Reforms needed to accelerate investment in social housing projects

Housing for workers has once again become a hot issue after tens of thousands of migrant workers left cities to return to their hometowns during the fourth Covid-19 wave. 

However, businesses have little interest in investing in social or low-cost housing projects.

Reforms needed to accelerate investment in social housing projects

According to the Ministry of Construction, 266 social housing projects have been completed, with a total area of more than 7,100,000m2, accounting for 41.4% of the target set out in the "National Housing Development Strategy to 2020 and a Vision to 2030".

The demand for social housing and affordable housing in Vietnam is high, but the supply is modest.

Dau Anh Tuan, Head of the Legal Department, Vietnam Chamber of Commerce and Industry (VCCI), says that businesses are not keen on investing in social and affordable housing project because of cumbersome, time-consuming administrative procedures and low profits. Only houses for high-income people can make a profit, according to a survey by VCCI.

A survey of 10,000 enterprises by VCCI, including 1,830 enterprises with construction projects in the past two years, shows there were 10 administrative procedures related to construction investment that caused difficulties for investors.

Specifically, 40.9% of enterprises said that they encountered difficulty in investment policy; 50% in land and site clearance procedures; 48% in procedures related to construction planning, urban planning; 41% in fire prevention and fighting approval; 42.9% in the appraisal of environmental impact assessment reports; 35.8% in confirmation of the environmental protection plan; 43.7% in design, facility, and construction design appraisal; and 39.8% in registration of building ownership certificates.

The average time to process construction permit procedures for enterprises was 23.93 days. Businesses also have to travel back and forth many times to get a license, an average of three times. In addition, a large percentage of enterprises reported that they faced difficulties raised by officers who deal with their records. Some 30% of enterprises admitted that they had to pay unofficial costs in performing some administrative procedures.

The Vietnam Real Estate Association noted that in order to get construction permits, many procedures need to be approved. Moreover, each locality has a different way of understanding and implementing related regulations, making it difficult for businesses.

For example, in Hanoi, an enterprise that wants to carry out a project must go through the following stages: the Department of Planning and Architecture introduces the location, approves the 1/500 plan, then the Department of Planning and Investment sets up the project, the Department of Natural Resources and Environment allocates land, and finally the Department of Construction grants a construction permit. At each stage, enterprises have to carry out many administrative procedures.

Dau Anh Tuan said that administrative reform, if considered separately in each field, has made positive changes. However, for construction projects, investors have to carry out administrative procedures at many different State management agencies, and at different levels, involving many stages. The conflicts in the law on procedures, documents, authority ... cause high costs in terms of time and money for enterprises. The authorities are also often confused when applying the law.

 

Further reform is needed, said Nguyen Minh Thao, from the Central Institute for Economic Management. Administrative procedures in the construction field have been simplified but it is not enough. According to surveys, the time to fulfill the procedures from the stage of fire prevention and fighting plan approval to the start of construction is up to 166 days, 2-3 times longer than other Southeast Asian countries. In Singapore, investors have to fulfill nine construction procedures, but it only takes them 35.5 days. They do it quickly thanks to the application of electronic transactions and online public services.

There is plenty of room to promote reform of construction permit procedures. First, it is necessary to develop detailed guidance documents and clear illustrations on the process of implementing administrative procedures in the field of construction; strengthen the application of information technology and digitization through online public services; review the legal system on construction investment and related fields such as fire prevention, land, environment; and design indicators to assess the convenience of administrative procedures on investment - construction - land - environment at the provincial level.

In particular, there should be coordination between State agencies so that businesses do not have to go through so many doors. It is necessary to amend the law to eliminate conflicting and overlapping regulations, and the most important thing is promoting digitalization and online public services, focusing on monitoring and enforcement.

Construction investment procedures have a direct impact on market entry, putting resources into production and the development of physical and technical infrastructure of enterprises as well as the economy. Fulfilling administrative procedures on construction investment is one of the important activities when starting a business, which affects long-term development.

Therefore, when the business community is heavily affected by the Covid-19 pandemic, administrative reform is one of the most important solutions that can help save time and costs and reduce the burden of legal compliance.

Administrative procedure reform in important fields such as investment, construction, land and environment has a positive effect that can be compared to a "relief package" for businesses to create momentum for rapid breakthroughs in the coming period.

Tran Thuy

State needs to remove obstacles in worker housing development

State needs to remove obstacles in worker housing development

The State needs to have policies that encourage the development of housing for workers in industrial parks, according to experts.

Social housing development in 2021-2025 requires over US$9.6 billion

Social housing development in 2021-2025 requires over US$9.6 billion

Vietnam needs an estimated VND220 trillion ($9.6 billion) to build about 294,600 units of social housing for low-income earners in urban areas and industrial parks in the 2021-2025 period, according to the Ministry of Construction.

 
 

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