Hanoi (VNA) - The massive stimulus package of 30 trillion VND (1.32billion USD), introduced in 2013 to encourage social housing development in Vietnamand revitalise the listless real estate sector, has been entirely disbursed.

However, with the expiry of the attractive interest rates, many businesses arecontemplating pulling out of the social housing market while the demands showno signs of flagging.

In a recent conference on measures to kick-start the real estate market towardsthe end of 2017, Vu Van Phan, deputy head of the Ministry of Construction’sHousing and Real Estate Market Management Department, admitted that there havebeen cases where businesses asked to withdraw from social housing projects.

In April, the National Assembly allocated 2 trillion VND (87.9 million USD) tothe construction of houses for contributors to the revolutionary cause as wellas social housing projects, with more than half of the figure (1.160 trillionVND) reserved for the latter purpose meant to be the continuation of the nowexpired stimulus package, but this amount is “still too little and not enough,”Phan said.

He also added that the construction ministry is asking the government for morefinancial support for social housing businesses as well as homebuyers, but thatremains a distant vision.

Prime Minister Nguyen Xuan Phuc signed a decision dictating the interest ratefor social housing loans in 2017 at 4.8 percent a year – even lower than the 5percent interest rate in the now expired stimulus package. But, it is reportedthat no allocation from the state budget has been made available to commercialbanks, so in reality, nobody has really benefitted from this policy.
Truong Anh Tuan, Chairman of the board of Hoang Quan Group, a Southern-basedreal estate corporation, said that their original plan was to implement 20social housing projects throughout the country.

However, since there are no longer any stimulus packages for businesses orhomebuyers, the company has to postpone the schedule of many projects.

The lack of capital also caused the company to fail to hand over finishedapartments to customers in time as per the contracts. To continue withconstruction, in addition to what capital the company has at its disposal, ithas to seek loans from commercial banks at commercial rates and mobilisecapital from the stock market.

Nevertheless, the majority of Hoang Quan Group’s social housing projects stillfall behind schedule.

According to existing regulations, housing projects are required to set out 20percent of the project land for social housing. The new law is considered“fairly flexible” in this regard as it allows businesses to contribute throughland, apartments, or monetary means, if the project’s total area is less than10ha. The last form of contribution is the preferred option for mostbusinesses.

Le Hoang Chau, Chairman of the HCM City Real Estate Association (HOREA), saidthat the social housing land fund must be “managed and used effectively”. Therevenue generated from this fund should be reserved for the development ofsocial housing projects as per each locality’s planning, and should not be used“for any other purpose.”

The association recommended the city focus its resources as well as call on theinvolvement of real estate businesses to implement affordable or social housingprojects, to serve the “growing but largely unmet demands” from middle-and-lowincome demographics, civil servants, manual workers and immigrants.

Furthermore, according to Chau, the law states that the fund for thedevelopment of social housing projects can come from “official developmentassistance or preferential loans from donors”, which he said “is a highlypotent source of funding”, however, up to now, there hasn’t been any guidancefor this mechanism.

According to Tran Trong Tuan, head of HCM City’s Department of Transport, theloan package is meant to ‘stimulate’ this oft-overlooked market as well as“plant the seeds” for the further development of social housing projects, and“the package is not meant to last forever”.

In the long term, existing laws must be observed in full, especially making useof housing credit funds to support social housing programmes.

“The main issue, first and foremost, is money, the mechanisms and institutionsare available, we just need to implement Decree 101/2015 and Law on Housingthen the social housing programme will roll on smoothly. This measure is thesteady and sustainable one, not just temporary stimulus packages,” Tuan said.-VNA