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A real estate project near Ba Son Bridge and Metro Route No.1 station (Photo: SGGP) |
Since the beginning of this year, HCMC People’s Committee has met with investors many times to find feasible solutions for current issues that real estate projects have encountered. These working sessions have been quite fruitful.
HCMC Real Estate Association (HoREA) informed that there are now 156 real estate projects in the city subject to legal review due to their complexity. Thanks to the help of the municipal authorities, five of them, carried out by Kim Land, Gotec Vietnam Co. Ltd., Gamuda Land, CapitaLand, and Novaland, are allowed to mobilize capital from customers for half of the to-be apartments. These five are waiting for legal review, but their investors have already paid land use fee and land lease. Another apartment building project in District 4 and one social housing project in Binh Chanh District have been greenlighted to address problems.
HoREA commented that if each problematic project is worth VND2 trillion (US$84.3 million), the total investment amount reaches VND312 trillion ($13.15 billion). Successful issue handling can bring a VAT increase of 10 percent or VND31.2 trillion ($1.32 billion). When these projects earn money, the State can gain a corporate income tax of VND12.5 trillion ($526.8 million) and other additional taxes, not to mention job creation for thousands of people.
To have a safer and more sustainable real estate market, HCMC Construction Department has just submitted to HCMC People’s Committee proposals to adopt the Government’s dispatch on addressing legal problems in real estate projects.
Accordingly, the HCMC Departments of Planning and Investment, Natural Resources and Environment, Construction, Transport, Planning and Architecture, Finance are going to cooperate with related units to directly work with relevant businesses in charge of problematic projects in the list provided by HoREA. The legal issues will be categorized according to authority levels (the Prime Minister and the National Assembly). They will be carefully reported to HCMC People’s Committee before being sent to the Central Government.
One proposal is that any projects not able to satisfy legal regulations must be stopped. This is expected to release the land resource as well as investment sources while reducing the risk of real estate bad debts for banks.
To avoid bubbles or freezing statuses in the real estate market and prevent the spread of harmful news, HCMC Construction Department will publicly announced information related to activities of real estate trading floors and commercial housing projects eligible for sale or rent in the future and projects allowed to be transferred.
To timely handle problems related to legal procedures for land price identifying, land handing, land lease, and land use purpose change, HCMC Construction Department will review and prepare a report to HCMC People’s Committee for drastic solutions.
General Director Ngo Quang Phuc of Phu Dong Group shared that he and other business leaders in this field have seen positive signs for the real estate market, coming from sensible fiscal and monetary policies introduced by the Government lately and the determination of the local authorities in addressing legal issues in problematic projects. This has brought about more confidence among businesses in the field.
The disbursement for public investment projects has been accelerated to boost investment and commercial activities, and a growth in the stock market is expected to promote the recovery of the real estate one.
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A real estate project in Thu Duc City (near Ba Son Bridge) is on the way (Photo: SGGP) |
Vice Chairman of Vietnam Real Estate Brokers Association cum General Director of DKRA Vietnam Co. Pham Lam commented that the trouble recently has been valuable experience for both real estate companies and state management units. For a more sustainable market, the State should tighten its monitoring of the market for smoother operations where each partner fulfills its own responsibilities. Any arisen problems must be immediately handled.
Real estate expert Phan Cong Chanh said that infamous issues in the real estate field are legal procedures and capital lack. The first exists because many civil servants are still afraid of making a decision due to legal-related matters. Therefore, with better and clearer laws, businesses can confidently attract more FDI capital, register for a loan, and invest money in real estate projects. Obviously, clear laws lead to no congestion in project launching, which in turn makes it possible for enterprises to sell their products and have a smooth cash flow.
Economic expert Dr. Le Ba Chi Nhan stated that the Prime Minister has already formed a task force to accelerate the handling of issues in real estate projects for each locality. This is necessary since the real estate market has a great influence on others like construction materials and interior decoration. It is essential to devise consistent solutions to promote the growth of this important market and to aid prestigious investors (like preferential loans) so that they can complete their projects on time and offer a reasonable price for their products.
There must be a more precise view on the role of real estate investors in the economy to introduce suitable policies for them. Banks should categorize these investors to allocate loans to support them. The current crisis in the real estate market is a good chance for it to self-screen and eliminate financially weak or dishonest investors with no clear development strategies.
The task force to address problems for real estate projects in HCMC has 14 members, led by Chairman of HCMC People’s Committee Phan Van Mai. Vice Chairman of HCMC People’s Committee Bui Xuan Cuong is the Standing Deputy Head.
The task force is in charge of tackling administrative problems which are now the responsibilities of the city’s departments and agencies so that the handling can be accelerated, and the projects can be completed on time. Any inadequacies and overlapping between legal regulations must be pinpointed and then addressed properly to speed up the investment process.
