Foreign firms could see faster project buy-in times

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According to Dr Tran Du Lich, member of the National Assembly’s Economic Committee, skipping the requirement for foreign firms to secure a new investment license for already existing projects would help reduce time and slash unnecessary procedures, while also providing an effective way to stimulate the market.

Many real estate projects were still unlikely to be finished in the near future due to capital shortages.

Many of those had resolved their delays through selling projects or merging. Others were keen to engage foreign partners, but they had been hindered by red tape that insisted that the involvement of foreign firms would require developers to restart all their investment applications. 

“This is unreasonable because it is a waste of time and creates concerns among the foreign partners that there may be a hitch,” Lich said.

Nguyen Manh Ha, head of the Ministry of Construction’s Housing and Real Estate Market Management Department, said that according to the current regulations, project owners who wanted to transfer their projects needed to have an investment certificate, the project needed to be on undisputed land and the investor needed the legal right to use the land.

In many cases, Ha said, the dispute between project and land plot owners were the original cause of the long delays in the first place.

New project investment licence holders needed to prove their financial capacity. 

Ha said the Ministry of Construction was reviewing and resetting the whole system and unreasonable procedures would be dumped.

In the Housing Law, domestic developers were forbidden from directly selling their projects to foreign partners without permission from local authorities. This transaction currently has to be carried out by a third party – the local authorities – and these procedures were also overly complicated, lengthy and subject to abuse.

The lack of investment and downturn in the real estate market in recent years has left many developers unable to either complete their projects. However, positive signs in the real estate market have encouraged developers to attempt to finish their projects as demand increases. Prospective investors have been searching for delayed projects to inject cash into. Others have pursued mergers or acquisitions or entered partnerships. According to SohoVietnam, a consultant focused on M&A real estate projects, hundreds of projects are seeking new partners.

“Instead of long delays and sitting on deteriorating half-built stock, firms should be seeking new partners to agree joint ventures, or sell their projects in order to recoup some capital,” said Phan Xuan Can, chairman of SohoVietnam, a consultant specialised in real estate project transactions.