OF MACHINERY,
Overview of MET
MET are tangible, movable assets that are used to serve to generate income for owners, other definitions include:
Machines can be defined as individual devices or production lines that utilize mechanical power and consist of multiple components to perform specific tasks Typically, a machine includes various essential parts that work together to achieve its intended functions.
In addition, some machines have electrical and control components
The development trend of machines is becoming more and more compact, consuming less energy, materials, and becoming increasingly automated
Equipment serves as a vital ancillary asset that enhances machine operations The current trend in equipment development focuses on creating devices that are more compact, versatile, and capable of connecting with a variety of other devices.
Compared with real estate, machines, equipment have some basic differences:
Movable Equipment Technology (MET) is designed for mobility, leading to minimal price variation across different geographic areas, particularly for new MET Consequently, when considering the price of such machines, it is essential to factor in transportation and installation costs.
The rapid advancement of science and technology has led to the emergence of numerous new machines and equipment, necessitating that appraisers continuously update their knowledge To enhance their expertise and understanding of the machine and equipment market, appraisers must possess comprehensive technical knowledge, which is essential for ensuring the quality and accuracy of their valuation work.
• Compared to normal real estate, MET have a shorter lifespan
Unlike real estate, Mechanical and Electrical Technologies (MET) have a limited lifespan influenced by factors such as the natural environment, human usage levels, and operational intensity This characteristic is crucial for assessing the value of used MET, providing a sound basis for evaluating their remaining quality and yielding accurate pricing for valuation purposes.
• MET can be transferred or changed owners easily
Most MET (Machine and Equipment Transactions) exhibit higher ownership liquidity compared to real estate, leading to increased transaction activity This heightened market activity generates more comparable transaction evidence, which facilitates more accurate market value estimations for machinery and equipment.
Based on different criteria, equipment is classified into many different types:
Specialized MET refers to materials used for specific tasks that are rarely traded in the market, making it challenging to gather information on their market prices Due to the lack of transaction data, obtaining accurate pricing for these specialized MET can be difficult.
Commonly traded METs are widely available in the market, making it easier to gather information on transactions and pricing due to their frequent buying and selling activities.
- Classification according to the function of use
● Dynamic MET (Motor generators, generators, transformers and power source equipment; other dynamic MET)
● Working MET (Machine tools; MET used in the mining industry; tractors; specialized equipment for the production of chemicals; )
● Measuring and experimental working tools (Optical and spectroscopic equipment; electrical and electronic equipment; measuring and analyzing physical and chemical equipment; )
● Equipment and means of transport (road, waterway, railway means of transport; means of loading and unloading, lifting goods; )
● Management tools (calculating and measuring equipment; machines, information equipment, electronics and computer software for management; other management tools and tools)
- Classification according to the new and old level of MET
● New MET: These are newly purchased or manufactured MET that have never been put into use
● Used MET: These are MET that have been used.
Value of MET
2.2.1 Value basis applied in MET price appraisal
The valuation of MET can be assessed through two primary bases: market value and non-market value The choice of valuation basis is influenced by the specific purpose of the assessment, the remaining quality ratio of the MET, and available data on comparable assets in the market.
Market value refers to the estimated price of MET at a specific time and location, reflecting the agreement between a willing buyer and seller This transaction is characterized by its objective nature, with both parties fully informed and engaged in a cautious exchange Each participant in this process possesses the necessary knowledge to make informed decisions, ensuring a fair market assessment.
The valuation of equipment occurs at a specific time and place where operators assess its worth based on supply, demand, and market purchasing power Buyers, motivated by their ability to pay, seek to acquire market-equivalent tangible assets (METs) at optimal prices, while sellers possess legitimate METs and aim to sell them at the best possible market rates An objective and independent transaction is characterized by the absence of special relationships that could influence the MET price, ensuring that all parties have adequate time to gather comprehensive information about the assets being traded Additionally, the involved parties must act prudently and informatively, carefully considering their options based on the data collected.
Notes on using the market value basis
Market value is the price that is established in an open or competitive market, be it a domestic or international market, with a large or limited number of buyers and sellers
If the market valuation of MET is constrained due to factors such as market information, appraisal conditions, or other limitations, the operator must explicitly outline the reasons for these restrictions and any remedial actions taken Additionally, the report on valuation results should detail the impact of these limitations on the overall valuation outcome.
The non-market value does not reflect the market value but is estimated based on the economic, technical, functional, utility features of the machine, value to a particular
7 buyer or special appraisal purpose, transaction values under restricted conditions, and other non-market values
Types of Non-Market Values
The value of MET is determined by its users based on specific purposes that are independent of market trends In evaluating this equipment, operators primarily consider its role and contribution to the production processes of a business, as well as the potential resale value in online markets.
The required MET value is a price that does not accurately represent the market value It occurs when the MET is compelled to sell in a shorter timeframe than usual, and the seller is either unprepared or unwilling to proceed with the sale Consequently, the total proceeds from this transaction are referred to as the required MET value for selling.
Special value refers to the worth of equipment that possesses unique characteristics appealing specifically to niche buyers or consumers These characteristics can include economic and technical attributes, legal factors, or other distinctive aspects related to the equipment's nature.
The limited market value of equipment refers to items that are less in demand by consumers due to factors such as their uniqueness or prevailing market conditions While these machines are not unsellable, successfully marketing them requires extensive and long-term strategies, making the process more costly and time-consuming compared to other more sought-after equipment.
Investment value refers to the worth determined by an individual investor based on their specific investment goals The disparity between investment value and market value of a financial asset serves as a motivation for investors to engage in the market.
Value for tax calculation: is the value of MET based on the provisions of law to calculate the payable tax
❖ Notes on using non-market value basis
When employing a non-market value basis, the enumerator must explicitly identify the type of non-market value being utilized and provide clear rationale and justifications for its application.
- Characteristics of MET to be appraised;
- Trading required to sell or in a restricted market;
- Value based on special purposes (e.g tax purposes)
To enhance the reliability and accuracy of asset valuations, particularly for MET, it is essential to thoroughly analyze the factors influencing their value By clearly identifying these factors, appraisers can evaluate their significance and understand their interrelationships, which aids in establishing criteria and selecting suitable assessment methods Factors affecting MET's value can be categorized based on its unique characteristics.
The purpose of pricing Machinery and Equipment Valuation (MET) is to align with specific job requirements, reflecting the intended use of the machines and equipment This valuation determines the expected benefits each machine or device must deliver for various tasks or transactions Consequently, the purpose of valuation is a crucial, subjective factor that significantly influences the selection of the value basis, guiding the choice of the most suitable valuation method.
When appraising machinery and equipment, the purpose of the appraisal dictates the class or standard of value, which in turn influences the methods and processes employed by the appraiser.
9 must clearly define and agree with the client from the outset about the purpose of the valuation
Material factors refer to the inherent and natural properties that a product offers to its user In the context of machinery and equipment, these factors encompass the features, effectiveness, and durability of the materials used.
The value of a machine or device is largely determined by its useful properties and the subjective perceptions of its worth While the functionality of the equipment plays a crucial role, the appraiser must also take into account the specific goals and needs of the customer This dual consideration ensures that the appropriate type of value is assessed, leading to more accurate consultations and recommendations.
Status The legislation of movable property (machine, equipment) provides for the human right to exploit the properties of movable property during use
THE VALUATION OF MACHINERY, EQUIPMENT AND
Overview about Chailease International Leasing
3.1.1 The Headquarter – China Leasing Company Limited
In 1977, China Leasing Company Limited began operations in Taiwan, focusing on asset-backed financing for heavy industries to facilitate the acquisition of manufacturing equipment and upgrades By 1981, it became a member of the American Leasing Association and the International Finance and Leasing Association In 1980, China Leasing launched CITC Co Ltd to specialize in installment sales, and in 1986, it expanded into international factoring for high-tech and listed companies The company went public in Taiwan in 1989, and in October 1995, it merged with CITC, which was subsequently renamed Chailease Finance.
In the early 1980s, Taiwanese companies began expanding internationally, prompting the establishment of Grand Pacific Financing Corp ("GPLA") in the United States in 1983, which became one of the first Taiwanese financing institutions approved for offshore investments This was followed by the creation of Grand Pacific Finance Corp ("GPNY") in 1984, Grand Pacific Holdings Corp ("GPHC") in 1987, and Grand Pacific Holdings N.V ("GPNV") in 1989, serving as holding companies for U.S operations Following a reorganization plan in 2010 and 2011, operations in the U.S are now conducted through GPHC, with an office located on the west coast in Los Angeles, California.
In 1989, they established operations in Thailand through the purchase of a 49% equity stake in Bangkok Grand Pacific Lease Public Company Limited (“BGPL”),
Initially, BGPL focused on leasing and installment sales for manufacturing MET within Thailand's business community, with Bangkok Bank and its group companies holding the remaining stake In 1992, BGPL acquired a 99.99% stake in Asia Sermkij Leasing Public Company Limited (ASK), which specializes in automobile installment sales By 2004, the shareholding structure of ASK was reorganized, making it a 99.99% shareholder of BGPL ASK subsequently became a publicly-listed company in Thailand in August 2005.
In October 2005, operations were established in the People's Republic of China (PRC) through Chailease International Finance Corporation (CIFC), focusing on leasing equipment and manufacturing machinery to small and medium-sized enterprises (SMEs) The head office is located in Shanghai, supported by registered branches in key cities including Beijing, Chengdu, and Guangzhou With a national license, CIFC provides leasing services in Renminbi, enhancing access for SMEs across the PRC.
In October 2006, approval was granted by the State Bank of Vietnam to establish a subsidiary in Ho Chi Minh City Following the completion of business registration in December 2006, operations officially began in January 2007 By 2010, a representative office was opened in Hanoi.
3.1.2 Chailease International Finance Leasing Company
- Full name: Chailease International Finance Leasing Limited ("CILC")
- English name: CHAILEASE INTERNATIONAL LEASING COMPANY LIMITED Address:
- Headquarters: Floor 28, Saigon Trade Center Building, No 37 Ton Duc Thang, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam
- Branch: Office 20th floor, CEO Building, Pham Hung Street, Me Tri Ward, Nam Tu Liem District, Hanoi City
Email: service02@chailease.com.vn
Chailease International Financial Leasing Company Limited with tax code 0304738328 was licensed by the State Bank of Vietnam in 2006 and started operating in Vietnam in
Chailease International Finance Leasing Company Limited (CILC) is a fully foreign-owned credit institution that is part of the Chailease Finance Group, a prominent financial leasing corporation in Taiwan with over 40 years of experience CILC operates across various regions, including China, Taiwan, the Asia Pacific, and the United States.
CILC was licensed by the State Bank of Vietnam in 2006 and started operating in Vietnam in 2007
Chailease offers comprehensive financial services in Vietnam, specializing in domestic property leasing, purchasing, and subleasing, as well as financial leasing for imported machinery, equipment, and transportation assets The dedicated team at CILC is passionate about delivering exceptional service, with a strong focus on enhancing quality and efficiency for clients Committed to continuous improvement, the company actively develops new services to maximize customer benefits, positioning itself as a trusted and effective partner for distributors' success.
● Head office: 28th floor, Saigon Trade Center building, 37 Ton Duc Thang, Ben Nghe ward, district 1, Ho Chi Minh
● Hanoi Branch: 20th floor, CEO Tower HH2-1, Pham Hung Street, Me Tri Ward, Nam Tu Liem District, Hanoi
● Representative office in Can Tho: 5th floor, Hoa Binh Building, 14-16B Hoa Binh, An Cu ward, Ninh Kieu district, Can Tho
● Representative office in Hai Phong: 7th floor, Sacombank building, 62-64 Ton Duc Thang, Tran Nguyen Han ward, Le Chan district, Hai Phong
● Representative office in Binh Duong: 12A floor, Becamex building, 230 Binh Duong Boulevard, Phu Hoa ward, Thu Dau Mot, Binh Duong
● Representative office in Da Nang: 12th floor, Vietinbank building, 36 Tran Quoc Toan, Hai Chau I ward, Hai Chau district, Da Nang
● Representative office in Long An: 2nd floor, Viettel Long An building, No 20 National Highway I, Binh Phu neighborhood, ward 5, Tan An, Long An province
● Representative office in Dong Nai: 5th floor, Mobifone Dong Nai management building, 236A Phan Trung, Tan Tien ward, Bien Hoa, Dong Nai
3.1.4 Vision, mission and core values
Currently, CILC always operates with the following mission – vision – values:
+ Support partners for customer success
+ The driving force for economic success
- Vision: To become an excellent credit institution in Vietnam
+ Value: creation for mutual benefit
+ Development: willingness to learn continuously and maintain long-term development
+ Credibility: serving customers honestly, respectfully and conscientiously
+ Discipline: volunteer to assume responsibility and implement the collective plan
CILC has established a robust presence in Vietnam, with its headquarters situated in Ho Chi Minh City The organization operates one branch in Hanoi and maintains six representative offices across key cities, including Can Tho, Hai Phong, Binh Duong, Da Nang, Long An, and Dong Nai.
3.1.5 The company's line of business
Financial leasing is a medium to long-term credit arrangement involving movable assets, where the Financial Leasing Company (Leaser) retains ownership of the leased property The customer, known as the Lessee, pays monthly rent that includes both principal and interest throughout the lease term Upon completion of the lease, ownership of the asset is transferred to the Lessee In domestic financial leasing, CILC acts on behalf of the Lessee to purchase the property from a local supplier and subsequently subleases the asset according to the payment schedule outlined in the Lease Contract.
Figure 3.2 Domestic financial leasing process
(2) Submission of finance lease documents
(4) Sign a contract to purchase equipment
CILC offers imported financial leasing services, acting on behalf of the Lessee to acquire property from international suppliers This process involves subleasing the asset based on the payment schedule outlined in the Lease Contract While the import finance leasing process closely resembles domestic leasing, the key distinction lies in the involvement of overseas suppliers.
In addition, CLIC also provides solutions for businesses to increase working capital from existing assets with buying and leasing services:
Figure 3.3 The process of buying and subleasing
(1) Submission of finance lease documents
(2) Sign Equipment Purchase Contract and Lease Contract
The Practice of Pricing Machinery, Equipment and Mean of Transportation
3.2.1 Legal documents applied in the pricing practice of MET at CILC
“Price Law No 11/2012/QH13”, June 20, 2012;
“Decree 89/2013/ND-CP”, August 6, 2013 on the implementation of a number of articles of the Law on Price on valuation;
“Circular No 38/2014/TT-BTC”, March 28, 2014 of the Ministry of Finance guiding “Decree 89/2013/ND-CP”, August 6, 2013
“Decree 177/2013/ND-CP”, November 14, 2013 promulgated by the Government detailing and guiding the implementation of a number of articles of the Law on Prices;
“Circular 56/2014/TT-BTC”, April 28, 2014 of the Ministry of Finance guiding
“Decree No 177/2013/ND-CP”, November 14, 2013
The current "system of valuation standards" of the Ministry of Finance:
“Circular No 158/2014/TT-BTC”, October 27, 2014 regarding “Promulgation of Vietnam Valuation Standards No 01, 02, 03 and 04”;
“Circular No 28/2015/TT-BTC”, March 6, 2015 regarding “Promulgation of Vietnam Valuation Standards No 05, 06 and 07”;
“Circular No 126/2015/TT-BTC”, August 20, 2015 regarding “Promulgation of price appraisal standards No 08, 09 and 10”;
“Circular No 145/2016/TT-BTC”, October 6, 2016 regarding “Promulgation of Vietnam price appraisal standards No 11”;
“Circular No 122/2017/TT-BTC”, November 15, 2017 regarding “Promulgation of Vietnam valuation standards No 12”
“Circular No 45/2013/TT-BTC”, April 25, 2013 regarding “Guidelines for management, use and depreciation of fixed assets”;
“Circular No 147/2016/TT-BTC”, October 13, 2016 amending and supplementing a number of articles of “Circular No 45/2013/TT-BTC” dated April 25, 2013;
“Circular 128/2017/TT-BTC”, April 12, 2017 amending and supplementing a number of articles of “Circular No 45/2013/TT-BTC” dated April 25, 2013
“Circular No 162/2014/TT-BTC”, November 6, 2014 regarding “Guidelines on management and depreciation of fixed assets”
3.2.2 The process of pricing MET at CILC
At CILC, the financial leasing asset appraisal process is managed by the credit department, which consists of 23 employees at the Hanoi branch, led by Mr David, the Credit AGD The company employs the MET appraisal process in accordance with Vietnam's standard appraisal system.
- Step 1: Determine in general about the property to be appraised and the type of value as the basis for valuation
- Step 2: Survey the scene, collect information
- Step 4: Determine the value of the property to be appraised
- Step 5: Make a report and certificate of valuation results
*Step 1: Determine in general about the property to be appraised and the type of value as the basis for valuation
1- The basic legal, economic and technical characteristics of the property to be appraised
2- Purpose of valuation: The CO must identify and perceive the customer's valuation purpose The valuation purpose must be clearly stated in the valuation report
3- Identify customers, customer requirements; users of appraisal results
4- The binding conditions in determining the subject of price appraisal:
The appraiser must establish specific assumptions and conditions that align with the client's valuation needs and objectives, while considering factors that influence property value These limitations encompass legal and usage constraints of the property, restrictions on data sources, and the application of appraisal results Additionally, the appraiser's rights and obligations as outlined in the price appraisal contract must be acknowledged.
5- The setting of restrictive and binding conditions of the appraiser must be based on:
- There is a written confirmation of the customer and on the basis of a clear awareness that those conditions will affect the third party through the results of the appraisal
- Comply with relevant laws and regulations
During the valuation process, if the appraiser determines that the imposed restrictive and binding conditions are either lenient or unjustified, the Compliance Officer must reassess the situation and promptly inform the enterprise's director.
6- Determine the time of valuation
Immediately after signing the valuation contract, it is essential to determine the characteristics and nature—both natural and legal—of the property being appraised The assessment opinion on the property's value should be provided within the timeframe specified in the contract.
7- Identify the data source needed for the valuation
8- Determine the basis of the property's value
An appraiser must first understand the characteristics and types of assets being evaluated to accurately determine whether the valuation will focus on market value or non-market value.
- Market value: determined in accordance with the provisions of the valuation standard No 01 (VAS 01)
- Non-market value: determined in accordance with the provisions of the valuation standard No 02 (VAS 02)
The value determination as a basis for valuation must be consistent with the provisions of current laws and legal documents promulgated by competent state agencies
*Step 2: Survey the scene, collect information
The appraiser must directly survey the scene:
For MET, appraisers are required to assess and gather information on the technical attributes of assets, including capacity, productivity, and usage, as well as their location, characteristics, scale, and size This process applies to both new and existing assets being valued, along with comparable properties.
During the survey, in order to have sufficient evidence for the appraisal, the appraiser needs to take pictures of the property in different forms (panoramic, detailed), in different directions
In addition to information and data collected from the field survey, the appraiser must collect the following information:
- Information related to costs, selling prices, interest rates, income of comparable properties
- Information about factors of supply - demand, forces participating in the market, potential buyers - sellers
- Information about the legality of the property
To conduct a thorough valuation, the appraiser must gather information from various sources, including field surveys, asset transaction data (such as asking prices, bid prices, actual purchase prices, trading conditions, and transaction volumes) obtained through interviews with property trading firms, construction companies, contractors, banks, and credit institutions Additionally, they should utilize media reports from local and central government sources regarding the property market, as well as documents that verify the property owner's legal rights and outline the property's economic and technical characteristics, along with the area's economic and social development plans It is essential for the appraiser to clearly cite the sources of information in the valuation report and ensure that all data is verified for accuracy.
Is the process of assessing the impact of factors on the price of the property to be appraised
1- Analyze the information from the property site survey
2- Analyze the characteristics of the property market to be appraised
The nature and behavior of market participants
The commercial and industrial property markets are characterized by distinct supply and demand dynamics, influenced by various ownership structures, including private companies, state-owned enterprises, and joint ventures These sectors exhibit unique features that attract different types of investors and buyers, shaping the overall accessibility of the market Understanding these characteristics is essential for potential buyers looking to navigate the complexities of commercial and industrial real estate.
- For residential properties, including: age, family structure, income level of supply and demand groups, extent of expansion of this property market with potential buyers
Supply and demand trends in the asset market
- Trends of increase and decrease in supply, increase and decrease in demand of similar assets currently on the market
- The effect of the above trend on the value of the property being appraised 3- Analysis of customers:
- Client preferences regarding the location, size, function and surroundings of the property
- Demand and purchasing power of assets
4- Analysis on the best and optimal use of assets
- Appraisers need to consider the best use of a property where the natural, legal and financial circumstances allow and bring the highest value to the property
- Appraisers need to specifically evaluate the use of assets on the following aspects:
• The rationality and feasibility of using the property, considering the correlation between current use and future use
• The material and technical suitability for the use of the asset: identify and describe the technical and economic characteristics, the usefulness of the asset
• The legality of the property in its use, specific restrictions under the contract, as required by law
When assessing financial feasibility, it is crucial to evaluate the property's potential for income generation by considering its market value, future utilization, demolition expenses, and residual asset value Additionally, factors such as interest rates, associated risks, and the capitalized value of the asset play a significant role in determining its overall viability.
• Maximum efficiency in using assets: considering maximum productivity, maintenance costs, and additional costs, allowing assets to be used to the highest and best
*Step 4: Determine the value of the property to be appraised
The appraiser must specify the methods used to determine the value of the property to be appraised
Valuation methods are specified in standard No 07 (VAS 07) “Methods of valuation.”
The appraiser must thoroughly evaluate the appropriateness of various valuation methods in relation to the property’s technical and economic attributes, as well as the specific objectives of the valuation process.
In the appraisal report, the appraiser must explicitly identify the primary valuation method utilized as the foundation for the assessment, as well as the secondary method employed for verification purposes, ultimately leading to a conclusive value determination.
*Step 5: Prepare report and certificate of valuation
The report and certificate of price appraisal adhere to the guidelines set forth in standard No 04 (VAS 04), which outlines the requirements for reporting results, documentation, and certificates related to price appraisals.
A valuation report's content can differ based on the appraisal subject, purpose, and customer requests, but it must include essential elements such as the appraisal's objectives, methodology, findings, and any relevant assumptions or limitations.
- Name and type of property
- Origin of assets (machinery, equipment, technological lines, etc.)
- Location of real estate (land, buildings and other structures)
- Name, address, telephone number, fax number of the customer requesting price appraisal
- Name, address, phone number, fax number of the enterprise, valuation organization or branch
- Full name of the appraiser making the valuation report
- Full name and signature of the director of the enterprise, the head of the valuation organization or in charge of the branch
Relevant legal documents and standards promulgated by central or local competent State agencies
3 Technical description of the property
For machinery, equipment, technological lines, means of transport, supplies and goods:
- Technical criteria, quality of materials and goods
- Year of manufacture, factory name, country of manufacture
- Rate of wear and tear (tangible, intangible) at the time of appraisal
For MET, technological lines, means of transport, materials and goods
- Origin (model, brand, import, domestic production, manufacturer, year of manufacture)
- Invoice for purchase and sale of assets
- Other documents showing the legality of the property
5 Assumptions and limitations in property valuation
- The rationality of making assumptions and limitations related to market characteristics, factors affecting the market value of assets
- If such restrictions are not introduced, what will be the results, how will the appraisal results be affected
- Purpose, time, and person conducting the field survey
When consulting experts regarding the design capacity, features, and effects of machinery, equipment, and technological lines, it is essential for the appraisal report to explicitly outline the purpose and timing of the assessment and expert advice provided.
This article provides a comprehensive analysis of the regional property market, focusing on key influencing factors and current movement trends It examines the behaviors of buyers and sellers, highlighting their preferences and decision-making processes Additionally, the article assesses the advantages and disadvantages of properties within this market, offering insights into their appraised values and potential for investment.
SOLUTIONS TO IMPROVE MET APPRAISAL IN
Development orientation of CILC in the future
CILC has now affirmed its prestige with corporate customers of all economic sectors, becoming one of the reliable financial leasing units in Vietnam
CILC currently relies on self-evaluation for its valuation model, conducted by the Credit Department at its branches To enhance the quality of appraisal work, CILC places a strong emphasis on human resources and plans to increase the number of appraisers across the nation These appraisers are required to have a solid foundational knowledge and must complete both short and long-term valuation courses, with certifications provided exclusively by the Ministry of Finance.
In addition, CILC also aims to recruit staff with experience in appraisal and practice certificates at valuation companies to further support this field
CILC strives to be the premier financial leasing company in Vietnam, backed by a strong brand, skilled workforce, and top-notch appraisal services The company is committed to enhancing its competitiveness against banks and financial leasing firms both regionally and globally To achieve its mission and development goals, CILC continually focuses on improving service quality and enhancing the capabilities of its staff, particularly in the appraisal sector.
Some solutions to enhance the valuation of MET at CILC
4.2.1 Building an information system, updating legal documents
To achieve accurate and reasonable appraisal results, it is essential to have a comprehensive and reliable source of information However, the current limitations in effectively searching and filtering this information hinder the process Therefore, enhancing and further developing the information system is crucial to ensure its richness, diversity, and accuracy.
To enhance appraisal accuracy, it is crucial to expand and diversify data sources beyond the current reliance on customer, supplier, and media information Appraisers should actively seek insights from exhibitions, auctions, and MET tenders, including events like the Vietnam International Printing and Packaging Industry Exhibition and the International Electrical Industry Exhibition This approach will yield valuable data on competitive pricing based on machine condition and specifications When evaluating winning bid prices, Appraisal Officers must conduct thorough analyses to establish fair valuations Building strong relationships with MET professionals is essential for obtaining reliable information, and maintaining regular contact will help appraisers stay informed about current market prices Additionally, collaboration within the bank can enhance data sharing, allowing Appraisal Officers to access information on similar MET from colleagues across branches.
The market's inherent volatility requires appraisers to stay informed about changes impacting the MET value Additionally, the value of a MET can differ based on its geographical location and usage, prompting Appraisal Officers to leverage the company's branch network By connecting with branches in various regions, they can swiftly gather essential information, including pricing for similar METs under appraisal.
The company must enhance its electronic data warehouse that houses all information related to the MET Upgrading the data warehouse will not only reduce the time and costs associated with information collection but also provide a historical foundation that ensures data accuracy, thereby safeguarding due diligence outcomes Additionally, the design of the data warehouse should prioritize user convenience for optimal functionality.
60 reasonably, with intelligent functions to make data search easy In my personal opinion, the electronic data warehouse should include 2 parts legal framework and MET data:
In the legal framework governing appraisal activities, essential documents such as Valuation Standards, decisions, and circulars will be preserved alongside key laws including the Commercial Law, Price Law, and Civil Law Specifically, regulations pertaining to MET valuation, including depreciation calculation, transaction guidelines, and machine liquidation, will also be archived It is crucial to systematically organize these regulations to facilitate easy access and searching.
The MET data section will categorize machines by type, providing comprehensive details on specifications, manufacturers, and years of manufacture, as well as their current applications in various businesses Additionally, it will include historical transaction data for each machine For machines previously recorded in CILC appraisal records, relevant appraisal documents will be linked to their information These appraisal dossiers will be sourced from the extensive CILC archives or can be selectively retrieved from publicly available valuation records in the market.
Creating an electronic data warehouse is a challenging task that demands significant time and research efforts To ensure optimal results, CILC should engage technical experts in the process Once the electronic data warehouse is established, CILC can explore long-term strategies, including the expansion of information services for various organizations and businesses.
4.2.2 Specialize and diversify in valuation methods
To enhance the comparative method in appraisals, it is essential to diversify and elevate the quality of information gathered on both the equipment being appraised and comparable equipment Furthermore, to boost the reliability and accuracy of appraisal outcomes, appraisers should utilize a minimum of three comparables instead of the current practice of relying on just two.
The company should explore and implement alternative valuation methods, such as the cost and investment approaches, which, despite their technical complexity, yield precise results and offer greater control over MET pricing compared to the comparison method Additionally, the Credit Department should propose training initiatives for staff to enhance their proficiency in these valuation techniques.
4.3 Some recommendations to improve the quality of assessment of MET with authorities
❖ Government, Ministries, Sectors and State Agencies
The enhancement of collateral deposit and repair quality is a shared responsibility among organizations and individuals, primarily led by the Government, Ministries, and State agencies To effectively guide and oversee these efforts, the State must prioritize the completion of key factors essential to improving this process.
- The legal document system needs to be improved
Over the past decade, the appraisal sector in our country has made significant strides, yet it remains unfinished and faces various challenges Key limitations persist, particularly due to an incomplete legal framework To foster ongoing development in appraisal work, establishing a comprehensive and robust legal system is essential.
Legal documents pertaining to appraisals must be detailed, clearly outlining the rights and responsibilities of the appraiser, client, and any third parties involved Additionally, the fees for appraisal services should be explicitly defined to prevent unfair competition among appraisal agencies.
- Valuation staff need to be trained and fostered
The number of skilled appraisers in Vietnam is limited, highlighting the need for the government to enhance and develop the capabilities of appraisal professionals.
The Ministry of Finance has established several appraisal training courses for officials, primarily focusing on short-term programs for existing staff seeking additional certification However, long-term educational pathways, such as bachelor's and postgraduate degrees in appraisal, remain underdeveloped and lack popularity To enhance the appraisal field, the State should invest in developing curricula, improving teaching quality, and upgrading learning facilities to attract more students Additionally, short-term training programs must be refined by enhancing course content, learning conditions, and lecturer quality to ensure participants gain a robust knowledge base in valuation It is also crucial to integrate professional ethics into the curriculum to cultivate both competence and ethical standards among trainees.
The Ministry of Finance has established regulations for the organization of exams and the issuance of appraisal cadre cards through "Decision No 21/2004/QD-BTC" dated February 24, 2004 However, challenges persist, including a lack of practical content in exams, an overemphasis on theoretical knowledge, and instances of cheating To enhance the effectiveness and fairness of the examination process and ensure that selected cadres are truly qualified, the State must focus on improving exam organization, particularly in developing questions that reflect practical knowledge and operations.
63 fairness and honesty during the examination and marking process Exams also need to be held with a higher frequency to meet the human resource needs of the market