VietNamNet Bridge – A shortage of funds and high interest rates have left a number of social housing projects unfinished or still at the blueprint stage.

The Ministry of Construction said only 25 of 110 housing projects planned for workers in industrial parks during 2009-15 were under construction or completed with a total investment capital of about VND2.7 trillion (US$131 million), of which nine projects (eight in HCM City and one in Ha Noi) had been completed, meeting the accommodation demand for only 27,800 workers.

Similarly, cities and provinces had proposed 189 housing projects for 700,000 low-income earners for the same period, but only 39 projects were under construction. As many as 1,714 apartments had been finished and ready for sale to about 6,800 people.

According to Government Decision No 96/2009/QD-TTg, investors who took part in building low-priced apartments to meet the urgent demand for accommodation of poor workers and low-income earners would enjoy a deduction of 50 per cent of Value Added Tax and be exempted from corporate income tax.

The decision states that tax reduction and exemption would be valid only until December 31, 2009.

The Viet Nam Development Bank has right to lend to low-priced housing projects which are exempt from tax on the transfer of land use rights. However, only five low-priced housing projects so far have taken out loans from the bank, worth about VND740 billion (over US$32 million).

Vicoland group general director Bui Duc Long said though the group had satisfied the bank's asset demands for a mortgage, it had not yet okayed the loan, despite the fact the group was going to build 1,000 flats in central Da Nang City.

Long said the bank was not interested in low-priced housing projects because interest rates on loans for these projects was only 10.4 per cent whereas it could be up to 24-s25 per cent for other commercial housing projects.

Director of Handico 5 Tran Van Can said it was absurd to grant preferential tax for one year when it would take at least two or three years to complete a low-cost housing project.

Vinaconex Xuan Mai general director Dang Hoang Huy said most investors had to borrow loans from commercial banks at non-preferential interest rates to build low-priced housing projects.

Meanwhile, Government Decree No 71/2010/ND-CP regulated that investors were permitted to collect money from their customers only after finishing the foundation of their housing projects. This problem was compounded by the length of time it took to consider and choose the right people to buy low-cost houses.

"Expenditures like high interest rates in recent time have caused a rise in the price of houses," Huy said.

Former deputy minister of natural resources and environment Dang Hung Vo said investors themselves had to save first instead of relying on the State for loans to build low-priced houses.

He cited the case of investors who were successful in mobilising capital from small business to their projects after they proved their benefits to other co-investors.

Vo said investors usually believed real estate would bring them a huge profit but that was not the case with low-priced housing projects.

To avoid pressures of fund shortages and high interest rates, Huy proposed the State play its role as a major investor in housing projects and sell them at market prices.

The State could use the profit from these projects to build social housing, he said.

Construction Deputy Minister Nguyen Tran Nam said the ministry had asked the Government to draft necessary regulations to ensure continuous preferential treatment to investors in low-cost house construction for low-income earners.

VietNamNet/Viet Nam News