Started then "covered up"
On the occasion of April 30, 2022, the Ho Chi Minh City Department of Construction coordinated with enterprises to organize groundbreaking ceremonies and start construction of a series of social housing projects. However, after more than a year, almost all of the above projects are still inactive and "covered in blankets". We contacted the leaders of Xuan Mai Company, the investor of the social housing project in Eco Green Urban Area (District 7) and were informed that after the groundbreaking ceremony to celebrate April 30, the project was stopped until now to complete procedures and legal procedures.
Currently, the project is still in the first step of extending the investment policy. Similarly, the Dragon E-Home social housing project in Thu Duc City of Dragon Village Company has stopped after breaking ground until now to run legal procedures. Also in Thu Duc City, the social housing project of Dien Phuc Thanh Company is also in a state of legal entanglement, unable to carry out the next steps.
The social housing project at Eco Green Urban Area broke ground in April 2022 but has been covered up until now.
Ms. Huynh Thi Bach Van, Chairwoman of the Board of Directors of Thien Phat Company, the investor of the housing project for workers (NOCN) in Linh Trung II Export Processing Zone (Thu Duc City), said that her company's project was also in a situation where it "froze" after the groundbreaking ceremony. The project documents were submitted to the Management Board of Export Processing and Industrial Zones of Ho Chi Minh City, but to date this unit has not received them.
"The State has introduced many preferential policies, calling on enterprises to invest in social housing and industrial housing. However, up to now, enterprises have not enjoyed any incentives from increasing the coefficient to 1.5 times compared to commercial housing, enjoying incentives on land use fees, borrowing capital with preferential interest rates, tax reduction... Enterprises have not received any support during the procedure process... Enterprises have the passion to contribute to society, not for profit, but it is very difficult. There are too many problems that cause project implementation to be slow," said Ms. Van.
As a company specializing in social housing investment, Mr. Vo Minh Hoang, General Director of Ho Chi Minh City Social Housing Development Investment Joint Stock Company, said with disappointment that the social housing development policy is correct, with many incentives, but is currently "stuck" at most stages. Specifically, although there is a credit package of 120,000 billion VND, businesses cannot access it. To borrow this capital, the project must have a construction permit. To get a construction permit, it takes 2-3 years to complete. Meanwhile, at the very first stage of approving the investment policy, businesses are "stuck", so borrowing preferential capital is impossible.
In addition to capital, enterprises also face difficulties with land funds. Currently, there are two land sources: self-negotiation, compensation, clearance or land allocated by the state, but both of these sources are difficult. Another difficulty is that enterprises doing social housing projects only have a profit of 10%, but the selling price and the selling object must go through the Department of Construction while there are costs that are not included in the selling price. "To encourage enterprises, the state has also offered many incentives, but most enterprises have not been able to access them. Therefore, I hope the state will accompany enterprises. Too many barriers make enterprises not interested in participating in development," Mr. Hoang shared.
Mr. Le Huu Nghia, Director of Le Thanh Company - a company specializing in social housing in Ho Chi Minh City, admitted that the government has introduced many preferential policies to attract socialization in this field. However, it is very difficult and time-consuming for businesses to complete project implementation procedures. Previously, the procedures for implementing a project could be done in parallel, but now they are done at the Department of Planning and Investment. In which, the first and most important step is approving the investment policy in parallel with approving the investor.
Currently, not only commercial housing but also social housing is stuck at this first stage, making other stages impossible to implement. This is demonstrated by the fact that no new social housing project has been implemented in the past. Therefore, no matter how many and attractive incentives are offered, if the implementation and implementation of policies in localities is ineffective and the legal process is not completed, it is very difficult to promote these incentives.
Preferential social housing policies are difficult to reach businesses
Don't leave "carpet on top, nails underneath"
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, analyzed that there are many preferential policies for social housing, but businesses are not interested in participating because of many bottlenecks in capital, legality, procedures, and processes. The biggest bottleneck is policy implementation. The first is preferential credit capital. Although the 2014 Housing Law stipulates credit incentives for buyers, renters of social housing and investors. However, since the end of 2015, the state has not spent the medium-term budget on social housing, so there is no source to spend.
By the end of 2017, the National Assembly had approved 400 billion VND for this program and then an additional 4,000 billion VND. But in reality, there was no capital source. Up to now, the medium-term budget expenditure for 2021 - 2025 has not clearly stated the allocation of credit sources for social housing. Therefore, in the past, businesses and people have not been able to access this capital source.
Up to now, the government has announced a VND120,000 billion package, considered a preferential package for social housing, but the interest rate is up to 8.2%/year, while the current lending rate from the Social Policy Bank is 4.8%/year. The interest rate is too high and the loan period is only 5 years, so people do not dare to borrow to buy or lease social housing. For businesses, even though they want to access this source of capital, they cannot borrow due to legal problems. Because of the above obstacles, after a long time of announcement, only less than VND100 billion has been disbursed from this package.
"The VND120,000 billion package is not a preferential package for social housing but is actually a credit loan package with interest rates 1.5 - 2% lower than the market. Therefore, I recommend that the Ministry of Construction continue to implement the VND110,000 billion package like the previously successful VND30,000 billion package. The VND110,000 billion package is truly preferential and needs to be restored. If this package is approved, people will dare to borrow to buy houses and hope to complete the program of 1 million social housing units," Mr. Chau suggested.
Regarding the incentives, especially the slow disbursement of the VND120,000 billion package, Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, said that it was due to the fixed lending interest rate in the initial period and then floating. This will not be sustainable because it is impossible to maintain a fixed interest rate of 8.2%/year for many years. This interest rate is also not attractive to investors and home buyers at present, because this is a long-term loan.
Therefore, to stimulate demand for the social housing segment, there should be a social housing development fund and the Prime Minister has asked the Ministry of Finance and the Ministry of Construction to study this package. Mobilizing policies, foreign investment funds, international investment funds, etc. to participate. Countries such as Singapore and South Korea are also operating this fund effectively and the interest rate is only about 50% of the market rate. With this interest rate, home buyers and investors can afford it. For administrative procedures that are still cumbersome and not suitable for reality, they need to be cut to create conditions for businesses to participate.
Just disbursed nearly 100 billion VND
Regarding the VND120,000 billion credit package, the Department of Housing and Real Estate Market Management (Ministry of Construction) said that 20 provinces have announced a list of 52 projects eligible for loans under the VND120,000 billion credit program with a loan demand of VND25,884 billion. Of which, 49 social housing projects have a loan demand of VND24,655 billion and 3 projects to renovate and rebuild old apartments have a loan demand of VND1,229 billion. Up to now, some social housing projects in localities have been disbursed with a capital of about VND83.1/1,095 billion.
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