According to recent figures from the Ministry of Construction (MoC) there are some 7 million people living in urban areas with demand to rent or buy social housing. The total requirement is 150 million sq m and investment capital is estimated at VND300-400,000 billion ($15-$21 billion).

MoC previously reported to the government about the implementation pace of housing projects for low-income earners, industrial zone workers and the poor, and the difficulties being experienced in mobilising the necessary capital. There are now 33 projects in place for low-income earners with capital of VND2,500 billion ($130 million) and 24 projects for workers in industrial zones with capital of VND2,600 billion ($136 million).

According to the Deputy Minister of Construction Nguyen Tran Nam, implementation is meeting capital difficulties because the State does not have sufficient funds for such projects. Under government Decision 67/2009, the State encourages all economic sectors to take part in building houses for low-income earners to buy or rent. An MoC report shows that many provinces have attempted to raise capital for such projects, in Hanoi, Ho Chi Minh City, Da Nang and elsewhere, but the policy for social housing development has not been easy to implement. Timeframes and a roadmap are very much in need.

In order to attract more capital for social housing, the State has created a range of positive conditions for investors. Those who take part in building social housing will receive preferential treatment such as exemptions from the rental of land in project areas, a preferential value added tax rate of zero per cent, a corporate income tax exemption for four years from the date profits are first earned, a 50 per cent reduction on corporate income tax for the following five years and then a rate of 10 per cent after that. The State has also supported investors as regards credit, infrastructure and other matters.

MoC figures show that 130 housing projects for low-income earners and 71 for workers at industrial zones need capital. The Ministry is continuing to cooperate with the Vietnam Development Bank (VDB) in order to secure preferential loans for housing projects for low-income earners in some provinces. Capital for 41 projects has already been arranged. The State is also mobilising other capital resources from domestic credit organisations and overseas development assistance (ODA).

While it’s not easy for low-income earners to rent or own a house, small apartments have become a reasonable alternative. The Dat Lanh Real Estate Company recently sought permission to build apartments of 20-40 sq m. MoC forwarded an opinion to the Ho Chi Minh City People’s Committee, who are responsible for housing development in the city and would study the actual demand for such apartments. MoC said that if demand was real the Committee could propose the building of small apartments of 20-40 sq m. After that, the report will be sent to the competent authorities to consider amendments or supplements to the law if appropriate, which currently states that all new apartments must be bigger than 40 sq m.

Associate Professor Le Duc Thang, head of the faculty of Urban and Rural Planning at the Hanoi University of Architecture, said that these apartments would only solve the accommodation problem in the short term.

Because the demand among low-income earners is high, the matter should be considered carefully. “We need to think about many other aspects,” he said. “It is not enough to just look at money savings. We need to consider other aspects as well, such as land capital, living quality, and management.” 

Low-income earner Mr Tran Viet Hung supports the small apartment model because he and his wife are now renting a small room of 22 sq m. “Many people in the city are like me,” he said. “They come from other provinces to work and need a small house or even just a room.” Owning a house of 70-80 sq m remains a dream, with living costs becoming more expensive. “How can we afford a small apartment at a price of VND300 million ($15,700),” he asked. “Everyone knows there is major demand for low cost housing. So the proposal from Dat Lanh will certainly have the support of many people.” 

One real estate analyst said the law is flexible and encourages enterprises to take part in building social housing, of which these small apartments are a good example. “The company is obviously keen to tap a market segment that has been left open,” he said. “The housing law has already been amended and supplemented many times to bring it closer to reality.” Small apartments are convenient for single people and low-income earners to buy or rent.

House prices are very high at the moment but there great demand for low cost housing. While the State continues to seek investment capital for social housing, the opinions of investors and enterprises are being considered.