Support the development of affordable housing from land capitalization

Affordable housing, including social housing is a hot issue that is of major concern. Currently, the demand for affordable housing, social housing is quite large, however, the policies to attract investment for these types of housing is very small. What do you think about this situation?

As we know, over time, since 2014 the affordable commercial real estate segment has developed strongly, the segment of social housing had breakthroughs thanks to a credit package of VND 30,000 billion in many localities, including Hanoi and HCMC, creating a huge supply of affordable housing. However, after this credit package closed, we can see that the capital for this segment is facing huge difficulties.

Although it is supposed to have a bigger credit package than VND 30 billion for this segment, the capital for it is still limited, quite small. The capital allocated to the Vietnam Bank for Social Policies (VBSP) only meets very little demand for the beneficiaries. It is not attractive enough to develop the social housing segment. And we can see, there is no project. About the affordable commercial housing segment, because there is no longer any credit for it, it hasn’t power to develop itself. I think this is a big issue. We have created a big step over the time, especially in using the credit package of VND 30,000 billion. But looking back, it can be said that we have difficult solutions to find to develop this segment, except that we can make special efforts for investment or for seeking large preferential loans.

So in your opinion, what is the solution to attract more enterprises to participate in the development of these projects?

I think that, through the development of affordable housing and social housing, one of the most important things is capital, and we also need more credit packages of VND 30,000 billion. However, so far, we still have not seen these credit packages. The problem here is what type of capital it is. It is hard to use the state budget’s capital because the pressure on public debt will increase. Thus, we only seek preferential loans from an international organization such as the World Bank or a financial institution. However, this is quite difficult because ODA for Vietnam is gradually decreasing. Thus, this is a serious problem and there is no solution to solve it.

Do you think there are new credit packages for the people?

In my opinion, it is difficult to see a new package of at least VND 30,000 billion. We have also seen that the Government itself has made great efforts, but since the end of the package of VND 30,000 billion, we have seen only about VND 1,000 billion allocated to the Vietnam Bank for Social Policies. The question arises as to whether any credit package can be formed at the same level as the previous VND 30 trillion billion credit package, I have yet to see any possibility of that. We also know that the current budget is in trouble, public debt, recurrent expenditures are high, and the urgent problem is that the development expenditures from the state budget is very limited. In this context, I have to say that it is difficult to see where we can create the same package of VND 30,000 billion as before. Therefore, we must continue to wait. I think this is a big difficulty for the development of social housing segment and cheap commercial housing.

So what other direction do you have to remove the current difficulties of the segment of social housing, affordable housing?

In fact, in some countries, people have already capitalized on land, and Da Nang has also done this. For example, gold plots in Hanoi and Ho Chi Minh City can be sold at market prices at relatively high prices, which can then be partially cut to support the development of social housing. That is how many countries have done it. From the capitalization of land, they can deduct a certain percentage, for example, they could deduct 10% of the land capitalization to return to meet the requirements of social housing development. At present, gold plots in many urban areas of Vietnam are still allocated at a “not very golden” price, so land capitalization for us has very low efficiency, leading to the support of cheap housing segment to become very difficult. Therefore, I think that now the Government and the provinces need to tighten the auction of land, better the allocation of public land for investment projects to prevent corruption, from which we will get great resources from land prices. This is an opportunity for us to develop, especially the development of affordable housing, social housing for low income people.

Thank you Sir!