City gets tough on slow-moving resettlement projects

Nguyen Le Dung, deputy head of Thu Thiem Investment and Construction Authority (Thu Thiem ICA), said the city is taking drastic measures to accelerate the progress of resettlement projects.

The program to build 12,500 apartments for resettlement purpose is planned for completion in late 2012 or the first quarter of 2013. Still, the program is now just halfway to its goal due to many slow-moving projects.

So far, the municipal government has only received 1,100 resettlement apartments developed by Nam Rach Chiec Co. Ltd. (NRC) over a 17.3-hectare area in An Phu Ward.

NRC has registered to build 1,844 apartments under the format of ‘land in exchange for infrastructure’. Given the current slow pace, it is hard for the developer to hand over the remaining 712 units by late this year as expected.

If on schedule, a project of Duc Khai Joint Stock Co. with over 1,000 apartments will be finalized in late 2013. Another project of 4,200 flats invested by 21st Century International Development Co. should have been completed by now after two years of execution, but the developer remains silent.

Meanwhile, South Korean investor Daewon has asked for permission to pull out of a resettlement project of 2,200 apartments in this urban area. The city is seeking new investors to carry on the project.

Dung said credit tightening is one of the reasons why investors are slow to carry out their projects. Many developers have suspended their projects after running out of capital.

For example, Duc Khai Co. has only finished the basement section of the project and is finalizing legal procedures to borrow capital to continue the project deployment.

Apart from the ‘land in exchange for infrastructure’ format, the city is buying apartments from project owners after auditing investment costs plus a profit margin for the investors.

Under this format, Thu Thiem ICA last week signed a contract with Duc Khai Co. to buy 1,000 apartments of the resettlement project in Binh Khanh, District 2. Thu Thiem ICA will spend some VND1.2 trillion on this deal.

In line with site clearance, the project to develop four central routes in the new urban area is in the final stage of basic design, but it is unknown if the project will be able to get off the ground in July as planned.

Dung said the city is still calling for investors into Thu Thiem. There are currently ten investors joining in the development of the new urban area, including owners of the projects approved in principle by the municipal government, with Bank for Investment and Development of Vietnam (BIDV) being the most recent.

The city has borrowed over VND10 trillion to prepare infrastructure in Thu Thiem New Urban Area. Despite the preferential lending rate, the urban area has to pay interest of VND3 billion every day.