The legal "iceberg" is gradually being removed, but the results are not yet highly effective.

At the Conference on Credit for Real Estate and Social Housing Development, organized by the State Bank of Vietnam (SBV) in coordination with the Ministry of Construction on November 13th, a representative from Novaland stated that the Group is currently developing a cluster of projects in the central area of ​​Ho Chi Minh City, including the Aqua City project, the NovaWorld Ho Tram project, and the NovaWorld Phan Thiet project.

These projects also received active support and funding from commercial banks such as TPBank, MBBank , VPBank, and PVcomBank.

However, projects, whether completed, under development, or undergoing development procedures, still face legal obstacles that have yet to be resolved.

The legal "iceberg" is gradually being removed, but the results are not yet highly effective.

In 2023, the Prime Minister 's directives and the Special Task Force addressed most of the pressing issues that needed resolving. This is a positive and groundbreaking sign aimed at breaking through the legal "iceberg" that has existed for many years. However, in the practical implementation process, we have identified two key difficulties that have prevented the resolution process from being highly effective.

Novaland representatives at the conference on credit for real estate and social housing development. Photo: SBV.

Firstly, regarding the Ho Chi Minh City project cluster, two Novaland projects are currently being prioritized by the Ho Chi Minh City People's Committee for the resolution of outstanding issues since the beginning of 2023. Novaland is still awaiting a conclusion from the City to resolve the final legal difficulties at the 100 Co Giang apartment project (The Grand Manhattan) and the 32-hectare Binh Khanh project (The Water Bay). These are two projects where Novaland has committed to allocating sufficient space for social housing and resettlement. Of these, the 100 Co Giang apartment project (The Grand Manhattan) has already completed the handover of the resettlement portion.

Secondly, the Aqua City project (Dong Nai) is a key project of Novaland that is facing many legal obstacles. At the same time, Novaland has over 70,000 billion VND to be collected from customers in this project, awaiting the resolution of approval procedures to continue maintaining cash flow for project development.

“This is a project we acquired from Dona Coop, and it has all the necessary legal documents, including paid land use fees, approved 1/500 scale planning, and approval from the Provincial Party Committee for the transfer of the residential land project. However, we requested adjustments to the 1/500 scale planning to suit the market while maintaining the approved indicators, but many obstacles have still arisen,” a Novaland representative shared.

Since the beginning of 2023, based on the direction of the Prime Minister, the People's Committee of Dong Nai province has allowed the investor to prepare and submit for appraisal the adjustment of the 1/500 detailed planning in parallel with the approval of the C4 zoning plan. In addition, the competent authority has facilitated the investor to continue implementing construction and sales for items consistent with the approved detailed planning to fully fulfill commitments to customers.

However, the prolonged approval process for the local adjustments to the 1/10,000 General Planning and the C4 Sub-area Planning has significantly impacted the progress of approving the adjustments to the 1/500 Detailed Planning of the projects, as well as the legal procedures for construction and sales.

Next, at the NovaWorld Ho Tram project (Ba Ria - Vung Tau), the Provincial People's Committee has directed decisive action to resolve difficulties and expedite legal procedures. Currently, most obstacles have been addressed and some procedures have been completed. However, Novaland recognizes that many lengthy administrative procedures are still slowing down the project's progress. These are core issues, as the project's investment period is typically 24 months, but the company has actually spent 18 months resolving legal procedures.

Finally, one of the Group's key projects - NovaWorld Phan Thiet (Binh Thuan) - has also received some positive legal signals. Specifically, the project has completed the approval of the adjusted 1/500 detailed planning for all project components. In addition, Binh Thuan province is also proceeding with the next legal steps to adjust the land lease payment method from annual to one-time payment. Currently, the Group is awaiting the issuance of the amended Decree 44/2014/ND-CP to determine the land use fee and complete the legal procedures to sign sales contracts with customers.

A representative from Novaland stated that in 2023, the State Bank of Vietnam issued timely directives to provide maximum support to the business community in accessing capital. However, for Novaland, legal issues are a key factor because the company still has a large amount of receivables from sold products. Without resolving these legal issues, banks will not release the temporarily frozen funds, and this also hinders banks from disbursing new capital and continuing to finance homebuyers.

This led to the company having to delay the construction and handover of houses to customers, causing very serious consequences: failure to keep commitments to customers, inability to boost the large amount of cash receivables from already sold products. Cash flow was blocked, and Novaland had to pay tens of billions of dong in interest every day, negatively impacting investment efficiency, wasting social assets, and threatening the survival of the Group.

Novaland is seeking further support in terms of legal matters and loan financing.

A representative from Novaland requested that the Prime Minister direct the prompt issuance of a decree amending Decree 44/2014/ND-CP in order to finalize the plan for land management and use; and the calculation of land use fees for Novaland's projects and other stalled projects nationwide.

Novaland is seeking further support regarding legal matters and loan financing. (Illustrative image)

This real estate company also hopes that the People's Committees of provinces/cities will finalize the master plans, creating favorable conditions for real estate businesses to develop projects synchronously in accordance with the assigned targets.

Novaland proposes that the Government and the National Assembly consider and improve the Investment Law so that the Investment – ​​Land Allocation – Planning – Construction Permit process can be carried out quickly, transparently, and save capital for society.

Novaland hopes the Government will provide comprehensive solutions to address the obstacles related to inconsistent legal procedures, issues that have arisen over time, and avoid retroactive application; and that ministries and agencies will implement policies to reduce and defer corporate income tax for real estate businesses to alleviate difficulties and focus on stabilizing business operations over the next three years (2022, 2023, and 2024).

Regarding access to credit, Novaland proposes that the State Bank of Vietnam and the Government jointly support the restructuring of loans and reduction of interest rates for projects to be implemented in the next two years (2024 and 2025) to ease payment obligations for the company.

The State Bank of Vietnam (SBV) has amended and supplemented Circular 08/2020/TT-NHNN, allowing credit institutions to use up to 34% of their short-term mobilized capital for medium- and long-term lending, instead of the current 30%. This will enable the rational use of short-term mobilized capital for medium- and long-term lending, as well as improve access to credit for businesses and individuals, without posing risks to the safety of the credit system.

Novaland hopes the State Bank of Vietnam will consider extending the debt repayment period to a maximum of 24 months as stipulated in Circular 02 (instead of the current maximum of 12 months), applicable to both corporate and individual customers, in order to meet the requirements of comprehensive debt restructuring and alleviate difficulties for the economy.

Source: https://www.congluan.vn/novaland-tang-bang-phap-ly-dan-duoc-thao-go-nhung-chua-dat-hieu-qua-cao-post272214.html