What is the difference between workers' housing and social housing?
Workers’ housing (NH) plays a role in solving the housing demand problem in some areas, while providing safe and convenient living conditions for workers. However, the housing supply for workers in industrial parks and export processing zones is still recorded to be quite limited, not meeting the demand.
According to Savills Vietnam, NƠCN has some differences with social housing (NƠXH), mainly in terms of location and legality. NƠXH can be developed in many places, while NƠCN only serves workers, so it will be concentrated in industrial parks or areas surrounding industrial parks.
Social housing buyers will receive a permanent or 50-year red book, and can only transfer it to eligible subjects to buy social housing after at least 5 years from the date of liquidation of the social housing purchase or lease-purchase contract.
Workers' housing has some differences from social housing. (Photo: TCKT)
For NƠCN, most of them are designed as rental apartments, and developed by state-owned enterprises or private enterprises. Three entities are allowed to provide NƠCN including enterprises developing industrial park infrastructure, manufacturing enterprises in industrial parks and real estate enterprises. In the northern provinces, 70% of NƠCN are currently developed by manufacturing enterprises in industrial parks.
NECN is a low-rise residential building with a maximum height of 5 floors and no elevator with parking areas arranged at ground level. Some supporting facilities include community areas, canteens, mini supermarkets, green spaces and playgrounds.
Accommodation is arranged in 2 types; serving singles and families. The average room area for singles is about 30 - 35 m2 for a maximum of 6 people to share. The average room area for families is 25 m2 for a household of 4 people. According to regulations, the minimum area standard for NƠCN in industrial parks is 5 m2/person, with a maximum of 8 people. Each room is equipped with basic furniture including 1 bedroom, 1 bathroom, with or without a kitchen.
Ms. Nguyen Hong Van, Deputy Director, Consulting and Valuation Services, Savills Hanoi commented: In fact, the supply of NOCCN is still very limited and cannot meet the existing demand.
According to records, Vietnam has about 4.5 million workers in industrial zones, half of whom need accommodation equivalent to a housing demand of 12.5 million square meters of floor space. However, the existing supply only meets nearly 30% of the actual demand of workers. Due to this shortage, many boarding houses near industrial zones are built by people for rent.
"Many of these boarding houses are old, rundown and have a high density of tenants, posing many potential health and safety risks," said Ms. Van.
In the Hai Phong market, the industrial development locomotive in Northern Vietnam, Ms. Van shared: Currently, Hai Phong has 14 industrial parks and 26 industrial clusters in operation with over 200,000 workers, of which about 50,000 are immigrant workers.
"The province currently has plans to develop 15 more industrial parks on 6,000 hectares of land, which are expected to require a workforce of up to 300,000 people and a demand for industrial space of up to 1.5 million square meters of floor space," Ms. Van revealed.
Policies and incentives applied to investment and development of workers' housing
According to Ms. Van, there was previously no legal framework or clear definition of NƠCN. However, Decree 33, passed in early 2023, has made important commitments on NƠCN and social housing.
In addition, the Prime Minister is directing the Ministry of Construction to develop and complete the draft Project "Investing in the construction of at least 1 million social housing apartments for low-income earners and industrial park workers in the period 2021 - 2030". The determination to develop these two types of housing has now been included in the general planning of local governments and the whole country.
There should be policies and incentives applied to investment and development of workers' housing. (Photo: BP)
The State has provided many policies to encourage investment and development and support packages for workers to access housing products. According to the law, for some industrial zones, there are specific regulations, at least 2% of the total land area of the industrial zone must be reserved for industrial housing. Land use fees are proposed to be exempted for land for industrial housing development.
Other financial mechanisms proposed for developers include exemption or reduction of value added tax and corporate income tax. In addition, construction costs can also be deducted when calculating corporate income tax. Developers can also access preferential loans from the Vietnam Bank for Social Policies and other credit institutions operating in Vietnam.
Workers are also eligible for loans from the Government’s VND15 trillion credit support package. According to Resolution 33, workers who want to buy or rent affordable housing can receive support with a loan interest rate of 2% per year for the two years 2022-2023.
Despite the upcoming NƠCN projects, the demand for worker housing remains high and unmet. According to Savills Q1/2023 price index, the manufacturing sector has provided 482,000 more workers compared to the same period last year, reflecting a strong demand for labor right from the first quarter of the year.
"Therefore, private enterprises can benefit from investing in this segment due to high market demand. With the continuous development of the industrial sector, stable FDI capital flows, large manufacturing workforce combined with investment incentive policies, NƠCN can be an attractive niche development segment in the coming time," Ms. Van commented.
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