Players to help shoot for improved infrastructure

May 30, 2011 | 07:16
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Ho Chi Minh City is pondering over collecting infrastructure-connection fees from real estate developers to improve its infrastructure and urban planning conditions and District 2 is expected to be the first to step up to the plate.
The rapidly growing southern hub is placing major stresses on its creaking infrastructure

The move is to secure funds for future infrastructure development. Accordingly, real estate developers involved in housing projects in District 2 may have to pay the new fees when building high-rises.

Nguyen Phuoc Hung, vice chairman of District 2 People’s Committee, said at a meeting with Ho Chi Minh City Real Estate Association (HoREA) that “any property project which amended and upgraded its plan will have to help the district invest in infrastructure.”

The district has around 260 property projects, with 100 projects asking for amendments to their licenced plans. Most of them asked for more space resulting in increased residents, he said.

For example, an 87 hectare urban town in the district was originally planned for 16,000 people. However, the population size in the urban town has been increased to 30,000 people while the infrastructure remains unchanged.

To ensure living conditions were maintained, the grassroots government, he said, would have to invest in schools, hospitals and park developments by using tax contributed from the people. That benefits property developers.

In addition, many condo projects smaller than 5ha have spent no money for infrastructure development but have enjoyed the current system. To ensure fairness, the district is considering a contribution from those project developers also.

Howang Yu Nam, executive director of Korean Daewon Company Limited in Vietnam - which has two under-construction residential projects in District 2, said: “The fee is reasonable and good for the city’s long-term development. However, I don’t think this is a good time to put such kind of fee on developers’ shoulder. The fee will be likely to worsen the current flat real estate market.”

“I agree that District 2 is the most developed now in terms of infrastructure, so we [Daewon and its Vietnamese partners] will be happy to contribute to any coming infrastructure development funds, but now is not a good time.”

Do Thi Loan, general secretary of HoREA, said the plan would cause difficulties to developers because their projects were licenced for construction and they had not budgeted for this issue. Therefore, it would not be easy to convince them to pay an additional payment.

Hung said: “The city’s government has given the green light to the policy. However, a clear mechanism is required to ensure fairness among property developers and the financial obligations, if charged, should not be collected in a lump sum but divided into phases and according to the percentage of capital poured into the projects.”

By Ly An

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