Vietnam is now a lower average income country, but its housing prices are sky high. Affordable apartments priced below VND30 million per sqm have not been available in the market in the last four years.

Instead of developing affordable housing which is in high demand, realtors only develop high-end apartments.

Asked why he doesn’t intend to build low-cost housing, a realtor said no one wants to develop products in the market segment because the risks are high.

Procedures

He said the problem lies in complicated procedures, which costs developers a lot of money. A recent survey by the Vietnam Confederation of Commerce and Industry (VCCI) found that developing social housing and affordable products does not bring profits because of low selling prices and complicated procedures that cause implementation to be slow.

VCCI has named 10 administrative procedures related to construction and project development that realtors usually face – investment decisions; land and site clearance; urban planning; fire prevention and fighting; environmental impact assessment; and design inspection, certificate on construction work ownership and others.

Realtors have to visit state agencies many times to obtain licenses because of problems related to officers handling their dossiers and  overlapping and complex laws. 

A high number of enterprises said officers deliberately persecute them with unreasonable requirements and admit that they accepted to pay ‘under the table’ fees to obtain licenses. 

Meanwhile, a survey by the Central Institute of Economic Management (CIEM) found that all the procedures on licensing construction works, which need approval from state management agencies, ‘have problems’. 

The time needed for administrative procedures, including inspection of fire prevention conditions and the construction kickoff is 166 days, or 2-3 times longer than other regional countries. 

And the time would be even longer, if including other procedures, such as ones on land, site clearance and construction programming.

According to the HCM City Real Estate Association (HOREA), legal problems are the biggest complication for realtors, which account for 70 percent of difficulties of real estate firms. 

This is attributed to inconsistent and contradictory regulations. 

A realtor told VietNamNet that the difficulties in accessing capital are not as serious as administrative procedures. Enterprises need many approvals from many different agencies to obtain licenses for construction. Though laws and regulations clearly show the procedures realtors have to follow, they still are confused about the procedures because each locality and agency interpret the regulation in their own way.

The complex procedures and overlapping competencies create risks for real estate developers and increase legal compliance costs. Therefore, developing low-cost housing projects is not profitable.

Reform package

Experts have asked management agencies to design necessary measures to develop popular products, stressing that this would not only the demand of the majority, but also act as the lever stimulating economic development as the real estate sector has relations with 38 other business fields.

In order to do this, there must be strong reforms on administrative procedures.

However, this proves to be difficult work. The real estate sector relates to 15 laws, tens of government decrees and hundreds of circulars issued by different ministries. The removal of the barriers, contradictions and overlaps in the ‘mountain of legal documents’ will take time and great efforts of both the legislative and executive bodies.

Tran Thuy