‘Bottleneck of bottlenecks’ continues to dog Vietnam's property, infrastructure projects

Limited consultations between state agencies and the parliament’s primary focus on wording are issues with Vietnam’s legal framework adversely affecting property and infrastructure projects, say experts and corporate leaders.

The issues were highlighted at a seminar on “Removing legal bottlenecks for infrastructure and property investment” organized by the Vietnam’s Association of Foreign Invested Enterprises (VAFIE) and The Investor in Hanoi on Tuesday.

Nguyen Anh Tuan, standing vice chairman of VAFIE, said institutional reform has been determined as one of three breakthrough strategies for Vietnam to achieve rapid and sustainable growth.

Although the National Assembly has updated laws and the Government has provided guiding decrees, businesses find many rules and administrative procedures challenging, he stressed.

Tuan quoted Party General Secretary To Lam as calling the nation’s legal framework "the bottleneck of bottlenecks."

However, he acknowledged that the Government is according top priority to updating the legal framework in order to improve the business environment.

The efforts of the Party General Secretary and the Government are expected to boost the process to update the nation’s legal framework, providing more transparency and clarity, Tuan noted.

He added that VAFIE would collect recommendations made at the seminar and convey them to the Party, the National Assembly, and the Government.

VAFIE chairman Nguyen Mai said the law-making process is struggling because laws are being drafted by ministries with limited consultations from other government agencies.

Meanwhile, the National Assembly's process focuses mainly on the "wording" and parliamentary discussions are based solely on government reports. This has resulted in contradictions among different laws, decrees, and circulars, he noted.

2025 would be a milestone in Vietnam’s preparations for updating its legal framework and effecting institutional reforms, Mai added.

Tran Chung, chairman of the Vietnam Association of Road Traffic Investors, pointed out problems in the legal framework for projects under the public-private partnership (PPP) format.

Since the PPP law became effective in 2021, the number of PPP projects in transport sector has fallen, he said.

Chung noted the PPP law did not fully account for investors' rights to their investments. Authorities should consult more with project investors to amend the legal framework, he added.

Chung also proposed that authorities improve the implementation of laws, especially the capacity of officials, in order to alleviate the PPP sector’s difficulties.

Nguyen Huu Duong, chairman of local multi-sector company Hoa Binh Group, highlighted challenges facing businesses in building social housing.

While the housing law has mandated local authorities with the task of site clearance, Hanoi has only disbursed VND47 billion ($1.85 million) out of the site clearance budget of VND12,350 billion ($486.17 million), he noted.

This has led to a sluggish progress by social housing projects, including zero social housing units in the ongoing tenure of the municipal People's Committee.

Duong pointed out another issue: land lots earmarked for city’s social housing projects do not match the city's masterplan and are lying idle at present.

Demand-supply mismatch

Nguyen Van Khoi, chairman of the Vietnam National Real Estate Association (VNREA), said the current "land fever" had risen out of a wide demand-supply mismatch, especially in the affordable housing segment.

While the legal framework aims to facilitate sustainability in the real estate sector, businesses need time to learn and adapt to the new rules, he said.

Speculative purchases are another factor behind the "land fever," Khoi said, urging authorities to improve the market management, handle violations by realtors, and strictly scrutinize land bids.

These measures are necessary to improve house buyers' sentiments, he said

To help businesses develop with social housing, authorities should further cut administrative procedures related to site clearance, issue detailed lists of technical requirements for social housing, and reduce land lease fees, he suggested.

Do Minh Anh, legal manager of Pacific Corporation, which specializes in optical fiber cable manufacturing, said several projects are subject to the Ministry of National Defense and the Ministry of Public Security's clearance. However, the two ministries classified their documents as "secret," making it impossible for local authorities to access them, leading to problems in approving projects.