Nguoi Dua Tin (NDT): First of all, I would like to thank you for answering Nguoi Dua Tin’s interview on the occasion of June 21. Sir, currently, the Government, ministries, sectors and localities are actively encouraging businesses to participate in building social housing. As a business with many years of experience in building social housing , how do you assess people’s current demand for social housing?
Mr. Nguyen Viet Hung - Head of Human Resources Administration Department, BIC Vietnam: According to the assessment of the Ministry of Construction, the results of social housing development in recent times have not met the requirements set out in the National Housing Development Strategy to 2020, with a vision to 2030.
According to the forecast of the Ministry of Construction, by 2030 the whole country will need 2.4 million social housing units to meet the housing needs of workers in industrial parks and low-income people.
The Ministry of Construction also proposed a project to invest in building at least 1 million social housing apartments for low-income earners and industrial park workers (2021-2030 period). The number of 1 million social housing apartments, when put into use, will meet part of the real housing needs of the people.
However, from a business perspective, we believe that the current problem is that the demand for social housing is very large but the supply accounts for a very small proportion of the market.
Besides, many investors are not interested in developing social housing projects for people because profits are controlled at no more than 10% and it is difficult to access preferential credit sources from banks.
At the same time, preferential policies for low-income people to access home buying are not many and difficult to access. Legal procedures are still overlapping, causing the time from the beginning of the procedure to the actual implementation to be prolonged.
Investor: It is known that BIC Vietnam has been implementing social housing projects. Could you please tell us what advantages and disadvantages the company has encountered in implementing the above projects?
Mr. Nguyen Viet Hung: As an investor developing social housing projects, during the project development process, our company has also received a lot of support from state agencies for this segment.
Firstly, in the context of scarce real estate credit sources, capital for social housing projects is still given preferential access to loans by the Government and banks.
Second, the land funds are facilitated by provincial and municipal authorities in terms of time and procedures for implementation, are exempted from land use fees, and these land funds are often planned, arranged, and cleared in advance.
Third, social housing development projects enjoy certain support and incentives on land, taxes and other investment incentives that are very clear and specific.
Mr. Nguyen Viet Hung - Head of Human Resources Administration Department of BIC Vietnam talked with Nguoi Dua Tin.
However, besides the advantages, the construction of social housing still faces some difficulties. Currently, our company is completing procedures to soon start the projects to provide the market with quality apartments, meeting the needs of the people of the capital.
However, this licensing process in Hanoi is currently facing many overlapping procedures and takes a lot of time. There are projects that we have completed site clearance since 2020 but are still waiting for the decision to allocate land from the City People's Committee. Along with that, the issuance of construction permits for construction works is also prolonged, causing the company to delay project implementation.
In addition, another problem that is troubling us is interest rates. Despite the incentives, banks still have many problems with loan procedures, and credit criteria for businesses to access capital are currently not really clear.
Investor: In reality, besides the capacity of the enterprise, solutions on land, mechanisms and policies also play a very important role. As an enterprise that has built and completed many social housing projects, how do you evaluate the mechanisms and policies of the State for social housing construction enterprises in recent times?
Mr. Nguyen Viet Hung: We believe that social housing development is a correct policy and strategy, with breakthroughs in viewpoints, ideas, approaches, and implementation solutions. Together with the determination and active participation of the Government, ministries, branches, and localities, effective mechanisms and policies have brought about many important results in recent times.
However, current policies and mechanisms on social housing still have limitations, hindering the development of social housing. Some of the identified challenges include challenges in land access, challenges in high housing prices, complicated and overlapping investment and land allocation processes with many inconvenient and unclear procedures.
In addition, we also believe that the shortage of social housing supply is due to the mechanism allowing conversion of usage purposes. Many projects are licensed for social housing but after a while are converted into commercial housing and investors accept to pay money to convert the purpose. This makes the already limited supply even more limited.
Not to mention that many investors are limited in investment resources and capital mobilization for the social housing market, making it difficult to access preferential loans. Limitations or regulations on rates and risk coefficients for real estate loans as well as the characteristics of this segment mean that the capital sources of banks for this program often lack long-term stability.
The Red River high-quality social housing project has the commercial name Rice City and is invested by BIC Vietnam.
Investor: As mentioned about the Government's target of 1 million social housing apartments by 2030, to achieve that goal, in addition to the 120,000 billion VND credit package that has been deployed, the Government is also asking ministries, branches and localities to review documents and remaining problems to remove them for investors. From the perspective of businesses, what solutions do you think are needed?
Mr. Nguyen Viet Hung: Firstly, we think that investors who own land or buy land for social housing should apply for a designated contractor mechanism, not a bidding mechanism. The remaining criteria are approved by state agencies.
Second, related to planning issues. Currently, many planning projects, detailed planning 1/500 for social housing must be adjusted, related to population targets, social infrastructure facilities, etc.
This leads to the need to adjust the zoning plan and detailed plan, which will be very time-consuming. Therefore, the enterprise proposes to join with localities in adjusting the 1/500 detailed plan in social housing projects to speed up the progress.
Third, the current approval process for social housing projects takes a long time. Therefore, we recommend that steps that can be done in parallel, such as public bidding documents, investor selection, etc., can be shortened to 90 to 120 days so that localities can announce social housing projects and enterprises can participate in submitting documents.
Fourth, regarding planned land funds, many social housing projects are scattered, not concentrated, small-scale, and have inconvenient and inappropriate access and utilities.
We hope that management agencies will implement clear planning and make transparent the planned area to help businesses implement construction in accordance with the general strategy.
Finally, we hope to increase access to preferential loans, supported by banks. At the same time, we will have access to "clean" land funds and increase land planning for social housing projects.
Investor: Thank you for the conversation!
Talking to investors, Professor Dang Hung Vo - former Deputy Minister of Natural Resources and Environment said that to unblock the supply of social housing, three factors are needed: capital, land fund and policy.
Meanwhile, the weakest point of the Vietnamese management system is administrative procedures. Although this is a segment specifically for low-income people, accessing to buy, lease-purchase and rent social housing always causes workers countless difficulties due to procedures. Enterprises also face legal difficulties in implementing projects in this segment.
"Currently, the VND120,000 billion credit package with the highest preferential rate of 2%/year is not really preferential for low-income people to access. Ten years ago, the VND30,000 billion credit package had a preferential loan rate of 5.5%, so workers and low-income people could easily access and want to access it," the expert shared .
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