Social housing to unlock property impasse

There has been much argument about whether the real estate market needs a government  rescue before the government decided to take action. Could you please explain more about this decision?

As we all know, in recent years the macroeconomy has suffered from unfavourable factors. Production and manufacturing activities have faced difficulties, the real estate market remains gloomy, unemployment is on the rise and  especially poor people and low income earners are living in a very difficult situation.

To promote social welfare policies and remove constraints for business activities, the government issued Resolution 02/2013/NQ-CP dated January 7, 2013. Solutions included supporting the real estate market through a number of mechanisms and policies. The resolution also calls for reviewing projects, restructuring apartment sizes and promoting the development of social housing - one of the most important elements in the National Housing Development Strategy. The MoC and many other related bodies together with local authorities have focused on the implementation of this resolution in key economic cities and provinces such as Hanoi and Ho Chi Minh City.

It can be said that social housing development has two main targets: to help people have accommodation and stimulate other related production areas such as building materials and many other items. This will increase trading, reduce bad debt and allow positive factors to spread to other segments of the real estate market. 

This is, I think, an absolutely right decision because if we let the real estate market fall into crisis, the consequences will be incalculable. Crisis lessons from other countries have shown that if the state let the market fall freely, it will damage the state also and the whole economy, including developers and people. If a crisis occurs, the whole society will be burdened with very huge losses.

Many aspects remain unclear, such as the procedures to borrow from VND30 trillion ($1.44 billion) package, or converting commercial to social housing. How do you react to complaints that the solutions were mostly aimed to rescue the “big fishes”?

I have to confirm that, firstly, the recent policies and solutions from the state were not aimed at rescuing the real estate market, as well as any “big fishes” at all. They are supportive measures to create a breakthrough in the market, to support the economy, workers and end-users.

The point here is not to pour in a sum of money, but to work out suitable directions, solutions and policies to help market recover and develop. I really understand and share the difficulties and problems people and developers meet in accessing the government’s support package. But we may say that we need a time for new policies to be smooth. Moreover, it is really hard for any policy to satisfy all of society.  Policy implementation, we know, must be closely linked with the interests of all sides of society.

It seems that big developers and conglomerates, especially those belonging the MoC, will be more favoured when accessing the credit support package. Is there any “group interest” here?

I do confirm that there will be no discrimination or group interests here. Developers or companies who have social housing projects approved by the local authorities, having cleared land, land allocation decision and land use right certificates will be introduced by the MoC to the banks for finding loans.

Moreover, when implementing support policies, we have not emphasised on monetary support, but on policy instruments and mechanisms.

Specifically, market development policies must be based on the plans, in accordance with market rules. Management authorities should provide specific information and pricing management to match the purchasing power of the people, thereby increasing liquidation. For developers and companies the state will support by giving mechanisms for commodity restructuring, specifically through converting commercial to social housing, allowing sub-division of apartments to suit market demands.

The social housing segment will come in for particular attention. The state has issued strict regulations on prices and eligible buyers. Therefore, social housing will be priced freely. For commercial housing, the state can only support by mechanism, management tools and market instruments to regain the trust of consumers and increase liquidation.

Apart from immediate solutions to support the market, what should be done in the long term?

In order to get the real estate market on track, we are setting up the real estate market development strategy which can be closely managed by related bodies such as land management agencies, bankers, finance institutions and construction firms, as well as to have more suitable decentralisation between central and local authorities.

Foremost, we have to implement the National Housing Development Strategy to 2020 with a Vision toward 2030. This is a breakthrough step in housing development,  ensuring the housing development is an obligation of both state, society and people.

Under the assignment of the prime minister, the MoC in conjunction with the local   authorities has built many policies and programs. Especially, the ministry had submitted the government a decree on social housing management and development for approval.

In this decree all needed objects will be fully covered. It also clearly defines incentives, support from state for social housing investment, such as land use fee exemption, VAT reduction, corporate income tax reduction and other incentives to encourage enterprises of all economic sectors, households and individuals to invest in social housing development, including rental housing reserved for low-income households who are currently unable to afford to buy houses.